Consent 1.G.
City Council Regular Business Meeting
- Meeting Date:
- 04/27/2026
- TITLE
- Action on the FY2026-2027 Annual Action Plan, Recommended CDBG and HOME Budget Allocations, and FTH Buyer Program
- PRESENTED BY:
- Brenda Beckett
- Department:
- Planning & Community Services
Presentation:
No
Legal Review:
No
Project Number:
N/A
RECOMMENDATION
City staff and the Community Development Board recommend that the City Council approve the FY2026-2027 Annual Action Plan and recommended budget allocations for Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) program and increase the amount of homebuyer assistance from $10,000 - $15,000 to 20% of the total purchase price to accommodate market fluctuations.
EXECUTIVE SUMMARY
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.
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.
The City Council conducted a public hearing to take comment on the FY2026–2027 Annual Action Plan and the City’s proposed use of HUD-funded CDBG and HOME resources at its April 13 meeting prior to taking action at this meeting.
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.
The City Council conducted a public hearing to take comment on the FY2026–2027 Annual Action Plan and the City’s proposed use of HUD-funded CDBG and HOME resources at its April 13 meeting prior to taking action at this meeting.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
Purpose and Funding Context
The FY2026-2027 Annual Action Plan (attachment A) 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 federally funded by HUD and do not include local funding allocations.
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.
Public Participation, Timeline, and Considerations
The draft Plan is available for public comment from March 14 through April 13, 2026. A public hearing was required prior to Council action, and the final Plan will be submitted to HUD on or around May 15, 2026. The City Council conducted a public hearing to take comment on the FY2026–2027 Annual Action Plan and the City’s proposed use of HUD-funded CDBG and HOME resources at its April 13 meeting prior to taking action at this meeting. 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:
· A public hearing was 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.
The FY2026-2027 Annual Action Plan (attachment A) 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 federally funded by HUD and do not include local funding allocations.
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.
Public Participation, Timeline, and Considerations
The draft Plan is available for public comment from March 14 through April 13, 2026. A public hearing was required prior to Council action, and the final Plan will be submitted to HUD on or around May 15, 2026. The City Council conducted a public hearing to take comment on the FY2026–2027 Annual Action Plan and the City’s proposed use of HUD-funded CDBG and HOME resources at its April 13 meeting prior to taking action at this meeting. 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 was 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.
FISCAL EFFECTS
Anticipated Revenues: The City will receive $650,440 in Community Development Block Grant (CDBG) funds and $362,385 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. The budget includes reprogrammed funds from stalled activities, repayment revenue from home repair and buyer programs, and anticipated repayment revenue.
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 on 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 as determined in the City’s approved five-year Consolidated Plan, 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 for the following programs may be adjusted, as needed, to prioritize close- and shovel-ready activities that support timely expenditure and to allocate additional repayment revenues received. This approach includes the strategic use of program income and loan repayments generated from programs such as First Time Homebuyer, Home Repair, Foreclosure Acquisition / Rehabilitation, and Affordable Housing Development.
Budget recommendation priorities are as follows (Attachment B):
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 on 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 as determined in the City’s approved five-year Consolidated Plan, 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 for the following programs may be adjusted, as needed, to prioritize close- and shovel-ready activities that support timely expenditure and to allocate additional repayment revenues received. This approach includes the strategic use of program income and loan repayments generated from programs such as First Time Homebuyer, Home Repair, Foreclosure Acquisition / Rehabilitation, and Affordable Housing Development.
Budget recommendation priorities are as follows (Attachment B):
- Administration at maximum caps, 20% of CDBG ($130,088) and 10% of HOME ($36,238.56). 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 ($54,357.84).
- Affordable Housing Development at $750,000 for the Sage Tower renovation project. Staff costs will be allocated as per the City’s time tracking and draw procedures (attachment C).
- The First Time Home Buyer program would be allocated $963,968 in CDBG and HOME funding. This includes at least $200,352 in new CDBG funding, $319,842 in program income, and $25,000 in future program income, if received. A new HOME funding allocation totals $271,789, at least $46,985 in repayment funding, and an additional $100,000 repayment funding would also be allocated, if received.
- 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.
- $320,000 would be allocated to the Foreclosure Acquisition / Rehabilitation program. This funding would assist the city in purchasing foreclosed homes to renovate and sell to low-income households. This program is the City’s most effective tool in managing timely expenditure and is highly regarded by neighborhood families and 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.
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, homebuyer 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 and HOME 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.
ALTERNATIVES
CIty Council May:
- Approve the Annual Action Plan and the allocation of CDBG and HOME FY26-27 funding as recommended by Staff and the Community Development Board.
- Approve the Annual Action Plan and the allocation of CDBG and HOME FY26-27 funding based on alternative funding amounts within program parameters as determined by the City Council.
- Not approve the Annual Action Plan, and the allocation of CDBG and HOME funding and refuse to undertake CDBG and HOME activities to benefit low-income residents with housing and support services in Billings.
Attachments
- Drafted FY26-27 Annual Action Plan
- FY2026-2027 Revenue & Recommendations
- Community Development Time Tracking & Draw Procedures