CAPER 1
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Attachment: 1
CAPER 2
OMB Control No: 2506-0117 (exp. 09/30/2021)
Contents
CR-05 - Goals and Outcomes ............................................................................................................................... 3 CR-10 - Racial and Ethnic composition of families assisted .............................................................................. 11 CR-15 - Resources and Investments 91.520(a) ................................................................................................. 13 CR-20 - Affordable Housing 91.520(b) .............................................................................................................. 21 CR-25 - Homeless and Other Special Needs 91.220(d, e); 91.320(d, e); 91.520(c) ........................................... 24 CR-30 - Public Housing 91.220(h); 91.320(j) ..................................................................................................... 28 CR-35 - Other Actions 91.220(j)-(k); 91.320(i)-(j) .............................................................................................. 30 CR-40 - Monitoring 91.220 and 91.230 ............................................................................................................. 38 CR-45 - CDBG 91.520(c) ..................................................................................................................................... 41 CR-50 - HOME 24 CFR 91.520(d) ....................................................................................................................... 42 CR-58 – Section 3 .............................................................................................................................................. 47 ATTACHMENTS: ................................................................................................................................................. 50 Attachment 1. City Council Resolution 2026-________ ..................................................................... 50 Attachment 2. PR-26 Financial and Activity Summaries (CDBG and CDBG-CV) .................................. 51 Attachment 3. Annual Performance and HOME Match Reports (40107, 40107-A) ........................... 52 Attachment 4. Fiscal Activity Accomplishment Reports ..................................................................... 53 Attachment 5. Public Notice Comments Outreach ............................................................................. 54
CAPER 3
OMB Control No: 2506-0117 (exp. 09/30/2021)
CR-05 - Goals and Outcomes
Progress the jurisdiction has made in carrying out its strategic plan and its action plan. 91.520(a) This could be an overview that includes major initiatives and highlights that were proposed and executed throughout the program year.
The City of Merced has prepared the 2025 Consolidated Annual Performance and Evaluation Report (CAPER) for the period of July 1, 2025, through June 30, 2026. The 2025 CAPER describes a general assessment of the City's progress in carrying out projects and programs during the 2025 Program Year (PY2025) with the use of CDBG, HOME, HOME-ARP, and CDBG-CV funds, provided by the U. S. Department of Housing and Urban Development (HUD), primarily to benefit Low to Moderate Income persons (LMI) and/or LMI areas within the City limits.
The CDBG allocation for PY2025 was $1,089,413, with approximately $260,509.09 in CDBG program income received during the program year. Carryover from previous years also contributed to the continued efforts of ongoing projects and programs. Overall, a total of $351,289.75 of CDBG and $30,000 of CDBG-CV funds were spent during the snapshot period of July 1, 2025, to June 30, 2026.
The HOME allocation for PY2025 was $447,510.24, with approximately $140,447.71 in program income received during the program year. Carryover from previous years also contributed to the continued efforts of ongoing projects and programs, and the PY2025 HOME expenditures were $1,053,329.16. Funds from the remaining 2025 HOME allocation, prior carryover, and accumulated program income were set aside for construction of affordable rental housing and HOME CHDO projects.
Additionally, $260,509.09 in CDBG program income, $362,902.31 in CDBG Repayment to Local Account (LA) funds, $140,447.71 in HOME program income, and $392,593.55 in HOME Repayment to Local Account (IU) funds were receipted during the 2025 program year.
The City of Merced allocated CDBG funds during PY2025 program year to social service agencies in order to address the community priorities and goals set forth in the Consolidated Plan for the 2025-2029 Strategic Plan period.
The 2025-2029 Consolidated Plan, which included the PY2025 (First Year) Annual Action Plan, was submitted to HUD for approval on August 14, 2025, and the City received preliminary HUD approval of the plan on August 25, 2025, after their initial review. Following HUD’s DEI Executive Order review during the month of September 2025, HUD executed its PY2025 CDBG and HOME Grant Agreements with the City on January 13, 2026, which gave the City access to its allocated PY2025 funding.
Comparison of the proposed versus actual outcomes for each outcome measure submitted with the consolidated plan and explain, if applicable, why progress was not made toward meeting goals and objectives. 91.520(g)
Categories, priority levels, funding sources and amounts, outcomes/objectives, goal outcome indicators, units of measure, targets, actual outcomes/outputs, and percentage completed for each of the grantee’s program CAPER 4
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year goals.
***This table is still in progress, as some data is still being collected from our partners. This table will be updated with correct figures before submittal to HUD.***
Goa
l
Categor
y
Source
/
Amoun
t
Indicato
r
Unit of
Measur
e
Expecte
d –
Strategi
c Plan
Actual –
Strategi
c Plan
Percent
Complet
e
Expecte
d –
Program
Year
Actual –
Progra
m Year
Percent
Complet
e
Table 1 - Accomplishments – Program Year & Strategic Plan to Date
Assess how the jurisdiction’s use of funds, particularly CDBG, addresses the priorities and specific objectives identified in the plan, giving special attention to the highest priority activities identified.
The City of Merced’s 2025-2029 Consolidated/Strategic Plan identifies five Priority Needs, with associated goals, that the City has and will continue to work to address during the 5-year period it covers (July 1, 2025 – June 30, 2030):
1. Increase Economic Development and Job Opportunities
Associated Goals: 1A - Provide Community Based Job Training; 1B - Provide Business and Industry Assistance; 6A - Administration and Planning
2. Expand and Improve Public Infrastructure and Facilities Associated Goals: 2A - Invest in Facilities & Centers; 2B - Public Infrastructure & ADA Improvements; 2C - Parks & Recreation Facility Improvements; 6A - Administration and Planning
3. Affordable Housing, Shelter, and Housing Stability
Associated Goals: 3A - Increase Affordable Rental Opportunities; 3B - Rehabilitation of Existing Rental Housing; 3C - Supportive, Shelter, & Transitional Housing; 3D - Provide Housing Stability & Homeless Prevention; 3E - Provide Fair Housing Services; 6A - Administration and Planning
4. Public Services & Quality of Life for Residents
Associated Goals: 4A - Provide Vital Services for LMI Residents; 6A - Administration and Planning
5. Increase and Rehabilitate Homeowner Housing
Associated Goals: 5A - Increase/Rehabilitate Homeowner Housing; 5B - Create New Opportunities for CAPER 5
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Homeownership; 6A - Administration and Planning
During PY2025, the first year of the Consolidated Plan, the City of Merced focused on the below-listed one- year goals to address the above Strategic Plan priorities:
Goal 2C - Parks & Recreation Facility improvements
Goal 3A - Increase Affordable Rental Opportunities
Goal 3D - Provide Housing Stability & Homeless Prevention Goal 3E - Provide Fair Housing Services
Goal 4A - Provide Vital Services for LMI Residents
Goal 6A - Administration and Planning
Program Year 2025 Use of Funds Towards Goals:
In the previous Consolidated Plan (PY2020 through PY2024), direct and indirect administration costs were spread amongst all annual goals based on the ratio of the expected project costs against the total available non-admin funds. To improve transparency and simplify tracking of administration funding, beginning with PY2025 and continuing through the end of the 2025-2029 Consolidated Plan period, direct and indirect administrative funds for both CDBG and HOME have been assigned their own goal, Goal 6A – Administration and Planning. Please see below. Additionally, City employee staff hours that can be directly tracked to specific projects are now tracked by project under each project’s associated goal.
Goal 2C - Parks & Recreation Facility Improvements
During PY2025, the City of Merced set aside a total of $834,981 in CDBG funding (project costs of $795,220, plus estimated $39,761 activity delivery) towards a new 2025 two-year project at Joe Herb Park to improve ADA accessibility in the park, including the existing softball fields, which includes improved grading, irrigation, drainage, and turf replacement to improve surface playability by disabled persons, upgraded pathway safety lighting and restrooms, and Braille lettering with improved park signage where possible. Housing staff completed a “Phase 1” 24 CFR Part 58 National Environmental Policy Act (NEPA) environmental review to cover all pre-construction soft costs that are exempted from Part 58 requirements, such as: engineering design, appraisals, planning etc. In addition, supplementary funding allocated to the project from the PY2026 HUD Annual Plan will expand ADA improvements with an emphasis on adequate park lighting for all users.
Improvements are expected to start during PY2026 and will likely extend into PY2027. Therefore, the 2027 CAPER will most likely document the project’s accomplishments, once it is fully completed.
Goal 3A - Increase Affordable Rental Opportunities
The PY2025 Annual Plan set aside a total of $1,696,843.54 in HOME funds, which includes $67,126.54 of CHDO reserves, that designated their use towards rehabilitation or new construction of affordable rental units, and $34,605.46 for activity delivery (total of $1,731,449). HOME funds were set aside for new construction, rehabilitation, and or acquisition of rental housing, including funds to cover activity delivery costs. During CAPER 6
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PY2025, a PY2023 HOME project, the 156-unit River Canyon Apartments (formerly Devonwood Apartments), finished construction and is nearly fully occupied. The project is income-restricted to residents at an income level between 30%-70% of the AMI for Merced County.
The previous PY2024 Annual Action Plan set aside funding for two projects that are still in various stages of progress, including a total of $349,149 of PY2024 CHDO HOME reserve funds set aside to rehabilitate an existing duplex structure at 1933 and 1935 H St for LMI Rental Housing. The CHDO HOME project will be reported under Goal 3A in a future CAPER when completed. 3D - Provide Housing Stability & Homeless Prevention
The City of Merced set aside a total of $197,381 towards public services and Housing ADC which would assist with the goal of providing housing stability & homeless prevention services. These projects included a tenant- landlord dispute counseling program administered by Project Sentinel ($50,000), a food distribution program administered by Harvest Time ($74,955), and a rental-utility assistance/mental health substance abuse services program administered by Dr. Jennifer M. Jones Foundation ($44,059). All programs were successfully implemented, and accomplishment data can be found in Table 1 - Accomplishments - Program Year & Strategic Plan to Date.
