Implications of Project Size in Section 811 and Section 202 Assisted Projects for Persons with Disabilities

by HUD USER

implications of project size

IN SECTION 811 AND SECTION 202
ASSISTED PROJECTS FOR PERSONS WITH DISABILITIES
U.S. Department of Housing and Urban Development

Office of Policy Development and Research

Acknowledgements

The authors of this report, Gretchen Locke, Caryn Nagler, and Ken Lam, wish to acknowledge the
assistance provided to this study by a variety of individuals and organizations. First, we appreciate
the guidance and support of the task order’s Government Technical Monitor, Dr. Cheryl Levine.
Mrs. Gail Williamson in HUD’s Office of Housing provided valuable assistance in helping us
assemble data for sample selection and select site visit locations; she also contributed helpful review
and comments on our reports. We also wish to recognize the members of the study’s advisory group
who provided insightful review during the study’s design phase and in the preparation of the final
report. The group’s members were: Moe Armstrong, Ethel Elan, Suellen Galbraith, Bill Henning,
Betsy Lieberman, Kathleen McGinley, Ann O’Hara, Anthony Penn, Susan Procop, Patrick Rafter, Liz
Savage, Andrew Sperling, Becca Vaughn, Susan Weaver, Linda Williams, and Tony Zipple.
Perhaps most importantly, thanks are due to the property sponsors from the HUD-assisted study
properties for volunteering their time and sharing their experiences with the Abt research staff. We
also thank the Section 811 project residents who spoke with us during our site visits. Their insights
greatly enriched this research. We are indebted to the local service providers for persons with
disabilities who shared their time and expertise on the issues associated with project size in housing
for persons with disabilities. We appreciate the assistance provided by state policymakers in agencies
serving persons with disabilities for their input in clarifying issues surrounding approaches to
providing affordable housing for persons with disabilities.
At Abt Associates, a number of staff members played important roles on this task order. Dr. Jill
Khadduri provided thoughtful and constructive technical review throughout the design, data
collection, and report writing. Technical advisor Dr. Raymond Glazier also provided valuable
assistance in designing the resident interview protocols and training site visitors for the resident
interviews. Site visitors Jean Amendolia, Larry Buron, Ty Hardaway, Debi McInnis, Linda Pistilli,
Claudia Solari, Kristin Winkel, and Michelle Wood carried out the site visits with efficiency and
thoroughness. Under the supervision of Debi McInnis, Esther Tan, Hong Ly, and Rudy Sabogal
conducted the telephone surveys and assembled the survey data with attentiveness and care. Jessica
Bonjorni provided programming support for the survey data analysis, and Michele Robinson
produced the report. We thank them all for their diligent efforts.

Table of Contents

Executive Summary ............................................................................................................................iii

Background.....................................................................................................................................iii

Research Design ..............................................................................................................................v

Key Findings....................................................................................................................................v

The Role of Project Size in Housing and Service Delivery ......................................................v

Project Size and Neighborhood Relations...............................................................................vii

Resident Experiences in Section 811 Projects........................................................................viii

Project Size and Development and Operating Costs................................................................ix

Policy Implications .........................................................................................................................ix

Chapter One Background and Methodology.....................................................................................1

Background......................................................................................................................................1

Research Design ..............................................................................................................................4

Telephone Discussions with State Policymakers ......................................................................5

Telephone Survey of a Nationally Representative Sample of Project Sponsors.......................5

Site Visits ..................................................................................................................................8

Organization of the Report...............................................................................................................9

Chapter Two Project Size and Housing/Services Models...............................................................10

Characteristics of Section 811 Projects and Their Residents.........................................................11

Role of Federal, State, and Local Government Regulations on Project Size and Service Approach

Characteristics of Section 202 (Direct Loan) Projects for Persons with Disabilities and Their

Project Size and Service Delivery in Section 202 (Direct Loan) Projects for Persons with

All Projects..............................................................................................................................12

Project Size and Service Delivery in Section 811 Projects............................................................13

Project Size and Severity of Disability in Section 811 Projects ....................................................15

De-linking Housing and Services ..................................................................................................16

Sponsors’ Views of Resident Preferences .....................................................................................17

.......................................................................................................................................................18

Residents........................................................................................................................................19

Resident Characteristics ..........................................................................................................21

Disabilities .....................................................................................................................................21

Summary........................................................................................................................................22

Chapter Three Project Size and Neighborhood Relations..............................................................24

Project Sites ...................................................................................................................................25

Neighborhood Acceptance.............................................................................................................25

Social and Economic Integration ...................................................................................................27

Summary........................................................................................................................................28

Chapter Four Resident Experiences in Section 811 Projects .........................................................29

Resident Characteristics.................................................................................................................29

Resident Satisfaction......................................................................................................................31

Residents’ Housing Preferences ....................................................................................................33

Service Needs and Preferences ......................................................................................................35

Table of Contents i

Community Integration..................................................................................................................36

Summary........................................................................................................................................37

Chapter Five Factors in Operating and Development Costs..........................................................38

Total Operating Costs ....................................................................................................................39

Administrative Expenses ...............................................................................................................42

Operating & Maintenance Expenses..............................................................................................44

Taxes & Insurance Expenses .........................................................................................................45

Utilities Expenses ..........................................................................................................................46

Total Development Cost ................................................................................................................47

Summary........................................................................................................................................51

Chapter Six Summary of Findings and Policy Implications ..........................................................52

Policy Implications ........................................................................................................................53

Appendix A Projects Selected for Site Visits...................................................................................55

Table of Contents ii

Executive Summary
In recent years, there has been growing interest among different sectors representing and serving
persons with disabilities in providing more mainstream housing opportunities for persons with
disabilities. The purpose of this research is to investigate the social and economic implications of
project size in Section 811 and Section 202 (direct loan) projects for persons with disabilities, their
residents, and the immediate neighborhoods.
A congressional mandate requires that this study look specifically at:
1
• The benefits and problems associated with providing Section 811 housing in projects that
have 7 or fewer units, 8 to 24 units, and more than 24 units; and
• The benefits and problems associated with providing housing for non-elderly persons
with disabilities under the Section 202 (direct loan) program, in projects having 30 to 50
units, 51 to 80 units, 81 to 120 units, and more than 120 units.
This report presents the study’s findings.
Background
In the mid-1960s, the Department of Housing and Urban Development (HUD) began providing
funding for housing for persons with disabilities through the Section 202 Direct Loan Program for the
Elderly as a result of Congress expanding the definition of elderly to include people with physical
disabilities. The program became known as the Section 202 Direct Loan Program for the Elderly or
Handicapped. In 1974, people with developmental disabilities became eligible under the program,
and after a three-year joint HUD/HHS Demonstration Program for Deinstitutionalization of the
Chronically Mentally Ill from 1978 through 1980, people with chronic mental illness became eligible
for the regular Section 202 Direct Loan Program in 1982. HUD funded more than 2,100 projects
totaling over 36,000 units for persons with disabilities under the Section 202 Direct Loan Program
from 1964 through 1990. During this time period, the types of projects being developed evolved
from large congregate dwellings, which offered a less restrictive setting than hospitals or nursing
homes, and shifted to much smaller, community-based projects. Also, project size limits shifted to no
more than 40 units if a project was an individual living complex, and a maximum of 15 residents if
the project was a group home.
In the Cranston-Gonzalez National Affordable Housing Act of 1990, Congress changed the Section
202 program from a direct loan program with Section 8 rental assistance to a capital advance program
with project rental assistance contract (PRAC) funds and restricted eligibility to the very low-income
elderly. Congress also created a similar program, the Section 811 Supportive Housing for Persons
Section 524 of Fiscal Year 2000 Appropriation Act (H.R. 2684; P.L. 106-74).
Executive Summary
1
iii

with Disabilities Program, to address the housing needs of very low-income adults with disabilities
(18 years of age or older) by providing funding primarily for independent living projects of no more
than 24 residents and small group homes of up to eight persons with disabilities, with an exception
provision for both. Supportive services are to be made available to residents of Section 811 housing,
but beginning in Fiscal Year (FY) 1996, receiving supportive services cannot be a condition of
occupancy. Services may be provided on- or off-site to assist residents in living as independently as
possible.
Over the 14-year history of the program, there has been a trend towards reduction in project size
limits. As of FY 2003, project sizes were limited to 14 persons with disabilities in an independent
living project with an opportunity to request an exception and 6 persons per group home with no
exceptions. The continued reduction in the maximum project size limits is attributed to
recommendations from national disability advocacy organizations as well as changes in state policy
regarding the provision of supportive services in residential settings.
At the time this research project began in 2001, 65 percent of the almost 1,600 projects (totaling
15,500 units) funded since the beginning of the Section 811 program in FY 1991 contained between 8
and 24 units. Most of the remaining projects (32 percent) have fewer than 8 units.
While persons with disabilities have more housing options today than they did thirty years ago, there
continues to be an ongoing debate over the appropriate size of projects for this population. Some
advocates contend that persons with disabilities prefer, and are more independent, living in small
developments that blend in with the surrounding neighborhoods. Others have argued that larger
projects are less expensive to build and operate, an issue that must be carefully weighed given the
significant need for affordable housing for this population. Another point of view suggests that there
should not be any housing specifically for persons with disabilities and that an increase in the
provision of housing vouchers for this population would better serve the housing needs of persons
with disabilities.
This study provides an important opportunity to explore the implications of project size with housing
sponsors, state policymakers, service providers, and residents of assisted housing projects for persons
with disabilities. The main issues we explore are:
• What are the characteristics of Section 202 (direct loan) and Section 811 projects and
their residents?
• What role does project size play in the types and locations of services provided to
residents?
• How does project size affect neighborhood relations, both before the project is developed
and after it is occupied? What are the economic and social relationships between projects
and the immediate neighborhoods?
• What are residents’ experiences in Section 811 housing?
• What is the role of project size in project development and operating costs?
Executive Summary iv

Research Design
While this study responds to the congressional mandate that the research include Section 202 (direct
loan) projects for persons with disabilities, these properties represented a smaller part of the overall
study because advocates and policymakers appear to have concluded already that very large
developments are not well suited for most persons with disabilities. Thus, it was agreed early in the
research that the study would give limited attention to the larger Section 202 (direct loan) projects and
greater attention to the benefits and challenges of the smaller Section 811 projects.
The key data collection activities were:
• Telephone survey of a nationally-representative sample of Section 202 (direct loan) and
Section 811 sponsors;
2
• In-depth site visits to 49 Section 811 projects located in 10 metropolitan areas across the
country;
• Telephone discussions with state policymakers to obtain a broad range of views on
housing for persons with disabilities; and
• Limited analysis of operating and development costs in the site visit projects, based on
administrative data obtained from HUD.
Key Findings
The Role of Project Size in Housing and Service Delivery
The research literature on housing preferences among persons with disabilities emphasizes themes of
consumer choice and independence, while the same literature claims that project sponsors’ choices
about the social setting and design of supportive housing facilities are driven by cost-efficiency and
access to certain funding streams. There is also an assumption that more services can be provided
more efficiently in larger projects. Researchers and practitioners acknowledge, however, that other
factors may play a role in determining project size and the types and location of services, including
the service needs and preferences of residents, the structure of service delivery systems, and
regulatory and licensing requirements.
Our findings with respect to housing and service delivery include:
Projects funded under both the Section 811 program and the Section 202 (direct loan) program are
important sources of affordable housing in their communities. Sponsors reported that their projects
The term “sponsor” refers to the nonprofit entity responsible for developing and operating the project.
Sponsors of Section 811 and Section 202 (direct loan) projects include nonprofit housing developers as
well as agencies and organizations serving persons with mental illness, physical disabilities, and
developmental disabilities.
Executive Summary
2
v

are in demand and vacancies are rare. New residents generally come either from living with other
family members or from another specialized residential setting.
Section 202 (direct loan) sponsors tend to view their projects as independent living apartments.
Project residents are most commonly persons with physical disabilities who moved to the Section 202
(direct loan) project from a variety of previous residences, including subsidized or private market
apartments. They presumably moved to their Section 202 (direct loan) projects in part for the
accessibility features the project offers. Because Section 202 (direct loan) projects are larger, it might
be expected that they would have space to offer services, but this was not the case. About one third
of the Section 202 (direct loan) sponsors we interviewed reported they play little or no role in either
providing or coordinating services for residents because residents arrange their own services.
Sponsors of Section 811 projects, by contrast, are more frequently part of a service system within
which Section 811 projects may be one of a number of housing options. Section 811 project
residents more frequently moved to the Section 811 project from another specialized residential
setting or from living with family, and were referred through supportive service systems. While
sponsors of Section 202 (direct loan) developments tended to be mainly housing providers, sponsors
of Section 811 developments often provided services for persons with disabilities in addition to
managed housing. For this reason, Section 811 developments tended to offer more resident services,
even though they tended to be smaller than the Section 202 developments.
Project size does not determine the level of assistance provided. The ways services are delivered –
where, by whom, and the extent of choice persons with disabilities have in service provision – are
unrelated to size. That is, within the Section 811 program, larger projects can offer more or less
assistance, as can smaller projects.
Most project sponsors do play a role in coordinating services for project residents, but project size
is not the main factor in sponsors’ decisions about what services will be provided or where.
Residents’ needs and preferences, sponsors’ organizational philosophies about services, and
regulatory and service system requirements are more important than project size. Service delivery is
primarily a function of the policies, programs, and funding sources for servicing the particular
population of persons with disabilities. State policies may set guidelines or more formal constraints
on size, but sponsors often have some flexibility within state policy.
Regardless of project size, the majority of sponsors prefer that on-site services be limited to those
that residents need to live as independently as possible in their homes and that residents go
elsewhere for services that are available and accessible at other locations. The services provided
on-site often (but not always) include some assistance with activities of daily living, including
dressing, bathing, meal preparation, and housekeeping. Therapeutic services, such as physical or
occupational therapy or medication management, are more often provided off-site. This approach has
more to do with sponsors’ missions and philosophies about services than with the physical
availability of space or the economics of securing services.
The small number of sponsors who said size is important in service delivery were associated with
larger projects. These sponsors all reported that efficiencies in on-site support are influenced by
project size; that is, larger projects allow them to provide sufficient on-site support for the residents.
Executive Summary vi

There does not appear to be a direct relationship between project size and the severity of disability
of the residents. We visited larger projects housing residents with more severe disabilities, as well as
smaller ones. Sponsors of larger projects cited efficiencies in support and service delivery as
important advantages of housing people with more severe disabilities in larger settings. By contrast,
the sponsor of a three-bed group home for people with physical disabilities said that this small setting
in a residential neighborhood was ideal for its residents, all of whom had other disabilities in addition
to severe mobility impairments (specifically, one had physical health problems and the other two had
behavioral and mental health issues).
The sponsors we visited said that on-site support does depend largely on the severity of disabilities
of the residents. Projects serving residents with less severe disabilities had limited on-site support,
with little or no overnight support. Projects housing residents with more severe disabilities had
awake, overnight support and more daytime coverage.
Project Size and Neighborhood Relations
As the number of supportive housing developments sponsored by HUD and others has increased,
community concerns about project siting, scale, and management have grown, and in some cases,
these concerns have led to vocal community opposition. During the site visits for this study, we
explored both community acceptance of the projects at the planning and development stages and also
the on-going economic and social ties between projects and neighborhoods once the Section 811
project is occupied.
Our findings regarding project size and neighborhood relations include:
For the most part, the projects visited for this study fit in well with the size, scale, and land use of
the surrounding neighborhoods. Site selection often includes such factors as proximity to public
transit, supportive and commercial services, and other neighborhood amenities that would enhance
the quality of life for residents. Yet, in about one-third of the projects visited for this study, site
visitors noted concerns primarily associated with isolation of the developments from shopping and
services or criminal activity in the neighborhood.
A few sponsors we visited developed larger projects in terms of total units, but located the units on
multiple sites. This helped maximize the number of units produced while keeping the scale of each
project smaller.
Section 811 project sponsors typically provide advance notification to neighboring residents and
businesses of the proposed development, and neighborhood acceptance of these projects is high.
Where there have been “NIMBY” (Not in My Back Yard) concerns, they appear to have been
mitigated through additional communication and neighborhood input into project design or other
facets of the program.
Economic integration between the projects and the surrounding neighborhoods is modest.
Although many residents use local businesses, there is little use of local vendors by project
management, and almost no neighborhood residents are employed by the projects.
Executive Summary vii

