201 S. Anaheim Blvd.
Tenth Floor
Anaheim, CA 92805
Tel: (714) 765-4300
Fax: (714) 765-4360
www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
HOUSING & COMMUNITY DEVELOPMENT
DEPARTMENT
DATE: JUNE 13, 2023
FROM: HOUSING & COMMUNITY DEVELOPMENT DEPARTMENT
SUBJECT: AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT
WITH NMAI LLC FOR INSPECTION SERVICES
ATTACHMENT (Y/N): YES ITEM # 14
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion, approve the First Amendment to the Professional Services Agreement with NMAI LLC for inspection services to
1. Modify the entity name from “NMA Inspections LLC” to “NMAI LLC,” as recorded with the California Secretary of State; and
2. Incorporate two additional 1-year Renewal Terms, extending the potential termination date to June 30, 2026; and
3. Increase the Maximum Compensation to $1,314,000 to incorporate funding for the additional two 1-year extensions, account for a $3.80 increase in the administrative fee per inspection, and augment the volume of work assigned to NMAI LLC; and
4. Remove the annual compensation limit to allow the Authority to compensate NMAI LLC for work performed during FY 2021-2022 that exceeded the annual limit by $11,271; and
5. Authorize the Director of Housing & Community Development, or her designee, to execute the Amendment on behalf of the City.
BACKGROUND:
The Anaheim Housing Authority (Authority) administers the Section 8 Housing Choice Voucher (HCV) program in the City of Anaheim on behalf of the U.S. Department of Housing and Urban Development Department (HUD) for over 6,300 households. The HCV program is the federal government's largest program for providing rental subsidies to very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. As an administrator of the HCV program, the Authority must comply with federal, state, and local policies and regulations.
First Amendment to Professional Services Agreement with NMAI LLC June 13, 2023
Federal regulations require that all units occupied by families that receive HCV assistance be inspected and meet HUD's Housing Quality Standards (HQS). HUD's HQS establishes the minimum quality criteria necessary to protect the health and safety of program participants. HQS inspections are required before any assistance is provided through the HCV program and at least biennially for as long as the unit remains on the program. Additionally, there are instances when inspections must be performed more often to identify potentially harmful conditions or compliance issues to protect the health and safety of program participants.
HUD has established accuracy and timeliness standards for HQS inspections that impact the Authority’s annual performance rating. Adherence to these standards is a contractual obligation and essential because they ensure safe living conditions for all participants.
The annual performance rating is directly correlated to the level of funding the agency receives.
On January 18, 2019, the Authority issued a Request for Proposals (RFP) for inspection services seeking a cost-effective way to keep up with the increased demand for required inspections. The RFP’s winning bid came from NMA Inspections LLC, a housing industry leader providing technical support in all aspects of the HCV program.
Staff received approval from the Governing Board to enter into a Professional Services Agreement (PSA) with NMA Inspections LLC for inspection services that commenced on July 1, 2019, with a potential termination date of June 30, 2024, if we utilize all extension periods granted through the PSA. It should also be noted that the Authority had a prior contract with NMA Inspections LLC for HQS inspection services from July 1, 2014, through June 30, 2019.
Throughout the first four years of the current PSA, NMA Inspections LLC has conducted most of the assigned HQS inspections while the Authority performed the administrative duties of the process (i.e., generating and sending appointment and results letters and scheduling and rescheduling inspections). NMA Inspections LLC has shown a willingness to accept more work when needed and has been a crucial partner in ensuring compliance with HQS inspection regulations.
DISCUSSION:
The Authority now seeks to amend the existing PSA to apply the following changes:
(1) Modify the entity name from “NMA Inspections LLC” to “NMAI LLC,” as the change in the entity’s name was recorded with the California Secretary of State in 2019. (2) Incorporate two additional 1-year Renewal Terms, extending the potential termination date to June 30, 2026. This change would allow the Authority to continue receiving inspection services without interrupting operations. (3) Increase the Maximum Compensation to $1,314,000 to incorporate funding for the additional two 1-year extensions. The increase would also allow the Authority to increase the volume of work assigned to NMAI LLC due to higher inspection demands and staffing challenges.
First Amendment to Professional Services Agreement with NMAI LLC June 13, 2023
At times, gaps in staffing due to the departure of staff and/or extended leaves due to illness or other circumstances beyond the Authority’s control impede the Authority’s ability to meet program standards. While some staffing challenges can be handled by reassigning work or bringing on temporary staffing, the HQS inspection process requires specific knowledge of program regulations and standards. Access to temporary staffing with HQS-specific knowledge and skill set is exceptionally limited. As a result, the Authority finds it necessary to expand the work assigned to NMAI LLC, whose staff is skilled and knowledgeable in HQS inspection regulations.
This modification would also allow the assignment of the administrative duties related to HQS inspections to NMAI LLC, previously performed by the Authority.
NMAI LLC increased the cost of performing administrative duties from the original amount of $7.50 to $11.30 per inspection. This increase was prompted by the Authority’s request that NMAI LLC follows the Authority’s internal electronic filing procedures, which include creating an electronic inspection file for each unit inspected and saving electronic copies of all inspection notices, individually, named in accordance with the Authority’s specified naming convention.
Additionally, HCV program funding allocations for Fiscal Year 2023/24 have increased significantly, creating the opportunity to expand the number of vouchers leased, which further increases the need for additional inspections.
Increasing this existing PSA would allow the Authority to meet the escalating demand more efficiently and achieve several significant benefits. The primary advantage is the ability to shift staff’s focus to other essential tasks related to the recently increased budget and voucher allocations expanding the HCV program. (4) Remove the annual compensation limit of $98,000, applicable to all services provided during the Term, including services performed prior to this First Amendment.
This change would allow the Authority to compensate NMAI LLC for work performed during FY 2021/22 that exceeded the annual limit by $11,271. The work performed under this contract for FY 2021/22 was extremely critical to addressing the backlog of inspections created by the COVID-19 pandemic stay-at-home and social distancing orders and ensuring the health and safety of all program participants.
Under the terms of the Agreement, NMAI LLC will continue to assist the Authority by conducting HQS inspections throughout Anaheim in accordance with all HUD regulations and the Authority’s Administrative Plan. The Authority will retain decision- making authority in all inspections-related work and continue to perform inspections when necessary.
The Authority will continue to conduct quality control reviews of any work NMAI LLC performs.
Funding for the HCV program is allocated by Congress annually and disbursed to the Authority by HUD.
First Amendment to Professional Services Agreement with NMAI LLC June 13, 2023
IMPACT ON BUDGET:
The HCV program is entirely funded by federal funds provided by HUD. Sufficient funds are included in the Housing and Community Development Department’s budget and are restricted for such purposes.
Respectfully submitted,
Grace Ruiz-Stepter
Director of Housing & Community Development
Attachments:
1. Amendment to Professional Services Agreement with NMAI LLC for Inspection Services
2. Existing Professional Services Agreement with NMAI LLC (formerly NMA Inspections LLC) for Inspection Services