Note from The Honorable Steve Cohen:

Cosponsor the CDBG Equity Act

Update the outdated allocation process and adopt a single formula that most accurately targets awards to need

Dear Colleague:

I encourage you to cosponsor of the Community Development Block Grant (CDBG) Equity Act, which would update the current CDBG funding formula and adopt a single formula based on factors that currently reflect need.

The U.S. Department of Housing and Urban Development’s (HUD’s) CDBG program is one of the largest and longest-standing federal block grants in existence, annually allocating billions of dollars in federal assistance to state and local governments in support of local neighborhood revitalization, housing rehabilitation, and community and economic development efforts, principally for low- and moderate-income persons. Entitlement communities are awarded funds from one of two formulas: ​“A” and ​“B,” depending on whichever formula provides the greatest award.

Formula A (established in 1974):                          Formula B (added in 1977):

1. Population: 25%                                                               1. Population Growth Lag since 1960: 20%

2. People in Poverty: 50%                                              2. People in Poverty: 30%

3. Overcrowded Units: 25%                                           3. Pre-1940 Housing Units: 50%

Unfortunately, these award formulas are inequitable, as they are based on outdated variables. Formula A grantees typically receive less funding than Formula B grantees because the measures for ​“people in poverty” and ​“population” are shared among communities in both formulas, but ​“growth lag” and ​“pre-1940’s housing” are specific to Formula B grantees and are not necessarily tied to economic need.

For instance, needy communities mostly demolished pre-1940 housing while well-off communities renovated their housing; therefore, many high-need communities do not qualify for Formula B. Additionally, growth lag does not represent a community in need. Most communities built in the 1960’s are likely not to grow further due to intentional development restrictions in some areas, a lack of available land, or a decrease in household size.  As a result, the communities will likely experience low or slightly declining growth when compared to the national average. Most of these communities are economically well.

My bill solves the problems that result from HUD’s dual formulas by adopting a single formula that targets funding to need. Based on a study done by Todd Richardson, a Policy Development Researcher for HUD, the new funding formula would utilize four new measures to determine CDBG allocations:

1.  Poverty rate per person in families and elderly households: 50%

2.  Female headed households with children under 18: 10%

3.  Pre-1950 housing occupied by a poverty household: 30%

4.  Overcrowded housing units (more than 1.01 persons per room): 10%

These variables would undoubtedly resolve the issues that exist between the dual formula methods in the following ways:

• The removal of population size creates equity by measuring need rather than city size.
• The use of poverty rate per person in families and elderly households corrects the issue of counting all college students as people in poverty.
• Pre-1950’s housing occupied by a poverty household fixes the issues underlying the pre-1940’s housing by increasing the age range of houses that are not yet demolished in high-need communities and tying the community development need to families in poverty.
• Overcrowded housing remains because it targets concentrated poverty; however, it receives a lower weight because concentrated poverty occurs in both high- and low-need communities.

By moving to one formula, all jurisdictions can finally be measured using the same criteria, and we can ensure that our neediest communities receive adequate funding. If you have additional questions about the CDBG Equity Act or would like to cosponsor, please contact Alex Schnelle at alex.schnelle@mail.house.gov.

Sincerely,

Steve Cohen

Member of Congress