3E – Provide Fair Housing Services
Fair Housing Services was provided by Project Sentinel, Inc. with $33,206.00 of HOME funding in the 2025 program year. During PY2025, Project Sentinel exceeded their annual goal for the number of people served through Intake and Referral services by assisting a total of 74 residents. Over the course of the year, they also surpassed their outreach goals in reaching 147 city residents through direct outreach and seven (7) fair housing case investigations. Additionally, Project Sentinel distributed a total of 833 pieces of educational materials, which includes both mailers and brochures, such as those distributed to and available from the Housing Division. Project Sentinel staff also attended fifteen (15) outreach events this year. 4A – Provide Vital Services for LMI Residents
The 2025 Annual Plan set aside $197,381 of CDBG funds for various public services projects which includes $28,367 for activity delivery. City staff continued to work with the last of the subrecipient organizations that had been affected by previous year delays to wrap up programs. 2025 Programs completed under Goal 3A:
Harvest Time was successful in completing their 2025 Food 4 You program, assisting a total of 619 households and a total of 1863 people throughout the year with food distributions. The 2025 Project Sentinel Tenant and Landlord Counseling project was successfully carried out during the 2025 program year and assisted 127 households with tenant and landlord mediation and counseling services that helped resolve conflicts.
A 2024-25 Program Year project - The Healthy House Within a MATCH Coalition-senior CAPER 7
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services/homeless prevention support services and elder abuse prevention program successfully ran their project and assisted a total of 61 persons from the households of 35 seniors. Final invoicing is near completion.
Walking by Faith Ministries International, dba SERENITY project Strengthen, Transform, Affirm, Restore, and Support (STARS) was implemented during PY 2024, however, final invoicing and reporting was completed during PY 2025-26. The STARS program successfully assisted 21 students with after- school homework & literacy support, a peer mentor program, and social development. Dr. Jennifer M. Jones Foundation – Administered their rental/housing stabilization services while connecting participants with case management community resources designed to promote long-term housing stability. Housing staff is working on concluding the final invoicing and reporting with the foundation. Final demographic information will be included and reported on 2026 CAPER. 6A – Administration and Planning
The PY2025 Annual Action Plan set aside a total of $239,482 of CDBG and $44,751 of HOME for administration activities related to management of the City’s HUD allocations and implementing required administrative programs, such as Fair Housing Services, through the program year.
At the start of PY2025, a total of $38,000 of CDBG administrative funding was set aside for planning and data collection activities related to assisting the Point-in-Time count carried out by the Continuum of Care (CoC) in January 2026. The Merced County Human Services Agency, acting as the administrative lead for the CoC, was reimbursed for the full $38,000 budgeted for this activity.
With a total remaining PY2025 CDBG administrative budget of $201,482, the Housing Division expended a total of $139,272.53 of CDBG on direct administrative activities and a total of $15,897.73 on indirect activities, for total CDBG PY2025 admin expenditures of $155,170.26. Combined with expenditures of the CoC mentioned above, the City expended $193,170.26 of CDBG on administrative activities.
Over PY2025, the City expended $8,548.15 of HOME funds on Fair Housing Services contracted through Project Sentinel. At the beginning of the program year, $33,206.00 of HOME was budgeted for this activity; however, as the City was unable to execute the contract with Project Sentinel until April 2026 due to receiving late access to PY2025 funding from HUD, Project Sentinel is still in the process of billing for each of the four quarters they carried out these activities. The City will report the remaining expenditures of PY2025 Fair Housing Services HOME funding in the next CAPER (PY2026).
A total of $11,544 of PY2025 direct HOME administrative was expended during the year. A total of $11,545 was budgeted at the start of the year. Combined with Fair Housing Services activities carried out by Project CAPER 8
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Sentinel, the City expended a total of $20,092.15 on HOME administrative activities.
Prior-Year Projects in Progress Under Other Goals:
In the PY2024 Annual Action Plan, a total of $154,500 of CDBG Funds was set aside for Habitat for Humanity Merced/Stanislaus (HHMSC) to complete the ongoing rehab project at 241 E Main St. This project is partially started (PY 2017/Activity 1114) and has received previous NEPA environmental clearance, but has experienced several setbacks and unanticipated cost increases since it began in approximately 2018, including deletion from the 2023 Annual Plan during its necessary second amendment, material cost increases, additional ADA- related costs, delays related to the Coronavirus pandemic, and the January 2020 HUD Environmental Monitoring. Previous agreements and amendments have since expired; and the original project scope has changed from a simple rehabilitation to a reconstruction/rehab after full demolition of the structure in 2019; however, Housing staff has been working with HUD and HHMSC to develop an acceptable path for completion.
Staff is processing updates to both the previous environmental review and a new agreement amendment to reflect these changes. The project will result in the completed home being sold to and occupied by an approved LMI family through HHMSC. When completed, the project will be reported in a future CAPER under Goal 5A (Increase/Rehabilitate Homeowner Housing) in the 2025-2029 Strategic Plan.
Continued (5)
CARES Act Coronavirus Community Development Block Grant (CDBG-CV) Funds:
As part of the CARES Act, additional assistance was provided for HUD grantees, and the City received CARES Act allocation of CDBG funds (CDBG-CV funds) in Rounds 1 and 3. In total, the City received $1,193,573 of CDBG-CV funds, and repurposed $125,239 of regular CDBG funds to be used towards combating the local effects of the pandemic and addressing immediate community needs that were identified through a public process.
The City implemented four programs that addressed community COVID needs through the pandemic and beyond. The needs of very low- to low-income residents who are at risk of homelessness and who regularly experience food insecurity were amplified by the effects of COVID-19, especially workers employed by the types of businesses, such as restaurants/bars and personal service (gyms, hair and nail salons, etc.), that were the first to be affected by State-mandated closures and among the last to reopen.
The remaining CV program that continued and completed in PY2025 was:
1). United Way of Merced County; Workplace Stabilization Program (Implemented August 2021) Activity: a) For-Profit Small Business Assistance (SBA); and b) Microenterprise Assistance Total Project Funding (Round 1 only): $500,000. United Way began accepting applications for assistance from businesses in October of 2021 for reimbursement of eligible expenses dating to the start of mandated business shutdowns (March 2020).
The final amount disbursed for this program very early in Program Year 2025 was $30,000 and assisted 1 small business in the City of Merced. The CDBG-CV funds were used to retain 2 full time and 7 part-time low- CAPER 9
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moderate income employees.
Amendments to the 2025 Annual Action Plan and Progress of PY2019 and PY2024 Substantial Amendments There were no minor or substantial amendments made to the 2025 Annual Action Plan during the course of the program year.
In 2024, the City of Merced substantially amended its 2024 Annual Action Plan (Substantial Amendment #1) to provide supplemental CDBG funding to the 2023 program year K/13th Street/Hwy 59 Water-Sewer Main & ADA Improvement Project. The amendment repurposed disencumbered CDBG Prior Year Resources, reductions in budgeted Activity Delivery Costs, and previously unanticipated 2024 Program Income to the project. It also strategically allocated $307,913.40 of 2014/2015 CDBG funds to the project, which were expected to be returned to the City during PY2025 and be available for re-use after previous expended CDBG funds from Activity #1102 were repaid to HUD. During PY2025, the repayment occurred and the subject CDBG funds of the same amount were returned to the City (as “LA” funds). The City is currently waiting for Activity #1102 to be cancelled in the Integrated Disbursement and Information System (IDIS) by HUD Headquarters.
During PY2025, the City was also continuing to work with HUD on clearing a 2012 CDBG Economic Development Activity #998 that also required repayment from the City’s local funds, after it was determined ineligible in 2014. At that time, HUD allowed the repayment to be made in small increments, through HUD payment vouchers, after which the CDBG funds were reallocated to a water main replacement project at T and 7th Streets (Activity #1054). However, costs incurred with Activity #1054 did not equal that of Activity #998, leaving $54,988.91 left to be repaid. In 2024, the City restarted its efforts to repay the remaining funds, with the intent, like the CDBG funds repaid from Activity #1102, to have the returned funds be reallocated to the K/13th Street/Hwy 59 Water-Sewer project discussed above. With limited staff resources at HUD over the last two years, however, this process has taken longer than expected. To date, the remaining funds have been repaid from a local City source, CDBG funds have been receipted for re-use on the project, and the City is waiting for Activity #998 be cancelled in the IDIS system.
In 2024, processed concurrently with the PY2024 Annual Plan amendment described above, Substantial Amendment #3 to the 2019 Annual Action Plan shifted all remaining unspent CDBG-CV funds totaling $470,109.69 from all current COVID-19 response projects to activities that help prepare public infrastructure for future pandemics by helping to protect the potable water supply, specifically the same 2023 program year infrastructure project as the 2024 first substantial amendment. However, with the repayment processes from Activities #1102 and #998 taking longer than expected, now the 2019 CDBG-CV funds are facing a 6-year Period of Performance deadline on September 4, 2026. The City was informed on June 26, 2026, that an extension request can be submitted to HUD to possibly extend the use of these funds through September 2027. On July 28, 2026, the City applied for the extension using explanation of these amendments and funding source delays as extenuating circumstances, in order to allow further time to expend the CDBG-CV funds and complete the planned water and sewer infrastructure project. As of September 4, 2026, the extension request CAPER 10
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is still pending.
Timely Expenditure of CDBG funds:
During the 2025-26 PY, and on the compliance tests date of May 2, 2026, City of Merced did not meet the CDBG Timeliness test and was not in compliance with the HUD acceptable ratio of 1.5% or below. The City of Merced had 2.48% of its annual grant still unspent. This figure represents that, as a CDBG Entitlement Grantee, City of Merced had a balance of funds greater than one and one-half times its annual grant 60 days prior to the end of the program year. The City is required to submit a workout plan to HUD to describe the steps it will take to ensure that the line of credit balance, including any program income, will be no greater than 1.5% on its next test date of May 2, 2027. City staff is currently working on this plan and will be submitted to HUD in the very near future.
