Community Development Block Grants (CDBG) may be under attack at the federal level, but they still remain a key avenue for municipalities and property owners hoping to fund historic preservation efforts.
The CDBG program, administered by the U.S. Department of Housing and Urban Development (HUD), can also be used to meet economic development, revitalization, and energy conservation measures, notes housing industry veteran Paul Flogstad. In his AudioSolutionz webinar “Historic Preservation and HUD Policy Benefits 2018,” Flogstad details how to use CDBG funds for historic property restoration—and details the program’s tax incentives.
Program Targeted for Elimination
CDBG was funded at $3 billion in 2017, notes Lissette Flores from the Center on Budget and Policy Priorities, and those flexible funds were used by some 1,300 states, cities, towns, and counties in urban, suburban, and rural areas. But President Trump’s proposed fiscal year 2019 budget, slated to go into effect October 1, would eliminate the program entirely, reports the National Association of Counties. HUD Secretary Ben Carson testified that what while CDBG “has had a very positive impact in many areas of the country,” the cuts were needed to reduce federal deficit spending.
Under the 1991 HUD historic preservation law, properties qualifying for historic preservation include those which are:
- Listed on the National Register of Historic Places
- Certified as historic by the Department of the Interior for tax purposes
- Listed on state or local registries as historic
- Or designed by the state or local municipality as a local landmark or historic district
While the number of properties rehabbed each year using CDBG funds is elusive, one survey of grant funding success stories in Wisconsin details a number of projects that turned a vacant church into a library and uplifted a deteriorating downtown by modernizing homes and buildings. Another example: CDBG historic preservation funds and tax credits were cited in the success of projects that drove profound urban revival in Philadelphia—in all, more than 277 projects in that city since 2001.
That’s because the city “still doesn’t offer any direct financial assistance to property owners who restore historic buildings,” the Philadelphia Inquirer reported. “Other than a puny tax credit offered by the state, the Historic Tax Credit is the only meaningful financial support for preservation available in Philadelphia.”
Program Popular Because of Flexibility
Part of CDBG’s popularity is the flexibility of the program. According to HUD, funds can be used to buy property, demolish buildings, rehab structures, install energy-efficient components, and even carry out economic development activities.
In general, funds move from federal coffers to states, which then award money based on suitable applications or dole out money to cities and counties. Boards in each municipality and government are then responsible for awarding projects based on community need and adherence to federal spending policies. The compendium of paperwork is not insubstantial, as illustrated by what the state of Montana requires. The list of ineligible projects is, however, short: acquisition of buildings by the government for government functions, political activities, some types of income payments, and most types of new housing construction.
When chasing CDBG funds, stated community development specialist Mike Larson, there are a handful of factors that you should understand:
- A qualifying project must benefit low- or moderate-income residents, eliminate a slum or blight, or eliminate a public health or safety issue
- Pay attention to reporting details, as project admin costs can be high
- Know the difference between “eligible” and “fundable”
- Start your pre-application work early
- Most fanfare goes to projects that fund large and densely-populated areas, though smaller “non-entitlement” communities can also apply for funding
With such broad bipartisan support for the program, it’s too early to predict an end to CDBG funding, notes Medium. That, says Flogstad, is the reason why now is the time to learn about CDBG funds and how they can be used for your historic preservation project.