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HUD Secretary Cuomo Proposes To Increase CDBG

By Eugene T. Lowe

The Department of Housing and Urban Development (HUD) Secretary Andrew Cuomo is proposing to allow more communities to receive annual formula funding of Community Development Block Grants (CDBG) rather than compete for funds. This new category of CDBG formula communities would be called "Optional Entitlement Communities." The funds that are allocated to current urban county and metropolitan city entitlement communities would not be reduced.

There has not been a change in the CDBG allocation formula since 1975. But with the Optional Entitlement Communities, not only would cities and counties that now must apply to their state for CDBG funds become eligible to receive a formula allocation directly from HUD, but those cities and counties would also be eligible for the Section 108 Loan Guarantee program.

With the new program, population thresholds would be adjusted. Cities with a population between 25,000 and 50,000 and counties with a population between 100,000 and 200,000 would be eligible to participate in the Optional Entitlement Communities.

Based on 1996 population estimates from the Bureau of Census, approximately 400 communities would meet the criteria and be eligible to participate in the program. . Towns and townships will qualify if they have "general municipal powers and have cooperation agreements with all villages and other places located in whole or in part within the town/township. Cities that meet the population requirement but are participating in an Urban County will be eligible to become Optional Entitlement Cities if they choose to end their participation in the county at the time the Urban County is up for re-qualification. Counties not recognized as Urban Counties will be deemed to meet the Optional Entitlement Counties population test if they have at least 100,000 population after excluding the population of any Metropolitan Cities and Optional Entitlement Cities within the county," according to a HUD document.

The Optional Entitlement Communities will receive their funding from the 30 percent State CDBG allocation. Metropolitan Cities and Urban Counties would continue to receive their funds from the 70 percent of CDBG formula funds that they currently share. The communities participating in the new program would administer the direct funds they receive under simplified rules that would also include a simplified Consolidated Plan. Technical assistance would be provided to assist those communities with special needs with respect to performance monitoring and accomplishment reporting.

Those communities that qualify for the program have complete discretion in what they may do. They can apply to HUD for the amount allocated to them under the CDBG formula. Or, the city could enter into a joint agreement with its county that is receiving a formula allocation. A community may also decide not to apply for a formula grant and instead compete in the State program. The funds that are allocated to a city or county that does not apply for a direct HUD grant will be reallocated to the state in which the city or county is located.

According to a HUD document, "If this proposal had been in effect in FY 1999 and all of the potentially eligible communities decided to take their grants, the amount available to the States would have been reduced from $1.268 billion to $956 million."


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