Increase HUD Community Development Block Grant (CDBG) program funding to $3.3 billion
The Challenge
Each city and town is different, and so are its housing and community development needs. HUD has allocated flexible grants to cities and states through its Community Development Block Grant (CDBG) program for over 40 years. The program is a crucial source of funding for a wide range of local projects, including filling funding gaps in the development of affordable housing, remediating lead exposure, funding infrastructure improvements and supporting code enforcement and other essential municipal services that have a real impact on the quality of a city’s housing stock. However, CDBG funding has been cut by 25 percent since 2010, even as demand continues to grow. In 2017 Congress appropriated $3 billion in CDBG funds, which is only about one-fifth of the 1975 funding level after adjusting for inflation. The Trump administration’s budget outline for fiscal year 2018 proposed eliminating the HUD CDBG program entirely, along with the elimination of the HOME Program and other significant cuts to affordable housing programs.73 While Congress has soundly rejected the Administration’s proposal to eliminate the CDBG program, low budget caps placed on non-Defense discretionary spending, which includes housing and community development programs, reduce the overall amount of resources available for vital programs like CDBG.
The Opportunity
The CDBG program has enjoyed bipartisan support since its inception, in part because every $1 billion in CDBG funds creates about 5,500 short term and permanent jobs. In 2016 alone, CDBG investments created or retained 17,454 jobs nationwide. The program also leverages significant private investment in historically underserved communities: between 2010 and 2012 grantees reported that every $1.00 of CDBG funds leveraged an additional $4.07 of other funds. According to a report by HUD, cities that choose to participate in the CDBG Section 108 Loan Guarantee Program were able to leverage on average $4.62 of additional funds (private, federal, state, and local) for every $1.00 of federal funding. The CDBG program is arguably the most flexible funding the Federal Government provides for mayors to achieve their resilience, housing, infrastructure, economic development and other community development goals. Almost every resilience action championed throughout this document could be funded at least in part by CDBG, if Congress were to appropriate the necessary resources.
Action Steps
Legislative
Members of the House and Senate Appropriations Transportation, Housing and Urban Development (THUD) subcommittees should stabilize and support the CDBG program by allocating at least $3.3 billion in funding for CDBG in coming years. Additional years’ funding should be commensurate with current community need and initial levels set forth in the program in 1974 and adjusted for inflation. Congress should also work with HUD and past CDBG-DR recipients to authorize a permanent CDBG-DR program.
Executive
HUD should provide guidance to allow cities to better leverage CDBG dollars for private investment in housing. For example, HUD should help cities establish CDBG-supported revolving loan programs that generate income and redeploy the capital over time. HUD should solicit grantee feedback on how to update its housing and economic development regulations to make it easier to use HUD CDBG to leverage private investment in properties with both residential and commercial uses, attracting renters of various income levels.
