Urban Development Corporation’s “Imaginative Use of Credit”: Creating Capital for Affordable Housing Development

Heralded as an innovative if short-lived builder of affordable housing, in 1975, the New York State Urban Development Corporation (UDC) defaulted on more than $2 billion in debt obligations and narrowly avoided bankruptcy. Offering the first detailed examination of its finances, this article argues the UDC was prescient of a new model for public-private housing finance that in the 1980s emerged in the ashes of conventional, state-financed public housing. In response to many of the long-standing challenges with government-produced housing, particularly inadequate funding, the UDC’s creation presaged the debt-driven model of development which would mature in the subsequent decades. While many scholars continue to reify criticism of government-created housing projects often on the basis of design or policy defects, the UDC’s failure highlights the importance of financial and political support in shaping the success of subsidized housing.