HomeMy WebLinkAboutItem 6b. Study Session - Inclusionary Housing Ordinance Update and Below Market Rate Housing Administration Item 6b
Department: Community Development
Cost Center: 4003
For Agenda of: 3/1/2022
Placement: Study Session
Estimated Time: 120 minutes
FROM: Michael Codron, Community Development Director
Prepared By: Rachel Cohen, Associate Planner and
Teresa McClish, Housing Policy and Programs Manager
SUBJECT: INCLUSIONARY HOUSING ORDINANCE UPDATE AND BELOW
MARKET RATE HOUSING ADMINISTRATION STUDY SESSION
RECOMMENDATION
Receive a presentation and provide feedback on the City’s current inclusionary housing
requirements, a preliminary inclusionary housing update recommendation, and the
progress to date on the onboarding of a Below Market Rate (BMR) Housing Administrator.
REPORT-IN-BRIEF
This Study Session provides background information and analysis of the City’s current
affordable housing requirements, a preliminary recommendation on updates to the City’s
Inclusionary Housing Ordinance, and an overview of progress of onboarding the City’s
Below Market Housing Administrator. Council is being asked to confirm that proposed
policy changes align with Council policy preferences before it conducts further outreach
and engagement in the community. Ultimately, staff plans to return to the City Council in
Summer 2022 with a recommendation from the Planning Commission to update the City’s
Inclusionary Housing Ordinance. With this Study Session staff is requesting feedback
from Council on four items: 1) fractional units, 2) the removal of Table 2A, 3) calculating
the total number of inclusionary units based on land use rather than zoning , and 4)
including provisions in the ordinance to codify the Below Market Rate (BMR) Housing
Administrator’s role. Additionally, staff is requesting feedback regarding the update of
procedures and administrative documentation related to the BMR Housing Administration
Program.
The City’s first Inclusionary Housing Ordinance (IHO) was adopted in 1999. Since then,
hundreds of affordable units have been constructed and financed to meet the
requirements of the IHO. A lot has changed since 1999 and in 2020 the City hired
consultant David Paul Rosen and Associates (DRA) to complete an Affordable Housing
Nexus Study to evaluate the nexus between new commercial and market-rate residential
development.
Page 175 of 381
Item 6b
The Study confirmed that both market-rate residential and commercial development are
inducing demand for affordable housing that is not being met by the current housing
market.1
The City Council has tasked the Community Development Department with updating the
ordinance as part of the 2021-23 Major City Goal work program for Housing. The Housing
Element (HE) Update adopted in 2020 also included a new program that says the City’s
Inclusionary Housing Ordinance should be updated based on the information provided in
the Nexus Study (HE Program 2.13). In addition to the Nexus Study, the City hired
Economic & Planning Systems, Inc. (EPS) in April 2021 to conduct a feasibility analysis
of the City’s proposed affordable housing in-lieu and commercial linkage fees based on
the findings and recommendations included in the Nexus Study. EPS has developed a
preliminary recommendation on changes to the City’s Inclusionary Housing Ordina nce
based on their feasibility analysis. Table 1 below provides an outline of the preliminary
recommendation alongside the Nexus Study recommendations and the City’s current
IHO. Council is being asked to confirm that proposed policy adjustments are aligned with
the Council’s policy preferences before staff conducts further outreach and engagement
in the community.
Table 1: Comparison of the City’s current IHO, the Nexus Study Recommendation,
and EPS’ preliminary recommendation.
Current IHO* Nexus Study
Recommendation
IHO Update Preliminary
Recommendation
Where the
IHO applies
Requirements differ within
City Limits and Expansion
Areas
Same requirements
Citywide
Same requirements
Citywide
Table 2A
Adjustments
Applies to projects that
qualify Remove Remove
Residential
For Sale
Within City Limits: 3% low
or 5% moderate income
Expansion Area: 5% low
and 10% moderate income
15% (5% at low and 10%
at moderate)
10% (5% low-income units
and 5% moderate income)
For Sale In-
lieu Fee
Within City Limits: 5% of
building valuation
Expansion Area: 15% of
building valuation
Apply on a square foot
basis (no specific amount
recommended)
$25 per square foot
1 According to the Nexus study, commercial development had a direct employment impact that generates
demand for additional housing and the private for-profit housing market, with no public assistance, has not
demonstrated the ability to meet the housing needs of low-earning employees.
Page 176 of 381
Item 6b
Current IHO* Nexus Study
Recommendation
IHO Update Preliminary
Recommendation
For Rent
Within City Limits: 3% low
or 5% moderate income
Expansion Area: 5% low
and 10% moderate income
15% very low- and low-
income units (5% very
low and 10% at low)
6% (3% very low-income
and 3% low-income)
For Rent In-
lieu Fee
Within City Limits: 5% of
building valuation
Expansion Area: 15% of
building valuation
Apply on a square foot
basis (no specific amount
recommended)
$20 per square foot
Commercial
Commercial
Development
Within City Limits &
Expansion Area: 2
affordable units per acre or
5% of building valuation
Other Non-residential
Uses: $2 to $5 per square
foot
Industrial Uses: $1 to $4
per square foot
Office, service, hotel, and
retail uses: $5 per square
foot
Industrial and Institutional
Uses: $4 per square foot
DISCUSSION
1. Inclusionary Housing Ordinance
The City’s first Inclusionary Housing Ordinance was adopted in 1999 and since that time,
the City has focused on ensuring that a percentage of all new housing units are affordable
to income eligible households. Current IHO requirements can be met by 1) building
affordable dwellings as part of a development project, 2) dedicating real property,
improved or not, for development of affordable housing by the City’s Housing Authority or
by a non- profit housing provider, 3) paying an in-lieu fee which is used to assist with the
development of new affordable housing throughout the City, or 4) a combination of the
above methods, to the approval of the Community Development Director.
To date, more than 1,201 deed-restricted or otherwise secured affordable dwellings have
been planned for, entitled, or built since the adoption of the IHO in 1999. The City has
granted, loaned, or committed $10,785,954 of affordable housing in-lieu funds to assist
with the development of 503 new deed-restricted affordable housing units.
2. 2020 Nexus Study
A priority identified in the 2019-21 Major City Goal work scope and action plan was to
complete an Affordable Housing Nexus Study to evaluate the nexus between new
commercial and residential development and the City’s requirements for affordable
housing embodied in its Inclusionary Housing Ordinance (SLOMC 17.138). 2004 was the
last time a similar study was completed.
Page 177 of 381
Item 6b
A nexus study is necessary to establish the relationship between market -rate residential
development and non-residential development and the need to support and construct new
deed-restricted affordable housing in the City. The nexus study analyzed if new market-
rate residential and non-residential development in the City increased demand for
affordable housing and included an analysis on the historical performance of the City’s
IHO program.
On April 21, 2020, the City Council received the 2020 Affordable Housing Nexus Study
completed by consultant David Paul Rosen and Associates (DRA). The Study determined
that both residential and commercial development are inducing demand for affordable
housing that is not being met by the housing market. The Study’s f indings verify that there
is a nexus that justifies the City having an Inclusionary Housing Ordinance that applies to
both residential and commercial development.
Nexus Study Recommendations
The Nexus Study provided several recommendations for updates to the City’s existing
Inclusionary Housing Ordinance. These recommendations are summarized below.
1. Inclusionary Housing Ordinance (IHO) and Geographical Variation. Based on
comparable cities and an analysis of San Luis Obispo ’s economic/market data,
the City should consider different requirements based on whether the
residential project is for sale or rent and should discontinue differentiating
between housing projects located within the City Limits and Expansion Areas.
Recommend City-Wide Affordable Housing Requirement for Residential
Development as follows:
Rental: 15% very low- and low-income units (5% very low income (50%
AMI2) and 10% at low income (80% AMI))
Owner: 15% low- and moderate-income units (5% at low income (80% AMI)
and 10% at moderate income (120% AMI))
2. Affordable Housing Standards. The City should maintain its current definitions
of affordable housing expense in terms of the percent of AMI used to calculate
affordable rents and sales prices. In addition, the City should include utility
costs as part of rent and Homeowners Association (HOA) fees as part of the
affordable sales prices.
