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Study session regarding the Community Development Block Grant (CDBG) Program Year 2025-2026 Annual Action Plan and Budget Allocation. (Alvina Condon, Management Analyst II)
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RECOMMENDATION
Recommendation
Staff recommends that the Community Development Block Grant (CDBG) Subcommittee of the City Council provide feedback regarding the Program Year 2025-2026 (PY 25-26) Annual Action Plan (Action Plan) and budget.
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BACKGROUND
The purpose of this study session is to receive feedback from the CDBG Subcommittee regarding the PY 25-26 Action Plan and budget.
The U.S. Department of Housing and Urban Development (HUD) requires local jurisdictions to prepare an Action Plan for the upcoming PY 25-26 to receive funds through the CDBG Program. As part of the development of the Action Plan, the City is required to hold two public hearings. The first public hearing was held at the regular meeting of the City Council on February 26, 2025, to obtain citizens' views on housing, community, and economic development needs, which will inform the Action Plan. Additionally, for those non-profit organizations seeking CDBG funds, they used this public hearing to make brief comments to the City Council regarding their programs. The second and final public hearing is scheduled for May 28, 2025. At this meeting, the City Council will consider adopting the PY 25-26 Action Plan and make final recommendations on CDBG funding allocations.
DISCUSSION
At present, the City has not been notified of its CDBG entitlement allocation for PY 25-26 and the federal government has not yet approved the budget for HUD. Given the level of uncertainty surrounding entitlement awards, staff recommends an estimated budget of $403,568, reflecting a decrease of 9% from the entitlement amount for Program Year 2024-2025 (PY 24-25). Based on this estimate, staff have developed funding recommendations for public service sub-recipients and programs. Should the final funding allocation vary from the estimated amount by 20% or more, staff will return to the Subcommittee and/or City Council to revise the funding proposals, in accordance with HUD guidelines.
The budget outlined in Attachment 1 includes the anticipated entitlement allocation of $403,568 for public services, minor home repair, administration, and public improvement, and rollover funding of $656,695, which has been dedicated to Public Improvement. Staff anticipates an estimated total budget of $1,060,263.
CDBG Programs
The following is a summary of currently funded activities under the CDBG program.
Public Services ($60,535 Estimated) - Plus $100,000 in City funds
In December 2024, the City invited public service agencies to apply for CDBG grant funding. These applications were due on January 21, 2025, and the City received 10 applications for public services. This is the second year of a two-year funding cycle, so subrecipient agencies that were approved for grant funding for PY 24-25 submitted a simplified renewal application for the second year.
Starting in PY 2020-21, in part due to the trend of decreasing CDBG allocations and in part in response to challenges meeting HUD income verification requirements, the City provided funding to several organizations through the City’s Housing Fund (Fund 205) instead of CDBG. Considering the on-going need in the community, staff recommends continuing to utilize City Housing Funds for eligible activities. This approach will allow the City to provide grants to all of the Public Service grantees that submitted an application.
The proposed public services budget is as follows:
CDBG Public Services Funds: $60,535
City Housing Funds: $100,000
TOTAL: $160,535
Minor Home Repair Programs ($90,000 Estimated)
Funding Minor Home Repair nonprofits is an effective way to support existing City residents to stay in their homes in a safe and healthy environment. For PY 24-25, the City Council approved funding for Center for Independence of Individuals with Disabilities (CID) and Rebuilding Together Peninsula (Rebuilding Together), for their Safe at Home and National Rebuilding Day programs. Shortly after the start of PY 24-25, CID informed staff that the organization was discontinuing their minor home repair program and would not be utilizing CDBG funds. Rebuilding Together was the only minor home repair program to receive funds for PY 24-25 and has also submitted applications for both their programs for PY 25-26. In Program Year 2023-2024, Rebuilding Together experienced issues with program mismanagement, with starting projects before environmental reviews were completed and given approval by City staff. They have since received additional training and have been diligent in improving their processes. Considering that the City no longer provides home improvement grants and only funds one organization to service City residents, staff recommends funding support for Rebuilding Together.
Planning and Administration ($80,714 Estimated)
The CDBG program allows the City to spend up to 20% of its grant award on program Planning and Administration. Given the anticipated award amount, staff propose to utilize the full budget of $80,714 for these expenses.
Public Improvement Programs ($172,319 Estimated)
The funds not set aside for public services, minor home repair, or administrative expenses have typically been utilized for public improvement activities. The City did not request applications for public improvement projects but have worked with other City departments to identify projects to utilize CDBG funding. The city currently has two Public Improvement projects in the works that include curb ramps and an accessible path at the Cypress and Pine Park. In addition to the $172,319, there is $656,695 of additional unspent funds reallocated to public improvement activities from previous years.
Fair Housing Activities ($12,575 Estimated)
The City has targeted the HOME Administrative funds it receives from the County of San Mateo for fair housing activities since CDBG regulations require the City to affirmatively further fair housing. Fair housing activities may only be funded from administrative or public service type funds. Using these HOME Administrative funds to fund fair housing activities allows other activities to be funded under the public services cap. The City received one application in this category.
FISCAL IMPACT
Holding this study session has no fiscal impact on the General Fund. Funding recommendations made by the CDBG Subcommittee, if approved by the City Council, will have impacts on the CDBG budget and the City’s Housing Fund as described above.
CONCLUSION
Staff recommends that the CDBG Subcommittee of the City Council provide feedback regarding the PY 25-26 Annual Action Plan and budget.
Attachments:
1. CDBG Budget and Funding Recommendations PY 2025-26