FY 1998 SuperNOFA Guidebook

Community Development Block Grants (CDBG)

The Community Development Block Grants (CDBG) Program is HUD's primary program for promoting community revitalization throughout the country. CDBG provides annual grants on a formula basis to more than 900 metropolitan cities and urban counties (entitlement recipients). In addition, it provides formula-based grants to 49 States and Puerto Rico for distribution to smaller, nonentitled communities (HUD directly distributes funds to nonentitled communities in New York and Hawaii). CDBG funds are used for a wide range of community development activities directed toward neighborhood revitalization, economic development, and improved community facilities and services. Activities that can be funded with CDBG dollars include acquisition of real property; acquisition and construction of public works and facilities; code enforcement; relocation assistance; reconstruction and rehabilitation of residential and nonresidential properties; provision of public services, such as child care, drug abuse, crime prevention, and education; provision of special economic development assistance; assistance to community-based development organizations for neighborhood revitalization, community economic development, and energy conservation projects; homeownership assistance; and planning and administrative costs.

Each activity must meet one of the CDBG program's three national objectives: (1) to benefit low- and moderate-income persons (primary objective), (2) to aid in the prevention or elimination of slums or blight, and (3) to meet other community development needs that present a serious and immediate threat to the health or welfare of the community. Over a 1-3 year period, at least 70 percent of the funds spent by a grantee must be used for activities that benefit low- and moderate-income persons.

For FY98, $4.7 billion (less approximately $481 million in set-asides) is appropriated for the CDBG program. This is the second largest single appropriation line item�excluding housing loan guarantees�in HUD's FY98 budget. Approximately $4.2 billion is available for distribution: 70 percent of CDBG dollars is allocated to metropolitan cities and counties known as "entitlement communities", and the remaining 30 percent is allocated to States under the State Community Development Block Grant program for distribution to nonentitled units of general local government (note that HUD distributes funds to nonentitled units of general local government in the states of New York and Hawaii). Allocations are made on the basis of a dual formula that takes into account the factors of population, poverty, overcrowded housing, age of housing, and growth lag. Entitlement communities carry out their own programs. Under the State CDBG program, States design a distribution system to pass funds through to smaller, nonentitlement communities and are responsible for ensuring compliance with program requirements. Localities receiving CDBG dollars often pass a large portion of their funding through to other organizations, such as nonprofits, that actually implement CDBG-funded activities.

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