FEDERAL ASSISTANCE FOR URBAN RENEWAL: A BRIEF SUMMARY OF THE PROGRAM

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HD 7287 U.S. G E-306 - R
THE LIBRARY OF CONGRESS
LEGISLATIVE REFERENCE SERVICE
FEDERAL ASSISTANCE FOR URBAN RENEWAL: A BRIEF SUMMARY OF THE PROGRAM
by
Joel B. Hincks
Analyst in Housing and Urban Development
Economics Division
Decem'er 6, 1968
Washington D.C.
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FEDERAL ASSISTANCE FOR URBAN RENEWAL: A BRIEF SUMMARY OF THE PROGRAM
Contents
Page
Introduction . • • • • • . • . • . • • . . • . . • • • • • . . • 1
Major Features of the Urban Renewal Program
The "Neighborhood Development Program" Under
the Housing and Urban Development Act of 1968
• • • 0 • • 0 • • •
0 0 0 • • • • • 0
3
7
Cost of the Urban Renewal Programs . • • • • • • . • • • • • . • 9
Pro-Con Arguments • • • • • • • • . • • • • • • • . • • • • • . 11
Appendix 1 - Urban Renewal Statistics • • • • • • • • • 0 • • • 16
Appendix 2 - Sources of Information for Further Research • • • . 17
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FEDERAL ASSISTANCE FOR URBAN RENEWAL: A BRIEF SUMMARY OF THE PROGRAM
Introduction
The Federal urban renewal program is one of the largest and most
important of the many Federal grant-in-aid programs. The program began
with the public works measures undertaken to counteract the depression
of the 1930's. The programs of the 1930's comprising slum clearance
and housing construction were the direct forebears of the present urban
renewal program.
Today's urban renewal program was begun with the Housing Act of
1949, which enunciated the often reaffirmed housing goal of "a decent
home and a suitable living environment for every American family." The
Housing Act of 1949 still provides most of the basic authority for pres­ent
urban renewal activities. To accomplish the goals of the 1949 Act,
the public housing program was expanded and a separate program of slum
clearance was begun. The 1949 slum clearance provisions differed from
those of earlier years in that the slum clearance program was no longer
directly tied to the construction of low-rent dwellings.
The 1949 Act, creating the urban renewal (then called urban
redevelopment) program, has been substantially amended over the years.
The Housing Act of 1954 amended urban redevelopment legislation to
include rehabilitation and neighborhood conservation programs, as well
as the earlier clearance approach. With the addition of these two pro­grams
in the 1954 Act, urban renewal took on the name and basic form we
know today. Additional changes were made in the Housing Acts of 1955,
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1956, 1959, 1961, 1964, 1965, 1966, and most recently in the Housing
and Urban Development Act of 1968.
It should be noted that an urban renewal program could, of course,
be conducted by a local government agency or a private developer at
any time with no assistance from the Federal government. Whenever a
private developer purchases improved land and rehabilitates the old
buildings, or demolishes them and constructs new buildings upon the
land, he is engaging in a form of urban renewal. Urban renewal, in
this sense, is simply the clearance of structures of low economic or
social value, and their replacement with ones of higher value.
The experience of most of our large cities has been, however,
that this process is so costly to private developers that it does not
occur sufficiently often or rapidly enough to insure that blight will
be prevented and slums cleared. Thus, during the 1930's and 1940's
it became clear that Federal assistance of some sort was required if
urban renewal was to be undertaken on a large scale. The urban renewal
program, as authorized in the 1949 Housing Act, is the form in which
this assistance has been provided.
This report will briefly describe the content of the urban renewal
program as it is presently administered, and will summarize the changes
made by the Housing and Urban Development Act of 1968. A brief survey
of some of the recent arguments for and against the program also is
presented, as well as a statistical appendix.
