HUD Secretary Ben Carson
HUD Secretary Ben Carson

A reform of the government’s senior housing portfolio that would allow private investment is underway, the Wall Street Journal reported Thursday

The Department of Housing and Urban Development is expected to allow nonprofit owners of 125,000 apartments to seek private financial streams. That is good news for providers struggling to update dilapidated senior housing units.

After HUD built close to 2,900 properties over 30 years, no funds were allocated for repairs or improvements in aging buildings. The proposed reform would allow senior housing owners to ask HUD if they can use private sources of funding. 

Such investments could fix broken HVAC systems, repair roofs or invest in other large-scale construction upgrades. National Church Residences, which has more than 5,000 apartments in several states, told the WSJ it was eager to investigate new private financing.

“We did capital needs assessments on all of them,” Michelle Norris, executive vice president at National Church, told the newspaper. “We are short approximately $27 million.”

The change also may allow improvements in existing senior housing properties over new construction, good news for many senior living operators in crowded markets. In 2018, Congress appropriated more than $100 million for new senior housing construction.

The draft guidelines from HUD would include stipulations to prevent a private real-estate lender from removing a low-income housing program due to foreclosure and would keep senior residents locked into affordable rates for at least 20 years, the WSJ reported.