CAPER 11
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CR-10 - Racial and Ethnic composition of families assisted Describe the families assisted (including the racial and ethnic status of families assisted).
91.520(a)
CDBG HOME
White 1841 52
Black or African American 179 22
Asian 74 0
American Indian or American Native 17 0
American Indian/Alaskan Native & White 19 0
Asian & White 10 0
Black/African American & White 29 0
American Indian/Alaskan Native & Black/African
American 13 0
Other Multi-Racial 83 0
Native Hawaiian or Other Pacific Islander 0 0
Total 2,304 74
Hispanic 1481 35
Not Hispanic 823 39
Table 2 – Table of assistance to racial and ethnic populations by source of funds Narrative
Please note that the above table does not list all the racial categories for which data is collected; therefore, numbers do not reflect individuals assisted with CDBG funds who identify as any race besides what is indicated in the table above. These individuals are, however, captured in the snapshot table shown below at the end of this section. This additional table gives a more accurate and detailed account of total numbers of different races identified and assisted. ***Table will be added with final CAPER download***
CDBG-CV funds = the table above does not report demographics for activities that used CDBG-CV funds.
This draft will be updated with separate text that will describe the racial/ethnicity data assisted with CDBG-CV.
The City also provided HOME administrative funding to Project Sentinel, Inc., for Fair Housing Services, which assisted 74 residents with housing discrimination case investigation, information/outreach, and intake/referrals, and distributed a total of 833 educational mailers and brochures to city residents in targeted LMI areas.
The Merced City and County Continuum of Care provides vital services to homeless individuals and families throughout Merced County each year. Annually, a Point-In-Time (PIT) count is carried out to CAPER 12
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determine the approximate number of individuals experiencing homelessness in the County. The 2026 PIT count was performed on January 22, 2026, and recorded 348 sheltered and 204 unsheltered individuals within the City of Merced city limits, an increase of 1.3% over last year’s count. Countywide, with a total count of 748 homeless individuals (345 sheltered/403 unsheltered) there was a 4.3% overall increase over the 2025 count. However, homeless individuals living in the City represent almost three- fourths of the County total (73.8%). As this data is used by the City of Merced to assess its own efforts to reduce homelessness, the City contributes a portion of its annual CDBG administrative funds to the cost of the consultant hired to perform the PIT and analyze its data.
Some of these individuals can assume to be assisted through CDBG funding by the Harvest Time food distribution program that delivered meals directly to homeless encampments throughout the City, as well as the Dr. Jennifer M. Jones Foundation “Legacy Homes” rental/housing stabilization program.
The populated data is not reflective of projects that were not implemented and/or closed out this fiscal year, projects currently underway or nearing completion, units acquired but not yet occupied, or other non-HUD funded housing projects. Some of these accomplishments will be reported in the 2026 CAPER next year.
CAPER 13
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CR-15 - Resources and Investments 91.520(a)
Identify the resources made available
Source of Funds Source Resources Made
Available
Amount Expended
During Program Year
CDBG public - federal $1,271,844.00 $351,289.75
HOME public - federal $1,776,200.00 $1,053,329.16
Table 3 - Resources Made Available
Narrative
The City of Merced received $1,089,413 in 2025 Community Development Block Grant (CDBG) and $447,510.24 in 2025 HOME Investment Partnership (HOME) formula funds. Over the program year, through monthly payments and complete payoff of existing rehabilitation and first time homebuyer loans of CDBG and HOME funds by city residents holding the loans, $260,509.09 in CDBG funds and $140,447.71 in HOME funds were received as program income.
As previously explained, the remaining balance of CDBG-CV funding, $470,109.69, will be spent over PY2026 with a water and sewer main improvement project, if the City’s request to extend the period of performance to September 2027 is granted.
Additionally, at the start of PY2025, the City had all of its 2021 HOME American Rescue Plan (HOME- ARP) funding conditionally committed to the Mercy Village project on Park Avenue in Merced. In April 2026, the City processed a minor amendment to PY2021 Annual Action Plan, in order to reduce the previously approved HOME-ARP Allocation Plan’s Activity Delivery Cost (ADC) and administrative funding budgets to correctly reflect anticipated direct staffing charges, effectively increasing the amount of project funding available to $1,961,248 (the total allocation did not change).
The City has taken no action to hinder the implementation of the 2025 Annual Action Plan, has strived to continue to monitor the progress of all projects and programs, and has implemented new projects and programs that continue to work toward achieving the PY2025-2029 Consolidated Plan’s goals and objectives and to meeting the changing needs of residents.
Identify the geographic distribution and location of investments Target
Area
Planned
Percentage
of
Allocation
Actual
Percentage
of
Allocation
Narrative Description
City Wide 73 25
The City allocated approximately 27 percent of its CDBG and HOME funds to eligible census tracts
Table 4 – Identify the geographic distribution and location of investments CAPER 14
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Narrative
The 2025 Annual Action Plan projected that over seventy-three (73%) of expenditures would be for activities benefiting low- and moderate-income persons citywide across all programs. The City is still on track to reaching this goal. However, not all of the reimbursements planned have been fully processed and drawn through the HUD financial system.
Normally each year, a small number of Merced’s subrecipients provide services and housing to residents living in the eligible census tracts. However, in PY2025, just one project, the Joe Herb Park ADA Improvement project, was directed exclusively to residents within CDBG income-eligible census tracts.
Some of the remaining funds were targeted to the general population; however, because the latest available Census data figures show that overall more than 51% of Merced City residents are low- to moderate-income, activities outside the designated income-eligible census tracts will still serve LMI populations.
CAPER 15
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Leveraging
Explain how federal funds leveraged additional resources (private, state and local funds), including a description of how matching requirements were satisfied, as well as how any publicly owned land or property located within the jurisdiction that were used to address the needs identified in the plan.
The City is dedicated to leveraging its funds towards increasing the number of affordable housing units available to City residents.
In PY2025, the City partnered with affordable housing developer Visionary Home Builders Inc. to construct the Bella Vista Apartments, a 108-unit affordable apartment complex that will be rented to households with incomes between 0-60% of the AMI (Area Median Income) for Merced County, leveraging a State and Local Fiscal Recovery Funds (SLFRF) American Rescue Plan Act (ARPA) Grant, along with Project Based Voucher support through the local Housing Authority. Construction is well underway with an estimated completion date of April 2027.
The City is still in the early stages of partnering with affordable housing developer LINC Housing to bring a 54-unit apartment complex to the Merced downtown’s older residential area, which will be restricted to income levels between 30%-80% AMI for Merced County. The City Council appropriated $1,608,830 of State PLHA (Permanent Local Housing Allocation funds) and $2,497,538 of State REAP funds (Regional Early Action Planning Grant). In PY2025, the City Council approved the issuance of a Conditional Letter of Commitment to the project, which sets aside $1,756,934 of HOME funds. A NEPA Environmental Assessment is currently being prepared for the project.
The City recently completed a unique 20-unit housing project by developer Certified Container/CC915 that created permanent supportive housing units for previously unsheltered veterans. This project leveraged funding from a California Homekey Round 2 grant, a private local grant, community partnerships with local organizations such as Merced Rescue Mission and the Veterans Administration office, and a small amount of City-provided funds. The development is now fully occupied.
A second project with CC915, initially named “Willow Haven,” is also in progress and will be located at 125 E. 13
th Street. It will feature a diverse range of unit types, including 24 studio units, 13 one-bedroom units, 20 two-bedroom units, and one one-bedroom manager units. The project will employ innovative and sustainable building practices, converting new 40-foot-long shipping containers or modular structures into comfortable, well-designed homes. This approach underscores Merced's commitment to environmentally friendly and cost-effective housing solutions. The successful implementation of this project is supported by the combined CAPER 16
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efforts and financial commitments of various local agencies:
Anabasis: Land donation valued at $500,000.
Merced County Human Services Agency: Enforceable funding commitment totaling $919,368 for the first three years.
Merced City and County Continuum of Care: Operating and support commitment of $400,000.
CalAIM Housing Support via Central California Alliance for Health: A one-time commitment of $230,000 in the first year and an annual commitment of $227,976 for years 1-5, totaling $1,369,880.
Housing Authority of the County of Merced: Intent to pursue tenant-based vouchers for years 6-15, totaling $5,263,152.
Central Valley Opportunity Fund: Rental and operational subsidy commitment totaling $625,000 for years 1-5.
On August 26, 2026, after five years of planning, the City and its partner, UP Mercy Village, LP, successfully closed escrow on Mercy Village Apartments, the 66-unit permanent supportive affordable housing project to be located at 3015 Park Avenue in Merced. The project leverages State Permanent Local Housing Allocation (PLHA), State Homekey+ funding, Housing Authority of the County of Merced Project Based Vouchers (PBVs), and all available HOME-ARP project funding.
Additionally, the City leveraged some of its CDBG administration and planning activity funds to the Merced City and County Continuum of Care program’s Collaborative Applicant, to support eligible costs of data collection and formulating strategies for homelessness planning for the City’s homeless populations.
All Participating Jurisdictions (PJs) receiving HOME funds, like the City of Merced, must contribute or match no less than 25 cents for each dollar of HOME funds spent on affordable housing. As PJs draw funds from HOME, they incur a match liability, which must be satisfied by the end each federal fiscal year. This being said, the HOME statute provides for a reduction of the matching contribution requirement under three conditions: 1) fiscal distress; 2) severe fiscal distress; and 3) for Presidentially declared major disasters covered under the Stafford Act.
