This is an illegal exaction suit filed pursuant to Article 16, Section 13 of the Arkansas Constitution and the Declaratory Judgment Act, Ark. Stat. Ann. § 34-2501 et. seq. (Repl. 1962). Jim Murphy, the plaintiff and appellant, is a citizen and taxpayer of Pope County, Arkansas. In this action, he represents all taxpayers within the state who might be potentially affected by the alleged illegal exactions. By his complaint in Pope County Chancery Court, the plaintiff alleged that the Arkansas Housing Development Agency should be enjoined from issuing Single Family Mortgage Bonds and Multi-Family Mortgage Bonds pursuant to Arkansas Acts 1977, No. 427 (“Act 427”). The Chancellor, in a well-considered memorandum opinion, held that the Single Family Bonds and the Multi-Family Bonds did not violate the Arkansas Constitution and were for a valid public purpose. He ordered the plaintiff’s complaint dismissed. It is from this order of dismissal that the appellant appeals.
The Arkansas Housing Development Agency (“AHDA”) *520was created by the Arkansas General Assembly by Act 427. The portions of the Act material to this litigation are as follows: Sections 2.00 through 2.02 are recitations as to the need for the AHDA and the public purposes it is to serve, i.e., basically the need for housing for the people with low and moderate incomes. Sections 4.00 through 4.08 establish a public body corporate and politic with corporation succession to be known as the AHDA with a board of directors consisting of the Director of the Department of Finance and Administration and six members appointed by the Governor. Sections 5.00 through 5.23 state the powers of the Agency to include the power to borrow money and to issue bonds. Sections 7.00 through 7.15 authorize the Agency to make loans to mortgage lenders under rules adopted by the Agency, and Sections 8.00 through 8.13 authorize the Agency to purchase and participate in mortgages made to eligible persons or families within the State of Arkansas. Sections 9.00 through 9.03 empower the Agency to issue revenue bonds from time to time and in amounts to be determined by the Agency. The bonds shall be authorized by resolution of the Agency to be made in such denominations, to mature at such time and to bear interest at such rate as the Agency shall determine not to exceed 10 percent per annum. The bonds shall be executed by the signature of the Chairman of the Agency and the Director of the Agency. The Agency shall adopt a seal, and each bond shall be impressed with the seal of the Agency. Section 10.00 requires it be plainly stated on the face of each bond that it is issued under the provisions of Act 427 and that the bonds shall be obligations only of the Agency and that in no event shall they constitute an indebtedness for which the faith and credit of the State of Arkansas or any of its revenues are pledged. Section 10.01 provides that the principal of, interest on and the trustee’s paying agent’s fees in connection with the bond shall be secured by a lien and pledge of the loans made or mortgages purchased from the bond proceeds and the collateral security received by the Agency. Section 12.00 says that the bonds shall be exempt from all state, county and municipal taxes, except property taxes. Section 16.00 states that all revenues received by the Agency, except revenues derived from appropriation, are specifically declared to be cash funds restricted to be used solely as provided *521in Act 427. These revenues shall not be deposited into the State Treasury but deposited in an account for the Agency.
The Board of Directors of the AHDA on June 14, 1984, adopted a series of resolutions which authorized the issuance by the Agency of $150,000,000 of single family residential mortgage revenue bonds (hereinafter referred to as “Single Family Bonds”) and $30,078,090 of multi-family housing revenue bonds (hereinafter referred to as “Multi-Family Bonds”). The proceeds from the sale of the Single Family Bonds will be used by the AHDA to purchase mortgages secured by single family dwellings of families with low and moderate income as those terms are defined by the Agency. The proceeds from the sale of the Multi-Family Bonds will be used to provide funding for the rehabilitation and construction for multi-family housing projects in the State of Arkansas. These are revenue bonds to be repaid from the mortgage payments made by the owners of the single family and multi-family residences. The interest on the bonds will be exempt from federal income taxation if certain criteria are met and the bonds are issued prior to January 1, 1985. The appellant contends that the bond issues are illegal in that they violate Article 16, Section 1 and Amendment 20 of the Arkansas Constitution and that they are not for a valid public purpose.
It is the opinion of this court that for the proposed revenue bonds to be valid, they must pass two tests: 1) Not to be in violation of the Arkansas Constitution; and 2) Be for a public purpose. We have concluded that these particular bonds meet both of these tests for the reasons explained below.
