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Committee forwards 2026 CDBG annual action plan and discusses reserving funds for city capital projects
Summary
Staff presented the 2026 Community Development Block Grant Annual Action Plan (HUD funding) and described using prior-year funds to cover shortfalls; the committee forwarded the plan to a public hearing and discussed a proposed 'Plan B' to reserve a portion of CDBG funds for city capital projects to avoid HUD untimeliness penalties.
City staff presented the Federal Way 2026 Community Development Block Grant (CDBG) annual action plan and the committee voted to forward the revised plan to a public hearing on June 16.
Community services manager Angelina Allen described the HUD-required annual action plan, the city’s recent allocation (reported in the presentation as "about $789,15" in the transcript), and the proposed distribution: roughly 20% for planning and administration, 15% for public services and the remaining funds directed toward capital projects and small-business support. Because program-year requests exceeded available funds, staff proposed using prior-year balances from 2024 and 2025 to cover shortfalls for certain public-service asks; staff said affected organizations had been notified of modest reductions.
Council members pressed for clarity about which organizations were affected (staff listed reductions to several partners), why the mobile dental clinic applicant declined the award (staff said capacity, staffing transitions and reporting concerns were factors), and what happens if program recipients decline funding. Staff confirmed HealthPoint Dental currently provides dental services for Federal Way residents under contract.
Staff also briefed the committee about HUD’s untimeliness review (the line-of-credit test allowing no more than 1.5 times the annual grant to remain unspent) and past untimeliness history. To reduce that risk, staff proposed exploring a policy option to reserve a portion of future CDBG SURF funds for city-led capital projects that meet CDBG national objectives so money would be ready to spend if community contracts fall through. Committee members generally supported staff returning with a list of potential city projects that meet HUD objectives so the council could consider whether a city capital set-aside would be an appropriate 'Plan B.'
The committee moved to forward the annual action plan to the June 16 public hearing; the motion passed. Staff said HUD approval will be required after a public comment period and that the city’s submission deadline to HUD is August 14.
What’s next: public hearing June 16; staff will return with examples of city capital projects that meet CDBG rules and could serve as contingency uses to improve timely expenditures.
Sources: presentation by Angelina Allen and committee discussion, Parks, Recreation, Human Services & Public Safety Committee, May 12, 2026.