When a local jurisdiction meets both distress criteria in 24 CFR 92.222, it is determined to be in severe fiscal distress and receives a 100% reduction of match. Individual poverty rate and per capita income (PCI) are based on data obtained from the latest American Community Survey (ACS) estimates from Census data. In 2025, for a jurisdiction to qualify as distressed based on the poverty criterion, its percentage of persons in poverty must have been at least 16.036% , and to qualify as distressed based on the Per Capita Income (PCI) criterion, its average PCI must CAPER 17
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have been less than $30,756. As of the most recent data released by Census Reporter, with an estimated poverty rate of 23.2% and a PCI of $26,076, the City of Merced’s match is reduced 100 percent for fiscal years 2025 and 2026.
Fiscal Year Summary – HOME Match
1. Excess match from prior Federal fiscal year $25,393,312
2. Match contributed during current Federal fiscal year 0
3. Total match available for current Federal fiscal year (Line 1 plus Line 2) $25,393,312
4. Match liability for current Federal fiscal year 0
5. Excess match carried over to next Federal fiscal year (Line 3 minus Line 4) $25,393,312 Table 5 – Fiscal Year Summary - HOME Match Report
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Match Contribution for the Federal Fiscal Year
Project No. or
Other ID
Date of
Contribution
Cash
(non-Federal
sources)
Foregone
Taxes, Fees,
Charges
Appraised
Land/Real
Property
Required
Infrastructure
Site
Preparation,
Construction
Materials,
Donated labor
Bond
Financing
Total Match
Table 6 – Match Contribution for the Federal Fiscal Year
HOME MBE/WBE report
*Calculation of figures and data needed for the following tables is in progress. Final updates will be made prior to submittal to HUD, or sooner. *
Program Income – Enter the program amounts for the reporting period Balance on hand at
beginning of reporting
period
$
Amount received during
reporting period
$
Total amount expended
during reporting period
$
Amount expended for
TBRA
$
Balance on hand at end
of reporting period
$
Table 7 – Program Income
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Minority Business Enterprises and Women Business Enterprises – Indicate the number and dollar value of contracts for HOME projects completed during the reporting period Total Minority Business Enterprises White Non-
Hispanic Alaskan
Native or
American
Indian
Asian or
Pacific
Islander
Black Non-
Hispanic
Hispanic
Contracts
Dollar
Amount 0 0 0 0 0 0
Number 0 0 0 0 0 0
Sub-Contracts
Number 0 0 0 0 0 0
Dollar
Amount 0 0 0 0 0 0
Total Women
Business
Enterprises
Male
Contracts
Dollar
Amount 0 0 0
Number 0 0 0
Sub-Contracts
Number 0 0 0
Dollar
Amount 0 0 0
Table 8 - Minority Business and Women Business Enterprises *In Progress*
Minority Owners of Rental Property – Indicate the number of HOME assisted rental property owners and the total amount of HOME funds in these rental properties assisted Total Minority Property Owners White Non-
Hispanic Alaskan
Native or
American
Indian
Asian or
Pacific
Islander
Black Non-
Hispanic
Hispanic
Number 0 0 0 0 0 0
Dollar
Amount 0 0 0 0 0 0
Table 9 – Minority Owners of Rental Property *In Progress*
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Relocation and Real Property Acquisition – Indicate the number of persons displaced, the cost of relocation payments, the number of parcels acquired, and the cost of acquisition Parcels Acquired 0 0
Businesses Displaced 0 0
Nonprofit Organizations
Displaced 0 0
Households Temporarily
Relocated, not Displaced 0 0
Households
Displaced
Total Minority Property Enterprises White Non-
Hispanic Alaskan
Native or
American
Indian
Asian or
Pacific
Islander
Black Non-
Hispanic
Hispanic
Number 0 0 0 0 0 0
Cost 0 0 0 0 0 0
Table 10 – Relocation and Real Property Acquisition *In Progress*
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CR-20 - Affordable Housing 91.520(b)
Evaluation of the jurisdiction's progress in providing affordable housing, including the number and types of families served, the number of extremely low-income, low-income, moderate-income, and middle-income persons served.
One-Year Goal Actual
Number of Homeless households to be provided affordable housing units 0 0
Number of Non-Homeless households to be provided
affordable housing units 126 0
Number of Special-Needs households to be provided
affordable housing units 31 2
Total 157 2
Table 11 – Number of Households
One-Year Goal Actual
Number of households supported through Rental Assistance 0 0 Number of households supported through The Production of New Units 154 0
Number of households supported through Rehab of Existing Units 1 0
Number of households supported through Acquisition of
Existing Units 2 2
Total 157 2
Table 12 – Number of Households Supported
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Discuss the difference between goals and outcomes and problems encountered in meeting these goals.
Accomplishment data represents the project completion of the PY2024 activity of a CDBG-assisted Acquisition with Rehabilitation housing project by Sierra Saving Grace. Sierra Saving Grace expended $579,788.38 of PY2024 CDBG funding to acquire and rehabilitate a two-unit property to house two extremely low- to moderate-income formerly or chronically homeless households at 639 and 641 W. 10th Street, within the city limits. Accomplishments are listed above in the “Actual” column under “Acquisition of Existing Units” for the two special needs households assisted.
The City of Merced saw the completion of the 156-unit (2-units reserved for on-site staff) affordable housing project River Canyon Apartments (formerly the Devonwood Apartments), which is reflected in the “One Year Goal” column above for Tables 11 and 12. This project has completed construction and is nearing full occupancy. The City is actively working with the developer and operations partner organization to gather required demographic information. Since project closeout is still in process, actual accomplishment information was not able to be captured in the above tables. Table accomplishment data will be updated in the 2026 CAPER.
The PY2025 Annual Action Plan also anticipated the completion of at least one unit of Homeowner Occupied Rehabilitation by Habitat for Humanity Merced/Stanislaus. Unfortunately, movement on a specific project did not progress during PY2025, so the one-year goals that were set to assist rehabilitation of one unit of existing non-homeless housing was not achieved within the program year. However, as a whole, the program is still moving forward, and actual accomplishments are expected to be reported in the PY2026 CAPER next year.
Discuss how these outcomes will impact future annual action plans.
The City continues to encourage the development of housing units for households earning 30 percent or less of the Area Median Income (AMI) for households in Merced County. When possible, specific emphasis will be placed on the provision of family housing and non-traditional housing types such as single-resident occupancies (SROs), transitional facilities, and facilities that serve temporary needs, such as shelters or warming and cooling centers. The City will encourage development of housing for extremely low-income households through a variety of activities such as outreach to nonprofit and for-profit housing developers, land donations, providing in-kind technical assistance for housing developers, financing and funding assistance, fee deferrals, and expedited processing as appropriate. The City’s objective shall be to encourage and facilitate construction of supportive housing units for extremely low-income households.
Include the number of extremely low-income, low-income, and moderate-income persons served by each activity where information on income by family size is required to determine the eligibility of the activity.
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Number of Households Served CDBG Actual HOME Actual
Extremely Low-income 2 0
Low-income 0 0
Moderate-income 0 0
Total 2 0
Table 13 – Number of Households Served
Narrative Information
CDBG funds were used for activities benefitting low- to moderate-income persons and were in compliance with certifications that require no less than 70% of CDBG funding during the specified period on activities that benefit individuals and households in those income groups.
During the 2025 program year, approximately 80% of CDBG funding was directed towards LMI households and persons.
Additionally, included in the Attachments are PR23 reports for both CDBG and HOME, which reflect matrix code/project categories, accomplishment type, beneficiaries by income category, including census data for persons, and number of household units.
Not reflected in this table are CDBG and HOME projects carried over from previous or PY2025 that are still underway, CDBG-funded public services projects, CDBG activities in designated Low-Mod areas (LMA) where income data is collected through Census-related data sources, all CDBG-CV project activity, and projects funded with administrative funds, such as the CoC’s Point-in-Time Count with CDBG and Fair Housing Services with HOME admin funds.
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CR-25 - Homeless and Other Special Needs 91.220(d, e); 91.320(d, e); 91.520(c) Evaluate the jurisdiction’s progress in meeting its specific objectives for reducing and ending homelessness through:
Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs The City closely follows the vision of the Merced City and County Continuum of Care to aid in preventing and ending homelessness. The City is able to assist in this mission by providing funding for the Point-in Time Count, which is a critical and required project yearly. The City is also committed to funding non-profit organizations (CDBG-funded Public Service activities) to reach out directly to homeless and special needs individuals in need of these services.
Among others, the following standout positive outcomes helped to direct resources towards homeless programs and activities:
The Sierra Saving Grace Homeless Project 2-unit acquisition with rehabilitation project (PY 2024-25) completed and houses formerly homeless families, who also receive supportive services including case management. 2 households received assistance from this project. The City of Merced provided the City and County Continuum of Care Collaborative Applicant (Merced County Human Services Agency) planning activities funding support in strategizing homeless support and prevention programs within the City Limits, for sheltered and unsheltered individuals.
Harvest Time continued to provide meals to homeless individuals throughout the program year through a collaboration with Merced Rescue Mission.
Dr. Jennifer M. Jones Foundation operated a rental/housing stabilization program while connecting participants with case management and community resources designed to promote long-term housing stability.
The CoC advertises the Coordinated Entry (CE) process in ways that include: 1) leaving business cards of outreach workers; 2) leaving flyers that describe the process and include contact information; 3) leaving information at service sites; 4) leaving information at public locations; 5) educating mainstream service providers; 6) presence at events that attract homeless persons; 7) through the B Street Navigation Center; 8) via the 2-1-1 help line; and, 9) through meal programs at centers and parks.
