HomeMy WebLinkAboutStaff Report 2505-4614CITY OF PALO ALTO
CITY COUNCIL
Monday, June 09, 2025
Council Chambers & Hybrid
5:30 PM
Agenda Item
16.Adoption of the Community Development Block Grant (CDBG) Fiscal Year (FY) 2025-2026
Annual Action Plan, 2025-2030 Consolidated Plan, and a Resolution Approving Use of
CDBG Funds for FY 2025-2026 as Recommended by the Human Relations Commission.
CEQA Status: Exempt under CEQA Guidelines Section 15378(b)(4). Staff Presentation
City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: June 9, 2025
Report #:2505-4614
TITLE
Adoption of the Community Development Block Grant (CDBG) Fiscal Year (FY) 2025-2026
Annual Action Plan, 2025-2030 Consolidated Plan, and a Resolution Approving Use of CDBG
Funds for FY 2025-2026 as Recommended by the Human Relations Commission. CEQA Status:
Exempt under CEQA Guidelines Section 15378(b)(4).
RECOMMENDATION
The Human Relations Commission (HRC) and staff recommend City Council take the following
actions:
1. Adopt the draft Fiscal Year (FY) 2025-2026 Annual Action Plan (AAP), 2025-2030
Consolidated Plan (ConPlan)1, and the associated resolution (Attachment A) allocating
Community Development Block Grant (CDBG) funding for FY 2025-2026;
2. Authorize the City Manager to execute the FY 2025-2026 CDBG application to fund the
FY 2025-2026 AAP and any other necessary documents concerning the application, and
to otherwise bind the City with respect to the applications and commitment of funds;
3. Authorize staff to submit the FY 2025-2030 Consolidated Plan and 2025-2026 AAP to
U.S. Department of Housing and Urban Development (HUD) by the extended deadline of
August 16, 2025;
4. Authorize the City Manager or designee to draft and execute amendments to a loan
agreement, regulatory agreement, and related documents necessary to implement City
Council direction on the Alma Garden Rehabilitation Project in a form consistent with
the City’s affordable housing loan documents and approved by the City Attorney; and
5. Direct staff to return to Council following budget adoption to amend the FY 2026 Budget
Appropriation for the Community Development Block Grant Fund (2/3 vote needed) by:
1 https://www.paloalto.gov/files/assets/public/v/3/planning-amp-development-services/cdbg-general-
information/plans-and-reports/consolidated-plans/attachment-a-2025-2030-conplan-and-2025-2026-aap.pdf
1. Increasing Revenue from Other Agencies by $616,233.
2. Increasing General Expenses by $616,233.
EXECUTIVE SUMMARY
HUD requires jurisdictions to prepare a five-year strategic plan, the ConPlan, which outlines
priority housing and community development needs and establishes related goals. Each year,
jurisdictions must also submit an AAP that identifies the specific projects and activities to be
funded during the upcoming program year to implement the ConPlan’s strategies.
On May 8, 2025, the HRC developed funding recommendations for the CDBG FY 2025-2026
funding cycle. Given that the City’s CDBG grant entitlement amount for FY 2025-2026 was
unknown at the time, the HRC also recommended the implementation of a contingency plan to
be used if FY 2025-2026 funds differed from the amount estimated by staff.
On May 14 2025, the City received HUD’s formal notification of the City’s CDBG FY 2025-2026
entitlement grant amount. Subsequently, staff updated the draft FY 2025-2026 AAP to:
Incorporate the City’s CDBG FY 2025-2026 entitlement grant amount; and
Update the CDBG FY 2025-2026 funding allocation amounts to implement the HRC’s
recommended contingency plan because the HUD allocation exceeded the staff
estimate by $16,233.
The draft 2025-2030 ConPlan and FY 2025-2026 AAP contains proposed funding allocations to
spend all available CDBG funds. CDBG funds available for allocation in FY 2025-2026 total
$616,233, including the City’s entitlement grant and estimated program income to be received.
It is not possible to fund all applications at the requested amounts due to the limitations of
available funds. However, the proposed recommendations:
Allocate all available CDBG program funds;
Are consistent with the City’s CDBG ConPlan;
Are consistent with the City’s 6th Cycle Housing Element goals and programs as they
pertain to CDBG; and
Will result in funding key services and projects that benefit many low and very low-
income Palo Alto residents.
