Agenda Packet — Salinas City Council, November 19, 2024 (part 4 of 5)

a. Terrestrial Survey - BKF will provide the field work to prepare a Topographic Map for the subject property. The limits of the topographic survey will be the subject property and the improved width of roadways along the property frontage. The topographic survey will be comprised of identified visible site features such as roadways, pavements, evidence of significant traveled ways, walls, fences, trees 6- inches and larger in diameter and visual utility infrastructure. We will obtain a succession of spot elevations to define the general terrain of the site and immediately adjacent improvements to produce mapping at a 1-foot contour interval.
b. Utilities - Utility infrastructure within the mapping limits, including sewer, water valves, hydrants, meter boxes, storm drain and marked utilities, if encountered during the course of our field survey, will also be identified. The basic routing, inverts and orientation of the on-site gravity utilities will be identified based on field evidence and any available plans provided if to BKF prior to commencement of the survey. If as-built drawings are not provided or are inconclusive when compared to the field evidence, only data at the dipped structures will be provided. c. Utility Locating - BKF’s in-house utility locators will perform utility investigation services using standard industry acceptable methods as per California Government Code section 4216 to determine the approximate horizontal position and depth of detectable subsurface utilities within the designated area (see attached Limits of Work). BKF’s field crews will use a combination of water-based paint and pin flags to mark the results of our investigation on the ground surface. BKF crews may opt to use the Ground Penetrating Radar (GPR), if the soil conditions will return a good signal to attempt to locate water lines and other utility lines with no tracer wires. Individual field conditions will dictate the thoroughness of our subsurface utility investigation. BKF will perform a reasonable effort to determine the location of the existing underground utility lines; however, due to technical limitations of today’s most modern equipment, no guarantee (expressed or implied) can be made. Irrigation lines, empty conduits, and abandoned utilities will not be located. Potholing and excavation are specifically excluded on this proposal. This scope of work does not include clearing areas for geotechnical boring, soil sampling, and drilling operations.
d. Mapping - BKF will produce the mapping in a reproducible hard copy and electronic format. The signed hardcopy Topographic Map will be an instrument of service. Electronic mapping will be completed in an AutoCAD format and can be transferred and used by other team consultants for their work, as a courtesy.
1) The mapping is anticipated to be compiled at 1" = 20', and will also indicate individual spot elevations at various locations throughout the site. BKF will take a series of photographs for future reference and documentation of current field conditions encountered during the time of our survey.
2) The vertical control for the survey will be tied to the North American Vertical Datum of 1988 (NAVD88), unless otherwise agreed upon in writing prior to commencement of the survey. 3) The horizontal location and rotation of the mapping is anticipated to be on an "assumed" coordinate system otherwise agreed upon in writing prior to commencement of the survey.

Note: Record of Survey
State law requires that the Surveyor of record performing the boundary resolution file a record of survey with the County if a map is not prepared as part of the project. As this project may anticipate pursuing a Tentative Parcel and Final Parcel Map for Condominium Purposes, we have currently excluded fee for this task in our scope of services. If a determination is made to eliminate pursuing filing of a map as part of the final permitting process BKF will be required to prepare and file a record of survey with the County at the expense of the owner. Recordation fees are not included in our proposal.

Page 3 of 4 ends

SCOPE QUALIFICATIONS AND ASSUMPTIONS
BKF Engineers' services are limited to those expressly set forth in the scope. We understand that BKF will have no other obligations or responsibilities for the project except as provided in this proposal letter, or as otherwise agreed to in writing. BKF will provide the scope of services consistent with, and limited to, the standard of care applicable to such services. For the scope of work identified, we have assumed the following:
1) Basis of Design and Site Information
a) Topographic Survey: Proposal assumes field survey will be completed for 37 and 45 Soledad Street sites concurrently. Separate mobilizations to survey each site independently will be an additional service. b) Title Report: A current title report for the property will be provided by the owner. c) Potholing: Potholing services are not included in this proposal unless specifically identified.

COMPENSATION

1. BASE SCOPE OF WORK:

BKF proposes to provide the services on a lump sum basis. We will invoice for our services on a percent complete basis per task summarized as follows:

Task Description Fee
1 Site Meeting $500
2 Topographic and Boundary Survey (45 Soledad) $21,000
Total Labor Fee $21,500
In addition, please budget $250 for reimbursable expenses. Reimbursable expenses are anticipated for reproduction, mileage, express and messenger deliveries, and computer deliverable plots. Reimbursable expenses will be billed on a cost plus 10-percent markup basis.

For tasks requested by the owner or Architect not defined in this scope of services, BKF will identify them as potential extra work. We can provide a scope and fee for these items or they may be tracked separately as extra work and billed on a time and materials per our attached rate schedule.

Thank you for the opportunity to present this proposal. We look forward to assisting in developing this project.

Please contact me at 650-482-6306 if you have any questions regarding our scope of services.

Respectfully,
BKF Engineers
Jonathan Tang, PE
Associate Principal

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BKF ENGINEERS PROFESSIONAL SERVICES RATE SCHEDULE
EFFECTIVE JANUARY 1, 2024

CLASSIFICATION HOURLY RATE

PROJECT MANAGEMENT
Principal $302.00
Senior Associate Principal $280.00
Associate Principal $273.00
Senior Project Manager | Senior Technical Manager $265.00 Project Manager | Technical Manager $260.00
Engineering Manager | Surveying Manager | Planning Manager $239.00

TECHNICAL STAFF
Senior Project Engineer | Senior Project Surveyor | Senior Project Planner $222.00 Project Engineer | Project Surveyor | Project Planner $195.00 Design Engineer | Staff Surveyor | Staff Planner $170.00 BIM Specialist I, II, III $170.00 - $195.00 - $222.00
Technician I, II, III, IV $162.00 - $172.00 - $189.00 - $203.00 Drafter I, II, III, IV $127.00 - $139.00 - $150.00 - $167.00 Engineering Assistant | Surveying Assistant | Planning Assistant $106.00

FIELD SURVEYING
Survey Party Chief $222.00
Instrument Person $190.00
Survey Chainperson $143.00
Utility Locator I, II, III, IV $116.00 - $164.00 - $197.00 - $224.00 Apprentice I, II, III, IV $88.00 - $118.00 - $130.00 - $138.00

CONSTRUCTION ADMINISTRATION
Senior Consultant $290.00
Senior Construction Administrator $253.00
Resident Engineer $188.00
Field Engineer I, II, III $170.00 - $195.00 - $222.00

FUNDING & GRANT MANAGEMENT
Director of Funding Strategies $208.00
Funding Strategies Manager $190.00
Funding/Research Analyst I, II, III, IV $130.00 - $150.00 - $160.00 - $176.00

PROJECT ADMINISTRATION
Project Coordinator $142.00
Senior Project Assistant $122.00
Project Assistant $108.00
Clerical | Administrative Assistant $90.00
Expert witness rates are available upon request. Subject to the terms of a services agreement:
• Charges for outside services, equipment, materials, and facilities not furnished directly by BKF Engineers will be billed as reimbursable expenses at cost plus 10%. Such charges may include, but shall not be limited to: printing and reproduction services; shipping, delivery, and courier charges; subconsultant fees and expenses; agency fees; insurance; transportation on public carriers; meals and lodging; and consumable materials. • Allowable mileage will be charged at the prevailing IRS rate per mile. • Monthly invoices are due within 30 days from invoice date. Interest will be charged at 1.5% per month on past due accounts.
• The rates shown are subject to periodic increases, including January 1st of each year.

Project Management | Construction Cost Management
2063 Grant Rd.

Los Altos, CA, 94024
Tel: 415.981.9430
Our ref.: DB
October 28th, 2024
Maryam Rostami
TEF Design
1420 Sutter Street, 2nd Floor
San Francisco, CA 94109
Re: Fee Proposal – Cost Estimating Services
45 Soledad Street Project
Dear Maryam,
Further to your email, we are pleased to offer Cost Estimating services for the above project.

Scope of Services
We understand the scope of our services is to prepare an opinion of probable cost at the programming stage for the City of Salinas Soledad Street historical affordable housing.

The opinion of probable cost will be at the Conceptual stage of design.

The estimate will be based on the measurements of quantities from the drawings with composite unit rates reflecting the scope of work and the current market conditions. We will not obtain any bids or opinions of cost from subcontractors unless the work is of such a unique nature that no other cost information is available. No bids or third-party opinions will be obtained without prior approval from the client.

We have included time required to review and discuss our cost estimate with the Design Team and for incorporating any requested revision to the estimate as a result of the Design Team review. We have excluded any time required to reconcile our estimate with another cost estimate prepared by others. We have also excluded time required to attend any meetings or any Value Engineering cost services from this proposal. Should additional work be required, our standard hourly rate of $235 per hour will apply.

Project Management | Construction Cost Management
Fees
We propose to provide the above services based on the following budget NTE Fees – Concept Phase Cost Estimate (80hrs @ $235/hr.) $ 18,800 Total Not to Exceed Fees $18,800
We assume no alternates or options.

Expenses such as drawing reproduction, courier services, special mailing services (Federal Express, Express Mail etc.), and other abnormal costs are excluded and will be charged at cost plus 0% administration.

Our fees exclude travel costs outside the San Francisco Bay Area, any such travel costs as incurred will be billed separately.

Payment and Terms
We will issue a monthly invoice. Payment will be due thirty (30) calendar days.

Our proposal remains open for a period of ninety (90) days. After this time, we will be pleased to review the proposal, make any required amendments, and re-submit for your review and approval.

Work will be completed under the direction of Deo Bhalotia.

We trust that we have interpreted your requirements correctly, if you have any questions or suggested amendments, please do not hesitate to contact the undersigned. If you would like to proceed with the above services, please complete and return the authorization below.

We look forward to working with you on this project.

On behalf of TBD Consultants On behalf of TEF Design
_______________________________ Accepted by: _________________________ Deo Bhalotia
Associate Principal Date: _________________________
Title: _________________________
October 28, 2024
Maryam Rostami
(415) 901-4902
[email protected]
Subject: Proposal to Prepare the Residential Financial
Feasibility Analysis for the Parcel Located at 45 Soledad Street in Salinas Chinatown EPS #242139
Maryam:

Economic & Planning Systems, Inc. (EPS) appreciates the opportunity to prepare a Financial Feasibility Analysis for the parcel located at 45 Soledad Street (Project) in the Chinatown area of the City of Salinas (City) for TEF Design (Client). This letter and the attached Proposed Scope of Work
(Attachment A) describe EPS’s understanding and approach to completing the work.

EPS understands that as the owner of the parcel and with recent grants, the City would like to examine the financial feasibility of potential residential and/or mixed-use land uses on the Soledad Street property. The Project is a 0.149-acre site, located south of East Rossi Street, east of State Route 183, north of the Amtrak line, and west of Sherwood Drive. The Project is located in the City’s Chinatown in the center of the City. Land uses neighboring the Project include a homeless shelter, a food bank, an art studio, multifamily apartments, and a few vacant lots. The current land use on the parcel is a vacant lot.

The Client has requested that EPS conduct a financial feasibility analysis to evaluate the potential for up to three (3) residential prototypes on the property. The assessment will offer an evaluation of the financial feasibility of residential development in the Salinas Chinatown area and will estimate supportable unit pricing based on projected household income ranges for existing and net new households, as well as the City’s
affordable housing requirements.

Maryam Rostami
October 28, 2024
Economic & Planning Systems, Inc. (EPS) 2
Key Personnel
Managing Principal David Zehnder will serve as Principal-in-Charge of this Project, guiding all aspects of the assignment and will be regularly available to the Client. Vice President Kate O’Beirne will serve as Project Manager and will conduct the day-to-day management of this Project. Additional EPS staff may assist with conducting the technical analysis and gathering data.

Schedule
EPS will begin working on this Project as soon as contract approval is received, and EPS will provide the Client with accurate information and work products on a schedule that meets the Client’s needs. EPS believes the Residential Market Assessment could be completed within approximately 4 to 6 weeks after receiving authorization to proceed from the Client.

Budget
EPS estimates a budget of $12,000 is necessary to complete the Project. EPS charges for its services on a direct-cost (hourly billing rates plus direct expenses), not-to-exceed basis; thus, you will be billed only for the work EPS completes up to the authorized budget amount. This amount includes a maximum of 2 iterations of the memorandum and does not include any in-person meetings or site visits. If the Client requests numerous model iterations or other additional services beyond those specified in Attachment A, EPS will request authorization for additional budget with the understanding that terms will be negotiated in good faith. EPS’s 2024 Hourly Billing Rates and Standard Terms and Conditions are attached as part of this letter proposal and Proposed Scope of Work.

EPS looks forward to working on this assignment and will strive to meet your scheduling needs. To approve this proposal, please sign below, return a signed copy of this letter agreement to EPS, and keep another signed copy for your records.

Maryam Rostami
October 28, 2024
Economic & Planning Systems, Inc. (EPS) 3
Thank you for your consideration of this proposal. Please call me at (916) 649-8010 if you have questions or require changes to the Proposed Scope of Work.

Sincerely,
ECONOMIC & PLANNING SYSTEMS, INC. (EPS)
David Zehnder
Managing Principal
Attachments
Approved:
____________________________________________ _________________ Maryam Rostami, TEF Design Date
Attachment A
October 28, 2024
Economic & Planning Systems, Inc. (EPS) 4
Attachment A
Proposed Scope of Work
Salinas Chinatown
Financial Feasibility Analysis
Introduction
This Proposed Scope of Work describes the tasks required to complete a Financial Feasibility Analysis for the property located at 45 Soledad Street in the City. The Financial Feasibility Analysis will provide information to help determine the scale of supportable demand, target affordability ranges to meet demand and affordable housing requirements, and forecast timing of potential absorption.

The specific work to be performed by EPS is described in additional detail in the following sections.

Proposed Scope of Work
Task 1: Prepare Financial Feasibility Analysis
The Financial Feasibility Analysis will provide information regarding market viability of various residential concepts.

Subtask 1.1: Key Housing Prototypes and Feasibility Profile Working with the Client, EPS will help develop up to three (3) different residential and/or mixed-use prototypes. EPS will prepare static pro formas to understand the relative performance among specific types of development. This approach will begin with price points or capitalized net lease rates to establish asset value and to back out key cost elements such as fees, horizontal costs, and vertical costs to understand overall feasibility issues. This information will be instrumental in calibrating the development outlook and understanding the likely character of development. EPS will evaluate any anticipated financing gaps to understand public policy options that may be necessary to achieve feasibility. Market analysis will be prioritized, focused, and limited to key metrics having major importance to the feasible delivery of housing and mixed-use projects.

Attachment A
October 28, 2024
Economic & Planning Systems, Inc. (EPS) 5
Subtask 1.2: Assemble Market Performance Indicators
EPS will assemble key real estate market performance indicators (lease rates, sales prices, vacancy rates, inventory, etc.) for the local market:
• Analyze multifamily residential trends using CoStar and Zillow for the Market Area to inform feasibility recommendations.
• Examine single-family attached residential trends in the Market Area using ACS data, The Gregory Group, Zillow, or RedFin to inform feasibility recommendations.

Subtask 1.3: Establish Project Recommendations
With consideration to the Client’s goals and objectives and using the above socioeconomic and real estate market performance analyses and pro forma analyses, EPS will advise on the viability of the Project from a real estate market feasibility standpoint. EPS will demonstrate the feasibility of the Project with the inclusion of the City’s affordability requirements.

Subtask 1.4: Prepare Draft and Final Memorandum
EPS will prepare a concise memorandum summarizing the key findings and recommendations for the Client to review. Based on the outcomes of the review and on receipt of one set of consolidated and non-conflicting comments from the Client, EPS will incorporate necessary revisions and prepare a final memorandum. 2024 Hourly Billing Rates
Sacramento Office
Managing Principal $320
Principal $300
Senior Vice President $260
Senior Consultant $260
Vice President $245
Senior Technical Associate $215
Senior Associate $215
Associate $195
Research Analyst II $155
Research Analyst I $105
Production and Administrative Staff $100
Billing rates updated annually.

34-40 Soledad Street
Community Meeting #2 - HRB

07.01.24 AGENDA

1. Project Goals & Schedule

2. Site & Historic Context

3. Local Housing Precedents

4. Use & Unit Targets

5. Massing Concepts

6. Discussion
2 Right: LH16 Building at 12 Soledad Street, 1940-1950 Billy Emery, https://calisphere.org/ Project Goals
● Engage community + build on revitalization work to date ● Celebrate history, character + culture of Chinatown
● Focus on mixed use + affordable housing
● Emphasize energy efficiency
1 PROJECT SCHEDULE

MAY JULY

PERMITTING
● Site Plan Options
● Review meeting w/
City of Salinas
Planning
● Concept elevations + 3D
model
● Community Meeting #1
● Community Meeting #2
(HRB Meeting)
● Community Meeting #3
● Developer Meeting

JUNE AUGUST

PERMITTING

SEPTEMBER

OCTOBER
● City of Salinas to
coordinate additional
community feedback
4 Site & Historic Context
2 SITE CONTEXT
6 34
36 38
40 28-32 Soledad: Dorothy’s Place (services and support to people experiencing homelessness and poverty)
34 & 36 Soledad: Existing 1-story buildings, formerly
commercial/restaurant use
38 Soledad: Existing 2-story building, formerly commercial + residential (Arre’s Pool Hall + apartments), City of Salinas Historic Resource
40 Soledad: Empty lot
31 & 33 Soledad: Empty lots
37 Soledad (Republic Cafe): NRHP listed property, City is in process to buy property
39 Soledad: former restaurant (Mi Cantina)
43 Soledad: Victory Mission (service organization focused on unhoused community)
45 Soledad: City-owned lot
Railway Tracks: Union Pacific installed boulders along tracks as measure against encampments
39 Soledad Street
Union Pacific Tracks
Market Way
Market Way
45 Bridge Alley
43 37
31-33
28-32

SITE PHOTOS
7 LEFT: 34 - 38
Soledad
Top Right: View from
Bridge Alley Looking
North
Lower Right: View
from Market Way to
railway tracks

HISTORIC DISTRICT
8 ● Asian Cultural Heritage District ● Period: 1893 - 1957 ● Largest active Chinatown between San Francisco and Los Angeles
● Multicultural gathering place for
immigrant laborers who formed the
backbone of CA’s agricultural economy
(Chinese, Japanese, Filipinos, Mexican)
● Within City of Salinas “Areas of Historic
and Architectural Merit”*
● Architectural style is an emblem of
multicultural heritage and historic
buildings display Asian and Spanish
influence: upturned roof eaves, tile roofs,
and detailed balcony railings**
* City General Plan Policies Related to Cultural Resources, City of Salinas, September 2000
** Chinatown Revitalization Plan, 2019

DISTRICT RESOURCES
9 National Register of Historic Places
● 37 Soledad (Republic Cafe) #11000430*
City of Salinas Historic Resources**
● 1 California Street (Salinas Confucius Church)
● 14 California Street (Buddhist Temple of Salinas)
● 21 California Street (Iglesia Agua Viva)
● 21 Peach Drive (Queen Anne style cottage)
● 38 Soledad (Arre’s Pool Hall)
* Also a City of Salinas Historic Resource
** List of Historic Resources - Salinas Survey 1989 & 2017 ARRE’S POOL HALL
10 ● Address: 38 Soledad
● Construction Date: c. 1920
● Previous Owner: Lily Ida Ahtye
● Significance:
● Condition (in 1989): Fair
● Current Condition: Unknown (City to conduct structural assessment in next phase of project)
*Source: Historic Resources Inventory, Monterey Historical Society, 1989

CHARACTER-DEFINING FEATURES
11 ● Style: Traditional Chinese Decorative Forms
● Major Alterations: First floor space
● Character-Defining Features:

Source: Historic Resources Inventory, Monterey Historical Society, 1989 Local Housing Precedents
3 MOON GATE
13 Location: 21 Soledad Street
90 Units: 40 supportive, 50 low-income
● Studio
● 1 Bedroom
● 2 Bedroom
29 Parking Spaces
HACIENDAS PLACE 1 & 2
14 Location: 245 Calle Cebu
99 Units:
● 15 x 1-bedroom (15%)
● 47 x 2-bedroom (47%)
● 31 x 3-bedroom (31%)
● 6 x 4-bedroom (6%)
HACIENDAS 3 (HIKARI)
15 Location: 40 E. Rossi Street
52 Units
● 19 x 1-bedroom (37%)
● 15 x 2-bedroom (29%)
● 15 x 3-bedroom (29%)
● 3 x 4-bedroom (5%)
Use & Unit Targets
4 HOUSING TARGETS
17 Mixed Use - Density Bonus
● Min. 40 units*
Proposed Sizing
● Studio / 1 Bath: 400 SF
● 1-Bed / 1 Bath: 600 SF
● 2-Bed / 2 Bath: 850 SF
● 3-Bed / 2 Bath: 1150 SF
Proposed Mix
● Studio: 10%
● 1 Bed: 40%
● 2 Bed: 40%
● 3 Bed: 10%
* assumes 100% affordable/supportive housing

ADDITIONAL CONSIDERATIONS
18 ● Ground floor residential: 25%-30% only
Commercial Space
● Allowable area: 5,276 SF (based on 0.48 acres)
● Potential tenants: small business incubator, SNAP/WIC grocery, bodega, other? Parking Options (40 Units):
● Baseline 1:1*: 40 spaces
● Residential Code**: 68 spaces
* Parking is not required due to proximity to downtown/transit, thus 1:1 is noted as a minimum ** Residential parking requirements per Salinas Code Section 37.50.350 and based on unit mix on previous slide Massing Concepts
5 INITIAL CONCEPTS
20 LINEAR DOUBLE BAR HISTORIC “C” ALLEY “L”

SELECTED CONCEPTS
21 LINEAR DOUBLE BAR HISTORIC “C” ALLEY “L”
HISTORIC “C”
22 Bird’s Eye
KEY

HISTORIC BLDG

COMMERCIAL

HOUSING

GREEN SPACE
HISTORIC “C”
23 Soledad Street Elevation
KEY

HISTORIC BLDG

COMMERCIAL

HOUSING
HISTORIC “C”
24 View from Market Way
KEY

HISTORIC BLDG

COMMERCIAL

HOUSING
HISTORIC “C”
25 N
26 Bird’s Eye
ALLEY “L”
KEY

HISTORIC BLDG

COMMERCIAL

HOUSING

GREEN SPACE
27 Soledad Street Elevation
ALLEY “L”
KEY

HISTORIC BLDG

COMMERCIAL

HOUSING
28 View from Market Way
ALLEY “L”
KEY

HISTORIC BLDG

COMMERCIAL

HOUSING
ALLEY “L”
29 N

CONCEPT SUMMARY
30 HISTORIC “C” ALLEY “L”
Discussion
6 DISCUSSION TOPICS
32 Community Concerns (per Community Meeting #1)
● New building scale relative to historic building
● Parking counts for complex and district in general
● Incorporation of cultural motifs/markers and district didactic materials (plaques, etc) Additional Topics
● Commercial space potential uses and relationship to district plan and uses ● Treatment of historic Pool Hall
Thank you
City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-651, Version: 1
Agreement for Professional Services with Opportunity Space, Inc. dba Tolemi for Residential Rental Registration and Rent Stabilization Program Online Management Platform Approve a Resolution authorizing the City Manager to execute an Agreement for Professional Services with Opportunity Space, Inc. dba Tolemi to provide an online management platform for the Residential Rental Registration and Rent Stabilization programs in an amount not to exceed $141,000 for a one-year term commencing on November 20, 2024 through November 19, 2025.

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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: NOVEMBER 19, 2024
DEPARTMENT: COMMUNITY DEVELOPMENT
FROM: LISA BRINTON, DIRECTOR
THROUGH: VINCENT MONTGOMERY, PLANNING MANAGER
BY: FRANCISCO BRAMBILA, MANAGEMENT ANALYST

CASSANDRA OROZCO, COMMUNITY DEVELOPMENT ANALYST
TITLE: AGREEMENT FOR PROFESSIONAL SERVICES WITH
OPPORTUNITY SPACE, INC. DBA TOLEMI FOR RESIDENTIAL

RENTAL REGISTRATION AND RENT STABILIZATION

PROGRAM ONLINE MANAGEMENT PLATFORM
RECOMMENDED MOTION:

A motion to approve a Resolution authorizing the City Manager to execute an Agreement for Professional Services with Opportunity Space, Inc. dba Tolemi to provide an online management platform for the Residential Rental Registration and Rent Stabilization programs in an amount not to exceed $141,000 for a one-year term commencing on November 20, 2024 through November 19, 2025.

EXECUTIVE SUMMARY:

The Residential Rental Registration (RRR) and Rent Stabilization (RSO) Programs (Program) requires property owners to register their rental units, ensuring compliance with approved ordinances. The proposed Agreement for Professional Services (Agreement) with Opportunity Space, Inc. dba Tolemi (Tolemi) to develop an online management platform will streamline operations, increase transparency, and enhance user experience, as well as improve registration tracking, reporting and communication between property owners and the City of Salinas (City) departments. The term of the Agreement is November 20, 2024, to November 20, 2025. Based on performance, the term may be extended annually.

BACKGROUND:

City Council approved the implementation of the Residential Rental Registration Ordinance on April 4, 2023, and on September 24, 2024, approved the Rent Stabilization, Tenant Protection and Just Cause Eviction, and Anti-Harassment Ordinances. These Ordinances require property owners to register residential rental units subject the Ordinances with the City of Salinas.

Page | 2
In response, the City issued a Request for Proposal (RFP) to select a qualified vendor to provide an online platform for managing the Program. The City received proposals from five vendors at the end of the RFP period. A selection committee, comprised of representatives from the Community Development, Administration, Public Works GIS, and IT departments, was tasked with evaluating and rating and ranking each proposal based on RFP criteria including technical assessment, qualification and management, and relevant experience. The competitive process included reviewing each vendor's written proposal, interviewing key personnel, and conducting product demonstrations. After careful consideration, the committee narrowed the field to the top three vendors to interview.

Tolemi was selected as the top vendor because of its ability to launch the platform on January 1, 2025, and the software’s capability to search and identify potential rental properties subject to the Ordinances within Salinas using different criteria. This feature could help achieve a higher compliance rate.

The Table 1 below lists the proposals received, the estimated cost, proposal median score, and product demonstration median score.

Table 1: RFP responses
Est. Cost
Year 1
Est. Cost
Year2
Est. Cost
Year3
Proposal
Median Score
Product Demo
Median Score
Opportunity Space, Inc
dba Tolemi $141,000 $129,000 $129,000 95 24
Neumeric
Technologies* $82,000 $60,000 Not provided 93 14
3Di, Inc. $38,111 $49,500 $50,445 91 20
CloudBase Services $122,890 $162,144 $178,273 79 Not selected FSH Tech $73,000 $66,000 $66,000 52 for interview
* Cost is based on 50 users. For Salinas, the cost could be up to $180,000 per year for unlimited number of users.

After thorough analysis, the selection committee determined that Tolemi best met the City's needs for the RRR and RSO Program platform. Tolemi’s platform offers a user-friendly interface that will allow property owners to easily register properties, pay fees, and monitor compliance online.

The platform integrates a robust reporting system and integrates well with the City's existing systems, ensuring smooth data transfer, and reducing manual data entry. Additionally, Tolemi demonstrated a strong track record of successful platform implementation with other municipalities and provided robust customer support and ongoing maintenance services. While their proposal was higher in cost than some competitors, the long-term benefits and superior features provided greater value that compensates for the higher cost.

The initial cost for implementing Tolemi's platform is estimated at $141,000 for year 1 and ongoing annual maintenance and support costs are $129,000. The project will be funded through the RRR and RSO program budget, which is supported by Program registration fees paid by property owners. The platform is expected to generate efficiencies that will reduce staff time spent on manual tasks, allowing resources to be reallocated to other critical functions. Over time, the increased compliance and streamlined processes are anticipated to lead to enhanced revenue Page | 3
collection for the program. The platform is expected to be available for end users by January 1, 2025, the Program effective date. Staff is working to develop a plan in the event there are delays with the platform implementation.

CEQA CONSIDERATION:

Not a Project. The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).

CALIFORNIA GOVERNMENT CODE §84308 APPLIES:

No.

STRATEGIC PLAN INITIATIVE:

The City Council’s consideration of the proposed action is consistent with and furthers the City Council’s goal of promoting Housing/Affordable Housing (City of Salinas Strategic Plan 2022- 2025).

DEPARTMENTAL COORDINATION:

Ordinance and Program implementation, selection of vendor, and preparation of the Agreement for Professional Services with Tolemi is a collaborative effort among Community Development, Public Work GIS, Legal, Finance, Administration, and IT departments and divisions.

FISCAL AND SUSTAINABILITY IMPACT:

On November 19, 2024, City Council will also consider the establishment of Program registration fees and a FY 24-25 budget, workforce augmentation to hire additional administrative staff, and authorization of a transfer from the General Fund to cover Program start-up costs prior to collecting sufficient Program fee revenue to cover Program expenses. The cost of this Agreement is included in the FY 24-25 Budget. The table below is based on City Council approval of the above actions.

Fund Appropriation Appropriation
Name
Total
Appropriation
Amount for
recommendation
FY 24-25
Operating
Budget Page
Last
Budget
Action
2530 30.3220-63.5900 Outside Services -
Other Professional
Services
$300,000 $141,000 N/A N/A
Page | 4
ATTACHMENTS:

Resolution
Draft Agreement for Professional Services
1 RESOLUTION NO. (N.C.S.)

A RESOLUTION AUTHORIZING THE EXECUTION OF AN AGREEMENT FOR

PROFESSIONAL SERVICES WITH OPPORTUNITY SPACE, INC DBA TOLEMI TO

PROVIDE AN ONLINE MANAGEMENT PLATFORM FOR THE IMPLEMENTATION

OF THE RESIDENTIAL RENTAL REGISTRATION AND RENT STABILIZATION PROGRAMS FOR AN AMOUNT NOT TO EXCEED $141,000 AND YEARLY AMENDMENTS FOR AN ANNUAL AMOUNT NOT TO EXCEED $129,000
WHEREAS, City Council approved the implementation of the Residential Rental Registration (RRR) Ordinance on April 4, 2023, and on September 24, 2024, approved the Rent Stabilization, Tenant Protection and Just Cause Eviction, and Anti-Harassment (RSO) Ordinances; and
WHEREAS, these Ordinances required property owners to pay Program fees and register their rental units subject to the Ordinances with the City of Salinas; and WHEREAS, the City issued a Request for Proposal (RFP) to select a qualified vendor to provide an online platform for managing the RRR and RSO programs and received proposals from five vendors at the end of the RFP period; and
WHEREAS, after a competitive rating and ranking selection process, Opportunity Space, Inc., dba Tolemi was identified as the most qualified vendor to provide the requested platform; and
WHEREAS, the City proposes to enter into an Agreement for Professional Services with Tolemi, commencing November 20, 2024, with a total compensation amount not to exceed $141,000; and
WHEREAS, the funding source for this agreement will be from the Program registration fees paid by property owners and General Fund dollars appropriated to Fund 2530; and WHEREAS, on November 19th the City Council approved Resolutions Nos. XXX, XXX and XXX to establish Program registration fees and a FY 24-25 budget, augment workforce allocation to hire additional administrative staff, and authorize a transfer from the General Fund to cover Program start-up costs prior to collecting sufficient Program fee revenue to cover Program expenses. The cost of this Agreement is included in the FY 24-25 Budget; and WHEREAS, the City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Salinas that it hereby authorizes the City Manager to execute an Agreement for Professional Services with Tolemi, in an amount not to exceed $141,000 to provide an online management platform for the Residential Rental Registration and Rent Stabilization programs for a one-year term commencing on November 20, 2024 through November 19, 2025.
2 PASSED AND APPROVED this 19th day of November 2024, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:
______________________________
Kimbley Craig, Mayor
ATTEST:
_________________________
Patricia M. Barajas, City Clerk

Form: Professional Services Agreement v. April 2023 Page 1 of 16 [Consultant Name]
[Agreement Month and Year]

AGREEMENT

FOR PROFESSIONAL SERVICES

BETWEEN

THE CITY OF SALINAS AND
OPPORTUNITY SPACE, INC. DBA
TOLEMI
Contents
RECITALS ..................................................................................................................................... 1 TERMS ........................................................................................................................................... 1

1. Scope of Service. ................................................................................................................. 1

2. Term; Completion Schedule. ............................................................................................... 1

3. Compensation. ..................................................................................................................... 1

4. Billing. ................................................................................................................................. 1

5. Meet & Confer. .................................................................................................................... 2

6. Additional Copies................................................................................................................. 2

7. Responsibility of Consultant................................................................................................ 2

8. Responsibility of City. ......................................................................................................... 2

9. Acceptance of Work Not a Release. .................................................................................... 3

10. Indemnification and Hold Harmless. ................................................................................... 3

11. Insurance.............................................................................................................................. 3

12. Access to Records................................................................................................................ 3

13. Non-Assignability. ............................................................................................................... 3

14. Changes to Scope of Work. ................................................................................................. 3

15. Ownership of Documents. ................................................................................................... 4

16. Termination.......................................................................................................................... 4

17. Compliance with Laws, Rules, and Regulations. ................................................................ 5

18. Exhibits Incorporated........................................................................................................... 5

19. Independent Contractor........................................................................................................ 5

20. Integration and Entire Agreement........................................................................................ 5

21. Jurisdiction and Venue......................................................................................................... 5

22. Severability .......................................................................................................................... 5

23. Notices. ................................................................................................................................ 5

24. Nondiscrimination................................................................................................................ 6

25. Conflict of Interest. .............................................................................................................. 6

26. Headings. ............................................................................................................................. 7

27. Attorneys’ Fees.................................................................................................................... 7

28. Non-Exclusive Agreement................................................................................................... 7

29. Rights and Obligations Under Agreement........................................................................... 7

30. Licenses................................................................................................................................ 7

31. Counterparts......................................................................................................................... 7

32. Legal Representation. .......................................................................................................... 7

33. Joint Representation............................................................................................................. 7

34. Warranty of Authority.......................................................................................................... 7

35. No Waiver of Rights. ........................................................................................................... 7 Exhibit A- Insurance Requirements................................................................................................ 9 Exhibit B- Scope of Service.......................................................................................................... 12 Form: Professional Services Agreement v. April 2023 Page 1 of 12 Opportunity Space, Inc. dba Tolemi
November 2024

AGREEMENT FOR PROFESSIONAL SERVICES BETWEEN
THE CITY OF SALINAS AND OPPORTUNITY SPACE, INC. DBA TOLEMI Agreement Number: 24RRR01
This Agreement for Professional Services (the “Agreement” and/or “Contract”) is made and entered into this 20th day of November 2024, between the City of Salinas, a California Charter city and municipal corporation (hereinafter “City”), and Opportunity Space, Inc. dba Tolemi, a corporation (hereinafter “Consultant”).

RECITALS
WHEREAS, Consultant represents that he, she, or it is specially trained, experienced, and competent to perform the special services which will be required by this Agreement; and WHEREAS, Consultant is willing to render such professional services, as hereinafter defined, on the following terms and conditions.

NOW, THEREFORE, City and Consultant agree as follows:

TERMS

1. Scope of Service. The project contemplated and the scope of Consultant’s services are described in Exhibit B, attached hereto and incorporated herein by reference.

2. Term; Completion Schedule. This Agreement shall commence on November 20, 2024, and shall terminate on November 19, 2025, and include an option to extend the term for up to one additional one-year term upon mutual written consent from both parties, and may be terminated only pursuant to the terms of this Agreement. Exercising the one-year option is contingent upon performance and funding availability.

3. Compensation. City hereby agrees to pay Consultant for services rendered the City pursuant to this Agreement on a time and materials basis according to the rates of compensation of the proposal as set forth in Exhibit B. The total amount of compensation to be paid under this Agreement for first year shall not exceed $141,000.00 (One Hundred and Forty-One Thousand dollars and Zero cents). Maximum compensation for subsequent years shall not exceed $129,000.00 (One Hundred and Twenty-Nine Thousand dollars and Zero cents).

4. Billing. Consultant shall submit to City an itemized invoice, prepared in a form satisfactory to City, describing its services and costs for the period covered by the invoice. Except as specifically authorized by City, Consultant shall not bill City for duplicate services performed by more than one person. Consultant’s bills shall include the following information to which such services cost or pertain:
(A) A brief description of services performed;
(B) The date the services were performed;
Form: Professional Services Agreement v. April 2023 Page 2 of 12 Opportunity Space, Inc. dba Tolemi
November 2024
(C) The number of hours spent and by whom;
(D) A brief description of any costs incurred; and
(E) The Consultant’s signature.

Any such invoices shall be in full accord with any and all applicable provisions of this Agreement.

City shall make payment on each such invoice within thirty (30) days of receipt; provided, however, that if Consultant submits an invoice which is incorrect, incomplete, or not in accord with the provisions of this Agreement, City shall not be obligated to process any payment to Consultant until thirty (30) days after a correct and complying invoice has been submitted by Consultant. The City shall process undisputed portion immediately.

5. Meet & Confer. Consultant agrees to meet and confer with City or its agents or employees with regard to services as set forth herein as may be required by the City to ensure timely and adequate performance of the Agreement.

6. Additional Copies. If City requires additional copies of reports, or any other material which Consultant is required to furnish as part of the services under this Agreement, Consultant shall provide such additional copies as are requested, and City shall compensate Consultant for the actual costs related to the production of such copies by Consultant.

7. Responsibility of Consultant. By executing this Agreement, Consultant agrees that the services to be provided and work to be performed under this Agreement shall be performed in a fully competent manner. By executing this Agreement, Consultant further agrees and represents to City that the Consultant possesses, or shall arrange to secure from others, all of the necessary professional capabilities, experience, resources, and facilities necessary to provide the City the services contemplated under this Agreement and that City relies upon the professional skills of Consultant to do and perform Consultant’s work. Consultant further agrees and represents that Consultant shall follow the current, generally accepted practices in this area to the profession to make findings, render opinions, prepare factual presentations, and provide professional advice and recommendations regarding the projects for which the services are rendered under this Agreement.

8. Responsibility of City. To the extent appropriate to the projects to be completed by Consultant pursuant to this Agreement, City shall:
(A) Assist Consultant by placing at its disposal all available information pertinent to the projects, including but not limited to, previous reports and any other data relative to the projects. Nothing contained herein shall obligate City to incur any expense in connection with completion of studies or acquisition of information not otherwise in the possession of City. (B) Examine all studies, reports, sketches, drawings, specifications, proposals, and other documents presented by Consultant, and render verbally or in writing as may be appropriate, decisions pertaining thereto within a reasonable time so as not to delay the services of Consultant.

Form: Professional Services Agreement v. April 2023 Page 3 of 12 Opportunity Space, Inc. dba Tolemi
November 2024
(C) Steve Carrigan, City Manager, or his designee, shall act as City’s representative with respect to the work to be performed under this Agreement. Such person shall have the complete authority to transmit instructions, receive information, interpret and define City’s policies and decisions with respect to materials, equipment, elements, and systems pertinent to Consultant’s services. City may unilaterally change its representative upon notice to the Consultant.
(D) Give prompt written notice to Consultant whenever City observes or otherwise becomes aware of any defect in a project.

9. Acceptance of Work Not a Release. Acceptance by the City of the work to be performed under this Agreement does not operate as a release of Consultant from professional responsibility for the work performed.

10. Indemnification and Hold Harmless.

Consultant shall defend, indemnify, and hold harmless the City and its officers, officials, employees, volunteers, and agents from and against any and all liability, loss, damage, expense, costs (including without limitation costs and fees of litigation) of every nature arising out of or in connection with Consultant’s performance of work hereunder, including the performance of work of any of Consultant’s subcontractors or agents, or Consultant’s failure to comply with any of its obligations contained in the agreement, except such loss or damage which was caused by the sole negligence or willful misconduct of the City.

11. Insurance. Consultant shall procure and maintain for the duration of this Agreement insurance meeting the requirements specified in Exhibit A hereto.

12. Access to Records. Consultant shall maintain all preparatory books, records, documents, accounting ledgers, and similar materials including but not limited to calculation and survey notes relating to work performed for the City under this Agreement on file for at least three (3) years following the date of final payment to Consultant by City. Any duly authorized representative(s) of City shall have access to such records for the purpose of inspection, audit, and copying at reasonable times during Consultant’s usual and customary business hours. Consultant shall provide proper facilities to City’s representative(s) for such access and inspection.

13. Non-Assignability. It is recognized by the parties hereto that a substantial inducement to City for entering into this Agreement was, and is, the professional reputation and competence of Consultant. This Agreement is personal to Consultant and shall not be assigned by it without express written approval of the City.

14. Changes to Scope of Work. City may at any time, and upon a minimum of ten (10) days written notice, seek to modify the scope of services to be provided for any project to be completed under this Agreement. Consultant shall, upon receipt of said notice, determine the impact on both time and compensation of such change in scope and notify City in writing. Upon agreement between City and Consultant as to the extent of said impacts to time and compensation, an amendment to this Agreement shall be prepared describing such changes. Execution of the Form: Professional Services Agreement v. April 2023 Page 4 of 12 Opportunity Space, Inc. dba Tolemi
November 2024
amendment by City and Consultant shall constitute the Consultant’s notice to proceed with the changed scope.

15. Ownership of Documents. Title to all final documents, including drawings, specifications, data, reports, summaries, correspondence, photographs, computer software (if purchased on the City’s behalf), video and audio tapes, software output, and any other materials with respect to work performed under this Agreement shall vest with City at such time as City has compensated Consultant, as provided herein, for the services rendered by Consultant in connection with which they were prepared. City agrees to hold harmless and indemnify the Consultant against all damages, claims, lawsuits, and losses of any kind including defense costs arising out of any use of said documents, drawings, and/or specifications on any other project without written authorization of the Consultant.

16. Termination.
(A) City shall have the authority to terminate this Agreement, upon ten days written notice to Consultant, as follows:
(1) If in the City’s opinion the conduct of the Consultant is such that the interest of the City may be impaired or prejudiced, or
(2) For any reason whatsoever.
(B) Upon termination, Consultant shall be entitled to payment of such amount as fairly compensates Consultant for all work satisfactorily performed up to the date of termination based upon the Consultant’s rates shown in Exhibit B and/or Section 3 of this Agreement, except that:
(1) In the event of termination by the City for Consultant’s default, City shall deduct from the amount due Consultant the total amount of additional expenses incurred by City as a result of such default. Such deduction from amounts due Consultant are made to compensate City for its actual additional costs incurred in securing satisfactory performance of the terms of this Agreement, including but not limited to, costs of engaging another consultant(s) for such purposes. In the event that such additional expenses shall exceed amounts otherwise due and payable to Consultant hereunder, Consultant shall pay City the full amount of such expense.
(C) In the event that this Agreement is terminated by City for any reason, Consultant shall:
(1) Upon receipt of written notice of such termination promptly cease all services on this project, unless otherwise directed by City; and (2) Deliver to City all documents, data, reports, summaries, correspondence, photographs, computer software output, video and audio tapes, and any other materials provided to Consultant or prepared by or for Consultant or the City in connection with this Agreement. Such material is to be delivered to City in completed form; however, Form: Professional Services Agreement v. April 2023 Page 5 of 12 Opportunity Space, Inc. dba Tolemi
November 2024
notwithstanding the provisions of Section 15 herein, City may condition payment for services rendered to the date of termination upon Consultant’s delivery to the City of such material.
(D) In the event that this Agreement is terminated by City for any reason, City is hereby expressly permitted to assume the projects and complete them by any means, including but not limited to, an agreement with another party.
(E) The rights and remedy of the City and Consultant provided under this Section are not exclusive and are in addition to any other rights and remedies provided by law or appearing in any other section of this Agreement.

17. Compliance with Laws, Rules, and Regulations. Services performed by Consultant pursuant to this Agreement shall be performed in accordance and full compliance with all applicable federal, state, and City laws and any rules or regulations promulgated thereunder.

18. Exhibits Incorporated. All exhibits referred to in this Agreement and attached to it are hereby incorporated in it by this reference. In the event there is a conflict between any of the terms of this Agreement and any of the terms of any exhibit to the Agreement, the terms of the Agreement shall control the respective duties and liabilities of the parties.

19. Independent Contractor. It is expressly understood and agreed by both parties that Consultant, while engaged in carrying out and complying with any of the terms and conditions of this Agreement, is an independent contractor and not an employee of the City. Consultant expressly warrants not to represent, at any time or in any manner, that Consultant is an employee or servant of the City.

20. Integration and Entire Agreement. This Agreement represents the entire understanding of City and Consultant as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters contained herein. This Agreement may not be modified or altered except by amendment in writing signed by both parties.

21. Jurisdiction and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California, County of Monterey, and City of Salinas.

Jurisdiction of litigation arising from this Agreement shall be in the State of California, in the County of Monterey or in the appropriate federal court with jurisdiction over the matter.

22. Severability. If any part of this Agreement is found to be in conflict with applicable laws, such part shall be inoperative, null and void insofar as it is in conflict with said laws, but the remainder of the Agreement shall continue to be in full force and effect.

23. Notices.
(A) Written notices to the City hereunder shall, until further notice by City, be addressed to:

Form: Professional Services Agreement v. April 2023 Page 6 of 12 Opportunity Space, Inc. dba Tolemi
November 2024
City Manager
City of Salinas
200 Lincoln Avenue
Salinas, California 93901
With a copy to:

City Attorney
City of Salinas
200 Lincoln Avenue
Salinas, California 93901
(B) Written notices to the Consultant shall, until further notice by the Consultant, be addressed to:

Opportunity Space, Inc. dba Tolemi
Daniel Marconi, VP of Sales
295 Devonshire St. 4FL
Boston, MA 02110
(C) The execution of any such notices by the City Manager shall be effective as to Consultant as if it were by resolution or order of the City Council, and Consultant shall not question the authority of the City Manager to execute any such notice. (D) All such notices shall either be delivered personally to the other party’s designee named above, or shall be deposited in the United States Mail, properly addressed as aforesaid, postage fully prepaid, and shall be effective the day following such deposit in the mail.

24. Nondiscrimination. During the performance of this Agreement, Consultant shall not discriminate against any employee or applicant for employment because of race, color, religion, ancestry, creed, sex, national origin, familial status, sexual orientation, age (over 40 years) or disability. Consultant shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion, ancestry, creed, sex, national origin, familial status, sexual orientation, age (over 40 years) or disability.

25. Conflict of Interest. Consultant warrants and declares that it presently has no interest, and shall not acquire any interest, direct or indirect, financial or otherwise, in any manner or degree which will render the services required under the provisions of this Agreement a violation of any applicable local, state or federal law. Consultant further declares that, in the performance of this Agreement, no subcontractor or person having such an interest shall be employed. In the event that any conflict of interest should nevertheless hereinafter arise, Consultant shall promptly notify City of the existence of such conflict of interest so that City may determine whether to terminate this Agreement. Consultant further warrants its compliance with the Political Reform Act (Government Code section 81000 et seq.) and Salinas City Code Chapter 2A that apply to Consultant as the result of Consultant’s performance of the work or services pursuant to the terms of this Agreement.

Form: Professional Services Agreement v. April 2023 Page 7 of 12 Opportunity Space, Inc. dba Tolemi
November 2024

26. Headings. The section headings appearing herein shall not be deemed to govern, limit, modify, or in any manner affect the scope, meaning or intent of the provisions of this Agreement.

27. Attorneys’ Fees. In case suit shall be brought to interpret or to enforce this Agreement, or because of the breach of any other covenant or provision herein contained, the prevailing party in such action shall be entitled to recover their reasonable attorneys’ fees in addition to such costs as may be allowed by the Court. City’s attorneys’ fees, if awarded, shall be calculated at the market rate.

28. Non-Exclusive Agreement. This Agreement is non-exclusive and both City and Consultant expressly reserves the right to contract with other entities for the same or similar services.

29. Rights and Obligations Under Agreement. By entering into this Agreement, the parties do not intend to create any obligations express or implied other than those set out herein; further, this Agreement shall not create any rights in any party not a signatory hereto.

30. Licenses. If a license of any kind, which term is intended to include evidence of registration, is required of Consultant, its representatives, agents or subcontractors by federal, state or local law, Consultant warrants that such license has been obtained, is valid and in good standing, and that any applicable bond posted in accordance with applicable laws and regulations.

31. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single agreement.

32. Legal Representation. Each party affirms that it has been represented, if it so chose, by legal counsel of its own choosing regarding the preparation and the negotiation of this Agreement and the matters and claims set forth herein, and that each of them has read this Agreement and is fully aware of its contents and its legal effect. Neither party is relying on any statement of the other party outside the terms set forth in this Agreement as an inducement to enter into this Agreement.

33. Joint Representation. The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any party. No presumptions or rules of interpretation based upon the identity of the party preparing or drafting the Agreement, or any part thereof, shall be applicable or invoked.

34. Warranty of Authority. Each party represents and warrants that it has the right, power, and authority to enter into this Agreement. Each party further represents and warrants that it has given any and all notices, and obtained any and all consents, powers, and authorities, necessary to permit it, and the persons entering into this Agreement for it, to enter into this Agreement.

35. No Waiver of Rights. Waiver of a breach or default under this Agreement shall not constitute a continuing waiver or a waiver of a subsequent breach of the same or any other provision of this Agreement. The failure to provide notice of any breach of this Agreement or Form: Professional Services Agreement v. April 2023 Page 8 of 12 Opportunity Space, Inc. dba Tolemi
November 2024
failure to comply with any of the terms of this Agreement shall not constitute a waiver thereof.

Failure on the part of either party to enforce any provision of this Agreement shall not be construed as a waiver of the right to compel enforcement of such provision or any other provision. A waiver by the City of any one or more of the conditions of performance under this Agreement shall not be construed as waiver(s) of any other condition of performance under this Agreement.

IN WITNESS WHEREOF, the parties hereto have made and executed this Agreement on the date first written above.

CITY OF SALINAS
____________________________
Steve Carrigan, City Manager
APPROVED AS TO FORM:
_________________________
□ Christopher A. Callihan, City Attorney, or
□ Rhonda Combs, Assistant City Attorney

CONSULTANT
___________________________________
By: Daniel Marconi
Its: VP of Sales
Form: Professional Services Agreement v. April 2023 Page 9 of 12 Opportunity Space, Inc. dba Tolemi
November 2024
Exhibit A- Insurance Requirements
Insurance Requirements
Consultant shall procure and maintain for the duration of the Agreement insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the Consultant, his agents, representatives, employees, or subcontractors. With respect to General Liability and Professional Liability, coverage should be maintained for a minimum of five (5) years after Agreement completion.

MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:
(A)Commercial General Liability (“CGL”): Insurance Services Office Form (“ISO”) CG 00 01 covering CGL on an occurrence basis, including products and completed operations, property damage, bodily injury, and personal & advertising injury with limits no less than $1,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit. (B) Automobile Liability: ISO Form CA 0001 covering any auto, or if Consultant has no owned autos, hired and non-owned, with limits no less than $1,000,000 per accident for bodily injury and property damage.
(C)Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease.
(D)Professional Liability (also known as Errors and Omissions) insurance appropriate to the work being performed, with limits no less than $1,000,000 per occurrence or claim, $2,000,000 aggregate per policy period of one year.

If the Consultant maintains broader coverage and/or higher limits than the minimums shown above, the City of Salinas requires and shall be entitled to the broader coverage and/or higher limits maintained by the Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.

OTHER INSURANCE PROVISIONS
The insurance policies are to contain, or be endorsed to contain, the following provisions:

Additional Insured Status
The City of Salinas, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Consultant including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Consultant’s insurance (at least as broad as ISO Form CG 20 10, CG 11 85, or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 forms if later revisions used).

Form: Professional Services Agreement v. April 2023 Page 10 of 12 Opportunity Space, Inc. dba Tolemi
November 2024
Primary Coverage
For any claims related to this Agreement or the project described within this Agreement, the Consultant’s insurance coverage shall be primary coverage at least as broad as ISO Form CG 20 01 04 13 as respects the City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of the Consultant’s insurance and shall not contribute with it.

Notice of Cancellation
Each insurance policy required above shall provide that coverage shall not be canceled, except with notice to the City.

Waiver of Subrogation
Consultant hereby grants to City a waiver of any right to subrogation which any insurer of said Consultant may acquire against the City by virtue of the payment of any loss under such insurance.

Consultant agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.

The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City of Salinas for all work performed by the Consultant, its employees, agents, and subcontractors.

Self-Insured Retentions
Self-insured retentions must be declared by Consultant to and approved by the City. At the option of the City, Consultant shall provide coverage to reduce or eliminate such self-insured retentions as respects the City, its officers, officials, employees, and volunteers; or the consultant shall provide evidence satisfactory to the City guaranteeing payment of losses and related investigations, claim administrations, and defense expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.

