City staff and the Community Development Board recommend that the City Council take action on the five-year FY2025-2029 Consolidated Plan, the FY2025-2026 Annual Action Plan, and recommended FY26 budget allocations for the Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) programs. The Council conducted a public hearing at its April 14 meeting, received one comment on the affordability of housing development on private streets, and had a few questions for staff. Staff has received no further public comment since the hearing.

Funding Source and Intent: The City of Billings has been a recipient of U.S. Department of Housing and Urban Development (HUD) CDBG funds since the mid-1970s and HOME funds since the early 1990s (over $50 million). Investments in CDBG and HOME have generated over $11 million in loan repayments since 2001. Projects, programs, and activities funded through CDBG and HOME are regulated and monitored by the federal government and must be primarily targeted to address community affordable housing for low-income citizens and poverty-impact needs in Billings.

Guidance & Recommendations Process: The Community Development Board provides staff guidance relative to assessment, planning, allocation, monitoring, and reporting processes for HUD federal funding. The Board is comprised of six low-income neighborhood representatives and three at-large members. This structure complies with a federal regulation to ensure decision-making processes include involvement from residents of low-income neighborhoods. The Board is also responsible for making funding recommendations to the City Council for review and approval.

Planning Process: The drafted Consolidated Plan is the primary planning document directing the City’s CDBG and HOME investments and it covers a five-year period from July 1, 2025 through June 30, 2030. The Annual Action Plan for FY2025-2026 is included in the Consolidated Plan.

Allocation Process: To allocate CDBG and HOME resources via the Consolidated Plan, the Community Development Division staff and Board members facilitate a process to gather public input on the use of federal funds. Applications were available at the beginning of December and due in mid-January. Staff prepares applications for internally-managed programs and forwards submissions from outside agencies to the Community Development Board. There were no otuside applications in the latest round. The Board then makes funding allocation recommendations. Staff facilitates a 30-day public comment period, the City Council takes action, and the Annual Action Plan is submitted to HUD by May 15.

PROCEDURAL HISTORY

• Community Development staff began citizen participation and outreach efforts in August 2024 with a presentation to the City Council to describe HUD programs and processes and garner understanding of the Council’s funding priorities for the 2025-2029 Consolidated Plan.
• The Billings City Council held a public hearing on Monday, September 23, 2024, to obtain public comment on current community needs to assist the Community Development Board in designing the application process for the upcoming program year, before the publication of the drafted Consolidated / Annual Action Plan.
• Community Development staff presented during a City Council Work Session meeting on November 18, 2024. Topics included: prior work session material, recent challenges Community Development is navigating to move the Consolidated Plan forward and to seek clarity on the Council’s goals for the new Consolidated Plan, schedule review, public engagement, etc.
• Staff made a presentation to the North Park Task Force on December 4, 2024, to present information on the Division and to identify community needs to address with CDBG and HOME.
• A public hearing was held on February 4, 2025, at the Community Development Board meeting to garner public comment on community needs, and for organizations interested in funding to present information on applications submitted.
• Planning and Community Services Department’s Annual Report was distributed, and it includes a QR code for the Consolidated Plan survey, posted on February 6, 2025. The report was also shared with the City’s boards, councils, and email distribution lists.
• The Community Development Board meeting on March 4, 2025, included a discussion of the Consolidated Plan structure, drafted findings, and recommended strategies and priorities.
• Community Development staff and Board members attended neighborhood Task Force meetings to share information about the Consolidated Plan and distribute the survey:
  • North Park, March 5, 2025
  • South Side, March 20, 2025
  • Billings Heights, March 25, 2025
• Community Development staff made a presentation to the Billings City Council on March 17, 2025, to review drafted findings, strategies, priorities, and to receive public comment on the drafted Consolidated Plan.
• Information and survey results were shared at the Task Force Leadership meeting on April 3, 2025.
• The public comment period for the Consolidated Plan began on March 15 and ended on April 14, 2025 when the City Council conducted its public hearing. The plan may be viewed online at www.BillingsMT.gov/ConPlan.
• A public hearing was held during the City Council meeting on April 14, 2025, to garner public comments on the drafted Consolidated Plan.
• The City Council is scheduled to take action on the Consolidated Plan at this meeting on April 28, 2025.

• Program Recipients - The City serves low-income households through a variety of affordable housing programs such as housing development, home buyer, and foreclosure acquisition / rehabilitation programs. Full descriptions of available programs can be found online at www.BillingsMT.gov/comdev.
• The Community Development Board - As an advisory body to the City Council, the Board provides detailed oversight to both the CDBG and HOME programs throughout the year. The Board also facilitates a public input process to prepare recommendations for the City Council’s consideration. Six of the nine total Community Development Board members are representatives of low-income neighborhoods either by residence or task force delegation, ensuring representation of low-income citizens in the planning and allocation processes.
• Non-Profit Organizations - Community organizations serving those experiencing poverty are supported by the Billings Metro VISTA Project. AmeriCorps VISTA members assist in the provision of social services to those in need.

City Council may:

• Approve the five-year Consolidated Plan, Annual Action Plan, and the allocation of CDBG and HOME FY25-26 funding as recommended by Staff and the Community Development Board.
• Approve the five-year Consolidated Plan, Annual Action Plan, and the allocation of CDBG and HOME FY25-26 funding based on alternative funding amounts as determined by the City Council.
• Not approve the five-year Consolidated Plan, Annual Action Plan, and the allocation of CDBG and HOME funding and refuse to undertake CDBG and HOME activities. Not approving the plans and budget places the City out of compliance with HUD regulations and jeopardizes the City's position to receive funds as an entitelment community under HUD.

