State Administered CDBG
This page provides information regarding state administration of CDBG funds to non-entitlement areas, and the terms to which use of this funding in these areas apply.
Since States are in the best position to know, and to respond to, the needs of local governments, Congress amended the Housing and Community Development Act of 1974 (HCD Act) in 1981 to give each State the opportunity to administer CDBG funds for non-entitlement areas. Non-entitlement areas include those units of general local government which do not receive CDBG funds directly from HUD as part of the entitlement program (Entitlement Cities and Urban Counties). Non-entitlement areas are cities with populations of less than 50,000 (except cities that are designated principal cities of Metropolitan Statistical Areas), and counties with populations of less than 200,000.
The State CDBG program has replaced the Small Cities program in States that have elected to participate. Currently, 49 States and Puerto Rico participate in the program. HUD continues to administer the program for the non-entitled counties in the State of Hawaii because the State has permanently elected not to participate in the State CDBG Program.
The primary statutory objective of the CDBG program is to develop viable communities by providing decent housing and a suitable living environment and by expanding economic opportunities, principally for persons of low- and moderate-income. The State must ensure that at least 70 percent of its CDBG grant funds are used for activities that benefit low- and moderate-income persons over a one-, two-, or three-year time period selected by the State This general objective is achieved by granting "maximum feasible priority" to activities which benefit low- and moderate-income families or aid in the prevention or elimination of slums or blight. Under unique circumstances, States may also use their funds to meet urgent community development needs. A need is considered urgent if it poses a serious and immediate threat to the health or welfare of the community and has arisen in the past 18 months.
Roles and Responsibilities of HUD, States Localities
States participating in the CDBG Program award grants only to units of general local government that carry out development activities. Annually each State develops funding priorities and criteria for selecting projects. HUD's role under the State CDBG program is to ensure State compliance with Federal laws, regulations and policies.
Participating States have three major responsibilities:
- formulating community development objectives;
- deciding how to distribute funds among communities in non-entitlement areas; and
- ensuring that recipient communities comply with applicable State and Federal laws and requirements.
Local governments have the responsibility to consider local needs, prepare grant applications for submission to the State, and carry out the funded community development activities. Local governments must comply with Federal and State requirements.
Communities receiving CDBG funds from the State may use the funds for many kinds of community development activities including, but not limited to:
- acquisition of property for public purposes;
- construction or reconstruction of streets, water and sewer facilities, neighborhood centers, recreation facilities, and other public works;
- rehabilitation of public and private buildings;
- public services;
- planning activities;
- assistance to nonprofit entities for community development activities; and
- assistance to private, for profit entities to carry out economic development activities (including assistance to micro-enterprises).
The State may use $100,000 plus up to 50% the costs it incurs for program administration, up to a maximum of 3 percent of its CDBG allocation. The State may expend up to 3% of its CDBG allocation on technical assistance activities. However, the total the State spends on both administrative and technical assistance expenses may not exceed 3% of the State's allocation.
Distribution of Funds
HUD distributes funds to each State based on a statutory formula which takes into account population, poverty, incidence of overcrowded housing, and age of housing. Neither HUD nor States distribute funds directly to citizens or private organizations; all funds (other than administrations and the technical assistance set-aside) are distributed by States to units of general local government.
The State must certify that:
- it is following a detailed citizen participation plan and that each funded unit of general local government is following a detailed citizen participation plan;
- it has consulted with affected units of general local government in the non-entitled area in determining the method of distribution of funding, it engages or will engage in planning for community development activities, it will provide assistance to units of general local government, it will not refuse to distribute funds to any unit of general local government based on the particular eligible activity chosen by the unit of general local government, except that a State is not prevented from establishing priorities based on the activities selected;
- it has a consolidated plan that identifies community development and housing needs and short-term and long-term community development objectives;
- it will conduct its program in accordance with the Civil Rights Act of 1964 and the Fair Housing Act of 1988 and will affirmatively further fair housing;
- it will set forth a method of distribution that ensures that each of the funded activities will meet one or more of the three broad national objectives described above in Program Objectives and at least 70% of the amount expended for activities over a period of one, two, or three consecutive program years will benefit low? and moderate-income families;
- it will require units of general local government to certify that they are adapting and enforcing laws to prohibit the use of excessive force against nonviolent civil rights demonstrations, and they will enforce laws against barring entrance and exit from facilities that are the targets of nonviolent civil rights demonstrations in their jurisdiction;
- it will comply with Title I of the HCD Act and all other applicable laws.
For More Information
If you are an interested citizen, contact your local municipal or county officials for more information. The local government may have received or may have applied for a grant from the State. If you are a local official, you should contact the agency that administers the program for your State. If your local government or State officials cannot answer your questions, contact the HUD field office* that serves your area. Note that the State administers the program and determines which local governments receive funding.
* Hearing impaired users may call the Federal Information Relay Service at 1-800-877-8339.