The CDBG program was enacted in 1974 by President Gerald Ford through the Housing and Community Development Act of 1974 and took effect in January 1975. Most directly, the law was a response to the Nixon administration's 1973 funding moratorium on many Department of Housing and Urban Development (HUD) programs.[1]

President Ford emphasized the bill's potential for reducing inefficient bureaucracy, as the grant replaced seven previous programs that were "too fragmented to provide comprehensive solutions to complex local needs".[2] He also noted its potential for improving government effectiveness by "replacing Federal judgments on local development with the judgments of the people who live and work there":[3] placing more decision-making power on local funding choices in the hands of local governments who "are most familiar with local needs".[4] The CDBG was presented as explicitly meant to "redistribute influence from the federal bureaucracies to local governments"[5] - in Ford's words, to "return power from the banks of the Potomac to people in their own communities".[6]

It had bipartisan support, reportedly because liberal legislators shared its goal of extinguishing poverty and "urban blight" and conservative legislators appreciated the control the program placed in the hands of private investors and the reduction it made in the role of the United States government. Decentralizing control over community development appealed to some Democrats because the central administration of previous programs meant benefits often did not reach the targeted low-income communities,[7] while Republicans appreciated that the program was represented as meant to "limit the powers of the federal bureaucracy",[8] a political and ideological presentation reflective of "growing public resentment of big government and big bureaucracy".[9

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