2 Area Median Income. AMI’s listed in the recommendations are maximums for the various income groups.
Page 178 of 381
Item 6b
3. Project Size and Density Adjustments. The Study recommends eliminating
project size and project density adjustments currently contained in Inclusionary
Housing Ordinance Table 2A and recommends a minimum inclusionary
requirement of one unit for projects of five or more units not otherwise exempt
from the ordinance.
4. Residential In-Lieu Fees. The Study recommends applying in-lieu fees on a per
square foot basis as the estimated economic equivalent of providing on-site
units.
5. Non-Residential Nexus Fees (Commercial Development). The Study
recommends fees in the range of $1 to $4 per square foot for industrial uses
and $2 to $5 per square foot for other non -residential uses.
3. Inclusionary Housing Feasibility Analysis
In 2020 the City began work updating the Housing Element of the General Plan for the
6th Cycle Regional Housing Needs Allocation (RHNA). Based on the findings and
recommendations of the Nexus Study and the need for additional affordable housing, the
Housing Element Update included a new program (Program 2.13) to update the City’s
IHO.
In April 2021, the City hired Economic & Planning Systems, Inc. (EPS) to conduct a
feasibility analysis based on the findings and recommendations provided by the Nexus
Study. Over the last several months, staff has worked with EPS as they have analyzed
the City’s current IHO, current market cond itions, and the Nexus Study and provided a
preliminary recommendation based on the analysis outlined below. A more detailed
discussion is provided as Attachment A – EPS Feasibility Memo.
EPS used separate methods of identifying appropriate fee levels for residential and
commercial uses. For residential, EPS developed a feasibility model to compare different
fee levels and inclusionary requirement scenarios and calibrated the inputs based on
inclusionary programs in similar jurisdictions. The approach for defining the appropriate
affordable housing commercial linkage fees was built off a similar exercise performed by
DRA in the Nexus Study that relied on surveying commercial linkage fees in other
jurisdictions.
It is important for the City Council and community to understand that financial feasibility
is an important consideration because if the development of market -rate housing is not
financially feasible for developers, then the amount of affordable housing accomplished
through the Inclusionary Housing Ordinance will be minimal.
Page 179 of 381
Item 6b
Residential Affordable Housing Analysis
EPS prepared financial proformas reflecting the expected costs of new development,
based on the Nexus Study analysis, and compared those costs to the revenues that could
be generated from the projects given various mixes of market-rate and affordable
housing.
For Sale Units
In evaluating various inclusionary and impact fee scenarios for ownership housing, EPS
analyzed the development economics of a hypothetical development consisting of 1,550
square foot, two-bedroom units, with an average of three persons per household.3 Seven
scenarios were considered with this evaluation:
Current Ordinance
Current In-Lieu Fee
No Inclusionary or Fee
Maximum Nexus-Based Fee
Maximum Feasible Fee
Recommended In-Lieu Fee
Feasible Inclusionary Requirements
Key revenue assumptions are based on RedFin sales data for San Luis Obispo over the
period from December 2020 through December 2021 . Data showed that a two-bedroom,
1,550 square foot unit could sell for around $840,000. Affordable units, depending on the
household income, could have a maximum home price between $163,000 (very low) to
$405,000 (moderate). Construction cost estimates are based on assumptions used in the
Nexus Study analysis, adjusted for inflation, with total direct and indirect costs (except
affordable housing fees) assumed to be approximately $650,000 per unit.
The seven scenarios test the feasibility of incorporating different fee levels and
affordability requirements, with feasibility being measured by an estimated profit margin.
Based on recent experience with developers and lenders in the region, EPS assumed
that developers would require at least a 15 percent profit margin in order to accept the
risk associated with the project. These revenue and cost estimates inform a range of profit
margins (net revenue divided by gross revenue), which vary by scenario, as shown in
Figure 1. The results show that the ‘No Inclusionary or Fee’ scenario yields the highest
return, while all others, except the maximum nexus fee, also yield a return.
3 This prototype based on the average size of units analyzed in the Nexus Study analysis.
Page 180 of 381
Item 6b
For Rent Units
In evaluating various scenarios for rental housing, EPS modeled a market rate multifamily
development. Units are assumed to average 900 square feet with two bedrooms, and a
household size of three people.4 Like the For Sale analysis, EPS evaluated seven
scenarios:
1. Current Ordinance
2. Current In-Lieu Fee
3. No Inclusionary or Fee
4. Maximum Nexus-Based Fee
5. Maximum Feasible Fee
6. Recommended In-Lieu Fee
7. Feasible Inclusionary Requirements
For income assumptions, EPS compiled market-rate and affordable rents based on
conditions and requirements in San Luis Obispo. As the standard metric for feasibility,
EPS modeled the annual yield on cost, calculating aggregate Net Operating Income (NOI)
divided by development costs. A 5 percent yield on cost was deemed the threshold for
feasibility.
4 As with the for-sale scenarios, development costs are based on those used by the DRA analysis, adjusted
for inflation.
Figure 1: For-Sale Feasibility Results by Scenario
Page 181 of 381
Item 6b
Income assumptions for market rate units equal a NOI (revenue minus operational costs)
of $23,000 per year, or roughly $2,900 per month in rent. This reflects typical rents for
newly constructed multifamily in the Greater San Luis Obispo area. Affordable rents were
informed by the 2021 income limits for San Luis Obispo County, with the assumption that
these households can spend up to 30 percent of gross income on housing. On the cost
side, EPS again relied on assumptions from the Nexus Study, adjusted for inflation. These
revenue and cost estimates inform a range of yield on cost percentages, which vary by
scenario, as show in Figure 2.
The results show that the current in-lieu fee is borderline infeasible, while the maximum
nexus-based fee is not at all feasible. The remaining scenarios all appear to generate
sufficient investment returns based on the assumptions used.
Figure 2: For-Rent Feasibility Results by Scenario
Page 182 of 381
Item 6b
Commercial Development - Linkage Fee Calculations
In determining an appropriate commercial linkage fee level, EPS examined fee levels
charged elsewhere in California. As noted in the Nexus Study, many cities within
California do not currently include commercial fees as a part of their inclusionary housing
requirements. Table 2 shows the commercial linkage fees by use (on a square foot basis)
for Berkeley, Oakland, Petaluma, and San Luis Obispo County. Fees range from less
than $1 for industrial uses in San Luis Obispo County to $5.90 for office and industrial
uses in Oakland. Unsurprisingly, the Bay Area cities of Berkeley and Oakland have the
highest commercial linkage fees, reflecting the higher cost of housing in the region.
Table 2: Commercial Linkage Fee Amounts in other California Jurisdictions
Inclusionary Housing Ordinance Update Preliminary Recommendation
EPS is recommending several revisions to the City’s existing affordable housing
inclusionary program for new residential development and the introduction of a nexus -
based commercial linkage fee for non-residential uses based on their feasibility analysis.
Bulleted below are details of the preliminary recommendation and Table 3 provides a
comparison between the City’s current IHO, the Nexus Study and the preliminary
recommendation.
Market-rate, for-sale residential development: 10 percent (split between low-income units
(5 percent) moderate income units (5 percent)).
Rental residential development: 6 percent (split between very low-income units (3
percent) low-income units (3 percent)).
In-lieu fee: Developers opting to pay a fee rather than providing the units onsite as part
of the development would pay an in-lieu fee charged per square foot (as opposed to a
proportion of unit value) of $25 for new for-sale housing and $20 for new rental housing.