Acceptability of Insurers
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City.

Claims Made Policies
If any of the required policies provide coverage on a claims-made basis:

1. The Retroactive Date must be shown and must be before the date of this Agreement or the beginning of Agreement work.

2. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the Agreement of work.

3. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the Agreement effective date, the Consultant must purchase “extended reporting” coverage for a minimum of five (5) years after completion of Agreement work.

4. A copy of the claims reporting requirements must be submitted to the City for review.

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November 2024
Verification of Coverage
Consultant shall furnish the City with original certificates and amendatory endorsements or copies of the applicable insurance language effecting coverage required by this Agreement. All certificates and endorsements are to be received and approved by the City before work commences.

However, failure to obtain the required documents prior to the work beginning shall not waive the Consultant’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

Subcontractors
Consultant shall require and verify that all sub-consultants and/or subcontractors maintain insurance meeting all the requirements stated herein, and Consultant shall ensure that Entity is an additional insured on insurance required from such sub-consultants and/or subcontractors.

Special Risks or Circumstances
City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

Maintenance of Insurance
Maintenance of insurance by Consultant as specified shall in no way be interpreted as relieving Consultant of its indemnification obligations or any responsibility whatsoever and the Consultant may carry, at its own expense, such additional insurance as it deems necessary.

Form: Professional Services Agreement v. April 2023 Page 12 of 12 Opportunity Space, Inc. dba Tolemi
November 2024
Exhibit B- Scope of Service
Scope of Service and Compensation on the following page. 295 Devonshire St 4
thFloorBoston,MA02119
781-208-8444
[email protected]
September 9, 2024
Cirt oy Salinas, CA
159Main St.

Salinas, CA 93901
To Whom it May Concern,
On behalf of OpportunitySpace, Inc. (doing business as “Tolemi”), I am oUicially submitting a response to the Request for Proposals “Residential Rental Registry and Rent Stabilization Software”(“RFP”)issued bySalinas,CA(“City”).

TolemiisuniquelypositionedtodelivertheScopeofServicesdescribedintheRFP.The TolemiSlate application was built and designed fromthe ground up to run an end-to end rentalregistration,licensing, andstabilizationincludingacceptingnewregistrations, managingexistingregistrations,updatinginformation,filingchangeintenancy,collecting rentamount,handlingnon-compliantlandlords,providingextensivereporting,allowingad hoc reporting, and automating notificationsto landlords.It is unmatched in the industry.

Within the body of the RFP response, we will lay out our proposal for the features and functionality required to run a modern registry.

Our oU-the-shelf web applications, BuildingBlocks and Slate meet all the requirements listed by the City, and we have a proven deployment & support model that has been successful in over 100 municipalities nationwide including several in the Bay Area. We are excited at the opportunity to work more deeply with the city, which we understand to be a forward-thinkingmunicipality.

Enclosed you will find the submittal elements, as defined by the RFP. Representatives from Tolemi are available to answer any questions that arise from these submissions. Please do not hesitate to reach out to. We look forward to hearing from the City, and we thank you for the opportunity to respond.

Sincerely,
DanielMarconi
VP of Sales
Firm Experience and Qualifications
Firm Qualifications and Experience
FoundedinAugust2013,Tolemiemergedfromtheco-founders’publicpolicyacademic studies, data analyticstechnology prototypes, and experiments correlating government data tosolve criticalurbanchallenges. Workingpurelywith localgovernments, our mission isto empower municipal governments by helping them harnessthe power of data to provide strongermore stable communities.

TheCompany worksto ensure every government has accessto critical data management, user-friendlyanalysistools, andspatiallyaware registrationandworkflowsoftware.In service to those goals, we have created a portfolio of user-first productsthat are easy to implement yet capable of handling the specific needs of every partner city.

TheTolemiplatformisthebackboneofmanycities’rentalregistration,licensing, and stabilization strategy. Its ability to not just manage a process but use existing data to automate and improve the process makesit unique in the industry. Slate, our property registration and workflow software has been implemented acrossthe country accepting tens ofthousands ofrental license applications annually. BuildingBlocks, our data centralization and analytics application helps cities acrossthe country better understand their community and the impact that city programs are having on theirresidents.

Tolemi has deployed Rental Registration and Stabilization solutions to over 100 municipalities including other Bay Area cities such as Half Moon Bay, Monterey, and the BerkeleyRentBoard.

ProductsBeingProposed
Tolemi proposes that the city implement our commercial off-the-shelf (COTS) rental licensing and inspection workflow management software (Slate) and our data integration and analytics software (BuildingBlocks) to meet the requirements defined in the City’s RFP.

Taken together, the Tolemi platform will enable the City to meet all of the requirements detailed in the Scope of Work section of this RFP.
□ Managecomplexworkflowsrelatingtorentalpropertylicensing,inspections,and compliance;
□ Seamlessly adapt the rules and configurations associated with workflows as policies and processes within theCity change,withoutrequiring additional costs; □ Prevent workarounds and require that users adhere to business processes establishedbytheCity togoverntheworkflowsmanagedwithin the solution; □ AllowforCity leadership to track the status of projects,properties, andworkflows, as well asto identify those that are behind schedule or otherwise needing attention; □ Manage and communicate with landlords, propertymanagers, and owners (“Landlords”);
□ Automate the process of alerting Users,Landlords, andmanagement of pending, open, upcoming, and/or late tasks;
□ Enable users to generate and customize reports & dashboards, and to extract data on operations&key performancemetrics; and
□ Centralize data and automate ongoing data ingestion from across diUerent City systems within the solution to inform the business logic applied to workflows and to reduce staU time spent on research & information gathering; and □ Enhance the capacity of the City to leverage data, mapping, and advanced analytics to inform land use decisions and policies.
□ Online registration platform for landlords, property managers, and City staff. □ Public facing platformfortenants, owners, and/orpropertymanagers. □ Notificationssystem forrenewal and compliance alerts. □ A secure database system to collect and maintain data on certain residential rental properties.
□ AnADA-compliantandbilingualonlineportal/dashboardfordatabase24/7,yearround access.The generalpublicwill be able to viewlimited information perthe ordinance.
□ DesignatedCity staU should be able to review the information and make edits/notes to the case file and make corrections as may be needed. Over a period of time, rights access may need to be amended.
□ Publicuserregistrationwithmultifactor authenticationand the ability to change/reset passwords giving property ownersthe ability to change/update information as necessary
□ Single sign-on (SSO)support forCity staU with Microsoft 365 integration. □ Registration fee and penalty fee collection system integrated with the database and online portal/dashboard.
□ Guidance and resources webpage, including a Rental Registration and Rent Stabilization Program overview, “how-to-register" training worksheets, demonstration videos, and other online information resources provided by the City. □ Corresponding paper-based rental unit registration forms, for landlord and staU use if Rental Registration or Rent Stabilization Program cannot be completed through the online portal.
□ Software systemsolutionsstaUtrainingexhibits and/ormanual. □ Ongoingmaintenance ofthe software systemsolutions, including updates and troubleshooting.
□ Collecting the following information below shall be provided and collected as part of initial and renewal registration of Residential Rental and Rent Stabilization units, including but not limited to:
o The name,mailing address, phone number, and email ofthe landlord. o The street address and/or assessor parcel Number (APN) of each ResidentialRentalUnitforrentorlease.
o The year the property and/or building was built.
o The number of bedrooms, bathrooms, and square footage of each rental unit. o The business license number, if applicable, to each rental unit. □ A system for annual and qualifying event-based reporting. □ Reporting capabilitiesfor data collection/trend analysis/major policy issues, quality control measures, data visualization for compliance monitoring and future policy anddecision-making.
□ ArcGIS enterprise integration with automatic mapping of registered properties/units. □ TRAKiT land managementsystem enterprise APIintegrations. □ Integratewith localcountyAssessorData.
□ An ADA-compliant and bilingual online portal/dashboard for database 24/7, yearround access. The general public will be able to view limited information per the ordinance.
□ DesignatedCity staU should be able to review the information and make edits/notes to the case file and make corrections as may be needed. Over a period of time,rights access may need to be amended.
□ Single sign-on (SSO)support forCity staU with Microsoft 365 integration. □ Ongoing maintenance of the software system solutions, including updates and troubleshooting.
□ Data packaged and provided to the City if ever the contract ends with initial and ongoing City ownership of all data collected within the software system solutions.

Slate
Slate is an end-to-end workflowtool that willfacilitate and automate the entire rental registration, inspection, and compliance processfor both the City and constituents/ registrants,includingLandlords.TheSlate applicationincludes apublic-facingportal, a secure database and reporting tools.

SlatewillallowLandlordstotransmitrequiredregistrationinformation,submitpayment, schedule inspections, track progress/status of applications, and manage outstanding tasksto remain compliantwith theCity’srentalregulation ordinance.The systemis online and accessible via mobile devices, with user-friendly featuressuch as address validation, bulk upload of property portfolios, and automated email alertsforrequired, upcoming, and overdue tasks. Landlords can accessCity staU availability to schedule inspections, communicatedirectlywithCitystaUbyreplyingtosystem-generatedemails(without needed to log into the system), and manage property portfolio compliance through an intuitive dashboard that centralizes allrequired, upcoming, and overdue tasks.

Slate is bothCOTSand fully customizable to theCity’s business processesthrough low/nocode configuration that allowsit to meet theCity’s current and future requirements. The implementation of Slate includesin-depth consultation and business process mapping led byTolemiexperts,who will assistin defining the required rules and protocols and harnessingworkflowautomationfeaturestomaximizeeUiciency&eUicacyinthe administrationofrentaloversight.The solution canbe configuredtotheCity’s specifications to allow for the management of tasks, stage-gate processes, and communications acrossmultiple workflows.City-defined businessrules and integrated data from other City systems can govern stage advance, assignment, and flags within the workflow.These featuresinclude, but are notlimited to:
□ Automated task assignment and due dates when specific criteria are met □ Automated alerts via email and in-app notifications when outstanding and overdue tasks are due
□ User-driven email prompts and in-app alertsto allowmanagersto alertEnd Users of outstanding and upcoming tasks
□ CustomizableUser-defined alertsforupcoming and overdue tasks,including batched task updates daily / weekly
□ Conditional and branching logic for workflows, including advancing projects and workflows based on data inputs, task fulfillment, and data integrated from other City systems of record
□ Validated field and drop-down data entry to prevent erroneous data input □ Paymentprocessing,includingin-systemrefunds
□ Automated document generation (e.g.registrations,rejection letters)when certain criteria are met, with automated or user-defined field inputs □ System-generated emailsto Landlords and other external parties □ Trackingof allexternalandinternalcommunications(includingrepliestosystemgeneratedemails)tied tospecific registration /licensingworkflows □ Task tracking and sorting based on various filters(e.g. assignee, due date, days overdue,workflow)
□ Customizable reports and downloadsthat track usage, overdue tasks, and overall compliance rates—allsegmented based on wide range of factorssuch aslocation, property attributes, and owner types
□ Performance measurement dashboardsto track time to completion for workflows, tasks, and users
□ Branching logic, workflow cloning / splitting, and identity-based assignment of tasks □ Multiple tiers of usergroupswitha wide range of permissionsthatdefinewhich actionsspecific users can take, including, but not limited to accessing the application; viewing stages, fields, filesreports, and data; editing stages, fields, files, reports, and data; managing users and accessing status reports; updating configuration such as required fields, stages, and form templates All data captured by and created in Slate can be exported into other City systems and databases to ensure Slate workflows are synced with other City processes.

BuildingBlocks
BuildingBlockswillenabletheCitytoimplementaRentalLicensingandInspection programthatis proactive,data,driven, and strategic.BuildingBlocksintegrates data from siloed City,County, and Federal databasesinto a single, map-based analytical tool.

Combining rental program data with other critical datasets such as code violations, police calls, and tax delinquency will provide the City with an unparalleled set of tools for driving future policy making and internal decision-making.

BuildingBlocks cleans, aggregates, and standardizesto the parcel-level data fromother Citysystemsofrecord(e.g.CodeEnforcement,BuildingPermits,Assessment)intoa single,map-based platformto allowCity staUaccessto holistic propertyinformation.

Users can access all City data associated with a parcel and/or addressindexed in BuildingBlocks,andthatdatawillbeupdatedonadaily,weekly,monthly,orquarterly basis, as directed by the City. Users can query and filter for parcels based on any of the integrated data, orsearch for parcels based on address, parcel ID, or owner of record.

These records can be used to configure rulesthat govern workflow management and stage advancelogic.

TolemiInsightsareasetofderivedpropertyattributeswithinBuildingBlocksbasedon complex, proprietary logic frommultiple data sourcesthatmake it quick and easy forthe City to identify propertiesthatmeetimportant criteria.These include theOwner-Occupied flag,theLikelyRentalflag,theVacantStructureflag,theVacantLotflag,theOwner Location(e.g.out-of-state,in-city)optionsfilter,andtheOwnerPropertyCountnumeric range filter. Tolemi’s proprietary Identity Linking algorithm ties together related beneficial owners across common masking entitiessuch asshell LLC’s and partnershipsto piece togetherthe true portfolio ofrentalpropertyownersin theCity.Together,these powerful toolswillenable theCitytoproactivelytargetnon-compliantrentals,identifyownersof large portfolios ofsubstandard and non-compliant properties, and more strategically manage theRentalLicensingandInspectionprogram.

The Property and Identity Scoring tool in BuildingBlocks will allow theCity to deploy prioritizationmodelsforinspection and compliance eUorts based on property conditions, including factorssuch as code violations, nuisance callsforservice, and timeliness of registration /renewal. Owners and property managers may also be scored, enabling the City to implementfuturemodificationsto the currentprogram,includingtiered inspection schedules with more aggressive reinspection schedulesfor non-compliant properties and graceperiodsfor compliantLandlords.

Tolemi StaU Involved in Project
Customer Success Manger – Kate BischoU
You customersuccess manager will be responsible for making sure that the project is completed on time and meetsthe needs of the city. Afterimplementation she will continue to be themain point of contactforthe city helping with training and improvementsto howthe city usestheTolemisoftware.

Kate has been a TolemiCustomer Success manager for eight years. Overthat time she has helped more than 100 citiesimplement and use Tolemi products. She has extensive experienceworkingwithCitiestounderstand the scope oftheirrequirements, configuring the software to exceed those requirements, and working with cities beyond implementation to ensure that citiesreceive the maximvalue.

Process Engineer - Reza JaUri
Yourprocess engineerwillprepareforthe implementationby readingrelevantordinances, this RFP, and our response to ensure that no aspect is overlooked. He will be the one that interviews city staU to fully understand the variousstages and stepsrequired to meet the requirements.

Reza has implemented Tolemi Slate in over 20 cities including rental registration and stabilization in the bay area wit h cities such as Half Moon Bay, Berkeley, and East Palo Alto.

Data Engineering – Ben Clayman and AV David
Data engineering works with City staU and the rest of the Tolemi team to understand what data integrations are required, where that data lives, and how best to extract it on a nightly basis. They will then build those connections, map the data into the Tolemi data standard and ensure that those connections remain active on an ongoing basis.

BenClayman is a former city Planner and has beenwith Tolemiformore than 5 years. He has helped build thousand of connectorsto help cities achieve their goals.

AV David will work internally with Ben to make sure that the connections are stable and continue to properly integrate data as it is created every day. She has worked with more than 30 cities doing this type of work.

Executive Sponsor – Dan Marconi
Dan isthe VP of Sales and has worked atTolemi the past 7 years. He reports directly to the CEO. Dan is available in case unique circumstances arrive thatrequireTolemito build additionalfeature sets. His direct line to theCEOmeansthat internalroadblocks within Tolemidon’tslowtheimplementationorpreventTolemifromdeliveringonthescopeofthis RFP.

Similar Customers
As this is a public document, Tolemi will provide basic information on existing customers using the software for similar purposes. More detailed information can be relayed via phone or Zoom meeting upon request.

Monterey, CA (December 2023 – Present)
Rental Registration and Assistance
Kimberly Cole
Community Development Director
[email protected]
(831)646-3759
Half Moon Bay, CA (August 2023 – Present)
Rental Registration
JohnDoughty
Assistant City Manager
[email protected]
(650)619-1440
Berkley Rent Board (December 20223 – Present)
Rental Registration and Stabilization Analysis
DéSeana Williams
ExecutiveDirector
[email protected]
(510)981-4949
Scranton, PA (January 2023 – Present)
Rental Registration
Robin Selemba
Rental Regulation Manager
[email protected]
570-348-4193 Ext. 4555
Detailed project plan
Proposal Overview
Please reference section“FirmExperience andQualifications” Implementation Overview
Tolemi is proposing implementing multiple applications within the Tolemi Platform.

Specifically:
□ BuildingBlocksfordatacentralization,analytics&reporting,automatedalerting, and as a public facing information site allowing residentsto understand if a property isregistered and ifthere are any knowproblems.
□ Slate asthe public facing portalforregistration, communication, and updating registration information. Slate will also function asthe backend systemto guide city staUon what tasks need to be performed, allowstaU to viewregistration, and communicate with registrants.

Toreduce implementation time for cities, Tolemi prefersto run these two separate, but related implementations concurrently.

Our team hasimplemented similarsystems acrossthe country and are comfortable with the timeline listed below. However, cityresponsivenessis key tomeeting deadlines. Long gaps between importantmeeting or a lack of responsivenessfrom theCity can delay the project.

Datacentralization,cleansing,andjoiningisafoundationalpillarof everyengagementwith our partner cities. Government data hastraditionally been diUicult to workwith because the various departmental software systems do not communicate and share data eUectively.

Recognizing thattherewas not a software solution on themarketthatwould accomplish our objective of connecting with disparate data sources &systems, cleaning& geo-codingdata, andautomatingtheextract-transform-load(ETL)process,webuiltthe Swarm application.

Our team of data engineers build connectorsinto City-controlled data sets, open data portals, and paid third party data providers. Those connections are scheduled and consume new data on a regular basis, typically nightly. Once the data is consumed, we clean and geo-code the data before storing it in a relational database that can be used by our other application. Swarmprocesses over 2,000 municipal data sets daily froma range of databases and vendor-supplied software. Based on our experience with common data issuesthat we encounter, we have incorporated over 200 unique diagnosticsreportsthat runautomatically.

During implementation, the Tolemi team will work to understand the City’s existing data structure and requirements. They will then use Swarm to consume, clean, and map the existing data into the Tolemi platform for the configuration of Slate & BuildingBlocks and for the quality assurance process. On the night of the system transition, we will remove all the data from our systems and do a complete data extract into our platform to guarantee that all data is properly migrated. The following day City staU can manage all stages of the process inside the Tolemi platform, and the legacy software can be deprecated.

Tolemiwillprovideunlimitedgroupandone-on-onetrainingforcitystaUpriortoandafter launch. Ourtrainings are typically remote and under an hour. We can cover basic and advanced needssuch as how to log in, finding and completing tasks, building reports, and communicatingwithapplicants.

Priorto launch,Tolemiwillworkwith cityappointed super users, admins, and technical leadsto ensure that they are able to fully manage the application. These trainings are highlycustomizedandaretypicallyone-on-one.

All city staUwill be able to connect the designatedCustomer SuccessRepresentative via phone, email, or chat, through the life of the contract, to have their questions answered or request additionaltraining. Our expectation isthatwewill provide both formal and informalhelp on anongoingbasis.

For BuildingBlocks application, comprehensive testing will occur in during a joint QA call with Tolemi CSM and Data Engineer to identify data discrepancies between the Tolemi platform and the City’s source systems, additional data transformations required to meet End User business objectives, and data gaps. Tolemi has a standard process for internal review prior to the joint QA call to identify potential issues. During the joint call, Tolemi will adhere to a similarly refined processto review all data sources and transformations with the City.

Forthe Slate application, comprehensive testingwill occurinmultiple phases of implementation.Theconfigurationprocesswillbegininconcertwith theweeklybusiness processmappingcalls, after each ofwhich the TolemiDataEngineerwillmake progress on configuration ofthe requiredworkflows.Thisincremental approach allowsthe SuperUsers and Tolemi to include weekly review of the progress as part ofthe business process mappingcalls.Tolemiwillthenincorporate feedbackandrefine theworkflowsthroughout the implementations process.

Afterthe beta versions oftheworkflowshave beencompleted,Tolemiwilltrain theSuper Users on the application and begin the user acceptance testing process. During this phase,Tolemi willsubmitregistrations and inspection requestsfrom the perspective of landlords/registrants,therebyinitiating testworkflowsforSuperUserstoperform acceptance testing. Super Users will then submit feedback and required refinement to Tolemito informthe last phase ofimplementation.

The ensuing Super User and End User training session will provide another opportunity to incorporate feedback prior to go-live.

Tolemi’s CSM and customer support team will continue to respond to requests from End Users for additional refinement and will incorporate feature requests into its longer-term product roadmap.

We are not proposing any on-site implementation orsupport as we have successfully implemented oursoftware in over 100 cities without the need to be face-to-face. Tolemi is happy to provide on-site training and implementation services upon requestforthe price of travel,lodging,andincidentals.

Tolemifully expectsCity to request trainings, changesto the process, the addition of new data sets, unexpected changes to existing data sets, and assistance building analytics insideofBuildingBlocksbeyondtheinitialimplementationtimeframe. Weprovidethese services at no additional cost beyond the ongoing subscription fee.

Implementation Timeline
Implementation Responsibilities
City will be responsible for the following tasks (number of hours | staU) in the BuildingBlocksworkstream:
□ Attend the kick-oUcall(est.one hour|fullprojectteam)
□ Complete data inventory (est.two hours|TechnicalSupport) □ Assistin definingintegrationmethodsforCity data (est.fourhours|Technical Support)
□ AttendQAtesting call(est. one and one-half hours|fullproject team) □ Attend training sessions(est. two hours| Super Users and End Users) City will be responsible for the following tasks (number of hours | staU) in the Slate workstream:
□ Attend the kick-oUcall(est.one hour|fullprojectteam)
□ Attend weekly business process mapping calls(est.six hours| Super Users) □ Attend beta training (est. two hours| SuperUsers)
□ Completeuseracceptancetesting(est.fourhours|SuperUsers) □ Attend training sessions(est. two hours| Super Users and End Users) Tolemi will be responsible for the following tasks in the BuildingBlocks workstream:
□ Host the kick-oUcall and circulate roles/responsibilities □ Assistincompletionofthe datainventory
□ Assist in defining integration methods for City data
□ Deploy / build connectorstoCity data
□ Host QA testing
□ Refine data mapping based on feedback from QA testing □ Launch BuildingBlocks application
□ Host training sessions
Tolemi will be responsible for the following tasks in the Slate workstream:
□ Host the kick-oU call
□ Lead weekly business process mapping calls
□ ConfigureworkflowsinSlateaccordingtoCityspecifications anddocumentation from business process mapping calls
□ Launch beta workflows and host beta training
□ Refine workflows based on user acceptance testing feedback □ Launch BuildingBlocks application
□ Host training sessions
Tolemi will provide City with a dedicated Customer Success Manager (CSM) who will project-managetheimplementation.TheCSMwillsubmitbi-weeklystatusupdatesvia email to theCity projectteamthat willuseRed (behind schedule / at high risk of delaying projectdelivery) Yellow(experiencingdelaysbutnotyetathighriskofdelayingproject delivery)Green(progressingaccordingtoanticipatedschedule)indicatorsforoutstanding tasks, including butnot limited to:
□ Dataintegrations
□ Responsivenessof criticalCitypointsofcontact(e.g.TechnicalSupport) □ Workflow configurations
□ Public- (e.g. landlords) facing portal configurations Example Sites
Slate Rental Registration and Stabilization
https://slate.tolemi.com/c/monterey-ca
DataAnalyticsandPublication
https://rochester-ny.tolemi.com/
Information Systems Questionnaires
AppendixA
Hosting Provider
Where is the product hosted? AWS East Coast Cloud. The data never leaves the United States.

What is the solution availability? i.e.

99.9% Yes,Tolemiexceedsthree9'savailability.

Is it a public, private, multi-cloud
environment? Private cloud
Arephysicalsecuritycontrols
implemented around sensitive
locations such as data centers?
Yes, AWS is FedRAMP Compliant and contains both
physicalanddigitalcontrols.Tolemialsoutilizes
physical and digital controlsto protect customer
data from our locations.

Applications Architecture
Whatlanguage isthe application
written in? Elixir, NodeJS,Java,JS, SQL
Do you use a Web Application
Firewall (WAF)? No
Do you comply with and adhere to
the Accessibility Standards of
Section 508 of the Rehabilitation
Act of 1973, as amended? Yes
Upon Termination of Services,
explain how you willreturnCity
information stored in your systems?
Customer data will be retained for 90 daysto allow
the City to access and store it in a new environment.

Afterthe90daysoruponwrittenrequest,Tolemiwill
delete the City data from oursystems.

AredataintegrationstoCity
systems planned? If yes, please
explainwhattypeandhowCity
informationisbeingsecured(i.e.
securityprotocols).

Yes, Tolemi specializes in building scheduled
recurring data connection into third party systems.

These connections can be accomplished in a
number of ways based on where the data lives, what
systems is producing the data, the sensitivity level of the data, the resources on production servers, and
the preferences of City IT. Privileged network access
is not required. Without further information on the
systemsit is diUicult for Tolemi to explain exactly
how these connections will be made, but we can
oUerto complete a Zoom call with City IT to go
system by system.

Data Storage Access and Security
Where and how is data stored? Data is encrypted in transit and at rest and Tolemi practices least privileged access.

Is all information staying in the
United States?
Yes
How isthe data encrypted at rest? Yes
How is data encrypted in transit? Yes
What application and data access
auditlogs do youmaintain?
We store all requests made between ourservices, in
most cases store field level access (reads/writes)
andmaintainapplicationlevellogs
How are backups stored and are
they encrypted?
In transit and at rest
How often do backups occur? Multiple times per day - stored for 30 days Arephysicalsecuritycontrols
Implemented?
Yes
What data is sensitive and eligible
for field-level encryption?
All data is encrypted in transit and at rest
Who has access to application data
and their backups?
Only TolemistaU has accessro customer data
through anymeans otherthan using the UI.Not all
TolemistaUor engineershaveaccess.Tolemi
practices least privileged access.

Is any customer data allowed
outside of production
environments?
No
Do you require that all removeable
media, which may contain
organizational data, is encrypted?
We do not use removable media
How do you ensure City information
is sanitized from retired hardware or
media?
Retired hardware ormedia is wiped out before
decommissioning
Regulatory & Certifications
Are you PCI-DSS certified? TolemiusesStripe forpaymentprocessing.Stripe is PCI-DSScertified.

Are you HIPAA certified (if
applicable)?
Tolemi does not typically handle HIPPA data. We can
sign aBAA.

Are youSOC2orISO-27001
certified?
No
Are youGDPRcompliant? N/A
Have you conducted external
penetration testing?
No
Business Continuity & Disaster Recovery
Whatisyourdisasterrecovery
solution?
Data backups,systemredundancy,failover
systems, notification/alarm systems
Howoften do you test your disaster
recovery solution?
Quarterly
Haveyouexperienceda significant
outage?
Our longest unplanned outage wasless than 10
minuteslong
Haveyouexperienceddisruptions
toyouroUicethataUectedyour
product?
No
Identity Management & Single Sign On
IsSingleSignOn(SSO) provided?
What types of SSO options are
available?
SSO is available. Tolemi can use Oauth or SAML.

Are all accessrightsto information
systemsimmediatelyrevoked upon
employee/contractortermination or
change ofrole?
If using SSO, Tolemi access is immediately revoked
upon the city revoking access to City systems.

Do you require the use ofmultifactor authentication for allremote access to organizational data?
Yes
Governance
Doyoumaintainaninventoryofall
hardware and software assets?
Yes
Howdo you track updatesto your
software?
Versioncontrol,taggedreleases(semver)
Do you perform security reviews on
your software prior to release?
Yes
Supply Chain
Who are the key vendors for your
standard oUering?
AWS, BetterStack, Papertrail
How do you ensure and monitor the
integrity of 3rd party libraries
included in your software?
All dependencies are monitored and updated
regularly to ensure the latest security patches and
fixes are in place
Doyouperformsecurity
assessments on potential suppliers
priorto entering into agreements
withthem?
Yes
Appendix B
Online Payment:

Does yoursolution facilitate online payments and
integratewithAuthorize.net?
What payment gateways do you support (pay by
phone, credit card, check, money order)?
Yes, the system will calculate and facilitate payments
through Authorize.Net
Users can pay online via credit card or eCheck. Additionally, citystaffhave the abilityto enter additional payment
methods such as cash, checks, money orders, and
vouchers.

IsthepaymentsolutionPCI-DSScompliant? Yes
How will your solution ensure the payment of
registration fees and the collection of registration
unit data from landlords?
Oursystem is designed to require specific fieldsto advance including unit data and payment. If a payment is made and then reversed by the user, the license can be revoked.

IntegrationsandApplicationProgrammingInterfaces
Does yoursoftware solution integrate with ArcGIS
Online & Enterprise? If it does not, do you have an
API that we can use to access the data?
Our GIS department maintains both a parcel layer
and an addressing layer that integrates directly into
TRAKiT. Do you need either or both, and can you
Yes,wemaintain connectionstomore than 100ESRI
instances acrossthe country.
accessusingtheArcGISAPI? We require both and can access via ArcGIS.

If you are not able to supportArcGISintegration, can
yoursolution work with an established
addressing format that theCitycurrently follows? We areable tointegratewithESRI.

UserManualsandCustomerService:

We have worked with at least 8 other cities building
Howmanyjurisdictionshave youworkedwiththat
use TRAKiT as their Land Management System?
Howmanyjurisdictionshave youworkedwiththat
use ArcGIS Online & Enterprise?
Can you provide the names of the organizations that
youhavepartneredwiththatuseTRAKiTand or
ArcGIS Online & Enterprise?
What training resources do you offer to ensure
efficient adoption and utilization ofthe software by
City staff, and landlords, and Tenants?
Can you provide documentation, white papers and
TRACKiT integrations. Most of these cities have transitioned offofTRACKiT,butwedostillhaveoneactive integration.

We haveworkedwith over 100ESRIinstances and maintain
active connections with them.

Forsecurity reasons and due to this being a public
document we will not provide that information here, but can provide upon request in a confidential format.

Our team will provide unlimited group and one-on-one
training for city staff. We will also commit to provide 2 one-hour long trainings annually for both landlords and tenants. Additional trainings available upon request.
user manuals for the software? Yes
What is your support model, including response
times, maintenance schedules, and how issues
will be handled.

Do you have online training documentation and or
Forstaff,Tolemiprovidesmultimodalmultilingualsupport
via email, chat, and phone.

Forlandlords andtenants,Tolemiwillprovidemultimodal
multilingualsupportfor technical questions. City specific questions such as confusion around the ordinance will be routed to city staff. Tolemi can provide a single phone number that routes support calls to the correct
organization.
videos? Wewill customcreate basedonthe citiesinstance.

How does your software facilitate communication
and collaboration between City staff and external
stakeholders, such as landlords.

Communications can be automated and include email, text, and direct physical mail. Additionally, users can email each other ad hoc through the system. All communications are logged and timestamped.

Additionally, communication through the platformare
available to city staff with the correct permissions so that you won't need to ask each other if they have received an email.

Whatisyour customerservice availability?
Standard is business hours 9-5:30ET. Extended hour and
west coast hours are available uponrequest.

Sample Screenshots:

Can you provide sample screenshots or videos
demonstrating how a landlord, and unit appear in
yoursoftware,includingtheavailabilityofrelated
data. See Below
Can you demonstrate any customizable
dashboards or reporting features available to
users for accessing and analyzing data? See Below
Please provide an architecture solution diagram
including data flowsfrom various data sources. See Below ContractMethods and InteractionNotes:

What methods of contact does yoursolution utilize
for staff, landlords, and tenants? i.e. text, email, in app notifications? In app, email, SMS, chat, and physical mail.

Doesit allow for different preferredmethods? Yes
Will all customer interaction notes be available to
staff directly through the portal? Yes
What isthe preferredmethod forreminding
landlordsto update or pay fees yearly?
We recommend escalating communication methods
movingfromfree (email,text)to paid (directmail).

Communicationcanbeautomated.

Can your software generate automated
notifications and remindersforCity staff tasks?
Yes, the software will automate notificationsto city staffto ensure that no balls are dropped and that tasks are handled in the appropriate amount of time.

BilingualSupport:

Does yoursoftware and/or customerservice offer
bilingualoptions,suchastranslateddocumentsor
bilingualphone lines? Yes, we offer bilingualsupport for documents and support.

Does yoursolution comply with California Title VI
regulations? Yes
Landlord/TenantPortalandDataAccess:

Yes, landlords will have their own portal that enablesthem If a landlord requests past or upcoming data, will
there be a landlord portal for access?
How does your software ensure data accuracy and
integrity when multiple users access and update
information within the landlord/tenant portal?
Can landlords set up personalized notification
preferences for reminders and updates within the
to view historic data, update information, and complete taskssuch as updating contact information or filing a
change in tenancy.

Tolemi logs changes and keeps a historic record.

Additionally, data isfield validated to ensure proper
structure.
software? Yes.

What do your landlord or tenant portal and data
access look like? What are key features that set
your portal(s) apart from others?
See screen shots below. Our landlord and tenant portals are differentiated by being much more than a webform. Users can use the portal to register new properties, update contact information, informthe city of a change in tenancy, sign up for alerts, file complaints, open support tickets and more.

Screenshots

Pricing and Fee Structure
Tolemiservices are provided as an annualservice. Allfeatures and functionalityin our response are included in the following annual price and one-time implementation fee, unless otherwise noted. There are no hourly costsinvolved. Support and software updates are included in the below pricing.

Annual Cost $120,000 annually
Implementation $12,000 one-time
Tolemi Rental Registration and Stabilization
Optionally, if the city would prefer a “Price Per Registration” instead of a “Flat Annual Fee” Tolemi can replace the above table with the following.

PerRegistrationCost $10 per unit per year
Implementation $30,000 one-time
In addition to the prices above,the citymayoptionally electto include the following addons:

Single Sign On $9,000 annually
Sending Post Cards $ 1.00 each
Tolemi Rental Registration and Stabilization
Add-ons
General Contract Requirements
Proof of Insurability
Concurrencewithcontractprovisions.

Tolemi concurs with the provisions oftheCity’sstandard contract as attached to theRFP andunderstandsthatunder certaincircumstances, andsubjecttothediscretionofthe City,some provisions ofthe contractmay bemodified upon final contract negotiations withtheselectedconsultant.

City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-652, Version: 1
Rejection of Bids for the Industrial Wastewater Treatment Facility Influent Pump Station and Electrical Improvements, CIP 9317
Approve a Resolution rejecting all bids for the Industrial Wastewater Treatment Facility Influent Pump Station and Electrical Improvements, CIP 9317.

City of Salinas Page 1 of 1 Printed on 11/14/2024
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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: NOVEMBER 19, 2024
DEPARTMENT: PUBLIC WORKS DEPARTMENT
FROM: DAVID JACOBS, P.E., L.S., PUBLIC WORKS DIRECTOR
TITLE: REJECTION OF BIDS FOR THE INDUSTRIAL WASTEWATER

TREATMENT FACILITY INFLUENT PUMP STATION AND
ELECTRICAL IMPROVEMENTS, CIP 9317
RECOMMENDED MOTION:

A motion to approve a resolution rejecting all bids for the Industrial Wastewater Treatment Facility Influent Pump Station and Electrical Improvements, CIP 9317.

EXECUTIVE SUMMARY:

On October 15, 2024, the City received two bids for the Industrial Wastewater Treatment Facility Influent Pump Station and Electrical Improvements, CIP 9317. The two bidders are Anderson Pacific Engineering Construction Inc. and Mountain Cascade, Inc., with a total Base Bid No. 2 of $10,075,740 and $9,030,000 respectively. The engineer’s estimate for Base Bid No. 2 is $6,165,651, putting the proposals received at 63% and 46% higher than anticipated and exceeding available funding. Staff recommends rejecting all bids for the Industrial Wastewater Treatment Facility Influent Pump Station and Electrical Improvements, CIP 9317 due to insufficient funding.

BACKGROUND:

In 2020, the City applied for a storm water implementation grant through Round 2 of the State Water Resources Control Board (State Water Board) Proposition 1 Storm Water Grant Program (SWGP) for the Salinas Project to Enhance Regional Stormwater Supply (SPERSS). The goals of the SPERSS project were to enhance the City’s stormwater capture, storage, and conveyance infrastructure at the Treatment Plant 1 and Industrial Wastewater Treatment Facility (IWTF) sites.

Stormwater Grant Agreement No. D2112160 was executed on October 31, 2022, with an award amount of $8,799,154. Council authorized the City Manager to execute the agreement on behalf of the City on March 30, 2021 (Resolution 22073). Council also approved a professional service agreement with E2 Consulting Engineers for design services and accepted grant funds on June 14, 2022 (Resolution 22394).

On October 15, 2024, the City received two bids for the for the Industrial Wastewater Treatment Facility Influent Pump Station and Electrical Improvements, CIP 9317. Bids were opened through Zoom, with the following results (see attached Bid Tabulation Sheet for details):

Page | 2
Rank Contractor Total Base Bid 1 Total Base Bid 2
1 Mountain Cascade, Inc. $10,781,000 $9,030,000
2 Anderson Pacific Engineering Construction Inc. $11,606,240 $10,075,740 Based on provisions of the Project Specifications, “Depending on available funding at the time of award, the BASIS OF AWARD shall be the lowest total of the Schedule 1 Base Bid Grand Total (or Schedule 2 Base Bid Grand Total, as noted on the Proposal. The City further reserves the right to award or reject the Base Bids or any item(s) within, depending on available funding.” The lowest bidder is Mountain Cascade, Inc. with a total Base Bid No. 1 of $10,781,000, and Base Bid No. 2 of $9,030,000. The engineer’s estimate is $6,165,651 for Base Bid No. 2, putting the proposals received higher than anticipated.

The “Notice to Bidders” informed the bidders that the City reserves the right to reject any and all Proposals and waive any irregularities to any Proposals received.

Staff is working on a reduced scope of work to fit within the grant allocation. The reduced scope of work will be packaged with the second phase of the grant work and bid in December.

Staff recommends rejecting all bids for or the Industrial Wastewater Treatment Facility Influent Pump Station and Electrical Improvements, CIP 9317.

CEQA CONSIDERATION:

Not a Project. The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).

Section 15300.2 as all exceptions do not relate to the project scope of work for this project.

STRATEGIC PLAN INITIATIVE:

This project, when awarded, will addresses the current City Council’s Goals of “Economic Development”.

DEPARTMENTAL COORDINATION:

Coordination between Public Works and Maintenance Department for identification of scope of work of the project.

FISCAL AND SUSTAINABILITY IMPACT:

This action does not have a fiscal impact.

Page | 3
ATTACHMENTS:

Resolution
Bid Tabulation
1 RESOLUTION NO. (N.C.S.)

A RESOLUTION REJECTING ALL BIDS FOR THE INDUSTRIAL WASTEWATER

TREATMENT FACILITY INFLUENT PUMP STATION AND ELECTRICAL IMPROVEMENTS, CIP 9317
WHEREAS, the City of Salinas owns and operates an Industrial Wastewater Treatment Facility (IWTF); and
WHEREAS, on March 30, 2021, the City Council approved an agreement with the State Water Resources Control Board for a grant of $8,799,154 for the Salinas Project to Enhance Regional Stormwater Supply (Resolution No. 22073); and
WHEREAS, on June 14, 2022 the City Council approved a professional services agreement with E2 Consulting Engineers for the design of the project (Resolution No. 22394); and WHEREAS, City Staff on October 15, 2024, at a public meeting held via Zoom meeting from City Hall, at Salinas, California, publicly opened, examined, and declared all bids or proposals delivered electronically via PlanetBids the Industrial Wastewater Treatment Facility Influent Pump Station and Electrical Improvements, CIP 9317 in accordance with the Project Specifications; and
WHEREAS, the City received two bids for the Industrial Wastewater Pump Station Improvements at Airport Blvd. Project from Anderson Pacific Engineering Construction Inc., , and Mountain Cascade, Inc., with a total Base Bid No. 2 of $10,075,740 and $9,030,000 respectively; and
WHEREAS, the two bids received are higher than the engineer’s estimate; and WHEREAS, there are currently insufficient funds in CIP 9317 to award the Industrial Wastewater Pump Station Improvements Project; and
WHEREAS, the Project Specifications state the City reserves the right to reject any and all proposals and waive any irregularities to any proposals received.

NOW, THEREFORE, BE IT RESOLVED that the Salinas City Council hereby rejects all bids received for the Industrial Wastewater Treatment Facility Influent Pump Station and Electrical Improvements, CIP 9317.

PASSED AND APPROVED this 19
th day of November 2024, by the following vote:

AYES:

NOES:

ABSENT:
2 ABSTAIN:

APPROVED:
________________________
Kimbley Craig, Mayor
ATTEST:
_________________________
Patricia M. Barajas, City Clerk
BID OPENING:

January 16 2024
B I D T A B U L A T I O N PROJECT No. 9720
IWTF INFLUENT PUMP STATION AND ELECTRICAL IMPROVEMENTS, CIP 9317 Drawing No.

Bid awarded on _______ by City Council to ___________ Project Engineer: Victor Sanchez for the sum of __________ Project Manager: Victor Sanchez All other bids were rejected and bid bonds returned.

Dated CONTRACTOR #1
City Clerk ENGINEER'S

ESTIMATE
ITEM APPROX. UNIT UNIT UNIT
NO. QUANTITY PRICE TOTAL PRICE TOTAL PRICE TOTAL
BASE BID NO. 1 - LOCATIONS 1 - 5
1-2. Construction of bypass pump connection and installation and maintenance of temporary bypass pumping system including pumps, control system and instruments required to maintain uninterrupted conveyance of industrial wastewater flows during construction of the Work, complete at 1 LS $ 86,625.00 86,625.00 $ $300,000.00 300,000.00 $ $215,000.00 $215,000.00 1-3. Relocation of existing IWTF electrical and control equipment, providing such temporary electrical equipment and materials and the re-routing and re-connection of the existing power utility services as shown on the Drawings and as necessary to maintain continuous power to the IWTF pumping facility during the Work until permanent electrical service is established, complete at 1 LS $ 98,175.00 98,175.00 $ $105,000.00 105,000.00 $ $160,000.00 $160,000.00 1-4. Sheeting and shoring for construction of new influent pump station, stormwater lift station and flow diversion structures in this Work , exclusive of excavation safety measures for buried pipeline covered in Bid Item 1-20, complete at 1 LS $ 419,694.00 419,694.00 $ $650,000.00 650,000.00 $ $686,000.00 $686,000.00 1-5. Dewatering to execute construction of the Work, complete at 1 LS $ 231,000.00 $ 231,000.00 $310,000.00 310,000.00 $ $464,000.00 $464,000.00 1-6. Demolition of the pumps, piping, valves and miscellaneous metals and appurtenances in the existing Influent Pump Station, a portion of the existing Influent Pump Station structure and the existing electrical facilities to the limits shown on the Drawings, complete at 1 LS $ 103,950.00 103,950.00 $ $280,000.00 280,000.00 $ $90,000.00 $90,000.00 1-7. Structural work for new Influent PS, including pump wet well, valve vault and Diversion Structure #2, complete at 1 LS $ 1,399,884.00 $ 1,399,884.00 $1,810,000.00 1,810,000.00 $ $1,938,000.00 $1,938,000.00 1-8. Structural work for refurbishment of existing Influent PS to a Stormwater Lift Station, including new top slab, handrails, pump wet well, access ladder and discharge basin with weir wall, complete at 1 LS $ 120,000.00 120,000.00 $ $365,500.00 365,500.00 $ $435,000.00 $435,000.00 1-9. Structural and architectural work for the elevated electrical equipment structure and platform and Electrical Control Building, including roof and doors, for the Work, exclusive of the electrical equipment covered by Bid Item 1-17, complete at 1 LS $ 350,000.00 350,000.00 $ $662,300.00 662,300.00 $ $865,000.00 $865,000.00 1-10. Structural work for the new elevated platform structure for the Diesel Generator, exclusive of the Diesel Generator covered in Bid Item 1-18, complete at 1 LS $ 220,000.00 $ 220,000.00 $336,840.00 336,840.00 $ $468,000.00 $468,000.00 1-11. Mechanical work for the new Influent Pump Station and new Diversion Structure #2, including submersible pumps (3), piping, valves, slide gates (3), bar screen and appurtenances, exclusive of force main, complete at 1 LS $ 919,705.00 919,705.00 $ $1,605,000.00 1,605,000.00 $ $1,356,000.00 $1,356,000.00 1-12. Mechanical work for the new Stormwater Lift Station, including vertical axial/mixed flow pumps (3), slide gates (2), flap gates (3), piping and appurtenances, complete at 1 LS $ 518,480.00 $ 518,480.00 $910,000.00 910,000.00 $ $856,000.00 $856,000.00 1-13.

Site work at the facilities including grading, excavation for the new Influent Pump Station, Diversion Structure #2, Stormwater Lift Station and discharge basin, Elevated Electrical Equipment Structure, elevated platform structure for Diesel Engine Generator Structure, paving and aggregate base surface, guard posts, removal and replacement of fencing and refurbishment of the existing Overflow Basin, complete at
1 LS $ 224,056.00 224,056.00 $ $1,245,600.00 1,245,600.00 $ $108,000.00 $108,000.00 1-14. 24-inch IWW Force Main including fittings and appurtenances as shown on the Drawings, complete at 1 LS $ 86,887.00 $ 86,887.00 $85,000.00 85,000.00 $ $87,000.00 $87,000.00 1-15. 24-inch stormwater pipeline from Stormwater Lift Station to Percolation Pond #1, complete at 1 LS $ 194,204.00 $ 194,204.00 $285,000.00 285,000.00 $ $290,000.00 $290,000.00 1-16. 18-inch Overflow Pipe, 18-inch Return Pipe, 42-inch influent pipe and new head wall structure, all for new Influent Pump Station, and Diversion Structure #2, complete at 1 LS $ 75,664.00 $ 75,664.00 $250,000.00 250,000.00 $ $170,000.00 $170,000.00 1-17. Electrical and instrumentation work for the facilities, including VFDs (3) for Influent Pump Station, Stormwater Lift Station (3) and as shown on the Drawings and described in the Specifications, exclusive of the Diesel Engine Generator covered in Bid Item 1-18, complete at 1 LS $ 1,777,430.00 1,777,430.00 $ $1,250,000.00 1,250,000.00 $ $1,493,000.00 $1,493,000.00 1-18. New Diesel Engine Generator, fuel tank and controls for the facilities, complete at 1 LS $ 209,633.00 $ 209,633.00 $310,000.00 310,000.00 $ $280,000.00 $280,000.00 1-19. Allowance for field changes due to unmarked and underground utilities not shown on the Drawings required to complete the Work, complete at 1 LS $ 57,750.00 $ 50,000.00 $50,000.00 50,000.00 $ $50,000.00 $50,000.00 1-20. For excavation safety measures for all Work, including the required excavation permits, exclusive of the sheeting and shoring work in Bid Item 1-4, complete at 1 LS $ 11,550.00 $ 11,550.00 $36,000.00 36,000.00 $ $10,000.00 $10,000.00 1-21. Contractor’s record drawings for all Work, complete at 1 LS $ 11,550.00 $ 10,000.00 $10,000.00 10,000.00 $ $10,000.00 $10,000.00 1-22. Allowance for compliance with conditions required by permits and implementation of mitigation measures additional to those referred to in the Contract documents for the construction of the Work, complete at 1 LS $ 50,000.00 57,750.00 $ $50,000.00 50,000.00 $ $50,000.00 $50,000.00 TOTAL BASE BID NO. 1 (ITEMS 1-25)
(FOR COMPARISON ONLY)
BASE BID NO. 2 - LOCATIONS 6-8
2-2. Construction of bypass pump connection and installation and maintenance of temporary bypass pumping system including pumps, control system and instruments required to maintain uninterrupted conveyance of industrial wastewater flows during construction of the Work, complete at 1 LS $ 86,625.00 $300,000.00 300,000.000 $ $215,000.00 215,000.00 $ 2-3. Relocation of existing IWTF electrical and control equipment, providing such temporary electrical equipment and materials and the re-routing and re-connection of the existing power utility services as shown on the Drawings and as necessary to maintain continuous power to the IWTF pumping facility during the Work until permanent electrical service is established, complete at 1 LS $ 98,175.00 $105,000.00 105,000.000 $ $160,000.00 160,000.00 $ 2-4. Sheeting and shoring for construction of new Influent Pump Station and flow structures in this Work, exclusive of excavation safety measures for buried pipeline covered in Bid Item 2-15, complete at. 1 LS $ 386,007.00 $650,000.00 650,000.000 $ $686,000.00 686,000.00 $ 2-5. Dewatering to execute construction of the Work, except for Stormwater Lift Station, complete at 1 LS $ 231,000.00 $310,000.00 310,000.000 $ $464,000.00 464,000.00 $ 2-6. Demolition of the pumps, piping and valves in the existing Influent Pump Station and the existing electrical facilities to the limits shown on the Drawings, complete at 1 LS $ 103,950.00 $280,000.00 280,000.000 $ $90,000.00 90,000.00 $ 2-7. Structural work for new Influent PS, including pump wet well, valve vault and Diversion Structure #2, complete at 1 LS $ 1,048,984.00 $1,810,000.00 1,810,000.000 $ $1,938,000.00 1,938,000.00 $ 2-8. Structural and architectural work for the elevated electrical equipment structure and platform and Electrical Control Building, including roof and doors, for the Work, exclusive of the electrical equipment covered by Bid Item 2-14, complete at 1 LS $ 350,000.00 $662,300.00 662,300.000 $ $865,000.00 865,000.00 $ 2-9. Structural work for the new elevated platform for the Diesel Generator, exclusive of the Diesel Generator covered in Bid Item 2-15, complete at 1 LS $ 220,000.00 $336,840.00 336,840.000 $ $468,000.00 468,000.00 $ 2-10. Mechanical work for the new Influent PS and Diversion Structure #2, including submersible pumps (3), piping, valves, slide gates (3), bar screen and appurtenances, exclusive of force main, complete at 1 LS $ 923,632.00 $1,605,000.00 1,605,000.000 $ $1,356,000.00 1,356,000.00 $ 2-11. Site work at the facilities including grading, excavation for the Influent Pump Station, Diversion Structure #2, elevated Electrical Equipment Structure, elevated platform structure for Diesel Generator, paving and aggregate base surface, guard posts, removal and replacement of fencing and refurbishment of the existing Overflow Basin as shown on Drawings, complete at 1 LS $ 246,353.00 $1,245,600.00 1,245,600.000 $ $108,000.00 108,000.00 $ 2-12. 24-inch IWW Force Main including fittings and appurtenances as shown on Drawings, complete at 1 LS $ 57,757.00 $285,000.00 285,000.000 $ $87,000.00 87,000.00 $ 2-13. 18-inch Overflow Pipe, 18-inch Return Pipe, 42-inch influent pipe and new head wall structure, all for new Influent Pump Station and Diversion Structure #2, complete at 1 LS $ 75,664.00 $250,000.00 250,000.000 $ $170,000.00 170,000.00 $ 2-14. Electrical and instrumentation work for the facilities, including including VFDs (3) for Influent Pump Station as shown on the Drawings and described in the Specifications, exclusive of the Diesel Engine Generator covered in Bid Item 2-15, complete at 1 LS $ 1,468,571.00 $1,250,000.00 1,250,000.000 $ $1,493,000.00 1,493,000.00 $ 2-15. New Diesel Engine Generator, fuel tank and controls for the facilities, complete at 1 LS $ 209,633.00 $310,000.00 310,000.000 $ $280,000.00 280,000.00 $ 2-16. Allowance for field changes due to unmarked and underground utilities not shown on the Drawings required to complete the Work, complete at 1 LS $ 30,000.00 $30,000.00 30,000.000 $ $30,000.00 30,000.00 $ 2-17. For excavation safety measures for all Work, including the required excavation permits, exclusive of the sheeting and shoring work in Bid Item 2-4, complete at 1 LS $ 11,550.00 $36,000.00 36,000.000 $ $10,000.00 10,000.00 $ 2-18. Contractor’s record drawings for all Work, complete at 1 LS $ 10,000.00 $10,000.00 10,000.000 $ $10,000.00 10,000.00 $ 2-19. Allowance for compliance with conditions required by permits and implementation of mitigation measures additional to those referred to in the Contract documents for the construction of the Work, complete at 1 LS $ 57,750.00 $50,000.00 50,000.000 $ $50,000.00 50,000.00 $ TOTAL BASE BID NO. 2 (ITEMS 26-50)
(FOR COMPARISON ONLY)
$ 9,030,000.00
$ 7,856,937.00 $ 11,606,240.00
$ 10,075,740.000 6,165,651.00 $
CONTRACTOR #2
1-1. Mobilization, bonds, permits and insurance and demobilization for the Work, complete at LS $ 854,613.00 $700,000.00 $700,000.00 1370 Norman Ave, Santa Clara, CA 95054
Anderson Pacific Engineering Construction, Inc.
(408)970-9900
Mountian Cascade, Inc.
555 Exchange Court, Livermore, CA 94550
(925) 373-8370

DESCRIPTION UNIT
$550,000.00 550,000.000 $ $550,000.00 550,000.00 $
1 $ 700,000.00 $700,000.00 700,000.00 $
2-1. Mobilization, bonds, permits and insurance and demobilization for the Work, without the Stormwater Lift Station, complete at 1 LS $ 550,000.00 $ 10,781,000.00
11/5/2024 2:00 PM J:\p\9317 IWTF influent pump station and Electrical\BID OPERATIONS\BidTab 9317.xlsx Page 1 of 1 City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-660, Version: 1
Amendment No. 2 to the Professional Services Agreement with Griffin Structures Approve a Resolution authorizing the City Manager to enter into Amendment No. 2 to the Professional Services Agreement between the City of Salinas and Griffin Structures for the Hebbron Family Center Revitalization Project to increase the compensation by $201,014 for a maximum compensation not to exceed $1,535,098.