Resident Experiences in Section 811 Projects
We interviewed a small number of residents in each of the Section 811 projects we visited. Resident
interviews covered a broad range of topics, including housing choices and preferences, supportive
services, community integration (with other residents in the development as well as neighbors in the
surrounding community), and residents’ overall perceptions of their current living situation.
Findings about resident experiences include:
Resident satisfaction is high among the individuals interviewed. Overall, 65 percent of respondents
reported being very satisfied with their current living situation. Another 29 percent are somewhat
satisfied or between somewhat and very satisfied. Six percent of the residents interviewed are not
satisfied with their current living situation. The main reasons cited for dissatisfaction include
interpersonal conflicts with other residents or staff (such as excessive noise, stealing food, or
gossiping).
Residents said they like the independence, privacy, and quality of their Section 811 housing. Of
those who cited things they dislike, problems with other residents were the most frequently
mentioned issue. Project sponsors said that interpersonal conflicts are a bigger problem in larger
projects. In the resident interviews, however, residents in smaller projects were more likely to
mention problems with other residents or staff.
Residents expressed a slight preference for smaller projects over larger ones, but a substantial
number expressed no preference. Nearly half of the residents said they would prefer to live in
projects with fewer than eight units, while about 30 percent expressed a preference for developments
with more than eight units. The remaining 20 percent had no preference.
Residents’ opinions are also mixed on whether they prefer to live with other persons with
disabilities or with people who do not have disabilities. When asked whether they prefer to live with
persons with disabilities or with people without disabilities, half of the residents expressed no
preference. Of the remainder, about 30 percent would prefer to live with others with disabilities and
20 percent stated a preference for living with others who do not have a disability.
Sponsors reported that project sites are often selected to promote community integration, but
residents reported little interaction with neighbors outside the Section 811 project. Residents do
seem to have some sense of community within the Section 811 projects, but integration with the
neighborhoods has been elusive. Some 60 percent of residents said they have no interaction at all
with neighbors outside the Section 811 project. Among those residents who noted specific barriers to
neighborhood interaction, the most common is that their disability prevents them from getting out
into the neighborhood (or they need assistance in doing so) or prevents them from being understood.
Other common reasons for limited neighborhood interaction are concerns about crime and safety, not
knowing the neighborhood residents, or simply being busy with their own lives.
Executive Summary viii

Project Size and Development and Operating Costs
One argument for building larger projects is that per unit operating and development costs are
reduced if costs are spread across more units.
In this exploratory analysis of development and operating costs, we found evidence of economies of
scale in some regions. The effect is strongest in lower cost regions of the country (the Midwest and
South) compared to more expensive regions (the Northeast and West).
A more complete analysis of operating costs would need to account more fully for project support
costs. Our quantitative cost analysis was limited to costs captured in HUD’s reporting systems,
which include only those costs covered by the Section 811 program. Support costs, which are an
important operating cost category for Section 811 projects but are not covered by the Section 811
program (and are therefore not reported to HUD), vary by size in more complex ways, according to
project sponsors.
Policy Implications
The Section 811 program and projects funded under the Section 202 (direct loan) program provide
important sources of affordable and accessible housing for persons with disabilities. The Section 811
projects that are the main focus of this study are generally located in residential or mixed residential
and commercial areas selected to provide residents with access to services in an integrated setting.
Project size does not determine the availability of services. Some of the policy implications of the
study’s findings include:
• Given that neither costs nor service availability is strongly influenced by project size,
HUD should continue to encourage the development of smaller projects. Projects with
fewer units are easier to site in appropriate settings and residents express high rates of
satisfaction with smaller projects.
• HUD should also maintain flexibility to permit sponsors to develop larger projects where
suitable sites are available and sponsors can demonstrate the demand for the housing.
• Privacy is an important concern for both sponsors and residents. Project design should
maximize privacy. Several sponsors noted design features of their projects that promote
privacy and autonomy and mitigate interpersonal problems. For example, in a group
home for four people with developmental disabilities and behavioral issues, a small
setting with lots of space is critical because interpersonal issues, noise, or distraction can
overwhelm the residents. Individual entries rather than common hallways in an
independent living project define individual space and give residents a greater sense of
autonomy and privacy. One sponsor noted that clusters of six units with individual
entries give residents privacy, but allow them to live “interdependently,” watching out for
each other.
• The cost analysis shows some evidence of economies of scale in both development and
operating costs for the small sample of projects we analyzed, but further research is
needed to explore costs more fully. A more comprehensive cost analysis should assess
Executive Summary ix

costs in a larger sample of projects and look at housing and services costs together. In
addition, a broader exploration of how financing mechanisms for affordable housing
could be combined and leveraged with those for housing for persons with disabilities to
create mixed residential developments would be useful.
• Further analysis of the cost effectiveness of using the Section 811 program to acquire
condominiums is also warranted. The small number of condominium project sponsors
we visited have high acquisition and operating costs and share some of the same
interpersonal problems among residents that are found in group homes and independent
living projects. There seem to be few cost advantages to having the sponsor own these
units compared to assisting residents with tenant-based Housing Choice Vouchers. Using
tenant-based vouchers may pose challenges as well, including discrimination by
landlords against persons with disabilities and a lack of affordable and accessible rental
housing for voucher recipients in many housing markets.
Executive Summary x

Chapter One
Background and Methodology
In recent years, there has been growing interest among different sectors representing and serving
persons with disabilities in providing more mainstream housing opportunities for persons with
disabilities. The purpose of this research is to investigate the social and economic effects of project
size in Section 811 and Section 202 (direct loan) projects for persons with disabilities, their residents,
and the immediate neighborhoods.
A congressional mandate requires that this study look specifically at:
3
• The benefits and problems associated with providing Section 811 housing in projects that
have 7 or fewer units, 8 to 24 units, and more than 24 units; and
• The benefits and problems associated with providing housing for non-elderly persons
with disabilities under the Section 202 (direct loan) program, in projects having 30 to 50
units, 51 to 80 units, 81 to 120 units, and more than 120 units.
These study objectives were addressed within the context of a broader goal: helping HUD to identify
the most effective project-based housing options that the federal government can provide for low-
income persons with disabilities. This report presents the study’s findings.
Background
The need for affordable housing for low-income persons with disabilities has been clearly
documented. Across the United States, the presence of a disability is generally associated with lower
levels of income and an increased likelihood of living in poverty. Among persons 25 years old and
over, 27.9 percent of people with a severe disability live below the poverty line, compared to 10.4
percent of people who do not have a disability.
4
According to 2004 data, some 3.9 million adults (age
18 to 64) with disabilities receive Social Security Income (SSI) benefits.
5
Nearly two-thirds of SSI
recipients have no other source of income,
6
yet SSI benefits are comparable to an hourly wage rate of
just $3.43, almost $2 per hour below the federal minimum wage.
Given their low incomes, housing costs pose a serious burden to low-income persons with disabilities.
In every county and metropolitan area in the country, a person whose income is limited to SSI must
pay more than 30 percent of monthly income to rent a one-bedroom apartment at HUD’s Fair Market
3
Section 524 of Fiscal Year 2000 Appropriation Act (H.R. 2684; P.L. 106-74).
4 
U.S. Census Bureau, Americans with Disabilities: 1997 – Table 3.
5
Social Security Administration, February 2004.
6
SSI Annual Statistical Report 1998, Social Security Administration.
Chapter 1 – Background and Methodology 1

Rent (FMR). In 2002, for the first time, the average national rent was greater than the total monthly
income received by SSI recipients.
7
Housing for persons with disabilities funded through HUD can be traced back to 1964 when Congress
expanded the definition of elderly for the Section 202 Direct Loan Program for the Elderly to include
persons with physical disabilities. Section 202 (direct loan) projects could be developed for the
elderly or for people with physical disabilities. In projects for the elderly, ten percent of the units had
to be accessible and could be occupied by either elderly or nonelderly people who required the
accessibility features of the unit. These projects were primarily large congregate settings. At that
time, it was thought that the elderly and persons with physical disabilities had similar housing and
supportive services needs that could be met in such a setting.
In 1974, Congress again amended the eligibility definition for the Section 202 (direct loan) program
to include persons with developmental disabilities. The project type of small group home was first
created for this population.
The “Deinstitutionalization Movement” began in the 1970s with the closing of many state hospitals
forcing persons with disabilities, primarily persons with chronic mental illness, into the community
before there were appropriate community-based residential settings. In 1978, Congress directed HUD
to initiate a joint three-year demonstration program with HHS entitled, “Demonstration Program for
Deinstitutionalization of the Chronically Mentally Ill.” Congress also indicated that it was never their
intent to exclude this population from being eligible for the Section 202 (direct loan) program. In
1982, HUD made persons with chronic mental illness eligible for the regular Section 202 Direct Loan
Program.
Over time, as a result of the “Deinsititutionalization Movement” and the recommendations of
disability advocacy groups, it became apparent that the larger congregate projects that were first
developed for people with physical disabilities in the Section 202 (direct loan) program tended to
isolate persons with disabilities from the surrounding community. It was also recognized that the
housing and supportive services needs of the elderly and persons with disabilities were not the same
and, overall, neither population wanted to live with the other.
Through changes in HUD regulations, project size decreased gradually from projects that could
contain over 100 units to independent living projects that could be no larger than 40 units and group
homes that could house no more than 15 persons. Between 1976 (the first year data was collected)
through the end of the Section 202 (direct loan) program for the Elderly or Handicapped in 1990,
HUD provided funding for over 2,100 projects comprising over 36,000 units for persons with
disabilities.
In 1990, through the Cranston-Gonzalez National Affordable Housing Act, Congress changed the
Section 202 program from providing direct loans with Section 8 rental assistance to providing capital
advances (which do not have to be repaid as long as the housing remains available for the intended
occupants for at least 40 years) with project rental assistance contract (PRAC) funds. The other major
Priced Out in 2002, Technical Assistance Collaborative and Consortium for Citizens with Disabilities
Housing Task Force, May 2003.
Chapter 1 – Background and Methodology
7
2

change was that the Section 202 (direct loan) program could only serve the elderly (62 and older).
Congress created a separate program called “Section 811 Supportive Housing for Persons with
Disabilities&rdquo; using capital advances and PRAC funds to develop and operate independent living
projects serving no more than 24 persons with disabilities and group homes housing a maximum of
eight persons with disabilities. The Section 811 program was first implemented in FY 1991.
In order to qualify for the Section 811 program, a person with a disability has to be at least 18 years
old and have a very low income. Supportive services are to be made available to residents, but,
beginning in FY 1996, receiving supportive services cannot be a condition of tenancy.
At the time this research began in 2001, the majority of the almost 1,600 projects (totaling 15,500
units) that had been selected since 1991 (65 percent) contain between 8 and 24 units. Most of the
remaining projects (32 percent) have fewer than eight units. Services may be provided on- or off-site
to provide residents with assistance to help them live as independently as possible. As of FY 2004,
almost 2,300 Section 811 projects consisting of 25,436 units have been selected for funding. In the
tenant-based assistance portion of Section 811, which became operationalized in FY 1997, the
Department provided 12,255 housing vouchers to persons with disabilities through FY 2004.
Thus, persons with disabilities have many more housing options today than they did 30 years ago,
ranging from tenant-based housing vouchers to small group homes or independent living projects to
larger multifamily properties. Some housing options offer on-site services. Others offer links to off-
site services, while some housing is completely “de-linked” from services; that is, there are no formal
arrangements by which housing residents are linked to either on- or off-site services. Despite the
growth in housing options and service models, there is still a widely held view that housing choices
for persons with disabilities need to be further expanded. In particular, many advocates contend that
housing for persons with disabilities should be indistinguishable from the rest of the neighborhood’s
housing. Some further argue that choice is maximized only when housing assistance is exclusively
tenant-based and services are completely de-linked from housing, allowing persons with disabilities
to make housing choices independently from choices about services.
In terms of project size, viewpoints vary as well. Most advocates have been lobbying for smaller
developments for more than ten years. Advocates say that persons with disabilities prefer small
properties that are integrated into neighborhoods, although there continue to be a few sponsors who
prefer to build larger developments. It has been claimed that larger projects are less expensive to
build and operate, an issue that must be carefully weighed, given the significant need for affordable
housing for this population. In particular, providers of housing for people with physical disabilities
(especially wheelchair users) further contend that the private rental housing market has failed to
produce a sufficient stock of wheelchair-accessible housing. Some sponsors of housing for people
with physical disabilities find it more cost effective to build larger projects because of the economies
of scale they can achieve with more units.
A fairly small but vocal group of advocates maintain that all housing assistance should be tenant-
based. Advocates of tenant-based vouchers contend that additional vouchers would support efforts to
reduce the number of persons with disabilities who live in institutional settings by integrating them in
other suitable housing developments in their communities. Some holding these opinions view
developments that are built specifically for persons with disabilities as “mini-institutions” that
Chapter 1 – Background and Methodology 3

unnecessarily segregate residents from their communities. Other proponents of expanded tenant-
based assistance are not necessarily opposed to shared or congregate living arrangements, but they
believe the choice should be left to the person with disabilities.
Advocates and much of the research literature suggest that the focus of policymakers has been to
ensure that services and supports are in place to meet the needs of persons with disabilities, while less
emphasis has been placed on promoting community integration. Yet, it is not clear what role project
size plays in decisions about housing and service models for project sponsors/manager or in outcomes
for residents. This study provides an important opportunity to further explore the issue with housing
sponsors, state policymakers, service providers, and residents of assisted housing projects for persons
with disabilities.
Research Design
In order to best meet the goals and objectives for this study, we targeted study resources toward
smaller projects. The following priorities guided the study:
• Limited attention to Section 202 (direct loan) projects. While the study responds to the
congressional mandate that the research include Section 202 (direct loan) projects for
persons with disabilities, these properties represented a smaller part of the overall study.
This approach was chosen early in the design phase because advocates and policymakers
appear to have concluded already that very large developments are not well suited for
most persons with disabilities.
• Emphasis on the social and economic costs and benefits of smaller Section 811
projects, including factors that contribute to development and operating costs. The
main focus of the study was on Section 811 projects with fewer than 25 units,
concentrating comparisons on projects with 8 to 24 units and with 7 units or fewer. In
particular, we have explored the factors that contribute to the costs of developing projects
based on these size groups, examined how operations differ, and assessed the extent to
which projects are integrated into the surrounding community and how residents’ daily
lives may differ in projects in each size category.
In order to conduct this study, we collected data on housing and services for persons with disabilities
from numerous perspectives—state policymakers, project sponsors/managers, project residents, and
local service providers and advocates. Our design was informed by two research activities
undertaken during the design phase: first, a targeted literature review that focused on issues related to
project scale and consumer preferences in housing and services for persons with disabilities; and
second, a meeting of a study Advisory Group made up of advocates for persons with disabilities and
developers of housing for persons with disabilities.
The key data collection activities are briefly described below.
Chapter 1 – Background and Methodology 4

Telephone Discussions with State Policymakers
The purpose of these discussions with state officials was to learn more about the role of states in
establishing housing and service priorities for persons with disabilities, how HUD’s programs for
persons with disabilities are integrated with state strategies, and what other initiatives and approaches
are being developed and implemented. We obtained recommendations both from HUD staff and
from members of our study Advisory Group to assemble a list of states that could offer helpful
perspectives on these issues. We asked for states that are viewed as innovative in the field of housing
for persons with disabilities, as well as those seen to be solid (but not necessarily innovative)
performers. In most cases, the respondents were representatives from the state’s housing, mental
health, developmental disabilities, and/or rehabilitation services agencies. The states selected were:
Alabama Massachusetts
Arizona Minnesota
California New Jersey
Colorado New York
District of Columbia North Carolina
Florida Ohio
Illinois Pennsylvania
Kansas Texas
Kentucky Virginia
Maryland Washington
Telephone Survey of a Nationally Representative Sample of Project Sponsors
As part of this study, HUD required a survey of a nationally representative sample of project
sponsors, selected within certain size categories. The sampling frame for the nationally representative
sample of Section 811 and Section 202 (direct loan) projects was based on a Real Estate Management
System (REMS) data extract containing property-level information on the number of units, program
type (Section 811 or Section 202 [direct loan]), category of people with disability served (chronic
mental illness, developmental disability, and physical disability), and address.
8
We selected 200
projects, with a target of 150 completed interviews.
Our overriding sampling strategy focused on the seven congressionally mandated size categories
(three in the Section 811 program and four in the Section 202 [direct loan] program). The seven size
categories are as follows:
• Section 811 projects with fewer than 8 units
• Section 811 projects with 8 to 24 units
• Section 811 projects with more than 24 units
Starting in 1995, HUD stopped funding intermediate care facilities under the Section 811 program. Since
these facilities are no longer part of the program, they were excluded from the study.
Chapter 1 – Background and Methodology
8
5

• Section 202 (direct loan) projects with 30 to 50 units
• Section 202 (direct loan) projects with 51 to 80 units
• Section 202 (direct loan) projects with 81 to 120 units
• Section 202 (direct loan) projects with more than 120 units
Although not a statistical sample, we selected projects to represent adequately the populations of
persons with disabilities served in the programs (people with physical disabilities, developmental
disabilities, and mental illness) and the building types produced (group homes, independent living
projects and condominiums). For more detailed information on the residents and building types
reflected in the sample, see Chapter Two.
Preliminary tabulations from the sampling universe indicated a relatively high concentration of
Section 811 projects with fewer than eight units. We, therefore, further stratified this group into
projects with four or fewer units, and five to seven units. Together, these eight size categories were
used as sampling strata when the sampled properties were drawn.
We selected the sampled properties using a stratified random sampling design, with the eight size
categories serving as sampling strata. The first two columns of Exhibit 1-1 show the distribution of
projects in the sampling universe across the size categories. Some of the larger size categories have
very few projects in the sampling universe. Therefore, we over sampled these projects to ensure an
adequate number of such projects for analysis. The next two columns of Exhibit 1-1 indicate the
number and percentage of sampled projects associated with each of the sampling strata.
The distribution of completed interviews by size category, shown in the final two columns of Exhibit
1-1, is very close to our targeted sample, although we have slightly fewer projects in the largest size
categories. As discussed in Chapter Two, this is because there are very few of these projects in the
universe and some of them are not single projects, but rather scattered site developments with
buildings in more than one location. In some cases, the scattered site nature of the development was
evident in the HUD administrative data, but this was not always the case. Sponsors selected for
interviews who reported their project was located on scattered sites were interviewed about a single
site. For analysis, the project was then assigned to the size category corresponding to the single site
for which they provided survey responses.
Chapter 1 – Background and Methodology 6

