Readily Available Measures of Neighborhood Quality May Help Local Communities Assess the Impact of CDBG Spending

A new study from HUD's Office of Policy Development and Research entitled "The Impact of CDBG Spending on Urban Neighborhoods" concludes that two readily available data - median home loan amount and the number of businesses - may be promising as tools for helping local communities measure the effects of concentrated Community Development Block Grant (CDBG) expenditures.

The Government Performance and Results Act (GPRA) of 1992 requires Federal agencies to devise performance indicators, benchmarks, and targets for all programs they administer to increase the effectiveness and accountability of these programs. This study examines whether readily available data sources can be used to track the outcomes of activities funded by the CDBG program.

HUD allocates more than $5 billion in CDBG funds to states, cities, and urban counties according to a formula based on population, poverty, age of housing stock, and other needs. By design, the program gives these communities extensive leeway in deciding how they spend their grants, enabling them to use funds in ways that best meet the particular needs of their local area.

This flexibility, however, can lead to difficulties in measuring the impact of such programs, particularly at the national programmatic level. Different types of investments might require different performance measures. A variety of external factors, such as interest rates, the economy and other community actions, can also affect neighborhood quality. To address these issues, the study had the following four goals:

1. Develop a small number of available, accepted, and easily replicable indicators of neighborhood quality suitable for an assessment of CDBG impacts.
   
2. Develop a definition of "substantial" CDBG investments in a neighborhood to allow development of performance standards that could be fairly applied and measure results.
   
3. Recommend alternative standards or benchmarks against which to assess the performance of neighborhoods that have received substantial levels of CDBG investments.
   
4. Compare the study's results with local informant's understanding of the impact of CDBG on their neighborhoods in the late 1990s.

The analysis presented in this study is a good first step in identifying a relationship between CDBG spending and measurable improvements in neighborhood quality. While HUD continues to refine the methodology for constructing a national performance measure applicable to all CDBG programs, the measures developed here may be useful to local communities interested in assessing their own program performance and in furthering their understanding of the neighborhood effects of past CDBG investments.