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Press Room

NAHRO Testifies before Congress on CDBG Funding Allocation Formula; Proposed Formulas Would Cause Significant Regional Shifts in Grants

Contact: Liz Hennessy, 202-289-3500 ext. 280

WASHINGTON, April 26 -- In the midst of the administration's proposal to eliminate the Community Development Block Grant (CDBG) program, Congress is also considering a recent report that would change the methodology used to allocate CDBG grants. Saul Ramirez, executive director of the National Association of Housing and Redevelopment Officials, today testified on the CDBG formula study before the House Government Subcommittee on Federalism and the Census. Ramirez urged Congress to proceed with caution in making changes to the current formula.

The report, "CDBG Formula Targeting to Community Development Need," was requested in 2003 by then-HUD Secretary Mel Martinez. It examines the funding consequences of four alternative allocation models, each of which, it argues, would target CDBG dollars more fairly and more effectively toward need. The four alternative funding formulas would each cause significant regional shifts in allocations. (The report's chart outlining these shifts is available online.)

Ramirez argued that the current formula is successful in targeting need: "Under the current formula structure, the CDBG program continues to make a real and positive difference in communities across America.

"…the statute requires that at least 70 percent of all CDBG funds expended go toward activities benefiting low- and moderate-income persons," Ramirez said. "The reality is that communities are targeting funds much more aggressively than the statute requires."

"We support the notion of a fair and equitable distribution of CDBG dollars, but I would urge you to proceed with caution in examining the issue of targeting CDBG funds in new and different ways," Ramirez said. "Adopting and immediately implementing any of the four alternatives outlined in the study will produce massive funding shifts."

For example, Ramirez cited the case of a New England city that would have to cancel between 40 and 60 percent of planned neighborhood improvement projects because of funding losses.

"These kinds of shifts are tantamount to a major change in federal community development policy and must not be taken lightly...If Congress feels change is truly necessary, then we think likely that change could happen in a way that mitigates uncertainty and avoids sudden and substantial losses in funding," he said. "Any consideration of change must involve a fully deliberative process within the committee of jurisdiction and must include participation from local and state governments, public interest groups and community development professionals."

Ramirez testified on behalf of NAHRO, the National League of Cities, the National Association of Counties, the National Conference of Black Mayors, the Council of State Community Development Agencies, the National Association for County Community and Economic Development, the National Association of Local Housing Finance Agencies and the National Community Development Association.

Full testimony is available onlin. For more information, contact Liz Hennessy at 202-289-3500 ext. 280.