Exhibit 1-1
Sampling Allocation and Response Rates for Nationally Representative Sample of Section 811 and Section 202 (Direct
Loan) Projects
Sampling Universe Sample Completed Interviews
Pct. of Pct. of
Number of Pct. of All Number of Sampled Number of Completed
Program/Size of Project
Projects Projects Projects Projects Projects Interviews
Section 811: < 5 units 193 13.0% 21 10.5% 17 10.9%
Section 811: 5 to 7 units 292 19.7% 37 18.5% 33 21.1%
Section 811: 8 to 24 units 812 54.8% 100 50.0% 81 51.9%
Section 811: > 24 units 41 2.8% 15 7.5% 5 3.2%
Section 202: 30 to 50 units 128 8.6% 19 9.5% 15 9.6%
Section 202: 51 to 80 units 5 0.3% 2 1.0% 1 0.6%
Section 202: 81 to 120 units 9 0.6% 4 2.0% 3 1.9%
Section 202: > 120 units 2 0.1% 2 1.0% 1 0.6%
All 1,482 100% 200 100% 156 100%
Chapter 1 – Backgr
ound and Methodology
7

Site Visits
We selected 50 projects in 10 metropolitan areas for site visits. The purpose of the visits was to
explore issues of project size in greater depth, focusing on projects of 24 units or fewer. We selected
metropolitan areas with at least six properties to ensure that we could identify five project sponsors
who were willing to participate in the study and available for a site visit. In addition, because the site
visit projects were the focus of our assessment of development and operating costs, we limited the
projects eligible for site visits to those for which we were able to obtain both operating costs and
development cost information from HUD’s financial data systems.
9
We made every effort to visit five projects in each metropolitan area, making substitutions if sponsors
were unwilling to participate in the study or unavailable during the site visit dates. In one case,
however, a Columbus, OH sponsor who had agreed to a site visit canceled the day before the
scheduled visit. Due to the late cancellation, we were unable to identify a substitute project. Thus,
we were only able to visit four projects in Columbus. Overall, a total of 49 projects were visited for
this study.
During the site visits, we interviewed property sponsors/managers and a small sample of residents
(one to five residents per property, for a total of 115 residents). In each metropolitan area, we also
met with local service providers and advocates who provide services and support to persons with
disabilities. The metropolitan areas selected for study, organized by Census region, are shown in
Exhibit 1-2, and the characteristics of the projects we visited are summarized in Exhibit 1-3. A list of
the projects we visited appears in Appendix A.
Exhibit 1-2
Metropolitan Areas Selected for Site Visits
Census Division MSA
New England Boston, MA-NH
East North Central Columbus, OH
West North Central Minneapolis-St. Paul, MN-WI
Mid Atlantic New York, NY-NJ
South Atlantic Charlotte-Gastonia-Rock Hill, NC-SC
South Atlantic Washington, DC-MD-VA-WV
East South Central Louisville, KY-IN
West South Central Little Rock-North Little Rock, AR
Mountain Denver, CO
Pacific Los Angeles-Long Beach, CA
Operating cost information came from HUD’s Annual Financial Statement (AFS) data system.
Development costs came from HUD’s Development Application Processing (DAP) system.
Chapter 1 – Background and Methodology
9
8

Exhibit 1-3
Projects Selected for Site Visits by Disability Group Served, Housing Type, and Size
Disability of Residents –
Total Projects Visited
Housing Type:
Number of
Projects Visited
Number of Units:
Range; Mean
Number of
Residents:
Range; Mean
Developmental Disabilities – 21 Group homes – 10 Range 3-8
Mean 4.9
Range 3-8
Mean 5.5
Independent living
projects – 9
Range 2-22
Mean 12.6
Range 2-24
Mean 14.6
Condominiums – 2 N/A** N/A**
Physical Disabilities* – 11 Group homes – 4 Range 4-12
Mean 7.3
Range 4-12
Mean 7.3
Independent living
projects – 6
Range 10-22
Mean 16.2
Range 10-25
Mean 16.5
Condominiums – 1 N/A** N/A**
Chronic Mental Illness &ndash; 17 Group homes – 6 Range 4-8
Mean 5.8
Range 4-8
Mean 5.2
Independent living
projects – 11
Range 4-24
Mean 11.3
Range 6-29
Mean 13.6
Condominiums – 0 N/A N/A
* Includes two projects for people with AIDS: one group home with 8 residents and one independent living

project with 17 units/17 residents.

** These condominium projects consist of 3 or 4 scattered site units purchased within larger condominium

complexes. The projects we visited housed 1 or 2 residents in each unit.

Organization of the Report
The findings from the study are presented in the following chapters. In Chapter Two, we discuss the
characteristics of projects funded under the Section 811 and Section 202 (direct loan) programs for
persons with disabilities, including the role of project size and other factors in approaches to
delivering services. In Chapter Three, we discuss the relationships between the developments and
their neighborhoods. In Chapter Four, we present the results of our interviews with project residents.
In Chapter Five, we review our findings on the development and operating costs in the Section 811
projects selected for site visits. Chapter Six presents a summary of findings and a discussion of
policy implications.
Chapter 1 – Background and Methodology 9

Chapter Two
Project Size and Housing/Services Models
This chapter presents the study’s findings on the characteristics of projects serving persons with
disabilities under HUD’s Section 811 program and Section 202 (direct loan) program and the role of
project size in decisions about housing features and service delivery. The research literature on
housing preferences among persons with disabilities emphasizes themes of consumer choice and
independence, while the same literature claims that project sponsors’ choices about the social setting
and design of supportive housing facilities are driven by cost-efficiency and access to certain funding
streams. There is also an assumption that more services can be provided more efficiently in larger
projects. Researchers and practitioners acknowledge, however, that other factors may play a role in
determining project size and the types and location of services, including the service needs and
preferences of residents, the structure of service delivery systems, and regulatory and licensing
requirements.
In this chapter, we review the findings on project size and housing and services models from
discussions with Section 811 and Section 202 (direct loan) project sponsors. The research questions
addressed in this chapter include:
• What are the physical characteristics and management practices of the projects funded
under the Section 811 and Section 202 (direct loan) programs?
• What is the relationship between project size and the types or severity of disabilities that
can be accommodated in developments?
• What is the relationship between project size and service models? What are the
feasibility and cost implications of de-linking housing and services?
• Do sponsors consider resident preferences with respect to project size and service
delivery?
• How do federal, state, and local governments’ regulations and policies affect the size of
developments?
The information on Section 202 (direct loan) projects for persons with disabilities is drawn from our
telephone survey of Section 202 (direct loan) sponsors and focuses primarily on the characteristics of
projects and their residents, services available, and the factors sponsors consider important in
determining the type and location of services. Information on Section 811 projects is more detailed
and comes from the telephone survey, as well as from in-depth information collected during site visits
about resident needs and preferences and the role of regulatory requirements in determining project
size.
We begin the chapter with a discussion of the survey and site visit findings for Section 811 projects
followed by a discussion of how the findings on the Section 811 program compare with the findings
Chapter 2 – Project Size and Housing/Services Models 10

from our telephone survey of Section 202 (direct loan) project sponsors. Information from state
policymaker interviews has been incorporated where appropriate as well.
Characteristics of Section 811 Projects and Their Residents
Since the Section 811 program was implemented in FY 1991, almost 2,100 projects have been
selected for funding to house people with physical and developmental disabilities and mental
illnesses. Given that 90 percent of the projects specified for inclusion in the study are Section 811
projects rather than Section 202 (direct loan) projects, our survey included interviews with a
considerably larger sample of Section 811 project sponsors. The characteristics of the projects
selected for the survey are summarized in Exhibit 2-1.
Exhibit 2-1
Project Characteristics: Section 811 Survey Respondents
Developmental Chronic Physical
Size Category Disabilities Mental Illness Disabilities All Projects
Up to 4 units 8 8 1 17
5-7 units 17 13 3 33
8-24 units 18 40 23 81
>24 units 0 1 4 5
All projects 43 62 31 136
Source: Telephone Survey of Section 811 Project Sponsors, October 2003
Most of the Section 811 sponsors we spoke to had projects that had been occupied for at least a few
years. Ten projects were funded in 2000 or 2001, with the remainder distributed fairly evenly over
the 1990s. Sponsors across all size categories reported their projects are almost always fully
occupied. Sponsors we interviewed during site visits reported their projects are in high demand and
often offer some of the highest quality affordable housing in their communities. Turnover is low,
with a median of just one move-out during the previous year. Nearly half of the projects (including
most of the smallest projects) had no move-outs in the previous year.
Nearly three-quarters of Section 811 sponsors (71 percent) said that referrals from state agencies,
institutions, or nonprofit services providers are the most common way applicants find out about their
projects. Word of mouth was infrequently cited as an important way persons with disabilities learn
about Section 811 projects.
Before moving to the Section 811 project, sponsors most frequently reported that residents lived with
family or in another specialized residential setting (such as another group home or a state mental
health facility). Overall, 30 percent of residents came from other specialized residential settings and
26 percent previously lived with family, as shown in Exhibit 2-2.
Chapter 2 – Project Size and Housing/Services Models 11

Exhibit 2-2
Residents’ Prior Living Situations
Developmental Physical
Prior Residence Disabilities Mental Illness Disabilities All Projects
Nursing home 5% 2% 7% 4%
Hospital/rehab facility 7% 12% 13%
11%
Other specialized residence 52% 37% 6%
30%
Family 28% 19% 34%
26%
Market housing 4% 12% 19%
12%
Homeless 1% 9% 5%
6%
Subsidized housing 1% 8% 13%
8%
Other 2% 1% 5%
2%
Source: Telephone Survey of Section 811 Project Sponsors, October 2003 (N=136)
Prior living situations do not vary by project size, but do vary somewhat by disability group. For
example, few sponsors of projects for people with developmental disabilities reported residents
coming from settings other than living with family or in another specialized residential setting. By
contrast, projects for people with chronic mental illness and those for people with physical disabilities
serve residents from more varied prior residences. About one-third (34 percent) of residents of
projects for people with physical disabilities previously lived with family members. About 20 percent
of residents of projects for people with physical disabilities came from hospitals or nursing homes and
a similar proportion had previously lived in their own market rate housing. Very few of these
projects’ residents (6 percent) came from specialized residential settings.
Among projects for people with chronic mental illness, 37 percent of the residents came to the
Section 811 project from another specialized residential setting. Just under one-fifth (19 percent)
came from market rate housing and 9 percent had been homeless previously.
The survey findings are consistent with what we learned about the resident referral process during our
site visits. Most Section 811 projects receive referrals from organizations that provide services (and
often advocacy) for persons with disabilities. In some cases, this organization is the Section 811
sponsor, but in other cases they are organizations such as councils on developmental disabilities,
independent living centers, or mental health authorities that serve as clearinghouses for information
and referrals. In many communities, the referral process was described as “closed;” that is, all
referrals to the Section 811 project came through a single referring source. The referring source is
responsible for assessing an applicant’s needs and making a housing referral, which could be to the
Section 811 project or to some other type of housing. In other places, referrals to the Section 811
project come from more varied sources.
The site visits also confirmed that Section 811 project residents often come from other specialized
residences, such as group homes, supervised apartments, and residential mental health treatment
programs. As residents’ needs change, they may move from one type of setting to another. For
example, project sponsors that are mental health agencies often have a variety of types of residential
settings, with varied levels of support. Some of the Section 811 independent living projects for
Chapter 2 – Project Size and Housing/Services Models 12

people with mental illness provide some of the most independent housing (other than Housing Choice
Vouchers) offered by the mental health provider.
We also visited some projects that had been developed to meet the needs of residents with
developmental disabilities who also have physical limitations. In one community, most of the
housing options for people with developmental disabilities are in single-family homes with stairs. To
facilitate aging-in-place, the sponsor used a Section 811 grant to build a single story, group home for
eight residents with mobility problems, most of whom are older. Most of the residents of this project
had lived in other group homes, but moved to the Section 811 project when they developed mobility
limitations.
Project Size and Service Delivery in Section 811 Projects
Based on our site visit and telephone interviews with project sponsors, it is clear that Section 811
residents have access to a variety of services, but there are different approaches to ensuring residents
have the services they need. Intuitively, it makes sense that larger projects would have more space
available for services and there might be economies of scale in offering on-site services rather than
transporting people. In the projects we visited, however, the types and locations of services were
driven by sponsor choices and regulatory requirements, not by size. In this section, we discuss the
role of size in sponsors’ decisions about service delivery.
Sponsors that also are service providers develop many Section 811 projects. Others have contractual
relationships with service providers to work with project residents, while a small number provide
housing for residents who make their own arrangements for services. In our telephone survey,
sponsors were asked who coordinates services for residents; that is, whether services are coordinated
by sponsor staff (either on- or off-site) or by staff from another agency or organization (either on- or
off-site). Multiple responses were possible and indeed in many cases, service coordination is shared
by on- and off-site staff or across organizations. On-site staff who work for the project sponsor
coordinate services for residents in 55 percent of all projects, and sponsor staff based off-site provide
service coordination in 42 percent of projects. In just under a quarter of projects (23 percent),
services are coordinated by off-site staff who work for another agency or organization. Only 9
percent of sponsors said that on-site staff working for an outside organization handle service
coordination.
Just under two-thirds of Section 811 sponsors we visited (30 of 49) play an active role in providing
services for residents, often both on-site at the project and off-site at other locations. Among the 13
sponsors that do not provide services, most (eight sponsors) contract with other agencies for services,
limiting the sponsor role primarily to housing management. In the remaining projects, there is no
formal arrangement between the sponsor and service providers; instead, residents make their own
arrangements for services. For example, in a ten-unit independent living project for people with
physical disabilities, the sponsor does not provide or even coordinate services for residents. The
sponsor representative explained that it would be impossible to meet the diversity of residents’ needs
with on-site services, and that residents should choose their own service providers because they know
what they need. (The two residents we interviewed agreed.) The sponsor added that the residents
share information about providers, creating an effective network among themselves.
Chapter 2 – Project Size and Housing/Services Models 13

The majority of sponsors we visited prefer that on-site services be limited to those that residents need
to live as independently as possible in their homes and that residents go elsewhere for services that
are available and accessible at other locations. This sentiment was echoed by policymakers,
including those in Ohio and New Jersey, where the emphasis is on services connected to the
individual and not to the housing. The services provided on-site often (but not always) include some
assistance with activities of daily living, including dressing, bathing, meal preparation, and
housekeeping. The services that need to be provided on-site depend on the individual resident and
may include more therapeutic services, such as physical or occupational therapy or medication
management.
This approach has more to do with sponsors’ missions and philosophies than with the physical
availability of space or the economics of securing services. Sponsors typically view housing as
housing, not as a therapeutic setting. The goal is to provide a setting that is safe, permits privacy and
security, encourages independence, supports community integration, and reduces stigma. For
example, in Maryland, state policymakers are trying to formalize a policy that will de-link services
and housing, and providers are responding positively. So far, the state has had more success with this
approach in projects serving residents with mental illness or physical disabilities, due in part to the
funding sources for those populations. Service delivery approaches may also have to do with
regulatory requirements and reimbursement policies. For example, group home residents with
developmental disabilities in Massachusetts are required to attend a day program, so daytime support
costs in residential facilities like Section 811 projects are not reimbursed by the state. (Additional
regulatory and licensing issues are discussed in more detail below.)
When we discussed the role of project size in service delivery with the sponsors we visited, only a
handful said project size played an important role in the type of services they provide or the way
services are delivered. The majority of sponsors said that the needs of residents drive the types of
services provided and the sponsor’s philosophy about services and regulatory and service system
requirements determine the ways services are delivered. Sponsors of a few of the smaller group
homes (three to seven residents) said that regulatory requirements and reimbursement policies are the
most important factors. State policymakers in New Jersey, where “A-level” group homes require 24-
hour support, also noted this.
Some sponsors reported they had reduced the services they offer on-site. For example, the sponsor of
a project for people with AIDS began designing the project in the early 1990s, assuming that the
future residents of the planned independent living project would be quite ill and would require
extensive on-site services. When the project opened in 1999, improvements in AIDS treatment meant
that the residents were healthier than expected and preferred to receive services off-site. A nearby
multiservice center for people with AIDS offered a wide array of services, as well as meals and social
events. Residents preferred to go to the multiservice center rather than receiving services in their
building. The project manager also noted that the project initially offered mental health treatment on-
site, but residents were uncomfortable that other residents would see them going to the therapist’s
office. The sponsor decided to arrange off-site therapy at a clinic instead.
The six sponsors who said size is important in service delivery were generally associated with larger
projects. These sponsors all reported that efficiencies in on-site support are influenced by project
Chapter 2 – Project Size and Housing/Services Models 14

