GAO Study: CDBG Communities Lack Alternative Sources of Income Data for Determining Project Eligibility

On September 6, the Government Accountability Office (GAO) published a report examining HUD’s policies related to communities that disagree with their Community Development Block Grant (CDBG) eligibility determinations based on 5-year American Community Survey (ACS) data.The findings of the report are based on the GAO’s analyses of ACS data and HUD’s policy guidance to grantees, as well as interviews with CDBG administrators, stakeholders and community development groups, including NAHRO.

In order for a project to qualify for CDBG funding under the objective of providing benefit to low- and moderate-income (LMI) persons on an area basis, HUD instructs communities to use ACS data to show that a majority of the proposed service area consists of LMI residents. Some communities believe the ACS produces inaccurate results due to its smaller sample size and larger error rates. When a community disagrees with an eligibility determination, local income surveys may be used instead.  However, the GAO finds a number of challenges small communities face when conducting local income surveys, including: resource constraints, administrative burdens, and difficulty obtaining a sufficient number of survey responses. Furthermore, alternative ways to demonstrate eligibility are limited because other sources of income data are not as reliable and comprehensive compared to the ACS.

The GAO report does not make any specific recommendations to Congress on the sources of data issue, but it does point out that the Census Bureau is currently exploring ways to use external data, such as data from the Social Security Administration and IRS, to supplement the ACS. These recommendations are expected by March 2017.

Learn more about this GAO report in the September 15, 2016 edition of the NAHRO Monitor.