local community development projects could fall to proposed cuts

On Feb. 4, the Bush administration rolled out its $3.1 trillion budget proposal for fiscal year 2009. The new budget calls for increased spending on national defense and foreign aid, while cutting funding for several domestic priorities. One of the programs that could suffer under the proposed budget is the Community Development Block Grant, a federal program that provides funding for local solutions to challenges like affordable housing, job creation and economic development.

The cuts could have a crippling effect on communities throughout New Hampshire, and three Seacoast cities would be among the hardest hit. Dover, Portsmouth and Rochester are three of the state’s five “entitlement cities,” meaning they meet certain standards that allow them to apply for CDBG money directly from the federal government.

“Every year for the past 30 years, the city has been receiving an entitlement grant,” said David Moore, community development coordinator for Portsmouth. This year, the city received approximately $642,000 from the grant. The amount of funds available to Portsmouth decreased in each of the last two years, Moore said.

Funding from CDBG helps pay for Portsmouth’s Housing Rehabilitation Program, the Affordable Housing Challenge, the First Time Home Buyers Program, the Residential Accessibility Program, Accessibility for Non-profit Organizations, the Public Agency Grant Program and the Social Service Grant Program.

“It’s important to note that the proposed cuts haven’t been approved by Congress,” Moore said. “If one of the cuts were to go through, it would prevent the city from being able to offer these programs.” 

The Bush administration’s budget proposal appropriates just $2.9 billion for the CDBG, which is $731 million (19.9 percent) less than 2008 levels, according to a report from the U.S. House of Representative’s Committee on the Budget. Meanwhile, spending for the Department of Defense would jump by about $35 billion under Bush’s new budget. Overall, spending for national defense comes in at $536.8 billion under the budget, while funding for domestic affairs would receive only $413.4 billion. According to the report, funding for the CDBG has been reduced by $1.5 billion since 2001.

After reviewing the president’s budget, Congress passed a budget resolution, which added funding to the appropriation for CDBG. However, Congress has a finite amount of money. If spending on the war and other foreign priorities continue, more cuts to CDBG could be on the way.

Introduced in 1974, the Community Development Block Grant is one of the longest running programs of the U.S. Department of Housing and Urban Development. Using federal money, it funds local community development activities, like affordable housing, anti-poverty programs and infrastructure development. 

According to Moore, the most significant expenditure of CDBG money in Portsmouth goes toward the Public Facility Program. In 2002, the city used CDBG money to improve the Atlantic Heights streetscape on Market Street. Other CDBG-funded projects have included upgrades to the Maynard Park basketball court, improvement of the parking area at Hislop Little League Field and a facelift for Hanscom Park.

Unlike other grant programs, which usually target a specific need, the CDBG can be used for whatever purpose the local community deems necessary. It is subject to less federal oversight and is therefore more flexible for suiting each community’s needs. 

Another reason CDBG has been so useful is that it leverages many public and private investments. “It’s known as catalyst money,” said Marcia Sigal, of the Council of State Community Development Agencies in Washington D.C. For every one dollar of CDBG money, three dollars are leveraged, according to Sigal.

The Council of State Community Development Agencies is a national association whose members include state and local community development agencies. The council advocates for funding and legislation that supports sustainable community development initiatives.

“This is not the first year the administration has proposed cuts,” Sigal said. For the last four years, the Bush administration has sought to cut the program. The administration has been successful in shaving funds, but CDBG still enjoys bipartisan support, Sigal said.

Last year, CDBG was at the lowest level since 1992. Over the past five years, it has lost about $1.5 billion. “Really, that’s because the administration is not supporting the program and because of the tight budget constraints due to all the other funding priorities of the administration,” Sigal said. “Any time there is a cut, there is always a good project that doesn’t get funded. States and municipalities don’t have the funding to do community development.”

