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Report regarding holding a Public Hearing for a Community Needs Assessment for the HUD Community Development Block Grant Program Year 2026-2027 Annual Action Plan (Alvina Condon, Management Analyst II)
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RECOMMENDATION
Staff recommends that the City Council hold a public hearing to receive public testimony on the City’s housing, community, and economic development needs for the Community Development Block Grant (CDBG) Program Year 2026-2027 Annual Action Plan, and to provide direction to the CDBG Subcommittee regarding funding priorities.
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BACKGROUND/DISCUSSION
As an entitlement jurisdiction, South San Francisco receives annual funding through the federal Community Development Block Grant (CDBG) program because it meets population and housing distress thresholds established by the U.S. Department of Housing and Urban Development (HUD). Entitlement status allows the City to receive funds directly from HUD to support eligible activities that benefit low- and moderate-income residents, address community development needs, and improve housing and public infrastructure. For Program Year 2025-2026 (PY 2025-26), South San Francisco received a CDBG allocation of $456,319.
HUD requires entitlement jurisdictions to prepare an Annual Action Plan for each program year as a condition of receiving CDBG funding. The Annual Action Plan identifies priority housing, community, and economic development needs, establishes goals, and outlines the programs and activities that will be undertaken to address those needs. As part of HUD’s citizen participation requirements, the City is required to conduct a community needs assessment and hold two public hearings during the development of the Annual Action Plan to ensure meaningful public input.
The purpose of the February 25, 2026 public hearing is to fulfill HUD’s requirement for a community needs assessment by soliciting public input to inform the development of the Program Year 2026-2027 (PY 2026-27) Annual Action Plan. In addition, nonprofit organizations seeking funding may provide brief comments to City Council regarding their proposed programs and activities. This hearing also provides an opportunity for City Council to ask questions of applicants and to provide direction to the CDBG Subcommittee regarding funding priorities. Applications submitted by nonprofit organizations are included as Attachment 1.
A second public hearing is tentatively scheduled for May 27, 2026, at which time City Council will consider adoption of the PY 2026-27 Annual Action Plan and make final determinations regarding funding allocations.
Notice of Funding Availability
For PY 2026-27, the City conducted a coordinated solicitation process to receive applications for both CDBG-funded and non-federal funding sources supporting public services, minor home repair, fair housing, and other City-funded programs. This process was administered through the release of a consolidated Notice of Funding Availability (NOFA), which outlines eligibility requirements, funding priorities, and submission instructions. To improve efficiency and reduce administrative burden for applicants, the NOFA was issued in collaboration with San Mateo County and the other CDBG entitlement jurisdictions within the county. Although applicants must submit individual funding requests to each jurisdiction, they are able to complete core organizational, administrative, and contact information a single time through the shared application framework. PY2026-27 represents the first year of a two-year funding cycle. The NOFA was published on the City’s website and through the City Data Services (CDS) portal on December 2, 2025. In addition, the NOFA was advertised on the City’s website and distributed via email to organizations that have received funding in prior years. Staff also routinely seek opportunities to expand outreach and invite additional organizations whose services may benefit the community, and welcome recommendations for potential applicants.
In coordination with other jurisdictions, the City hosted a virtual Technical Assistance Workshop on December 16, 2025. During the workshop, staff provided an overview of eligible uses of CDBG and City funds, and CDS staff demonstrated the CDS application platform. Applications were due by 4:00 p.m. on January 15, 2026. The City received 10 applications for Public Services funding, one application (under two programs) for Minor Home Repair funding, and one application for Fair Housing services.
Applications for Funding
Applications are evaluated based on multiple criteria, including CDBG eligibility requirements and consistency with the City’s adopted priorities. City staff review all submissions for completeness, eligibility under 24 CFR Part 570, alignment with a national objective, and organizational capacity. As part of this process, staff also consider subrecipients’ prior performance, including past contract compliance, expenditure timeliness, and monitoring outcomes, in conjunction with current funding priorities and Consolidated Plan goals to inform funding determinations. Applications are evaluated using standardized criteria by staff and the City Council CDBG Subcommittee, with funding recommendations advanced to the City Manager for review prior to submission to HUD.
To be eligible for federal funding, proposed programs must meet at least one of the goals identified in the City’s 2023-2027 Consolidated Plan, which governs CDBG and other HUD-funded programs for Program Years 2023-24 through 2027-28.
Through the Consolidated Plan community engagement process, the City identified the most significant housing and community development needs and established the following four goals:
• Goal 1: Increase, maintain, and improve the supply of affordable housing for extremely low- to moderate-income individuals and families.
• Goal 2: Preserve and improve public facilities and infrastructure serving low-income neighborhoods or special needs populations.
• Goal 3: Provide public services that improve quality of life for low-income individuals and families, including those at risk of homelessness and special needs populations.
• Goal 4: Support service-enriched emergency shelter and transitional housing for individuals and families experiencing homelessness.
The City may not allocate CDBG funds to programs that do not address at least one of these goals. Funding programs outside the scope of these priorities would require an amendment to the Consolidated Plan and additional public review, consistent with HUD regulations.
