Why Washington Should Invest in Community Development Block Grants

From large metropolitan centers to rural villages, investment matters. Even the tiniest of contributions in our communities can make all the difference. In low and moderate-income (LMI) areas, where private investment rarely flows without public incentives, federal investment can make all the difference.

For many members of Congress, the question is not whether federal investment helps LMI people but rather how to optimize its effectiveness. For our cities, towns and villages, however, the answer is clear—allocate greater funding through the Community Development Block Grant program (CDBG).

On July 23, nearly 45 years after the program was signed into law in the Housing and Community Development Act, the CDBG Coalition—of which National League of Cities is a member—released the new report, “CDBG: Impact and Funding Need”, and hosted a briefing on Capitol Hill to reiterate the program’s purpose and success; and to illustrate its oversight, benefits and needs.

Among the major findings of the report, annual funding for CDBG has fallen far below need. As a result. local projects are being been, delayed, scaled-back, and eliminated. Over 92% of 253 local governments that responded to a CDBG Needs Survey reported reductions in projects or services as a direct result of CDBG funding cuts, and nearly 70% have eliminated some programs altogether because of a decrease in CDBG funding.

CDBG was signed into law by President Ford in 1974 as a program that provides funding to state, local and insular governments with enough flexibility to use the funds on their community’s priorities. In 1975, CDBG was initially funded at $2.4 billion, which was allocated to 594 state and local governments. Today, the number of CDBG grantees has doubled to 1,268.  However, because the CDBG program has never been adjusted for inflation, total funding is stuck at approximately $3 billion, The new report notes that if the program were adjusted for inflation, $2.4 billion in 1975 would have the same buying power as $11.2 billion today.

Despite the drop in purchasing power, regulations and reporting requirements have grown. To earn CDBG awards, prospective grantees submit a Consolidated Plan. This plan provides HUD with the prospective grantees wholistic approach to implementing their award while detailing community needs and priorities. Then, once the state, county or municipality receives their award, each year they submit a Consolidated Annual Performance and Evaluation Report to update HUD about their project’s progress. These procedures function as the oversight element of the program, ensuring that CDBG recipients are using the funds appropriately and effectively.

An effectively implemented CDBG award provides decent housing, creates a suitable living environment or expands economic activity. Within these goals, grantees can pursue a short list of projects categorized under the following activities: public facilities and improvements, affordable housing, public services and economic development. Or, grantees can borrow up to five times the amount of their award through Section 108 loans. Yet, even CDBG awards alone inspire more investment.

The Department of Housing and Urban Development reports that for every $1.00 federal investment through CBDG another $4.09 in private and public funds are leveraged. These leveraged funds allow communities to make large investments in LMI neighborhoods, where public services, affordable housing and economic development are needed the most. Typically, states, counties and municipalities distribute CDBG awards to local partners, who they collaborate with on the Consolidated Plan. Then, in coordination, the groups invest in development projects. Therefore, CDBG effectively acts as the catalyst for investment in at risk LMI areas that may otherwise not receive any substantial funding.

At the CDBG Coalition Congressional Briefing, Patrick Wojahn, mayor of College Park, Maryland, spoke for local leaders to the benefits of the program. He described how CDBG funds allow College Park to mediate the student exodus every summer from the University of Maryland by building more affordable housing for permanent residents, including the university’s faculty and staff. Consequently, local business will not be hit as hard when the students leave. Ultimately, CDBG is used on this project to maintain and create jobs, as well as build housing and roads.

This year, NLC and the CDBG coalition are urging Congress to continue on the path of incremental funding increases with an allocation of $3.8 billion for CDBG in FY2020. To add your support to this effort, you can add your city or organization as a supporter of greater funding for CDBG at this link.

The Letter of Support link is maintained by the National Community Development Association, which chairs the CDBG Coalition.

About the Authors: Michael-Wallace-small.jpgMichael Wallace is the Program Director for Community and Economic Development at the National League of Cities. Follow him on Twitter @MikeWallaceII.



Z.Gossett.jpgZachary Gossett is the Federal Advocacy Intern at the National League of Cities and Butler University student in Indianapolis, Indiana.