FEDERAL PARTICIPATION IN HOUSING AND URBAN RENEWAL In his State of the Union Message, President Johnson said that the central problem in urban areas is "to protect and restore man's satisfaction in belonging to a community where he can find security and significance." Earlier in the message, and speaking more generally about our national progress and hopes, he said that a great society "will not flower spontaneously from swelling riches and surging power. It will not be the gift of governments or the creation of Presidents." The recent expansion of the Housing and Home Finance Agency (HHFA), and the proposal that it be elevated to cabinet status, might well lead people to believe that the solution to the problems of the urban areas are to be found in the gift of governments. HHFA spent $309 million in 1960 and $328 million in 1964. The new spending authority requested by the President for fiscal years 1965 and 1966 totals over $3 billion. Thus the outlook is definitely toward larger commitments. The slum clearance programs of the 1930's, with their emphasis on welfare and the relief of emergency conditions, were the precursors of the present programs and projects encompassing urban environment. Currently, the federal government has been administering nearly four dozen separate programs of financial aid for urban development, involving some 13 departments and agencies. More than half of these programs of grants-in-aid, loans, insurances, shared revenues and other direct operations were not in existence in 1950. The Cities' Problems and the Federal Response In recent years, the "downtown" areas of many cities have suffered because, when middle-and upper-income families move to the suburbs, they also shop, bank, and find entertainment there. This has been a fairly general post-World War II trend. It started when the physical plants of many cities reflected the neglect of the depression and war years. Individual cities had problems of a less general nature: some were losing population, others gaining it (primarily among low-income groups) faster than they were ready to provide the required services; some were losing their traditional industry and seeking replacements; in others, the pattern of use of economic re sources was changing, and the supply of basic community facilities, such as water and sewage disposal, had to be accommodated to new needs. With more people commuting, transportation became a problem in many areas. New York City's problem is associated with the economic situation of the commuter railroads; Los Angeles and Washington D.C. have no rail facilities for commuting. Encompassing all this was the fact that, as the central government pre-empted an increasing proportion of the total tax revenue, what was left locally seemed very small in relation to the problems to be solved. Title I of the Housing Act of 1949 (P.L. 81-171) is the basic authorization for urban renewal projects. It provided for loans to local communities for working capital until the project gets under way, and for grants for a part of the net project cost. Urban planning grants were provided under the Housing Act of 1954. There are also 100 per cent grants to reimburse the communities for relocation payments to individuals and businesses. The first appropriation for urban renewal under the Housing Act of 1949 was $100 million. As of June 30, 1964, $4 billion had been committed to the effort, and the Housing Act of 1964 authorized an additional $725 million. The authority for the urban renewal fund, in fiscal 1965, would be $1.4 billion, if the additional authorization for $675 million is voted. Further expansion is involved in the proposals which the President made this January. The Declaration of Policy of the 1949 Housing Act included the statement that, in achieving the goals of national housing policy, "private enterprise shall be encouraged to serve as large a part of the total need as it can." The idea was that the funds lent, or granted, to the cities would permit them to remove, or refurbish, the areas of "blight". Then, because the greater attractiveness and improved quality of land-use would contribute to the economic growth of the city, there would be a larger tax return even from the localities' shrinking share of the citizens' tax dollars. Every city participating would, as it were, have a "scholarship" for the purpose of improving its earning power. 2 "When urban renewal was proposed and seeking support, like most new The author of that remark is not an opponent of urban renewal, but the present HHFA Administrator, Robert C. Weaver. 1/ The local communities are responsible for approving any urban renewal plan. However, no loans or grants can be made for urban projects unless the HHFA Administrator has certified approval of a "workable program" for the locality seeking such aid. This approval requirement undoubtedly influences what the communities propose in the first place. Land Use In Urban Renewal The fact that housing is, by law, the preferred use for redeveloped acreage creates some built-in problems for redevelopment. It is in the central city of a metropolitan area that slum clearance and rehabilitation are likely to be needed. It is in that same area that the market for medium-and high-rental housing has not been strong in recent years. Mr. Weaver has pointed out that the demand for highrental housing was limited, except in very few cities, and such demand as did exist was "often satisfied by private construction ... during the long period initially required to plan and execute an urban renewal project". The delay associated with federally-aided urban renewal projects increases the probability that the original "plan" will either have to be changed or, if it is acted on, the need will already have been met. Certainly private builders, as well as other businessmen, make mistakes in estimating the market. However, they are more likely than a government agency to be influenced by economic logic and, therefore, to enter on a greater proportion of economically viable projects. In the governmental type of urban renewal, the private developer must be guided by two 1/ Weaver, R.C.: The Urban Complex. Doubleday, 1964. levels of government, which may not agree with each other. The private developer becomes an agent for carrying out government policy, not an element in a market economy. The New York Times, on July 26, 1964, carried a travel story with urban re newal overtones: A section of Portsmouth, New Hampshire, which was originally a settlement To bring the story up-to-date, the September-October 1964 issue of Urban Renewal Notes (published by the Urban Renewal Administration) featured Strawberry Banke as an historical preservation and without reference to earlier plans. According to this source, it is hoped that this will become a major tourist attraction, employing 100 people and contributing $1 million annually to the city's economy. How this compares with what had been expected from the housing development is not known. At least it is not one of the projects which have been abandoned. Representative John Dowdy, of Texas, has quoted the Massachusetts state auditor's comment to the effect that "the principal result of urban renewal in Boston has been the creation of numerous parking lots on valuable lands." Other examples of delay, confusion, and questions of eligibility have been widely publicized. Louis Winnick, an observer of urban renewal developments, has indicated his belief that much of what has been built would very likely have been built anyhow although not necessarily at the same site. Several years ago, Winnick commented: "If public resources are not to be misused, no more or less should be given than is required by the market to fulfill the plan." - 2/ 2/ Winnick, Louis: "Economic Questions in Urban Redevelopment." American Economic Review (Proceedings), May 1961 4 |