PART II: HUD's Major Non-Competitive Programs
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 50 States and Puerto Rico for distribution to smaller, nonentitled communities (HUD directly distributes funds to nonentitled communities in 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, including but not limited to, those concerned with employment, crime prevention, child care, health, drug abuse, education and fair housing counseling; provision of special economic development assistance; assistance to community-based development organizations for neighborhood revitalization, community economic development, and energy conservation projects; homeownership assistance; fair housing; and planning and administrative costs, including actions to meet the grantee's certification to affirmatively further fair housing.

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 FY 2000, $4.78 billion (less approximately $545 million in set-asides) is appropriated for the CDBG program. This is the second largest single appropriation line item following Section 8 Contract Renewals and excluding housing loan guarantees, in HUD's FY 2000 budget. Approximately $4.24 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 state of Hawaii). In FY2000, New York State, for the first time, is planning to take over administration of the CDBG States Small Cities Program. 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.