Special Notice / Hearing: 30-day notice (newspaper and electronic)
Vote Required: Majority
To: Honorable Board of Supervisors
From: Raymond J. Hodges, Director of Department of Housing
Subject: Approve FY25-26 Annual Action Plan and Winter NOFA Activities
RECOMMENDATION:
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Conduct a public hearing regarding the FY25-26 Annual Action Plan and Winter Notice of Funding Availability (NOFA) activities and invite community input on the use of funds for a potential Section 108 loan:
A) Open public hearing
B) Close public hearing
C) Adopt a resolution:
1. Approving and accepting the FY25-26 Annual Action Plan (“Annual Action Plan”), and the activities to be funded by the United States Department of Housing and Urban Development (“HUD”) entitlement awards: Community Development Block Grant (“CDBG”), Emergency Solutions Grant (“ESG”), and Home Investment Partnership Program (“HOME”) as provided in Attachments A and B; and
2. Approving the activities to be funded via the State’s ESG (“CA ESG”) and Permanent Local Housing Allocation (“PLHA”) programs as provided in Attachment A; and
3. Authorizing the Director of the Department of Housing or Designee, to make adjustments to the amounts and/or sources of individual awards and funding levels set forth in Attachment A as may be necessary and advisable to reflect final entitlement allocations released by HUD, to accommodate changes once state agreements are finalized for CA ESG and PLHA programs, and to allow for adjustments in funding sources or amounts across the federal and State sources included in the County’s Winter FY 25-26 Notice of Funding Availability (“NOFA”); and
4. Authorizing the Director of the Department of Housing, or Designee, to submit the Annual Action Plan, the related certifications, and all understandings and assurances contained therein to HUD, to take all necessary actions in connection with the submission of and any amendments to the Annual Action Plan, including providing additional information that the federal government may require, and to negotiate and execute contracts, documents, certifications, amendments and extensions, acting in consultation with the County Attorney, for the programs and activities as indicated in the Annual Action Plan as well as for activities to be funded by State CA ESG and PLHA funding as shown in Attachment A.
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BACKGROUND:
The County receives funding allocations from the United States Department of Housing and Urban Development (“HUD”) under three entitlement programs: Community Development Block Grant (“CDBG”), Home Investments Partnership Program (“HOME”) and the Emergency Solutions Grant program (“ESG”). The CDBG Program supports community development activities to build stronger and more resilient communities. Activities may address needs such as infrastructure, economic development projects, public facilities installation, community centers, housing rehabilitation, public services, clearance/acquisition, microenterprise assistance, code enforcement, homeowner assistance, and other specified activities.
The HOME Program provides formula grants to states and localities to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people.
The ESG Program is designed to assist people with quickly regaining stability in permanent housing after experiencing a housing crisis and/or homelessness.
To receive these funds, the County is required to submit an Annual Action Plan each year that delineates allocations of the HUD funding to specific local projects, and reports outcomes attributable to these expenditures. These required documents serve both as an application for funds and a local policy statement. The draft Annual Action Plan is attached hereto as Attachment B.
As the lead agency for the HUD-designated Urban County, the County receives CDBG funds on behalf of 16 smaller cities within the County and on its own behalf. The County also receives HOME funds on behalf of the San Mateo County HOME Consortium which includes the County, the City of South San Francisco, and the City of San Mateo. The City of Redwood City and the City of Daly City are not members of the County HOME Consortium and, instead, these cities receive HOME funding directly. Federal ESG funds are provided to the County as the sole recipient for countywide distribution.
In addition, the County is the sole recipient for countywide distribution of CA ESG funds, which were included in the County’s Winter FY25-26 Notice of Funding Availability (“NOFA”). One hundred sixty thousand dollars ($160,000) of CA ESG funds were included in the NOFA and three applications were recommended for funding as shown in Attachment A.
The County, along with the cities of Daly City, San Mateo, South San Francisco, and Redwood City, also receives Permanent Local Housing Allocation (“PHLA”) funding. PLHA provides funding to local governments in California for housing-related projects and programs that assist in addressing the unmet housing needs of their local communities. The County invests 50% of its annual PLHA allocation in projects that serve individuals at risk of or experiencing homelessness; 45% of its annual PLHA allocation in new affordable housing developments, and 5% of its annual PLHA allocation to support the administration of this source of funding. Two hundred forty-three thousand four hundred ninety-six dollars ($243,496) of PLHA funds were included in the NOFA and five applications were recommended for funding as shown in Attachment A.
