HUD Publishes Proposed Rule to Promote Economic Development in Underserved Communities

The Notice of Proposed Rulemaking for HUD’s Community Development Block Grant (CDBG) and Indian Community Development Block Grant Programs (ICDBG) would bolster economic and community development in underserved communities across the country.

WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) published a Notice of Proposed Rulemaking in the Federal Register to update regulations for the Community Development Block Grant (CDBG) and Indian Community Development Block Grant Programs (ICDBG). The proposed rule would streamline program requirements, promote economic development and investments in underserved communities, and enable larger, transformative construction projects such as housing rehabilitation, mixed-use development, and infrastructure improvements.

“From coast to coast and nearly everywhere in between, Community Development Block Grant funds build roads and sewers, rehabilitate homes, support nonprofit organizations and small businesses, and help communities prepare for and recovery from weather related disasters,” said HUD Secretary Marcia L. Fudge. “The Biden-Harris Administration has committed to making federal programs easier to use, and this rule will reduce burden on grantees and ensure this critical funding reaches communities quickly.”

These updates would improve the ability of CDBG grantees to implement funding more effectively and efficiently – making it easier for States and localities to use CDBG or Section 108 Loan Guarantee funding to invest in underserved areas. Section 108 allows communities to access up to five times their annual CDBG allocation via low interest loans for eligible activities and is a valuable tool in spurring economic development and job creation. Additionally, if promulgated, the proposed rule would strengthen provisions related to Consolidated Plan, public participation requirements, and the timely expenditure of CDBG funding.

HUD is also proposing corresponding technical changes to ICDBG program regulations to better align CDBG and ICDBG. HUD intends to publish another ICDBG proposed rule soon, substantially changing the ICDBG program regulations following further Tribal consultation.

Principal Deputy Assistant Secretary Marion McFadden added: “For fifty years, CDBG has been a reliable resource for communities across the country. CDBG’s annual formula grant provides flexible funding for States and localities to address their greatest needs.”

The proposed revisions to the CDBG regulations would be the first substantial regulatory update since 1995. If finalized, this proposed rule would be a significant step to modernizing and strengthening the programs to allow funds to flow more quickly to economically distressed communities. The proposed updates also aim to improve data collection to measure effectiveness and program outcomes.

HUD seeks public comment on this proposed rule and invites all interested parties and members of the public to submit their views, comments, and recommendations for improvement for this proposal. Comments may be submitted electronically through www.regulations.gov, or through the methods described in the proposed rule.

CDBG is a formula grant program which provides funding to all fifty states and over 1,200 localities – primarily benefiting people of modest means. ICDBG is a competitive grant program available to Tribes. Further information regarding CDBG is available at www.hud.gov/program_offices/comm_planning/cdbg. Further information regarding ICDBG is available at https://www.hud.gov/program_offices/public_indian_housing/ih/grants/icdbg.

For the full proposed rule text find HUD's Notice of Proposed Rulemaking on the Community Development Block Grant Program and Indian CDBG Rule here.