Community Development Block Grant (CDBG)

What is the Community Development Block Grant (CDBG) ?

One of the Department of Housing and Urban Development's (HUD) longest-running programs, the Community Development Block Grant (CDBG), funds regional community development initiatives with the stated objectives of providing affordable housing, anti-poverty initiatives, and infrastructure development. Unlike categorical awards, which are granted for defined purposes, CDBG and comparable block grant programs are subject to less federal regulation and are generally used at the discretion of the state and local governments and their sub grantees.

The Community Development Block Grant Program funds initiatives that help communities become stronger and more resilient. Activities that will help community development are chosen through a continuous process. Infrastructure, economic development projects, the installation of public facilities, community centres, housing rehabilitation, public services, clearance/acquisition, aid for micro businesses, code enforcement, homeowner help, and other requirements may be addressed by activities.

The CDBG program offers federal money for initiatives that would raise the standard of living for those with low or moderate incomes, regenerate urban areas, and take care of low-income populations' immediate health and safety needs. In order to improve the quality of life for low- and moderate-income individuals and consequently strengthen the entire community, the CDBG program makes improvements to the economic, social, and physical environments of qualifying rural communities and counties. The CDBG Program provides grants for general purposes.

Community Development Block Grants (CDBG) from the US Department of Housing and Urban Development (US HUD) are used to finance local community development initiatives such the construction of affordable housing, anti-poverty initiatives, and infrastructure. The core cities in Metropolitan Statistical Areas (MSAs), cities with a population of at least 50,000, and qualified urban counties with a population of at least 200,000 are considered designated entitlement communities and receive federal CDBG funding directly. Federal money are also given to states for distribution to their rural and small-town counties. The money must be put to use helping low-income individuals, preventing or getting rid of slums and blight, or taking care of emergencies.

What is the Purpose of CDBG Program ?

One of the following national objectives must be met by CDBG activities:
  • Benefit people with low and very low incomes.
  • Prevent or eliminate slums or blight, as defined by HUD.
  • Satiate immediate needs caused by disasters that the government has declared, like floods or earthquakes.

Key Facts of Community Development Block Grant

  • The US Department of Housing and Urban Development (HUD), CDBG is a long-standing program that gives flexible federal financing to states and local authorities to assist economic development, community development and Infrastructure.
  • Federal financing is made available for initiatives through Community Development Block Grants (CDBGs) that aim to raise the standard of living for those with low or moderate incomes.
  • To receive funding, CDBG projects must support national objectives such as aiding individuals with low and moderate incomes, preventing urban blight, and eradicating slums.
  • Housing for low- and moderate-income persons is one of the projects that is eligible for project funding, as are projects that benefit the community as a whole, such as installing water and sewer systems.

How Does the Community Development Block Grants Works ?

In order to create livable urban communities, states, cities, and counties receive annual grants from the Community Development Block Grant (CDBG) Program on a formula basis. These grants are used to expand economic opportunities, especially for people with low and moderate incomes, and to provide decent housing and a suitable living environment.

HUD allots a portion of its annual budget to support the CDBG initiative. Funds are distributed according to a formula by HUD to so-called "entitlement grantees," or counties with a population of more than 200,000 and every metropolitan area with at least 50,000 residents. Seventy percent of all CDBG monies go to entitlement beneficiaries. The remaining 30% of CDBG funding are given to the states by HUD. Localities within the state then compete for CDBGs by submitting applications. 

Nearly $3.5 billion was set aside by HUD for the CDBG program in 2021. HUD figures show that since 1974, it has given out CDBGs worth more than $160 billion. Every CDBG project has a set of prerequisite requirements that are established by HUD. The CDBG grantees can select a one-, two-, or three-year term to measure compliance, and they must spend at least 70% of all funding to assist low- and moderate-income people.

Low- and moderate-income households are those that have yearly household incomes that are at or below 50% and 80%, respectively, of the area's median income, as calculated by HUD, or appropriate local income figures that use a methodology that HUD approves. If at least 51% of the community members or households receiving some benefit from a proposed project fall below the minimum required median income, then the project will have achieved the national goal of helping low- to moderate-income people.

Who Can Apply for Community Development Block Grant ?

