Secretary Alphonso Jackson “fought very hard” to retain the Community Development Block Grant (CDBG) program at the Department of Housing and Urban Development (HUD) with a “promise to reform” it, HUD Assistant Secretary Pamela Patenaude said on a press call in May introducing CDBG rewrite proposals.

These phrases may give the clearest picture publicly available of HUD officials’ negotiations with the White House regarding the CDBG program, which has been popular with local governments and most of Congress but not with the Office of Management and Budget. Last year, the White House budget proposal called for dissolving CDBG and moving its funding to the Department of Commerce; this year the White House proposal would keep the CDBG formula grant program at HUD but would reduce its funding from $3.711 billion to less than $2.975 billion. (See AFFORDABLE HOUSING FINANCE May 2006, page 18.)

Patenaude’s comments opened a May 25 call with reporters that announced HUD’s proposal to rewrite the CDBG grant distribution formula and other aspects of the program. The proposal was presented as draft legislation, but officials said it had “no identified sponsor” in Congress; HUD was simply submitting the text to the majority leadership of the House and Senate. It was uncertain whether the bill, if introduced, would be taken up this session.

HUD’s May 25 proposal (see resembles the most sweeping of four new formulas proposed in a February 2005 HUD report, CDBG Formula Targeting to Community Development Need (available at Like “Alternative Four,” the new proposal would redistribute funds according to measures of poverty, overcrowding, “female-headed households” with minor children, older homes with low-income residents, and communities with per capita incomes below those of surrounding metropolitan areas.

Alternative Four had been criticized for excluding all non-elderly childless adults from its poverty measures in order to compensate for “low-income” students who might be supported by richer family members. HUD’s new proposal instead would exclude “unrelated individuals enrolled in college” from the main poverty measure. (HUD’s accompanying press release said “full-time dependant [sic] college students” would be excluded, but the draft legislation seems to exclude anyone taking a college class.)

The new proposal would impose a minimum grant threshold on “entitlement communities” before they could share in the 70 percent of CDBG funds earmarked for urban areas. Any community that by itself would receive less than 0.014 percent of the fund – currently $518,000 – would have to join the 30 percent rural pool instead of receiving an individual grant. As expected, the new plan would create a special $200 million “challenge fund” within the proposed appropriation. It would require jurisdictions to get “Performance Plans” approved in advance and meet the plans’ stated objectives or be subject to cuts in future grant money. Patenaude said HUD would hold 15 presentations around the country this summer to explain the performance measures. Additionally, it would consolidate the Brownfields, Sec. 108, and Rural Housing and Economic Development programs into CDBG.

In news for the existing CDBG program, two recent final rules expanded definitions to make more toxic cleanups eligible for grants and finalized an existing interim rule against “job pirating” by CDBG-funded projects.

Cox confirmed as HUD CFO

In other housing regulatory news ... John W. Cox of Texas, an accountant and former software executive, was confirmed by the Senate to serve as chief financial officer ... The Federal Housing Administration’s (FHA) Mortgagee Letter 2006-11 allowed some FHA-insured multifamily mortgages in “high-cost areas” to exceed (and sometimes more than double) the usual maximum mortgage amounts, especially in hurricane-affected areas ... The Internal Revenue Service issued a strict and controversial Revenue Ruling 2006-27 limiting tax-exempt status for downpayment-assistance nonprofits linked to home sales companies, which HUD has interpreted in its Mortgagee Letter 2006-13 ... HUD made available $30 million for emergency capital repairs for multifamily seniors’ projects, with applications to be accepted on a first-come, first-served basis for up to $500,000 per project. ... There are new special lists of surplus ex-military properties in the Federal Registers of May 9 and 17 ... and the daily Federal Register table of contents is available by free e-mail subscription via