Staff Report
City Council
Item No. 4.B
Meeting Date: May 13, 2026
From: John A. Corella, Director of Public Works
Title: Approve the FY 2026-27 Community Development Block Grant Annual Action Plan
RECOMMENDATION:
To approve the FY 2026-2027 Community Development Block Grant (CDBG) Annual Action Plan (AAP) for submittal to the U.S. Department of Housing and Urban Development (HUD); and authorize the City Manager, or designee, to execute all required certifications; funding agreements, and related documents consistent with the FY 2026-2027 AAP.
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 conducts at least two public hearings annually to solicit community input, address questions, and review proposed activities and program performance. The first public hearing on the draft FY 2026–2027 AAP was held on March 11, 2026; no modifications were recommended by the City Council. The second public hearing, presenting the final draft for City Council approval, is being held at tonight’s meeting.
Additionally, a public comment period was conducted from March 12 through April 11, 2026, in accordance with the CPP. A Notice of Availability for Review and Comments was published in the Desert Sun on March 12, 2026, and posted at the Cathedral City Civic Center, Senior Center, Boys and Girls Club, and Library. The draft AAP was also made available at the Civic Center for a 30-day review period. No public comments were received.
DISCUSSION:
During the March 11, 2026, public hearing, the city had not yet received its FY 2026–2027 funding allocation from HUD and therefore presented proposed allocations based on an estimated funding level of $510,000, consistent with the FY 2025–2026 allocation of $511,608.
On April 3, 2026, HUD announced the official FY 2026–2027 grant allocations, awarding Cathedral City $482,495. This amount is approximately $30,000 less than the allocation received in FY 2025–2026 and the amount estimated in the proposed allocations presented on March 11, 2026. Accordingly, staff have proportionally adjusted the proposed allocations to reflect the final award amount while maintaining the 20% administrative cap, as shown below.
PUBLIC SERVICES (≤15%) FUNDING
- -
Total Funding Allocated $0.00
ADMINISTRATIVE (≤20%) FUNDING
City Planning and Administration $46,499.00
TAMJAC (CDBG On-Call Consultant) $30,000.00
Fair Housing Services $20,000.00
Total Funding Allocated $96,499.00
PUBLIC IMPROVEMENTS FUNDING
Avenida El Mundo and Avenida El Pueblo
Street Reconstruction Project
$385,996.00
Total Funding Allocated $385,996.00
TOTAL FUNDING $482,495.00
Public Services
HUD regulations limit public service expenditures to 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 under the Cathedral City Community Assistance Grant Program.
This approach allows CDBG funds to be prioritized for public improvement projects. In the most recent year, the City Council awarded 21 grants totaling $70,000 to local nonprofit organizations using the city’s General Fund, not CDBG funds.
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. The extension will be authorized by the City Manager in accordance with the current contract terms and will include an amendment establishing a not-to-exceed annual amount of $30,000, reduced from the prior contract amount of $35,000.
Historically, the city has not expended the full contract amount with TAMJAC LLC annually, as city staff perform the majority of program administration. In FY 2024–2025, $13,557.50 was utilized, and no expenditures have been incurred to date in FY 2025–2026. When the contract amount is not fully utilized, remaining funds are used to support eligible planning and administration activities.
Despite prior and current underutilization, staff recommend maintaining a higher not-to- exceed amount for the upcoming year due to the anticipated need for increased consultant support for development of the upcoming Five-Year Consolidated Plan for FY 2027-2032.
Administrative funds also support the city’s Fair Housing Services Program. A Notice of Funding Availability (NOFA) for these services was published on January 23, 2026, and applications were accepted through February 23, 2026. The recommendation to award a subrecipient agreement in the amount of $20,000 to the highest-ranked applicant is also included on tonight’s City Council agenda for consideration at the May 13, 2026, meeting.
Public Improvements
Public improvement expenditures are not subject to a funding cap. $385,996 is proposed for public improvements from the FY 2026-2027 allocation. These funds will support projects located within HUD-designated low- and moderate-income (LMI) areas, including the Avenida El Mundo and Avenida El Pueblo Street Reconstruction Project.
The Avenida El Mundo and Avenida El Pueblo Street Reconstruction Project include rehabilitation of deteriorated roadway segments between McCallum Way and Ramon Road.
Current Pavement Condition Index (PCI) ratings are 55 for Avenida El Mundo (fair condition) and 48.5 for Avenida El Pueblo (poor condition). The project is listed 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.
As presented and discussed during the CDBG FY 2026–2027 AAP public hearing on March 11, 2026, staff propose to continue the Sidewalk Repair Assistance Program using remaining FY 2024–2025 CDBG funds previously allocated to this program. As of May 13, 2026, the remaining balance is $4,200. Therefore, no FY 2026–2027 CDBG funds are proposed for this program.
Staff recommend that the City Council approve the FY 2026-2027 CDBG AAP for submittal to HUD; and authorize the City Manager, or designee, to execute all required certifications; funding agreements, and related documents consistent with the FY 2026-2027 AAP.
FISCAL IMPACT:
All CDBG program funding is provided on a reimbursement basis in accordance with the Annual Action Plan entitlement amounts. Staff will return to City Council at a later date to recommend a provider for fair housing support services, to be funded through the available CDBG administrative allocation.
The Avenida El Mundo and Avenida El Pueblo Street Reconstruction Project will be presented to City Council in FY 2026–2027 for consideration of a construction contract award. Currently, there is no fiscal impact.
FIVE-YEAR STRATEGIC PLAN:
Goal B- Community Investment
Objective: Cathedral City roads, gateways, public spaces, and other city infrastructure are well planned, designed, constructed, and maintained.
ATTACHMENTS:
1. FY 2026-2027 Final Draft CDBG Annual Action Plan