Housing and Urban Development Act of 1968

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Housing and Urban Development Act of 1968
Great Seal of the United States
Long titleAn act to assist in the provision of housing for low and moderate income families, and to extend and amend laws relating to housing and urban development.
Enacted bythe 90th United States Congress
EffectiveAugust 1, 1968
Citations
Public law90-448
Codification
Titles amended
Legislative history

The Housing and Urban Development Act of 1968, Pub.L. 90–448, 82 Stat. 476, enacted August 1, 1968, was passed during the Lyndon B. Johnson Administration. The act came on the heels of major riots across cities throughout the U.S. in 1967, the assassination of Civil Rights Leader Martin Luther King Jr. in April 1968, and the publication of the report of the Kerner Commission, which recommended major expansions in public funding and support of urban areas. President Lyndon B. Johnson referred to the legislation as one of the most significant laws ever passed in the U.S., due to its scale and ambition.[1] The act's declared intention was constructing or rehabilitating 26 million housing units, 6 million of these for low- and moderate-income families, over the next 10 years.[2]

The act authorized $5.3 billion in spending over its first three years, designed to fund 1.7 million units over that time.[3] In the longer term, the act was designed to cost $50 billion over 10 years, had it ever been fully implemented. Its policies were to be implemented by the United States Department of Housing and Urban Development, which had been created in 1965.

The legislation provided a significant expansion in funding for public programs, such as Public Housing. But it also marked a shift in Federal programs, increasingly focusing on using private developers as a strategy to encourage housing production of affordable units.[4] Though the program's 10-year ambitions were not achieved, in some ways it set the tone for future U.S. approaches to policy because of this focus on public-private joint initiatives in achieving public ends.

The creation of Ginnie Mae and new financing programs[edit]

The Act established Ginnie Mae to expand availability of mortgage funds for moderate income families using government-guaranteed mortgage-backed securities. The new entity was split from the former Fannie Mae, which retained other functions under that same name.[5] The new entity was under the purview of the United States Department of Housing and Urban Development and its Federal Housing Administration.

The Act's major programs included Section 235 guarantees for lenders to offer mortgages for low- and moderate-income families with $200 down and 20% of a household’s salary, and 1% mortgage interest rates. These guarantees were insured by the Federal Housing Administration.

The way Section 235 was designed, however, led to problems. Borrowers were submitted to limited credit requirements, and first-time buyer education was minimally provided. The Rouse Company used Section 235 to resell hundreds of homes that had been condemned and abandoned for a cancelled highway project in Baltimore, Maryland. After poor results, the highway project was renewed.[6][7]

Section 235, in some cases, increased segregation; white families were encouraged to purchase in suburban, newly developed areas, whereas black families, held up by exclusionary practices, primarily purchased homes in lower-income, central-city areas. This pattern increased the wealth of many white families while leaving many black families behind.[8] Though Section 235 provided aid to about a half a million families and cost the Federal Government $1.37 billion by 1974, the program featured very high rates of housing abandonment due to families being unable to pay the mortgage (10% of families foreclosed).[9]

The act also included the more-successful Section 236 assistance for moderate-income renters, replacing the 221(d)(3) Below-Market-Interest Rate program that had been created by the 1961 Housing Act. As with Section 235, developers would receive a subsidy to reduce their mortgage interest rate to just 1%. This program was used to support the majority of housing built by New York's prolific Empire State Development Corporation, then known as the Urban Development Corporation, and which completed roughly 30,000 housing units between 1968 and 1975.

Subsidies for low- and moderate-income housing and community redevelopment[edit]

The legislation provided hundreds of millions of dollars for the public housing, Model Cities, and Urban Renewal programs, all intended to aid low-income communities. The rent supplement program, which had been initially authorized under the Housing and Urban Development Act of 1965 and which provided funds for private landlords to accept low-income tenants (and can be seen as the predecessor of the Section 8 program), was also expanded.

