Title
Approval the Community Development Block Grant Program Year 2025 Annual Action Plan Allocations Recommendation
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve the recommendation for the Community Development Block Grant (CDBG) Program Year 2025 Annual Action Plan allocations and forward to the City Council for consideration.
Report
Issue:
Whether to approve the recommendation for the CDBG Program Year 2025 Annual Action Plan allocations and forward to the City Council for consideration.
Staff Contact:
Anastasia Everett, Sr. Housing Program Specialist, Community Planning and Economic Development, 360.233.6197
Presenter(s):
Anastasia Everett, Sr. Housing Program Specialist, Community Planning and Economic Development
Background and Analysis:
The City of Olympia is an entitlement community for the U.S. Department of Housing and Urban Development’s (HUD) CDBG Program. The CDBG Program is a formula award that supports community development activities to build stronger and more resilient communities. The CDBG Program is a tool for the City to meet strategic goals outlined in our One Community Plan and Housing Action Plan.
The City of Olympia has received an annual CDBG allocation since 1982. At its initial level of funding in 1982 of $322,000, adjusted for inflation an equal grant in 2025 would be $1,095,397. Olympia’s allocation rose steadily from 1998 to 2003, peaking at $482,000. Due to declining federal allocations and the addition of more entitlement communities, the City’s funding has been trending in a decline over the past several years. The Program Year 2025 allocation is $341,583.
CDBG is a flexible grant that can be used for a variety of activities that primarily support low-income households. Eligible activities include the acquisition of real property, public facilities and improvements, public services, homeowner and rental rehabilitation, code enforcement, special economic development activities, microenterprise assistance, planning and capacity building, and program administrative costs, among others. The authorizing statute of the CDBG program requires that each activity funded, except for program administration and planning activities, must meet one of three national objectives established by HUD:
• Benefit to low- and moderate-income (LMI) persons;
• Aid in the prevention or elimination of slums or blight; and
• Meet a need having a particular urgency (referred to as urgent need).
Federal CDBG regulations require entitlement communities use at least 70% of non-administrative funds to meet the benefit to low- and moderate-income persons national objective (LMI). The requirements for meeting the LMI national objective for this program is that a beneficiary’s income must not exceed 80% of the area median income. The 2025 HUD area median income for the Olympia-Lacey-Tumwater metropolitan service area is $116,700.
Request for Proposal and Annual Action Plan Processes
As a requirement to receive federal CDBG funding, the City must prepare and submit a Consolidated Plan to HUD. The Consolidated Plan is designed to help states and local jurisdictions assess their affordable housing and community development needs and market conditions, and to make data-driven, place-based investment decisions. The consolidated planning process serves as a framework for a community-wide dialogue to identify housing and community development priorities that align and focus funding for the CDBG program. The process involves extensive stakeholder and public engagement to set goals and objectives.
The City completes a Consolidated Plan on a 5-year cycle in partnership with our consortia members, Thurston County and the City of Lacey. The Consolidated Plan is then carried out through the Annual Action Plan (AAP), which provide a concise summary of the actions, activities and the specific federal and non-federal resources that will be used each Program Year to address the priority needs and specific goals identified by the Consolidated Plan. The City’s Program Year begins September 1 and Ends August 31, annually.
The most recent Consolidated Plan was completed in 2023 and will guide the City’s AAPs until the fifth year, 2027. The upcoming Program Year 2025 is the third year of our Consolidated Plan. The priorities outlined in the Consolidated Plan identify Housing as the highest community need. Activities to support this priority include the increase of affordable housing supply, increasing the supply of permanent supportive housing for persons previously homeless, the preservation and improvement of existing affordable housing and making housing more resilient to climate change. Additionally, Community and Economic Development has been identified as a high priority. Activities to address this priority need include improvements to public facilities and infrastructure which support housing for low-income households and neighborhoods and assistance to small businesses.
