The Housing and Community Development Act of 1974 is best known for the creation of the Community Development Block Grant Program (see Memo 8/18) and the Section 8 programs, but the Act also made major changes to the public housing program.
The Act created the now familiar term “very low income family” (VLI), meaning a family with income of 50% or less of the area median income (AMI). The legislation also required at least 20% of all units in new public housing developments be occupied by VLI families.
The VLI targeting amendment reflected a policy shift intended to broaden the range of incomes families occupying public housing, while also raising rent revenues for public housing agencies (PHAs). Prior to the amendment, the Housing Act of 1937 defined low income families as those in the “lowest” income category who “cannot afford to pay enough to cause private enterprise in their locality or metropolitan area to build an adequate supply of decent, safe, and sanitary dwellings for their use.” The new 20% VLI targeting provision effectively raised the meaning of lowest income to 50% of AMI and opened 80% of the units to “low income” families with higher incomes.
Another provision of the Act required a PHA to set rent levels so that the rent revenues received each year from all public housing families served by a PHA equaled at least 20% of the incomes of all families. This too could have the effect of causing PHAs to prefer admitting families with higher incomes.
The Act required PHAs to establish tenant selection criteria designed to ensure that, within a reasonable period of time, a development would include families with a broad range of incomes and not have concentrations of low income families and “deprived families with serious social problems.” The provision prohibited PHAs from keeping units vacant while waiting for higher income applicants if lower income applicants were available.
Thanks to Senator Edward Brooke (R-MA), the Housing and Urban Development Act of 1969 established the principle of an income-based rent payment cap. Senator Brooke’s provision limited an assisted family’s rent payment to no more than 25% of their adjusted income. In 1974, Senate bill S. 3066 would have reduced the maximum rent payment to 20%, but the final legislation retained the 25% cap. The cap was increased to 30% in 1981.
In reaction to Senator Brooke’s 1969 maximum rent payment provision, the House bill in 1974 (H.R. 15361) introduced minimum rents, but the Senate Bill (S. 3066) had no minimum rent provision. The House bill proposed a basic minimum rent of 10% of a family’s gross rent. As a compromise, the Act set the base minimum rent at 5%. The House report accompanying H.R. 15361 characterized the minimum rent provision as “correcting serious inequities.” It claimed, “A substantial portion of these tenants are not contributing a fair share toward the costs of their housing units…The minimum rent recommended by the committee [House Committee on Banking and Currency] will prevent zero or minimal rents caused by the application of the maximum rent provision of the 1969 Housing Act [the Brooke 25% cap].”
Increased rent payments resulting from implementation of the new 5% minimum rent provision would be phased in by $5 at six-month intervals until the minimum rent payment was reached.
The House introduced a second minimum rent provision pertaining to public housing families receiving welfare. If part of a family’s welfare payment was designated to meet housing costs (as was the case in 30 states), then the family had to pay as rent either that part of the welfare assistance or 5% of gross income, whichever was greater. In order to apply this second minimum rent provision, the House bill succeeded in repealing the “Brooke III” amendment. Enacted in 1971, “Brooke III” reduced the rent paid by welfare recipients living in public housing to 25% of their adjusted incomes, but prohibited welfare agencies from reducing the housing portion of their welfare payments.
Representative Joe Moakley (D-MA) wrote supplemental views regarding the minimum rent provisions of H.R. 15361:
“The concept of a minimum rent for occupants of low-rent housing is a regressive concept with which I cannot concur….The economic gains that tenants realized through Brooke III will be shifted from their pocket to rental payments and will thus reduce the amount available for the basic necessities of clothing, food, and medical expenses….The income derived from these families will be insignificant since the Secretary of HUD advises us that less than one-half of one percent of public housing tenants pay zero rent. A situation of zero rent payers should point out a crisis of income for the very poor of this country, rather than an opportunity to take part of that extremely low income for rent. It is inconceivable to me that we would look to the residents of public housing, and to the poorest residents at that, for the additional revenues needed, rather than to the subsidy system already mandated by Congress. It is ironic that we penalize low-income persons while we continue to provide large subsidies to Lockheed and Boeing.”
The definition of public housing “operations” was modified to also mean financing of tenant programs and services, particularly if there was maximum feasible participation of the residents in the development and operation of tenant organizations. Tenant programs and services included the development and maintenance of tenant organizations that participate in the management of public housing; training of tenants to manage and operate public housing; counseling on household management, housekeeping, budgeting, money management, and child care; and advice regarding resources for job training and placement, education, welfare, health, and other community services.
The 1974 Act deleted a requirement for residents to move if family income increased beyond income limits for continued occupancy. Also deleted was a provision that required a gap of at least 20% between the highest income people served and the income needed to obtain private market housing.
Compilation of the Housing and Community Development Act of 1974:
- Joint Explanatory Statement of the Managers of the Committee of Conference
- House Report 93-1114
- Senate Report 93-693
Subcommittee on Housing of the Committee on Banking and Currency of the House of Representatives. Hathi Trust Digital Library, http://babel.hathitrust.org/cgi/pt?id=mdp.39015082042030;view=1up;seq=1
A Chronology of Housing Legislation and Selected Executive Actions, 1892-1992, Congressional Research Service, December 1993, pages 214 – 215, http://www.huduser.org/portal/publications/pdf/HUD-11661.pdf
The Housing and Community Development Act of 1974 – Who Shall Live in Public Housing? Barbara Graul, Catholic University Law Review, 1976, http://scholarship.law.edu/cgi/viewcontent.cgi?article=2505&context=lawreview
Public Law 93-383, Title II (page 653), http://www.gpo.gov/fdsys/pkg/STATUTE-88/pdf/STATUTE-88-Pg633-2.pdf
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