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those displacees forced to occupy more expensive units. To achieve the first objective, the 1968 Act provided that the FHWA should not approve a federal highway project involving displacement until "satisfactory assurances" were received from the state highway department that "decent, safe and sanitary" housing units within their financial means would be available to all displacees. The second objective was achieved by providing supplemental payments to those displaced, both homeowners and tenants. The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) stengthened each of the two thrusts of the 1968 Act. To ensure an adequate supply of housing for displacees, the 1970 Act authorized construction of replacement housing (new or rehabilitated units added to the supply). The URA also increased the payments to the individuals displaced-- a homeowner may get up to $15,000, and a tenant may get up to $4,000 over a four-year period. These acts are an important step toward reconciling the federal highway program with national housing goals. They have in common two important elements: the "market" focus on an adequate supply of relocation housing, and the "individual" focus on payments to those displaced. Although concern with individual relocation payments has characterized FHWA administration of the relocation acts, it will be argued in Part II that full implementation of these acts requires a concern for the market effects of highway displace- ment as well, especially in the low-income housing market. To understand these market effects, and to lay the basis for a later critique of ~HWA administrative practices, a discussion of the economics of the low-income housing market is required. II. The Impact of Urban Highways: The Low-Income Housing Market The housing market in urban areas is rarely a uniform whole. Most often, urban housing markets are segmented into submarkets, thus limiting the res- ponsiveness of the whole market to changes in any one submarket. Partially for this reason, low-income submarkets are subject to chronic shortages of adequate housing supply. Because most new housing is constructed for upper-income households, low- income submarkets are usually dependent on the "trickle down" of older housing. However, this "trickle down" process is seriously deficient as a source of supply, particularly for minorities. Construction of new upper-income housing can trigger some "trickle down," but the older units which eventually become available to low-income families often do not meet housing codes. Shortages in the low-income housing market are aggravated by demolitions for urban highway construction. The demand for housing caused by displacement of both tenants and homeowners focuses most sharply on the same submarkets in which the demolition occurred as the displacees seek housing similar to that demolished--in size, neighborhood location and accessibility to work and public facilities; moreover, low-income and minority displacees tend to relocate within the same neighborhoods from which they are displaced. As a result of the increased demand, focusing on inelastic submarkets, the price of low-income housing may rise appreciably, especially since initial price increases are normally insufficient to generate new housing construction. This increase in housing prices may be magnified by the relocation pay- ments which give increased purchasing power to the displacees, both owners and III-3