CDBG activities may be carried out by the City as a grantee, or sub-awarded through subrecipients. The City lacks the organizational capacity and specialization to directly implement most CDBG funded activities identified as priorities in our Consolidated Plan, such as housing rehabilitation. To plan and implement activities in a timely manner, the City partners with local nonprofits and other eligible organizations through subrecipient awards. These awards are made available through the issuance of a Request for Proposals (RFP) to the community.
Local service providers and other eligible organizations can submit project proposals with accompanying funding requests for inclusion in the upcoming Program Year’s AAP. This year, the RFP was launched March 3rd and was open until March 24th. The allocation for the City of Olympia CDBG PY25 award was not known at the time of the RFP issuance and was estimated based on the PY24 award of$347,000. The City has since received its allocation for PY25 at $341,583. The City can use up to 20% of the formula allocation for program administration. Based on the PY24 estimation, City staff advertised an estimated amount of $277,600 of CDBG funding to be available in the RFP, with $50,000 designated for public service activity applications and $69,000 set aside for program administration which supports City staff managing the CDBG program.
The CDBG regulations allow the use of grant funds for a wide range of public service activities, such as services for seniors, employment services, services for homeless persons, and welfare services. CDBG regulations state that public service activities must not exceed 15 percent of the City’s yearly allocation plus 15 percent of program income received. Through engagement with local service providers and other jurisdictions, staff received feedback concerning the decline of available state funding that is typically relied upon in our community for public service. To expand the program’s reach and increase the number of beneficiaries served in Olympia, staff advertised public service funding in this year’s RFP.
Project and Funding Award Recommendations for PY25 AAP
The City received 13 project proposals, nearly doubling last year’s seven. The total funding requested equaled over $1.1 million. Following the closure of the RFP, CDBG staff completed a risk assessment and eligibility review for each application. Two applications were unable to move on to the scoring process due to ineligibility determinations.
CDBG staff formed a scoring team of City staff from the Housing and Climate teams to review the eligible applications and score in accordance with the following factors: documentation and justification of the need for the activity, Consolidated Plan priority, narrative quality and responsiveness, application completeness, risk assessment results, and project spend down timeline. The scoring team recommends nine proposals for funding. Projects and their respective funding awards recommended for inclusion in the PY25 Annual Action Plan are summarized in an attachment titled Recommendations for Funding - PY25.
Description of Projects
Rebuilding Together Thurston County ($60,000) - Funding will support their critical home repair program. The estimated accomplishment for this project is between 5 and 8 homes rehabilitated. Funding supporting Rebuilding Together Thurston County’s Critical Home Repair program serves low-income homeowners with the following eligibility criteria: homeowners must live in Olympia, must meet income requirements, must be unable to do the work on their own, and must either have a disability, be a senior citizen, military veteran, or a family with young children. Rebuilding Together Thurston County consistently spent down prior year critical home repair awards within the period of performance and has shown capacity to administer a large level of funds.
Enterprise for Equity ($50,300) - Funding will support for their Microbusiness Development Program. Enterprise for Equity is intending to provide specialized training for over 40 low- and moderate-income local entrepreneurs.
Interfaith Works (Sandy’s Flats, $24,570) - Funding will support the installation of a security fence at the permanent supportive housing, Sandy’s Flats. Residents of this housing complex are individuals who have recently experienced significant episodes of homelessness with co-occurring disabilities. The fence will restrict access to the property from the alley, preventing burglaries, unsafe access, and property damage to the three abutting buildings. Sandy’s Flats has 26 units.
Interfaith Works (Sergio’s, $12,500) - This public service funding will support the services available at the daytime resource center, Sergio’s. The resource center connects people with hygiene services and vital social services such as medical and mental health care. In 2024, Sergio’s served more than 1,325 unique individuals. Similar accomplishments can be expected with the recommended PY25 award.