Staff recommends that Council review and approve the draft FY 2025-2030 ConPlan and 2025-
2026 AAP2, the associated draft Resolution (Attachment A), and authorize staff to submit and
execute associated documents necessary to implement the FY 2025-2030 ConPlan and 2025-
2026 AAP.
2 https://www.paloalto.gov/files/assets/public/v/3/planning-amp-development-services/cdbg-general-
information/plans-and-reports/consolidated-plans/attachment-a-2025-2030-conplan-and-2025-2026-aap.pdf
On May 2, 2025, the White House Office of Management and Budget released its topline
discretionary budget request for Fiscal Year 2026 to Congress, which proposes the elimination
of the CDBG program. If this request is enacted, the City would be unable to award CDBG funds
in FY 2026-2027. Staff will continue to monitor the status of the FY 2026 federal budget and
keep potential CDBG subrecipients informed regarding the availability of funds in the upcoming
funding cycle.
BACKGROUND
Projects funded through the City by the CDBG program must be consistent with the goals
outlined in the draft 2025-2030 ConPlan. The projects identified for funding in the draft AAP are
consistent with these goals and, following the City Council's final approval of funding
allocations, will be reported to HUD in the FY 2025-2026 AAP.
3" ensure adequate citizen
participation in the CDBG funding process.
ANALYSIS
3 Adopted Citizen Participation Plan: https://www.paloalto.gov/files/assets/public/v/1/planning-amp-
development-services/cdbg-general-information/plans-and-reports/amended-citizen-participation-plan-2022-
approved-by-city-council-9-12-22-final.pdf
Funds Available for Allocation in FY 2025-2026
Table 1. FY 2025-2026 CDBG Estimated Funds Available
CDBG Funds Available Available for Funding
Estimated Total CDBG Funds Available for Allocation $616,233.00
Public Services (15% Cap) — The amount of any CDBG funds that may be obligated
toward Public Services during a program year is capped at 15 percent of the sum of the
grant allocation plus the total amount of program income received during the prior
program year.
Planning & Administration (20% Cap) — The amount of any CDBG funds that may be
obligated toward Planning & Administration during a program year is capped at 20
percent of the sum of the grant allocation plus the total amount of program income
received during the current program year.
Table 2. FY 2025-2026 Breakdown of Capped/Un-Capped Funds
CDBG Amount
15% x [Grant allocation ($516,233) + prior year FY 2024-2025 program income
($129,950)]
20% x [Grant allocation ($516,233) + current year FY 2025-2026 estimated
program income ($100,000)]
Estimated Total Available for CDBG Allocation $616,233.00
CDBG 2025-2026 Funding Allocations
Table 3: Fiscal Year 2025-2026 CDBG Budget
Applicant Agency Requested Funding Recommended
Allocation
CDBG Applicants
Subtotal $96,927.40
Subtotal $90,000.00
Subtotal $236,059.00
Subtotal $70,000.00
Subtotal $123,246.60
Grand Total for CDBG Budget $616,233.00
*“N/A” indicates that no formal application was submitted. These uncapped projects were previously awarded
funds, and additional funding was determined to be necessary through staff and HRC review based on identified
need.
Should the 2025-2030 ConPlan and FY 2025-2026 AAP be adopted by City Council, it would be
submitted to HUD prior to the August 16, 2025, extended deadline.
POLICY IMPLICATIONS
FISCAL/RESOURCE IMPACT
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
Resolution No. ______XXXX_________
Resolution of the City Council of the City of Palo Alto Approving
The Use of Community Development Block Grant Funds for
Fiscal Year 2025-2026
A. On June 9, 2025, the Palo Alto City Council approved and adopted a document entitled “Consolidated
Plan” which identified and established the Palo Alto housing and non-housing community
development needs, objectives, and priorities for the period July 1, 2025, to June 30, 2030.
B. The Fiscal Year 2025-2026 Annual Action Plan, the annual funding update to the Consolidated Plan,
was subjected to public review and commentary during the period from May 5, 2025, through June
4, 2025.
C. The potential uses of Community Development Block Grant (CDBG) funds were evaluated in light of
the needs and objectives identified in the Consolidated Plan and reflected in the recommendations
and comments of the Human Relations Commission Selection Committee, Human Relations
Commission, and other interested citizens.
