Authorizing the opening of the required public comment period regarding the 2027 Annual Action Plan, as required by the United States Department of Housing and Urban Development for the receipt of Community Development Block Grant funds. The public comment period will close on November 2, 2026.

On May 4, 2020, the Council adopted a new allocation process for the Community Development Block Grant (CDBG) Program. The process includes a steering committee making a recommendation to the Council on how the annual CDBG funding should be allocated. Applications were called for those activities that are considered public service activities that meet the City's Consolidated Plan. Funding for public service activities is limited to 15% or less of our CDBG allocation. The steering committee has provided a recommended list of projects and funding amounts for the 2027 CDBG allocations. The steering committee is made up of six members, with four being from different departments within the City and two being members from the community.

The allocation process includes scoring criteria for all formal applications submitted by external agencies for requests considered public service activities. The application scoring criteria include points for activities that have an equitable impact on the community.

At this time, the Council is being asked to open the public comment period on the 2027 Annual Action Plan, which has a minimum 30-day open comment period and will be closed on November 2, 2026. Any changes to the 2026 allocations can be made when the Council closes the public comment period, and any comments received will be noted in the final document submitted to the United States Department of Housing and Urban Development (HUD). The City needs to have adopted the Annual Action Plan by November 15th. 

Due to the length of the 2027 Annual Action Plan, the document can be found on the City's website: Community Development Block Grant (CDBG) | Rochester, MN 

The attached 2027 Application Summary indicates that nine external applications for public service activities were received. In addition, the attached includes internal allocation needs identified by Community Development that the team would like to support, which aligns with the 2025-2029 Consolidated Plan Priorities.

Public Service Activities

External applications were considered and recommended based on application scores. The committee discussed each activity and the merits of each. The feeling was that certain activities provided a direct impact on the community in addressing the priorities established in the City's 2025-2029 Consolidated Plan. Based on this desire, the amount of requested funding for each activity was reviewed, and the steering committee recommended that five activities should receive some funding level. 

Administrative Activities

Funding in the amount of $145,000 for CDBG program administration and planning activity. $70,000 of these dollars will go to the Housing Coalition for their role in affordable housing. The remaining funds cover staff time for administering the CDBG program and miscellaneous costs, such as publication costs.

Internal Recommendation

Affordable Housing: $474,600

Funding for the City’s Single Family Rehab Program, which has been in existence since 1983, falls under this initiative. This program fulfills our highest priority of affordable housing and has a proven record of accomplishment. This program continues our partnership with Olmsted County Housing & Redevelopment Authority (OCHRA), preserves our affordable housing, and provides financial relief to qualifying households. It is anticipated that there would be enough funding ($250,000) to complete at least 10+ single-family rehab projects. In addition, funding in the amount of $125,000 would be used for a rental rehab activity. We recently completed 2 rental rehab projects, and there is strong interest in continuing the program. $107,500 for administrative costs in administering the rehab activity. Any program income received over the anticipated $75,000 could go back into the City’s Single Family Rehab Program, as there is usually a capacity to complete 15+ projects during the year.

Based on the requests received, scoring criteria of applications, consistency with the 2025-2029 Consolidated Plan, recommendation of the CDBG Steering Committee, and direction from the Community Development team, the team would like to recommend the following 2027 CDBG allocations:

Allocation of received funding from the U.S. Department of Housing and Urban Development (HUD) through the CDBG program goes towards activities that meet the priorities established by the City in its Consolidated Plan. The Consolidated Plan is a five-year plan that is submitted by the City to HUD outlining the goals and vision for actions to be accomplished with CDBG funds. Five components make up the Consolidated Plan: a description of the lead agency, a housing and homeless needs assessment, a housing market analysis, a strategic plan, and an annual action plan. Annual goals and benchmarks for these goals are included in the Consolidated Plan. Priority needs found in the 2025-2029 Consolidated Plan are the following: Access to Affordable Housing, Access to Public Services, Non-Housing Community Development, Affirmatively Furthering Fair Housing, and Planning and Administration. Each activity must meet one of the following national objectives for the program: benefit low- and moderate-income persons, prevent or eliminate slums or blight, or meet an urgent community need that threatens the health or welfare of the Community.

July 17, 2026: Notice of 2027 CDBG application period sent to organizations

July 18, 2026: Notice of 2027 CDBG application period published in the Post Bulletin

July 22, 2025: Press Release issued regarding 2026 CDBG application period

July 22, 2025: Open house held for questions regarding the 2027 application

August 31, 2026: Steering Committee review of the 2027 applications

Funding is received is from the Department of Housing and Urban Development.

No alternative action is suggested at this time.