Residents at Valley Springs in Auburn recently received a letter notifying them to vacate the building. That’s because the Kansas-based complex for seniors — a Section 42 participant — is being foreclosed on.
Increasingly, such dwellings, which participate in an $8 billion federal program designed to make senior living options more affordable, are facing operational difficulties. Critics blame mismanagement and inadequate oversight.
“The IRS and no one else in the federal government really has an idea of what’s going on,” said Daniel Garcia-Diaz, an auditor with the Government Accountability Office, during a Senate hearing. “These are basic accountability requirements we would expect of any program, especially one as important as this one.”
Garcia noted that federal auditors have no way to determine whether the projects are costing too much to build, whether developments are completed on time, or even if the buildings are in compliance. The IRS does not currently collect or maintain such data, he added.
The Section 42 housing program provides tax credits to operators who build affordable housing for senior living residents and others. Along with the Section 8 rental program, it is one of the government’s two main initiatives for those who otherwise could not afford housing.
In its most recent annual report, the GAO found that state and local housing finance agencies varied in how they implemented requirements for Section 42 credit allowances, performed cost reviews and conducted project monitoring. This followed an unflattering investigation by NPR and the PBS program “Frontline.” The joint project alleged that the Section 42 program is producing fewer new housing starts each year, despite huge funding increases.