(2) Section 3- Slum Clearance and Urban Renewal in the United States

Main Concept-slum clearance and reasoning

• Post-WWII the redevelopment of central cities and slum clearance topped the US domestic policy agenda

• Slums or “blight” had large negative externalities

• Transaction costs of negotiating with many different parties inhabited redevelopment by private groups

• Cities alone did not have the financial (or legal) resources to undertake clearance

Main Concept- Title 1 of the Housing Act of 1949

• Housing and Home Finance Agency (HHFA)

• Ambitious and highly controversial program of slum clearance and urban redevelopment that was undertaken in the US after World War II 

• Provided federal subsidies for locally planned 

Main Concept- LPA

Local Public Agency

• Identify an urban renewal area

• Hold public hearings

• Seek approval from the local government

• See approval from HHFA to proceed

• By mid-1966, Title 1 projects had 

  • Cleared over 400000 housing units

  • Forced the relocation of over 300,000 families just over half of whom were non-whites

• 57000 acres of cleared areas used for

Main Concept- Media

• Media trumpeted urban renewal as a success into the 1960s 

• The urban renewal program became increasingly controversial with time

• Political support for the program eroded

• New funding halted in 1974

Main Concept- spillovers

Spillovers within the city

• Blight was considered contagious, detrimental to well-being, a drain on public resources, and both a cause and consequence of middle-class flight and local government’s fiscal problems 

Main Concept- channels

• If the urban renewal program affected city-level economic outcomes how were these results achieved?

• Displacement channel- removal of low quality housing, altering city composition

Research Question

Did Title 1 of the Housing Act of 1949 benefit or harm the property value and economy of urban areas?

Main Findings

• A $100 per capita difference in grant funding is associated with a 2.4% difference in 1980 median income and a 6.9% difference in 1980 median property value 

• The median city in the dataset received $122 per capita in funding 

• A $100 per capita increase in urban renewal funding is associated with a 9-11% increase in population and housing units in the base specifications

• An additional $100 per capita in funding decreased the share of old housing by 3 %p

• This suggests substantial local spillovers from the urban renewal program beyond the narrow confines of each project location