- Meeting Date:
- 04/14/2026
- From:
- Kristine Pavlik, Housing and Grants Administrator
- Department:
- Housing
TITLE:
DESIRED OUTCOME:
Obtain Council direction on the use of Community Development Block Grant (CDBG) funds for the Program Year 2026 Annual Action Plan, as required by the U.S. Department of Housing and Urban Development (HUD).
Executive Summary:
The City of Flagstaff receives an annual allocation of Community Development Block Grant (CDBG) funds from the U.S. Department of Housing and Urban Development (HUD) on a "Program Year" basis (July 1 - June 30). The purpose of the CDBG program is to develop viable urban communities by providing decent, affordable housing, a suitable living environment, and expanded economic opportunity, principally for low- and moderate-income persons. In Flagstaff, for 2025, low- and moderate-income households are defined as those at or below 80% of Area Median Income, which for a four-person household is $87,250.
To receive CDBG funding, the City must complete and submit an Annual Action Plan to HUD. The plan describes how the anticipated CDBG allocation will address community needs identified in the 2026-2030 Consolidated Plan and how funds will be distributed within Flagstaff City limits. The Annual Action Plan is due to HUD 60 days from the notification of the annual entitlement allocation. Allocations were released April 3, 2026 and the Annual Action Plan is due to HUD June 2, 2026.
The City of Flagstaff has received notice that its entitlement allocation for Program Year 2026 is $681,196. In addition to HUD entitlement funds, the City may also include program income and de-obligated prior year funds to increase the total funding available for allocation. These additional funds include $154,000 in prior year funds and $46,000 of Program Income, resulting in a total funding amount of $881,196 available for CDBG-eligible projects in the 2026 Program Year.
Information:
Through the 2026 CDBG process, the City of Flagstaff Housing Division received six external and three internal proposals in response to the Notice of Funding Availability (NOFA) released on January 29, 2026. Housing Staff are responsible for determining whether proposed activities are eligible and for conducting risk assessments of both the proposed projects and the applicant agencies. The administration of federal funds requires sufficient organizational capacity to ensure compliance and the timely expenditure of funds.
Additionally, a Ranking Committee composed of four community representatives and two City staff members met to review the external proposals and reach consensus-based rankings. These rankings primarily serve as a risk-and-benefit assessment and provide key input into staff recommendations. The below staff recommendations were presented to the Housing Commission on March 26, 2026 with a vote to forward to City Council for approval.
Below is the CDBG funding available for the 2026 Annual Action Plan:
| Program Year 2026 Entitlement Allocation | $681,196.00 |
| Program Income | $46,000.00 |
| Prior Year Funds | $154,000.00 |
| Total Funding Available for Allocation | $881,196.00 |
Planning and Administration Funding Recommendation
Under federal CDBG regulations, no more than 20% of the annual entitlement allocation, plus the projected future year program income, may be used for Planning and Administration activities. For Program Year 2026, this cap allows for a maximum of $146,239.20 to be allocated for administrative costs. Staff recommends allocating slightly less than the maximum allowable to the administration and indirect category to ensure compliance with the 20% limit.
Below are the funding recommendations for the Administration Category:
|
Grant Compliance and Administration
|
$68,000.00 |
| Indirect - 10% federal de minimis | $78,000.00 |
| Total Administration and Indirect (20% Maximum)* | $146,000.00 |
Public Service Funding Recommendation
Under federal CDBG regulations, no more than 15% of the annual entitlement and prior year program income may be used for Public Service activities. For Program Year 2026, this cap amounts to $109,079.40. To ensure compliance with the 15% limit, staff recommends allocating $109,000 (rounded down slightly to ensure compliance) to support public service projects.
To maximize the use of limited public service funds, staff proposes funding the highest-ranked applications 50/50 by dividing the total available funds. This approach ensures that the City utilizes the maximum allowable public services funding while supporting critical services to vulnerable populations.
Below are the funding recommendations for the Public Service Category:| Applicant | Proposed Program | Requested Funding | Ranking | Staff Recommendation |
| Flagstaff Shelter Services | Operations at The Lantern | $60,000.00 | 142/150 | $54,500.00 |
| Northland Family Help Center | Case Management for DV Shelter Clients | $62,737.50 | 142/150 | $54,500.00 |
| Terros Health | Crisis-to-Recovery Navigation | $65,805.00 | 137/150 | $0 |
| Boys and Girls Club of Flagstaff | Childcare Scholarships | $67,250.00 | 130/150 | $0 |
| Coconino County Health and Human Services | Meals on Wheels / Senior Nutrition Program | $41,616.00 | 129/150 | $0 |
| Tynkertopia | Programming at Siler Homes | $60,000.00 | 117/150 | $0 |
| Total Public Services Recommendation* | $109,000.00 | |||
Public Improvements/Housing Activity Funding Recommendation
After the above-recommended allocations to Administration and Public Services, $626,196.00 in CDBG funding remains available for Housing, Public Facility and Infrastructure Improvement Activities. Staff recommends fully funding the three internal applications received in this category. This includes funding for the reconstruction of Ponderosa Park in the Sunnyside neighborhood, improvements to the Murdoch Center Resilience Hub in the Southside neighborhood, and the removal of architectural barriers at the Sustainability offices.
Below are the funding recommendations for the Public Improvements/Housing Category:
| Applicant | Proposed Project | Requested Funding | Staff Recommendation | |
| PROSE (Parks, Recreation, Open Space, and Events) | Reconstruction of Ponderosa Park Sunnyside Area Benefit |
$500,000.00 | $500,000.00 | |
| Sustainability | Murdoch Resilience Hub Improvements Southside Area Benefit |
$77,000.00 | $77,000.00 | |
| Sustainability | ADA Ramps at the Sustainability Office | $48,750.00 | $49,196.00 | |
| Total Public Improvements Recommendation | $626,196.00 | |||
The chart below compares each project's intended impact and the number of beneficiaries with the goals outlined in the 2026-2030 Consolidated Plan to demonstrate the Community Benefit of the CDBG funding recommendations.
| 2026 CDBG Funding Allocation Recommendations | |||
| Project/Program | Recommended Funding | Beneficiaries | ConPlan Goal |
| Flagstaff Shelter Services Operations at The Lantern |
$54,500.00 | 300 Individuals (Homeless) | Public Services for LMI & Special Needs Populations |
| Northland Family Help Center DV Shelter Case Management | $54,500.00 | 90 Individuals (DV/Homeless) | Public Services for LMI & Special Needs Populations |
| PROSE Ponderosa Park Reconstruction (Sunnyside) | $500,000.00 | 4,435 Households | Improve Public Facilities and Infrastructure |
| Sustainability Murdoch Resilience Hub Improvements (Southside) | $77,000.00 | 2,650 Households | Improve Public Facilities and Infrastructure |
| Sustainability Offices - ADA Improvements | $49,196.00 | Residents Citywide | Improve Public Facilities and Infrastructure |
Program Year 2026 CDBG Funding Recommendations
The proposed funding allocations align with the goals outlined in the 2026--2030 Consolidated Plan and result from a comprehensive evaluation process that includes public input, proposal rankings, and community priorities.
| Program Year 2026 CDBG Funding Recommendations | |
| Total Public Improvements Activities | $626,196.00 |
| Total Public Service Activities | $109,000.00 |
| Total Administration and Indirect | $146,000.00 |
| Total 2026 CDBG Allocation | $881,196.00 |