Housing and Community Development Act of 1974
The 1974 federal law that created the Community Development Block Grant and the Section 8 rental assistance program, shifting federal housing aid toward local decision-making and subsidies for privately owned housing.
What Is the Housing and Community Development Act of 1974?
The Housing and Community Development Act of 1974 (Public Law 93-383) is a federal law signed by President Gerald Ford on August 22, 1974. It created the Community Development Block Grant (CDBG). It also added a new Section 8 to the Housing Act of 1937, launching the rental assistance approach still known as Section 8.
The act marked a turn in federal strategy. Under earlier grant programs, federal officials approved local projects one application at a time, and public housing was built and owned by public agencies. The 1974 law moved more decisions to local governments and moved subsidies toward privately owned housing.
How the Act Works
The law is divided into titles. Four have had the longest reach:
| Part | What it did | What it led to |
|---|---|---|
| Title I | Replaced seven separate grant programs, including urban renewal and Model Cities, with one flexible block grant | The Community Development Block Grant |
| Title II | Created Section 8 in three parts: new construction, substantial rehabilitation, and certificates for existing housing | Housing choice vouchers and project-based rental assistance |
| Title VI | Directed HUD to set national construction and safety standards for mobile homes | The federal building code for manufactured housing |
| Title VIII | Added sex to the classes protected by the Fair Housing Act | A federal ban on sex discrimination in housing |
Under Section 8, a tenant originally paid 25% of adjusted income toward rent, later raised to 30%, and the federal government paid the owner the difference. In the construction and rehabilitation parts, the subsidy was attached to a building through a long-term contract of 20 or 40 years. In the existing-housing part, the subsidy was attached to the tenant, who could use it in the private market.
CDBG money is distributed by formula, not by competition. After set-asides, 70% goes directly to larger cities and urban counties, and 30% goes to states to pass on to smaller communities.
Why It Matters
Tenant-based vouchers and project-based contracts, the two largest forms of federal rental assistance, both descend from Section 8. CDBG is still operating more than 50 years later. Congress funded it for fiscal year 2026, and it remains a flexible source of federal money for local governments.
Criticisms and Limitations
- Cost. Building new subsidized housing under Section 8 proved expensive, and long contracts required large budget commitments up front. Congress repealed the new construction and substantial rehabilitation parts in 1983.
- Flexibility versus targeting. Block grants give local officials wide discretion, which raises the question of who benefits. The statute now requires that at least 70% of a grantee’s CDBG spending, measured over one to three years, go to activities that principally benefit low- and moderate-income people.
Sources
- 42 U.S. Code § 5301 — Congressional findings and declaration of purpose (Cornell LII) (opens in a new tab)
- Gerald R. Ford — Statement on the Housing and Community Development Act of 1974 (The American Presidency Project) (opens in a new tab)
- Congressional Research Service — An Overview of the Section 8 Housing Programs (RL32284) (opens in a new tab)
- Congressional Research Service — Community Development Block Grants and Related Programs: A Primer (R43520) (opens in a new tab)
- National Association of Counties — Legislative Analysis for Counties: FY 2026 Appropriations (opens in a new tab)
- 42 U.S. Code § 5403 — Construction and safety standards for manufactured homes (Cornell LII) (opens in a new tab)
- 42 U.S. Code § 3604 — Discrimination in the sale or rental of housing, with 1974 amendment note (Cornell LII) (opens in a new tab)
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