The CDBG program is open to applications from local governments, nonprofit groups, and municipalities. The CDBG does not accept applications from specific individuals. Small, rural cities/towns and counties can apply for a state CDBG grant if they are not eligible to receive CDBG funding directly from the U.S. Department of Housing and Urban Development (HUD).

Special purpose districts, public housing authorities, community action organizations, economic development councils, other non-profit organizations, and Indian tribes are not permitted to submit funding requests to the state CDBG Program on their own but are permitted to partner with eligible applicants from cities, towns, and counties as sub recipients.

The U.S. Census Bureau's population statistics and the Office of Management and Budget's published metropolitan area delineations are used to determine eligibility for participation as an entitlement community.

Each entitlement grantee's annual funding allocation from HUD is determined by a statutory dual formula that takes into account a number of objective indicators of community needs, such as the degree of poverty, population, housing overcrowding, housing age, and the population growth lag relative to other metropolitan areas.

The eligible communities, which are designated as metropolitan cities, cities with a population of at least 50,000, and urban counties with at least 200,000 residents, receive around 70% of the program's funding.

According to a formula-based allocation method, the remaining 30% of money are distributed to the states. States distribute CDBG monies to localities that are not entitled to federal funds. $7 million is statutorily set aside for distribution among the American territories before allocations are made to states and communities.

Eligible Grantees

The following grantees are eligible :
  • Metropolitan statistical areas' major cities (MSAs)
  • Other large cities with a minimum of 50,000 residents.
  • urban counties that meet the criteria and have at least 200,000 residents. (excluding the population of entitled cities)

Eligibility for Community Development Block Grants

One of the following national objectives must be met by every application:

1) Low and Moderate Area Benefit : 
The project satisfies the needs of residents who have an L/M income and who make up at least 51% of the area's population.

2) Clientele with low and moderate incomes : 
Such a project must benefit a particular population (rather than all locals in a given area), at least 51% of whom are people with low and moderate incomes. The following demographics are presumptively at risk: old people, battered spouses, homeless people, people with disabilities, and uneducated people.

3) Low and moderate housing : 
Upon project completion, low-income households will have access to new or improved permanent residential dwelling structures. In single-family or multi-family buildings, housing can be found as either rental or owner-occupied units.

4) Low- and medium-paying jobs :
At least 51% of the permanent jobs created or maintained by the initiative are either held by people earning the target income or are seen as being available to them.

5) Micro-Enterprise Assistance : 
The project aids in starting a micro business or helping others who are already starting one.

If you're interested in taking part in this initiative, get in touch with your neighborhood's municipal or county leaders to learn more about how it works there. Each grantee may have different participation standards.

If your local government representatives are unable to respond to your inquiries, or if you are a local official, get in touch with the HUD field office that covers your region. Keep in mind that the regional government manages the program and chooses which regional projects get funding.

Income Limits for Community Development Block Grants

The page lists the CDBG income thresholds for extremely low income (30%), very low income (50%) and low income (80%).

This interactive tool allows establishing the recipients of CPD programs income eligibility and aid levels (if necessary) as simple as 1-2-3.

Assessment Criteria for Community Development Block Grants

The CDBG application process is quite competitive. In order for your idea to pass the evaluation stage, the following conditions must be met:
  • Promote the CDBG's goals.
  • Have a huge impact
  • Encourage the participation of vulnerable and excluded groups.
  • improving gender equality
  • have a good chance of being implemented successfully
  • Your company needs to have a solid track record.
  • Be conceptually and presentationally technically sound.
  • offer an excellent value for the money
  • have a good chance of continuing after the project's completion.

What Can CDBG Funds Be Used For ?

Funds from the CDBG can be used for a variety of things, including but not restricted to :

    CDBG Eligible Activities 

    The following activities are covered by the Community Development Block Grant :
    • Acquisition of real property.
    • Relocation and demolition.
    • Renovation of both residential and non-residential buildings.
    • The creation of public facilities and upgrades, such as streets, neighborhood gathering places, and the conversion of school buildings into uses that qualify.
    • Within specific parameters, public services.
    • Energy-saving and renewable energy resource-related activities.
    • Assistance given to enterprises with a profit motive so they can carry out initiatives for economic development and job creation/retention.
    Every activity in the program must fulfill one of the following national objectives: benefit low- and moderate-income people, prevent or eliminate slums or blight, or address community development needs that are particularly urgent because the current conditions pose a serious and immediate threat to the health or welfare of the community and for which other funding is not available.

