Community Development
Block Grants at 40:
Time for a Makeover
Michael J. Rich
Emory University
Department of Political Science
Center for Community Partnerships
Urban Affairs Association
n
San Antonio, TX
n
March 21, 2014
Context for Reform
Problems
• Number of grant programs tripled
between 1960 and 1968
• Grants tended to go to special
purpose governments
• Duplication, overlap, narrow
categories of aid, variable
matching rates, funding
uncertainty, grantsmanship v.
need
• Federal government’s role
become “bigger, broader,
deeper”
Solutions
• Creative Federalism Hearings
– Mayors called for block grants
• Nixon’s domestic policy agenda
– Executive branch reorganization
• 4 “super” agencies including
Community Development
– Intergovernmental reform
• New Federalism
• General Revenue Sharing
• Six special revenue sharing programs
that would consolidate 129
programs, about half of all federal
aid at the time
CDBG Structural Features
Feature
Nixon Proposal
CDBG
Grant type
Special revenue sharing
Block grant
Scope
Community development
Community development
Eligibility
Local governments
Local governments
Funding distribution
Formula
Formula
Application
None
Yes
National goals
None
Yes
Use of funds
Locally determined
Locally determined within
federal guidelines
Grant consolidation
6 programs
8 programs
Housing and Community Development Act of 1974
Passed Senate, 80-4
Passed House of Representatives, 377-21
CDBG: Views from Washington
• Swinging pendulum between categorical grant
and general revenue sharing
• Presidential administrations (and Congress)
oscillated on key features of CDBG
• Despite bipartisan consensus in legislative
enactment, many differences remained
(emerged) during implementation
• These differences largely centered on the
federal role
Points of Contention
• “Three national objectives”
– Maximum feasible priority to activities which will
benefit low- or moderate-income families
– Aid in the prevention or elimination of slums or
blight
– Meet other community development needs
having a particular urgency
• Social targeting: 1 of 3 or primary goal?
• Extent of Federal review and oversight
Carter Administration (1977-1980)
What Happened in CDBG
• 1977 Legislative changes
– Dual Formula allocation system to increase targeting to
distressed cities and counties
– Economic development as an eligible activity
• Administrative changes
– Social targeting
• Application review—conditional approvals
– Geographic targeting—NSAs
• Restricted public services to NSAs
– Citizen participation plan
Reagan Administration (1981-1988)
What Happened in CDBG
– Deregulating CDBG
•
•
•
•
Application and HUD review eliminated
Social targeting—eliminated percentage threshold reviews
Geographic targeting—rescinded NSAs
Citizen participation—eliminated CP plan
– Social Targeting contested
• 1983 reauthorization set 51% threshold
• 1987 reauthorization set 60% threshold
• HUD did not issue regulations implementing LM thresholds
until September 1988
Bush Administration (1989-1992)
What Happened in CDBG
• LM benefits threshold increased to 70%
What Didn’t Happen
– CDBG reforms
• Social targeting increase to 75%, 100% in affluent communities
• Change method for calculating social targeting
• Fold CDBG into a mega block grant to the states
Clinton Administration (1993-2000)
What Happened in CDBG
– Sharp rise in CDBG funding
– Consolidated Plan—CDBG, HOME,
Emergency Shelter Grants, HOPWA
– On-site CDBG entitlement
community monitoring declined by
90% between 1990 and 1998
Other HUD
– Empowerment
Zones and
Enterprise
Communities
– HOPE VI
Bush Administration (2001-2008)
What Didn’t Happen in CDBG
CDBG Reform
– Revise formula allocation system
– New performance evaluation system
– Program consolidation
• CDBG consolidated into new block grant under control of
Commerce Dept.
