Community Development Block Grant.

What CDBG does

The Community Development Block Grant (CDBG), authorized by Title I of the Housing and Community Development Act of 1974 (42 U.S.C. § 5301 et seq.) and implemented under 24 CFR Part 570, is the federal government's primary tool for funding local community development. CDBG is administered by HUD's Office of Community Planning and Development (CPD), the same office that runs HOME, HTF, and similar programs.

What distinguishes CDBG from program-specific federal subsidies is its flexibility. Within three statutory national objectives, recipient jurisdictions can use CDBG for a wide range of activities — affordable housing, infrastructure, public services, economic development, public facilities, and many others. This flexibility makes CDBG one of the most practical tools for filling the unpredictable gaps in affordable housing finance: predevelopment costs, infrastructure tied to housing sites, environmental review, and other costs that LIHTC, HOME, and HTF cannot reach.

Who receives CDBG

CDBG flows to two types of recipients:

Entitlement Jurisdictions (CDBG-Entitlement)

Approximately 1,200 entitlement jurisdictions receive CDBG funds directly by formula. These include:

• Principal cities of metropolitan statistical areas
• Cities with population of 50,000 or more
• Urban counties with population of 200,000 or more (excluding entitlement city populations)

Approximately 70% of total CDBG funding goes to entitlement jurisdictions.

Non-Entitlement (CDBG-States)

The remaining 30% is allocated to states for distribution to smaller localities (cities under 50,000 population and counties under 200,000 population that are not part of an urban county). States operate their own competitive or formula-based CDBG programs for sub-state distribution. State CDBG administration varies considerably; some states distribute by formula while others run application rounds.

The three national objectives

Every CDBG-funded activity must meet one of three national objectives:

1. Benefit Low/Moderate Income (LMI) persons — activities benefiting individuals or households whose incomes are at or below 80% AMI
2. Aid in the prevention or elimination of slums or blight — activities addressing blighted areas or individual blighted properties
3. Address an urgent need — activities responding to a sudden community emergency (rarely used outside disaster contexts)

Statutorily, at least 70% of a jurisdiction's CDBG funds must benefit LMI persons over a 1-3 year period selected by the grantee. This LMI-benefit requirement is the practical lever ensuring CDBG funds reach low-income households even when activities are broadly community-oriented.

Eligible activities

CDBG's eligible-activities list is unusually broad. Affordable housing-relevant activities include:

• Acquisition of real property for use in eligible activities
• Public facilities and improvements — streets, water, sewer, sidewalks, parks — including infrastructure serving affordable housing developments
• Privately-owned utilities serving low-income areas
• Clearance and demolition of buildings unfit for human habitation
• Public services — capped at 15% of grant; includes fair housing counseling, tenant assistance, supportive services
• Relocation payments for households displaced by CDBG-funded activities (mandatory under URA)
• Rehabilitation of privately-owned housing (with limitations on new construction)
• Economic development activities benefiting LMI persons
• Special economic development for businesses creating jobs for LMI persons
• Planning and administration — capped at 20% of grant for entitlements

What CDBG generally cannot fund

The most significant restriction: new housing construction is generally ineligible for direct CDBG funding (with limited exceptions for CHDOs and other community-based development organizations under specific circumstances). For new construction, jurisdictions typically use HOME or HTF (which permit new construction) with CDBG funding adjacent activities like site preparation, infrastructure, and predevelopment.

How CDBG funds affordable housing deals

Despite the new construction restriction, CDBG is widely used in LIHTC and other affordable housing deals for activities CDBG can fund:

• Predevelopment costs: Market studies, environmental review, design, legal fees, site control
• Site acquisition: CDBG funds property purchase, then the property is donated, sold, or leased to the development entity
• Public infrastructure: Streets, water, sewer, sidewalks serving the housing site — often the largest CDBG line item
• Demolition and site preparation: Clearing blighted structures before LIHTC-funded new construction
• Owner-occupied rehab: Single-family home improvement loans alongside (but not part of) LIHTC deals
• Public services tied to housing: Resident services, fair housing counseling, eviction prevention

Typical structure: The local jurisdiction uses CDBG for predevelopment and site preparation. The development entity then takes the prepared site and assembles a LIHTC + HOME + private debt capital stack for the actual construction.

CDBG variants — the disaster recovery family

Beyond annual CDBG, Congress periodically appropriates supplemental CDBG funds for disaster recovery. These supplemental appropriations are administered by HUD CPD under the same statutory framework but with disaster-specific guidance:

• CDBG-DR (Disaster Recovery): Supplemental appropriations following Presidentially-declared disasters. Recent rounds include Hurricane Harvey, Hurricane Maria, Hurricane Ian, multiple California wildfires, and Hurricane Helene. Often the largest single source of capital for post-disaster housing reconstruction.
• CDBG-MIT (Mitigation): Supplemental appropriations for mitigation activities to reduce risk from future disasters. Authorized periodically; typically tied to specific disaster appropriations.
• CDBG-NDR (National Disaster Resilience): Competitive grants for resilience and recovery projects with national scope.
• CDBG-CV (COVID): Pandemic-era supplemental appropriations from 2020-2021; mostly sunsetting through 2025-2026.

For LIHTC developers operating in disaster-affected areas, CDBG-DR has become a major capital source, often functioning as a deeper-than-HOME gap subsidy with specific affordability priorities tied to disaster recovery.

How to access CDBG for your project

Unlike LIHTC (where developers apply directly to state HFAs), CDBG access is mediated by the local jurisdiction. Process:

1. Identify the recipient jurisdiction: For entitlement cities, the local Community Development department. For non-entitlement, the state CDBG program (often through state HCD).
2. Review the Consolidated Plan: 5-year strategic plan listing the jurisdiction's priorities for CDBG, HOME, HTF, ESG, and HOPWA funds
3. Review the Annual Action Plan: Yearly funding plan listing specific activities and budgets
4. Identify alignment: Find the specific activity in the Action Plan that funds the predevelopment, infrastructure, or other costs your project needs
5. Apply through the jurisdiction's process: May be RFP, NOFA, or negotiated allocation
6. Execute subrecipient or developer agreement: CDBG funds flow through formal written agreements
7. Comply with cross-cutting requirements: Davis-Bacon (above 8 housing units), Section 3, Uniform Relocation Act, environmental review (NEPA), and lead-based paint

Pairing with other programs

• LIHTC: CDBG funds predevelopment, site acquisition, or infrastructure; LIHTC funds the construction
• HOME: Common combination — CDBG on predevelopment/infrastructure, HOME on the hard construction
• HTF: Triple-stacked with deep affordability units
• Section 108: CDBG-backed loan guarantees for larger capital needs (separate program)
• Section 8 PBV / PBRA: Operating subsidy layered on CDBG-supported deals

Recent program developments

OBBBA impact

The One Big Beautiful Bill Act did not directly amend CDBG. CDBG continues to operate under its existing statute and 24 CFR Part 570.

Annual appropriation trends

CDBG appropriations have been roughly flat in nominal terms over the past decade, ranging from $3.0B to $3.4B. Inflation-adjusted, CDBG's purchasing power has declined approximately 20% since 2010. FY2026 appropriations remain pending as of May 2026.

Practitioner resources

• HUD CPD CDBG program homepage
• 24 CFR Part 570 (the CDBG implementing regulations)
• Your jurisdiction's Consolidated Plan and Annual Action Plan
• HUD CDBG-DR / CDBG-MIT program pages (for disaster-related funding)
• Industry resources: NCDA (National Community Development Association), HCDA Coalition, NAHRO publications