In addition, the County is planning on applying for the Section 108 Loan Guarantee Program (Section 108) offered by HUD which would provide the County the ability to leverage up to $10,000,000 of its annual grant allocation to access low-cost, flexible financing which would be used to create a loan pool to fund strategic developments. The Section 108 loan is included in the FY25-26 Annual Action Plan and if approved, an amendment to the 2023-2027 Consolidated Plan will be needed. Public input is requested concerning the potential use of these funds for public facilities and/or for the repair of affordable rental housing complexes.
Lastly, $50,967.73 in unexpended CDBG funding from previous years, was added to an existing activity, Moonridge II rehabilitation program, for a total contract value of $664,747.73.
DISCUSSION:
The County’s Annual Action Plan links national objectives to local project and program priorities, providing necessary context and justification for local decisions regarding the use of federal funds. Four overarching principles govern the County’s administration of HUD entitlement funding: process, accountability, transparency, and collaboration. For the Annual Action Plan, a study session was held in February 2025 with the San Mateo County Housing and Community Development Committee (“HCDC”), followed by an HCDC public hearing with applicants on March 6, 2025. The public hearing with the Board on April 22, 2025 will conclude the required community participation process, after which the associated final Annual Action Plan will be submitted to HUD for review and approval on or around May 15, 2025.
HUD entitlements to the County over the past 20 years have declined, from a high of $5.1 million in FY 1994-1995 to $4.3 million in FY24-25. The total estimated value of funding available, which includes the most-recent HUD entitlement awards, any unused prior year funding, expected program income (primarily from loan payments), State ESG, and PLHA funding is $5,335,085.34. Of that total value, $2,058,984.26 will be allocated to new or rehabilitated affordable housing developments and public facility activities, $672,288.10 to minor home repair activities, $965,261.07 for community development services, $493,736.26 for Section 108 loan repayments, and $820,045.99 to program administration and delivery. Three hundred twenty-four thousand seven hundred sixty-nine dollars and sixty-six cents ($324,769.66) remains unallocated because of HUD set-aside requirements and fewer renewal applications than anticipated.
The current year is the second year of two-year agreements the County enters with providers to implement public service, micro-enterprise development, fair housing, and shelter operations programs. The funding approved in connection with the proposed Action Plan will provide one-time only funding for new affordable housing and housing rehab projects and minor home repair programs. Attachment A also details specific activities recommended for funding from the federal entitlement programs, the State’s ESG and PLHA programs, which were included in the Winter FY25-26.
In order to receive HUD entitlement funds, the County must submit certifications to HUD assuring, among other things, that the County: (1) will not discriminate in providing services; (2) is following a citizen’s participation process (now known as a community participation process and plan); (3) is providing a drug-free workplace for staff; and (4) has adopted and is enforcing a policy prohibiting the excessive use of force against individuals engaged in non-violent civil rights demonstrations.
In view of the foregoing, staff recommends that the Board approve and accept the FY25-26 Annual Action Plan and Winter FY25-26 NOFA program funding outlined in Attachments A and B, and authorize the Director of the Department of Housing or designee, to submit the Annual Action Plan, the related certifications, and all understandings and assurances contained therein to HUD, to take all necessary actions in connection with the submission of or amendments to the Annual Action Plan, including providing additional information that the federal government may require, and to negotiate and execute contracts, documents, certifications, amendments and extensions, acting in consultation with the County Attorney, for the programs and activities as indicated in the Annual Action Plan, for activities to be funded by State ESG and PLHA programs, and for an existing activity as shown in Attachment A.
The County Attorney has reviewed and approved the resolution as to form.
EQUITY IMPACT:
This resolution includes projects to be provided with CDBG, HOME, CA and federal ESG, and PLHA funds. These sources of funding have income-based restrictions to ensure that those served are extremely low to moderate-income. In the case of CA and federal ESG and PLHA funds, persons served must be persons experiencing or at-risk of homelessness.
FISCAL IMPACT:
Budgetary appropriation to approve and accept the Annual Action Plan sources and projects, the additional Winter FY25-26 NOFA projects funded via CA ESG and PLHA funds, and the addition of funding for the Moonridge project are included in the Department of Housing FY24-25 or FY25-26 Adopted Budget. There is no net County cost associated with expenditures under the federal entitlement programs and State pass-through funds.
ATTACHMENTS:
Attachment A: Winter Fiscal Year 2025-2026 NOFA Recommended Activities and Federal Funds Annual Action Plan Sources, Uses and Activities
Attachment B: Draft FY 25-26 Annual Action Plan