Introduction

HUD’s Community Development Block Grant (CDBG) Program was authorized under Title I of the Housing and Community Development Act of 1974 as amended. By that Act, Congress consolidated a number of categorical grant programs under which communities competed for funds. The block grant concept allows participating governments to receive funding via an annual allocation, the amount being determined by formula. Predictable funding enables local jurisdictions to plan and act strategically to address locally identified needs.

The Entitlement Program provides block grants to Metropolitan Cities and Urban Counties. The City of Frederick is an Entitlement Metropolitan City, as are Hagerstown, Annapolis, Baltimore, and Cumberland.

The U.S. Department of Housing and Urban Development (HUD) includes CDBG as one of several Community Planning and Development (CPD) programs, advancing the following basic goals:

• Developing viable communities by providing decent housing and a suitable living environment and by expanding economic opportunities, principally for low- and moderate-income persons.

HUD requires local governments participating in CPD programs to prepare a Consolidated Plan, which describes community needs, resources, and priorities, and also includes a strategic plan in the areas of homelessness, affordable housing, and community development.

Eligible Activities

The CDBG Program allows local jurisdictions considerable freedom to plan, set priorities, and select activities that meet local needs. But it is not open-ended. There are certain eligible and ineligible activities established in HUD’s regulations. These can be found in the Code of Federal Regulations at 24 CFR 570.200-209.

Eligible activities include (but are not limited to) property acquisition, rehabilitation, clearance and blight removal, homeownership loans, down payment assistance, lead-based paint testing and abatement, historic preservation activities, economic development activities (such as micro enterprise loans), public facilities, and improvements.

HUD places a cap on the amount of CDBG funds that can go into administration of the program and into public services, such as job training, employment services, child care, crime prevention, and fair housing counseling. The cap on services is 15% of the program year grant and 15% of the preceding year’s program income. The cap on administration is 20% of the program year grant and 20% of the current year’s program income. These caps mean that, by and large, CDBG is a “bricks and mortar” program, with most of the funds going to acquire and/or improve property, or to upgrade neighborhoods.

National Objectives

In order to quality for CDBG funding, an activity must be an eligible activity (see above), and it must further one or more of the National Objectives:

• Benefit low- and moderate-income persons;
• Aid in the prevention or elimination of slums or blight; and
• Meet a community need having particular urgency.

Frederick has used most of its CDBG funds over the years to address the first of these three National Objectives - to benefit low- and moderate-income persons. There are several possible approaches to benefiting low- and moderate-income persons. Direct housing activities (rehab loans, purchase assistance, facilitating new housing construction) are a very common approach. Another is benefiting low- and moderate-income neighborhoods via infrastructure activities. Assisting a limited clientele (elderly, children in day care, disabled persons, and the homeless) will also meet this National Objective. In many cases, participants must provide documentation of their income-eligibility. Finally, activities that promote job creation (micro enterprise loans, and infrastructure that helps to attract or retain employers who hire low- and moderate-income workers) will also meet this objective.

Activities that further the National Objective of eliminating slums and blight can be undertaken on a spot basis or area wide basis. Frederick has used the National Objective for spot blight acquisition in the past through the acquisition and stabilization/rehabilitation of dilapidated properties.

Activities that further the urgent need National Objective are rare. They generally address a serious and immediate threat to public health, perhaps a natural disaster or other unforeseen calamity. The City of Frederick has not yet needed to use CDBG funding for the urgent need National Objective.

Planning and Citizen Participation

The City of Frederick’s CDBG funds are used to address needs and achieve objectives that have been identified and prioritized as part of a planning process that is wide-ranging and inclusive.

The activities in the Action Plans have been fashioned to address needs and realize objectives articulated in the Consolidated Plan 2005-2010. That document provides the basic guidance for activities the City will undertake for the 2005 through 2010 grant years. The public is welcome and encouraged to comment and provide feedback concerning how well we met our goals and objectives, and to suggest areas for improvement.