size. For example, three sponsors of large, independent living projects with a high level of support
(one for people with brain injuries and other physical disabilities and the other two for people with
severe developmental disabilities) said their residents need intensive support and the larger sizes of
these projects (which range from 10 to 16 units) make it cost efficient to have more intensive support.
In these projects, the sponsors’ views on the need for on-site support set the lower limit for project
size, while in the other projects, efficiencies in support set the upper limit. Two of the largest projects
we visited were independent living projects for people with mental illness; one project has 18 units
and the other has 20. Both sponsors reported they built the largest projects that could be
accommodated with the resources they had for on-site support. The sponsors said the need for
affordable housing for people with mental illness was as important in deciding on project size as
efficiencies in service delivery.
In another example, size plays an important role in the housing and services model used by
Accessible Space, Inc. (ASI), a Minneapolis-based service provider and developer of housing for
people with mobility impairments. The service model used by ASI relies on larger developments.
Residents pool the hours of service provision available to them for personal care attendants through
Medicaid to provide 24-hour per day service coverage at the development. On site support staff is
present at all times. This arrangement works best when there are at least 10 residents pooling service
hours. To achieve maximum efficiencies in development costs and management as well as service
provision, ASI favors properties with 20 to 25 units.
Project Size and Severity of Disability in Section 811 Projects
We explored sponsors’ views on whether the severity of residents’ disabilities plays a role in
decisions about project size. We will limit our discussion of this topic to the findings from the site
visits, because we did not obtain extensive information on the severity of resident disabilities in our
telephone survey. The projects we visited ranged in size from 2 units to 24. Among projects serving
people with particular disabilities, we visited projects across the full size spectrum: projects for 
people with developmental disabilities ranged from 2 to 22 units; projects for people with physical
disabilities from 3 to 22 units; and projects for people with mental illness from 4 to 24 units. The size
ranges within housing types was limited for condominium projects (3 to 4 units).
There does not appear to be a direct relationship between project size and the severity of disability of
the residents. We visited larger projects housing residents with more severe disabilities, as well as
smaller ones. Sponsors of larger projects cited efficiencies in support and service delivery as
important advantages of housing people with more severe disabilities in larger settings. By contrast,
the sponsor of a three-person group home for people with physical disabilities said that this small
setting was ideal for its residents, all of whom had other disabilities in addition to severe mobility
impairments (one had physical health problems, and the other two had behavioral and mental health
issues). The renovated single-family home offered sufficient privacy for the residents, and a personal
care attendant was on-site at all times. The sponsor said a larger project would make it more difficult
to meet the needs of the residents, as well as making it difficult to find suitable homes to renovate in
residential neighborhoods (the sponsor’s preferred development approach).
Chapter 2 – Project Size and Housing/Services Models 15

The sponsors we visited said that the degree of on-site support does depend largely on the severity of
disabilities of the residents. Projects serving residents with less severe disabilities had limited on-site
support, with little or no overnight support. Projects housing residents with more severe disabilities
had awake overnight support and more daytime coverage. The three projects we visited for people
with developmental disabilities in North Carolina provide examples of the interaction of project size
and the severity of residents’ disabilities. There seemed to be economies of scale in providing on-site
support for six residents or more, but this depended on the level of disability of the residents: one
daytime support person was sufficient for three residents with severe developmental disabilities, but
six such residents would require two daytime support personnel. Even for those with severe
disabilities, there are some economies of scale in overnight coverage, when only one support person
is required regardless of the number of residents. For residents with moderate developmental
disabilities, one support person would be enough for up to six residents both during the day and at
night. For high functioning residents, the size of the project did not seem to matter, because support
could be provided on a drop-in basis.
There is great interest in expanding housing options by using Section 811 to purchase condominiums.
We visited only three condominium projects, and they were quite different from each other.
However, taken together, they seem to offer evidence that residents with a variety of types and
severity of disability can be accommodated in condominiums. For our purposes, these “projects” are
considered small, because the sponsor purchased only three or four units for Section 811 residents.
The units are all in large condominium complexes, so residents are living in a larger community but
sometimes with more privacy than in a group home or independent living project. Two projects
housed people with developmental disabilities who are able to live independently with roommates.
The residents are “group home graduates” who require few services. By contrast, the third
condominium project housed people with physical disabilities, including brain injuries and cognitive
difficulties. Some of the project’s five residents require considerable assistance.
De-linking Housing and Services
Since the Section 811 Project Rental Assistance Contract (PRAC) does not cover the cost of services,
sponsors do not view de-linking (that is, separating services from housing) as a cost issue for the
Section 811 program. Persons with disabilities are eligible for services based on their incomes and
the nature of their disabilities, regardless of where they live. To varied extents, Section 811 sponsors
do separate housing and services. For many developments, the services offered on-site are limited to
those necessary for residents to live as independently as possible, while residents access other
services at other locations.
Sponsors reported few problems with securing the services residents need. In some cases, residents
come to the housing already connected to a support network. Many sponsor organizations are also
service providers, so there is a natural link to services even if the services are not located on-site. The
challenge in this arrangement is that, if the resident is dissatisfied with either the services or the
housing, it may be difficult to make a change. (See Chapter Four for examples of concerns raised by
residents.)
Chapter 2 – Project Size and Housing/Services Models 16

There were a few cases in which sponsors noted problems with contracted services. We visited three
projects – all for people with mental illness – where there seemed to be such a “hands-off” approach
that some residents’ needs were not being met. In all cases, the project sponsors were aware of the
problems and were working on improving contractor performance or exploring options to change
service providers. In geographic areas with limited choices of service providers (more rural
communities, for example), finding an alternative service provider may be difficult.
Sponsors’ Views of Resident Preferences
Sponsors place the preferences of persons with disabilities about project size and design high in their
priorities when designing their projects. Overall, 39 percent of survey respondents cited the home-
like environment of their projects as a key advantage of their project size. Fewer sponsors of larger
projects (32 percent) cited this advantage compared to sponsors of smaller projects (about half). The
greater diversity of residents in larger projects was cited as an advantage by 17 percent of
respondents, but 21 percent noted that the greater potential for interpersonal conflict is a problem in
larger projects. Just over one-quarter of sponsors (27 percent) said that larger projects stand out from
their neighborhoods, making integration more difficult. (Issues related to project size and
neighborhood integration are discussed in detail in Chapter Three.)
Whether sponsors succeed in responding to residents’ preferences is subject to the confounding
effects of self-selection: the persons with disabilities who move in to Section 811 projects (or their
families or others involved in selecting their housing) have made a decision that the project and its
associated services would be a suitable place to live. From the sponsors’ points of view, one of the
main advantages to developing housing specifically for persons with disabilities is that residents can
form a community, rely on each other, and have peer relationships. (As discussed in Chapter Four,
residents do not always agree that such a sense of community exists, or that it is even desirable.)
Larger projects offer opportunities to meet more people and perhaps a greater likelihood a resident
will develop social networks. On the other hand, some sponsors believe larger projects can be more
alienating and may encourage isolative behavior. There may also be more interpersonal problems
among residents.
Sponsors were asked what proportion of their residents are satisfied with their living situations.
While most sponsors believe that most residents are satisfied, they acknowledged that a small
proportion of their residents are not fully satisfied. As we describe in Chapter Four, most of the
residents we interviewed during site visits confirmed that they are very satisfied with their living
arrangements. Even those who were less satisfied often commented that the Section 811 housing was
their best option in terms of quality, affordability, and suitability for their needs. (Resident views on
segregation of housing and services and project size are also reported in Chapter Four.)
Group or shared living arrangements pose challenges, however. In smaller projects (especially group
homes with shared common space or independent living projects (ILPs) where residents share units),
sponsors take considerable care to select residents who will get along with each other.
10
10
In ILPs, residents do not share bedrooms, but two residents may share a two-bedroom unit with each
resident having a private bedroom. Some older Section 811 group homes have double occupancy
Chapter 2 – Project Size and Housing/Services Models 17

Considerations include the type and level of disability, level of functioning, personality, age, and
gender. For example, in one Boston group home for people with developmental disabilities, one
resident was much more social and had higher-level independent living skills than her housemates.
As a result, she moved to another group home with residents whose characteristics and interests were
more similar to hers.
A few independent living projects we visited were originally designed to have residents share units,
but sponsors elected to limit occupancy to one resident per unit because it was too difficult to find
compatible roommates. For example, in one metropolitan area, we visited two ILPs for people with
developmental disabilities owned by the same sponsor. The two bedroom units in the ILPs each had
only one resident. The sponsor was working with HUD on various options for addressing the two
under-occupied two bedroom units.
Role of Federal, State, and Local Government Regulations on
Project Size and Service Approach
Among the communities we visited, project sponsors in a number of locations said that state
regulations or policies influence their decisions about project size and service approach. In projects
for people with developmental disabilities in North Carolina, for example, decisions on what services
to provide and whether to provide them on-or-off-site are dominated by the way the service delivery
system is structured. County mental health department staff provides service coordination off-site,
while contractor agencies provide support, assistance with activities of daily living, and transportation
assistance both on-and-off-site.
State policies in a number of states, including Massachusetts, Colorado, North Carolina, and
Maryland, dictate the size of projects for persons with disabilities. In addition, state reimbursement
policies may influence program design. In Massachusetts, for example, most clients of the
Department of Mental Retardation (DMR) are required to attend a day program. Residents typically
have some choice among programs and some residents (such as those who are elderly) have some
flexibility about participating. In general, however, it is assumed that group homes housing residents
with developmental disabilities do not require daytime support; DMR, therefore, will not reimburse
housing providers for daytime support staff. Two sponsors serving residents with developmental
disabilities noted that some residents complain about having to go to day programs every day, but the
sponsors generally cannot let them stay at the group home because there is no on-site support present
during the day.
11
Other states set guidelines rather than firm requirements. For example, Kentucky’s state housing
agency provides recommendations for special needs developments based on preferences established
by an agency-sponsored committee. A staff member termed Kentucky’s approach as “flexibility with
parameters,” designed to make sure good projects do not slip through the cracks because they do not
bedrooms, but beginning in FY 1999, sponsors were no longer permitted to develop double occupancy
bedrooms in group homes. (A group home resident may choose to have a roommate, however.)
11
If a resident is ill, the project does arrange for a support person to be at the group home during the day.
Chapter 2 – Project Size and Housing/Services Models 18

fit within strict guidelines. In Alabama, policymakers said the preferred size for housing projects for
persons with disabilities is no more than six units, while New Jersey reportedly promotes small,
scattered site models, including small projects specifically for persons with disabilities as well as
apartments in integrated developments.
Sponsor preferences and local guidance may result in even smaller project sizes than official policy
would dictate or recommend. In Maryland, for example, state policy indicates that group homes can
house no more than eight residents. In one of the counties we visited, however, the county mental
health authority’s preference was no more than six, whereas the project sponsor we interviewed said
that no more than three unrelated adults should live together.
Local zoning requirements were an issue in some of the communities we visited. In Los Angeles and
Louisville, group home sponsors must notify neighbors of a new project, but only if the project is
larger than a certain size. The sponsors we spoke to preferred to keep projects small rather than meet
the notification requirements. In Colorado, group homes with four or more residents are subject to
more reviews and requirements than smaller group homes. Two Denver sponsors we visited had
different responses to the requirements. In one case, the sponsor elected to build a larger group home
in order to provide more housing. Another sponsor elected to limit its group home to three residents
to avoid the more stringent requirements.
In addition to influencing project sizes, requirements for the development and updating of service
plans are also often dictated by states. Although participation in services is not generally mandated,
developing and updating the plans is required. States expect residents to be as actively involved in
service planning as possible. Families of residents with developmental disabilities are involved when
possible as well.
Characteristics of Section 202 (Direct Loan) Projects for Persons
with Disabilities and Their Residents
In the next few sections, we review our findings on projects funded under HUD’s Section 202 (direct
loan) program for persons with disabilities and how these older, larger projects contrast with the more
recent Section 811 projects discussed above. HUD funded over 2,100 projects for persons with
disabilities under the Section 202 (direct loan) program from 1964 through 1990. The earliest Section
202 (direct loan) projects for persons with disabilities were developed for persons with physical
disabilities. In 1974, people with developmental disabilities became eligible, and after a three year
joint HUD/HHS Demonstration Program for Deinstitutionalization of the Chronically Mentally Ill
from 1978 through 1980, people with chronic mental illness became eligible for the regular Section
202 (direct loan) program in 1982. The project size limits under the Section 202 (direct loan)
program for persons with disabilities were 20 units for independent living projects for persons with
chronic mental illness and 40 units for independent living projects for persons with disabilities other
than chronic mental illness. The size limit for group homes was 15 persons per site (regardless of the
disability of the residents).
As described in Chapter One, we interviewed a sample of Section 202 (direct loan) project sponsors
by telephone, but did not conduct site visits to Section 202 (direct loan) projects. The sample of
Chapter 2 – Project Size and Housing/Services Models 19

projects was selected according to the congressionally-specified size categories. Exhibit 2-3 shows
the number of sponsors we interviewed for each size category of project and type of resident
disability. These projects represent about 15 percent of projects within the size categories covered by
the study funded under the Section 202 (direct loan) program.
Exhibit 2-3
Project Characteristics: Section 202 (Direct Loan) Survey Respondents
Developmental Chronic Physical
Size Category Disabilities Mental Illness Disabilities All Projects
< 50 units 9 1 5 15
51-80 units 0 0 1 1
>80-120 units 3 3
>120 units 0 0 1 1
All projects 9 1 10 20
The Section 202 (direct loan) sample has fewer large projects than initially expected. Projects with
more than 40 units often turned out to be clusters of buildings or scattered site developments, rather
than single buildings with large numbers of units. The survey was designed to capture information
about projects at a single location. Therefore, in cases of scattered site projects, we selected a single
location and administered the interview for that location.
The disabilities of the residents in the projects selected for interviews included all three disability
groups: one project for people with chronic mental illness; nine projects for people with
developmental disabilities; and ten projects for people with physical disabilities. Reflecting the early
priorities of the program, all of the projects with 50 units or more are projects for people with
physical disabilities.
The Section 202 (direct loan) project sponsors we interviewed were funded between 1967 and 1989,
thus spanning nearly the full period during which projects for persons with disabilities were funded
under the program. Not surprisingly, given that all of the projects were funded nearly 15 years ago
(and some considerably longer ago than that), some of the respondents had difficulty answering
questions about the program design and development phases of their projects. When important for
interpreting findings, we note cases for which respondent recall was a problem.
Like the Section 811 sponsors, the Section 202 (direct loan) sponsors reported that these projects are
generally fully occupied, with vacancy rates over the past year of no more than 4 percent across all
project size categories. Sponsors said that the most common ways people hear about their projects
are through referrals by housing organizations or advocacy groups that work with persons with
disabilities (16 sponsors each) and through word of mouth (18 sponsors). This contrasts with the
Section 811 program, where residents are more likely to learn about the project through formal
referral networks and word-of-mouth referrals are more rare.
Across all project sizes, turnover is low. Very few sponsors reported that more than one or two
residents moved out of these projects within the previous year. Among those who did report move-
Chapter 2 – Project Size and Housing/Services Models 20

outs from these projects, the residents who left typically went to places with higher levels of services,
such as a nursing home, hospital, or other specialized residential setting. Very few moved to market
or other subsidized independent housing.
Resident Characteristics
The previous residences of Section 202 (direct loan) project residents seem to be somewhat different
from those of Section 811 project residents. The Section 202 (direct loan) sponsors often were not
able to specify the number or proportion of residents coming from various types of prior residence,
but they generally were able to say whether or not some current residents came from each type of
place. Previous residences mentioned by sponsors included the following: living with family (19
sponsors); in their own subsidized housing (12); in other specialized residences, such as group homes
(9 sponsors); in their own market rate housing (9); and in hospitals or rehabilitation facilities (8
sponsors). Respondents said their residents most commonly moved to the Section 202 (direct loan)
project from living with family, in another specialized residential setting (such as a group home), or
in their own subsidized or market rate housing. Section 202 (direct loan) project residents seem
somewhat more likely to have lived in their own subsidized or market rate housing than Section 811
project residents.
When asked about the criteria they use to select tenants (in addition to HUD eligibility requirements),
12 sponsors said they consider the severity of the applicant’s disability. Very few mentioned other
personal factors such as the gender of the applicant or how the applicant would get along with other
project residents. These criteria were more often noted in interviews with Section 811 sponsors.
Project Size and Service Delivery in Section 202 (Direct Loan)
Projects for Persons with Disabilities
In most of these Section 202 (direct loan) projects, a mixture of on- and off-site support personnel is
responsible for coordinating services for project residents. Most of the Section 202 (direct loan)
sponsors (14 of 20) said that on-site support personnel who work for the project sponsor provide this
function. In one project, an employee of an outside organization provides coordination on-site. On-
site coordination is supplemented by off-site support personnel who work for the sponsor (in four
projects) or support personnel who work for other organizations (in five projects).
Six of the Section 202 (direct loan) project sponsors we interviewed said that their projects do not
provide or coordinate services at all for their residents. Some respondents seemed surprised we even
asked, responding that their projects are considered “independent living” and that residents who are
unable to live independently or make their own arrangements for services would not be living in the
Section 202 (direct loan) project. This seems consistent with the fact noted above that a relatively
large proportion of sponsors reported that their tenants moved to the Section 202 (direct loan) project
from living in their own subsidized or market rate housing. Some of the sponsors of projects for
people with physical disabilities said that residents move to the Section 202 (direct loan) project for
the accessibility features that are difficult to find in other rental housing.
Chapter 2 – Project Size and Housing/Services Models 21

