City of Costa Mesa
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
Item #: 25-252
Meeting Date: 5/20/2025
TITLE: PUBLIC HEARING FOR 2025-2029 CONSOLIDATED PLAN, INCLUDING FISCAL YEAR 2025-2026 FUNDING PRIORITIES FOR THE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) AND HOME INVESTMENT PARTNERSHIPS PROGRAM (HOME) AND AMENDED CITIZEN PARTICIPATION PLAN, AND 2025-2029 ORANGE COUNTY REGIONAL ASSESSMENT OF FAIR HOUSING DEPARTMENT: ECONOMIC AND DEVELOPMENT SERVICES DEPARTMENT/HOUSING AND COMMUNITY DEVELOPMENT DIVISION PRESENTED BY: MIKELLE DAILY, GRANT ADMINISTRATOR
CONTACT INFORMATION: MIKELLE DAILY, GRANT ADMINISTRATOR, (714) 754-5678 RECOMMENDATION:
Staff recommends the City Council:
Hold a Public Hearing regarding the 2025-2029 Consolidated Plan, including the 2025-2026 Annual Action Plan and the amended Citizen Participation Plan, and the 2025-2029 Orange County Regional Assessment of Fair Housing.
Approve the recommended allocation of $907,261 for the Fiscal Year (FY) 2025-2026 Community Development Block Grant.
Approve the recommended allocation of $378,720 for the Fiscal Year (FY) 2025-2026 HOME Investment Partnerships Grant.
Adopt Resolution No. 2025-XX (Attachment 1) to:
Approve the 2025-2029 Consolidated Plan including the 2025-2026 Annual Action Plan and amended Citizen Participation Plan.
Approve the 2025-2029 Orange County Regional Assessment of Fair Housing.
Authorize the Acting City Manager, or the Acting City Manager’s designee, to submit the 2025-2029 Consolidated Plan, including the 2025-2026 Annual Action Plan, to the U.S. Department of Housing and Urban Development.
Designate the Acting City Manager, or the Acting City Manager’s designee, as the official representative of the City to administer the programs and to execute and submit all required agreements, certifications, and documents required by HUD, and execute all agreements and subrecipient agreements for the use of funds approved in the 2025-2026 Annual Action Plan.
BACKGROUND:
Costa Mesa is a recipient of two U.S. Department of Housing and Urban Development (HUD) grant program funds: (1) the Community Development Block Grant (CDBG) Program and (2) the HOME Investment Partnerships Program (HOME). These two HUD programs annually provide approximately $1.3 million to the City and can be used for various activities that assist low-income Costa Mesa residents (residents with household incomes at or below 80% of the median income for Orange County).
Table 1 – 2025 Orange County Income Limits Summary
% median income
Persons in Household
1 2
3 4
5 6
7 8
Extremely Low (30%)
$35,550
$40,600
$45,700
$50,750
$54,850
$58,900
$62,950
$67,000
Very Low (50%)
$59,250
$67,700
$76,150
$84,600
$91,400
$98,150
$104,950
$111,700
(60%)
$71,100
$81,240
$91,380
$101,520
$109,680
$117,780
$125,940
$134,040
Low (80%)
$94,750
$108,300
$121,850
$135,350
$146,200
$157,050
$167,850
$178,700
The Housing and Community Development Division (HCD) of the Economic and Development Services Department is responsible for administering the City’s CDBG and HOME grants. CDBG and HOME-funded activities must address the needs outlined in the City’s Consolidated Plan.
FIVE-YEAR CONSOLIDATED PLAN
The Consolidated Plan is a five-year strategic planning document required by HUD for communities to qualify for federal community development grant funding. It is built on a participatory process among City residents, organizations, businesses, and other stakeholders. It includes a five-year strategic plan that identifies priority housing and community needs and programs/resources to address these needs. It functions as the City’s application for CDBG and HOME federal funds and is a management tool for assessing performance and tracking results.
