EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: February 1, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Rachel Horst, Housing and Economic Development Manager SUBJECT: Amendment to Agreement with EPACANDO for Below Market Rate Housing Program Administration
Recommendation
Adopt a Resolution (Attachment 1):
1. Clarifying that the term of the Agreement with EPACANDO to administer the City’s Below Market-Rate Housing Program (“Agreement”) may be extended for up to two additional periods of one year each, with approval of the City Manager, commencing upon the expiration of the initial term, which began on May 10, 2019; and
2. Authorizing the City Manager to amend the Agreement to reflect the above clarifications.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Priority No. 6: Create a Healthy and Safe Community
Background
City of East Palo Alto Below Market-Rate Housing Program The City’s Below Market-Rate Housing Program (“BMR Program”) consists of approximately 53 ownership units that were created either through the former Redevelopment Agency’s assistance or market-rate developer obligations to create affordable units under an Inclusionary Housing or other program.
Prior to 2019, due to low staffing levels, units in the BMR Program were not under consistent monitoring, and actions such as a refinances, loan subordinations, re-sales were difficult and inefficient for the City to facilitate.
RFP and Professional Services Agreement with EPACANDO
To improve the BMR Program and achieve the City’s Five-Year Affordable Housing Strategy goal to Add Capacity for Stewardship and Monitoring of Affordable Housing Assets, the City released a Request for Proposals (RFP) to identify a qualified organization to administer the City’s BMR Program. EPACANDO and BAAHA were selected via this Request for Proposals (RFP) process in November 2018 to administer the City’s BMR portfolio.
On February 5, 2019, the City Council adopted Resolution No. 5080, authorizing the City Manager to enter into a three-year Professional Services Agreement (“Agreement”) with EPACANDO and the Bay Area Affordable Homeownership Alliance (BAAHA) in an amount not to exceed $125,000 to administer the City’s BMR Program. The February 5, 2019 staff report and Resolution No. 5080 are included as Attachment 2.
Term of EPACANDO Agreement
The staff report from February 5, 2019 provides a proposed scope of work and standard contract terms. Among these, the contract term was described as “three years from date when the contract is fully executed by all parties,” with “the option to extend the term for two additional periods of one year each, commencing upon the expiration of the initial or extended term.” However, neither of these terms were included in Resolution No. 5080 or the executed Agreement, which states that the term ends on February 2, 2022.
The purpose of this staff report is to seek City Council authorization to clarify, via the proposed resolution, the intent of the City Council was to allow for two additional one-year extensions of the contract term, with the approval of the City Manager, from the date that the Agreement was fully executed by both parties.
Analysis
Progress under the Below Market-Rate Administration Agreement The scope of the Agreement is provided as Exhibit A to Resolution No. 5080. Since execution of the Agreement, EPACANDO has made significant progress on all areas, including, but not limited to:
• Hired a Program Associate to oversee all aspects of the BMR program. • Facilitated the re-sale of three BMR ownership units to an eligible buyer, in addition to three refinances and one loan payoff.
• Hosted a series of homebuyer workshops for prospective BMR buyers. • Conducted an initial period of review of each of the 108 BMR files provided by the City at the start of the contract term, verified all BMR units, and entered the files into an electronic recordkeeping system.
• Annual compliance monitoring of the entire BMR portfolio. There are currently 11 cases of concern under EPACANDO review.
• Responding to inquiries from the public and from BMR unit owners.
The Agreement was fully executed on May 10, 2019. If the City Council adopts a clarifying resolution, the City Manager may approve up to two one-year extensions. If amended, the original, three-year term, would end on May 9, 2022 and could then be extended through May 8, 2023 and again to May 7, 2024 if the City Manager approved. No amendment to the budget is necessary at this time.
Next Steps
If approved, the City Manager may amend the Agreement on record to reflect three years from the date of execution of May 10, 2019 as the end of the initial term and to allow up to two oneyear extensions. No additional amendments to the Agreement are necessary at this time.
Fiscal Impact
There is no fiscal impact associated with this staff report. The not-to-exceed amount under the Agreement remains $125,000, of which $85,742 have been expended to date.
Prior to EPACANDO becoming the City’s BMR administrator, the City’s Community and Economic Development Department, Office of the City Attorney, and outside counsel were all involved in facilitating BMR transactions. Partnering with EPACANFDO has saved the City an estimated $40-$50K in costs.
Public Notice
The public was provided notice by making the agenda and report available on the City’s website and at the San Mateo Co. Library located at 2415 University Avenue, East Palo Alto.
Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.
Attachments
1. Resolution
2. February 5, 2019 Staff Report and Resolution 5080