Staff Report
City Council
Item No. 4.A
Meeting Date: March 11, 2026
From: John A. Corella, Director of Public Works
Title: Community Development Block Grant (CDBG) FY 2026-2027 Annual Action Plan Introduction
RECOMMENDATION:
To introduce the Community Development Block Grant FY 2026-2027 Annual Action Plan for review, discussion, and direction.
BACKGROUND:
The Community Development Block Grant (CDBG) program, funded by the U.S. Department of Housing and Urban Development (HUD), provides Cathedral City with resources to carry out community development activities supporting neighborhood revitalization, economic development, and improvements to community facilities and services, primarily benefiting low- to moderate-income (low-mod) residents.
As an entitlement community, Cathedral City receives annual CDBG funding to address priority needs identified in the city’s Five-Year Consolidated Plan (Con Plan). The Annual Action Plan (AAP), a component of the Con Plan, outlines how CDBG funds will be allocated during the upcoming fiscal year to meet established goals and objectives.
On June 22, 2022, the City Council approved the FY 2022–2027 Con Plan, which established broad and flexible priority needs to allow the city to respond to emerging community needs during the plan period while maintaining eligibility for CDBG funding. The FY 2026-2027 AAP will outline the goals, objectives, and programmed projects for the fifth and final year of the FY 2022-2027 Con Plan.
In accordance with the city’s CDBG Community Participation Plan (CPP), adopted May 28, 2020, the city will conduct at least two (2) public hearings annually to solicit community input, address questions, and review proposed activities and program performance during development of the AAP, the first of which will be held at tonight’s City Council meeting.
DISCUSSION:
At this meeting, staff will introduce the FY 2026–2027 AAP for City Council review. The presentation will include an overview of proposed funding allocations for program administration and public improvements, along with the anticipated development schedule.
Historically, HUD announces final allocation amounts in the spring, prior to the May 15 submission deadline. In 2025, federal appropriations were delayed, and HUD instructed grantees to prepare draft AAPs using estimated funding amounts until official allocations were released. Grantees were then provided sixty (60) days from the allocation announcement to submit final plans. The FY 2025–2026 allocation was announced on May 14, 2025.
Although HUD has not yet issued guidance for FY 2026–2027, staff anticipate a similar timeline. Therefore, the city will develop the AAP using an estimated allocation, with proportional adjustments made once the final funding amount is announced.
Based on the FY 2025–2026 allocation of $511,608, the city estimates approximately $510,000 for FY 2026–2027. This amount will serve as a placeholder for planning purposes and will be proportionately updated upon receipt of HUD’s final allocation.
FY 2026-2027 CDBG Program Allocations
The AAP typically includes funding for public services, program administration, and public improvements.
Public Services
HUD regulations cap public service expenditures at fifteen percent (15%) of the annual allocation. Due to limited CDBG funding, staff recommend continuing to fund public services through the city’s General Fund via the Cathedral City Community Assistance Grant Program. This approach allows CDBG funds to be prioritized for public improvement projects.
Program Administration
Administrative costs are capped at twenty percent (20%) of the annual allocation. The city contracts with TAMJAC LLC to provide on-call CDBG consulting services and anticipates exercising a one-year contract extension in July 2026, with a not-to-exceed annual amount of $35,000. This contract extension will be authorized by the City Manager per the current contract terms, once the funding allocation has been determined.
Administrative funds also support the city’s fair housing services program. A Notice of Funding Availability (NOFA) for Fair Housing Services was published on January 23, 2026, and applications were accepted from January 23 through February 23, 2026. Staff will return to City Council at a later date to recommend award of a subrecipient agreement to the highest-ranked applicant for $20,000.
Public Improvements
Public improvement expenditures are not capped. Based on the estimated allocation, approximately $408,000 is proposed for public improvements. Funding would support projects located within HUD-designated low-mod areas, including the Avenida El Mundo and Avenida El Pueblo Street Reconstruction Project.
The Avenida El Mundo and Avenida El Pueblo Street Reconstruction Project includes the rehabilitation of deteriorated roadway segments between McCallum Way and Ramon Road.
The current Pavement Condition Index (PCI) ratings are 55 for Avenida El Mundo, reflecting fair condition, and 48.5 for Avenida El Pueblo, reflecting poor condition. The project is identified in the city’s Five-Year Capital Improvement Plan (CIP), adopted in 2025, and is proposed to be funded through a combination of CDBG and Road Maintenance and Rehabilitation Program (SB-1) funds.
Staff are not recommending new FY 2026–2027 CDBG funding for the Emergency Sidewalk Repair Program. During FY 2025–2026, the program was maintained using remaining FY 2024–2025 funds totaling $5,000. Enhanced coordination between Engineering and Code Compliance improved outreach and awareness; however, program utilization remained limited. As of February 2026, four (4) applications were received: one (1) ineligible, two (2) approved but no reimbursement submissions were received, and one (1) successfully completed. The remaining balance of approximately $4,200 is considered sufficient to support anticipated program demand in the upcoming year.
Thus, the proposed FY 2026-2027 CDBG allocations are as follows:
PUBLIC SERVICES (≤15%) FUNDING
- -
Total Funding Allocated $0
ADMINISTRATIVE (≤20%) FUNDING
City Planning and Administration $ 47,000
TAMJAC (CDBG On-Call Consultant) $ 35,000
Fair Housing Services $ 20,000
Total Funding Allocated $102,000
PUBLIC IMPROVEMENTS FUNDING
Avenida El Mundo and Avenida El Pueblo
Street Reconstruction Project
$408,000
Total Funding Allocated $408,000
TOTAL FUNDING $510,000
Annual Action Plan Development Schedule
The following schedule is proposed to maintain compliance with HUD requirements and the city’s Community Participation Plan:
March 11, 2026: City Council Meeting Public Hearing for the introduction of the FY 2026-2027 AAP
March 12, 2026 Posting of the 30-day notice for public
comments on the AAP
April 11, 2026 End of the 30-day public comment period
for the AAP
April 22, 2026: City Council Meeting Public Hearing for the approval of the FY 206-2027 AAP
At tonight’s meeting, staff request City Council review the proposed FY 2026–2027 AAP, provide feedback, and offer direction to proceed with plan development.
FISCAL IMPACT:
At this time, this draft item has no direct fiscal impact. Any unexpended FY 2025–2026 AAP funds will be reprogrammed into the FY 2026–2027 AAP through an administrative or substantial amendment for future City Council approval.
FIVE-YEAR STRATEGIC PLAN:
Goal B: Community Investment
Objective: Cathedral City roads, gateways, public spaces, and other infrastructure are well planned, designed, constructed and maintained.
ATTACHMENTS:
1. Draft FY 2026-2027 CDBG AAP