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Volume 11, Issue 4, 2011   Federal Reserve Bank of Dallas

Opportunities Within the Disability Housing Market

With 14.2 percent of the population over the age of 5 having a disability,[1] finding viable housing options that are universally designed and constructed to be accessible for people with disabilities is an ongoing challenge in Texas. And promoting housing solutions and partnerships that can benefit this growing population has become critical, not just for Texas but for the entire country. Not only is the need enormous, but federal government resources that traditionally have funded housing for people with disabilities have evolved and retrenched in the wake of the financial crisis. As a result, innovation, partnerships and leverage are vital in tackling this housing challenge.

The need can be measured using various statistics:[2]

  • The aging U.S. population:
    • By 2040, the population of those 65 and older will double from 40 million to 80 million.
    • 25 percent of people between 65 and 75 currently have a disability.
    • 50 percent of those over 75 have a disability.
  • Veterans returning from Iraq and Afghanistan with disabilities.
  • Record high rates of autism for those age 22 and under.

These numbers have far-reaching ramifications on the accessibility of housing for the disabled.

The funding model of near 100 percent federal government subsidies on developments has become the exception rather than the rule as Congress continues to cut domestic programs. The disability housing market is in the midst of a paradigm shift, and nontraditional players have emerged in this growth segment. In addition, disability care continues to shift away from the use of institutional and nursing home care toward more individualized residential support services. With 56 million people in the United States currently identifying themselves as having a disability, housing for the disabled is a market where the need is growing and, by most metrics, demand is not being met.

The largest barrier to providing quality affordable housing is that people with disabilities tend to have low incomes, which make it difficult for them to finance their housing options. The standard 30 percent of income designated for housing expenses creates shortfalls in cash flow for developments catering to low-income residents. This is the usual conundrum with most low-income housing developments, since rental revenue cannot fully meet the debt service. Additionally, developers are reluctant to take on debt from financial institutions for disability projects and related services. Debt-free properties allow developments to serve those with the lowest incomes. However, to accelerate development and cover lost federal grant funding, banks and lending institutions will play a bigger role in financing the gaps well into the foreseeable future.

Therefore, partnerships with other actors, in addition to the government, become necessary. Financial institutions, foundations, intermediaries, for-profit developers, religious organizations and community-based organizations have shown increased interest in serving this segment. These newer players are becoming even more essential to the development process, whether it is home modifications, rehabilitation construction or new single- or multifamily housing.

To stimulate housing development for people with disabilities, it is also important to understand some of the capital and capacity obstacles and learn from strategies that have been tried. With a more thorough understanding of the market and its trends, such as the emergence of residential support technologies, stakeholders will be better equipped to work together to address this demand.

The City of Austin—Promoting Housing for Those with Disabilities

One community in the Eleventh Federal Reserve District has addressed disability housing head-on. In November 2006, with 67 percent of the vote, Austin residents approved Proposition 5. It allowed the city to issue $55 million in tax-supported general obligation (GO) bonds for the construction, renovation, improvement and modification of affordable-housing facilities for low-income persons and families. This has been a boon for the disabled community because it has helped leverage over 130 units and five development projects specific to people with disabilities. In addition, $5 million has been used for home repair and home modification programs serving those with and without disabilities.

Two projects in Austin serve as examples of how a development can be leveraged combining federal and local resources.

The Willows

The Willows is a 64-unit development in south-central Austin that was developed by the Mary Lee Foundation, a nonprofit organization that specializes in serving those with special needs. The $4.2 million development was completed in 2011 and used the GO bonds as the primary source of funding. The project funding breakdown was

  • $2,475,000 from Austin’s GO bond program,
  • $1,200,000 from the Texas State Affordable Housing Corp. (low-interest loan),
  • $57,600 from private foundations, and
  • $500,000 grant to the Willows from the Federal Home Loan Bank of Dallas’ Affordable Housing Program.

The Willows

The project complies with accessibility design standards established by Austin’s SMART Housing Initiative and also includes solar panels that have reduced electric utility costs by 40 percent. Half of the units are reserved for individuals at 30 percent of the median family income and below. Residents of the Willows have access to support services offered by the Mary Lee Foundation. The development is currently at 100 percent capacity.

The Ivy

In January 2009, Easter Seals of Central Texas (ESCT) was awarded a $739,000 grant from the U.S. Department of Housing and Urban Development in Section 811 (Supportive Housing for Persons with Disabilities Program) funding to acquire eight units at the Ivy, a 104-unit condominium conversion project in south Austin. The federal capital advance grant provided about 60 percent of the development’s budget. This was supplemented by approximately $495,000 in local funding from the GO bonds. The rest of the development’s funding came from ESCT.

the Ivy

In November 2010, the project was opened for business. The one- and two-bedroom units are fully accessible. The units were attractive to ESCT because of the open floor plan, which enables people with mobility impairments to utilize all the floor space. The purchase price of over $1.2 million included all the accessibility modifications and full finish-out. The units are completely occupied and maintain a wait list of over 25 households.

—Roy Lopez


  1. The term disability is used here to refer to a physical, developmental or mental impairment that substantially limits one or more of the major life activities.
  2. “Disabilities 101,” by Charles D. Hammerman, presentation at “Finding Housing Opportunities for People with Disabilities” conference, Austin, Sept. 14–15, 2011, www.dallasfed.org/cd/events/2011/disability-hammerman.pptx.

e-Perspectives, Volume 11, Issue 4, 2011

Federal Reserve Bank of Dallas Off-site page
Community Development Office Send an e-mail
P.O. Box 655906, Dallas, Texas 75265-5906
Alfreda B. Norman Send an e-mail
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    Julie Gunter Send an e-mail
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Jackie Hoyer Send an e-mail
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Senior Community Development Advisor
    Wenhua Di Send an e-mail
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    Roy Lopez Send an e-mail
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Emily Ryder  Send an e-mail
Community Development Analyst
The views expressed are the authors' and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted on the condition that the source is credited and a copy is provided to the Community Development Office.
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