Agenda #: 5.3
Meeting Date: April 1, 2025
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: TRANSFER OF FISCAL YEAR 2025/26 COMMUNITY DEVELOPMENT
BLOCK GRANT (CDBG) UNALLOCATED BALANCE TO FISCAL
YEAR 2024/2025 PROGRAM BUDGET.
STRATEGIC
GOAL: Responsible Stewardship of Public Resources
RECOMMENDATION:
Adopt Resolution No. 2025-07 approving the transfer of Fiscal Year 2025/26 Community Development Block Grant unallocated balance to the Fiscal Year 2024/25 Community Development Block Grant Program Home Improvement Program budget.
FISCAL IMPACT:
Community Development Block Grant (CDBG) funds are received from the Federal Government on a reimbursement basis. The proposed reallocation of funding from Fiscal Year (FY) 2025/26 to FY 2024/25 will have no impact on the City’s General Fund balance.
BACKGROUND:
Diamond Bar is one of 48 participating cities that participate in the CDBG program through the Los Angeles County Development Authority (LACDA). One of LACDA’s roles is to distribute CDBG funds to participating cities based on the U.S. Department of Housing and Urban Development’s (HUD) funding formulas.
LACDA requires its participating cities to adopt their CDBG budgets by February 1 of the prior fiscal year. As such, the City Council approved the FY 2025/26 CDBG budget on January 16, 2025.
However, in response to the uncertainty over future funding for federal programs, LACDA recently provided guidance to its participating cities recommending that they amend their CDBG budgets by transferring the carryover portions of their FY 2025/26
CDBG program allocations to their current 2024/25 fiscal year budgets. By doing so, these funds are immediately committed. Once committed, the funds are locked in; otherwise, these balances may be subject to recapture by the Federal Government.
DISCUSSION:
Diamond Bar’s CDBG funding is primarily used to provide Home Improvement Program (HIP) loans to income-eligible households, to construct ADA-compliant crosswalk curb ramps, and to offset operational costs for the City’s six senior clubs.
The City’s annual CDBG budget is drawn from two funding sources:
• Annual allocation – This is the new funding that HUD provides to LACDA each fiscal year, which is then distributed to the participating cities. • Unallocated (carryover) funds – These are funds from previous years’ allocations that were either not fully spent, or otherwise become available to reprogram. A significant portion of Diamond Bar’s unallocated funds comes from the repayment HIP loans when the recipients sell or refinance their homes. These funds may only be repurposed for public works and housing projects, including the HIP.
Diamond Bar’s CDBG budget for the upcoming fiscal year (FY 2025/26) includes $106,781 in carryover funds, all of which have been allocated to the HIP. In accordance with LACDA’s recent guidance, it is recommended that this carryover balance be transferred to the current fiscal year HIP allocation. The table below illustrates the recommended adjustments between the FY 2024/25 and 2025/26 CDBG program allocations:
CDBG PUBLIC WORKS AND HOUSING BUDGETS FOR FYs 24/25 & 25/26 Before Transfer of Carryover Funds After Transfer of Carryover Funds FY
Construction Funds
HIP ADA Curb
Ramps
Construction Funds
HIP
ADA
Curb
New Carryover New Carryover Ramps
24/25 $215,439 $113,150 $160,000 $168,589 $215,439
(no change)
$219,931
(↑106,781)
$266,781
(↑106,781)
$168,589
(no
change)
25/26 $235,480 $106,781 $197,261 $145,000 $235,480
(no change)
$0
(↓$106.781)
$90,480
(↓$106.781)
$145,000
(no
change)
Because the carryover funds are proposed to be transferred to a current housing rehabilitation program, LACDA will allow the City extend the program through June 30, 2026 to better ensure that the entire allocation spent.
Pursuant to the City Council Resolutions approving the Fiscal Year 2024/25 and 2025/26 CDBG budgets, the City Manager is authorized to administratively adjust funding allocations by up to 25% of the total budgets. Because the recommended reallocation of $106,781 exceeds this threshold for both fiscal years, City Council approval of the adjustments is required prior to implementation (Attachment 1).
PREPARED BY:
REVIEWED BY:
Attachments:
1. 5.3.a Resolution No. 2025-07