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 FY26-27 Annual Action Plan and Winter NOFA Activities
RECOMMENDATION:
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Conduct a public hearing regarding the Fiscal Year 2026-2027 Annual Action Plan and Winter Notice of Funding Availability (“NOFA”) activities and the use of funds for the City of East Palo Alto’s Minor Home Repair Program, which will be administered by the County of San Mateo:
A) Open Public Hearing
B) Close Public Hearing
C) Adopt a resolution:
1. Approving and accepting the Fiscal Year 2026-2027 (FY 2026-27) 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 the City of East Palo Alto’s Minor Home Repair (EPA MHR) 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 the state agreement is finalized for the CA ESG program, and to allow for adjustments in funding sources or amounts across the federal and State sources included in the County’s Winter FY 2026-27 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 City of East Palo Alto funding as shown in Attachment A; and
5. Authorizing the Director of the Department of Housing, or Designee, to execute a Memorandum of Understanding with the City of East Palo Alto, as well as any required documents, certifications, amendments and extensions, acting in consultation with the County Attorney, for the EPA MHR program; and
6. Authorizing the Director of the Department of Housing, or Designee, to negotiate and execute any required documents, certifications, amendments and extensions, acting in consultation with the County Attorney, to add any unexpended CDBG funding from previous years to the Middlefield Junction Childcare activity for up to the FY 2026-27 requested amount of $996,387.46, or in a higher amount as needed to meet CDBG Timeliness requirements.
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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 households.
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 Redwood City, the City of San Mateo, and the City of South San Francisco. The City of Daly City is not a member of the County HOME Consortium and, instead, Daly City receives 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 FY 2026-27 NOFA. One hundred sixty thousand dollars ($163,702.44) of CA ESG funds were included in the NOFA and two applications were recommended for funding as shown in Attachment A. No rapid re-housing applications were received, and an over-the-counter process will be employed to allocate the required forty percent of the entitlement required to be invested in this programmatic area.
The City of East Palo Alto has allocated funds to contribute to financing minor home repairs on properties in the City to assist with preserving affordable housing. The City recognizes that staff of the County’s Department of Housing have expertise in managing nonprofit operators of minor home repair programs across the County, including in the City. Therefore, to increase administrative efficiency and reduce duplication of effort, the City wishes to enter into a Memorandum of Understanding (MOU) with the County to transfer $125,000 in City funds for the EPA MHR Program to the County to administer this program in accordance with the terms of this MOU attached hereto in Attachment C. The County shall retain $18,750 of said funding as a fixed fee to contribute to covering the County’s costs of administering the MHR Program.
Lastly, in order to meet CDBG Timeliness requirements, any unexpended CDBG funding from previous years, may be added to existing activities including the Middlefield Junction Childcare Center application for up to the FY 2026-27 requested amount of $996,387.46, or in a higher amount as needed to meet CDBG Timeliness requirements.
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 public hearing was held in March 2026 with the San Mateo County Housing and Community Development Committee (HCDC), applicants and the general public. The public hearing with the Board on April 21, 2026, 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, 2026.
HUD entitlements to the County over the past 20 years have declined, from a high of $5.1 million in FY 1994-95 to $3.78 million in FY 2025-26. The total estimated value of the FY26-27 funding available, which includes the most-recent HUD entitlement awards, any unused prior year funding, expected program income (primarily from loan payments), State CA ESG, and the City of East Palo Alto funding is $6,076,296.79. Of that total value, $2,620,815.39 will be allocated to new affordable housing developments and public facility activities, $595,834.00 to minor home repair activities, $389,273.50 for community development services, $50,000 for micro-enterprise / economic development services, $290,357.79 for services for persons experiencing homelessness, $493,716.26 for Section 108 loan repayments, and $853,122.34 to program administration and delivery. Due to the lack of applications for HUD set-aside requirements for HOME Community Housing Development Organizations (CHDO) and rapid re-housing programs, $783,177.51 remains unallocated and will be allocated via an over-the-counter process or added to the Winter FY 2027-28 NOFA.
The current year is the first year of two-year agreements the County enters with providers to implement public service, micro-enterprise development, fair housing, minor home repair (CDBG-funded), rapid re-housing, and shelter operations programs. The funding approved in connection with the proposed Action Plan will provide one-time funding for new affordable housing and public facility activities. The City of East Palo Alto funds are for one year, with the option of extending them for one additional year. Attachment A also details specific activities recommended for funding from the federal entitlement programs, the State’s ESG program and the City of East Palo Alto’s Minor Home Repair programs, which were included in the Winter FY 2026-27 NOFA.
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 FY 2026-27 Annual Action Plan and Winter FY 2026-27 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 and/or MOUs, 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 CA ESG and the EPA MHR programs as shown in Attachment A.
The County Attorney has reviewed and approved the resolution as to form.
PERFORMANCE MEASURE:
As a result of the federal and state funding invested in the proposals from the Winter FY 2026-27 NOFA, nearly 2,000 persons will have more stable housing due to new affordable housing units to be constructed, critical improvements to existing housing units, services to decrease the length and severity of homelessness, legal and fair housing support, micro-enterprise advising and subsidized childcare to increase earning capacity, and the defraying of costs for basic needs so people are not forced to choose between making rent/mortgage payments and obtaining other basic needs like food and medicine.
|
Impact Area |
Number to be served |
Comments |
|
Provide services to low to moderate income and special needs households |
1,063 persons |
Basic needs, legal/fair housing services |
|
Preserve and protect existing affordable housing |
70 homes, housing approx. 105 persons |
Minor home repair programs |
|
Support development of new housing for low to moderate income and special needs households |
63 housing units, housing approx. 147 persons |
The Ridge on Masonic, Belmont |
|
Assist access to shelter and stable housing |
564 unhoused persons |
Shelter operations support and rapid re-housing programs |
|
Improve/construct public facilities |
36 infants and toddlers |
Middlefield Junction Childcare Center |
|
Support micro-enterprise and job creation/retention |
40 entrepreneurs |
Renaissance Center |
COMMUNITY IMPACT:
This resolution includes activities to be provided with CDBG, HOME, CA and federal ESG, and the City of East Palo Alto funds. These sources of funding have income-based restrictions to ensure that the approximately 2,000 community members to be served with these funds are extremely low to moderate income. In the case of CA and federal ESG funds, only persons experiencing, or at risk of, homelessness will be served.
FISCAL IMPACT:
Budgetary appropriation to approve and accept the Annual Action Plan sources and activities and the additional Winter FY 2026-27 NOFA activities funded via CA ESG and City of East Palo Alto funds will be included in the Department of Housing FY 2026-27 Adopted Budget. There is no net County cost associated with expenditures under the federal entitlement programs, State or City of East Palo Alto pass-through funds.
ATTACHMENTS:
Attachment A: Winter Fiscal Year 2026-2027 NOFA Recommended Activities including Federal Funds Annual Action Plan Sources, Uses and Activities
Attachment B: Draft FY 2026-27 Annual Action Plan
Attachment C: MOU with the City of East Palo Alto