The current Consolidated Plan was approved by City Council on May 19, 2020, and is applicable from FY 2020-21 through FY 2024-25. Pursuant to HUD regulations, the City has now prepared the draft 2025-2029 Consolidated Plan that applies to FY 2025-2026 through FY 2029-2030 and includes the FY 2025-2026 Annual Action Plan and amended Citizen Participation Plan. The City must submit the five-year Consolidated Plan and the one-year Annual Action Plan to HUD to continue to receive these federal funds. Based on the analysis of housing and community needs, market-analysis, and input from the community, the following five-year goals and priorities identified in the 2020-2024 Consolidated Plan will continue to be implemented in the 2025-2029 Consolidated Plan:
Goal 1: Housing Preservation - To provide decent and affordable housing through a variety of activities, including owner-occupied housing rehabilitation, code enforcement, and rental housing acquisition/rehabilitation.
Goal 2: Infrastructure and Facility Improvements - To enhance the suitability of the living environment through improvements to public infrastructures and facilities.
Goal 3: Homeless Continuum of Care - To provide supportive services and housing assistance for the homeless and near homeless.
Goal 4: Public Social Service - To provide services for low- and moderate-income persons, and those with special needs.
Goal 5: Program Administration - To provide administration of the CDBG and HOME programs, ensuring effective and efficient delivery of programs and services and complying with all HUD program requirements, including the provision of fair housing services.
CITIZEN PARTICIPATION PLAN
Pursuant to federal program requirements, citizen participation is a required component of the Consolidated Planning process to: (1) afford residents the opportunity to provide input on housing and community development needs, issues and problems affecting very-low and low-income persons; (2) to educate interested residents about the HOME and CDBG programs and the expected annual amount of assistance to be received from each; (3) to allow residents an opportunity to provide their input regarding project selections and funding distributions; and, (4) to afford residents an opportunity to participate in the process of developing and implementing funded activities.
As required, the City held two community meetings and one stakeholder meeting in an effort to obtain citizen participation. All three meetings were open to the public. The Stakeholder meeting advertisement was focused on organizations that provide services to low-income residents of Costa Mesa. The public community meetings were held on October 10, 2024, at the Community Senior Center and October 24, 2024, at the Norma Hertzog Community Center. A stakeholder meeting was held October 29, 2024, in the Community Room at City Hall. In addition to these public meetings, City staff attended the Health and Wellness Expo at the Senior Center to provide residents and attendees with information about the consolidated planning process and solicit feedback on the priority needs in the City for services, housing and infrastructure. A community survey was available online in both English and Spanish from September 25, 2024, through February 28, 2025, for residents unable to attend in-person meetings. Additional information about the participation and consultation process is available in Appendix A of Attachment 3.
The Citizen Participation Plan was last revised in 2020 to include regulatory waivers in response to the COVID-19 Pandemic. HUD provides a Community Planning and Development (CPD) Monitoring Handbook with exhibits to be used by HUD reviewers to assess grantee compliance with program regulations, applicable federal statutes, grant requirements and terms and conditions of the grant awards for CPD Programs. These exhibits are available for grantees to conduct a periodic self-monitoring assessment. The Citizen Participation Plan has been reviewed in accordance with Exhibit 19-1 and re-formatted for easier readability and is available for review on the City’s Housing and Community Development webpage under “Public Notices”: Citizen Participation Plan
ANNUAL ACTION PLAN
The Annual Action Plan is the one-year expenditure plan for the use of HUD funds. HUD notified the City of Costa Mesa of its FY 2025-2026 allocation amount for HOME and CDBG on May 14, 2025. A year-long Continuing Resolution (CR) is in place that maintains level funding from FY 2024 to FY 2025, however, HUD applies a formula to the funding amount to determine allocations for individual cities, which is why the allocation amounts for FY 2025-2026 are slightly different than those of FY 2024-2025. The City of Costa Mesa will receive $907,261 in CDBG for FY 2025-2026, a seven percent (7%) reduction from the amount received in FY 2024-2025. The City will receive $378,720 in HOME funds for FY 2025-2026, which is a four percent (4%) reduction from the amount received in FY 2024-2025.
The City is required to submit the Consolidated Plan or Action Plan to HUD by May 15th each year unless HUD provides additional guidance. Additional guidance was provided for FY 2025-2026 that allows jurisdictions to use estimated allocation amounts in a draft Consolidated Plan for the required 30-day public comment period and public hearing but requires that Plans be submitted with actual amounts within 60-days after actual grant amounts are announced by HUD. The City will submit the Consolidated Plan and Annual Action Plan with actual CDBG and HOME allocation amounts no later than July 14, 2025 to meet the 60-day HUD submission requirement.
