COMMUNITY DEVELOPMENT DEPARTMENT
CITY HALL
10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3308 • www.cupertino.org
CITY COUNCIL STAFF REPORT
April 19, 2022
Subject
Contract for Below Market Rate (BMR) Program Administration Recommended Action
Consider authorizing the City Manager to execute Consultant Agreement with Rise Housing Solutions for BMR Program Administration, not to exceed $1,147,206 Discussion
BMR Housing Mitigation Program
The City’s Housing Mitigation Program (BMR Program) was adopted in 1992 to generate affordable housing. The ordinance requires developers to provide a specified number of affordable owner-occupied and rental units. BMR for-sale units are made available to median and moderate-income households. BMR rental units are made available to low and very low-income households. The units are managed in accordance with City Council adopted guidelines, which are available for view on the HYPERLINK "https://www.cupertino.org/our-city/departments/community-development/housing/housing-documents/-fsiteid-1" City’s Housing website (www.cupertino.org/housing). These units are subject to deed restrictions which ensure that the units remain affordable for the longest possible period of time, either in perpetuity or for 99 years. Since the adoption of this ordinance, the City has secured 263 total BMR units, of which 121 units are for-sale units and 142 are rental units.
BMR Program Administration
The City has overall responsibility for the BMR Program although the administration may be contracted out to another agency. The consultant contract is funded through the BMR Affordable Housing Fund (AFH). Typical consultant duties include program outreach, waitlist management, certification and eligibility review, resale and refinance coordination, and annual program monitoring and compliance.
The City has contracted with Rise Housing Solutions (formerly Hello Housing) for BMR Program Administration since 2017. To ensure that the City’s program remains innovative and follows best practices, staff determined it was appropriate to pursue a Request for Qualification (RFQ), included as Attachment C. In February 2022, the City issued an RFQ inviting qualified consultants to provide proposals to administer the City’s BMR Program. The RFQ was sent to over 200 contacts in the Santa Clara County affordable housing field, including seven agencies that have direct experience in BMR Program Administration.
Evaluation Criteria
The City received two proposals from Housekeys and Rise Housing Solutions. Agencies were reviewed on the qualifications and experience working with City BMR programs, knowledge and ability to implement Cupertino’s BMR program, and annual program costs. Staff conducted a thorough review and selected Rise Housing Solutions as the preferred lead consultant for the project. Rise Housing Solutions’ current portfolio includes 532 for-sale homes and 700 rental units, including all 263 Cupertino BMR units. Highlights of the Rise Housing Solutions proposal include significant knowledge and successful implementation of the Cupertino BMR Program, an extensive documentation and record keeping system, established best practices, fixed projected costs for the life of the contract, and a proven track record in monitoring and foreclosure prevention. Rise Housing Solutions also manages current contracts in the cities of Daly City, Novato, Sonoma, and Truckee. The following table outlines the evaluation of Rise Housing Solutions proposal.
RISE HOUSING EVALUATION
RATING NOTES
Criteria
1 Ability to meet RFQ goals and objectives. What objectives are met? Yes- meets all Criteria, Program Service Delivery, and Cost objectives Does the agency / firm have the necessary qualifications and experience? Yes- program design, program evaluation, policy recommendations, and BMR Program Management What is the firm’s knowledge and ability to implement Cupertino's program? 5 years’ direct experience as Cupertino's BMR Program Administrator How much experience and with what agencies or organizations? What is the experience level of the staff? 15 years of combined experience, currently managing cities of Cupertino, Daly City, Novato, Sonoma, and Truckee contracts Is there a conflict of interest?
No
Program Service Delivery
2 What services are being offered?
BMR Program Administration, annual compliance monitoring, ownership resale process, ownership refinance process, rental housing services, ongoing waitlist management, and informational workshops Where are the services being offered? Are the services local? Remote
Who is providing the services? Which staff members? Direct contact for Cupertino? 3 staff members, 1 assigned directly to Cupertino program Is the staff multi-lingual? If so, which languages?
Spanish, translation available upon request
What is the Consultant’s monitoring experience? What is the number of units managed? Experience monitoring 532 ownership and 700 rental units What is the Consultant’s refinance experience?
Manage refinance process including restricted value determination, application, owner/lender checklist, coordination with homeowner/lender/title What is the Consultant’s default resolution and foreclosure experience? Performs buy-backs of all homes at risk of foreclosure
Costs
3 Is there an initial onboarding cost?
No
Is the proposal detailed and are costs / fees clearly outlined? Yes
Is there a fixed fee for basic services?
Yes
Is there a fee per transaction / sale?
Yes- all transaction fees are included in the anticipated annual program cost What are the typical annual program costs anticipated?
$265,000 (7% annual escalator)
What percentages of costs / fees are tied to salary?
7%
What percentages of costs / fees are tied to services?
93%
Contract Term
It is estimated that 67% of the City’s BMR rental units will expire from the BMR Program between July 2026 and January 2028 due to the expiration of many BMR Developer Agreements. In anticipation of this change, it is recommended that the City enter into a four-year contract with Rise Housing to meet the growing needs of the BMR Program.
Year
Term
Cost
Year 1
FY 2022-23
$265,556
Year 2
FY 2023-24
$279,734
Year 3
FY 2024-25
$293,913
Year 4
FY 2025-26
$308,003
TOTAL
$1,147,206
Housing Commission Recommendation
The Housing Commission held a public hearing on March 10th to review the selection of the consultant for BMR Program Administration. The Commission recommended approval of Rise Housing Solutions as the consultant for the City’s BMR Program Administration.
Sustainability Impact
No sustainability impact.
Fiscal Impact
Budget for this contract is included as an ongoing expense in the (BMR Affordable Housing Fund, 265-72-711, page 428 of final adopted budget) contracts expense category.
Prepared by: Kerri Heusler, Housing Manager
Reviewed by: Benjamin Fu, Director of Community Development Approved for Submission by: Dianne Thompson, Assistant City Manager Attachments:
A - Housing Commission Resolution 22-02
B - Consultant Agreement with Rise Housing Solutions for BMR Program Administration C - RFQ BMR Program Administration
CDBG, HSG, AHF and CDBG Annual Action Plan April, 1, 2014 PAGE \* MERGEFORMAT 3