In Dover, officials have been keeping a close eye on the fate of the CDBG. “It’s always been on our radar,” said community development coordinator Rick Jones. Dover received $348,787 from the grant this year, down 5 percent, or $12,000, from last year. “The cuts have been pretty drastic, when you look at what a small portion of the federal budget this is,” Jones said.
Money from the CDBG goes toward the Dover Housing Authority, Community Action, economic development programs and public facility improvement projects. Dover uses 15 percent of the grant to cover the operating cost of human service agencies. “We always max that out,” Jones said. “The rest of it is bricks-and-mortar type stuff.”

If more cuts get passed, Jones worries that Dover would be unable to fund its community development projects. Unlike Portsmouth, which uses some money from its general fund to pay for community development projects, Dover relies entirely on CDBG money for such projects.  

The three CDBG entitlement communities on the Seacoast exchange information and ideas, especially when addressing issues that have a regional impact, like homelessness, transportation and affordable housing.

“The advantage is that it’s community driven,” said Ea Ksander, community development coordinator for Rochester. “We each do our own plans. They are similar, but much more adapted to the hot issues or where the gaps are in our communities.”

Rochester officials are less worried about potential cuts now than they were in years past, Ksander said. She remembers when the Bush administration suggested eliminating the program altogether in 2005. “We were more alarmed then,” she said. “This year, it doesn’t feel as scary. We’re looking forward to the next administration.”

Rochester received $302,411 in CDBG money this year, making it the lowest entitlement community in the state. The city’s share of federal money is down $100,000 from its peak in 2001. “It’s always great to get CDBG funding. It’s not an enormous amount of money, but it has a big impact,” Ksander said.

Rochester’s CDBG funding is used as grant money for nonprofits and as a way of stimulating economic growth. Small business owners receive loans, which they use to expand their businesses or purchase new equipment. In turn, they promise to hire new employees. CDBG money is also used to make improvements to public facilities, parks and sidewalks in lower income communities.

“It’s all interconnected. There is a whole reverberation effect that goes beyond low-income people,” Sigal said. For example, if a factory wanted to relocate to a town but there was no affordable housing for its employees, the town would miss out on economic development because of a lack of community development.

One area where CDBG cuts could have a ripple effect in Rochester is the Community Center. “We have to do a community development plan every five years. One of our big focuses is on the Community Center,” Ksander said. The Rochester Community Center is home to the Recreation Department, a state Health and Human Services office, the Head Start program, a food pantry and other programs. Funding from CDBG is used to make the facility more accessible to the public.  

“The majority of things would no longer exist. It would be very difficult to continue them with city funds. As tax dollars get tighter, these would be among the first kinds of things that would be cut,” Ksander said. 

Entitlement communities, which are designated based on their demographics, are not the only communities to benefit from CDBG money. Towns throughout New Hampshire can apply directly to the state for a share of the federal funds. Right now, New Hampshire receives about $9 million per year, according to Michele Talwani, external relations and communications director for the New Hampshire Community Development Finance Authority. About half of the money goes toward housing and improving public facilities. The funds can also be used as grants for nonprofit organizations and human service agencies, or for economic development and loan programs.

“The proposed cuts not only reduced the statewide amount, some of the proposals are talking about eliminating entitlement communities,” Talwani said. If that happens, the large municipalities that currently qualify for direct funding from the federal government would have to compete for funding with the rest of the state’s smaller communities. Each year, Talwani sees more and more applications for CDBG money. If the proposed cuts are approved, more communities would be applying for less money.

Officials from the Community Development Finance Authority have already seen a drop in CDBG funds. The current funding of $9.1 million is down from $10.4 million in 2001. The decrease may seem insignificant, but, considering the number of projects that apply for funding, every dollar counts. “In the late 1990s, we were getting $14 million,” Talwani said.

For now, local officials and state workers are paying attention to the national headlines concerning the CDBG. “Through our national associations, we follow the developments in Congress,” Moore said.
Some concerned people have taken a more proactive stance.

“We’ve written letters to Congress in the past—representatives and senators—advocating for the program. We’re hoping that, once we get a change in office, CDBG will be maintained. Only time will tell,” Jones said.