The CDBG was enacted in 1974 by president Ford through the Housing and Community Development Act of 1974. It took effect Jan 1975. It had bipartisan support. The liberals liked that it required local governments to try and extinguish poverty and "urban blight." Conservatives appreciated the grant because it placed a lot of control in the hands of private investors while simultaneously reducing the role of the government. Cities automatically qualified for the grant if they met the requirements, but were required to submit allocation reports (who and where the money was spent) and quarterly reports to HUD. HUD did not keep good records, southern cities in particular spent grant money in affluent neighborhoods. CDBG funds were distributed in such a way as to generate a bias against older (declining) frostbelt cities, cities that were losing population to the sunbelt. This problem was rectified after a bitter dispute in 1978. Compare to Urban Development Action Grants (UDAG).
