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Ayear after the termination of Urban Renewal, Congress passed the Housing and Community Development Act of 1974. This omnibus act replaced Urban Renewal as well as a variety of urban "categorical" programs; that is, programs that provide funds for specific categories of activity, such as sewage treatment, recreation, or housing. The act provided Community Development Block Grants (CDBGs) to permit localities to pursue a wide range of activities including, but not limited to, activities that had been pursued under the Urban Renewal program. The intent of the block grant approach, as opposed to the categorical approach that it superseded, was to reduce the federal role in local affairs by allowing municipalities more discretion. In that sense it was in keeping with the more conservative political philosophy of the Nixon administration in contrast to preceding Democratic administrations. Community Development (CD) funds were distributed on a formula basis, which counted population, age of housing

Baltimore's Inner Harbor redevelopment done jointly by the city and the Rouse Corporation. The development includes tourist attractions such as the restored USS Constellation (below), restaurants and retailing, large amounts of office space, and hundreds of hotel rooms to accommodate tourists and business travelers.

The project works because the mix of uses is mutually reinforcing. Thus such redevelopment can be done only as a unified effort involving many adjacent parcels of land.

The Stamford, Connecticut Urban Renewal area as it appeared in the 1960s before redevelopment began (top) and as it appeared two decades later at full development (bottom). Note the ready access to Interstate 95 and the revised street pattern.

stock, and poverty. Thus virtually every municipality in the nation received some funds. Municipalities were free to expend funds on a wide range of projects, including many types of service provisions as well as capital expenditures. Among the purposes for which CDBG funds could be used were the acquisition of real property, public facilities and improvements, parks and playgrounds, centers for individuals with disabilities, neighborhood facilities, solid-waste disposal facilities, parking facilities, public utilities, street improvements, water and sewer facilities, pedestrian malls and walkways, flood and drainage facilities, clearance activities, public services, rehabilitation of public residential structures, rehabilitation financing, temporary relocation assistance, and economic development.9

The act emphasized services for the poorer segment of the population, but in many communities there was a tendency to spend most of the funds on bricks and mortar. Bricks and mortar last longer and are more visible. Then, too, services are hard to discontinue, so if the source of funding is cut off, the municipality that spent most of its CD funds on services could find itself out on a financial limb.

According to the legislation, municipalities were not to use CD funds for expenditures they would make in the absence of such grants, nor were they simply to use CD funds for tax relief. In the terminology of public finance, CD funds were to be "stimulative," not "substitutive."10

The legislation also required the predominant share of CD funds to be used in a manner that primarily benefited low- and moderate-income persons. Essentially, this requirement means either spending CD funds in areas that have substantial proportions of low- and moderate-income residents or spending the funds on facilities or services that will be used by or that will benefit these persons. Presumably day care or land clearance for a factory or warehouse would so qualify; repairing the sea wall at the municipal yacht basin would not.

The act required each community to include as part of its grant application a Housing Assistance Plan (HAP), which spelled out community housing needs and laid out plans for dealing with them. The act also imposed significant "citizen participation" requirements on communities. The regulations state:

There shall be involvement of low and moderate income persons, members of minority groups, residents of areas where a significant amount of activity is proposed or ongoing, the elderly, the handicapped, the business community, and civic groups. . . . The applicant shall make reasonable efforts to insure continuity of involvements. Citizens shall be provided adequate and timely information. . . . Citizens, particularly low and moderate income persons and residents of blighted neighborhoods, shall be encouraged to submit their views and proposals.11

Clearly, these requirements were motivated in part by criticisms of Urban Renewal, which accused these programs of riding roughshod over the residents of renewal areas. Even if the federal government were to make no effort to enforce these rules directly, they would have considerable force. Any citizen or any group that felt slighted in the community planning process could bring suit against the municipality on the grounds that it had failed to provide an adequate citizen participation process. A successful suit might well enjoin the municipality from spending further federal or perhaps even local funds until this fault was remedied.

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