MEETING DATE:
March 24, 2026
SUBJECT:
Title
2026-2027 DRAFT COMMUNITY DEVELOPMENT BLOCK GRANT ANNUAL ACTION PLAN AND SUBSTANTIAL AMENDMENTS TO PROGRAM YEARS 2023-2024 AND 2025-2026
Body
Recommendation
Recommendation
OPEN, CONDUCT, and CLOSE a public hearing regarding the Draft Program Year 2026-2027 Annual Action Plan for the Community Development Block Grant (CDBG) and the proposed Substantial Amendments to the PY 2023-2024 and PY 2025-2026 Annual Action Plans.
OPEN a 30-day public comment period for the Draft Program Year 2026-2027 Annual Action Plan and proposed Substantial Amendments to the PY 2023-2024 and PY 2025-2026 Annual Action Plans.
Body
Board or Commission Action
On April 8, 2025, the City Council conducted a public hearing to review proposed goals for the 2025-2029 Consolidated Plan and 2025-2026 Annual Action Plan and authorized release of those documents for a 30-day public review period.
On May 13, 2025, the City Council approved Resolution No. 2025-9434 adopting the 2025-2029 Consolidated Plan and 2025-2026 Annual Action Plan.
Executive Summary
The U.S. Department of Housing and Urban Development (HUD) allocates annual funding to entitlement jurisdictions through the Community Development Block Grant (CDBG) program. Funds must be used for eligible activities benefiting low- and moderate-income (LMI) residents and must be consistent with the City’s Consolidated Plan. The current Consolidated Plan (ConPlan) was approved on May 13, 2025, and runs through June 30, 2029.
HUD requires the City to conduct a public hearing to provide notice that the Annual Action Plan (AAP) and Substantial Amendment will be available for a 30-day public comment period beginning March 20, 2026. The Notice of Public Hearing and request for public comment was published in the Coast News and Hispanos Unidos on March 13, 2026.
The City expects to receive approximately $703,648 in new CDBG entitlement funds and anticipates $496,937 in reinstated prior-year CDBG funds, bringing the estimated total available funding to $1,200,585.
Discussion
The Community Development Block Grant (CDBG) program is administered by the U.S. Department of Housing and Urban Development (HUD) and requires entitlement jurisdictions to prepare a five-year Consolidated Plan (ConPlan) identifying priority housing and community development needs. The ConPlan is implemented through Annual Action Plans (AAPs), which outline the activities and funding allocations proposed for each program year to address the priorities identified in the ConPlan. Grantees report progress toward these goals annually through the Consolidated Annual Performance and Evaluation Report (CAPER).
CDBG-funded activities must meet one of three national objectives:
• Benefit low- and moderate-income (LMI) persons
• Aid in the prevention or elimination of slums or blight
• Meet a need having a particular urgency
The primary national objective of the CDBG program is to benefit low- and moderate-income persons. HUD requires that at least 70 percent of CDBG funds be used for activities that benefit LMI households. Low- and moderate-income is defined by HUD as household income at or below 80 percent of the Area Median Income (AMI) for the County.
Draft 2026-2027 Annual Action Plan: The Draft PY 2026-2027 Annual Action Plan outlines the City’s proposed use of CDBG funding for the upcoming program year beginning July 1, 2026. Proposed activities are consistent with priorities identified in the 2025-2029 Consolidated Plan, including housing affordability, improvements to community facilities, neighborhood infrastructure improvements within qualifying low- and moderate-income areas, public service programs, and program administration.
The City issued a Notice of Funding Availability inviting nonprofit organizations to submit proposals for eligible public service activities. Applications were accepted through March 6, 2026, and staff is currently conducting an eligibility review and evaluation of proposals. Staff will return to City Council following the public comment period with recommended public service providers and proposed funding allocations for consideration as part of adoption of the Annual Action Plan.
HUD regulations limit public service activities to 15 percent of the annual CDBG allocation and program administration to 20 percent, with remaining funds used for housing and capital improvement activities.
