State and Local Programs

During the 1970s state and local governments created Housing Finance Agencies (hfas) to complement federal housing programs. By federal law, hfas are empowered to issue tax-exempt housing bonds, which underwrite new construction of privately owned rental housing. The tax-exempt status of the bond allows a reduction in mortgage interest rates. To qualify for tax-exempt financing, private developers must set aide a portion of the housing they build (usually 20 percent) for households with incomes below 80 percent of area median.

These tax-exempt bonds have become increasingly important in the past few years, and have been responsible for a growing share of rental housing production. During the first half of 1985 tax-exempt financing exceeded the total for all of 1984, even though rental housing starts were down. However, the 1986 Tax Reform Act placed strong limits on the use of these bonds. As a consequence, their contribution to housing finance programs has been reduced. (See Appendix F for data on the total number of rental units produced with tax-exempt bonds.)

Ford Foundation Programs

During the 1970s both federal support for Community Development Corporations and the Foundation's cdc program continued to expand. In 1972 Title VII of the Community Services Act moved the cdc model from a research and demonstration status to full operation. In the following years, approximately fifty cdcs were set up throughout the country and hundreds of millions of federal dollars were granted for their operation.

As in the 1960s, housing development was a central focus of cdc neighborhood revitalization. For example, during the 1970s both grant and pri support helped the Watts Labor Community Action Committee (wlcac) in Los Angeles initiate an innovative housing program aimed at stabilizing the city's Watts neighborhood. wlcac took possession of homes that were slated for demolition, moved them to vacant sites in Watts, and priced them to attract moderate-income families. The aim was to create an atmosphere that would encourage both private investment and community improvement. By all accounts the program has made a visible difference in the neighborhood and has contributed to the continuing success of wlcac.

Early grants to cdcs were concentrated in large urban centers with predominantly black populations. Beginning in 1970 the program was expanded to include Hispanic organizations, such as the Mexican American Unity Council in San Antonio and the Spanish-Speaking Unity Council in Oakland, California. By the end of the 1970s the cdc program