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Major Features of the Urban Renewal Program
The Federal urban renewal program, as authorized in the Housing
Act of 1949 and succeeding legislative measures, is basically a
locally conceived and administered program of slum clearance and
blight abatement that is conducted with the assistance of Federal
grants, loans and technical aid. Thus, Federal urban renewal is the
physical upgrading of a specific area or areas of a city conducted,
at least in part, with Federal funds. Basically the Federal govern­ment
is "underwriting" or "funding" a portion of the costs of a local
urban renewal program.
The first step in the urban renewal process must be made by the
local community. Urban renewal projects are conceived and planned by
local public agencies. These may be departments of a city government,
local housing authorities, or independent agencies. Federal financial
and technical assistance may be made available to help the community
plan and implement its renewal program. To be eligible for Federal
financial assistance for urban renewal, a community must adopt a
"workable program for community improvement."
The "workable program" must be approved by the Department of
Housing and Urban Development, and should contain a plan for system­atically
eliminating slums and blight. This plan must describe in
considerable detail the use of: building and housing codes; compre­hensive
land use planning;. analyses of blighted neighborhoods;
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administrative organization; financing; relocation housing; and nature
of citizen participation in carrying out the urban renewal projects
proposed to implement the "workable program for community improvement."
Once a "workable program" is certified by the Department of
Housing and Urban Development, a community becomes eligible to receive
a number of forms of Federal assistance. Most important, and the
primary subject of this report, are urban renewal grants provided
under authority of Title I of the Housing Act of 1949. Administration
of the urban renewal program is handled by the Renewal Assistance
Administration within the Department of Housing and Urban Development.
Urban renewal projects are financed by Title I grants, arranged
through agreement between the Federal government and the local urban
renewal agency. The Federal government usually provides planning
advances, project implementation loans, and ultimately a capital
grant to cover two-thirds or three-fourths of the "net project cost."
The local government provides the remaining one-third or one­fourth
of the "net project cost" in the form of cash, or non-cash
items related to the urban renewal project. The non-cash items can
include such things as donated land, demolition and removal work, pro­ject
improvements, expenditures for certain kinds of public facilities,
and certain university and hospital construction expenditures.
"Net project cost," for purposes of computing Federal urban
renewal grants, is defined as the total of expenditures for project
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execution activities, plus the value of the local non-cash contribu­tions,
less the proceeds from land disposition.
For example, suppose a local renewal agency decides to assemble
and clear a tract of blighted land for renewal purposes. Usually a
substantial portion of the land is resold to private developers at a
cost that is based on its reuse value, rather than on the cost of
acquisition. This means that the land is usually sold at a price
considerably below that required for its acquisition and improvement.
The developers then construct residential or commercial facilities
upon the land in accordance with the urban renewal plans. Some of
the land is frequently utilized for the construction of various
municipal facilities. In the simplified case described above, "net
project cost" would be based upon the sum of the costs of land
assembly, clearance, and improvement, plus the cost of constructing
the municipal facilities, less the sales price of the land sold to
private developers.
The Renewal Assistance Administration ordinarily contributes
two-thirds of this residual amount, called "net project cost." The
Federal government will contribute three-fourths of the "net project
cost" if planning costs have been borne completely by the local
government, or if the municipality has a population of less than
50,000 persons.
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Since the Housing Act of 1954, Federal urban renewal grants have
not been limited to projects involving only clearance and new con­struction.
Urban renewal projects consisting primarily of housing
code enforcement, and the rehabilitation of existing properties to
bring them up to code standard have gained steadily in importance
since 1954. Projects of these types may also receive Federal urban
renewal grants of two-thirds to three-fourths of "net project cost."
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The "Neighborhood Development Program" Under
the Housing and Urban Development Act of 1968
Urban renewal programs of the type described above must be located
in a contiguous area of a city, and must be completely planned in
advance. After planning is completed Federal project grant assistance
is contracted for by the Renewal Assistance Administration for the
total project on the basis of the overall plan. Large urban renewal
projects may take as long as seven to ten years, or even longer, to
complete. Changing circumstances may make it necessary for the local
urban renewal authority to modify its renewal plans from time to time
before the project is finally completed. This can be an involved
process, since it may also require changes in the Renewal Assistance
Administration's grant commitment.