The citizen participation process begins each January as staff prepares to develop the Annual Action Plan that includes the specific activities we will undertake for pending grant year. This process involves several public informational meetings to consider project proposals by the City and prospective sub-recipient organizations. With assistance from a group of ad-hoc advisors, Community Development staff prepares a recommended plan, followed by a period for public comment and public hearings before elected officials prior to plan adoption in early-May.

Other Federal Requirements

In addition to HUD requirements, there are other regulations applicable to the use of federal funds. Although not all apply in all cases (depending on size, type of project, etc.), it is important to be mindful of them.

Environmental Regulations – HUD regulations in 24 CFR Part 58 provide grantees, such as The City of Frederick, a structure to ensure that compliance with the National Environmental Policy Act (NEPA) and other relevant environmental regulations that may pertain to an activity funded with federal dollars.

Historic Resources – There is a review of the effect CDBG activities would have on Frederick’s historic resources, pursuant to Sec 106 of the National Historic Preservation Act. This review is undertaken as part of the Environmental Review Record noted above. The City’s Director of Community Development, in his capacity as environmental officer, consults with preservation groups, generally the HDC, and determines the effect, if any, and receives concurrence from the Maryland State Historic Officer (Maryland Historical Trust) prior to seeking the authorization to use HUD funds.

Relocation and Displacement – The provisions of the Uniform Relocation Act (URA) apply when property is acquired or rehabilitated. A notice of rights sent to residents or businesses under the URA is a requirement of the City and all sub-recipients.

Labor – When construction is funded by CDBG, certain federal labor standards may apply, specifically Davis-Bacon wages (most non-residential and residential of up to seven units), Contract Work Hours, the Safety Standard Act, Copeland Act, minimum wage standards, etc. The Community Development Division monitors compliance of contractors for all work using CDBG funds.

Anti Discrimination – All activities must be undertaken in a non-discriminatory manner, and offered and administered in full compliance with the Fair Housing Act, which prohibits discrimination in housing, because of race, color, national origin, religion, sex, familial status, or handicap. Other federal anti-discrimination requirements also apply, such as Civil Rights Act of 1964, Age Discrimination Act of 1975, Sec 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act.

Sec 3 – The Housing and Urban Development Act of 1968 calls for economic opportunities to be given to residents and businesses in the area served to the greatest extent feasible. Local contractors and vendors, especially those in low- and moderate-income areas, are encouraged to contact the Department of Community Development about the opportunities for contracts in the CDBG Program.

Record keeping, etc. – Organizations who receive CDBG funding as sub-recipients must have sufficient capacity to manage funds and keep adequate records pursuant to HUD and Office of Management and Budget requirements.

There are some activities exempt from HUD’s environmental review process (planning and public service activities are examples). There are some activities that are categorically excluded from a complete environmental assessment, because their nature is such that they generally do not have adverse effects on the general environment (residential rehabilitation is an example). For these, a review of regulations other than NEPA is still required, and a notice to the public of the intent to use CDBG funds is published in the local newspaper.

The City’s environmental officer is the Deputy Director for Planning, who conducts the environmental assessments of activities (those of the City and its sub-recipients), looking at potential environmental effects using a HUD Environmental Review Checklist. An environmental assessment is documented in a file, and is available for inspection at the Department of Planning. Given the nature and scope of most activities, there is generally a Finding of No Significant Impact (FONSI). Prior to use of funds, there is public notice of the FONSI and notice of intent to request the release of funds (NOIRRF) for a specific activity placed in the newspaper. A larger, more complex project may necessitate preparation of a full Environmental Impact Statement, but none of the activities in recent years have crossed that threshold.

The above is intended as an overview in layman terms, and not as a substitute for the applicable HUD or other federal regulations. For additional information on the CDBG, or any of HUD’s other programs, go to www.hud.gov.