Community Development Block Grants at 40: Time for a Makeover

Abstract

This article reviews the origins and evolution of the Community Development Block Grant (CDBG) program, the federal government's largest program providing direct assistance to local governments. The article examines the program's changing national policy context over its 40-year history, as manifest in presidential, executive, and legislative deliberations over the program's national goals and objectives, as well as the key components of the program's policy design and administrative structure. The article also explores how the decisions affecting policy design adopted at the national level play out at the local level, through an examination of the choices communities have made regarding uses of CDBG funds and the social and geographic targeting outcomes that have been obtained. The article then revisits the extent to which the CDBG program conforms with the basic characteristics of block grants. The article concludes with several recommendations for revising CDBG that will provide a policy tool better aligned with the new community-building paradigm that has emerged over the past two decades, with its emphasis on collaborative, comprehensive, community-based initiatives.

Keywords::

• Community Development Block Grants
• CDBG
• neighborhood revitalization
• federal urban policy

Acknowledgments

I thank Steve Johnson, director of the Entitlement Communities Division in the Office of Block Grant Assistance at the U.S. Department of Housing and Urban Development for several helpful conversations and assistance in procuring the entitlement communities data extracts that were analyzed for this article. I also thank Paul Dommel, William Rohe, and the two anonymous reviewers for their helpful comments on earlier drafts of this article. Portions of pages 9–14 were previously published in Rich (1993) and are reprinted with permission from Princeton University Press.

Notes

^1. These included Partnership for Health (1966), Safe Streets (1968), and Comprehensive Employment and Training (1973). A fourth, Social Services Block Grant, was not formally recognized as a block grant until 1975, when Congress moved to cap spending under open-ended provisions of the Social Security Bill adopted in 1956 that permitted states to spend funds on a broad range of social services to support families and children. See Finegold et al. (2004) and Waller (2005) for an overview on block grants; see Derthick (1975) for a detailed portrait of the origins of the Social Services Block Grant.

^2. For discussion of the nonentitlement component of CDBG see Jennings, Krane, Pattkos, and Reed (1986) and Rich (1993).

^3. Among the programs affected were public housing, all private rental assistance programs, Urban Renewal, and Model Cities. Previously approved projects and activities were permitted to continue, but no new commitments would be made. See Hays (2012, p. 135) and Orlebeke (2000, pp. 500–502).

^4. The inclusion of urban counties as entitlement jurisdictions was hotly contested during the legislative process. The National League of Cities saw urban counties as a direct threat to cities and sought to have urban counties excluded as entitlement jurisdictions or limited to discretionary funding. As Nathan et al. (1977, p. 47) noted, their inclusion “attests to the growing influence in Congress of suburban jurisdictions and of county government in general.”

^5. The Secretary's special discretionary fund supports the CDBG program for Indian Tribes and Alaskan Native Villages, the CDBG Insular Areas program, technical assistance programs, special projects, and demonstration programs, such as the Economic Development Initiative, the Neighborhood Initiative, and the Sustainable Communities Program. Funding for the secretary's discretionary fund increased from $27 million in FY 1975 to $102 million in 1981. Over the last decade the amount of funding and number of programs supported has varied widely (e.g., $647 million in FY 2001, $61 million in FY 2007). See Boyd (2012).

^6. To ease the transition to formula funding, the CDBG legislation provided for hold harmless entitlements, based on a jurisdiction's annual average funding (1968–1972) under the eight categorical programs folded into the CDBG program. For CDBG's first three years, they would receive the larger of their formula grant or the hold-harmless grant; in year four, their hold-harmless grant would be phased down by one-third, and in year five, by two-thirds; and in year six they would receive their full formula entitlement.

^7. In addition to HUD's annual reports to Congress on the CDBG program, these included studies by the Brookings Institution, the National Association of Housing and Redevelopment Officials, the General Accounting Office, and the National Urban League. See HUD (1978, p. 54) for a discussion of their findings.

^8. Although both Nixon and Reagan used the term “New Federalism” to describe their visions of how the national government should relate to subnational governments, they encompassed very different philosophies. For a discussion of these differences, see Conlan (1988, 1998). The Reagan quote is from Commission on Presidential Debates, The Carter-Reagan Presidential Debate, October 28, 1980.

^9. Personal interview with HUD area office CPD director, March 21, 1991.

^10. The consolidated plan would superseded the five- and one-year Comprehensive Housing Affordability Strategy, the HOME program description, the community development plan, applications for ESG and HOPWA funds, and the CDBG final statement of proposed uses of funds. See Turner et al. (2002).

