City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01067 6/11/2024 Consent Item 8.
Agreement: Administrative Services Agreement with Housing Authority of the City of Sacramento for Property Management Services
File ID: 2024-01067
Location: 827 K Street, District 4, Represented by Councilmember Valenzuela Recommendation: Pass a Motion authorizing the City Manager or the City Manager’s designee to execute the attached Administrative Services Agreement with the Housing Authority of the City of Sacramento for property management services at the City-owned real property located at 827 K Street.
Contact: Richard Sanders, Facilities and Real Property Superintendent, (916) 808-7034, [email protected]; James Christensen, Facilities Manager, (916) 808-5863, [email protected]; Department of Public Works Presenter: None
Attachments:
1-Description/Analysis
2-Administrative Service Agreement
Additional Description/Analysis
Issue Detail: The City-owned property located at 827 K Street (the “Property”) is a three-story building containing approximately 73,098 gross square feet in the downtown corridor. The building consists of both retail and office space - currently there is one retail tenant and one office tenant. To ensure prompt and professional management of the Property, staff is recommending that the City enter into an Administrative Services Agreement with the Housing Authority of the City of Sacramento (HACS) whereby HACS will manage all aspects of the Property.
Policy Considerations: The recommendation in this report is in accordance with City Code section
3.04.020, which requires City Council approval of real property agreements involving expenditures of $250,000 or more.
Economic Impacts: None.
File ID: 2024-01067 6/11/2024 Consent Item 8.
Environmental Considerations:
California Environmental Quality Act (CEQA): The proposed activity of entering into an agreement with HACS to provide property management services is not a project pursuant to the California Environmental Quality Act (CEQA) Guidelines Sections 15378(b)(2) and (4). The activity described in this report is a continuing administrative activity and government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. The proposed activity is not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3).
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: The Property requires daily property management services to ensure adherence to the terms outlined in lease agreements with current tenants and proper maintenance of the building. HACS has experience in managing multi-tenant properties and will also utilize the services of an on-call property management firm to manage all aspects and operations of the Property. HACS will be responsible for all services necessary to properly manage the Property, including:
· Collection of rents.
· Manage leases and tenant relations.
· Management, coordination, and payment of the Property’s current service providers and vendors.
· Primary contact for all emergency calls.
· Regular maintenance, including testing of building systems. · Budgeting and reporting.
· Record keeping.
Financial Considerations: Estimated annual rent revenue from existing tenants during calendar year 2024 is projected to be $344,291. Additional operating funds in the amount of $58,362 (from the escrow account following the Property acquisition) were deposited into the trust account operated by the HACS on-call property management firm, totaling $402,653. Expenses for calendar year 2024 are estimated to be approximately $401,000. Rent revenue and the additional operating funds are sufficient to cover expenses during the term of the Agreement.
Local Business Enterprise (LBE): Not applicable.
ADMINISTRATIVE SERVICES AGREEMENT FOR 827 K STREET, SACRAMENTO, CA 95814 This Administrative Services Agreement (“Agreement”) is entered into ____________ 2024, by and between the HOUSING AUTHORITY OF THE CITY OF SACRAMENTO, a body corporate and politic ("HACS") and the CITY OF SACRAMENTO, a municipal corporation ("CITY"), which are also referred to herein collectively as “Parties” or singularly as “Party,” who agree as follows: 1. Services. Subject to the terms and conditions set forth in this Agreement, HACS shall provide to CITY the services described in Exhibit A (the “Services”), through a retained Property Manager (“PM”). HACS shall not be compensated or reimbursed for any services outside of or in addition to the Services (the “Additional Services”) unless, prior to the commencement of the Additional Services: (a) HACS documents the additional compensation required for these additional services; (b) CITY, after receipt of such notice, approves in writing the Additional Services and amount of additional compensation; and (c) this Agreement is amended to include the Additional Services and compensation. 