April 25, 2024 - Community Development Block Grant (CDBG) Voluntary Grant Reduction ( VGR)CITY OF
CUPERTINO
COMMUNITY DEVELOPMENT DEPARTMENT
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA
95014-3255 TELEPHONE: (408) 777-3308 • FAX: (408) 777-3333
CUPERTINO.ORG INFORMATIONAL MEMORANDUM April 25, 2024
To: Pamela Wu, City Manager
From: Benjamin Fu, Director of Community Development
Re: Community Development Block Grant (CDBG) Voluntary Grant Reduction (VCR)
Background
From March 1st through March 11th, 2021, the U.S. Department of Housing and Urban
Development (HUD) Office of Environment and Energy (OEE) conducted remote
monitoring of the City's Community Development Block Grant (CDBG) program in order
to assess performance and compliance with applicable Federal requirements. As a part of
the monitoring, a total of ten CDBG activities that occurred between 2015 and 2020 were
assessed. On February 22, 2022, HUD' s Office of Community Planning and Development
(CPD) sent their monitoring report to the City.
As per the monitoring report, OEE found that in 2018 the City and/or subrecipient
obligated and expended CDBG and/or non-HUD funds on a project prior to the City
having documented its environmental compliance and/or determination of exemption in
violation of the provisions in §58.22 or §58.34(b ). As a result of this finding, OEE
prescribed that the City must repay the funds disbursed from non-Federal funds to the
CDBG program account in the amount of $176,201. In lieu of repayment, the City
submitted a Voluntary Grant Reduction (VCR) request to HUD on August 9, 2022, and
again on October 6, 2022. This request would result in a future CDBG allocation being
reduced by the designated amount. The City's HUD representative notified staff that all
VCR requests were on hold, and the City would be notified when the request was
approved.
On March 8, 2024, HUD notified the City that the VCR would be applied to its FY 2024-
25 CDBG allocation. Due to this penalty, the City anticipates receiving approximately
$182,709 in FY 2024-25 CDBG entitlement funding.
Sustainability Impact
No sustainability impact.
Fiscal Impact
The VGR will result in a reduction in CDBG funding for FY 2024-25 by $176,201.
Prepared by: Alec Vybiral, Senior Housing Coordinator
Reviewed by: Luke Connolly, Assistant Director of Community
Development
Approved for Submission by: Benjamin Fu, Director of Community Development
Attachments:
A – CDBG VGR (Voluntary Grant Reduction) Timeline
B – 2023 Cupertino VGR Letter 9.29.22
CDBG VGR (Voluntary Grant Reduc�on) Timeline
• February 8, 2021
o HUD’s OEE (Office of Environment and Energy) sends a CDBG monitoring no�fica�on
email to CMO and Housing Division.
• February 18, 2021
o City’s Housing Division receives official leter from OEE that remote monitoring of the
CDBG program will be conducted from March 1-11, 2021.
• March 1-11, 2021
o HUD’s remote CDBG monitoring is conducted by OEE.
• February 22, 2022
o HUD’s CPD (Office of Community Planning and Development) sends monitoring report to
the CMO.
• March 22, 2022
o In response to the 2/22/2022 monitoring report, CMO submits a compliance plan to
HUD iden�fying the correc�ve ac�ons it will take for the monitoring findings.
• March 2022
o City Manager advised Council of the audit and a poten�al loss of approximately
$400,000 in CBDG funds, which was subsequently reduced to the amount of the current
voluntary grant reduc�on ($176,201) based on the City’s response to the audit.
• July 5, 2022
o HUD sends the City’s monitoring results leter, which serves as their response to the
City’s proposed correc�ve ac�ons.
• August 9, 2022
o City sends HUD a VGR request leter reques�ng that the reduc�on be applied to FY
2022.
Staff followed up with HUD on 9/1/22 and 9/19/22.
• October 6, 2022
o The City sends HUD a second VGR request leter reques�ng that the reduc�on be
applied to FY 2023.
Staff followed up with HUD on 11/28/22, 1/17/23, 2/27/23, and 5/31/23 (at this
mee�ng HUD no�fied the City that at HUD headquarters all VGR requests are on
hold, and to wait un�l further no�ce to follow up)
• March 24, 2023
o City staff submit all required correc�ve ac�ons via email to HUD with the excep�on of
two: 1. VGR because the request was s�ll under HUD’s review. 2. Environmental reviews
that meet criteria specified by HUD, because the City doesn’t have any pending CDBG
projects that meet the criteria.
• March 29, 2023
o OEE representa�ve responds with email acknowledging City submission of correc�ve
ac�on.
• March 8, 2024
o HUD emails City to no�fy that they are ready to apply the VGR to the City’s FY 2024-25
CDBG alloca�on.
September 29, 2022
Kimberly Nash, CPD Director
U.S. Dept. of Housing and Urban Development (HUD)
1 Sansome St #1200
San Francisco, CA 94104
E-Mail: SFCPDMail@hud.gov (sent via email)
Re: City of Cupertino Community Development Block Grant – Second Request for
Voluntary Grant Reduction (PY 2023)
Dear Ms. Nash:
I am the City Manager for the City of Cupertino, and I wanted to thank you for the discussion
you had with Cupertino staff on July 28, 2022. Cupertino deeply values our relationship with
HUD, and very much appreciates the opportunity to address the Corrective Actions identified
in HUD’s February 22, 2022 Monitoring Report. Pursuant to the July 28 th meeting, the City
submitted a Voluntary Grant Reduction (VGR) Request Letter on August 9, 2022 for Program
Year (PY) 2022. In the event that HUD may not be able to address our request for PY 2022, we
respectfully request that HUD consider the VGR for Program Year 2023.
Accordingly, with respect to the Corrective Action related to IDIS Activity ID 137: 2018/5/Vista
Village Rehabilitation, the City respectfully requests a VGR in the amount of $176,201.24 for
one year during PY 2023, and that such reduction is determined to satisfy the Corrective
Action related to IDS Activity ID 137 (Finding No.1 – Corrective Action, Bullet Point No. 2).
In connection with this request, the City waives its right to a hearing under 24 C.F.R. § 570.913.
This letter further confirms that IDIS Activity ID 137 did not involve the acquisition of
property.
Thank you for your consideration of this request. Please contact Kerri Heusler at
kerrih@cupertino.org or 408-777-3251 if any further information is needed.
Sincerely,
Pamela Wu
City Manager
Pamela Wu (Oct 5, 2022 15:47 PDT)
Pamela Wu
2023 Cupertino VGR Letter 9.29.22
Final Audit Report 2022-10-05
Created:2022-10-05
By:Alec Vybiral (AlecV@cupertino.org)
Status:Signed
Transaction ID:CBJCHBCAABAA8fNLsKeqjo6hea5tQus8ajSOuHrnlFMm
2023 Cupertino VGR Letter 9.29.22" History
Document created by Alec Vybiral (AlecV@cupertino.org)
2022-10-05 - 10:44:28 PM GMT
Document emailed to Debra Nascimento (debran@cupertino.org) for signature
2022-10-05 - 10:44:44 PM GMT
Email viewed by Debra Nascimento (debran@cupertino.org)
2022-10-05 - 10:46:43 PM GMT
Signer Debra Nascimento (debran@cupertino.org) entered name at signing as Pamela Wu
2022-10-05 - 10:47:51 PM GMT
Document e-signed by Pamela Wu (debran@cupertino.org)
Signature Date: 2022-10-05 - 10:47:52 PM GMT - Time Source: server
Agreement completed.
2022-10-05 - 10:47:52 PM GMT