DATE: APRIL 21, 2026
DEPARTMENT: COMMUNITY DEVELOPMENT
FROM: LISA BRINTON, DIRECTOR
THROUGH: ORLANDO REYES, ASSISTANT DIRECTOR
BY: FRANCISCO BRAMBILA, MANAGEMENT ANALYST
ERIC SOTELO, COMMUNITY DEVELOPMENT ANALYST
VINCENT MONTGOMERY, PLANNING MANAGER
TITLE: SECOND SUBSTANTIAL AMENDMENT TO THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FY 2025-2026 ANNUAL ACTION PLAN RECOMMENDED MOTION:
A motion to approve a Resolution authorizing:
The submission of the Second Substantial Amendment to the Fiscal Year (FY) 2025-2026 Annual Action Plan (AAP) to the United States Department of Housing and Urban Development (HUD); and The allocation of $1,173,419 in Community Development Block Grant Program Income funds from FY 2025-2026 AAP to projects described in the Summary of Second Substantial Amendment to HUD FY 2025-2026 AAP; and The City Manager, or designee, to incorporate any necessary modifications to the Substantial Amendment based on community feedback, and to execute any agreements and related documents for HUD-funded projects and activities as outlined in the Summary of Second Substantial Amendment to HUD 2025-2026 AAP.
EXECUTIVE SUMMARY:
On February 9, 2026, the City received $1,173,419 in Community Development Block Grant (CDBG) Program Income from the sale of City-owned property located at 342 Front Street, Salinas. Staff recommend allocating $1,085,000 of these funds toward the acquisition of real property in the Chinatown Neighborhood to support future housing and/or economic development goals consistent with the Chinatown Neighborhood Revitalization Plan. The remaining $88,419 is proposed to be allocated to the Alisal Neighborhood Revitalization Strategy Area Sidewalk Improvements project and eligible CDBG program administration costs. Approval of these allocations requires a Substantial Amendment to the FY 2025-2026 Annual Action Plan.
BACKGROUND:
The City of Salinas (City), as an Entitlement Jurisdiction under the U.S. Department of Housing and Urban Development (HUD), administers the CDBG Program and is responsible for the planning, implementation, and oversight of activities funded through the program. On February 9, 2026, the City completed the sale of the property located at 342 Front Street, generating $1,173,419 in revenue for the CDBG program. The property was originally transferred to the City in 2000 by the State of California at no cost for the intended development of a childcare facility in partnership with the Monterey County Children and Families Commission. The City utilized funding from CDBG, Proposition 10, and the David and Lucile Packard Foundation to complete capital improvements necessary to prepare the facility for its intended use.
Pursuant to CDBG regulations, proceeds from the sale or long-term lease of real property acquired or improved using CDBG funds are considered Program Income and must be used to support eligible CDBG activities that meet a national objective. The sale of 342 Front Street generated $1,173,419 in CDBG Program Income, which must be allocated through an amendment to the FY 2025-2026 Annual Action Plan.
Victory Mission, Inc., the current owner of the property located at 43 Soledad Street, has informed the City of its intent to sell the building and relocate its operations outside of the Chinatown Neighborhood. This presents a strategic opportunity for the City to acquire property within the Chinatown Neighborhood that could support future housing and/or economic development activities consistent with the Chinatown Neighborhood Revitalization Plan.
Staff recommend allocating up to $1,085,000 in CDBG Program Income funds toward the potential acquisition of 43 Soledad Street, including eligible activity delivery costs and other due diligence expenses. Victory Mission, Inc. has proposed selling the property to the City with an option to lease the facility back for a period of up to four years, or until an alternative site is secured. The proposed leaseback period would provide the City with sufficient time to complete project planning, environmental review, and developer procurement necessary to implement a future housing and/or economic development project. This activity will be added as a new project to the FY 2025-2026 Annual Action Plan.
Staff also recommend allocating an additional $56,619 in CDBG Program Income to the existing Alisal Neighborhood Revitalization Strategy Area (NRSA) Sidewalk Improvements project to expand the project scope. This adjustment will increase the total project funding from $950,000 to $1,006,619 and support additional public infrastructure improvements benefiting residents within the NRSA.
