Community Development Block Grant (CDBG) funds are generally used for long-term community needs, including mitigation. Grants cannot duplicate funding available from the Federal Emergency Management Agency (FEMA), the U.S. Small Business Administration, or the U. S. Army Corps of Engineers (USACE).

Utilities can use these grants to buy, construct, or fix public facilities such as water and sewer systems. They can also match FEMA grants. Grantees may fund activities that meet urgent community development needs. 

CDBGs may be used when other financial resources are not available. CDBG funds may be used for activities which include, but are not limited to:

• Acquisition of real property
• Acquisition of property for public purposes
• Construction or reconstruction of water and sewer facilities, streets and other public works
• Relocation and demolition
• Rehabilitation of public and private buildings
• Public services, within certain limits
• Planning activities
• Activities relating to energy conservation and renewable energy resources
• Assistance to nonprofit entities for community development activities
• Assistance for profit-motivated businesses to carry out economic development and job creation/retention activities

CDBG - Entitlement Communities  

Entitlement Communities can receive grants directly from HUD. They include three groups:

• Metropolitan cities with populations of at least 50,000
• Principal cities of Metropolitan Statistical Areas (MSAs) 
• Urban counties with populations of at least 200,000 (excluding the population of entitled cities)

CDBG - State Administered  

The Housing and Community Development Act of 1974 allows each state to manage CDBG funds for non-entitlement areas. Non-entitlement areas:

• Are cities with populations of less than 50,000 people
• Do not include cities that are designated as principal cities of Metropolitan Statistical Areas
• Include some counties with populations of less than 200,000 people

Forty-nine states and Puerto Rico participate in the program. Non-Entitlement Communities must apply for CDBG funds through their state (except in Hawaii). Non-Entitlement Communities in Hawaii apply directly to HUD.

In response to presidentially-declared disasters, the U.S. Congress may authorize disaster recovery funding for the CDBG program. This funding helps cities, counties and states recover from disasters, especially in low-income areas. Disaster Recovery grantees are required to spend at least 50 percent of their funds on activities that principally benefit low-and moderate-income persons. 

Examples of CDBG-eligible activities include:

• Debris removal not covered by the Federal Emergency Management Agency
• Acquisition, construction or rehabilitation of public facilities such as neighborhood centers
• Construction or reconstruction of streets
• Construction or repair of water, sewer, or drainage systems
• Construction or reconstruction of water lift stations
• Public services
• Helping businesses retain or create jobs in disaster-impacted areas
• Planning and administration costs (no more than 20 percent of the grant)

More information can be found at HUD's CDBG Disaster Recovery Assistance website.

Section 108 loan guarantees provide communities with public project financing. This includes public facilities and economic development such as housing rehabilitation and large-scale physical development projects. Local governments can transform a small portion of their CDBG funds into federally guaranteed loans.

Local governments borrowing funds must pledge their current and future CDBG funds as security for the loan. Activities eligible for Section 108 financing include, but are not limited to:

• Economic development activities eligible under CDBG
• Acquisition of real property
• Repair of publicly owned real property
• Construction, reconstruction or installation of public facilities
• Related relocation, clearance and site improvements
• Payment of interest on the guaranteed loan and issuance costs of public offerings
• Debt service reserves
• Public works and site improvements in colonias (colonias are rural communities located within 150 miles of the U.S.-Mexico Border)

Eligible applicants include:

• Metropolitan cities and urban counties (i.e., CDBG entitlement recipients)
• Non-entitlement communities that are assisted by states administering the CDBG program
• Non-entitlement communities receiving funds under the HUD-Administered Small Cities CDBG program (Hawaii)

Commitments are limited as follows:

• Entitlement public entities -- may apply for up to five times the entity's latest approved CDBG request
• State-assisted public entities -- may apply for up to five times the latest approved CDBG amount received by its state