The FY2026-2027 Annual Action Plan outlines the City’s proposed use of HUD-funded CDBG and HOME resources to address housing and community development needs for low-income residents. The Plan represents the second year of the adopted FY2025-2029 Consolidated Plan and includes recommended funding allocations. A public hearing is required to receive comment at this Council meeting prior to the City Council taking formal action at its April 27, 2026, meeting, with subsequent submission to HUD.

The Plan's recommendations are outlined in the Fiscal Effects section and Attachment B with this memo, and include: Administration of all City Community Development programs, a Community Housing Development Organization set-aside, Affordable Housing Development, First Time Home Buyer program, Billings Metro VISTA Project, Foreclosure Acquisition / Rehabilitation program, and improvements in low-income neighborhood parks utilizing Crime Prevention Through Environmental Design (CPTED) concepts. 

Purpose and Funding Context
The FY2026-2027 Annual Action Plan is consistent with the City’s five-year Consolidated Plan and outlines how the City will allocate Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) funds for the program year of July 1, 2026, through June 30, 2027, to address local housing and community development needs. These programs are funded by the U.S. Department of Housing and Urban Development (HUD).

The City has received CDBG funding since the mid-1970s and HOME funding since the early 1990s, totaling over $50 million. These programs have generated more than $11 million in loan repayments since 2001, allowing continued reinvestment. All funded activities must primarily benefit low-income households and address affordable housing and poverty-related needs.

Process and Recommendations
The Community Development Board, comprised of six low-income neighborhood representatives and three at-large members, provides guidance on planning and funding allocations and makes recommendations to the City Council. Applications were released in December and reviewed in January, with recommendations incorporated into the draft Plan.

The Plan's recommendations are outlined in the Fiscal Effects section and Attachment B with this memo, and include: Administration of all of the City Community Development programs, a Community Housing Development Organization set-aside, Affordable Housing Development, First Time Home Buyer program, Billings Metro VISTA Project, Foreclosure Acquisition / Rehabilitation program, and improvements in low-income neighborhood parks utilizing Crime Prevention Through Environmental Design (CPTED) concepts. 

Public Participation, Timeline, and Considerations
The draft Plan is available for public comment from March 14 through April 13, 2026. A public hearing is required prior to Council action, and the final Plan will be submitted to HUD on or around May 15, 2026. Final funding amounts remain subject to HUD allocations and program income, which may vary.

PROCEDURAL HISTORY

• The City Council adopted the FY2025-2029 Consolidated Plan on April 28, 2025, following extensive public outreach and planning efforts, establishing the City’s five-year goals, objectives, strategies, and priority programs for HUD-funded activities.
• Public notices were published, and a City Council public hearing was held in September 2025 to gather input on prior performance and current community needs.
• Funding availability and application processes for CDBG, HOME, and AmeriCorps VISTA were publicly advertised, with applications released in December 2025 and due in January 2026.
• A public hearing was held at the Community Development Board meeting on February 3, 2026, to receive input on community needs and funding applications.
• Targeted outreach included email notifications to nonprofit, healthcare, housing organizations, and neighborhood task forces, along with in-person presentations to neighborhood task forces:
  • South Side: March 19, 2026
  • Heights: March 24, 2026
• The draft Annual Action Plan was made available for a 30-day public comment period from March 14 to April 13, 2026.
• A public hearing will be held during the City Council meeting on April 13, 2026, to garner public comments on the drafted Annual Action Plan.
• The City Council is scheduled to act on the Annual Action Plan on April 27, 2026.

Anticipated Revenues: HUD allocation amounts have not yet been released; however, the City anticipates receiving approximately $650,000 in Community Development Block Grant (CDBG) funds and $300,000 in HOME Investment Partnerships (HOME) funds for FY2026-2027 to support affordable housing and other activities benefiting low-income residents. The Corporation for National and Community Service (CNCS) has also awarded $572,864 to support the Billings Metro VISTA Project.

