HRA hears update on CDBG, HOME and ESG funding; staff flags federal uncertainty and district council impacts

City of Saint Paul Planning and Economic Development staff updated the Housing and Redevelopment Authority on CDBG, HOME and ESG grants, described administrative and timing constraints, and warned the board that proposed federal budget changes could reduce local funding streams used for affordable housing and gap financing.

Beth Ulrich (Planning and Economic Development) told the board the department had not yet received 2025 HUD grant agreements because federal appropriations were delayed; staff expect 2025 funding to be similar to 2024 but said the 2026 outlook is uncertain. "The Administration's budget request proposed a 51% cut to HUD funding with $0 for CDBG and HOME," Ulrich said; she added the House THUD subcommittee subsequently previewed a spending bill that fully funded CDBG and ESG but eliminated HOME, while the Senate had not yet marked up its proposals.

Ulrich and staff reviewed the department's consolidated-plan schedule and reporting requirements. They noted HUD's existing timeliness test (the grantee may not have more than 1.5 times its current allocation on hand at the annual test date) remains in force because proposed rule changes were suspended by the new administration. Staff also described recent executive-order certifications and compliance requirements routed through the city attorney for review.

Zoe Borgeray, district council coordinator, described how recent Office of Management and Budget clarifications about indirect-cost reimbursement are affecting district councils. The city applies CDBG compliance rules across the full community engagement program (which mixes CDBG money and general-fund support). District councils may use a standard 15% indirect cost rate without extra documentation; some councils report that 15% is insufficient and that preparing a custom indirect cost proposal would impose administrative burdens many councils cannot meet. Borgeray said the department is evaluating whether the $345,000 in CDBG community-engagement funding is still the best approach given the new constraints; the remainder of the district council support in 2025 is general-fund backed (approximately $1,211,000 according to staff).

On HOME, Ulrich said the program typically provides gap financing for multifamily projects and that losing HOME funding would likely stall roughly one to two projects annually if federal HOME grants are eliminated. On ESG, Ramsey County manages the local process; staff reported a possible formula change that could shift how funds are allocated.

Commissioners asked for documentation of HUD national objectives and the specific program rules that determine eligible activities for CDBG, and requested follow-up on which district councils and activities qualify under the area-benefit tests. Staff said they would provide HUD guidance and further analysis of the budget scenarios if federal HOME funding is reduced or eliminated.

No formal board action was taken on the presentation; staff flagged follow-up items including providing HUD documentation, clarifying district council indirect-cost options, and returning with fiscal scenarios if HOME funding changes at the federal level.