Let Us Now Praise the Humble CDBG
One of the few things about the American Rescue Plan Act that Republicans and Democrats agree on is:
The $1.9 trillion of spending in this sweeping new law is really quite a lot of money.
Very big-ticket items abound in the Rescue Plan, which in size completely eclipses the $787 billion stimulus package enacted to help dig the nation out of the Great Recession back in 2009.
Headline-grabbing features include: the direct payments of up to $1,400 going out to households; the dramatic expansion of Child Tax Credits (going up to $3,600 annually per family); and the $34 billion in subsidies that will make Obamacare more affordable for close to 14 million Americans.
But let’s also consider for a moment another less splashy but crucial element of the Rescue Plan:
Funding for local governments linked to the humble, hardworking Community Development Block Grant.
Unless you’re an urban policy wonk, you may never have heard of CDBG funding (and if you use that acronym in conversation, just try not to tongue-twist it into the name of the late, lamented, and similarly initialed East Village punk rock performance cave).
But year in and out, CDBG dollars do a lot of unheralded but pretty important heavy lifting in low-income communities across the country.
Now the Rescue Plan is about to put CDBG-based funds on steroids.
The non-partisan Tax Foundation estimates that the $350 billion in state and local government relief included in the Rescue Plan will direct about $130 billion to city and county governments using CDBG criteria (more about that funding formula in a minute).
Some $10.6 billion of that will go to localities in New York State – with New York City getting over half that pot.
That expected extra $6.1 billion should make hearts beat fast at a revenue-strapped New York City Hall – not just because of the size of this grant, but for three other key reasons, too.
First, unlike most Federal support, CDBG funding like this comes directly to the City without being routed through State government.
Result: There’s none of the leakage of largesse to suburban and Upstate localities that often occurs when checks from Uncle Sam meant for the five boroughs first make stopovers in Albany.
Or as Senator Chuck Schumer put it in an unusual moment of understatement at a recent press availability about the Rescue Plan with New York City Mayor Bill de Blasio:
“When Albany gets the money, sometimes the City doesn’t see all of it.”
Second, CDBG-based funds come with relatively few ties or mandates. Local officials enjoy a good deal of freedom in deciding how to spend them.
That’s not to say that they’re completely unrestricted: CDBG funds are intended to improve housing and economic opportunity in low-income areas, and they’re distributed using a formula that includes such factors as population, poverty levels, and housing density.
But it’s important to bear in mind that CDBGs originated during the Nixon-Ford years, in reaction to something Republicans (and also many Democratic mayors) of that era had strongly disliked about President Lyndon Johnson’s War on Poverty:
What they regarded as unwelcome Washington intrusion in local decision making.
To this day, guidance from the US Department of Housing and Urban Development (HUD) about spending CDBG funds remains rather broad:
“Activities may address needs such as infrastructure, economic development projects, public facilities installation, community centers, housing rehabilitation, public services, clearance/acquisition, microenterprise assistance, code enforcement, homeowner assistance, etc.”
And that leads to the third reason why – especially in times of recession and recovery – City Hall loves CDBG-type dollars: They’re worker bees in the hardest-hit communities.
Consider, for example, how New York City spent the enhanced CDBG funds it got under the American Recovery and Reinvestment Act of 2009.
Roughly half went to the scut work of making essential housing repairs in landlord-neglected apartment buildings after the real estate speculation bubble preceding the Great Recession went poof:
Replacing washed-up hot water heaters and busted boilers, fixing leaky roofs and broken windows, and other unglamorous but critical projects. (Landlords were subsequently billed for that emergency work.)
More recently, the City has used CDBG funds for projects in coastal communities devastated by Hurricane Sandy, and for court-mandated repairs to public housing developments.
And in calmer, less-straitened budget times, as much as two-thirds of the City’s typical pot of hundreds of millions of CDBG dollars regularly covers the salaries of City housing inspectors.
During the Great Recession, some CDBG funds also paid for workforce training and placement.
That could also well happen in post-pandemic New York, as the City faces the challenge of preparing many thousands of long laid off, mostly low-wage workers for a job market dramatically reshaped by the cyclonic forces of the current recession.
As Center for New York City Affairs director of economic and fiscal policies James A. Parrott argued in his March 24 Urban Matters, these workers’ jobs were sacrificed to protect the city from Covid-19 during the social distancing lockdown last spring – and the City now has a profound obligation to help them reclaim their futures.
In the past, New York City has also shown willingness to stretch its discretion in using CDBG funds, especially in the wake of physical and economic disasters.
After the devastating 9-11 terrorist attack, for instance, CDBG dollars were invested in enhancing and creating open spaces in Lower Manhattan – part of the Bloomberg Administration’s largely successful strategy to reassure shell-shocked businesses to stay in the area while also hastening Lower Manhattan’s simultaneous evolution as a residential district. City Hall may bear that example in mind as it considers how to deal with the current broad commercial slump in Midtown and Lower Manhattan.
Former President Donald Trump and his HUD secretary Ben Carson regularly proposed completely eliminating Community Development Block Grant funding from the Federal budget. The head-snapping turnaround in attitude about CDGBs embodied in the Rescue Plan is all the proof the nation’s mayors need that, when it comes to partnership with Washington, they’re not in budgetary Kansas anymore.
Bruce Cory is editorial advisor to the Center for New York City Affairs at The New School.
Photo by Steven Pisano.