Using Community Development Block Grant Dollars to Revitalize Neighborhoods: The Impact of Program Spending in Philadelphia

Since the 1930s, federal housing policy has pursued an array of goals: addressing housing quality and affordability, neighborhood conditions, and residential segregation; and seeking to increase local employment opportunities and cities' tax bases. While the Community Development Block Grant (CDBG) program, established in 1974 to replace a number of categorical grants, was designed to be flexible and broad enough to include all of these goals, in most cases, local decision makers have focused program dollars on improving housing, not neighborhood-wide, conditions.Public community development and housing programs can play a central role in prompting positive neighborhood change and ultimately repositioning weaker neighborhoods. There is a growing consensus in the literature that subsidized housing investments are more likely to generate such spillover effects if they are geographically targeted. What is less well known is exactly how much spending is required-what the threshold amount is-to positively impact neighborhood-wide conditions and values.This project tests recent estimates of threshold spending amounts using data on investments funded by Philadelphia's Community Development Block Grants and Section 108 loans, and house value trends at the census-tract level. According to this analysis, Philadelphia census tracts receiving above-sample-median amounts of CDBG and/or Section 108 loan funds saw property values increase far more than those tracts receiving less subsidy or control group tracts receiving no subsidy at all. This suggests that geographically targeting subsidies can help maximize their neighborhood-wide effects.