Office Retail Industrial Hotel R&D
Other
Non-Res
Berkeley $4.50 $4.50 $2.25 $4.50 $4.50 -
Oakland $5.90 -$5.90 ---
Petaluma $2.93 $5.07 $3.02 ---
SLO County $2.46 $2.11 $0.98 $2.11 -$1.84
City of San Luis Obispo$5.00 $5.00 $4.00 $4.00
Sources: David Rosen and Associates; Keyser Marston Associates; City of Berkeley; City
of Oakland; City of Petaluma; County of San Luis Obispo; Economic & Planning Systems,
Inc.
2021 Commercial Linkage Fee Amount
Jurisdiction
Page 183 of 381
Item 6b
Commercial developments: EPS recommends a per square foot commercial linkage fee
amount of $5.00 for office, service, hotel, and retail uses, and $4.00 for industrial and
institutional uses.
Table 3: Comparison of the City’s Current IHO, the Nexus Study’s recommendation,
and the preliminary recommendation based on EPS’ feasibility analysis.
Current IHO* Nexus Study
Recommendation
IHO Update Preliminary
Recommendation
Where the
IHO applies
Requirements differ within
City Limits and Expansion
Areas
Same requirements
Citywide
Same requirements
Citywide
Table 2A
Adjustments
Applies to projects that
qualify Remove Remove
Residential
For Sale
Within City Limits: 3% low
or 5% moderate income
Expansion Area: 5% low
and 10% moderate income
15% (5% at low and 10%
at moderate)
10% (5% low-income units
and 5% moderate income)
For Sale In-
lieu Fee
Within City Limits: 5% of
building valuation
Expansion Area: 15% of
building valuation
Apply on a square foot
basis (no specific amount
recommended)
$25 per square foot
For Rent
Within City Limits: 3% low
or 5% moderate income
Expansion Area: 5% low
and 10% moderate income
15% very low- and low-
income units (5% very
low and 10% at low)
6% (3% very low-income
and 3% low-income)
For Rent In-
lieu Fee
Within City Limits: 5% of
building valuation
Expansion Area: 15% of
building valuation
Apply on a square foot
basis (no specific amount
recommended)
$20 per square foot
Commercial
Commercial
Development
Within City Limits &
Expansion Area: 2
affordable units per acre or
5% of building valuation
Other Non-residential
Uses: $2 to $5 per square
foot
Industrial Uses: $1 to $4
per square foot
Office, service, hotel, and
retail uses: $5 per square
foot
Industrial and Institutional
Uses: $4 per square foot
Page 184 of 381
Item 6b
Table 4 provides some project comparisons of the implementation of the City’s current
IHO and the preliminary recommendation.
Table 4: Project Example Comparison of the City’s Current IHO and Preliminary
Recommendation.
Project
Number of
Residential
Units
Total
affordable
per Table
2
Total
affordable
per Table
2A
What the
plans
actually
include
Total affordable per preliminary
recommendation
For
Rent
(6%)**
For
Sale
(10%)**
Commercial
($5/s.f.)
600 Tank
Farm 280 23.38 1 8* 17 28 $62,500.00
Bullock Ranch 184 28 7 7 12 19 N/A
950 Orcutt 78 4 1 1 5 8 $34,000.00
2800 Broad 20 1.22 1 Paid fee 2 2 $39,090.00
1030 Orcutt 15 0.98 1 1 1 2 $8,570.00
2120 Santa
Barbara 69 3.28 1 Paid fee 5 7 $15,000.00
*Negotiated more units with the GP and Zoning amendment request
**Rounded to the next whole number
Study Session Discussion Items
Staff is requesting feedback from Council on three items: 1) fractional units, 2) the removal
of Table 2A, and 3) calculating total number of inclusionary units based on land use rather
than zoning.
Fractional Units
The City’s current IHO requires that fractional units (i.e., the inclusionary requirement
results in a non-whole number of affordable units) be rounded up to the nearest whole
number of units. Table 5 shows how this is applied to residential projects with various
numbers of units.
Page 185 of 381
Item 6b
Table 5: Results of rounding to the next whole number on different sized residential
projects
Total affordable per
preliminary
recommendation
Rounded up to next
whole number
% of Project Affordable
(based on whole
numbers)
No. of Units
in Project Rent (6%) For Sale
(10%) Rent (6%) For Sale
(10%) Rent (6%) For Sale
(10%)
6 0.36 0.60 1 1 16.67 16.67
12 0.72 1.20 1 2 8.33 16.67
15 0.9 1.50 1 2 6.67 13.33
18 1.08 1.80 2 2 11.11 11.11
20 1.2 2.00 2 2 10.00 10.00
24 1.44 2.40 2 3 8.33 12.50
30 1.8 3.00 2 3 6.67 10.00
43 2.58 4.30 3 5 6.98 11.63
50 3 5.00 3 5 6.00 10.00
73 4.38 7.30 5 8 6.85 10.96
100 6 10.00 6 10 6.00 10.00
141 8.46 14.10 9 15 6.38 10.64
200 12 20.00 12 20 6.00 10.00
333 19.98 33.30 20 34 6.01 10.21
500 30 50.00 30 50 6.00 10.00
The highlighted examples in Table 5 show that rounding to the next whole number results
in smaller projects having a higher percentage of affordable units as compared to those
projects with more units. It should be noted that smaller projects are likely to qualify for a
density bonus just by meeting our inclusionary housing requirement and that this issue
may be partially mitigated by building more market rate units. There are a few ways that
the City could address fractional units.
1. The current requirement could be retained, and all projects would be required to
round up no matter the fractional unit; or
2. If requirements result in less than one affordable unit or fractions of units (i.e., 10%
of a 14-unit rental project = 1.4 affordable units), an applicant may pay the in-lieu
fee for those fractional units or round up and provide the unit. The applicant may
treat the fractional unit as Moderate; or
3. Apply option #2 to a certain size of residential projects (e.g., only residential
projects that contain 20 units or less).
During the study session, City staff would like the Council to discuss and provide direction
regarding how to address fractional units.
Page 186 of 381
Item 6b
Table 2A
One of the biggest proposed changes to the IHO is the elimination of Table 2A. This
proposal is consistent with HE Program 2.135. Table 2A was established as a part of the
IHO to encourage the development of projects with higher density and smaller unit sizes,
that would be considered affordable-by-design within the City. Table 2A has been very
successful in achieving this goal, however, as noted in the EPS’ Feasibility Memo, Table
2A is no longer achieving affordability in the current market. The feasibility analysis found
that under current market conditions, smaller units are not affordable, even for moderate -
income households. During the study session, City staff would like the Council to discuss
and provide direction regarding the removal of Table 2A.
Zoning vs. Land Use
The preliminary recommendation also proposes that inclusionary requirements be
calculated based on the land use, rather than the zoning of the site. Table 6 provides
recent examples of projects that are located on commercially zoned properties. The City’s
current IHO calculates the required number of units based on acreage and then allows
that number to be adjusted based on Table 2A. The preliminary recommendation would
calculate the number of affordable units based on number of total residential units and
the square feet of commercial space proposed for the project. The preliminary
recommendation more accurately captures the housing needs based on the actual uses
proposed as part of the project. During the study session, City staff would like the Council
to discuss and provide direction regarding the calculation of inclusionary housing
requirements based on land use rather than zoning.
Table 6: Examples of housing projects located on commercially zoned properties
Project No. of
Units Acres Square
Feet
Current IHO
Affordable Unit
Total
Preliminary Recommendation
Affordable Unit Total
Table 2a Table
2Ab
For Rent
(6%)c
For Sale
(10%)d
Commercial
($5/s.f.)e
600 Tank Farm 280 11.69 12,500 23.38 1 16.8 (17) 28 $62,500.00
650 Tank Farm 249 9.89 18,600 19.78 1 14.94 (15) 24.9 (25) $93,000.00
2800 Broad 20 0.61 7,818 1.22 1 1.2 (2) 2 $39,090.00
1030 Orcutt 15 0.49 1,714 0.98 1 0.9 (1) 1.5 (2) $8,570.00
2120 Santa
Barbara 69 1.64 3,000 3.28 1 4.14 (5) 6.9 (7) $15,000.00
950 Orcutt 78 2.00 6,800 4 1 4.68 (5) 7.8 (8) $34,000.00
a) Total number of affordable units is based on 2 units per acre as required in Table 2 for commercially
zoned properties.
