Reliance on community block grants formula leads to uneven rescue plan funds for cities

During the past few decades in Ohio, as the population of Columbus has surpassed Cleveland as the largest city in the state, there have been comparisons made between the two cities on many levels. Which is better, which is worse, which is moving up, which is moving down.

Many of those questions surfaced when the recent money allocations per city from the federal grants from the American Rescue Plan had been made public. Under that plan, Cleveland is getting about $512 million in appropriations, while Columbus is getting $187 million. When broken down further, based on amount of money each city receives per person based on general population, Cleveland is getting about $1,347 per person, while Columbus is getting about $205 according to the Allocation for Metropolitan Cities from the U.S. Department of the Treasury (treasury.gov).

Why such a disparity on the amount granted to each city per person? Given that the stated purpose of the national $350 billion being awarded nationally to cities and counties states is “help turn the tide on the pandemic, address its economic fallout, and lay the foundation for a strong and equitable recovery,” with about $6.6 billion going directly to 37 Ohio cities and all 88 counties, one would think that Columbus and Cleveland would have similar amounts given to each to address pandemic problems. A difference perhaps, but not Cleveland getting about 6.5 times more money per person than Columbus. 

The answer is rooted in a long-term policy the United States government has used in funding its “Community Development Block Grant” program, which has been around since the early 1970s and has been designed to fund solutions for urban problems. The formula uses several objective measures of community needs, including the poverty rate, population decline and housing overcrowding.

But there is one other factor used that seems to be of great importance in determining the amount of money cities in Ohio and nationally are getting now for pandemic recovery. That would be the age of housing.

Specifically, the percentage of housing a city has that was built pre-1940, which is the CDBG standard. In this case, Cleveland has 53.7% of its housing built before 1940, while Columbus has 12.1%. That is part of the reason that there is a $324 million difference in the amount of money the cities receive in addressing pandemic issues.

Edward “Ned” Hill, professor of economic development in the John Glenn College of Public Affairs at The Ohio State University, told Ohio Capital Journal that the age of housing has long been tied to the CDBGs measurement of infrastructure needs cities have for decades — especially water and sewer problems linked to EPA requirements. Over time, however, the age of housing has had regional funding implications: Cities in the Northeast and Midwest generally have older housing than the cities in the South and West. And cities in the Northeast and Midwest aren’t growing as fast as the cities in the South and West.

That why the Midwest and Northeast get far more CDBG grants than the rest of the country. But it is also why there are disparities between cities in the same state like Cleveland and Columbus.

“The [CDBG] funding has always had pork barrel politics as part of the way money is being distributed, and the age of housing has always been part of that to protect some cities’ ability to get more grants” Hill said. “But it raises the issue of  subsidizing declining cities with scarce public funding resources. But if they are declining, and less infrastructure with accelerate their decline, and they have limited ability to self-finance, then the downward cycle keeps going on.”

Over time, the pre-1940 housing age has been one of those lines in the sand Congress has kept through the decades. But it does bring up some very odd and quirky applications. The top five cities in older housing now (all with more than 50% of their housing being in the pre-1940 category) are all very high in the funding per person from the American Rescue Plan: Buffalo (64.1% and $1,298 per person), St. Louis (56.4%, $1,464), Cleveland (53.7%, $1,343), Pittsburgh (51.4%, $1,116), and Boston (51.3%, $612).

One could make the argument that Boston has old housing because it is an old city, and having little to do with its poverty and decaying infrastructure issues. Case in point: Those older homes have value in some of these older cities (median home price in Boston is about $650,000), and it is odd to think that the age of these houses in historic cities would be a basis for how poor they are, and how much money they get to fight pandemic economic problems.

It is quite clear, however, that the amount of money awarded under the American Rescue Plan is definitely affected by housing age. Of the top ten largest cities in the U.S., three got more than $500 per person (New York City, Chicago, and Philadelphia; all with more than 40% of their housing pre-1940). Six of the others in the top ten (Houston, Phoenix, San Antonio, San Diego, Dallas, and San Jose), all had housing at less than 10% in the “old” category and their per person amount was $250 or less.

Of the top 20 larger cities with the highest percentage of older housing, 19 are in the top 20 per person cash grants.

In Ohio, which ranks 11th among states with 19.9% of its housing built before 1940, has cities much smaller than Columbus with older housing, and thus, higher per person dollar amounts: Lakewood (64.2% if housing pre-1940, $963 per person), Cincinnati 40.9%, $920), Dayton (37.1%, $983), Akron (32.9%, $738), and Youngstown (39.4%, $1,241).

On the other hand, Ohio cities with less older housing, like Columbus, also got less in per person funding: Newark (24.5%, $356), Mansfield (25.3%, $449), Lancaster (23%, $309), and Kettering (5.8%, $254).

“The problem we are seeing across the country is that the amount of money given to cities does not account for need,” said Michael Rich, a political science professor at Emory University in Atlanta, who has studied CDGB’s history and policy decisions.

“This is not a good response to the pandemic, as they are not defining local issues that involve the relationship between all the cities in the states. When you see on city getting four or five times as much as another for a specific timely issue like this, then needs aren’t likely being factored in.”

And, of course, given Columbus status as an upper echelon, higher education urban area, we decided to compare it to other such urban areas.

Cambridge, Massachusetts — home of Harvard and Massachusetts Institute of Technology — has 47.3% of its housing in the pre-1940 category, and gets $539 funding per person. The median home value is $881,417.

Berkley, California — home of University of California, Berkley — has 46.9% older housing and is getting $551 per person. The media home value there is $1,338,191. South Bend, Indiana — home to Notre Dame — has 23.7 of its housing older, and gets $577 per person. The median home price is $120,400

And Ann Arbor, Michigan — home to that school up north — has 16.5% of housing pre-1940, and gets about $205 per person. Median home price is $401,609.

If Columbus wants to fight the inequity of the American Rescue Plan’s funding arrangements, it will have numerous examples. But one might stand out — getting close to the same amount per person as that one city in Michigan.