Addressing the emergency shelter and transitional housing needs of homeless persons The City of Merced participates in the Merced City and County Continuum of Care, which is linked to a wide range of public and private agencies CAPER 25
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working together to address emergency and transitional housing needs of homeless persons. Each year, the Continuum of Care produces a Housing Inventory Count Report (HIC). In the 2025 Homeless Inventory Count Report completed by the Continuum of Care, the HIC reported the following bed/emergency shelter options as available in the Merced City & County CoC area:
Emergency Shelter Beds available (includes centers/motel vouchers/bridge housing): 314 Transitional Housing Beds: 136
Permanent Supportive Housing: 44
Rapid Re-Housing: 255
Please note: “bed” relates to the number of beds and units available on the night designated for the count by program type, and includes beds dedicated to serve persons who are homeless, as well as persons in Permanent Supportive Housing.
This past year, the City of Merced collaborated with the following organizations to provide immediate shelter to chronically homeless individuals or individuals at-risk of becoming homeless:
Dr. Jennifer M. Jones Foundation - Emergency rental, mortgage, and utility payment assistance Merced County - CoC Collaborative Applicant for homelessness strategies A Healthy House within a Match Coalition - Homelessness prevention/case management for seniors; rental assistance Project Sentinel - Tenant/landlord mediation services Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families and those who are: likely to become homeless after being discharged from publicly funded institutions and systems of care (such as health care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); and, receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs
In partnership with the Merced City and County Continuum of Care, the Merced County Rescue Mission operates a Respite Care program that focuses on helping homeless persons discharged from local hospital and healthcare facilities. The Respite Care program offers such persons a safe and supportive environment, as well as meals and oversight of medical treatment, while helping them explore long-term housing options through case management.
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Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again The collaborative partnership to strategize assistance to homeless persons and to prevent homelessness in the City exists as the Merced City and County Continuum of Care, and includes:
Focusing more intensely on chronically homeless individuals and families through street outreach and engagement into areas and encampments where chronically homeless persons are known to live; Engaging chronically homeless households through the Coordinated Entry System, to help link them to the appropriate permanent supportive housing provider and level of supportive services; Increasing resources to provide bridge housing for chronically homeless households who need a short-term stay while awaiting permanent housing availability that includes low-barrier shelter and vouchered stays in motels; Connecting chronically homeless households to mainstream resources, including Medi-Cal and behavioral health services while awaiting PSH placement;
Connecting chronically homeless households to community resources such as food, transportation, money management, housing counseling services, etc., to ensure they maintain their housing; and, Emphasizing a consumer-driven mindset that is choice-based.
The Coordinated Entry System (CES) plays a critical role in providing the right intervention for each homeless family to effectively house them within 30 days. CES helps families avoid entering shelters by offering assistance to help them remain in their housing or live with friends and families for a short period of time in order to gain time to move into permanent housing. If emergency shelter is needed, rapid rehousing assistance and supportive services are provided to help ensure a stay of no more than 30 days. Services are provided within a housing first and low-barrier environment. Assistance is flexible, so that families with lower barriers receive modest financial assistance and those with higher barriers receive moderate assistance.
The Continuum of Care has also developed more effective coordination between prevention efforts and mainstream benefits and programs.
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Merced City and County Continuum of Care – Regionally Coordinated Homelessness Action Plan In 2019, the City and County began work on a regional homeless plan that would bring coordination of jurisdictions county-wide to address concerns associated with homelessness and the homeless population. Meetings between regional leaders to potential fruition of the concept, with CA Governor Gavin Newsom's willingness to support regional solutions for homelessness in the State budget pivoted this effort.
The Regionally Coordinated Homelessness Action Plan has been in effect since approximately 2024. As it states, the objective of the plan is to structure progressive steps towards preventing and ending homelessness for all people and populations within the County region by reaching “functional zero.” The plan lays out actionable advances to improve the homeless system’s current measurable outcomes and emphasizes collaborative roles and responsibilities of partnerships within the homeless response system.
The regional plan set the following guiding principles and practices, which were formed in alignment with the State’s plan for preventing and ending homelessness:
Racial Equity
Culturally Sensitive Services
Serving the Fully Diversity of People Experiencing Homelessness Housing First Approach
No Wrong Door Policy
Expertise of People with Lived Experience of Homelessness Balancing Crisis Response and Permanent Housing Solutions Trauma-Informed Care and Person Centered Services
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CR-30 - Public Housing 91.220(h); 91.320(j)
Actions taken to address the needs of public housing
The Housing Authority of Merced County (HAMC) is the public housing agency serving those needs within the City of Merced. HAMC is independent of the City of Merced, and the City retains no control or decision-making over its funding, voucher programs, or implementation of programs. HAMC owns and manages 182 public housing units, where low-moderate income families and individuals are provided rental assistance to occupy. The City does not own any public housing.
The City of Merced continues to work closely with non-profit organizations who, in association, work closely with HAMC to provide assistance to low-income families in the development of housing projects in Merced. In this connection, the City and HAMC each strive to address the public housing needs of the community, though our combined funds are insufficient to address the extent of the affordable housing crisis.
The Housing Authority provides and manages the Housing Choice Voucher program, formerly known as Section 8. Due to the lack of available units and the community’s low vacancy rate, many voucher recipients still have trouble finding and securing housing.
The success of the HAMC assistance within the City of Merced continues to hinge on the shortage of available units, and the lack of affordable, decent housing is a major issue in Merced County as a whole. The HAMC has begun construction of 11 project-based small homes that will be designated as housing for elderly and/or disabled families.
The City is currently working with affordable housing developers to increase affordable housing stock as reported in Section CR-20 of this report.
Actions taken to encourage public housing residents to become more involved in management and participate in homeownership The Housing Authority of Merced County (HAMC) created a Homeownership Program (HOP) for tenants residing in public housing. The Homeownership Program was established to create a pathway for low-income families to purchase a home. Families are required to meet normal eligibility requirements for public housing and demonstrate the potential to achieve homeownership status. Prospective tenants are required to attend a variety of classes which include homeownership, credit counseling, home maintenance, etc.
HAMC encourages residents to participate in policy, procedure, and program implementation and development through its Board, particularly focusing on self-sufficiency and enhancing the quality of one's own life. HAMC connects residents and participants to services, activities, and CAPER 29
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other organizations that promote that vision. There are community and network center partnerships for residents to utilize, including public computer centers. On the HAMC website, residents can locate relevant services and service providers in dedicated resident and resident services sections. Additionally, HAMC distributes information via webpage and mail-outs to participants about the status of its programs and residents for current and future participants, relevant news, information on training and employment opportunities, and other community resources available. Public housing residents also participate in the development of the HAMC five-year and annual plans. The HAMC distributes a survey to prioritize residents’ needs and schedule short- and long-term improvements.
Actions taken to provide assistance to troubled PHAs
HACM is not in troubled status.
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CR-35 - Other Actions 91.220(j)-(k); 91.320(i)-(j)
Actions taken to remove or ameliorate the negative effects of public policies that serve as barriers to affordable housing such as land use controls, tax policies affecting land, zoning ordinances, building codes, fees and charges, growth limitations, and policies affecting the return on residential investment. 91.220 (j); 91.320 (i) Beginning In 2024, the City of Merced drafted its Multi-Jurisdictional Housing Element for the years 2024-2032, which as a State-required element of the City’s General Plan, is essentially the policy document for addressing housing issues and topics in the city limits. The preparation process helped the City evaluate and reshape its vision and goals for providing housing opportunities. It was a lengthy process that included the requirement to rezone several properties in the City; however, on August 12, 2026, the City received communication that the City’s Housing Element substantially complies with the State Housing Element Law.
During this process, a number of factors were considered in mitigating barriers to affordable housing, such as:
Residential Infill Study - compiled a list of vacant and developable land for residential development. This helped the City to conclude that there is still sufficient land designated for multifamily development for extremely low-, very low-, and low-income households. Streamlined building permit review process - allows the developer to submit specific house plans; or, in the case of multifamily development, develop specific building plans for review, then pull subsequent building permits with only a site plan and any other required documents for an expedited review (masterplans). This process is used within all zones in the city. Density Bonus Provision - encourages the use of the Density Bonus Zoning Ordinance provision to allow a 50% increase in number of units allowed in medium- and high-density land use zones dedicated exclusively for senior housing, if at least 50% of the units are affordable to very low-income households.
Lot Split Process - encourages developers of affordable housing to consider subdividing large lots into smaller lots that may be more suitable for affordable housing. This process is done through staff-level approval with no public hearings before the City Council or Planning Commission. This expedited process takes approximately 3 weeks.
The Housing Program continues to service existing First Time Homebuyer Program (FTHB) loans funded by the previous-year HOME program funds, Neighborhood Stabilization Program (NSP) funds, and previous-year CalHOME funds.
The City was awarded $2.5 million of 2021 CalHOME Program funding from the State of California Housing and Community Development (HCD) on April 19, 2022. This amount is split towards the following activities and amounts: 1) homeowner occupied rehabilitation - $1,375,000; and 2) CAPER 31
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first time homebuyer for mortgage assistance - $1,125,000. The City enlisted the partnership of Self-Help Enterprises for their expertise in both applying for and managing the programs post-award.
CalHOME 21 funding under the First Time Homebuyer program was able to assist 7 households with down payment assistance on their first home. 1 household was assisted with a homeowner-occupied rehabilitation loan. The total expended by CalHOME 21 program was $884,758.00. The City is in the process of working with State of California Department of Housing & Community Development to determine if program income funds that has accumulated from payoffs of previous-year CalHOME funding can be used towards starting a new First Time Homebuyer program.
In February 2020, the City received an award of State SB2 Planning Grant Program funds that funded planning activities directed at accelerating the production of new housing units in the City. These funds were directed towards several activities, including updating the Accessory Dwelling Units (ADU) Ordinance, developing pre-approved ADU and duplex plans to streamline permitting processes and encourage the construction of housing units by home and landowners, and to strategize use of permanent Local Housing Allocations (PLHA) funds towards activities that reduce the cost and policy barriers for residents.