5 HE Program 2.13: Update the Inclusionary Housing Ordinance, including Table 2A, based on findings and
recommendations in the 2020 Affordable Housing Nexus Study and co nduct further feasibility analysis in
order to evaluate the City’s ability to provide affordable housing in the proportions shown in the Regional
Housing Needs Allocation, per Policy 2.4.
Page 187 of 381
Item 6b
b) Adjusted total of affordable units based on Table 2A.
c) These numbers reflect if the residential units are all rental.
d) These numbers reflect if the residential units are all for sale.
e) These numbers reflect if all the commercial spaces were being used for o ffice, service, hotel, and retail
uses.
HouseKeys is Under Contract to Perform Services as the City’s “Below Market
Rate (BMR) Housing Administrator”
In 2021, the City of SLO issued construction permits for over 100 BMR units. The City’s
program is growing, and at the same time, oversight and enforcement at the State level
is ramping up to ensure local affordable housing programs comply with State law. In 2020,
recognizing the growing challenges of in-house administration of the City’s Affordable
Housing Inventory, the City Council authorized an RFP for a BMR Housing Administrator.
HouseKeys was the successful firm through the RFP process and the City entered into a
contract with HouseKeys on August 4, 2021 and began the onboarding process (please
see Housekeys contract in Attachment B).
Having a contract program administrator is a departure f rom past City practice and staff
have engaged the community over recent months to introduce HouseKeys and help
clarify program expectations as part of the onboarding process. One of the core features
of the BMR is that they are expected to act as the City’s agent in all BMR transactions.
During the onboarding process, staff has received input regarding concerns that members
of the mortgage and real estate community have about the exclusive role that HouseKeys
will play with respect to BMR transactions involving the City.
Program History
Historically, the local ecosystem of loan officers, real estate agents, housing counselors,
community organizations, and homebuilders has played an important role in the process
of connecting eligible households with affordable housing units. The principal functions of
the program were accomplished, as follows:
1. HASLO or PSHHC would perform income certifications for eligible households.
2. Developers would market and identify eligible buyers of their choosing, sometimes
through a lottery depending on the number of units for sale.
3. A limited number of realtors and mortgage lenders who understand how the City’s
deed restrictions work would engage with eligible buyers and help them through
the transaction process.
4. City staff would work with income certified households by providing all the
necessary paperwork for the City’s Deed of Trust and Promissory Note, which is a
part of every BMR transaction.
5. City staff would work with owners and their mortgage brokers on refinancing
requests.
Page 188 of 381
Item 6b
6. City staff would work with owners and their real estate agents on resale requests,
including working with the buyer when the unit is being sold to another income
eligible household.
Program Direction and Benefits
This process was manageable when the total number of units in the City’s inventory was
smaller. However, this decentralized method of administration also has had significant
drawbacks. The onboarding of HouseKeys is expected to allow the City to effective ly
scale its program up while providing significantly enhanced benefits to the City and
community in the form of program compliance, customer service, and implementation of
best practices. A summary of these benefits follows.
Transparency: The regulatory landscape, and the oversight from the state has
changed with increasing scrutiny and oversight. Maintaining program
transparency and accountability on all levels including marketing, procurement,
transactions, and accounting is required. HouseKeys will maintain an active
eligible buyer list to match buyers with available housing units. Every transaction
is audited and verified for compliance with State Housing and Community
Development (HCD) criteria.
Efficiency: HouseKeys is a company with 29 employees that provides similar BMR
administration services to jurisdictions throughout California. This allows the City’s
program to scale up without adding staff who do not have the particular specialties
needed to run an effective program of this scale in house.
Accountability and Compliance: HouseKeys will perform annual compliance
checks to ensure that City affordable housing units continue to be occupied by
eligible households in compliance with City requirements and State law. In
addition, HouseKeys will operate a training program and maintain lists of eligible
mortgage brokers and real estate agents that are trained and authorized to work
within the City’s program. Finally, HouseKeys will engage with HCD regarding any
enforcement actions or compliance audits.
Equity and Inclusion: One of the most important features of the BMR role and
HouseKeys’ service is the fact that the City will finally have an outward facing
presence to market its program and available affordable housing units through out
the region. A short-coming of the City’s program to date is that the process of
connecting eligible buyers to available units is opaque. Best practices for
marketing affordable housing units include robust advertising and minimum time
on market for every unit to give eligible buyers the opportunity. Where multiple
eligible buyers exist, a lottery is normally the best way to ensure equity. Going
forward, these are functions that will be accomplished by HouseKeys.
Page 189 of 381
Item 6b
Customer Service: Finally, the BMR role allows the City to provide excellent
customer service to owners and occupants of homes within the City’s inventory.
HouseKeys will maintain an online portal that will allow owners to register their
units and submit questions or requests for assistance at any time. Whether a
property owner wants to sell, refinance, or just has questions about the status of
their unit, that information will be readily available whereas City staff is limited in
its ability to help with such requests.
Program Costs
Formal administration of the City’s BMR housing program comes at a cost. The City will
pay an annual fee to HouseKeys that is covered within the budget of the Community
Development Department. For the cost of less than one FTE, the City is now able to
reassign work to its Housing Coordinator to focus on high priority initiatives and projects,
while gaining the work of a 29-member team to support BMR administration functions.
Concerns raised by members of the community primarily center around the HouseKeys
business model and their fee schedule (please see Attachment C for responses to
inquires posed by Ms. Donna Lewis). As an agent of the City, HouseKeys intends to
charge customary fees associated with the various transactions it will manage as outlined
in their contract. During the onboarding process, HouseKeys has reached an agreement
to administer the Avila Ranch affordable housing plan on behalf of the City. Now that
HouseKeys is on board, all new projects with an affordable housing component will be
required to work through HouseKeys to accomplish program compliance.
Revenues earned by HouseKeys, a for-profit company, come from its fee schedule and
the transaction fees paid by buyers, sellers and homeowners in the program. In many
respects, HouseKeys’ fee schedule represents costs that are currently experienced by
the City, builders, owners and sellers, however, they are simply absorbed instead of
clearly identified. HouseKeys fee schedule and their ability to earn revenue in the program
will be assessed on an ongoing basis. It is important to note that if the City and community
are not satisfied with the work performed by HouseKeys, the City has every right to find
another BMR Housing Administrator for its program. For this reason, staff is
recommending that the updated Inclusionary Housing Ordinance codifies the role and
responsibilities of a BMR Administrator.
Housekeys approach to BMR administration is particularly attractive to the City because
it provides a cost structure to manage the whole affordable housing lifecycle, including
HCE oversite (See Summary of management steps in the Affordable Housing Lifecyle in
Attachment D). In this way, HouseKeys uses its fee schedule for cost recovery, as well.
For example, fees related to the City’s BMR homeownership program also support
Housekeys ability to manage the City’s BMR rental program at a highly competitive cost
to the City.
Page 190 of 381
Item 6b
Program Process including Procurement
Finally, formalizing a BMR Housing Administrator allows for responsiveness to a changing
landscape for affordable housing providers. Income certifications, a service historically
provided through HASLO, is no longer available. PSHHC is currently providing this
service on a temporary basis until an Administrator takes over the service. Going forward,
Housekeys will perform the service with all associated costs built into their fee for
services.
The procurement process includes how buyers are introduced to the program and how
the program is operated. Standardization is critical for transpa rency, to meet program
goals of equity and inclusion, and accountability and monitoring, and to ensure that there
is a fair process for all prospective buyers and renters, properties are priced properly, and
that buyers can afford the housing payment according to HCE criteria.