2. Budget and Payment. CITY has approved the budget submitted by HACS to provide the services, as more particularly described in Exhibit B (the “Approved Budget”). On or about February 1, 2024, CITY provided security deposits in the amount of $53,723.48 and additional operating funds in the amount of $58,362.23 to HACS through the PM for placement into a trust account for management of 827 K street. This trust account is entitled “Sierra Asset Management ITF City of Sacramento”. City shall deposit additional funds into the trust account as needed if actual expenses exceed the Approved Budget. PM shall collect rents from tenants, consistent with the terms of tenant leases, and place rents into the 827 K street trust account. HACS, through its PM, shall pay monthly charges actually incurred up to the amounts indicated in the Approved Budget from the 827 K Street trust account. HACS, through the PM, shall provide monthly accounting of rents collected and expenses, within 30 days, to the CITY. If Additional Services have been approved pursuant to Paragraph 1, above, HACS, through the PM, shall add the monthly amount of such approved Additional Services to the monthly invoice. 3. Facilities, Supplies and Equipment. HACS, except as otherwise stated herein, shall furnish all facilities, supplies and equipment to the extent provided for in the Approved Budget. 4. General Provisions. The general provisions set forth in Exhibit C are part of this Agreement. In the event of any conflict between the general provisions and any other terms or conditions of Exhibit C, such other terms or conditions of Exhibit C shall control over the general provisions. 5. Authority. Each of the signatories to this Agreement represent that he or she is authorized to sign the Agreement on behalf of such Party, all approvals and consents which must be obtained to bind such Party have been obtained, and no further approvals, acts or consents are required to bind such Party to this Agreement.
Administrative Services Agreement 827 K Street, Sacramento, CA 95814 Page 2 of 9
6. Exhibits. All exhibits referred to herein are attached hereto and are by this reference incorporated as if set forth fully herein. [signature page follows] Administrative Services Agreement 827 K Street, Sacramento, CA 95814 Page 3 of 9 Executed as of the day and year first above stated. HOUSING AUTHORITY OF THE CITY OF SACRAMENTO CITY OF SACRAMENTO By:________________________________La Shelle Dozier Executive Director By:________________________________ Ryan Moore Assistant City Manager APPROVED AS TO FORM: By:__________________________________ General Counsel APPROVED AS TO FORM: By:__________________________________ Senior Deputy City Attorney ATTEST: By:__________________________________ Assistant City Clerk Attachments: Exhibit A - Scope of ServicesExhibit B - Approved Budget Exhibit C - General Provisions Administrative Services Agreement 827 K Street, Sacramento, CA 95814 Page 4 of 9 EXHIBIT A SCOPE OF SERVICES 1. Representatives. HACS Representative for this Agreement is: Michael Taylor Housing Authority of the City of Sacramento 801 12th Street Sacramento, CA 95814 (916) 449-6285 [email protected] All CITY questions pertaining to this Agreement will be referred to the HACS Representative as set forth above. All correspondence to HACS shall be sent to the address set forth above. CITY Representative for this Agreement is: Steve T. Ward City of Sacramento 915 I Street, 2nd Floor Sacramento CA 95814 (916) 808-1081 [email protected] All HACS questions pertaining to this Agreement will be referred to the City Representative as set forth above. All correspondence to CITY shall be sent to the address set forth above. 2. Scope of Work. a. Term: This Agreement shall be for the period commencing on December 27, 2023 and ending on January 31, 2025, unless extended by mutual agreement of the Parties. b. Services to be provided by HACS: HACS agrees to provide all services necessary for the property management of 827 K Street, Sacramento, CA 95814 (the “Property”). Services will include the following: i. HACS shall retain a property manager (“PM”). PM shall coordinate all routine services provided by the building’s current service providers.
