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Council approves HUD action plan with targeted deferrals, citing budget timing
Summary
The City Council approved the FY2026 HUD Annual Action Plan (S400) but directed staff to return a subset of CDBG allocation items to coincide with the city's final budget adoption, citing uncertainty about federal allocations and local budget decisions.
The San Diego City Council voted on April 21 to approve staff recommendations for the FY2026 HUD Annual Action Plan (S400) while deferring a subset of CDBG allocation actions until the city adopts its FY2026 budget.
Economic Development staff asked the council to approve 25 related actions that together form the city's application to the U.S. Department of Housing and Urban Development for CDBG, HOME and ESG entitlement grant funds. Staff explained that HUD had not yet released final entitlement allocations, so the action plan relied on estimates and contingency language to proceed with grant planning and subrecipient agreements.
Councilmember Elo Rivera moved to approve the staff recommendations but to return action items 1 through 7, 10, 11, 14, 16 and 17 to staff for reconsideration concurrently with or after the council adopts the FY2026 budget; Council President Pro Tem Lee seconded the motion. Councilmembers debated the tradeoffs: some said the council should retain flexibility in light of potential changes to the city budget and federal allocations, while others warned that delaying awards would hurt nonprofits that need early certainty to plan services. An alternative motion to approve the staff recommendations in full failed 4-5. The motion to defer the listed items passed 6-3.
Staff had explained that delaying some awards would push subrecipient agreements later in the fiscal year and could affect the city's ability to meet HUD timeliness tests; conversely, proponents of the deferral emphasized the need to align CDBG allocations with the final budget to avoid supplanting local funds and to preserve council discretion. Economic Development staff said they had built contingency language with the city attorney so the action plan could be submitted within HUD's regulatory timeline once entitlement notices are issued.
What passed: the council approved the action plan as recommended by staff with the specific instruction that the listed action items be returned to council concurrent with or following final budget adoption. Staff will incorporate public comments received through May 7 into the final plan to be submitted to HUD after the department receives entitlement allocations.
