Movement to Preserve HUD’s CDBG Program Gathers Steam

WASHINGTON — Affordable housing and local government lobbyists appear to be succeeding in their efforts to preserve the U.S. Department of Housing and Urban Development’s $4.7 billion Community Development Block Grant program that the Bush administration proposed to eliminate in the fiscal 2006 budgetary blueprint.

Fifty-five senators — including 14 Republicans — have signed a letter urging their fellow lawmakers to reject President Bush’s proposal to replace CDBG and 17 other programs with the proposed $3.7 billion Strengthening America’s Communities Grant Program, said Kristen Sarri, legislative director of the Northeast-Midwest Senate Coalition, a bipartisan bloc of 25 senators that wants to keep CDBG alive.

One of the 55 signers is Sen. Mel Martinez, R-Fla., who until December 2003 ran CDBG as Bush’s HUD secretary.

Sarri added Friday that the number of signatories is expected to rise today to at least 57 because two other senators — a Republican and a Democrat — have committed to signing the document. One advocate pressing to save CDBG, John C. Murphy, executive director of the National Association of Local Housing Finance Agencies, expressed confidence Friday that the lobbying campaign that is also backed by the National League of Cities, would succeed.

“I think the fact that we have 55 senators on a letter to the [Senate] Budget Committee speaks volumes,” said Murphy, who also runs another advocacy organization with an interest in the issue, the National Association for County Community and Economic Development, an affiliate of the National Association of Counties.

In the so-called dear colleague letter, the signers urge lawmakers, including Senate Budget Committee chairman Judd Gregg, R-N.H., to support allocating $4.7 billion for CDBG in the upcoming fiscal 2006 budget resolution, which is roughly the same amount that Congress appropriated for the program in the current fiscal year. The signers also urge lawmakers to keep CDBG under the control of HUD, which the Bush administration opposes.

Bush favors creating an agency within the Commerce Department that would administer the less well-funded Strengthening America’s Communities program. CDBG funds can currently be leveraged in municipal bond transactions.

Gregg’s committee is expected to vote on the fiscal 2006 budget resolution in two days.

A congressional staffer said a similarly worded letter is circulating on the House side, though it is not clear how many representatives have signed it. Kay Gibbs, communications director for the Democratic minority on the House Financial Services Committee, refused Friday to say how many signatures were on the document, explaining that she wanted to wait until the deadline for signatures passes today.

However, Gibbs said Bush’s CDBG plan has few fans in the House. “We’re pretty sure that there is fairly strong bipartisan opposition to this proposal,” she said.

That opposition was apparent at a House Financial Services Committee oversight hearing last week at which lawmakers from both parties took turns denouncing the proposal.

At that meeting, both Rep. Michael Oxley, R-Ohio, chairman of the committee, and Rep. Bob Ney, R-Ohio, chairman of the committee’s panel on housing and community opportunity, seemed generally skeptical of the CDBG proposal.

During the hearing, Republicans and Democrats took turns criticizing the proposal. Rep. Christopher Shays, R-Conn., said eliminating CDBG would be “a big mistake,” and Rep. Gary Miller, R-Calif., said “there is not a better use of” federal dollars than CDBG.

The senior Democrat on the committee, Rep. Barney Frank of Massachusetts, said the true purpose of cutting domestic spending such as on CDBG was to preserve billions of dollars in tax cuts for the rich, and Rep. Maxine Waters, D-Calif., said gutting the existing program would have a “devastating impact” on communities.

At the same hearing last Wednesday, Frank accused the administration of dragging its heels on developing a formal plan to implement the proposed Strengthening America’s Communities program.

Although the administration held a press conference on the proposal at the Commerce Department on Feb. 3, and outlined the plan in the briefing books that accompanied the release on Feb. 7 of the president’s proposed fiscal 2006 budget, it has apparently not yet begun preparing implementing legislation for the proposed program.

The Commerce Department recently posted a notice on its Web site inviting interested parties to submit nominations for members of an advisory committee that would make recommendations to the department on how to implement the program. Nominations are scheduled to close March 11 but the panel’s report to Commerce Secretary Carlos M. Gutierrez is not due until May 31, according to the notice.

Committee members would be expected to “provide advice and recommendations” and to “develop a comprehensive written report of policy parameters to assist in implementing” the program, including “advising on its legislation, regulations and other guidance,” the notice said.

Although municipal market sources have said they do not see any reason why it would not be possible to sell bonds backed by funds under the proposed program, a senior administration refused at the Feb. 3 media briefing to discuss whether securitization of grants under the program would be possible. The official said at that time that it was “premature to talk about the implementation” of the program.

Since then, Commerce Department officials have not returned telephone calls.