    CDBG Ineligible Activities

    The following activities are not covered by the CDBG :
    • Building acquisition, construction, or reconstruction for use in government operations generally.
    • Political activities.
    • specific income transfers.
    • the building of new housing (with some exceptions).
    • Rental help or other payments made directly to people for their income.

    Types of CDBG Projects

    The CDBG program allows for a variety of projects to be implemented within the approved activities.

    1) Property Development : 
    CDBG grantees may utilize their funding for a variety of property-related objectives, including acquisition, sale, and destruction, because community regeneration and the elimination of urban blight are important national goals of the CDBG program. Additionally, it is permitted to use CDBG monies to support the enforcement of local building codes and activities related to historic preservation.

    2) Housing Activities :
    Grantees may also use CDBG funding for a wide range of housing-related objectives in order to fulfill the objective of providing housing opportunities for people with low to moderate incomes. These initiatives may involve renovating houses and rental properties (by removing asbestos or lead paint, for instance), giving home ownership assistance programs, working with other government housing initiatives like the HOME Investment Partnerships Program, or even helping people move.

    3) Public Facilities and Services :
    The development of a community depends critically on the availability of adequate public infrastructure and services. With the use of CDBG money, grantees can construct brand-new public facilities, such community centres and special needs facilities, or upgrade already-existing ones, like by enhancing accessibility for those with physical disabilities.

    Through the investment in public services, CDBG grantees may also use funding to address community needs for economic development, health care, and welfare. Some of the services that qualify for CDBG funding include crime prevention, employment services, substance abuse treatment programs, child care services, and job training programs.

    4) Commercial Activities :
    Although residential areas and activities receive the majority of CDBG funding, the grants can also be used for suitable commercial projects. The development of designated areas for special economic development, the renovation of commercial properties, or even financial support for small businesses are all examples of approved CDBG activities.

    Funds from the CDBG may also be used for numerous other community development and improvement initiatives. However, HUD also expressly disqualifies some activities from the CDBG program, such as :
    • Investment in structures for the general operation of government operations (e.g., a town hall).
    • Payment of general administrative costs of the government.
    • Expenditures for political purposes.
    • Public service operational and maintenance costs (with some minor exceptions).
    • Financing the building of new homes.

    How Much is Community Development Block Grant ?

    The CDBG Program provides annual grants on a formula basis to states, cities, and counties to develop viable urban. The Community Development Block Grant program funded by the U.S. Department of HUD. Approximately $2.5 million is available for competitive grants for the FFY 22 grant cycle. CDBG competitive grants are single-purpose project grants, maximum of $850,000 per community.

    Grants for General Purposes $11,500,000 :
    for projects involving affordable housing, communal facilities, public infrastructure, or economic development. Competitive. Depending on the type of project, the maximum grant is $1,000,000.00.

    Grants for Public Services $1,500,000 :
    funding services for those with lower incomes for 17 counties and community action organizations. based on a model that takes into account poverty and population.

    CDBG Income Survey Toolkit

    This toolkit offers materials and details on how to carry out a local income survey in accordance with HUD's requirements. A low and moderate income (LMI) population proportion in the service area of a proposed CDBG activity is to be ascertained with the aid of an income survey.

    How to Apply for Community Development Block Grant ?

    A general definition of the CDBG program, which is run by the Agency for Housing and Urban Development, is work done to ensure good and affordable housing, offer services to those who are most in need in our communities, and create jobs through supporting business expansion and retention.

    Over 1,200 metropolitan city and county governments, as well as state governments, receive annual funding from the CDBG program based on a formula. A total of 214 counties directly get funding. States receive 30% of CDBG funding, but these "entitlement" cities and counties receive 70% of them. Rural counties and other "non-entitlement" towns must compete for cash under the state system.

    Every year, through a competitive application process, Community Development Block Grant (CDBG) General Purpose Grants are made available to small cities, towns, and counties to help them carry out significant community and economic development projects that primarily benefit low- and moderate-income people. The U.S. Department of Housing and Urban Development provides funding for the CDBG Program (HUD).