1. Constitutional.
First, we point out that this case is factually distinguishable from Purvis v. City of Little Rock, 282 Ark. 102, 667 S.W.2d 936 (1984), where the court was considering bonds issued by the City of Little Rock to be paid by revenues generated under a lease to La Quinta of a motel on property owned by the City. The Purvis v. City of Little Rock, supra, bonds were issued pursuant to Arkansas Constitution *522Amendment 49, Act 9 of 1960 and Act 380 of 1971. In the case at bar, the bonds are authorized and issued by the AHDA pursuant to Act 427 and are not issued by the State of Arkansas or even in the name of the State of Arkansas. The AHDA is, by Section 4.00 of Act 427, a public body corporate and politic with corporation succession. The bonds here in question are obligations only of the AHDA and so state on their face. They do not constitute an indebtedness of the State of Arkansas under Section 10.00 of Act 427. Each bond bears the seal of the AHDA and not the State of Arkansas.
The Arkansas Constitution is not a grant of enumerated powers to the legislature but rather the legislature may rightfully excercise the power of the people subject only to the restrictions of the state or federal constitutions. Wells v. Purcell, 267 Ark. 456, 592 S.W.2d 100 (1979). In the context of this case, the Arkansas Legislature could rightfully enact Act 427 to allow AHDA to issue the proposed revenue bonds without an election by the people of this state unless prohibited by the Constitution of the United States and/or Arkansas. It is not contended by either party that any provision of the United States Constitution is applicable, but appellant does argue that Article 16, Section 1 and Amendment 20 of the Arkansas Constitution prohibit the proposed bond issues. We do not agree. The concurring opinion of Justice Dudley in Purvis v. City of Little Rock, supra, is a recent statement of the reason why:
“Our cases constitute a well developed body of precedent, now stretching over half a century, by which this court has consistently interpreted the constitution to authorize governments to incur long term debt, without elective approval, in order to make authorized improvement for public purposes when the debt is to be paid out of revenues.”
282 Ark. at 126, 667 S.W.2d at 948. See also Miles v. Gordon, 234 Ark. 525, 353 S.W.2d 157, Davis v. Phipps, 191 Ark. 298, 85 S.W.2d 1020 (1935), Jacobs v. Sharp, 211 Ark. 865, 202 S.W.2d 964 (1947) and McArthur v. Smallwood, 225 Ark. 328 281 S.W.2d 428 (1955).
*523In Miles v. Gordon, supra, suit was brought seeking an injunction to prohibit the issuance of certificates of indebtedness to finance construction of buildings at the state-supported university and colleges under Act 65 of 1961. The certificates were to be repaid with interest received from the investment income received by the State Board of Finance on state funds. This interest went into a special fund and was pledged to the payment of the certificates of indebtedness. This was the sole source from which payment could be made. This court held that Act 65 and the certificates of indebtedness were not in violation of Article 16, Section 1 of the Constitution and said:
“Article 16, Section 1, of the Arkansas Constitution provides, inter alia, that the state shall not lend its credit for any purpose whatever. The answer to that argument is simply that Act 65 does not call for the State to lend its credit. The obligation arising under Act 65 is solely that of the Reserve Fund Commission. In Brown v. Arkansas Centennial Commission, 194 Ark. 479, 107 S.W.2d 537, the same contention was made in an attack upon Act 180 of 1935. This Court, after citing language of the Act to the effect that no bond, note, or other evidence of indebtedness issued under the Act or created by the Commission should be held or construed as an obligation of the State of Arkansas, stated:
‘It is plainly manifest from this language that the bonds to be issued are not obligations of the state, but “shall be solely and exclusively the obligations of the Commission in its corporate and representative capacity.” ’
This language is too plain to be misunderstood and is not open to construction. So the state is not lending its credit and it is not issuing any interest bearing treasury warrants or scrip, and the provisions of said section of the Constitution are not invaded.”
The Miles v. Gordon decision also concluded that Act 65 of 1961 did not violate Amendment 20.
*524In the case at bar, the AHDA is issuing bonds solely and exclusively as the Agency’s obligations and Act 427 specifically provides that the bonds shall be obligations only of the Agency. Those bonds are secured by a lien and pledge of the loans made or mortgages purchased from the proceeds and the collateral security received by the Agency. Section 10.01. The purchaser has no legal recourse against the State of Arkansas in the event of default of the bonds. Therefore, we conclude that on this set of facts, the state has not lent its credit. Consequently, Act 427 and the proposed bonds to be issued thereunder are not in violation of Article 16, Section 1.
Amendment 20 of the Constitution, as pertinent to this case, provides:
. . the State of Arkansas shall issue no bonds or other evidence of indebtedness pledging the faith and credit of the State or any of its revenues for any purpose whatsoever, except by and with the consent of the majority of the qualified electors of the State voting on the question at a general election or at a special election called for that purpose.”