Together! ($12,500) - This public service activity, Host Homes, will support safe housing for unaccompanied youth in Olympia. This program aims to support youth not connected to the foster care system nor under state supervision, mainly young people who have aged out of child welfare intervention. The program accepts referrals from the Olympia School District’s McKinney-Vento liaison. Funding will be used for case management, client supplies, host family outreach and training as well as transportation assistance. Together! Anticipates serving approximately 28-36 youth with the recommended PY25 award.
Mercy Housing Northwest ($12,500)- Funding recommended will support the public service activity Resident Services at Evergreen Vista. Funding would be used to support salary and benefits for program staff, as well as program operating costs. The CDBG funding support will allow Mercy Housing Northwest the capacity to expand its on-site food pantry services, mental health services, life skills development programs, and Out-of-School Time initiatives. Evergreen Vista I & II are home to 462 residents, 47% of whom are youth under 18. All residents of the multifamily apartment complex are low- and moderate-income, restricted to below 60% of area median income. Mercy Housing Northwest anticipates 291 residents reached with CDBG funded services during the program year.
Senior Services for South Sound ($12,500) - Funding will support the Home Share Program a match-making service, where home providers who have an extra room in their home are matched with home seekers needing affordable housing. The program provides a unique, cost-effective solution to housing insecurity among the senior population of Thurston County. Participants in the Home Share program pay an average rent of only $636 monthly. Senior Services for South Sound anticipate 50 seniors will receive assistance in PY25 with support from this program.
South Puget Sound Habitat for Humanity (Critical Home Repair, $40,000) - Funding is recommended for the Critical Home Repair program. Examples of home repairs include mold remediation, roof repair or replacement, and bathroom accessibility improvements. An estimated 3-5 low- and moderate-income households will participate in the Home Repair program in the upcoming program year. South Puget Sound Habitat for Humanity’s Critical Home Repair Program is available for eligible low-income homeowners that meet program criteria, including a documented need, ability to contribute financially towards a small percentage of their repair costs, and willingness to partner with sweat equity requirements.
South Puget Sound Habitat for Humanity (Energize Thurston, $48,397)*- Funding will go towards the fully subsidized installation of energy efficient heat pumps for low-income Olympia homeowners. Available grant funding for subsidized installations has already been exhausted, with at least 16 households on the waitlist currently in Olympia. The recommended funding for this project will install heat pumps in approximately 3-5 homes. Subsidized installations are managed by subrecipient South Puget Sound Habitat for Humanity.
*This is a contingency project that is selected for funding in the AAP. Contingency projects are funded in the case of program income being received or cancellation of a project. Additional information on contingency projects and the project selection process can be found below.
Planning and Administration Costs (City, $68,316) - Costs for City staff salary and benefits for administering the CDBG program
Total recommended funding: $341,583
CDBG funding for PY25 activities is estimated to achieve the following accomplishments:
• Rehabilitation of 11 to 18 single family homes for low- and moderate-income homeowners
• Security improvements benefiting 26 apartment units
• 40 small businesses receiving technical assistance
• 1,600 individuals to receive benefits from public services
In accordance with the priorities identified in the Consolidated Plan, the majority of our programmatic funding available is being recommended for activities related to the creation and preservation of affordable housing. Additionally, all four recommended public services are housing or homelessness related activities.
Program Income and Contingency Projects
Annually, the City receives Program Income (PI) from projects or programs funded in previous program-years. Program income must be allocated in the AAP as well as the current program-year funding. The City receives PI from repayments of existing home rehabilitation loans made from the Rental Rehabilitation Program. Rental rehabilitation PI is routed to the Revolving Loan Fund (RLF), which is reloaned to new rental rehabilitation projects. Staff are working currently on the rehabilitation of a 12-unit multifamily property, which is expected to be completed by summer 2025. There is approximately $214,000 available in the RLF to be used for rehabilitation projects.
Single family homeowner PI is generated through the repayment of existing single family homeowner CDBG loans. This PI is treated as entitlement funding and can be programmed to any eligible activity. City staff recommend any PI received during PY25 not routed to the RLF to be allocated to critical home repair activities.
