COUNCIL AGENDA REPORT
TO: Mayor and City Council
FROM: Chenin Dow, Community Development Director
DATE: April 7, 2026
SUBJECT: Fiscal Year 2026 -27 Community Development Block Grant Program Drafted Action Plan
Description:
The City Council will receive comments from the public and review and approve the overall allocations and contingencies of the drafted Fiscal Year 2026 -27 Community Development Block Grant Action Plan.
Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
RECOMMENDATION:
1. Conduct a public hearing to receive comments from the public as part of the drafted Fiscal Year 2026 -27 Community Development Block Grant Action Plan 30 -day public review period; and
2. Consider the Block Grants Advisory Committee (BGAC)’s recommendation for the allocation of Fiscal Year 2026 -27 Community Development Block Grant Program Public Services and Capital funds; and
3. Allocate the remaining $37,500 to Public Services programs in keeping with the BGAC’s recommendations; and
4. Review and approve the overall allocations and contingencies of the drafted Fiscal Year 2026-27 Community Development Block Grant Action Plan.
BACKGROUND:
The Community Development Block Grant (CDBG) Program is the primary federal program that provides state and local governments with grant funds for local programs and projects that address complex physical and social needs within the community. The objective is to develop viable urban communities by providing decent housing and a suitable living environment.
The program is administered by the U.S. Department of Housing and Urban Development (HUD). These Federal grant funds may be used at the discretion of the City, provided that the City’s activities comply with Federal regulations and meet one of the three national objectives: (1) benefit primarily low - and moderate -income persons, (2) prev ent or 2 eliminate slums or blight, or (3) meet an urgent community-wide need caused by a major catastrophic event (e.g., flood, earthquake).
The City has participated as an entitlement community in the CDBG Program for 52 years.
As an entitlement community, the City automatically receives annual funding based on a HUD formula that considers factors such as population growth, poverty levels, age of housing, and overcrowding.
The annual allocation process involves the required development of an Annual Action Plan. The City Council -appointed BGAC oversees this process, including assessing community needs, establishing funding priorities, reviewing applications, conducting site visits, and making allocation recommendations.
The BGAC conducted a public community needs assessment on July 14, 2025. The needs identified were consistent with the City’s existing CDBG priorities under the Five - Year Consolidated Plan (Attachment B).
On September 16, 2025, the City Council adopted FY 2026 –27 funding priorities and directed that most CDBG Capital funds be allocated to the Recreation and Parks Sports Complex project.
Application Process
Notice of Funding Availability issued: September 18, 2025 Mandatory pre-application workshop: October 2, 2025
Public Services applications due: November 23, 2025
Applications received: 19 Public Services
A small portion of Capital funds will support administrative costs for the City’s Tenant - Based Rental Assistance (TBRA) security deposit program.
Review Process
The BGAC evaluated and ranked proposals based on the adopted priorities for FY 2026- 27 (Attachment B), the Federal Guidelines for Eligibility, and the Additional City Criteria for CDBG Public Service and Capital Projects. The BGAC also conducted t wo public deliberations:
February 9, 2026: Applicant Presentations and Questions February 11, 2026: Final Funding Recommendations
Staff also conducted a separate analysis of applicants’ CDBG administrative performance (Attachment C) to document their ability to manage CDBG funds.
DISCUSSION:
The purpose of this public hearing is to receive public testimony on the FY 2026 –27 CDBG funding recommendations made by the BGAC on February 11, 2026. The recommendations are based on the City’s anticipated allocation from HUD for the 3 upcoming fiscal year. As HUD has not yet released the final allocation amount, the prior year’s funding level was used to develop the proposed recommendations (Attachment A).
Public Services
BGAC recommends funding 11 of the 19 applicants (see Attachment C). While all applicants provide valuable services, available funding is limited. In making recommendations, the Committee considered each agency’s ov erall budget to ensure programs could continue operating even if CDBG funds were reduced. CDBG funds are intended to enhance or expand services , not fully sustain them. Because the City’s final FY 2026–27 CDBG allocation is not yet known, BGAC adopted contingency plans:
If funding increases:
Up to $14,999 increase: Evenly distribute among agencies recommended under $20,000 (up to the funding cap).
$15,000–$29,999 increase: Fund the next -ranked agenc y at $15,000, then distribute remaining funds evenly among agencies under $20,000. Over $30,000 increase: Fund additional ranked agencies, then distribute remaining funds evenly (up to the funding cap).
If funding decreases:
Evenly reduce funded agencies down to a $15,000 minimum. If the reduction exceeds $15,000, eliminate funding starting from the lowest-ranked agencies and redistribute remaining funds evenly.
Staff Recommendation for Council Set-Aside
To streamline the April 7 public hearing and provide funding to additional service providers, staff recommends that the City Council utilize the remaining $37,500 in keeping with BGAC’s rankings and contingency plan as follows:
Fund the agencies ranked #12 and #13 at $15,000 each; and Distribute the remaining $7,500 evenly among all agencies recommended for funding that are currently under $20,000.
This approach would expand funding to two additional agencies while modestly increasing support for all recommended agencies . This would also support an efficient public hearing on April 7 and follow the BGAC contingency plan.
CDBG Capital
Consistent with Council direction on September 16, 2025, most Capital funding will be allocated to the Recreation and Parks Department’s Sports Complex project (Attachment D). Capital contingencies adopted by BGAC:
If funding increases: Additional funds go to the Community Sports Park. If funding decreases: Reductions will come from the Community Sports Park allocation.
TBRA Administration ($20,000): Will remain unchanged.
4 Alternative(s)
The City Council may choose to change the recommended allocations, approve different funding amounts, or select different agencies to receive the Council’s public services set- aside, as long as the changes stay within the limits set by the City Council and HUD. Any allocation must still meet the program requirements: at least $15,000 per award and no more than $20,924 per activity (10% of the total Public Service funding). However, making these changes could delay the CDBG funding process, which may postpone the release of funds until an updated Action Plan is approved.
Fiscal Considerations
The proposed action will provide an estimated $1.4 million annually in Federal funds for social services, affordable housing opportunities, and public facilities that will help relieve pressures on the City’s General Fund.
Impact on the Community
The proposed action will support essential community services, facilities, and infrastructure improvements, including assistance for homeless and special needs populations, services for at -risk youth, affordable h ousing, neighborhood revitalization, and public facility improvements.
These recommendations are included in the draft FY 2026–27 Annual Action Plan, available for public review from March 27 through April 26, 2026, at www.cityofsantamaria.org.
The City Council is scheduled to consider final funding allocations on May 5, 2026. If the U.S. Department of Housing and Urban Development (HUD) delays release of the final CDBG allocation, the approval timeline will be adjusted accordingly. Following approval, the Action Plan will be submitted to HUD.
ATTACHMENT(S):
A. Anticipated FY 2026-27 Funding
B. Priorities for Fiscal Year 2026-27
C. Public Service Recommendations
D. Capital Recommendations