Section 10.00 of Act 427 specifically says:
“It shall be plainly stated on the face of each bond that it has been issued under the provisions of this Act, that the bonds shall be obligations only of the Agency, and that in no event shall they constitute an indebtedness for which the faith and credit of the State of Arkansas or any of its revenues are pledged.”
In Purvis v. Hubbell, 273 Ark. 330, 620 S.W.2d 282 (1981), this court reviewed the holdings of McArthur v. Smallwood, supra, Miles v. Gordon, supra, and Holmes v. Cheney, 234 Ark. 503, 352 S.W.2d 943 (1962). It was concluded that bonds which are clearly not general obligation bonds of the city or state but are revenue bonds payable as authorized by the legislature from special funds not available for general purposes are not prohibited by the Arkansas Constitution, and such revenue bonds do not have to be approved by an election.
*525The bonds issued under Act 427 do not pledge the full faith and credit of the state nor the state’s revenues at all. The only revenues that are to be used to repay the bonds are the collection of the principal and interest from the loans made or mortgages, purchased with the bond proceeds. These revenues received by the Agency are not to be deposited into the State Treasury but rather are restricted in their use to be used by the Agency solely for the purposes of carrying out the provisions of Act 427. Section 16.00. There is no public money, either in the form of appropriations, rentals, license fees or the like, being pledged to support the repayment of these bonds. This is even a clearer case of there being no state revenues involved than were the facts of Purvis v. Hubbell, supra, Mr Arthur v. Smallwood, supra, Holmes v. Cheney, supra, and Miles v. Gordon, supra.
Act 427 is not in violation of Article 16, Section 1 or Amendment 20 of the Arkansas Constitution, and the revenue bonds to be issued by the AHDA are not subject to the requirement of an election. The remaining question is whether these bonds are for a public purpose.
2. Public Purpose.
In reviewing whether this legislation serves a public purpose, we do so in accordance with Kerr v. East Central Arkansas Housing Authority, 208 Ark. 625, 187 S.W.2d 189 (1945):
“Public policy is declared by the General Assembly; not by courts. Unless there is something in the Constitution restraining the Legislature from saying that a designated course of conduct or a policy is for the public welfare, or unless the thing authorized is so demonstrably wrong that reasonable people would not believe that such was the legislative intent; the Act must prevail.”
The concurring opinion of Justice Dudley in Purvis v. City of Little Rock, supra, can be applied in determining whether or not Act 427 is for a public purpose. That opinion, when applied to Act 427, says that the determi*526nation of whether legislation fulfills a public purpose is a legislative decision and a court will reverse that decision only if the legislature acted arbitrarily, unreasonably or capriciously. The court should not substitute its own j udgment for that of the legislature. As the Chancellor stated in his memorandum opinion, the legislature studied the need for the creation of the Arkansas Housing Development Agency and included in Act 427 particular findings of fact as to why it felt there was a public purpose. It is to be noted that Act 427 is the enabling legislation for the issuance of the Single Family Bonds and the Multi-Family Bonds. However, both series of bonds are issued under the AHDA’s bond authorization resolutions which set forth the terms of the bonds and how the bond proceeds will be used within the confines of Act 427. So, when this court examines the public policy of the bonds, we are not only reviewing the legislation but also the administration of this Act by the AHDA.
The evidence in the trial court concerning public purpose was either stipulated or uncontradicted.
As to the bond issue for single family dwellings, the proof shows that, at least in 1974, 70 percent of the state’s population was unable to afford a home through conventional private financing. The loan supported by the Single Family Bonds will be available only to families with annual incomes of $40,000 or less plus an additional $2,000 for each dependent. The interest rate for loans made under the bond issue is anticipated to be 11.5 percent, and the conventional loan interest rate is between 14 percent and 14.25 percent. Consequently, 20,000 potential home buyers would be eliminated from the housing market if the proposed bond issue is not implemented. The minimum qualifying income for a conventional loan of $37,000 is $21,469.68 per year. The qualifying annual income under the AHDA Single Family Bonds is $18,070.32. The median income in Arkansas is $19,737.00. Therefore, the proposed bond issue will allow families with less than the median income to purchase a home and save approximately $28,500 in interest over the life of a 30-year mortgage on a $37,000 loan. The testimony is that the AHDA bonds bring low and moderate income buyers into the housing market making it possible for them *527to obtain home loans where otherwise not available. There is a public purpose served by aiding the low and middle income residents of Arkansas to secure adequate housing which would otherwise be beyond their reach.