In order to streamline and provide more flexibility in the urban
renewal planning and implementation process, a new "neighborhood develop-ment"
urban renewal program was authorized in the Housing and Urban
Development Act of 1968. Under this new approach the Renewal Assistance
Administration may make loan or grant contracts for urban renewal pro-jects
in several contiguous, or non-contiguous neighborhoods within a
city. Funding for the projects is to be provided on the basis of the
amount of loan and grant funds needed to carry out renewal activities
for a one year period. Thus, new funds are provided each year to carry
out the next year's increments of the overall renewal program.
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Except for the planning and funding differences, the new program
is generally similar to the earlier urban renewal approach, which
will be continued. The new "neighborhood development program" should
make it easier, particularly for smaller cities, to plan and imple­ment
an urban renewal program.
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Cost of the Urban Renewal Programs
Congress appropriated funds for urban renewal program contract
authority of $750 million for each of fiscal years 1968, 1969, and 1970.
In addition, for fiscal year 1968, $125 million was appropriated for
urban renewal projects in model cities areas, and $312.5 million was
approved for these projects in model cities areas for fiscal year 1969.
Other Federal government community development programs, such as
model cities (not counting the urban renewal projects in model cities
areas, mentioned above) and the various programs of the Economic
Development Administration, have received relatively much more limited
funding than the urban renewal program. Thus, model cities appropria­tions
were $412 million for fiscal year 1968, and $312 million for
fiscal year 1969, excluding funds for renewal projects in model cities
areas, cited above. It is estimated the Economic Development Adminis­tration
spent slightly over $150 million for community development
assistance in fiscal year 1968, and will spend only about $186 million
in fiscal year 1969.
The agricultural price support program, on the other hand, had
expenditures of about $2.7 billion in fiscal year 1968, and it is
estimated that expenditures will be something more than $3.5 billion
in this fiscal year (1969). The space program had expenditures of
about $4.7 billion in fiscal year 1968, and will cost an estimated
$4.6 billion in fiscal year 1969. Defense expenditures for Viet Nam
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operations alone are estimated to have been about $24.5 billion in
fiscal year 1968, and should be almost $26 billion in fiscal year 1969.
These statistics indicate that in relation to other community
development programs the urban renewal program is quite large--more
than three times the size of the model cities program in fiscal year
1969 (not counting urban renewal funds earmarked for model cities
areas), for example. Compared to many other expenditures of the
Federal government, however, urban renewal is quite small--less than
one-fourth the estimated expenditures of the space program in fiscal
year 1969 for instance. Urban renewal appropriations represent only
a small fraction of the overall Federal budget of about $185 billion
this fiscal year.
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Pro-Con Arguments
President Johnson has stated that "the Federal program of urban
renewal is today our principal instrument for restoring the hope and
renewing the vitality of older cities and worn-out neighborhoods."
The President is not alone in describing the urban renewal program in
glowing terms. Many business leaders have accepted the desirability
of Federal financial assistance for urban renewal, while holding to
the concept that the actual work of renewing our cities must, and
will, remain a job for private enterprise.
During the hearings on the Housing and Urban Development Act of
1968, the National Association of Home Builders, the National League
of Cities, Urban America, Inc., the American Institute of Architects,
the AFL-CIO, and the National Association of Counties all supported
the new "neighborhood development" concept, and favored the continua­tion
and/or expansion of the traditional Federal urban renewal
approach. The Chamber of Commerce of the United States supported
the new "neighborhood development program" as providing a "new and
worthwhile direction to urban renewal efforts."
Other influential groups, however, have expressed little confi­dence
in the urban renewal program. The National Association of Real
Estate Boards and the Apartment Association of America have indicated
their displeasure with the program from time to time, and have asked
for more local responsibility. The primary issue in urban renewal is
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widely seen as the question of the proper role for government (especially
the Federal government) to play in various aspects of the housing market,
rather than resistance to the process of urban renewal itself.
