To: Honorable Mayor and Members of City Council
From: Molly Rattigan, Community Resources and Development Director
Prepared By: Jonathen Sakamoto, Housing Supervisor
TITLE:
Title
Community Development Block Grant (CDBG) Program Income Funding
LABEL
RECOMMENDED ACTION:
Recommendation
Receive a report on the Community Development Block Grant (CDBG) Program Income resulting from the sale of 1051-1199 Pearl Street and provide direction on prioritizing or limiting the applications received in the upcoming special round of CDBG program notice of funding availability.
Body
DISCUSSION:
The CDBG fund received approximately $860,000 from the sale of 1051-1199 Pearl Street (“the Property”). The CDBG fund typically receives approximately $600,000 in entitlement funds and usually does not receive non-revolving loan fund program income. The significant amount of program income from the sale of the Property provides a unique opportunity to fund projects the CDBG fund usually does not have the capacity to fund.
Under CDBG regulations, up to 20% of the program income is available for CDBG planning and administration activities, and the balance is available under the community development category. Because public service allocations are calculated using the previous year’s program income, the program income does not directly increase the amount of funding available for public service activities until Fiscal Year 2026-2027.
The City of Napa 2025-2030 Consolidated Plan serves as a planning document which identifies needs for affordable housing and community development and provides a five-year strategy to address those needs. In order to fund an activity that does not meet a goal of the Consolidated Plan, an amendment to the Consolidated Plan would be required. The goals currently identified in the Consolidated Plan are as follows and are described in more detail in Attachment 1:
• Housing rehabilitation
• Construction of affordable rental units
• Acquisition and rehabilitation of existing units
• Rental assistance
• Farmworker housing
• First time homebuyer assistance
• Permanent supportive housing
• Emergency shelter services
• Outreach/referral for racial/ethnic minority group
• Fair housing activities
• Services for children aging out of foster care
• Non-profit capital improvements
• In-fill sidewalks in low-income neighborhoods
• Improvements to City facilities and parks
• Affordable childcare facilities
• Local business Support
• Green space/expansion/improvement in areas of need
• Improvements of access to parks and rec facilities
• Bicycle and pedestrian improvements
• Expansion of programming at parks and rec facilities
• Physical/Menta/Behavioral health services
• Flexible funding to prevent homelessness
Under the Annual Action Plan for Fiscal Year 2025-2026, the City is currently funding activities that meet the goals of housing rehabilitation, emergency shelter services, outreach/referral for Latino/Hispanic residents, fair housing activities and non-profit capital improvements. The City will be required to process an amendment to the Annual Action Plan to allocate the funds received from the sale of the Property.
Staff will release a public application for eligible sub recipients to apply for CBDG funding upon receiving direction from Council. Sub recipients are required to be a non-profit or government entity and must propose a project that benefits low- and moderate-income persons, is eligible under CDBG requirements, and meets one of the goals identified in the Consolidated Plan. Additionally, due to CDBG expenditure requirements, they will be required to execute the proposed project in a timely manner.
Staff believes that there are many viable projects in the City that could utilize the large amount of program income. During previous City Council discussion, Council has expressed interest in exploring the use of these funds to support affordable housing and other high-impact community needs. Staff is seeking policy direction regarding whether the applications should be limited or prioritized for activities addressing one or more specific Consolidated Plan priorities, such as affordable housing. Possible actions for the City Council to take include directing staff to:
• Limit CDBG applications to projects that qualify under one or more specific Consolidated Plan goals
• Prioritize specific Consolidated Plan goals and evaluate CDBG applications on a tiered basis
• Amend the Consolidated Plan to include additional goals not previously identified and prioritize or limit CDBG applications based on the new goals
• Do not limit, prioritize, or otherwise restrict CDBG applications as long as they meet a Consolidated Plan goal
The program income funds have been received and can be awarded to sub recipients upon completion of the public vetting process. The award to sub recipients and corresponding adoption of the Amended Annual Action Plan is anticipated to be completed in June 2026. An amendment to the 2025-2030 Consolidated Plan is a lengthy public process and could possibly delay the award of the program income funds. However, an amendment to the Consolidated Plan would restructure the goals that guide funding in the remaining years of 2026 through 2030 if the Council believes an amendment is warranted.
Based upon previous City Council discussions, staff is recommending that applications be limited to or prioritize affordable housing projects. Furthermore, staff is suggesting giving priority to those applications which indicate the CDBG funding can be fully expended in a timely manner.
FINANCIAL IMPACTS:
There is no fiscal impact at this time. The financial impact will be defined with adoption of the Fiscal Year 2026-2027 Amended Annual Action Plan after the applications are received and reviewed by staff and the CDBG Citizen’s Advisory Committee.
CEQA:
The Community Development Director has determined that the Recommended Action described in this Agenda Report is not subject to CEQA, pursuant to CEQA Guidelines Section 15060(c).
DOCUMENTS ATTACHED:
ATCH 1 - Goals Identified in the City of Napa 2025-2030 Consolidated Plan
NOTIFICATION:
The CDBG Citizens’ Advisory Committee was notified of this item.