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The Bush Administration’s plan to make steep cuts in the Community Development Block Grant program (CDBG), and to transfer jurisdiction over the money from the Department of Housing and Urban Development to the Commerce Department could have a serious impact on housing in New York City.

The city’s Department of Housing Preservation and Development gets close to 30 percent of its $530 million budget from the CDBG pot, and uses the money to funds crucial programs like code enforcement, emergency repairs, housing litigation, and maintenance of the stock of city-owned properties. All these efforts would be threatened under the Bush plan.

“New York City uses a very large chunk of this money for housing,” said Molly Wasow Park, a senior budget and policy analyst with the Independent Budget Office, a nonpartisan city-funded agency that analyzes local fiscal issues. “Economic Development is a teeny piece of our grant. So I think this would have some serious implications here.”
The Bush plan, first reported in the Washington Post on January 14, has yet to be publicly unveiled. Citing a White House memorandum and unnamed sources, the Post detailed a possible 50 percent cut in the $4.7 billion CDBG program and a plan to move the grant out of the U.S. Department of Housing and Urban Development (HUD).

Federal housing officials and Congressional staffers have confirmed the proposed cut and the relocation of the program to the Commerce Department, housing lobbyists told City Limits.

The Community Development Block Grant program was created in 1974 by Republican President Richard Nixon as a consolidation of several previous smaller and more specific grants.

In the 2005 budget, New York City received approximately $207 million in CDBG money. Over the past five years, more than half of the city’s CDBG allocation went to housing, while only 2 percent was used for economic development, according to Independent Budget Office statistics. An increasing amount of CDBG money was used to bolster day care in the city, up from $2.8 million in 2001 to $23.6 million in 2003 (the most recent years for which the IBO has detailed numbers.) Under HUD rules, cities are also allowed to borrow up to five times the annual CDBG allocation to fund major housing redevelopment and rehabilitation efforts, though New York has apparently used this provision very sparingly.

Representatives from budget and housing agencies in Washington and New York declined to comment on the budget cuts and agency turmoil, arguing that it would be fruitless to discuss rumors of budget cuts before the President releases his actual budget proposal in early February.

But, housing advocates are gearing for a fight. “Obviously, it would be a devastating blow,” said Linda Couch, deputy director of the National Low Income Housing Coalition, a Washington consortium of community groups. In New York, local officials would not speak on the record. But behind the scenes they’re disturbed. Said one, “Clearly, for the city to make up over $100 million would be a major problem.”

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