^11. The PART, however, is not without controversy. Many have questioned the feasibility of using the PART as a “one size fits all” assessment tool for federal programs that “does not recognize congressional decisions to enact programs in different forms” (Gueorguieva et al., 2009). For example, the Center for Effective Government (2005) reported that more than 40% of all block grant programs included in the FY 2005 and FY 2006 PART reviews were scored as ineffective.

^12. The Strengthening America's Communities Advisory Committee was composed of representatives from state and local government, the private sector, nonprofit organizations, and research institutions. In protest of the Administration's SACI proposal, several national organizations that represent state and local governments and community development organizations chose not to submit nominations for the committee. See Boyd et al. (2006, p. 9).

^13. Several bills introduced in the House and Senate in 2011 and 2013 under the title “CDBG Public Services Flexibility Act” were designed to increase the percentage of CDBG funds that could be used to provide public services. Hearings were held in the House and Senate in 2009 to examine the use of CDBG funds in disaster recovery, and one hearing was held in the House to examine the use of census data in determining federal grant allocations to state and local governments.

^14. The data for 1975–2000 are from HUD's annual and consolidated reports on the CDBG program and are based on an analysis of planned and actual uses of CDBG funds in about 200 entitlement communities; data from 2001–2012 are from HUD's “CD matrix” and are based on expenditures in all entitlement communities.

^15. Communities that allocated more than 10% of their funds for public services were permitted to apply for a waiver for fiscal 1982 through 1984 in order to gradually phase down their service commitments.

^16. Recipients that exceeded the percentage cap could allocate CDBG funds in future years up to the amount spent or the percentage of funds used for services in either fiscal 1982 or 1983, whichever was greater.

^17. The sample, which includes 231 entitlement jurisdictions, includes all cities with a population of 250,000 or more (n = 134) and a random sample of smaller cities (n = 48) and urban counties (n = 49).

^18. On studies of the CDBG formula allocation system, see Bunce (1976), Nathan et al. (1977), Bunce and Goldberg (1979), Bunce, Neal, and Gardner (1983), Dommel and Rich (1987), Neary and Richardson (1995), Richardson, Meehan, and Kelly (2003), Richardson (2005), and Joice, Winter, and Johnson (2011).

^19. Examples include assistance that reduces the development cost of new construction of nonelderly multifamily rental housing that includes at least 20% of the units for LMI households at affordable rents and job creation or retention activities A person is presumed to be LMI if they reside in a census tract or block group that has a 20% poverty rate and evidences pervasive poverty and general distress, or an area that is within a federally designated empowerment zone or enterprise community, or an area where at least 70% of the residents are LMI.

^20. For a visualization of these differential effects on CDBG entitlement communities (Basically CDBG, HUD 2007), see the interactive online map, “U.S. Department of Housing and Urban Development, Redistribution Effects of Introducing 2011 Population Estimates and 2006–2010 ACS Data into the CDBG Formula” (available at http://www.huduser.org/maps/CDBG_Reintroduction_Map.html).

^21. CDBG has also been the platform selected to distribute federal assistance to the recovery and mitigation efforts of communities affected by a variety of natural and man-made disasters (Boyd, 2012). The most recent example includes $16 billion in federal assistance awarded in January of 2013 through CDBG to communities affected by Hurricane Sandy. Other examples include the Gulf Coast hurricanes of 2005 (Katrina, Rita, and Wilma) and several other hurricanes, tropical storms, floods, and earthquakes. CDBG was also used to help in recovery efforts following the terrorist attacks of September 11, 2001, the Oklahoma City bombing, and the 1992 riots in Los Angeles.

^22. The replaced all of the additional planning and application requirements associated with the programs covered under the consolidated plan, which meant that the Annual Plan would be the sole document providing information on a jurisdiction's proposed uses of funds (covering all four programs) that would be submitted to HUD.

^23. HUD required local jurisdictions to consult with local nonprofits, advocacy groups, and service providers in assessing local housing needs and strategies, and also to obtain citizen input on draft versions of the consolidated plan and to hold at least two public hearings for citizen review of and comment on the proposed plan and strategies (Turner et al., 2002, pp. 4–7).

Additional information

Notes on contributors

Michael J. Rich

Michael J. Rich is an associate professor of political science and environmental studies and executive director of the Center for Community Partnerships at Emory University. He is the author of Federal Policymaking and the Poor (Princeton University Press, 1993), Collaborative Governance for Urban Revitalization (with Robert Stoker, Cornell University Press, 2014), and several publications on federalism and a variety of urban public policy topics, including community development, housing and homelessness, crime, and economic development. His current research focuses on community building, neighborhood revitalization and local poverty-reduction strategies, particularly concerning issues relating to cross-sector collaboration and the revitalization of urban communities.