REPORT TO CITY COUNCIL
SUBJECT
Title
Action on an Agreement with Hello Housing for Administration Services for the Below Market Price Purchase Program
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
BACKGROUND
The City of Santa Clara has operated a Below-Market Price Purchase (BMP) Program since 1995 to assist low and moderate-income families with achieving the goal of homeownership and to fulfill State mandates to produce housing for all income levels within Santa Clara. The City’s BMP Program is administered by the City’s Housing and Community Services Division in the Community Development Department with certain functions delegated under a service contract to an outside entity. The outside entity acts as the City’s BMP Administrator conducting homebuyer outreach and education, maintaining a website with available units, marketing new BMP opportunities and resales, processing applications, documenting client eligibility, managing wait lists, helping coordinate closings and transactions, ensuring long term compliance, and more. Individuals searching for affordable for sale units which are part of Santa Clara’s BMP Program are directed to the BMP Administrator’s website for opportunities and information on the eligibility process.
In February 2015, the California Department of Housing and Community Development determined that the City’s previous Housing Element complied with state law. That Housing Element included an affordable housing policy that requires "developers of residential developments of 10 or more units to provide at least 10 percent of their units at prices affordable to very low, low, and moderate-income households." Specifically, under this policy, housing developers building for-sale units were required to designate at least 10 percent of the total units in an approved project as BMP units to be sold to qualified buyers.
Through the adoption of the City’s Affordable Housing Ordinance in February 2018, the City’s inclusionary requirement for homeownership projects increased from 10 to 15 percent. The new requirements expanded the production of affordable units through inclusionary requirements for both rental and for-sale residential projects and through the collection of impact fees for smaller projects and nonresidential projects. The Ordinance is intended to provide both a steady stream of inclusionary affordable housing units and revenue to fund the provision of affordable housing projects across the City.
Since 2020, the City of Santa Clara has utilized Housekeys as the BMP Administrator for units which are required by the City to be deed restricted affordable.
Staff determined a need to issue a new Request for Proposals (RFP) to ensure that the scope of the BMP program aligns with the cost to administer it.
DISCUSSION
Pursuant to City Code Section 2.105.140(c), a formal RFP was conducted with the award recommendation based on “best value.” In April 2024, the RFP for Administration Services for the Below Market Price Purchase Program was published on the City’s e-procurement system. In addition, staff sent emails directly to five companies notifying them of the RFP.
The RFP closed on May 14, 2024, and the City received two proposals from Housing Inc. and Hello Housing. The proposals were evaluated by a three-member evaluation team against the criteria and weights set forth in the RFP. The factors considered in the evaluation were firm experience, capability, and cost. After thorough review of the two proposals, staff determined that the proposal from Hello Housing satisfied all of the requirements set forth in the RFP.
Hello Housing is a 501(c)(3) nonprofit organization with over 12 years of experience in designing and operating affordable homeownership programs in the Bay Area. Hello Housing has served as a below market rate portfolio administrator and as a developer of affordable for-sale homes. As an administrator, Hello Housing has crafted program guidelines, developed educational resources, facilitated outreach and application processes, conducted eligibility assessments, conducted client underwriting, managed program data, engaged stakeholders, and ensured full compliance with program regulations.
Currently, Hello Housing serves as the below market rate program administrator for the cities of Emeryville and South San Francisco and administers the County of Alameda’s down payment assistance program. In the past, Hello Housing has worked with the cities of Novato, Menlo Park, Concord, Cupertino, Livermore, Pleasanton, and the Town of Los Gatos.
Staff is requesting Council authorization to negotiate and execute an agreement with Hello Housing, with an initial term starting on or around December 1, 2024 and ending on June 30, 2027. After the initial term, the City may exercise up to seven one-year options to extend the agreement through June 30, 2034.
The proposed agreement with Hello Housing, Inc. includes program set up, establishing and maintaining an application waitlist of pre-approved prospective buyers, marketing of new BMP units, providing homebuyer education, helping with access to homeowner financial assistance, determining eligibility and pre-qualification of potential homeowners, and coordinating the BMP lottery and sales process.
Pricing for administration and transaction services for the initial term of the agreement are set forth as below.
|
|
FY 2024/25 (Prorated) |
FY 2025/26 |
FY 2026/27 |
|
Program Set Up |
$20,000.00 |
N/A |
N/A |
|
Program Administration |
$49,800.00 |
$103,584.00 |
$107,727.00 |
|
Transactions |
$67,175.00 |
$83,255.00 |
$88,227.00 |
|
Total |
$136,975.00 |
$186,839.00 |
$195,954.00 |
An additional $10,232 has been included bringing the maximum compensation to $530,000. This additional amount is optional and may be used to cover the costs of additional workshops and any other unanticipated services during this period.
After the initial term of the agreement, Hello Housing may request fee adjustments. Any such request must be justified by Hello Housing and is subject to the City’s approval and appropriation of funds. Increases may not exceed 4% per year.
If the City chooses to extend the agreement through June 30, 2034, the total maximum compensation will increase by $1,609,610 for a new not-to-exceed amount of $2,139,610 for the full term of the agreement, including all optional extensions. This amount reflects the anticipated costs associated with the services, including any potential rate increases.
ENVIRONMENTAL REVIEW
The action being considered 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 to the environment.
FISCAL IMPACT
The term of the agreement is 31 months beginning on or about December 1, 2024 and ending on or about June 30, 2027. Total cost for the administration services shall not exceed $530,000 over a 31-month period.
Funding for the prorated year one of this agreement is available in the FY 2024/25 Adopted Operating Budget in the City Affordable Housing Fund. Funding for subsequent years is subject to budget appropriations and will be incorporated into the budget development process.
COORDINATION
This report has been coordinated with the Finance Department and the City Attorney’s Office.
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 or designee to execute an agreement with Hello Housing (Agreement) for administration services for the Below-Market Purchase Program for an initial term starting on or around December 1, 2024 and ending on June 30, 2027 for a total maximum compensation of $530,000 subject to the appropriation of funds and approval as to form by the City Attorney; and
2. Authorize the City Manager or designee to take any actions as necessary to implement and administer the Agreement and to negotiate and execute amendments to the Agreement to (a) add or delete services consistent with the Agreement’s scope of services; (b) adjust future rates in accordance with the Agreement; (c) extend the term of the Agreement through June 30, 2034; and (d) increase the maximum compensation by $1,609,610 for a new not-to-exceed maximum compensation amount of $2,139,610 for the full term of the agreement, subject to the appropriation of funds and approval as to form by the City Attorney.
Staff
Reviewed by: Reena Brilliot, Acting Director, Community Development Department
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Agreement with Hello Housing