– Sharp funding reductions
Obama Administration (2009-)
What Happened in CDBG
– CDBG key tool in addressing
recession
– No formal hearings or legislation
introduced to address CDBG reform
– Despite initial rise in early years
(10%), sharp funding reductions
(25%) between 2010-2012
Other HUD
– Neighborhood
Revitalization
Initiative
– Choice
Neighborhoods
– Sustainable
Communities
Initiative
Entitlement Funding and Jurisdictions
3,500,000
1400
3,000,000
1200
2,500,000
1000
Funding ($000)
Entitlement Communities
2,000,000
800
1,500,000
600
1,000,000
400
500,000
200
Ford
0
Carter
Reagan
Bush
Clinton
Bush
Obama
0
Number of Entitlement Communities
Entitlement Funding
CDBG Funding and Need
Richardson, CDBG Formula Targeting to Community Development Need, 2005
Uses of CDBG Funds
45
40
Housing
35
30
Public Improvements & Facilities
25
20
Planning & Administration
15
Public Services
10
5
Acquisition & Clearance
Economic Development
0
1975
1980
1985
1990
1995
2000
2005
2010
2012
Uses of CDBG Funds
Program Income
Geographic Targeting
THEN:
Carter Administration -- NSAs
• Encourage concentration of
CDBG activity
• Limited public services to
NSAs
• More than 75% of
entitlement communities
established NSAs
• NSAs received about half of
all CDBG funds invested in
1979 and 1980
NOW:
Local Target Areas 1995-2012
– Increased flexibility for
housing and economic
development
– Exemption from services cap
– About half of CDBG
entitlements jurisdictions
identified at least one local
target area; 17% had at least
one NRSA
– About 17% of CDBG funds
invested in local target areas
(32% unweighted)
Geographic Targeting
Whose Targeting?
Social Targeting
THEN
• Lack of consistency in
measuring social targeting
in early years of program
• Social targeting increased
under Carter
• Studies show social
targeting estimates vary
widely from what local
jurisdictions report
NOW
• Direct benefit activities
• Area benefit activities (51%
or more LMI persons)
• Exception (upper quartile of
all census block groups)
• Little variation across
entitlement cities—96% in
low poverty jurisdictions vs.
99% in high poverty
jurisdictions
1. Federal aid is authorized for a wide range of
activities within a broadly defined functional
area and allows its recipients greater program
discretion
Scope
1975
2010
CDBG as % of all outlays in community and regional
development
53%
19%
CDBG as % of HUD outlays
31%
7%
Neither the statute nor administrative regulations have significantly constrained
the choices entitlement communities may make regarding the allocation of their
CDBG funds
2. Eligibility provisions are statutorily specified
and favor general purpose governmental units
as recipients and elected officials and
administrative generalists as decision makers
• More than 100 communities have been
“grandfathered” into the CDBG entitlement program
and account for more than $75 million
• Nearly one-third of CDBG entitlement communities are
cities with populations less than 50,000
• Institutional transformation at local level—new
departments and agencies with responsibility for
housing and community development
– Over 60% of lead agencies have community development
in their title
3. Federal aid is distributed on the basis of a
statutory formula, which results in narrowing
federal administrator’s discretion and providing
a sense of fiscal certainty to recipients
• Entitlements have broadly expanded the number of
recipient communities
• Formula funding has brought greater fiscal certainty
• Less evidence that formula funding has yielded a
distribution system more responsive to need than the
discretionary system it replaced
4. Administrative, fiscal reporting, planning, and
other federally imposed requirements are kept to
the minimum amount necessary to ensure that the
national goals are being accomplished
• Depth and scope of requirements have oscillated
across presidential administrations
• “minimum” and “necessary” represent competing
tensions in the struggle to define CDBG. Both terms
defined in the eyes of the beholder.
• Processes that appear comprehensive and
performance-oriented may not necessarily translate to
practices that promote efficiency and effectiveness at
the local level
Recommendations:
Improve targeting to need
• Revise the formula allocation system to
improve targeting to community need
• The formula alone cannot carry the entire
burden of improving targeting. One must also
examine the eligibility criteria for determining
entitlement status
• Enhance geographic targeting
• Enhance social targeting
Recommendations:
Strengthen the process
• Strengthen the consolidated planning
requirements
– Strategies v. block grant spending plan
• Strengthen citizen participation requirements
– Promote citizen engagement
– Invest in CBOs to build their capacity to become
effective partners
Recommendations:
Local intermediaries
• Paradigm shift underway, from community
development (real estate development model, housing
production) to community building (collaborative,
comprehensive, community-based initiatives)
• Asset-based, holistic, strategic planning, community
engagement, cross-sector
• Local intermediaries key ingredient of success
– Support relationships among groups, build capacity, steer
strategic investments to communities, lead planning
process, manage implementation, ensure accountability