Staff recommends FY25-26 allocations for CDBG, HOME, ESG and human-services funds; HUD allocations still pending

Michelle Pillsbury told the Mesa City Council at its March 17 study session that staff are recommending funding allocations for fiscal year 2025-26 for Community Development Block Grant (CDBG), HOME Investment Partnerships (HOME), Emergency Solutions Grants (ESG) and city human-services programs.

Pillsbury opened by noting the federal budget uncertainty: "on Friday of last week, there was a continuing resolution that was passed, which will continue through September 30. Now that doesn't include any new funding. It's just to keep the government going. However, for our programs, we have already been allocated those dollars to get us through the rest of the fiscal year. But for these dollars, we haven't had any notification of what the budget is yet." She said staff will continue the normal nine-month funding process and will return to council if allocations are cut significantly; for cuts of about 10% or less staff would make administrative adjustments.

Pillsbury summarized program rules and recommendations: CDBG public-services spending is capped at 15% of CDBG funds; HOME funds are for affordable housing (development and tenant-based rental assistance); ESG funds are for homelessness response with up to 65% allowed for shelter services; human-services funding (including the "ABC" utility-donation fund) follows city policy rather than federal rules. She described the process: staff eligibility review, advisory-board presentations (Housing and Community Development Advisory Board contributes up to 30 points of the score, staff 70 points), follow-up questions, and a public-comment period starting March 30 for 30 days. The council was told formal approval is scheduled for May 12 and HUD submission is tentatively planned for May 15 pending allocation notice.

Pillsbury gave program-specific recommendations and clarifications included in staff materials: for CDBG public services staff recommended funding down a ranked list up to La Masita Family Shelter and set aside funding for homeless navigation; for CDBG non-public-service (the emergency-repair program) staff recommended $2,500,000 and reported the program previously assisted about 31 households and involved nearly $4,000,000 in spending. Pillsbury said the emergency-repair program commonly prioritizes seasonal needs such as HVAC replacements and can provide up to $25,000 per household in a fiscal year. She said there is currently a wait list of approximately 35 households for emergency-repair assistance.

On HOME funds Pillsbury said the city recommends funding tenant-based rental assistance (including $400,000 for rent/utility deposits) and recommended two rental-development projects (New Leaf La Masita Phase 4 and Copa Health Beverly Family) contingent on successful award of low-income housing tax credits; HOME funding is typically used as gap financing for such projects and requires local leverage. Regarding affordable-housing covenants, Pillsbury said the city records a lien and restrictive covenants to ensure affordability for a minimum of 20 years (often 30-35 years where LIHTC is involved); HOME also requires a 25% nonfederal match from the sponsor.

On ESG staff recommended setting aside funds for rapid rehousing and shelter services and identified three agencies recommended for shelter funding totaling $329,000. On human services Pillsbury said demand exceeds available funds and the process tries to preserve a range of service types; staff also described a new administrative cap in the human-services pot to spread smaller awards among more organizations. Council members pressed staff on how need and financial capacity are weighed; staff responded that federal funds require demonstrable capacity and timely expenditure and that the city encourages smaller/new agencies to build capacity through nonfederal funding before applying for federal programs.

Pillsbury said the next steps are the public comment period beginning March 30, a May 12 council vote on funding recommendations and the consolidated plan, and a tentative HUD submission around May 15 pending allocations. Council members thanked staff for outreach to agencies, described scoring and process concerns, and asked staff to consider workshops or assistance for smaller nonprofits to build capacity.