STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of August 8, 2023
TO: Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Edwin Gato, Director of Finance
SUBJECT: Professional Services Agreement with RSG, Inc. for Housing Loan Administration RECOMMENDED ACTION:
Staff recommends that the City Council:
Receive the Staff report on the item and ask any clarifying questions of staff; Receive and comments from the public; and
Adopt a resolution approving a Professional Services Agreement with RSG, Inc. in the Amount of $61,500 for Housing Loan Administration.
BACKGROUND AND ANALYSIS:
The former Hercules Redevelopment Agency (“Former Agency”) issued loans for a variety of programs from its Low- and Moderate-Income Housing Fund (“Housing Fund”) and non-housing redevelopment fund (“Non-Housing Fund”). The majority of loans were issued under a First-Time Homebuyer program. Other programs included Emergency Repair and Business Development loans.
Upon the dissolution of redevelopment in 2012, the City did not elect to become the Housing Successor to the Former Agency. Pursuant to dissolution law, the loans were supposed to be transferred to the Contra Costa County Housing Authority (“Housing Authority”), which became the Housing Successor by operation of law. The Housing Authority declined the transfer of Housing Assets for reasons that are unclear to City staff. Over 100 city issued loans have been in a state of limbo since 2012. City staff administered loan repayments on a case by case basis on a minimal level. The City has collected over $4.9 million in loan repayments, and outstanding loans have a balance due of approximately $3.9 million.
In September 2022, with the outstanding loans still not being managed by the Housing Authority, the City Council authorized staff to negotiate an agreement with the Housing Authority to acknowledge going forward that the City would serve as Housing Successor. This would enable the City to fund affordable housing projects and activities using loan proceeds. The Housing Authority has expressed support for the City’s position; however, due to staffing shortfalls, their review of a draft agreement is still pending.
The City continues to receive requests from loan holders to refinance or close outstanding loans. City staff recommends contracting with RSG, Inc. to review outstanding loan agreements and obligations. RSG will create a payment schedule and assist City staff with creating a process and template documents to recover past-due amounts and invoices for regular payments. RSG will also assist with coordinating resale and refinance requests. The proposed contract amount is $61,500 for a one-year term. A copy of the proposed Professional Services Agreement is attached.
FISCAL IMPACT:
Funds are available in and will be appropriated from the Housing Fund (#640) for FY 23-24, accumulated from the loan proceeds, for this proposed professional agreement with RSG, Inc. for $61,500 for a one-year term.
ATTACHMENTS:
Resolution
Proposal from RSG, Inc. for Housing Loan Administration