Urban Development Act Explained

The Urban Development Act of 1970 was designed to improve federal aid for housing subsidy programs that benefited low-income tenants. Along with establishing the Community Development Corporation, a non-profit organization dedicated to revitalizing impoverished communities through investments and business development, the act also managed the Federal Experimental Housing Allowance Program. This program aimed to evaluate the effectiveness of housing subsidies for low-income individuals.

Basics

The Urban Development Act of 1970, implemented through the U.S. Department of Housing and Urban Development (HUD), introduced two significant initiatives: the Federal Experimental Housing Allowance Program and the Community Development Corporation.

This act had the following objectives:

1. Create a national growth policy in the U.S.
2. Promote and support responsible growth and development at all levels of government, with a focus on new community and inner-city development.
3. Amend laws related to housing and urban development.

About Urban Development Act

The U.S. Department of Housing and Urban Development was established in 1937 under the U.S. Housing Act of 1937. In 1965, the Department of Housing and Urban Development Act made HUD a Cabinet-level agency. The Urban Development Act of 1970 authorized increased government spending on housing subsidies and rent supplement programs for low and moderate-income households.

The act also created the Community Development Corporation, a network of nonprofit organizations working to revitalize underprivileged communities, often in low-income areas with limited investment. These organizations primarily focus on affordable housing development while also engaging in economic development, sanitation, street beautification, and neighborhood planning projects.

Federal Housing Subsidies and Mortgage Interest Deduction

The Federal Experimental Housing Allowance Program, which operated from 1973 to 1979, aimed to improve housing conditions for low-income individuals. It involved over 25,000 families in 12 metropolitan areas, providing approximately $170 million in subsidies for market-rate housing through vouchers instead of constructing new public housing.

Evaluation of the Federal Housing Subsidies

However, the Urban Institute's late 1970s assessment revealed that housing allowances did not significantly achieve HUD's intended goals. Consequently, later policies shifted towards HUD providing subsidies directly to landlords through the Section 8 program, and the construction of large public housing projects decreased significantly.

Federal Spending on Housing

Currently, a significant portion of federal spending on housing benefits wealthier individuals, with the mortgage interest deduction costing $71 billion in 2015, surpassing the $29 billion spent on Section 8 funding for low-income renters. High-income households mostly benefit from this deduction, whereas only 11% of low-income households receive any form of housing subsidy.

Mortgage Lending Discrimination

It's essential to note that mortgage lending discrimination based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age is illegal. If you believe you have faced discrimination, you can report it to the Consumer Financial Protection Bureau or the U.S. Department of Housing and Urban Development.

Conclusion

The goal of the Urban Development Act of 1970 was to enhance federal support for low-income housing and to create the Community Development Corporation. The act also managed the Federal Experimental Housing Allowance Program to evaluate the effectiveness of housing subsidies for low-income individuals. While the program did not achieve its intended goals, it paved the way for later policies such as HUD's Section 8 program. It's important to note that mortgage lending discrimination based on various factors is illegal, and individuals can report discrimination to relevant authorities.