Via Electronic Mail July 20, 2023 Dante Hall, City Manager Edwin Gato, Finance Director CITY OF HERCULES 111 Civic Drive Hercules, CA 94547 PROPOSAL FOR HOUSING LOAN ADMINISTRATION SERVICES Dear Mr. Hall and Mr. Gato: RSG has prepared this proposal for the City of Hercules (“City”) to assist with administering housing loans issued by the former Hercules Redevelopment Agency (“Former Agency”) and/or the City. Although the City awaits a response from the Contra Costa County Housing Authority to formally declare the City as Housing Successor to administer loans, the City has received increased inquiries and needs assistance responding to requests. This proposal presents RSG’s proposed scope of services and fee. RSG has intimate knowledge of the City’s history and needs gained from working closely with staff on redevelopment dissolution, housing, and real estate matters for several years. SCOPE OF SERVICES 1: Former Agency Loan Review and Payment Schedules In 2018, RSG conducted a comprehensive review of housing and business loans in the City’s files. RSG found the City and former Redevelopment Agency originated 139 housing loans and 27 business development loans since 2002. As of August 2022, 108 housing loans and 15 business development loans were outstanding. The City has not actively administered these loans since dissolution. It has only processed occasional requests for loan payoffs related to home sales and refinancing. RSG will review outstanding loans and payment history to determine outstanding loan balances and required payment schedules. RSG will discuss the results with City staff to determine how the City would like to proceed with requesting past-due amounts or invoicing for regular payments.
Dante Hall, City Manager Edwin Gato, Finance Director CITY OF HERCULES July 20, 2023 Page 2 Task 2: Loan Administration Based on the results of Task 1, RSG is available to assist with monthly invoicing and balance tracking on outstanding loans. The fee schedule includes an estimate on a per unit basis. Alternately, RSG could coordinate with City staff to set up the initial process and provide invoice templates, with the City taking over invoicing on an ongoing basis. RSG can also provide on-call services to prepare documents needed for resale or refinance transactions related to outstanding housing loans. Resale Coordination may include: • Income Eligibility: Ensure all new applicant/borrower is income eligible pursuant to the agreement for the specific property being purchased. • Affordable Housing Cost Calculation: Provide a detailed resale price and monthly affordable housing cost calculation to the City and other interested parties. • Forms: Coordinate all City forms and documents with the new purchaser, lender, escrow or title company. • Loan Documents & Closing: Prepare any corresponding City loan documents and coordinate closing as needed. Refinance Coordination may include: • Forms: Draft, complete, and submit corresponding forms to the City and lender as applicable. • Documentation Preparation: Complete as requested by the lender, which may include: o Pay-off Demand o Subordination Agreement • Closeout: Coordinate all tasks on behalf of the City and ensure all requested documents from escrow, title and the lender are addressed at the time of closing for the refinance. PROJECT TEAM This engagement will be led by Jim Simon, Principal, with assistance from Suzy Kim, Director, and Rosa Romero, Associate. Additional staff will be assigned as needed. Staff resumes can be found at www.websrsg.com.
Dante Hall, City Manager Edwin Gato, Finance Director CITY OF HERCULES July 20, 2023 Page 3 FEE ESTIMATE Task 1, Former Agency Loan Review and Schedule, would be completed for a not-to-exceed fee of $34,000 billed on a time and materials basis. Task 2, Loan Administration, will depend on the number of loans and resale or refinance transactions administered. RSG proposes a fee per unit transaction of: • Monthly loan invoicing: $1,300 per unit for 12 months of monthly invoicing • Resale transaction: $2,000 per unit transaction • Refinance transaction: $2,000 per unit transaction An annual not-to-exceed budget paid on a time and materials basis may be negotiated based on the results of Task 1. Sample budgets are provided in the table below. Generally, RSG’s fees may be paid from loan proceeds. If RSG issues 12 monthly invoices for 123 loans, the annual fee would equal $228,780 ($1,860 x 123). Alternately, RSG could create a monthly invoicing template for City staff to issue monthly invoices and track loan balances after payments are processed. RSG estimates a one-time fee of $7,500, billed on a time and materials basis. Sample Budget 1 Sample Budget 2 Task 1: Loan Review and Payment Schedules $34,000 $34,000 Task 2: Monthly invoicing 1. RSG administers monthly 2. RSG set-up; City administers monthly $159,900 $7,500 Task 2: Resale Transactions (up to 5) $2,000 x 5 $10,000 $10,000 Task 2: Refinance Transactions (up to 5) $2,000 x 5 $10,000 $10,000 Total $213,900 $61,500 Any services in excess of the quoted amounts will be conducted with City staff’s authorization and may require a contract amendment. Our services for this engagement would be charged on a time-and-materials basis using the billing rates as follows.
Dante Hall, City Manager Edwin Gato, Finance Director CITY OF HERCULES July 20, 2023 Page 4 Principal/Director $ 275 Senior Associate 200 Associate 185 Senior Analyst 150 Analyst 135 Research Assistant 125 Technician 100 Clerical 60 Reimbursable Expenses Cost plus 10% RSG does not charge clients for mileage (except direct costs related to field surveys), parking, standard telephone/fax expenses, general postage or incidental copies. However, we do charge for messenger services, overnight shipping/express mail costs, and teleconferencing services. We also charge for copies of reports, documents, notices, and support material in excess of five (5) copies. These costs are charged back at the actual expense plus a 10% surcharge. RSG issues monthly invoices payable upon receipt, unless otherwise agreed upon in advance. Invoices identify tasks completed to date, hours expended, and the hourly rate. Our Federal Tax ID is 95-3435849. The work under this scope of services would be undertaken under a new contract that is separate from RSG’s master contract with the City (Agreement No. 23-030-CM dated 5/12/2023). We welcome the opportunity to discuss this proposal with you in further detail. If you have any questions, please do not hesitate to contact Jim Simon at (714) 316-2120 or [email protected]. Thank you for the opportunity to assist the City. Sincerely, RSG, INC.
Jim Simon Principal