The CDBG program requires that each CDBG funded activity must either principally benefit low- and moderate-income persons, aid in the prevention or elimination of slums or blight, or meet a community development need having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community and other financial resources are not available to meet that need. With respect to activities that principally benefit low- and moderate-income persons, at least 51 percent of the activity's beneficiaries must be low and moderate income.
Some CDBG assisted activities, such as parks, neighborhoods, facilities, community centers and streets, serve an identified geographic area. These activities generally meet the low- and moderate-income principal benefit requirement if 51 percent of the residents in the activity's service area are low and moderate income. However, in some communities, they have no or very few areas in which 51 percent of the residents are low and moderate income. For these grantees, the CDBG law authorizes an exception criterion in order for such grantees to be able to undertake area benefit activities. Specifically, section 105(c)(2)(A)(ii) of the Housing and Community Development Act of 1974, as amended, states that an activity shall be considered to principally benefit low and moderate income persons when "the area served by such activity is within the highest quartile of all areas within the jurisdiction of such city or county in terms of the degree of concentration of persons of low and moderate income."
Section 105(c)(2)(A)(ii) is implemented in the CDBG regulations at 24 CFR 570.208(a)(1)(ii), which identifies the following methodology to calculate a grantee's "exception" threshold: all block groups within the grantee's jurisdiction in which people are residing are rank ordered from the highest percentage of low- and moderate-income persons to lowest. (For urban counties, the rank ordering covers the entire area of the county, rather than being done separately by participating units of government within the county.) The total number of block groups is divided by four. If the percentage of low- and moderate-income persons in the last block group in the top quartile is less than 51 percent, that percentage becomes the grantee's low- and moderate-income threshold for area benefit activities. NOTE: whenever the total number of block groups does not divide evenly by four, the block group that would be fractionally divided is included in the top quartile.
The attached list (PDF Excel) reflects the CDBG "exception grantees" and the exception threshold for each. This percentage represents the minimum percentage of low- and moderate-income persons that must reside in the service area of an area benefit activity for the activity to be assisted with CDBG funds.