Community Development Block Grants shape the places where Maryland residents live, work, and gather. These flexible funds power local priorities that strengthen communities and fuel economic growth. Without them, critical projects in economic development, housing, and infrastructure might stall.
Introduction
In the federal government’s FY 2026 budget proposal, several cuts are on the table, including the elimination of key housing programs, such as the Community Development Block Grant (CDBG) program. The Program is a vital federal funding stream for counties. It provides flexible support that allows local governments to invest in affordable housing, upgrade infrastructure, and carry out community revitalization projects. Without it, counties would lose a critical tool for meeting the needs of residents and strengthening local economies.
What are Community Development Block Grants?
The Community Development Block Grant (CDBG) program, administered by the US Department of Housing and Urban Development, is a tool for counties to strengthen communities, create jobs, and improve local infrastructure. Established by Congress in 1974, the Community Development Block Grant funding helps urban, suburban, and rural communities address housing, economic development, and public service needs, particularly for low-and moderate-income residents.
The Program’s flexibility allows counties to partner with private and nonprofit organizations to fund projects that match local priorities. This can include upgrading housing, improving water and sewer systems, enhancing infrastructure, and expanding human services. According to NACo, every federal dollar invested in block grant programs leverages more than five dollars in additional local and private investment.
From NACo:
Since 2005, CDBG facilitated the creation and retention of 563,236 economic development related jobs, contributed to infrastructure development benefiting approximately 57 million persons, assisted over 189 million persons through public service activities, and met the housing needs of over 1.9 million households.
According to NACo, the Program provides formula-based grants to over 1,250 entitlement communities, including 208 counties that receive funding directly. Non-entitlement communities, such as many rural counties, compete for state-administered funds. The US Department of Housing and Urban Development calculates grant amounts based on factors like poverty, population, housing conditions, and local growth trends.
From the Maryland Department of Housing and Community Development (DHCD):
Community Development Block Grant Program funds help strengthen Maryland’s communities by expanding affordable housing opportunities, creating jobs, stabilizing neighborhoods and improving the overall quality of life.
How do Community Development Block Grants work?
The US Department of Housing and Urban Development (HUD) oversees the program.
Community Development Block Grant funding flows through two main channels:
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Entitlement Program: the US Department of Housing and Urban Development directly allocates funds to large metropolitan cities and counties.
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States and Small Cities Program: the US Department of Housing and Urban Development distributes funds to states (and Puerto Rico), which then award grants to smaller counties, towns, and municipalities. About 70% of federal block grant funds go to entitlement communities, with the remaining 30% directed through states.
In Maryland, the Department of Housing and Community Development (DHCD) administers the state’s share of Community Development Block Grant funds. These dollars are awarded primarily through two categories:
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Community Development Grants: Competitive grants, with applications accepted once a year.
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Special Projects Grants: Support for planning, economic development, or other initiatives that meet special project criteria.
This structure ensures that both Maryland’s large and small communities can access federal resources to advance local priorities.
Proposed cuts to Community Development Block Grants:
Congress faces a September 30 deadline to approve funding or funding cuts for the new fiscal year, avoid a government shutdown, and allocate resources for key programs.
Despite its proven impact, Community Development Block Grant funding has been steadily declining and is included in the federal administration’s FY 2026 proposed budget cuts.
From a letter of the federal government’s Fiscal Year 2026 budget proposal:
The Budget proposes to eliminate the CDBG program, which provides formula grants to over 1,200 State and local governments for a wide range of community and economic development activities. CDBG is poorly targeted, and the program has been used for a variety of projects that the Federal Government should not be funding, such as improvement projects at a brewery, a plaza for concerts, and skateboard parks.
Community Development Block Grant funding is currently funded at $3.3 billion for FY 2025, and according to NACo, down $1 billion from its peak in 1995. In FY 2023 alone, the block grant funding helped create or retain over 14,500 jobs, provided public services to more than 7.5 million people, and improved infrastructure for 2.5 million residents.
Local governments rely on Community Development Block Grants to meet the unique development needs of their communities. NACo is urging Congress to increase funding to $4.2 billion in FY 2026 to ensure these essential investments in housing, infrastructure, and economic development continue.
What do Community Development Block Grants support in MD?
Queen Anne’s County:
Community Development Block Grant funding has played a central role in Queen Anne’s County’s economic development. A $575,000 grant supported the transformation of 51 acres into the Matapeake Business Park, which is now home to six businesses and has created more than 76 jobs, 51 of them filled by low-to moderate-income residents. These investments continue to generate millions in economic activity and new opportunities.
In Sudlersville, the county used a $50,000 block grant to study the adaptive reuse of the Old Sudlersville Middle School, part of broader revitalization efforts that could include affordable housing and community amenities. This complements other investments, like a community laundromat supported by a Community Legacy Grant.
Frederick County:
Frederick County has used block grant resources to expand accessibility and housing opportunities. Funds have supported new ADA sidewalks and curb ramps, home renovations for residents with mobility challenges, and direct assistance during COVID-19, including emergency hotel/motel placements and senior food services.
The county also helps families build stability through its first-time homebuyer program, which has provided down payment and closing cost assistance to 99 households with the help of block grant funds.
Additionally, Frederick’s Bell Court Senior Apartments, a 28-unit community serving very low-income seniors, has relied on block grant dollars for essential upgrades like roofs, HVAC systems, kitchen cabinetry, and ADA-compliant showers. These improvements not only keep housing safe and accessible but also reduce utility costs, allowing the county to maintain affordable rents for some of its most vulnerable residents.
Anne Arundel County:
In Anne Arundel County, Community Development Block Grant funds support the Severn Center Development, a signature project that brings together multiple resources under one roof. The center houses a senior activity space, a Boys & Girls Club, public art installations, and a modern gymnasium, creating an intergenerational hub in one of the county’s designated sustainable communities.
Conclusion
Despite ongoing threats of federal cuts, Community Development Block Grants continue to fuel local progress across Maryland. From job creation and affordable housing to accessibility upgrades and community revitalization, these flexible funds support projects that directly improve the quality of life for residents, particularly those with low to moderate incomes.
This article is part of MACo’s Deep Dive series, where expert analysts explore and explain the top county issues of the day. A new article is added each week – read all of MACo’s Deep Dives.