ANALYSIS:
The Consolidated Plan is designed to help cities that receive funding from HUD’s Office of Community Planning and Development (CPD) to assess their affordable housing and community development needs and market conditions, and to make data-driven, place-based investment decisions. The consolidated planning process serves as the framework for a community-wide dialogue to identify housing and community development priorities that align and focus funding from the CPD formula block grant programs.
The five-year Consolidated Plan is implemented through Annual Action Plans, which provide a concise summary of the actions, activities, and the specific federal and non-federal resources that will be used each year to address the priority needs and specific goals identified by the Consolidated Plan. Accomplishments and progress toward Consolidated Plan goals are reported in the Consolidated Annual Performance and Evaluation Report (CAPER).
As previously indicated, a significant component of the Consolidated Plan process is obtaining resident and stakeholder involvement. Residents and stakeholders provided feedback about City priorities at public meetings and the health expo based on eight different categories eligible for CDBG and HOME funding (see Exhibit 1 and Exhibit 2 below). The surveys provided more detailed data for each category.
Exhibit 1
Exhibit 2
2025-2026 ANNUAL ACTION PLAN
Both CDBG and HOME programs have specific requirements. For example, CDBG funds must be utilized to achieve one of three national objectives: 1) elimination of slums and blight; 2) meet an urgent need (e.g., declared disaster); or 3) benefit to low- and moderate- income persons. HOME funds must be used to preserve or increase housing opportunities for low-income residents living in Costa Mesa. Outlined below are the programmatic recommendations for the use of FY 2025-2026 CDBG and HOME funds.
CDBG FUNDING AND ALLOCATION:
The City of Costa Mesa will receive $907,261 in CDBG funds for FY 2025-2026. Additionally, $172,000 in prior year funds will be available for CDBG-funded activities. Staff is recommending funding in six primary program areas: 1) public facilities & infrastructure/capital improvement; 2) public services grants; 3) housing rehabilitation administration; 4) housing rehabilitation grants program 5) code enforcement; and 6) program administration.
PUBLIC FACILITIES & INFRASTRUCTURE/CAPITAL IMPROVEMENT
CDBG funds may be used to improve public facilities and infrastructure provided the primary beneficiaries are low- and moderate- income Costa Mesa residents. Areas in the city that are CDBG eligible (51% or more of the population at 80% AMI or below) are identified in the map of CDBG areas (Attachment 3, Appendix B-1). For FY 2025-2026, staff is recommending the allocation of $251,720 in CDBG funds for The Westside Street Improvement project.
PUBLIC SERVICE GRANTS
The City is allowed to earmark up to 15 percent (15%) of its annual CDBG allocation for public service grants. Based on the City’s FY 2025-2026 CDBG grant allocation, a maximum of $136,089 is available for public service grant funding. $30,000 is allocated for a portion of the Senior Center caseworker’s salary, which leaves $106,089 available for nonprofit public service funding.
On February 14, 2025, the City received six eligible nonprofit organization applications requesting a total of $180,000 in public service grants. On March 5, 2025, the City’s Housing and Public Service Grant Committee (H&PSG Committee) heard presentations from grant applicants, finalized the rating and ranking of applications, and developed public service grant funding recommendations for the City Council’s consideration based on funding limitations and rating criteria. The Housing and Public Services Committee (H&PSG) recommended $100,000 for five nonprofit organizations that submitted applications for CDBG funding based on the estimated maximum available. The H&PSG included in their recommendation that the amount for each awarded nonprofit grant would be increased by an equal percentage if the actual maximum available is more than estimated amount of $100,000. The actual amount available for public services is $6,089 more than the estimated amount, so that amount has been distributed equally among the H&PSG nonprofit organizations recommended for funding.
