1970s
Summary
The dubious success of the national approach to problem solving and decision making leads to a movement to devolve housing and urban development policy authority. Federal categorical and competitive programs are replaced with formula-based block grants to states and localities, giving local governments more flexibility to spend federal funds.
Local governments establish agencies to cope with housing and urban development problems, while secondary market mortgage institutions create a national housing finance market and mobilize large amounts of new private capital. The income tax system is used to create incentives for private investment in housing and urban development projects.
Although racial segregation and discrimination are illegal, a significant proportion of blacks and other minorities continue to live in segregated areas with poor schools and amenities.
Migration patterns continue: Industry and people move from cities to the suburbs, while the population expands regionally to the South and West.
Women become an increasingly prominent part of the workforce, strengthening the economic power of dual-income families.
Influences
- Environmental concerns affect governmental policy making.
- Oil crisis leads to inflation and high interest rates.
- "Professionalization" of government occurs (e.g., urban planning improves, public administration degree programs are established).
- New Jersey compels "fair share" housing requirement for affordable housing (New Jersey State Supreme Court, 1975).
- Chicago Housing Authority must racially desegregate public housing (Gautreaux, 1968).
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Policies and Programs
- Urban Development Action Grant Program (UDAG) stimulates public-private partnerships and local economic development (Housing Act, 1977).
- Banks invest in and expand availability of financing in central cities (Community Reinvestment Act, 1977).
- Environmental legislation is enacted (Clean Air Act, 1970, and Clean Water Act, 1977).
- States adopt environmental laws regarding development (e.g., California Environmental Quality Act [CEQA]).
- Department of Housing and Urban Development programs are consolidated into Community Development Block Grants (CDBGs) local governments.
- Voucher payment program (Section 8) creates housing assistance (Housing and Community Development Act, 1974).
- Cities set up land banking programs to provide sites for new developments.
- Local government growth management programs focus on the environment, fiscal stability, and quality of life (e.g., Petaluma, Boulder, Ramapo).
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Institutional Roles
- States housing finance agencies (HFAs) and development corporations implement and manage new state authorities and responsibilities.
- FannieMae and FreddieMac expand secondary mortgage market via mortgage-backed securities.
- New Communities Corporation supports development of new planned communities.
- Local governments form metropolitan agencies to delivery services more efficiently.
- Habitat for Humanity builds housing for low-income homeowners (1976).
- HUD International Office is established (1973).
- State and local government staffs are trained in comprehensive planning, local economic development, and public-private partnerships.
- New York State Urban Development Corporation (1970) issues housing and urban development bonds.
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Methods, Tools, and Practices
- Local and state governments use new budgeting, planning, and evaluation tools.
- Business Improvement Districts (BIDs) improve services to downtowns.
- Office and research parks are developed in suburbs; cooperatives and condominiums become common.
- First inclusionary zoning law: Density bonuses for affording housing (Montgomery County).
- Housing advocates' "discriminating testing" reveals discrimination (real estate and banking industries).
- Urban Development Action Grants foster public-private development partnerships.
- Mortgage instruments are standardized and securitization provides liquidity to the housing finance market.
- Planned Unit Developments adopt sustainable growth management planning principles.
- Real Estate Investment Trusts become an investment vehicle.
- Insurance companies offer private mortgage insurance.
- Computers enable the widespread use of computerized pro formas.
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Lessons and Outcomes
- While formal and legal segregation is eliminated, large numbers of minorities are unemployed and poorly schooled and live in crime-infested neighborhoods.
- Cleveland Policy Plan Report (1975) shifts emphasis from traditional land-use planning to advocacy planning for city’s disadvantaged.
- Pruitt Igoe public housing buildings are demolished (1972).
- Mobile homes become an important housing resource for affordable housing.
- Private initiatives affecting housing and urban development activities include foundation support and CDC grants.
- Public housing vouchers replace project-based subsidies and investment in publicly owned housing, enabling low-income families to rent privately owned housing of their choice.
- General Revenue Sharing and CDBGs provide local governments flexibility.
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