As to the Multi-Family Bond issue, 51 percent or more of the occupants must be families whose incomes do not exceed 1.5 times the median income of the State of Arkansas or the county in which the project is located, whichever is greater. Twenty percent of the occupants must have incomes of less than 80 percent of the median income. This is necessary because Act 427 does say that the bonds issued by the AHDA are to be tax exempt. To qualify as tax exempt, the Multi-Family Bond proceeds must be used to provide projects for residential rental property where 20 percent or more (except in “target areas”, where it is 15 percent) are to be occupied by individuals of low or moderate income, meaning the percentage of median gross income shall be 80 percent. 26 USCA Section 108. These requirements are to assure an “economic mix” of tenants. The testimony is that this will result in greater overall stability of the multi-family project, because there will be a mixture of economic households rather than being solely low income persons. This is to avoid the adverse consequences of isolating low income households. Wooten Epes, Executive Director of AHDA, testified that the requirement of 20 percent of the units in the project be reserved for persons whose income is not more than 80 percent of the median income is a form of rent subsidy for the poor. The developer will have to charge higher rent for the remainder of the units to generate enough cash flow to repay the indebtedness secured by the mortgage on the project that is pledged to the AHDA under the bond issue.
The concept of an ‘ ‘economic mix” in housing has been recognized in other jurisdictions as being for a public purpose by both courts and legislatures. The dominant intention of Act 427 is to provide adequate housing to people of low and moderate income. The concentration of low income families even in standard structures has been recognized as not eradicating undesirable housing or social conditions for the poor. However, integrating the housing *528of persons with varied economic means in the same rental projects and neighborhoods is conducive to the permanent elimination of substandard living conditions. Massachusetts Acts 1966, Chapter 708, Section 2; Tedford v. Massachusetts Housing Finance Agency, 459 N.E.2d 780 (Mass. 1984). This concept encourages the investment of private capital and stimulates construction of residential housing for the low and moderate income people by stabilizing the longevity of the project with an economic mix of residents. Virginia Housing Development Authority Act, Code Section 56-55.25; Infants v. Virginia Housing Development Authority, 272 S.E.2d 649 (Va., 1980). Act 427 states in Section 2.00 the legislature’s concern over depreciated property values, impaired economic values of large areas and reduced capacity to pay taxes where there exists a shortage of safe, adequate and sanitary residential housing in the state. We are persuaded by the reasoning of Infants v. Virginia Housing Development Authority, supra, that promotion of economic and social integration in low and moderate income housing will serve to reduce unsatisfactory social conditions in the rural and urban areas of this state. This intermingling of households of different economic strata reflects a legitimate public purpose of avoiding ethnic, economic and racial isolation. California Housing Finance Agency v. Elliot, 551 P.2d 1195 (Cal., 1976).
It is not overlooked that persons with unrestricted incomes will have access to possibly 49 percent of the multifamily housing allowed to be financed with Multi-Family Bonds. It is our conclusion that this is incidental and subordinate to the primary purpose of providing satisfactory housing for the poor and moderate income citizens of this state. In Grubbs v. Iowa Housing Finance Authority, 255 N.W.2d 89 (Ia., 1977), the Supreme Court of Iowa held a housing finance plan that required 30 percent of all housing units be for the elderly, handicapped and very low income to be for a public purpose and said:
"This built-in flexibility is reasonably designed by the legislature to promote the goal of adequate housing for the designated beneficiaries of the enactment, and does *529not convert a public policy into an unconstitutional private purpose.”
Hogue v. The Housing Authority of North Little Rock, 201 Ark. 263, 144 S.W.2d 49 (1940), held that housing for the low and moderate income is a valid public purpose. The Legislature has stated in Sections 2.00 through 2.02 of Act 427 that the statute is for a public purpose. The uncontradicted and stipulated proof in this case is that the statute and its administration by the AHDA with the proposed bond issue are for a public purpose. The Chancellor found the bonds to be for a public purpose. This court’s standard for reviewing a Chancellor’s finding of fact is that his decision will be affirmed unless clearly against the preponderance of the evidence. For the reasons set forth above, we are unable to say that the Chancellor erred in finding the issuance of the Single Family Bonds and the Multi-Family Bonds is for a valid public purpose.
We affirm the Chancellor’s dismissal of the appellant’s complaint.
Hubbell, C.J., and Hollingsworth, J., not participating.
Purtle, J., concurs. Hickman, J. dissents.