Mesa staff outline CDBG five-year plan; federal budget draft could affect next fiscal year

Mesa City Council staff told the council at its May 8 study session that the city’s five-year consolidated plan for Community Development Block Grant (CDBG) funds is based on level funding from last year and that any reductions proposed in the President’s draft budget would not affect the city’s CDBG plan for fiscal year 2025–26.

The consolidated plan matters because CDBG funds support local social-service safety-net programs, housing rehab and other community projects that the city routes through nonprofit partners and city divisions.

Michelle, a city staff member working on the grants process, said, “what is proposed in front of you today is based on level funding from our previous year.” She told the council the federal continuing resolution currently funds programs at prior-year levels and that the U.S. Department of Housing and Urban Development (HUD) was expected to provide the city’s exact allocation by May 13. “We do not have the funds at this time,” she said.

City staff and council members discussed how CDBG is a reimbursement-based program. The city or participating nonprofits must provide services first and then submit documentation to HUD for reimbursement; staff said that reality often favors larger nonprofits with capacity to front expenses. Jeff (city staff) described the cycle: after council approval of a plan, staff develop contracts with agencies, the agencies perform services, then submit reimbursement requests electronically to the city for processing and HUD approval.

Council members pressed about timing and risk. One council member asked whether the city would be financially on the hook if the federal government ultimately reduced or eliminated allocations; staff replied that the immediate risk to the city’s budget is low because the contracts will not be executed until the city receives HUD’s final allocation and letter of authorization. Staff said that if the next federal budget year includes cuts, the reductions would affect the following funding round (fiscal year 2026–27) and could force the city to revisit allocations and return to council if changes are large.

City staff summarized key procedural facts raised in the discussion: HUD works on an October–September federal fiscal year (the city’s fiscal year begins in July); the continuing resolution passed earlier this year temporarily funds programs at level amounts; HUD would notify Mesa of the final CDBG allocation by mid-May; and most CDBG activity is reimbursement-based, not upfront awards like American Rescue Plan Act (ARPA) distributions.

Councilmembers and staff said they would monitor the federal budget process through the summer and revisit program funding during next year’s allocation process if the President’s draft budget or congressional action reduces available funds.

Staff also noted that contingencies were included in the plan so a minor adjustment to HUD’s allocation could be absorbed administratively, while a substantial reduction would likely require returning to council for reauthorization or reallocation decisions.

The city did not take a formal vote during the study session on the consolidated plan; staff indicated the plan and related public hearings remain on the council’s agenda for the regular meeting cycle and that the city would not execute contracts until it received final HUD allocations.