City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: June 17, 2025
Report #:2504-4489
TITLE
Approval of Professional Services Contract Number C25193814 with Alta Housing BMR Services LLC in an Amount Not to Exceed $450,600 for Administration and Consulting Services for the City's Below Market Rate Housing Program for a Period of Two Years and Approve a FY 2026 Budget Amendment in the Residential Housing In-Lieu Fund. CEQA Status: Exempt under CEQA Guidelines 15262.
RECOMMENDATION
Staff recommends that the City Council:
1. Approve and authorize the City Manager or their designee to execute Contract No.
C25193814 (Attachment A) with Alta Housing BMR Services LLC, to provide administration and consulting services for the Below Market Rate Housing Program over a two-year term in the amount not-to-exceed $450,600; and
2. Amend the Fiscal Year 2026 Budget Appropriation in the Residential Housing In-Lieu Fund (requires 2/3 approval) by:
1. Increasing the Planning and Development Services contract services appropriation in the amount of $31,000; and
2. Decreasing the Ending Fund Balance in the amount of $31,000.
EXECUTIVE SUMMARY
The City of Palo Alto released a Request for Proposals (RFP) for administration of the City’s Below Market Rate (BMR) housing program in February 2025. Staff reviewed the proposals and selected Alta Housing BMR Services LLC to provide administration and consulting services for the City’s BMR Program. Staff recommends that City Council approve and enter into a twenty- four-month contract with Alta Housing for an amount not to exceed $450,600.
BACKGROUND
Palo Alto adopted one of the nation’s first inclusionary zoning policies requiring that all residential development include ten percent of units as BMR units. In 1972, the policy required a mix of housing types and affordability levels within residential Planned Unit Developments. In 1973, the City Council expanded the policy to all new residential developments. In 1974,
anticipating the sale of BMR units in several new developments, the City contracted with Alta Housing to administer the City’s BMR Program. The BMR program Administrator’s responsibilities include managing the initial sale and re-sale of BMR ownership units and the occupancy of BMR rental units. Since the program’s inception, BMR administration has been funded through the Residential Housing Fund.
Under contract with the City, the BMR Administrator provides the following services:
•Administering the sale and re-sale of new and existing BMR owner units; •Maintaining the home purchase waiting list;
•Monitoring occupancy of BMR ownership units;
•Conducting annual income certifications of BMR rental units; and •Addressing special issues related to the program.
While the BMR Administrator performs most tasks required for the ongoing administration of the home ownership and rental components of the BMR program, Planning and Development Services Department staff also devote time to the BMR program. Staff responsibilities primarily include negotiating BMR requirements for new developments, drafting and managing agreements, leading program improvement initiatives, and management oversight of the service provider contractor performance.
ANALYSIS
Solicitation Process
The term of the City’s existing agreement with Alta Housing is concluding on June 30, 2025. As a result, the City issued a Request for Proposals (RFP) for BMR program administration on January 30, 2025, for a term of two years. Table 1 summarizes the RFP process.
The City received three responses for the BMR RFP issued. Staff formed a review panel following the standard procedures to review the proposals received and evaluate them based on the scoring criteria established. The proposals received from Alta Housing BMR Services LLC, Table 1: Summary of Request for Proposal
Proposal Description RFP193814 Below Market Rate Housing Administrator
Proposed Length of Project 2 years
Number of Vendors Notified 3,465
Number of Proposal Packages Downloaded 24
Total Days to Respond to Proposal 42
Pre-Proposal Meeting No
Pre-Proposal Meeting Date N/A
Number of Proposals Received 3
Proposal Price Range $84,680 - $316,136
Public Link to Solicitation https://procurement.opengov.com/portal/palo- alto-ca/projects/144215
MNS Engineers, Inc., and Housing Inc. were deemed to be complete. The proposed cost of the scope of services provided by the firms ranged between $84,680 and $316,136 per year, with Alta Housing submitting a proposed budget of $225,300 per year.
