Urban Development Act of 1970

Overview

The Urban Development Act of 1970 (also known as the Housing and Urban Development Act of 1970) expanded federal involvement in housing and urban policy. Enforced through the U.S. Department of Housing and Urban Development (HUD), the act aimed to support urban growth, revitalize distressed neighborhoods, and increase assistance for low- and moderate-income households.

Primary objectives included:
* Establishing a national growth and urban development policy.
* Encouraging sensible growth in metropolitan regions, counties, cities, and towns, with attention to inner-city renewal.
* Amending and expanding federal housing and urban development programs.

Key provisions

• Expanded federal funding for housing subsidy and rent supplement programs targeting low- and moderate-income households.
• Authorized and supported Community Development Corporations (CDCs) — nonprofit, community-based organizations focused on local revitalization.
• Launched the Federal Experimental Housing Allowance Program to test housing voucher approaches.

Community Development Corporations (CDCs)

CDCs were created as a national network of nonprofit organizations focused on revitalizing low-income, underserved neighborhoods. Typical CDC activities include:
* Developing affordable housing.
* Promoting local economic development and small-business support.
* Improving sanitation, streetscapes, and neighborhood planning.
Funding for CDC projects comes from federal, state, and local governments, private donations, and loans from traditional and nontraditional lenders.

Federal Experimental Housing Allowance Program (FEHAP)

FEHAP ran from 1973 to 1979 as a large-scale experiment in housing assistance:
* Enrolled more than 25,000 families across 12 metropolitan areas.
* Provided roughly $170 million in housing subsidies to participant families.
* Tested vouchers that enabled low-income families to rent market-rate housing rather than live in new public housing construction.

Findings and aftermath:
* Evaluations by the late 1970s concluded that housing allowances did not significantly advance most HUD policy goals at that time.
* Later federal approaches shifted toward direct landlord subsidies (Section 8) and, for a time, continued construction of larger public housing projects; the large-scale construction activity has since largely ended.

Broader context and fiscal notes

Federal housing policy has long been marked by a mix of targeted subsidies and tax benefits that often produce unequal distributional effects. For example, a 2017 analysis found that the mortgage interest deduction cost the federal government substantially more than direct rental assistance programs and tended to benefit higher-income households disproportionately.

Legacy and impact

The Urban Development Act of 1970 helped institutionalize community-driven urban revitalization through CDCs and advanced experimentation with rental subsidies. While some experimental programs did not achieve all intended policy goals, the act influenced later housing assistance models and reinforced the role of nonprofit, local organizations in urban redevelopment.

Key takeaways

• The act expanded federal housing assistance and supported community-based redevelopment efforts.
• It established Community Development Corporations to promote affordable housing and neighborhood improvement.
• The Federal Experimental Housing Allowance Program tested voucher-based subsidies but produced mixed results, shaping later programs like Section 8.