Council pauses decision on CDBG draft after councilmembers question $50,000 award to for‑profit childcare support program

City staff presented the draft 2025–2030 consolidated plan and the draft fiscal year 2025–26 expenditure plan for the Community Development Block Grant (CDBG) program at the April 15 meeting. The plan outlines priorities for housing, community development and public services and sets out a proposed allocation of FY25‑26 CDBG funds.

Staff told the council HUD had not announced final grant allocations for 2025 at the time of the presentation and that the recommended plan would be adjusted if the final allocation differed. Staff estimated a working budget of roughly $781,930 and proposed the following high‑level distribution for next year: about 44% for housing improvements (rehab/paint/loan programs), 29% for ADA ramps, 12% for administration (capped at 20%), roughly 9% to subrecipients for public services, and 6% (approximately $50,000) for a new BOOST program application from Upwards Inc.

BOOST would provide technical and business support to in‑home licensed childcare providers (the applicant proposed targeting a subset of providers in the city). Staff recommended allocating about half of Upwards’ $104,000 request ($50,000) for an initial year so the program could be piloted while meeting federal CDBG requirements.

Multiple councilmembers raised concerns about using CDBG funding — intended principally for nonprofit public services to benefit low‑ and moderate‑income residents — for a contract with a for‑profit business. They asked staff whether the services could instead be procured through a 501(c)(3) nonprofit, whether the proposed award created an unfair advantage for private providers, and what safeguards (insurance, indemnity, administrative controls) would be in place. Staff and legal counsel said the city would contract with the applicant organization (Upwards Care Inc.), not directly with individual in‑home providers, and that standard contractual indemnity and insurance requirements would apply.

Because HUD’s NOFA (notice of funding availability) window had closed for the current cycle, staff said reallocating the BOOST amount to another nonprofit would not be feasible within the current schedule. Councilmembers asked for more information and for staff to return with alternatives. The mayor proposed, and the council agreed, to form an ad hoc (Councilmembers Tetimer and Yoo volunteered) to work with staff on finalizing the plan and the recommended allocations ahead of the May 6 adoption deadline so the city could meet HUD’s submission schedule.

Why it matters: The draft plan determines how federal CDBG funds are applied locally. CDBG rules restrict certain uses of grant funds and generally favor nonprofit subrecipients for public‑service allocations; awarding funds to a for‑profit entity raised policy and precedent questions for the council.

What’s next: Staff will work with the ad hoc councilmembers to refine allocations and return the draft consolidated plan and FY25‑26 annual action plan for adoption at the next meeting, before HUD’s anticipated May 15 allocation announcement.