DATE: OCTOBER 21, 2025
DEPARTMENT: COMMUNITY DEVELOPMENT
FROM: LISA BRINTON, DIRECTOR
THROUGH: ORLANDO REYES, ASSISTANT DIRECTOR
BY: ERIC SOTELO, COMMUNITY DEVELOPMENT ANALYST VINCENT MONTGOMERY, PLANNING MANAGER
FRANCISCO BRAMBILA, MANAGEMENT ANALYST
TITLE: SUBSTANTIAL AMENDMENTS TO HUD FY 2023-2024, 2024-2025, AND 2025-2026 ANNUAL ACTION PLANS RECOMMENDED MOTION:
A motion recommending that the City Council approve a Resolution authorizing:
The submission of Substantial Amendments to HUD Fiscal Year (FY) 2023-2024, 2024-2025, and 2025-2026 Annual Action Plans (AAPs) to the United States Department of Housing and Urban Development (HUD); and The allocation of a cumulative $5,491,595 in unspent HOME & CDBG funds from FY 2023-2024, 2024-2025 and 2025-2026 AAPs to various projects; and The City Manager, or designee, to incorporate any necessary modifications to the Substantial Amendments based on community feedback, and to execute, on behalf of the City, any agreements and related documents for HUD-funded projects and activities as outlined in the Substantial Amendment Summary to HUD FY 2023-2024, 2024-2025, and 2025-2026 AAPs.
DISCUSSION:
The City of Salinas (City) is an Entitlement City in the U.S. Department of Housing and Urban Development's (HUD) Community Development Block Grant (CDBG) Program, Emergency Solutions Grant (ESG) Program, and HOME Investment Partnership Program (HOME).
CDBG regulations require that each CDBG Entitlement grantee administers its program in a timely manner, which is measured by the rate at which funds are drawn from the grantee’s Line of Credit (LOC). Specifically, a grantee’s LOC balance must not exceed one and one-half (1.5) times its annual grant amount, 60 days before the end of the program year. Failure to meet HUD expenditure timeframe may result in a reduction in the City’s future CDBG allocations.
The City has not met this expenditure timeliness standard for the past four years and has been working with HUD on an expenditure plan to achieve compliance. However, when the Sherwood Recreation Project was not awarded to the selected general contractor on September 9, 2025, the City had to shift its focus to other shovel-ready projects that could help meet the expenditure ratio requirement within the current fiscal year.
The City has determined that the Chinatown Neighborhood Improvements Project, which includes activities such as installation of streetlights, ADA curb cuts and resurfacing of some streets in the area, will not be able to fully expend its allocated funds by April 2026, impacting the expenditure ratio required by HUD. The project currently has $1,290,817 in CDBG funds allocated through the FY 2022–2023 and FY 2025–2026 Annual Action Plans (AAP). As the project remains in the design phase, construction is not expected to begin until early FY 2026–2027. The project continues to be funded through the design phase.
To ensure timely expenditure of funds, the staff propose reallocating $1,060,000 of appropriated FY 2025–2026 CDBG funds from the Chinatown Neighborhood Improvement Project to shovel-ready projects. Reappropriated CDBG funds will be used to support public improvement projects, such as streetlights and ADA sidewalk curb ramps, primarily in low- and moderate-income neighborhoods in the Alisal and rehabilitation of low-income affordable housing development including activity delivery for the projects.
Funding for the Chinatown Neighborhood Improvements Project construction phase will be restored with future grant allocations in the FY 2026–2027 Annual Action Plan. The Table 1 below outlines the proposed FY 2025-2026 projects and corresponding CDBG reallocations.
Table 1
AAP FY
Project No.
