Milpitas council moves to sunset home‑rehab loan program, directs staff to reallocate CDBG revolving funds
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Summary
The Milpitas City Council on Feb. 4 voted unanimously to authorize the city manager to sunset the Home Rehabilitation revolving‑loan program and return with a plan to reallocate program income after staff said the city had received more than $675,000 in repayments that must be spent quickly to meet HUD timeliness requirements.
The Milpitas City Council on Feb. 4 directed the city manager to sunset the city’s Home Rehabilitation revolving‑loan program and return with a plan to reallocate program income from that fund to activities staff says can spend the money before the Department of Housing and Urban Development’s timeliness test.
Housing official Robert Musalom told council that the city had received more than $675,000 in repayments to the Home Rehabilitation revolving fund and that HUD requires jurisdictions to spend program income in a timely manner. “City has received repayments, for, to the revolving loan fund totaling over $675,000, which needs to be spent as soon as possible to meet timeliness in April of 20 25,” Musalom said during the presentation.
Staff presented three options: keep the Home Rehab loan program open and wait for borrower demand; the recommended option to reallocate $148,000 to Rebuilding Together Silicon Valley and $148,000 to the microenterprise assistance program while directing future program income toward economic‑development activities; or a blended alternative reallocating funds to economic development and capital activities. Staff noted HUD rules limit public‑service spending to 15% of available CDBG funds, so the revolving income cannot be used to increase public services above that cap.
Why it matters: the city received 19 applications requesting about $1.1 million for the upcoming CDBG cycle against a projected HUD allocation of roughly $600,000. The shortage of available federal funds and the timeliness deadline, staff said, made it difficult to find eligible activities that could be implemented quickly enough to meet HUD’s spending tests.
Public testimony: multiple nonprofit applicants and program representatives testified in support of funding, including City Team (microenterprise and career development), Terrace Gardens senior housing (roof replacement), YWCA and Next Door Solutions to Domestic Violence (survivor services), Senior Adults Legal Assistance (SALA) and Project Sentinel (tenant/landlord assistance). Speakers described the number of Milpitas residents served by their programs and asked the council to fund a mix of seniors, domestic violence survivors, tenant services and small‑business support.
Council action: Councilmember Chua moved and Vice Mayor Barbara Dio seconded a motion authorizing the city manager to sunset the Home Rehab loan program and to return with a reallocation proposal for the revolving‑loan funds. The motion passed 5–0. Councilmembers asked staff to prioritize seniors, tenant/landlord assistance, domestic‑violence services and microenterprise support when developing allocation recommendations and to return with a detailed recommendation after HUD releases final funding levels.
Selected figures and constraints cited in the hearing: staff projected a likely HUD allocation of approximately $600,000 to the city; the city received repayments totaling over $675,000; staff proposed reallocating $148,000 to Rebuilding Together Silicon Valley and $148,000 to a microenterprise assistance program as interim steps to meet timeliness. Staff said the revolving‑loan account still contains roughly $675,000 available now and an overall outstanding loan portfolio of approximately $3,000,000 in legacy liens that will continue to be repaid over time.
Attribution: Housing Official Robert Musalom presented the case for a substantial amendment and explained timeliness concerns; Root Policy Research (Heidi Agler) summarized the consolidated‑plan analysis; numerous nonprofit representatives provided public comment. Council voted unanimously to authorize sunsetting the Home Rehab program and directed staff to return with a reallocation plan.