    It can take three to five months to complete the standard approval procedure steps. During this period, CDBG staff approval is required before any monies are spent or contracts are signed.

    Community Development Block Grant Application

    For an initial review and assessment of a project, get in touch with your Business Development Manager (BDM map) or Community Assistance Team Specialist (CAT map).

    The community will be invited to complete a CDBG Application if it is found that the project meets the requirements of the intended program. The following files will help applicants make their applications:

    The Community Assistance Team Specialist or Business Development Manager will pitch the project to MEDC for support after submitting the CDBG application. The community will be obliged to finish an environmental review if it is approved.

    When the project is finished, the MEDC will suggest it to the MSF for consideration. The community will move on to a Grant Agreement if the MSF approves the initiative.

    A CDBG Program Specialist will give the community permission to incur costs and begin project work after all paperwork has been signed and authorized. It is crucial that no work begins and no contracts are signed prior to the applicant receiving approval from the CDBG Staff in order to avoid jeopardizing the project.

    Application Period for CDBG General Purpose Grants

    The following application period will start in March 2023. With a June 1, 2023 application submission deadline, $11 million is what we predict will be made accessible. For building, the maximum award is $1,000,000, and for planning, it is $30,000.

    Frequently Asked Questions

    How Do Recipients of Community Development Block Grants Show That They Are Achieving National Objectives ?

    Reports on the results of their programs are required from CDBG recipients. Grantees are required by HUD to submit reporting in the following crucial areas:
    • How much funding they get and apply for each CDBG activity from other federal, state, municipal, and private sources
    • Affected individuals, homes, or businesses by CDBG funds
    • the income threshold for individuals or households at 30%, 50%, or 80% of the median income for the neighborhood. Reporting should contain both the total number and the number of low- to moderate-income recipients for CDBG activities with particular requirements about the number of low- to moderate-income individuals or households receiving benefits from the project.
    • Grantees are required to provide the pertinent information for initiatives with a small clientele that concentrate on racial, ethnic, or disability-related concerns.
    Depending on the type of CDBG activity, up to 18 additional performance criteria may be applicable.

    What Happens if a CDBG Project Makes Money ?
    The receivers of a CDBG grant may occasionally make money from the investments they make with CDBG money. Property purchased using CDBG money may be sold, rented, or leased to produce program revenue. All payments made to a grantee and its sub-recipients in a calendar year that exceeds $25,000 are considered program income.

    In general, grantees must use program income prior to withdrawing any more money from the Community Development Block Grant line of credit. Numerous exclusions are taken into account in the computation of program revenue, which might be challenging. It is significant to remember that there are restrictions on charging fees for accessing a public facility built or improved using CDBG monies. The fees must be fair and cannot discourage those with low to moderate incomes from using the facility, defeating the goal of the CDBG.

    Projects Funded by Community Development Block Grants Have to Be Completed Within a Specific Time frame ?

    Basically, yes Every year, HUD uses a "timeliness test" to evaluate the development of each CDBG project in order to guarantee the quick and efficient use of CDBG funding. The entire amount of an outstanding line of credit for a project is compared to its annual budgeted amount by HUD 60 days prior to the conclusion of the CDBG program year to determine timeliness. The project is considered "untimely" by HUD if the ratio is greater than 1.5.

    A CDBG project has 12 months to fix its spending after the first late payment and move the project forward. HUD lowers the line of credit to return the credit/budget ratio to 1.5 if a second finding of untimeliness is made that does not fit under one of the two exceptions. The only permitted exclusions are if:
    • The program was spending money at a rate that would bring it into compliance before the following annual measurement at the time of the second timeliness measurement.
    • The recipient of the CDBG was not at fault for the malfunction.

    How to use Community Development Block Grant Funds ?
    You may have wondered how to use CDBG Program monies if you are a community development professional who works on projects supported by the CDBG program.
    • Improve the quality of life for all citizens, especially those with low and moderate income levels, and make a trans-formative impact on your town.
    • Create plans that integrate partners and resources, maximizing funding and creating community assets.
    • Implement your program successfully to increase the likelihood that initiatives will succeed.
    HUD has developed Explore CDBG, a selection of online technical support resources, to aid in addressing these queries.