Friday, May 7, 2010

Community Development Block Grants (CDBG)

The Community Development Block Grant (CDBG) is an adaptive program administered by the U.S. Department of Housing and Urban Development. The program began in 1974 as resource assistance for a variety of community development needs. The Federal program provides annual grants on a formula basis to 1209 general units of local government and States. The program provides for a variety of program areas including Entitlement Communities, State Administered “Small Cities” CDBG, Section 108 Loan Guarantee Program, Neighborhood Stabilization, CDBG Insular Communities, Disaster Recovery Assistance, Non-entitlement CBDGs in Hawaii, and Colonias. Each of the programs addresses an issue in the mission to support families to find affordable house, jobs, and meet community needs.

The previous approach prior to 1974 of “top down” community development from the Federal level did not achieve the results The CDBG grant allows a more bottom up approach for the community to decided what types of support they need at a current time. These communities that have a strong network of bottom up approach will also attract a certain type of developer based on public support.
Block grants provide the opportunity for political organization of local development projects because of the support of Federal funding awards. The differences in the CDBG are due to the need to support the diverse needs of structurally and geographically different communities.

The differentiation between the types of programs depends on the size of the municipality or jurisdiction that is delivering the resources. Entitlement Communities are for larger cities and addresses the housing, built environment, and jobs for low and m
oderate income residents.

According to HUD, eligible entitlement grantees have the following characteristics:

  • Principal cities of Metropolitan Statistical Areas (MSAs)
  • Other metropolitan cities with populations of at least 50,000
  • Qualified urban counties with populations of at least 200,000 (excluding the population of entitled cities) are entitled to receive annual grants.

Smaller cities, counties, and other local forms of government can apply for CDBG funding from the State administration of non-entitlement areas or areas with populations less than 50,000 and counties with popula
tions less than 200,000. Another source of funding are Section 108 loans which are long-term, fixed-rate financing tools to finance economic development, housing rehab, public facilities rehab in order to also benefit low to moderate income residents. Insular Areas such as eligible Territories are also included and funded for similar purposes.

CDBG funds may be used for activities, which include, but ar
e not limited to:
  • Acquisition of real property
  • Relocation and demolition
  • Rehabilitation of residential and non-residential structures
  • Construction of public facilities and improvements, such as water and sewer facilities, streets, neighborhood centers, and the conversion of school buildings for eligible purposes
  • Public services, within certain limits
  • Activities relating to energy conservation and renewable energy resources
  • Provision of assistance to profit-motivated businesses to carry out economic development and job creation/retention activities

A special purpose CDBG is the Colonias set-aside program for
communities on the U.S.-Mexico border. These are 10% of State allocated funds set aside for the pupose of funding water and sanitation projects specifically. These services are designed to meet the basic needs of public service


As a part of the Federal Recovery Act of 2009, the CDB
G included grants known as CDBG-R for recovery. The Recovery Act included $1 billion appropriation or CBDG. The requirements for the CDBG-R according to the grant applications include providing the activity name, narrative, jobs created, organizations responsible. Under the Recovery Act, recipients shall give priority to projects that can award contracts based on bids within 120 days of the grant agreements.


According to the Community development block grant CDBG critics believe that the programs do allow for a certain level of flexibility but argue that the ambiguous goals and lack of accountability lead to inefficiencies in the funding. The discrepancies of the targeted beneficiaries of the grant funding can be disproportional. Communities with low need for Federal support can receive higher levels per capita of support. The flexibility in the system to support entitled larger jurisdictions and the discretion of the state to select any community projects that would fit the flexible goals has lead to some inefficiency in the system. These are just specific example, however, overall the system does support the those with the highest need receiving the most benefit. The general trend of the needs index is that communities with the most need receive the most benefit from the CBDG.

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