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PUBLIC HEARING: FY 2026-2027 ANNUAL ACTION PLAN FOR HOUSING AND URBAN DEVELOPMENT FUNDING, INCLUDING COMMUNITY DEVELOPMENT BLOCK GRANT, HOME INVESTMENT PARTNERSHIPS, AND EMERGENCY SOLUTIONS GRANT PROGRAMS
recommended action
RECOMMENDATION
It is recommended that, after the public hearing, the City Council adopt a resolution:
1. Approving the FY 2026-2027 Annual Action Plan and the estimated Sources and Uses of Funds for the Community Development Block Grant (CDBG), HOME Investment Partnerships (HOME), and Emergency Solutions Grants (ESG) Programs awarded by the U.S. Department of Housing and Urban Development (HUD); and
2. Authorizing the City Manager, or designee, to make the appropriate adjustments to the FY 2026-2027 Annual Action Plan and Sources and Uses for the CDBG, ESG, and HOME programs upon HUD’s publication of the official 2026-2027 awards to the City of Stockton; and
3. Authorizing the City Manager, or designee, to execute and submit all documents to HUD and to take whatever actions are deemed necessary and appropriate to carry out the purpose and intent of the resolution.
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Summary
The U.S. Department of Housing and Urban Development (HUD) requires jurisdictions to prepare an Annual Action Plan (AAP) to receive CDBG, HOME, and ESG funding (Exhibit 1 to the Resolution). The AAP identifies the types of projects and/or services to fund during the year to accomplish the goals established in the Five-Year Consolidated Plan (Con Plan), as listed in the proposed Source and Uses of Funds (Exhibit 2 to the Resolution). The AAP and related information must be submitted to HUD by May 15, 2026 to meet HUD’s funding allocation deadlines.
DISCUSSION
Background
2026-2027 Annual Action Plan
The City of Stockton is designated as an entitlement community, enabling the receipt of federal CDBG, HOME, and ESG funds. In order to receive annual federal entitlement funds, HUD requires jurisdictions to prepare an Annual Action Plan (AAP). The 2026-2027 AAP represents year two (2) of the 2025-2029 Consolidated Plan and identifies the specific projects and activities that the City will fund during the year to help accomplish the goals established in the City’s Five-Year Consolidated Plan. The AAP contains funding recommendations for CDBG, HOME, and ESG funds for the upcoming program year 2026-2027. The AAP recommendations align with local established adopted goals and metrics, HUD requirements, and best practices.
Using award amounts from the previous program year as projected entitlement awards for FY 2026-2027, the City expects to receive approximately $3,255,850 in CDBG funds, $1,342,709 in HOME funds, and $283,814 in ESG funds. Final award amounts and distribution among the different projects/activities identified in this AAP and Sources and Uses will be proportionately increased or decreased upon HUD’s official announcement of 2026-2027 allocations.
Community Input and Funding Process
The initial planning process for the development of this AAP began through a community meeting held on December 18, 2025 by the Community Development Committee (CDC) with an overview of the 2026-2027 Annual Action Plan development process and the Public Service Notice of Funding Availability (NOFA) framework.
The 2026-2027 NOFA for CDBG public services and ESG homeless services programs was launched on December 3, 2025 and closed on January 15, 2026 with applications being received through the City’s online grant application portal. The recipients of the NOFA funding will be brought before Council at a later date to allow review of the allocation recommendations. Meanwhile the goals and objectives contained in the drafted AAP define the expectations that those services in the NOFA support.
The AAP has been prepared in accordance with community participation requirements with publication of public notices announcing the availability of the Annual Action Plan and the 30-day public review prior taking place from March 26 through April 28, 2026. The contents of the draft AAP were shared with the CDC, an advisory body of the City Council, at a public hearing held on March 27, 2026.
Present Situation
Below is an overview of each funding source within the 2026-2027 Annual Action Plan:
Community Development Block Grant Program (CDBG)
CDBG is a flexible program that provides communities funding to address a wide range of community development needs that benefit low-income residents. Cities with more than 50,000 people and counties with a population of more than 200,000 are eligible to receive this funding from the federal government.
Each year, HUD determines the CDBG allocation using a formula that considers the total population, the number of persons in poverty, housing overcrowding, and the age of the housing stock within the jurisdiction.
