MEETING DATE:
JUNE 23, 2026
SUBJECT:
Title
RESOLUTION NO. 2026-9621 - AUTHORIZING AN AGREEMENT WITH DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) TO RESTORE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS FOR ELIGIBLE COMMUNITY PROJECTS
Body
Recommendation
Recommendation
ADOPT resolution authorizing the City Manager to execute a Repayment Agreement with the U.S. Department of Housing and Urban Development (HUD) related to the Community Development Block Grant (CDBG) Program.
Body
Board or Commission Action
City Council previously approved Substantial Amendments to prior CDBG Annual Action Plans through Resolution No. 2025-9435 and Resolution No. 2026-9580, establishing eligible activities for future allocation of restored CDBG funds. The proposed Repayment Agreement represents the remaining administrative action necessary to facilitate restoration of those funds to the city's CDBG balance in accordance with HUD requirements.
Executive Summary
The Department of Housing & Urban Development (HUD) has provided the city with a Repayment Agreement establishing the terms for repayment of certain previously expended Community Development Block Grant (CDBG) funds identified through HUD's FY23 monitoring process of activities in program years 2020 and 2021. Execution of the agreement will satisfy HUD's repayment requirements and facilitate restoration of the repaid funds to the city's CDBG balance for future expenditure on eligible CDBG activities.
Discussion
The proposed Repayment Agreement establishes the terms under which the city will repay HUD a total of $1,490,811 in non-federal funds. The agreement provides for three annual payments of $496,937 due no later than July 31, 2026, July 31, 2027, and July 31, 2028. In accordance with HUD requirements, funds repaid under the agreement will be restored to the city's CDBG line of credit and made available for future eligible CDBG activities.
City Council has previously approved Annual Action Plans and Substantial Amendments identifying eligible activities for these funds. Execution of the Repayment Agreement is the remaining administrative action necessary to facilitate restoration of the funds and implementation of those previously approved activities in accordance with HUD requirements.
Upon repayment, HUD will restore the funds to the city's CDBG balance, making them available for eligible CDBG activities within the City. The restored funds are anticipated to replenish Program Year 2021-22, 2022-23, and 2023-24 CDBG resources and support implementation of activities previously approved by City Council through Annual Action Plans and Substantial Amendments.
Environmental Review
This action is not a project under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378 because it involves administrative and fiscal activities that will not result in direct or indirect physical change in the environment.
Fiscal Impact
The Repayment Agreement will allocate repayment of $1,490,811 from the City’s Public Facilities Fees Fund (Fund 402) or other non-federal city funds over a three-year period as follows:
July 31, 2026: $496,937
July 31, 2027: $496,937
July 31, 2028: $496,937
The repayment funds will be appropriated into the City’s operating and/or capital improvement program budget as needed to meet the requirements of the agreement.
Attachment(s)
1. Resolution
2. Repayment Agreement between the City of San Marcos and the U.S. Department of Housing and Urban Development
Prepared by: Quinton Hufferd, Senior Management Analyst
Submitted by: Quinton Hufferd, Senior Management Analyst
Reviewed by: Beth Herzog, Administrative Services Manager
Reviewed by: Janet Brotherton, Budget & Analysis Manager
Approved by: Michelle Bender, City Manager