Community Development Block Grant (CDBG)
The CDBG program is a federally funded program dating back to 1974. The program is designed to provide eligible local units of government with grants to assist low and moderate income people, eliminate slum and blight, or meet an urgent need. Each year the state receives approximately $40 million in CDBG funds from the U.S. Department of Housing and Urban Development (HUD). The Michigan State Housing Development Authority uses a portion of the allocation of the CDBG funds for housing-related activities that assist low and moderate income persons and MSHDA CATeam Downtown Programs. The Michigan Economic Development Corporation utilizes their portion of the CDBG funds for economic development infrastructure to facilitate business locations/expansions; public works public infrastructure grants for low/mod communities; and unique innovative project needs.
Who Is Eligible to Apply?
Michigan's general purpose local units of government (counties, cities, villages, and townships) with populations under 50,000 are eligible to apply for the State of Michigan's CDBG funding. HUD also provides CDBG funds directly to larger metropolitan communities within the state and those communities are not eligible to receive funds under the state's CDBG Program. The following counties and all of their respective local units of government are ineligible to receive CDBG funds: Macomb, Oakland, and Wayne. Some local units of government that are within ineligible counties are eligible to receive CDBG funds: Genesee County (Flushing City and Linden are eligible for state's program); Kent County (only Cedar Springs City is eligible for state's program); and the following local units of government within Washtenaw County are also ineligible for the state's program: Ann Arbor, Township of Ann Arbor, Bridgewater Township, Northfield Township, Pittsfield Township, Salem Township, and Superior Township. The following Michigan cities are not eligible to directly apply or receive state CDBG funds, but an eligible county may apply for state CDBG funds for projects located in these cities: Battle Creek, Bay City, Benton Harbor, East Lansing, Holland, Jackson, Kalamazoo, Lansing, Midland, Monroe, Muskegon, Muskegon Heights, Niles, Norton Shores, Portage, Port Huron, and Saginaw.
How Does It Work?
MSHDA’s CATeam offers the following two downtown programs on a continuous basis: ECONOMIC DEVELOPMENT PLANNING - Grants are available to help communities accomplish project-specific, public planning and design work that is likely to lead to an eligible economic development implementation project. Local matching funds are typically required to show that there is local commitment for the project. DOWNTOWNS AND GATEWAYS - Communities may request grants to provide public infrastructure improvements necessary for the location, expansion, and growth of specific for-profit businesses, which are or will locate in a downtown or a significant gateway to a downtown area. Public infrastructure could include such items as: public water or sanitary sewer lines and related facilities, streets, bridges, and public utilities. For additional information including competitive funding rounds go to CDBG Programs on our website. The MEDC offers the following CDBG programs: ECONOMIC DEVELOPMENT INFRASTRUCTURE - Communities may request grants to provide public infrastructure improvements necessary for the location, expansion, and/or retention of a specific for-profit business firm(s) which are engaged in an economic base activity (e.g. manufacturing, point-of-destination tourism, headquarter operations, major multi-state distribution facility). Public infrastructure includes items such as: public water or sanitary sewer lines and related facilities, streets, roads, bridges and public utilities. PUBLIC WORKS - The MEDC will provide funds for public works activities as CDBG funds are available. Preferred public works projects are projects that upgrade existing public infrastructure systems either by replacing deteriorating or obsolete systems or by adding needed capacity to existing systems. In addition, funds under this program can be utilized for public facilities which will have significant impact throughout the community. Projects must benefit low and moderate income households. UNIQUE AND INNOVATIVE PROJECTS - Discretionary grants will be considered based on special and/or unique needs or situations requiring innovative program approaches not specifically provided for in regular economic development infrastructure grants. This may include brownfield site redevelopment, downtown development, general public infrastructure activities. For additional information, please contact the MEDC Community Services office at 517.373.6213.
What Is the Process?
Proposals are considered on a continuous basis and proposed projects may be submitted at any time during the year. Communities with potential business projects should contact their MEDC business account manager. Communities with potential downtown or community development projects should contact their MSHDA Community Assistance Team representative. NOTICE OF INTENT - To receive consideration for funding, an eligible local unit of government must prepare and submit a Notice of Intent (NOI). The NOI is a two-page form providing basic information on the proposed project, project activities and a summary of the project budget including grant funds being requested and other funds. NOI's can only be obtained once the project has been reviewed by a State staff person who has verified eligibility. The State has final approval of all NOI's. After State approval, a full application process is required. SELECTION CRITERIA - A system based on selection guidelines is used to evaluate and approve applications for CDBG funds. These selection criteria are considered to be thresholds that must be met or exceeded for a particular project to receive funding. If these thresholds are met by a proposed project, a positive funding decision may be made depending on the availability of funds, quality of jobs and compliance with all other program requirements. ECONOMIC DEVELOPMENT AND DOWNTOWNS AND GATEWAYS INFRASTRUCTURE Projects will be expected to meet each of the following guidelines:
Minimum Leverage Ratio -Priority will be given to projects when the leverage ratio of all other private and public funds to CDBG funds is two to one (2:1) or greater. Financial Viability -The business must be financially viable and able to document that it has sufficient management abilities and skills to operate the business. Cost Per Job-Proposed projects are expected to create the largest number of jobs with the least amount of CDBG investment. Priority will be given to projects where the amount of CDBG funds per job created is $10,000 or less ($20,000 or less for downtowns and gateways projects). Job Creation/Retention -Priority will be given to projects creating 10 or more permanent full-time jobs. Minimum Local Participation -Proposed projects are expected to have local government funding for public infrastructure activities. Priority will be given to projects where local funding for public infrastructure is 10% or more of the total public infrastructure costs.
ECONOMIC DEVELOPMENT PLANNING - Proposals will be evaluated on the extent to which it appears that the planning grant will lead to an eligible implementation project. Selection factors will include: an evaluation of near term (two to four years) job creation, where at least 51% of the jobs are held by, or made available to low and moderate income people, the number and quality of jobs and the overall impact on the community. Proposals which are of a general planning nature, or which involve activities to carry out regular responsibilities of general local government units are not eligible. The maximum grant amount shall not exceed $50,000 and the local unit must match with a 50% cash contribution equal to the CDBG funds provided. MAXIMUM PROJECT PERIOD - Projects must be completed within 24 months from the date the grant is awarded. The State may make exceptions to project periods based on the significance of project impact on the community and the economy, the number of jobs created, the needs of the community and/or the level of benefits to low and moderate income people. Funds not disbursed within the specified time limit may be recaptured by the state for reallocation to eligible CDBG projects.
Why Would a Community Want to Apply for a Community Development Block Grant?
CDBG funds are usually provided in the form of grants not requiring repayment of funds to the state if the compliance and reporting requirements are met. These funds have some flexibility because the funds can be used for many types of eligible activities. With the many reasons for applying for CDBG funds, it should be noted that these funds are federal funds and there are various federal requirements that are attached to the use of these funds. To assist communities with meeting the federal requirements, the state provides intensive and hands-on assistance.