CARES Act Provides $5 Billion in CDBG Funding for State and Local Governments

April 13, 2020 - Ronald T. Scott
In the midst of the Coronavirus Pandemic, the federal government appropriated funding for low-income and moderate-income communities and persons through the Community Development Block Grant (CDBG) Program.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law by President Donald J. Trump on March 27, 2020, appropriates $5 billion in additional CDBG Program funding to state and local governments. 

The CDBG Program, administered by the U.S. Department of Housing and Urban Development (HUD), provides formula-based grants to states and local governments to support decent housing and suitable living environments, along with expanded economic opportunities, principally for low-income and moderate-income communities and persons.  CDBG is flexible and allows local communities to determine how federal funding can provide needed support through a wide range of eligible projects and services. For example, state and local governments may use their CDBG allocations to provide various forms of assistance to eligible citizens and small businesses and to provide other needed services in response to the Coronavirus Pandemic. The CARES Act also removes the traditional statutory cap limiting CDBG expenditures on public services to no more than 15% of a state or local government’s allocation. Removal of the public service expenditure cap allows greater flexibility for CDBG funding to be used for a wide range of support services for communities and persons impacted by the Coronavirus Pandemic.

Of the $5 billion set aside for CDBG through the CARES Act, existing entitlement communities that already receive direct CDBG allocations from HUD will share in $2 billion based on the current funding formula for the federal fiscal year 2020. Seventeen South Carolina counties and cities will receive direct CDBG allocations under the CARES Act, along with a separate allocation to the State of South Carolina. The chart below shows the specific CDBG funding allocations for South Carolina announced by HUD:

South Carolina counties and cities not receiving a direct CDBG allocation can likely apply for funding through the state’s allocation, which will be administered through the South Carolina Department of Commerce. 

Of the remaining $3 billion in CDBG funding appropriated under the CARES Act, $1 billion will be allocated to states and insular areas "to prevent, prepare for, and respond to coronavirus within the state or insular area, including activities within entitlement and nonentitlement communities, based on public health needs, risk of transmission of coronavirus, number of coronavirus cases compared to the national average, and economic and housing market disruptions, and other factors as determined by the Secretary, using the best available data.” 

Finally, $2 billion in CDBG funding will be distributed to state and local governments, at the discretion of the HUD Secretary. HUD issued a press release on April 2 with great examples of how these CDBG funding may be used in the present pandemic. Final guidelines are yet to be determined.

Please contact your HSB attorney or Ron Scott with any questions.

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