Report Prepared by: Kimberly Nutt, Housing Program Supervisor, Housing Division/Development Services Department
Title
SUBJECT: Public Hearing - Receipt of Final Public Comment and Approval of the U.S. Department of Housing and Urban Development (HUD) 2025-2029 Consolidated Plan, Which Includes the 2025 First Year Action Plan; Final Determination of 2025 Project Funding Pending HUD Approval; Authorization to Complete and Submit the Final Plan to HUD for Approval; and Authorize City Manager to Execute all Related Documents and Agreements to Implement the Plan
REPORT IN BRIEF
Provides an opportunity for the Public to provide their final comments relating to the 2025-2029 Consolidated Plan, which includes the 2025 First Year Action Plan; Requests City Council final approval of 2025 program year project funding as recommended by staff and subsequent approval of the Draft Consolidated Plan, to enable final completion and submittal to HUD; and, Authorizes the City Manager to execute all related agreements and implementing documents, and the Finance Officer to perform necessary appropriations of HUD funds once disbursed.
RECOMMENDATION
City Council -
A. Open and conduct a Public Hearing, to receive the views and comments from interested residents and stakeholders regarding the use of HUD-issued federal funding and other related areas of interest regarding the 2025-2029 Consolidated Plan and 2025 First Year Action Plan; and,
City Council - Adopt a motion:
B. Adopting Resolution 2025-41, A Resolution of the City Council of the City of Merced, California, Approving the Program Year 2025-2029 Consolidated Plan and First Year 2025 Annual Action Plan, and Certifying Compliance with the Requirements of the Community Development Block Grant (CDBG) and Home Investment Partnership (HOME) Programs; and,
C. Allocating CDBG and HOME funding to 2025 program year projects, contingent upon HUD’s final approval and provided all National Objectives and other related HUD requirements, including environmental clearances, are met and obtained for each activity, to enable completion of the Consolidated Plan and First Year Action Plan and its submittal to HUD; and,
D. Authorizing staff to finalize and complete all sections of the plan and work with HUD for final submission, minor changes, and approval of all activities; authorize the City Manager to execute all related documents and certifications, including agreements with HUD; and,
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, and refer to staff for reconsideration of and/or minor changes to specific items that would not trigger a substantial amendment, prior to authorized submittal to HUD (specific items to be addressed in the motion); or,
3. Refer back to staff for reconsideration of specific items and defer approval to a future City Council meeting (specific items and date and time to be specified in City Council motion); or,
4. Deny the request (City would not receive HUD funding for five years); or,
5. Continue to a future City Council meeting (date and time to be specified in City Council motion).
AUTHORITY
Title 24 of the Code of Federal Regulations Section 91, requiring receiving agencies to involve citizens in the development of the Consolidated Plan, Annual Action Plan, Consolidated Annual Performance and Evaluation Report (CAPER), and Citizen Participation Plan; and the Charter of the City of Merced, Section 405,409, and 411, et seq.
CITY COUNCIL PRIORITIES
As provided for in the 2025-26 Draft City Budget; and City Council priorities regarding quality of life, economic development, public safety, parks, and infrastructure, affordable housing, homelessness and homeless prevention, and community investment that can be addressed through HUD funding.
DISCUSSION
Staff is requesting that a second and final public hearing be held to receive final public input on the Draft 2025-2029 Consolidated Plan that is the five year strategy required by the U.S. Department of Housing and Urban Development (HUD) to be eligible for Community Development Block Grant (CDBG) and Home Investment Partnership (HOME) funding over the next five years (“Con Plan period”). Following the close of the public hearing and any discussion by Council, staff requests approval of the Consolidated Plan.
Within in the Consolidated Plan document is the First Year Action Plan, which carries out eligible activities for the first fiscal year (2025-2026) of the Con Plan period with 2025 Program Year CDBG and HOME allocations, which were announced nationally by HUD on May 14, 2025. The plans are due to HUD within 60 days following this announcement date (no later than July 13, 2025). Once submitted to HUD, the plans will be deemed approved 45 days later, unless HUD notifies the City before then that the plans are disapproved (and the reasons thereof).
About the 2025-2029 Consolidated Plan
Once every five years, HUD requires jurisdictions that receive federal entitlement funds through its Community Planning and Development Department (HUD CPD) to develop and prepare a five-year Consolidated Plan that details and analyzes data within the “Needs Assessment” sections of the plan about the housing and community development needs of its low- to moderate-income (LMI) residents. In the subsequent “Strategic Plan” section, the Consolidated Plan then lays an anticipated strategy for the types and estimated dollar amounts of projects that the jurisdiction may undertake over the five-year period to address a list of the highest priority needs of LMI residents, as expressed through public input and stakeholder consultation. An associated list of anticipated goals and outcome objectives is also developed from this process.