CDBG funds can be used for a wide range of activities, including but not limited to:
• Rehabilitation of residential and commercial property
• Demolition
• Public facilities and infrastructure improvements
• Economic development
• Public services (up to 15% annually)
The primary eligibility requirement for each activity is that it must benefit low-income persons. HUD defines low-income as a household that is at or below 80% of the area median income (AMI), which in Stockton as of April 2025, is an annual income of $83,700 for a family of four. HUD has not yet released income limits for FY 2026, but they are expected to be updated in May 2026.
A jurisdiction may spend up to 20% of its CDBG entitlement and program income on administrative costs, which are the costs associated with daily operations, such as staff costs to administer programs, materials and supplies, training, and consultant services. CDBG Program Delivery includes costs attributed directly to projects, as well as project delivery hard costs, such as obtaining title reports and appraisals.
The CDBG-funded initiatives being recommended in the draft 2026-2027 Annual Action Plan includes public infrastructure projects, various public service activities, and economic development activities such as the Commercial Rehabilitation Program and Business Support Programs.
HOME Investment Partnership Program (HOME)
HOME funds must be used by local governments to create affordable housing for low-income households. HOME funds are awarded annually as formula grants to participating jurisdictions. The program allows states and local governments to use HOME funds to issue direct loans, loan guarantees, or other forms of credit enhancement to eligible housing developers, as well as to offer homebuyer programs, homeowner rehabilitation programs, rental housing programs, and tenant-based rental assistance. The incomes of households benefitting from HOME funds must not exceed 80% of the AMI.
HUD regulations require that 15% of the City's HOME allocation be reserved for Community Housing Development Organizations (CHDO), which are community-based organizations that develop affordable housing.
A jurisdiction may spend up to 10% of its HOME entitlement and program income on administrative costs. Housing Program Delivery includes costs attributed directly to specific housing projects.
The HOME-funded initiatives being recommended in the draft 2026-2027 Annual Action Plan includes activities related to the construction and rehabilitation of affordable housing.
Emergency Solutions Grants Program (ESG)
The City uses ESG program funds to provide grant funding to local service providers to operate emergency shelters, provide homeless services, homeless prevention, rapid rehousing programs, and street outreach services. Funds may also be used for implementation of the required Homeless Management Information System (HMIS) and for administrative activities.
The emphasis of the ESG program is to help people regain stability with placement in permanent housing after experiencing a housing crisis and/or homelessness; therefore, HUD limits the amount of a jurisdiction's ESG grant that can be used for assistance to emergency shelters and street outreach to not more than 60%.
A jurisdiction may spend up to 7.5% of its ESG entitlement on administrative costs.
The ESG-funded activities being recommended in the draft 2026-2027 Annual Action Plan includes a homeless prevention program and emergency shelter operations.
Notification
In conformance with HUD's requirements and the City's current Community Participation Plan (CPP), a notice of the public hearings were published in The Stockton Record on March 17, 2026, identifying the dates of the public hearings and notifying the community about the availability of the draft AAP for the 30-day public review period beginning on March 26, 2026. A copy of the draft Annual Action Plan is posted on the City’s website and a hard copy is available at the City’s Economic Development Department.
In addition to the public hearings, five (5) public meetings were held throughout the community to present the draft Annual Action Plan:
• April 7, 2026, at Van Buskirk Community Center
• April 8, 2026, at Sierra Vista Community Center
• April 13, 2026, at Seifert Community Center
• April 15, 2026, at Arnold Rue Community Center
• April 21, 2026, at Oak Park Senior Center
As part of the CPP process, the Annual Action Plan will be presented to the City Council on April 28, 2026 during a public hearing, providing an additional opportunity for public comment. Public comments received as of the date of this staff report can be found in AP-12 Participation, Table 3, of the draft Annual Action Plan.
FINANCIAL SUMMARY
The proposed resolution will have no financial impact on the General Fund or any other unrestricted fund. The Annual Action Plan includes estimated appropriations from HUD to the Economic Development Department’s FY 2026-2027 budget for: CDBG, HOME, and ESG funds. These appropriations are dependent upon the receipt of anticipated funds from HUD and may vary based upon actual funding received.