HAGERSTOWN — City Council continued discussions on the proposed fiscal year 2027 budget, reviewing federal Community Development Block Grant funding, redevelopment incentives and housing-related investments aimed at neighborhood revitalization and economic growth.
During the May 5 work session, Chief Finance Officer Michelle Hepburn and budget manager Brooke Garver detailed how federal entitlement dollars and locally funded redevelopment programs are expected to support infrastructure improvements, housing rehabilitation and commercial investment throughout the city.
They explained that the city expects to receive about $780,000 in federal Community Development Block Grant funding from the U.S. Department of Housing and Urban Development for FY2027. Describing the projected allocation as relatively stable compared with recent years.
The funding supports a variety of city projects and community initiatives, including demolition of blighted structures, alley reconstruction, handicap ramp installations, housing rehabilitation and public service programs.
Hepburn noted that while the city receives annual entitlement funding, federal guidelines allow those dollars to be spent over multiple fiscal years depending on the scope and timing of projects.
“We may have a project that fiscal year 27 entitlement dollars are going to cover, and maybe it doesn’t happen in fiscal year 27,” Michelle explained during the presentation. “It starts in 27 but carries to 28 and 29.”
The city detailed several planned FY2027 infrastructure projects funded via the program, such as handicap ramp construction and alley reconstruction, which will complement existing projects in the broader capital improvement plan. Approximately $175,000 in expected federal funding is proposed for direct city infrastructure enhancements.
Staff also reviewed federal restrictions placed on public service spending within the CDBG program. Under federal rules, cities may allocate no more than 15 percent of entitlement and program income funds toward public service agencies and initiatives.
The proposed FY2027 budget currently includes approximately $126,000 for public service activities while city staff completes the application and evaluation process to determine agency funding awards. Officials said final allocations will be adjusted later through budget amendments after the review process concludes.
City officials also discussed housing rehabilitation efforts funded through the program, including emergency repair assistance and support for the Hagerstown Neighborhood Development Partnership. Staff explained that some housing-related activities do not count toward the federal public service spending cap because they are classified under HUD regulations.
In addition to federal funding discussions, officials reviewed the city’s economic redevelopment fund and the ongoing “Invest Hagerstown” initiative.
The redevelopment program includes several incentive categories designed to encourage investment in both residential and commercial properties, including:
- City center redevelopment grants.
- Citywide redevelopment assistance.
- Homeownership loan programs.
- Rental property rehabilitation support.
- Commercial sign and façade improvement grants.
The proposed FY2027 budget allocates approximately $1.175 million toward Invest Hagerstown initiatives. Officials said the funding is transferred from the city’s general fund and is roughly equivalent to about three cents of the city’s property tax rate.
Michelle Hepburn also highlighted other redevelopment-related expenditures planned within the fund, including approximately $275,000 for the city’s PEP program, which provides rent assistance and grant-back incentives tied to property taxes over a five-year period.
Additional funds are budgeted for economic incentives and redevelopment activities associated with the acquisition, rehabilitation and potential resale of blighted properties. Officials said the city may also use the fund for future neighborhood stabilization and revitalization efforts.
City staff noted the redevelopment fund also benefits from state grant opportunities, including Community Legacy funding through the Maryland Department of Housing and Community Development, which allows the city to supplement local investment efforts.
The FY2027 budget process will continue during upcoming meetings and public hearings, including hearings on the city budget and tax rate.
