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Why It Would Be a Mistake to Cut This HUD Program

A new Urban Institute report corrects the record on the benefits and flaws of the Community Development Block Grant (CDBG) program.

HUD Secretary Ben Carson answers questions at his confirmation hearing.
HUD Secretary Ben Carson, who supports the President's proposal to kill CDBG, answers questions at his confirmation hearing. (Kevin Lamarque/Reuters)

The Trump administration’s proposed budget slashes funding for the Department of Housing and Urban Development (HUD) by roughly 13 percent. A chunk of that comes from eliminating the Community Development Block Grant (CDBG), currently worth $3 billion. Among other things, it helps fund local infrastructure, community revitalization projects, affordable housing, education initiatives like head-start, and programs like Meals on Wheels. According to the administration, CDBG “is not well-targeted to the poorest populations and has not demonstrated results.”

But a new brief by Urban Institute’s Brett Theodos, Christina Plerhoples Stacy, and Helen Ho, takes a closer look at this program, and comes to a different conclusion:

The Trump administration has proposed to eliminate CDBG funding, and the program has faced criticism for the lack of evidence on its benefits. This lack of evidence, though, may be more related to a lack of investment in evaluating the program rather than to a lack of true impacts.

Some parties have rushed to agree with the Trump administration, citing instances of waste and funds going toward projects that, they say, don’t help the poor. But grantees disagree. Smaller cities including Fall River, Massachusetts, Crisfield, Maryland, and Lawton, Oklahoma, have expressed worry that crucial housing and infrastructure projects will be impossible without CDBG funds. Cleveland, Ohio, a major beneficiary of the program in the Midwest, uses the money for housing rehabilitation. City officials there say consequences of eliminating that funding stream would be disastrous. "It is the lifeblood of our neighborhoods,” Cleveland City Councilman Anthony Brancatelli told Crain’s Cleveland.

The UI brief presents the entire story, detailing the program’s benefits and its flaws. First, the positives. The UI team writes:

According to HUD, between 2005 and 2013, CDBG created or retained 330,546 jobs, assisted over 1.1 million people with homeownership and improvements, benefitted over 33 million people nationwide through public improvements, and provided public services to over 105 million people.

Previous research measuring the impact of this program concludes that above a certain level of CDBG spending in a neighborhood can help improve it. But funding for the program has been falling drastically over the years—by 80 percent since 1979 in 2016 dollars (first image below). Meanwhile, the number of local entities receiving funds directly from the federal government has increased by 86 percent in roughly the same time (second image below). In other words, each grantee gets less money to spend.

(Urban Institute)
(Urban Institute)

The other big question is whether CDBG grants are adequately serving the most needy communities. The truth is: not always. A part of the blame lies with the 1974 formula CDGB uses to match funding to need. It takes into account a place’s population growth, poverty levels, and overcrowding to determine how much it’ll get, but the way these factors are weighted doesn’t always yield the right result. Via the report:

Studies have found that the formulae’s abilities to match funding to need have diminished over time. Sources of the mismatch include the imperfect relationship between the variables in the allocation formulae and need. For example, wealthy suburbs may have older housing stock and low population growth but are not especially needy.

Then, once a grantee gets the money, they can use it for a wide variety of activities based on set requirements. In Pharr, Texas, for example, CDBG money was used to host festivals. In Boston, it went toward home repairs for elderly folks living in poverty. But not all activities equally benefit the the most needy. The UI brief cites some evidence that neighborhood improvement projects tend to directly benefit the poor more than providing social services meant to boost economic development.

But the big takeaway from all this is that these issues can be resolved. And that’s why the CDBG needs to be updated, not nixed. By increasing funding, restricting the number of direct grantees, updating the formula, and strengthening program requirements so they benefit the people and places that are most in need, this already-crucial program can work better. And better assessment of its benefits and deficiencies will go a long way in meeting that goal.

The uncertainty over the budget and tax reform is already jeopardizing housing assistance and affordable housing development. If the budget, when it’s finally passed, does away with this key HUD program, communities around the country are going to lose out—and that includes ones that voted for the current president.

*Update: The Miami Herald reports that HUD Secretary Ben Carson may be willing to retain parts of CDBG and other HUD programs “that are functioning well.”

About the Author

  • Tanvi Misra
    Tanvi Misra is a staff writer for CityLab covering demographics, inequality, and urban culture. She previously contributed to NPR's Code Switch blog and BBC's online news magazine.