WASHINGTON -- Happy 20th birthday, CDBG. Well, maybe not.

Proponents of the Community Development Block Grant Program, created by Congress in 1974, don't feel like celebrating. In fact, lately, they are beginning to feel a bit besieged.

Over the past two decades, the program has provided billions in federal funds to allow local governments to revitalize their neighborhoods. Housing and Urban Development Secretary Henry Cisneros has called the grants "the most flexible community building tool available to mayors and governors."

But some recent proposals by Cisneros' own department have left housing advocates unsettled, because the proposals seem to advocate chipping away at the effectiveness and flexibility the advocates say is the hallmark of CDBG.

To be fair to Cisneros, they say, the problem didn't start with him. "Since the demise of many grant programs to local governments over the last several years, CDBG has been under tremendous pressure to do more for everyone," says Albert Eisenberg, the vice chairman of the Arlington, Va., county board.

"Hardly a legislative session goes by without someone calling for a new eligible activity for the program or a new way of using CDBG funds, or more accurately another reason to withhold CDBG funds, in order to get some desired response from local government," Eisenberg said. He made his remarks during a hearing in May of the Senate Banking Committee's subcommittee on housing and urban affairs.

But this legislative session, thanks to HUD, more than the usual number of proposals seem poised to take small bites out of CDBG.

The first blow came in President Clinton's budget plan, released in February, which proposed $4.4 billion for the program in fiscal 1995. On the surface, that was actually good news, because $4.4 billion was what the program received the previous year, and proponents had been pessimistic about sustaining that level of funding.

But in reading the fine print of the budget plan, CDBG proponents discovered that HUD wanted to siphon off $200 million from the $4.4. billion for a new program, Leveraged Investments For Tomorrow, or LIFT. Much like CDBG, LIFT would aid cities' economic development initiatives.

Housing industry officials and members of Congress cried foul, and HUD ultimately relented: Cisneros announced in April that HUD would get the money for LIFT from somewhere else.

Later in April, a second proposed drain on CDBG funds came to light when HUD officials unveiled the department's proposals for reauthorizing federal housing programs. Among the proposals was one to beef up the public housing modernization program, which allocates money to public housing authorities each year for rehabilitation of deteriorated housing.

HUD wants local housing authorities to obtain large, up-front blocks of money by borrowing against future allocations of modernization funds. But it also wants the authorities to collateralize the loans using CDBG moneys, a move that Eisenberg sharply criticized at the subcommittee hearing in May.

"The possibility that CDBG funds may be used to serve as collateral for the housing modernization funds is definitely a poor policy decision. This, in effect, will result in a net decrease in CDBG funds, which are already strained in localities," Eisenberg said in his testimony.

A third HUD proposal would make initiatives to fight discrimination in the sale or rental of affordable housing units eligible for CDBG funding. On the surface, that would seem like a proposal housing advocates would support, because it would expand their opportunities to use CDBG funds.

But local housing officials are worried that the proposal could expand HUD's reach as well. HUD could withhold CDBG funds from localities that it feels do not do enough to stop housing discrimination. Or it could penalize those that decide not to allocate CDBG funds to anti-discrimination initiatives. HUD officials, for their part, say they don't intend to create such linkages.

As they do battle with the various proposals to chip away at CDBG, state and local officials say they have found a sympathetic ear in Congress. Lawmakers, they say, want to keep the program intact. Which should be welcome news to anybody planning the 21st birthday party.

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