Allocation Compliance: Proposed allocations are consistent with the goals and priorities established in the adopted FY2025-2029 Consolidated Plan. Funding recommendations comply with federal requirements, including administrative caps (CDBG up to 20%; HOME up to 10%), public service limits (CDBG up to 15%), and the Community Housing Development Organization (CHDO) set-aside (HOME minimum 15%). Failure to meet federal requirements may result in repayment of funds and could impact the City’s eligibility for future funding.
Funding Constraints: CDBG and HOME funds are restricted by federal eligibility requirements and must address identified community needs, including affordable housing, housing choice, and poverty-related impacts. HUD regulations prohibit the use of federal funds to supplant local government funding for activities typically supported with local resources.

FY2026-2027 Budget Recommendation Priorities
Ensuring Timeliness: To maintain compliance with federal commitment and expenditure requirements, the City allocates CDBG and HOME funds through a public application process to subrecipients while also funding staff-managed programs. Budget allocations may be adjusted, as needed, to prioritize close- and shovel-ready activities that support timely expenditure. This approach includes the strategic use of program income and loan repayments generated from programs such as First Time Homebuyer, Foreclosure Acquisition / Rehabilitation, and Affordable Housing Development.

Budget recommendation priorities and estimates are as follows (Attachment B):  

• Administration at maximum caps, 20% of CDBG (estimated $130,000) and 10% of HOME (estimated $30,000). Funding is reserved for administrative costs including technology and phone charges, duplication, publication of notices, motor vehicle costs, liability insurance, staff time; etc.
• Community Housing Development Organization set-aside will be allocated 15% of new HOME funding, as required by HUD (estimated $45,000).
• Affordable Housing Development at $750,000 for the Sage Towers renovation project in addition to an estimated $87,619 to cover City staff costs to manage and monitor the project.  
• The First Time Home Buyer program would be allocated an estimated $559,965 in CDBG and HOME funding. This includes at least $200,000 in CDBG funding in addition to $25,000 in CDBG repayment funding, if received. An estimated $234,965 in HOME and $100,000 in HOME repayment funding would also be allocated, 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. If the HUD allocations are higher than anticipated or the City receives higher amounts of repayment revenue, additional funds would be allocated to this program.
• Billings Metro VISTA Project would be allocated an estimated $25,000 in repayment revenue, if received during next fiscal year. CNCS changed 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.
• An estimated $320,000 would be allocated to the Foreclosure Acquisition / Rehabilitation program. This funding would assist the city in purchasing a foreclosed home to renovate and sell to a low-income household. This program is the City’s most effective tool in managing timely expenditure and is highly rated by participants.  
• An estimated $50,000 in CDBG repayment 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. If the City receives less CDBG funding from HUD than anticipated, this allocation would be lowered to accommodate.

Stakeholders
Stakeholders for CDBG and HOME programs include:

• Program Recipients: The City serves low-income households through CDBG and HOME-funded activities, including affordable housing development, home buyer assistance, and foreclosure acquisition/rehabilitation programs. Additional program information is available at www.BillingsMT.gov/comdev.
• Community Development Board: The Board serves as an advisory body to the City Council, providing oversight of CDBG, HOME and VISTA programs and facilitating public input to develop funding recommendations. Six of nine members represent low-income neighborhoods, ensuring participation in planning and allocation processes.
• Nonprofit Organizations: Local organizations serving low-income populations are supported in part through the Billings Metro VISTA Project, where AmeriCorps VISTA members assist in delivering community services.

• Hold a public hearing to receive public comment on the FY2026-2027 Annual Action Plan and proceed with HUD submission for CDBG and HOME funding recommendations.
• Do not hold a public hearing and do not submit an Annual Action Plan for CDBG and HOME funding. Not moving ahead with the process and programs would prevent the City from utilizing CDBG and HOME programs and no longer provide the programs supporting low-income residents and low-income service providers in Billings.