Coinciding with the development of the Strategic Plan, the first year Action Plan is also established within the Con Plan document and details specific projects and associated goals, expected outcomes, and actual dollar amounts that will be carried out and expended during the first year of the Consolidated Plan cycle, based on the announcement from HUD of the anticipated funding to be received after the Con Plan/Action Plan package is approved.
Each year thereafter, the Consolidated Plan/Strategic Plan will serve as a guide for how the City has said it will expend HUD’s fund distributions. Each Annual Action Plan, including the first year plan, essentially becomes the City’s application to HUD for the grant funds that have been set aside for us from Congress through HUD’s formula allocation. Any substantial deviation from the approved Strategic Plan or an approved Annual Action Plan will require a public input process and HUD approval (a substantial amendment).
Citizen Participation
Consistent with the City’s current adopted Citizen Participation Plan (CPP), Housing staff implemented a comprehensive citizen and stakeholder engagement, analysis, and planning process in November 2024, after enlisting the services of RSG Solutions to assist with this process and with plan preparation. RSG’s contracted services also include updates to the CPP, Analysis of Impediments to Fair Housing, and assisting with the drafting and compilation of policy and procedure documents, to come later this calendar year.
Alongside RSG, Housing staff used multiple methods to engage with and obtain input from Merced residents and interested community stakeholders, including:
• Held 3 community meetings with residents - January 8 (virtual), January 16 (in-person), and February 25, 2025 (virtual)
• Held 2 stakeholder meetings - January 9 (virtual) and January 17, 2025 (in-person)
• Distributed an online-based Community Needs Survey to Merced City residents through utility bill newsletters, City website, the City’s Instagram and Facebook social media pages, “The Bus” transit (electronic screens in buses displayed QR codes), and through distribution of flyers at the Post Office, Merced College, UC Merced, the Transpo Center, Senior Center, Community Action Agency, Golden Valley Health Center, the Retreat Apartments, Merced County Library, City Hall, Parks & Recreation, and at Town Hall meetings. 92 responses were recorded. Hard copies of the survey were also offered and distributed to those that requested it.
• Distributed an online-based Stakeholder Consultation Survey to multiple non-profit, business, and governmental agencies. 9 responses were recorded.
• Held 3 one-on-one stakeholder interviews - Merced Rescue Mission, Merced County Behavior Health and Recovery Services, and the Merced County Hispanic Chamber of Commerce to gather input from these crucial community agencies regarding their specialized areas of expertise.
• Held the First Public Hearing on February 18, 2025 (Attachment 4) - introduced broadly scoped need statements formulated from community input that had been gathered to date. These need statements later became the Con Plan’s “Guiding Principles” as the structure of the goals and objectives to be carried out over the Con Plan period were further developed and contemplated to meet the needs of project categorization and outcome reporting by staff.
• Two 30-day Public Review and Comment Periods: 1) February 19 to March 20, 2025 - to introduce the completed needs assessment and initial strategic plan priority needs and goals, and to make a preliminary draft of the Con Plan and Action Plans available for viewing and comment; 2) April 23 to May 23, 2025 - to post the completed draft of the Con Plan and Action Plan with completed goals and objectives, anticipated outcomes, and estimated funding. The posted draft included a contingency plan for how the pending allocations would be handled if the actual amounts were more or less than the estimates.
• Published Public Notices in the Merced County Times and Merced Sun-Star in English, Spanish, and Hmong languages to inform residents and stakeholders of Notices of Funding Opportunity (NOFO), both Public Hearings, and both Public Review and Comment Periods (1/8/2025, 1/9/2025, 1/31/2025, 2/6/2025, 3/20/2025, 3/21/2025, 5/22/2025, and 5/23/2025).
Spanish and Hmong interpretation was made available at all meetings, and all in-person meetings were held at disabled accessible locations.
Though not a required CPP element, Housing staff also attended each of the City Council Town Hall meetings to note more citizen comments regarding community needs, filtering what needs might be able to be addressed with HUD funding. Additionally, staff answered questions from residents who attended the Town Hall meetings and informed them of the resident community survey that was active during that time.
Analysis of Impediments to Fair Housing Choice
A historical regulatory requirement of the Consolidated Plan analysis and development process has also been to conduct a fair housing study - also known as an Analysis of Impediments to Fair Housing Choice, or simply “AI” - and submit this study to HUD at the same time as the Consolidated Plan. When RSG Solutions was first contracted to assist the City with the Consolidated Plan, work to update the 2020 AI was planned to commence, as well.
