What are Community Development Block Grants (CDBG)?

As part of the SDG Leadership Academy and in collaboration with the Mayor’s Office of Economic Opportunity, the CDBG team consisted of 7 students from Arizona State University, University of Southern California and Occidental College with multidisciplinary backgrounds in International Affairs, Business Administration, Social Entrepreneurship and Public Health. This project analyzed the funding allocations of annual federal entitlement grants known as Community Development Block Grants (CDBG) focused on investments in low and moderate income communities.

The Community Development Block Grant (CDBG) Program began in 1976 and is administered through the U.S. Department of Housing and Urban Development (HUD). The first national objective of the CDBG program is to support low and middle income (LMI) communities. At least 70% of CDBG funds granted to a city/state must be used directly to benefit LMI communities.The program’s second objective is the elimination and prevention of blight and slums.  A third objective is to meet urgent needs, such as responding to natural disasters¹. CDBG allocation focuses on 7 categories of which this study analyzed three: neighborhood improvements, economic development, and public services. 

Below is a graph that shows the funding allocations across the three categories over the years 2013-2019. 

What did we accomplish and how did we do it? 

The plan of action for the project was categorized into three phases based on the deliverables: 

1.  Background research, including identification of [eight] cities across the U.S. that have comparable characteristics to the City of Los Angeles in terms of demographics, funding needs, priority public issues, as well as funding avenues for a) economic development, b) neighborhood improvement, and c) public services. 
2.  Collecting and cleaning data on the aforementioned categories. The team extracted and synthesized project details from annual action plans and prepared a matrix consisting of program year, project name, council district, city department, and CLA/CAO proposed budget. To categorise each project, we utilised the HUD Matrix Code. 
3.  Mapping projects with potential  funding options other than CDBG. We used Special Fund schedules from the City Budget and All City Funds dataset to identify alternative funding sources for each individual project.

What did we learn? 

Neighborhood Improvements

Neighborhood Improvements (NI) refers to projects that contribute to the development of a sustainable and livable city through the construction of facilities for parks and recreation, healthcare, senior and youth citizens, people experiencing homelessness, street improvements, etc.

The City of Los Angeles allocates the largest portion of CDBG funding towards Neighborhood Improvements. 

Parks and Recreational Facilities, Neighborhood Facilities, and Street Improvements are consistently the most-funded subcategories.  Homeless Facilities, Health Facilities, Senior Centers, and Youth Centers are consistently the least-funded subcategories.

In our research to find alternative public funding sources, we found that these same categories receiving the most CDBG funds also have the most alternate public funding available. HCIDLA (Housing and Community Investment Department), PW (Public Works), and RAP (Recreation and Parks) are the city departments that manage the most CDBG funds. 

The projects funded through HCIDLA, PW, and RAP often receive large amounts of funding over a multi-year period.

Economic Development

All CDBG funding for the Economic Development (ED) category receives funding through the Economic and Workforce Development Department (EWDD). Over the past seven years, 70% of CDBG ED funding supports direct technical assistance, including but not limited to business development, marketing, and business services referrals. Direct financial assistance and micro-enterprise assistance account for 17% and 6% respectively represented by specific incubator projects, loans and grants for micro-businesses. 

Among all the economic development projects, most of them are implemented citywide. Additionally,we found that some example projects as shown below receive CDBG funding repeatedly over past years, accounting for a relatively large proportion of the grand total.

Public Services

Public Services (PS) refers to projects that provide employment, health, housing, or other general community-based services that are either new to CDBG entitled state or city, or provide a quantifiable increase in the level of existing services within the state or city. The CDBG subcategory of public services is the only subcategory analyzed that has a mandated cap on the percentage of funding to be distributed - 15%. 

The general distribution of CDBG funding into public services has decreased in the variation of services since PY 39 as seen in the following figure.

A large proportion of CDBG PS funding goes toward the subcategory of “Other Public Services”. Disaggregating this broad category to reflect the projects that are funded within this group would allow for a clearer view of specifically how CDBG funding is distributed within Los Angeles. 

An analysis of CDBG project distribution through the administering department reveals that while PS projects are funded through a variety of city departments, HCIDLA (Housing and Community Investment Department) and the Department of Aging consistently funded PS projects over the 7 years analyzed.

CDBG allocations for PS projects that are consistently funded through these two administering departments could be built into the respective department budgets, allowing for more CDBG dollars to be allocated to new projects without removing funding sources for existing projects, and while remaining within the 15% CDBG budget cap. 

Why is this important and what can be concluded? 
 
The City of Los Angeles is home to 4 million of which 38% are foreign born, 48% are Hispanic and 47% of households earn less than the median income of the City of Los Angeles². The City has a poverty rate of 20% and its safety net services serve as the first source of access for many families living in Los Angeles and specifically those in low to moderate income communities³. 

Given the varied necessities of the community, it is imperative that the City takes a look at how and where they allocate the resources. Do the allocated resources create the intended impact in the communities that need it most? And how can we ensure that the resources stay agile and resilient to meet the needs of the city as needed? 

Based on the above research and analysis, the team recommends that the City:

a.  Identify projects that are funded consistently through CDBG funds and build funding into the base budgets of the relevant city departments; and,
b.  Utilize alternative public funding sources to build resilience into safety net programs and increase the ability to respond to the immediate needs of the LMI communities; and, 
c.  Better disaggregate “other” public services projects to understand themes and trends, potentially allowing for funding through existing sources and freeing resources to respond to the most important needs of the LMI community. 
d.  Establish an SDG-based impact measurement framework to evaluate the results and long-term success of CDBG-funded projects in the low-moderate income communities. Such a model that could be adopted by other cities as well as HUD, to evaluate federal entitlement spending through the lens of the Global Goals.

The CDBG grant scheme is imperative to the sustainability of the community and it supports the quality of life for the communities it supports in the City of Los Angeles. With the above recommendations, the City of Los Angeles can maximize the impact of these funds for the communities who need them most, and build resilience into its social safety net.
 

Team Members: 
Stephanie Oyolu Occidental College,
Brillarch Amante M Dayag II Arizona State University, 
Dilay Akcora, Ellory Longdon, Pengyu Ji, Sarah Eng and Hamsini Balaji University of Southern California