Kentucky panel adopts 2025 CDBG application, reviews minor guideline changes

The joint Senate and House committees on state and local government heard an update from the Kentucky Department for Local Government on proposed guidelines for the federal Community Development Block Grant (CDBG) program for fiscal year 2025 and approved the 2025 block grant application and the Section 108 loan guarantee program as meeting the standards set out in KRS 45.353.

Department of Local Government Commissioner Matt Sawyers told the committees the department expects about $26,000,000 in CDBG funding for 2025 and laid out proposed pre-allocations and administrative guideline adjustments. “We’re here to update you on our guidelines for fiscal year 2025 to the Community Development Block Grant program administered by the Housing and Urban Development federal agency,” Sawyers said.

Why it matters: CDBG funds are a federal source routed through the state to smaller municipalities; how the state allocates them affects water and wastewater projects, community facilities, housing services, and recovery services across many rural and small urban jurisdictions.

Key details and allocations - Total expected 2025 funding (estimate): about $26,000,000. - Public facilities (water/wastewater infrastructure, coordinated with Kentucky Infrastructure Authority): proposed ≈ $8,800,000. - Community projects (volunteer fire departments, libraries, health centers, food banks, senior centers): proposed ≈ $5,800,000; the per-project community projects cap is proposed to rise from $750,000 to $850,000. - Economic development (job-creation activities): proposed ≈ $4,800,000. - Public services (including recovery services): proposed ≈ $2,600,000. - Housing programs (work often coordinated with Kentucky Housing Corporation): proposed ≈ $3,300,000.

Sawyers emphasized statutory and federal compliance: CDBG requirements direct that roughly 70% of funds be spent on activities benefiting low- and moderate-income individuals or areas, with narrow exceptions for urgent needs or blight elimination. He said the department proposes primarily administrative and clarifying edits to the program guidelines for 2025, including: - Removing the Community Emergency Relief Fund appendix and issuing it as a standalone document to reflect recent disaster-relief usage patterns. - Increasing the community project maximum from $750,000 to $850,000. - Formalizing criteria and documentation for supplemental CDBG funding for projects with construction cost overruns (projects funded between 2018 and 2023 may request supplemental funds as a last resort; combined initial award and supplemental funding may not exceed $1,000,000). - Adjusting administrative thresholds and combining related sections to reduce duplication of verbiage. - Adding a public-facilities “design-only” option and minimum local match requirements (a 1:1 match in some cases and a minimum 20% match for other projects) so larger projects with incomplete design work can apply first for design funding and later for construction awards.

Committee action and next steps The House committee moved, seconded and voted that “the 2025 block grant application and the Section 108 loan guarantee program meet the standards and criteria set out in KRS 45.353.” The motion carried on a voice and roll-call vote. Committee members did not raise substantive objections during the public hearing portion and invited staff follow-up on project-specific questions.

Program context and administration Sawyers described DLG’s long-standing role as the state administrator for CDBG and noted the department’s practice of working with area development districts for applications from smaller communities, while larger cities receive direct allocations. He said the department frequently coordinates housing initiatives with the Kentucky Housing Corporation and files a joint five-year plan with KHC.

What did not change Sawyers repeatedly described most edits as administrative or clarifying; he characterized the requested changes as “mostly just administrative, tweaking here or there,” and invited committee members or constituents with project-specific questions to follow up with department staff.

The committee recessed after completing the CDBG agenda item; members were directed to the DLG website (dlg.ky.gov) for full guideline text and application materials.