New Town Blues

HUD abandons a disaster

They are an urban planner's dream: new cities carved out of the raw earth, self-contained, self-sufficient and carefully designed to avoid all the problems that afflict older, unplanned urban centers. In 1971 the Department of Housing and Urban Development began financing 13 such communities,*and that so-called new towns program became one of the decade's most widely publicized Government social experiments. Now the planner's dream has become HUD'S nightmare. Housing Secretary Patricia Harris has announced that the new towns program will be ended, and HUD will abandon financial control of seven of the agency's 13 communities.

To begin with, the project was launched at the worst possible moment: the start of the 1973-74 recession, when demand for new housing shriveled. Says Michael Spear, former general manager of Columbia, Md., a successful new community that is privately financed: "Launching a new towns program in the early 1970s was like asking the Wright brothers to test their airplane in a hurricane and then concluding, when it crashed, that the invention did not work."

The invention was also unwisely financed. By buying land outright (with money acquired from selling Government-backed bonds) and by building facilities before they were needed, developers saddled themselves with high fixed interest costs long before sales and rental income started flowing. In Park Forest South, for example, land costs were 89% higher than expected, while sales for the first five years were 58% lower than expected. Developers of seven HUD-financed new towns eventually defaulted on interest payments, leaving the agency to pay bondholders $149 million and take title to the bankrupt burgs.

In addition, a number of the new towns were built in the wrong place at the wrong time. Newfields (near Dayton) and Riverton and Gananda (outside Rochester) were begun when the nearby metropolitan areas were losing jobs. Other towns like Flower Mound were located outside the path of growth of their cities. As a result, all the HUD new towns have experienced slower-than-expected growth. Flower Mound has attracted only 420 residents in six years, out of a projected eventual population of 61,141. Gananda was a ghost town until a developer took over last year. Besides that, a number of the ventures were built by energy firms, shopping center developers, civic groups and others with no new town experience.

Despite all these problems, the new town concept is not dead. Several privately financed new communities--notably Columbia, Md., Reston, Va., and Irvine, Calif.--are profitable and growing. Even HUD does not label its program a total failure. The agency will try to sell off or transfer financing of seven of the 13 federally backed towns and dissolve the corporation that oversees the project, but it will continue to spend money on the six other communities that HUD planners think might survive. Besides, a 1976 National Science Foundation study of 17 new towns, HUD-backed and otherwise, shows that most people living in them like them. -

*Maumelle, Ark.; Shenandoah, Ga.; Park Forest South, Ill.; St. Charles, Md.; Cedar-Riverside and Jonathan, Minn.; Gananda and Riverton, N.Y.; Soul City, N.C.; Newfields, Ohio; Harbison, S.C.; Flower Mound and The Woodlands, Texas.

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