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Community Development Block Grant Job Creation

This overview discusses the complexities of job creation under the Community Development Block Grant (CDBG) program, highlighting findings from the NACCED Conference in 2011. It examines the challenges of demonstrating low/moderate benefit ratios, particularly the $35,000 per job metric dictated by regulations, as well as the role of various stimulus programs. Additionally, the paper emphasizes the necessity of recognizing both direct and indirect jobs, provided by multiple studies, and recommends adopting an average job cost of $33,000 based on IHS Global’s research.

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Community Development Block Grant Job Creation

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  1. Community Development Block Grant Job Creation Paul Herdeg, Cuyahoga County, Ohio NACCED Conference 2011

  2. Brief history of CDBG and jobs • Economic Development Lending Need to demonstrate Low/Mod Benefit Ratio of $35,000/job is hard-wired in regs • CDBG-R and other 2009 stimulus programs Early confusion over how to count Full Time Equivalent – directly funded jobs only • Little or no published research available

  3. NACCED working group ideas • Encourage voluntary “CDBG-R” counting • Attempt to define a new methodology • Review literature for existing work on point • Keep members’ limited resources in mind

  4. Literature Review (Lite) • Startup incubator studies • Wind energy studies • Arts studies • Homebuilder studies • Best fit - 2011 CDBG study in progress now

  5. Startup incubator studies • Focus on business survival and growth • Job creation usually a secondary focus • Bias towards technology startup efforts • Fuzzy estimates: “$15,000 or more per job” (Halpern, 1995) • Kitchen study estimated $5K to $9K per jobbut omitted some costs (Hall, 2007)

  6. Wind energy studies • Focus on taxes paid to local governments • Only direct jobs counted in most studies • High cost per job: $175,000 in one study (Kammen, 2004)

  7. Homebuilders’ 2009 study • Claim to count both direct and indirect jobs • Focus on local tax revenue as well as jobs • Averages from$99K per job (new single-family) to $375K per job (new apartments) • Remodeling $128K per job

  8. Americans for Arts 2007 study • Extensive surveys of nonprofit arts groups • Both direct and indirect jobs counted • Leveraged funds (audience spending) counted • Modeled indirect jobs by type of spending • Cost per job $33,000 to $35,000

  9. 2011 IHS Global CDBG Study • Commissioned by Mayors, NACO, NLC • Surveyed 12 CDBG entitlement cities/counties • Used HUD data to group expenditures by type • Surveyed jurisdiction for leverage amounts • Counted both direct and indirect jobs • Modeled by type of activity using IM-PLAN

  10. Preliminary IHS Global Results • Cost per job varied somewhat by jurisdiction • Average cost per job approx. $33,000 • Valid regardless of region, size of grantee • Methodology confirmed by analyst, 9/2011 • Final report unlikely, little additional data

  11. Recommendation • Adopt $33,000 average cost per job from IHS Global study • Compare with Arts study with same results • Count both direct and indirect jobs • Distinguish from CDBG-R direct job counting

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