Lastly, the Program Administrator will ensure that all parties involved (real estate agents,
lenders, etc.) know how to comply with the program with a third-party to provide oversight
and better customer service.6 One example of anticipated improvement is transparency
of procurement that includes monitoring and enforcement of Section 17.138.130
“Eligibility Screening” in the City’s current Inclusionary Housing Ordinance that requires:
The housing authority or other housing provider designated by the city shall
screen prospective renters or buyers of affordable units. Renters or buyers
of affordable units shall enter into an agreement with the city. Occupants
must be selected by means of an open, public process which ensures that
individuals of a group of interested participants have equal probability of
selection. Private selection of individuals by project owners is not permitted
for any affordable units.
Next steps and expectations for program administration
Staff and Housekeys will continue community engagement for the BMR Housing
Administration Program in concert with the Inclusionary Housing Ordinance update and
ensure the update will provide additional clarity regarding the requirement and obligation
for administration of BMR housing units over the entire affordable housing lifecycle with
the defined role of program administrator. Staff is recommending that the updated IHO
include the following provisions with respect to the IHO BMR.
6 Management of an approved vendor list includes creating a fair process to get on the list, hosting group
and 1-on-1 trainings, creating content, updating materials, and fielding input from the public as complaints
arise about response from individual providers. The annual fee is used both to contribute to costs and to
establish commitment by the professionals who are on the list.
Page 191 of 381
Item 6b
1. Purpose.
2. Definitions.
3. Applicability.
4. Program Administration Costs.
5. Duties of Program Administrator.
6. Default, Foreclosure, and Loss of Unit.
7. Annual Report.
Additionally, staff will work with Housekeys to update the City’s administrative procedures
and supporting documentation consistent with industry best practices. This work effort is
described below. Staff is requesting concurrence from the City Council on these next
steps.
Update templates for Affordable Housing Agreements that include procedu res for
working with the Program Administrator with the following approximate language:
“The City may either handle in-house or contract responsibility for administration
for the BMR Housing Program and monitoring compliance with the requirements
to a Program Administrator pursuant to an Agreement executed between the City
and the Administrator”.
Update the City’s Purchasing and Rental Guidelines to clearly reflect fees and
procedures of the Program Administrator including underwriting, eligibility and
compliance, as well as refinements to ensure procedures are consistent with state
law and program goals.
Produce Rental Compliance Guidelines (Tenants, Property Managers) and First-
Time Homebuyer Loan Program Guidelines.
Update the City’s Affordable Housing Standards to reflect state guidance on
standardized price calculations7. These standards are updated by staff on an
annual basis ever July based on state area median income numbers for our area.
Additionally, specific updates to standards are required to implement Housing
Element Program 2.10 that states:
Update the Affordable Housing Standards to include Homeowners’
Association (HOA) fees and a standard allowance for utilities in the
calculation for affordable rents and home sales prices within two years of
adopting the Housing Element.
7 Updated City Affordable Housing Standards will include State Law Calculations of a max 30% x 70% for
"Low" and a range from 28-35% x 110% for "Moderate".
Page 192 of 381
Item 6b
Finally, City staff will work with the City Attorney’s office and Housekeys to update
the City’s Equity Share program. The Equity-Share program has become more
popular by developers but needs further evaluation to ensure compliance and
consistency with the intent of the program.8
Previous Council or Advisory Body Action
City Council received the 2020 Affordable Housing Nexus Study on April 21, 2020.
The item was submitted as a “receive and file” and no action was taken.
On May 4, 2021, the City Council authorized an RFP to solicit outside consultant
expertise to oversee BMR housing administration, including ownership and rental
units, and administration of the City’ s First- Time Homebuyer Loan program.9
Policy Context
The Housing Element was updated in 2020 and included Program 2.13 that specifically
states that the City will update the IHO based on the findings and recommendations of
the 2020 affordable Housing Nexus Study.
Program 2.13: Update the Inclusionary Housing Ordinance, including Table 2A, based on
findings and recommendations in the 2020 Affordable Housing Nexus Study and conduct
further feasibility analysis in order to evaluate the City’s ability to provide affordable
housing in the proportions shown in the Regional Housing Needs Allocation, per Policy
2.4.
Public Engagement
City staff and Housekeys have engaged with community members regarding BMR
housing administration in recent months in the forums described below:
Developers’ Roundtable meeting on December 9, 2021.
City Staff question and answer with interested parties from the real estate and
lending community and stakeholders from the Developer Roundtable on January
11, 2022.
8 The Equity Share program allows flexibility for properties to sell at market rate , thus removing an
affordable unit from the City’s inventory and the program update will need to include evaluation of formulas
to ensure appropriate recapture of the City’s principal and interest to adequately support the construction
of future affordable housing units.
9 May 4, 2021 Council Agenda Report Item 11 - Authorization to issue a RFP for a Below Market Rate
Housing Program Administrator (slocity.org)
Page 193 of 381
Item 6b
Housekeys Meet and Greet #1 with Affordable housing partners (including HASLO,
PSHH, and Habitat for Humanity and Transitions Mental Health Association ) on
January 13, 2022.
Housekeys Meet and Greet #2 with Developers (including the Developers
Roundtable, Home Builders Association, SLO Chamber and REACH) on January
27, 2022.
Housekeys Meet and Greet #3 with Lenders and Real estate professionals
(including professionals who have engaged with the City’s Affordable Housing
program and the SLO Coastal Association of Realtors) on February 3, 2022.
Housekeys various direct engagement upon request with developers and real
estate professionals.
This Study Session kicks off public outreach for the IHO update. Staff will be reaching out
to stakeholders and the community regarding the IHO preliminary recom mendation.
Updates to the IHO will be refined based on public feedback before moving onto the
Planning Commission and City Council for final review.
STUDY SESSION QUESTIONS:
The following study session questions are suggested for Council’s consideratio n:
1. Fractional units: should applicants be required to round up no matter the fractional
unit; or pay the in-lieu fee for fractional units and if so, should it be applicable to
smaller projects (e.g. 20 units or less).
2. Table 2A: should Table 2A be removed from the IHO.
3. Land use vs. Zoning: should the total number of inclusionary units be calculated
based on land use rather than zoning.
4. Formalization of Administrator: should the IHO include codification of the role of
the BMR Housing Administrator.
5. Administrative documents: authorize the City Manager to approve updates to the
City’s affordable housing guidelines, administrative templates, equity share
procedures, and supporting documentation.
ENVIRONMENTAL REVIEW
This item is provided as part of a study session and intended to provide information and
involves no action by the City Council. As such, the California Environmental Quality Act
(CEQA) does not apply.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2021-23
Funding Identified: Yes
Page 194 of 381
Item 6b
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $ $ $
State
Federal
Fees
Other:
Total $ $ $ $
The IHO update is part of the 2021-23 budget with funding provided by a $283,000
Regional Early Action Planning (REAP) state grant.
The $111,000 BMR administration contract, for year 1 and $96,000 for Year 2 was
approved as part of the 2021-23 financial plan.
ALTERNATIVES
1. Continue consideration of the Inclusionary Housing Preliminary
Recommendation. Although no action is recommended in association with this
recommendation, the City Council could ask staff to return during a future meeting to
present additional information.
2. Continue consideration of the Below Market Rate Administration. Although no
action is recommended in association with this recommendation, the City Council
could ask staff to return during a future meeting to present additional information.
ATTACHMENTS
A - EPS Feasibility Memo – includes a feasibility analysis and a Preliminary
Recommendation of proposed changes to the City’s current Inclusionary Housing
Ordinance
B - Houskeys Contract
C - Responses to Inquiries by Ms. Donna Lewis
D - Summary Management Steps in the Affordable Housing Lifecyle
Page 195 of 381
Page 196 of 381
M EMORANDUM
To: Rachel Cohen, City of San Luis Obispo
From: Ashleigh Kanat and Jake Cranor
Subject: Recommendations for San Luis Obispo’s Proposed Affordable
Housing Fees Inclusionary Requirements, In-lieu Fees and
Commercial Linkage Fees; EPS #191142
Date: February 2, 2022
Economic & Planning Systems, Inc. (EPS) was retained by the City of
San Luis Obispo (City) to help identify the parameters of an updated
affordable housing program, and recommend updated inclusionary
requirements, associated in-lieu fees and new commercial linkage fees.
