Community Development

Block Grant Economic Development Activities Reflect Local Priorities Gao ID: RCED-94-108 February 17, 1994

To help state and local governments develop viable communities, Congress has appropriated more than $62 billion to the Community Development Block Grant Program since 1975. Grantees have broad discretion, but funded activities must either benefit low- or moderate-income households, help prevent or eliminate slums, or meet other urgent community development needs. This report (1) provides information on the funding of economic development activities and the impediments that grantees have experienced; (2) identifies issues related to the proper use of these funds; (3) provides information on the types and quality of jobs resulting from programs funding and identifies possible criteria for measuring job quality; and (4) identifies potential performance indicators for measuring the overall effectiveness of economic development activities under the program.

GAO found that: (1) annual appropriations for the Community Development Block Grant Program range between $2.2 billion to $4.5 billion; (2) grant funds targeted for economic development activities are a small percentage of the total program funding; (3) grantees have identified impediments to using grants for economic development activities such as confusion over grant rules, a significant administrative and documentation burden, and difficulty in using grants for job retention activities, but HUD has implemented remedies for two of the three impediments; (4) HUD and community groups question whether program funds have been properly used to benefit low- and moderate-income people, assist for-profit businesses, and safeguard public loans; (5) there are no criteria for defining job quality or performance indicators for measuring the effectiveness of grantees' economic development activities; (6) Congress has given local communities discretion over establishing standards for job quality and the effective use of economic development funds; and (7) although HUD expects to publish proposed guidelines to help grantees define economic development performance indicators, grantees could benefit from learning about the procedures and criteria other grantees have used in promoting job quality.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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