Actions taken to address obstacles to meeting underserved needs. 91.220(k); 91.320(j) The City of Merced Housing Division has partnered with the Merced County Human Services Agency as Collaborative Applicant to identify planning strategies that the Continuum of Care program can oversee within the City of Merced and County of Merced jurisdictional lines. Almost three-fourths of Merced County’s homeless reside within the city limits. Through the Annual Plan, the City of Merced continues to provide CDBG planning and data collection activity funding to support staff and consultant costs of the Merced County Human Services Agency Collaborative Applicant homelessness planning role. Several positive activities identified by the Continuum of Care can be found throughout this document and in past year performance reports.
In 2011, the City and County of Merced took a lead role in providing resources to the homeless in Merced and the County outlying areas and smaller communities by adopting the 10-Year Strategy to End Homelessness. The plan discussed the extent of homelessness in Merced County, recommended best practices, identified potential local resources, described solutions, and ultimately rendered area organizations eligible for federal Continuum of Care grant funding. The City intentionally supports and complements the goals of the former 10-Year Strategy and the current Regionally Coordinated Homelessness Action Plan by striving to fund any of the following activities each year through public services and housing provider partnerships, as funding availability, non-profit organization capacity, and community need allows:
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Rental and utility assistance/homeless prevention
Security deposit assistance/support for rapid re-housing programs Owner occupied rehabilitation
Housing navigation services
Homeless program operating cost support
Health services
Mental health services
Legal aid services to homeless and low-income persons Services for victims of domestic violence
Permanent supportive housing
Employment training
Programs to address barriers to employment, such as self-sufficiency skills and personal finance education Childcare services, including parenting skills classes Food bank operating costs
Construction of affordable housing units
Provide set-aside units within housing projects for homeless and special needs Fair housing services
As the Housing Division does not have the staff capacity to provide these services, the City relies heavily on existing and new non-profit organizations as subrecipients to carry out these activities.
Actions taken to reduce lead-based paint hazards. 91.220(k); 91.320(j) Since a majority of housing units in the City of Merced were built before 1978, the City requires lead-based paint testing for all acquisition and rehabilitation projects. If lead-based paint is detected within the project area, the Housing Division requires that the problem is abated prior to the final reimbursement, closeout of the project, and occupancy of the unit. As required by Federal and State funding sources, housing rehabilitation programs must comply with the Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X) and subsequent changes made since its enactment.
As part of its procedures, the City requirements include:
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Notification of potential lead-based paint hazards
Identification
Treatment, if necessary
The City works with its Acquisition with Rehabilitation and Homeowner Occupied Rehab subrecipient partners to abate properties that are identified as potentially containing lead-based paint by requiring testing for every project. The practice of automatic testing for all relevant projects was fully implemented in the 2019 Annual Plan for all contracts and programs, no matter the age of the structure involved.
During PY2025, the City reconfirmed its long-standing partnership with Habitat for Humanity of Merced/Stanislaus County (HHMSC) for the fourth year of a five-year homeowner occupied rehabilitation program. The program assists homeowners with abating properties of any lead paint hazards, as well as helping with needed health and safety repairs. The program was restarted in 2022 for a three year contract, using PY2022, PY2023, and potentially, PY2024 funding, if needed. However, at the start of the program, HHMSC had become heavily involved in flood recovery efforts after January 2023 flooding affected parts of Merced and the outlying community of Planada. As a result, HHMSC could not initially begin carrying out the program, and the contract expired on June 30, 2025. On January 20, 2026, the City Council approved a new contract that renewed and extended the program through June 30, 2027, giving the organization additional time to expend the PY2022 and PY2023 CDBG funds that had already been allocated.
Actions taken to reduce the number of poverty-level families. 91.220(k); 91.320(j) The City's anti-poverty strategy is based on funding and supporting a range of housing, employment, and family service opportunities aimed at enabling those in poverty to move into or increase their skills in the workforce. Also, the City, in cooperative efforts, continues important planning strategies with the Continuum of Care and its partnering cities and non-profit agencies to identify resources available to reduce the number of persons living below the poverty level and address the needs of the community. We continue to encourage job and life skills training programs and the provision of connections to employment agencies.
Additionally, City of Merced partnered with United Way using CDBG-CV funds to implement a workplace stabilization program which was implemented August 2021. This program aided microenterprise and small businesses responding to difficult economic effects of the Coronavirus pandemic. This program allowed businesses to retain jobs, retain or rehire LMI persons, help prevent overall loss of the community’s workforce, and help ensure the continuance, stability, and economic recovery of Merced’s business community.
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The City also hosted its second annual "Fall into Success" Job Fair in October 2025, which connects City of Merced residents to a wide variety of companies in the area.
Actions taken to develop institutional structure. 91.220(k); 91.320(j) The City continues to support and encourage institution-wide - even interagency - cooperation and partnership with developers, non-profit organizations, and other organizations through the provision of financial and/or technical assistance in working towards the shared goal of providing affordable housing opportunities to extremely low-, very-low, low- and moderate-income households. As we continue these relationships, we are constantly evaluating and striving to improve their effectiveness when addressing the community's housing issues. The City continues to find ways to provide support by way of multi-agency partnerships, technical assistance, funding support, expedited permit processing, fee deferrals, land write-downs, and incentives and concessions that meet or exceed State density bonus law, as appropriate.
The Housing Division resolves to be diligent and thorough in its approach to working with developers, monitoring the progress of projects at all stages, and remaining compliant with HUD rules, laws, and authorities. The Division is deep into the process of drafting environmental, monitoring, and other policies and procedures in an effort to remain compliant with HUD requirements. The completed draft policies and procedures will need to receive City Council final approval and adoption.
The Housing Division also continues to work with all City departments, particularly Code Enforcement, Police/Fire, and Inspection Services, to identify substandard housing and encourage the owners to contact the Housing Division. If the homeowner is living in a non-compliant residence, Housing staff will contact its current partners, such as Habitat for Humanity, to see if the homeowner is eligible for the Homeowner Rehabilitation Program. If the property owner is not living on-site and would like to sell the substandard unit, Housing staff will assist the property owner in connecting with local non-profit organizations who may be interested in purchasing the unit, thereby transforming the unit from market rate to affordable housing. Whether by homeowner rehab or acquisition and rehab, these measures to identify and improve these units in this way also stabilizes the neighborhoods in which they are located and improves the lives of the residents in them.
Lastly, the City continues to encourage the creation of housing units for households earning 30% or less of Area Median Income, with emphasis on housing for families, single-occupant units, transitional facilities, and housing units serving temporary needs.
Actions taken to enhance coordination between public and private housing and social service agencies. 91.220(k); 91.320(j) CAPER 35
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The City actively collaborates and provides CDBG funding to the Continuum of Care (CoC) in planning for the fight against homelessness, joining other governmental agencies, service providers, and community members in sharing information on existing programs, identifying areas for improvement in the coordination of services, and exchanging knowledge of best practices to better understand and address the community’s needs as a whole. The Continuum of Care holds quarterly board meetings to provide a platform for agencies to coordinate services and exchange information. Board Members of the Continuum of Care include public housing authorities, service providers, community stakeholders, and people who have experienced homelessness themselves. These meetings are held to address unmet needs and ensure that resources are leveraged and not duplicated.
The Merced County Human Services Agency became the Collaborative Applicant in 2017 and still oversees the CoC. A staff member is designated to serve on the Board as a liaison between the department and homeless clients and service providers who may be experiencing barriers in receiving assistance. The County has had a significant presence in the Project Homeless Connect events held each year pre-COVID-19. At these events, the needs of at-risk individuals and people experiencing homelessness were assessed on-the-spot to get them connected to services immediately. These linkages increased the community’s efforts to avoid discharge into homelessness, as well as to serve the existing homeless population. Post-Covid, the County has teamed with the Central California Alliance for Health to hold annual Homeless Summits, which bring together governmental agencies, non-profit service organizations, and housing developers in learning about new resources and brainstorming further ways to collaborate in the push to solve homelessness.
In addition to the actions listed above, the City will continue to try to enhance coordination and work with the Housing Authority of Merced County, housing and service providers, and faith-based organizations to identify services, housing, and other needs. Other agencies that we will continue to collaborate with include the Central Valley Coalition for Affordable Housing and Habitat for Humanity Merced/Stanislaus Counties.
These and other such relationships are extremely important in providing safe, affordable housing to residents in need.
Identify actions taken to overcome the effects of any impediments identified in the jurisdictions analysis of impediments to fair housing choice. 91.520(a)
Insufficient supply of affordable rental housing:
The City of Merced has identified the provision of affordable housing as a high priority in nearly all policy documents and reports involving topics surrounding the City’s housing supply, and it is a need expressed continually and vocally by the residents of our community. The City continually works to be able to provide these crucial housing units.
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While the City is not a direct provider of affordable housing, it does assist developers and non-profit organizations with affordable housing funding and National Environmental Policy Act (NEPA) Part 58 “Responsible Entity” support. The City is currently working with several affordable housing developers on projects that will further alleviate the impediments to housing choice that the affordable housing crisis continues to present.
Whenever possible, the City funds acquisition and rehabilitation of existing affordable rental units in collaboration with non-profit organizations and leverages other City monies to assist with financing new construction.
As a result of feedback from the public regarding the City’s ordinances and policies that may be unintentionally causing barriers to housing construction and affordability, staff and City Council have proactively looked for ways to increase the number of affordable units, whether by creating workable, custom-fit policies unique to Merced, adjusting fee schedules to encourage the construction of affordable units either directly by developers or via a Council-appropriated Housing Opportunity Fund, by seeking funding opportunities and creative subsidy layering strategies, or a combination of these.
Unfair Lending Practices:
Residents who took advantage of First Time Homebuyer Program through 2021 CalHOME funding received homebuyer education training.
