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HUD CPD Announces Third and Final Round of CDBG-CV Allocations

HUD’s Office of Community Planning and Development (CPD) posted the third (final) round allocations of $1.988 billion from the $5 billion supplemental Community Development Block Grant funds (CDBG-CV) Congress appropriated by the CARES Act. Also posted was a description of the allocation method. The second round of $1 billion was announced on May 11 (see Memo, 5/18) and the initial round of $2 billion was announced on April 1 (see Memo 4/6).

The CARES Act requires HUD to allocate the $2 billion final round directly to states or local governments at HUD’s discretion according to a formula based on factors to be determined by HUD, prioritizing risk of transmission of coronavirus, number of coronavirus cases compared to the national average, and economic and housing market disruptions resulting from coronavirus. The CARES Act allowed third round allocations to be made on a rolling basis based on the best available data at the time of allocation; however, HUD has allocated the final round all at once.

The methodology claims that HUD followed the statute, along with President Trump’s Executive Order 13945 “Fighting the Spread of COVID–19 by Providing Assistance to Renters and Homeowners.” That EO called on HUD to identify any and all available federal funds to provide temporary financial assistance to renters and homeowners who, as a result of financial hardships caused by the coronavirus, are struggling to meet their monthly rent or mortgage obligations. HUD’s media release neglects to say that Congress appropriated the funds for this purpose.

The methodology also states that the allocations comply with the EO, which called on HUD to promote the ability of renters and homeowners to avoid eviction or foreclosure resulting from financial hardships caused by the coronavirus. The EO provides that such action may include encouraging and providing assistance to public housing authorities, affordable housing owners, landlords, and recipients of federal grant funds in minimizing evictions and foreclosures. Given that directive, the method for allocating the final round of CDBG-CV targets three categories of communities:

  • Communities with a high proportion of individuals in industries with high job loss in states with high unemployment;
  • Communities with a high proportion of businesses in industries with high job loss in states with high unemployment; and
  • Communities with households most at risk for transmission and risk of eviction, with higher amounts for states with high rates of coronavirus.

The methodology looked at four sources of data addressing the three above categories:

  • Communities with high risk of virus spread. The Journal of the American Medical Association (JAMA) shows virus spread is most common in neighborhoods with larger household sizes, overcrowding (1.01 or more persons per room), and higher unemployment.
  • Communities with large numbers of very low-income renters pre-pandemic. These renters are the most likely to be at risk for missing rent payment during an economic downturn because of limited resources and being most vulnerable to job loss. Data from the 2017 American Housing Survey shows that pre-pandemic, 43% (7.7 million) of all very low-income (VLI) renters (those with income at or less than 50% of the area median income) were paying more than half of their income for rent or living in substandard housing. Pre-pandemic, 10% of VLI renters were late on rent for 30 days or more (which is twice the rate of other renter missed payment).
  • Communities with businesses not reopening or failing. According to HUD, a handful of industries represent businesses with unemployment rates more than 1.5 times that of the national rate. According to HUD, those industries are:
    • Mining, quarrying, and oil and gas extraction;
    • Arts, entertainment, and recreation (leisure); and
    • Accommodation and food services (hospitality).

According to HUD, these three categories combined represent 23% of those unemployed who have experienced economic damage 1.5 times greater than most other industries. The largest of these, leisure and hospitality, have credit card transaction data that shows 24% of small businesses were not open as of July 14 compared to January. Consumer spending as of July 12 for the subcategory of arts, entertainment, and recreation was down 48%, and down 32% for the subcategory of restaurants and hotels. Curiously, no data is provided for mining, quarrying, and oil and gas extraction.

  • Communities where the employees of the closed and struggling businesses live.

Given the data, HUD allocated 40% of the third round funds to toward households whose characteristics are known to put them at higher risk of transmission of coronavirus (using as a measure, overcrowding – more than one person per room), or higher risk of eviction due to likely limited means to sustain a long-term economic disruption (using as a measure, VLI renters). Per the statute, both of these factors are adjusted upward for communities within states that have higher coronavirus case or death rates per 100,000, or higher positivity rates, compared to the national average.

The remaining 60% of the third-round funds were awarded based on unemployment as explained in more detail in the methodology. Of this 60%, 70% is targeted toward communities in which the workers in the three categories of industries above live, and 30% is targeted toward communities in which the workers in this industry work(ed).

Other items of note include:

  • The amount allocated does not add up to $2 billion because $10 million was set aside for technical assistance.
  • Washington, DC was allocated $2.42 million from round three (indicated as the only CDBG-CV3 Part B allocation) when the rest of the nation was allocated funds from the second round on May 11 because a drafting error in the CARES Act unintentionally excluded DC from the second round.
  • The data used above was not available for Puerto Rico or the U.S. insular areas (American Samoa, Guam, Northern Marianas, and Virgin Islands). HUD allocated 0.2% of the round three funds to each of the insular areas, and explains how it determined Puerto Rico’s allocation.

The third round CDBG-CV allocations are at: https://bit.ly/3m7RwGi

The methodology is at: https://bit.ly/32m9UU9

EO 13945 is at: https://bit.ly/33ognwS

More about CDBG is on page 8-3 of NLIHC’s 2020 Advocates’ Guide.