Anticipated Revenues: Although HUD has not released allocation numbers for FY26 to date, the City of Billings will receive approximately $645,000 in new CDBG and $350,000 in HOME funding for use in affordable housing and other projects benefiting low-income residents for FY2025-2026. The Corporation for National and Community Service (CNCS) has also awarded the City of Billings $460,042 in federal funds to support the Billings Metro VISTA Project.

Allocation Compliance: Proposed allocations are consistent with the goals and priorities of the approved five-year Consolidated Plan for the use of CDBG & HOME resources in Billings. Allocation recommendations conform to pre-determined spending requirements on several categories, including: CDBG and HOME administration caps (maximum of 20% and 10% of new funding respectively); public service caps (up to 15% of new CDBG funding); and Community Housing Development Organization set-aside for affordable housing development (minimum 15% of new HOME funding). Changes creating non-compliance with federal spending requirements would place the City’s entitlement status for federal funds at risk. Non-federal funding repayment is required for noncompliant project, program, and activity expenditures. 

The allocation of funding is restricted by eligibility requirements for CDBG and HOME and must meet pressing citywide community needs as identified in the Consolidated Plan; affordable housing, housing choice, and poverty-impact. HUD policy prohibits the use of federal funds to supplant local government funds on projects communities typically underwrite, regardless of whether federal grant dollars are available.

FY2025-2026 Budget Recommendation Priorities
Ensuring Timeliness: The best strategy for ensuring CDBG expenditure timeliness with HUD is to hold a public application process to allocate funds to subrecipients while also funding staff-managed programming. Initial budget allocations may be changed to facilitate close- and shovel-ready priorities to assist the City in maintaining compliance with commitment and expenditure deadlines. This includes all repayment funding received during the program year from loans issued through programs such as First Time Home Buyer, Housing Rehabilitation, Affordable Housing Development, etc.

One of the issues the City balances is the difference between programs and project applications. One of the 2025-2029 ConPlan priorities is - Support efforts to expand public facilities to provide services for vulnerable populations, which is focused on domestic violence prevention and family support. This is a City priority and not a standalone program. However, it is a priority that may be funded when an application for a project is submitted. Funding, like loan repayments or funds from programs, is available based on the flexibility to adjust and allocate funds as the City moves through the year and as applications come in.

Budget recommendation priorities and estimates are as follows:  

• Administration at maximum caps, 20% of CDBG (estimated $129,000) and 10% of HOME (estimated $35,000). Funding is reserved for administrative costs including technology and phone charges, duplication, publication of notices, motor vehicle costs, liability insurance, staff time; etc.
• Affordable Housing Development at $1,545,000 for the LB Lofts affordable housing project. The total amount includes: entitlement funding from next fiscal year and prior years; older CHDO funding the staff was able to release from the restricted set-aside; and uncommitted loan repayment revenue. Additionally, the City must reserve 15% of new HOME funding for a future Community Housing Development Organization (CHDO) restricted set-aside (estimated $52,500).
  • The City Council will be asked to act on this specific allocation, including the drafted legal agreements, during a May 2025 City Council meeting.
• Billings Metro VISTA Project would only be allocated $25,000 in repayment revenue, if received during next fiscal year. CNCS is changing the City’s cost-share requirement to reduce financial strain in managing the program. Rollover funding, in addition to a small amount of repayment revenue, should be sufficient for the next fiscal year.
• Lead Water Line Replacement Program would be allocated $200,000 in CDBG funding to assist up to 20 low-income households. The City must facilitate the replacement of 100 residential water lines over the next five years. Many of the homes are located in low-income neighborhoods.
• $50,000 would be allocated to the Foreclosure Acquisition / Rehabilitation program as a timeliness placeholder. If the City may not meet its timeliness goal in May 2026, and no other applications or programs are expected to assist in meeting timeliness, City staff may purchase a foreclosed home to renovate and sell to a low-income household. This program is the City’s most effective tool in managing timely expenditures and is highly rated by participants.
• The First-Time Home Buyer would be allocated $121,229 in CDBG funding, $125,000 in HOME and CDBG repayment funding, if received. This program is a top-rated program as per the City’s Consolidated Plan survey and the Community Development Board strongly supports homeownership initiatives.
• $50,000 in CDBG funding would be allocated to make improvements in low-income neighborhood parks utilizing  Crime Prevention Through Environmental Design concepts. Public safety is a high priority for the City Council. An additional $25,000 in loan repayment revenue would also be allocated to the program, if received.
• Applications for CDBG funding may be submitted if the City opens an application period later in 2025 based on knowledge that there are organizations that have projects that could be funded through CDBG. Projects are not listed or allocated funding now since they have not been submitted. Funding from loan repayments and shifting funds from the programs listed above would occur under an application process to assist in funding an application for a new project. These applications would go through the CDBG process and ultimately come to Council for action.

City staff and the Community Development Board have made recommendations for CDBG and HOME budgets and the Consolidated and Annual Action Plans are ready for Council action. The Council conducted a public hearing on April 14.