The Department of Housing and Urban Development announced yesterday that it will scrap much of its existing "new communities" program, which began with fanfare eight years ego as a federal attempt to halt suburban sprawl and to promote economic and racial integration in housing.
The program produced developments such as Soul City, N.C., Gananda, N.Y., and Newfields, Ohio, many of which have been "plagued by a series of financial disasters," HUD Secretary Patricia Roberts Harris said yesterday.
HUD funds 13 "new community" developemnts. Of the government-backed projects, seven are in financial trouble; of those seven, five have either been foreclosed on or put up for foreclosure.
"We . . . found that there was very little we could do to salvage some existing projects," said Harris, who also announced that her department will attempt to replace the "new communities" program with a "new-town-in-town" program aimed at "bolstering the sagging economies of existing cities."
In other words, according to a HUD official, the department plans to start concentrating its community development in inner cities.
Most of the original "new communities" were low-density "satellite" developments, located outside city limits. They were supposed to be planned communities that would carefully coordinate residential, industrial and commercial growth, and that would provide for "social balance" by offering low, middle and upper-income housing.
The plan didn't work. And Harris lost no time yesterday in placing the blame for failure on the Ford and Nixon administrations, the latter of which originated the program.
"There was a total lack of support from the Nixon administration . . . There was mismanagement and there were bad decisions. Not surprisingly, there were financial failures," Harris said.
She said that though the present program is a failure, "HUD will not close out those existing new communities that are viable and are meeting national and local goals." She added: "We not only intend to support them, but to make them stronger."
Harris said the salvageable projects include St. Charles, Md., Maumelle, Ark., The Woodlands, Tex., Harbison, S.C., and Shenandoah, Ga. They also include Soul City, a financially troubled development that recently had to foreclose on its only commercial building, Soultech, Inc.
Those communities can be helped with HUD grants for public facilities, federal housing assistance to home builders and other federal grants, Harris said.
When asked why Soul City was included among those existing communities listed as "capable of continued development," Harris said: "It is in an area where clearly there is a need for low and moderate-income housing . . . We are not prepared at this time to say that we should cease our efforts to make Soul City viable . . ."
Harris said she could not provide details on how many new in-town developments HUD plans, in what cities those developmets might be located, or how much they might cost.
Instead, she implied that the in-town program under consideration may not come into being if HUD is unsuccessful in correcting the problems caused by the existing "new communities" program.
However, Harris added: "I am confident that it will be responsible for use to move to the new-town-in-town program because we will have reduced the drain on, and the cost to, the federal government caused by the existing new communities program."
Harris said she could not say how much money HUD has lost on the existing program. But another HUD official said the new communities have so far defaulted on $140 million in government-backed bonds and notes.