D. Under the CDBG program, the highest priority is given to activities which will benefit persons with low
and moderate incomes.
E. The City Council and the Human Relations Commission have held publicly noticed public hearings on
the proposed uses of the CDBG funds for Fiscal Year 2025-2026.
F. CDBG funds allocated to the City for Fiscal Year 2025-2026 are proposed to implement the programs
described in this resolution.
NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows:
SECTION 1. The uses of CDBG funds for Fiscal Year 2025-2026 are hereby approved and
authorized for the following programs:
Name of Program Amount
1. Catholic Charities of Santa Clara County –
Program. Advocate for the rights of seniors and disabled residents in long
term care facilities.
$8,500.00
2. LifeMoves – Opportunity Services Center. Provide case management
services to Opportunity Services Center and Hotel De Zink clients in locating
housing and/or employment and be connected to benefits.
$39,154.64
3. Silicon Valley Independent Living Center – Housing and Emergency Services.
Provide case management services to low-income individuals with disabilities
to secure affordable and accessible housing.
$20,067.43
4. Project Sentinel –
including complaint investigation, counseling, advocacy and community
education
$22,005.33
5. Upwards/WeeCare. A microenterprise business that will provide Palo Alto
childcare business improvement services. $90,000.00
6. Next Door Solutions to Domestic Violence. Provide client-centered services
to residents identifying as victims/survivors of domestic/intimate partner $7,200.00
7. Rebuilding Together Peninsula – Safe at Home. Provision of critical health
and safety related home repair needs for low-income Palo Alto
homeowners.
$73,585.00
8. Community Working Group/Abode – Alma Garden. The rehabilitation of a
10-unit affordable housing development. $162,474.00
9. Homekey Palo Alto – Recreation Project. This project will provide a
recreation area and recreation equipment at the Homekey Palo Alto
shelter.
$70,000.00
10. CDBG Program Planning and Administration. $123,246.60
Total CDBG Funds $616,233.00
SECTION 2. The total amount set forth under Section 1 of this resolution represents the
proposed allocation of $516,233, in CDBG funds from the United States Department of Housing and Urban
Development (HUD) for Fiscal Year 2025-2026, and $100,000, in anticipated program income for Fiscal
Year 2025-2026 from Palo Alto Housing Corporation.
SECTION 3. The City staff is hereby authorized to submit the Fiscal Year 2025-2030
Consolidated Plan and Fiscal Year 2025-2026 Annual Action Plan, update and appropriate funding to HUD
for the Fiscal Year 2025-2026 CDBG funds, and such money shall be spent as set forth in this resolution.
The Mayor, City Manager and any other designated City staff or officials are hereby authorized to execute
such application forms and any other necessary documents to secure these funds. The City Manager or
designee is authorized to sign all necessary grant agreements with the program providers set forth in
Section 1.
SECTION 4. The funding amounts set forth in Section 1 of this resolution are based on
final allocation amounts from the Federal Fiscal Year 2025-26 HUD appropriations; City Staff is authorized
to adjust increasing or decreasing the funding amounts set forth herein as consistent with the adopted
Citizen Participation Plan.
SECTION 5. The City Council hereby finds that the Fiscal Year 2025-2026 CDBG program
authorized under Section 1 of this resolution is not a project under the California Environmental Quality
Act (CEQA). However, the Council further authorizes and directs City staff to prepare certifications that
may be required, under CEQA and the National Environmental Policy Act (NEPA), for each project under
the Fiscal Year 2025-2026 CDBG program prior to the release of funds for any such project.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST: APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:
City Manager
Sr. Assistant City Attorney Director of Planning and
Development Services
APPROVED AS TO CONTENT:
Director of Administrative Services
CDBG Coordinator
City Council – June 9, 2025 www.paloalto.gov
City Council
CDBG FY 2025-2030
Consolidated Plan and
2025-2026 Annual Action Plan
Public Hearing #2
Presenter: Robert Feign, Housing Planner
Meeting Purpose
City Council review and approval of
the draft Community Development
Block Grant (CDBG) Fiscal Year (FY)
2025-2030 Consolidated Plan and
2025-26 Annual Action Plan
2
Consolidated Plan and CDBG
▪The City receives approximately $500k/year from HUD through the CDBG
program.
