REPORT TO COUNCIL
SUBJECT
Title
Public Hearing: Opportunity for Public Comment and Action on the Final Version of the 2025-2030 Consolidated Plan & FY 25/26 Annual Action Plan for the Use of Federal Housing and Urban Development (HUD) Grant Funds
Report
BACKGROUND
The City of Santa Clara receives entitlement funding from two federal programs administered by the United States Department of Housing and Urban Development (HUD): Community Development Block Grant (CDBG) and Home Investment Partnerships Act (HOME). The purpose of these two programs is to benefit persons of low and moderate incomes by providing decent, affordable housing, public services, and community development. Every five years, the City is required to prepare a Consolidated Plan and every year an Annual Action Plan for the first year in the upcoming cycle.
The City must hold two public hearings on these plans. One of the public hearings must be held during the drafting phase; this occurred at the City Council meeting on April 8, 2025. Several public service agencies submitted written emails and/or spoke in support of the funding proposals. This report serves as the second and final formal 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 11, 2025 and will end on May 13, 2025. The Report to Council for the April 8, 2025 Public Hearing is included as Attachment 1 for reference.
DISCUSSION
Staff is asking City Council to receive public input on the final versions of the Consolidated Plan and FY 25/26 Annual Action Plan. Staff made minor updates to these plans from what was presented on April 8, 2025. These minor revisions are highlighted in Attachment 2 for reference.
Attachment 3 (“Annual Action Plan Breakdown-HUD Funds”) provides a more detailed breakdown of fiscal year 2025/2026 HUD Estimated Expected Resources and how the City proposes to spend them. No changes were made to this breakdown since the first hearing.
Public Service Agencies (PSAs) submitted applications during a Notice of Funding Availability (NOFA) process earlier this year. Submissions were ranked based on whether the proposed activity was deemed a high priority and consistent with the objectives and priorities of the Consolidated Plan, managerial and financial capability to receive and expend grant funds, if the majority of beneficiaries to be served were extremely low and low income, the amount of funds leveraged, and the agency’s history of drawing funds down. Other considerations were years of service, the number of people served versus the amount of funds granted, and whether other agencies provide similar services.
Of the estimated $1,050,000 in FY 25/26 CDBG funds, $180,000 is the maximum the City can spend on public service activities due to HUD’s 15% public service cap. Based upon the applications received for the current cycle, staff recommends the following distribution of funds. The applicants are ranked from high to low in Table 1 based on their scoring in the Notice of Funding Availability. If actual CDBG funds are less than projected, the lowest scoring agency(ies) will not be funded. The allocations in Table 1 have not changed since the first public hearing.
Table 1: Proposed CDGB Funding Distribution*:
*Agencies listed are in order of NOFA scoring from highest to lowest.
HUD expects to announce actual funding amounts on May 16, 2025. After the amounts are announced, staff will make necessary adjustments to both plans following contingency language in the Annual Action Plan and included below:
CDBG FUNDING CONTINGENCIES
More than expected: If the City receives more CDBG Entitlement funding than expected, funds will be used for the City Homeowner Rehabilitation Program (i.e., NCIP) and/or the Minor Repair Program. The City reserves the option to provide more funding for public services if the Public Service Cap allows for another agency to be funded to at least $30,000.
Less than expected: If the City receives less CDBG Entitlement funding than expected, the Public Service and Administration Caps will be recalculated and amounts adjusted. If the re-calculation results in a Public Service Cap of less than $180,000, the City will need to reduce its number of Public Service Agencies accordingly to come under the Public Service Cap. The agency(ies) that scored lowest during the NOFA process will be cut first. Further, the amount allocated to the Minor Repair Program may need to be reduced. All Program Income is placed in the Revolving Loan Fund for use in the NCIP program.
HOME FUNDING CONTINGENCIES
More than expected: If the City receives more HOME Entitlement funding than expected, the CHDO set-aside amounts and the Administration amounts will be recalculated. All remaining funds will be used for the TBRA Program.
Less than expected: If the City receives less HOME Entitlement funding than expected, the CHDO set-aside amounts and the Administration amounts will be recalculated. The TBRA program will then be reduced in funding.
Please note that Next Door Solutions, a public agency that provides services to domestic violence survivors, will continue to be funded with HOME-ARP funding in the amount of $30,000 per year. HOME-ARP funds are managed through a separate plan and not included in the Consolidated Plan or AAP.
Staff proposes to continue using local funding to support additional public services as summarized in Table 2. This allocation has not changed since the first public hearing.
Table 2: Proposed Local Funding for other Public Services:
For capital projects, staff recommends the following allocation as summarized in Table 3. This allocation has not changed since the first public hearing.
Table 3: Proposed HUD funding for Capital Improvements and Affordable Housing:
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 estimated resources from HUD for FY 25/26 are $1,050,000 in CDBG funds and $665,000 in HOME funds. Additionally, subject to City Council approval, as part of the FY 2025/26 and FY 2026/27 Proposed Biennial Operating Budget, the Community Development Department budget includes appropriations of $89,459 in the General Fund, $225,697 in the City Affordable Housing Fund, and $250,000 in the City Housing Successor Fund for the funding of the other Public Services (as detailed in Table 2).
These appropriations, in conjunction with the estimated new entitlement funds, would be used to support the goals set forth in the City’s Consolidated Plan.
Actions to recognize and appropriate the CDBG and HOME FY 25/26 federal entitlement funds will be brought forward as part of the FY 2025/26 and FY 2026/27 Biennial Operating Budget process.
COORDINATION
This report has been coordinated with the Finance Department and 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.
Preparation of the Consolidated Plan follows a procedure determined by HUD and has included two public hearings to identify community needs and objectives, and to review priorities for the City’s HUD funding allocations. The first public hearing was held at the April 8, 2025 Council Meeting, and the second is being held tonight. Comments made at the two public hearings will be noted in the final Consolidated Plan.
The Consolidated Plan and Annual Action Plan were made available for public review and comment for a 30-day period from April 11 thru May 13, 2025. Noticing of the 30-day public comment period was published on March 5, 2025 in The Santa Clara Weekly. The Consolidated Plan was also made available on the City’s website, and at public locations including the City Clerk’s Office, the Housing and Community Services Division, and City libraries. 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 the 2025-2030 Final Consolidated Plan and FY 25/26 Annual Action Plan for U.S. Department of Housing and Urban Development Funds.
2. Approve the 2025-2030 Final Consolidated Plan and FY 25/26 Annual Action Plan, in the forms presented, and direct staff to summarize and include all public comments to be submitted to HUD within sixty (60) days after receiving allocation notice.
3. Delegate authority to the City Manager or designee to execute all agreements and amendments that exceed the City’s $250,000 threshold for federal and local funding that is allocated through the City Council’s adoption of the FY 25/26 Annual Action Plan in final forms approved by the City Attorney.
Staff
Reviewed by: Afshan Hamid, Director of Community Development
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. April 8, 2025 Report To Council
2. Final 2025-2030 Consolidated Plan and FY 25/26 Annual Action Plan
3. FY 25/26 Annual Action Plan Breakdown - HUD Funds