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Recently Released: The Impact of CDBG Spending on Urban Neighborhoods

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Interested in developing benchmarks for measuring the effectiveness of your Community Development Block Grant (CDBG) program? Frustrated by having little data to use in determining performance targets?

A new study from HUD's Office of Policy Development and Research titled "The Impact of CDBG Spending on Urban Neighborhoods" concludes that two readily available data elements - median home loan amount and the number of businesses - may hold some promise as tools for helping local communities answer these and other questions about their CDBG expenditures.

The Government Performance and Results Act (GRPA) of 1992 requires Federal agencies to devise performance indicators, benchmarks, and targets for all programs they administer to increase the effectiveness and accountability of these programs. This study examines whether readily available data sources can be used to track the outcomes of activities funded by HUD's flagship program.

HUD allocates more than $5 billion in CDBG funds to states, cities, and urban counties using a formula that’s based on population, poverty, age of housing stock, and other needs factors. By design, the program gives these organizations extensive leeway in deciding how they spend their grants, enabling communities to use the funds in ways that best meet the particular needs of their communities.

This flexibility, however, can lead to difficulties in measuring the impacts of such programs; particularly at the national programmatic level. What’s more, a variety of external factors, such as interest rates, the economy, and other dynamics within the community can affect neighborhood quality and the performance of the local CDBG program. To address these issues, the study establishes the following goals:

1. Develop a small number of available, accepted, and easily replicable indicators of neighborhood quality suitable for an assessment of CDBG impacts.
2. Develop a definition of "substantial" CDBG investments to enable the development of performance standards that could be fairly applied to neighborhoods.
3. Recommend alternative standards or benchmarks against which to assess the performance of neighborhoods that have received substantial levels of CDBG investments.
4. Compare the study's results with local informant's understanding of the impact of CDBG on their neighborhoods in the late 1990s.

The analysis presented in this study is a good first step in identifying a relationship between CDBG spending and measurable improvements in neighborhood quality. While HUD continues to refine the methodology for constructing a national performance measure applicable to all CDBG programs, the measures developed here may be useful to local communities interested in assessing their own program performance and in furthering their understanding of the neighborhood effects of past CDBG investments.

"The Impact of CDBG Spending on Urban Neighborhoods" is available at https://www.huduser.gov/portal/publications/commdevl/cdbg_spending.html.

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