However, after the change in the Federal Administration in January 2025 and the subsequent revoking of related executive orders of the previous administration, HUD terminated the previously issued Affirmatively Furthering Fair Housing (AFFH) rule that required submission of an updated AI and replaced it with an interim rule which requires a general commitment of the City, through execution of the AFFH certifications that are routinely signed each year, that the City will be active in promoting fair housing for all residents, such as helping to eliminate housing discrimination through fair housing services.
This said, the City and the Housing Division remain committed to ensuring fair housing for all residents. The existing 2020 AI will continue to be referenced for actionable items and is planned to be updated with minor amendments later this year in other contracted work with RSG to keep it up to date.
2025 First Year Action Plan - Project Funding
In late December 2024, and as publicly noticed in early January 2025, area non-profit organizations were informed about the availability of HUD funding that could be applied for to carry out programs that would meet one of the priority needs of the community during the 2025 program year.
At the April 21, 2025, City Council meeting (Attachment 5), Housing staff presented the list of applications, scoring results, and potential projects to be included in the First Year Annual Plan and received Council direction regarding public service projects. The list of applications and project scoring results that was presented at the April 21, 2025, meeting is included again with this report at Attachment 3 for convenience.
After discussion, Council’s 4/21/25 direction was: 1) to not include the Love Never Fails/Bay Valley Foundation employment training project in the final list of funding; 2) to increase the Project Sentinel Tenant-Landlord (TLL) Counseling program to $50,000; and, 3) distribute the remaining balance to the Harvest Time “Food 4 You” program. Please see Attachment 2 (Amended/Actual Budget) and 6 (PowerPoint) for these adjusted amounts, which also reflect the slight increase of the previously estimated 15% Public Services cap due to HUD’s allocation of CDBG funds being more than previously estimated.
Housing staff was unable to obtain a response from WorkNet regarding the concerns discussed at the April meeting. Staff has encouraged Love Never Fails and all other listed project applicants to attend and speak during the final public hearing, so that all the organizations have an equal opportunity to directly address any questions prior to final action regarding funding. This will also better inform the public about what programs will be available to them over the coming year.
Council still has the option of awarding funding to the Love Never Fails employment training program, in the event Council’s prior concerns are resolved during the organizations’ presentations. Since employment training was shown during the needs assessment process as the second highest overall community need, a specific ‘employment training’ Con Plan/Strategic Plan goal and objective has been set, in order for the City to support these types of projects over the five years for residents’ benefit.
Funds Available
Per HUD’s announcement of allocation figures on May 14, 2025, CDBG funding for program year 2025 (Fiscal Year 2025-2026) is expected to be $1,089,413, and CDBG program income during the year is estimated to be $108,000, with prior year carryover funds to begin the year currently standing at $22,593 (total of $1,220,006 CDBG funds available).
The expected HOME 2025 program year allocation is $447,510.24, with $60,000 in 2025-26 HOME program income expected, and a total of $1,218,701.87 of prior year resources on hand before final reconciliation of all receipts of the current year (total of $1,726,212.11 HOME funds available).
Final totals may slightly change prior to submittal of the Con Plan to HUD, after final invoices for the current program are submitted and tabulated, additional program income received since early April is accounted for, and the amount of carryover funding is updated to the most current available figures.
A final budget for each grant’s expected allocation is included at Attachment 2.
IMPACT ON CITY RESOURCES
No budget or appropriation action is required at this time. Due to adjustments in progress regarding how activity delivery and general administration costs are charged to the HUD allocations, General Fund and/or Affordable Housing Funds may be needed to supplement the Housing Division budget during the 2025-2026 fiscal year. The Housing Division is currently fully staffed at three positions to begin the fiscal year.
HUD notified the City of its expected CDBG and HOME allocations for Fiscal Year 2025-2026 on May 14, 2025, and the budget outlined in the Draft First Year 2025 Action Plan is based upon those expected allocation amounts.
ATTACHMENTS
1. Final Draft 2025-2029 Consolidated Plan/First Year 2025 Action Plan
2. CDBG and HOME Final PY2025 Budget
3. Project Application Scoring Results
4. Admin Report #25-125 (February 18, 2025) - First Public Hearing
5. Admin Report #25-279 (April 21, 2025) - Presentation of Proposed Project Funding
6. Presentation - Final Public Hearing
7. Draft Resolution