Committee recommends 2026 CDBG allocations plan to Olympia City Council

A proposed 2026 Community Development Block Grant funding plan is heading to the Olympia City Council after getting the green light from a local committee.

The Olympia Community Livability & Public Safety Committee recommended the plan, as well as an amendment to a housing document to the Olympia City Council for further consideration.

The funding plan would allocate $411,591 in CDBG resources to existing nonprofit partners.

City staff also recommended dissolving the city’s revolving loan fund and rental rehabilitation program due to limited staff capacity and low program impact.

“Since its establishment in 2021, two projects have been completed, and one is underway,” a staff report states. “Dissolving the rental rehabilitation program will help the city ensure timely spend down of funds.”

Senior Housing Program Specialist Anastasia Everett presented the recommendations during the committee’s meeting.

“The proposal is based on the current threats and uncertainty at the federal level and, in my opinion, best positions the city to protect its CDBG funds in future use,” she said.

The City of Olympia receives annual CDBG funding from the U.S. Housing and Urban Development (HUD) to support activities benefiting low- and moderate-income residents.

The city’s 2023-2027 Consolidated Plan identifies affordable housing, economic development, public services and public facilities improvements as its primary priorities for the funding.

Everett said Olympia’s 2025 CDBG program year was disrupted after the city joined a lawsuit challenging new federal grant conditions. The lawsuit resulted in a preliminary injunction preventing HUD from enforcing the conditions against participating jurisdictions.

Because of the legal dispute and delays in receiving grant agreements, Olympia was unable to execute its 2025 subrecipient contracts until February, around six months later than usual.

The injunction currently covers Olympia’s upcoming 2026 funding cycle, but HUD has appealed the ruling to the U.S. Court of Appeals for the Ninth Circuit.

“If the injunction is overturned, HUD would have the authority to issue the city a new grant agreement requiring compliance with the new conditions,” Everett said.

In response, city staff recommended bypassing the typical competitive request for proposals process for this year, and instead directly awarding funding to existing subrecipients with a proven track record of compliance and timely spending.

Olympia’s 2026 entitlement award totals $376,415, approximately $35,000 more than the city received in 2025. Everett is proposing reallocating $35,176 from the revolving loan fund, bringing total available resources to $411,591.

Under the proposal, funding would be divided evenly among existing subrecipients that provide housing and microenterprise assistance programs. The city would also allocate the maximum allowable 20 percent of its entitlement award, or roughly $75,000, for program administration.

The recommended subrecipients are Rebuilding Together Thurston County for the critical home repair program, Enterprise for Equity for the microenterprise program, and South Puget Sound Habitat for Humanity for critical home repair and Energize Thurston programs. Each program would receive $84,077.

Everett said the selected organizations have experience complying with federal requirements and spending funds efficiently.

The proposal also includes a substantial amendment to Olympia’s Consolidated Plan that would dissolve the city’s revolving loan fund and discontinue future rental rehabilitation projects. Everett also recommended future program income be directed to contingency projects identified in an annual action plan.

The city currently holds about $285,000 in its revolving loan fund, with $250,000 already committed to the rehabilitation of a 12-unit multifamily property.

City staff recommended allowing that project to proceed because it will preserve affordable housing through a 20-year affordability covenant.

The committee unanimously voted to recommend approval of the plan allocations and the amendment.

If approved by the city council, a draft 2026 plan will be released for public comment at a later date. Public hearings on both the action plan and amendment are scheduled for June 23.