CDBG regulations permit entitlement jurisdictions to allocate up to 20 percent of Program Income received during the fiscal year toward planning and administration costs associated with the delivery of the CDBG program. Therefore, staff recommend allocating $31,800 in CDBG Program Income for eligible administrative activities through the end of the fiscal year. The recommended amount is consistent with regulatory limits and reflects the estimated administrative costs necessary to effectively manage the program.
Table 1 summarizes the proposed allocations of CDBG Program Income.
Table 1
CDBG Recommendations
AAP FY
Project No.
CDBG Project Name
Current Allocation
Proposed Adjustment
Recommended Allocation
2025-2026
3 Alisal Neighborhood Revitalization Strategy Area Sidewalk Improvements $950,000
$56,619
$1,006,619
9 CDBG Program Planning and Administration
$441,883
$31,800
$473,683
11 Acquisition of Real Property in the Salinas Chinatown Neighborhood $0
$1,085,000
$1,085,000
Total
$1,391,883
$1,173,419
$2,565,302
In accordance with the City’s Citizen Participation Plan, the allocation of CDBG Program Income requires a Substantial Amendment to the FY 2025-2026 Annual Action Plan because the funding was not anticipated at the time the plan was adopted. Through this process, staff identified the eligible projects that are prepared to utilize the additional funding and further the goals of the Consolidated Plan.
The draft Second Substantial Amendment Summary has been available for public review during the required 30-day comment period beginning March 21, 2026, and concluding with the scheduled City Council public hearing on April 21, 2026. In accordance with the Citizen Participation Plan, public notices in English and Spanish were published in the Monterey Herald and posted on the City’s website on or before March 21, 2026. 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 and the City’s Gov Delivery distribution list. Documents have been made available at the Community Development Department, City Hall, public libraries, and on the City’s website, with copies available upon request via email. The public is encouraged to review and provide comments on the proposed amendment.
The proposed amendment was not presented to the Housing and Land Use Committee (HLUC) because no committee meetings were scheduled during the public review period.
CEQA/NEPA CONSIDERATION:
Not a Project. The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378). However, future discretionary actions may be subject to CEQA. All projects and activities funded with CDBG funds will be subject to National Environmental Protection Act (NEPA).
CALIFORNIA GOVERNMENT CODE §84308 APPLIES:
No
STRATEGIC PLAN INITIATIVE:
This action furthers the 2025 Strategic Plan Economic Development objective to revitalize residential and commercial blighted areas through targeted initiatives, the Housing objective to facilitate the addition of low-income housing, and the Infrastructure objective of improving sidewalks by funding public infrastructure improvements and new construction and rehabilitation of affordable multi-family rental housing.
DEPARTMENTAL COORDINATION:
Community Development’s Housing and Community Development Division has coordinated proposed Substantial Amendment with other City departments including Finance, Legal, Economic Development, Library Community Services and Public Works.
FISCAL AND SUSTAINABILITY IMPACT:
There is no General Fund impact associated with this agenda item as available City of Salinas HUD entitlement funds will be used to support this allowable CDBG projects. The table below breaks down the requested appropriations of $1,173,419 in CDBG PI funds for the FY 2025-2026 AAP to various projects as described in the Summary of Substantial Amendments to HUD FY 2025-2026 AAP.
Fund
General Ledger Number
(Operating/CIP)
General Ledger Account Name
Remaining Budget Appropriation
Amount Requested
2910
30.3220-55.7546
Intergovernmental Federal Grant Program Revenue
$1,173,419
$0
2910
30.3220-Various
Salaries & Benefits
$45,527.10
$31,800
2910
30.3240-Various
CDBG Various
$4,354,353.44
$1,141,619
ATTACHMENTS:
Resolution – FY 25-26 AAP Second Substantial Amendment
FY 25-26 AAP Second Substantial Amendment Summary - Draft Presentation – FY 25-26 AAP Second Substantial Amendment Page | 3
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