EPS’s work follows and builds on the Affordable Housing Nexus Study
prepared by David Rosen and Associates (DRA) in 2019, which
established the maximum allowable fees that could be charged to new
residential and nonresidential development following nexus logic but did
not evaluate the feasibility of those fees (i.e., the effect the maximum
fees would have on the financial feasibility of new development).
This analysis recommends a framework for updating the City’s affordable
housing requirements and conducts a feasibility analysis to refine the
recommended inclusionary requirements and fee levels. The following
memorandum discusses the key findings of the analysis, examines the
City’s current inclusionary housing program, provides an overview of the
DRA Affordable Housing Nexus Study, and outlines the methodology
used for the feasibility analysis before providing EPS’s suggested
updates and revisions to the City’s affordable housing program.
Summary of Findings
1. The maximum nexus-based affordable housing impact fees
and commercial linkage fees calculated in 2019 cannot be
absorbed by developers without negatively affecting the
financial feasibility of new development.
The David Rosen and Associates Nexus Study calculated a
maximum fee of between $48.33 and $113.99 per square foot for
new residential development, depending on the residential product
type, and between $65.85 and $173.09 per square foot for non-
residential uses. While such fees may be technically justifiable, it is
Page 197 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 2
not uncommon for the maximum nexus-based fees to render new development infeasible
and, as such, cities typically adopt affordable housing fees at much lower levels. This is a
typical result of nexus-based fee calculations, and DRA notes in its report that it often
recommends cities adopt fees lower than the maximum allowable level.
2. The City’s existing percent-of-value approach to calculating in-lieu fees is not
consistent with best practices as the amount of the fee can vary from unit to unit,
even among similar product types, and EPS recommends that the in-lieu fees be
calculated based on technical analysis and made publicly available on the City’s fee
schedule.
The City’s current inclusionary program requires that market-rate developments include a
certain percentage of affordable units to be built onsite. Developers may elect to pay a fee in
lieu of building the affordable units as part of the market-rate project. The City currently
charges an in-lieu fee equal to 5 percent of building value should developers elect not to
provide the required amount of inclusionary units onsite. This process requires judgement on
the part of City staff who need to determine if the value as submitted by the developer at the
time of application is accurate. Such self-reporting can lead to variability among fees paid by
developers of similar product types, potential underreporting, and inconsistencies in how
different developers are complying with the inclusionary requirements.
3. EPS’s preliminary recommendations include several revisions to the City’s existing
affordable housing inclusionary program for new residential development and the
introduction of a nexus-based commercial linkage fee for non-residential uses.
For new, market-rate, for-sale residential development, EPS recommends an inclusionary
requirement of 10 percent, meaning that a 100-unit development would be required to
provide 10 onsite units that are affordable to income-constrained households. Inclusionary
units for for-sale development would be targeted half to low-income and half to moderate-
income households. For new rental developments, a 6 percent inclusionary requirement is
recommended, which would again be targeted half to low-income and half to moderate
income households. Developers opting to pay a fee rather than providing the units onsite as
part of the development would pay an in-lieu fee charged per square foot of $25 for new for-
sale housing and $20 per square foot for new rental housing. For new commercial
developments, EPS recommends a per square foot commercial linkage fee amount of $5.00
for office, service, hotel, and retail uses, and $4.00 for industrial and institutional uses.
Recommendations for the City’s inclusionary housing requirements, in-lieu fee levels, and
affordable housing commercial linkage fee levels are summarized in Figure 1.
Page 198 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 3
Figure 1 Recommended Inclusionary Requirement and Fee Levels
4. EPS recommends eliminating “Table 2A,” which currently adjusts the inclusionary
requirement of residential projects, with lower requirements for higher density
projects and smaller units because current market data suggests that Table 2A is
no longer furthering the “affordable by design” objectives that it was originally
intended to support.
Table 2A outlines inclusionary requirement adjustment factors based on both unit size and
project density. For example, developments consisting of 1,100 square-foot units or smaller
are only required to provide one inclusionary unit onsite, regardless of how many total units
are being built. EPS analysis finds that under current market conditions, new units of these
sizes rent for approximately $3,000 per month (as shown on Figure 2), which is not
affordable even for moderate-income households (households earning 120 percent of AMI).
Therefore, units of at least 1,100 square feet are no longer ‘affordable by design’, as was the
intent of Table 2A, and as the City anticipates more development at smaller unit sizes, there
is an opportunity to ensure that affordable housing is included as part of new, market-rate
development.
Legal Background
Prior to 2017, there was some uncertainty about the legal parameters of inclusionary housing
programs and whether inclusionary programs could apply to ownership and rental projects. For
some time, there were two California Court of Appeals decisions from 2009 that informed the
legal parameters of inclusionary zoning and related in-lieu fees. These are “Palmer/Sixth Street
Properties L.P. v. City of Los Angeles” (Palmer) and “Building Industry Assn of Central California
v. City of Patterson” (Patterson). The former found that local governments must implement their
inclusionary housing requirements so that developers of rental housing are allowed to determine
the initial rents of all units on site. The latter suggests that inclusionary housing ordinances
should be viewed as “exactions” that must be justified by nexus studies.
More recently, in 2015, the California Supreme Court decided in favor of the City of San Jose,
which had passed an inclusionary requirement in 2010. The California Building Industry
Use Onsite Requirement
Residential
For Sale 10% (1/2 Mod and 1/2 Low)$37,795 per unit $25.00 per sq.ft.
Rental 6% (1/2 Mod and 1/2 Low)$19,839 per unit $20.00 per sq.ft.
Nonresidential
Office $5.00 per sq.ft.
Retail $5.00 per sq.ft.
Service $5.00 per sq.ft.
Hotel $5.00 per sq.ft.
Institutional $4.00 per sq.ft.
Industrial $4.00 per sq.ft.
Inclusionary Housing Requirement
[1] The per square foot fee assumes approximately 1,500 square feet for a for sale unit and 990 square feet for a rental unit.
Affordable
Housing Impact
Fee
n/a
n/a
In-lieu Fee
(max per unit)
In-lieu Fee
(per sq.ft.) [1]
Page 199 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 4
Association filed a lawsuit claiming that the San Jose ordinance was invalid because the
conditions imposed by the ordinance constituted “exactions” under the takings clauses of the
state and federal Constitutions. The California Supreme Court held that the conditions that the
San Jose ordinance imposes on future developments do not impose “exactions” upon the
developers’ property.
More concretely, Assembly Bill 1505 (2017) now clarifies that cities and counties may adopt
inclusionary housing ordinances requiring residential rental housing developments to include a
specified percentage of affordable units as a condition of development.
Existing Affordable H ousing Program
The City’s existing affordable housing program is outlined in San Luis Obispo Municipal Code
Chapter 17.91, and requires that new development projects satisfy the inclusionary housing
requirements, as specified by Table 2 (and adjusted by Table 2A). The program also allows non-
exempt developments to contribute an in-lieu fee equal to 5 percent of the development’s value
instead of physically constructing the inclusionary units.
Table 2 states that, within the City limits, residential development must set aside 3 percent of
units as affordable to low-income households or 5 percent of units as affordable to moderate
income households (but not less than one affordable unit per project). In the Expansion Area,
the requirement is increased to 5 percent affordable to low-income households or 10 percent
affordable to moderate income households. Residential developments of less than four units are
exempt. Table 2 also specifies that commercial developments both within the City limits and in
the Expansion Area must build two affordable units per acre, but no less than one affordable unit
per project. Commercial projects of less than 2,500 square feet are exempt.