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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: NOVEMBER 19, 2024
DEPARTMENT: PUBLIC WORKS DEPARTMENT

LIBRARY AND COMMUNITY SERVICES
FROM: DAVID JACOBS, PUBLIC WORKS DIRECTOR

KRISTAN LUNDQUIST, LCS DIRECTOR
TITLE: AMENDMENT NO. 2 TO THE PROFESSIONAL SERVICES

AGREEMENT BETWEEN THE CITY OF SALINAS AND GRIFFIN

STRUCTURES
RECOMMENDED MOTION:

A motion to approve a Resolution authorizing the City Manager to enter into Amendment no. 2 to the Professional Services Agreement between the City of Salinas and Griffin Structures for the Hebbron Family Center Revitalization Project to increase the compensation by $201,014 for a maximum compensation not to exceed $1,535,098.

EXECUTIVE SUMMARY:

On December 8, 2021, the City issued a Request for Qualifications (RFQ) for Project and Construction management and Community Engagement assistance for the Hebbron Family Center Revitalization Project. Griffin Structures was selected as the most qualified for the Hebbron Project. On May 24, 2022, through Resolution No. 22361, the City Council approved a professional services agreement with Griffin Structures which includes a scope of work, budget and schedule for:

1. Project management

2. Demolition plans and specifications

3. Community outreach

4. Design development

5. Management of the selection of a Design Build Entity

6. Construction oversight
The final scope, budget and schedule did not include special inspection and testing. Currently the City does not have the resources or expertise to cover special inspection and testing for this Page | 2
project. Griffin has submitted a proposal to cover special inspection and testing for the Hebbron Family Center Project in the amount of $201,014.

BACKGROUND:

In July of 2019, the Salinas City Council adopted the Parks, Recreation and Libraries Master Plan.

The Master Plan represents a community engagement effort that connected with thousands of residents and community leaders over eighteen (18) months. The plan assessed the state of our current park, recreation, and library facilities and engaged resident to prioritize the need for maintenance. The Hebbron Family Center is not only identified in the Master Plan to have “no architectural value” but scored and ranked the highest in priorities due to its current structural conditions as well as community feedback. In addition, the Alisal Vibrancy Plan (AVP) also adopted by the City Council in 2019, is an action-oriented, comprehensive strategy for the City of Salinas’ (City’s) East Salinas (Alisal) neighborhoods. Created with equity at its core, the AVP is a community-driven plan to alleviate and reverse decades of neglect and underinvestment in the 95% Hispanic/Latino Alisal neighborhoods of the City and to improve the quality of life for residents by building upon the social and cultural wealth of the Alisal. Rebuilding the Hebbron Family Center was identified by the community as a top priority in the AVP as a vital community resource that is in serious disrepair.

The Hebbron Family Center has served residents since the 1960s, the Center was once a community church and then repurposed as a community center in the 1970s. The center has provided many critical programs and services for the community, including after-school recreation and homework assistance programs, a teen lounge, martial arts training, food bank distribution, citizenship classes, a pre-kinder program, and much more. Unfortunately, the Hebbron Community Center closed in 2020 due to the ongoing pandemic and critical safety issues such as roof leaks, potential mold, and significant foundation problems.

Following the recommendations of the Master Plan, staff has worked diligently to secure funding sources to rebuild the Hebbron Family Center. In 2019 and 2020, LCS submitted a Prop 68 application to the Office of Grants and Local Services (OGALS) but was unsuccessful in securing funds for the renovation of the Hebron Family Center. In addition to seeking grant funding, the City submitted a direct request for funds from the State of California through Assemblymember Rivas’ office. The City was notified in September 2021 that the Hebbron Family Center Revitalization Project would receive $8.1 Million from the State.

In April 2022, the LCS and PW Departments made an inquiry to the CDD about the availability of HUD CDBG Entitlement Funds to support the project’s pre-development costs. CDD staff reviewed the request in consultation with HUD staff and have deemed the project as an eligible activity to receive CDBG Entitlement Funds as the project satisfies the National Objective of Page | 3
benefiting a Low Mod Area where 51% of the residents fall within the low- and moderate-income categories. Therefore, CDBG funds to support the Hebbron Family Center have been allocated.

On May 24, 2022 with resolution 22361 the City Council approved a professional services agreement with Griffin Structures which includes a scope of work, budget and schedule for:

1. Project management

2. Demolition plans and specifications

3. Community outreach

4. Design development

5. Management of the selection of a Design Build Entity

6. Construction oversight
On October 22, 2024, through Resolution No. 23139, the City Council approved amendment no.1 to the professional services agreement to include labor compliance for the project.

The final scope, budget and schedule did not include special inspection and testing. Currently the City does not have the resources or expertise to cover special inspection and testing for this project.

Griffin has submitted a proposal to cover special inspections and testing for the Hebbron Family Center Project in the amount of $201,014.

The total contract will have a not to exceed amount of $1,535,098.

Given that Griffin is already providing oversight of this project, City staff recommends amending the existing agreement with Griffin Structures so they may perform these additional services without delay to the project.

On April 4, 2023, a contract for the demolition of the old Hebbron Family Center was awarded to Randazzo Enterprises, Inc.

On August 8, 2023, the demolition project was accepted by City Council.

On March 5, 2024, a design build contract was awarded to Diede Construction.

CEQA CONSIDERATION:

Categorical Exemption. The City of Salinas has determined that the project is exempt from the California Environmental Quality Act (CEQA) Guideline (Section 15300, Class 2) because it involves replacement and reconstruction of an existing structure.

No Significant Impact. The City of Salinas has determined that the project is of no significant impact under 24 CFR 58.32 – National Environmental Policy Act. No factors were found to be significant on a stand-alone basis.

Page | 4
CALIFORNIA GOVERNMENT CODE §84308 APPLIES:

No.

STRATEGIC PLAN INITIATIVE:

This action supports the Council’s initiative of “Youth and Seniors” and “Economic Development” and implements a top priority of the PRLMP and AVP.

DEPARTMENTAL COORDINATION:

The Public Works Department worked with Library & Community Services Department and Community Development Departments to develop the RFQ, rate and rank the SOQs, interview the top firms and negotiate a final scope of work and budget proposal.

FISCAL AND SUSTAINABILITY IMPACT:

Fund Appropriation Appropriation
Name
Total
Appropriation
Amount for
recommendation
FY 24-25
Operating
Budget Page
Last Budget
Action (Date,
Resolution)
5800 55.9165 Outside servicesOtherprofessional $160,096 $160,096 N/A N/A 5800 55.9336 Outside servicesother and
professional
$496,555 $40,918 N/A N/A
ATTACHMENTS:

Resolution
Amendment #2
Griffin Structures Fee Proposal
1 RESOLUTION NO. (N.C.S.)

A RESOLUTION OF THE SALINAS CITY COUNCIL APPROVING
AMENDMENT NO. 2 TO THE PROFESSIONAL SERVICES AGREEMENT

BETWEEN

THE CITY OF SALINAS AND GRIFFIN STRUCTURES
WHEREAS, the Parks, Recreation and Libraries Master Plan identified Hebbron Family Center to have “no architectural value” and was the highest ranked priority due to its current structural conditions; and
WHEREAS, the Hebbron Family Center Revitalization Project has received $8.1 Million from the State of California; and
WHEREAS, The City issued a Request for Qualifications for Project and Construction management and Community Engagement assistance; and
WHEREAS, Council with Resolution 22361 approved a professional services agreement with Griffin Structures; and
WHEREAS, Council with Resolution 23139 approved Amendment #1 to the professional services agreement with Griffin Structures; and
WHEREAS, the approved professional service agreement did not include Special Inspections as part of the original scope of services; and WHEREAS, Griffin Structures has submitted fee proposal for special inspection and testing in the amount to $201,014; and
WHEREAS, staff recommends sole source award of this work to Griffin Structures as no other consulting entity is currently as familiar with the project and the timing involved in meeting the grant deadlines. Griffin also can begin work immediately.

NOW THEREFORE, BE IT RESOLVED THAT THE COUNCIL OF THE CITY OF SALINAS approves Amendment No. 2 to the Professional Services Agreement between the City of Salinas and Griffin Structures and authorizes the City Manager to sign Amendment No. 2 to the agreement to increase the compensation by $201,014 for a maximum compensation not to exceed $1,535,098.

PASSED AND APPROVED this 19th day of November 2024, by the following vote:

AYES:

NOES:
2 ABSENT:

ABSTAIN:

APPROVED:
________________________
Kimbley Craig, Mayor
ATTEST:
_________________________
Patricia M. Barajas, City Clerk

Page 1 of 1 ends

Version: July 2024
AGREEMENT —AMENDMENT NO. 2 TO

PROGRAM AND CONSTRUCTION MANAGEMENT SERVICES FOR THE

HEBBRON FAMILY CENTER REVITALIZATION PROJECT

BETWEEN
GRIFFIN STRUCTURES, INC., AND CITY OF SALINAS
This Amendment No. 2 to the to the Agreement for Professional Services (the “Amendment”) is entered into this ___ day of ________ 2024, by and between the City of Salinas (the “City”) and Griffin Structures, Inc., (the “Consultant”). City and Consultant may be individually referred to herein as a “Party” and collectively the City and Consultant may be referred to as the “Parties.”

RECITALS
WHEREAS, the City and Consultant first entered into an agreement for Program And Construction Management Services for the Hebbron Family Center Revitalization Project effective May 24, 2022, pursuant to which Consultant agreed to act as and provide certain services to the City for compensation (the “Agreement”); and WHEREAS, the City and Consultant desire to amend the Agreement to reflect additional scope of services and additional compensation.

NOW, THEREFORE, in mutual consideration of the terms and conditions set forth below, the Parties agree as follows:

TERMS

1. The Scope and Services set forth in the Agreement is amended to include special inspections and testing as outlined in Attachment ASR 02

2. The total amount of compensation to be paid under the Agreement is hereby amended to include $201,014 for special inspections and testing for a not to exceed amount of $1,534,098.

3. All other covenants, terms, and conditions set forth in the Agreement, Amendment No. 1 and not amended by this Amendment shall remain in full force and effect as if fully set forth herein.

IN WITNESS WHEREOF, the undersigned, as authorized representatives of the City and Contractor have entered into this Agreement as of the date first written above.

CITY OF SALINAS Griffin Structures, Inc.
___________________________________
René Mendez, City Manager
Printed Name
Title
APPROVED AS TO FORM:
___________________________________
□ Christopher A. Callihan, City Attorney
□ Rhonda Combs, Assistant City Attorney
ASR 02

GRIFFIN STRUCTURES FEE PROPOSAL

HEBBRON FAMILY CENTER REVITALIZATION PROJECT

CITY OF SALINAS
10/09/2024
Griffin Structures’ Fee Proposal is based on all reasonable costs necessary to provide Special Inspections and Testing services for the Hebbron Family Center Revitalization Project. For these requisite services, Griffin Structures proposes the following Not to Exceed Fee:

Special Inspections & Testing (BAGG Engineers): $ 174,795 Contract Administration and Mark Up (15%): $ 26,219
Total $ 201,014
All proposed hourly rates are fully burdened and include overhead, profit, taxes, and benefits. The hours identified for each individual employee and task are estimates only and are not to be construed as not to exceed hours for any individual task, phase, or time-period. We reserve the right to reallocate hours between staff members and tasks to accomplish the overall objectives and requirements of the project. Services are based on the attached proposal for BAGG engineers. Any extension of the schedule or services may result in additional fee, in good faith negotiation with the City.

ADDITIONAL SCOPE OF SERVICES
Per the City’s request, this Add Service Request consists of scope related to Special Inspections and Testing. For this service we have requested the attached proposal for the BAGG Engineers which articulates the scope services, the number of months it includes, and a price per month. www.baggengineers.com
phone: 650.852.9133fax: 650.852.9138[email protected] 138 Charcot Ave, San Jose, CA 95131

PROPOSAL
TO: Griffin Structures, Inc. DATE: September 25, 2024
1 Technology Drive
Building 1, Suite 829 Job No.: GRIFS-24-02
Irvine, CA 92618
CLIENT: same as above
Attn: Hernan Munayco
BILLING ADDRESS: same as above
Dear Mr. Munayco:

Following a review of the progress structural drawings, this proposal summarizes the geotechnical observation & testing and special inspection services we are prepared to perform and suggests contract arrangements, as follows:

TYPE OF SERVICES: Geotechnical Observation, Testing & Special Inspection Services PROJECT TITLE: Hebbron Community Center
SITE LOCATION: 683 Fremont Street
Salinas, California
DESCRIPTION:

The subject project will consist of construction of a new single story family center building at 683 Fremont Street in Salinas, California. The new construction will be supported on conventional footings and slab on gade foundation. The new building will be a wood framed structure with an approximate floor area of 7,695 SF. Exterior improvements will include new concrete flatwork, new AC pavement, bioretention area, landscaping areas and underground utilities.

SCOPE OF SERVICES:

Based on the progress structural plans dated September 9, 2024, we anticipate the scope of our services will consist of:

Geotechnical Observation and Testing Services:
• Footing Excavation and Grading
Proposal to: Diede Construction PROPOSAL No.23-518
September 25, 2024 Page 2
• Field Density Testing of Subgrade
• Field Density Testing of Aggregate Base
• Trench Bakcfill Density Testing
Special Inspection and Testing Services:
• Reinforcing Steel Placement Inspection
• Concrete Placement Inspection
• CMU Wall Placement and Sampling
• Non-Shrink Grout Placement Inspection
• Post Installed Anchor Bolt Inspection
• Material ID & Welding Inspection
• Shear Wall and Diaphragm Nailing Inspection
• New Paving and Reconditioning
• Laboratory Compression Testing of Concrete and Grout Samples • Laboratory compaction Curve for Native soil, Aggregate Base and Backfill Material All materials and/or work will be examined and tested for conformance with the approved project plans and specifications, and all reports will be submitted within 7 days of inspection and/or testing, except that failing tests will be reported immediately.

These services will be performed in accordance with the attached “General Conditions for CoMET Services”. An estimate of the fees to provide these services is attached to this proposal; however, the total cost will depend upon a number of factors that are beyond our control. Among the cost determining factors are:
➢ The number of working days required by the subcontractors to complete each work element.
➢ The duration of each of our site visits required for inspection of various construction activities.
➢ The number of failing tests, number of welders, location of the fabrication shop, nonconformance items, and/or unidentified structural steel members. ➢ Revisions to scheduled activities that will require additional testing visits, sampling, or laboratory testing.
➢ Deferred items not included in the original estimate (EX: shop location and the need to retain out-of-State 3rd party inspection agencies to provide inspections).

FEE AND CONTRACTUAL ARRANGEMENTS:

We propose to perform these services on a time-and-expense basis in accordance with the attached “Schedule of Charges” and “General Conditions for CoMET Services”. On this basis, we have estimated that the total fee for the scope of services outlined above will be $174,795.

The breakdown of our estimated fee is shown on the attached Fee Estimate and Scope of Services.

Proposal to: Diede Construction PROPOSAL No.23-518
September 25, 2024 Page 3
The fees associated with our inspection services and testing will be based on the actual hours worked.

We will not have any control over the progress of the work or the performance of the subcontractors.

Therefore, all overages on inspection duration pertaining to the slower than expected work progress, delays caused by the inclement weather, unanticipated site visits beyond the number estimated herein, longer than assumed duration of the site visits, or a change in the scope of work outlined in this proposal, will be billed with a request for contract extension.

This proposal does not include any allowances for over-time rates pertaining to work on weekends or holidays. A multiplier of 1.5 and 2.0 will be applicable for our technicians for work on Saturdays and Sundays/Holidays, respectively. Over-time rates will also be applicable when and if work extends beyond 8 hours on regular work days.

SCHEDULE:

Our field staff will be available to service your project within 48 hours of your advance notice.

CLOSURE:

Thank you for the opportunity to submit this proposal. If the content of this proposal meets your approval, please sign and return one executed copy for our files to indicate acceptance of this proposal and its attachments.

Very Truly Yours
BAGG Engineers
Anushree Bharadwaj Alan O’Driscoll
Anushree Bharadwaj, PE Alan O’Driscoll
Sr. Engineer Vice President
Attachments: Fee Estimate and Scope of Services
Important Information about This CoMET QA Proposal
BAGG Engineers 2023 Fee Schedule (12/22)
General Conditions for CoMET Services (2/12)

THE ABOVE PROPOSAL AND ALL ENCLOSURES HAVE BEEN READ AND UNDERSTOOD, AND ARE HEREBY AGREED TO AND ACCEPTED. IT IS AGREED THAT "SCHEDULE OF CHARGES" AND "TERMS OF AGREEMENT" FORM AN EXPRESS PART OF THIS CONTRACT AS EVIDENCED BY MY SIGNATURE BELOW.

Proposal to: Diede Construction PROPOSAL No.23-518
September 25, 2024 Page 4
ACCEPTED BY: __________________________________________________ Date: ____________ Signature of Person Authorized to Accept
_______________________________________________________________________ Typed or Printed Name of Signatory
_____________________________________________________________________________________ Name of Company or Organization
Project: Hebbron Community Center Date: 10/9/2024
File No.: 24-518
Client: Diede Construction
Hourly Rate--ACI Inspector $150.00 2 hour minimum
Hourly Rate--AWS Inspector $160.00 2 hour minimum
Mileage $130.00 per trip
Item Number of Trips Hours or Units Total time Rate unit Fee Footing Excavation Observation 3 6 18 $150.00 hr. $2,700.00 Field Density Testing of Subgrade 15 8 120 $150.00 hr. $18,000.00 Field Density Testing of Aggregate Base 10 8 80 $150.00 hr. $12,000.00 Trench Backfill Density Testing 25 6 150 $150.00 hr. $22,500.00 Mileage to jobsite 53 18 $130.00 trip $6,890.00
Nuclear Density Gauge 50 2 100 $20.00 trip $2,000.00
Subtotal of Geotechnical Observation & Testing (1) $64,090.00 Item Number of Trips Hours or Units Total time Rate unit Fee Reinforcing Steel Placement Inspection for new Footings and Slabs 8 6 48 $150.00 hr. $7,200.00 Concrete Placement Inspection for New Footings and Slabs 8 8 64 $150.00 hr. $9,600.00 Concrete Placement for Exterior Flatwork 3 8 24 $150.00 hr. $3,600.00 Reinforcing Steel Placement Inspection for CMU Walls 3 6 18 $160.00 hr. $2,880.00 CMU Wall Placement Inspection and Sampling 5 8 40 $150.00 hr. $6,000.00 Non-Shrink Grout Placement Inspection 2 8 16 $150.00 hr. $2,400.00 Shear Wall & Diaphragm Nailing Inspection 4 8 32 $150.00 hr. $4,800.00 Post Installed Anchor bolt Inspection 2 6 12 $150.00 hr. $1,800.00 Material ID & Welding Inspection* 20 10 200 $160.00 hr. $32,000.00 New Paving and Reconditioning 2 10 20 $150.00 hr. $3,000.00 Sample Pickup 18 4 72 $150.00 hr. $10,800.00
Mileage to jobsite 75 454 $130.00 trip $9,750.00
Subtotal of Special Inspections (2) $93,830.00
Laboratory Testing Sets Samples Rate Unit Fee
Laboratory Compaction Curve 3 3 $350.00 each $1,050.00
Concrete Compression Testing 11 55 $50.00 each $2,750.00 Grout Prism Compression Testing 5 20 $55.00 each $1,100.00 Non-Shrink Grout Compression Testing 2 10 $50.00 each $500.00 Subtotal of Laboratory Testing (3) $5,400.00
Reports and Project Management Units Rate Fee
Project Management, Review WP certificates, Supervision (in hours) 20 $180.00 hr. $3,600.00 Final Verified Report of Special Inspections and Testing 1 $400.00 hr. $400.00 Unpaid Invoice for previous demolition work $7,475.00
$11,475.00
$174,795.00
*Shop time and mileage will depend on the fabricator's shop location.

Fee Estimate and Scope of Services
Estimated Total Inspection and Testing Budget (1+2+3+4) Subtotal of Reports, Project Management and Engineering (4) Special Inspections Budget
Geotechnical Observation and Testing Budget
BAGG Engineers 1 of 1 FMT 2024 Scope
Activity ID Activity Name Original
Duration
Start Finish
CITY OF SA CITY OF SALINAS DB NEW HEBBRON FA L M 634d 3/5/24 11/28/25 Preconstru Preconstruction 284d 3/5/24 12/13/24
A1010 Contract Issuance & Notice to Proceed 0d 3/5/24 3/5/24A1020 100% Design Development 71d 3/5/24 5/14/24A1650 CalWater 1318 Form Sent to Owner 0d 3/5/24 3/5/24A1030 Client Review - 100% DD 14d 5/15/24* 5/28/24A1040 50% Construction Documents 0d 6/28/24* 6/28/24A1050 Client Review - 50% CD 14d 6/28/24 7/11/24A1060 95 % Drawings/Specs Submit for Permit 0d 7/26/24* 7/26/24A1070 City Permit Review 26d 7/26/24 8/20/24A1120 PG&E Payment Requested from Owner 0d 8/1/24* 8/1/24A1140 PG&E 1st Payment Follow up 0d 8/5/24* 8/5/24A1150 PG&E 2nd Payment Follow Up 0d 8/15/24* 8/15/24A1660 CalWater 1318 Form Sent to DDC 0d 8/15/24* 8/15/24A1160 PG&E 3rd Payment Follow Up 0d 8/19/24* 8/19/24A1640 Cal Water Preconstruction KickOff Meeting 0d 8/20/24* 8/20/24A1080 DBE Team Addresses 1st Round Comment 30d 8/21/24* 9/19/24A1220 PG&E Electric Estimate 21d 8/26/24* 9/15/24A1130 Payment sent to PG&E 0d 8/28/24* 8/28/24A1670 1318 Form returned to Cal Water 0d 9/13/24* 9/13/24A1680 Fire Marshall Approved Plans returned to Ca 0d 9/13/24 9/13/24A1690 Field Meet with Cal Water 0d 9/13/24 9/13/24A1700 CalWater Estimate & Full Payment 21d 9/13/24 10/3/24A1610 PG&E Electric Drawings & Contract Receive 0d 9/16/24 9/16/24A1090 City Review/Permits 2nd Round 14d 9/20/24 10/3/24A1230 PG&E Gas Estimate 20d 9/23/24* 10/12/24A1110 Groundbreaking 0d 9/28/24* 9/28/24A1100 City Issue Permit for Construction 0d 10/4/24 10/4/24A1710 CalWater Installation 71d 10/4/24 12/13/24A1620 PG&E Gas Drawings & Contract Received 0d 10/13/24 10/13/24A1630 PG&E Onsite Preconstruction Meeting 0d 10/13/24 10/13/24 Constructi Construction 488d 7/29/24 11/28/25
A1170 Bid Project 30d 7/29/24* 8/27/24A1180 Subcontract + POs 30d 8/28/24 9/26/24A1210 SWPPP 20d 9/11/24* 9/30/24A1190 Schedule 20d 9/27/24 10/16/24A1240 Staking 15d 10/1/24 10/15/24A1250 Grade & AB Site 40d 10/16/24 11/24/24A1200 Submittals 50d 10/17/24 12/5/24A1260 Underground Site 40d 11/30/24* 1/8/25A1350 Site Electric 40d 11/30/24* 1/8/25A1370 Building Fd 40d 12/10/24* 1/18/25A1270 Site Concrete 40d 1/9/25 2/17/25A1380 Structural Steel 30d 1/19/25 2/17/25A1390 Frame Walls & Roof 90d 1/19/25 4/18/25A1300 Landscape 20d 1/29/25* 2/17/25A1290 Trash Enclosure 30d 2/8/25* 3/9/25A1320 Fence & Gates 50d 2/8/25* 3/29/25A1550 Fire Sprinkler 70d 3/30/25* 6/7/25A1560 Plumbing 70d 3/30/25* 6/7/25 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 2024 2025 2026
11/28/25, CITY OF SA
12/13/24, Preconstruction
Contract Issuance & Notice to Proceed
100% Design Development
CalWater 1318 Form Sent to Owner
Client Review - 100% DD
50% Construction Documents
Client Review - 50% CD
95 % Drawings/Specs Submit for Permit
City Permit Review
PG&E Payment Requested from Owner
PG&E 1st Payment Follow up
PG&E 2nd Payment Follow UpCalWater 1318 Form Sent to DDC PG&E 3rd Payment Follow Up
Cal Water Preconstruction KickOff Meeting
DBE Team Addresses 1st Round Comments
PG&E Electric Estimate
Payment sent to PG&E
1318 Form returned to Cal WaterFire Marshall Approved Plans returned to Cal WaterField Meet with Cal Water CalWater Estimate & Full Payment
PG&E Electric Drawings & Contract Received
City Review/Permits 2nd Round
PG&E Gas Estimate
Groundbreaking
City Issue Permit for Construction
CalWater Installation
PG&E Gas Drawings & Contract ReceivedPG&E Onsite Preconstruction Meeting 11/28/25, Construction
Bid Project
Subcontract + POs
SWPPP
Schedule
Staking
Grade & AB Site
Submittals
Underground SiteSite Electric
Building Fd
Site ConcreteStructural Steel
Frame Walls & Roof
Landscape
Trash Enclosure
Fence & Gates
Fire SprinklerPlumbing
CITY OF SALINAS DB NEW HEBBRON FAMILY CENTER 9/4/24 13:52 Actual Work Remaining Work Critical Remaining Work Mi... Page 1 of 2 Diede Construction Activity ID Activity Name Original
Duration
Start Finish
A1570 HVAC 70d 3/30/25* 6/7/25A1580 Electrical 70d 3/30/25* 6/7/25A1280 Paving New & Recondition 20d 4/19/25* 5/8/25A1310 Bioretention 20d 4/19/25* 5/8/25A1400 Roofing 30d 4/19/25* 5/18/25A1440 Windows 20d 4/19/25 5/8/25A1330 Benches 10d 4/29/25* 5/8/25A1340 Athletic Equipment 10d 4/29/25* 5/8/25A1360 Stripe 10d 4/29/25* 5/8/25A1410 Lath & Plaster 60d 4/29/25* 6/27/25A1420 Insulation 20d 6/24/25* 7/14/25A1430 DrFrHdw 30d 7/9/25* 8/8/25A1510 Rollup Doors 20d 8/2/25* 8/22/25A1450 Drywall 30d 8/23/25* 9/21/25A1520 Cabinets & Tops 20d 9/19/25* 10/8/25A1460 Paint 30d 10/9/25* 11/7/25A1470 Accoustical 30d 10/10/25* 11/8/25A1480 Ceramic Tile 30d 10/10/25* 11/8/25A1490 Seal Concrete 30d 10/10/25* 11/8/25A1500 Flooring & Base 30d 10/10/25* 11/8/25A1720 Owner Equipment 10d 11/9/25 11/18/25A1530 Toilet Partitions & Accessories 10d 11/10/25* 11/19/25A1540 Signage 10d 11/10/25* 11/19/25A1590 Final Clean 10d 11/19/25* 11/28/25A1600 Final Inspection 10d 11/19/25* 11/28/25 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 2024 2025 2026
HVACElectrical
Paving New & ReconditionBioretention
Roofing
WindowsBenchesAthletic EquipmentStripe
Lath & Plaster
Insulation
DrFrHdw
Rollup Doors
Drywall
Cabinets & Tops
Paint
AccousticalCeramic TileSeal ConcreteFlooring & Base
Owner Equipment
Toilet Partitions & AccessSignage
Final CleanFinal Inspection
CITY OF SALINAS DB NEW HEBBRON FAMILY CENTER 9/4/24 13:52 Actual Work Remaining Work Critical Remaining Work Mi... Page 2 of 2 Diede Construction City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-662, Version: 1
Third Amendment to the Professional Services Agreement with Harris and Associates for the Salinas Creeks Maintenance and Enhancement Plan
Approve a Resolution authorizing the City Manager to negotiate and execute Third Amendment with Harris and Associates to expand the scope of work and increase the compensation by $88,221 for a maximum compensation not to exceed $784,414.

City of Salinas Page 1 of 1 Printed on 11/14/2024
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Page | 1

CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: NOVEMBER 19, 2024
DEPARTMENT: PUBLIC WORKS
FROM: DAVID JACOBS, DIRECTOR
BY: HEIDI NIGGEMEYER, NPDES PROGRAM MANAGER
TITLE: THIRD AMENDMENT TO THE PROFESSIONAL SERVICES

AGREEMENT BETWEEN THE CITY OF SALINAS AND HARRIS

AND ASSOCIATES FOR THE SALINAS CREEKS

MAINTENANCE AND ENHANCEMENT PLAN
RECOMMENDED MOTION:

A motion to approve a Resolution authorizing the City Manager to negotiate and execute Third Amendment with Harris and Associates to expand the scope of work and increase the compensation by $88,221 for a maximum compensation not to exceed $784,414.

EXECUTIVE SUMMARY:

The City entered into an Agreement with Harris and Associates to obtain streambed alteration permits for Gabilan and Natividad Creeks under a Professional Services Agreement. Amendment 1 was approved by Council (Resolution No. 22827) to increase the scope of services to prepare design plans and complete the permitting process following information received from the initial feasibility study. Amendment 2 was approved by Council (Resolution No. 23072) to increase the scope of services to complete the feasibility study, permitting, conceptual mitigation plan w/engineering designs, and evaluation of Ryder Ranch parcel for potential mitigation bank project.

Amendment 3 will add to the scope of services in the amount of $88,221 to finalize all creek permits, revise the Natividad creek project design and biological reports, and revise activity impact calculations. The total amount of the Agreement upon approval of Amendment 3 is not to exceed $784,414.

BACKGROUND:

The 2017 winter storms caused heavy erosion and large amounts of silts to be deposited at Gabilan Creek, Natividad Creek, and Santa Rita Creek. In the process of performing emergency work as a result of the storm damage, staff discovered that permits required for the maintenance work within these creeks had expired.

The primary purpose of these essential drainage facilities is to convey flood water in order to Page | 2
protect property, human health and safety; however, opportunities exist which could enhance the ecological health of the creeks’ riparian zones. Adding an ecological element to any restoration project would not only improve habitat along the drainage facility but also could have added benefits such as increasing flood water capacity, water quality, infiltration and percolation, cost effectiveness of maintenance, climate resiliency and recreational opportunities. Gabilan, Natividad, and Santa Rita Creeks offer a chance to create a nexus for these benefits.

On December 22, 2022, the City authorized the initial scope of work for $85,729 to initiate the permitting process to obtain streambed alteration permits for Gabilan and Natividad Creeks under a Professional Services Agreement. The scope of work included the following:
 Initiate the permitting process for ongoing maintenance activities in Gabilan and Natividad Creeks
 Identify ecological enhancement opportunities
 Draft a conceptual plan the improves flood capacity, water quality, habitat and infiltration of surface flows, and
 Perform a field evaluation of existing conditions to better understand the level of investigation and analysis required to successfully complete an engineered design During the permitting process for Gabilan and Natividad Creeks, the Regional Water Quality Control Board indicated the requirement of mitigation areas such that the ongoing maintenance does not continually require disturbance of the flora and fauna within the stream bed. In cooperation with Harris and their subconsultants, staff discussed various mitigation scenarios, evaluated alternatives, and considered the constraints along with need to remove silt deposits from streams and to conduct regular maintenance activities.

The project, called the “Salinas Creeks Maintenance and Enhancement Plan”, advanced to the next phase which involved preparation of design plans and completion of the permitting process based on information acquired during the feasibility study. This included elements required by the permitting agencies that were not considered in the original scope of work. Collectively the additional scope included:
1) Project Management and Project Description
2) Technical Studies to Support Project Permitting
3) CEQA Compliance/Documentation
4) Regulatory Compliance/Permit Applications
5) Natividad Creek and Gabilan Creek Maintenance Plan and Conceptual Mitigation Plan 6) Concept Level, 65%, and 100% Design Plans.

The additional scope represented a net increase of $278,139 to the original agreement. On October 24, 2023, Amendment 1 was approved by Council via Resolution No. 22827 to increase the scope of services of the Agreement by $278,139 for a total not to exceed $363,868 with the Agreement term expiring on December 31, 2024.

It came to the attention of NPDES staff that permitting for work in Santa Rita Creek and the costs for the Gabilan and Natividad permits were not included in the initial “Salinas Creeks Maintenance and Enhancement Plan” project. A streambed alteration permit is required for work in Gabilan, Natividad, and Santa Rita Creeks. Therefore, a cost estimate was requested from Harris and Page | 3
Associates to complete the required permitting and mitigation planning work for Santa Rita Creek as had been contracted for completion for Natividad and Gabilan creeks and add the costs of the permits for Gabilan and Natividad Creeks. The additional scope represented and net increase of $332,325 to the original Agreement. On August 20, 2024, Amendment 2 was approved by Council via Resolution No. 23072 to increase the scope of services of the Agreement by $332,325 for a new total not to exceed $696,193 and extend the Agreement term to September 1, 2026.

Amendment 3 will increase the scope of services of the Agreement for the “Salinas Creeks Maintenance and Enhancement Plan” project by $88,221 to complete the permitting for Gabilan and Natividad Creeks, revise Natividad Creek design plans and biological reports, and further evaluate an agricultural parcel called “Ryder Ranch” for potential use as a wetlands mitigation bank for an Agreement amount not to exceed $784,414. An appraisal must be performed before the City can consider purchase of this parcel. Development of a wetlands mitigation bank could provide mitigation “credits” for any work the City performs that requires mitigation measures by the State agencies.

Agreement Description Resolution Date Agreement
Amount
Original
Initiate permitting process to obtain
streambed alteration permits for Gabilan
and Natividad Creeks
N/A Dec 22, 2022 NTE $85,729
Amendment 1
Prepare mitigation project design plans
and complete permitting process
following information received from
initial feasibility study
22827 Oct 24, 2023 NTE $278,139
Amendment 2
Complete feasibility study, permitting,
conceptual mitigation plan
w/engineering designs for Santa Rita
Creek
23072 Aug 20, 2024 NTE $332,325
Amendment 3
Revise Natividad Creek mitigation
project design plans and biological
reports and further evaluate Ryder Ranch
for potential mitigation banking
TBD Nov 19, 2024 NTE $88,221
Final
Agreement
Total
NTE $784,414
CEQA CONSIDERATION:

The proposed scope of work includes making a determination as to the extent if any, the project has the potential for causing a “significant effect on the environment”. This will be examined during the CEQA process along with any relevant information compiled and submitted. In and of itself however, the amendment of an agreement which includes such a CEQA determination does not constitute a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).

CALIFORNIA GOVERNMENT CODE §84308 APPLIES:

No
Page | 4
STRATEGIC PLAN INITIATIVE:

The proposed project and agreement meet the City Council’s goal of Infrastructure and Environmental Sustainability (City of Salinas Strategic Plan 2022-2025) by improving City maintenance of creeks.

DEPARTMENTAL COORDINATION:

Public Works will advance this project through coordination with Engineering and Maintenance Services with additional input from the Department of Library and Community Services given that the streams are located within or along City parks.

FISCAL AND SUSTAINABILITY IMPACT:

Fund Appropriation Appropriation
Name
Total
Appropriation
Amount for
recommendation
FY 24-25
Operating
Budget Page
Last Budget
Action (Date,
Resolution)
3911 50.8192-63.5900 Outside servicesOther
professional
$1,296,986 $88,221 N/A 8/20/24
Reso 23072
The additional requested funds of $88,221 will be utilized from American Rescue Plan Act (ARPA) funds appropriated to the Public Works Dept (Fund 3911.50.8192 – Green Infrastructure).

ATTACHMENTS:

Harris and Associates PSA Amendment 3 Resolution
Harris and Associates PSA Amendment 3
Exhibit B3 Additional Scope of Work
Page | 1
RESOLUTION NO. (N.C.S.)

A RESOLUTION APPROVING AN AMENDMENT TO THE PROFESSIONAL SERVICES

AGREEMENT BETWEEN THE CITY OF SALINAS AND HARRIS AND ASSOCIATES FOR

THE SALINAS CREEKS MAINTENANCE AND ENHANCEMENT PLAN
WHEREAS, winter storms in 2017 caused heavy erosion and silts deposits at several of the City’s waterways requiring maintenance work; and
WHEREAS, specific permits are required for repair or maintenance work in the City waterways; and
WHEREAS, on December 22, 2022, the City authorized the initial scope of work for permitting of Natividad and Gabilan Creeks for $85,729 under a Professional Service Agreement; and WHEREAS, the “Salinas Creeks Maintenance and Enhancement Plan” project advanced to the next phase which involved preparation of design plans and completion of the permitting process based on information acquired during the feasibility study; and WHEREAS, on October 24, 2023, the City authorized Amendment 1 to increase the scope of work for permitting of Natividad and Gabilan Creeks by $278,139 to include the additional permitting requirements; and
WHEREAS, on August 20, 2024, the City authorized Amendment 2 to increase the scope of work for permitting of Santa Rita Creek by $332,325 and extend the Agreement term to September 2026; and
WHEREAS, Amendment 3 will add additional scope of services and increase compensation by $88,221 to complete permitting for Santa Rita, Gabilan and Natividad creeks and revise project plans for upper Natividad creek.

NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SALINAS, that Amendment No 3 to the Professional Services Agreement between the City of Salinas and Harris and Associates to provide professional services related to the Salinas Creeks Maintenance and Enhancement Plan project for an additional amount of $88,221 for a total Agreement amount not to exceed $784,414; and
BE IT FURTHER RESOLVED that the City Manager of Salinas is hereby authorized and directed, for and on behalf of the City of Salinas, and as its act and deed, to execute the attached Amendment No 3 to the Professional Services Agreement. between the City of Salinas, a Charter City, and Harris and Associates, a California Corporation.

PASSED AND APPROVED this 19th day of November 2024 by the following vote:

Page | 2
AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:

Kimbley Craig, Mayor
ATTEST:

Patricia M. Barajas, City Clerk

Page 1 of 2 ends

Version: November 2022
AGREEMENT —AMENDMENT NO. 3 TO

AGREEMENT FOR PROFESSIONAL SERVICES FOR ENVIRONMENTAL

CONSULTANTS/CONTRACTORS BETWEEN HARRIS AND ASSOCIATES,

A CALIFORNIA CORPORATION AND CITY OF SALINAS
This Amendment No. 3 to the Agreement for Professional Services (the “Amendment”) is entered into this 19th day of November 2024, by and between the City of Salinas (the “City”) and Harris and Associates, a California Corporation, (the “Consultant). City and Consultant may be individually referred to herein as a “Party” and collectively the City and Consultant may be referred to as the “Parties.”

RECITALS
WHEREAS, the City and Consultant first entered into an Agreement for Professional Services for Environmental Consultants/Contractors effective December 22, 2022, pursuant to which Consultant agreed to act as and provide certain services to the City for compensation (the “Agreement”); and WHEREAS, the City and Consultant amended the Agreement on October 24, 2023 to increase compensation for additional scope of services to obtain permits for work in Gabilan and Natividad creeks; and WHEREAS, the City and Consultant further amended the Agreement on August 20, 2024 to 1) extend the term of the Agreement to September 1, 2026 and 2) increase compensation for additional scope of services to provide permitting work for Santa Rita creek; and
WHEREAS, the City and Consultant desire to again amend the Agreement to increase compensation for additional scope of services to complete permit work and design plans; NOW, THEREFORE, in mutual consideration of the terms and conditions set forth below, the Parties agree as follows:

TERMS

1. The Agreement, Section 1 “Scope of Service”, is amended and restated in its entirety with the following:

The project contemplated and the scope of Consultant’s services are described in Exhibits B, B1, B2, and B3 attached hereto and incorporated by herein reference.

2. The Agreement, Section 3 “Compensation”, is amended and restated in its entirety with the following:

City hereby agrees to pay Consultant for services rendered the City pursuant to this Agreement on a time and materials basis according to the rates of compensation set forth in Exhibits B, B1, B2, and B3. The total amount of compensation to be paid under this Agreement shall not exceed seven hundred and eighty-four thousand, four hundred and fourteen dollars ($784,414).

3. All other covenants, terms, and conditions set forth in the Agreement and not amended by this Amendment shall remain in full force and effect as if fully set forth herein.

IN WITNESS WHEREOF, the undersigned, as authorized representatives of the City and Consultant have entered into this Agreement as of the date first written above.

Page 2 of 2 ends

Version: November 2022

CITY OF SALINAS
___________________________________
Rene Mendez, City Manager
APPROVED AS TO FORM:
___________________________________
□ Christopher A. Callihan, City Attorney
□ Rhonda Combs, Assistant City Attorney
CONSULTANT:

HARRIS AND ASSOCIATES
____________________________________
Frank Lopez
Principal
Amendment 3 - Scope of Work
The Request for Amendment 3 includes:

A. Additional effort required for the Salinas Creeks Flood Control Project (as discussed during our meeting and subsequent emails on October 25, 2024),
B. Year 1 Annual Mitigation Monitoring and Reporting (as requested on October 29, 2024), and C. Contingency Fund for Agency Consultation (as an optional item for the City’s consideration).

A. ADDITIONAL EFFORT REQUIRED FOR SALINAS CREEKS FLOOD CONTROL PROJECT This additional effort required is described below and shown for Tasks 1, 2, 4 and 5 in Attachment A.

This effort supports deliverables already included in the scope of work and the additional deliverables underlined below, as requested by the agencies.

UPPER NATIVIDAD CREEK AND UPPER GABILAN CREEK
• Extended Time Period and Additional Communications with City regarding Side Channel and Changing Project Design
• Project Design Conceptually Revised to reduce Project costs and Mitigation needs/costs • On-Site Meetings/Field Investigations to Revise Project Design and Conceptual Mitigation Plan • Virtual Meetings regarding the City of Salinas’s Changing Project Goals, Funding Availability, Revised Timing of Project Implementation, and Revised Conceptual Mitigation Plans • Additional Meetings with the Regional Board regarding the Changing Project Design (Pre-Filing Meeting #2) and 5-Year Management Plan (Pre-filing Meeting #3) • On-going Meetings with City (2x/month for 6 months)
• Revise Project Description, Project Design Plans, Biological Assessment and Aquatic Resources Delineation Report, Impact Calculations (wetlands, waters, and riparian), and Permit Applications to Current Project Plan
• Incorporate/Edit Steelhead Critical Habitat Memo (prepared for Lower Gabilan – see below), and Prepare Southwestern Pond Turtle, and California Red-legged Frog (CRLF) Assessment and Incorporate into Permit Applications
• Additional rounds of consultation with the Corps, Regional Board, and CDFW due to the issuance of permits for both one-time sediment removal and 5-Year maintenance (per October 29, 2024 meeting with Alia Ajina of the Regional Board).
• Formal consultation with NOAA Fisheries and US Fish and Wildlife Service regarding sensitive wildlife species (see also above bullet)
The beneficial results of these extra efforts and communications include:
• Obtaining a single permit for both One-time Sediment Removal (Channel Restoration) and 5-year Maintenance Activities (instead of two separate permits) to allow:
o on-going sediment removal at pinch points (bridges),
o tree limbing and pruning, and
o removal of large debris (fallen trees or limbs) from the main channel. • Substantial reduction in the amount and cost of mitigation through negotiations with the Regional Board staff to:
o eliminate the side channel and
o identify most impacts as temporary.

Exhibit B3

LOWER GABILAN CREEK
• Steelhead Critical Habitat Memorandum, at the request of NOAA Fisheries

CITY OF SALINAS UNPERMITTED CLEARING OF RIPARIAN VEGETATION • Research, emails and phone calls with City staff regarding unpermitted clearing of riparian and wetland vegetation.

B. YEAR 1 ANNUAL MITIGATION MONITORING AND REPORTING
Per the City’s request, to satisfy the Agency permit requirements, this new task includes Year 1 Annual Mitigation Monitoring and Reporting for the project work conducted at Upper Natividad Creek, Upper Gabilan Creek, and Lower Gabilan Creek (shown as Tasks X and Y in Attachment A).

C. CONTINGENCY FUND FOR AGENCY CONSULTATION
It is notoriously difficult to predict the level of effort required during Agency Consultation because of different and changing agency representatives, their different interpretations of regulations and requirements, and on-going agency-wide changes in regulatory implementation and associated permit conditions. Therefore, we included a contingency fund as an optional item for the City’s consideration (shown as Task Z in Attachment A).

AMENDMENT 3 COST ESTIMATE
A. Additional Effort Required for Salinas Creeks Flood Control Project $35,511 B. Year 1 Annual Mitigation Monitoring and Reporting $44,604 C. Contingency Fund for Agency Consultation $8,106
Total Amendment 3 Request: $88,221
Attachments
A. Amendment 3 Cost Estimate
$280.00 $170.00 $170.00 $140.00
Task 1: Project Management and Project Description (Phase 01) Project Management and Coordination 16.0 16.0 $ 7,200.00 Additional Field Visits and Meetings with City Staff 12.0 8.0 12.0 $ 6,760.00 Project Description Revisions 2.0 2.0 $ 900.00
Hours Subtotal 30 8 30 0
Task 1 Subtotal $8,400.00 $1,360.00 $5,100.00 $0.00 $14,860.00 Task 2: Technical Studies (Phase 02)
Biotic Assessment Revisions 4.0 4.0 $ 1,360.00
Hours Subtotal 0.0 4 4
Task 2 Subtotal $0.00 $680.00 $680.00 $0.00 $1,360.00
Task 4: Regulatory Compliance/Permitting (Phase 04)
Agency Consultation 4.0 24.0 $ 4,760.00
Permit Package Revisions (Prepare Sensitive Wildlife Assessment per Agency Request) 4.0 16.0 12.0 $ 5,080.00 Hours Subtotal 0.0 8 40 12
Task 4 Subtotal $0.00 $1,360.00 $6,800.00 $1,680.00 $9,840.00 Task 5: Mitigation and Enhancement Program (Phase 05)
Natividad Creek and Gabilan Creek Maintenance Plan Revisions 8.0 8.0 $ 2,720.00 Conceptual Mitigation Plan Revisions 16.0 16.0 $ 5,440.00 Hours Subtotal 0.0 24.0 24.0 0.0
Task 5 Subtotal $0.00 $4,080.00 $4,080.00 $0.00 $8,160.00 New Task X: Year 1 Annual Mitigation Monitoring and Reporting for Upper Gabilan and Natividad Creeks Regional Board Annual Site Visit/s and Report 20.0 8.0 28.0 $ 8,680.00 Corps Annual Site Visit/s (performed concurrently) and Report 6.0 12.0 16.0 $ 5,300.00 CDFW Annual Site Visit/s (performed concurrently) and Report 24.0 36.0 $ 9,120.00 Hours Subtotal 0.0 26.0 44.0 80.0
Task X Subtotal $0.00 $4,420.00 $7,480.00 $11,200.00 $23,100.00 New Task Y: Year 1 Annual Mitigation Monitoring and Reporting for Lower Gabilan Creek Regional Board Annual Site Visit and Report 16.0 8.0 24.0 $ 7,440.00 Corps Annual Site Visit and Report 6.0 8.0 12.0 $ 4,060.00 CDFW Annual Site Visit and Report 20.0 32.0 $ 7,880.00
Hours Subtotal 0.0 22.0 36.0 68.0
Task Y Subtotal $0.00 $3,740.00 $6,120.00 $9,520.00 $19,380.00 New Task Z: Contingency Fund for Agency Consultation
Regional Board 2.0 12.0 $ 2,600.00
Corps (SHPO Consultation + USFWS/NOAA Fisheries Requirements for Special-Status Wildlife) 2.0 12.0 $ 2,600.00 CDFW 2.0 12.0 $ 2,600.00
Hours Subtotal 6.0 0.0 36.0 0.0
Task Z Subtotal $1,680.00 $0.00 $6,120.00 $0.00 $7,800.00 SUBTOTAL TASKS $10,080.00 $15,640.00 $36,380.00 $22,400.00 $84,500.00 Subconsultant Markup (5%) $782 $1,819 $1,120 $3,721
TOTAL $88,221.00
Task Description
Fee

STAFF HOURS
EcoSystems West Harris &
Associates
Kate Elliott
Project Director Biologist Justin Davilla
Senior Ecologist
Erin McGinty Sr
Wildlife Biologist/
Project Manager
10/29/2024
Attachment A. Amendment 3 Cost Estimate - Salinas Creeks Flood Control Project (October 29, 2024) City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-664, Version: 1
City Hall 1st Floor Build Back Project No. 8170 Additional Construction Contingencies Approve a Resolution approving an increase in the contingency amount by $200,000 for a revised contingency amount not to exceed $600,000 for unanticipated changes in requirements for the City Hall First Floor Build Back Project (CIP 8170).

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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: NOVEMBER 19, 2024
DEPARTMENT: PUBLIC WORKS DEPARTMENT
FROM: DAVID JACOBS, P.E., L.S., PUBLIC WORKS DIRECTOR
BY: JONATHAN ESTEBAN, ASSISTANT ENGINEER

ADRIANA ROBLES, PE, CFM, CITY ENGINEER
TITLE: CITY HALL 1
st FLOOR BUILD BACK PROJECT NO. 8170

ADDITIONAL CONSTRUCTION CONTINGENCIES
RECOMMENDED MOTION:

A motion to approve a Resolution approving an increase in the contingency amount by $200,000 for a revised contingency amount not to exceed $600,000 for unanticipated changes in requirements for the City Hall First Floor Build Back Project (CIP 8170).

EXECUTIVE SUMMARY:

On December 5, 2023, City Council awarded an emergency construction contract to Premier Builders, Inc. for the City Hall 1
st Floor Build Back No. 8170 in the amount of $1,859,138.00.

During the City Hall Emergency Roof Repair work included the removal of the ceiling and roof decking which left office walls unstable and required them to be replaced. TEF Architectures provided revised plans to include details for new office walls and included new ADA restrooms.

On April 23, 2024, City Council, pursuant to Resolution No. 22950, approved Change Order No. 3 in the amount of $1,259,693 and established a new construction contingency amount of $400,000.

Approximately $90,000 remains of the $400,000 approved contingencies. In preparation for anticipated change orders remaining and the deadline for ARPA funds to be encumbered by the end of the year, City staff requests to increase the total approved contingencies by $200,000 for a total of $600,000.

BACKGROUND:

On April 4, 2023, City Council awarded a contract to F C & Sons Roofing, Inc. for the City Hall Emergency Roof Repair Project, CIP 8170 in the amount of $646,271 and Contract Change Order No. 1 for abatement of City Hall First Floor in the amount of $412,031.

The scope for Contract Change Order No. 1 included abatement of asbestos containing fireproofing spray, demolition of T-bar ceiling, ceiling tiles, lighting, HVAC, flooring, and mastic within the first floor of city hall. Prior to the project all City staff and furniture were moved out of the city hall 1st floor abatement space.

Page | 2
On December 5, 2023, City Council awarded an emergency construction contract to Premier Builders, Inc. for the City Hall 1st Floor Build Back No. 8170 in the amount of $1,859,138. The project scope included rebuild of all building elements that were removed during the abatement including HVAC, lighting, ceiling, and flooring.

After the abatement work, most office walls were unstable and required replacement. The City’s architect, TEF Architects, revised the original plans to include the installation of new office walls, revised lighting and flooring, installation of new doors and storefronts, upgrade of restrooms and installation of new ADA restrooms. Design-build plans were prepared for new electrical and mechanical systems. Contract Change Order No. 3 is for completing all the work per revised plans in the amount of $1,259,693.

