CDBG 100%

CDBG Administration

Lesson 2: The primary objective and the 70 percent rule

24 CFR 570.200(a)(3) and 570.484 · 14 practice questions

Content current as of September 22, 2026, per the 2026 TxCDBG Project Implementation Manual (effective September 1, 2026) and the current eCFR.

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Reading

There are two separate tests sitting on top of every CDBG dollar, and people routinely confuse them. Get this distinction right at the start and a lot of the rest of the program stops being confusing.

Test one applies to each activity. Every single activity you fund has to meet one of three national objectives. Not most activities. Every one. That is the subject of the next three lessons.

Test two applies to the grant as a whole. Across everything you spend, at least 70 percent has to benefit low and moderate income persons. That is the primary objective, and it lives at 24 CFR 570.200(a)(3).

The regulation says that "not less than 70 percent of the aggregate of CDBG fund expenditures shall be for activities" benefiting low and moderate income persons. Read the word aggregate carefully. It is not asking whether any one activity clears 70 percent. It is asking what the pile adds up to.

570.200(a)(3) is the entitlement grantee's citation. TxCDBG runs under Subpart I, where the same 70 percent overall benefit requirement is stated at 24 CFR 570.484 instead, measured against the state's CDBG funds over a period of one, two, or three consecutive annual grants. In that version the certification belongs to the State: the State selects the period and certifies it to HUD, so an individual TxCDBG grantee does not choose its own. Neither section writes a case-by-case exception into the 70 percent floor.

The 70 percent primary objective test measured across the certification period A stacked bar shows a grantee's CDBG expenditures over its certification period. At least 70 percent must benefit low and moderate income persons across the period as a whole, shown here as 78 percent LMI-benefiting activities against 22 percent other activities, alongside a separate reminder that every individual activity must also independently meet one of the national objective tests. LMI-benefiting: 78% 22% 70% line Measured across the whole certification period, not per activity (570.200(a)(3); 570.484 for TxCDBG). Each individual activity must still independently meet a national objective test. The period is 1, 2 or 3 years; neither section writes in a case-by-case exception.
Two tests apply at once: the 70 percent primary objective test is measured across a grantee's whole certification period, while every individual activity must separately clear one of the national objective tests on its own.

The measurement period

The 70 percent is measured over "a period of time specified in their certification not to exceed three years." An entitlement recipient picks the period when it certifies (in TxCDBG, the State does). The period can never be longer than three years.

The percentage is not a simple share of every dollar. Administration costs are left out of the calculation, as are most planning costs (see 570.200(a)(3)(i), and 570.484(b)(1) for the State program). Housing counts only for the share of its cost that matches the share of low and moderate income occupied units (570.200(a)(3)(iv); 570.484(b)(4)), and other activities that meet the low and moderate income criteria count in full.

This matters more than it looks. A one year period gives you no room to maneuver: one large activity that benefits an area at 51 percent low and moderate income, in a year when you did little else, can pull the whole year under 70. A three year period lets a lean year sit next to a strong one. The trade is that you are then committed to hitting the number across all three years, and by year three you have very little ability to correct a shortfall that built up in years one and two.

The practical discipline is to track the running percentage continuously rather than discovering it at the end. If you are at 64 percent two thirds of the way through a three year certification period, you do not have a reporting problem, you have a programming problem, and the only fix is to change what you are funding with the money that is left.

Both tests apply at once

An activity can meet a national objective and still hurt your 70 percent. A slum and blight activity, for example, meets a national objective perfectly well under 570.208(b), but it does not count toward the low and moderate income aggregate at all. Fund enough of those and you will fail the primary objective while every individual activity was compliant.

The reverse is also true. An activity that is wonderfully low and moderate income in character but does not fit any of the three national objectives is not eligible, no matter how much good it does. There is no "but it helps poor people" exception that bypasses 570.208.

So the two tests are a floor and a ceiling working together. National objective compliance is the gate each activity has to walk through. The 70 percent is the shape of the whole portfolio once everything is through the gate.

What this means when you are planning

Think about the aggregate before you commit, not after. When a community asks you to fund something that will land in the slum and blight or urgent need column, the first question is not whether it qualifies, it is what else is in the pipeline to carry the low and moderate income weight. If the answer is nothing, you have just found the reason to say no, or to phase the work differently.

Keep the certification period in front of you as a live number. The 70 percent is one of the handful of things a monitor can check quickly and objectively, and a shortfall is not something you can explain away.

Why this matters

Exam questions like to blur these two tests together. The 70 percent line is an aggregate across the certification period, not a per-activity test; a single activity passing or failing its own national objective test is a separate, activity-level question. An answer choice that treats them as the same thing is usually the trap.

Practice questions

1. What minimum share of aggregate CDBG expenditures must benefit low and moderate income persons?

  1. 70 percent
  2. 51 percent
  3. 80 percent
  4. 100 percent

2. The primary objective is measured over a period specified in the recipient's certification. What is the maximum length of that period?

