Tax-Exempt Bonds: Retirement Center Bonds Were Risky and Benefited Moderate-Income Elderly.
GENERAL ACCOUNTING OFFICE WASHINGTON DC GENERAL GOVERNMENT DIV
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According to the American Association of Retired Persons, by the year 2030, persons age 65 and older are expected to represent 22 percent of the U.S. population-2 12 times that in 1980. Responding to this expected growth, nonprofit charitable organizations have increasingly used tax-exempt bonds to obtain lower interest rates to finance housing for the elderly. This increased use has, in turn, increased Congress concerns about how the bonds are being used and who is benefiting from the federal subsidy that tax exemption provides. Congress also is concerned about why some of these bonds are going into default. Congressman Brian Donnelly and Senator David Pryor asked GAO to review the extent to which charitable organizations use tax-exempt bonds for housing the elderly. In addition to determining the volume of bonds, they asked Government Accounting Office to identify the characteristics of the housing facilities, including the type of services provided and related fees and residents incomes and determine the extent to which and reasons why housing facilities default on their tax-exempt bonds.
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