CDBG National Objectives

CDBG National Objectives

CDBG grantees are responsible for ensuring that each eligible activity meets one of three national objectives:

  • Benefit low- and moderate-income persons;

  • Aid in the prevention or elimination of slums or blight; and

  • Meet a need having a particular urgency (referred to as urgent need) that the grantee is unable to finance on its own.

    Grantees must be able to show that every CDBG-funded activity fits into one of these categories. The chart below graphically demonstrates the CDBG national objectives.

    Benefit Low- and Moderate-Income Persons

    Under this national objective, CDBG-assisted activities must benefit low- and moderate-income persons using one of the following categories:

    • Area benefit activities;

      • Illiterate adults;

      • Persons living with AIDS; and

      • Migrant farm workers.

    • Require documentation on household size and income in order to show that at least 51 percent of the clientele are low- and moderate-income.

    • Limited clientele activities;

    • Housing activities; or

    • Job creation or retention activities.

    A moderate-income person is one whose gross annual income is at or below 80 percent of the area median income, as determined by HUD. A low-income person is one whose income is at or below 50 percent of the area median income.

    Area Benefit. Area benefit is the most commonly used category for community-wide activities. To qualify under area benefit, an activity must benefit all residents in a particular area (i.e., the service area) where at least 51 percent of the residents are low- and moderate-income persons. The service area must be primarily residential and the activity must meet the identified needs of low- and moderate-income persons.

    Street improvements, water and sewer lines, neighborhood facilities, and façade improvements in a commercial district that serves a low- and moderate-income neighborhood are all examples of activities that have an area benefit.

    Limited Clientele. Limited clientele activities benefit a limited number of people and are eligible, as long as at least 51 percent of those served are low- and moderate-income persons. The grantee must do one of the following to demonstrate a benefit to a limited clientele:

    • Be designed to exclusively serve one or more groups of clientele that are presumed to be principally low- and moderate-income:

      • Abused children;

      • Battered spouses;
      • Elderly persons;
      • Adults meeting the U.S. Census definition of severely disabled;
      • Homeless persons;
    • Have income eligibility requirements limiting the activity to low- and moderate-income persons only.
    • Provide the benefit that is of such a nature and in such a location that it can be concluded that clients are primarily low- and moderate-income.

    In addition, the following activities may qualify under the limited clientele national objective:

    • Removal of architectural barriers to mobility for elderly persons or severely disabled adults;
    • Microenterprise activities carried out in accordance with the HUD regulations when the person owning or developing the microenterprise is low- or moderate-income; or
    • Activities that provide training and other employment support services when the percentage of persons assisted is less than 51 percent low- and moderate-income:
      • If the proportion of total cost borne by CDBG is no greater than the proportion of low- and moderate-income persons assisted; and
      • When the service assists businesses, CDBG is only used in the project to pay for the job training and/or supportive services.

    Examples of limited clientele activities include construction of a senior center; public services for the homeless; meals on wheels for the elderly; and construction of job training facilities for the disabled.

    Housing Activities. This is an eligible activity undertaken for the purpose of providing or improving permanent residential structures that, upon completion, will be occupied by low- and moderate-income households. Structures with one unit must be occupied by a low- and moderate-income household. Two-unit structures must have at least one unit occupied by a low- and moderate-income household. In structures with three or more units, low- and moderate-income households must occupy at least 51 percent of the units.

    Under the following limited circumstances, structures with less than 51 percent low- and moderate-income households may be assisted:

    • Assistance is for an eligible activity that reduces the development cost of new construction of non-elderly, multifamily rental housing project; and
    • At least 20 percent of the units will be occupied by low- and moderate-income households at an affordable rent; and
    • The proportion of cost borne by CDBG funds is no greater than the proportion to be occupied by low-and moderate-income households.

    Examples of housing activities include acquisition; downpayment assistance to a homebuyer; and assistance to owners to rehabilitate their homes. Note that housing assistance activities (such as rehabilitation or homebuyer assistance) may not be categorized under any other low- and moderate-income national objective other than the housing national objective. Thus, housing activities cannot be documented under the Area Benefit, Limited Clientele or Job Creation/Retention national objectives.

    Job Creation or Retention Activities. These are eligible activities designed to create or retain permanent jobs, at least 51 percent of which (computed on a full-time equivalent basis) will be made available to, or held by, low- and moderate-income persons.

    Potentially eligible activities include construction by the grantee of a business incubator; loans to pay for the expansion of a plant or factory; and assistance to a business to prevent closure and a resultant loss of jobs for low- and moderate-income persons.

    Elimination of Slum and Blight

    These are activities that help to prevent or eliminate slums and blighted conditions. The activities must meet the criteria of one of the three following categories:

    • Prevent or eliminate slums and blight on an area basis;
    • Prevent or eliminate slum and blight on a spot basis; or
    • Be in an urban renewal area (entitlements only).

    Area Slum/Blight. These activities aid in the prevention or elimination of slums or blight in a designated area. Specifically:

    • The delineated area in which the activity occurs must meet a definition of a slum, blighted, deteriorated, or deteriorating area under state or local law;
    • In addition, there must be a substantial number of deteriorated or deteriorating buildings or public improvements in the area, and the activity must address one or more of the conditions that contributed to the deterioration of the area; and
    • Documentation must be maintained by the grantee on the boundaries of the area and the conditions that qualified the area at the time of its designation.

    Examples of area slum/blight activities might include assistance to commercial or industrial businesses, housing rehabilitation for non low and moderate income persons, public facilities or improvements, and code enforcement when these activities are conducted in a blighted area.

    Spot Slum/Blight. These are activities that eliminate specific conditions of blight or physical decay on a spot basis not located in a designated slum or blighted area. In addition:

    • Only acquisition, clearance, relocation, historic preservation, and building rehabilitation activities qualify for this national objective; and
    • Rehabilitation is limited to the extent necessary to eliminate specific conditions detrimental to public health and safety.

    Examples of spot basis include elimination of faulty wiring, falling plaster or other similar conditions that are detrimental to all potential occupants; historic preservation of a public facility; and demolition of a vacant, deteriorated building.

    Urban Renewal Area. These are activities located within an Urban Renewal project area or Neighborhood Development Program action area that are necessary to complete an Urban Renewal Plan, pursuant to Title I of the Housing Act of 1949. A copy of the Urban Renewal Plan in effect at the time the CDBG activity is carried out, including maps and supporting documentation, must be maintained for recordkeeping purposes. Note that this national objective is not applicable to the State CDBG Program.

    Urgent Need

    Use of this category is rare. It is designated only for activities that alleviate emergency conditions. Urgent need activities must meet the following qualifying criteria:

    • The existing conditions must pose a serious and immediate threat to the health or welfare of the community; and
    • The existing conditions must be of recent origin, or must have recently become urgent (generally within the past 18 months); and
    • The grantee is unable to finance the activity on its own; and
    • Other sources of funding are not available.

    An example of urgent need may be when a coastal city is struck by a major hurricane and does not have any other resources to demolish severely damaged structures that pose a danger to occupants of neighboring structures.

    For more information on CDBG national objectives and activity eligibility

    Two HUD publications provide excellent guidance on issues of activity eligibility and meeting national objectives.

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