Administrative Services Agreement 827 K Street, Sacramento, CA 95814 Page 5 of 9 ii. If HACS or PM determine that capital improvements or repairs exceeding $10,000 are required, PM shall notify the CITY and obtain CITY authorization prior to undertaking the repair. Except in case of emergency HACS and PM shall give City 30 days notice of any proposed capital improvement or repair. iii. HACS shall ensure PM maintains and repairs the Property consistent with the terms of the following lease agreements, assigned to the City via the Purchase and Sale Agreement executed between the City and Hale Bros on June 14, 2023. All such lease agreements have been provided to HACS for review: TENANT Lease SNRH Ultimate, Inc. dba The Ultimate Wireless Metro by T-Mobile Original Lease: 11/01/2014 First Amendment: 04/07/2020 Wayport, LLC dba AT&T WiFi Services Original Lease: 05/06/2014 Skyslope, Inc. a California corporation(acquired by Fidelity National Financial NYSE: FNF in 2017) Original Lease: 09/06/2016 First Amendment: 02/06/2020 Second Amendment: April 2023 PDOC, LLC Original Lease: 11/01/2011 First Amendment: 06/01/2017 Second Amendment: 05/02/2022 Third Amendment: 07/19/2023 iv. PM shall receive invoices from vendors and process monthly payments to them with HACS approval. PM shall provide monthly accounting of trust account to HACS and CITY for review, consistent with Section 2 of this Agreement. v. PM shall be primary contact for emergency calls pertaining to building security or other building needs.
Administrative Services Agreement 827 K Street, Sacramento, CA 95814 Page 6 of 9 EXHIBIT B Budget Annualized Budget 1/1/2024 – 12/31/2024 Category Annual Total Maintenance & Operations $ 168,000 Contingency $ 30,000 Note that contingency funds may be used for any of the line items in the budget, as needed. Property Management $ 42,000 HACS Administration $ 36,000 To be paid monthly from Trust Account for actual hours worked at $93.75/hr., not to exceed $36,000/year. Utilities $125,000 Total $ 401,000 Projected rent revenue: $ 344,000 per year Potential balance required from City: $ 57,000 per year Administrative Services Agreement 827 K Street, Sacramento, CA 95814 Page 7 of 9 EXHIBIT C GENERAL PROVISIONS 1. No Joint Venture. This Agreement does not create a joint venture, partnership, or any other legal relationship of association among the Parties. Each Party is an independent legal entity and is not acting as an agent of the other Party in any respect. 2. No Agency. Except as CITY may specify in writing, HACS and HACS's personnel shall have no authority, express or implied, to act on behalf of CITY in any capacity whatsoever as an agent. HACS and its personnel shall have no authority, express or implied, to bind CITY to any obligations whatsoever unless specifically authorized in writing by CITY to act on its behalf. 3. Independent Contractor. A. It is understood and agreed that CITY and HACS are independent contractors and that no relationship of employer-employee exists between the Parties hereto for any purpose whatsoever. CITY is not required to make any deductions or withholdings for employee taxes or benefits from the compensation payable to HACS under the provisions of this Agreement. As an independent contractor, HACS agrees to indemnify and hold CITY harmless from any and all claims that may be made against CITY based upon any contention by any of HACS's employees or employees of any third-party contractor hired by HACS, that an employer-employee relationship or a substitute therefore exists between the Parties for any purpose whatsoever by reason of this Agreement or by reason of the nature and/or performance of any services under this Agreement. B. It is further understood and agreed by the Parties that HACS, in the performance of its obligations hereunder, is subject to the control and direction of CITY as to the designation of tasks to be performed and the results to be accomplished by the services agreed to be rendered and performed under this Agreement, but not as to the means, methods, or sequence used by HACS for accomplishing such results. C. If, in the performance of this Agreement, any third persons are employed by HACS, such persons shall be entirely and exclusively under the direction, supervision, and control of HACS. Except as may be specifically provided elsewhere in this Agreement, all terms of employment, including hours, wages, working conditions, discipline, hiring, and discharging, or any other terms of employment or requirements of law, shall be determined by HACS. D. Nothing in this Agreement shall be construed as to create an exclusive relationship between HACS and CITY for the services to be provided. HACS and CITY may each independently represent, perform services for, or be employed by such additional persons or companies as each Party sees fit, provided that there is no conflict with the Administrative Services Agreement 827 K Street, Sacramento, CA 95814 Page 8 of 9 performance of services or the obligations of the Parties hereunder. 4. Standard of Performance. If HACS assigns employees or contractors to perform services under this Agreement, HACS shall assign only competent personnel to perform said services pursuant to this Agreement. 