These classes give residents the knowledge they need to help them recognize any unfair lending practices in their future home purchase transactions.
Fair Housing Education Efforts
Fair Housing Services are provided by Project Sentinel, Inc. During PY2025, Project Sentinel served - through Intake and Referral services - a total of 74 individuals. Over the course of the year, they opened seven fair housing case investigations and distributed a total of 833 pieces of educational materials, which includes both mailers and brochures, such as those available in the Housing Division lobby and at the County Library. Project Sentinel staff also attended 15 events through outreach related activities, including Continuum of Care meetings. Project Sentinel also updated their website to streamline how tenants can access fair housing resources (website address:
https://www.housing.org/resources). City Housing staff is committed to furthering those efforts throughout the remainder of this Consolidated Plan period.
The City of Merced Housing Division has a dedicated Fair Housing Resources and Services webpage on its own website, providing multi-language CAPER 37
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downloadable resources to foreign-born, non-English speaking residents, families with children, and veterans, among others, and provides the website and direct contact information for Project Sentinel, to better connect residents who need assistance.
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OMB Control No: 2506-0117 (exp. 09/30/2021)
CR-40 - Monitoring 91.220 and 91.230
Describe the standards and procedures used to monitor activities carried out in furtherance of the plan and used to ensure long- term compliance with requirements of the programs involved, including minority business outreach and the comprehensive planning requirements
The City is in the process of developing a comprehensive multi-topic Policy & Procedures manual that will include HUD-provided guidelines and policies regarding monitoring standards and program compliance requirements. The City expects to have this completed during program year 2026-27.
As a whole, the City is responsible for oversight and monitoring all of the public service projects carried out with HUD funding, as well as long- term rental housing projects, through their various periods of affordability. The City also services its own housing loan portfolio, which includes homeowner and rehab loans using CDBG and HOME funding.
The Division performs desk reviews as subrecipient reimbursement requests are submitted, and staff continues to communicate with each subrecipient by email, online meetings, and telephone calls as much as possible, to ensure programs remain compliant.
There were no problems with public service programs that needed mitigation as a result of these monitoring efforts.
Multi-Family Housing Program Monitoring
City Housing staff are required by HUD regulation to conduct site visits and audits annually to multi-family housing projects during the period of affordability to review record keeping, upkeep of facilities, and ensure that tenant income eligibility requirements are being maintained.
If discrepancies are found, the manager or authorized agent will be informed during the on-site visit, provided a formal letter, and provided 30 days to correct any findings and/or work with staff for a reasonable timeline in achieving compliance for those items. Once compliance has been achieved, the manager or agent receives a clearance letter from the City. The City Council is informed of any unresolved problems during the budget process. Before each monitoring, the City allows each manager or agent reasonable time to prepare for the monitoring.
Single-Family Housing Program Monitoring
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OMB Control No: 2506-0117 (exp. 09/30/2021)
Single family, duplex, triplex, or quadplex homes rehabilitated or purchased with CDBG and/or HOME funds for use as rental properties for moderate to low-income families should be monitored regularly, if not annually, by City staff. The owner is provided with a letter requesting information and income verification of the current renters.
Given a small staff, City of Merced Housing visitations to all sites in one program year is not possible. Instead, staff should ensure that project sites are visited on a rotating yearly schedule. If discrepancies are found, the subrecipient and/or on-site manager will be informed during the in person visit, provided a formal letter, and provided 30 days to correct the problem; and/or work with staff for a reasonable timeline.
Public Service/Other Activity Monitoring
Although no written procedures are in place as yet, the City has established a history of monitoring procedures for monitoring of public service program subrecipients to ensure compliance with all CDBG and HOME activity requirements, income eligibility, and national objectives. Those procedures include written contracts and invoicing before funds are distributed; mandatory pre-application workshops with applicants and new subrecipients to ensure an understanding of reporting requirements; clear timelines for measured success; reporting forms that include hours, task, client demographic information, and income range; and, clear provision of information on HUD's cost and other principles. Reporting of demographics and other data points are required with each invoice, and year-end evaluations are required.
All subrecipients should normally receive one on-site visit during the program year.
For CDBG/HOME funded construction or rehabilitation projects, Minority Business Enterprise (MBE) requirements are monitored and reported. MBE certifications are obtained and maintained on file and submitted to HUD.
Citizen Participation Plan 91.105(d); 91.115(d)
Describe the efforts to provide citizens with reasonable notice and an opportunity to comment on performance reports.
The Housing Division held a public meeting on August 12, 2026, from 5:30-6:30 p.m. in the Sam Pipes Room in the Merced Civic Center. At the meeting, accomplishment and expenditure information was made available about programs that had been completed during the year. No members of the public attended.
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OMB Control No: 2506-0117 (exp. 09/30/2021)
Public Notices were published in the Merced County Times on July 30, 2026, and the Merced Sun Star on July 26, 2026. The notices invited residents to the public meeting and notified the public about the Public Review and Comment Period, including how to review the draft report and how to submit written comments.
**This section will be completed after the Public Hearing is held on September 21, 2026** CAPER 41
OMB Control No: 2506-0117 (exp. 09/30/2021)
CR-45 - CDBG 91.520(c)
Specify the nature of, and reasons for, any changes in the jurisdiction’s program objectives and indications of how the jurisdiction would change its programs as a result of its experiences.
Program Year 2025 represents the first year of the City’s 2025-2029 Consolidated Plan. The 2025-2029 Consolidated Plan outlines the City’s strategies for program years 2025 through 2029. There have been no major changes in the City’s objectives since development of the plan, and no substantial amendments were submitted as of the preparation of the 2025 CAPER.
The City certifies that:
• The City provided certifications of consistency in a fair and impartial manner; • The City did not hinder Consolidated Plan implementation by action or willful inaction; • Pursued all resources described in the Consolidated Plan; and • All CDBG funds used went toward meeting a national objective.
The City spent 100% of its CDBG program funds (not including administrative) on activities that met a low- and moderate-income national objective.
Does this Jurisdiction have any open Brownfields Economic Development Initiative (BEDI) grants? No
[BEDI grantees] Describe accomplishments and program outcomes during the last year.
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CR-50 - HOME 24 CFR 91.520(d)
Include the results of on-site inspections of affordable rental housing assisted under the program to determine compliance with housing codes and other applicable regulations
Please list those projects that should have been inspected on-site this program year based upon the schedule in 24 CFR §92.504(d).
Indicate which of these were inspected and a summary of issues that were detected during the inspection. For those that were not inspected, please indicate the reason and how you will remedy the situation.
The Housing Division has worked very closely during PY2025 with RSG Solutions on developing a monitoring plan. The monitoring policies & procedures have not yet been formally adopted by City Council. Once this plan has been approved, it will be implemented during PY2026.
Thereafter, results of monitoring will be reported here beginning in the next CAPER. 1-4 Unit Housing Program Monitoring
Homes rehabilitated or purchased with HOME funds for use as rental properties for moderate- to low-income families are normally monitored annually by Housing staff. The owner is provided with a letter requesting information and income verification of the renter.
Rental projects with 1-4 total units in the project are required to have an onsite monitoring visit every three years. Currently there are 18 single family units that are on the rotation to be monitored once every three years. Given staffing constraints, City of Merced Housing Division monitoring visits to all sites in the same year is not possible; instead, staff ensures that a minimum of one or two sites is visited. If discrepancies are found, the subrecipient and/or on-site manager will be informed during the on-site tour, provided a formal letter, and provided 30 days to correct the problem; and/or work with staff for a reasonable timeline.
Multi-Family Housing Program Monitoring
Housing Division Staff enlisted the help of RSG Solutions to monitor and provide a training opportunity for The Retreat Apartments (formerly the Childs and B Apartments) affordable housing project. Staff conducted the annual tenant file audit, physical unit, and common areas inspection.
The results of this site visit conclude that the property is in compliance with the agreement requirements.
RSG Solutions also provided annual monitoring services for the Woodbridge Apartments affordable housing project. Staff conducted the annual CAPER 43
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tenant file audit, physical unit, and common areas inspection.
The City is required to monitor multi-family housing subrecipients to review record keeping, the upkeep of facilities, and to ensure eligibility requirements are being maintained. A City building inspector is part of this tour, and if discrepancies are found, the subrecipient is informed during the on-site tour, provided a formal letter, and provided 30 days to correct the finding and/or work with staff for a reasonable timeline.
Annual audits are required by these subrecipients for their programs. If discrepancies in this area are found, the subrecipient is informed immediately, and a formal letter is mailed. The subrecipient is given 30 days to correct the problem or provide a timeline for correction. The City will work with the organization to ensure the requirements are understood and that compliance is attained. Once compliance has been achieved, the subrecipient receives a clearance letter from the City. The City Council is informed of any unresolved problems during the budget process.
These same procedures will be followed with non-housing subrecipients.
Multi-family Housing to be Monitored every 3 years
Gateway Terrace Apartments
1113 W. 2nd Street
Willowbrook Apartments I/II
The Retreat Apartments (Monitored November 2025)
Childs Avenue Apartments
Sunnyview Apartments
The Grove Apartments
Woodbridge Apartments (Monitored November 2025)
River Canyon Apartments (formerly Devonwood Apartments -to be completed during PY 2026) Continued (1)
Inspections and Property Standards for Projects Using HOME funds CAPER 44
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The inspection schedule in 24 CFR 92.504(d) notes that inspections are required at two different stages of a project; at project completion, and during the period of affordability, to determine that the project meets the property standards contained in 24 CFR 92.251. These required Property Standards include specific requirements for new construction projects, rehabilitation projects, acquisition of standard/existing housing, occupied housing by tenants receiving HOME tenant-based rental assistance, manufactured housing, and ongoing property condition standards for rental housing.
