The Community Development Block Grant (CDBG), one of the longest-running programs of the U.S. Department of Housing and Urban Development, funds local community development activities such as affordable housing, anti-poverty programs, and infrastructure development. CDBG, like other block grant programs, differ from categorical grants, made for specific purposes, in that they are subject to less federal oversight and are largely used at the discretion of the state and local governments and their subgrantees.
CDBG funds are allocated to more than 1,100 local and state governments on a formula basis, at $4.7 billion in FY2005. Larger cities and urban counties, called "entitlement communities," are required to prepare and submit a "Consolidated Plan" that establishes goals for the use of CDBG funds. Grantees are also required to hold public meetings to solicit input from the community, ensuring that proposed projects are aligned with the community's most urgent needs.
Proposed CDBG projects must be consistent with broad national priorities for CDBG: activities that benefit low- and moderate-income people, the prevention or elimination of slums or blight, or other community development activities to address an urgent threat to health or safety. CDBG funds may be used for community development activities (such as real estate acquisition, relocation, demolition, rehabilitation of housing and commercial buildings), construction of public facilities and improvements (such as water, sewer, and other utilities, street paving, and sidewalks), construction and maintenance of neighborhood centers, and the conversion of school buildings, public services, and economic development and job creation/retention activities. CDBG funds can also be used for preservation and restoration of historic properties in low-income neighborhoods.
The Community Development Block Grant (CDBG) was enacted in 1974 by president Gerald Ford through the Housing and Community Development Act of 1974 and took effect in January 1975. It had bipartisan support, reportedly because liberal legislators shared its goal of extinguishing poverty and "urban blight" and conservative legislators appreciated the control it placed in the hands of private investors and the reduction it made in the role of the government. Cities automatically qualified for the grant if they met the requirements, but were required to submit allocation reports (showing to whom and where the money was spent) and quarterly reports to the United States Department of Housing and Urban Development. HUD's records were disputed, and there were complaints that Southern cities, in particular, spent grant money in affluent neighborhoods. CDBG funds were distributed in such a way as to generate a bias against older (declining) frostbelt cities, cities that were losing population to the sunbelt.
When Congress re-authorized CDBG in 1978, they instituted a dual formula to strengthen controls on how money was spent and to better serve communities with different types of problems. Formula A (based on poverty rate, population, and overcrowding) typically benefits rapidly growing cities with high poverty that lack affordable housing. Formula B (based on age of housing stock, poverty rate, and growth lag) tends to benefit older cities with large amounts of old and deteriorating housing. HUD calculates both formulas for all entitlement grantees and awards the larger amount, but Congressional appropriation has ultimate determination on program funding. The 1978 re-authorization also required HUD to award a "rural set-aside" of at least 30% of all CDBG funds to states for projects in rural areas.
Recent Congressional changes have created additional small CDBG set-asides that fund programs in minority-serving universities (Section 107), in US territories such as Guam, and for large-scale rehabilitation loans (Section 108).
In response to Hurricane Katrina, Congress authorized HUD an additional $4.2 billion in CDBG funds for recovery of the Gulf Coast Region in 2006.
In order to receive CDBG funds, applicants must identify urgent needs of the community, and solicit project ideas and plans from citizens and local organizations that address those needs. Thus, the CDBG program represents a significant shift in how the federal government addresses poverty and blight. Some researchers argue that because CDBG is a bottom-up program it is significantly more successful than previous programs. Others have said CDBG's scope of allowed activities is too broad, making it difficult to measure program performance.
Marcus, Seth R. "Community Development Block Grants." In Goldfield, David R. (ed.) _Encyclopedia_of_American_Urban History_. Sage, 2006.