HUD Proposes Rule to Advance Economic Development in Underserved Communities

The U.S. Department of Housing and Urban Development (HUD) published a Notice of Proposed Rulemaking in the Federal Register to update regulations for the Community Development Block Grant (CDBG) and Indian Community Development Block Grant Programs (ICDBG).

The proposed rule would streamline program requirements, promote economic development and investments in underserved communities, and enable larger, transformative construction projects such as housing rehabilitation, mixed-use development, and infrastructure improvements.

“From coast to coast and nearly everywhere in between, Community Development Block Grant funds build roads and sewers, rehabilitate homes, support nonprofit organizations and small businesses, and help communities prepare for and recover from weather-related disasters,” said HUD Secretary Marcia L. Fudge. “The Biden-Harris Administration has committed to making federal programs easier to use, and this rule will reduce the burden on grantees and ensure this critical funding reaches communities quickly.”

These updates would improve the ability of CDBG grantees to implement funding more effectively and efficiently, making it easier for states and localities to use CDBG or Section 108 Loan Guarantee funding to invest in underserved areas. Section 108 allows communities to access up to five times their annual CDBG allocation via low-interest loans for eligible activities and is a valuable tool in spurring economic development and job creation.

According to the report, if promulgated, the proposed rule would strengthen provisions related to the Consolidated Plan, public participation requirements, and the timely expenditure of CDBG funding.

HUD is also proposing corresponding technical changes to ICDBG program regulations to better align CDBG and ICDBG. HUD intends to publish another ICDBG proposed rule soon, substantially changing the ICDBG program regulations following further tribal consultation.

“For fifty years, CDBG has been a reliable resource for communities across the country," said Marion McFadden, Principal Deputy Assistant Secretary for Community Planning and Development. "CDBG’s annual formula grant provides flexible funding for states and localities to address their greatest needs.”

The proposed revisions to the CDBG regulations would be the first substantial regulatory update since 1995. If finalized, this proposed rule would be a significant step toward modernizing and strengthening the programs to allow funds to flow more quickly to economically distressed communities.

The proposed updates also aim to improve data collection to measure effectiveness and program outcomes.

To read the full release click here.