The need for continual removal from the housing supply of obsolete
structures that have literally worn out is generally accepted. Propo­nents
of government assistance for such efforts hold that private enter­prise,
for a number of reasons, has failed to remove such structures
from our cities. In this situation, it is argued, the removal and
reconstruction of such structures has become a public responsibility.
Few opponents of the Federal urban renewal program contend that
private enterprise has removed, or is likely to be able to remove, all
worn out residences and commercial buildings without some form of sub­sidy.
Some maintain, however, that the introduction of public action
into this traditionally private sector of the economy undermines pri­vate
property rights to such an extent that slums are preferable to
public activity. Moreover, they contend that given sufficient time
private enterprise will do the job.
In addition to the controversy over the proper role of government
in the areas of housing and slum clearance, considerable debate over
urban renewal also centers on which unit of government under our
Federal system should have the responsibility for renewing our cities.
Many opponents of Federal urban renewal activities maintain that State
governments should have a larger role. Others say that the cities
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should collect sufficient taxes to pay for their own urban .newal
projects. Criticism along these lines recognizes the neei for public
action to clear the slums, but rejects the notion that t.te Federal
government has the primary responsibility for this activity.
Other opponents of the Federal urban ·enewal program argue that
it has become a subsidy to private developers, rather than to the
poor for whom it was originally intended. They point to the large
number of luxury apartments built on urban renewal land and to the
equally large number of poor families that have been displaced by
the clearance of slums, only to find housing in other slums. They
note that little low-income housing has been built in project areas
and that the close relationship between housing the poor and clearing
the slums has been abandoned.
The increased emphasis on providing low-cost housing and adequate
relocation facilities for displacees in recent years has blunted this
argument to some extent. However, the question of who is to be subsi­dized,
and for what, in the urban renewal process has still not been
completely resolved. It seems likely that there are still some urban
renewal projects that destroy more low-income housing than is provided
elsewhere in the city. In these cases the argument that urban renewal
tends to subsidize the relatively rich at the expense of the relatively
poor still has considerable validity •
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Many critics hold that the government has a responsibility to
eliminate slums, that the Federal government has a role to play, and
the the present urban renewal program is both needed and basically
sound. Still, they say, improvements in the program are gravely
needed. Some call for tighter Federal control over projects; others
want more autonomy for the local agencies. Some critics call for an
increased emphasis on wholesale clearance and reconstruction, while
still others want clearance abandoned entirely in favor of code
enforcement and rehabilitation.
Opposition to the program is thus divided into three distinct
categories: (1) those who see no governmental role in the redevelop­ment
of our urban areas regardless of which unit of government is
prepared to do the job; (2) those who assume that urban renewal is,
in part, a public responsibility, but staunchly maintain that only
local government or State government should be involved; and (3)
those who accept both the idea of public responsibility for urban
renewal and the necessity of active Federal participation, but see a
number of improvements that could be made in the techniques now in use.
There is currently little reason to believe that the Federal
urban renewal program will be abandoned. It is much more likely that
the admitted limitations of the program will be reduced by legislation
and administrative action. The recently enacted "neighborhood develop­ment"
urban renewal approach represents the latest attempt to improve
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the program. This new concept should make it considerably easier for
smaller cities to plan and implement renewal programs.
Based on the continued funding of the traditional urban renewal
program, and the passage of the new "neighborhood development program,"
the continuation of Federal assistance for urban renewal in the near
future seems assured. Additional improvements and reforms will no
doubt be forthcoming as further experience, especially with the new
"neighborhood development program," is gained and as the merits and
weaknesses of the urban renewal process are publicly discussed.