Respondents who do provide or coordinate services for residents were asked what services were
provided and who provided them, the sponsor or an outside organization. Between 7 and 9 of the 14
sponsors reported they or another organization provides home-based services, such as assistance with
activities of daily living, shopping, medications, transportation, or housekeeping. Case management
is arranged for residents of 12 of the 14 projects. Clinical services, such as psychological counseling,
medical treatment, physical or occupational therapy, independent living skills training, and career or
vocational assistance, are coordinated for residents at between eight and ten projects. Several projects
offer case management and independent living skills training on-site, but most of the clinical services
are more commonly offered off-site, regardless of project size.
Respondents were asked about the importance of a series of factors in deciding what kinds of services
would be provided for residents and where services would be provided. As we heard from Section
811 sponsors, project size was not viewed as an important factor in determining either the types or
locations of services. Sponsors said the most important factors were regulatory or licensing
requirements (cited by five respondents), the needs of the residents (three respondents), and the
mission or philosophy of the sponsor organization (two respondents.)
Services funding for Section 202 (direct loan) residents was not tied to project size. When asked
whether the size of their project affected the availability of services funding, only two Section 202
(direct loan) sponsors said yes. Both of these projects had between 30 and 50 units.
The factors sponsors consider most important in deciding the appropriate size for a project most
frequently were operating costs and the type and severity of disability of the residents. When asked
what the most important factor was, six respondents cited operating costs, while five respondents said
the disability of the residents was most important. The remaining sponsors cited the housing location
(two respondents), the preferences of persons with disabilities (two respondents), the service
approach (two respondents), or other factors (two respondents.)
Summary
The sponsors we interviewed provided insights into the characteristics of projects funded under the
Section 811 program and the Section 202 (direct loan) program and the role of project size in housing
and service models. The Section 202 (direct loan) sponsors we spoke to view their projects as
independent living apartments. Project residents are mostly commonly people with physical
disabilities who moved to the Section 202 (direct loan) project from a variety of previous residences,
presumably in part for the accessibility features the Section 202 (direct loan) projects offer. About
one third of the Section 202 (direct loan) sponsors we interviewed reported they play little or no role
in coordinating services for residents because their residents arrange their own services. Project size
is not viewed as an important factor in service delivery.
Sponsors of Section 811 projects, by contrast, are more frequently part of a service system within
which Section 811 projects may be one of a number of housing options. Through referrals within
these service systems, Section 811 residents more frequently come from another specialized
residential setting or from living with family. Section 811 projects offer access to a wide array of
services, but most sponsors prefer to limit on-site services to those residents who need to live as
Chapter 2 – Project Size and Housing/Services Models 22

independently as possible. This service approach derives more from the sponsor’s organizational
approach and regulatory requirements than from project size.
Sponsors do consider residents’ preferences about project size and service location, and most
sponsors believe the majority of their residents are satisfied with the arrangements they have. One
challenge sponsors do struggle with is managing group living arrangements. A few sponsors we
visited had such difficulty matching compatible roommates that they have elected to reduce the
number of residents they house. We discuss resident perceptions of their housing and service
arrangements in Chapter Four.
Chapter 2 – Project Size and Housing/Services Models 23

Chapter Three
Project Size and Neighborhood Relations
As the number of supportive housing developments sponsored by HUD and others has increased,
community concerns about project siting, scale, and management have grown, in some cases leading
to vocal community opposition. Community opposition may be attributed in some instances to the
NIMBY (not in my back yard) syndrome. In this chapter, we explore the relationship between project
size and neighborhood relations in HUD’s Section 811 Supportive Housing Program for Persons with
Disabilities. We discuss both community acceptance of the projects at the planning and development
stages and also the on-going economic and social ties between projects and neighborhoods once the
Section 811 project is occupied. The research questions addressed include:
• Do projects match surrounding land uses?
• What have been community reactions to projects for persons with disabilities and to what
extent are reactions linked to project size?
• What approaches have sponsors used to respond to neighborhood opposition?
• What social and economic ties exist between projects and neighborhoods?
In our telephone surveys of Section 811 project sponsors, we found that about half of the projects
encountered no community opposition at all and very few encountered major opposition that delayed
the project substantially.
12
A large majority (85 percent) of sponsors reported they had a favorable
relationship with their neighbors once the project was occupied. Given the nature of a telephone
survey, however, we were not able to determine the extent to which projects are similar to
surrounding land uses or are integrated in their neighborhoods.
The findings on neighborhood relations issues we present in this chapter are drawn primarily from the
site visits, where we had the benefit of both talking to local respondents (sponsor/managers, residents,
and services providers/advocates) and seeing the properties and communities first-hand. We also
present findings on the extent of social and economic integration between the developments and the
neighborhoods, based on information about issues such as resident employment in the neighborhood,
neighborhood employment at the property, and managers’ and residents’ reported use of
neighborhood businesses for products or services.
12
Although we asked Section 202 (direct loan) project sponsors about community opposition to their projects,
we did not obtain very useful responses. Because the projects were built at least 15 years ago (and some
considerably longer ago than that), nearly half the respondents did not know or did not recall the
neighborhood’s reaction to the project.
Chapter 3 – Project Size and Neighborhood Relations 24

Project Sites
Among the Section 811 projects included in this study, the majority (about two-thirds) are located in
exclusively or largely residential neighborhoods. A small group are situated in a “buffer zone”
between residential and commercial areas or in a mixed use neighborhood that includes residential,
commercial, or institutional buildings. One project is in a primarily commercial area. The type of
neighborhood in which the project was built does not vary by project size or disability group. One
sponsor in Minneapolis, however, indicated that for larger projects, they try to avoid exclusively
residential neighborhoods, presumably to minimize neighborhood opposition. A few of the Section
811 projects we visited are located in rural or semi-rural areas. Transportation is more difficult to
obtain in these areas, and the locations provide little opportunity for neighborhood interaction and
integration. According to project sponsors and site visitors, nearly all of the projects fit in well with
the surrounding land uses, including the size and scale of other housing.
Sponsor staff reportedly consider a variety of criteria when selecting sites for Section 811 projects.
For about 15 percent of the projects visited, the sponsor already owned the land or it was donated to
the organization. In general, whether the land was donated or acquired, sponsors sought to develop
projects in locations that would meet multiple criteria typically including the following: proximity to
bus lines or other transit; access to shopping and supportive services; and a safe, desirable
neighborhood. Sponsors in several cities remarked on the need to strike a balance between
desirability and cost when finalizing site selection. The site selection criteria for Section 811 projects
in our sample does not appear to vary by project size or disability group. Despite sponsor efforts to
locate projects in desirable neighborhoods that are accessible to transit and services, site visitors noted
concerns with about one-third of the project sites. These projects are somewhat isolated from
commercial activities or services (including transportation) or are located in areas where crime is an
issue. Sponsors and residents noted issues with neighborhood crime in about 12 percent of the
projects visited.
Neighborhood Acceptance
The majority of Section 811 projects visited were developed through new construction and undertook
a community notification process to inform residents and businesses in the surrounding neighborhood
about the proposed project. In a few cases, where the project was developed through the
rehabilitation of an existing structure, sponsors stated that they were not required to notify the
community. Interviews with project sponsors revealed a wide range of responses regarding the
community notification process. On one end of the spectrum are sponsors or developers who made
minimal efforts to notify the community and provided little or no information about the project or
their organization. This approach is generally intended to minimize unwanted attention on the
project. A few sponsors stated outright that they “never ask permission” or that their organization’s
philosophy is to build without notification and “fly under the radar” when developing Section 811
projects. On the other end of the spectrum are organizations that used many methods to notify the
community including: media releases; letters of support; written neighborhood and municipal
notification; zoning notices and in-person meetings with neighbors/officials; and provided
information about the proposed project, residents, and the sponsor. This approach is intended to build
neighborhood support by highlighting the sponsor’s good track record, offering tours of other
Chapter 3 – Project Size and Neighborhood Relations 25

projects, inviting input on design decisions, and telling neighbors about how any problems that may
arise will be dealt with. In a few instances, sponsors held groundbreaking ceremonies at the start of
construction or open houses once the project was complete to help cultivate good relations with
neighbors. About half of the sponsor agencies we interviewed used multiple methods, and roughly
one-third of project sponsors provided detailed information to the community, such as the number of
residents, disability group, physical design, management, services, and sponsor agency information.
Sponsors of projects that serve residents with chronic mental illness were the least likely to provide
detailed information to the surrounding neighborhood during the community notification process.
The extent of community notification does not appear to vary by project size.
According to project sponsors, more than half of the projects visited faced no opposition whatsoever
to the Section 811 development, and just over one-fourth faced only “minor” opposition in the form
of questions or issues raised (typically related to the disability group) that caused no delays. One
project encountered “major” opposition from the community, resulting in what they characterize as a
“NIMBY” lawsuit and several months of construction delays. The rest faced “moderate” opposition
that caused brief delays in the development phase. This opposition was typically around concerns
over property values or the disability group to be served. Among the projects we visited, those
serving residents with chronic mental illness were more likely to have faced opposition during
development. When viewed by project size, larger projects (with 8 or more units) were slightly more
likely to have faced community opposition.
Sponsors for about half of the projects visited characterized the project’s relationship with the
neighborhood as excellent, and another 30 percent as good. Only one sponsor noted a mixed
relationship with the neighborhood. Several sponsors indicated that there is no relationship to speak
of between the project and the neighborhood – either good or bad. Of the projects that faced initial
community opposition, all but one now reportedly have a good or excellent relationship with the
neighborhood. Although initial opposition to the remaining project was only minor, the sponsor
described the current relationship with the neighborhood as mixed, where some neighbors are
supportive while others are not.
Project sponsors were asked whether they thought neighborhood reaction to a project was influenced
by its size, defined as the number of units. Most respondents said that project size does matter and
that larger projects are more likely to generate concerns around issues such as traffic, parking, and
increased activity in the neighborhood. A few respondents mentioned that larger projects also tend to
stand out due to the large vans used to transport residents. In general, larger projects tend to be more
conspicuous in residential areas even if efforts are made to match the neighborhood’s architectural
style.
Sponsors were quick to point out, however, that several other factors are also influential in
neighborhood response. Chief among these is the type and level of disability of the residents to be
served. Some sponsors who did not report neighborhood concerns related to project size are
nonetheless reluctant to house large groups of residents with mental illness together because of the
increased likelihood of conflict among residents. Other key factors in the ongoing relations between
projects and their neighborhoods include the general upkeep/maintenance of the property and fear of
declining property values.
Chapter 3 – Project Size and Neighborhood Relations 26

Interviews with project sponsors revealed a number of strategies employed to facilitate project
acceptance in the neighborhood. Ongoing communication and the good track record of the sponsor
agency are said to go a long way in smoothing this process. Another strategy is to make the physical
design of the development resemble other neighborhood structures. For example, one independent
living project in the Boston area is relatively large in scale, but has Victorian features that are similar
to those of neighboring homes. Also, it is a long building that sits perpendicular to the street, so from
the street it does not appear as large as it actually is. A sponsor in Columbus addressed community
concerns about the density of a project by reconfiguring the site design to locate one of three
buildings on an adjacent street and connect the development with a shared courtyard. Some projects
boost neighborhood acceptance by creating something of benefit to the community. For example, in
response to neighbors’ interest in maintaining open space in a dense urban neighborhood, one Boston
sponsor built a garden area on the project site.
In general, neighboring residents want to be assured that the presence of the Section 811 project does
not adversely affect their neighborhood. To that end, project sponsors strive to maintain the physical
property, including landscaping and repairs. In addition, some sponsors publicize contact information
for neighbors to report problems with the building or residents, and sponsors respond quickly to
address any issues. Other strategies to enhance project and resident acceptance include holding open
houses or welcome parties when the development is complete, so that neighbors can see inside and
meet the new residents. In a few instances, project sponsors reported resident participation in
neighborhood events, such as holiday celebrations and clean-up efforts.
In several cases, the development of the Section 811 project appears to “bring up” the neighborhood
in which it is located. This was claimed by sponsors in Denver, Columbus, and Little Rock of well-
maintained and attractive developments in somewhat neglected or unsafe areas. On the other hand,
residents of these projects cited safety concerns that inhibit their integration into the neighborhood.
Social and Economic Integration
Staff generally select sites for Section 811 projects with community integration in mind; this requires
finding a location close to services, transit, and in residential areas where people can interact. Despite
these efforts, the extent to which project residents are socially integrated into the surrounding
community is limited, as discussed in more detail in Chapter Four. The project’s economic ties to the
neighborhood are discussed below.
Sponsors typically contract out project services through a central office. Only 20 percent reported
using neighborhood businesses to provide some services to the project. The services most often
contracted for locally are landscaping and snow removal. As another measure of economic
integration with the neighborhood, we asked project sponsors whether they hire residents from the
surrounding neighborhood. Very few project sponsors (about 12 percent) reported employing
neighborhood residents at the project.
We also examined the extent to which project residents got out into the neighborhood to work,
volunteer, or attend school. Overall, residents in about 40 percent of the projects pursue such
activities in the neighborhood in which they live. This does not differ by disability group. We also
Chapter 3 – Project Size and Neighborhood Relations 27

asked sponsors whether residents of their project use businesses and services in the neighborhood; the
majority do (about 65 percent overall). Most of the service/business use involves grocery stores and
pharmacies, but sponsors also mentioned resident use of local restaurants, churches, YMCAs, dry
cleaners, and banks. Sponsors of projects serving residents with physical disabilities reported slightly
lower use of neighborhood businesses.
Summary
For the most part, the projects visited for this study fit in well with the size, scale, and land use of the
surrounding neighborhood. While site selection often includes such factors as proximity to public
transit, supportive and commercial services, and other neighborhood amenities that would enhance
the quality of life for project residents, site visitors noted concerns in about one-third of the project
sites – primarily associated with isolation of the developments from shopping and services or criminal
activity in the neighborhood.
Project sponsors typically provide advance notification to neighboring residents and businesses of the
proposed Section 811 development, and neighborhood acceptance of these projects is high. Where
there have been concerns, they appear to have been mitigated through additional communication, and
sometimes the inclusion of neighborhood opinions in project design or other facets of the program.
Economic integration between the project and the surrounding neighborhood is mixed. Although
many residents use local businesses, there is little use of local vendors by project management, and
almost no neighborhood residents are employed by the projects.
Chapter 3 – Project Size and Neighborhood Relations 28

