CITY COUNCIL STAFF REPORT
DATE: March 11, 2026 PUBLIC HEARING
SUBJECT: COMMUNITY DEVELOPMENT BLOCK GRANT 2026–2027 ANNUAL
ACTION PLAN AND BUDGET PUBLIC HEARING
FROM: Scott C. Stiles, City Manager
BY: Housing and Community Development
SUMMARY:
This is the first of two public hearings for the 2026-2027 Community Development Block Grant (CDBG) Annual Action Plan (AAP, Attachment A). The CDBG AAP is prepared by the City every year pursuant to requirements set forth by the Department of Housing and Urban Development (HUD), which mandates that units of government receiving federal housing and community development assistance must prepare an AAP as part of the implementation of the Five-Year Consolidated Plan (ConPlan), which serves as the blueprint for community development activity in the City. A second public hearing will be scheduled for April 22, 2026, to complete the public review process and consider adoption of these items for submittal to HUD.
RECOMMENDATION:
1. Open the Public Hearing for testimony.
2. Review the draft 2026-2027 CDBG Budget and Annual Action Plan and provide direction to staff.
3. Schedule a Public Hearing for April 22, 2026, to consider for approval and adoption of the 2026-2027 CDBG Budget and Annual Action Plan.
BACKGROUND:
Palm Springs is an “entitlement city”, meaning that it is a direct recipient of CDBG funds from the federal government. The CDBG Program was adopted by Congress over fifty years ago, and offers local governments, along with citizen participation, the opportunity to fund certain projects, programs and/or public services provided that they meet one of the three national objectives:
City Council Staff Report
March 11, 2026 -- Page 2
CDBG 2026–2027 Annual Action Plan
1. Benefit low/moderate-income (LMI) persons.
2. Prevent or eliminate slums and blight.
3. Meeting urgent local community development needs.
In Fiscal Year 2020, the City Council opted to change the way it allocates CDBG funds and to directly select the sub-recipients, which may include only City Departments for funding of City programs, services, or capital projects.
STAFF ANALYSIS:
The anticipated total amount of CDBG funds to be allocated for the 2026-2027 Fiscal Year is estimated to be $350,000. The Federal statute requires that at least 70% of the expenditures benefit Low/Mod persons. As an entitlement grantee, the City has and will continue to utilize these funds for neighborhood revitalization, preserving decent housing, expanding economic opportunities, and/or improving community facilities and services, principally to benefit Low/Mod persons. A map showing the City’s Low/Mod areas is provided in Attachment B.
2026-2027 Annual Action Plan
Based on the estimated CDBG allocation of $350,000, and given the statutory limitations on the percentage of CDBG funds that may be utilized for Administration (20%), Public Services (15%), with the remaining funds to be utilized for Public Facilities and Capital Improvements, including Housing Rehabilitation, the total CDBG resources for 2026- 2027, by eligibility category, are estimated as follows (assuming the maximum allowable allocations are applied):
ESTIMTED CDBG 2024–2025 ALLOCATION $350,000
[Less] Administration (20%, Maximum) $ 70,000
[Less] Fair Housing – Public Service
(15%, Maximum) $ 52,500
REMAINING PROGRAMMATIC FUNDS $227,500
In recent years, the City Council has requested that staff not allocate CDBG funds for Administration and to increase the Programmatic Funds by the amount of the Administration funds. For this fiscal year, staff is requesting to allocate funds for Administration.
As such, the budget recommendations for the Draft 2026-2027 Annual Action Plan are as follows:
City Council Staff Report
March 11, 2026 -- Page 2
CDBG 2026–2027 Annual Action Plan
City Council Staff Report
March 11, 2026 -- Page 3
CDBG 2026–2027 Annual Action Plan
2026-2027 ANNUAL ACTION PLAN PROGRAM RECOMMENDATIONS:
1. Public Services:
Legal Assistance: The City currently provides a legal assistance program to qualifying residents. Staff recommends working with a local non-profit fair housing services organization to provide comprehensive services, assisting with tenant/landlord issues. These include anti-discrimination investigations, landlord/ tenant mediation services, training and technical assistance, workshops and seminars.
The goals for this activity are to provide fair housing services to 500 Palm Springs households citywide. Of those, 500 will be Low- or Moderate-Income Households.
The recommended amount of CDBG funding for this activity is $52,500.
2. Residential Rehabilitation:
Major Home Repair: Major Home Repair: Under this program, the City would provide grants to qualified low- to moderate-income homeowners to make needed home improvements. Grants would be available to address code deficiencies, eliminate blight, and improve handicapped accessibility. The maximum grant amount is $35,000 per household. The Major Home Repair Program will be provided on a first come/first-served basis to qualified applicants. To participate, the property must be located within the City of Palm Springs, must be owner- occupied, and owners must meet income requirements. Grant funds may only be used for costs of services and materials necessary to carry out City-approved repair work.
The goals for this activity are to serve approximately six Palm Springs households Citywide. Of those, 6 will be Low- or Moderate-Income Households. The recommended amount of CDBG funding for this activity is $227,500 Staff will incorporate City Council’s recommendations for use of the CDBG funds into a draft CDBG 2026-2027 Annual Action Plan and Budget and will seek approval of the CDBG 2026-2027 Annual Action Plan and Budget as follows:
March 12 - April 21 – 30-day public review of Fiscal Year 2024-2025 Annual Action Plan and Budget.
April 22 – Public Hearing #2 and Council approval of Fiscal Year 2026-2027 Annual Action Plan and Budget.
May 1 – Submittal of Fiscal Year 2026-2027 Annual Action Plan and Budget to HUD for review and approval.
July 1 – CDBG funds available for use (reimbursement basis).
These activities are consistent with the City’s 2025-2029 Consolidated Plan (ConPlan).
City Council Staff Report
March 11, 2026 -- Page 4
CDBG 2026–2027 Annual Action Plan
ENVIRONMENTAL ASSESSMENT:
The recommended action does not result in a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a Project means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. According to Section 15378(b), a Project does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
FISCAL IMPACT:
There is no direct fiscal impact to the General Fund. These dollars are the City’s allocated federal annual entitlement funds from the U.S. Department of Housing & Urban Development Community Development Block Grant program.
REVIEWED BY:
Department Director: Jay Virata
Assistant City Manager: Flinn Fagg
City Manager: Scott Stiles
ATTACHMENTS:
A. Draft 2026-2027 Annual Action Plan
B. Map of CDBG Low/Mod Areas