City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-01548 11/28/2023 Consent Item 15.
Professional Services Supplemental Agreement with Keyser Marston Associates, Inc. for the Mixed Income Housing Ordinance Review
File ID: 2023-01548
Location: Citywide
Recommendation: Pass a Motion authorizing the City Manager, or City Manger’s designee, to execute a Supplemental Agreement No. 1 to the professional services agreement PRC001871 with Keyser Marston Associates, Inc. for the Mixed Income Housing Ordinance Review in the amount not- to-exceed $88,098, bringing the new total not-to exceed amount to $337,803.
Contact: Greta Soos, Associate Planner, (916) 808-2027, [email protected], Community Development Department; Monica Chao, Administrative Analyst, (916) 808-5875, [email protected], Community Development Department Presenter: None
Attachments:
1-Description/Analysis
2-Keyser Marston Associates, Inc. Supplemental Agreement Description/Analysis
Issue Detail: In November 2021, the City of Sacramento solicited proposals (RFP No.
P21211222004) for the tasks necessary to complete the Mixed Income Housing Ordinance Review.
Keyser Marston Associates, Inc. was awarded the contract. City Agreement PRC001871 was executed on June 3, 2022, with Keyser Marston Associates, Inc. with a budget of $249,705 funded by the Housing Impact Fees and Housing Trust Ordinance project.
Staff is requesting the authorization to execute Supplemental Agreement No. 1 for $88,098 with Keyser Marston Associates, Inc. for additional consulting services. The additional services include preparing an affordable housing nexus analysis, additional stakeholder engagements, and as needed support. In addition, the time of performance will be extended to December 2, 2024.
File ID: 2023-01548 11/28/2023 Consent Item 15.
Policy Considerations: City Code Section 3.64.040 requires City Council approval for a supplemental agreement that increases the agreement amount to $250,000 or more.
Economic Impacts: Not applicable.
Environmental Considerations: This report concerns administrative activities and government fiscal activities that do not constitute a “project” as defined by the CEQA Guidelines Sections 15378 (b)(2) and 15378(b)(4) and are not subject to the provisions of CEQA (CEQA Guidelines15060(c)(3)).
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: Decisions on changes to the Mixed Income Housing Ordinance could have impacts on the City’s housing production going forward. As such, staff recommends amending the current contract to add additional funds to support outreach and additional analysis that will aid in the decision-making process.
Financial Considerations: There are sufficient funds in the General Plan Update project (I22000000, Fund 1001) to fund the Supplemental Agreement No. 1 with Keyser Marston Associates, Inc.
Local Business Enterprise (LBE): Keyser Marston Associates, Inc. is not an LBE, but they satisfied the LBE requirements by subcontracting a minimum of 5% of the contract with subconsultants.
SUPPLEMENTAL CONTRACT
(Rev. 11-1-19)
Project Title and Job Number: Mixed Income Housing Ordinance Review Date: 11/3/2023 Purchase Order #: Supplemental Contract No.: 1
The City of Sacramento ("City") and Keyser Marston Associates, Inc._("Contractor"), as parties to that certain Professional Services Agreement designated as Contract Number PRC001871, including any and all prior supplemental contracts modifying the contract (the contract and all supplemental contracts are hereafter collectively referred to as the "Contract"), hereby supplement and modify the Contract as follows:
1. The Scope of Services specified in Exhibit A of the Contract is amended as follows:
The additional services provided shall be set forth in Attachment 1 to this supplemental agreement, attached hereto and incorporated herein. The time of performance shall be extended for an additional one-year term to December 2, 2024.
2. In consideration of the additional and/or revised services described in section 1, above, the maximum not-to-exceed amount that is specified in Exhibit B of the Contract for payment of Contractor's fees and expenses, is increased by $88,098, and the Contract’s maximum not-to-exceed amount is amended as follows:
Agreement's original not-to-exceed amount: $249,705
Net change by previous supplemental contracts: $0
Not-to-exceed amount prior to this supplemental contract: $249,705 Increase by this supplemental contract: $88,098
New not-to exceed amount including all supplemental contracts: $337,803
3. Contractor agrees that the amount of increase or decrease in the not-to-exceed amount specified in section 2, above, shall constitute full compensation for the additional and/or revised services specified in section 1, above, and shall fully compensate Contractor for any and all direct and indirect costs that may be incurred by Contractor in connection with such additional and/or revised services, including costs associated with any changes and/or delays in schedules or in the delivery of other services by Contractor.
4. Contractor warrants and represents that the person or persons executing this supplemental contract on behalf of Contractor has or have been duly authorized by Contractor to sign this supplemental contract and bind Contractor to the terms hereof.
5. Except as specifically revised herein, all terms and conditions of the Contract shall remain in full force and effect, and Contractor shall perform all of the services, duties, obligations, and conditions required under the Contract, as supplemented and modified by this supplemental contract.
