Implementing Urban Housing Rehabilitation Programs: A Comparison of the Federal and State Experiences

Abstract

Recent changes in federal housing rehabilitation policy have shifted the emphasis from single-family to multi-family units and from direct federal delivery of housing services to state and local administration. To discover the implications of this shift, this study compares the implementation of a state home improvement loan program with the financing and administration approach adopted by the federal Section 312 and Community Development Block Grant loan programs prior to 1983. A survey of borrowers who participated in the state and federal rehabilitation loan programs reveals that both types of programs assist the “incumbent up grader,” both increased the value of property, both achieved high levels of borrower satisfaction, and both concentrated on the single-family unit. Differences, however, did arise between the federal and state programs in that the state program borrowers were encouraged to conduct preventive maintenance, while the federal programs advanced social goals of serving a greater number of low-income homeowners with larger loan amounts at lower interest rates. This comparison study does not support the federal withdrawal from providing direct single-family rehabilitation loans because it can supplement the bond-market orientation of the state approach with a social targeting function.