Federal place-based programs are cornerstones of many thriving low- and moderate-income communities across the US, creating economic opportunity and improving quality of life.

During my time overseeing the Federal Reserve System’s community development function and leading the Joint Center for Housing Studies of Harvard University, I saw firsthand how these programs can be transformative.

Community Development Block Grants and Low-Income Housing Tax Credits can help redevelop disinvested neighborhoods and create more affordable rental housing and homeownership opportunities. The New Markets Tax Credit enables communities to build commercial and industrial workspace that supports job creation and invest in infrastructure that improves access to essential services, while the Community Reinvestment Act increases access to community development, mortgage, and small business loans.

In fiscal year 2024, Congress allocated about $60 billion to place-based programs in the form of block grants, subsidies, and tax expenditures.

But having devoted my career to researching and advising on federal housing and community development policy and programs, I know the success and reach of these programs depends on more than just funding levels. The plumbing—or the efficiency and effectiveness of their rules, requirements, and program administration—also matters.

My Urban Institute colleagues capture both the strengths and challenges created by current federal place-based programs in their detailed landscape policy review. Their findings can help federal policymakers better target federal place-based supports to areas with the greatest need, improve their efficiency and coordination, and magnify their transformative outcomes.

Key strengths and areas for improvement

The landscape review surfaces the following insights into funding for federal place-based supports:

• Annual federal spending has more than doubled since 2010 but remains low relative to the need and to the levels of private investment.
• Many communities that are eligible for—and in need of—investment and support do not receive much, if any, funding.
• Metrics like the number of affordable rental units produced and the number of businesses served are easy to collect for specific programs, years, and projects. By comparison, evaluating place-based programs’ effects on a given community is difficult and underfunded. This is true despite emerging evidence that place-based programs benefit communities.

The report also tracks important ways the programs’ administration and delivery have evolved over time:

• Funding allocation and program administration of federal place-based programs have increasingly come to rely on both the private sector and states and localities.
• Many federal programs have complex funding structures and processes because of their design and state and local agencies’ involvement. These complexities can lead to challenges with efficiency, effectiveness, and coordination, and can require specialized expertise to secure or deploy funding. For example, lengthy application processes, inconsistent funding decision cycles, and challenges coordinating across programs and agencies can increase transaction costs and project risks.
• Though programs have shifted more allocation and administration responsibilities to the state and local levels, residents have little input into and control over how their tax dollars are spent.

Federal leaders overseeing these programs can draw on this landscape policy review to inform revisions to program policies, rules, and requirements. The review also provides helpful information for state and local governments on how to better allocate federal place-based supports to projects that will help their communities thrive.

Leaders at all levels of government could also build on the findings captured in the policy review by collecting insights from a wide range of community development stakeholders—including state and local allocating agencies, banks, resident groups, and the community-based organizations that deliver federal supports—on what specific program changes would lead to better outcomes.

Stepping back and considering how place-based policies interact and have shifted over time can help both federal and local leaders improve programs and their administration to maximize local results.