The Impact of CDBG Spending on Urban Neighborhoods

Release Date: 

  • October 2002 (105 pages)

Posted Date:   

  • October 1, 2002
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The largest of HUD's formula block grant programs, with an annual appropriation of approximately $5 billion, the Community Development Block Grant (CDBG) program is administered by more than 1,000 metropolitan cities and urban counties and 50 State governments, which have great discretion in how they spend their funds.

This study examines whether readily available data sources can be used to track the outcomes of activities funded with CDBG. The study concludes that two readily available data elements – median home loan amount and the number of businesses-hold some promise as tools for helping local communities measure the effects of concentrated CDBG expenditures, but that additional research is needed to verify the utility and clarify the limitations of this methodology. The study is likely to be of greatest interest to researchers and local communities interested in measuring the impact of concentrated CDBG (and other community development) investments at the neighborhood level.

Given the local flexibility afforded States and local governments under formula block grants such as CDBG, the impacts of such programs are difficult to measure, particularly at the national programmatic level. Different performance measures might be needed for different types of investments. Other factors complicating measurement of the effects of CDBG expenditures include the strong effects of such external factors as the economy and interest rates and the fact that neighborhoods are also affected by significant investments of non-CDBG funds.

The analysis presented in this study is a good first step in identifying a relationship between CDBG spending and measurable improvements in neighborhood quality, but this initial work does not support the use of this methodology as the basis for a national performance measure applicable to all CDBG programs. Even as HUD continues to refine its research in this area, the measures developed here may be useful to local communities interested in assessing their own community development performance and in furthering their understanding of the neighborhood effects of past CDBG investments.

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