On April 23, 2024, City Council, City Council, pursuant to Resolution No. 22950, approved Change Order No. 3 in the amount of $1,259,693 and established a new construction contingency amount of $400,000.

CEQA CONSIDERATION:

The City of Salinas has determined that the proposed action is categorically exempt from environmental review under the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15301).

CALIFORNIA GOVERNMENT CODE §84308 APPLIES:

No.

STRATEGIC PLAN INITIATIVE:

This project addresses the current City Council’s Goals of Operational Efficiency and Public Safety.

DEPARTMENTAL COORDINATION:

The Public Works Department is collaborating with Legal, Administration and Finance Departments for the budget.

FISCAL AND SUSTAINABILITY IMPACT:

Fund Appropriation Appropriation
Name
Total
Appropriation
Amount for
recommendation
FY 24-25
Operating
Budget Page
Last Budget
Action (Date,
Resolution)*
3911 50.8170 Capital Outlays $239,128 $200,000 119 4/23/24, 22950 Page | 3
ATTACHMENTS:

Resolution
1 RESOLUTION NO. (N.C.S.)

A RESOLUTION AUTHORIZING APPROVAL OF ADDITIONAL CONSTRUCTION CONTINGENCIES FOR THE CITY HALL 1
ST FLOOR BUILD BACK PROJECT, NO.
8170
WHEREAS, On April 4, 2023, City Council, pursuant to Resolution No.22627, awarded an emergency construction contract to F C & Sons Roofing, Inc. for the City Hall Emergency Roof Repair, Project No. 8170 and Contract Change Order No. 1 for abatement; and WHEREAS, The scope for Contract Change Order No. 1 included abatement of asbestos containing fireproofing spray, demolition of T-bar ceiling, ceiling tiles, lighting, HVAC, flooring, and mastic within the first floor of city hall; and
WHEREAS, On December 5, 2023, City Council, pursuant to Resolution No. 22860, awarded an emergency construction contract to Premier Builders, Inc. for the City Hall 1st Floor Build Back No. 8170 in the amount of $1,859,138.00; and WHEREAS, On April 23, 2024, City Council, pursuant to Resolution No. 22950, approved Change Order No. 3 in the amount of $1,259,693 and established a new construction contingency amount of $400,000; and
WHEREAS, Approximately $90,000 remains of the $400,000 approved contingencies; and
WHEREAS, In preparation for anticipated change orders remaining and the deadline for ARPA funds to be encumbered by the end of the year, City staff requests to increase the total approved contingencies by $200,000 for a total of $600,000.

NOW, THEREFORE, BE IT RESOLVED that the City Council authorizes an increase in the contingency amount of $200,000 for a revised contingency amount not to exceed $600,000 for unanticipated changes in requirements for the City Hall First Floor Build Back Project (CIP 8170).

PASSED AND APPROVED this 19th day of November 2024, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
2 APPROVED:
________________________
Kimbley Craig, Mayor
ATTEST:
_________________________
Patricia M. Barajas, City Clerk
City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-670, Version: 1
Boronda Road Congestion Relief Project Phase 1, CIP No. 9510 - CCOs Approve a Resolution approving Contract Change Order (CCO) No. 2 for the Boronda Road Congestion Relief Project Phase 1, CIP No. 9510 in the amount of $180,000; approving 12% project contingencies in the amount of $1,876,536 for this project for a revised not to exceed total construction costs amount of $17,514,332.93; and authorizing the City Manager to approve all change orders for this project.

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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: NOVEMBER 19, 2024
DEPARTMENT: PUBLIC WORKS
FROM: DAVID JACOBS, PE, LS, DIRECTOR
BY: JOSIE LANTACA, ASSISTANT ENGINEER
TITLE: BORONDA ROAD CONGESTION RELIEF PROJECT PHASE 1,
CIP 9510 - CCOs
RECOMMENDED MOTION:

A motion to:
1) Approve Contract Change Order (CCO) No. 2 for the Boronda Road Congestion Relief Project Phase 1, CIP No. 9510 in the amount of $180,000; 2) Approve 12% project contingencies in the amount of $1,876,536 for this project for a revised not to exceed construction costs of $17,514,332.93; and 3) Authorize the City Manager to approve all change orders for this project.

EXECUTIVE SUMMARY:

The Boronda Road Congestion Relief Phase 1 Project (Phase 1 Project) will build the McKinnon roundabout with the associated improvements and was awarded to Granite Construction Company on June 18, 2024 (Resolution No. 23008 and 23053). Construction of the Phase 1 Project started on November 13, 2024.

CCO No. 2 in the amount of $180,000 is to accelerate the project to accommodate the Regional Water Quality Control Board (RWQCB) Permit restriction during winter work.

Page | 2
BACKGROUND:

The Boronda Road Congestion Relief Project (Project) proposes to widen East Boronda Road into a four-lane roadway (two-lanes at each direction) between Dartmouth Way and Independence Boulevard, and to construct roundabouts at McKinnon Street, El Dorado Drive, Natividad Road, and Independence Boulevard. In May 2017, City Council approved the roundabout concept at the intersections identified above along with Hemingway Drive (Resolution No. 21169). The Project is planned to be built in phases to accommodate funding availability. The Boronda Road Congestion Relief Phase 1 Project (Phase 1 Project) will build the McKinnon Roundabout and associated improvements from east of Dartmouth Way to a point between McKinnon Street and El Dorado Drive.

The Phase 1 Project will include:

1. Widening East Boronda Road from east of Dartmouth Way to east of El Dorado Dr from two lanes to four lanes;

2. Constructing a multilane roundabout at McKinnon Street;

3. Relocating the existing agricultural ditches along the north side of East Boronda Road north of the improvements;

4. Constructing stormwater treatment facilities and bioretention facilities to mitigate runoff from the improvements;

5. Constructing buffered bike lanes;

6. Constructing shared‐use paths at the roundabout;

7. Install a flashing beacon system at the pedestrian crossing;

8. Constructing bus pullouts, street lighting, sidewalks, ADA-compliant pedestrian curb ramps at all crosswalks; and install storm drain lines, sanitary sewer mainline and extensions, and pavement delineation and street signs, and landscaping.

Design of the Phase 1 Project was completed in February 2024. The Phase 1 Project was awarded to Granite Construction Company on June 18, 2024 (Resolution No. 23008 and 23053).

Construction of the project started on November 13, 2024 with the installation of Animal Exclusion Fence.

CCO No. 1 in the amount of $102,000 was approved for this project to change the type of temporary fencing to the Animal Exclusion Fence for California red-legged frog and California tiger salamander as specified by the California Department of Fish and Wildlife, and US Fish and Wildlife Service. CCO No 1 deleted the bid item for high visibility fence in the amount of $28,300 and reduced the amount of fiber rolls required. Thus, the net cost for CCO No. 1 will be under $70,000. The final cost will be determined after the installation of the fiber rolls.

CCO No. 2 in the amount of $180,000 is to accelerate the project to accommodate the Regional Water Quality Control Board (RWQCB) Permit during winter work restriction. Among the conditions listed by the RWQCB is accelerating the work to 10-hour shifts during weekdays and 8-hour shifts on Saturdays to complete the agricultural ditch portion of the work as soon as possible. Staff is requesting approval of this CCO No. 2 to accommodate RWQCB Permit.

Page | 3
The “Fiscal and Sustainability Impact” portion of the June 18th staff report included the estimated construction costs for the Phase 1 project as follows:

Construction Cost (Granite’s Bid) $15,637,796.93
Contingencies (12%) $1,876,536.00
Construction Management Services (MNS Engineers, Inc.) $1,829,248.00 Construction Support – Design (Wallace Group) $400,000.00 Administrative Overhead (2 years) $100,000.00
City Staff Project Management (2%) $312,700.00
Environmental Mitigation (Sparling Ranch) (Phase 1 & 2a) $608,300.00 Total Estimated Construction Costs $20,764,584.93
Staff is requesting that the 12% contingencies in the amount of $1,876,536.00 be encumbered as a separate Purchase Order for Granite Construction Company for Contract Change Orders (CCOs), and staff is also requesting that the City Manager be authorized to approve all CCOs for this project. This action would help streamline the project’s construction activities timeline in case additional unforeseen issues may be encountered during the course of the project construction requiring CCOs.

CEQA CONSIDERATION:

The environmental impacts of the project have been analyzed in accordance with CEQA guidelines. An Initial Study (IS) was prepared to evaluate the potential impacts associated with the project. Based upon review of the IS, the proposed project will not have a significant effect on the environment because the mitigation measures outlined in the Mitigation Monitoring and Reporting Program (MMRP) have been included in the project.

A Mitigated Negative Declaration (MND) was prepared for this project pursuant to the provisions of CEQA, and on November 3, 2020, the Salinas City Council adopted and approved the MND and MMRP for the project.

In addition, the following Environmental Permits have been received for Phases 1 & 2 of the Project:

A. Central Coast Regional Water Quality Control Board (Water Board):

Section 401 Permit/Water Quality Certification was issued by the Water Board last October 2021.

B. US Army Corps of Engineers (USACE):

USACE Nationwide Permit (NWP) (for Phases 1 & 2) was received on May 9, 2023. a. On April 24, 2023, a reinitiated Biological Opinion was issued by the US Fish and Wildlife Service, through the USACE consultation process. The reinitiated BO contains environmental measures to minimize effects to California red-legged frogs and California tiger salamanders.

Page | 4
b. A Consistency Determination dated September 22, 2023, was issued by the California Department of Fish and Wildlife. The Determination states that the Service’s incidental take statement and accompanying revised BO are consistent with the California Endangered Species Act (CESA).

CALIFORNIA GOVERNMENT CODE SECTION 84308 APPLIES:

No.

STRATEGIC PLAN INITIATIVE:

The project addresses the City Council’s Strategic Goals of Infrastructure and Environmental Sustainability, and Economic Development.

DEPARTMENTAL COORDINATION:

The planning phase of this Project involved Public Works, Community Development, Finance, and Legal Departments. Public Works Department was the lead on this Project in close coordination with Community Development and Legal Departments in the review of the CEQA Documents, and there has been an extensive and iterative coordination effort between West Area Specific Plan, Central Area Specific Plan and the Boronda Road Congestion Relief Project to ensure consistency with the projects.

FISCAL AND SUSTAINABILITY IMPACT:

Fund Appropriation Appropriation
Name
Total
Appropriation
Amount for
recommendation
FY 24-25 CIP
Budget Page
Last Budget
Action (Date,
Resolution)*
2510 50.9510-66.4000 Capital Outlays
Improvements
$3,540,685 $2,056,536 33 6/11/24, 22979
*The FY 24-25 Adopted Budget was adopted on June 11, 2024.

ATTACHMENT:

Resolution
CCO No. 2 Exhibit A

Page 1 of 2 ends

RESOLUTION NO. (N.C.S.)
A RESOLUTION APPROVING CONTRACT CHANGE ORDER NO. 2 FOR THE BORONDA ROAD CONGESTION RELIEF PROJECT PHASE 1, CIP NO. 9510 IN THE AMOUNT OF $180,000; APPROVING THE 12% PROJECT CONTINGENCIES IN THE AMOUNT OF $1,876,536; AND AUTHORIZING THE CITY MANAGER TO APPROVE

ALL CHANGE ORDERS FOR THE PROJECT
WHEREAS, the Boronda Road Congestion Relief Project, CIP No. 9510 is one of the identified priority projects in the current CIP; and
WHEREAS, on June 18, 2024, the Boronda Road Congestion Relief Project Phase1; CIP No. 9510 was awarded to Granite Construction Company (Resolution No. 23008 and 23053); and WHEREAS, construction work started for the Phase 1 Project and Contract Change Orders (CCOs) are necessary to accommodate environmental permit requirements and any unforeseen issues that may be encountered during the course of the project construction.

NOW, THEREFORE, BE IT RESOLVED that Contract Change Order No. 2 for the Boronda Road Congestion Relief Project Phase 1, CIP No. 9510 in the amount of $180,000 is hereby approved; and
BE IT FURTHER RESOLVED that the 12% project contingencies in the amount of $1,876,536 for a revised not to exceed total construction costs amount of $17,514,332.93 for this project is hereby approved; and
BE IT FURTHER RESOLVED that the City Manager is hereby authorized to approve all change orders for this Phase 1 Project.

PASSED AND APPROVED this 19th day of November 2024, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:
________________________
Kimbley Craig, Mayor

Page 2 of 2 ends

ATTEST:
__________________________
Patricia M. Barajas, City Clerk

City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-673, Version: 1
Ordinance Amending Chapter 12, Article III, Section 2 regarding Purchasing Authority Adopt an Ordinance amending Article III of Chapter 12 of the Salinas Municipal Code related to the delegation of purchasing authority to the City Manager.

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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: NOVEMBER 19, 2024
DEPARTMENT: FINANCE
FROM: SELINA ANDREWS, FINANCE DIRECTOR
CHRISTOPHER A. CALLAHAN, CITY ATTORNEY
TITLE: ORDINANCE AMENDING CHAPTER 12 (FINANCE), ARTICLE III, SECTION 2 REGARDING PURCHASING AUTHORITY
RECOMMENDED MOTION:

A motion to adopt an Ordinance amending Article III of Chapter 12 of the Salinas Municipal Code related to the delegation of purchasing authority to the City Manager.

EXECUTIVE SUMMARY:

The proposed Purchasing Ordinance updates and concurrent Purchasing Policy revision provide updated thresholds, and memorializes City purchasing procedures, such as appropriate level of purchasing authority and procurement methods. Additionally, the proposed updates add important guidelines to bring the City into compliance with evolving regulations while incorporating best practices without compromising important values underlying City Council decision-making processes, such as transparency and competitiveness for contracts.

BACKGROUND:

On August 16, 2016, City Council adopted an ordinance amending Sections 12-21, 12-22, 12-27, and 12-28.020 of the City’s Municipal Code to (1) add a public works formal bid purchasing threshold automatically adjusted by the consumer cost index on an annual basis, (2) include a definition for public works purchases, (3) adopt a best interest exception/alternative; and (4) adjust the general purpose purchasing threshold.

On November 12, 2024, staff presented the proposed Ordinance revisions regarding purchasing authority for general purchases and public works purchases to the Finance Committee. The discussions regarding the revisions were generally positive with one member seeking to ensure that appropriate levels of transparency would still be maintained. Ultimately, the Finance Committee provided direction to bring staff’s recommended changes to the full City Council.

ANALYSIS:

Since the last Purchasing Ordinance adoption staff has faced obstacles and inefficiencies while operating under the current purchasing Ordinance. Staff reviewed purchasing authority Page | 2
information from cities of various sizes, and from federal and state governments and is presenting its recommendation to increase the City’s purchasing appropriation thresholds to establish efficient procedures for the purchase of goods and services at the lowest possible cost commensurate with quality needed, to exercise positive financial control over purchases, and clearly define authority for the purchasing function.

In addition to the recommendation to amend the Ordinance, staff is working on revising its Purchasing Policy (Policy), which has not had substantive revisions since 1978. The Policy revisions will memorialize current contract and agreement practices, modernize annual inflation increases to authorization thresholds, and align authorization levels with other jurisdictions that are similar in size and population to the City.

The major changes recommended for consideration include increasing the threshold for formal Council approval from $100,000 to $250,000 with yearly adjustment in accordance with the annual April Consumer Price Index for Urban Consumers (CPI-U) for the San Francisco-OaklandHayward, CA areas. In addition to operational efficiencies (i.e., more projects and purchases would be done quicker), the revisions in conjunction with revising the Policy clarify ambiguities as to which City officer is delegated authority to approve certain types of less-common agreements as well as clarify the types of contracts and agreements that are approved by Council. As a reminder, the City utilizes an online bidding platform for maximum transparency in competitive bidding and is linked on the City’s website.

Summarized data from the survey for smaller and larger cities is listed in the table below and is referenced as Attachment 2 – Survey of Signature Authorities.

CEQA CONSIDERATION:

Not a Project. The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).

In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls City Population Last Updated Amounts
Council City Manager Council City Manager Council City Manager Council City Manager City of Palo Alto 66,680 >$250,000 <$250,000 >$250,000 <$250,000 >$85,000 <$85,000 >$85,000 <$85,000 4/6/2020 City of Cupertino 58,622 >$200,000 <$200,000 >$200,000 <$200,000 >$200,000 <$200,000 >$200,000 <$200,000 2002 (CUPCCAA) City of Fremont 227,514 >$200,000 <$200,000 >$100,000 <$100,000 >$100,000 <$100,000 >$100,000 <$100,000 7/12/2011 (CUPCCAA) City of Gilroy 58,101 >$200,000 <$200,000 >$100,000 <$100,000 >$100,000 <$100,000 >$100,000 <$100,000 4/3/2023 City of Milpitas 79,066 >$200,000 <$200,000 >$100,000 <$100,000 >$100,000 <$100,000 >$100,000 <$100,000 8/20/2019 (CUPCCAA) City of Napa 78,818 >$200,000 <$100,000 >$200,000 <$200,000 >$200,000 <$200,000 >$200,000 <$200,000 1/1/2009 City of Redwood City 81,643 >$100,000 <$100,000 >$100,000 <$100,000 >$100,000 <$100,000 >$100,000 <$100,000 5/4/2020 City of Santa Clara 127,151 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 9/13/2022 City of Sunnyvale 152,258 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 12/8/2020 City of San Jose 983,489 >$1,000,000 <$1,000,000 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 11/16/2023 City of Sacramento 525,041 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 2020 Attachment 2 - Survey of Signature Authorities
Public Works Material Equipment General Services Professional Services Page | 3
within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

CALIFORNIA GOVERNMENT CODE §84308 APPLIES:

No.

STRATEGIC PLAN INITIATIVE:

Revising the appropriations limit meets the Council Goal of Operational Efficiencies.

DEPARTMENTAL COORDINATION:

This staff report was coordinated with the Finance Department, City Attorney’s Office, and the City Manager’s Office.

FISCAL AND SUSTAINABILITY IMPACT:

Although there is no fiscal impact directly associated with approval of the recommendation, fewer City Council reports would be required to be prepared by staff, increasing operational efficiencies, and allowing staff time to be focused on other City priorities.

Fund Appropriation Appropriation
Name
Total
Appropriation
Amount for
recommendation
FY 24-25
Operating
Budget Page
Last Budget
Action (Date,
Resolution)
n/a n/a n/a n/a n/a n/a n/a
ATTACHMENTS:

1. Ordinance

2. Survey of Signature Authorities
1 ORDINANCE NO. ___________ (N.C.S.)
AN ORDINANCE AMENDING ARTICLE III OF CHAPTER 12 OF THE SALINAS

MUNICIPAL CODE RELATED TO THE DELEGATION OF PURCHASING

AUTHORITY FOR GENERAL PURCHASES AND PUBLIC WORKS PURCHASES City Attorney Impartial Analysis
This Ordinance amends sections of Article III of Chapter 12 of the Salinas Municipal Code to provide the City Manager with authority to make general purchases and public works purchases up to the amount of two hundred-fifty thousand dollars, subject to the City’s procurement processes. General Purchases and public works purchases above that amount continue to require City Council approval.

BE IT RESOLVED BY THE CITY COUNCIL OF SALINAS AS FOLLOWS:

SECTION 1. Section 12-20 of the Salinas Municipal Code is hereby amended to read as follows:

Subject to specific limitations stated in this article, and except as may otherwise be specifically provided in this article, the Purchasing Agent shall have the following powers and duties:
(a) He or she shall be the sole agent for the City in contracting for supplies, materials, equipment, and contractual services. This authority may be delegated in writing where necessary with the approval of the City Manager.
(b) He or she shall prepare and maintain a current purchasing manual for the direction and information of users and the public.
(c) He or she shall prepare or supervise preparation of written specifications and advertising. (d) He or she shall advertise and award bids as authorized. (e) He or she shall execute purchase orders and changes thereto. (f) He or she shall inspect or supervise the inspection of delivered items to ensure adherence to specifications and standards.
(g) He or she shall maintain and control a central stores inventory on a revolving fund arrangement.
(h) He or she shall purchase only when funds are available. (i) He or she shall edit and issue specifications for all bids or quotations.

SECTION 2. Section 12-21 of the Salinas Municipal Code is hereby amended to read as follows:

Sec. 12-21. General purchases or public works purchases in excess of two hundred-fifty thousand dollars..
(a) General Purchases. Except as otherwise directed by the City Council or pursuant to subsection (b) of this section, whenever the amount to be expended for any purchase is in 2 excess of two hundred-fifty thousand dollars the Purchasing Agent shall advertise for sealed bids and the contract of purchase shall be awarded to the lowest responsible bidder. (b) Public Works Purchases. For public works purchases, except as otherwise directed by the City Council, whenever the amount to be expended for any purchase is in excess of two hundred-fifty thousand dollars, the Purchasing Agent shall advertise for sealed bids and the contract of purchase shall be awarded to the lowest responsible bidder. The two hundredfifty thousand dollar limit set forth above shall automatically adjust annually to reflect the construction cost index percentage change as published by the Engineering News Record In no event shall the adjusted limit be less than one hundred thousand dollars. (c) Bid Solicitation. Bid solicitation requests made pursuant to subsection (a) or (b) shall be published in a local newspaper of general circulation describing the goods and services required, stating the date, time, and place assigned for the public opening of the bids. No bids will be received at any time subsequent to the time indicated in the announcement.

The Purchasing Agent shall submit a tabulation of bids to the City Council together with recommendations for award to the lowest responsible bidder. (d) Rejection of Bids. The council, City Manager, and/or the Purchasing Agent shall have authority to reject any and all bids.

SECTION 3. Section 12-22 of the Salinas Municipal Code is hereby amended to read as follows:

Sec. 12-22. General purchases or public works purchases for less than two hundred-fifty thousand dollars.

All purchase orders or contracts for services, materials, equipment, or supplies involving general purchases or public works purchases of two hundred-fifty thousand dollars or less, may be approved by the City Manager. The two hundred-fifty thousand dollar limit set forth in this section shall automatically adjust annually, with respect to general purchases to reflect the change in the April Consumer Price Index for Urban Consumers (CPI-U) for the San Francisco-OaklandHayward areas, and with respect to public works purchases to reflect the construct cost index percentage change as published by the Engineering News Record. In no event shall the adjusted limit be less than two hundred-fifty thousand dollars. These contracts shall be let in the open market in a manner calculated to ensure the best interests of the public, after solicitation for quotations by mail, telephone, or competitive negotiation by the Purchasing Agent. In the solicitation for competitive quotations, the Purchasing Agent shall contact as many local sources of supply as reasonable for the solicitation.

SECTION 4. All ordinances and parts of ordinances and all resolutions and parts of resolutions in conflict herewith are hereby repealed as of the effective date of this ordinance.

SECTION 5. Publication. The City Clerk shall cause a summary of this ordinance to be published once in a newspaper published and circulated in Salinas within fifteen (15) days after adoption. (Salinas Charter Section 11.9)
SECTION 6. CEQA Compliance. The City Council’s adoption of this ordinance is not a project subject to environmental review under the California Environmental Quality Act (CEQA 3 Guidelines Section 15061(b)(3) because it would not have a significant effect on the environment.

Additionally, the City Council’s adoption of this ordinance is exempt because it does not meet the definition of a “project” under CEQA, pursuant to CEQA Guidelines sections 15060(c)(1) and 15378(a), because it has no potential to result in a direct or reasonably foreseeable physical change in the environment.

SECTION 7. Severability. If any section, subsection, sentence, clause, or phrase of this ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of any competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance.

The Salinas City Council hereby declares that it would have passed this ordinance and each and every section, subsection, clause, and phrase thereof not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional.

SECTION 8. Effective Date. This ordinance will take effect thirty (30) days from and after its adoption.

This Ordinance was INTRODUCED on the 19th day of November 2024, and was PASSED AND ADOPTED on the _____ day of _____________ 2024, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:
_________________________________
Kimbley Craig, Mayor
APPROVED AS TO FORM:
___________________________________
Christopher A. Callihan, City Attorney
ATTEST:
___________________________________
Patricia M. Barajas, City Clerk
City Population Last Updated Amounts
Council City Manager Council City Manager Council City Manager Council City Manager City of Palo Alto 66,680 >$250,000 <$250,000 >$250,000 <$250,000 >$85,000 <$85,000 >$85,000 <$85,000 4/6/2020 City of Cupertino 58,622 >$200,000 <$200,000 >$200,000 <$200,000 >$200,000 <$200,000 >$200,000 <$200,000 2002 (CUPCCAA) City of Fremont 227,514 >$200,000 <$200,000 >$100,000 <$100,000 >$100,000 <$100,000 >$100,000 <$100,000 7/12/2011 (CUPCCAA) City of Gilroy 58,101 >$200,000 <$200,000 >$100,000 <$100,000 >$100,000 <$100,000 >$100,000 <$100,000 4/3/2023 City of Milpitas 79,066 >$200,000 <$200,000 >$100,000 <$100,000 >$100,000 <$100,000 >$100,000 <$100,000 8/20/2019 (CUPCCAA) City of Napa 78,818 >$200,000 <$100,000 >$200,000 <$200,000 >$200,000 <$200,000 >$200,000 <$200,000 1/1/2009 City of Redwood City 81,643 >$100,000 <$100,000 >$100,000 <$100,000 >$100,000 <$100,000 >$100,000 <$100,000 5/4/2020 City of Santa Clara 127,151 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 9/13/2022 City of Sunnyvale 152,258 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 12/8/2020 City of San Jose 983,489 >$1,000,000 <$1,000,000 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 11/16/2023 City of Sacramento 525,041 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 >$250,000 <$250,000 2020 Attachment 2 - Survey of Signature Authorities
Public Works Material Equipment General Services Professional Services City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-674, Version: 1
a. Pending Litigation - Cal. Govt. Code §54956.9(d)(1), conference with legal counsel regarding Gonzales et al. v. City of Salinas et al. Monterey County Superior Court Case No. 24CV004434.

City of Salinas Page 1 of 1 Printed on 11/14/2024
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City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-671, Version: 1
Establishment of Rent Stabilization Program Fee, Amendment of Rental Registration Fee, Approval of FY 24-25 Rental Registration and Rent Stabilization Program Budget and General Fund Loan Transfer, and Workforce Allocation Modification
Approve a Resolution establishing a Rent Program Fee for the Rent Stabilization Ordinance (Ordinance No. 2681 N.C.S.) on each Controlled Rental Unit owned and offered for rent in the City of Salinas subject to Ordinance No 2681; and a Resolution amending Residential Registration Fees established by Ordinance Number 2663 (N.C.S.) and integrated into the City’s Schedule of Fees and Charges for City Services by Resolution No. 22622; and a Resolution establishing the FY 24-25 Residential Rental Registration and Rent Stabilization Program revenue and expense budget under Fund 2530 in the amount of six hundred fifty-five thousand and two hundred and fifty dollars ($655,250); authorizing the appropriation of two hundred and five thousand two hundred and three dollars ($205,203) to the Residential Rental Registration and Rent Stabilization Program (Fund 2530) in the form of a General Fund loan transfer; and approving an amended Workforce Allocation to add two limited term administrative positions to the Community Development Department’s workforce to staff the above-referenced program.

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Page | 1

CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: NOVEMBER 19, 2024
DEPARTMENT: COMMUNITY DEVELOPMENT
CITY ATTORNEY’S OFFICE

FINANCE

HUMAN RESOURCES
FROM: LISA BRINTON, DIRECTOR
CHRIS A. CALLIHAN, CITY ATTORNEY

SELINA ANDREWS, DIRECTOR

MARINA HORTA-GALLEGOS, DIRECTOR
TITLE: ESTABLISHMENT OF RENT STABLIZATION PROGRAM FEE,

AMENDMENT OF RENTAL REGISTRATION FEE, APPROVAL OF
FY 24-25 PROGRAM BUDGET AND GENERAL FUND LOAN

TRANSFER, AND WORKFORCE ALLOCATION MODIFICATION
RECOMMENDED MOTION:

A motion recommending the City Council approve:

1. A Resolution establishing a Rent Program Fee for the Rent Stabilization Ordinance (Ordinance No. 2681 N.C.S.) on each Controlled Rental Unit owned and offered for rent in the City of Salinas subject to Ordinance No 2681; and

2. A Resolution amending Residential Registration Fees established by Ordinance Number 2663 (N.C.S.) and integrated into the City’s Schedule of Fees and Charges for City Services by Resolution No. 22622; and

3. A Resolution
a. establishing the FY 24-25 Residential Rental Registration and Rent Stabilization Program revenue and expense budgets in the amount of six hundred fifty-five thousand two hundred fifty ($655,250); and
b. authorizing the appropriation of two hundred five thousand two hundred and three ($205,203) to the Residential Rental Registration and Rent Stabilization Program in the form of a General Fund loan transfer; and
c. approving an amended Workforce Allocation to add two limited term administrative positions to the Community Development Department’s workforce to staff the above-referenced program.

Page | 2
EXECUTIVE SUMMARY:

The City Council adopted a Rental Registration Program (April 2023) and Rent Stabilization Program (September 2024). Implementation of the Rental Registration and Rent Stabilization Program (Program) requires City Council action to establish Program registration fees and a FY 24-25 budget, hire additional administrative staff, and authorize a loan transfer from the General Fund to cover Program start-up costs prior to collecting sufficient Program fee revenue to cover Program expenses.

DISCUSSION:

The City retained Economic & Planning Systems, Inc. (“EPS”) to prepare an analysis of the City’s costs to provide and administer the programs created by the Rent Stabilization Ordinance (“Fee Study”). The Fee Study further recommended that the Residential Rental Registration Program be merged with the Rent Stabilization Program (Program) and recommended Program Fee amounts for the registration of residential rental units subject to the Ordinances. Post Ordinance adoption, the City entered into a second Agreement for Professional Services with EPS to conduct additional analysis and refine their recommendations for staff allocation, Program cost and fees, and anticipated timing for reaching a cost-neutral status.

FY 24-25 Proposed Program Staffing, Workforce Allocation Modification, and Budget Using the EPS Fee Study, Community Development and Finance staff worked collaboratively to estimate staffing, software, and education and outreach costs though FY 24-25. The Fee Study recommended 5.1 Full Time Equivalent (FTE ) positions to staff the Program. After discussion with EPS, additional interviews with other jurisdictions, and refinement of projected Program Fee revenue, Program staffing allocation has been reduced to 3.2 FTE positions. The Rental Registration and Rent Stabilization Ordinance Program will be staffed with a Planning Manager (partial), one Community Development Analyst, one limited term Administrative Analyst, and one limited term Administrative Aide as shown below.

0.2 FTE Planning Manager

1.0 FTE Community Development Analyst (Limited Term)

1.0 FTE Admin Analyst (Limited Term)

1.0 FTE Admin Aide (Limited Term)

3.2 FTE
The Community Development Department requests authorization to add the limited term Administrative Analyst and limited term Administrative Aide to the Department’s workforce to staff the Program. The limited term Administrative Analyst and limited term Administrative Aide will need to be filled immediately to assist with implementation of the program by January 1, 2025.

The proposed FY 24-25 Program budget has a total cost of $732,350, however, the Community Development Analyst (Limited Term) will continue to be funded out of a United Way grant for the remainder of the fiscal year, therefore reducing the proposed FY 24-25 Program budget to $655,250 as shown below.

Page | 3
Salaries and Benefits $142,250
Software $200,000
Supportive Services $300,000
(Hearing Officer, Education/Outreach)
Indirect Costs/Overhead $ 13,000
$655,250
Program Fees
The Fee Study recommended a flat fee of $28.00 per rental unit subject to the Residential Registration Ordinance and a flat fee of $115.00 per rental unit subject to the Rent Stabilization Ordinance. Multiplying these fee rates by the number of subject units, city staff projected Program revenues using 30% to 90% collection rates. Staff projections, provided as an attachment to this staff report show that an 80% collection rate would be required for the Program to be cost neutral.

Depending on the revenue collection rate, the Program funding gap ranged from $107,111 (70% collection rate) to $379,699 (50% collection rate) per year.

Given that the Program is intended to be self-sustaining, EPS was asked to revisit their Fee analysis to minimize the gap between Program revenues collected and expenses. In addition, EPS conducted follow up interviews with jurisdictions identified in their Fee Study to collect information regarding collection rates, the timeframe for reaching cost-neutral status, and staff work allocation. A revised Fee Study with updated Program Fee analysis and recommendation is provided as an attachment to this staff report.

Table 4-13 of the Updated Fee Study, provided as an attachment to this staff report, increases both Program Fees and projects Program revenue to cover Program costs in Year 3 at a 50% collection rate. The revised recommended Rental Registration fee per unit is $45.00 and $170.00 per unit for Rent Stabilization Units.

CEQA CONSIDERATION:

Not a Project. Adoption of this Resolution is not a project under the California Environmental Quality Act (CEQA Guidelines Section 15061(b)(3)) because it would not have a significant effect on the environment. Additionally, the City’s approval of this Resolution is exempt because it does not meet the definition of a “project” under CEQA, pursuant to CEQA Guidelines sections 15060(c)(1) and 15378(a), because it has no potential to result in a direct or reasonably foreseeable physical change in the environment.

STRATEGIC PLAN INITIATIVE:

The City Council’s consideration of the proposed actions to establish Program Fees and Budget, budget appropriation, and workforce allocation augmentation to implement a merged Rental Registration and Rent Program is consistent with and furthers the City Council’s goal of promoting and preserving Housing/Affordable Housing (City of Salinas Strategic Plan 2022-2025).

Page | 4
DEPARTMENTAL COORDINATION:

The City Attorney’s Office and Community Development, Finance and Human Resources Departments collaborated on and contributed to the preparation of this agenda item. Community Development’s Housing and Community Development Division will administer Program implementation in continued coordination with the city departments listed above.

FISCAL AND SUSTAINABILITY IMPACT:

Program implementation is intended to be cost-neutral and self-funded through the collection of annual fee revenues. However, based upon perspective obtained from other jurisdictions, initial implementation of similar programs has often resulted in lower than anticipated revenues and the need for additional sources of funding, including the General Fund. At this time, based on a conservative projection of a thirty percent (30%) fee collection rate, an estimated amount of $205,203 will need to be appropriated from the General Fund in FY 24-25 in the form of a loan transfer to cover Program start-up costs including contracting for Program portal and data base development, hiring administrative staff, developing education and marketing materials, and providing Program supportive services. Should actual Program revenue collection rates exceed Program costs, the General Fund loan transfer will be repaid. The table below establishes the FY 24-25 appropriation of revenue and expenses. Program Budget and Fees will be included as part of the FY 25-26 budget development process.

Fund Appropriation Appropriation
Name
Total
Appropriation
Amount for
recommendation
FY 24-25
Operating
Budget Page
Last Budget
Action (Date,
Resolution)
2530 00.000-90.1000 Transfer In from
General Fund
$0 $205,203 N/A N/A
1000 00.000-95.2530 Transfer Out to

RRR/RSO
Program
$0 $205,203 N/A N/A
2530 30.3220-56.3530 Charges for Rental
Registration Fees
$0 $97,632 N/A N/A
2530 30.3220-56.3540 Charges for Rent
Stabilization Fees
$0 $212,422 N/A N/A
2530 30.3220-61.1100 Salaries & Benefits $0 $142,250 N/A N/A 2530 30.3220-66.5800 Capital Outlays
Computer
Software
$0 $200,000 N/A N/A
2530 30.3220-63.5900 Outside Services
Other Professional
Services
$0 $300,000 N/A N/A
2530 30.3220-64.1000 Other Charges
Administrative
Overhead
$0 $13,000 N/A N/A
ATTACHMENTS:

Draft Resolutions
Staff Program Cost and Revenue Projections
Table 4-13: Estimated Program Fee: Revised Proposed Number of FTE EPS Updated Fee Study: November 14, 2024
Page | 5
EPS Fee Study, September 2024
RESOLUTION NO. ________ (N.C.S.)
A RESOLUTION ESTABLISHING THE PROGRAM FEE FOR THE CITY’S RENT STABILIZATION ORDINANCE FOR FISCAL YEAR 2024-2025
WHEREAS, on September 24, 2024, the Salinas City Council adopted a Rent Stabilization Ordinance (Ordinance No. 2681) to protect local tenants from the rapidly increasing cost of rental housing that is the result of rising rents and a tight rental market; and WHEREAS, Ordinance No. 2681 went into effect October 25, 2024, and becomes operative on January 1, 2025; and
WHEREAS, Section 17-02.13 of the Ordinance provides that for the sole purpose of reimbursing the City for the costs of administering the Ordinance, a Rent Stabilization Program Fee is imposed on each Controlled Rental Unit subject to the Ordinance to cover the costs of the City to provide and administer the programs created by the Ordinance in such amount as the City Council may establish by resolution from time-to-time; and WHEREAS, the City retained Economic Planning Systems, Inc. (“EPS”) to prepare an analysis of the City’s costs to provide and administer the programs created by the Ordinance (“Fee Study”) which Fee Study is attached to this Resolution as Attachment A; and WHEREAS, in preparing the Fee Study, EPS worked closely with the City’s Community Development and Finance Departments to understand all the administrative and enforcement procedures and other program activities necessary to administer the Ordinance; and WHEREAS, the Fee Study demonstrates that the amount of the Rent Stabilization Program Fee to be imposed on rental property owners is a function of:

1. The number of applicable rental units covered by the Ordinance;

2. The amount of staff necessary to administer the programs created by the Ordinance (including, but not limited to, receiving and tracking rent increase notices, preparing notices and educational materials, providing support services for property owners and tenants in implementation of the Ordinance, scheduling and staffing hearings before the Hearing Officer, providing legal advice and support, billing and collection, and enforcement activities);

3. Contracted services (hearing officers, translators, etc.); and

4. Materials and supplies to support the administration of the program (including office space, program software, printing, postage, office equipment, etc.); and WHEREAS, EPS and the City determined that 8,330 rental units in the City would be subject to the Ordinance and therefore subject to the Rent Stabilization Program Fee; and WHEREAS, the costs associated with the administration and regulation of the Ordinance include direct and indirect labor costs, contracted services, and supplies costs and the Fee Study confirms that the tasks and estimated associated labor hours, as developed by the City are reasonable and accurate; and
WHEREAS, the Fee Study further recommended that the Rental Registration Program approved by the Salinas City Council on April 04, 2023 (Ordinance 2663 and Resolution No. 22622) be merged with the Rent Stabilization Program and that fees be established and amended; and
WHEREAS, the Fee Study determined the costs attributable to the combined Residential Rental Registration and Rent Stabilization Program are estimated to be approximately $1 million dollars; and
WHEREAS, Fiscal Year 2024-25 (1/2 year) costs are estimated to be $655,250; and WHEREAS, based on the Fee Study, City staff has recommended that the City Council establish for Fiscal Year 2024-25 a Rent Stabilization Program Fee of $170.00 per rental unit; and WHEREAS, the Rent Stabilization Program Fees will be charged annually to rental property owners on a per rental unit basis and will be billed by the Salinas Community Development Department; and
WHEREAS, if the Rent Stabilization Program Fees were not imposed on rental property owners, the City’s General Fund would absorb the cost to administer the various programs created by the Ordinance which would be an unfair burden on taxpayers of the city who neither own rental property nor are renters; and
WHEREAS, adoption of this Resolution is not a project under the California Environmental Quality Act (CEQA Guidelines Section 15061(b)(3)) because it would not have a significant effect on the environment. Additionally, the City’s approval of this Resolution is exempt because it does not meet the definition of a “project” under CEQA, pursuant to CEQA Guidelines sections 15060(c)(1) and 15378(a), because it has no potential to result in a direct or reasonably foreseeable physical change in the environment; and WHEREAS, pursuant to Article XI, §7 of the California Constitution, the City of Salinas intends to exercise its police power by adopting a regulatory fee, which does not exceed the reasonable cost of providing services necessary to carry out the purposes and provisions of Ordinance No. 2681 and any related policies related thereto hereinafter established by the City.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF SALINAS AS FOLLOWS:

1. A Rent Stabilization Program Fee of $170.00 is imposed on every Controlled Rental Unit owned and offered for rent in the city of Salinas subject to Ordinance No. 2681, which Rent Program Fee will be billed by the Salinas Community Development Department.

2. The Rent Stabilization Program Fee shall be deemed delinquent if it is unpaid thirty (30) days from the date of annual registration invoice.

3. A ten percent (10%) late fee will be assessed on unpaid and delinquent fees.

4. This Rent Stabilization Program Fee shall be periodically evaluated at the discretion of the Community Development Department to ensure that it reflects the reasonable costs incurred by the City to administer the various programs and services established under the Ordinance and any policies related thereto hereinafter established by the City.

5. The Rental Registration Program and associated Program Fees approved by the Salinas City Council on April 04, 2023 (Ordinance No 2663; Resolution 22622) be merged with the Rent Stabilization Program.

6. Revenues collected from the merged Residential Rental Registration Program and Rent Stabilization Program will be appropriated to Fund 2530.

7. This Resolution is effective immediately upon its approval.

PASSED AND APPROVED this 19th day of November by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED
____________________________________
Anthony Rocha, Mayor Pro Tempore
ATTEST:
__________________________________
Patricia M. Barajas, City Clerk
RESOLUTION NO. ________ (N.C.S.)
A RESOLUTION AMENDING RESOLUTION NO. 22622 TO AMEND THE PROGRAM FEE FOR THE CITY’S RESIDENTIAL RENTAL REGISTRATION PROGRAM FOR FISCAL YEAR 2024-2025
WHEREAS, on April 4, 2023, the City of Salinas adopted and codified Ordinance Number 2663 (N.C.S.) establishing Residential Rental Registration fees in Chapter 17, Article I of the Salinas Municipal Code.

1. The number of applicable rental units covered by the Ordinance;

3. Contracted services (hearing officers, translators, etc.); and

4. Materials and supplies to support the administration of the program (including office space, program software, printing, postage, office equipment, etc.); and WHEREAS, EPS and the City determined that 14,464 rental units in the City would be subject to the Ordinance and therefore subject to the Residential Rental Registration Program Fee; and
WHEREAS, the costs associated with the administration and regulation of the Ordinance include direct and indirect labor costs, contracted services, and supplies costs and the Fee Study confirms that the tasks and estimated associated labor hours, as developed by the City are reasonable and accurate; and
WHEREAS, the Fee Study determined the costs attributable to the combined Rental Registration and Rent Stabilization Program are estimated to be approximately $1 million dollars; and
WHEREAS, based on the Fee Study, City staff has recommended that the City Council establish for Fiscal Year 2024-25 a Residential Rental Registration Program Fee of $45.00 per rental unit; and
WHEREAS, the Residential Rental Registration Program Fees will be charged annually to rental property owners on a per rental unit basis and will be billed by the Salinas Community Development Department; and
WHEREAS, if the Residential Rental Registration Program Fees were not imposed on rental property owners, the City’s General Fund would absorb the cost to administer the various programs created by the Ordinance which would be an unfair burden on taxpayers of the city who neither own rental property nor are renters; and
WHEREAS, adoption of this Resolution is not a project under the California Environmental Quality Act (CEQA Guidelines Section 15061(b)(3)) because it would not have a significant effect on the environment. Additionally, the City’s approval of this Resolution is exempt because it does not meet the definition of a “project” under CEQA, pursuant to CEQA Guidelines sections 15060(c)(1) and 15378(a), because it has no potential to result in a direct or reasonably foreseeable physical change in the environment; and WHEREAS, pursuant to Article XI, §7 of the California Constitution, the City of Salinas intends to exercise its police power by adopting a regulatory fee, which does not exceed the reasonable cost of providing services necessary to carry out the purposes and provisions of Ordinance No. 2681 and any related policies related thereto hereinafter established by the City.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF SALINAS AS FOLLOWS:

1. Residential Rental Registration Program Fees established under Resolution No. 22622 are amended to be $45.00 imposed on every Rental Unit in the city of Salinas subject to Ordinance No. 2663, which Program Fee will be billed by the Salinas Community Development Department.

2. The Residential Rental Registration Program Fee shall be deemed delinquent if it is unpaid thirty (30) days from the date of annual registration invoice.

3. A ten percent (10%) late fee will be assessed on unpaid and delinquent fees.

4. This Residential Rental Registration Program Fee shall be periodically evaluated at the discretion of the Community Development Department to ensure that it reflects the reasonable costs incurred by the City to administer the various programs and services established under the Ordinance and any policies related thereto hereinafter established by the City.

5. The Residential Rental Registration Program be merged with the Rent Stabilization Program approved by the Salinas City Council on September 24, 2024 (Ordinance No. 2681.

6. Revenues collected from the merged Residential Rental Registration Program and Rent Stabilization Program will be appropriated to Fund 2530.

7. This Resolution is effective immediately upon its approval.

PASSED AND APPROVED this 19th day of November by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

REGISTRATION AND RENT STABILIZATION PROGRAM REVENUE AND EXPENSE BUDGET OF $655,250 UNDER FUND 2530; AUTHORIZING A GENERAL FUND LOAN TRANSFER AND APPROPRIATION OF $205,203 TO FUND 2530; AND APPROVING A

WORKFORCE ALLOCATION MODIFICATION TO ADD TWO LIMITED TERM

ADMINISTRATIVE POSITIONS TO THE COMMUNITY DEVELOPMENT

DEPARTMENT
WHEREAS, on April 4, 2023, the City of Salinas adopted and codified Ordinance Number 2663 (N.C.S.) establishing Residential Rental Registration fees in Chapter 17, Article I of the Salinas Municipal Code.

WHEREAS, Ordinance No. 2663 went into effect May 4, 2023, and became operative on July 1, 2023; and
WHEREAS, Section 17-01.14 of the Ordinance provides that for the sole purpose of reimbursing the City for the costs of administering the Ordinance, a Residential Registration Program Fee is imposed on Residential Rental Units subject to the Ordinance to cover the costs of the City to provide and administer the programs created by the Ordinance in such amount as the City Council may establish by resolution from time-to-time; and WHEREAS, on April 4, 2023, the City of Salinas adopted Resolution No. 22622 amending the City of Salinas Schedule of Fees and Charges for City Services to incorporate applicable Residential Rental Registration Fees, establish a corresponding fund and budget, and the appropriation of fees collected to the fund; and
WHEREAS, on September 24, 2024, the Salinas City Council adopted a Rent Stabilization Ordinance (Ordinance No. 2681) to protect local tenants from the rapidly increasing cost of rental housing that is the result of rising rents and a tight rental market; and WHEREAS, Ordinance No. 2681 went into effect October 25, 2024, and becomes operative on January 1, 2025; and
WHEREAS, Section 17-02.13 of the Ordinance provides that for the sole purpose of reimbursing the City for the costs of administering the Ordinance, a Rent Stabilization Program Fee is imposed on each Controlled Rental Unit subject to the Ordinance to cover the costs of the City to provide and administer the programs created by the Ordinance in such amount as the City Council may establish by resolution from time-to-time; and WHEREAS, in 2024 the City retained Economic Planning Systems, Inc. (“EPS”) to prepare an analysis of the City’s costs to provide and administer the programs created and to establish Program Registration Fee amounts (“Fee Study”) which Fee Study is attached to this Resolution as Attachment A; and
WHEREAS, the Fee Study recommended that Residential Rental Registration Program be merged with the Rent Stabilization Program; and
WHEREAS, in preparing the Fee Study, EPS worked closely with the City’s Community Development and Finance Departments to understand all the administrative and enforcement procedures and other program activities necessary to administer the Ordinances; and WHEREAS, the Fee Study determined the costs attributable to the combined Rental Registration and Rent Stabilization Program are estimated to be approximately $1 million dollars; and
WHEREAS, if Program Fees were not imposed on rental property owners, the City’s General Fund would absorb the cost to administer the various programs created by the Ordinance which would be an unfair burden on taxpayers of the city who neither own rental property nor are renters; and
WHEREAS, on November 19, 2024, the Salinas City Council considered and adopted Resolutions to establish a Rent Stabilization Program Fee (Resolution No. XXXX) and amend the Residential Rental Registration Program fees established under Resolution 22662 (Resolution No.

XXXX); and
WHEREAS, implementation of the Rental Registration and Rent Stabilization Program (Program) also requires the appropriation of FY 2024-25 budget including revenues and expenses, modification of Workforce Allocation to hire additional administrative staff, and authorization to a General Fund loan transfer to cover Program start-up costs prior to collecting sufficient Program fee revenue to cover Program expenses; and
WHEREAS, Program implementation is intended to be cost-neutral and self-funded through the collection of annual fee revenues and with no impact to the General Fund; and WHEREAS, total Program costs include staffing, software, and education and outreach total Program costs though FY 2024-25 are estimated to be $655,250; and WHEREAS, based upon perspective obtained from other jurisdictions, initial implementation of similar programs has often resulted in lower than anticipated revenues and the need for additional sources of funding, including the General Fund; and.

WHEREAS, at this time, based on a conservative projection of a thirty percent (30%) fee collection rate, an estimated amount of approximately $205,203 will need to be transferred from the General Fund in the form of a loan in FY 2024-25 to contract for Program portal and data base development, hire administrative staff, develop education and marketing materials, and provide Program supportive services; and
WHEREAS, a Workforce Allocation modification is required to add a limited term Administrative Analyst and a limited term Administrative Aide to the Community Development Department’s workforce to assist with implementation of the Program; and WHEREAS, adoption of this Resolution is not a project under the California Environmental Quality Act (CEQA Guidelines Section 15061(b)(3)) because it would not have a significant effect on the environment. Additionally, the City’s approval of this Resolution is exempt because it does not meet the definition of a “project” under CEQA, pursuant to CEQA Guidelines sections 15060(c)(1) and 15378(a), because it has no potential to result in a direct or reasonably foreseeable physical change in the environment; and WHEREAS, pursuant to Article XI, §7 of the California Constitution, the City of Salinas intends to exercise its police power by adopting a regulatory fee, which does not exceed the reasonable cost of providing services necessary to carry out the purposes and provisions of Ordinances Nos 2663 and 2681 and any related policies related thereto hereinafter established by the City.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF SALINAS AS FOLLOWS:

1. A FY 2024-25 Residential Rental Registration and Rent Stabilization Program revenue and expense budget is established under Fund 2530 in the amount of six hundred fifty-five thousand and two hundred and fifty dollars ($655,250).

2. The appropriation of two hundred and five thousand two hundred and three dollars ($205,203) to the Residential Rental Registration and Rent Stabilization Program (Fund 2530) in the form of a General Fund loan transfer is authorized.

3. The City’s Workforce Allocation is modified to add two limited term administrative positions to the Community Development Department’s workforce to staff the Program.

4. Program Budget, General Fund Loan Transfers and Workforce Allocation shall be periodically evaluated at the discretion of the Community Development Department to ensure that they reflect the budget and staffing needs of the City to administer the various programs and services established under the Residential Rental Registration and Rent Stabilization Program and any policies related thereto hereinafter established by the City.

PASSED AND APPROVED this 19th day of November by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED
____________________________________
Anthony Rocha, Mayor Pro Tempore
ATTEST:
__________________________________
Patricia M. Barajas, City Clerk

ESTIMATED MAXIMUM REVENUE
Number of
Units Fees Per Unit FY 24-25 (6 months) FY 25-26
14,464 $28 $ 202,496 $ 404,992
8,330 $115 $ 478,975 $ 957,950
22,794 $ 681,471 $ 1,362,942

CITY'S ESTIMATED COST
FY 24-25 FY 25-26
$ 219,350 $ 482,570
Operating Expenses $ 513,000 $ 578,600
$ 732,350 $ 1,061,170

COST RECOVERY ANALYSIS
Compliance
Rate
Ordinance
Fees
Cash
Carryover
Non-General
Fund
General
Fund Total
30% $ 204,441 $ 140,000 $ 77,100 $ 310,809 $ 732,350
40% $ 272,588 $ 140,000 $ 77,100 $ 242,662 $ 732,350
50% $ 340,736 $ 140,000 $ 77,100 $ 174,514 $ 732,350
60% $ 408,883 $ 140,000 $ 77,100 $ 106,367 $ 732,350
70% $ 477,030 $ 140,000 $ 77,100 $ 38,220 $ 732,350
80% $ 545,177 $ 140,000 $ 77,100 $ (29,927) $ 732,350
Compliance
Rate
Ordinance
Fees
Cash
Carryover
Non-General
Fund
General
Fund * Total
30% $ 408,883 $ (310,809) -$ $ 963,096 $ 1,061,170
40% $ 545,177 $ (242,662) -$ $ 758,655 $ 1,061,170
50% $ 681,471 $ (174,514) -$ $ 554,213 $ 1,061,170
60% $ 817,765 $ (106,367) -$ $ 349,772 $ 1,061,170
70% $ 954,059 $ (38,220) -$ $ 145,331 $ 1,061,170
80% $ 1,090,354 $ 29,927 -$ $ (59,111) $ 1,061,170
* General Fund contribution for FY 24-25 and FY 25-26.