▪Funded activities must benefit low and very low -income persons.
▪To receive funding, HUD requires:
▪A Five-Year Consolidated Plan identifying community needs and goals
▪An Annual Action Plan outlining projects to be funded
3
Consolidated Plan Primary Findings
Top Housing Needs:
▪Affordable rentals
▪Rental assistance
▪Homeownership opportunities
▪Housing navigation support
▪Supportive services in affordable
housing
4
Top Community Needs:
▪Childcare assistance
▪Services for those who are unhoused
▪Mental health services
▪Support for survivors of domestic
violence
▪Workforce development opportunities
Consolidated Plan Five-Year Goals
▪Increase the supply and condition of affordable housing
▪Respond to homelessness and risk of homelessness
▪Strengthen neighborhoods through investing in infrastructure and public
facility improvements that prioritize safety, accessibility, and community
building
▪Support projects that increase opportunities for workforce development
▪Provide supportive services to low-income households
5
6
Palo Alto CDBG Funds Available for Allocation in FY 2025-26
Funding Sources Amount
FY 2025-2026 Entitlement Grant $516,233
Program Income in FY 2025-26 (Estimated) $100,000
Estimated Total CDBG Funds Available for
Allocation
$616,233
Funding
Categories
&
Proposed
Subrecipients
•Catholic Charities of Santa Clara County – Long Term Care Ombudsman Program $8,500
•LifeMoves – Case Management $39,154
•Silicon Valley Independent Living Center (SVILC)– Case Management $20,067
•Project Sentinel – Fair Housing Services $22,005
•Next Door Solutions to Domestic Violence: $7,200
CDBG Public Services – 15% Cap
•WeeCare/Upwards $90,000
CDBG Economic Development
•Rebuilding Together Peninsula (RTP) – Safe at Home $73,585
•Community Work Group/Abode – Alma Garden $162,474
CDBG Housing Rehabilitation
•Homekey Palo Alto – Recreation Project $70,000
CDBG Public Facilities and Improvements
•City of Palo Alto $123,246
CDBG Planning & Administration – 20% Cap
7
FY 2025-26 AAP Funding Recommendations
Implementation Timeline
8
HRC Selection
Committee
March
Human
Relations
Commission
May
Public Review
& Comment
Period
May-June
City Council
June 9th
Submission to
HUD
By July 15th
▪The Human Relations Commission (HRC) reviewed the draft AAP and ConPlan on
May 8, 2025.
▪The HRC voted 6-1 to recommend Council approval of the Plans, with the following
direction:
–Consider a 25% reduction to the proposed allocation for Upwards
–Reallocate those funds to other applicants, with emphasis on the Alma Garden
project
▪The HRC also approved a contingency plan in case the City's CDBG award differed
from the staff estimate.
▪Staff updated the Plans to reflect the HRC's recommendations.
HRC Review and Recommendation
9
The Human Relations Commission and staff recommend that the City Council:
1.Adopt the draft Fiscal Year (FY) 2025-2026 Annual Action Plan (AAP), 2025-2030 Consolidated Plan (ConPlan), and the
associated resolution (Attachment A) allocating Community Development Block Grant (CDBG) funding for FY 2025-2026;
2.Authorize the City Manager to execute the FY 2025-2026 CDBG application to fund the FY 2025-2026 AAP and any other
necessary documents concerning the application, and to otherwise bind the City with respect to the applications and
commitment of funds;
3.Authorize staff to submit the FY 2025-2030 Consolidated Plan and 2025-2026 AAP to U.S. Department of Housing and Urban
Development (HUD) by the extended deadline of August 16, 2025;
4.Authorize the City Manager or designee to draft and execute amendments to a loan agreement, regulatory agreement, and
related documents necessary to implement City Council direction on the Alma Garden Rehabilitation Project in a form
consistent with the City’s affordable housing loan documents and approved by the City Attorney; and
5.Direct staff to return to Council following budget adoption to amend the FY 2026 Budget Appropriation for the Community
Development Block Grant Fund (2/3 vote needed) by
1.Increasing Revenue from Other Agencies by $616,233.
2.Increasing General Expenses by $616,233.
Recommendations
10
Robert Feign
Housing Planner
Robert.Feign@PaloAlto.gov