Funds Available for PY 2026-27
HUD provides jurisdictions with an estimated CDBG entitlement amount in advance of issuing final allocation notices. The City has not yet received its confirmed CDBG entitlement allocation for PY 2026-27. This delay is typical for the CDBG program, as funding levels are subject to the federal budget process and associated timelines. Notwithstanding the pending confirmation, staff has developed a schedule that allows the City to comply with HUD requirements, adopt the Annual Action Plan by June 2026, and ensure adequate opportunities for community engagement.
In advance of receiving the confirmed entitlement amount, staff recommends using an estimated CDBG allocation of $456,000, which is consistent with the City’s PY 2025-26 award. Funding recommendations will be reviewed by the CDBG Subcommittee and subsequently presented to the City Council, and will include a contingency plan allowing for adjustments within a 20 percent variance, as permitted under HUD regulations. If the final entitlement amount varies by more than 20 percent from the estimate, staff will return to the CDBG Subcommittee and/or City Council with revised funding recommendations, as required by HUD.
The proposed budget, included as Attachment 2, reflects the PY 2026-27 funding requests received. HUD regulations limit expenditures for Public Services to 15% and Administrative costs to 20% of the City’s annual CDBG allocation. In recognition of these constraints, and to reduce reliance on federal funding for public services, the City has increasingly supplemented CDBG-funded public services with other funding sources.
In recent years, federal program requirements and eligibility criteria, including requirements related to the legal citizenship status of program participants, have introduced additional compliance considerations for service providers. These requirements may limit the suitability of CDBG funding for programs intended to serve community members in an inclusive manner. For PY 2026-27, staff have projected a budget up to $212,000 from non-CDBG sources, including Permanent Local Housing Allocation (PLHA) funds, HOME administrative funds, and Economic and Community Development General Funds (ECD General Funds), to support services such as emergency shelter, transitional housing, housing navigation, and referral services. This funding strategy allows the City to continue addressing critical community needs while reducing long-term reliance on federal funding streams.
Below is a summary of funding activities available through the CDBG Program and supplemental City funding sources for PY 2026-27. As part of the City’s ongoing effort to reduce reliance on federal funding for public services, CDBG resources are being gradually shifted from public services toward public improvement activities. Public services will continue to be supported through a combination of limited CDBG funds and alternative local and state funding sources, including HOME Administrative funds, the Housing Trust Fund, and ECD General Funds.
CDBG Public Improvement Program Activities - $364,800 Available from PY 2026-27 (Estimated)
CDBG funds not allocated to public services, minor home repair, or administrative expenses are directed toward public improvement activities. These activities support Consolidated Plan Goal 2 and include capital improvement projects that primarily benefit low-income neighborhoods and populations. While applications for public improvement projects were not solicited through the NOFA, program staff have coordinated with other City departments to identify eligible projects. Recent CDBG-funded public improvements include citywide curb ramp accessibility upgrades and the installation of an accessible pathway at Cypress & Pine Park.
CDBG Administration - $91,200 Available (Estimated)
HUD regulations allow the City to allocate up to 20% of its annual CDBG entitlement toward program administration. These funds support grant management, compliance, reporting, and monitoring activities necessary to administer the CDBG Program.
City-Funded Housing and Public Services Activities - $200,000 Available (Estimated)
Income received from in-lieu fee payments is deposited into the City’s Housing Trust Fund (Fund 205). For PY 2026-27, approximately $100,000 in Housing Trust Fund resources is proposed to support housing-related public services, including emergency shelter, transitional housing, and housing stabilization activities for low-income households.
In addition, approximately $100,000 in ECD General Funds is proposed to support public services that would otherwise be subject to the CDBG public services cap. Leveraging these non-federal funding sources allows the City to continue addressing critical housing and service needs while preserving CDBG funds for capital and infrastructure investments.
PLHA Minor Home Repair Activities - $100,000 Available
Minor Home Repair activities support the preservation and improvement of affordable housing for low-income households and will be supported with PLHA funds. Eligible activities include health and safety repairs and accessibility modifications that allow residents to safely remain in their homes.
HOME Admin. Fair Housing Activities - Approximately $12,000 Available (Estimated)
For PY 2026-27, the City proposes to allocate approximately $12,000 in HOME Administrative funds received through the County to support fair housing services. CDBG regulations require the City to affirmatively further fair housing, and eligible fair housing activities may only be funded using administrative or public service-type funds.
Next Steps
Following this public hearing held at City Council, the CDBG Subcommittee will meet to consider the public testimonies and finalize funding recommendations in March 2026.
FISCAL IMPACT
There is no fiscal impact on the General Fund to hold this Public Hearing. For the City to allocate federal funds, two Public Hearings must be held - this is the first of two hearings. At a subsequent City Council meeting, Council will be asked to consider adopting the Annual Action Plan following the second Public Hearing, which will include funding appropriations for both CDBG and non-federal funding sources.
CONCLUSION
Holding the first of two required public hearings for the PY 2026-27 Annual Action Plan is a key step in meeting HUD’s citizen participation requirements and obtaining City Council and community input on priority housing, community, and economic development needs. Input received at this hearing will guide funding recommendations and ensure that CDBG and supplemental City resources are allocated in a manner that is responsive to community needs and City Council priorities.
Attachments:
1. PY 2026-27 Consolidated Package of Applications Received
2. PY 2026-27 Grant Allocation Requests