Chapter Four
Resident Experiences in Section 811 Projects
In this chapter, we explore the experiences of a sample of residents from HUD’s Section 811
Supportive Housing Program for Persons with Disabilities. The findings on resident experiences are
gleaned from both the resident interviews and the perceptions of other respondents about the
residents’ experiences. Resident interviews covered a broad range of topics, including housing
choices and preferences, supportive services, community integration (with other residents in the
development as well as neighbors in the surrounding community), and residents’ overall perceptions
of their current living situation. The research questions we address include:
• What are the characteristics of the residents?
• Are residents satisfied with their housing and its management? What are the housing
preferences and supportive services needs of the residents?
• What are residents’ views about project size, the location of services, and links between
housing and services?
• What are residents’ relationships with other residents and with the neighboring
community?
Resident Characteristics
The research team conducted in-person interviews with a total of 115 residents of 49 Section 811
projects in ten metropolitan areas around the country. We interviewed between one and four
residents for each project. To determine the resident interview sample we selected units randomly,
but did have to rely on the project sponsor or manager to determine if the selected resident or a proxy
could respond. Some residents were unable to participate fully in the interview because of the nature
or severity of their disability. Where possible and known in advance, interviewers arranged for a
proxy (typically a service provider or advocate) to respond on behalf of the resident. A proxy was
used in seven percent of the interviews. Residents without proxies had difficulty comprehending
questions or were non-responsive in approximately 18 percent of the interviews. This was much
more common for residents with developmental disabilities.
Of the 115 residents interviewed, 65 are women and 50 are men. Exhibit 4-1 presents some basic
individual and project characteristics for the sample of residents interviewed. They range in age from
18 to 79 years. We interviewed residents in Section 811 projects classified as serving primarily one
of the following four disability groups: developmental disabilities, chronic mental illness, physical
disabilities, and HIV/AIDS. While some projects serve residents with more than one type of
disability (e.g., an individual with developmental disabilities and mental illness), for the purpose of
this analysis these individuals are classified under the primary disability served by the project.
Comparable numbers of interviewees reside in projects serving residents with developmental
Chapter 4 – Resident Experiences in Section 811 Projects 29

disabilities (47 residents) and projects serving residents with chronic mental illness (42 residents).
The remainder of study interviewees lives in projects serving persons with physical disabilities (20
residents) or persons with HIV/AIDS (6 residents).
The residents interviewed live in scattered site condominiums, group homes, and independent living
projects. While most independent living projects (ILPs) we visited consist of one building or a small
cluster of buildings on a contiguous site, some ILPs are scattered among two or three separate
geographic locations, giving residents the sense of a smaller “project” at each location. Overall, 74 of
the residents interviewed (65 percent) live in an independent living project, while 36 reside in a group
home setting, and 5 are in scattered site condominiums.
Exhibit 4-1
Resident/Project Characteristics
Residents Interviewed
Women 57%
Men 43%
Primary Disability
Developmental Disabilities 41%
Chronic Mental Illness 37%
Physical Disabilities 17%
HIV/AIDS 5%
Housing Type
Independent Living Project 65%
Group Home 31%
Scattered Site Condominiums 4%
Source: Resident interviews during on-site visits in spring/summer 2003 (N=115).
Among the residents interviewed, the size of the project in which they live varies considerably,
ranging from 2 to 24 units. Forty-two (37 percent) reside in developments with fewer than 8 units
(classified as “smaller” projects for the purpose of this research), while 73 residents (63 percent) live
in “larger” projects with 8 or more units. The group homes visited range in size from three to 12
units; however, the 12-unit project is actually comprised of two 6-unit buildings on the same site.
Excluding this project, the largest group home has eight units. Most of the 34 residents in group
homes (82 percent) live in “smaller” projects with fewer than eight units, while most of the 74
residents in independent living projects (88 percent) live in “larger” projects. This relationship
between housing type and project size is a function of the Section 811 program rules.
The length of time respondents have lived in their current home ranges from two months to ten years,
with a median length of stay of about three and one-half years. The residents interviewed arrived at
their current Section 811 project from a variety of housing situations. The largest proportion, about
one-third, most recently lived with family members, while sizeable groups came from other
supportive housing projects (including group homes), other subsidized housing, or private apartments.
Smaller groups of residents previously lived in institutional settings, such as mental health facilities,
Chapter 4 – Resident Experiences in Section 811 Projects 30

rehabilitation centers, nursing homes, and intermediate care facilities for the mentally retarded
(ICFMR). Several were homeless prior to moving to the Section 811 project. When viewed by
disability type, a much higher proportion (49 percent) of residents with developmental disabilities
came from living with family members. The previous residence of those interviewed does not vary
when viewed by current housing type or project size.
Resident Satisfaction
Resident satisfaction is high among the individuals interviewed. As shown in Exhibit 4-2, 65 percent
of respondents reported being very satisfied with their current living situation. Another 29 percent
are somewhat satisfied or between somewhat and very satisfied. Six percent of the residents
interviewed are not satisfied with their current living situation. The main reasons cited for
dissatisfaction include interpersonal conflict with other residents and/or support staff (excessive
noise, stealing food, gossiping, etc.). Interestingly, issues with roommates or household dynamics are
also voiced by about nine percent of the residents who are somewhat or very satisfied.
Regardless of the size of their development, a large majority of residents interviewed for this study
reported high levels of satisfaction with their living arrangement. Eighty-eight percent of residents of
Section 811 projects with less than 5 units reported being very satisfied or somewhat satisfied.
Among respondents living in projects with 5-7 units and 8-24 units, the rates of very satisfied and
highly satisfied are 92 percent and 90 percent, respectively.
Resident satisfaction varies only slightly by disability group. Among the small sample of residents
with HIV/AIDS, 50 percent reported being very satisfied, while for residents with developmental
disabilities it is 60 percent. The rates of very satisfied residents with chronic mental illness and
physical disabilities are 69 percent and 70 percent, respectively. On the other hand, the rate of
dissatisfaction is higher among residents with chronic mental illness (ten percent are not satisfied) as
compared to residents with developmental disabilities or physical disabilities (five percent each) and
residents with HIV/AIDS (none reported being dissatisfied).
Exhibit 4-2
Resident Satisfaction
Overall Satisfaction
Very Satisfied 65%
Somewhat Satisfied 29%
Not Satisfied 6%
Very or Somewhat Satisfied, By Project Size
Less than 5 Units 88%
5-7 Units 92%
8-24 Units 90%
Chapter 4 – Resident Experiences in Section 811 Projects 31

Very Satisfied, By Primary Disability
Developmental Disabilities 60%
Chronic Mental Illness 69%
Physical Disabilities 70%
HIV/AIDS 50%
Not Satisfied, By Primary Disability
Developmental Disabilities 5%
Chronic Mental Illness 10%
Physical Disabilities 0%
HIV/AIDS
Source: Resident interviews during on-site visits in spring/summer 2003 (N=111).
Resident satisfaction does not vary much based on the type of housing, whether group homes,
independent living projects, or scattered site condominiums. Between 60 and 65 percent of residents
in each housing type reported being very satisfied overall, while the rate of dissatisfaction ranges
from 5 percent in independent living projects to 9 percent in group homes (compared to 6 percent
overall).
When asked what they like about their living situation, residents most often noted the independence it
affords them, whether it is having their own unit or simply a room of their own. One resident in an
independent living project in Denver remarked, “It’s a place I can call home.” A number of residents
are also pleased with the condition and appeal of their unit or building and the services and on-site
support available to them. Being around friends or friendly people; privacy; peace and quiet; and
location are among the other “likes” noted by residents.
When examined by disability group, there are some slight variations in what residents like about their
living situations. Residents with developmental disabilities and those with HIV/AIDS (albeit a much
smaller sample) put more of a premium on having friends and friendly people with whom to interact.
Not surprisingly, residents with physical disabilities are more likely to laud the condition of the unit
or building, sometimes noting features or design elements that enhance accessibility.
Residents were also asked what they do not like about their living situation. Consistent with their
reports of overall satisfaction, resident conflict (including issues with roommates) is the most
frequently cited concern for respondents overall. This conflict ranges from relatively minor
annoyances (e.g., perceived nosiness) to excessive disturbances, as in the case of one group home
resident who likens his housing situation to a “prison sentence” due to the nightly turmoil created by
one housemate. The prevalence of interpersonal issues among those interviewed does not vary by
disability group. However, these issues are more common in smaller projects (those with fewer than
eight units) than in larger ones. Respondents in scattered site condominium housing also commonly
note resident issues. Two residents without on-site support typically share these units, and problems
with roommates were noted in our small sample of interviews.
As another measure of general satisfaction, interviewers inquired whether residents want to live
somewhere other than their current home. Overall, three-quarters of the respondents want to remain
Chapter 4 – Resident Experiences in Section 811 Projects 32

in their current residence. Even among residents expressing a desire to live elsewhere, about one-
third are reportedly very satisfied or somewhat to very satisfied overall. For those who do want to
move, reasons most often cited include: a desire to live alone or with one roommate at most (because
of interpersonal conflict and/or privacy concerns); a desire for a larger unit; and a desire for a better
location (e.g., more urban, closer to activities). Resident desire to live elsewhere does not vary by
disability group or project size.
Residents’ Housing Preferences
When asked what is important to them about where they live, most residents cited a long list of
preferences, typically with no indication of relative importance. Very few expressed only one or two
overarching considerations. For those who do, common priorities include location, independence,
cleanliness of the unit or development, quiet, affordability, privacy, the availability of supportive
services, and safety. The responses to this particular question were not sufficiently detailed to
examine differences across disability group or housing type, or project size. It should be noted that
residents with developmental disabilities had a particularly hard time with preference questions such
as this.
As a follow up to the question about housing preferences, residents were asked whether their current
housing meets their needs in the areas they deem important. For the overwhelming majority of 
respondents, most or all of their housing needs are met by their current living situation. Despite the
favorable ratings overall, however, about 40 percent indicated at least one area of importance in
which their housing needs are not met. The most common unmet needs are transportation (noted by
13 percent) and more privacy (9 percent). Additional areas of concern include: distance to
supportive services, safety, and distance to work. There appears to be very little variation by
disability group in whether residents’ priority housing needs are met. In each disability group about
80 percent of residents believe that most or all of their housing needs are met.
Interviewers also asked whether residents prefer to live with other persons with disabilities, or those
without. As shown in Exhibit 4-3, nearly half of the respondents have no preference on the matter
with some noting that it really depends on the people. Almost one-third prefer to live with other
persons with disabilities. Reasons for this – cited by residents with developmental disabilities,
physical disabilities and chronic mental illness – include a desire to live with people facing the same
issues, because they can relate better, feel more comfortable, and more easily form peer groups and
friendships. One resident in a Louisville project stated that she feels like “a fish out of water” when
around people without disabilities.
Exhibit 4-3
Residents’ Housing Preferences
Prefer to live with others…
(N=100)
With disabilities 31%
Without disabilities 20%
No preference 49%
Chapter 4 – Resident Experiences in Section 811 Projects 33

Preferred project size
(N=106)
Fewer than eight units 48%
Eight or more units 32%
No preference 20%
Source: Resident interviews during on-site visits in spring/summer 2003.
The remaining 20 percent of respondents prefer to live with people without disabilities. Several of
these residents expressed frustration about living with others who may be “worse off,” particularly
those with behavior issues that affect other residents. A few respondents who prefer to live with
people that do not have disabilities said they feel “trapped” by the community they are in and just
want to “be normal,” presumably something that can be achieved in a more integrated setting.
Among respondents with a housing preference, those with developmental disabilities and physical
disabilities are more likely to prefer living with others who have a disability. Conversely,
respondents with chronic mental illness are more likely to prefer living with other residents who do
not have a disability.
Resident interviews included a set of questions related to general preference regarding the number of
units in the development. Nearly half of the respondents prefer to live in developments with fewer
than eight units, while almost one-third prefer developments with eight or more units. The remaining
20 percent have no preference regarding project size. (As noted above, 37 percent of the residents we
interviewed actually do live in a project with fewer than eight units and the remaining 63 percent live
in a larger project.)
The reasons for preferring a smaller project include a dislike (or sometimes fear) of crowds and noise,
a desire for more privacy, and a greater sense of independence. Among those with a preference for
larger projects, the overwhelming reasons are to meet more people and make more friends (noted
more often by respondents with developmental disabilities and physical disabilities than by those with
chronic mental illness). When viewed by disability group, there is little variation in the preference for
smaller verses larger projects. The only noticeable difference among groups is that respondents with
HIV/AIDS and physical disabilities are less likely to have a preference regarding project size.
Project sponsors have varying opinions about the relationship between project size and quality of life
for residents. Some said that smaller settings are preferable because they create a more home-like
atmosphere, while others think quality of life is improved in larger projects because residents have an
opportunity to meet and develop friendships with more people. Several sponsors said that the key
factor is not the overall size of the project, but whether residents have their own bedroom and are able
to maintain some level of privacy. Project sponsors were also asked how they thought residents feel
about project size. Many think the residents are satisfied with the current project size, but others said
that residents would probably prefer a smaller development, or, better still, their own apartment.
Chapter 4 – Resident Experiences in Section 811 Projects 34

Service Needs and Preferences
Among the residents interviewed for this study, the type and level of supportive services provided
vary considerably. While some residents receive only minimum support, such as job coaching or case
management, others require a more intensive combination of medical and psychological services,
housekeeping support, and training in independent living skills. As noted earlier, some residents had
difficulty responding to preference questions during the interview. Overall, the vast majority of
residents interviewed (80 percent) said that they are able to obtain the services they need. The few
exceptions noted unmet service needs in several areas primarily transportation, recreation, and
wheelchair repair (mentioned by three residents in the same project).
A small minority of residents interviewed (about 15 percent) reported that they have encountered
some difficulty in obtaining needed services. Some respondents were unsure of the reason for the
difficulty; a few noted challenges such as budget cuts, a lack of transportation, or service workers
simply not understanding their needs. When viewed by disability group, residents with physical
disabilities are somewhat more likely to get the services they need, while residents with chronic
mental illness are slightly more likely to report issues with obtaining services. Residents in larger
projects (with eight or more units) are also more likely to report difficulty in obtaining needed
services.
Resident Service Needs
• The vast majority of residents interviewed (80 percent) are able to obtain the services
they need.
• Residents with physical disabilities are somewhat more likely to get needed services.
• Residents with chronic mental illness and residents in larger projects reported more
difficulty in obtaining needed services.
• Unmet service needs include transportation and recreation.
The location in which residents receive particular services is typically determined by both the service
needs of the resident and the philosophy of the service provider and project sponsor. As presented in
Exhibit 4-4, the majority of residents interviewed (about 65 percent) receive a combination of on- and
off-site services, while about 25 percent receive primarily off-site services and only a very small
minority (10 percent) receives almost exclusively on-site services. Interviews with project staff
revealed that they generally think it is important to have on-site services when needed, but to provide
as much as possible off-site to encourage residents to get out of the house, to separate home life from
services, and to reduce the stigma that may be associated with services. One sponsor agency in Los
Angeles confirmed that residents receive many services off-site, consistent with the agency’s
commitment to “normalization” for these residents (with developmental disabilities). He added that
this arrangement is also a selling point to the community, because it puts money into the local
economy.
Chapter 4 – Resident Experiences in Section 811 Projects 35

Exhibit 4-4
Resident Services
Location of Resident Services
(N=107)
Mix of on-site and off-site 65%
Primarily off-site 25%
Primarily on-site 10%
Preferred location for services*
(N=85)
Current location (as is) 66%
Prefer more on-site services 24%
Prefer more off-site services 10%
*Among residents with a stated preference.

Source: Resident interviews during on-site visits in spring/summer 2003.

About one-fourth of the residents interviewed did not indicate a preference for the location of
services. Of those residents with a stated preference, about two-thirds are pleased with the location of
the supportive services they currently receive (generally, a combination of on- and off-site). About
ten percent would like more off-site services, and nearly one-fourth would like to have more on-site
services (typically psychological or other medical services). Preferences for the location of
supportive services are consistent across disability group and project size.
Community Integration
Section 811 project support personnel we interviewed said that the development of a sense of
“community” within the project is important to residents. To that end, many take great care when
selecting new residents for a project (particularly in roommate situations). Residents interviewed also
seem to place some importance on “community” within the project. About half interact daily with at
least one other resident, while only about 12 percent noted little or no interaction with other project
residents. Furthermore, as mentioned above, the most common reason for residents wanting to live in
larger projects is the opportunity to meet and become friends with more people. Interaction with on-
site support personnel provides another level of socialization for many residents, but one Boston
group home sponsor added that residents would benefit from a more integrated setting where they
have opportunities “to develop relationships with people who are not paid to have a relationship with
them.”
Support personnel often noted that site selection is done with community integration in mind in order
to find a location close to services, transit, and in residential areas where people would have
opportunities to interact with neighborhood residents and businesses. Despite these efforts, the extent
to which the residents interviewed are integrated into the surrounding community is limited. When
asked how often they interact with neighbors outside of the project, only about 15 percent of the
respondents have daily or frequent contact with neighbors, and a small group noted occasional
interaction (typically waving hello or goodbye). On the other hand, nearly 60 percent of residents
Chapter 4 – Resident Experiences in Section 811 Projects 36

interviewed have no interaction at all with residents in the surrounding neighborhood. Some of the
residents in this group are unable to articulate specific barriers to neighborhood interaction. Others
do not feel there are barriers; they simply do not do it. Among those residents who noted specific
barriers to neighborhood interaction, the most common is that their disability prevents them from
getting out into the neighborhood (or they need assistance in doing so) or prevents them from being
understood. Other common reasons for limited neighborhood interaction are concerns about crime
and safety, not knowing the neighborhood residents, or simply being busy with their own lives. The
latter is not surprising, given that more than 60 percent of residents interviewed spend at least part of
the day off-site in sheltered workshops, other day programs, at work, or in school.
Summary
The residents we interviewed expressed high rates of satisfaction with their housing and the type and
location of the services they receive. Residents said they like the independence, privacy, and quality
of their Section 811 housing. Of those who cited things they dislike, problems with other residents 

were the most frequently mentioned issue. As noted in Chapter Two, project sponsors said that
interpersonal conflicts are a bigger problem in larger projects. However, in the resident interviews,
residents in smaller projects were more likely to mention problems with other residents or on-site
support personnel.
In terms of preferences regarding project size, nearly half of the residents said they would prefer to
live in projects with fewer than 8 units, while about 30 percent expressed a preference for
developments with more than 8 units. The remaining 20 percent had no preference.
Half of the residents expressed no preference about living with persons with disabilities versus those
without disabilities. Of the remainder, about 30 percent would prefer to live with others with
disabilities and 20 percent stated a preference for living with others who do not have a disability.
Sponsors reported that project sites are often selected to promote community integration. Residents
do seem to have some sense of community within the Section 811 projects, but integration with the
neighborhoods has been elusive. Some 60 percent of residents said they have no interaction at all
with their project’s neighbors.
Chapter 4 – Resident Experiences in Section 811 Projects 37