The legislation encouraged new forms for public housing, discouraging the towers-in-the-park that had characterized previous designs in many large U.S. cities. One of its key sections was a promotion of higher architectural standards. The legislation specifically noted that "except in the case of housing predominantly for the elderly... the Secretary [of Housing and Urban Development] shall not approve high-rise elevator projects for families with children unless he makes a determination that there is no practical alternative."[10]

The act successfully expanded production of housing in the U.S. during the four years that followed. Between 1969 and 1972, for example, the U.S. government funded more than 340,000 units of public housing. These were produced "conventionally,” meaning public financing and public operations, but also through turnkey (a private builder taking on responsibility for financing and construction), acquisition (purchase by the public of an existing building), and leasing.[11]

Title IV New Towns[edit]

Title IV, provided funding for New Town projects. The initial funding of $500 million was reduced to $250 million. Jonathan, Minnesota, and Park Forest South, Illinois developments were the first to utilize this funding.[12]

(Several communities also applied as Title VII new towns with the follow-on National Urban Policy and New Community Development Act of 1970)[13]

The program's end and legacy[edit]

In early 1973, President Richard Nixon placed a moratorium on new federal housing subsidies, making the 1968 Act's goals impossible to achieve. This moratorium was not lifted until the passage of the Housing and Community Development Act of 1974.[14]

See also[edit]

References[edit]

  1. ^ Coan, Carl A.S. (1969). "The Housing and Urban Development Act of 1968: Landmark Legislation for the Urban Crisis". The Urban Lawyer. 1 (1): 1–33.
  2. ^ McGhee, Fred. "The Most Important Housing Law Passed in 1968 Wasn't the Fair Housing Act". Shelterforce. Retrieved August 30, 2019.
  3. ^ "Summary of '68 Session". The New York Times. October 14, 1968.
  4. ^ von Hoffman, Alexander (2013). "Calling upon the Genius of Private Enterprise: The Housing and Urban Development Act of 1968 and the Liberal Turn to Public-Private Partnerships". Studies in American Political Development. 27 (2): 165–194. doi:10.1017/S0898588X13000102.
  5. ^ Title VIII of the Housing and Urban Development Act of 1968, 82 Stat. 536
  6. ^ Elfenbein, Jessica, Hollowak, Thomas L., Nix, Elizabeth. Baltimore '68 : Riots and Rebirth in an American City. p. 62.CS1 maint: multiple names: authors list (link)
  7. ^ "Governor O'Malley Breaks Ground on Removal of West Baltimore's 'Highway to Nowhere' MARC Station improvement plan reunites West Baltimore communities". Archived from the original on April 26, 2014. Retrieved August 28, 2014.
  8. ^ Gotham, Kevin Fox (2000). "Separate and Unequal: The Housing Act of 1968 and the Section 235 Program". Sociological Forum. 15 (1): 13–37. doi:10.1023/A:1007542019652.
  9. ^ McClaughry, John (1975). "The Troubled Dream: The Life and Times of Section 235 of the National Housing Act". Loyola University Chicago Law Journal. 6 (1): 1.
  10. ^ "Housing and Urban Development Act of 1968 - Text" (PDF).
  11. ^ Vale, Lawrence; Freemark, Yonah (2012). "From Public Housing to Public-Private Housing: 75 Years of American Social Experimentation". Journal of the American Planning Association. 78 (4): 379–402. doi:10.1080/01944363.2012.737985.
  12. ^ Nicholas Dagen Bloom. Merchant of Illusion. p. 140.
  13. ^ The American City Corporation (January 1971). Urban Life In New and Renewing Communities.
  14. ^ Freemark, Yonah (2015). "Myth #5: Public Housing Ended in Failure during the 1970s". In Bloom, Nicholas Dagen; Umbach, Fritz; Vale, Lawrence (eds.). Public Housing Myths. Ithaca: Cornell University Press. p. 121–138.

External links[edit]