A recent study published in Cityscape, “Community Development Block Grants Disaster Recovery, Rental Requirements, and Rental Market Impacts,” examines the effects of Community Development Block Grant Disaster Recovery (CDBG-DR) funding on rental markets following natural disasters. CDBG-DR, administered by the U.S. Department of Housing and Urban Development (HUD), provides flexible funding to state and local governments for long-term disaster recovery, including housing and infrastructure support. The study focuses on nine counties in Colorado impacted by a 2013 declared major disaster, analyzing the association between CDBG-DR rental requirements and rent growth and multifamily housing development. The findings suggest that ZIP Codes receiving CDBG-DR funds experienced slower rent increases and higher rates of multifamily housing permit approvals compared to disaster-impacted areas that did not receive this funding.
CDBG-DR is an important part of a broader disaster response framework that includes programs from the Federal Emergency Management Agency (FEMA) that provide direct aid to households (Individual Assistance) and short-term support for infrastructure repair (Public Assistance). The authors’ analysis of Federal Register notices shows that since 2010, every CDBG-DR grant has included at least one rental requirement, with most focusing on funding set-asides for rental housing or rental affordability periods. Despite CDBG-DR’s essential role in long-term disaster recovery, the impact of its rental requirements on rental markets remains understudied. This study seeks to fill that gap by exploring how rental requirements have evolved over time and their effect on rental market outcomes.
Using a case study approach, the researchers examine nine counties in Colorado affected by severe storms and subsequent floods, landslides, and mudslides in September 2013. This event, which was declared a major disaster, provided a natural comparison between counties that received only FEMA assistance and those that also received CDBG-DR funding, allowing the researchers to assess the relationship between rental requirements and rental market recovery. The counties were grouped based on the type of disaster assistance received. The strict treatment group included counties that received FEMA Individual Assistance and Public Assistance, followed by CDBG-DR funding. The loose treatment group consisted of counties that received FEMA Public Assistance but not Individual Assistance, before later receiving CDBG-DR. The control group included counties that received FEMA Individual Assistance and Public Assistance, but no CDBG-DR funding. By contrasting areas that received CDBG-DR funding with those that only had FEMA assistance, the study isolates CDBG-DR’s effects on rental market stability.
The researchers used quarterly ZIP Code-level data from CoStar Group to track average multifamily apartment rents from 2000 to 2023 across the nine counties studied. To control for potential confounding variables, they incorporated 5-year estimates from the U.S. Census Bureau’s American Community Survey (ACS) on income, population, unemployment rate, housing supply, and demographic composition. Additionally, they analyzed multifamily housing permits using HUD’s State of the Cities Data Systems (SOCDS) database to determine whether CDBG-DR funding contributed to increased rental housing construction in disaster-affected areas.
The study found that ZIP Codes receiving CDBG-DR funds experienced slower rent growth compared to disaster-impacted areas that did not receive these funds. While rents rose across all affected areas, rent increases were 4.0% to 5.8% lower in counties receiving CDBG-DR than comparable areas without CDBG-DR funding. Additionally, CDBG-DR areas had a higher rate of multifamily housing permits, suggesting that the funding helped boost rental housing supply. The findings indicate that rental requirements tied to CDBG-DR funds may help moderate post-disaster rent hikes, benefiting renter households that are particularly vulnerable to housing instability after disasters.
The findings highlight the importance of rental requirements in disaster recovery programs. The authors recommend the permanent authorization of CDBG-DR funds to streamline funding distribution and reduce delays in disaster recovery – a key legislative priority of NLIHC’s Disaster Housing Recovery Coalition (DHRC). Improved coordination between HUD and FEMA could ensure renters receive timely assistance, while clearer communication with residents about how CDBG-DR funds can be used would help those affected navigate the recovery process more effectively. These policy adjustments could enhance rental stability and promote equitable recovery in future disaster-impacted communities.
The Cityscape article can be found at: http://bit.ly/3QfXSUy.