REPORT TO COUNCIL
SUBJECT
Title
Action on Amendment No. 3 to the Agreement with HouseKeys Inc. for Administration Services for the City’s Affordable Rental Program
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
BACKGROUND
The City of Santa Clara is committed to promoting and pursuing the availability of affordable housing to moderate, low, very-low and extremely-low income households. Adoption of the City’s Affordable Housing Ordinance in 2018 provided a key tool to help achieve this objective. Along with other provisions, the Affordable Housing Ordinance establishes an inclusionary requirement for new rental residential development projects.
Specifically, the Affordable Housing Ordinance requires residential rental projects of ten (10) or more units to provide at least fifteen percent (15%) of the units at affordable rental prices to extremely-low, very-low, low, and moderate-income households. These units are required to remain a part of the City’s Affordable Housing Rental Program for 55 years.
The City also has an existing portfolio of designated affordable rental housing units. These units were developed through various means including use of former Redevelopment Agency (RDA) funds as well as Home Investment Partnerships Program (HOME) funds. The City will be implementing new policies and procedures to certify the eligibility of prospective tenants, as well as coordinating with project owners, developers and property management companies to ensure program compliance. The City also should conduct an annual compliance review for consistency with the City’s affordable housing program policies. Ongoing implementation of the Affordable Housing Ordinance inclusionary requirement, as well as the development of new affordable housing projects, will produce a continuous stream of new, affordable, rental units being added to the City’s inventory.
In April 2019, the City conducted a competitive Request for Proposal process for administration services for the City’s Affordable Rental Program. Through this process, HouseKeys Inc. was selected and awarded a one-year agreement with two one-year options, approved by Council on September 24, 2019. Subsequently, Council approved Amendments No. 1 on August 18, 2020, and No. 2 on July 13, 2021, respectively.
DISCUSSION
HouseKeys Inc. was created in April 2015 in response to the void left by the closing of several Silicon Valley nonprofit housing, lending and counseling service providers. HouseKeys Inc. currently administers similar programs for the cities of Morgan Hill, Campbell, Burlingame and Gilroy and has a proven record of successfully developing and managing affordable rental housing programs. HouseKeys Inc. staff includes a diverse team of program administration specialists, software engineers, data scientists and real estate professionals with a focus on building a program administration model driven by data, expertise, service, and technology. Over the last ten years, HouseKeys Inc. staff has completed nearly 1,000 program for-sale transactions and managed a broad portfolio of multi-family rental units during initial new construction lease-up, annual compliance and tenant turnover. In addition to the primary entity, the HouseKeys Inc. team formed the nonprofit agency, HouseKeys Inc. Resource & Education Center Inc., which obtained federal tax-exempt status in summer 2017.
The current agreement will expire on June 30, 2022. Staff recommends amending the existing agreement by extending the term through June 30, 2024. HouseKeys Inc. has demonstrated its ability to successfully deliver services as described in the agreement. Approval of Amendment No.3 will allow for continuous delivery of services for the City’s Affordable Rental Program.
The maximum compensation under the current agreement is $543,000. Amendment No. 3 increases the maximum compensation by $332,000 for a revised not-to-exceed maximum compensation of $875,000, subject to the appropriation of funds. The administration services compensation is $156,000 per year ($332,000 for two years) and should the City require services for special projects, there is an amount of $10,000 per year ($20,000 for two years) included in the revised not-to exceed maximum compensation to pay for additional hours to be charged at an hourly rate.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
The current total cost of the Agreement for Services with HouseKeys Inc. for Administration of the City’s Affordable Rental Program shall not exceed $332,000 over a two-year period subject to budget appropriations. This agreement provides for an ongoing monthly fee of $13,000 for program administration not to exceed $156,000 per year and $20,000 for special projects.
If the extension is approved, funding for this agreement will be recommended in the Fiscal Year 2022/23 operating budget in the City’s Affordable Housing and Housing Successor Agency Funds, as part of the budget adoption on June 21, 2022.
COORDINATION
This report was coordinated with the City Attorney’s Office and Finance Department.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Authorize the City Manager to execute Amendment No. 3 to the Agreement with HouseKeys Inc. for Administration Services for the City’s Affordable Rental Program to increase the amount of the agreement by $332,000 and to extend the term of the agreement through June 30, 2024 for a revised not-to-exceed maximum compensation of $875,000, subject to the appropriation of funds; and
2. Authorize the City Manager to execute all related documents for the provision of administrative services for the Affordable Rental Program.
Staff
Reviewed by: Andrew Crabtree, Director of Community Development
Approved by: Rajeev Batra, City Manager
ATTACHMENTS
1. HouseKeys Inc. Agreement and RTC
2. Amendment No. 1 and RTC
3. Amendment No. 2 and RTC
4. Amendment No. 3 with HouseKeys Inc.