New Construction Projects: Section 92.251
Property Standards for new construction projects require that, first, the project meet State and Local codes, ordinances, and zoning requirements. Second, all new construction projects must also meet: 1) accessibility requirements contained in 24 CFR Section 8 (Nondiscrimination Based on Handicap in Federally Assisted Programs and Activities), 2) any disaster mitigations, 3) written cost estimates and construction contracts/documents, 4) progress and final construction inspections, and 5) requirements for the provision of broadband infrastructure.
Acquisition of Standard/Existing Housing and Rehabilitation Projects: Section 92.251 Property Standards for rehabilitation projects have specific standards that require health and safety or life-threatening deficiencies to be addressed immediately if the unit is occupied, and that major systems, such as roofing and plumbing, be addressed in rehab activities. Lead based paint, accessibility, state and local codes, and broadband infrastructure requirement for projects involving more than four units.
The City generally follows the Section 92.251 acquisition and rehab property standards in CDBG assisted projects, with lead based paint, health and safety, and accessibility being the first and most important focus of rehab activities.
There were no HOME-funded acquisition with rehab or homeowner-occupied rehab projects planned or funded during the 2025 program year.
Tenant-Based Rental Assistance and Manufactured Housing The City of Merced has not used HOME funds for tenant based rental assistance or manufactured housing.
Ongoing Property Condition Standards for Rental Housing CAPER 45
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The City of Merced is in the process of extensively updating its Monitoring Policies and Procedures to include inspection checklists, property standards requirements, and a rotating monitoring schedule for the rental housing projects that have recently completed and are due for inspections. These Policies and Procedures are currently in draft form and will be taken to City Council for formal approval and adoption.
Housing Division expects to have inspection results to report in the 2026 CAPER.
Provide an assessment of the jurisdiction's affirmative marketing actions for HOME units. 24 CFR 91.520(e) and 24 CFR 92.351(a) The City of Merced continues to follow the Affirmative Marketing Policy as outlined in the Consolidated Plan and monitors compliance with the Policy by the City and participating property owners on an annual basis.
The City of Merced Housing Division is responsible for implementing the Affirmative Marketing Policy and evaluating its effectiveness concurrently with the HOME Program:
The Housing Division shall inform the public about the Affirmative Marketing Policy through handouts and application forms, periodic advertisements in general circulation newspapers, and regularly scheduled public meetings. The City shall, at times, display informational posters in the Merced City Hall Lobby, which is open to the public. All graphic presentations concerning the HOME Program shall display the HUD Equal Housing Opportunity logo or slogan. The owners of buildings selected for rehabilitation shall likewise be informed about the City’s Affirmative Marketing Policy at the time that an application is submitted to the Housing Division. The City shall also provide tenants and rental property owners with copies of the “Landlord-Tenant Fact Sheet” produced by the State Department of Consumer Affairs.
The City shall continue its practice of providing general information and telephone reference numbers to individuals who contact the Housing Division with questions regarding affirmative marketing, federal fair housing, tenant rights, assisted housing, and correction of substandard conditions in tenant-occupied dwellings.
This year, the City continued the services of the Fair Housing Services provider (Project Sentinel) for all Merced residents. Services provided include: outreach activities, collaboration with Merced City and County Continuum of Care, provided residents educational materials, and attended community events. Project Sentinel also opened 7 total cases to investigate Fair Housing Act-related disputes.
Refer to IDIS reports to describe the amount and use of program income for projects, including the number of projects and owner CAPER 46
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and tenant characteristics
The City received $140,447.71 in program income during PY2025. The City used $5,922.48 of 2021 program income towards the affordable housing development River Canyon Apartments (Formerly Devonwood) in FY2025.
Describe other actions taken to foster and maintain affordable housing. 24 CFR 91.220(k) (STATES ONLY: Including the coordination of LIHTC with the development of affordable housing). 24 CFR 91.320(j) The HOME program objectives continue with promoting, maintaining, and providing affordable housing by working with affordable housing developers and nonprofit organizations.
In April 2021, the City published an open RFQ (Request for Qualifications) to continuously recruit affordable housing developers as potential partners for both current and future affordable housing projects. The RFQ attracted several affordable housing developers, whom we have continued working with on several viable future and progressing projects in the City of Merced, including the 108-unit Bella Vista Apartments currently under construction and the 66-unit Mercy Village project that closed escrow in August 2026. This RFQ list will continue to be utilized for the foreseeable future.
During PY2025, the City and Habitat for Humanity Merced/Stanislaus Counties continued the CDBG-funded homeowner occupied program.
Currently one forgivable loan has been approved for homeowner rehabilitation and work is due to begin soon. The City is actively working with Habitat for Humanity on ramping up its outreach campaign in order to increase applications from homeowners who are good candidates for this assistance, as there is still enough funding for 5 more homeowners to be assisted.
Sierra Saving Grace completed rehab work on two properties purchased with 2024 CDBG funds. Both units gained occupancy early in PY2025.
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CR-58 – Section 3
Identify the number of individuals assisted and the types of assistance provided
Total Labor Hours CDBG HOME ESG HOPWA HTF
Total Number of Activities 0 0 0 0 0
Total Labor Hours 0
Total Section 3 Worker Hours 0
Total Targeted Section 3 Worker Hours 0
Table 14 – Total Labor Hours
Qualitative Efforts - Number of Activities by Program CDBG HOME ESG HOPWA HTF Outreach efforts to generate job applicants who are Public Housing Targeted Workers Outreach efforts to generate job applicants who are Other Funding Targeted Workers.
Direct, on-the job training (including apprenticeships).
Indirect training such as arranging for, contracting for, or paying tuition for, off-site training.
Technical assistance to help Section 3 workers compete for jobs (e.g., resume assistance, coaching).
Outreach efforts to identify and secure bids from Section 3 business concerns.
Technical assistance to help Section 3 business concerns understand and bid on contracts.
Division of contracts into smaller jobs to facilitate participation by Section 3 business concerns.
Provided or connected residents with assistance in seeking employment including: drafting resumes, preparing for interviews, finding job opportunities, connecting residents to job placement services.
Held one or more job fairs. 1
Provided or connected residents with supportive services that can provide direct services or referrals. 1 Provided or connected residents with supportive services that provide one or more of the following:
work readiness health screenings, interview clothing, uniforms, test fees, transportation.
Assisted residents with finding child care. 1
Assisted residents to apply for, or attend community college or a four year educational institution.
Assisted residents to apply for, or attend vocational/technical training.
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Assisted residents to obtain financial literacy training and/or coaching.
Bonding assistance, guaranties, or other efforts to support viable bids from Section 3 business concerns.
Provided or connected residents with training on computer use or online technologies.
Promoting the use of a business registry designed to create opportunities for disadvantaged and small businesses.
Outreach, engagement, or referrals with the state one-stop system, as designed in Section 121(e)(2) of the Workforce Innovation and Opportunity Act.
Other.
Table 15 – Qualitative Efforts - Number of Activities by Program
Narrative
Section 3 is a provision of the Housing and Urban Development Act of 1968, since amended and expanded, for the purpose of ensuring that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing federal, state, and local laws and regulations, be directed to low- and very low-income persons, particularly those who are recipients of governmental assistance for housing and to business concerns which provide economic opportunities to low- and very low- income persons. The HUD Act of 1968 was enacted as a result of civil unrest in the 1960’s, to which nationwide high unemployment was a contributing cause.
Training or employment opportunities resulting from public housing development or operating assistance including administration, management, clerical support, and construction, as well as those that arise in connection with a HUD-funded housing rehabilitation, housing construction, or other public construction project that exceeds $300,000 (new threshold amount as of 3/16/2026), are subject to compliance with Section 3. Additionally, contracting opportunities arising from public housing and other Section 3 projects are required to be given to business concerns that provide economic opportunities to low- and very-low persons.
The Final Rule to the Section 3 regulations took effect on November 30, 2020, and creates more effective incentives for employers to retain and invest in their targeted workers, streamline reporting by aligning them with typical business practices, provide for program-specific oversight, and clarify the obligations of entities covered by Section 3. This Final Rule requires certain benchmarks to be met, which are updated by the Secretary of HUD every three years. An update was published on October 5, 2023, that issued no changes to the prior benchmarks, and the March 16, 2026, notice that changed the threshold amount noted above did not change the benchmarks.
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As an entitlement jurisdiction that receives annual formula grants of CDBG and HOME and special allocations such as CDBG-CV and HOME-ARP funding, the City of Merced is required to comply with Section 3 regulations. The current benchmarks are:
25 percent of all labor hours must be performed by a Section 3 worker; and, 5 percent of labor hours must be performed by Targeted Section 3 workers During PY2024 and PY2025 (prior to 3/16/2026), Sierra Saving Grace implemented and completed an acquisition with rehabilitation project that exceeded the then-Section 3 project threshold of $200,000 for the rehab portion. Sierra Saving Grace could not meet the Section 3 benchmarks, as it was determined at the time of completion of the project that technical assistance and training to the organization was needed to help meet the benchmark.
Since the City was not able to meet the above project benchmarks, Qualitative Effort reporting using the above table are necessary. Section 3 requirements do not apply to public service projects, since public services do not include housing rehab, construction, or other public construction activities. Therefore, public service projects typically would not be included on the table.
However, through CDBG funding and the City’s Economic Development department, programs and events were offered that satisfies some Section 3 Qualitative Efforts such as:
The City’s Economic Development division started an annual “Fall into Success: Merced Job Fair” that connects City of Merced residents with local employers.
Walking by Faith Ministries International/STARS program CDBG offered an afterschool care program.
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ATTACHMENTS:
Attachment 1. City Council Resolution 2026-________
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Attachment 2. PR-26 Financial and Activity Summaries (CDBG and CDBG-CV)
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Attachment 3. Annual Performance and HOME Match Reports (40107, 40107-A)
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Attachment 4. Fiscal Activity Accomplishment Reports
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Attachment 5. Public Notice Comments Outreach