HUD Assistant Secretary for Community Planning and Development (CPD) Mercedes Márquez sent a mid-December memo to every jurisdiction that receives CDBG and HOME formula-based grants. The memo provides jurisdictions with preliminary estimates of the amount of CDBG and HOME they might receive in FY12.
FY12 is the first year that the formulas, which determine the amount of CDBG and HOME funds jurisdictions are to receive, will be based data from the annual American Community Survey (ACS), as well as from the 2010 decennial census. The memo has links to spreadsheets that estimate the percentage change in CDBG and HOME formula allocations for each jurisdiction attributed to the use of ACS.
Because formula allocations of Emergency Solutions Grants (ESG) are based on the prior year’s CDBG formula allocation, ESG grantees will not be impacted until FY13.
The memo notes that Congressional FY12 appropriations for CDBG and HOME were reduced by 11% and 38%, respectively. A third spreadsheet shows the estimated combined effect of the reduced appropriations and the new census data. HUD stresses that these figures are merely preliminary estimates, and that formal notification of actual formula grant amounts will be provided later.
The CDBG program has two formulas rooted in statute. Jurisdictions receive an amount based on the formula that is most favorable to them. Formula A has three factors: the extent of poverty, with a weight of 2; the extent of housing overcrowding, with a weight of 1; and total population, with a weight of 1. Formula B also has three factors: the age of the housing stock, with a weight of 2.5; the extent of poverty, with a weight of 1.5; and the extent of the lag in population growth, with a weight of 1. In short, the more poor people live in a jurisdiction, and the worse the housing stock, the more CDBG funds a jurisdiction receives.
The HOME statute called on HUD to devise a formula and provided general guidance. HUD’s formula has six factors. Four factors have a weight of 0.2: number of households in poverty; occupied rental units with at least one housing problem, such as paying more than 30% of income for rent; rental units built before 1950 and occupied by poor households; and a measure of the cost of rehabilitating rental housing that has housing problems. The two other factors have a weight of 0.1: vacancy-adjusted rental units with a household head in poverty, and population multiplied by net per capita income.
There is a new CPD webpage at http://www.hud.gov/offices/cpd/about/budget/CDBGHOMEFormula/index.cfm. The Mercedes Márquez memo is at http://www.hud.gov/offices/cpd/about/budget/CDBGHOMEFormula/DraftACSLetter.pdf
The spreadsheet estimating CDBG formula changes for each jurisdiction due to the use of ACS data is at http://www.hud.gov/offices/cpd/about/budget/CDBGHOMEFormula/ACS_Impacts_ONLY___CDBG___FY11.pdf
The spreadsheet estimating HOME formula changes for each participating jurisdiction due to the use of ACS data is at http://www.hud.gov/offices/cpd/about/budget/CDBGHOMEFormula/ACS_Impacts_ONLY___HOME___FY11.pdf
The spreadsheet estimating grant allocations for both CDBG and HOME due to FY12 appropriations in combination with the ACS data is at http://www.hud.gov/offices/cpd/about/budget/CDBGHOMEFormula/Estimated_Allocations_for_CDBG_and_HOME_FY2012.pdf