Community Development Block Grant (CDBG)

How It Works

CDBG is one of the longest-running federal programs for cities, created under Title I of the Housing and Community Development Act of 1974 by consolidating seven categorical programs into a block grant. Entitlement cities (generally those with 50,000+ population and urban counties with 200,000+) receive annual formula allocations calculated from population, poverty rate, housing units built before 1940, overcrowded housing, and "growth lag" relative to other metropolitan areas. Approximately 1,250 entitlement jurisdictions receive 70% of total CDBG funding, with the remaining 30% distributed to states for smaller communities. CDBG funds can be used for housing rehabilitation, public facility improvements (water, sewer, sidewalks, parks), economic development loans, public services (capped at 15% of allocation), and planning, but at least 70% of expenditures over a three-year certification period must benefit low- and moderate-income (LMI) residents, defined as households below 80% of area median income. Activities must meet one of three national objectives: LMI benefit, slum/blight elimination, or urgent need. Annual CDBG funding has declined significantly in real terms since its peak: the FY1978 appropriation was approximately $3.5 billion, equivalent to over $17 billion in 2026 dollars, versus the current appropriation of roughly $3.3 billion, a 75-80% real cut. Cities must submit Consolidated Plans every five years and Annual Action Plans for HUD review. CDBG is tracked in USASpending.gov and is a key component of the intergovernmental revenue analysis in the CitySpend Fiscal Health Score.

Related Terms

• Federal Grants, Funding from the federal government to cities for specific purposes, housing, transportation, public health, law enforcement, and environmental protection.
• Intergovernmental Revenue, Money a city receives from federal or state government through grants, shared taxes, or direct transfers.