Iowa City commission recommends City Council approve FY27 plan directing CDBG and HOME funds

The Housing Development Commission voted to recommend that City Council approve the city’s fiscal year 2027 annual action plan, which lays out how the city will use federal Community Development Block Grant (CDBG) and HOME funds, staff said.

Briana, a city staff member who presented the plan, told commissioners HUD has announced allocations that result in “collectively, it's about a $15,000 decrease” from FY26 and that the plan represents access to roughly $1.1 million in federal funding. She said the annual action plan is the required HUD submission that explains how Iowa City will use its CDBG and HOME allocations for the coming fiscal year.

The plan submitted for the commission’s recommendation includes several program allocations and reserves. Staff said about $115,000 in CDBG funds will support Aid-to-Agencies activities and that the commission anticipates directing that federal portion to Neighborhood Centers of Johnson County. HOME program rules require a 15% set‑aside for a certified Community Housing Development Organization (CHODO); staff proposed using that CHODO reserve (and up to 5% of HOME for CHODO operating support) and identified the local Housing Fellowship as an entity that can meet CHODO requirements.

Other program priorities in the plan include an owner‑occupied rehabilitation program for households below 80% of area median income (with priority for those below 50% AMI, seniors, veterans and people with disabilities) that staff estimated would assist about eight households with CDBG rehab funds; continued funding for a down‑payment assistance program established through the City Steps consolidated planning process; and a $290,000 competitive rental‑acquisition allocation recommended to the Iowa City Housing Authority to add affordable rental units.

Staff also flagged $108,000 that remained unallocated after the competitive round due to insufficient applications. Rather than reopening a months‑long competitive cycle, staff recommended the city, the housing authority or a certified CHODO acquire an additional rental unit using those funds to help meet the HUD timeliness test. As staff explained, HUD delays in passing federal budgets mean Iowa City may not receive grant agreements until the fall, but the local timeliness test requires certain spending actions by May 2.

Commissioners asked clarifying questions about the CHODO option and how the small federal portion of Aid‑to‑Agencies fits into the larger agency budgets. Staff explained the annual action plan reflects only the federal portion of those allocations and that City Council will review broader funding allocations, including local and legacy agency funding, at its meeting the next day.

A motion to recommend City Council approve the FY27 annual action plan was moved, seconded and approved by voice vote. The commission’s recommendation and the annual action plan will be considered by City Council at its next meeting, and staff said final HUD approval and grant agreements typically follow later in the year.