Developers often elect to pay the 5 percent in-lieu fee, which presents several issues. Upon
reviewing recent in-lieu fee data provided by City staff, EPS notes that: 1) residential
construction values reported by the developers are sometimes significantly lower than what
market data sources imply; and 2) there is significant variability in the construction value per
square feet for similar product types. These findings suggest that an in-lieu fee based on a
developer-reported construction value is not the most transparent or equitable means of levying
such a fee.
Table 2A provides adjustment factors to be applied the inclusionary requirements for residential
development. For example, a 100-unit development with an average unit size of 1,800 square
feet is assigned an adjustment factor of 0.75. Therefore, instead of being required to build 3 low-
income units or 5 moderate income units, as specified by Table 2, it is given a 25 percent
reduction in the number of affordable units it must provide. This means the developer could
satisfy the inclusionary requirement with just 4 (rounded up from 3.75) moderate income units.
Table 2A strives to encourage development of smaller units and greater density, and
developments with units of 1,100 square feet or less are only required to provide one
inclusionary unit on site, regardless of the total number of units proposed. As another example,
the same requirement of building one affordable unit onsite applies to 1,500 square-foot units, in
cases where the development consists of 24 or more units. Conversely, units of more than 2,500
square feet are required to provide more affordable units than the baseline listed in Table 2.
While this concept does indeed encourage smaller, and thus less expensive units, the market has
shifted such that even 1,100 square foot units are no longer affordable to moderate and some
above moderate households. Figure 2 shows the affordability gap for unit sizes exempted from
inclusionary requirements under some or all scenarios, compared to a unit that is truly affordable Page 200 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 5
to moderate income households. While an 800 square foot unit is affordable to a moderate-
income household of two, a family of three would experience an affordability gap of $15,400 for
an 1,100 square foot unit. A moderate-income household of four would experience an
affordability gap of $32,650 for a 1,500 square foot unit, despite having a higher income than
the household of three. This analysis shows that 1,100 and 1,500 square foot units are
unaffordable and thus contributing to an affordable housing shortage, because their construction
is not required to contribute to the development of housing that is affordable in the community.
Figure 2 Affordability Gaps for Units Adjusted by Table 2A
Overview of DRA Nexus Studies
The City retained DRA to prepare a nexus study, completed in 2019, establishing a rational
nexus between market-rate residential development and non-residential development and the
need for affordable housing in the City. The purpose of the of the nexus study was to determine
the extent to which new market-rate residential and non-residential development in the City
increases demand for housing and exacerbates the City’s shortage of affordable housing. DRA
states that the basis for the fee is that development increases employment, which also increases
the demand for housing for the added employees. Since the private housing market, with no
public assistance, will not provide housing affordable for lower-earning employees, a nexus fee is
justified to help create that housing. DRA also notes that non-residential development, such as
retail/services, office, and industrial uses, have a direct employment impact since employees
work from these buildings.
In its residential nexus study, DRA calculates fees for three categories of residential
development: owner-occupied single-family units, owner-occupied townhomes, and renter-
occupied multifamily units. Maximum fees calculated were $113.99 per square foot for single-
family, $48.33 per square foot for townhomes, and $55.31 for multifamily units. For commercial
uses, DRA calculated fees for retail, hotel, service, office, industrial and institutional space. The
maximum fees calculated per square foot were: $69.60 for retail; $86.12 for hotel; $65.85 for
service; $173.09 for office; $84.47 for industrial; and $151.64 for institutional.
DRA states in its report that it does not recommend the maximum nexus fees for adoption, and
notes the need to evaluate development feasibility, along with a range of other policy factors, in
800 Sq. Ft.1,100 Sq. Ft.1,500 Sq. Ft.
(2-person HH)(3-person HH)(4-person HH)
Average Market Rate Rent1 $2,280 $3,025 $3,750
Moderate Income for Typical Household Size2 $93,900 $105,600 $117,350
Income Required to Rent2 $91,200 $121,000 $150,000
Affordability Gap $2,700 ($15,400)($32,650)
Sources: HCD Income Limits 2021; CoStar; Apartments.com; City of San Luis Obispo; Economic & Planning
Systems, Inc.
Unit Size
Item
[1] Based on CoStar and Apartments.com data on typical rents per square foot for new construction in San Luis
Obispo in November 2021.
[2] Assumes families of the specified sizes can pay up to 30 percent of gross income on rent without becoming rent
burdened. Does not include other housing related costs such as utilities
Page 201 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 6
determining appropriate fee levels. The DRA report also shows a set of other municipalities’
commercial linkage fees to demonstrate typical fee levels elsewhere.
Defining the Inclusionary Program and Fee Levels
EPS used separate methods of identifying appropriate fee levels for residential and commercial
uses. For residential, EPS developed a feasibility model to compare different fee levels and
inclusionary requirement scenarios. EPS calibrated the inclusionary requirement inputs based on
inclusionary programs in other jurisdictions. The approach for defining affordable housing
commercial linkage fees relied principally on a survey of commercial linkage fees in other
jurisdictions, building off a similar exercise performed by DRA in 2019. Details on these
approaches are outlined in the subsections below
Defining the Inclusionary Program for Residential Uses
EPS has prepared financial pro formas reflecting the expected costs of new development, based
on DRA’s analysis, and compared those costs to the revenues that could be generated from the
projects given various mixes of market-rate and affordable housing.
Ownership Scenarios
In evaluating various inclusionary and impact fee scenarios for ownership housing, EPS analyzed
the development economics of a hypothetical development consisting of 1,550 square feet units
and two bedrooms each, with an average of three persons per household. This prototype based
on the average size of units analyzed in the DRA analysis. The seven scenarios are:
Current Ordinance – This scenario assumes 5 percent of units are priced for moderate
income households.
Current In-Lieu Fee – This scenario assumes an in-lieu fee equal to 5 percent of total cost
of construction of the market rate units.
No Inclusionary or Fee – This scenario shows the estimated return that could be achieved
by developers if they are not required to pay any fee or provide any inclusionary units.
Maximum Nexus-Based Fee – This scenario assumes a fee of $48.33 per square foot,
based on results of DRA Nexus Study.
Maximum Feasible Fee – This scenario assumes the maximum fee that still allows
developer to achieve a 15 percent return. Calculated to be $34.60 per square foot.
Recommended In-Lieu Fee - This scenario assumes an in-lieu fee of $25.00 per square
foot.
Feasible Inclusionary Requirements – This scenario shows 10 percent of total units as
inclusionary, all provided onsite. Assumes ½ of units are priced for Moderate income
households and ½ are priced for Low-income households.
Key revenue assumptions are based on RedFin sales data for San Luis Obispo over the period
from December 2020 through December 2021, which suggest that a home of this type and size
in San Luis Obispo could sell for about $540 per square foot, or roughly $840,000. For the
affordable units, maximum value by income category is shown in Figure 3. Construction cost
estimates are based on assumptions used in the DRA analysis, adjusted for inflation, with total
Page 202 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 7
direct and indirect costs (except affordable housing fees) assumed to be approximately $650,000
per unit.
Figure 3 Affordable Home Value for a 3-Person Household by Income Category
The scenarios presented test the feasibility of incorporating different fee levels and affordability
requirements, feasibility being measured by an estimated profit margin. These revenue and cost
estimates inform a range of profit margins (net revenue divided by gross revenue), which vary
by scenario, as shown in Figure 4. Based on recent experience with developers and lenders in
the region, EPS assumes that developers would require at least a 15 percent profit margin in
order to accept the risk associated with the project. The results show that, unsurprisingly, the
‘No Inclusionary or Fee’ scenario yields the highest return, while all others except the maximum
nexus fee also appear feasible.
