CDBG Entitlement FAQ
Q

If our community must acquire the property with CDBG funds in order to carry out the demolition, how can we meet a national objective?

Date Published: October 2018

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When using CDBG funds to acquire such properties (24 CFR 570.201(a)), the situation can be more complicated. This is due to the fact that both the acquisition and demolition activities must meet a national objective. In this case, the demolition would have to meet the slum and blight national objective, either on an area basis (SBA) or a spot basis (SB), unless the demolition is integral to another activity that benefits lower-income persons, such as affordable housing.

The acquisition must also meet a national objective, usually based on the follow-on activity that the property will be used for after the demolition. There are several ways to approach national objective compliance. If acquisition for the purpose of clearing the property occurs, the clearance that meets the slum and blight (area or spot basis, SBA or SB) national objective is considered the use of the property. Second, through public ownership for an eligible use such as a park in a low- and moderate-income area (LMA), the acquisition can rely on the national objective of that eligible end use. Third, the acquisition can qualify through the property’s disposition for an eligible activity (24 CFR 570.201(b)).

In all cases, the acquisition activity must meet a national objective, but not necessarily the slum and blight national objective required for the demolition. For example, if the property is ultimately used for affordable housing, the acquisition would meet the low- and moderate-income national objective for housing activities (LMH).

It is very rare for acquisition alone to meet a national objective; generally acquisition is paired with another activity such as rehabilitation or disposition, and the rehabilitation or disposition meets the national objective (unless, as above, demolition is the end use). If the acquisition never meets a national objective, the purchase is ineligible. Note that an eligible end use that meets a national objective could be funded with sources other than CDBG.


Tags: CDBG Entitlement Program Acquisition-Disposition-Demolition

FAQ ID:

3454