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Appendix 1 - Urban Renewal Statistics
URBAN RENEWAL PROJECTS UNDER TITLE I, HOUSING ACT OF 1949, AS AMENDED
(Dollar amounts in millions)
Program status at end of xear Changes in Erogram status during xear
Activity Grant Number of Number Grant Number of Number
and year reservations project of reservations project of
outstanding ai!Erovals localities outstanding !!EP. rov als localities
1950 2_1 $ 198.8 124 XX $198.8 124 XX
1951 282.7 201 XX 83.9 77 XX
1952 329.2 259 XX 46.5 58 XX
1953 348.5 260 XX 19.3 1 XX
1954 377.2 278 XX 28.6 18 XX
1955 553.8 346 XX 176.6 68 XX
1956 827.7 450 XX 273.9 104 XX
1957 1,021.1 518 XX 193.3 68 XX
1958 1,326.2 672 XX 305.2 154 XX
1959 1,390.9 717 XX 64.6 45 XX
1960 1,871.6 879 XX 480.7 162 XX
1961 2,476.6 1,095 559 604.9 216 XX
1962 3,028.3 1,335 666 551.8 240 107
1963 3,698.7 1,556 743 670.4 221 77
1964 4,303.7 1,723 800 605.0 167 57
1965 4,972.3 1,914 838 668.6 191 38
1966 5,743.3 2,117 885 'E.! 771.0 203 47
1967 6,386.4 2,326 954 'E._/ 643.1 209 69
2_/ For years 1950-1954 figures for total were urban renewal projects.
b/ Excludes localities in which only demonstration grant contracts are being
- carried out.
Source: U.S. Department of Housing and Urban Development. Housing and urban
development trends: annual summary, May 1968. UP/PR-35. Washington,
D.C. Table A-78, p. 70.
...,
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:D
:ing year
•mber
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XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
. 07
77
57
38
47
69
. ng
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,ton,
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Appendix 2 - Sources of Information for Further Research
Information on specific local urban renewal projects can be
obtained from the local renewal agency conducting the project. A
directory of local renewal agencies is published periodically by
the National Association of Housing and Redevelopment Officials, the
Watergate Building, 2600 Virginia Avenue, N.W., Washington, D.C. 20037.
Additional information on the national aspects of the urban
renewal program can be obtained from the numerous publications of
the Department of Housing and Urban Development (HUD). Information
on HUD publications may be obtained from either: The Superintendent
of Documents, U. S. Government Printing Office, Washington, D.C. 20402;
or from, The Department of Housing and Urban Development, Office of
Consumer Relations, Washington, D.C. 20410 .
Information on urban renewal is also available from the various
Department of Housing and Urban Development Regional Offices. The
Regional offices may also be able to supply information of a more
local or regional nature than can the Washington office of HUD. A
list of HUD Regional Offices is provided below .
Region I: 346 Broadway, New York, New York 10013 (Connecticut, Maine,
Massachusetts, New Hampshire, New York, Rhode Island, Vermont)
Region II: Widener Building, Chestnut and Juniper Streets, Philadelphia,
Pennsylvania 19107 (Delaware, District of Columbia, Maryland, New Jersey,
Pennsylvania, Virginia, West Virginia)
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Region III: 803 Peachtree, Atlanta, Georgia 30323 (Alabama, Florida,
Georgia, Kentucky, Mississippi, North Carolina, South Carolin~,
Tennessee)
Region IV: Room 1500, 360 North Michigan Avenue, Chicago, Illinois,
60601 (Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, North
Dakota, Ohio, South Dakota, Wisconsin)
Region V: Federal Office Building, Room 13A01, 819 Taylor Street,
Fort Worth, T~xas 76102 (Arkansas, Colorado, Kansas, Louisiana,
Missouri, New Mexico, Oklahoma, Texas)
Region VI: 450 Golden Gate Avenue, P.O. Box 36003, San Francisco,
California 94102 (Arizona, California, Guam, Hawaii, Nevada, Southern
Idaho, Utah, Wyoming) Area Office: 909 First Avenue, Seattle,
Washington 98104 (Alaska, Montana, Northern Idaho, Oregon, Washington)
Region VII: Ponce de Leon Avenue and Bolivia Street, P.O. Box 1105,
Hato Rey, Puerto Rico 00919
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