City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: June 17, 2025
Report #:2505-4728
TITLE
Amend the Fiscal Year (FY) 2026 Budget Appropriation for the Community Development Block Grant (CDBG) Fund to Reflect Final Entitlement Grant Allocation. CEQA Status: Exempt under CEQA Guidelines Section 15378(b)(4).
RECOMMENDATION
Staff recommend City Council amend the FY 2026 Budget Appropriation for the Community Development Block Grant Fund (2/3 vote needed) by:
1. Increasing Revenue estimate from Other Agencies by $616,233; and
2. Increasing General Expense appropriation by $616,233.
BACKGROUND
On June 9, 2025 (Attachment A), City Council will consider the FY 2025-2026 Annual Action Plan (AAP) and 2025-2030 Consolidated Plan, including the associated funding allocations for the City’s CDBG Program. In the June 9 report, staff recommended that Council provide direction to staff to return following budget adoption to amend the FY 2026 Budget to reflect the City’s actual CDBG entitlement allocation. If necessary, a late packet will be brought forward with any amendments based on Council direction prior to the Council’s final consideration.
ANALYSIS
The U.S. Department of Housing and Urban Development (HUD) notified the City of a CDBG entitlement award of $516,233 for FY 2025-2026. In addition, staff estimates that $100,000 in Program Income will be available for allocation. This Program Income is derived from loan repayments of previously funded CDBG housing projects. To implement the AAP and enable expenditure of CDBG funds, the adopted FY 2026 City budget must be amended to reflect this revenue and associated expenses.
This budget amendment ensures compliance with Federal requirements and supports the continued administration of CDBG-funded activities benefiting low- and moderate-income Palo Alto residents.
FISCAL/RESOURCE IMPACT
This budget amendment has no net impact on the General Fund. All proposed revenue and expense adjustments are within the CDBG Fund, supported by federal entitlement funds.
STAKEHOLDER ENGAGEMENT
Stakeholder and community engagement occurred as part of the development and adoption of the Fiscal Year 2025-2026 Annual Action Plan and 2025-2030 Consolidated Plan. Public outreach included a 30-day public comment period from May 5 to June 4, 2025, as well as two public hearings. The Human Relations Commission held the first hearing on May 8, 2025, and the City Council held the second hearing on June 9, 2025. No additional engagement was required for this budget amendment, which implements previously approved funding allocations.
ENVIRONMENTAL REVIEW
For the purposes of the National Environmental Policy Act (NEPA) and the California Environmental Quality Act (CEQA), budgeting by itself is not a project. Prior to the commitment or release of funds for each of the proposed programs, projects, and activities, staff will carry out the required environmental reviews or assessments and certify that the review procedures under HUD, NEPA, and CEQA regulations have been satisfied for each activity.
ATTACHMENTS
Attachment A: CDBG Staff Report 2505-4614
APPROVED BY:
Jonathan Lait, Planning and Development Services Director