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CDBG-DR Program’s Lack of a Permanent Authorization Has Unintended Consequences for Recent Allocations [1]

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Date: 2024-04 

Turning to programmatic consequences, the long wait for CDBG-DR funding reduces its effectiveness and delays community recovery. The impact is most pronounced with respect to housing recovery as it is historically the largest use of CDBG-DR funding. During my years with HUD, I met with many state and local officials who struggled to address post-disaster housing needs in their communities. They made the point that you can’t have a recovery without residents and, when a significant amount of housing is severely impacted, the inability to meet housing needs represents a drag on the overall recovery.

FEMA has multiple options under its Individual and Household Program to assist a household post-disaster, but, in reality, home repair assistance is limited. For example, assistance was capped in FY 2022 to $37,900, a fraction of the funds necessary for the repair or reconstruction of a home that has suffered major damage in a disaster. SBA loan funds may be available if the homeowner can qualify for the loan (on top of any existing house-related indebtedness). These conditions, when combined with chronic underinsurance and post-disaster construction cost increases, make it difficult for many jurisdictions to assist in producing a timely post-disaster rebuild of their housing stock.

When jurisdictions fund housing rehabilitation and construction programs with CDBG-DR, it provides a tremendous financial resource targeted to low- and moderate-income populations that have been shown to have the fewest resources for recovery. To the extent that this segment of the population is unable to fund their own recovery, delays in accessing CDBG-DR funds for housing purposes present a distinct drag on economic recovery as it is dependent upon the ability of the workforce to have affordable housing close to their place of employment.

One of the blind spots in the federal post-disaster assistance net is an aid for the repair, reconstruction, or new construction of rental housing. CDBG-DR can and often does fill that gap but, again, the inability to access those funds in a timely manner delays that aspect of recovery. Given the predictable shortage of affordable rental housing in disaster-impacted communities, it is critical that damaged rental housing quickly be returned to service and to take advantage of the opportunity to construct additional affordable units by teaming CDBG-DR funds with other resources such as low-income housing tax credits.

On the infrastructure front, delays in the availability of CDBG-DR often have an impact on the use of the funds as non-federal match for other federal programs, particularly permanent repairs under FEMA’s Public Assistance program.

By the time many CDBG-DR grantees can access their funds, a substantial proportion of PA projects have already been initiated and some even completed. To introduce CDBG-DR to these projects as a non-federal match, various hurdles need to be overcome, most notably the retroactive application of federal labor wage rate requirements to construction activities. This approach is less than ideal and could be avoided if the CDBG-DR funds were available earlier and in coordination with FEMA’s PA assistance.

Simply put, the longer it takes to deliver CDBG-DR to jurisdictions, the slower overall recovery will be. While permanent authorization of CDBG-DR would not resolve all timing concerns that affect the program’s utility, a more predictable funding mechanism accompanied by permanent regulations would go a long way toward improving performance.

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[1] Url: https://bipartisanpolicy.org/blog/cdbg-dr-programs-lack-of-a-permanent-authorization-has-unintended-consequences-for-recent-allocations/

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