A summary of the H&PSG Committee’s ratings, rankings and grant recommendations is provided in Attachment 4. The application summaries include the Fair Housing Foundation, which will be funded out of CDBG Administration, and the senior services provided at the City’s senior community center that are partially funded by CDBG public services. The Committee’s grant recommendations are also listed in the proposed CDBG budget below. Complete grant applications are posted on the City’s website: Public Service Grants Program | City of Costa Mesa
HOUSING REHABILITATION ADMINISTRATION (CDBG)
Staff is proposing to allocate $50,000 in CDBG funding for staff and other direct costs associated with the City’s HUD-funded housing rehabilitation program. Examples of eligible costs include staff costs associated with preparation of work specifications, property inspections and loan/grant application processing/implementation.
HOUSING REHABILITATION
The City has a HOME-funded Housing Rehabilitation Grants and Loans Program. Improvements may include, but are not limited to, health and safety code items such as plumbing, electrical, heating, roofing, etc. Adding a Housing Rehabilitation Grants program with $75,000 in CDBG funding will provide more flexibility and increase the number of residents and properties eligible for rehabilitation grants. CDBG funds do not limit eligibility to homes according to the value of the home. HOME funds require that the home value not exceed 95% of the median purchase price for the area after rehabilitation. The addition of CDBG funding to the Housing Rehabilitation Grants program is a direct response to the needs assessment and community feedback provided through the consolidated planning process. Once the Action Plan is approved by the City Council, staff will begin to design the specific details of the CDBG rehabilitation grants (grant amounts, scope of program).
CODE ENFORCEMENT
CDBG funds may be used for code enforcement activities provided the program primarily benefits low- and moderate- income persons, and that such code enforcement “together with public or private improvements, rehabilitation, or services to be provided, may be expected to arrest the decline of the area.” The crux of this regulation is that any CDBG-funded code enforcement activity must have a direct nexus to the rehabilitation or improvement of housing in an eligible area. Over 55% of the City is made up of CDBG eligible census blocks and the CDBG funding recommendation makes up 14% of the total budget for code enforcement activities in the City. For FY 2025-2026, staff is recommending a total allocation of $385,000 in CDBG funds to support the work effort of two full-time and one part-time code enforcement officers. Enforcement activity will be limited to eligible Census Tract Block Groups identified by HUD.
ADMINISTRATION
HUD allows the City to allocate up to 20 percent (20%) of its annual grant for planning and program administration. Based on the City’s FY 2025-2026 CDBG grant, a maximum of $181,452 is available for program administration. Eligible program administration expenditures include program staff salaries and benefits, contract services, legal services, direct program operating costs and fair housing services, if not funded through public services. For FY 2025-2026, fair housing services are provided through the Fair Housing Foundation with $20,000 from the City’s administration funds.
Table 1: Proposed FY 2025-2026 CDBG Budget
AVAILABLE FUNDS
2025-2026 CDBG Allocation
$907,261
Prior Year Funds
$172,000
TOTAL:
$1,079,261
PROPOSED PROGRAMS/PROJECTS
Code Enforcement
Salary & Benefits 2 FT & 1 PT
$385,000
SUBTOTAL:
$385,000
Infrastructure/Public Facilities/Capital Improvement
Wilson Street Improvement Westside Neighborhood
$251,720
SUBTOTAL:
$251,720
Public Service grants (15% Maximum)
City of CM Senior Center Caseworker
$30,000
Assistance League – Newport Mesa
$15,913
Families Forward
$26,522
Human Options
$26,522
Project Hope Alliance
$21,219
Trellis – Labors of Love
$15,913
SUBTOTAL:
$136,089
Housing Rehabilitation
Housing Rehabilitation Administration
$50,000
Housing Rehabilitation Grants Program*
$75,000
SUBTOTAL:
$125,000
Administration (20% Maximum)
CDBG Program Administration
$161,452
Fair Housing Foundation**
$20,000
SUBTOTAL:
$181,452
TOTAL:
$1,079,261
*New program for 2025-2026
**Required by HUD
HOME FUNDING AND ALLOCATION:
The City of Costa Mesa will receive $378,720 in HOME funds for FY 2025-2026. Additionally, $50,000 in HOME Program Income (PI), and $1,685,283 in prior year uncommitted HOME funds will be available for HOME-funded activities.
