The Community Development Block Grant Program:

Discretionary Grant Funds Not Always Given to the Most Promising Small City Programs

CED-78-157: Published: Aug 31, 1978. Publicly Released: Aug 31, 1978.

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Under the Department of Housing and Urban Development's (HUD) Community Development Block Grant program, nonmetropolitan communities receive discretionary grants in accordance with an application rating and approval procedure. Two primary rating factors are: (1) the extent that the project supports the expansion or conservation of low- and moderate-income housing; and (2) the extent that the project is designed to benefit low- and moderate-income families.

The HUD review of applications by two area offices in Ohio and Kentucky was not totally adequate, and as a result, funds were given to some communities which did not have the most promising programs. If 31 of 67 grant applications reviewed by GAO had been adequately reviewed and rated by HUD, some approved applications would not have been funded and some disapproved applications would have been funded. Reviewers sometimes reached conclusions about project benefits which were not consistent with information in the application or without adequately resolving conflicting statements in the application. Communities sometimes overstated benefits, and officials often failed to identify overstated claims. The shortcomings in the rating system could be perpetuated in the new Small Cities Community Development Block Grant Program unless HUD includes in its implementing instructions requirements for validation and documentation of project benefits.

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