Table 1 - PY 2026-2027 Estimated CDBG Allocation
|
Activity Category |
PY 2026-2027 Entitlement |
Reinstated Prior Year Funds |
Total Estimated Allocation |
|
Housing Affordability Programs |
$100,000 |
- |
$100,000 |
|
Community Facility Improvements |
$357,419 |
- |
$357,419 |
|
Neighborhood Infrastructure Improvements |
- |
$496,937 |
$496,937 |
|
Public Service Programs |
$105,500 |
- |
$105,500 |
|
Program Administration |
$140,729 |
- |
$140,729 |
|
Total Estimated Resources |
$703,648 |
$496,937 |
$1,200,585 |
Reinstated funds totaling $496,937, reflect prior-year CDBG resources restored to the City's line of credit following repayment processing through HUD’s Line of Credit Control System (LOCCS). These funds are directed toward park infrastructure improvements to support timely expenditure of CDBG funds.
Timeliness Requirement: HUD requires entitlement jurisdictions to administer CDBG funds in a timely manner. Specifically, a grantee’s line of credit balance must not exceed 1.5 times the annual grant amount 60 days before the end of the program year. Failure to meet this standard may result in reductions to future CDBG allocations. The City has not met this timeliness expenditure standard in recent program years and has developed an expenditure plan to improve compliance. The proposed amendments prioritize construction-ready projects to support timely expenditure of CDBG funds.
Substantial Amendments: Staff has prepared substantial amendments to the PY 2023-2024 and PY 2025-2026 Annual Action Plans to adjust project funding allocations, update project budgets to reflect finalized construction costs, and process a repayment installment to HUD. Funding is being reallocated from one capital improvement project to construction-ready projects that will allow the City to expend funds more quickly and improve compliance with HUD timeliness requirements.
Table 2 - Summary of Proposed PY 2023-2024 and PY 2025-2026 Substantial Amendments
|
Project |
Original Budget |
Amended Budget |
Change |
Revised Funding Sources |
|
Bradley Park Master Plan |
$250,000 |
$0 |
-$250,000 |
Project removed |
|
Neighborhood Lighting Improvements |
$26,676 |
$26,676 |
- |
$26,676 (PY2025 Entitlement) |
|
Richmar Park Phase 2 |
$839,776 |
$1,200,000 |
+$360,224 |
$490,861 (Prior-Year Funds); $496,937 (Restored HUD Funds) |
|
Senior Activity Center HVAC Rehabilitation |
$1,156,899 |
$1,500,000 |
+$343,101 |
$445,425 (PY2025 Entitlement) |
|
Program Administration |
$140,729 |
$140,729 |
- |
$114,581 (PY2025 Entitlement); $25,878 (Prior-Year Funds) |
Citizen Participation Process: The Draft PY 2026-2027 Annual Action Plan and proposed Substantial Amendments will be available for a 30-day public review period from March 20 through April 22, 2026. Staff anticipates returning to City Council on April 28, 2026, with final funding recommendations and proposed adoption of the Annual Action Plan and Substantial Amendments.
Environmental Review
The activities associated with this item involve program planning and administrative actions and are not considered a “Project” under the California Environmental Quality Act (CEQA) pursuant to Section 15378 of the CEQA Guidelines. Environmental review will be conducted for individual projects as required prior to implementation.
Fiscal Impact
CDBG funding is provided by HUD and administered as a reimbursable federal grant program, requiring the City to pay costs upfront and then submit for reimbursement. The City’s estimated $703,648 will be programmed into the FY 2026-2027 Operating Budget in Fund 207 Revenue Account No. 435001. Failure to adopt an Annual Action Plan would result in the City being unable to access its annual CDBG entitlement funding.
Attachment(s)
1. Draft Program Year 2026-2027 Annual Action Plan
2. Proposed Substantial Amendment - PY 2023-2024 and PY 2025-2026 Annual Action Plans
Prepared and submitted by: Quinton Hufferd, Sr. Management Analyst
Reviewed by: Sylvia Solis Daniels, Housing and Neighborhood Services Director
Approved by: Michelle Bender, City Manager