CDBG Project Name
Amount Available
Proposed Adjustment
Recommended
2025-2026
5 Chinatown Neighborhood Improvements
$1,110,817
$(1,060,000)
$50,817
2025-2026
3 Alisal Neighborhood Revitalization Strategy Area Sidewalk Improvements $330,000
$620,000
$950,000
2025-2026
11 Rehabilitation of Affordable Housing
$0
$440,000
$440,000
Total
$1,440,817
$0
$1,440,817
On June 24, 2025, the City issued a Notice of Funding Availability (NOFA) for FY 2025–2026 to solicit proposals for multi-family affordable housing developments. Through this process, the City identified three projects proposing a total of 160 residential units that are well-positioned to benefit from HOME funding.
Under the FY 2023–2024 Annual Action Plan (AAP), the City allocated $2,482,022 in HOME funds to the Republic Café Housing project However, this project is currently in the pre-development phase, which is being funded through a Regional Early Action Plan (REAP) grant. The pre-development work includes activities across multiple City-owned parcels within the Chinatown Revitalization Plan area, including 34, 36, 38, 37, 39, 40 and 45 Soledad Street. As a result, the HOME funds originally committed to this project can now be reallocated to eligible developments identified through the recent NOFA process.
Currently, the Republic Café Housing project is in the schematic design phase. The target date for completing the construction plan bid set is the first quarter of 2026. As the project approaches the construction phase, the City plans to allocate funding from future grant sources, including the CDBG, HOME, Housing Successor Agency (HSA), Local Housing Trust Fund, and Permanent Local Housing Allocation (PLHA). Additionally, funding will be pursued from the California Department of Housing and Community Development (HCD), and other sources to support the construction. As a result, shifting these funds as proposed will not impact this project. To keep the community informed, public meetings will be held throughout the project’s development, with regular updates provided at the monthly Downtown Community Board meetings.
In addition, the City has $1,949,573 in uncommitted HOME funds, including HOME Community Housing Development Organization (CHDO) Set-Aside funds, from the FY 2024–2025 and FY 2025–2026 AAPs, which were reserved for future affordable housing projects once suitable developments were identified.
Altogether, the City has identified a total of $4,431,595 in HOME funds, available to support affordable multifamily rental housing projects selected through the NOFA process. This amount includes project implementation and activity delivery for identified projects. Reappropriated funds will be used to sponsor several projects involving activities such as the new construction and rehabilitation of affordable multifamily rental housing. The Table 2 below outlines the proposed projects and corresponding reallocations.
AAP FY
Project No.
HOME Project Name
Amount Available
Proposed Adjustment
Recommended
2023-2024
1 Republic Café Housing
$2,482,022
$(2,482,022)
$0
2024-2025
8 Future Affordable Housing Activity
$1,126,001
$(1,126,001)
$0
2025-2026
10 NOFA HOME Affordable Housing
$823,572
$3,608,023
$4,431,595
Total
$4,431,595
$0
$4,431,595
This Substantial Amendment will also help the City meet its timeliness expenditure for CDBG and expenditure deadline for HOME to obtain compliance with HUD requirements.
The draft Substantial Amendments Summary is available for public review during the mandatory 30-day comment period, beginning on or before October 18, 2025, and concluding with the scheduled City Council hearing on November 18, 2025. In accordance with the City’s Citizen Participation Plan, public notices in English and Spanish were published in The Monterey Herald and on the City’s website on or before October 18, 2025. Notices were also posted at the Community Development Department (65 W. Alisal Street), City Hall (200 Lincoln Avenue), and City libraries. Additionally, the draft amendment summary was distributed via email to the Community Development Department’s Housing Distribution list. Documents are accessible at the Community Development Department, City Hall, public libraries, and online. Copies may also be requested via email. The public is encouraged to review and provide feedback on the proposed amendment.
ATTACHMENTS:
CDBG & HOME Substantial Amendments Summary - Draft
Presentation – CDBG & HOME Substantial Amendments
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CITY OF SALINASHOUSING AND LAND USE COMMITTEE STAFF REPORTCITY OF SALINASHOUSING AND LAND USE COMMITTEE STAFF REPORT
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