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BACKGROUND As a condition of receiving its annual allocation of federal CDBG funds, the City is required to submit an "Annual Action Plan" to HUD. The Annual Action Plan includes a listing of projects and activities to be funded with CDBG funds (also scheduled for review and approval by the Council at the meeting of May 3) as well as an annual assessment of the City's progress toward meeting its goals for housing and community development. Every five years, the City must also submit a "5-Year Consolidated Plan" which is required to include a statement of its local goals and objectives related to housing and community development. A new 5-Year Consolidated Plan for fiscal years 2020 through 2024 (FY 2020-24 Consolidated Plan) was completed two years ago. As the Council is aware, the City is a member of the Alameda County HOME Consortium which makes Pleasanton eligible to receive an annual allocation of federal HOME Investment Partnership Program (HOME) funds for affordable housing activities in addition to its CDBG allocation. The Consortium coordinates the submittal of a composite Annual Action Plan to HUD; however, each City member of the Consortium is required to submit its own section of the Annual Action Plan. The draft Annual Action Plan for fiscal year 2022 for the City of Pleasanton is attached to this report. DISCUSSION The attached draft Annual Action Plan document is similar in format and content to the plans that have been submitted in previous years. Staff incorporated the goals, policies, and programs from the City's most recent Housing Element. Staff believes the resulting document is a reasonable expression of the City's goals and objectives for human services, housing and community development, particularly as they relate to the needs of the City's lower income population and the use of the relatively small allocation of federal grant funds received for housing and community development activities. HUD regulations impose the following limits on the use of CDBG funds including: 1) At least 70 percent of all funds must be spent on activities that benefit low-income persons; 2) No more than 15 percent of the CDBG funds can be used for public service activities; and 3) No more than 20 percent of the CDBG funds can be used for administrative activities. Contingency Plan The federal CDBG and HOME funding amounts are conservative estimates based on last year's annual allocations as HUD has not provided the City with its CDBG and HOME funding allocations for FY 2022/23. As in the past, it has occasionally been necessary to adopt a contingency plan to deal with a slight deficit or surplus in federal funding once the final allocations are received. Staff recommends that the Council authorize the City Manager to adjust final grant amounts for these two funding sources on a pro-rata basis as long as the allocations are within 20 percent of the estimates used in this report. If the final allocations differ more than 20 percent, staff can bring a supplemental report back to the Council for action. Page 2 of 3