REPORT TO COUNCIL
SUBJECT
Title
Public Hearing: Opportunity for Public Comment and action on the Final Version of the FY 2026/27 Annual Action Plan for the Use of Federal Housing and Urban Development (HUD) Grant Funds (Hearing 2 of 2)
Report
BACKGROUND
The City of Santa Clara (City) receives annual funding from HUD, including Community Development Block Grant (CDBG) and Home Investment Partnerships Program (HOME) funds. CDBG funds support public services and capital projects for residents, while HOME funds are used for affordable housing development and rental assistance. The City is allocated these funds yearly based on a federal population formula and the federal budget. Each year, the City must also submit an Annual Action Plan (AAP) detailing funding allocations for CDBG and HOME.
The City must hold two public hearings on the AAP. One of the public hearings must be held during the drafting phase; this occurred at the City Council meeting on March 24, 2026, see Attachment 1 for this report.
This report serves as the second and final opportunity for public comment. HUD requires at least a 30-day public comment period on the final version of the plans prior to submission to HUD. This public comment period began on April 2, 2026, and was extended through tonight’s meeting of May 5, 2026.
The City Council requests are summarized as follows:
• Receive public input on the final version of the FY 2026/27 Annual Action Plan (AAP).
• Approve the 2026-2027 Annual Action Plan in the forms presented and submit to HUD.
• Approve the allocation of $30,000 for the Family Therapy Counseling Program administered by Bill Wilson from the Housing Division’s annual General Fund appropriation.
• Approve appropriation of $60,000 in HOME ARP for Nextdoor Solutions to support domestic violence services using FY 2026/27 and 2027/28 funds.
DISCUSSION
Staff is asking the City Council to receive public input on the final version of the FY 2026/27 AAP. Staff has made updates to the draft plan, which was presented to the City Council on March 24, 2026. Staff received the actual FY 2026/27 CDBG and HOME allocations after the first public hearing and the actual amount is lower than what was projected in the first draft of the Annual Action Plan. Staff updated this along with program income and prior year estimates so that the total expected CDBG funds for FY 2026/27 has decreased from $1,580,000 to $1,500,000. Attachment 2 is an updated plan that replaces estimates with actual numbers, along with the other minor revisions that were made in the public review draft (Attachment 3).
FISCAL YEAR 2026/2027 ALLOCATIONS - HUD FUNDS
Annual Action Plan Breakdown-HUD Funds (FY 2026/27 AAP), Attachment 4, provides a detailed breakdown of HUD Expected Resources for CDBG and HOME, and how the City proposes to spend them. Minor changes were made to reflect the use of the General Fund for Bill Wilson’s Family Therapy Counseling Program, discussed further below.
The FY 2026/27 AAP is a one-year plan that details how HUD and local funds will be spent on projects and activities to address goals and needs identified in the Five-Year Consolidated Plan. The AAP also allocates funds from prior year activities and projects that did not fully spend down, and funds that have come back to the City as Program Income (PI) when loans are repaid.
At the time of this report, the City has not finalized the acceptance nor signed its Federal Grant Agreements with HUD for the funding for FY 2025/26. This delay is due to several factors, including the government shutdown, legal concerns with new terms and conditions set forth in the Federal Grant Agreements, and new federal polices for entitlement funding. The City is working to address these concerns through a lawsuit. Due to this delay in accepting HUD funding, Public Services that were planned for FY 2025/26 were not funded. Very recently, on April 28, 2026, the Court granted a preliminary injunction in favor of the City, which should allow the City at least in the short term to process certain HUD funding requests.
HUD regulations restrict the amount of CDBG funds that can be spent on Public Services each year (i.e., the Public Service Cap), so $150,000 is reprogrammed into the AAP for Capital Improvement Projects, see Budget Summary Row A, Attachment 4.
The AAP also proposes to continue funding Next Door Solutions, a public service agency that provides services to domestic violence survivors. This AAP proposes to use HOME-ARP funding in the amount of $30,000 per year for fiscal years 2026/27 and 2027/28. HOME-ARP funds are managed through a separate plan and not included in the Consolidated Plan.