STAFF ANALYSIS OF PROGRAM REVENUE, COST AND COST RECOVERY Staffing
Totals
Residential Rental Registration
Rental Stabilization Ordinance
Totals
FY 24-25 (Jan-June) Analysis
FY 25-26 Analysis

UPDATED DRAFT
Table 4-12
City of Salinas
Rent Stabilization Analysis
Estimated Annual Cost Rental Registry and Rent Stabilization Program Item Assumptions Proposed Minimum Average Maximum

CITY COST
Number of Staff
Planning Manager - 0.1 0.1 0.1 0.1 0.2
Community Development Analyst - 1.0 0.0 1.2 1.8 4.6
Administrative Analyst - Housing - 1.0 0.0 1.2 1.8 4.6
Admin Aide - 0.0 1.0 0.5 1.0 2.0
Subtotal - 2.1 1.1 3.0 4.7 11.4

UPDATED DRAFT
Table 4-13
City of Salinas
Rent Stabilization Analysis
Estimated Fee: Proposed Number of FTEs
Year 1
(1/2 Year) Year 2 Year 3 Year 4
Item 30% 40% 50% 60% 100%
Estimated Number of Employees 3.2 FTEs
Residential Units
Fully Covered Units (Qualify for Rent Stabilization) 8,330 Units 2,499 3,332 4,165 4,998 8,330 Partially Covered Units (Qualify for Just Cause Protections) 14,464 Units 4,339 5,786 7,232 8,678 14,464 Fee Amount to Break Even based on Level of Staff and
Third Party Services + Software
Rent Stabilization Program + Rent Program $170 per unit/per year $212,422 $566,459 $708,073 $849,688 $1,416,147 Rent Program $45 per unit/per year $97,632 $260,352 $325,440 $390,528 $650,880 Total Annual Revenue $310,054 $826,811 $1,033,513 $1,240,216 $2,067,027 Estimated Costs [1]
Staffing Costs 1.00% annual increase $426,950 $431,220 $435,532 $439,887 $426,950 Software & Systems Supporters 0.05% annual increase $200,000 $200,100 $200,200 $200,300 $200,000 Tenant/Landlord Services and Resources 0.05% annual increase $300,000 $300,150 $300,300 $300,450 $300,000 Total Annual Estimated Costs $926,950 $931,470 $936,032 $940,637 $926,950 Program Surplus/Deficit ($616,896) ($104,659) $97,482 $299,579 $1,140,077 Source: EPS.
[1] Estimated annual increases are included to adjust for any increases in staff compensation, software costs, and third party resources costs.

Estimated Revenue and Costs based on Proposed FTEs (3.2) Assumption
Prepared by EPS 11/13/2024 Z:\Shared\Projects\SAC\242000\242128 Salinas RSO Additional Analyses\Model\242128_Salinas_Rent_Stabilization_11-13-24 Final Report
Proposed Rent Stabilization
Ordinance Analysis
Prepared for:

City of Salinas
Prepared by:

Economic & Planning Systems, Inc. (EPS)
November 2024
EPS #242050
Table of Contents
Introduction and Summary of Findings ..............................................1 Introduction.......................................................................................1 Study Overview ..................................................................................2 Background .......................................................................................3 California Rent Stabilization..................................................................4 Rent Stabilization Concepts and Discussion.............................................5 Key Findings and Considerations ...........................................................7 Overall Conclusions ...........................................................................12 Recommendations ............................................................................13 Regulatory Context ....................................................................... 16 California Rent Stabilization................................................................16 Summary of Salinas’ Proposed Ordinance .............................................17 Additional Renter Protections..............................................................18 Literature Review and Case Study................................................... 20 Impacts on Renter Displacement.........................................................21 Impacts on Rental Supply ..................................................................22 Impacts on Economic Inequality..........................................................24 Impacts on Property Values................................................................25 Impacts on Building Quality................................................................26 Other Potential Impacts .....................................................................27 Case-Study Research ........................................................................28 Literature Review and Case-Study Conclusions......................................32 Economic and Fiscal Impacts of Rent Stabilization............................ 34 Housing Supply ................................................................................34 Affordable Housing Supply .................................................................36 Residential Property Tax ....................................................................36 Rent Pressures and Displacement........................................................39 Renter Household Socioeconomics.......................................................42 Economic Impact on Property Owner ...................................................45 Program Implementation Costs to the City ...........................................54 Conclusions and Recommendations................................................. 60 Conclusions......................................................................................60 Recommendations ............................................................................61 Appendices
Appendix A: Demographic and Socioeconomic Analysis Support Tables Appendix B: Financial Analysis Support Tables
List of Tables
Table 1-1. California Cities with Rent Stabilization ...........................................6 Table 3-1. Comparison of Rent Stabilization Ordinance (3 pages) ....................29 Table 4-1. Summary of Housing Inventory as it Relates to Rent Stabilization: City of Salinas.......................................................................35 Table 4-2. Affordable Housing Inventory: City of Salinas ................................36 Table 4-3. Real Estate Assessed Values: City of Salinas..................................38 Table 4-4. Rent-Burdened Households: City of Salinas ...................................41 Table 4-5. Renter Movement by City............................................................42 Table 4-6. City Salinas Median Income, Average Household Size, and Income per Capita by Household Tenure: City of Salinas ................................42 Table 4-7. Householder Race: City of Salinas ................................................43 Table 4-8. Householder Age: City of Salinas .................................................44 Table 4-9. Median Renter Household Income compared to
Average Monthly Rent ...............................................................................45 Table 4-10. IRR and Property Value Growth Sensitivity Analysis ......................51 Table 4-11. Estimate Range of Required Staff ...............................................55 Table 4-12. Estimated Staffing and Annual Costs Rental Registry and Rent Stabilization Program.........................................................................56 Table 4-13. Rental Registry and Rent Stabilization Program Estimated Annual Cost Variations: Minimum Number of Employees ................................58 Table 4-14. Current Rental Registry Fee Comparison .....................................59 List of Figures
Figure 1. CPI Comparison ..........................................................................14 Figure 2. Housing Inventory as it Relates to Rent Stabilization:

City of Salinas..........................................................................................35 Figure 3. Breakdown of the City of Salinas Assessed Value by Land Use............38 Figure 4. Year-Over-Year Percentage Change in Median Renter-Occupied Household Income versus Average MFR Rent for Apartments Built Before 1995: City of Salinas: 2012-2022/2024 .............................................40 Figure 5. Rental Revenue Differential: Market Rate vs
Stabilization Alternatives ...........................................................................47 Figure 6. Effective Rent Roll Growth with Vacancy Decontrol by Rent Stabilization Rate ..............................................................................48 Figure 7. Inflation and Corresponding Allowable Rental Increases ....................48 Figure 8. Internal Rate of Return Differential: Market-Rate Base Case vs.

Alternative Rent Stabilization Scenarios .......................................................50 Figure 9. Internal Rate of Return Differential: Impact of 5 Percent Annual Operating Expense Growth.........................................................................52 Figure 10. Peer Cities Hypothetical IRR Comparison.......................................53 Proposed Rent Stabilization Ordinance Analysis
November 2024
Economic & Planning Systems, Inc. (EPS) 1
Introduction and Summary of Findings
Introduction
At the request of the City of Salinas’ (City) City Council (Council), Economic & Planning Systems, Inc. (EPS) was retained to provide due diligence by analyzing the potential economic effects of establishing a rent stabilization policy (Study).1 Please note that rent stabilization ONLY applies to residential land uses with the following characteristics:
• Multifamily rental dwelling units (including duplexes and triplexes, unless one unit is occupied by the property owner).
• Built before February 1, 1995.
• Remodeled residential units converted from space long dedicated to residential.2
The following residential land uses are EXEMPT:
• Single-family dwelling units.
• Single-family rentals.
• Condominium units.
• Condominium rentals.
• Multifamily dwelling units built after February 1, 1995. • Newly constructed dwelling units.3
1 The City Attorney retained the services of EPS to serve as an outside expert by conducting a Consultant’s study of the proposed rent stabilization ordinance intended to inform and support the City Attorney’s legal evaluation. As such, this Study is subject to evidentiary protections under the attorney work product doctrine or attorney-client privilege, and all written communications should be appropriately marked to preserve those protections. 2 California Legislative Information Civil Code—CIV DIVISION 3. OBLIGATIONS [1427 - 3273.69] (Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14.) PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.69] (Part 4 enacted 1872.) TITLE 5.

HIRING [1925 - 1997.270] (Title 5 enacted 1872.) CHAPTER 2.7. Residential Rent Control [1954.50 - 1954.535] (Title 5 added by Stats. 1995, Ch. 331, Sec. 1.) https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=CIV&division=3.&title =5.&part=4.&chapter=2.7.&article (accessed May 2024).
3 Ibid.

Proposed Rent Stabilization Ordinance Analysis
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NOTE: Rent stabilization provides landlords with the ability to increase rent by a fixed percentage year over year. This differs from rent control, which is defined as when a municipality locks in rental rates at a specific amount. Please note that while the distinction between these methods of regulating rent is important, the terms may sometimes be used interchangeably within the literature review and other parts of this analysis.

This Study was prepared to answer the following key questions related to a potential rent stabilization ordinance on multifamily residential rental units in the City:
• What socioeconomic and real estate trends led City officials to consider implementing a rent stabilization policy?
• How can the experiences of cities with existing rent stabilization policies inform the elements of the proposed policy requirements in Salinas? • What are the potential fiscal implications of a proposed rent stabilization ordinance on the City’s General Fund?
• What are the estimated impacts of different rent stabilization ordinance scenarios on housing supply in the City?
It is important to note that local rental markets are complex and influenced by a variety of factors that are external to the proposed ordinance, including regional growth trends, federal and State of California (State) policies and regulations, and business cycle considerations, among others. Thus, the identified economic and fiscal impacts of the proposed ordinance are informed by available evidence and are not intended to be precise predictions but are to support discussion of potential policies and recommendations.

Study Overview
This Study includes various research methods to help examine the economic and fiscal effects of rent stabilization, including a literature review on rent stabilization, case studies of rent stabilization regulations implemented in jurisdictions in California, and a technical socioeconomic and financial analysis.

The technical analysis component of this Study comprises the following key analytic elements and addresses how they relate to and could be affected by rent stabilization:

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• Demographic and Socioeconomic Profile. Identifies trends in population and households, age, race & ethnicity, and household income. • Residential Market Profile. Examines the housing inventory and residential market trends in the City.
• Economic and Fiscal Impacts. Estimates the economic impacts of rent stabilization on housing supply and pricing, the City’s General Fund, and on landlord returns.

The purpose of this evaluation is to develop an understanding of the dynamics of socioeconomic and residential market trends in Salinas to examine the economic and fiscal impacts of rent stabilization and address the key questions to help the City develop a rent stabilization ordinance that considers and balances the economic implications for both the tenants and building owners.

Supporting data tables underlying the findings and figures presented herein are included in appendices at the end of this Study.

Sources
This Study relies on publicly available data sources (e.g., 2012 and 2022 U.S. Census American Community Survey, California Department of Finance, Housing and Urban Development, RedFin, Zillow, Nolo) and subscription-based data (e.g., CoStar, ParcelQuest) to document and evaluate trends in the City, the State, and other jurisdictions.

Background
As the county seat, the City is both a center of agricultural production and an affordable residential center for service economy employees serving the Monterey Peninsula. The City has been making gains in its downtown, which has become a compelling and livable district. Recent years have shown Salinas’ economic base growing at a modest pace, with agriculture making up the largest portion of economic activity.

Salinas’ labor force is young, with a large proportion of workers lacking a high school or college education. Salinas also has a shortage of both agricultural production workers, as well as health care and educational workers.

The labor force also has a sizable number of professionals and construction workers who commute to jobs outside of the City and Monterey County. The role of Salinas as a bedroom community for those workers has put upward pressure on housing prices, and the regional shortage of agricultural workers, as well as the tourist-serving hospitality workers, is an outcome of that trend.

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Salinas has a rare if not unfortunate status as an area of lower wage labor subject to very expensive land and development costs (similar to the greater Bay Area).

With very little new market supply added despite several major Specific Plans on the books, these forces have combined to create a high cost of living in the City. Communities to the south of Salinas on U.S. Highway 101 are actively seeking to compete for this labor force as part of their own economic development ambitions. While every effort is being made to diversify and train the local labor force and enable citizens to gain additional skills and command higher wages, these efforts take time. In the interim, the rising costs of living, including the cost of housing, are important to understand, and efforts to help must center on stabilizing housing costs through various policies, including but not limited to rent stabilization.

California Rent Stabilization
The California Tenant Protection Act established a statewide maximum allowable rent increase and just-cause eviction protections. The statewide policy caps rent increases at the lesser of 5 percent plus the increase in the regional consumer price index (CPI) or 10 percent of the lowest rent charged over the 12 months before the increase.4
Cities and counties may also enact their own rent stabilization with a lower rent cap than the statewide provision. However, any local ordinance is limited by the Costa-Hawkins Rental Act, which exempts single-family homes, condominiums, and all housing built after 1995 from rent stabilization (but not just-cause eviction). State law also dictates that all units covered by rent stabilization are subject to vacancy decontrol, which allows landlords to establish market-rate rents for new tenants.5
There is a statewide ballot initiative set for the November 2024 ballot that would repeal Costa-Hawkins.6 If the initiative passes, any local ordinance not explicitly written to exempt single-family homes or provide vacancy decontrol will take effect. Therefore, if Costa-Hawkins is repealed, the City’s proposed rent stabilization ordinance, if approved, would apply to all rental housing, including single-family units, and rents would not reset to market rate for new tenants if these elements are not specified in the ordinance.
4 Rent Control Is Here: California’s Tenant Protection Act of 2019 | Nolo 5 Costa-Hawkins Act • California Apartment Association (caanet.org) 6 California Prohibit State Limitations on Local Rent Control Initiative (2024) - Ballotpedia Proposed Rent Stabilization Ordinance Analysis
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Various studies on rent stabilization in California suggest that approximately 30 cities in the State have some form of rent stabilization program, or about 7 percent of the total cities (accounting for 22 percent of the State’s population).7 As illustrated in Table 1-1 most of these cities tie rent caps to a percentage of the CPI. A smaller number of cities cap rent at an annual percentage increase, ranging from 2 percent to 10 percent, regardless of the CPI.

Rent Stabilization Concepts and
Discussion
Rent stabilization and control are a controversial concept, subject to divisive opinions and concerns.

These are some of the common concerns with this regulatory policy:
• Reduced rental unit supply.
• Reduced residential mobility.
• Reduced property value.
• Decreased revenue leading to property disinvestment.
• Inflated rent as an effect of vacancy decontrol.

Conversely, these are some of the positive expectations from rent stabilization:
• Housing stability:
‒ Reduced worker turnover.
‒ Improved educational outcomes.
‒ Reduced demand for social services.
• Increased discretionary income potentially to help boost the local economy. • Protecting communities of color from historical housing cost burdens. • Increase in income equality.

Many of the concerns can be alleviated through education of the proposed rent stabilization policy. For example, making sure the community understands which residential units qualify for rent stabilization and specifically clarifying it does not affect new development, as discussed in Chapter 2, and refuting some common misconceptions, as discussed in Chapter 3.
7 California Rent Control Law | Nolo
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Table 1-1. California Cities with Rent Stabilization
City City
Bell Gardens 50% Gardena 5%
Antioch 60% Hayward 5%
Concord 60% Larkspur 7%
Oakland 60% Mountain View 2% - 5%
Richmond 60% Oxnard 4%
San Francisco 60% Sacramento 10%
Berkeley 65% San Jose 5%
Alameda 70% Average 6%
Los Gatos 70%
Fairfax 75%
Palm Springs 75%
Pasadena 75%
Santa Monica 75%
West Hollywood 75%
East Palo Alto 80%
Santa Ana 80%
Baldwin Park 100%
Beverly Hills 100%
Cudahy 100%
Culver City 100%
Inglewood 100%
Los Angeles 100%
Pomona 100%
Average 78%
Source: Nolo; EPS.

Allowable Annual
Rent Increase
(% of CPI)
Allowable Annual
Rent Increase
Flat %
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Key Findings and Considerations
Key Question 1: What socioeconomic and real estate trends led City officials to consider implementing a rent stabilization policy? For decades, California has faced a housing crisis related to its significant unhoused population and housing affordability related to rising housing costs and lack of supply. For renters, especially those living in poverty, high rental rates have translated into large proportions of their income allocated to housing costs, leaving little remaining for basic living expenses, let alone bolstering savings accounts to build wealth.8 Disparities in cost burdens persist among renters, particularly affecting households from a diverse racial background. These disparities are attributed to long-standing discrimination in housing,9 employment, and education.10 Black, Hispanic, and multiracial households face higher rates of cost burdens compared to White renters by 5 to 10 percent.11 Among the renters experiencing housing hardships, 4 in 10 renter households are Black and Latinx.12 This housing crisis is exacerbated for people of color, who often face additional barriers such as lower wages and fewer housing options in desirable neighborhoods. These communities are more likely to experience housing instability and are at greater risk of eviction. The socioeconomic factors and real estate trends discussed below have prompted the City Council to consider a rent stabilization policy in the City to help protect the vulnerable renter communities by helping to alleviate the pressures of increasingly high rents. 8 Kimberlin, Sara and Esi Hutchful, 2019. New Census Figures Show More Than 1 in 6 Californians Struggle to Afford Basic Necessities. California Budget and Policy Center. [online] https://calbudgetcenter.org/resources/number-of-californians-living-in-poverty-has-beendeclining-but-more-than-1-in-6-residents-still-struggle-to-afford-basicnecessities/#:~:text=Approximately%207.1%20million%20Californians%20lived,Supplemental% 20Poverty%20Measure%20(SPM) [Accessed January 2021].
9 CBPC, Who is Experiencing Housing Hardship in California? May 2022; 5. 10 JCHS of Harvard University, America’s Rental Housing, 2024; 34-36. 11 Ibid.
12 CBPC, Who is Experiencing Housing Hardship in California? May 2022.

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These are characteristics of renter-occupied households in Salinas:
• Overcrowding in renter-occupied households has increased by more than 24 percent over the last decade, compared to only 6 percent statewide.13 • About 53 percent of City renter-occupied households have 4 or more occupants, compared to 27 percent statewide.
• Mirroring a trend negatively affecting all of California, more than half of renter-occupied households in the City are considered rent-burdened and 26 percent are considered severely cost-burdened:
‒ Median renter household income: $64,509/year.
‒ 30 percent of median income: $1,612/month.
‒ Median multifamily residential rent for units built before 1995:
$1,994/month.
• Approximately 18 percent of families that are renters fall below the poverty level, compared to 6 percent of owner-occupied families in Salinas, and statewide, 16 percent of renters fall below the poverty level, compared to 4 percent of owner-occupied.14
• More than half (53 percent) of the City’s households are renter occupied, in comparison to 44 percent statewide.
• Latinx population comprises 81 percent of the renter-occupied units in Salinas, compared to 30 percent countywide and 37 percent statewide. • About 57 percent of renter-occupied households comprise householders ages 44 or younger, compared to 37 percent countywide and 53 percent statewide.

The multifamily rental rate increase of 86 percent over the past decade greatly exceeds the increase in renter-household incomes, which only increased by a total of 33 percent (in 2022 dollars) over the same period.15 13 An overcrowded household is defined by the U.S. Census as having 1 or more persons per room (excluding bathrooms and kitchens).
14 The US Department of Housing and Urban Development defines a household spending more than 30 percent of their income on housing as “rent burdened.” Households spending more than 50 percent of their income on housing are considered “severely rent burdened.” 15 This is based on the difference between 2012 and 2024 for multifamily rental units built before 1995.

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In addition, the housing market in Salinas has become much more expensive.

Home prices have increased 203 percent since 2012 (2023 average median sales price is $675,000 for for-sale units), and rents in multifamily units built before 1995 have increased by 86 percent since 2012 (2023 average asking rent was about $1,980 for all unit sizes).

The housing market is considered tight, with little room for movement.

Overall low vacancy of about 3 percent, compared to Monterey County’s 8 percent average, indicates the need for increased housing supply.

The City’s current overall vacancy rate of 3 percent falls below the 5 percent threshold that many housing experts believe to be an ideal vacancy rate.16 Higher vacancy rates provide prospective buyers and renters with more options when searching for homes, helping to stabilize prices. Below this 5 percent rate, those looking for housing have fewer options, allowing landlords or sellers to charge higher prices. Research consistently has found that a vacancy rate below this 5 percent threshold leads to increasing rents and sales prices.

The undersupply of housing most prominently affects underserved populations— including students, teachers, young families, low-income families and individuals, seniors, people with disabilities, and the unhoused population—indicating the need for focused strategies to increase access to a variety of housing types at various levels of affordability.

Key Question 2: How can the experiences of cities with existing rent stabilization policies inform the elements of the proposed policy requirements in Salinas?
A survey of rent stabilization ordinances in comparable jurisdictions was completed to examine established policy structures, as well as program fee amounts. The full survey can be found in Chapter 3 Table 3-1.

The rent-stabilized jurisdictions analyzed in the case study implemented varying levels of rent increase percentages, as well as different fee amounts. One of the key takeaways is the emphasis on the importance of educating the community, property owners, and developers on the types of units subject to rent stabilization, as well as the elements within the ordinance that can help both renters and landlords.

In addition, it is important to acknowledge that rent stabilization does not serve as a single “silver bullet” solution to such a pervasive problem. For it to alleviate some of the housing pressure, it must be combined with other policies that protect renters and encourage additional supply such as providing incentives 16 Phillips, Shane. 2020. Does the Los Angeles Region Have Too Many Vacant Homes? UCLA Lewis Center for Regional Policy Studies Working Paper Series. https://escholarship.org/uc/item/87r4543q [Accessed October 2021].

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to support the development of missing housing types in the City, encouraging infill development, streamlining the permitting process, creating supportive housing-related programs for underserved populations, etc.

Key Question 3: What are the potential fiscal implications of a proposed rent stabilization ordinance on the City’s General Fund? Property Tax
There may be positive fiscal impacts on property taxes and property transfer taxes if rental units are sold in response to a rent stabilization ordinance.

However, these fiscal impacts will be minor under current conditions as the ordinance only applies to multifamily units. The building would either be sold and continued to be occupied as rental units, or the property owner would have to go through the detailed process of converting to condominiums, which could then reduce the rental supply.

There is also the potential that limiting rent increases could reduce the assessed value of a rent-stabilized property. However, because of the impact of Proposition 13 on assessed values, only properties that have been sold would be eligible for a reassessment in their taxable value. In these circumstances, some new property owners ultimately may file assessment appeals if the values of their properties do not keep pace with inflation because the real rental revenue is declining over time. The impact of this effect on property taxes will depend on the portion of multifamily rental housing that was recently transacted. In the last 5 years, only 5.5 percent of the City’s rental inventory that would qualify for the ordinance was sold.

In addition to property tax payments, any change in property values would impact the City’s property tax in-lieu of vehicle license fee revenue received from the State. Therefore, if the proposed ordinance were to result in a decrease (or increase) in assessed values, the City would receive lower (or higher) revenue from the State.

Program Costs to the City’s General Fund
Salinas will incur both one-time and ongoing costs to implement and administer a Rent Stabilization Program—costs that potentially could be covered through a per-unit fee program specified in the ordinance. Based on discussions with rent stabilization program staff in other jurisdictions, Salinas would likely need 1.1 to

11.4 full-time equivalent employees (FTEs) to manage the proposed ordinance (excluding the Rental Registry FTEs). Preliminary EPS estimates suggest ongoing program administration costs ranging from about $927,000 to $2.6 million per year, as detailed in Chapter 4 Table 4-12.

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A combined annual per-unit fee for the Rental Registry and Rent Stabilization programs should be designed to recover the costs of the fully burdened costs of staff. An illustrative example using the estimated annual costs of $927,000 reflects a $45 fee per unit for partially covered units and a $170 fee per unit for fully covered units. The actual fees will depend on the level of staffing and will decrease over time if not escalated to keep pace with inflation. This fee does not include the initial costs to implement the program, and it provides an estimated cost of hiring third-party sources that may help with services such as legal counsel, tenant relocation assistance, and renter helpline. Actual costs of thirdparty services will depend on what elements are included from each service type.

Key Question 4: What are the estimated impacts of different rent stabilization ordinance scenarios on housing supply in the City? Under current State law, the impact of the proposed ordinance on City finances and economic trajectory is likely to be relatively modest.

Because of the statewide exemptions for single-family homes and multifamily units built after 1995, the rent stabilization provisions of the ordinance would only impact about 19 percent of the City's total housing stock. The most significant economic impacts are likely to be distributional, with existing renters experiencing direct financial benefits at the expense of property owners. The rent and eviction protections also may limit displacement among lower income communities who tend to disproportionately occupy rental housing.

Vacancy decontrol, which allows the rent for vacated units to be brought up to market rate, helps stabilize the potential financial effects for property owners, reflecting only a slightly decreased Internal Rate of Return (IRR) depending on the rent cap. A financial sensitivity analysis shows that a prototypical rent-stabilized building would appreciate at a slower rate compared to a market-rate building not subject to rent stabilization. In addition, rent-stabilized buildings are considered low-risk investments, requiring a stable IRR from about 8 percent to 12 percent compared to new construction, which would need to range about 2 percentage points higher. See Chapter 4.

Operating expenses for multifamily buildings have been somewhat volatile in recent years, largely because of increases in utility costs and particularly insurance costs. Increases in operating costs impact the net operating income for owners of multifamily rental units that are unable to pass along the total increased cost to tenants. Correspondingly, the return on investment for landlords can be negatively impacted. At the most restrictive rent control rates, the rates of investor return can potentially dip close to levels that can be achieved with far less risk and effort through an investment account. Under such a scenario, there would be increased incentive for some landlords to exit the market. The inclusion of provisions for landlords to petition for rent increases Proposed Rent Stabilization Ordinance Analysis
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to accommodate additional operating expenses is an important safety valve to prevent undue burden and potential loss of rental units.

Overall Conclusions
Rent regulations are increasingly prevalent in California. In cities like Salinas, where apartments account for about 36 percent of the housing stock, the policy could have a range of potential impacts. As discussed previously, current State law limits the impact of rent stabilization by exempting single-family units, condominiums, and properties built after February 1995 and allowing for vacancy decontrol (the ability to raise rent back to market rate after a tenant leaves).

For applicable units (19 percent of the City’s housing), the proposed ordinance is likely to stabilize rents and decrease displacement risk, which is an important equity concern in the City. Thus, existing City renters would be the direct beneficiaries of the ordinance, accruing long-term financial benefits and reduced risk of eviction. This benefit would come at a cost to existing Salinas landlords who could experience reduced rental income and limitations on removing unwanted tenants. However, the effects on income appear to be relatively modest, particularly as the ordinance has policies to help protect hardships by allowing a landlord to petition for rent increase beyond the allowed rent-stabilized increase to obtain a fair and reasonable return, as well as petition to pass through to the tenant specific capital improvements. Conversely, there is a policy that allows a tenant to petition for a rent reduction if they believe that the landlord has demanded, accepted, or retained any rent in excess of the rent permitted.

However, despite the clear and direct redistribution effects of the proposed ordinance, the broader economic implications are likely to be modest absent the repeal of Costa-Hawkins, which would expand the incidence of rent control beyond the above-referenced 19 percent of the City’s housing.

While 19 percent of the City’s housing is not immaterial, the renter protections included in the ordinance are likely to have both positive and negative impacts on the local economy and the City’s fiscal health. The positive impacts include reduced displacement, as well as increased economic stability and disposable income for renters. The negative impacts may include reduced labor mobility and housing availability for new residents, as rent stabilization is shown to decrease turnover by about 20 percent, and with vacancy in the City experiencing an extremely tight market, this exacerbates the limited housing options for new residents and the ability for existing residents to move, as discussed in Chapter 3.

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Rent stabilization is part of a toolkit that, along with other policies and incentives, can help alleviate some housing cost pressures. Taken in combination with other policies that encourage renter protections and additional supply, it can be part of a multi-pronged effort to improve the outlook for residents struggling to afford housing.

Recommendations
Based on the findings from the literature review, a survey of comparable cities, and the technical fiscal and economic impacts analysis, EPS recommends the City consider adopting a rent stabilization ordinance, limiting the maximum increase of rent between the following ranges to help stabilize rents and prevent displacement for the City’s most vulnerable populations:
• The lesser of 2.5 percent or 65 percent of the CPI for All Urban Consumers in the Urban West (CPI-U West)
OR
• The lesser of 2.75 percent or 75 percent of the CPI-U West Using a percentage of CPI to calculate allowed annual rent increases maintains a logical basis because the CPI itself includes changes in housing prices to measure inflation. As of December 2023, rent of primary residences of relative importance to the CPI-U West was 9.7 percent, while owners’ equivalent rent’s relative importance was 27.1 percent.17 Thus, using CPI to calculate allowable rent increases risks of “double-counting” rent, in that exogenous rent increases in non-rent stabilized units could drive higher allowable rent increases that are larger than the increased costs of maintenance services captured in the CPI. Using either 65 percent or 75 percent of CPI to benchmark allowable rent increases helps to mitigate this potential issue.

The Bureau of Labor Statistics (BLS) does publish inflation measures that exclude housing costs, titled “CPI-Less Shelter.” However, this measure can be extremely volatile, as the large relative importance of shelter costs and their relative stability year-over-year mitigates more volatile consumer goods and services costs in unstable inflationary environments. For example, during the inflationary spikes of 2021 and 2022, which were driven by COVID-related supply chain issues 17 Owners’ equivalent rent is the amount that an owner-occupied home would rent for on the open market. Relative importance indicates the relative contribution of one category of items to the overall inflation measure. For example, with 9.7 percent relative importance, a 10 percent increase in rent of primary residences would increase the overall CPI by 0.97 percent, assuming all other items’ prices do not change.

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for consumer goods, the CPI-Less Shelter was 26 percent and 12 percent higher than the overall CPI-U West, respectively. See Appendix A Table A-14.

The allowed rent increases strike a balance to benefit both the tenant and the property owner, preventing exorbitant increases in rent, while still providing a reasonable rate of return for the property owner.

Figure 1. CPI Comparison
The Rent Stabilization Ordinance should include strong tenant protections. Strong tenant protections include Just-Cause eviction protections, as well as No-Fault eviction protections such as requiring landlords to pay fair relocation costs. See Appendix A Table A-1 for no-fault eviction protections in the California cities that have rent stabilization ordinances. An additional protection the City could consider is setting a cap on the number of units that can convert to condominiums within a year and providing current tenants the right of first refusal to purchase condominium conversions.

The City should consider merging the Rent Stabilization Fee into the Rental Registry Fee and charge this fee on a per-unit basis. The fee amount should differ based on unit type: fully covered units (rental registry, tenant protections, and rent stabilization) should be higher than partially covered units (rental registry and tenant protections). The fee is to help the City recover the costs to run the program, including costs for staffing, third-party services and software, community education, and program enforcement, and should provide financial neutrality.
-2%
0%
2%
4%
6%
8%
10%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 [2]
60% CPI
80% CPI
CPI - Less Shelter
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Based on data from other cities, the additional staffing needed to establish, operate, and maintain the Rent Stabilization Ordinance ranges from the equivalent of 4.2 to 11.4 net new hires (excluding the rental registry staff) or a percentage of existing employees’ time. With the minimum level of only 4.2 new staff members, or 5.1 FTEs total, Salinas would likely need to contract third-party services for legal counsel, tenant relocation services, and mediation and dispute resolution. As staffing increases beyond 5.1 FTEs, the number of third-party source contracts will decrease.

The City should consider including language in the ordinance establishing periodic review elements such as the rent increase caps, the number of petitions, staffing levels, fee amounts, etc., to ensure the program operates effectively for property owners, tenants, and the City.

In addition, the City should take careful consideration to explicitly include any elements they would like to retain from Costa-Hawkins, such as exempting single-family homes, exempting new development, and providing vacancy decontrol. If these are not included in the City’s ordinance and the statewide ballot initiative set for the November 2024 ballot to repeal CostaHawkins passes, the local ordinance would apply to all rental housing, including single-family units, and rents would not reset to market for new tenants.

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Regulatory Context
This chapter summarizes the existing California legal context relevant to evaluating the fiscal and economic impact of the proposed ordinance and the specific provisions of the proposed ordinance in this context.

Assorted studies on rent stabilization in California suggest that approximately 30 cities in the State currently have some form of a program, or about 7 percent of the total cities (accounting for 22 percent of the State’s population).21 18 Rent Control Is Here: California’s Tenant Protection Act of 2019 | Nolo 19 Costa-Hawkins Act • California Apartment Association (caanet.org) 20 California Prohibit State Limitations on Local Rent Control Initiative (2024) - Ballotpedia 21 California Rent Control Law | Nolo
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As illustrated in Table 1-1, most of these cities tie rent caps to a percentage of the CPI, similar to the approach in the proposed Salinas Ordinance. A smaller number of cities cap rent at an annual percentage increase, ranging from 2 percent to 10 percent, regardless of the CPI.

Summary of Salinas’ Proposed
Ordinance
The “City of Salinas Rent Stabilization and Tenant Protection Ordinance” (Ordinance) proposes to establish an annual rent increase cap of the lesser of a specified percentage or a percentage of the CPI (percentage amounts to be determined later) and establish just-cause eviction protections. As illustrated in Table 1-1, 60 percent of CPI threshold is the lower end (e.g., more favorable for existing tenants) than other California cities that have such ordinances (the average is 78 percent of CPI).

Like most rent stabilization programs, the proposed Ordinance applies to all covered units irrespective of household income (e.g., it is not means tested).

As in Costa-Hawkins, the Ordinance exempts the following properties:
• Any residential real property with a certificate of occupancy issued after February 1, 1995.
• Rental units in hotels, motels, and inns (for a period of fewer than 30 days). • Dormitories.
• Rental units in any hospital, convent, monastery, or extended care facility. • A rental unit that has been the primary residence of the landlord since the beginning of the tenancy, and where the landlord shares a bathroom or kitchen with the tenant.
• Rental units fully owned, operated, and managed by a county government unit, agency, or authority, if applicable. Federal, State, or administrative regulations specifically exempt the units from local rent stabilization. • Mobile homes located in mobile home parks.

Notably, the Ordinance does not exempt single-family or vacated units. While these units are exempt from rent stabilization under Costa-Hawkins, if voters repeal this law (as proposed in a statewide ballot measure), both single-family and vacated units would thereafter be covered by the proposed Ordinance.

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In addition, the Ordinance provides the following policy stipulations to protect both tenants and property owners:
• Reasonable rate of return.
• Tenant protection for rent reduction.
• Landlord petition for rent increase.
• Petition for pass through for specific capital improvements. • Rent increase ineffective (e.g., landlord fails to comply with the provisions of the Ordinance).
• Notice requirements.
• Violations and remedies.

If passed, the City would fund the administration of the Ordinance through the Rent Program Fee charged to landlords per non-exempt unit per year. The amount of the fee has yet to be determined. Other complaint-driven enforcement jurisdictions charge fees that range from $59 to $144 per unit.

Additional Renter Protections
Rent stabilization is a single policy tool designed to protect renters, and other rental protections and aid should be considered as well. For example, from March 2021 through the end of 2023, the City partnered with United Way to establish a funding agreement, providing the City with $15 million to assist with more than 3,800 rental payments. The program serves low-income residents throughout Monterey County who are at risk of becoming homeless. During this time, the City was able to help:
• 2,031 Rental Cases.
• 1,705 Utility Cases.
• 61 Motel Payments.

The City is working with United Way to develop a Homeless Housing Navigation and Stabilization Program (HHNSP), which includes partnering with the Housing Authority of Monterey County as a subgrantee. Funding will be used by the City’s housing case navigators to provide case management, housing navigation referrals, and financial assistance with application fees, deposits, move-in fees, and storage fees to help residents obtain stable housing. These services are provided to individuals that are already a part of the City’s Emergency Motel Program (EMP) or the Salinas Outreach and Response Team (SORT).

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The City is not assisting with rental or utility services but helps provide referrals to outside services using the Smart Referral Network (SRN). The City is working on partnering with Monterey College of Law to assist tenants with tenant/landlord mediation services.

Potential Options for Additional Renter Protection
In addition to or in place of a rent stabilization ordinance, the following renter protection methods can be considered:
• Assembly Bill (AB) 1482: The California Tenant Protection Act of 2019.

This law went into effect January 1, 2020, and expires on January 1, 2030.

These are the two main aspects of this law:
‒ Requires a landlord to have a “just cause” to terminate a tenancy. ‒ Limits annual rent increases to more than 5 percent + local CPI, or 10 percent, whichever is lower.

This law applies to units that were constructed 15 years ago or more, which differs from Costa-Hawkins, in that unit age is on a rolling basis. Another difference is it can apply to single-family homes and condominiums if those units are owned by a real estate trust, a corporation, or an LLC with at least one corporate member.
• Additional renter protection programs provided by other cities:
‒ Just-cause eviction ordinances.
‒ Tenant protection ordinances.
‒ Legal assistance.
‒ Fair housing services.
‒ Emergency assistance programs.
‒ Housing stability assistance program.

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Literature Review and Case Study
The impact of rent stabilization ordinances on communities largely depends on the framework of the policy and the context of the local housing market. That said, there are common themes that can be gleaned from empirical and academic studies on the topic. Traditional economic analyses often focused on negative aspects of rent control, a much stricter form of rent regulation originating from World War II-era price controls that are now only applicable to approximately 24,000 rental units located exclusively in New York City.22 Under the rent control regime that was in place between 1943 and 1968 in New York City, landlords were required to apply to a rent commission for rental increases, with no allowances for automatic inflationary increases of rent.23 Although economic theory predicts that such a hard price ceiling, coupled with no exemptions for new construction, would significantly depress new construction of rental housing and investment in maintenance and upkeep of current units, such strict policies were only in place temporarily and are not reflective of the more nuanced policies in place in most jurisdictions.24
Nearly all rent stabilization policies currently in place include significant allowances for automatic inflationary adjustments of rent, increases for capital improvements, vacancy decontrol, and exemptions for new construction, mitigating harmful effects on new construction and maintenance investment from the price control aspect of the policies. Most empirical studies on more moderate rent stabilization policies indicate that the policy is effective in its intended goal of reducing rent for existing tenants. However, rent stabilization policies have also been found to cause a range of other impacts on the housing market, including increased rent for new residents and reduced housing mobility/displacement.

Impacts on other factors are more ambiguous. A summary of the salient findings from a variety of empirical rent stabilization studies is provided below. 22 New York City Rent Guidelines Board, 2024. Frequently Asked Questions. https://rentguidelinesboard.cityofnewyork.us/resources/faqs/. Accessed June 18, 2024. 23 Cavadias, M., 2017. A Brief History of Rent Regulation in New York. Hypocrite Reader. https://hypocritereader.com/81/rent-regulation-nyc. Accessed June 18, 2024. 24 Jenkins, B., 2009. Rent Control: Do Economists Agree? Econ Journal Watch. Vol. 6, Issue 1.

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Impacts on Renter Displacement
Almost all academic research indicates that tenants in rent-stabilized apartments have longer tenures and are less likely to move than renters in non-rent-stabilized units.25 In other words, households that are protected from rapid rent increases appear less likely to move. In a 2019 Stanford research paper, authors Diamond, McQuade, and Qian (DMQ) examined the impacts of San Francisco’s rent stabilization after a 1994 law removed an exemption for small multifamily units in the city. The paper concluded that San Francisco’s rent stabilization lowered renter displacement by about 20 percent.26 The authors note that rent stabilization had an especially significant impact in preventing the displacement of racial minorities. A summary of stabilization’s impacts by PolicyLink noted that tenants living in rent-stabilized units move less frequently and are less likely to experience forced moves.27
The “strictness,” as measured by the magnitude of rent increases allowed and the burden of proof necessary to raise rents beyond the standard allowable increases, of rent control policies is strongly correlated with longer tenancies.28 Under extremely strict rent control regimes, such as those that existed in New York City before 1968, the impacts on tenant mobility can be extreme, with a 1992 study finding that the typical tenant in a rent-controlled unit would remain in the same unit for 18 years longer than a similar tenant in a non-rent-controlled unit.29 Although economic analyses of strict rent control policies have often focused on the misallocation of rent control’s benefits (i.e., that most benefits accrue to upper income households), recent analysis of rapidly gentrifying neighborhoods in the San Francisco Bay Area finds that rent stabilization is uniquely effective in preventing displacement of extremely low-income households.30 25 Pastor, M.; Carter, V.; Abood, M. 2018. Rent Matters: What are the Impacts of Rent Stabilization Measures? https://dornsife.usc.edu/eri/wpcontent/uploads/sites/41/2023/01/2018RentMattersPERE.pdf 26 DMQ.pdf (stanford.edu)
27 OurHomesOurFuture_Web_08-02-19.pdf (policylink.org)
28 Crispell, M., 2016. Rent Control Policy Brief. University of California Berkeley Urban Displacement Project.
29 Ault, R.l Jackson, J.; & Saba, R. 1992. The Effect of Long-Term Rent Control on Tenant Mobility.
30 Hwang, J., et al., 2022. Who Benefits from Tenant Protections? The Effects of Rent Stabilization and Just Cause for Evictions on Residential Mobility in the Bay Area. University of California Berkeley Institute of Governmental Studies Policy Brief.

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In Salinas, increasing housing stability for the City’s rental community, specifically the 81 percent of renter-occupied units comprising Latinx residents, and other vulnerable residents such as farmworkers, the elderly, and low-income households, is key to ensuring quality of life for these communities and the City as a whole. Research from San Mateo County shows that displacement, whether from formal eviction or an inability to afford rent, has disastrous impacts on families’ well-being. Renters displaced from their homes experienced extremely high rates of homelessness compared to other families and, on average, were forced to move to communities with worse environmental health outcomes and longer commutes.31 Additional research from Michigan conducted during the Great Recession shows that people who move because of an inability to afford rent or mortgage are more than twice as likely to report anxiety attacks or severe depression than people who move for other reasons.

Impacts on Rental Supply
Much of the economic literature critical of rent control policies’ depressive impact on new housing development examines strict rent control policies present in New York City and many European cities immediately following World War II.32 33 However, empirical evidence from more moderate rent stabilization policies with exemptions for new construction find little to no effect on the supply of new housing. An examination of the end of rent stabilization policies in Boston, where new construction was exempted, found that being in a zone of Boston exempt from rent stabilization led to an increase of only

0.2 percentage points in the quantity of new housing.34 Similarly, analysis comparing 76 cities in New Jersey both with and without rent stabilization policies found that moderate price control policies had no statistically significant effect on new construction.35
31 Marcus, J.; Zuk, M., 2017. Displacement in San Mateo County, California: Consequences for Housing, Neighborhoods, Quality of Life, and Health. University of California Berkeley Institute of Governmental Studies Policy Brief.
32 Glaeser, Edward L. 2002. Does Rent Control Reduce Segregation? Harvard Institute of Economic Research Discussion Paper No. 1985.
33 Arnott, Richard. 1995. "Time for Revisionism on Rent Control?" Journal of Economic Perspectives, 9 (1): 99–120.
34 Sims, David P. 2007. Out of Control: What Can We Learn from the End of Massachusetts Rent Control? Journal of Urban Economics 61(1).
35 Gilderbloom, John I., and Lin Ye. 2007. “Thirty Years of Rent Control: A Survey of New Jersey Cities.” Journal of Urban Affairs 29(2).

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While moderate rent stabilization policies with exemptions for new construction may not depress new housing development, they may lead to the conversion of existing rental units to condominiums, generating a shift toward for-sale housing. Over the 36-year study period, DMQ found that impacted landlords reduced the supply of available rental housing by 15 percent by selling to owneroccupants and redeveloping buildings. As a result, rental properties made up a smaller portion of the City’s housing over time, which increased the cost of rental housing. The shift toward for-sale housing and the increased price of rental housing together directed the City’s housing stock toward higher income households.

Because the Ordinance would apply only to multifamily buildings, the property owners of apartment buildings that qualify for rent stabilization in Salinas would have to go through the legal process to convert the rental units to condominiums.

The conversion process is complex, with many detailed steps:

1. Consult with a real estate attorney.

2. Conduct a market assessment.

3. Retain a licensed professional to examine the property.

4. Talk to a mortgage broker.

5. Understand the role of the title company.

6. Tenant notice or vacancy exemption.

7. Application process:
‒ Application.
‒ Tenant history and provisions.
‒ Inspection.
‒ CC&Rs.
‒ Site plan and floor plans.
‒ Utility plan.
‒ Tentative parcel map.
‒ Subdivision map.
‒ Preliminary title report.
‒ Affordable housing proposal, if applicable.

8. Recordation of applicable paperwork.

9. Post-conversion refinance and sales transactions.36
36 Old Republic Title, “Understanding the Condo Conversion Process,” December 14, 2022, https://www.linkedin.com/pulse/understanding-condo-conversion-process-oldrepublictitle/ (accessed May 2024).

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While apartment-to-condominium conversions would reduce rental inventory, several policies exist to mitigate the threat of these conversions, including the prohibition of condominium conversions for buildings over a certain number of units, requiring that landlords pay fair relocation costs, or providing current tenants the right of first refusal to purchase condominium units in the converted building.

Impacts on Economic Inequality
Economists have made varying conclusions on how rent stabilization impacts inequality.

While rent control does not directly decrease income inequality, the benefits of housing, rental expenditure, and neighborhood stability are much more impactful for low-income households. Because rent stabilization is a broadly targeted policy, benefitting tenants regardless of their income levels, many economists have noted that the majority of the aggregate benefits of cheaper rent accrue to middle- and upper-income households.37 However, analysis of the aggregate benefits of lower rent does not consider the relative effect of stabilized rents on households of different incomes. Lower income families spend a much larger proportion of their incomes on rent— in 2017, 80 percent of low-income households spent more than 30 percent of their income on rent, compared to only 16 percent of high-income households.38 39 Thus, the income-saving aspect of rent stabilization policies is much more impactful for low-income households than for higher income households, even if the nominal dollar benefit is the same.

However, rent stabilization (along with the robust tenant protections that often accompany these policies) allow lower income families to remain in neighborhoods even as rental prices and neighborhood incomes rise. As noted in the DMQ study of San Francisco rent stabilization, allowing low-income families to remain in place while the average income of in-migrants rises actually increases income inequality on a citywide scale as the incomes of existing tenants and new residents diverge.

However, these families, and especially young children, strongly benefit from housing stability in an improving neighborhood. As noted above, low-income families displaced from gentrifying neighborhoods are often forced to move to neighborhoods with lower opportunity and higher environmental health risks. 37 Ault, R. & Saba, R., 1990. The economic effects of long-term rent control: The case of New York City. The Journal of Real Estate Finance and Economics. Volume 3. 38 Kimberlin, S., 2019. California’s Housing Affordability Crisis Hits Renters and Households With the Lowest Incomes the Hardest. California Budget & Policy Center. 39 Low-income is less than 200 percent of the federal poverty line, while high-income is 400 percent or more of the federal poverty line.

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In addition, as average neighborhood incomes rise, children raised in these higher income, higher opportunity neighborhoods grow up to have significantly lower incarceration rates, much higher employment rates, and higher incomes, regardless of the household income of the family in which they were raised.40 In an economy such as Salinas, where many workers cannot afford to live and may struggle to afford rent and price increases and with elevated levels of overcrowding in residential units and high percentages of households that are cost burdened, rent stabilization can allow low-income households to remain in their neighborhoods even as the housing prices and average incomes rise.

Impacts on Property Values
Classical economics holds that rent stabilization potentially impacts property values by limiting the income earning potential of rental properties and potentially by reducing investment on building maintenance, leading to building deterioration. Although studies of strict rent control policies do show that such policies lead to significantly lower property values compared to uncontrolled rental properties, moderate rent stabilization policies, allowing for vacancy decontrol and providing allowances for capital improvements, have been shown to have little to no effect on property values.

The unanticipated elimination of rent stabilization in Massachusetts in 1995 provided economists with an opportunity to study the price effects on decontrolled properties. MIT researchers analyzed the elimination of rent stabilization in Cambridge and found that previously rent-controlled properties rose in assessed value by approximately 13 percent to 25 percent over the 10 years following rent decontrol. However, Cambridge’s rent control policy and implementation was extremely strict, with very limited annual allowable rent increases for inflation and no vacancy decontrol.

Alameda County’s experience with rent stabilization in the 1970s and 1980s also allowed for studying the effects of varying degrees of strictness. Of the 13 incorporated cities in Alameda County, 1 (Berkeley) had strict rent control, with minimal allowed rent increases and no rent control, 2 (Hayward and Oakland) had more moderate rent stabilization policies, and the remaining 10 cities had no rent control or stabilization policies during the study period (1970-88). Although property values in Berkeley were approximately 50 percent lower than would have been expected during the study period, property values in Oakland and Hayward were unaffected by their more moderate policies.41 40 Kramer, M. How the neighborhood you grow up in affects your future. https://projects.publicsource.org/pittsburgh-neighborhood-success/ 41 St. John, M., 1990. The Impact of Rent Controls on Property Value. UC Berkeley Fisher Center Working Papers. https://escholarship.org/uc/item/8c9648s1 Proposed Rent Stabilization Ordinance Analysis
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A similar study in New Jersey examined property values in 74 cities with moderate rent stabilization polices and 87 cities without rent stabilization policies.

With more than 40 years of data captured, the study found that the rent stabilization policies had no significant impact on property values, with property appreciation rates amongst the cities driven much more strongly by median household income and other demographic factors.42
Impacts on Building Quality
Research on rent stabilization and building quality is ambiguous, largely because of the difficulty in measuring building quality and levels of maintenance on a large scale. However, empirical research has found that moderate rent stabilization policies, which allow landlords a return on investments in building improvements, do not depress the amount of building maintenance. In Boston, rent stabilization regulations were found to lead to a decline in cosmetic maintenance, although the author notes that such regulations did not appear to lead to “catastrophic failures” and that the end of such policies did not lead to an increase in “functional maintenance” of building systems such as windows, plumbing, and climate control. 43 Similarly, experience in Cambridge showed that the strict rent control regime there, combined with the low likelihood that the city would approve rent increases for property improvements, reduced property owners’ incentive to maintain or improve their units.44 Conversely, several researchers have found that the increased length of tenure allowed by rent stabilization policies increases tenants’ willingness to maintain their own units.45 46 Importantly, a study of moderate rent stabilization policies in North American cities finds that such policies that allow for capitalization of building improvements or increase enforcement of housing codes finds that these policies do not negatively impact owner investments in property upkeep and improvements. A key finding from that study is that “allow[ing] increases in the level of housing services [i.e., building improvements] to be valued at their market price,” is critical to ensuring that the price control aspect of rent 42 Ambrosius, J., et al., 2015. Forty years of rent control: Reexamining New Jersey’s moderate local policies after the great recession. Cities. Vol. 49. 43 2007 Sims MA rent control study - DocumentCloud
44 Autor, D.; Palmer, C.; and Pathak, P., 2014.
45 Gyourko, J., and Linneman, P. 1990. Rent Controls and Rental Housing Quality: A Note on the Effects of New York City’s Old Controls. Journal of Urban Economics Vol. 27, Issue 3. 46 Moon, Choon-Geol, and Janet G. Stotsky. 1993. The Effect of Rent Control on Housing Quality Change: A Longitudinal Analysis. The Journal of Political Economy Vol. 101, Issue 6.

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stabilization policies does not depress investment in building upkeep and improvement.47
However, when coupled with strong just-cause protections, rent stabilization has been found to provide leverage to tenants to advocate for improved conditions.

A study in Washington, D.C. found that the share of physically deficient units decreased after rent stabilization because most tenants said they were more willing to insist on repairs.48
This discrepancy may be explained by the type of investments being examined.

While tenants may have added leverage to request repairs related to basic building functionality and health and safety requirements, landlords may have less of an incentive to make more cosmetic investments or add amenities designed to appeal to new tenants.

If Salinas does implement a rent stabilization ordinance, it will be important to include strong just-cause protections and support for tenants to advocate for the health and safety of their living conditions.

Other Potential Impacts
There are many potential impacts of rent stabilization that have not been significantly studied. A few impacts have been noted by researchers but have less empirical support. One example is listed below:
• Sales tax impacts. Sales taxes may be impacted both positively and negatively by rent stabilization. Rent stabilization increases the discretionary income of renters, allowing households to spend money and boost the local economy.