The City is required to reserve a minimum of 15 percent (15%) of annual HOME funds for a project to be undertaken by a qualified nonprofit housing developer known as a Community Housing Development Organization (CHDO). A CHDO is a nonprofit housing developer. The City is also allowed to use a maximum of 10 percent (10%) of HOME funds for program administration. Staff is recommending funding for five activities: 1) single-family housing rehabilitation loans and grants; 2) Tenant Based Rental Assistance (TBRA); 3) Affordable Housing Project(s) 4) CHDO reservation; and 5) program administration.
HOUSING REHABILITATION
HOME funds may be used to improve and preserve the City’s supply of owner-occupied housing for households with an income up to 80 percent (80%) of the County median income. Grants are available for both Single Family and Mobile Home property owners for property improvements including health and safety code items such as plumbing, electrical, heating and roofing. Staff is recommending allocating a total of $319,323 to the City’s Single-Family Housing Rehabilitation Loan and Grant Program to assist up to 16 households.
TENANT BASED RENTAL ASSISTANCE (TBRA)
The City has contracted with Families Forward to implement the Costa Mesa TBRA program since FY 2020-2021. The program provides rental assistance for families with minor children for up to 24 months, however many of the families are able to reach self-sufficiency with six months of assistance. The TBRA rental subsidy covers rental costs, security deposits and utilities and temporarily reduces the housing costs for participating households to 30% of the household’s monthly adjusted income. Each eligible family receives assistance based on need. The TBRA program is expected to provide assistance to 15 families with $200,000 in HOME funds for FY 2025-2026.
AFFORDABLE RENTAL HOUSING DEVELOPMENT
In an effort to preserve and increase affordable rental housing opportunities for lower income households, the City will be soliciting applications for funding and/or selecting developers, service providers, subrecipients and/or contractors by issuing a Request for Proposal (RFP) or a Request for Qualifications (RFQ) for the development of permanent affordable rental housing in the City using prior year(s) uncommitted HOME Program funds in the amount of $1,500,000. If the selected vendor is an approved Community Housing Development Organization (CHDO), a nonprofit developer, CHDO set-aside funds may also be included in the project.
COMMUNITY HOUSING DEVELOPMENT ORGANIZATION (CHDO FUNDS) HOME program regulations require that a minimum of 15 percent (15%) of the City’s annual grant allocation be reserved for a CHDO. Based on the City’s FY 2025-2026 HOME grant, $56,808 is the minimum CHDO set-aside requirement. The current set-aside balance available including $56,808 from FY 2025-2026 is $232,532.
ADMINISTRATION
The City is allowed to use up to 10 percent (10%) of its annual grant for HOME program administration. Based on the City’s FY 2025-2026 grant, $37,872 is available for HOME program administration. Eligible administration expenditures include program staff salaries and benefits, contract services, and legal services.
Table 2: Proposed FY 2025-2026 HOME Budget
AVAILABLE FUNDS
2025-2026 HOME Allocation
$378,720
Prior Year Program Income (PI)
$50,000
Prior Year(s) Uncommitted HOME Funds
$1,685,283
TOTAL:
$2,114,003
PROPOSED PROGRAMS/PROJECTS
Housing Rehabilitation
Housing Rehab Loans and Grants (1 loan & 15 grants)
$319,323
SUBTOTAL:
$319,323
Tenant Based Rental Assistance
Families Forward TBRA
$200,000
SUBTOTAL:
$200,000
Affordable Rental Housing
Project – To be Determined
$1,500,000
SUBTOTAL:
$1,500,000
CHDO Reserve (15% Minimum)
CHDO Reserve – Project to be determined
$56,808
SUBTOTAL:
$56,808
HOME Administration (10% Maximum)
FY 2025-2026 HOME Program Administration
$37,872
SUBTOTAL:
$37,872
TOTAL:
$2,114,003
The 2025-2026 Fiscal Year will be the first year of the 2025-2029 Consolidated Plan cycle. The Action Plan serves as the link between the objectives and goals listed in the Consolidated Plan with activities to be carried out during a 12-month period that address priority needs. The time period covered by the 2025-2026 Action Plan begins July 1, 2025, and ends June 30, 2026. The draft 2025-2026 Action Plan is incorporated into the 2025-2029 Consolidated Plan. The Consolidated Plan is attached to this Agenda report as Attachment 2. 2025-2029 Orange County Regional Assessment of Fair Housing As a recipient of CDBG funds, the City of Costa Mesa is required to comply with the Fair Housing Act of 1968, as amended (Title VIII of the Civil Rights act of 1968) (42 U.S.C. section 3601, et seq.), which prohibits discrimination in housing-related transactions, including the sale, rental or financing of dwellings. Protected classes under Federal law include race, color, national origin, religion, sex, disability and familial status. California has additional protected classes, including source of income. Effective April 2, 2025, the Fair Housing Act Interim Rule revises HUD’s regulation governing the Fair Housing Act’s mandate to affirmatively further fair housing. Under the Interim Final Rule, grantees must certify that they will take active steps to promote fair housing.
