HUD’s Office of Community Planning and Development (CPD) issued Notice CPD-14-16 providing guidance on using Community Development Block Grant (CDBG) funds for code enforcement activities.
The Notice comments that jurisdictions have been tempted to shift existing code enforcement activities funded by general revenues to CDBG in order to relieve pressure on their general fund budgets. CPD has observed examples of significant increases in some jurisdictions’ CDBG code enforcement budget, while the jurisdictions’ overall spending on enforcement remains the same. CPD reminds jurisdictions that they may not use CDBG to pay for code enforcement in area of the jurisdiction that are not CDBG eligible.
The Notice reiterates the statutory and regulatory provisions that allow CDBG to be used for code inspection and enforcement only if carried out in deteriorated or deteriorating areas in which code enforcement, along with public or private improvements or services, may be expected to arrest an area’s decline. In addition, the statute and regulations prohibit jurisdictions from using CDBG for general government expenses.
Therefore, CPD takes note if it appears that CDBG is used for general government expenses, if the use of CDBG appears excessive in relation to the jurisdiction’s overall code enforcement program, or if areas in which CDBG-assisted code enforcement is carried out are not deteriorating.
Because code enforcement is defined in many ways by jurisdictions, the Notice states that for CDBG purposes, code enforcement is defined as a process for gaining compliance with local ordinances and regulations regarding health and housing codes, land use and zoning ordinances, uniform building and fire codes, and sign standards. Code enforcement may take place in primarily residential, commercial, or industrial areas. However, CPD notes that a primary emphasis on structural issues is suggested by the legislative language requiring other improvements to accompany code enforcement. Consequently, CPD expects localities to emphasize health and safety issues in buildings. Ancillary efforts to address violations of codes concerning vacant lots, signs, and motor vehicles are permitted in conjunction with efforts regarding buildings, but should form a minor part of a code enforcement program.
Eligible code enforcement costs include the salaries and related expenses of code inspectors. Also discussed are the costs of legal proceedings, hearings, citation processing and issuance, and fine collecting and processing. The Notice elaborates on costs associated with the use of vehicles, hand-held electronic devices, and even uniforms. Because the CDBG statute lists code enforcement as a separate, specific eligible activity, correcting code violations is not eligible under this unique CDBG activity. Rather, correcting code violations is an eligible rehabilitation activity.
Because the statute and regulations require code enforcement be done in conjunction with other improvements expected to arrest decline, the Notice declares that the purpose of the requirement is to ensure that a deteriorated or deteriorating area is being made safe for the general public, “not to generate revenue via code violation fines.”
CPD clarifies that fines generated by CDBG-assisted code enforcement are not program income, which would have to be recycled into a jurisdiction’s CDBG program and used for eligible activities meeting CDBG’s national objectives of benefitting lower income people or addressing slums and blight, which the Notice describes in detail. The Notice also explains how fine revenues are to be treated.
According to CDBG expenditure reports, in FY13 CDBG entitlement jurisdictions (cities with populations of at least 50,000 and urban counties with populations of at least 200,000) disbursed $119,829,531 for code enforcement, which was 4.74% of all CDBG disbursements. The highest percentage between FY01 and FY13 was 5.51% ($154,529,969) in FY10, and the lowest was 2.65% ($100,429,256) in FY02. For states, $903,837 was disbursed for code enforcement in FY13, representing 0.09% of all state CDBG disbursements. The highest percentage disbursed by states between FY01 and FY13 was 0.10% ($1,034,861) in FY10, and the lowest was 0.05% ($583,795) in FY12, although four other years were at the 0.05% level as well.
Notice CPD-14-16 is at http://portal.hud.gov/hudportal/documents/huddoc?id=14-16cpdn.pdf
Earlier CPD informal code enforcement guidance is at:
- Basically CDBG, Chapter 5 “Other Real Property Improvements,” pages 5-8 and 5-9, https://www.hudexchange.info/resources/documents/Basically-CDBG-Chapter-5-Property-Improvement.pdf
- CDBG Guide to National Objectives, Chapter 2, “Categories of Eligible Activities,” pages 2-52 through 2-54, https://www.hudexchange.info/onecpd/assets/File/CDBG-National-Objectives-Eligible-Activities-Chapter-2.pdf
CDBG National Expenditure Reports: “Entitlement Disbursements,” “State Disbursements,” and “All CDBG Disbursements,” are at https://www.hudexchange.info/manage-a-program/cdbg-expenditure-reports
More information about CDBG is on page 285 of NLIHC’s2014 Advocates’ Guide, http://nlihc.org/sites/default/files/2014AG-285.pdf