CDBG Basics: How Community Development Block Grants Work for Cities and Counties
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How we wrote this: A plain-English summary of HUD's CDBG program page and 24 CFR 570.200, checked October 29, 2026. General information, not legal or audit advice; your award terms and agency guidance control.
What CDBG is
The Community Development Block Grant gives annual formula grants to states, cities and counties for decent housing, a suitable living environment and economic opportunity, principally for low- and moderate-income (LMI) people. It's authorized by Title I of the Housing and Community Development Act of 1974.
Who gets it directly
Entitlement communities, per HUD:
- principal cities of Metropolitan Statistical Areas;
- other metropolitan cities of at least 50,000 people; and
- qualified urban counties of at least 200,000 people, excluding entitled cities.
HUD sets allocations by a dual formula using poverty, population, overcrowded housing, age of housing and growth lag.
Smaller communities go through the State CDBG Program, in which 49 states and Puerto Rico participate. States award grants to non-entitlement units of general local government. HUD runs the program for non-entitled counties in Hawaii.
HUD doesn't fund individuals, businesses or nonprofits directly. They work through the local government.
Eligible and ineligible activities
Eligible examples:
- housing and non-residential rehabilitation;
- public facilities such as water and sewer, streets and neighborhood centers;
- energy conservation; and
- economic development assistance to businesses.
Generally ineligible:
- buildings for the general conduct of government; and
- new housing construction (with some exceptions).
National objectives and key limits
Every activity must meet one national objective:
- benefit LMI persons;
- prevent or eliminate slums or blight; or
- meet an urgent need that poses a serious, immediate threat when no other funding is available.
Two limits in 24 CFR 570.200:
- The 70 percent rule: over a 1-, 2- or 3-year period that you choose, at least 70% of CDBG spending must benefit LMI persons (570.200(a)(3)).
- The 20 percent cap on planning and administration: no more than 20% of the grant plus program income (570.200(g)).
Planning and participation
Grantees must follow a citizen participation plan, with public hearings and timely written answers to complaints. They submit a Consolidated Plan and Annual Action Plan in IDIS.
Related: allowable costs, Single Audit.