Conversely, if rent stabilization were to limit the influx of higher income residents, it may reduce the number of households that spend the most money on local services:
• Workforce impacts. A lack of available housing can be a barrier to attracting and retaining employees. While the proposed Ordinance would help existing renters remain in place, it may reduce the availability of housing for people moving to Salinas. A potential spatial mismatch between employment and worker populations can limit access to jobs.49 On the other hand, rent stabilization and subsequent housing stability may provide economic benefits 47 Kutty, N. 2007. The impact of rent control on housing maintenance: A dynamic analysis incorporating European and North American rent regulations. Housing Studies. Vol. 11, Issue 1. 48 OurHomesOurFuture_Web_08-02-19.pdf
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through reduced worker turnover. Displacement and housing instability lead to absenteeism from work, reduced productivity, and higher turnover—people who experience eviction are up to 22 percent more likely to be laid off.50 • Improved educational outcomes. Children who move frequently have more absences and a lower likelihood of finishing school. Reduced displacement can lead to fewer moves for students and, as a result, improved overall educational outcomes. In addition, rent stabilization may help teachers who are rent burdened to continue in their profession at their local school. • Demand for social services. The benefits of improving financial stability for renters can be significant.51 All else equal, financially stable households are less likely to need public benefits. As a result, increased housing stability can potentially decrease the need for government spending on food and housing assistance. This has the potential to reduce a city’s expenditures.

Case- Study Research
A survey of the rent stabilization programs in comparative jurisdictions was completed to help examine the current requirements and fee amounts in cities with a similarly sized population or socioeconomic elements. The communities surveyed include the cities of Oxnard, Antioch, Mountain View, Oakland, and San Diego. Examining the rent stabilization elements in these communities provides insight into ordinance elements that are working well in other communities, as well as concerns from the community. Table 3-1 provides a summary of the survey of the rent stabilization ordinances in the comparative jurisdictions.

Both Oxnard and Antioch only recently adopted their rent stabilization ordinances in 2022, and while Oxnard established a straight percentage limit of 4 percent, Antioch limits rent increases to the lesser of 3 percent or 60 percent of CPI.

Oakland adopted an amendment in 2022 to their rent stabilization ordinance, which was originally passed in 1980, to the same limits as Antioch. Mountain View limits rent increases to no less than 2 percent and no more than 5 percent.

As shown in Table 1-1, cities in California with rent stabilization ordinances have allowed increases ranging from a low of 50 percent of CPI up to a maximum 10 percent increase, which is the maximum increase per State law. The City of San Diego chose to adopt the AB 1482 rent cap, discussed in Chapter 1, which limits the rent increase to 5 percent plus the percentage change in CPI or 10 percent, whichever is lower.
50 Housing and Employment Insecurity among the Working Poor | Social Problems | Oxford Academic (oup.com)
51 Thriving Residents, Thriving Cities: Family Financial Security Matters for Cities (urban.org) Table 3-1 Page 1 of 3
Case Study Item [1] Salinas Oxnard Antioch Mountain View Oakland San Diego [2] Richmond SacramentoSocioeconomic Factors (2023) Total Housing Units 43,649 54,494 36,850 35,973 175,640 531,259 39,245 197,362 Households 157,083 195,793 114,712 83,311 409,417 1,307,002 111,924 505,137Persons per Household 3.60 3.59 3.11 2.32 2.33 2.46 2.85 2.56 Renter-Occupied Housing
Total 22,437 22,668 13,637 20,589 96,383 264,566 96,383 941 Persons per Household 3.93 3.99 3.25 2.23 2.21 2.45 2.89 2.45 Renter Median Household Income $64,509 $68,872 $61,411 $153,279 $68,434 $75,291 $62,537 $56,131 Median Rent $1,795 $1,907 $2,150 $2,855 $1,849 $2,080 $1,853 $1,592Estimated Average Rent Burden 33% 33% 42% 22% 32% 33% 36% 34% % Rent Burden Households 52% 57% 62% 37% 48% 52% 56% 51% Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Peer City_ Matrix_7.30.24.xlsx 29 Table 3-1 Page 2 of 3
Case Study Item [1] Salinas Oxnard Antioch Mountain View Oakland San Diego [2] Richmond SacramentoRent Stabilization Factors Article Name N/A Rent Stabilization Ordinance
No.3013
Rent Stabilization Ordinance No. 2219-C-S
Community Stabilization and Fair Rent Act
Rent Adjustment Program O.M.C. Section 8.22.010 (RAP)
N/A Richmond Fair Rent, Just
Cause for Eviction and Homeowner Protection Ordinance Chapter 11.100 Sacramento Tenant Protection Act Ordinance. 2019-0025 § 2 Municipal Code N/A Chapter 1 of Title 11, Section 11-

1.01 Part 1 Article 17 Title 8 Chapter 8.22 N/A Chapter 11.100 Title 5 Chapter 5.156 Tenant Protection
Year Adopted N/A 2022 2022 2016 1980 (Ordinance No. 9980 C.M.S.) but it was amended many times from 1980 to 2023. Current Ordinance is O.M.C. Section 8.22.010 et seq.) N/A 2017 2019
Expiration Year N/A 2030 N/A N/A - N/A N/A 2024
Increase N/A Limits rent increases to one rent
increase per 12-month period not to exceed 4%
Limits rent increases to one rent increase per 12-month period not to exceed lesser of 3% or 60% of the most recent 12-month increase in the CPI for All Urban Consumers in the San Francisco OaklandHayward Area Limits rents to no less than 2%, no more than 5%
In June 2022, the City Council has adopted an amendment to change the formula used to calculate the annual allowable rent increase to 60% of the change in CPI, or 3%, whichever is lower. (per 12-month period) N/A On November 8, 2022,
Richmond Measure P limit rent increases for regulated units to 3% or 60% of the Consumer Price Index, whichever is less. (per 12-month period) Evert April 1st the annual rent adjustment is 5% plus the percentage of the annual increase in the cost of living adjustment, if any, but not to exceed a combined total of 10%. A tenant may not waive this limitation on the increase in rent.

Fees N/A Fee amount not yet established. The
City is currently performing a research study.

Fee amount not yet established. $108 per unit $101 per unit N/A $220/Controlled rental unit $125/Partially covered rental unit
$20 flat rate
Other N/A - N/A -minimum of 3+ units The Oakland Rent Adjustment Ordinance allows an annual rent increase based on the regional Consumer Price Index (CPI) without a petition.If the owner does not give a RAP notice, the landlord cannot increase the rent until 6 months after the tenant receives the notice.

N/A N/A Staff can impose
administrative penalties against landlords for violation of the ordinance which can range from $100 to $25,000 per violation.

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Case Study Item [1] Salinas Oxnard Antioch Mountain View Oakland San Diego [2] Richmond SacramentoRent Stabilization Factors Legal Issues N/A Passed in a 5-2 vote.
-Concern of not enough affordable housing stock. Fear that the new ordinances may exacerbate the housing shortage.

City Counsel voted 3-2 for a Rent Stabilization Ordinance. Concerns for Mom-and-Pop renters and disagreement with limit percentages.-Organizers claim renters in apartments received rent increasesbetween $200 and $700 per month threatening to displace them. -Other speakers believe Antioch should build more homes not focuson rent control. -Landlords protested and requested regulations that do not affect base rent.-April (2024), the Rental Housing Committee in Mountain View rejected a proposal related to rent reduction guidelines in a 2-4 vote.-Mountain View experienced an increase in the number of petitions filed by tenants and appeals from tenants and landlords challenging the decisionsof hearing officers.

The City Council voted 6-1 for an ordinance to stabilize rents. -Despite amending their Rent ordinance
multiple times, at the time of the most recent ordinance amendment renters were claiming to have 7% rent increases, which could force them out of their home (in 2022).

N/A N/A A significant number of
landlords objected to the wording in the act, which was approved with a 7-to1 vote. Low-income residents also voiced their concerns during the meeting, stating that a 10 percent cap on yearly rent increases is inadequate.

Additional Renter Protection Programs N/A -Mobile Home Park Rent Stabilization (MHRS)-Tenant Protection Ordinance 3012-Just Cause-No-fault Just Cause EvictionsOrdinance 3042-Urgency Ordinance Regarding NoFault Just Cause Evictions Ordinance 3041 -Tenant Protection Ordinance No. 2232-C-S-Bay Area Legal Aid-Contra Costa Senior LegalServices-California Civil Rights Department -Tuesday Tenant Legal Clinic -Housing Help Center for Tenants(HHC)-Fair Housing Services-Mediation Program-Emergency Assistance Program -Just Cause for Eviction Ordinance (Measure EE) Section 8.22.300-Tenant Protection Ordinance Section 8.22.600 -Residential Tenant ProtectionsOrdinance 21647 N.S.-Housing Stability Assistance Program (COVID-19)-California Western Community Law Project-Legal Aid Society of San DiegoAffordable Housing Advocates -San Diego Regional Alliance for
Fair Housing (SDRAFFH)
-Renter Assistance Resources-Renter Relief Program-Richmond Rapid Response Fund (R3F) -Tenant Protection Program-Emergency Rental Assistance Program Grounds for Landlord Rent Increase Petitions
Landlord must substantiate their claim that the Ordinance has impeded their ability to achieve a fair
return. Explanation of claim and
accompanying evidence must satisfy
the following condition: "The 4%
annual limitation imposed by the City
of Oxnard Rent Stabilization Ordinance has prevented the petition owner from receiving a fair and reasonable return on the [identified] property". - Maintenance of Net-Operating Income (MNOI)- MNOI with Amortized Operating Expenses (includes Capital Improvement costs and legal expenses)- Other GroundsApplicable factors Hearing Officer may consider when determining outcome of Fair Return Petition:
- Changes in CPI - Time since last Rent increase
or
Rent increase application
- Capital Improvements (inc.
materials, labor, construction
interest, permit fees) amortized
over period not less than 60
months
- Rehab work amortized over
period not less than 36 months
- Changes in property taxes or
other taxes related to the subject real property
- Changes in utility charges - Changes in reasonable
operating
and maintenance expenses
- Repairs caused by
circumstances other than ordinary wear and tear
- Amount and quality of services
- Maintenance of Net Operating Income (MNOI): "provides for rent increases if necessary to ensure that the net operating income earned in the petition year is at least equal to the inflationadjusted net operating income earned in the base year."- Specified Capital Improvement Petitions: allows a temporary increase in rent for qualifying improvements. The maximum increased allowed under this petition is:
- Capped at 5% of annual rent (not
including the Annual General Adjustment)
- Amortized over a specific time
period
for each type of improvement
- Limited by the number of units on
the
property (associated values reflect the maximum percentage of costs that can be passed through to tenants) - 1-5 units on property: 90% - 6-20 units on property: 75% - >20 units on property: 50% - Capital improvements: Allows a 70% cost pass-through (plus interest) to tenants, divided among affected units and amortized over the improvement'sexpected life.- Uninsured repair costs: Allows passthrough of costs for compliance-related repairs from natural disasters, not covered by insurance.- Increased Housing Service Costs: Permits rent increases above CPI due to rising net operating costs. ReplacesCPI increase for the current year and applies to all units.- Fair Return: Allows rent increases when NOI indicates the owner is denied a fair return, replacing CPI increases for
all years.- Banking: Deferred annual rent
increases can be carried over ("banked)
for up to 10 years without prior approval, unless combined with other petitions.- Additional Occupant(s): Allows up to a 5% rent increase for occupants exceeding the base level, excluding covered family members, legal guardians, and caretakers.- Tenant Not Residing in Unit asPrincipal Residence: Allows for unrestricted rent increase For its Section 8 Housing Choice
Voucher program, the San Diego Housing Commission permits landlords to increase rents if the requested amount is deemed "reasonable." The SDHC determines this by evaluating comparable units within the same complex and the
broader market.
- Maintenance of Net Operating Income (MNOI)- Increase in Number of Occupants: Allows an increase of up to 15% for each additional
occupant above base occupancy level, in addition to any Maximum Allowable Rent adjustment to which the Landlord is otherwise entitled.

Excludes family members, legal
guardians and caretakers. - Change in Space or Services: Increase in usable space or in Housing Services. Rent increase request commensurate with the cost increase associated with the change in space or service. - Restoration of Denied Annual General Adjustments: Allows landlords to recover AGAs previously denied due to code violations, non-payment of Rental Housing Fees, or failure to comply with orders from a Hearing Examiner or Rent Board (or other reasons).- Increase in Security Deposit Due to Addition of Pet(s) Six options for valid claims:- Cap improvements (a) necessary for safety and health and are not routine maintenance/repair or (b) substantial repair outside of normal wear and tear (uninsured disaster or vandalism) - "Unavoidable" increasesin operating expenses- Increases in Housing Services costs- Tenant number increase leading to operating or capital improvement expense increases- Property tax increasesabove standard 2%- Cost of debt service due to purchase of the rental property by new owner.

Does not include refi or variable rate loan
Source: Cities of Oxnard, Antioch, Mountain View, Oakland, and San Diego; EPS.[2] The City of San Diego adopted the California Assembly Bill 1482 rent cap, which the limits rent increases to 5 percent plus the percentage change of CPI or 10 percent, whichever is lower.[1] California Assembly Bill 1482 also known as the Tenant Protection Act of 2019, was signed into law in September 2019 and it was established to address the state's housing affordability crisis by imposing statewide rent control measures and provide just cause eviction protection for tenants. The bill caps annual rent increases at 5 percent plus the local rate of inflation, with a maximum limit of 10 percent. In response to AB 1482, some cities in California have established additional rent stabilization ordinances to further protect tenants. These local ordinances often provide stricter rent control measures and additional tenant protection beyond the statewide law. However, there are exceptional cities that enacted rent control ordinances before the California Assembly Bill 1482, such as City of Oakland.

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As discussed later in Chapter 4, enforcing the rent stabilization ordinance creates the need for additional staffing at a cost to the City, even if enforced on a complaint-driven basis. To help alleviate some of the financial burden, some jurisdictions opt to charge a fee to the property owners of the rent stabilized units. The cities of Oxnard and Antioch have not established their fee amounts but plan to at a later time. Mountain View charges $108 per unit, and Oakland charges $101 per unit.

These are rent stabilization concerns from the City Council and the communities:
• The Ordinance will negatively affect smaller “mom-and-pop” building owners, and it should be directed more at corporate owners.
• The City should focus on building more housing, not focus solely on rent stabilization.
• The Ordinance will drive up landlord costs, causing them to go out of business, and accelerating housing shortages or corporate owners to take over the buildings.
• California Apartment Association representatives argue that protections are already covered by State law: AB 1482.
• The question of the equity of the economic effects created by the potential policy. For example, the Ordinance will affect a landlord’s income, but for tenants, the Ordinance affects both their discretionary income and their access to housing.

Literature Review and Case- Study
Conclusions
The literature review and case-study findings indicate the potential for the following positive and negative outcomes.

Pros to Rent Stabilization
• Reduces renter displacement by about 20 percent and has a significant impact in preventing the displacement of racial minorities and other vulnerable renter populations.
• Increases benefits to low-income households:
‒ Housing.
‒ Decreased rental expenditure.
‒ Neighborhood stability.

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Cons to Rent Stabilization
• Very little to no negative effect on property value.
• Slight reduction in rental supply through condominium conversions, building redevelopment, and reduced tenant turnover.
• May increase rents as landlords react to the policy.
• If the policy does NOT allow for increases of housing services to be valued at their market price, it may disincentivize building improvements and maintenance.

While the jurisdictions analyzed in the case study implemented varying allowed rent income percentages and fee program amounts, one of the key takeaways is the emphasis on the importance of educating the community, property owners, and developers on rent stabilization. In addition, acknowledging that rent stabilization is not the single solution, and it is one part of a larger toolkit that, along with other policies and incentives, can help alleviate some housing cost pressures. Taken in combination with other policies that encourage additional supply, it can be part of a multi-pronged effort to improve the outlook for residents struggling to afford housing.

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Economic and Fiscal Impacts of
Rent Stabilization
This chapter describes the composition of the City’s housing supply and renter population to shed light on likely fiscal and economic implications of the Ordinance, if approved, followed by discussion of the potential economic implications for property owners.

Housing Supply
The City has more than 44,500 total residential units, with 97 percent occupancy (43,070 occupied units). Of the total inventory, 52 percent comprises rental units and 51 percent is occupied by renters, as shown in Table 4-1 and Appendix A Table A-1, Table A-2, Table A-3, and Table A-4. All the rental properties would be subject to the just-cause portion of the proposed Ordinance; however, because of the Costa-Hawkins Rental Housing Act, single-family homes, condominiums, and all housing built after 1995 are exempt from rent stabilization. As shown in Figure 2, Table 4-1, and Appendix A Table A-5 and Table A-6, these statewide exemptions would cover 35 percent of the City’s rental inventory and 81 percent of total housing inventory. More than half of the City’s occupied housing comprises renters (53 percent), a rental housing portion of 7 percentage points higher than the State overall (44 percent). As a result, whether Costa-Hawkins is repealed or maintained, the proposed Ordinance would have some impact on the City’s housing market.

As noted in the literature review section, research indicates that rent stabilization has the potential to cause landlords to sell off units. Single-family homes are most likely to be sold in response to rent stabilization because they are the easiest to convert to for-sale housing, as opposed to shifting multifamily rentals to condominiums; however, given that State law currently exempts singlefamily units from rent stabilization, the scale of conversion is likely to be relatively small, unless California voters overturn Costa-Hawkins. Single-family attached and detached homes account for 38 percent of the City’s occupied rental housing. If this portion of rental properties was sold in response to the Ordinance, it may lead to a significant reduction in rental supply. Conversely, this phenomenon would also lead to an increase in for-sale housing, which could increase home ownership opportunities. The fiscal impact of housing stock being sold in response to the proposed Ordinance could lead to a short-term gain in property transfer taxes and an increase in property taxes because of a realignment of the taxes with market value. Conversely, over the long term, this phenomenon could decrease overall affordability in the rental market by reducing rental supply.

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Table 4-1. Summary of Housing Inventory as it Relates to Rent Stabilization: City of Salinas (2022)
Figure 2. Housing Inventory as it Relates to Rent Stabilization: City of Salinas (2022)
Item Total
Residential Units [1]
Total Units 44,503 100.0% 52.0%
Total Rental Inventory 23,132 52.0% 100.0%
Total Renter-Occupied 22,794 51.2% 98.5%
Total Exempt Units 36,173 81.3% 35.3%
Total Units Qualifying for Rent Stabilization 8,330 18.7% 36.0% Source: American Community Survey 5-Year Estimates; CoStar; EPS. [1] See Table A-6.

City of Salinas
% of Total
Housing
Inventory

Rental
Housing
Inventory
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Affordable Housing Supply
As shown in Table 4-2 and Appendix A Table A-7, the City has approximately 3,240 deed-restricted affordable housing units, most of which were constructed after 1995. These units are essentially already rent-stabilized and likely would not be impacted by the proposed ordinance.

Table 4-2. Affordable Housing Inventory: City of Salinas Residential Property Tax
Property tax accounts for about 21 percent of Salinas’ total General Fund revenues.52 Thus, to the extent that rent stabilization materially affects the performance of the City’s housing markets, the proposed Ordinance could affect the City’s fiscal outlook through property-related taxes. Rent stabilization policies can potentially impact property-related revenues in multiple ways, as described below:
• Conversion of rental housing to ownership. To the extent that the Ordinance incentivizes landlords to sell rental housing, these properties would be reassessed to prevailing market values. Because of Proposition 13, the assessed value of most property that has remained under the same ownership 52 https://www.cityofsalinas.org/files/sharedassets/city/v/1/finance/documents/fy_2023_adopted_o perating_budget.pdf
Item
Median
Year Built
Total
Units
% of
Rental
Housing
Affordable Housing [1]
Apartment Units 2003 2,654 11.5%
Other Afford. Units 1998 587 2.5%
Total Affordable Units 2001 3,241 14.0%
[1] See Table A-7.

City of Salinas
Source: Costar; HUD National Low Income Housing Tax Credit 1987- 2022 Data; EPS.

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for multiple years is typically well below its true market value.53 This pattern is often more acute for rental property, which tends to exhibit lower market turnover rates relative to owner-occupied units. Thus, any increase in housing sales attributable to the Ordinance would likely generate at least a temporary increase in property-related tax revenues such as property tax, property transfer tax, and motor vehicle in-lieu payments.
• Reduced assessed value of rent-stabilized properties. By limiting rent increases to a specified percentage of the CPI, the proposed Ordinance essentially mandates a gradual decline in the real rents of affected properties over time. This effect will, in turn, limit the income-generating potential of these properties and ultimately their economic and market values. However, because of the impact of Proposition 13 on assessed values, as noted above, it is likely that only a portion of residential rental properties would be eligible for a reassessment in their taxable value. Specifically, recently transacted multifamily properties, that is, those that have been recently purchased, are most likely to have assessed values that are most closely aligned with prevailing market prices. In these circumstances, some new property owners ultimately may file assessment appeals if the values of their properties do not keep pace with inflation because real rental revenue is declining over time.

The impact of this effect on property taxes will depend on the portion of multifamily rental housing that was recently transacted. In the last 5 years, 74 multifamily properties have been sold in Salinas, according to CoStar.

Almost 96 percent of these properties (71) were built before 1995 and would therefore be subject to rent stabilization. These properties are most at risk for assessment repeals under the premise that the income stream estimated at purchase will now be restricted. The 71 properties account for 1,277 units, or 5.5 percent of the City’s total rental housing inventory. The potential impact of reassessments is likely to be more pronounced if Costa-Hawkins is overturned.

In addition to property tax payments, any change in property values would impact the City’s property tax in-lieu of vehicle license fee revenue received from the State. The State sends cities these funds based on the gross assessed valuation of taxable property in the jurisdiction. Therefore, if the proposed ordinance were to result in a decrease (or increase) in assessed values, the City would receive lower (or higher) revenue from the State.

The significance of the potential impacts of rent stabilization on housing values and in turn, property taxes, depends on the value makeup of Salinas’ rental stock.

Based on 2023 assessed value data, residential property accounted for 67 percent 53 California passed Proposition 13 in 1978 to limit property tax increases. Property taxes are based on a property’s purchase price, each year thereafter, the property’s taxable value increases by 2 percent or the rate of inflation, whichever is lower.

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of the citywide assessed value. As shown in Table 4-3 and Figure 3, singlefamily properties comprised almost 82 percent of the residential assessed value, while multifamily rental units, including duplexes and triplexes, accounted for about 13 percent of residential assessed value. As noted previously, under CostaHawkins, rent stabilization will only apply to the portion of multifamily units that were built before 1995. Therefore, any property value impacts caused by the proposed Ordinance will impact properties accounting for less than 13 percent of the City’s residential assessed value.

Table 4-3. Real Estate Assessed Values: City of Salinas (2023) Figure 3. Breakdown of the City of Salinas Assessed Value by Land Use (2023)
Item Total % of Total
Residential Land Use
Single-Family $11,637,215,636 81.9%
Multifamily $1,804,679,180 12.7%
Condo $662,840,239 4.7%
Mobile home Park $101,282,848 0.7%
Residential Total $14,206,017,903 100.0%
Total Citywide Assessed Value $21,169,840,831 67.1%
Source: ParcelQuest, Monterey County Secured Tax Roll, 2023; EPS.

City of Salinas
Residential Assessed Value
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Rent Pressures and Displacement
Salinas’ low-income households have experienced significant overcrowding and displacement pressures primarily caused by rising house prices and the influx of higher income households. Although Salinas has experienced a 23 percent increase in median income over the past decade, the growth has come from households with annual incomes above $75,000; the City experienced a net decrease in households in every income category below $75,000. The increase in household incomes may be explained by the increase in persons per household or increased income disparity.

Average rents for multifamily units have continually increased at a higher rate, compared with the increase in the median income for renter-occupied households, as shown in Figure 4, with the exception of 2018 and 2022, which both followed years with very large percentage increase gaps between rents and income. Rents in multifamily buildings built before 1995 in Salinas have increased by 117 percent between 2000 and 2024, with an average vacancy of only

3.3 percent, as shown in Appendix A Table A-8.

In addition, as an agriculture-based economy, Salinas has a bifurcated population, with farm workers who serve the community not being able to afford to live there.

A 2018 study done for the Salinas Valley and Pajaro Valley regions indicated a farmworker housing shortage of more than 45,500 units.54 As a result of the disparity between increases in rents and household incomes, lack of farmworker housing, overcrowding, and displacement have become pressing issues facing the community, creating overcrowding by causing households to double up or move, redistributing demand to southern Monterey County and other locations.

In addition to the influx of higher income households, the cost of living in Salinas has remained high, in line with Monterey County overall. As shown in Figure 4, rents have increased an average of about 5 percent each year since 2012, with a spike in rent between 2020 and 2021, with an almost 13 percent increase, and then resuming regular increases over the past 2 years.55 A little more than half of the City’s renter-occupied households remain rent-burdened, paying 30 percent or more of their household income on housing, as shown in Table 4-4. 54 Farmworker Housing Study and Action Plan for Salinas Valley and Pajaro Valley, prepared by California Institute for Rural Studies, June 2018.
55 The years time trend between 2012 to 2022 was analyzed based on availability of ACS data at the time this Study was completed. For renter-household incomes, rents are based on CoStar, which provides more up-to-date data out to the most recently completed month of the current year.

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Rent-burdened households have less money to spend on other essentials like food, transportation, healthcare, and childcare.

Figure 4. Year-Over-Year Percentage Change in Median
Renter-Occupied Household Income versus Average MFR Rent for Apartments Built Before 1995: City of Salinas: 2012-2022/2024 [1] Source: CoStar; ACS 5-year Estimates Table B25119; BLS; EPS.

1.9% 2.7%

4.0%

11.5%

7.9%

7.6%

5.0%

2.4%

6.9%

12.8%
(3.2%)

6.4%

0.81%
(1.0%) (1.5%)

0.9% 1.3%

3.3%

1.2%

5.3%

2.8%

5.6% 2.4%

4.9%
(10.0%)
(5.0%)

0.0%

5.0%

10.0%

15.0%

20.0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Average MFR Rent Median Renter HH Income
[1] See Appendix A Table A-8 and Table A-9.

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Table 4-4. Rent-Burdened Households: City of Salinas (2012 & 2022) Based on renter mobility/displacement data, it appears that other economic factors may be more significant than rent stabilization in impacting renter movement. Table 4-5 compares the percentage of renters living in the same unit as the previous year in Salinas compared to other communities with rent stabilization. Mountain View adopted their rent stabilization in 2017 but continually shows significantly lower rates of renters staying in the same units than the State overall. This may be caused by a prevalence of students and young professionals that stay for short periods, which may also be a factor in San Diego.

Salinas and four of the comparable cities experienced an increase in renters remaining in the same unit between 2017 and 2022, likely based on two contributing factors. First, rent stabilization ordinances and amendments were approved in 2022 in Oxnard, Antioch, and Oakland and are a likely result from a State-approved rent stabilization ordinance in 2020 that limited rent increases and prevented evictions until September 2021. San Diego adopted AB 1482 in 2023, indicating that the increase in renters staying longer in San Diego and Salinas was also a likely result from the State-approved rent stabilization ordinance passed in 2020. Second, the decrease in housing movement also may be contributed by ever-rising housing costs.

Item
Total Renter
Households
% of Total Renter
Households
Total Renter
Households
% of Total Renter
Households
Rent as a Percentage of
Household Income [1]
Less than 30% of Income 8,908 39.4% 10,245 44.9%
30% to 50% of Income 6,934 30.6% 6,086 26.7%
More than 50% of Income 6,007 26.5% 5,837 25.6%
Total Renter Households 22,637 100.0% 22,794 100.0%
2022
Source: American Community Survey 5-Year Estimates, Table B25070; EPS. [1] The US Department of Housing and Urban Development defines a household spending more than 30% of their income on housing as "rent burdened." Households spending more than 50% of their income on housing are considered "severely rent burdened." Approximately 612 households were not computed. 2012
City of Salinas
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Table 4-5. Renter Movement by City
Renter Household Socioeconomics
Literature indicates that current renting residents benefit the most from rent stabilization and eviction protections. However, because rent stabilization policies are not means-tested, a question arises about the socioeconomic status of the intended beneficiaries. As shown in Table 4-6, renter-occupied households in Salinas have lower incomes per capita than households who own their homes.

Therefore, although the proposed Ordinance is not means-tested, it will on average benefit households with lower than median incomes.

Table 4-6. City Salinas Median Income, Average Household Size, and Income per Capita by Household Tenure: City of Salinas (2022) Item Salinas Antioch Oakland San Diego
2022
Renting HH's 88,229 91,491 44,663 46,179 232,184 653,750 Renters Living in the Same Unit as Previous Year 78,316 83,432 37,351 33,083 194,535 509,207 % of Renters Living in the Same Unit as Previous Year 89% 91% 84% 72% 84% 78% 2017
Renting HH's 86,183 98,722 43,516 44,122 235,423 692,471 Renters Living in the Same Unit as Previous Year 76,550 84,213 32,785 31,914 190,430 519,901 % of Renters Living in the Same Unit as Previous Year 89% 85% 75% 72% 81% 75% 2012
Renting HH's 83,660 87,636 37,825 41,497 211,425 624,587 Renters Living in the Same Unit as Previous Year 67,496 69,937 23,987 29,128 163,262 450,068 % of Renters Living in the Same Unit as Previous Year 81% 80% 63% 70% 77% 72% Source: ACS 2022 5-Year estimate Table B07013; EPS.

Oxnard
Mountain
View
Item
Household Tenure
Owner-occupied $107,679 3.32 $32,433
Renter-occupied $64,509 3.58 $18,019
Total Households $84,250 3.46 $24,350
Source: ACS 2022 5-Year estimate Table B25010 and Table B25119; EPS.

Median
Household
Income
Average
Household Size
Income per
Capita
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In addition, the affordability crisis disproportionately affects people of color because these communities are over-represented in the renter population.

As shown in Table 4-7, Latinx residents and residents of Some Other Race in Salinas make up larger shares of the renter population than in the City overall.

The pattern of disparity of affordability for people of color is not unique to Salinas; it is prevalent in most U.S. cities and is driven primarily by a history of racially restrictive housing covenants, redlining, and discriminatory lending. Because of existing racial disparities in home ownership, policies that protect renters like rent stabilization and just-cause eviction protections are most likely to benefit Salinas’ Latinx residents.

Table 4-7. Householder Race: City of Salinas (2022)
Item
RenterOccupiedOwnerOccupied Citywide
Householder Race
White 24.1% 41.0% 32.1%
Latinx (Hispanic or Latino) 80.4% 59.3% 70.5%
Asian 4.4% 9.2% 6.6%
Some Other Race 60.8% 35.4% 48.9%
Two of More Races 8.0% 11.7% 9.7%
Black 1.6% 1.3% 1.5%
Indigenous (Native American and Alaksa Native) 0.2% 0.1% 0.1% Source: American Community Survey 5-Year Estimates Table S2502; EPS.

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Salinas’ renter population also skews younger than the City’s population overall.

As indicated in Table 4-8, residents above the age of 65 account for approximately 12 percent of the City’s renters, compared to residents under 35, which account for almost 30 percent of the renter population. However, older renters may be one of the groups most positively impacted by rent stabilization because many seniors live on fixed incomes. Noting that not every renter lives in a unit that falls under the rent stabilization building qualifications, the effect of the proposed Ordinance will impact less than the total renter population.

Table 4-8. Householder Age: City of Salinas (2022)
Item Total % Total % Total %
Householder Age
Under 35 years 6,468 28.4% 1,572 7.8% 8,040 18.7%
35 to 44 years 6,576 28.8% 3,564 17.6% 10,140 23.5%
45 to 54 years 4,563 20.0% 4,664 23.0% 9,227 21.4%
55 to 64 years 2,561 11.2% 4,565 22.5% 7,126 16.5%
Over 65 years 2,626 11.5% 5,914 29.2% 8,540 19.8%
Total 22,794 100.0% 20,279 100.0% 43,073 100.0%
Source: American Community Survey 5-Year Estimates Table S2502; EPS.

City of Salinas Housing Units
Renter-Occupied Owner-Occupied Citywide
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A comparison of the median renter income compared with average monthly rents between 2012 and 2022 for the comparable cities reflect a large disparity between the increases in rent compared to the increases in income for the cities with recent adoptions or no rent stabilization in place. See Table 4-9. The cities with recent or no rent stabilization in place—including Salinas, Oxnard, Antioch, and San Diego—experienced high increases in average rent, ranging from about 38 percent up to almost 50 percent, compared to proportionally lower increases in renter median household income from 18 percent to 33 percent. Both Mountain View and Oakland have had rent stabilization policies in place and both cities experienced higher increases in rental household incomes compared to increases in average rent. This indicates rent stabilization policies actually do help control increases in rent, helping maintain a balance in inflation.

Table 4-9. Median Renter Household Income compared to Average Monthly Rent (2012 and 2022)
Economic Impact on Property Owner
The proposed Ordinance also needs to consider the implications of reduced rents for the property owners resulting from rent stabilization. While a rent stabilization policy restricts annual rent adjustments, costs of operating and maintaining residential properties to their current standard will continue to increase. However, with vacancy decontrol, vacated units revert to the current market rate, helping to offset some of reduction in rental revenue to landlords.

Item Salinas Oxnard Antioch Mountain View Oakland San Diego Year RSO Adopted -- 2022 2022 2016 1980
Median Renter Household Income (2022$)
2012 [1] $48,547 $55,058 $52,256 $100,070 $45,906 $60,767 2022 $64,509 $68,872 $61,411 $153,279 $68,434 $75,291
% Change 32.9% 25.1% 17.5% 53.2% 49.1% 23.9%
Average Monthly Effective Rent [2]
2012 $1,070 $1,193 $994 $2,050 $1,318 $1,289
2022 $1,859 $1,942 $1,647 $2,675 $1,701 $2,093
% Change 73.7% 62.8% 65.7% 30.5% 29.1% 62.4%
Percentage Point Difference Rent Inc. to Income 40.9% 37.7% 48.2% (22.68%) (20.02%) 38.5% Source: U.S. Census Bureau ACS 2012 & 2022, Table S1901; CoStar; EPS. [1] The median household incomes reported by ACS are inflation-adjusted to constant dollars. [2] This data reflects market rate multifamily apartment units built before 1995 from CoStar.

Comparable Cities
AB 1482 as of
2023
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Rental Revenue Impact
Each year, a share of units in rent-stabilized buildings/complexes will be vacated by existing tenants and replaced by new tenants. As noted above, with vacancy decontrol, the vacated units will be eligible for rental at current market rates.

It has been found that the average length of tenure in units, or turnover, decreases with rent stabilization by about 20 percent. For Salinas, a 20 percent reduction in turnover translates to an average turnover of 11 percent.

For purposes of analyzing the effects of rent stabilization on property owners, EPS modeled rental revenue and operating expenses for a hypothetical 100-unit existing apartment complex, occupied at the current market average occupancy rate of 97 percent, with current rents at the market average for pre-1995 apartments.

Several scenarios were modeled to compare the impact of different rent stabilization thresholds: Base Case, using the recent market rent growth rate of 3.35 percent; 100 percent of CPI (currently 3 percent); 80 percent of CPI; and 60 percent of CPI. Estimated rent rolls were developed for each scenario, assuming each year 11 percent of units are vacated, re-rented at current market rents under the vacancy decontrol provision, and escalated annually according to the assumed rate for that scenario.

The effect of the vacancy decontrol provision is a lessening of the overall reduction in potential rental revenues collected by landlords, while maintaining rent stabilization for existing tenants and for future tenants after occupancy.

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The overall effect on rental income for the 4 scenarios described above is shown in Figure 5.

Figure 5. Rental Revenue Differential: Market Rate vs Stabilization Alternatives
As shown in the figure above, after factoring in vacancy decontrol, the estimated reduction in rental revenue by the tenth year of rent stabilization ranges from a 2 percent reduction with a rent growth cap at 100 percent of CPI to an 8 percent reduction with a rent growth cap at 60 percent of CPI.56 56 Assumes annual turnover of 11 percent (20 percent lower than current turnover without rent stabilization) and annual market-rate rent growth of 3.35 percent. -2%
-5%
-8%
Market Rate
100% of CPI
80% of CPI
60% of CPI
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Figure 6 provides a summary of the estimated effective annual growth rate in rental revenue for different rent stabilization rates, after factoring in vacancy decontrol.

Figure 6. Effective Rent Roll Growth with Vacancy Decontrol by Rent Stabilization Rate
In low or moderate inflation years, stabilized rents typically will increase based on the adopted percentage of CPI growth. However, in years with higher inflation, the adopted maximum rate of rent growth provides a cap on the rent increases that would otherwise be allowed based on the percentage of CPI. Figure 7 provides a comparison of the allowable rent increases at different rates of inflation (CPI) under alternative rent stabilization rates (65 percent to 75 percent of CPI) to illustrate at what level of inflation the adopted flat rates would take effect.

The proposed flat rate caps would take effect at about 3.5 to 4.0 percent inflation (CPI).

Figure 7. Inflation and Corresponding Allowable Rental Increases Measure 60% 65% 70% 75% 80% 85% 90% 95% 100%
Effective Rent Roll Growth Rate [1][2] 2.50% 2.58% 2.66% 2.74% 2.83% 2.91% 2.99% 3.07% 3.16% Source: US Census; Costar; EPS.
[2] Compound Annual Growth Rate (CAGR).

Rent Stabilization Rate - % CPI
[1] Assumes 11% turnover (20% reduction from current state due to rent stabilization), average CPI of 3%, and vacancy decontrol market-based annual rent growth of 3.35% (based on recent historic average).

Consumer Price Index 2.0% 2.5% 3.0% 3.5% 3.75% 4.0% 4.5% 5.0% Allowable Rent Increases at Alternative Stabilization Rates 65% of CPI 1.3% 1.6% 2.0% 2.3% 2.4% 2.6% 2.9% 3.3%
70% of CPI 1.4% 1.8% 2.1% 2.5% 2.6% 2.8% 3.2% 3.5%
75% of CPI 1.5% 1.9% 2.3% 2.6% 2.8% 3.0% 3.4% 3.8%
Source: EPS.

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Financial Feasibility Summary
The financial feasibility analysis uses multi-year cash flows to compare investment returns of the hypothetical 100-unit apartment complex under a market-rate base case scenario and 3 alternative rent stabilization scenarios.

The metric used to compare the alternative scenarios is the IRR. IRR is a standard measure used in real estate analysis that evaluates the potential project return over time against the investment required, accounting for risk and the time-value of money. Technically, the IRR is the discount rate that equates the present value of the future cash inflows with the initial cash outflow.57 IRRs typically include an initial investment (acquisition), ongoing revenues and expenses, and reversion (sale) in the final year of analysis. For this Study, acquisition of a hypothetical, existing, occupied 100-unit building was assumed, with resale after 10 years of operation.

IRRs can be categorized as either “leveraged” (also referred to as “levered”) or “unleveraged” (also referred to as “unlevered”). A leveraged IRR measures return on equity and compares initial equity investment and debt service, while an unleveraged IRR, sometimes referred to as a project IRR, compares the costs with the anticipated future revenues, without regard to the financing structure.

While most of buildings in question in Salinas are not necessarily changing ownership, the IRR requires some form of initial investment to be compared to the following cash flow, so in the hypothetical scenarios, a cap rate was applied to the net operating income (NOI) to estimate the initial investment (building purchase).
57 Brueggeman & Fisher, Real Estate Finance and Investments, Tenth Edition, 1997, page 321.

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Net Operating Income Sensitivity Analysis
Figure 8 illustrates the leveraged and unleveraged IRRs for the hypothetical 100-unit apartment under the market-rate base case scenario and 3 rent stabilization scenarios.

Figure 8. Internal Rate of Return Differential: Market-Rate Base Case vs. Alternative Rent Stabilization Scenarios

7.5%

8.0%

8.5%

8.7%

9.8%

11.0%

12.2%

12.5%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
60% of CPI
80% of CPI
100% of CPI
Market Rate
Leveraged IRR Unleveraged IRR
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Table 4-10 presents the same IRR sensitivity results illustrated above in tabular form, along with a comparison of the average annual growth rate in property value for the hypothetical apartment complex under the different scenarios.

Note that for each rent stabilization scenario, operating expenses are assumed to increase at the same rate as CPI.

Table 4-10. IRR and Property Value Growth Sensitivity Analysis Detailed cash flow analyses, including assumptions and prototype characteristics, can be found in Appendix B. The rent stabilization allowed increases based on a percentage of CPI options that were chosen based on the average low and high of the rent stabilization requirements in other jurisdictions, as shown in Table 1-1. In addition, as discussed in Chapter 3, rent stabilization impacts renter turnover, with estimates of turnover rates decreasing by about 20 percent.

The rates of return in the sensitivity analysis would be considered low for a new construction project, but for a relatively low-risk investment in an existing, tenanted asset, the returns for scenarios with rent stabilization at 80 percent of CPI and 100 percent of CPI appear adequate and are not too dissimilar to the market-rate base case returns. Projects entailing substantial new development or upgrades to existing product entail speculative market risk, suggesting higher rates of return needed (e.g., 10 to 15 percent leveraged; 15 to 20 percent unleveraged). The hypothetical scenarios included in this Study assume the purchase, operation, and sale of a stabilized and operating asset, where acceptable returns may be much lower in the absence of development risk.

A strong IRR for a lower risk, stable property is estimated to range from around 8 percent to 12 percent.

Property Value
Annual
Item Growth Rate Unleveraged Leveraged
Scenario
Market Rate Building 3.4% 8.7% 12.5%
Rent Stabilized Building [1]
60% of CPI 2.3% 7.5% 9.8%
80% of CPI 2.8% 8.0% 11.0%
100% of CPI 3.2% 8.5% 12.2%
Source: EPS.
[1] Includes 20% lower tenant turnover.

Value Comparison
Internal Rate of Return
(IRR)
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Impact of Operating Expense Growth
Operating expenses have been somewhat volatile in recent years, largely because of increases in utility costs and particularly insurance costs. Increases in operating costs impact the net operating income for multifamily rental units that are unable to pass along the total increased cost to tenants. Correspondingly, the return on investment for landlords can be negatively impacted. Figure 9 summarizes the effect higher operating expense growth has on the potential investment return at different rent stabilization rates (modeled using a 5 percent average growth in costs).

Figure 9. Internal Rate of Return Differential: Impact of 5 Percent Annual Operating Expense Growth
Compared to Figure 8, with operating expenses increasing at the overall rate of inflation, Figure 9 illustrates the lower rates of return resulting from higher operating expenses under different rent stabilization rates. At the more restrictive rent control rates, the rates of investor return are not significantly higher than what can be achieved with far less risk and effort through an investment account.

Under such a scenario, there may be increased incentive for landlords to exit the market. The inclusion of provisions for landlords to petition for rent increases to accommodate additional operating expenses is an important safety valve to prevent undue burden and potential loss of rental units. See Appendix A Table A-15 and Table A-16.

6.4%

7.0%

7.5%

7.9%

7.1%

8.6%

9.9%

10.7%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
60% of CPI
80% of CPI
100% of CPI
Market Rate
Leveraged IRR Unleveraged IRR
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Peer Cities Feasibility Comparison
To compare the scenarios discussed above to the identified peer cities, EPS developed similar investment and operating pro formas, using the adopted rent stabilization rates and actual local market data for hypothetical 100-unit apartment complexes in each city.

The results of the peer city rent stabilization financial feasibility comparison are illustrated in Figure 10.

Figure 10. Peer Cities Hypothetical IRR Comparison
Antioch and Oakland both have rent stabilization rates at 60 percent of CPI.

Both Oxnard (4 percent maximum) and Mountain View (2 to 5 percent) were estimated to be roughly equivalent to CPI, while San Diego, based on AB 1482 allowing 5 percent plus the rate of inflation, was assumed to be the equivalent of 167 percent of CPI.

San Diego’s much higher allowable annual rent increase, combined with relatively high rents and high turnover, results in the highest rate of return of the peer cities. Mountain View’s high acquisition cost and currently low rate of market rent growth results in the lowest rate of return, along with Antioch, which limits rent growth to 60 percent of CPI and has the lowest market rent among the peer cities.
0% 2% 4% 6% 8% 10% 12% 14%
San Diego - 167% of CPI (est.)
Oakland - 60% of CPI
Mtn View - 100% of CPI (est.)
Antioch - 60% of CPI
Oxnard - 100% of CPI (est.)
Salinas - 60% of CPI
Salinas - 80% of CPI
Salinas - 100% of CPI
Salinas - Market Rate
Leveraged
Unleveraged
Note: Based on purchase, 10-year operation, and resale of prototypical existing, occupied 100-unit building/ complex using current local market variables. Leveraged analysis assumes 30% equity, 25-year loan at 6%.

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Program Implementation Costs to the
City
EPS conducted research to help estimate the costs of implementing and administering rent stabilization programs. EPS reviewed financial information from other city programs and interviewed staff from 3 jurisdictions with varying levels of rent stabilization: Mountain View, Hayward, and Richmond. This research confirmed that implementing and administering these programs requires full-time staff and associated equipment and office space. However, costs can vary significantly based on the level of enforcement and the cost of complementary support services. The City envisions that, if adopted, the Rent Stabilization Program would consolidate with the existing Rental Registry Program, combining the existing costs with the estimated costs to implement the Rent Stabilization Program.

The estimated implementation costs for Salinas depend on the level of enforcement and subsequent staffing. The City estimates that their Rent Stabilization Program will be a complaint-driven enforcement program.

To illustrate this range, EPS estimated staff at a minimum, average, and maximum level of complaint-based enforcement, as shown in Table 4-11.

Please note that these totals exclude the Rental Registry FTEs. The ratio of units per staff is based on a staffing level analysis of rent stabilization jurisdictions.58 58 City of Mountain View Memorandum to the Rental Housing Committee, dated January 25, 2021.

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Table 4-11. Estimate Range of Required Staff
Based on data from other cities, the required staff for Salinas would range from the equivalent of 1.1 to 11.4 net new hires (excluding the Rental Registry staff) or a percentage of existing employees’ time. At the lower staffing-level estimates, the primary role of the City employees would be to monitor the Rental Registry and Rent Stabilization Program, educate the community, manage third-party services and software, and manage the petition process. Education occupies the most core part of the program.

Even in a complaint-driven enforced rent stabilization program, staff communicated that education is key to keeping people informed of their rights.

Education includes preparing materials in multiple languages, direct mailing, and speaking at community events. With the minimum level of only 1.1 new staff members, or 3.2 FTEs total, Salinas would likely need to contract third-party services for legal counsel, tenant relocation services, and mediation and dispute resolution. These services along with third-party software are estimated to cost approximately $500,000 annually. See Table 4-12.

In each increasing staffing-level scenario estimated below, there is the potential that fewer services would be contracted out, with City in-house staff completing all tasks in the maximum staffing level scenario. Under maximum staff, Salinas would actively oversee the rental registry, which would involve reviewing every rent increase submitted by landlords. The City of Richmond demonstrates a Item Total
Staffing Level
Minimum 0.13 1.1 1.9 3.0
Average 0.20 1.7 3.0 4.7
Maximum 0.50 4.2 7.2 11.4
Salinas Rental Units 8,330 14,464 22,794
Partially
Covered Units
Complaint-Driven Rest Stabilization Enforcement
Estimated City of Salinas
FTEs Equivalent by Unit Type
(Excluding the Rental Registry)
[1] Based on varying fee levels for complaint-driven rent stabilization jurisdictions across California, sourced from a 2021 Mountain View staff report.

Required
Staff per 1,000
Units [1]
Fully Covered
Units
Source: City of Mountain View Memorandum to the Rental Housing Committee, dated January 25, 2021; EPS.

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Table 4-12. Estimated Staffing and Annual Costs Rental Registry and Rent Stabilization Program
staffing level of full enforcement, and the City of Mountain View is approaching this level by adding additional staff. Both cities, however, did not start their programs at full capacity; rather, they began by contracting portions of the program and hiring full-time staff over time. Richmond staff noted that the first 6 months of the program cost about $1.1 million.

Item Assumptions Proposed Minimum Average Maximum

3.0 4.7 11.4
Total Combined with Rental Registry 3.2 5.1 6.7 13.4
Total Staffing Costs Cost per FTE [2]
Planning Manager $235,000 $11,750 $35,250 $26,304 $32,708 $65,611 Community Development Analyst $154,200 $154,200 $154,200 $345,197 $429,242 $861,038 Administrative Analyst - Housing $128,800 $128,800 $128,800 $288,336 $358,537 $719,207 Admin Aide $108,700 $0 $108,700 $54,350 $108,700 $217,400 Subtotal Staffing Costs - $294,750 $426,950 $714,187 $929,187 $1,863,255 Other Costs
Software & Systems Supporters - $10,000 $200,000 $200,000 $200,000 $200,000 Tenant/Landlord Services and Resources [4] - $100,000 $300,000 $300,000 $250,000 $200,000 Subtotal Other Costs - $110,000 $500,000 $500,000 $450,000 $400,000 Total Cost $404,750 $926,950 $1,214,187 $1,379,187 $2,263,255 Source: City of Salinas; EPS.
[2] Staff costs are based on the data received from the Community Development department October 19, 2024. [3] Total Rent Stabilization Program costs include the total for the Rental Registry Program. [4] Third party resource requirements are estimated to decrease with increased levels of City staff. ---------------------------------------- FTEs ---------------------------------------------- --------------------------------- Cost by Staff Level [3]-------------------------------------- [1] See Table 4-11
---------------------------- Other Costs by Staff Level [3] --------------------------------- Rental Registry + Rent Stabilization Program Level of
Enforcement Range [1]
Existing
Rental
Registry
Program
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• Charges allocated to City departments to reimburse the General Fund for administrative services by central service departments (i.e., City Council, City Manager, City Attorney, City Clerk, Finance, Human Resources, etc.). • Information Technology expenses associated with a property and renttracking database and maintenance of computer hardware and software. • Legal costs to support enforcement and defense of legal challenges to the Ordinance.
• Cost of education and outreach, including printing and distributing materials and hosting community workshops and seminars.
• Contracts for translation and other professional services. • An operating reserve to fund unanticipated costs and variations in collection of the fee.59
Table 4-12 estimates the range of staff when combined with the Rental Registry Program and the associated costs.60 The Rental Registry Program is budgeted for

2.1 FTEs, with a total estimated staffing cost of about $295,000, plus $110,000 for other costs, totaling almost $405,000 per year. Combined with the estimated range of required Rent Stabilization staff increases, third-party services, and software, the FTEs range from 3.2 to a total of 13.4, with costs ranging from $927,000 up to $2.3 million per year. The City is proposing an additional

1.1 FTEs, as shown in Table 4-12.

Table 4-13 illustrates the potential fee amount for all rental units with the proposed level of staffing of 3.2 total FTEs. This tables provide estimated fees for both the fully covered units (rent stabilization, tenant protections, and rental registry) and partially covered units (tenant protections and rental registry), which are exempt from Rent Stabilization. These fees are calculated to allow the City to essentially “break even” in covering the estimated costs of the required staff needed for the administration of the proposed Ordinance, combined with the Rental Registry Program, as well as third-party services and software.

The fee is proposed to be set at $45 per unit for the 14,464 exempt residential units to be part of the existing Rental Registry Program and $170 per unit for fully covered units based on the level of staffing. The fully burdened cost of staff shown includes salaries, taxes, and benefits. Please note that the fee for partially covered units should be less than the fully covered unit fee. Other cities have fees ranging from about $60 for all units in San Francisco up to $344 per fully covered 59 City of Richmond Rent Program, Adopted May 31, 2002, Fiscal Year 2022-23 Budget and Rental Housing Fee Study.
60 Estimated staff and staff costs are based on the proposed budget amounts for the rental registry program per the Residential Registry Community Development Council Staff Report, dated April 4, 2023.

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unit and $212 for partially covered units in Berkeley, as shown in Appendix A Table A-13.

Table 4-13. Rental Registry and Rent Stabilization Program Estimated Annual Cost Variations: Minimum Number of Employees
For the Rental Registry Program fee, the City currently charges a fee based on the number of units within a range per parcel. The initial goal was to not overcharge owners of smaller buildings; however, this fee structure actually provides a monetary discount for larger developments and creates a financial loss to the City. As shown in Table 4-14, the total estimated revenue based on the City’s current Rental Registry fee structure is about $207,000, compared to if the City charged a fee on a per-unit basis. For illustrative purposes, EPS used the estimated average cost of the proposed staffing and fee revenue at 100 percent compliance to estimate the total revenue, which would create a cost recovery of about $2.1 million.