[SIGNATURES ON FOLLOWING PAGE]
Additional Scope of Services
The following proposed additional scope of services expands on KMA’s existing scope to support potential updates to the Mixed Income Housing Ordinance. Additional services are to provide a nexus analysis as an additional support measure for in-lieu fees, or if Housing Impact Fees are retained, to provide updated nexus support for the City’s Housing Impact Fees.
Task 1. Nexus Technical Analysis
KMA will prepare an affordable housing nexus analysis. Depending on the nature of updates to the Mixed Income Housing Ordinance, the nexus analysis will serve either as a “backup” support measure for potential in-lieu fees, or to provide updated nexus support for Housing Impact Fees. The nexus analysis will document the impact of residential development on the need for affordable housing, quantify the cost of providing affordable units to mitigate the increased affordable housing need and determine the resulting mitigation cost on a per unit and per square foot basis.
The following chart provides an illustration of the approach used in the residential nexus analysis in linking new residential units to the increased demand for affordable housing. It is conceptually the same approach used in the prior nexus analyses that KMA conducted for the City.
Nexus Analysis Concept
a. Prototype SelecƟon
KMA will select up to six prototypes developed in the previously completed feasibility analysis. The market rate sales prices and rents per unit and per square foot for the prototypes will serve as the starting point for the residential nexus analysis. The analysis will be based on the lowest-priced or rent submarket for each prototype and use the current market scenario as a conservative assumption.
b. Affordability Gaps
A key input into the residential nexus analysis is the affordability gap, the difference between the development cost of a new affordable unit and the value of the unit with affordability restrictions in place. KMA will estimate affordability gaps based on projects recently assisted using the City’s Housing Trust Fund.
c. Residential Nexus Analysis
KMA will prepare a residential nexus analysis that demonstrates and quantifies the relationship between market rate and affordable housing. The analysis links the addition of new market rate units in Sacramento to increased demand for affordable housing, and the cost of mitigating the new demand. The analysis will track and quantify a series of steps commencing with the rent/ price/value of the new market rate unit, the income of the household that buys or rents it, the consumption of goods and services of the household, the new jobs generated by that consumption, and the fact that some of the jobs have lower paying compensation levels that result in new worker households needing affordable housing.
To conduct the analysis, KMA uses two models: the IMPLAN model, which is purchased, and KMA’s proprietary jobs-housing nexus model. The IMPLAN model is a commercially available model that was developed roughly thirty years ago and has been refined over the years. It is widely used in planning applications throughout the U.S.
Starting with the price/rent level of the new unit, gross household income will be computed, the starting point of the IMPLAN model. The IMPLAN model will use data for Sacramento County. The output of the IMPLAN model is the number of jobs in various industry categories that are associated with the consumer spending of new households.
The next portion of the nexus analysis uses the KMA jobs housing nexus model, originally developed to support jobs housing impact fee programs and refined over the years. This model analyzes the compensation levels of the new jobs generated and resulting household income. The KMA model imports local wage and salary data from the California Employment Development Department (EDD).
The output of the KMA model is the number of employee households at various income levels.
The last step in the analysis establishes a mitigation cost or cost to deliver affordable housing to the employee households that qualify using the affordability gaps developed in Task b. The mitigation cost establishes the maximum affordable housing fee level supported by the nexus analysis.
Deliverable: KMA will prepare a written report documenting the analysis and findings of the nexus analysis. KMA will prepare a draft report for City review, and a final report incorporating City feedback. The report will include full documentation of findings, methodology and data sources.
Task 2. Additional Stakeholder Engagement and As-Needed Support
The City is now planning an expanded set of public, focus groups, and stakeholder outreach meetings, beyond that originally contemplated in KMA’s scope. This task consists of providing as-needed support to the City on a time and materials basis through additional meeting participation, supplemental analysis to assist in the development and refinement of recommendations, and / or other as-needed support as the City moves toward adoption of an updated policy.
Proposed Budget
KMA will proceed with the additional scope of services on a time and materials basis within a not-to- exceed contract authorization of $88,098 based on the estimate included in the table below, which when combined with the existing authorization of $249,705, results in a $337,803 combined authorization.
BUDGETSr PrincipalManagerAssociateAdminTotalESTIMATEHourly Rates$270 $225 $167.50 $80Task 1. Nexus Analysis a. Prototypes4 - - - 4 1,080$ b. Affordability Gaps6 10 - - 16 3,870$ c. Nexus Analysis50 65 15 - 130 30,638$ d. Report30 10 - 4 44 10,670$ Subtotal90 85 15 4 194 46,258$ Task 2. Additional Stakeholder Engagement and As-Needed Support a. Supplemental Analysis, As-Needed80 - 8 - 88 22,940$ b. Subject Matter Focus Groups (4)30 - - - 30 8,100$ c. Public Workshops and Hearings (4)40 - - - 40 10,800$ Subtotal150 - 8 - 158 41,840$ Total 240 85 23 4 352 88,098$