Chapter Five
Factors in Operating and Development Costs
Many persons with disabilities, their advocates and families applaud the trend toward smaller
projects. Given the great need for affordable housing for persons with disabilities and the limited
funds available, however, there are concerns that larger projects may offer cost efficiencies while
having a greater impact on the supply of housing.
This chapter presents an exploratory analysis of operating and development costs in Section 811
projects. We asked the telephone survey respondents a few questions about the most important
factors determining development and operating costs in their projects. During the site visits, we
discussed the development and operating costs in somewhat greater detail with project sponsors.
Where appropriate in this chapter, we have included sponsors’ comments on what they perceive to be
important cost considerations for their projects. The quantitative analysis we present here focuses
primarily on the purposive sample of 49 Section 811 projects selected for site visits and in-depth
interviews.
13
The projects are located across ten metropolitan areas and were selected to represent
projects of different sizes, building types, and population of persons with disabilities served. Since it
is not a statistically representative sample, findings from our analysis may not be generalizeable to the
universe of Section 811 projects. The sample size is particularly small for condominium projects
(three projects) and projects that are designed to serve people with HIV/AIDS (two projects).
The costs we analyze are the development and operating costs reported by sponsors to HUD’s
administrative data systems. Operating cost data are based on the 2001 Annual Financial Statement
(AFS) data that property owners submitted to HUD’s Real Estate Assessment Center (REAC). One
project in the Louisville MSA is not included in the analysis because its cost data are missing from
HUD’s data system. Development cost estimates were obtained from HUD’s Development
Application Processing (DAP) system. Data are incomplete for five projects in the Boston MSA and
one project in the Twin Cities MSA. Property characteristics are provided by HUD’s Real Estate
Management System (REMS).
The analysis is stratified by census region, since previous studies have indicated that location is a
major determinant for both operating expenses and development costs of multifamily developments.
14
Cross tabulations are used to examine how average per-unit costs are related to the project size,
building type, and the particular population of persons with disabilities served.
13
The research approach did not include analysis of cost data for the larger universe of Section 811 and
Section 202 (direct loan) projects for persons with disabilities. Instead, the approach focused on analysis of
quantitative data for the smaller site visit sample, augmented by exploratory discussions with project
sponsors during the site visits to obtain their views on the factors driving costs.
14
Public Housing Operating Cost Study: Final Report. June 6, 2003. Harvard University Graduate School
of Design. Analysis of Total Development Costs in Public Housing: Final Report, prepared for the U.S.
Department of Housing and Urban Development. Christopher Logan, Ken Lam, James Wallace, and Seth
Cooper. Abt Associates Inc., July 1998.
Chapter 5 – Factors in Operating and Development Costs 38

One challenge in this analysis that is not clear is how a “housing unit” is defined in the various HUD
databases. In particular, for condominium projects, housing units might actually refer to the number
of bedrooms in the apartments that make up the “project.” Because of this ambiguity, condominium
projects are analyzed separately when we look at the relationship between project sizes and costs.
Another problem we discovered is that, for 23 projects, the unit counts obtained from REMS are
different from the information collected by our site visitors. In a number of cases, this is because the
location we visited is actually part of a larger, scattered site project. We adjusted the REMS unit
counts accordingly for this analysis.
The remainder of this chapter is organized as follows. We first examine total operating expenses.
Major components that make up the total operating expenses are analyzed separately in the following
sections. The last section focuses on the total development costs.
Total Operating Costs
In our telephone survey of Section 202 (direct loan) and Section 811 sponsors, we asked what factors
are important in driving operating costs. The majority of Section 202 (direct loan) sponsors said
either project size (35 percent) or regulatory or licensing requirements (20 percent) are the most
important factors, as shown in Exhibit 5-1. Size is viewed as most important by 40 percent of the
Section 811 sponsors we surveyed, followed by administrative costs (19 percent) and the type and
severity of the residents’ disabilities (12 percent).
Exhibit 5-1
Sponsor Views on Most Important Factor Driving Operating Costs
All Section 811 All Section 202 (Direct
Sponsors Loan) Sponsors
Most Important Factor Cited (N=136) (N=20)
Type/Severity of Disability of Residents 12% 5%
Project Size 40% 35%
Regulatory/Licensing Costs 10% 20%
Administrative Costs 19% 10%
Service Coordination Costs 6% 10%
Supportive Services Costs 8% 10%
Source: Telephone Surveys of Section 811 and Section 202 (Direct Loan) Project Sponsors, October 2003
(N=156).
Although survey respondents rated size as an important factor in overall costs, many Section 811
sponsors we interviewed during site visits said that operating costs are not closely linked to project
size. Audit costs, insurance, and maintenance were often cited as examples of costly items in
operating budgets that do not vary with project size. Sponsors with older projects and those who had
renovated existing properties (rather than building new), commonly mentioned maintenance costs.
Chapter 5 – Factors in Operating and Development Costs 39

Interviews with state policymakers revealed a variety of perspectives about the factors that contribute
to operating costs. Few mentioned project size as an important factor, but several respondents noted
the importance of service coordination and supportive services costs in operating budgets.
For the purpose of our quantitative analysis of HUD administrative data on operating costs, total
operating cost is defined as the total of administrative expenses, operating and maintenance expenses,
and taxes and insurance expenses. Utilities expenses are excluded because the treatment for tenant-
paid utilities is not uniform across projects in the AFS reporting. For ease of comparison, we report
per-unit-month cost estimates.
Exhibit 5-2 shows how total operating cost is related to project size, building type and population
group, stratified by census region in the Section 811 projects we visited. On average, the total
operating cost is $346 per-unit-month for this sample of Section 811 projects. As expected,
developments located in higher cost regions of the Northeast and West are more expensive to operate,
while projects in the South are associated with the lowest operating cost. The effect of development
size on cost is presented in the first two panels of the exhibit, with condominium projects presented
separately.
For projects other than condominiums, economies of scale correlate with geography. There appears
to be a strong “economies of scale” effect for projects located in the Midwest and South as shown in
the bar chart in Exhibit 5-3. This means that as project size increases, per-unit total operating cost
declines. For example, for projects in the South, the per-unit operating cost decreases from $316 for
projects with 1-4 units to $194 for projects with 19-24 units. Projects located in the two high-cost
regions, the Northeast and West, show the opposite trend with costs increasing as size increases.
There are too few condominium projects in the sample to allow us to identify any relationship
between project sizes and operating costs for this development type. Sponsors in these regions noted
that high audit costs, insurance rates and utilities costs all contribute to their high operating costs.
One Los Angeles sponsor said insurance costs (including property and liability, workers’
compensation, directors and officers insurance, and health insurance for employees) have increased
by 200 percent per year for the last several years.
The relationship between building type and cost is presented in the third panel of Exhibit 5-2. It
shows that in most areas independent living projects have the least per-unit total cost. Projects in the
Northeast are exceptions, where group homes appear to be the least expensive to operate.
15
No discernable relationship between total operating costs and the population group served is
observed, as shown in the last panel of Exhibit 5-2.
15
In the case of group homes, bedrooms are counted as “units.” Some projects have an extra bedroom for a
resident manager; these units are not included in cost calculations because HUD-assisted clients do not
occupy them.
Chapter 5 – Factors in Operating and Development Costs 40

Exhibit 5-2

Distribution of Total Operating Cost (Per-Unit-Month)

Region
Northeast Midwest South West All
(N=10) (N=9) (N=19) (N=10) Regions
Group Homes & Independent Living Projects
Project Size (Units)
1-4 $301 $485 $316 $280 $348
5-7 $356 $356 $261 $688 $410
8-12 $323 $217 $220 $382 $269
13-18 $406 $287 $304 $338
19-24 $410 $264 $194 $242
All Size Categories $351 $328 $238 $498 $331
Condominiums
Project Size (Units)
1-4 $335 $638 $487
5-7 $757 $757
All Size Categories $757 $335 $638 $577
Building Type
Condominium $757 $335 $638 $577
Group Home $271 $410 $243 $569 $389
Independent Living Project $415 $263 $236 $252 $280
All Building Types $392 $328 $243 $512 $346
Population Group
HIV/AIDS $362 $712 $537
Developmental Disabilities $379 $374 $217 $623 $383
Chronic Mental Illness $301 $268 $251 $252 $263
Physical Disabilities $757 $323 $283 $395 $369
All Population Groups $392 $328 $243 $512 $346
Chapter 5 – Factors in Operating and Development Costs 41

Exhibit 5-3
Total Operating Costs (Per-Unit-Month) by Region: Group Homes and ILPs
$0
$100
$200
$300
$400
$500
$600
$700
$800
Northeast Midwest Region South West All Regions
1-4 Units 5-7 Units 8-12 Units 13-18 Units 19-24 Units All Size Categories
Administrative Expenses
Categories related to administrative expenses are a major component of each property’s operation.
On average, they account for about 55 percent of total operating expenses and include categories such
as management fees, office salaries, bookkeeping fees, legal costs, and audits.
As Exhibit 5-4 indicates, projects in the Northeast and West are associated with high administrative
expenses. The relationship between administrative expenses and project sizes for projects other than
condominiums is shown in the first panel of the exhibit. Across all four regions, per-unit
administrative expenses decline as project sizes increase. This “economies of scale” effect is
especially strong for projects located in the Midwest and South.
Chapter 5 – Factors in Operating and Development Costs 42

Exhibit 5-4

Distribution of Administrative Expenses (Per-Unit-Month)

Region
Northeast Midwest South West All
(N=10) (N=9) (N=19) (N=10) Regions
Group Homes & Independent Living Projects
Project Size (Units)
1-4 $148 $284 $220 $262 $214
5-7 $138 $165 $136 $390 $213
8-12 $183 $87 $141 $219 $155
13-18 $160 $114 $158 $141
19-24 $98 $116 $96 $100
All Size Categories $147 $157 $138 $293 $175
Condominiums
Project Size (Units)
1-4 $94 $527 $310
5-7 $621 $621
All Size Categories $621 $94 $527 $414
Building Type
Condominium $621 $94 $527 $414
Group Home $129 $213 $122 $337 $212
Independent Living Project $161 $113 $146 $137 $142
All Building Types $194 $157 $136 $316 $190
Population Group
HIV/AIDS $183 $481 $332
Developmental Disabilities $149 $201 $122 $364 $201
Chronic Mental Illness $132 $132 $138 $137 $136
Physical Disabilities $621 $137 $161 $293 $224
All Population Groups $194 $157 $136 $316 $190
There appears to be no coherent relationship between administrative expenses, building types and the
population groups served across the four regions, as indicated in the third panel of the exhibit.
It is important to note that, although not covered by the Section 811 PRAC, support costs for on-site
support and assistance in activities of daily living are an important operating cost in many projects
and do vary by project size, according to the project sponsors we visited. The level of support
necessary depends on the needs of the residents and the approach to service delivery (as discussed in
Chapter Two). Several sponsors offered examples of the interplay between project size and staffing
levels and the effect on support costs. For example, a sponsor of a 17 unit ILP for people with mental
illness said her agency also has residential programs with 8 and 12 beds in addition to the 17-unit ILP.
She said that the 8 and 12 bed programs are not cost-effective and the agency loses money on them.
The costs of on-site support are the key factor, she explained. Given state budget cuts in her location,
having enough residents to generate sufficient revenue for on-site support costs determines whether a
Chapter 5 – Factors in Operating and Development Costs 43

project covers its costs. The Section 811 ILP had one live-in resident manager; an agency client who
had completed mental health services training and received reduced rent in exchange for her support
role. Case management and clinical services were coordinated by the agency and provided off-site.
As another example, at a group home for eight people with mental illness, sponsor staff said eight
units is the minimum size that assures a proper level of on-site support. Staff noted the same level of
support could cover a group home for up to 12 persons, and that other per unit operating costs would
not differ substantially. The sponsor had requested a waiver from HUD to develop a ten-person
group home at their current site, but the waiver request was denied.
Operating & Maintenance Expenses
In general, expense categories related to operating and maintenance make up about 29 percent of the
total operating expenses. Analysis of these expenses is presented in Exhibit 5-5. Conforming to our
expectation, it shows that projects located in the Northeast and West have the highest per-unit
operating and maintenance expenses. For projects other than condominiums, an “economies of scale”
effect is observed only in the South region. For projects in other areas, there is no relationship
between project size and operating and maintenance expenses.
Similarly, operating and maintenance expenses appear to be uncorrelated with either building type or
the population group served.
Chapter 5 – Factors in Operating and Development Costs 44

Exhibit 5-5

Distribution of Operating & Maintenance Expenses (Per-Unit-Month)

Region
Northeast Midwest South West All
(N=10) (N=9) (N=19) (N=10) Regions
Group Homes & Independent Living Projects
Project Size (Units)
1-4 $146 $64 $103 $68 $105
5-7 $114 $102 $85 $166 $115
8-12 $84 $91 $63 $74 $72
13-18 $159 $71 $97 $111
19-24 $95 $59 $42 $54
All Size Categories $129 $80 $70 $117 $93
Condominiums
Project Size (Units)
1-4 $77 $78 $77
5-7 $147 $147
All Size Categories $147 $77 $78 $101
Building Type
Condominium $147 $77 $78 $101
Group Home $132 $72 $74 $122 $101
Independent Living Project $127 $86 $68 $100 $87
All Building Types $131 $80 $71 $113 $94
Population Group
HIV/AIDS $169 $52 $111
Developmental Disabilities $135 $68 $67 $115 $96
Chronic Mental Illness $106 $101 $88 $100 $94
Physical Disabilities $147 $78 $28 $150 $84
All Population Groups $131 $80 $71 $113 $94
Taxes & Insurance Expenses
On average, expense categories related to taxes and insurance account for approximately 16 percent
of the total operating expenses. As shown in Exhibit 5-6, projects located in the Northeast are
associated with the highest per-unit taxes and insurance expenses, while projects in the South have
the lowest taxes and insurance expenses.
Across the regions, there appear to be no discernable relationships between taxes and insurance
expenses per unit and project sizes. The same is true for building types and population groups.
Chapter 5 – Factors in Operating and Development Costs 45

Exhibit 5-6

Distribution of Taxes & Insurance Expenses (Per-Unit-Month)

Region
Northeast Midwest South West All
(N=10) (N=9) (N=19) (N=10) Regions
Group Homes & Independent Living Projects
Project Size (Units)
1-4 $65 $96 $25 $0 $55
5-7 $42 $49 $47 $94 $60
8-12 $51 $35 $36 $41 $38
13-18 $86 $63 $18 $63
19-24 $65 $70 $25 $40
All Size Categories $63 $59 $36 $58 $51
Condominiums
Project Size (Units)
1-4 $19 $30 $25
5-7 $96 $96
All Size Categories $96 $19 $30 $48
Building Type
Condominium $96 $19 $30 $48
Group Home $59 $54 $47 $71 $58
Independent Living Project $66 $65 $31 $11 $44
All Building Types $67 $59 $35 $55 $50
Population Group
HIV/AIDS $92 $104 $98
Developmental Disabilities $75 $78 $14 $66 $52
Chronic Mental Illness $33 $29 $41 $11 $34
Physical Disabilities $96 $68 $66 $45 $65
All Population Groups $67 $59 $35 $55 $50
Utilities Expenses
Because the treatment of tenant-paid utilities is not uniform across projects in the AFS reporting
system, we do not include utilities costs when analyzing total costs. It is still useful to check whether
the total utilities expenses reported bear any relationship to geographic locations, project sizes,
building type, or population group served. Exhibit 5-7 presents such an analysis.
As expected, projects located in the Northeast and West bear the highest per-unit utilities cost. There
appears to be no “economies of scale” effect across the four regions. There is no consistent
relationship between building types and utilities costs.
Chapter 5 – Factors in Operating and Development Costs 46

Exhibit 5-7

Distribution of Utilities Expenses (Per-Unit-Month)

Region
Northeast Midwest South West All
(N=10) (N=9) (N=19) (N=10) Regions
Group Homes & Independent Living Projects
Project Size (Units)
1-4 $88 $105 $71 $18 $79
5-7 $176 $141 $78 $204 $137
8-12 $88 $78 $43 $122 $72
13-18 $160 $110 $128 $133
19-24 $247 $77 $72 $102
All Size Categories $141 $105 $64 $148 $104
Condominiums
Project Size (Units)
1-4 $223 $81 $152
5-7 $40 $40
All Size Categories $40 $223 $81 $115
Building Type
Condominium $40 $223 $81 $115
Group Home $83 $130 $74 $160 $115
Independent Living Project $188 $85 $59 $103 $95
All Building Types $131 $105 $72 $141 $105
Population Group
HIV/AIDS $86 $127 $106
Developmental Disabilities $155 $95 $81 $193 $130
Chronic Mental Illness $136 $92 $71 $103 $90
Physical Disabilities $40 $119 $56 $57 $80
All Population Groups $131 $105 $72 $141 $105
As the last panel of the exhibit indicates, projects that serve people with developmental disabilities
tend to require the highest per-unit utilities costs compared to projects that serve other particular
populations of persons with disabilities. Projects for people with physical disabilities are associated
with the lowest utilities costs. Projects in the Midwest are exceptions, where projects that serve
people with physical disabilities tend to have higher costs.
Total Development Cost
Our analysis of total development costs is shown in Exhibit 5-8. On average, the per-unit
development cost is $78,826 for this group of projects. Consistent with our expectation, projects
located in the Northeast and West have the highest development cost. Projects in the Midwest are
associated with the lowest development cost.
Chapter 5 – Factors in Operating and Development Costs 47

Exhibit 5-8

Distribution of Total Development Cost (Per-Unit)

