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BACKGROUND The City receives an annual allocation of federal CDBG funds, generally for the purpose of supporting housing-related programs and activities for eligible lower-income residents. 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 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 three years ago. As a separate but related action, the City Council will review and consider approval of the CDBG-funded projects and activities reflected in the action plan, as part of the annual Housing and Human Services Grant process. 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 2023 for the City of Pleasanton is attached to this report. DISCUSSION The draft Annual Action Plan document (Attachment 1) 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. Recommended Funding for Tri-Valley Haven's Emergency Shelter Rebuild Project In the draft Annual Action Plan for FY 2023/24, Tri Valley Haven's Emergency Shelter Rebuild Project is being recommended for funding in the amount of$250,000 of CDBG funds. In order to provide Tri-Valley Haven's full funding request of$250,000, City staff recommends reprogramming $27,056 of the $195,483 CDBG funding that was previously allocated to the Axis Community Health New Dental Site project. On March 7, 2023, the City Council approved a Substantial Amendment to the FY 2022/23 Annual Action Plan to remove the Axis project after it was determined that a Page 2 of 4