Defining basic concepts re: the New Federalism Acts, this monograph presents the following: (1) survey results of a study of 21 small cities in the California Sacramento Valley designed to determine why local administrative and elected officials had or had not taken advantage of the Housing and Community Development Act (H/CD) of 1974; (2) survey analysis (cities under 5,000 lacked the governmental structure for H/CD participation; availability and use of external technical assistance via cooperative arrangements improved a community's ability to initiate an H/CD application; and governmental capacity was a stronger determining factor than community need); (3) suggestions for change with an emphasis upon internal administrative capacity and comprehensive planning (consideration of the county cooperative, the confederation of communities, and the regional agency models as alternatives for change; development of a small community research and service institute; utilization of the University of California's Cooperative Extension Service; development of a rural policy makers' development program, a community problem-solving program, and a small town technical assistance team); (4) a summary of New Federalism programs (General Revenue Sharing, H/CD, Comprehensive Employment and Training Act, Social Services Amendments, Rural Development Act); (5) additional information sources re: the New Federalism Acts. (JC)