Title
Approval of a Resolution Authorizing a Grant Agreement with the U.S. Department of Housing and Urban Development for the Program Year 2026 Community Development Block Grant Award
Recommended Action
Committee Recommendation:
At their May 27 the Community Livability and Public Safety Committee approved forwarding the Program Year 2026 Community Development Block Grant funding recommendations to the full Council.
City Manager Recommendation:
Move to approve to approve a resolution authorizing the City Manager to enter a grant agreement with the U.S. Department of Housing and Urban Development for the Program Year 2026 Community Development Block Grant program.
Report
Issue:
Whether to approve a resolution authorizing the City Manager to enter a grant agreement with the U.S. Department of Housing and Urban Development for the Program Year 2026 Community Development Block Grant program.
Staff Contact:
Anastasia Everett, Senior Housing Program Specialist, Community Development, 360.753.8277
Presenter(s):
None - consent calendar item.
Background and Analysis:
The City of Olympia is an entitlement community for the U.S. Department of Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG) Program. More information about the CDBG program is available as an attachment to this staff report, titled CDBG Program Information. Each year the City must prepare an Annual Action Plan to identify projects funded with available resources and associated goals.
Staff presented recommendations for the Program Year 2026 allocations at the Community Livability and Public Safety Committee on May 27. The Committee voted to forward recommendations to the full Council for consideration of approval. The City held the required public hearing at the June 23 City Council meeting, and the public comment period was open from June 8 - July 9. The City Council approved the Annual Action Plan at the July 14 regular Council meeting.
Due to the funding award amount being greater than $350,000, a resolution is presented to Council for consideration of authorization for the City Manager to execute the agreement.
HUD has provided the City with the Program Year 2026 grant agreement. The grant agreement contains new conditions which require compliance with Executive Orders related to DEI, cooperation with immigration enforcement, and other Administration policies. The City’s CDBG program and legal staff found the new grant conditions to be in conflict with the City’s values generally and City’s Sanctuary Policy specifically, and otherwise unlawful.
The City joined a lawsuit, King County v. Turner, et al. in November 2025. More than 80 local government Grantees from around the state and country represented in the lawsuit received an injunction on new grant conditions added to federal funding awards such as CDBG. The injunction blocks HUD from requiring compliance with the new grant conditions. The City’s Program Year 2026 grant agreement is covered while the injunction is in place. This permits the City to execute our CDBG Grant Agreement and access funds without complying with the new grant conditions introduced in 2025.
The grant agreement is attached with all contested terms crossed out, indicating the City’s understanding that the City does not agree to, and is not bound by, the enjoined Grant Agreement terms or the Executive Orders. Additional language is attached which will be provided to HUD along with the submission of the grant agreement.
Climate Analysis:
CDBG is a flexible grant that can be used to support the City’s climate goals. Activities proposed in the Program Year 2026 award such as Energize Thurston decrease carbon emissions. No activities presented are expected to increase carbon emissions.
Equity Analysis:
CDBG funds must primarily benefit 80% or under Area Median Income (AMI) persons. Most of the Program Year 2026 funding is dedicated to activities to help achieve housing preservation goals outlined in our Consolidated Plan, Housing Action Plan, and One Community Plan. Activities funded provide ways to keep low-income households stably housed in safe and healthy housing. Improvements funded by CDBG are free or very low cost to homeowners. There are statistically major disparities in income that are tied to marginalized groups in our community. More information about disparities can be found in the City’s Assessment of Fair Housing.
Neighborhood/Community Interests (if known):
CDBG funds are used to support residents of Olympia at or under 80% of the Area Median Income. Supporting low- and moderate-income Olympia residents is a high priority for the community, and CDBG funded projects help meet many of the City’s goals outlined in the One Community Plan.
Financial Impact:
The PY26 entitlement award is $376,415 and the proposed reallocation of unspent Revolving Loan Fund (RLF) is $35,176. $250,000 of revolving loan funding is proposed to remain allocated for the current rental rehabilitation project underway. The CDBG program can anticipate collecting between $50,000 and $250,000 in Program Income during the program year, increasing the funding available for proposed contingency activities. Local funds are used to pay for approximately half of 1 FTE’s salary and benefits.
Options:
1. Move to approve to approve a resolution authorizing the City Manager to enter a grant agreement with the U.S. Department of Housing and Urban Development for the Program Year 2026 Community Development Block Grant program.
2. Do not approve the resolution - will cause a delay or inability to receive HUD funds
3. Request changes to the resolution and consider approval at a later date.
Attachments:
Resolution
Agreement
Order Granting Plaintiffs’ Third Motion for Preliminary Injunction
Order Granting Plaintiffs’ Fourth Montion for Preliminary Injunction
Submission Language