The City participated with all 34 cities in Orange County in the preparation of the 2025-2029 Orange County Regional Assessment of Fair Housing. The executive summary of the draft Orange County Assessment of Fair Housing is provided as Appendix F to the Consolidated Plan. The entire draft document is available for review on the City’s Housing and Community Development webpage: FY 2025-2029 Orange County Regional Assessment of Fair Housing.
PUBLIC NOTICE, REVIEW AND COMMENT PERIOD
As required by HUD, a notice was published in English and Spanish in local newspapers on April 17, 2025, inviting the public to review and comment on the draft 2025-2029 Consolidated Plan, including the 2025-2026 Annual Action Plan and amended Citizen Participation Plan, and the 2025-2029 Orange County Assessment of Fair Housing. The comment period began on April 18, 2025, and concluded on May 20, 2025.This notice also announced the May 20, 2025, City Council public hearing. At the time this report was written, no comments have been received.
ALTERNATIVES:
The City Council can choose to not fund the proposed activities as recommended by staff and allocate CDBG or HOME funds to other eligible activities. The City Council can also direct staff to not submit the Consolidated Plan, Action Plan, or approve the 2025-2026 Orange County Regional Assessment of Fair Housing; however, if the City does not submit the Action Plan, HOME funds will most likely be returned to the U.S. Treasury and the City’s CDBG funds will be distributed proportionally among all other Orange County jurisdictions that receive CDBG funds. Additionally, the City may be out of compliance with program regulations without an approved fair housing analysis.
FISCAL REVIEW:
The City receives an annual grant allocation from HUD for the City’s CDBG Program and HOME Program. These grants provide funding for various activities that assist low-income Costa Mesa residents. The City will receive a grant allocation of $907,261 for the CDBG Program and $378,720 for the HOME Program for FY 2025-26. The grant allocations received have an eight (8) year period to expend the funds. Additional funds from prior year(s) in both the CDBG and HOME program are available in the amount of $172,000 (CDBG) and $1,685,283 (HOME), inclusive of program income. The City is reimbursed by HUD for the total amount of eligible CDBG and HOME program expenditures.
LEGAL REVIEW:
The City Attorney’s Office has reviewed and approved this agenda report and the attached resolution as to form.
CITY COUNCIL GOALS AND PRIORITIES:
This project would achieve the following City Council goals and objectives:
Strengthen the public’s safety and improve the quality of life; Diversify, stabilize and increase housing to reflect community needs; Achieve long-term fiscal sustainability; and
Advance environmental sustainability and climate resiliency.
CONCLUSION:
Pursuant to Federal regulations, the City Council must adopt a resolution for the approval of the Consolidated Plan and the Annual Action Plan in order for the City to implement the respective federal grant programs. The draft 2025-2029 Consolidated Plan and the 2025-2026 Annual Action Plan are prepared according to HUD regulations, and outline how the City will utilize FY 2025-2026 CDBG and HOME funds to meet the objectives and goals of the federal CDBG and HOME programs. In addition, the City participated with all 34 jurisdictions in Orange County to prepare the 2025-2029 Orange County Regional Assessment of Fair Housing for Council approval and updated its Citizen Participation Plan to reflect current HUD regulations. Staff recommends that the City review the aforementioned Plans and designate the Acting City Manager, or the Acting City Manager’s designee, as the official representative of the City to administer the programs and to execute and submit all required agreements, certifications, and documents required by HUD, and execute all agreements and subrecipient agreements for the use of funds approved in the 2025-2026 Annual Action Plan.
https://www.hudexchange.info/programs/consolidated-plan/ Ibid
Item #: 25-252 Meeting Date: 5/20/2025