State CDBG Program Eligibility Requirements

Under the State CDBG Program, states award grants to smaller units of general local government that develop and preserve decent affordable housing, to provide services to the most vulnerable in our communities, and to create and retain jobs. Annually, each State develops funding priorities and criteria for selecting projects.

Since States are in the best position to know, and to respond to, the needs of local governments, Congress amended the Housing and Community Development Act of 1974 (HCD Act) in 1981 to give each State the opportunity to administer CDBG funds for non-entitlement areas. Non-entitlement areas include those units of general local government which do not receive CDBG funds directly from HUD. Non-entitlement areas are cities with populations of less than 50,000 (except cities that are designated principal cities of Metropolitan Statistical Areas), and counties with populations of less than 200,000.

Eligible Grantees

49 States and Puerto Rico participate in the State CDBG Program. HUD continues to administer the program for the non-entitled counties in the State of Hawaii because the State has permanently elected not to participate in the State CDBG Program. HUD distributes funds to each State based on a statutory formula which takes into account population, poverty, incidence of overcrowded housing, and age of housing.

States participating in the CDBG Program award grants only to non-entitlement Units of General Local Government (UGLG).

Eligible Activities

CDBG funds may be used for activities which include, but are not limited to:

• Acquisition of real property
• Relocation and demolition
• Rehabilitation of residential and non-residential structures
• Construction of public facilities and improvements, such as water and sewer facilities, streets, neighborhood centers, and the conversion of school buildings for eligible purposes
• Public services, within certain limits
• Activities relating to energy conservation and renewable energy resources
• Provision of assistance to nonprofit and profit-motivated businesses to carry out economic development and job creation/retention activities

Each activity must meet one of the following national objectives for the program: benefit low- and moderate-income persons, prevention or elimination of slums or blight, or address community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community for which other funding is not available. A need is considered urgent if it poses a serious and immediate threat to the health or welfare of the community and has arisen in the past 18 months.

Generally, the following types of activities are ineligible:

• Acquisition, construction, or reconstruction of buildings for the general conduct of government;
• Political activities
• Certain income payments
• Construction of new housing (with some exceptions)

States may use $100,000 plus up to 50% of costs it incurs for program administration, up to a maximum of three percent of its CDBG allocation. Amounts expended on administration in excess of $100,000 must be matched. States may expend up to three percent of their CDBG allocation on technical assistance activities. However, the total a state spends on both administrative and technical assistance expenses may not exceed three percent of the state's allocation.

Eligible Beneficiaries

Over a 1, 2, or 3-year period, as selected by the grantee, not less than 70 percent of CDBG funds must be used for activities that benefit low- and moderate-income persons.

HUD does not provide CDBG assistance directly to individuals, businesses, nonprofit organizations, or other non-governmental entities. If you are interested in participating in this program, contact a grantee to find out how the program operates in your area. Participation requirements may differ from one grantee to another.

Find a State CDBG Program contact.

If a State CDBG grantee cannot answer your questions, or if you are a local official, contact the HUD field office that serves your area.

Consolidated Plan and Citizen Participation

Under the State CDBG Program, states are responsible for:

• Designing the CDBG Program within statutory and regulatory parameters
• Setting priorities and deciding what activities to fund
• Distributing funding according to the method of distribution
• Establishing financial management, recordkeeping, reporting, monitoring, audit and closeout systems for their programs
• Ensuring compliance by state grant recipients
• Developing the Consolidated Plan

The Consolidated Plan is a jurisdiction's comprehensive planning document and application for funding under the following Community Planning and Development formula grant programs: CDBG, Emergency Solutions Grants (ESG), HOME Investment Partnerships (HOME), and Housing Opportunities for Persons with AIDS (HOPWA). The Consolidated Plan is carried out through Annual Action Plans which must contain the required certifications, description of CDBG eligible activities to be funded, and timetables for completing the projects.

Under the State CDBG Program, UGLG are responsible for:

• Prioritizing the types of activities they apply for
• Carrying out eligible activities
• Complying with federal and state requirements
• Handling local citizen participation

As part of the Consolidated Planning process, units of local government receiving CDBG from their state must follow the requirements of 24 CFR 570.486 which provides for, and encourages, citizen participation and which emphasizes participation by persons of low- or moderate-income, particularly residents of predominantly low- and moderate-income neighborhoods, slum or blighted areas, and areas in which the local government proposes to use CDBG funds. The plan must:

• Provide citizens with reasonable and timely access to local meetings, information, and records related to the grantee's proposed and actual use of funds
• Provide for public hearings to obtain citizen views and to respond to proposals and questions at all stages of the community development program, including at least the development of needs, the review of proposed activities, and review of program performance
• Provide for timely written answers to written complaints and grievances
• Identify how the needs of non-English speaking residents will be met in the case of public hearings where a significant number of non-English speaking residents can be reasonably expected to participate

In May 2012, HUD introduced the eCon Planning Suite, including the Consolidated Plan template in IDIS OnLine and the CPD Maps website. By creating a more cohesive planning and grants management framework and providing better data and a tool for analysis, the eCon Planning Suite supports grantees and the public to assess their needs and make strategic investment decisions. HUD grantees are now required to submit their Consolidated Plan and year one Annual Action Plan using the Consolidated Plan template in IDIS OnLine. If grantees have an approved multi-year Consolidated Plan, they are not required to use IDIS to submit their Annual Action Plan until the next multi-year strategy is due.