What Is the Urban Development Act of 1970?

The Urban Development Act Of 1970 is legislation through the U.S. Department of Housing and Urban Development that introduced the Federal Experimental Housing Allowance Program and Community Development Corporation. This act was enacted to establish a national growth policy in the U.S.; to encourage and support sensible growth and development in states, metropolitan regions, counties, cities, and towns highlighting new community and inner-city growth; and to amend certain laws regarding housing and urban development.

Also known as the Housing and Urban Development Act of 1970.

Understanding Urban Development Act Of 1970

The U.S. Department of Housing and Urban Development (HUD) was established in 1937 through the U.S. Housing Act of 1937. The Department of Housing and Urban Development Act of 1965 established HUD as a Cabinet-level agency within the U.S. government. The Urban Development Act of 1970 authorized the government to provide greater outlays for housing subsidy programs and rent supplement programs for low and moderate-income households.

Housing Experiment

The Federal Experimental Housing Allowance Program began in 1973 and ended in 1979 and involved more than 25,000 families in 12 metropolitan areas with some $170 million in subsidies to individual families. The idea was to see how best to improve housing conditions for low-income people by giving them vouchers to pay for market-rate housing rather than build new public housing.

The Urban Institute concluded in the late 1970s that housing allowances “do not provide significant momentum towards most of the stated goals of HUD policy." Later policies had HUD providing subsidies directly to landlords through the Section 8 program, and building additional large public housing projects, an activity that has largely ended.

The Community Development Corporation is a national network of nonprofit, community-based organizations focused on revitalizing their local communities, typically low-income, underserved neighborhoods that have deteriorated and where investment is scant. They first and foremost help develop affordable housing, but they are also involved in economic development, sanitation, street beautification, and neighborhood planning projects.

Funding for projects comes from a variety of sources including state, local and federal government, donations from individuals and corporations, as well as loans through traditional and non-traditional financial institutions.

Federal spending on housing is mostly geared toward wealthier people. A 2017 study by Apartment List found the popular tax break called the mortgage interest deduction (MID), cost the federal government $71 billion in 2015, more than double the $29 billion spent on Section 8 funding for low-income renters. In addition, over half of high-income households claim MID while just 11% of low-income households receive subsidies of any kind for housing.