Year 1
(1/2 Year) Year 2 Year 3 Year 4
Item 30% 40% 50% 60% 100%
Estimated Number of Employees 3.2 FTEs
Residential Units
Fully Covered Units (Qualify for Rent Stabilization) 8,330 Units 2,499 3,332 4,165 4,998 8,330 Partially Covered Units (Qualify for Just Cause Protections) 14,464 Units 4,339 5,786 7,232 8,678 14,464 Fee Amount to Break Even based on Level of Staff and
Third Party Services + Software
Rent Stabilization Program + Rent Program $170 per unit/per year $212,422 $566,459 $708,073 $849,688 $1,416,147 Rent Program $45 per unit/per year $97,632 $260,352 $325,440 $390,528 $650,880 Total Annual Revenue $310,054 $826,811 $1,033,513 $1,240,216 $2,067,027 Estimated Costs [1]
Staffing Costs 1.00% annual increase $426,950 $431,220 $435,532 $439,887 $426,950 Software & Systems Supporters 0.05% annual increase $200,000 $200,100 $200,200 $200,300 $200,000 Tenant/Landlord Services and Resources 0.05% annual increase $300,000 $300,150 $300,300 $300,450 $300,000 Total Annual Estimated Costs $926,950 $931,470 $936,032 $940,637 $926,950 Program Surplus/Deficit ($616,896) ($104,659) $97,482 $299,579 $1,140,077 Source: EPS.
[1] Estimated annual increases are included to adjust for any increases in staff compensation, software costs, and third party resources costs.

Estimated Revenue and Costs based on Proposed FTEs (3.2) Assumption
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Table 4-14. Current Rental Registry Fee Comparison
Item Buildings Units % Total
Estimated per Unit Fee [3] $45 $170
Number of Units [4] 14,464 8,330
Number of Units per Parcel
1 8,691 8,691 38.1% $20 $173,820 $248,166 $539,955 $788,121 $614,301 2-4 11 3,192 14.0% $35 $385 $91,145 $198,313 $289,458 $289,073 5-9 168 1,455 6.4% $60 $10,080 $41,553 $90,410 $131,963 $121,883 10-24 118 2,151 9.4% $75 $8,850 $61,410 $133,614 $195,024 $186,174 25-49 30 1,344 5.9% $120 $3,600 $38,390 $83,529 $121,919 $118,319 50-99 13 1,132 5.0% $225 $2,925 $32,331 $70,344 $102,675 $99,750 100+ 20 4,829 21.2% $350 $7,000 $137,876 $299,989 $437,865 $430,865 Total 9,051 22,794 100.0% - $206,660 $650,868 $1,416,147 $2,067,025 $1,860,354 Source: ACS; CoStar; City of Salinas; EPS.
[1] Estimated based on data from ACS and CoStar.
[3] The annual fee for partially covered units should be less than that for fully covered units. The fee shown is based on the City's proposed FTEs. [4] See Table 4-11.

Difference
between
Current
Estimate
Revenue and
Updated Fee
Current Rental Registry Fee
Partially Covered
Units
Fully Covered
Units
[2] Registration fees for the rental registry program per the Residential Registry Community Development Council Staff Report dated April 4, 2023.

Estimated Revenue of a Rental Registry + Rent
Stabilization Combined Fee on a Per Unit Basis
based on the Proposed FTEs at 100%
Estimated Salinas Rental Compliance [3]
Residential [1]
Annual
Registration
Fee [2]
Estimated
Total
Revenue
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Conclusions and Recommendations
Conclusions
Rent regulations are increasingly prevalent in California. In cities like Salinas, where apartments account for about 36 percent of the housing stock, the policy could have a range of potential impacts. As discussed previously, current State law limits the impact of rent stabilization by exempting single-family units, condominiums, and properties built after 1995 and allowing for vacancy decontrol (the ability to raise rent back to market rate after a tenant leaves).

For applicable units (19 percent of the City’s housing), the proposed Ordinance is likely to stabilize rents and decrease displacement risk, which is an important equity concern in the City. Thus, existing City renters would be the direct beneficiaries of the Ordinance, accruing long-term financial benefits and reduced risk of eviction. This benefit would come at a cost to existing Salinas landlords who could experience reduced rental income and limitations on removing unwanted tenants. However, the effects on income appear to be relatively modest, particularly as the Ordinance has policies to help protect hardships by allowing a landlord to petition for rent increase beyond the allowed rent-stabilized increase to obtain a fair and reasonable return, as well as petition to pass through to the tenant specific capital improvements. Conversely there is a policy that allows a tenant to petition for a rent reduction if they believe that the landlord has demanded, accepted, or retained any rent in excess of the rent permitted.

However, despite the clear and direct redistribution effects of the proposed Ordinance, the broader economic implications are likely to be modest absent the repeal of Costa-Hawkins, which would expand the incidence of rent control beyond the above-referenced 19 percent of the City’s housing.

While 19 percent of the City’s housing is not immaterial, the renter protections included in the Ordinance are likely to have both positive and negative impacts on the local economy and the City’s fiscal health. The positive impacts include reduced displacement, as well as increased economic stability and disposable income for renters. The negative impacts may include reduced labor mobility and housing availability for new residents, as rent stabilization is shown to decrease turnover by about 20 percent, and with vacancy in the City already extremely tight, this exacerbates the limited housing options for new residents and the ability for existing residents to move, as discussed in Chapter 3.

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Rent stabilization is part of a toolkit that, along with other policies and incentives, can help alleviate some housing cost pressures. Taken in combination with other policies that encourage additional supply, it can be part of a multi-pronged effort to improve the outlook for residents struggling to afford housing.

Recommendations
Based on the findings from the literature review and economic impacts analysis, EPS recommends the City consider adopting a rent stabilization ordinance limiting the maximum increase of rent to the lesser of 2.5 percent or 65 percent of the CPI-U West or 2.75 percent or 75 percent of the CPI-U West.

The Rent Stabilization Ordinance should include strong tenant protections, as well as clear guidance on the types of units that would qualify in the event Costa-Hawkins is repealed. Strong tenant protections include Just-Cause eviction protections, as well as No-Fault eviction protections such as requiring landlords to pay fair relocation costs. See Appendix A Table A-1 for no-fault eviction in the California cities that have rent stabilization ordinances. An additional protection the City could consider is setting a cap on the number of units that can convert to condominiums within a year and providing current tenants the right of first refusal to purchase condominium conversions.

The City should consider merging the Rent Stabilization Fee into the Rental Registry Fee and charge this fee on a per-unit basis. The fee amount should differ based on unit type: fully covered units (rental registry, tenant protections, and rent stabilization) should be higher than partially covered units (rental registry and tenant protections). The fee is to help the City recover the costs to run the program, including staffing, third-party services and software, community education, and program enforcement and should provide financial neutrality. Based on data from other cities, the additional staffing needed to establish, run, and maintain the Rent Stabilization Ordinance ranges from the equivalent of 1.1 to 11.4 net new hires (excluding the rental registry staff) or a percentage of existing employees’ time. With the minimum level of only 1.1 new staff members, or 3.2 FTEs total, Salinas would likely need to contract third-party services for legal counsel, tenant relocation services, and mediation and dispute resolution. As staffing increases beyond the 3.2 FTEs, the amount of third-party source contracts will decrease.

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The City should consider including language in the Ordinance establishing periodic review elements such as the rent increase caps, the number of petitions, staffing levels, fee amounts, etc., to ensure the program operates effectively for property owners, tenants, and the City.

In addition, the City should take careful consideration to explicitly include any elements they would like to retain from Costa-Hawkins, such as exempting singlefamily homes, exempting new development, and providing vacancy decontrol.

If these are not included in the City’s Ordinance, and the statewide ballot initiative set for the November 2024 ballot to repeal Costa-Hawkins passes, the local Ordinance would apply to all rental housing—including single-family units—and rents would not reset to market for new tenants.

APPENDICES:

Appendix A: Demographic and Socioeconomic
Analysis Support Tables
Appendix B: Financial Analysis Support Tables
APPENDIX A:

Demographic and Socioeconomic
Analysis Support Tables
Table A-1 Units in Structure: City of Salinas..................................A-1 Table A-2 Vacant Housing Units by Usage Category........................A-2 Table A-3 Total Vacancy Rate......................................................A-3 Table A-4 Tenure by Units In Structure ........................................A-4 Table A-5 Tenure by Age of Structure: City of Salinas.....................A-5 Table A-6 Residential Inventory Characteristics:

City of Salinas ............................................................A-6 Table A-7 Subsidized Affordable Housing Units ..............................A-7 Table A-8 Multifamily Housing Market Summary ............................A-8 Table A-9 Household Income by Range.........................................A-9 Table A-10 Household Size and Tenure ........................................A-10 Table A-11 Year Householder Moved into Unit ...............................A-11 Table A-12 Units Permitted by Year .............................................A-12 Table A-13 Comparable Rent Stabilization Programs
Staffing and Fees ......................................................A-13 Table A-14 Inflation Method Comparison ......................................A-14 Table A-15 Household Operations and Furnishings
Price Index Change ...................................................A-15 Table A-16 Median Operating Expenses by Property Type ...............A-16 Table A-1
City of SalinasRent Stabilization AnalysisUnits in Structure: City of Salinas (2022) Item Units % of TotalType of Unit
Single Detached Units 25,252 56.7%Single Attached Units 2,517 5.7%2-4 Units 3,602 8.1%5+ Units 11,019 24.8%Mobile Homes 2,113 4.7% Total Housing Units 44,503 100.0%
Source: ACS; EPS.
2022
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City of SalinasRent Stabilization Analysis
Vacant Housing Units by Usage Category (2022)
Item Units % of Total Units % of TotalVacant Housing Units For Rent 265 18.5% 1,589 12.4% Unoccupied Rentals 73 5.1% 302 2.4% For-Sale 162 11.3% 565 4.4%
Unoccupied Sold Units 165 11.5% 501 3.9%
Seasonal, Recreational, or Occasional Use
123 8.6% 6,290 49.3%
For Migrant Workers - - 95 0.7% Other 642 44.9% 3,428 26.8% Total Vacant 1,430 100.0% 12,770 100.0%
Source: American Community Survey 5-Year Estimates Tables B25004; EPS.

Monterey County
2022 VACANT HOUSING UNITS
City of Salinas
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City of SalinasRent Stabilization AnalysisTotal Vacancy Rate (2010-2023)Item City of Salinas Monterey CountyYear 2010 5.3% 9.4%2011 5.3% 9.6%2012 5.3% 9.6%2013 5.5% 9.9%2014 5.5% 10.0%2015 5.5% 10.0%2016 5.6% 10.3%2017 5.6% 10.3%2018 5.6% 10.5%2019 5.7% 10.6%2020 2.8% 8.2%2021 2.9% 8.2%2022 2.9% 8.1%2023 2.9% 8.1% Source: California Department of Finance E-5; EPS.

Total Residential Vacancy Rate
Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Rent_Stabilization_08-08-24.xlsx Table A-4
City of SalinasRent Stabilization AnalysisTenure by Units In Structure (2012-2022) Item
OwnerOccupied Renter Occupied Share Renter Occupied % of Unit Type Owner- Occupied Renter Occupied Share Renter Occupied % of Unit Type Total % Total % Unit Type
Detached Single-Family 15,409 6,834 30.7% 55.2% 17,392 7,234 29.4% 57.2% 1,983 12.9% 400 5.9%Attached Single-Family 1,140 1,456 56.1% 6.4% 1,031 1,457 58.6% 5.8% (109) (9.6%) 1 0.1%Duplex 38 815 95.5% 2.1% - 891 100.0% 2.1% (38) (100.0%) 76 9.3% 3 to 4 unit building 116 2,654 95.8% 6.9% 255 2,301 90.0% 5.9% 139 119.8% (353) (13.3%)5 + unit building 200 10,368 98.1% 26.2% 124 10,288 98.8% 24.2% (76) (38.0%) (80) (0.8%)Other 752 510 40.4% 3.1% 1,477 623 29.7% 4.9% 725 96.4% 113 22.2% Total 17,655 22,637 56.2% 100.0% 20,279 22,794 52.9% 100.0% 2,624 14.9% 157 0.7% Source: American Community Survey 2018-2022 5-Year Estimates, Table B25032; EPS.

Owner-Occupied
2021-2022 Change
2012 2022 Renter Occupied
City of Salinas
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City of SalinasRent Stabilization AnalysisTenure by Age of Structure: City of Salinas (2022)Item Total % Total % Total % Total %Year Built 2020 or later 22 0.1% 13 0.1% 35 0.1% 35 0.1%
Built 2010 to 2019 216 1.1% 621 2.7% 837 1.9% 845 1.9%
Built 2000 to 2009 2,499 12.3% 1,921 8.4% 4,420 10.3% 4,645 10.4%Built 1990 to 1999 3,344 16.5% 3,753 16.5% 7,097 16.5% 7,258 16.3% Est. of units built between 1990 and 1994 751 3.7% 843 3.7% 1,593 3.7% 3,187 7.2% Built 1980 to 1989 2,147 10.6% 3,803 16.7% 5,950 13.8% 6,221 14.0%Built 1970 to 1979 3,384 16.7% 4,636 20.3% 8,020 18.6% 8,213 18.5%Built 1960 to 1969 3,005 14.8% 2,860 12.5% 5,865 13.6% 6,074 13.6%Built 1950 to 1959 2,607 12.9% 2,387 10.5% 4,994 11.6% 5,231 11.8%Built 1940 to 1949 1,553 7.7% 1,657 7.3% 3,210 7.5% 3,257 7.3%Built 1939 or earlier 1,502 7.4% 1,143 5.0% 2,645 6.1% 2,724 6.1% Total 20,279 100.0% 22,794 100.0% 43,073 100.0% 44,503 100.0% Built Before 1995 14,949 73.7% 17,329 76.0% 32,277 74.9% 34,907 78.4%Built 1995 or Later 5,330 26.3% 5,465 24.0% 10,796 25.1% 9,596 21.6% Source: American Community Survey 2018-2022 5-Year Estimates, Table B25034; EPS.

CITY OF SALINAS AGE OF RESIDENTIAL STRUCTURE
Tenure of Occupied Housing Units
Total Housing Units
[1] ACS data only provides data within 10-year timeframes; the number of units estimated to be built between 1990 and 1994 is based on the average percentage of permits pulled between those years within the 1990 to 1999 time period. See Table A-12.

Owner-Occupied Renter-Occupied Total
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City of Salinas
Rent Stabilization Analysis
Residential Inventory Characteristics: City of Salinas (2022) Item Source/Table Formula Total
Housing Inventory
Total Single Family Residential (SFR) Detached Table A-1 A 25,252 56.7% 28.6% Total Multifamily (MFR) and Other Table A-1 B 19,251 43.3% 82.6% Total Units 44,503 100.0% 52.0%
Total Occupied Units
Owner-Occupied SFR Table A-4 C 17,392 39.1% -
Owner-Occupied MFR Table A-4 D 2,887 6.5% -
Renter-Occupied SFR Table A-4 E 7,234 16.3% 31.3%
Renter-Occupied MFR Table A-4 F 15,560 35.0% 67.3%
Total Occupied Units G = C + D + E + F 43,073 96.8% -
Vacant Units
Owner/For-Sale Table A-2 H 327 0.7% -
Rental/For Rent Table A-2 I 338 0.8% 1.5%
Seasonal, Rec. Use, Migrant Workers, Other Table A-2 J 765 1.7% - Total Vacant Units K = H + I + J 1,430 3.2% -
Total Rental Unit Inventory L = E + F + I 23,132 52.0% 100.0% Units Exempt from Rent Stabilization
Built 1995 or Later
Total Owner-Occupied M = C + D + H 20,606 46.3% -
Renter-Occupied Built 1995 or Later Table A-5 N 5,465 12.3% 23.6% Multifamily Built 1995 or Later [1] CoStar O 2,022 4.5% 8.7% SFR Renter-Occupied E 7,234 16.3% 31.3%
Seasonal, Rec. Use, Migrant Workers, Other [2] J 765 1.7% - Built 1995 or Later Table A-5 P 24% - -
Rental/For Rent [3] Q = I * P 81 0.2% 0.4%
Total Exempt Units R = M + N + O + E + J + Q 36,173 81.3% 54.9% Units Qualifying for Rent Stabilization
Renter-Occupied Built Prior to 1995 Table A-5 S 17,329 38.9% 74.9% Built Prior to 1995 Table A-5 T 76% - -
Rental/For Rent [3] U = I * T 257 0.6% 1.1%
Less Renter-Occupied SFR E (7,234) (16.3%) (31.3%)
Less Multifamily Built 1995 or Later O (2,022) (4.5%) (8.7%) Total Units Qualifying for Rent Stabilization V = S + U - E - O 8,330 18.7% 36.0% Source: American Community Survey 5-Year Estimates Table S2502; EPS. [1] Per CoStar.
[2] To remain conservative, EPS assumes seasonal, recreational, occasional use, migrant worker housing, and other are exempt from rent stabilization. [3] To estimate the year built for vacant rentals, EPS applied the percentage breakdown for renter-occupied units from Table A-5.

City of Salinas
% of Total
Housing
% that is Rental
Housing
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City of Salinas
Rent Stabilization Analysis
Subsidized Affordable Housing Units (April 2024)
Item Address Type Year Built
Total
Units Studio
OneBedroomTwoBedroomsThreeBedroomsFour BedRooms
Apartment Units
Moon Gate Plaza 21 Soledad Street Apartments 2017 90 81 4 5 - - Haciendas 3 40, 50, 60 East Rossi Street Apartments 2016 50 - 19 16 15 - Gabilan Plaza 736 Williams Rd. Apartments 2013 200 - 36 74 90 - Harden Ranch Apts 1907 Dartmouth Way Apartments 2013 100 - 16 20 48 16 Haciendas Apartments II 275 Calle Cebu Apartments 2012 46 - 6 20 17 3 One Haciendas 233 Calle Cebu Apartments 2011 52 - 9 27 14 3 Salinas Gateway Apts 25 Lincoln Ave Apartments 2011 52 25 21 6 - - Tresor Apts 1041 Buckhorn Dr Apartments 2009 81 - - 24 41 16 La Gloria Senior Apts 539 E Market St Apartments 2009 23 - 23 - - - Sherwood Village 808 N Main St Apartments 2006 124 - 102 22 - - Jardines Del Monte Apartments 1259 Del Monte Ave Apartments 2004 28 - - - - - Salinas Pointe Apts 1260 John St Apartments 2003 219 3 91 61 8 - Salinas Bay Apts 920 Larkin St Apartments 2002 95 - - 25 60 10 Plaza Grande 50 E Market St Apartments 2002 92 91 1 - - - Montecito at Williams Ranch 1598 Mesquite Dr Apartments 2000 132 - 107 25 - - Steinbeck Commons Apts 10 Lincoln Ave Apartments 2000 100 - 99 - - - Nantucket Bay Apts 950 Nantucket Blvd Apartments 1999 160 - - 70 70 20 Plaza Club Apts 100 Harden Pkwy Apartments 1997 208 - 7 28 8 - Shadowbrook Apartments 1115-1118 Alamo Way Apartments 1988 88 - 20 38 30 - Vista De La Terraza 165-177 Carr Ave Apartments 1984 40 - - 15 10 15 Las Casas de Madera 510 E Market St Apartments 1982 75 - - 22 28 25 Lakeview 58 Natividad Rd Apartments 1982 50 - - 28 9 13 Parkside Manor 1112-1115 Parkside St Apartments 1971 48 - - - - - Tynan Village 323 Front St Apartments - 172 - 65 60 35 12 Santanna Apartments 1235 Garner Ave Apartments - 160 - - - - - Tesoros del Campos 42 La Posada Dr Apartments - 57 - - 8 43 6 Del Monte Plaza 1415 Del Monte Ave Apartments - 44 - - - - - Ocean View Apartments 44 Natividad Rd Apartments - 40 - 8 19 13 - Mariposa Apartments 300 Casentini St Apartments - 21 - - - - - - 775 Elkington Ave Apartments - 7 - - - - -
Subtotal Multifamily Units 2,654
Other Affordable
East Salinas Family Rad Scattered Sites Townhomes 2016 202 - 35 86 63 18 Los Abuelitos Senior Apts 528 E Market St Senior 2004 25 - 25 - - - Mountain View Townhomes 1580 Falcon Dr Townhomes 2000 68 - - 20 40 8 Addington Way Homes 288 Addington Ln Special Needs 1999 2 - - - 2 - Roosevelt Street Townhomes II 504 Roosevelt St Townhomes 1998 22 - - - 22 - Regency Court Senior 472 Regency Cir Senior 1997 119 - 96 24 - - Gabilan Hills Townhomes 1051-1057 Paseo Grande Townhomes 1995 100 - - 32 34 34 Roosevelt Townhomes 522 Roosevelt St Townhomes 1995 22 - - - - - Plaza Hotel 30 E Market St SRO 1992 27 - - - - -
Subtotal Other Units 587
Total 3,241 200 626 594 526 139
Source: Costar; HUD National Low Income Housing Tax Credit 1987-2022 Data; EPS.

City of Salinas
[1] Some properties do not include the number of rooms as Costar and the Department of Housing and Urban Development (HUD) do not provide this information.

The absence of data may occur due to various reasons, such as privacy policies, incomplete records, or the nature of the reporting systems of these organizations.

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City of Salinas
Rent Stabilization Analysis
Multifamily Housing Market Summary (2012-2024)
Item
Year
2000 $920 - 2.4%
2001 $963 4.7% 3.3%
2002 $955 (0.8%) 4.0%
2003 $947 (0.8%) 4.3%
2004 $948 0.1% 4.3%
2005 $979 3.3% 4.0%
2006 $1,015 3.7% 3.9%
2007 $1,046 3.1% 3.4%
2008 $1,068 2.1% 3.7%
2009 $1,027 (3.8%) 4.1%
2010 $1,041 1.4% 4.1%
2011 $1,050 0.9% 4.5%
2012 $1,070 1.9% 4.1%
2013 $1,099 2.7% 3.7%
2014 $1,143 4.0% 3.1%
2015 $1,274 11.5% 2.8%
2016 $1,375 7.9% 3.0%
2017 $1,480 7.6% 2.4%
2018 $1,554 5.0% 2.1%
2019 $1,592 2.4% 2.7%
2020 $1,702 6.9% 2.4%
2021 $1,920 12.8% 2.4%
2022 $1,859 (3.2%) 2.8%
2023 $1,978 6.4% 2.8%
2024 $1,994 0.8% 2.7%
Average/
Total Change $1,280 3.4% 3.3%
Source: CoStar; EPS.
[1] This data reflects market rate multifamily apartment units built before 1995 in the City of Salinas.

City of Salinas Multifamily Housing [1]
Monthly Effective
Rent
% Change, Rent
Asked Vacancy Rate
Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Rent_Stabilization_08-08-24.xlsx Table A-9
City of SalinasRent Stabilization AnalysisHousehold Income by Range (2012 & 2022)Item 2012 [1] % 2022 % % Change 2012 [1] % 2022 % % Change Income Range
<$15,000 3,981 9.9% 2,550 5.9% (35.9%) 10,761 8.6% 6,915 5.3% (35.7%) $15,000 - $24,999 4,992 12.4% 2,718 6.3% (45.6%) 12,012 9.6% 6,667 5.1% (44.5%)$25,000 - $34,999 4,831 12.0% 2,589 6.0% (46.4%) 12,012 9.6% 8,369 6.4% (30.3%)$35,000 - $49,999 6,080 15.1% 4,355 10.1% (28.4%) 16,766 13.4% 12,560 9.6% (25.1%)$50,000 - $74,999 7,974 19.8% 7,111 16.5% (10.8%) 24,524 19.6% 19,240 14.7% (21.5%)$75,000 - $99,999 4,871 12.1% 6,638 15.4% 36.3% 15,891 12.7% 18,454 14.1% 16.1%$100,000 - $149,999 5,153 12.8% 8,963 20.8% 73.9% 19,394 15.5% 25,658 19.6% 32.3%$150,000 - $199,999 1,527 3.8% 3,924 9.1% 157.0% 6,882 5.5% 13,739 10.5% 99.6%$200,000+ 882 2.2% 4,225 9.8% 378.9% 6,882 5.5% 19,371 14.8% 181.5%Total 40,292 100.0% 43,073 100.0% 6.9% 125,123 100.0% 130,973 100.0% 4.7% Median Household Income in 2022$ $68,364 $84,250 23.2% $81,279 $91,043 12.0%Source: U.S. Census Bureau ACS 2012 & 2022, Table S1901; EPS.[1] The median household incomes reported by ACS are inflation-adjusted to constant dollars.

City of Salinas Monterey County
Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Rent_Stabilization_08-08-24.xlsx Table A-10
City of SalinasRent Stabilization AnalysisHousehold Size and Tenure (2012 and 2022)Item Total % Total %Renter-Occupied Households 1-person 3,973 17.6% 3,821 16.8% (3.83%)2-person 3,721 16.4% 3,773 16.6% 1.40%3-person 3,750 16.6% 3,093 13.6% (17.52%)4+ -person 11,193 49.4% 12,107 53.1% 8.17% Total 22,637 100.0% 22,794 100.0% 0.69%
Owner-Occupied
1-person 2,648 15.0% 3,082 15.2% 16.39%2-person 4,645 26.3% 5,112 25.2% 10.05%3-person 3,011 17.1% 3,211 15.8% 6.64%4+ -person 7,351 41.6% 8,874 43.8% 20.72% Total 17,655 100.0% 20,279 100.0% 14.86%
Source: American Community Survey 5-Year Estimates Table B25009; EPS. 2012 2022 Change
(2012-2022)
City of Salinas
Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Rent_Stabilization_08-08-24.xlsx Table A-11
City of SalinasRent Stabilization AnalysisYear Householder Moved into UnitItem Min Max Avg. Total % Total %Year Householder Moved Into Unit Moved in 2021 or later 0 - 1 0.5 5,141 20.4% 472 2.3%Moved in 2018 to 2020 2 - 4 3 7,406 29.3% 2,254 11.0% Moved in 2010 to 2017 5 - 12 8.5 7,775 30.8% 6,036 29.3% Moved in 2000 to 2009 13 - 22 17.5 3,641 14.4% 5,867 28.5%Moved in 1990 to 1999 23 - 32 27.5 918 3.6% 3,211 15.6%Moved in 1989 or earlier 33 + 33 358 1.4% 2,736 13.3% Total 25,239 100.0% 20,576 100.0%Weighted Average Years Lived in Unit 7.6 16.5
Source: ACS 2022 5-Year estimates Table B25038; EPS.

Renter-Occupied
City of Salinas Households
Owner-Occupied
Years Lived
in Unit
Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Rent_Stabilization_08-08-24.xlsx Table A-12
City of Salinas
Rent Stabilization Analysis
Units Permitted by Year (2000-2022)
Item 1-Unit 2-Unit
3- and 4-
Unit 5-Unit + Total
Year
1990 194 8 3 - 205
1991 160 8 3 - 171
1992 197 10 - 16 223
1993 275 - 7 27 309
1994 585 10 46 6 647
1995 431 4 9 98 542
1996 413 2 11 253 679
1997 628 - - 207 835
1998 500 - - - 500
1999 809 22 - 531 1,362
2000 579 4 18 50 651
2001 268 - - 160 428
2002 442 14 9 92 557
2003 257 - 14 273 544
2004 231 - 6 25 262
2005 224 - - 21 245
2006 119 - - - 119
2007 72 2 - 170 244
2008 24 2 8 58 92
2009 19 - - 18 37
2010 35 - 16 88 139
2011 7 - 8 10 25
2012 11 2 - - 13
2013 3 2 3 51 59
2014 30 - - 36 66
2015 46 2 - 46 94
2016 2 2 - 48 52
2017 26 - - - 26
2018 57 - - 106 163
2019 80 4 - 12 96
2020 96 - - 109 205
2021 64 4 - 130 198
2022 59 2 - - 61
Total 1990-2022 6,943 104 161 2,641 9,849
Average per Year (1990-2022) 217 3 5 83 308
Total 1995-2022 5,532 68 102 2,592 8,294
Average per Year (1995-2022) 205 3 4 96 307
City of Salinas
Source: United States Department of Housing and Urban Development State of the Cities Database; EPS.

Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Rent_Stabilization_08-08-24.xlsx Table A-13
City of SalinasRent Stabilization AnalysisComparable Rent Stabilization Programs Staffing and FeesItemJURISDICTION Actively Enforced Rent Programs
East Palo Alto 2,500 2 1,250 0.80 $234 NA 50%Berkeley 20,000 22 909 1.10 $344 $212 50%Oakland 65,000 11 5,909 0.17 $101 NA 50% Richmond 18,000 13 1,385 0.72 $238 $135 0%Santa Monica 28,000 26 1,077 0.93 $228 NA 50% Total/Weighted Avg. 133,500 74 3,449 0.83 $185 - - Complaint Driven Rent Programs Mountain View 15,000 5 3,000 0.33 $120 NA NAWest Hollywood 17,000 9 2,000 0.50 $144 $144 50% San Jose 39,000 16 2,438 0.41 $106 $34 NA
San Francisco 173,000 31 5,581 0.18 $59 $59 50%Los Angeles 600,000 80 7,500 0.13 $39 NA 50% Total/Weighted Avg. 844,000 141 6,682 0.20 $50 - - Source: City of Mountain View Memorandum to the Rental Housing Committee, dated January 25, 2021; City Web Sites; EPS.

Portion of the Fee
Passed Through
to Tenants
Number of
Qualifying
Units
Staff per
1,000 Units
Number
of Units
per Staff
Staffing
FTEs
Fully Covered
Unit
Partially
Covered Unit
Current Rental Housing
Fees per Fully Covered Unit
Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Rent_Stabilization_08-08-24.xlsx Table A-14
City of SalinasRent Stabilization AnalysisInflation Method ComparisonYear Total 60% CPI 80% CPI Total Change 2014 240.215 226.976
2015 243.015 0.70% 0.93% 226.12 -0.38%
2016 247.705 1.16% 1.54% 226.814 0.31%2017 254.738 1.70% 2.27% 230.467 1.61%2018 263.263 2.01% 2.68% 236.871 2.78%2019 270.350 1.62% 2.15% 240.92 1.71%2020 275.057 1.04% 1.39% 243.674 1.14%2021 287.494 2.71% 3.62% 257.523 5.68%2022 310.509 4.80% 6.40% 280.63 8.97%2023 323.834 2.57% 3.43% 288.792 2.91%2024 [2] 331.933 1.50% 2.00% 294.262 1.89% Total Change (2014-2024) 22.91% 30.55% 29.64%
Source: Bureau of Labor Statistics; and EPS. [1] Consumer Price Index for All Urban Consumers (CPI-U), West Region.[2] Values for 2024 indicate calendar year average through June.

CPI [1]
Annual Change CPI - Less Shelter
Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Rent_Stabilization_08-08-24.xlsx Table A-15
City of SalinasRent Stabilization AnalysisHousehold Operations and Furnishings Price Index ChangeYear HIOC COICOP 05 CPI2014 -1.38% -1.45% -0.86%2015 -0.43% -0.74% 0.48%2016 -0.86% -1.16% -0.18%2017 -0.77% -0.90% -0.53%2018 0.72% 0.55% 1.25%2019 1.75% 1.75% 2.30%2020 1.50% 1.75% 3.08%2021 4.49% 4.41% 3.29%2022 9.03% 9.16% 8.82%2023 2.93% 2.63% 2.86%Total Change (2014-2023) 19.47% 18.38% 23.16%CAGR (2014-2023) 1.63% 1.55% 1.98%Source: Bureau of Labor Statistics; and EPS. [1] Consumer Price Index for All Urban Consumers (CPI-U), West Region.[2] Values for 2024 indicate calendar year average through June.

Index Change from Previous Year
Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Rent_Stabilization_08-08-24.xlsx Table A-16
City of SalinasRent Stabilization AnalysisMedian Operating Expenses by Property Type (2011-2022)Item 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Mid Rise Administration $668 $647 $643 $602 $627 $720 $688 $813 $836 $785 $855 $887Repairs and Maintenance $1,067 $1,042 $1,031 $1,135 $1,106 $1,259 $1,263 $1,349 $1,480 $1,481 $1,741 $1,829Utilities $833 $782 $838 $923 $871 $919 $928 $927 $1,022 $1,103 $1,020 $1,202Payroll $1,298 $1,347 $1,360 $1,380 $1,299 $1,471 $1,429 $1,455 $1,553 $1,658 $1,655 $1,837Management Fee $485 $460 $491 $497 $422 $535 $523 $629 $708 $764 $778 $695Property Insurance $288 $298 $306 $286 $262 $239 $224 $332 $324 $421 $560 $739 Total Mid Rise [1] $4,639 $4,576 $4,669 $4,823 $4,587 $5,143 $5,055 $5,505 $5,923 $6,212 $6,609 $7,189 Low Rise
Administration $557 $620 $594 $580 $631 $612 $588 $711 $744 $755 $741 $852Repairs and Maintenance $839 $838 $917 $964 $974 $1,037 $1,075 $1,103 $1,236 $1,202 $1,308 $1,650Utilities $694 $725 $775 $811 $793 $804 $793 $844 $876 $946 $966 $1,043Payroll $1,075 $1,101 $1,132 $1,172 $1,239 $1,228 $1,274 $1,336 $1,423 $1,482 $1,489 $1,639Management Fee $392 $406 $421 $431 $420 $436 $443 $519 $589 $673 $707 $672Property Insurance $229 $250 $265 $275 $272 $281 $282 $311 $346 $395 $515 $528 Total Low Rise [1] $3,786 $3,940 $4,104 $4,233 $4,329 $4,398 $4,455 $4,824 $5,214 $5,453 $5,726 $6,384 Single-family. Duplex and Townhomes
Administration $505 $525 $575 $552 $595 $659 $657 $681 $769 $753 $737 $787Repairs and Maintenance $840 $908 $961 $1,000 $1,022 $1,119 $1,145 $1,131 $1,243 $1,253 $1,375 $1,554Utiiities $669 $694 $749 $758 $800 $780 $750 $891 $912 $995 $872 $972Payroll $1,006 $1,074 $1,116 $1,091 $1,280 $1,203 $1,376 $1,416 $1,473 $1,625 $1,461 $1,605Management Fee $364 $335 $330 $328 $454 $438 $481 $679 $729 $762 $705 $683Property Insurance $258 $293 $329 $309 $262 $258 $243 $265 $348 $318 $497 $542 Total Single-family. Duplex and Townhomes [1] $3,642 $3,829 $4,060 $4,038 $4,413 $4,457 $4,652 $5,063 $5,474 $5,706 $5,647 $6,143 Average All
Administration $577 $597 $604 $578 $618 $664 $644 $735 $783 $764 $778 $842Repairs and Maintenance $915 $929 $970 $1,033 $1,034 $1,138 $1,161 $1,194 $1,320 $1,312 $1,475 $1,678Utiiities $732 $734 $787 $831 $821 $834 $824 $887 $937 $1,015 $953 $1,072Payroll $1,126 $1,174 $1,203 $1,214 $1,273 $1,301 $1,360 $1,402 $1,483 $1,588 $1,535 $1,694Management Fee $414 $400 $414 $419 $432 $470 $482 $609 $675 $733 $730 $683Property Insurance $258 $280 $300 $290 $265 $259 $250 $303 $339 $378 $524 $603 Total Average All $4,022 $4,115 $4,278 $4,365 $4,443 $4,666 $4,721 $5,131 $5,537 $5,790 $5,994 $6,572 Year-Over-Year Change (Average All Types)
Administration 3.58% 1.12% (4.30%) 6.86% 7.45% (2.91%) 14.07% 6.53% (2.38%) 1.74% 8.27%Repairs and Maintenance 1.53% 4.34% 6.53% 0.10% 10.09% 1.99% 2.87% 10.49% (0.58%) 12.40% 13.77%Utiiities 0.23% 7.31% 5.50% (1.12%) 1.58% (1.28%) 7.73% 5.56% 8.33% (6.11%) 12.56%Payroll 4.23% 2.44% 0.97% 4.80% 2.20% 4.54% 3.14% 5.75% 7.10% (3.36%) 10.34%Management Fee (3.22%) 3.41% 1.13% 3.18% 8.72% 2.70% 26.26% 10.89% 8.54% (0.41%) (6.39%)Property Insurance 8.52% 7.02% (3.33%) (8.51%) (2.26%) (3.73%) 21.23% 12.11% 11.39% 38.62% 15.08% Total Year Over Year Change 2.30% 3.95% 2.03% 1.79% 5.02% 1.17% 8.69% 7.92% 4.58% 3.52% 9.64%Compound Annual Growth Rate (2014-2020) Administration 3.50%Repairs and Maintenance 5.66%Utiiities 3.53%Payroll 3.78%Management Fee 4.67%Property Insurance 8.01% Total 4.56%
Source: Novogradac, 2023. Low-Income Housing Tax Credit Income and Operating Expenses Report.

Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Rent_Stabilization_08-08-24.xlsx APPENDIX B:

Financial Analysis Support Tables
Table B-1 Rent Stabilized Annual Cash Flow Estimate—
Market Rate Base Case ................................................B-1 Table B-2 Rent Stabilized Annual Cash Flow Estimate—
100% of CPI ..............................................................B-2 Table B-3 Hypothetical Rent Stabilized Gross Rent Roll Estimate— 100% of CPI ..............................................................B-3 Table B-4 Rent Stabilized Annual Cash Flow Estimate—
100% of CPI ..............................................................B-4 Table B-5 Hypothetical Rent Stabilized Gross Rent Roll Estimate— 80% of CPI ................................................................B-5 Table B-6 Rent Stabilized Annual Cash Flow Estimate—
60% of CPI ................................................................B-6 Table B-7 Hypothetical Rent Stabilized Gross Rent Roll Estimate— 60% of CPI ................................................................B-7 Appendix Table B-1
City of Salinas
Rent Stabilization Analysis
Rent Stabilized Annual Cash Flow Estimate - Market Rate Base Case Item Assumptions Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Market Rent Increase 3.35%
Allowed Rent Increase (% of CPI) na
CPI (Inflation) 3.00%
Operating Expense Growth 3.00%
Gross Rental Revenue $2,388,000 $2,468,043 $2,550,768 $2,636,267 $2,724,631 $2,815,957 $3,320,609 Less Vacancy Loss @ 3.00% ($71,640) ($74,041) ($76,523) ($79,088) ($81,739) ($84,479) ($99,618) Net Rental Revenue - $2,316,360 $2,394,001 $2,474,245 $2,557,179 $2,642,892 $2,731,478 $3,220,991 Less Operations & Maintenance [1] @ 30.00% ($694,908) ($715,755) ($737,228) ($759,345) ($782,125) ($805,589) ($933,898) Net Operating Income (NOI) - $1,621,452 $1,678,246 $1,737,017 $1,797,834 $1,860,767 $1,925,890 $2,287,092 Capitalization Rate 6.00%
Building Value $27,024,200 $27,970,769 $28,950,289 $29,963,899 $31,012,782 $32,098,158 $38,118,207 Annual Change in Value 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 10-Year Average Annual
Appreciation Rate

3.50%
Return on Investment (ROI) 10-yr = 41.05% 3.50% 7.13% 10.88% 14.76% 18.78% 41.05% Hypothetical Acquisition
(Plus Acq. Cost)
@ 4.00% ($28,105,168)
Net Operating Income $1,678,246 $1,737,017 $1,797,834 $1,860,767 $1,925,890 $2,287,092 Reversion Value
(Less Marketing Cost)
@ 4.00% $36,593,478
Net Cash Flow ($28,105,168) $1,678,246 $1,737,017 $1,797,834 $1,860,767 $1,925,890 $38,880,571 Unleveraged IRR 8.84%
Leveraged IRR
Initial Equity Investment @ 30% -$8,431,550
Net Operating Income $1,678,246 $1,737,017 $1,797,834 $1,860,767 $1,925,890 $2,287,092 Debt Service - Principal (25-yr) @ 6.00% -$358,585 -$380,101 -$402,907 -$427,081 -$452,706 -$605,823 Debt Service - Interest (25-yr) @ 6.00% -$1,180,417 -$1,158,902 -$1,136,096 -$1,111,921 -$1,086,297 -$933,180 Reversion $36,593,478
Less Remaining Principal -$14,947,176
Net Proceeds to Developer Equity ($8,431,550) $139,244 $198,015 $258,831 $321,764 $386,887 $22,394,392 Leveraged IRR 12.88%
Source: CoStar; EPS.
[1] For market-rate base case example, op ex as percentage of rental income applied across all years.

Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Cash_Flow_06_19-24.xlsx Appendix Table B-2
City of Salinas
Rent Stabilization Analysis
Rent Stabilized Annual Cash Flow Estimate - 100% of CPI Item Assumptions Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Market Rent Increase 3.35%
Allowed Rent Increase (% of CPI) 100.00%
CPI (Inflation) 3.00%
Operating Expense Growth 3.00%
Gross Rental Revenue $2,388,000 $2,460,562 $2,536,178 $2,614,897 $2,696,778 $2,781,881 $3,258,336 Less Vacancy Loss @ 3.00% ($71,640) ($73,817) ($76,085) ($78,447) ($80,903) ($83,456) ($97,750) Net Rental Revenue - $2,316,360 $2,386,745 $2,460,092 $2,536,450 $2,615,874 $2,698,425 $3,160,586 Less Operations & Maintenance [1] Yr 0 @ 30.00% ($694,908) ($715,755) ($737,228) ($759,345) ($782,125) ($805,589) ($933,898) Net Operating Income (NOI) - $1,621,452 $1,670,990 $1,722,864 $1,777,106 $1,833,749 $1,892,836 $2,226,688 Capitalization Rate 6.00%
Building Value $27,024,200 $27,849,834 $28,714,406 $29,618,425 $30,562,487 $31,547,270 $37,111,462 Annual Change in Value 3.06% 3.10% 3.15% 3.19% 3.22% 3.35% 10-Year Average Annual
Appreciation Rate

3.22%
Return on Investment (ROI) 10-yr = 37.33% 3.06% 6.25% 9.60% 13.09% 16.74% 37.33% Hypothetical Acquisition
(Plus Acq. Cost)
@ 4.00% ($28,105,168)
Net Operating Income $1,670,990 $1,722,864 $1,777,106 $1,833,749 $1,892,836 $2,226,688 Reversion Value
(Less Marketing Cost)
@ 4.00% $35,627,003
Net Cash Flow ($28,105,168) $1,670,990 $1,722,864 $1,777,106 $1,833,749 $1,892,836 $37,853,691 Unleveraged IRR 8.54%
Leveraged IRR
Initial Equity Investment @ 30% -$8,431,550
Net Operating Income $1,670,990 $1,722,864 $1,777,106 $1,833,749 $1,892,836 $2,226,688 Debt Service - Principal (25-yr) @ 6.00% -$358,585 -$380,101 -$402,907 -$427,081 -$452,706 -$605,823 Debt Service - Interest (25-yr) @ 6.00% -$1,180,417 -$1,158,902 -$1,136,096 -$1,111,921 -$1,086,297 -$933,180 Reversion $35,627,003
Less Remaining Principal -$14,947,176
Net Proceeds to Developer Equity ($8,431,550) $131,987 $183,862 $238,103 $294,747 $353,834 $21,367,513 Leveraged IRR 12.20%
Source: CoStar; EPS.
[1] After Year 0 for rent stabilization examples, operations and maintenance expenses increase at the rate of CPI.

Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Cash_Flow_06_19-24.xlsx Appendix Table B-3
City of SalinasRent Stabilization AnalysisHypothetical Rent Stabilized Gross Rent Roll Estimate - 100% of CPIItem Assumptions Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Assumed Units 100
Year 0 Average Rent $1,990Year 0 Vacancy Decontrol Rent $1,990Average Number Years in Unit 9.11Turnover 11.0%Market Rent Increase 3.35%Allowed Rent Increase (% CPI) 100.00% CPI Inflation 3.00%Gross Units by Occupancy Date
Year 0 (or before) 100.0 89.0 79.3 70.6 62.8 55.9 49.8 44.3 39.5 35.1 31.3 Year 1 - 11.0 9.8 8.7 7.7 6.9 6.1 5.5 4.9 4.3 3.9Year 2 - - 11.0 9.8 8.7 7.7 6.9 6.1 5.5 4.9 4.3Year 3 - - - 11.0 9.8 8.7 7.7 6.9 6.1 5.5 4.9Year 4 - - - - 11.0 9.8 8.7 7.7 6.9 6.1 5.5 Year 5 - - - - - 11.0 9.8 8.7 7.7 6.9 6.1
Year 6 - - - - - - 11.0 9.8 8.7 7.7 6.9
Year 7 - - - - - - - 11.0 9.8 8.7 7.7
Year 8 - - - - - - - - 11.0 9.8 8.7
Year 9 - - - - - - - - - 11.0 9.8
Year 10 - - - - - - - - - - 11.0
Total Units 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0Average Rent by Occupancy Date Year 0 (or before) $1,990 $2,050 $2,111 $2,175 $2,240 $2,307 $2,376 $2,447 $2,521 $2,596 $2,674 Year 1 - $2,057 $2,118 $2,182 $2,247 $2,315 $2,384 $2,456 $2,529 $2,605 $2,684Year 2 - - $2,126 $2,189 $2,255 $2,323 $2,392 $2,464 $2,538 $2,614 $2,693 Year 3 - - - $2,197 $2,263 $2,331 $2,401 $2,473 $2,547 $2,623 $2,702Year 4 - - - - $2,271 $2,339 $2,409 $2,481 $2,555 $2,632 $2,711 Year 5 - - - - - $2,347 $2,417 $2,490 $2,564 $2,641 $2,720 Year 6 - - - - - - $2,425 $2,498 $2,573 $2,650 $2,730
Year 7 - - - - - - - $2,507 $2,582 $2,659 $2,739
Year 8 - - - - - - - - $2,591 $2,668 $2,748
Year 9 - - - - - - - - - $2,677 $2,758
Year 10 - - - - - - - - - - $2,767
Gross Rent $2,388,000 $2,460,562 $2,536,178 $2,614,897 $2,696,778 $2,781,881 $2,870,277 $2,962,038 $3,057,244 $3,155,980 $3,258,336Source: US Census; Costar; EPS.

Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Cash_Flow_06_19-24.xlsx Appendix Table B-4
City of Salinas
Rent Stabilization Analysis
Rent Stabilized Annual Cash Flow Estimate - 80% of CPI
Item Assumptions Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Market Rent Increase 3.35%
Allowed Rent Increase (% of CPI) 80.00%
CPI (Inflation) 3.00%
Operating Expense Growth 3.00%
Gross Rental Revenue $2,388,000 $2,447,807 $2,511,406 $2,578,768 $2,649,874 $2,724,718 $3,155,573 Less Vacancy Loss @ 3.00% ($71,640) ($73,434) ($75,342) ($77,363) ($79,496) ($81,742) ($94,667) Net Rental Revenue - $2,316,360 $2,374,372 $2,436,064 $2,501,405 $2,570,377 $2,642,976 $3,060,905 Less Operations & Maintenance [1] Yr 0 @ 30.00% ($694,908) ($715,755) ($737,228) ($759,345) ($782,125) ($805,589) ($933,898) Net Operating Income (NOI) - $1,621,452 $1,658,617 $1,698,836 $1,742,060 $1,788,252 $1,837,387 $2,127,007 Capitalization Rate 6.00%
Building Value $27,024,200 $27,643,618 $28,313,934 $29,034,334 $29,804,206 $30,623,123 $35,450,120 Annual Change in Value 2.29% 2.42% 2.54% 2.65% 2.75% 3.09% 10-Year Average Annual
Appreciation Rate

2.75%
Return on Investment (ROI) 10-yr = 31.18% 2.29% 4.77% 7.44% 10.29% 13.32% 31.18% Hypothetical Acquisition
(Plus Acq. Cost)
@ 4.00% ($28,105,168)
Net Operating Income $1,658,617 $1,698,836 $1,742,060 $1,788,252 $1,837,387 $2,127,007 Reversion Value
(Less Marketing Cost)
@ 4.00% $34,032,115
Net Cash Flow ($28,105,168) $1,658,617 $1,698,836 $1,742,060 $1,788,252 $1,837,387 $36,159,122 Unleveraged IRR 8.01%
Leveraged IRR
Initial Equity Investment @ 30% -$8,431,550
Net Operating Income $1,658,617 $1,698,836 $1,742,060 $1,788,252 $1,837,387 $2,127,007 Debt Service - Principal (25-yr) @ 6.00% -$358,585 -$380,101 -$402,907 -$427,081 -$452,706 -$605,823 Debt Service - Interest (25-yr) @ 6.00% -$1,180,417 -$1,158,902 -$1,136,096 -$1,111,921 -$1,086,297 -$933,180 Reversion $34,032,115
Less Remaining Principal -$14,947,176
Net Proceeds to Developer Equity ($8,431,550) $119,615 $159,833 $203,057 $249,250 $298,385 $19,672,944 Leveraged IRR 11.02%
Source: CoStar; EPS.
[1] After Year 0 for rent stabilization examples, operations and maintenance expenses increase at the rate of CPI.

Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Cash_Flow_06_19-24.xlsx Appendix Table B-5
City of SalinasRent Stabilization AnalysisHypothetical Rent Stabilized Gross Rent Roll Estimate - 80% of CPIItem Assumptions Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Assumed Units 100
Year 0 Average Rent $1,990Year 0 Vacancy Decontrol Rent $1,990Average Number Years in Unit 9.11Turnover 11.0%Market Rent Increase 3.35%Allowed Rent Increase (% CPI) 80.00% CPI Inflation 3.00%Gross Units by Occupancy Date
Year 0 (or before) 100.0 89.0 79.3 70.6 62.8 55.9 49.8 44.3 39.5 35.1 31.3 Year 1 - 11.0 9.8 8.7 7.7 6.9 6.1 5.5 4.9 4.3 3.9Year 2 - - 11.0 9.8 8.7 7.7 6.9 6.1 5.5 4.9 4.3 Year 3 - - - 11.0 9.8 8.7 7.7 6.9 6.1 5.5 4.9
Year 4 - - - - 11.0 9.8 8.7 7.7 6.9 6.1 5.5
Year 5 - - - - - 11.0 9.8 8.7 7.7 6.9 6.1
Year 6 - - - - - - 11.0 9.8 8.7 7.7 6.9
Year 7 - - - - - - - 11.0 9.8 8.7 7.7
Year 8 - - - - - - - - 11.0 9.8 8.7
Year 9 - - - - - - - - - 11.0 9.8
Year 10 - - - - - - - - - - 11.0
Total Units 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0Average Rent by Occupancy Date Year 0 (or before) $1,990 $2,038 $2,087 $2,137 $2,188 $2,241 $2,294 $2,349 $2,406 $2,464 $2,523 Year 1 - $2,057 $2,106 $2,157 $2,208 $2,261 $2,316 $2,371 $2,428 $2,486 $2,546Year 2 - - $2,126 $2,177 $2,229 $2,282 $2,337 $2,393 $2,451 $2,510 $2,570 Year 3 - - - $2,197 $2,250 $2,304 $2,359 $2,416 $2,473 $2,533 $2,594Year 4 - - - - $2,271 $2,325 $2,381 $2,438 $2,496 $2,556 $2,618 Year 5 - - - - - $2,347 $2,403 $2,461 $2,520 $2,580 $2,642 Year 6 - - - - - - $2,425 $2,483 $2,543 $2,604 $2,667
Year 7 - - - - - - - $2,507 $2,567 $2,628 $2,691
Year 8 - - - - - - - - $2,591 $2,653 $2,716
Year 9 - - - - - - - - - $2,677 $2,742
Year 10 - - - - - - - - - - $2,767
Gross Rent $2,388,000 $2,447,807 $2,511,406 $2,578,768 $2,649,874 $2,724,718 $2,803,306 $2,885,654 $2,971,789 $3,061,747 $3,155,573Source: US Census; Costar; EPS.

Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Cash_Flow_06_19-24.xlsx Appendix Table B-6
City of Salinas
Rent Stabilization Analysis
Rent Stabilized Annual Cash Flow Estimate - 60% of CPI
Item Assumptions Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Market Rent Increase 3.35%
Allowed Rent Increase (% of CPI) 60.00%
CPI (Inflation) 3.00%
Operating Expense Growth 3.00%
Gross Rental Revenue $2,388,000 $2,435,051 $2,486,771 $2,543,027 $2,603,707 $2,668,724 $3,056,973 Less Vacancy Loss @ 3.00% ($71,640) ($73,052) ($74,603) ($76,291) ($78,111) ($80,062) ($91,709) Net Rental Revenue - $2,316,360 $2,361,999 $2,412,168 $2,466,736 $2,525,596 $2,588,662 $2,965,264 Less Operations & Maintenance [1] Yr 0 @ 30.00% ($694,908) ($715,755) ($737,228) ($759,345) ($782,125) ($805,589) ($933,898) Net Operating Income (NOI) - $1,621,452 $1,646,244 $1,674,940 $1,707,391 $1,743,471 $1,783,073 $2,031,366 Capitalization Rate 6.00%
Building Value $27,024,200 $27,437,403 $27,915,664 $28,456,517 $29,057,852 $29,717,886 $33,856,095 Annual Change in Value 1.53% 1.74% 1.94% 2.11% 2.27% 2.85% 10-Year Average Annual
Appreciation Rate

2.28%
Return on Investment (ROI) 10-yr = 25.28% 1.53% 3.30% 5.30% 7.53% 9.97% 25.28% Hypothetical Acquisition
(Plus Acq. Cost)
@ 4.00% ($28,105,168)
Net Operating Income $1,646,244 $1,674,940 $1,707,391 $1,743,471 $1,783,073 $2,031,366 Reversion Value
(Less Marketing Cost)
@ 4.00% $32,501,852
Net Cash Flow ($28,105,168) $1,646,244 $1,674,940 $1,707,391 $1,743,471 $1,783,073 $34,533,217 Unleveraged IRR 7.49%
Leveraged IRR
Initial Equity Investment @ 30% -$8,431,550
Net Operating Income $1,646,244 $1,674,940 $1,707,391 $1,743,471 $1,783,073 $2,031,366 Debt Service - Principal (25-yr) @ 6.00% -$358,585 -$380,101 -$402,907 -$427,081 -$452,706 -$605,823 Debt Service - Interest (25-yr) @ 6.00% -$1,180,417 -$1,158,902 -$1,136,096 -$1,111,921 -$1,086,297 -$933,180 Reversion $32,501,852
Less Remaining Principal -$14,947,176
Net Proceeds to Developer Equity ($8,431,550) $107,242 $135,937 $168,388 $204,469 $244,071 $18,047,039 Leveraged IRR 9.79%
Source: CoStar; EPS.
[1] After Year 0 for rent stabilization examples, operations and maintenance expenses increase at the rate of CPI.

Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Cash_Flow_06_19-24.xlsx Appendix Table B-7
City of SalinasRent Stabilization AnalysisHypothetical Rent Stabilized Gross Rent Roll Estimate - 60% of CPIItem Assumptions Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Assumed Units 100
Year 0 Average Rent $1,990Year 0 Vacancy Decontrol Rent $1,990Average Number Years in Unit 9.11Turnover 11.0%Market Rent Increase 3.35%Allowed Rent Increase (% CPI) 60.00% CPI Inflation 3.00%Gross Units by Occupancy Date
Year 0 (or before) 100.0 89.0 79.3 70.6 62.8 55.9 49.8 44.3 39.5 35.1 31.3 Year 1 - 11.0 9.8 8.7 7.7 6.9 6.1 5.5 4.9 4.3 3.9Year 2 - - 11.0 9.8 8.7 7.7 6.9 6.1 5.5 4.9 4.3 Year 3 - - - 11.0 9.8 8.7 7.7 6.9 6.1 5.5 4.9
Year 4 - - - - 11.0 9.8 8.7 7.7 6.9 6.1 5.5
Year 5 - - - - - 11.0 9.8 8.7 7.7 6.9 6.1
Year 6 - - - - - - 11.0 9.8 8.7 7.7 6.9
Year 7 - - - - - - - 11.0 9.8 8.7 7.7
Year 8 - - - - - - - - 11.0 9.8 8.7
Year 9 - - - - - - - - - 11.0 9.8
Year 10 - - - - - - - - - - 11.0
Total Units 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0Average Rent by Occupancy Date Year 0 (or before) $1,990 $2,026 $2,062 $2,099 $2,137 $2,176 $2,215 $2,255 $2,295 $2,337 $2,379 Year 1 - $2,057 $2,094 $2,131 $2,170 $2,209 $2,249 $2,289 $2,330 $2,372 $2,415Year 2 - - $2,126 $2,164 $2,203 $2,243 $2,283 $2,324 $2,366 $2,408 $2,452 Year 3 - - - $2,197 $2,236 $2,277 $2,318 $2,359 $2,402 $2,445 $2,489Year 4 - - - - $2,271 $2,311 $2,353 $2,395 $2,438 $2,482 $2,527 Year 5 - - - - - $2,347 $2,389 $2,432 $2,476 $2,520 $2,566 Year 6 - - - - - - $2,425 $2,469 $2,513 $2,559 $2,605
Year 7 - - - - - - - $2,507 $2,552 $2,598 $2,644
Year 8 - - - - - - - - $2,591 $2,637 $2,685
Year 9 - - - - - - - - - $2,677 $2,726
Year 10 - - - - - - - - - - $2,767
Gross Rent $2,388,000 $2,435,051 $2,486,771 $2,543,027 $2,603,707 $2,668,724 $2,738,005 $2,811,499 $2,889,170 $2,970,997 $3,056,973Source: US Census; Costar; EPS.

Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Salinas_Cash_Flow_06_19-24.xlsx Final Report
Proposed Rent Stabilization
Ordinance Analysis
Prepared for:

City of Salinas
Prepared by:

Economic & Planning Systems, Inc. (EPS)
September 2024
EPS #242050
Table of Contents
Introduction and Summary of Findings ..............................................1 Introduction.......................................................................................1 Study Overview ..................................................................................2 Background .......................................................................................3 California Rent Stabilization..................................................................4 Rent Stabilization Concepts and Discussion.............................................5 Key Findings and Considerations ...........................................................7 Overall Conclusions ...........................................................................12 Recommendations ............................................................................13 Regulatory Context ....................................................................... 16 California Rent Stabilization................................................................16 Summary of Salinas’ Proposed Ordinance .............................................17 Additional Renter Protections..............................................................18 Literature Review and Case Study................................................... 20 Impacts on Renter Displacement.........................................................21 Impacts on Rental Supply ..................................................................22 Impacts on Economic Inequality..........................................................24 Impacts on Property Values................................................................25 Impacts on Building Quality................................................................26 Other Potential Impacts .....................................................................27 Case-Study Research ........................................................................28 Literature Review and Case-Study Conclusions......................................32 Economic and Fiscal Impacts of Rent Stabilization............................. 34 Housing Supply ................................................................................34 Affordable Housing Supply .................................................................36 Residential Property Tax ....................................................................36 Rent Pressures and Displacement........................................................39 Renter Household Socioeconomics.......................................................42 Economic Impact on Property Owner ...................................................45 Program Implementation Costs to the City ...........................................54 Conclusions and Recommendations................................................. 60 Conclusions......................................................................................60 Recommendations ............................................................................61 Appendices
Appendix A: Demographic and Socioeconomic Analysis Support Tables Appendix B: Financial Analysis Support Tables
List of Tables
Table 1-1. California Cities with Rent Stabilization ...........................................6 Table 3-1. Comparison of Rent Stabilization Ordinance (3 pages) ....................29 Table 4-1. Summary of Housing Inventory as it Relates to Rent Stabilization: City of Salinas ...............................................................35 Table 4-2. Affordable Housing Inventory: City of Salinas ................................36 Table 4-3. Real Estate Assessed Values: City of Salinas..................................38 Table 4-4. Rent-Burdened Households: City of Salinas ...................................41 Table 4-5. Renter Movement by City............................................................42 Table 4-6. City Salinas Median Income, Average Household Size, and Income per Capita by Household Tenure: City of Salinas ................................42 Table 4-7. Householder Race: City of Salinas ................................................43 Table 4-8. Householder Age: City of Salinas .................................................44 Table 4-9. Median Renter Household Income compared to
Average Monthly Rent ...............................................................................45 Table 4-10. IRR and Property Value Growth Sensitivity Analysis ......................51 Table 4-11. Estimate Range of Required Staff ...............................................54 Table 4-12. Estimated Staffing and Annual Costs Rental Registry and Rent Stabilization Program.........................................................................57 Table 4-13. Estimated Annual Cost Variations: Rental Registry and Rent Stabilization Program.........................................................................58 Table 4-14. Current Rental Registry Fee Comparison .....................................58 List of Figures
Figure 1. CPI Comparison ..........................................................................14 Figure 2. Housing Inventory as it Relates to Rent Stabilization:

Alternative Rent Stabilization Scenarios .......................................................50 Figure 9. Internal Rate of Return Differential: Impact of 5 Percent Annual Operating Expense Growth.........................................................................52 Figure 10. Peer Cities Hypothetical IRR Comparison.......................................53 Proposed Rent Stabilization Ordinance Analysis
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Introduction and Summary of Findings
Introduction
At the request of the City of Salinas’ (City) City Council (Council), Economic & Planning Systems, Inc. (EPS) was retained to provide due diligence by analyzing the potential economic effects of establishing a rent stabilization policy (Study).1 Please note that rent stabilization ONLY applies to residential land uses with the following characteristics:
• Multifamily rental dwelling units (including duplexes and triplexes, unless one unit is occupied by the property owner).
• Built before February 1, 1995.
• Remodeled residential units converted from space long dedicated to residential.2
The following residential land uses are EXEMPT:
• Single-family dwelling units.
• Single-family rentals.
• Condominium units.
• Condominium rentals.
• Multifamily dwelling units built after February 1, 1995. • Newly constructed dwelling units.3
1 The City Attorney retained the services of EPS to serve as an outside expert by conducting a Consultant’s study of the proposed rent stabilization ordinance intended to inform and support the City Attorney’s legal evaluation. As such, this Study is subject to evidentiary protections under the attorney work product doctrine or attorney-client privilege, and all written communications should be appropriately marked to preserve those protections. 2 California Legislative Information Civil Code—CIV DIVISION 3. OBLIGATIONS [1427 - 3273.69] (Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14.) PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.69] (Part 4 enacted 1872.) TITLE 5.

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NOTE: Rent stabilization provides landlords with the ability to increase rent by a fixed percentage year over year. This differs from rent control, which is defined as when a municipality locks in rental rates at a specific amount. Please note that while the distinction between these methods of regulating rent is important, the terms may sometimes be used interchangeably within the literature review and other parts of this analysis.

The technical analysis component of this Study comprises the following key analytic elements and addresses how they relate to and could be affected by rent stabilization:

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• Demographic and Socioeconomic Profile. Identifies trends in population and households, age, race & ethnicity, and household income. • Residential Market Profile. Examines the housing inventory and residential market trends in the City.
• Economic and Fiscal Impacts. Estimates the economic impacts of rent stabilization on housing supply and pricing, the City’s General Fund, and on landlord returns.

Supporting data tables underlying the findings and figures presented herein are included in appendices at the end of this Study.

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Salinas has a rare if not unfortunate status as an area of lower wage labor subject to very expensive land and development costs (similar to the greater Bay Area).

California Rent Stabilization
The California Tenant Protection Act established a statewide maximum allowable rent increase and just-cause eviction protections. The statewide policy caps rent increases at the lesser of 5 percent plus the increase in the regional consumer price index (CPI) or 10 percent of the lowest rent charged over the 12 months before the increase.4
Cities and counties may also enact their own rent stabilization with a lower rent cap than the statewide provision. However, any local ordinance is limited by the Costa-Hawkins Rental Act, which exempts single-family homes, condominiums, and all housing built after 1995 from rent stabilization (but not just-cause eviction). State law also dictates that all units covered by rent stabilization are subject to vacancy decontrol, which allows landlords to establish market-rate rents for new tenants.5
There is a statewide ballot initiative set for the November 2024 ballot that would repeal Costa-Hawkins.6 If the initiative passes, any local ordinance not explicitly written to exempt single-family homes or provide vacancy decontrol will take effect. Therefore, if Costa-Hawkins is repealed, the City’s proposed rent stabilization ordinance, if approved, would apply to all rental housing, including single-family units, and rents would not reset to market rate for new tenants if these elements are not specified in the ordinance.
4 Rent Control Is Here: California’s Tenant Protection Act of 2019 | Nolo 5 Costa-Hawkins Act • California Apartment Association (caanet.org) 6 California Prohibit State Limitations on Local Rent Control Initiative (2024) - Ballotpedia Proposed Rent Stabilization Ordinance Analysis
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Various studies on rent stabilization in California suggest that approximately 30 cities in the State have some form of rent stabilization program, or about 7 percent of the total cities (accounting for 22 percent of the State’s population).7 As illustrated in Table 1-1 most of these cities tie rent caps to a percentage of the CPI. A smaller number of cities cap rent at an annual percentage increase, ranging from 2 percent to 10 percent, regardless of the CPI.

Rent Stabilization Concepts and
Discussion
Rent stabilization and control are a controversial concept, subject to divisive opinions and concerns.

Many of the concerns can be alleviated through education of the proposed rent stabilization policy. For example, making sure the community understands which residential units qualify for rent stabilization and specifically clarifying it does not affect new development, as discussed in Chapter 2, and refuting some common misconceptions, as discussed in Chapter 3.
7 California Rent Control Law | Nolo
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Table 1-1. California Cities with Rent Stabilization
City City
Bell Gardens 50% Gardena 5%
Antioch 60% Hayward 5%
Concord 60% Larkspur 7%
Oakland 60% Mountain View 2% - 5%
Richmond 60% Oxnard 4%
San Francisco 60% Sacramento 10%
Berkeley 65% San Jose 5%
Alameda 70% Average 6%
Los Gatos 70%
Fairfax 75%
Palm Springs 75%
Pasadena 75%
Santa Monica 75%
West Hollywood 75%
East Palo Alto 80%
Santa Ana 80%
Baldwin Park 100%
Beverly Hills 100%
Cudahy 100%
Culver City 100%
Inglewood 100%
Los Angeles 100%
Pomona 100%
Average 78%
Source: Nolo; EPS.

Allowable Annual
Rent Increase
(% of CPI)
Allowable Annual
Rent Increase
Flat %
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Key Findings and Considerations
Key Question 1: What socioeconomic and real estate trends led City officials to consider implementing a rent stabilization policy? For decades, California has faced a housing crisis related to its significant unhoused population and housing affordability related to rising housing costs and lack of supply. For renters, especially those living in poverty, high rental rates have translated into large proportions of their income allocated to housing costs, leaving little remaining for basic living expenses, let alone bolstering savings accounts to build wealth.8 Disparities in cost burdens persist among renters, particularly affecting households from a diverse racial background. These disparities are attributed to long-standing discrimination in housing,9 employment, and education.10 Black, Hispanic, and multiracial households face higher rates of cost burdens compared to White renters by 5 to 10 percent.11 Among the renters experiencing housing hardships, 4 in 10 renter households are Black and Latinx.12 This housing crisis is exacerbated for people of color, who often face additional barriers such as lower wages and fewer housing options in desirable neighborhoods. These communities are more likely to experience housing instability and are at greater risk of eviction. The socioeconomic factors and real estate trends discussed below have prompted the City Council to consider a rent stabilization policy in the City to help protect the vulnerable renter communities by helping to alleviate the pressures of increasingly high rents. 8 Kimberlin, Sara and Esi Hutchful, 2019. New Census Figures Show More Than 1 in 6 Californians Struggle to Afford Basic Necessities. California Budget and Policy Center. [online] https://calbudgetcenter.org/resources/number-of-californians-living-in-poverty-has-beendeclining-but-more-than-1-in-6-residents-still-struggle-to-afford-basicnecessities/#:~:text=Approximately%207.1%20million%20Californians%20lived,Supplemental% 20Poverty%20Measure%20(SPM) [Accessed January 2021].
9 CBPC, Who is Experiencing Housing Hardship in California? May 2022; 5. 10 JCHS of Harvard University, America’s Rental Housing, 2024; 34-36. 11 Ibid.
12 CBPC, Who is Experiencing Housing Hardship in California? May 2022.

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These are characteristics of renter-occupied households in Salinas:
• Overcrowding in renter-occupied households has increased by more than 24 percent over the last decade, compared to only 6 percent statewide.13 • About 53 percent of City renter-occupied households have 4 or more occupants, compared to 27 percent statewide.
• Mirroring a trend negatively affecting all of California, more than half of renter-occupied households in the City are considered rent-burdened and 26 percent are considered severely cost-burdened:
‒ Median renter household income: $64,509/year.
‒ 30 percent of median income: $1,612/month.
‒ Median multifamily residential rent for units built before 1995:
$1,994/month.
• Approximately 18 percent of families that are renters fall below the poverty level, compared to 6 percent of owner-occupied families in Salinas, and statewide, 16 percent of renters fall below the poverty level, compared to 4 percent of owner-occupied.14
• More than half (53 percent) of the City’s households are renter occupied, in comparison to 44 percent statewide.
• Latinx population comprises 81 percent of the renter-occupied units in Salinas, compared to 30 percent countywide and 37 percent statewide. • About 57 percent of renter-occupied households comprise householders ages 44 or younger, compared to 37 percent countywide and 53 percent statewide.

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In addition, the housing market in Salinas has become much more expensive.

The housing market is considered tight, with little room for movement.

Overall low vacancy of about 3 percent, compared to Monterey County’s 8 percent average, indicates the need for increased housing supply.

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to support the development of missing housing types in the City, encouraging infill development, streamlining the permitting process, creating supportive housing-related programs for underserved populations, etc.

11.4 full-time equivalent employees (FTEs) to manage the proposed ordinance (excluding the Rental Registry FTEs). Preliminary EPS estimates suggest ongoing program administration costs ranging from about $621,000 to $1.2 million per year, as detailed in Chapter 4 Table 4-12.

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A combined annual per-unit fee for the Rental Registry and Rent Stabilization programs should be designed to recover the costs of the fully burdened costs of staff. An illustrative example using the estimated maximum annual costs of $1.2 million reflects a range from about $20 for partially covered units to $115 for fully covered units. The actual fees will depend on the level of staffing and will decrease over time if not escalated to keep pace with inflation. This fee does not include the initial costs to implement the program, and it provides an estimated cost of hiring third-party sources that may help with services such as legal counsel, tenant relocation assistance, and renter helpline. Actual costs of third-party services will depend on what elements are included from each service type.

Operating expenses for multifamily buildings have been somewhat volatile in recent years, largely because of increases in utility costs and particularly insurance costs. Increases in operating costs impact the net operating income for owners of multifamily rental units that are unable to pass along the total increased cost to tenants. Correspondingly, the return on investment for landlords can be negatively impacted. At the most restrictive rent control rates, the rates of investor return can potentially dip close to levels that can be achieved with far less risk and effort through an investment account. Under such a scenario, there would be increased incentive for some landlords to exit the market. The inclusion of provisions for landlords to petition for rent increases Proposed Rent Stabilization Ordinance Analysis
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to accommodate additional operating expenses is an important safety valve to prevent undue burden and potential loss of rental units.

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Rent stabilization is part of a toolkit that, along with other policies and incentives, can help alleviate some housing cost pressures. Taken in combination with other policies that encourage renter protections and additional supply, it can be part of a multi-pronged effort to improve the outlook for residents struggling to afford housing.

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for consumer goods, the CPI-Less Shelter was 26 percent and 12 percent higher than the overall CPI-U West, respectively. See Appendix A Table A-14.

The City should consider merging the Rent Stabilization Fee into the Rental Registry Fee and charge this fee on a per-unit basis. The fee amount should differ based on unit type: fully covered units (rental registry, tenant protections, and rent stabilization) should be higher than partially covered units (rental registry and tenant protections). The fee is to help the City recover the costs to run the program, including costs for staffing, third-party services and software, community education, and program enforcement, and should provide financial neutrality.
-2%
0%
2%
4%
6%
8%
10%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 [2]
60% CPI
80% CPI
CPI - Less Shelter
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Based on data from other cities, the additional staffing needed to establish, operate, and maintain the Rent Stabilization Ordinance ranges from the equivalent of 4.2 to 11.4 net new hires (excluding the rental registry staff) or a percentage of existing employees’ time. With the minimum level of only 4.2 new staff members, or 5.1 FTEs total, Salinas would likely need to contract third-party services for legal counsel, tenant relocation services, and mediation and dispute resolution. As staffing increases beyond 5.1 FTEs, the number of third-party source contracts will decrease.

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Regulatory Context
This chapter summarizes the existing California legal context relevant to evaluating the fiscal and economic impact of the proposed ordinance and the specific provisions of the proposed ordinance in this context.

Assorted studies on rent stabilization in California suggest that approximately 30 cities in the State currently have some form of a program, or about 7 percent of the total cities (accounting for 22 percent of the State’s population).21 18 Rent Control Is Here: California’s Tenant Protection Act of 2019 | Nolo 19 Costa-Hawkins Act • California Apartment Association (caanet.org) 20 California Prohibit State Limitations on Local Rent Control Initiative (2024) - Ballotpedia 21 California Rent Control Law | Nolo
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As illustrated in Table 1-1, most of these cities tie rent caps to a percentage of the CPI, similar to the approach in the proposed Salinas Ordinance. A smaller number of cities cap rent at an annual percentage increase, ranging from 2 percent to 10 percent, regardless of the CPI.

Like most rent stabilization programs, the proposed Ordinance applies to all covered units irrespective of household income (e.g., it is not means tested).

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In addition, the Ordinance provides the following policy stipulations to protect both tenants and property owners:
• Reasonable rate of return.
• Tenant protection for rent reduction.
• Landlord petition for rent increase.
• Petition for pass through for specific capital improvements. • Rent increase ineffective (e.g., landlord fails to comply with the provisions of the Ordinance).
• Notice requirements.
• Violations and remedies.

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The City is not assisting with rental or utility services but helps provide referrals to outside services using the Smart Referral Network (SRN). The City is working on partnering with Monterey College of Law to assist tenants with tenant/landlord mediation services.

This law went into effect January 1, 2020, and expires on January 1, 2030.

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Literature Review and Case Study
The impact of rent stabilization ordinances on communities largely depends on the framework of the policy and the context of the local housing market. That said, there are common themes that can be gleaned from empirical and academic studies on the topic. Traditional economic analyses often focused on negative aspects of rent control, a much stricter form of rent regulation originating from World War II-era price controls that are now only applicable to approximately 24,000 rental units located exclusively in New York City.22 Under the rent control regime that was in place between 1943 and 1968 in New York City, landlords were required to apply to a rent commission for rental increases, with no allowances for automatic inflationary increases of rent.23 Although economic theory predicts that such a hard price ceiling, coupled with no exemptions for new construction, would significantly depress new construction of rental housing and investment in maintenance and upkeep of current units, such strict policies were only in place temporarily and are not reflective of the more nuanced policies in place in most jurisdictions.24
Nearly all rent stabilization policies currently in place include significant allowances for automatic inflationary adjustments of rent, increases for capital improvements, vacancy decontrol, and exemptions for new construction, mitigating harmful effects on new construction and maintenance investment from the price control aspect of the policies. Most empirical studies on more moderate rent stabilization policies indicate that the policy is effective in its intended goal of reducing rent for existing tenants. However, rent stabilization policies have also been found to cause a range of other impacts on the housing market, including increased rent for new residents and reduced housing mobility/displacement.

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Impacts on Renter Displacement
Almost all academic research indicates that tenants in rent-stabilized apartments have longer tenures and are less likely to move than renters in non-rent-stabilized units.25 In other words, households that are protected from rapid rent increases appear less likely to move. In a 2019 Stanford research paper, authors Diamond, McQuade, and Qian (DMQ) examined the impacts of San Francisco’s rent stabilization after a 1994 law removed an exemption for small multifamily units in the city. The paper concluded that San Francisco’s rent stabilization lowered renter displacement by about 20 percent.26 The authors note that rent stabilization had an especially significant impact in preventing the displacement of racial minorities. A summary of stabilization’s impacts by PolicyLink noted that tenants living in rent-stabilized units move less frequently and are less likely to experience forced moves.27
The “strictness,” as measured by the magnitude of rent increases allowed and the burden of proof necessary to raise rents beyond the standard allowable increases, of rent control policies is strongly correlated with longer tenancies.28 Under extremely strict rent control regimes, such as those that existed in New York City before 1968, the impacts on tenant mobility can be extreme, with a 1992 study finding that the typical tenant in a rent-controlled unit would remain in the same unit for 18 years longer than a similar tenant in a non-rent-controlled unit.29 Although economic analyses of strict rent control policies have often focused on the misallocation of rent control’s benefits (i.e., that most benefits accrue to upper income households), recent analysis of rapidly gentrifying neighborhoods in the San Francisco Bay Area finds that rent stabilization is uniquely effective in preventing displacement of extremely low-income households.30 25 Pastor, M.; Carter, V.; Abood, M. 2018. Rent Matters: What are the Impacts of Rent Stabilization Measures? https://dornsife.usc.edu/eri/wpcontent/uploads/sites/41/2023/01/2018RentMattersPERE.pdf 26 DMQ.pdf (stanford.edu)
27 OurHomesOurFuture_Web_08-02-19.pdf (policylink.org)
28 Crispell, M., 2016. Rent Control Policy Brief. University of California Berkeley Urban Displacement Project.
29 Ault, R.l Jackson, J.; & Saba, R. 1992. The Effect of Long-Term Rent Control on Tenant Mobility.
30 Hwang, J., et al., 2022. Who Benefits from Tenant Protections? The Effects of Rent Stabilization and Just Cause for Evictions on Residential Mobility in the Bay Area. University of California Berkeley Institute of Governmental Studies Policy Brief.

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In Salinas, increasing housing stability for the City’s rental community, specifically the 81 percent of renter-occupied units comprising Latinx residents, and other vulnerable residents such as farmworkers, the elderly, and low-income households, is key to ensuring quality of life for these communities and the City as a whole. Research from San Mateo County shows that displacement, whether from formal eviction or an inability to afford rent, has disastrous impacts on families’ well-being. Renters displaced from their homes experienced extremely high rates of homelessness compared to other families and, on average, were forced to move to communities with worse environmental health outcomes and longer commutes.31 Additional research from Michigan conducted during the Great Recession shows that people who move because of an inability to afford rent or mortgage are more than twice as likely to report anxiety attacks or severe depression than people who move for other reasons.

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While moderate rent stabilization policies with exemptions for new construction may not depress new housing development, they may lead to the conversion of existing rental units to condominiums, generating a shift toward for-sale housing. Over the 36-year study period, DMQ found that impacted landlords reduced the supply of available rental housing by 15 percent by selling to owneroccupants and redeveloping buildings. As a result, rental properties made up a smaller portion of the City’s housing over time, which increased the cost of rental housing. The shift toward for-sale housing and the increased price of rental housing together directed the City’s housing stock toward higher income households.

The conversion process is complex, with many detailed steps:

1. Consult with a real estate attorney.

2. Conduct a market assessment.

3. Retain a licensed professional to examine the property.

4. Talk to a mortgage broker.

5. Understand the role of the title company.

6. Tenant notice or vacancy exemption.

8. Recordation of applicable paperwork.

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While apartment-to-condominium conversions would reduce rental inventory, several policies exist to mitigate the threat of these conversions, including the prohibition of condominium conversions for buildings over a certain number of units, requiring that landlords pay fair relocation costs, or providing current tenants the right of first refusal to purchase condominium units in the converted building.

Impacts on Economic Inequality
Economists have made varying conclusions on how rent stabilization impacts inequality.

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In addition, as average neighborhood incomes rise, children raised in these higher income, higher opportunity neighborhoods grow up to have significantly lower incarceration rates, much higher employment rates, and higher incomes, regardless of the household income of the family in which they were raised.40 In an economy such as Salinas, where many workers cannot afford to live and may struggle to afford rent and price increases and with elevated levels of overcrowding in residential units and high percentages of households that are cost burdened, rent stabilization can allow low-income households to remain in their neighborhoods even as the housing prices and average incomes rise.

Alameda County’s experience with rent stabilization in the 1970s and 1980s also allowed for studying the effects of varying degrees of strictness. Of the 13 incorporated cities in Alameda County, 1 (Berkeley) had strict rent control, with minimal allowed rent increases and no rent control, 2 (Hayward and Oakland) had more moderate rent stabilization policies, and the remaining 10 cities had no rent control or stabilization policies during the study period (1970-88). Although property values in Berkeley were approximately 50 percent lower than would have been expected during the study period, property values in Oakland and Hayward were unaffected by their more moderate policies.41 40 Kramer, M. How the neighborhood you grow up in affects your future. https://projects.publicsource.org/pittsburgh-neighborhood-success/ 41 St. John, M., 1990. The Impact of Rent Controls on Property Value. UC Berkeley Fisher Center Working Papers. https://escholarship.org/uc/item/8c9648s1 Proposed Rent Stabilization Ordinance Analysis
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A similar study in New Jersey examined property values in 74 cities with moderate rent stabilization polices and 87 cities without rent stabilization policies.

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stabilization policies does not depress investment in building upkeep and improvement.47
However, when coupled with strong just-cause protections, rent stabilization has been found to provide leverage to tenants to advocate for improved conditions.

Conversely, if rent stabilization were to limit the influx of higher income residents, it may reduce the number of households that spend the most money on local services:
• Workforce impacts. A lack of available housing can be a barrier to attracting and retaining employees. While the proposed Ordinance would help existing renters remain in place, it may reduce the availability of housing for people moving to Salinas. A potential spatial mismatch between employment and worker populations can limit access to jobs.49 On the other hand, rent stabilization and subsequent housing stability may provide economic benefits 47 Kutty, N. 2007. The impact of rent control on housing maintenance: A dynamic analysis incorporating European and North American rent regulations. Housing Studies. Vol. 11, Issue 1. 48 OurHomesOurFuture_Web_08-02-19.pdf
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through reduced worker turnover. Displacement and housing instability lead to absenteeism from work, reduced productivity, and higher turnover—people who experience eviction are up to 22 percent more likely to be laid off.50 • Improved educational outcomes. Children who move frequently have more absences and a lower likelihood of finishing school. Reduced displacement can lead to fewer moves for students and, as a result, improved overall educational outcomes. In addition, rent stabilization may help teachers who are rent burdened to continue in their profession at their local school. • Demand for social services. The benefits of improving financial stability for renters can be significant.51 All else equal, financially stable households are less likely to need public benefits. As a result, increased housing stability can potentially decrease the need for government spending on food and housing assistance. This has the potential to reduce a city’s expenditures.

Fees N/A Fee amount not yet established. The
City is currently performing a research study.

N/A N/A Staff can impose
administrative penalties against landlords for violation of the ordinance which can range from $100 to $25,000 per violation.

Prepared by EPS 9/4/2024 Z:\Shared\Projects\SAC\242000\242050 Salinas Rent Stablization\Model\242050_Peer City_ Matrix_7.30.24.xlsx 31 Proposed Rent Stabilization Ordinance Analysis
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As discussed later in Chapter 4, enforcing the rent stabilization ordinance creates the need for additional staffing at a cost to the City, even if enforced on a complaint-driven basis. To help alleviate some of the financial burden, some jurisdictions opt to charge a fee to the property owners of the rent stabilized units. The cities of Oxnard and Antioch have not established their fee amounts but plan to at a later time. Mountain View charges $108 per unit, and Oakland charges $101 per unit.

Literature Review and Case- Study
Conclusions
The literature review and case-study findings indicate the potential for the following positive and negative outcomes.

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Cons to Rent Stabilization
• Very little to no negative effect on property value.
• Slight reduction in rental supply through condominium conversions, building redevelopment, and reduced tenant turnover.
• May increase rents as landlords react to the policy.
• If the policy does NOT allow for increases of housing services to be valued at their market price, it may disincentivize building improvements and maintenance.

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Economic and Fiscal Impacts of
Rent Stabilization
This chapter describes the composition of the City’s housing supply and renter population to shed light on likely fiscal and economic implications of the Ordinance, if approved, followed by discussion of the potential economic implications for property owners.

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Table 4-1. Summary of Housing Inventory as it Relates to Rent Stabilization: City of Salinas (2022)
Figure 2. Housing Inventory as it Relates to Rent Stabilization: City of Salinas (2022)
Item Total
Residential Units [1]
Total Units 44,503 100.0% 52.0%
Total Rental Inventory 23,132 52.0% 100.0%
Total Renter-Occupied 22,794 51.2% 98.5%
Total Exempt Units 36,173 81.3% 35.3%
Total Units Qualifying for Rent Stabilization 8,330 18.7% 36.0% Source: American Community Survey 5-Year Estimates; CoStar; EPS. [1] See Table A-6.

City of Salinas
% of Total
Housing
Inventory

Rental
Housing
Inventory
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Affordable Housing Supply
As shown in Table 4-2 and Appendix A Table A-7, the City has approximately 3,240 deed-restricted affordable housing units, most of which were constructed after 1995. These units are essentially already rent-stabilized and likely would not be impacted by the proposed ordinance.

City of Salinas
Source: Costar; HUD National Low Income Housing Tax Credit 1987- 2022 Data; EPS.

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for multiple years is typically well below its true market value.53 This pattern is often more acute for rental property, which tends to exhibit lower market turnover rates relative to owner-occupied units. Thus, any increase in housing sales attributable to the Ordinance would likely generate at least a temporary increase in property-related tax revenues such as property tax, property transfer tax, and motor vehicle in-lieu payments.
• Reduced assessed value of rent-stabilized properties. By limiting rent increases to a specified percentage of the CPI, the proposed Ordinance essentially mandates a gradual decline in the real rents of affected properties over time. This effect will, in turn, limit the income-generating potential of these properties and ultimately their economic and market values. However, because of the impact of Proposition 13 on assessed values, as noted above, it is likely that only a portion of residential rental properties would be eligible for a reassessment in their taxable value. Specifically, recently transacted multifamily properties, that is, those that have been recently purchased, are most likely to have assessed values that are most closely aligned with prevailing market prices. In these circumstances, some new property owners ultimately may file assessment appeals if the values of their properties do not keep pace with inflation because real rental revenue is declining over time.

The significance of the potential impacts of rent stabilization on housing values and in turn, property taxes, depends on the value makeup of Salinas’ rental stock.

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of the citywide assessed value. As shown in Table 4-3 and Figure 3, singlefamily properties comprised almost 82 percent of the residential assessed value, while multifamily rental units, including duplexes and triplexes, accounted for about 13 percent of residential assessed value. As noted previously, under CostaHawkins, rent stabilization will only apply to the portion of multifamily units that were built before 1995. Therefore, any property value impacts caused by the proposed Ordinance will impact properties accounting for less than 13 percent of the City’s residential assessed value.

City of Salinas
Residential Assessed Value
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Rent Pressures and Displacement
Salinas’ low-income households have experienced significant overcrowding and displacement pressures primarily caused by rising house prices and the influx of higher income households. Although Salinas has experienced a 23 percent increase in median income over the past decade, the growth has come from households with annual incomes above $75,000; the City experienced a net decrease in households in every income category below $75,000. The increase in household incomes may be explained by the increase in persons per household or increased income disparity.

3.3 percent, as shown in Appendix A Table A-8.

In addition, as an agriculture-based economy, Salinas has a bifurcated population, with farm workers who serve the community not being able to afford to live there.

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Rent-burdened households have less money to spend on other essentials like food, transportation, healthcare, and childcare.

1.9% 2.7%

4.0%

11.5%

7.9%

7.6%

5.0%

2.4%

6.9%

12.8%
(3.2%)

6.4%

0.81%
(1.0%) (1.5%)

0.9% 1.3%

3.3%

1.2%

5.3%

2.8%

5.6% 2.4%

4.9%
(10.0%)
(5.0%)

0.0%

5.0%

10.0%

15.0%

20.0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Average MFR Rent Median Renter HH Income
[1] See Appendix A Table A-8 and Table A-9.

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Table 4-4. Rent-Burdened Households: City of Salinas (2012 & 2022) Based on renter mobility/displacement data, it appears that other economic factors may be more significant than rent stabilization in impacting renter movement. Table 4-5 compares the percentage of renters living in the same unit as the previous year in Salinas compared to other communities with rent stabilization. Mountain View adopted their rent stabilization in 2017 but continually shows significantly lower rates of renters staying in the same units than the State overall. This may be caused by a prevalence of students and young professionals that stay for short periods, which may also be a factor in San Diego.

Item
Total Renter
Households
% of Total Renter
Households
Total Renter
Households
% of Total Renter
Households
Rent as a Percentage of
Household Income [1]
Less than 30% of Income 8,908 39.4% 10,245 44.9%
30% to 50% of Income 6,934 30.6% 6,086 26.7%
More than 50% of Income 6,007 26.5% 5,837 25.6%
Total Renter Households 22,637 100.0% 22,794 100.0%
2022
Source: American Community Survey 5-Year Estimates, Table B25070; EPS. [1] The US Department of Housing and Urban Development defines a household spending more than 30% of their income on housing as "rent burdened." Households spending more than 50% of their income on housing are considered "severely rent burdened." Approximately 612 households were not computed. 2012
City of Salinas
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Table 4-5. Renter Movement by City
Renter Household Socioeconomics
Literature indicates that current renting residents benefit the most from rent stabilization and eviction protections. However, because rent stabilization policies are not means-tested, a question arises about the socioeconomic status of the intended beneficiaries. As shown in Table 4-6, renter-occupied households in Salinas have lower incomes per capita than households who own their homes.

Therefore, although the proposed Ordinance is not means-tested, it will on average benefit households with lower than median incomes.

Median
Household
Income
Average
Household Size
Income per
Capita
City of Salinas
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In addition, the affordability crisis disproportionately affects people of color because these communities are over-represented in the renter population.

As shown in Table 4-7, Latinx residents and residents of Some Other Race in Salinas make up larger shares of the renter population than in the City overall.

City of Salinas Housing Units
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Salinas’ renter population also skews younger than the City’s population overall.

City of Salinas Housing Units
Renter-Occupied Owner-Occupied Citywide
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A comparison of the median renter income compared with average monthly rents between 2012 and 2022 for the comparable cities reflect a large disparity between the increases in rent compared to the increases in income for the cities with recent adoptions or no rent stabilization in place. See Table 4-9. The cities with recent or no rent stabilization in place—including Salinas, Oxnard, Antioch, and San Diego—experienced high increases in average rent, ranging from about 38 percent up to almost 50 percent, compared to proportionally lower increases in renter median household income from 18 percent to 33 percent. Both Mountain View and Oakland have had rent stabilization policies in place and both cities experienced higher increases in rental household incomes compared to increases in average rent. This indicates rent stabilization policies actually do help control increases in rent, helping maintain a balance in inflation.

Comparable Cities
AB 1482 as of
2023
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Rental Revenue Impact
Each year, a share of units in rent-stabilized buildings/complexes will be vacated by existing tenants and replaced by new tenants. As noted above, with vacancy decontrol, the vacated units will be eligible for rental at current market rates.

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The overall effect on rental income for the 4 scenarios described above is shown in Figure 5.

Figure 5. Rental Revenue Differential: Market Rate vs Stabilization Alternatives
As shown in the figure above, after factoring in vacancy decontrol, the estimated reduction in rental revenue by the tenth year of rent stabilization ranges from a 2 percent reduction with a rent growth cap at 100 percent of CPI to an 8 percent reduction with a rent growth cap at 60 percent of CPI.56 56 Assumes annual turnover of 11 percent (20 percent lower than current turnover without rent stabilization) and annual market-rate rent growth of 3.35 percent. -2%
-5%
-8%
Market Rate
100% of CPI
80% of CPI
60% of CPI
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Figure 6 provides a summary of the estimated effective annual growth rate in rental revenue for different rent stabilization rates, after factoring in vacancy decontrol.

The proposed flat rate caps would take effect at about 3.5 to 4.0 percent inflation (CPI).

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Financial Feasibility Summary
The financial feasibility analysis uses multi-year cash flows to compare investment returns of the hypothetical 100-unit apartment complex under a market-rate base case scenario and 3 alternative rent stabilization scenarios.

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Net Operating Income Sensitivity Analysis
Figure 8 illustrates the leveraged and unleveraged IRRs for the hypothetical 100-unit apartment under the market-rate base case scenario and 3 rent stabilization scenarios.

Figure 8. Internal Rate of Return Differential: Market-Rate Base Case vs. Alternative Rent Stabilization Scenarios

7.5%

8.0%

8.5%

8.7%

9.8%

11.0%

12.2%

12.5%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
60% of CPI
80% of CPI
100% of CPI
Market Rate
Leveraged IRR Unleveraged IRR
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Table 4-10 presents the same IRR sensitivity results illustrated above in tabular form, along with a comparison of the average annual growth rate in property value for the hypothetical apartment complex under the different scenarios.

Note that for each rent stabilization scenario, operating expenses are assumed to increase at the same rate as CPI.

A strong IRR for a lower risk, stable property is estimated to range from around 8 percent to 12 percent.

Value Comparison
Internal Rate of Return
(IRR)
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Impact of Operating Expense Growth
Operating expenses have been somewhat volatile in recent years, largely because of increases in utility costs and particularly insurance costs. Increases in operating costs impact the net operating income for multifamily rental units that are unable to pass along the total increased cost to tenants. Correspondingly, the return on investment for landlords can be negatively impacted. Figure 9 summarizes the effect higher operating expense growth has on the potential investment return at different rent stabilization rates (modeled using a 5 percent average growth in costs).

6.4%

7.0%

7.5%

7.9%

7.1%

8.6%

9.9%

10.7%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
60% of CPI
80% of CPI
100% of CPI
Market Rate
Leveraged IRR Unleveraged IRR
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Peer Cities Feasibility Comparison
To compare the scenarios discussed above to the identified peer cities, EPS developed similar investment and operating pro formas, using the adopted rent stabilization rates and actual local market data for hypothetical 100-unit apartment complexes in each city.

The results of the peer city rent stabilization financial feasibility comparison are illustrated in Figure 10.

Figure 10. Peer Cities Hypothetical IRR Comparison
Antioch and Oakland both have rent stabilization rates at 60 percent of CPI.

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Program Implementation Costs to the
City
EPS conducted research to help estimate the costs of implementing and administering rent stabilization programs. EPS reviewed financial information from other city programs and interviewed staff from 3 jurisdictions with varying levels of rent stabilization: Mountain View, Hayward, and Richmond. This research confirmed that implementing and administering these programs requires full-time staff and associated equipment and office space. However, costs can vary significantly based on the level of enforcement and complimentary support services. The City envisions that, if adopted, the Rent Stabilization Program would consolidate with the existing Rental Registry Program, combining the existing costs with the estimated costs to implement the Rent Stabilization Program.

To illustrate this range, EPS estimated staff at a minimum, average, and maximum level of complaint-based enforcement, as shown in Table 4-11.

Please note that these totals exclude the Rental Registry FTEs. The ratio of units per staff is based on a staffing level analysis of rent stabilization jurisdictions completed by Mountain View in 2021.

Table 4-11. Estimate Range of Required Staff
Item Total
Staffing Level
Minimum 0.13 1.1 1.9 3.0
Average 0.20 1.7 3.0 4.7
Maximum 0.50 4.2 7.2 11.4
Salinas Rental Units 8,330 14,464 22,794
Source: City of Mountain View Memorandum to the Rental Housing Committee, dated January 25, 20 y
Covered
Units
Complaint-Driven Rest Stabilization Enforcement
Estimated City of Salinas
FTEs Equivalent by Unit Type
(Excluding the Rental Registry)
[1] Based on varying fee levels for complaint-driven rent stabilization jurisdictions across California, sourced
Required
Staff per 1,000
Units [1]
Fully Covered
Units
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Based on data from other cities, the required staff for Salinas would range from the equivalent of 4.2 to 11.4 net new hires (excluding the Rental Registry staff) or a percentage of existing employees’ time. At these levels, the primary role of the City employees would be to monitor the Rental Registry and Rent Stabilization Program, educate the community, manage third-party services and software, and manage the petition process. Education occupies the most core part of the program.

Even in a complaint-driven enforced rent stabilization program, staff communicated that education is key to keeping people informed of their rights.

Education includes preparing materials in multiple languages, direct mailing, and speaking at community events. With the minimum level of only 4.2 new staff members, or 5.1 FTEs total, Salinas would likely need to contract third-party services for legal counsel, tenant relocation services, and mediation and dispute resolution. These services along with third-party software are estimated to cost approximately $360,000 annually.

In each increasing staffing-level scenario estimated below, there is the potential that fewer services would be contracted out, with City in-house staff completing all tasks in the maximum staffing level scenario. Under maximum staff, Salinas would actively oversee the rental registry, which would involve reviewing every rent increase submitted by landlords. The City of Richmond demonstrates a staffing level of full enforcement, and the City of Mountain View is approaching this level by adding additional staff. Both cities, however, did not start their programs at full capacity; rather, they began by contracting portions of the program and hiring full-time staff over time. Richmond staff noted that the first 6 months of the program cost about $1.1 million.

The program fee should be designed to recover costs of all budgeted operations:
• Personnel costs of staff, benefits, and overtime.
• Risk management of general and supplemental liability insurance. • Charges allocated to City departments to reimburse the General Fund for administrative services by central service departments (i.e., City Council, City Manager, City Attorney, City Clerk, Finance, Human Resources, etc.). • Information Technology expenses associated with a property and renttracking database and maintenance of computer hardware and software. • Legal costs to support enforcement and defense of legal challenges to the Ordinance.

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• Cost of education and outreach, including printing and distributing materials and hosting community workshops and seminars.
• Contracts for translation and other professional services. • An operating reserve to fund unanticipated costs and variations in collection of the fee.58
Table 4-12 estimates the range of staff when combined with the Rental Registry Program and the associated costs.59 The Rental Registry Program is budgeted for

2.1 FTEs, with a total estimated staffing cost of about $290,000 plus $110,000 for other costs, totaling almost $400,000. Combined with the estimated range of required Rent Stabilization staff increases and third-party services and software, the FTEs from 5.1 up to 13.4 total costs from $1.1 million up to $1.8 million.

Table 4-13 illustrates the potential fee amount for all rental units, including fully covered units (rent stabilization, tenant protections, and rental registry) and partially covered units (tenant protections and rental registry), which are exempt from Rent Stabilization. These fees are calculated to allow the City to essentially “break even” in covering the estimated costs of the required staff needed for the administration of the proposed Ordinance, combined with the Rental Registry Program, as well as third-party services and software.

Looking at each program separately, the fee ranges from $28 per unit for the 14,464 exempt residential units to be part of the existing Rental Registry Program, $135 per fully covered unit for the minimum of 5.1 staff members, up to about $220 per fully covered unit for 13.4 staff members. The fully burdened cost of staff shown includes salaries, taxes, and benefits. These fees are higher than what would likely be charged because this calculation is examining each program separately. Table 4-14 provides an estimate of the fees with the rental registry, tenant protections, and rent stabilization in a combined program. Please note that the fee for partially covered units should be less than the fully covered unit fee.

Other cities have fees ranging from about $60 for all units in San Francisco up to $344 per fully covered unit and $212 for partially covered units in Berkeley, as shown in Appendix A Table A-13.
58 City of Richmond Rent Program, Adopted May 31, 2002, Fiscal Year 2022-23 Budget and Rental Housing Fee Study.
59 Estimated staff and staff costs are based on the proposed budget amounts for the rental registry program per the Residential Registry Community Development Council Staff Report, dated April 4, 2023.

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Table 4-12. Estimated Staffing and Annual Costs Rental Registry and Rent Stabilization Program
Item Assumptions Minimum Average Maximum

CITY COST
Number of Staff
Planning Manager - 0.1 0.1 0.2 0.5
Community Development Analyst - 1.0 0.5 0.5 1.7
Administrative Analyst - Housing - 1.0 0.5 1.0 2.0
Subtotal - 2.1 3.0 4.7 11.4
Total Combined with Rental Registry 5.1 6.7 13.4
Total Staffing Costs Cost per FTE [2]
Planning Manager $229,947 $11,497 $34,492 $57,487 $126,471 Community Development Analyst $158,720 $158,720 $238,080 $238,080 $428,545 Administrative Analyst - Housing $119,489 $119,489 $179,233 $238,977 $358,466 Subtotal Staffing Costs - $289,706 $451,805 $534,544 $913,481 Other Costs
Software & Systems Supporters - $10,000 $24,825 $32,715 $65,595 Tenant/Landlord Services and Resource - $100,000 $248,254 $327,147 $655,951 Subtotal Other Costs - $110,000 $273,079 $359,862 $721,546 Subtotal Staff Cost $399,706 $724,884 $894,406 $1,635,027 Third-Party Software + Services Estimate - $400,000 $300,000 $200,000 Total Cost $399,706 $1,124,884 $1,194,406 $1,835,027
Source: City of Salinas; EPS.
[3] Total Rent Stabilization Program costs include the total for the Rental Registry Program. ------------------------------------- FTEs ------------------------------------------- --------------------------- Cost by Staff Level [3]-------------------------------- Rental Registry + Rent Stabilization
Program Level of Enforcement Range [1]
[2] Staff costs are based on the proposed budget amounts for the rental registry program per the Residential Registry Community Development Council Staff Report dated April 4, 2023. [1] See Table 4-11
---------------------- Other Costs by Staff Level [3] --------------------------- g
Rental
Registry
Program
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Table 4-13. Estimated Annual Cost Variations: Rental Registry and Rent Stabilization Program
Table 4-14. Current Rental Registry Fee Comparison
Item Buildings Units % Total
Estimated per Unit Fee [3] $20 $115
Number of Units [4] 14,464 8,330
Number of Units per Parcel
1 8,691 8,691 38.1% $20 $173,820 $110,296 NA $110,296 -$63,524 2-4 11 3,192 14.0% $35 $385 $40,509 NA $40,509 $40,124
5-9 168 1,455 6.4% $60 $10,080 $18,468 $499,416 $517,884 $507,804 10-24 118 2,151 9.4% $75 $8,850 $27,293 $90,386 $117,679 $108,829 25-49 30 1,344 5.9% $120 $3,600 $17,062 $56,505 $73,567 $69,967 50-99 13 1,132 5.0% $225 $2,925 $14,369 $47,586 $61,955 $59,030 100+ 20 4,829 21.2% $350 $7,000 $61,278 $202,934 $264,212 $257,212 Total 9,051 22,794 100.0% $206,660 $289,276 $896,827 $1,186,103 $979,443 Source: ACS; CoStar; City of Salinas; EPS.
[1] Estimated based on data from ACS and CoStar.
[4] See Table 4-13.
[3] The annual fee for partially covered units should be less than that for fully covered units. For illustrative purposes, EPS is estimating the fees based on the minimum total annual cost of about $1.1 million.

Difference
between
Current
Estimate
Revenue and
Updated Fee
Current Rental Registry Fee
Partially
Covered Units
Fully Covered
Units
[2] Registration fees for the rental registry program per the Residential Registry Community Development Council Staff Report dated April 4, 2023.

Estimated Revenue of a Rental Registry +
Rent Stabilization Combined Fee on a Per
Estimated Salinas Rental Unit Basis [3]
Residential [1]
Annual
Registration
Fee [2]
Estimated
Total
Revenue
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For the Rental Registry Program fee, the City currently charges a fee based on the number of units within a range per parcel. The initial goal was to not overcharge owners of smaller buildings; however, this fee structure actually provides a monetary discount for larger developments and creates a financial loss to the City. As shown in Table 4-14, the total estimated revenue based on the City’s current Rental Registry fee structure is about $207,000, compared to if the City charged a fee on a per-unit basis. For illustrative purposes, EPS used the estimated minimum cost of about $1.1 million to estimate a fee for the 14,464 partially covered units of $20 per unit per year and $115 for the 8,330 fully covered units, which would create a cost recovery of about $1.2 million.

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Conclusions and Recommendations
Conclusions
Rent regulations are increasingly prevalent in California. In cities like Salinas, where apartments account for about 36 percent of the housing stock, the policy could have a range of potential impacts. As discussed previously, current State law limits the impact of rent stabilization by exempting single-family units, condominiums, and properties built after 1995 and allowing for vacancy decontrol (the ability to raise rent back to market rate after a tenant leaves).

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Rent stabilization is part of a toolkit that, along with other policies and incentives, can help alleviate some housing cost pressures. Taken in combination with other policies that encourage additional supply, it can be part of a multi-pronged effort to improve the outlook for residents struggling to afford housing.

The City should consider merging the Rent Stabilization Fee into the Rental Registry Fee and charge this fee on a per-unit basis. The fee amount should differ based on unit type: fully covered units (rental registry, tenant protections, and rent stabilization) should be higher than partially covered units (rental registry and tenant protections). The fee is to help the City recover the costs to run the program, including staffing, third-party services and software, community education, and program enforcement and should provide financial neutrality. Based on data from other cities, the additional staffing needed to establish, run, and maintain the Rent Stabilization Ordinance ranges from the equivalent of 4.2 to 11.4 net new hires (excluding the rental registry staff) or a percentage of existing employees’ time. With the minimum level of only 4.2 new staff members, or 5.1 FTEs total, Salinas would likely need to contract third-party services for legal counsel, tenant relocation services, and mediation and dispute resolution. As staffing increases beyond the 5.1 FTEs, the amount of third-party source contracts will decrease.

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The City should consider including language in the Ordinance establishing periodic review elements such as the rent increase caps, the number of petitions, staffing levels, fee amounts, etc., to ensure the program operates effectively for property owners, tenants, and the City.

APPENDICES:

Appendix A: Demographic and Socioeconomic
Analysis Support Tables
Appendix B: Financial Analysis Support Tables
APPENDIX A:

Salinas City CouncilNovember 19, 2024

Salinas City Council
November 19, 2024