by Bruce Checefsky

     Cleveland City Council introduced measures to overhaul funding for Community Development Corporations (CDCs) in January of this year. Ordinance No. 113-2025 would change how neighborhood development corporations get money by creating a Neighborhood Development Sub-fund. The program will provide grants to expand economic opportunities for low- to moderate-income residents.

     In Cleveland, CDCs apply for Community Development Block Grants (CDBG) funds through the Department of Community Development, which manages the annual CDBG application process. Cleveland receives roughly $30 million annually from the U.S. Department of Housing and Urban Development (HUD) to support its Department of Community Development program. In 2024-2025, the program earmarked $1.5 million to demolish or board up vacant homes, $623,454 to assist homeless Clevelanders, and $284,393 to provide medical aid to those with AIDS.

     Under the proposed legislation, the City would create an annual application for CDCs with five eligible activity categories, including Community Engagement, Neighborhood Development, Neighborhood Planning, Marketing, and Partnerships, according to Josh Jones Forbes, Marketing & Communications Director for Cleveland Neighborhood Progress. CDCs would have to meet a standard of three to eight required activities per category within a range of eighty-nine eligible activities. City Council would then divide its funds equally between all council members.

     CDCs must show how they will accomplish a minimum number of neighborhood development activities in each category and subcategory for that year; the Law Department must approve all development activities as being a proper public purpose.

     Among the eligible categories are communication strategies to reach residents, businesses, and others to share news, opportunities, events, etc., and resources available to them from the City; support for physical conditions of housing and real estate in a neighborhood; neighborhood planning support to improve a neighborhood’s physical, economic and social conditions; marketing and promotion of a neighborhood which would include campaigns to attract residents, housing market analysis and consumer research, or experiential event marketing for resident attraction and business attraction, and neighborhood branding management and partnerships with anchor institutions and attractions; and partnerships/collaboration between organizations and stakeholders, with faith-based community engagement, recreation programs, arts and culture programming, education and out-of-school time programming, volunteer management, and community health access.

     The City Council would also establish a Review Committee to review and update the list of twenty organizations defined as CDCs after the first three years and then every five years. These currently include: West Park and Kamms Dev. Corp., Jefferson Puritas West Park Dev. Corp., Westown CDC, Northwest Neighborhoods CDC, Metro West Community Dev. Organization, Tremont West Dev. Corp., Ohio City Inc., Old Brooklyn CDC, Slavic Village Dev., St. Clair Superior Dev. Corp., Midtown Inc., Famicos Foundation, Fairfax Renaissance Dev. Corp., Greater Collinwood Dev. Corp., NuPoint Community Dev. Corp., Burten, Bell, Carr Dev. Corp., Harvard Community Services Center, Little Italy Dev. Corp., University Circle, Inc., and Campus District.

     Ward 3 Councilman Kerry McCormack, who introduced the legislation along with Councilmen Danny Kelly and Anthony Hairston, and is not seeking reelection in November, said the new policy changes give CDCs a funding opportunity that provides greater transparency throughout the neighborhood development system.

     McCormack said that the progress around Cleveland would not have been possible without the CDCs. If passed, the measure would go into effect as part of the 2026 Cleveland fiscal budget, but critical Trump Administration cuts to HUD funding could change the entire funding system.

     In March, Congress reduced HUD’s Community Development Fund by $3.29 billion as part of a six-month stopgap measure that will fund government programs through September 30; President Trump signed the bill. The Trump Administration, including Elon Musk and the Department of Government Efficiency (DOGE), has taken steps to undermine policies to help people afford needed housing by cutting HUD staff.

     Expected cuts to staff that administer vouchers, public housing, and Native American housing programs by as much as 50% will negatively impact the project-based rental programs. Homelessness aid and grants that help communities build affordable housing and recover from disasters will experience significant reductions. The department responsible for enforcing fair housing laws expects a 75% reduction in staff.

     In response to the threats, HUD officials plan to publish a rule rolling back on non-discrimination protections that guarantee access to safe shelter and housing assistance for transgender and nonbinary people, who experience disproportionately high rates of homelessness, says a report published by the Center on Budget and Policy Priorities. According to the report, fewer people who struggle to keep a roof over their heads will get the help they need.

     City Council President Blaine Griffin said that most of the 80-plus jobs in the Department of Community Development get paid with CDBG funds, meaning layoffs and cuts would be in store in the worst-case scenario. 

     “I’ll be honest with you guys, there’s a lot of uncertainty around this,” Griffin said to cleveland.com. “It’s even as severe as they may wake up one day and have to lay off that entire department.”

     CDBG funds historically support a third to two-thirds of the CDC budget. With the delay or reduction in CDBG funds, each CDC may have to sell off real estate, max lines of credit and endowments, scale back community programs, and reduce staff. Ordinance 113-2025, if passed, could provide some benefits that allow the CDCs to report on, receive reimbursement for, and get recognized for the full range of services they provide to city neighborhoods, said Julie Dahlhausen, Executive Director of Tremont West Development Corporation.

     “CDCs get used to shoestring budgets. That is absolutely nothing new, but in the challenges ahead, to be very blunt, it could mean slow suffocation of the industry as a whole,” she said.

     Funding for CDCs needs to switch to non-federal funding sources like the philanthropic and foundation communities, and while some of them are fortunate enough to have a broad investment portfolio that includes real estate, vacant land, and commercial properties that could be a financial resource, albeit finite, others are not so lucky, Dahlhausen added

     “You could sell your real estate holdings if necessary for an infusion of cash. But once sold, it is gone. You no longer have that vacant lot in your pocket for affordable housing, and if you are selling to make payroll, that is a desperate situation.”

     Although some CDCs depend on CDBG funding for only a portion of their budget, others rely heavily on federal funding for as much as 90% of their operating budget. 

     “That is just dead in the water,” she said.