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League Opposes Effort to Cut CDBG Economic Development Funds for Small Cities

“Non-Entitlement” Cities Should Contact Their Legislators Immediately

May 2, 2017
The League issued an action alert and an opposition letter earlier today on proposed trailer bill language sponsored by the Department of Housing and Community Development (HCD) that proposes major changes to the Community Development Block Grant (CDBG) program, including provisions that would significantly reduce funds available for local economic development.
 
These federal CDBG funds are traditionally allocated by HCD to "non-entitlement" cities (under 50,000 population) and counties (under 200,000 population). Many of these communities are in California’s rural areas that have been losing population and facing harder times than other regions of the state. These areas depend on these funds to attract and retain business in their communities, operate revolving loan programs to assist local businesses and other activities.
 
What is particularly surprising is that HCD does not appear to have vetted a proposal of this magnitude with the affected small cities and counties which use these programs. In brief, the proposal would cut the longstanding share of CDGB economic development funds in half (from an existing 30 percent set-aside to 15 percent) and then eliminate it entirely if total funding falls below $25 million — something highly likely given President Trump’s recent proposals.
 
The League is joined in opposition by the California Association for Local Economic Development (CALED), which also issued an opposition letter.
 
Such a major proposed change should not be put through as a budget proposal, but rather, given the impacts on many small cities and counties, HCD should be expected to thoroughly vet this proposal with affected cities and counties and propose related changes through the usual policy process. 
 
Cities with populations under 50,000, which are considered under federal “non-entitlement” jurisdictions under HUD, should contact their legislators immediately and urge opposition to this proposal.
 
The League has prepared a sample letter that can cities can also use.   


 
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