Region
Northeast Midwest South West All
(N=10) (N=9) (N=19) (N=10) Regions
Group Homes & Independent Living Projects
Project Size (Units)
1-4 $79,182 $66,100 $112,100 $96,267 $87,290
5-7 $60,117 $92,528 $124,001 $101,026
8-12 $48,303 $57,829 $46,931 $52,723
13-18 $86,106 $77,356 $68,644 $77,366
19-24 $83,545 $82,976 $47,766 $59,597
All Size Categories $82,004 $63,879 $73,189 $89,079 $75,551
Condominiums
Project Size (Units)
1-4 $80,275 $196,850 $138,563
5-7 $90,340 $90,340
All Size Categories $90,340 $80,275 $196,850 $122,488
Building Type
Condominium $90,340 $80,275 $196,850 $122,488
Group Home $79,182 $62,796 $93,598 $93,587 $85,592
Independent Living Project $84,826 $64,746 $62,985 $73,300 $66,467
All Building Types $83,671 $63,879 $73,562 $99,856 $78,826
Population Group
HIV/AIDS $32,775 $32,775
Developmental Disabilities $84,826 $61,987 $59,801 $121,177 $81,182
Chronic Mental Illness $79,182 $51,858 $87,476 $73,300 $77,989
Physical Disabilities $90,340 $77,793 $63,932 $106,650 $80,979
All Population Groups $83,671 $63,879 $73,562 $99,856 $78,826
For projects located in the South and West (excluding condominiums), per-unit development cost
declines as the project size increases. However, for projects in the Midwest, the exact opposite is
observed. There appears to be no relationship between development costs and project sizes in the
Northeast. Across all developments in the sample, we find a weak “economies of scale” effect as
shown graphically in the bar chart in Exhibit 5-9.
Chapter 5 – Factors in Operating and Development Costs 48

Exhibit 5-9
Total Development Cost (Per-Unit) by Region: Group Homes and ILPs
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
Northeast Midwest Region South West All Regions
1-4 Units 5-7 Units 8-12 Units 13-18 Units 19-24 Units All Size Categories
There is not a strong relationship between development costs and building type, although
condominium projects appear to be associated with high development costs. Under the Section 811
program, condominiums are acquired rather than developed. In other words, the sponsor purchases
existing units in a condominium complex. The development cost for the sampled condominium
project in the West is especially high – $196,850 per unit. This project consists of four, two-bedroom
units (with two residents in each unit) located in two very attractive unassisted condominium
complexes. In addition to acquisition costs, the Section 811 grant paid for renovations to improve
accessibility. HUD also required soil surveys, site surveys, and ‘other activities’ that had high costs
(including legal fees), according to the sponsor.
Cost variations across developments that serve different population groups are shown in the last panel
of the exhibit. In general, projects that serve people with physical disabilities appear to be the most
expensive to develop. Projects that are designed to house people with HIV/AIDS and those with
chronic mental illness are associated with relatively low development costs. Projects in the South are
exceptions. Some of the sponsors of these projects noted specific project features or amenities that
increased their costs. Examples included elevators, therapeutic tubs, keycard entry systems, and
chair-lift systems (for stairways).
In contrast to the results of the development cost data analysis, project sponsors interviewed during
our site visits generally agreed that project size is an important driver of per unit development costs in
the Section 811 program. According to the sponsors we visited, specific features that drive
Chapter 5 – Factors in Operating and Development Costs 49

development costs include the following: accessibility features to meet statutory or regulatory
accessibility requirement; and code compliance features, such as sprinkler systems and earthquake
resistance features (for Los Angeles area projects). Sponsors of ILPs said that equipping units with
individual utility systems (such as heating and air conditioning) is costly. Policymaker interviews
supported the notion that regulatory or licensing requirements are an important factor in overall
development costs. Total soft costs, such as architectural and legal fees, do not vary much with
project size within the size range permitted under Section 811. Thus, larger projects that spread these
relatively fixed costs over more units have lower per unit soft costs.
Sponsors noted that they may make trade-offs to control costs. For example, several sponsors noted
that land availability is as much an issue as land cost. Sponsors are often looking for a parcel that is
in a residential area (for smaller projects) or a mixed residential and commercial area (for larger
projects). In addition, they are often looking for locations that are safe, accessible to transportation
and shopping, and meet requirements for residential space, parking, and other uses (such as a lawn or
patio area). Finding a parcel that meets all the sponsor’s needs and is affordable can be difficult in
many housing markets. Several sponsors also noted that the agency must carry the costs of land
acquisition until the grant is received. This can be a costly requirement for a small agency and may
serve to drive project size down, as a smaller parcel will have a lower carrying cost.
The choice between building a new project and renovating an existing structure may be driven by cost
concerns as well. Among the projects we visited, the majority were built new, but there were a few
exceptions. Sponsors in North Carolina, for example, explained that new construction is more cost
effective than rehabilitating an existing property. By contrast, some sponsors in the higher cost
communities we visited in Maryland and Colorado reported that renovating existing properties is
more cost effective.
Sponsors of at least five of the projects we visited minimized development costs by either building on
donated land or renovating a site already owned by the sponsor. For example, two projects in Boston
were already owned by their respective sponsors and were being used for supportive services for
agency clients. Both projects were in residential areas and offered good locations for residences. The
Section 811 grants provided a way to renovate the structures for residential uses in a cost-effective
way.
One of the Little Rock area projects was built on land the sponsor owned, even though the location
was “challenging” in regard to safety. Despite the location in a troubled neighborhood, the project is
attractive, and the housing and services offered seem to meet the needs of the residents. The sponsor
added that the Section 811 project “helps boost the neighborhood.” The sponsor viewed the parcel as
a good opportunity because it was sufficiently large to build the 19-unit project the agency said was
required to meet the need for affordable housing.
We asked sponsors whether they used additional sources of funding other than the original Section
811 capital advance to develop their projects. Few project sponsors reported receiving amendment
funds in addition to the amount of their original Section 811 fund reservation, although a number of
sponsors reported other sources of funding to supplement the Section 811 capital advance. Other
sources included Federal Home Loan Bank funds, CDBG and HOME funds, state housing finance
agency funds, and private fundraising. In some cases, the additional funding sources were used to
Chapter 5 – Factors in Operating and Development Costs 50

cover the costs of items that HUD does not cover in the Section 811 capital advance. For example, in
one project, central air conditioning and an extra half-bath were funded with private donations. A
developer of projects for persons with AIDS commented that combining funding sources, such as
HUD’s homeless assistance programs or the Housing Opportunities for Persons with AIDS
(HOPWA) program, can be challenging because eligibility requirements are slightly different across
programs.
Summary
Across the sample of Section 811 projects we analyzed, we found an average per unit operating cost
of $346 per-unit-month. In most areas, independent living projects have the least per-unit total cost.
Operating costs do not vary by type of population served. It is important to note, however, that our
quantitative analysis was limited to costs captured in HUD’s reporting systems, which include only
those costs covered by the Section 811 program. Support costs, which are an important operating
cost category for Section 811 projects but are not covered by the PRAC (and are therefore not
reported to HUD), vary by size in more complex ways, according to project sponsors. A more
complete analysis of operating costs would need to more fully account for project support costs.
The sample projects had an average per unit development cost of $78,826. There is not a strong
relationship between development costs and building type, although condominium projects appear to
be associated with high development costs. During the site visits, sponsors mentioned a number of
strategies to reduce their development costs, including building on donated land or sites the
organization already controlled or making choices about renovation or new construction based on
relative cost advantages.
Do larger projects offer more cost efficiencies? In this exploratory analysis, we found some evidence
of economies of scale for both operating and development costs in some regions of the country. The
effect is strongest in lower cost regions of the country (the Midwest and South) compared to more
expensive regions (the Northeast and West).
Chapter 5 – Factors in Operating and Development Costs 51

Chapter Six
Summary of Findings and Policy Implications
According to project sponsors, residents, service providers, and policymakers, HUD’s Section 811
and Section 202 (direct loan) programs for persons with disabilities provide important sources of
affordable housing for people with physical and developmental disabilities and mental illness.
Sponsors do struggle with the tension between providing more housing for more people while
creating a home-like environment and integrating projects in their neighborhoods. Our key findings
with respect to the role of project size on projects, their residents, and the immediate neighborhoods
are as follows:
• Project size is not the main factor in sponsors’ decisions about what services will be
provided or where. Residents’ needs and preferences, sponsors’ organizational
philosophies about services, and regulatory and service system requirements are more
important.
• Sponsors prefer to limit on-site services to the services residents need to live as
independently as possible while offering other services off-site. This approach is viewed
as supporting independence and protecting privacy while using service resources
efficiently.
• Overall, the vast majority of residents interviewed (80 percent) said that they are able to
obtain the services they need. When viewed by disability group, residents with physical
disabilities are somewhat more likely to get the services they need, while residents with
chronic mental illness are slightly more likely to report issues with obtaining services.
Residents in larger projects (with eight or more units) are also more likely to report
difficulty in obtaining needed services.
• Most sponsors we visited chose sites for their projects that are in residential
neighborhoods or in mixed residential/commercial areas. The sponsors were seeking
safe, desirable neighborhoods with good access to services. Views on the value of
neighborhood notification are varied. Some sponsors see notification as an opportunity
to build good relations early on while others prefer to keep a low profile (assuming there
are no requirements that they do otherwise.)
• Few projects encounter Not in My Backyard (NIMBY) concerns from neighbors at the
development stage, and nearly all have good relations with their neighbors once the
project is occupied. Sponsors of projects for people with mental illness were more likely
to be concerned about community opposition and may have selected their project sites to
minimize opposition.
• The majority of residents of Section 811 projects are satisfied with their living situations:
65 percent of the residents we interviewed were very satisfied and an additional 29
percent were at least somewhat satisfied. The rate of dissatisfaction was slightly higher
among residents of projects for people with mental illness. Although many residents had
difficulty answering questions about what was important to them about their housing,
Chapter 6 – Summary of Findings and Policy Implications 52

those who did answer said location, independence, cleanliness of the unit/development,
quiet, affordability, privacy, the availability of supportive services, and safety were
important. Almost all said their Section 811 housing meets their needs in the areas that
are important to them.
• When asked whether they prefer to live with persons with disabilities or with persons
without disabilities, half of the residents we interviewed expressed no preference. Of the
remainder, 30 percent would prefer to live with others with disabilities and 20 percent
stated a preference for living with others who do not have a disability.
• Community integration, while clearly embraced as a goal, is challenging to achieve. A
substantial majority of Section 811 sponsors who responded to our telephone survey (75
percent) said that community integration is a key advantage to their project size; that is,
even sponsors of larger projects said they are able to integrate in their communities. On
the other hand, a few project sponsors across project sizes (18 sponsors in all) said a
disadvantage to their size is that the project stands out in the neighborhood.
• Sponsors noted that, even in residential neighborhoods, residents have few opportunities
to interact with neighbors outside the project. Residents of some projects spend much of
the day at day programs or working, leaving little time to spend at home. Others need
assistance to leave their project and there may be insufficient support persons on site to
accompany people when they want to go out.
Policy Implications
The Section 811 program and existing Section 202 (direct loan) projects provide important sources of
affordable and accessible housing for persons with disabilities. The Section 811 projects that are the
main focus of this study are generally located in residential or mixed residential and commercial areas
selected to provide residents with access to services in an integrated setting. Project size does not
determine the availability of services. Some of the policy implications of the study’s findings
include:
• Given that neither costs nor service availability is strongly influenced by project size,
HUD should continue to encourage the development of smaller projects. Projects with
fewer units are easier to site in appropriate settings and residents express high rates of
satisfaction with smaller projects.
• HUD should also maintain flexibility to permit sponsors to develop larger projects where
suitable sites are available and sponsors can demonstrate the demand for the housing.
• Privacy is an important concern for both sponsors and residents. Project design should
maximize privacy. Several sponsors noted design features of their projects that promote
privacy and autonomy and mitigate interpersonal problems. For example, in a group
home for four people with developmental disabilities and behavioral issues, a small
setting with lots of space is critical because interpersonal issues, noise, or distraction can
overwhelm the residents. Individual entries rather than common hallways in an
independent living project define individual space and give residents a greater sense of
Chapter 6 – Summary of Findings and Policy Implications 53

autonomy and privacy. One sponsor noted that clusters of six units with individual
entries give residents privacy, but allow them to live “interdependently,” watching out for
each other.
• The cost analysis shows some evidence of economies of scale in both development and
operating costs for the small sample of projects we analyzed, but further research is
needed to explore costs more fully. A more comprehensive cost analysis should assess
costs in a larger sample of projects and look at housing and services costs together. In
addition, a broader exploration of how financing mechanisms for affordable housing
could be combined and leveraged with those for housing for persons with disabilities to
create mixed residential developments would be useful.
• Further analysis of the cost effectiveness of using the Section 811 program to acquire
condominiums is also warranted. The small number of condominium project sponsors
we visited have high acquisition and operating costs and share some of the same
interpersonal problems among residents that are found in group homes and independent
living projects. There seem to be few cost advantages to having the sponsor own these
units compared to assisting residents with tenant-based Housing Choice Vouchers. Using
tenant-based vouchers may pose challenges as well, however, including discrimination by
landlords against persons with disabilities and a lack of affordable and accessible rental
housing for voucher recipients in many housing markets.
Chapter 6 – Summary of Findings and Policy Implications 54

Appendix A

Projects Selected for Site Visits

Appendix A – Projects Selected for Site Visits 55

Ap
p
e
n
d
i
x A –
Pro
j
ects Sele
cted
fo
r Site Visits
Site Project
Project
Size
Number of
Residents
Disability
Group
Housing
Type Sponsor
Maryland Irish Meadows
Georgetowne Apts
Old Towne Homes
Next Step Housing
Castleton Homes
4
8
6
7
5
6
14
6
7
3
MI
MI
MI
MI
MI
ILP
ILP
ILP
GH
GH
Way Station
Way Station
Way Station
Family Services Inc.
Rehab Services Inc.
Minneapolis Pesch Place
Leah's Apts
Silver Lake House
Evergreen
Apple Grove Ct.
5
17
4
21
17
5
16
4
21
17
PD
PD
PD
PD
DD
GH
ILP
GH
ILP
ILP
Accessible Space, Inc.
Accessible Space, Inc.
Accessible Space, Inc.
National Handicap Housing Institute Inc.
LW Fraser
Charlotte Powell Home/WNC #5
Camelot (ARC Rowan #6)
RSS Condominiums
6
6
4
6
6
8
DD
DD
DD
GH
GH
Condo
United Methodist Agency for the Retarded
ARC of NC
RSS
Tillinghast Place
Caramel Forest (CHS Metrolina #5)
22
6
25
6
PD
MI
ILP
GH
NC Independent Living for Deaf Persons
Mental Health Assoc of NC
Denver 4040 Radcliff
Rosewood
Fenton Place
3
8
9
3
8
18
DD
DD
MI
GH
GH
ILP
Community Options
Developmental Disability Resource Center
Jefferson Center for Mental Health
Lowell Terrace
Our House
18
8
18
8
MI
PD
ILP
GH
Mental Health Corporation of Denver
Our House Inc.
Louisville Cedar Lake East 8 8 DD ILP Cedar Lake Residences
Abigail Apts
Center Place III
Hagan-Trabue
Anderson Place
2
8
10
10
2
8
10
10
DD
MI
PD
PD
ILP
GH
ILP
ILP
Cedar Lake Residences
Lifespring
Cain Center
Cain Center
56

Ap
p
e
n
d
i
x A –
Pro
j
ects Sele
cted
fo
r Site Visits
Site Project
Project
Size
Number of
Residents
Disability
Group
Housing
Type Sponsor
NY/NJ Rivervale Supervised Apts
Jawonio Apts
Clifton Consumer Home
16
3
5
29
5
3
DD
PD
MI
ILP
Condo
GH
Spectrum Housing
Jawonio
CSP
Belmont House/Haledon
Camp Venture
4
22
4
24
MI
DD
GH
ILP
CSP
Camp Venture
Los Angeles New Vision
LARC Homes
Village Way
Rainbow Homes
12
3
6
3
12
6
6
6
PD
DD
DD
DD
GH
GH
GH
GH
Therapeutic Living Centers for the Blind
LARC Housing Corp
Valley Village
Rainbow Horizons Inc.
HOPE Condominiums 4 8 DD Condo Harbor Regional Center
Columbus Network Housing 92
Parkview Plaza
Sunrise Dwellings II
Jireh Manor
12
10
6
4
12
11
6
4
MI
DD
MI
DD
ILP
ILP
ILP
GH
Community Housing Network Inc
Licking Arc
Del-Mor Dwellings
Jireh Services Inc.
Boston Robert McBride House 17 17 PD ILP Archdiocese of Boston
Warren House
120 Prospect Street
18 Dale St
11
5
6
15
8
6
DD
MI
DD
ILP
ILP
GH
Supportive Living Inc.
Advocates Inc
Charles River ARC
Pitman Drive 4 4 DD GH EMARC Reading
Little Rock Conway Apts
VOA Living Center
Kathleen Peek Apartments
Howell Complex
Pathfinder Meadows
20
12
24
19
9
21
12
29
18
8
MI
MI
MI
DD
DD
ILP
ILP
ILP
ILP
ILP
Counseling Associates Inc.
Pulaski County VOA
Little Rock CMHC
Pathfinder, Inc.
Pathfinder, Inc.
57

U.S. Department of Housing and Urban Development
Office of Policy Development and Research
Washington, DC 20410-6000
Official Business
Penalty for Private Use $300
Return Service Requested
FIRST-CLASS MAIL

POSTAGE & FEES PAID

HUD

PERMIT NO. G-795