Contingency projects are identified during the AAP process to reduce the administrative burden of preparing Substantial Amendments to the Consolidated Plan, which require a 30-day public comment period and public hearing. In the event of a canceled project or receipt of program income, that funding is routed to projects identified in the AAP as contingencies. The staff recommendation is to award PI to subrecipients South Puget Sound Habitat for Humanity’s Critical Home Repair and Energize Thurston programs and Rebuilding Together Thurston County’s Critical Home Repair program, be determined based on PY25 subrecipient spenddown of funds and documentation of need. These projects have been identified as contingency projects in prior program years, with both subrecipients having the capacity and expertise to utilize the funds compliantly and efficiently.
Projects Not Recommended for Funding
The request for funding far exceeded the funding available to allocate, and unfortunately, not every eligible project submitted is being recommended for funding.
Eligible projects submitted but not recommended to fund include a request from Community Youth Services for a public facility improvement to rehabilitate their young adult shelter, Rosie’s Place. The project proposal requested $140,000 - $164,000 of CDBG assistance. The project proposal scored well, but due to the large amount of assistance requested, this project is not recommended for funding at this time. Secondly, an eligible application from the Low Income Housing Institute was received, requesting $45,000 to $98,822 of assistance with the rehabilitation of the elevator in their housing complex at Fleetwood Apartments. This project is not selected for recommendation of funding due to the complexity of cross-cutting requirements associated with this project, such as the Uniform Relocation Act and Lead Safe Housing Rule. The Low Income Housing Institute was informed of a potential other source of funding for this project, the Opportunity Fund, from the Regional Housing Council.
Additionally, following the scoring process, one applicant informed staff that their organization mistakenly submitted the wrong proposal for funding and requested to replace the submitted proposal with a different project proposal. The applicant communicated that the submitted project had already been funded and completed. Because the RFP had already closed and to maintain the transparency and integrity of the RFP process a new or revised proposal was not accepted from the applicant. As a result, the applicant was not eligible for funding. At this time, applicants that had been selected for a recommendation of funding had been informed of their recommended award amount.
Staff recommend funding Energize Thurston as a contingency project instead. The City’s CDBG program has funded the Energize Olympia campaign in 2023 and 2024 to support the installation of fully subsidized ductless heat pumps for low- and moderate-income homeowners. The Energize campaign expanded regionally, serving Thurston County homeowners. The available grant funding for fully subsidized installations in Olympia through non-CDBG sources has been exhausted, with at least 16 households on the funding waitlist. As the program continues to advertise, this number is expected to increase. The total cost of the current waitlist for heat pumps is estimated at $220,000. An award of $48,397 is recommended to fund the installation of heat pumps for 3-5 of the households currently on the waitlist. South Puget Sound Habitat for Humanity did not submit a proposal for Energize Thurston but is recommended by staff as a prior-year funded City sponsored program that is anticipated to be able to draw down funds quickly and efficiently.
Federal Funding Risks
There is a chance the City will not receive CDBG funds at all in PY25. Executive Order 14287, signed April 28, 2025, identified consequences for Sanctuary Cities to include the potential suspension or termination of federal funds. As a Sanctuary City, Olympia could be identified for consequences outlined in the Executive Order. In the event that the CDBG award for Olympia is terminated, approximately 60% of one housing FTE would be unfunded, and the recommended projects would not be funded without an alternative funding source. The impact on local service providers would be significant, and many existing programs would lose the funding and capacity to provide services to Olympia residents The City has not executed any contracts with subrecipients for PY25 CDBG funding and the contracts will not be executed until the City receives a grant agreement from HUD for the upcoming program year. Additionally, the RFP included language that made clear the available funding was based on estimates from prior allocations and is subject to change.
