The great
expansion of federal housing programs during the 1960s and early
1970s brought with it severe criticism. Housing advocates said
developers were allowed excessive profits and developers complained
of Hud administrative
delays and red tape. Moreover, inflation was rampant in the early
1970s. Utility and maintenance costs soared, but incomes failed to
catch up. Defaults accelerated in a number of subsidized
homeownership and rental programs. In 1972 the demolition of the
Pruitt-Igoe public housing project in St. Louis drew national
attention to public housing's problems in management and
design.
In the face
of these difficulties, President Nixon in 1973 declared a
moratorium on all federal housing programs and established a
National Housing Policy Review, which determined that housing
programs should emphasize the family rather than the unit and that
future housing assistance should be targeted to the income of the
household rather than to the cost of the unit. Accordingly, the
1974 Housing and Community Development Act scrapped the old
production-oriented "supply-side" programs in favor of various
Section 8 "demand-side" programs, which completely altered the
course of federal housing programs.
The Section 8
program provides an income supplement for qualifying households
(originally those with incomes up to 80 percent of area median;
currently those with incomes up to 50 percent of area median).
Families receiving Section 8 benefits were to pay 25 percent of
their incomes in rent (30 percent now), with the Section 8 subsidy
covering the remainder up to a predetermined "fair-market" rent.
The Section 8 program was the precursor of housing vouchers, which
the Reagan administration proposed in 1981 to replace all other
housing programs.
By the end of
the 1970s most of the programs begun during the 1960s were closed
out and replaced by programs that were different but had similar
purposes. Tax incentives expanded to encourage additional private
investment in housing. Tax-exempt financing became available for
Section 8 projects and for other housing projects that reserved a
portion of their units for qualifying households.