FISCAL YEAR 2026/2027 ALLOCATION - LOCAL FUNDS
Annual Action Plan Breakdown-LOCAL Funds, Attachment 5, provides a more detailed breakdown of FY 2026/27 LOCAL Estimated Expected Resources and how the City proposes to spend them.
The AAP outlines the use of local funding, including a two-year agreement (FY 2026/27 and FY 2027/28) for $350,000 with the County Office of Supportive Housing for Intensive Case Management and Homeless Prevention Program, as shown in Attachment 5.
Due to the pending lawsuit described above and the uncertainty of funds, staff is asking the City Council to allow the allocation of $30,000 from the Housing Division’s annual General Fund appropriation for the Family Therapy Counseling Program, administered by Bill Wilson. The amount of CDBG funding originally set aside for this agency in the first public comment draft of the Annual Action Plan is now proposed to be distributed evenly among the other Public Service Agencies as shown in Attachment 4.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
The total HUD Funding for FY 2026/27 is:
CDBG Funds: $ 1,500,00
HOME Funds: $ 761,000
Total amount: $2,261,000
The Community Development Department’s budget includes ongoing appropriations of approximately $90,542 in the General Fund, $240,697 in the City Affordable Housing Fund, and $240,000 in the City Housing Successor Fund to further support these housing programs. These annual amounts are subject to the City’s appropriation of funds. These appropriations will aid in leveraging the new entitlement funds to support the goals set forth in the City’s Five-Year Consolidated Plan.
Secondly, the Housing Division has historically recognized savings at the end of each fiscal year under its annual General Fund appropriation. Staff is requesting City Council approval to allocate $30,000 from the Division’s existing General Fund appropriation to fund one year of services for the Bill Wilson Center’s Family Therapy Counseling Program.
Finally, staff is also recommending two $30,000 appropriations to Nextdoor Solutions for domestic violence support services using HOME ARP funding for fiscal years 2026/27 and 2027/28. These funds were already programmed for supportive services in the HOME ARP Plan, but additional action is needed to award these funds to Nextdoor Solutions.
COORDINATION
This report has been coordinated with the Finance Department and the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
The 30-day public comment period for the final version began April 2, 2026, and is extended through tonight’s hearing. Noticing the 30-day public comment period was published on February 18, 2026, in The Santa Clara Weekly. The final AAP was made available on the City’s website on April 2, 2026, and at public locations including the City Clerk’s Office and the Housing and Community Services Division. Notification of the availability of the AAP was also emailed to interested parties, which include local nonprofit agencies.
RECOMMENDATION
Recommendation
1. Note and File Public Comment on FY 2026/27 Annual Action Plan for U.S. Department of Housing and Urban Development Funds;
2. Approve the FY 2026/27 Annual Action Plan in substantially the form presented, and direct staff to summarize and include all public comments to be submitted to HUD within sixty (60) days after receiving the allocation notice;
3. Allocate $30,000 from the Housing Division’s annual General Fund budget for the Bill Wilson Center Family Therapy Counseling Program and reallocate $30,000 in HUD public service funding evenly to the other public service agencies;
4. Appropriate a total of $60,000 to Nextdoor Solutions for domestic violence support services using HOME ARP funding for fiscal years 2026/27 and 2027/28. These funds were already programmed for supportive services in the HOME ARP Plan, but additional action is needed to award these funds to Nextdoor Solutions;
4. Delegate authority to the City Manager or designee to negotiate, draft, and execute a two-year agreement with the County Office of Supportive Housing not-to-exceed $350,000, using local funding that is allocated through the City Council’s adoption of the FY 2026/27 Annual Action Plan in final forms approved by the City Attorney; and
5. Delegate authority to the City Manager or designee to execute all agreements and amendments for federal and local funding that is allocated through the City Council’s adoption of the FY 2026/27 Annual Action Plan in final forms approved by the City Attorney.
Staff
Reviewed by: Afshan Hamid, Director, Community Development
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. March 24, 2026, Report to Council
2. 2026-27 Annual Action Plan - Final - Public Comment Version with Actuals
3. 2026-27 Annual Action Plan - Final - Public Comment Version with Estimates
4. 2026-27 Annual Action Plan Breakdown - HUD Funds
5. 2026-27 Annual Action Plan Breakdown - LOCAL Funds