5. Time. HACS shall devote such time to the performance of services pursuant to this Agreement as may be reasonably necessary for satisfactory performance of HACS’s obligations under this Agreement. Neither Party shall be considered in default of this Agreement, nor be entitled to additional compensation, to the extent performance is prevented or delayed by any cause, present or future, which is beyond the reasonable control of the party. 6. Assignment Prohibited. HACS may assign any right or obligation pursuant to this Agreement. 7. Termination. CITY and HACS shall have the right to terminate this Agreement at any time by giving not less than thirty (30) days’ notice of such termination to the other party. If CITY gives such notice of termination, HACS shall immediately cease rendering services pursuant to this Agreement and shall cancel all contracts with third parties providing services for HACS pursuant to this Agreement. 8. Indemnity. HACS shall indemnify, defend and hold harmless CITY, its officers and employees from and against all actions, damages, costs, liability, claims, losses, judgments, penalties and expenses of every type and description (hereafter collectively referred to as "liabilities"), to which any or all of them may be subjected, for death, personal injury or damage to real or personal property resulting from any negligent act or omission or willful misconduct of HACS, its officers, employees, contractors or agents in connection with the performance or nonperformance of services by HACS employees for CITY under this Agreement, whether or not CITY, its officers or employees reviewed, accepted or approved any service or work product performed or provided by HACS employees. HACS shall, upon CITY’s request, defend at HACS's sole cost any action, claim or suit or portion thereof brought by a third-party, which asserts or alleges any such liabilities, whether well founded or not and whether or not such action, claim or suit also asserts or alleges negligent or wrongful conduct by CITY, its officers or employees, so long as the action, claim or suit alleges negligence or misconduct by a SHRA officer or employee. If a final decision or judgment allocates liability by determining that any portion of damages awarded is attributable to the CITY's negligence or willful misconduct separate and apart from any act or omission by a HACS officer or employee, CITY shall pay the portion of damages which is allocated to the CITY’s acts, negligence or willful misconduct. As used herein, the phrase "negligence or willful misconduct" shall not include the passive negligence of the CITY, its officers or employees in reviewing, accepting or approving any service or work product performed or provided by HACS employees.
Administrative Services Agreement 827 K Street, Sacramento, CA 95814 Page 9 of 9
9. Records, Audit and Inspection. HACS shall keep appropriate books, records, and accounts in connection with the funds received and activities performed under this Agreement. HACS shall provide CITY with any relevant information requested and shall permit CITY access to its premises, upon no less than 48 hours’ prior written notice during normal business hours for the purpose of interviewing employees for a reasonable duration and inspecting and copying, at City sole cost, such books, records, accounts, and other material pertaining to performance of the Agreement. HACS further agrees to maintain such records for a minimum period of five (5) years after final payment under this Agreement, unless a longer period of records retention is mandated under the applicable grant program. 10. Severability. If any portion of this Agreement or the application thereof to any person or circumstance shall be held invalid or unenforceable, the remainder of this Agreement shall not be affected thereby and shall be enforced to the greatest extent permitted by law. 11. Waiver. No waiver of any provision of this Agreement shall be effective unless it is in writing and signed by a duly authorized representative of the Party against whom enforcement of a waiver is sought. No waiver of any right or remedy in respect of any occurrence or event shall be deemed a waiver of any right or remedy in respect of any other occurrence or event. Failure by either Party to complain of any action or non-action on the part of the other Party or to declare the other in default, irrespective of how long such failure may continue, shall not be deemed to be a waiver of any rights hereunder. 12. No Third Party Beneficiaries. Nothing contained herein is intended, nor shall this Agreement be construed, as an agreement to benefit any third parties. 13. Ambiguities. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve its objectives and purposes. Captions on sections are provided for convenience only and shall not be deemed to limit, amend or affect the meaning of the provision to which they pertain, and shall be disregarded in the construction and interpretation of this Agreement. The Parties have each carefully reviewed this Agreement and have agreed to each term hereof. No ambiguity shall be presumed to be construed against either Party. 14. Entire Agreement. This document, including all Exhibits, contains the entire agreement between the Parties and supersedes whatever oral or written understanding they may have had prior to the execution of this Agreement. No alteration to the terms of this Agreement shall be valid unless approved in writing by CITY and HACS.