Timeline and Next Steps
Staff will draft the Annual Action Plan in accordance with recommendations submitted from this Committee. The draft AAP will be available for a 30-day public comment period beginning May 30 and ending June 30. A public hearing will be held at the regular City Council meeting June 17. Consideration of Council approval for the AAP is scheduled at the July 8 regular City Council Meeting. The AAP is due to HUD no later than Friday, July 18.
Climate Analysis:
CDBG is a flexible grant that can be used to support the City’s climate goals. In 1980, the U.S. Congress gave the CDBG program a mandate to support energy efficiency and renewable energy technologies in property rehabilitation.
Typical energy efficiency activities funded by CDBG nationally include design features to public facilities improvements promoting energy efficiency. Activities may also include public energy conservation services, assistance to neighborhood-based organizations undertaking energy conservation projects, and the development of energy use strategies to achieve maximum energy efficiency.
The City’s CDBG program can be used to reduce our community’s greenhouse gas emissions and build our climate resilience. The City of Olympia has invested a significant amount of CDBG funding into energy efficiency projects in the past several years. Examples of prior projects include solar installation, home weatherization, home electrification and energy-efficient heat pump installation. In past years, the City has funded the Energize Olympia campaign to install fully subsidized electric heat pumps to low- and moderate-income homeowners. PY25 funding is recommended to support the Energize Thurston campaign.
Equity Analysis:
CDBG funds must primarily benefit 80% or under Area Median Income (AMI) persons. There are statistically major disparities in income that are tied to marginalized groups in our community. Poverty is more prevalent in some races and ethnicities in Thurston County. 15.5% of Black or African American residents are below the poverty level, compared to 9.1% white residents, according to the City’s Assessment of Fair Housing.
CDBG funding can be used in a variety of activities to improve accessibility for residents with disabilities in our community. Eligible activities include reconstruction of sidewalks to install ramps and rehabilitation of homes or public facilities to include the removal of architectural barriers to accessibility. Examples of projects funded in prior program years and recommended for funding in PY25 include critical home repair by our subrecipients, Rebuilding Together Thurston County and South Puget Sound Habitat for Humanity. Critical home repair projects funded include installation of handrails, wheelchair ramps and safety equipment in the home.
PY25 funding is recommended to support Senior Services for South Sound, an organization specializing in senior care. Seniors are an often-overlooked demographic frequently experiencing poverty. Services provided by Senior Services for South Sound support vulnerable seniors at risk for homelessness.
CDBG funds can also be used to provide energy efficiency upgrades to low- and moderate-income persons in the community, which for many years have been inaccessible to many families as the cost of energy improvements can be significantly higher than what is affordable. This use of funds helps close the disparity in who can benefit from high efficiency heat pumps or solar installation. Energy efficiency upgrades also often lower the cost of electricity for the homeowner or tenant, which reduces the utility burden on households.
Neighborhood/Community Interests (if known):
CDBG funding is used to support Olympia residents at or below 80% AMI. CDBG funding priorities align with the 5-year HUD Consolidated Plan, and more specific goals are targeted annually in the AAP. Supporting low-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 amount available to allocate for PY25 is $341,583. 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 as well as the revolving loan fund. The existing revolving loan fund balance is $214,000.
Over the past several years, staff have worked diligently alongside our federal lobbyist to highlight the merit of the CDBG program and its impact on the community. Unfortunately, the program continues to receive appropriation cuts and does not reflect the rising inflation rates. Impacts to decreased funding include reduced capacity for grant administration and fewer beneficiaries served annually.
Options:
1. Move to recommend and forward to the full City Council for approval staff recommendation of Community Development Block Grant Program Year 2025 Annual Action Plan allocations.
2. Provide alternate funding recommendations and move to forward those to the full City Council for approval recommendation of Community Development Block Grant Program Year 2025 Annual Action Plan allocations.
3. Take other action.
Attachments:
Recommendations for Funding - PY25
CDBG Funding - PY25 by Consolidated Plan Priority
Presentation