Biden Wants to Send Extra Community Development Grants to Underserved Neighborhoods

As part of his equity agenda, President Biden wants to give the nation’s 100 most underserved areas nearly $2 million apiece in extra Community Development Block Grant funding, which can be used for purposes ranging from increasing affordable housing to renovating local parks.

In addition to helping those communities, Biden hopes the initiative will lead cities to address structural issues, like zoning and permitting laws that hold back economic development.

“This program is unique in that it specifically delivers funding to communities that need it most, while also incentivizing community planning activities that address barriers to revitalization,” the Biden administration wrote in its March 28 budget request to Congress for the next fiscal year.

In his proposal, Biden is asking to increase CDBG funding by $295 million, to $3.8 billion total, with $195 million being equally spread among the 100 communities that the U.S. Department of Housing and Urban Development determines are the most in need.

Experts, though, said the money would fall well short of the federal help that those places could use.

“The idea of getting cities to look at structural barriers is a good idea,” said Alan Mallach, a senior fellow at the Center for Community Progress and former director of housing and economic development for Trenton, New Jersey.

“The problem is it’s not a lot of money. When you’re talking about dividing it among the 100 neighborhoods … , it’s a drop in the bucket,” he said. “It’s not going to get you there.”

But Anjali Chainani, a senior advisor at Results for America, said it could spur experiments around the country to reform zoning laws or streamline permitting laws that could be shared with other cities.

While the details are being worked out, Biden said there will be incentives to allow grantees to improve their housing and community development strategies and to incorporate flexibility into local regulations and practices to promote equitable development and innovative housing solutions, like streamlining complicated permitting processes.

A HUD official told Route Fifty in an email that barriers to affordable housing include exclusionary laws and regulations, harmful land-use policies, complicated permitting processes, deteriorating or inadequate infrastructure, and lack of available resources or capacity.

As a result, funding could be awarded for a number of purposes including acquiring property, improving infrastructure and environmental remediation, the budget request said.

The HUD official also envisioned grant recipients using the money “for reducing residential and commercial vacancy and blight through innovative housing,” including through reuse, rehabilitation, mixed-use development and conversion to affordable multifamily units.

The Push to Re-Examine Zoning

The president’s proposal is among several efforts by the administration to get cities to re-examine zoning laws. Critics say that zoning that allows only single-family homes in some areas not only bars more affordable multifamily housing but excludes lower-income and people of color from living in parts of town with better schools and amenities.

Two weeks ago, Biden said the Transportation Department will give extra points for funding to states and localities that allow more multifamily housing in areas reserved for single-family homes.

“Exclusionary land use and zoning policies constrain land use, artificially inflate prices, perpetuate historical patterns of segregation, keep workers in lower productivity regions, and limit economic growth,” said a fact sheet released by the White House. 

Biden is also calling for creating a $10 billion state and local grant program to give extra funding for affordable housing, road, water and sewer improvements to those communities willing to revamp zoning codes. The money would also be available for research and technical assistance.

Skepticism for Changes

In terms of the CDBG effort, though, Mallach said he’s skeptical that zoning changes would do much to revitalize America’s most distressed neighborhoods because developers may not want to build there.

However, he said the 100 communities could use the additional CDBG dollars for things like renovating parks that could make areas more attractive to developers and to rehabilitate schools to give children in an area a better chance at success.

Michael Wallace, the National League of Cities’ program director for community and economic development, said the proposal could make it possible for cities to examine  barriers other than zoning.

“There’s deteriorating infrastructure, a lack of neighborhood amenities, outdated building codes,” he said.

Also, cities need to examine their business licensing requirements to make sure they are “not creating barriers for local entrepreneurs,” he said. “If you have a food desert, you need to make sure you’re not working at cross purposes.”

However, he said, “in historically underserved areas, the odds are pretty good that you’re going to have budget limitations” on hiring the staff to do the analysis.

Still, Jennifer Vey, senior fellow and director of Brookings Metro’s Anne T. and Robert M. Bass Center for Transformative Placemaking, questioned whether the money proposed could be better spent.

“If you’re targeting the communities with the very deepest need, the money is likely going to be too little to make much of a difference,” she said. 

Rather than pouring money into places “where you can’t make a dent,” she said cities could help more residents through efforts that keep a declining neighborhood from becoming distressed.

One of Several Efforts

The effort is among several the Biden administration is taking to help communities that have traditionally been left out of getting the federal funding they need. 

The administration, as part of its Justice40 initiative, is working to ensure that 40% of federal funding in areas like housing, transportation and climate change benefit communities it considers disadvantaged.

The White House is figuring out how to define what that means. The administration’s Council on Environmental Quality in February released the first draft of a map, called the Climate and Economic Justice Screening Tool, showing which communities are considered disadvantaged based on a number of poverty, health and environmental factors. It is refining the criteria based on the feedback it received, including concerns from Alaska cities that they were left out.

Similarly, the HUD official said the department is discussing how to pick the 100 most underserved communities.

The criteria will consider a range of factors from available datasets and census tract data, and will consider factors unique to the program’s goals, like the concentration of low-income households in an area and socioeconomic indicators, the official said.  

HUD could also consider such factors as the displacement of low-income tenants, the official said.