  1. One year, since every annual grant is tested separately
  2. Three years, the regulatory maximum
  3. Five years, matching a typical Consolidated Plan cycle
  4. Ten years, matching a long-term loan repayment period

3. A recipient funds ten activities. Each one individually meets a national objective. Does that alone satisfy the primary objective?

  1. Yes, meeting a national objective is the whole requirement
  2. Yes, provided at least one activity is a housing activity
  3. No, the 70 percent aggregate test is separate and also applies
  4. No, but only if the grant exceeds a dollar threshold set by HUD

4. The word the regulation uses for how the 70 percent is measured across activities is:

  1. Average
  2. Median
  3. Per activity
  4. Aggregate

5. A slum and blight activity properly qualified under 570.208(b) contributes what to the 70 percent primary objective calculation?

  1. Nothing, it does not count toward low and moderate income benefit
  2. Its full cost, because it met a national objective
  3. Half its cost
  4. Its full cost, but only in the final year of the certification period

6. A recipient is two years into a three year certification period and its running low and moderate income share is 64 percent. What is the accurate characterization?

  1. A reporting problem that can be corrected in the annual CAPER narrative
  2. A programming problem that must be fixed with the remaining funds
  3. Acceptable, because the test is applied year by year
  4. Acceptable, because 51 percent is the real threshold

7. An activity that clearly helps low income residents but fits none of the three national objectives is:

  1. Eligible, because low and moderate income benefit is the program's purpose
  2. Eligible if the recipient certifies urgent need
  3. Ineligible, there is no general benefit exception
  4. Eligible if it is under 15 percent of the grant

8. Which best describes the relationship between the national objective test and the primary objective?

  1. They are two names for the same requirement
  2. The primary objective applies only to housing activities
  3. The national objective applies only to entitlement communities
  4. The national objective is a gate each activity passes; the 70 percent describes the portfolio as a whole

9. Choosing a one year certification period rather than three years has what practical effect?

  1. Less room to offset a low benefit year against a strong one
  2. A lower required percentage, such as 60 percent, for that single year
  3. Exemption from the aggregate test until the period ends
  4. A longer period to correct a shortfall than a three year period allows

10. Where is the primary objective's 70 percent requirement found for entitlement grantees?

  1. 24 CFR 570.208(a)(1)
  2. 24 CFR 570.200(a)(3)
  3. 24 CFR 570.201
  4. 24 CFR 570.902

11. This lesson describes two separate tests that apply to CDBG spending. What is the difference between them?

  1. Test one, the 70 percent primary objective, applies to the grant as a whole; test two, the national objective, applies to each individual activity
  2. Both tests apply only to entitlement grantees, while TxCDBG grantees are subject to neither of them
  3. Test one, the national objective, applies to each activity; test two, the primary objective's 70 percent, applies to the grant as a whole
  4. There is only one test, and the "two tests" framing has no basis in the regulations at all

12. According to this lesson's exam guidance, what kind of answer choice on this topic is usually the trap?

  1. One that cites the wrong CFR section for slum and blight, such as 570.200 instead of 570.208(b)
  2. One that names TDA instead of HUD as the agency that administers the entitlement program directly
  3. One that says TxCDBG grantees are exempt from the national objectives because a state agency administers the funds
  4. One that treats the 70 percent aggregate test and a single activity's national objective test as if they were the same requirement

13. Under 24 CFR 570.484, the State program counterpart, who selects the length of the overall benefit period (one, two or three consecutive annual grants)?

  1. The State, which selects the period and certifies it to HUD
  2. Each local grantee, in its own application to TDA, subject to TDA approval
  3. HUD, based on the size of the state's annual grant and the number of grantees
  4. It is fixed by regulation at exactly three years for every state and every recipient

14. Per this lesson's planning guidance, when a community proposes an activity that will land in the slum and blight or urgent need column, what should a grantee ask first?

  1. Whether the activity independently qualifies under 570.208(b) or (c)
  2. What else is in the pipeline to carry the low and moderate income weight, since this activity will not count toward the 70 percent
  3. Whether TDA has pre-approved that specific activity
  4. Whether the activity costs less than $25,000

Glossary

Primary objective
The requirement at 24 CFR 570.200(a)(3) that at least 70 percent of aggregate CDBG expenditures, over a certification period, benefit low and moderate income persons.
National objective
The separate, activity-level test at 570.208 that every individual CDBG activity must independently meet.
Aggregate
The total of expenditures across the whole certification period, as opposed to a test applied to any single activity.
Certification period
The 1 to 3 year window a recipient specifies in its certification over which the 70 percent primary objective is measured.
Low and moderate income (LMI) benefit
The category of national objective, and the population, that counts toward the 70 percent aggregate; slum/blight and urgent need activities do not count toward it.
24 CFR 570.208
The regulation holding the national objectives; distinct from 570.200(a)(3), which holds the primary objective.
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