An Intent to Award the contract to Alta Housing was issued on April 8, 2025. Alta Housing provided a comprehensive and well-organized proposal that specifically addressed the elements listed in the RFP. The proposal demonstrated a high quality of content and a strong understanding of Palo Alto’s BMR program. It balanced program compliance with responsiveness to resident needs and included proposed innovations to improve program effectiveness and meet the evolving needs of the program.
Alta Housing was selected based on its strong performance across all evaluation criteria. The organization has administered the City’s BMR program continuously for over 40 years, providing consistent service and institutional knowledge. Their experienced staff is able to offer in-person and multilingual support with an office in Palo Alto to ensure accessibility. Alta Housing has demonstrated financial stability, met contract timelines reliably, and maintained compliance with applicable laws and City policies.
Below Market Rate Program Administration
With the selection of Alta Housing, the administration of the program will continue uninterrupted. There are 250 BMR ownership units and 357 BMR rental units managed by Alta Housing as part of the City’s inclusionary housing program. There are an additional 72 entitled BMR inclusionary units that could come online during the contract period. Alta Housing coordinates the sale of both newly built BMR units and the resale of existing units. Sales activities include establishing resale prices; marketing units to the waiting list; scheduling open houses; qualifying and selecting buyers; coordinating the transaction between the buyer, seller, lender, and escrow; and explaining the requirements of the BMR deed restrictions. Alta Housing maintains a database of all units and statistics on the number and characteristics of the households served by the program.
The ownership BMR units require periodic monitoring of occupancy and title, which Alta Housing conducts in cooperation with City staff. Monitoring activities include reviewing online assessor’s records to detect transfers in title or ownership and an annual self-certification letter to owners. These letters verify owner occupancy, reminding the owners of program rules, and provide updates on procedural changes. If a violation of a deed restriction is discovered, Alta Housing undertakes initial attempts to remedy the situation. More complex enforcement matters are referred to planning staff and/or the City Attorney.
The City receives quarterly reports showing ownership transaction and rental activity for income restricted units and yearly income certification reports. Informational workshops for prospective buyers on the waiting list are also conducted bi-annually, focusing on preparation for homeownership, understanding credit and mortgage financing, and the regulations of the BMR program.
POLICY IMPLICATIONS
The recommendation in this report does not represent any change to the City’s existing policies. Implementation of the Agreement is consistent with the City’s adopted Housing Element and various housing policies that support the provision of affordable housing and a variety of housing opportunities.
FISCAL/RESOURCE IMPACT
The administration of the BMR program has historically been funded from residential housing in-lieu fees collected from ownership residential developments of three or more units (including mixed-use with ownership housing) in lieu of providing the required below market rate unit(s) to low- and moderate-income households (Palo Alto Municipal Code Chapter
16.65). As of March 10, 2025, the preliminary unaudited balance of the Residential Housing In- Lieu special revenue fund is $3,202,420.
The Fiscal Year 2026 Proposed Budget includes approximately $195,000 for contract services related to the BMR program. At the time of budget development, the request for proposals was underway and the total cost of the new contract was not included in the budget. The Alta Housing proposal is for $225,300 per year for a two-year total of $450,600. Therefore, an increase of $31,000 to the FY 2026 budget is recommended to align with the proposed annual contract cost. For reference, the prior contract for BMR administration was $178,278 for both FY 2024 and FY 2025 for a total of $356,556. This increase can be partially tied to increased staff time necessary for initial BMR sales, general trends of increased labor costs, and projected increases in BMR sales activities during the contract period.
Funding for the second year of the contract will be included as part of the FY 2027 budget development process and subject to Council approval.
STAKEHOLDER ENGAGEMENT
An RFP for the project was posted on OpenGov Procurement, the City’s eProcurement platform, and 3,465 vendors were notified. The solicitation period was posted for 42 days, and 3 proposals were received. The solicitation closed on March 12, 2025.
ENVIRONMENTAL REVIEW
The approval of an agreement for administration and consulting services is not an action subject to environmental review under the California Environmental Quality Act (CEQA).
ATTACHMENTS
Attachment A: Alta Housing BMR Services LLC, Contract C25193814 APPROVED BY:
Jonathan Lait, Planning and Development Services Director