2021 Max Income Maximum Home Price
Affordability Category 3-person household
Very Low Income (VLI)$44,050 $163,000
Low Income (LI)$70,450 $265,000
Moderate Income (Mod)$105,600 $405,000
Sources; HCD 2021 Income Limits; San Luis Obispo County Housing Authority; EPS
Page 203 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 8
Figure 4 For-Sale Feasibility Results by Scenario
Rental Scenarios
On the rental side, EPS modeled a market rate multifamily development. Units are assumed to
average 900 square feet with two bedrooms, and a household size of three people. As with the
for-sale scenarios, development costs are based on those used by the DRA analysis, adjusted for
inflation. For income assumptions, EPS compiled market-rate and affordable rents based on
conditions and requirements in San Luis Obispo. As the standard metric for feasibility, EPS
modeled the annual yield on cost, calculating aggregate Net Operating Income (NOI) divided by
development costs. A 5 percent yield on cost was deemed the threshold for feasibility. Again,
EPS evaluated a number of scenarios, adjusting the inclusionary requirements and fee levels in
each. Outlined below are the tested against the current rental ordinance:
Current Ordinance – This scenario assumes 5 percent of units are priced at levels
affordable for Moderate income households
Current In-Lieu Fee – This scenario assumes an in-lieu fee equal to 5 percent of total cost
of construction of the market rate units.
No Inclusionary or Fee – This scenario shows the estimated return achieved by developers
when they are not required to pay any fee or provide any inclusionary units.
Maximum Nexus-based Fee – This scenario assumes a fee of $55.31 per square foot,
based on DRA Affordable Housing Nexus Study results for this product type.
Maximum Feasible Fee – This scenario shows the maximum fee that still allows developer
to achieve 5 percent yield-on-cost. Calculated to be $22.50 per square foot
Recommended In-Lieu Fee – This scenario assumes an in-lieu fee of $20.00 per square
foot.
Page 204 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 9
Recommended Inclusionary – This scenario shows 6 percent of total units as inclusionary,
provided onsite. Assumes ½ of units are priced for Moderate income households and ½ are
priced for Low-income households.
Income assumptions for market rate units equal a net operating income (revenue minus
operational costs) of $23,000 per year, or roughly $2,900 per month in rent. This reflects typical
rents for newly constructed multifamily in the Greater San Luis Obispo area. Affordable rents
were informed by the 2021 income limits for San Luis Obispo County, with the assumption that
these households can spend up to 30 percent of gross income on housing. On the cost side, EPS
again relied on assumptions from the DRA analysis, adjusted for inflation. These revenue and
cost estimates inform a range of yield on cost percentages, which vary by scenario, as show in
Figure 5. In the case of rental, the current in-lieu fee is borderline infeasible, while the
maximum nexus-based fee is almost certainly infeasible. The remaining scenarios all appear to
generate sufficient returns based on the assumptions used.
Figure 5 Rental Feasibility Results by Scenario
Page 205 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 10
Survey of Other Jurisdictions’ Residential Affordable Housing Programs
As part of the feasibility analysis for residential uses, EPS aggregated key features of inclusionary
programs in nearby jurisdictions, or jurisdictions of similar size and character. While the market
conditions informing these jurisdictions’ inclusionary housing policies can vary substantially, it
can nevertheless be informative to use other local governments’ policies as a benchmark for
reasonableness. Key aspects of several jurisdictions’ inclusionary programs are listed below:
– Arroyo Grande
• Inclusionary requirement, but varies from 5 percent (VLI) to 15 percent (Mod)
depending on affordability depth provided
• In-lieu fee a percentage of construction value
– County of San Luis Obispo
• Inclusionary requirement of 8 percent (25 percent reduction, if onsite) for
ownership housing over 2,200 sq. ft., with 2 percent each for workforce,
moderate, low-income and very low-income households. Commercial
developments greater than 5,000 also subject to inclusionary requirements or in-
lieu fee.
• Fee charged on a per square foot basis, but rate escalates as unit size increases
(first 2,200 SF are exempt)
– Morro Bay
• Inclusionary requirement, either 1 unit, or 10 percent of all units, whichever is
greater
• Onsite and offsite inclusionary units must be demonstrably non-feasible for the
City to accept a fee
– Atascadero
• Inclusionary requirement of 20 percent moderate in place, but projects utilizing
density bonus program are exempt
– Pismo Beach
• Inclusionary requirement of 10 percent for projects of 10 or more units. Projects
of 5-9 units pay fee
– Santa Barbara
• 15 percent for ownership housing, rental developments of between 5-9 units
required to set aside 1 unit
– Davis
• Single-family ranges from 10 percent to 25 percent depending on lot size, while
townhomes require 10 percent. Multifamily ranges from 5 percent for condos to
35 percent for rental projects of 20+ units
Page 206 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 11
Determining Commercial Linkage Fee Level for Non-Residential Uses
In determining an appropriate commercial linkage fee level, EPS examined fee levels charged
elsewhere in California. Existing fee levels in other jurisdictions serve as a proxy for development
feasibility, given each of the jurisdictions has seen commercial development since the adoption
of their affordable housing commercial linkage fees. In most cases, this involved obtaining
updated information on the fee levels reported by DRA. The exception to this was the inclusion of
the County of San Luis Obispo’s commercial linkage fee program. Figure 6 shows the
commercial linkage fees by use (on a square foot basis) for Berkeley, Oakland, Petaluma, and
San Luis Obispo County. Fees range from less than $1 for industrial uses in San Luis Obispo
County to $5.90 for office and industrial uses in Oakland. Unsurprisingly, the Bay Area cities of
Berkeley and Oakland have the highest commercial linkage fees, reflecting the higher cost of
housing in the region. It should be noted that each city, with the exception of Berkeley, has
updated its fees since 2019. No other cities in San Luis Obispo County have adopted commercial
linkage fees.
Figure 6 Commercial Linkage Fee Amounts in Other California Jurisdictions
Preliminary Affordable Housing Program
Recommendation
Based on the feasibility study and comparative analysis of existing fee levels in other
municipalities, EPS recommends adopting a per square foot approach for both the residential in-
lieu fee and the commercial linkage fee, both to be applied citywide. Fees should be paid
according to land use, not necessarily zoning. For example, a mixed-use development would pay
impact fees on the nonresidential development and the residential development would need to
comply with the inclusionary requirements.
Inclusionary Requirements
EPS’s recommended inclusionary approach would see an increase in the percentage of required
affordable units, from 3-5 percent (depending on affordability) to 10 percent. Residential
developers may choose to comply with the inclusionary housing requirement by providing units
onsite or by paying an in-lieu fee.1 In-lieu fees are calculated to be approximately equivalent to
1 AB1505 specifies that inclusionary programs must provide alternative means of complying with the
requirement. Alternatives often include: land dedication, building affordable units off-site, payment of
an in-lieu fee, and various combinations.
Office Retail Industrial Hotel R&D
Other
Non-Res
Berkeley $4.50 $4.50 $2.25 $4.50 $4.50 -
Oakland $5.90 -$5.90 ---
Petaluma $2.93 $5.07 $3.02 ---
SLO County $2.46 $2.11 $0.98 $2.11 -$1.84
City of San Luis Obispo $5.00 $5.00 $4.00 $4.00
Sources: David Rosen and Associates; Keyser Marston Associates; City of Berkeley; City of Oakland; City
of Petaluma; County of San Luis Obispo; Economic & Planning Systems, Inc.
2021 Commercial Linkage Fee Amount
Jurisdiction
Page 207 of 381
Memorandum February 2, 2022
San Luis Obispo Affordable Housing Fees Page 12
complying onsite. If provided onsite in a for-sale development, 10 percent of the units would be
required to be affordable, with the inclusionary units split between low-income units (5 percent)
and moderate-income units (5 percent). For rental properties, 6 percent of units would be
required to be affordable, again split between low-income units (3 percent) and moderate-
income units (3 percent).
EPS also recommends the removal of Table 2A. As discussed, EPS analysis finds that under
current market conditions, units of these sizes are not affordable even for moderate-income
households (households earning 120 percent of AMI). Therefore, units of at least 1,100 square
feet are not ‘affordable by design’, as was the intent of Table 2A, and developers of these units
are providing lower levels of affordable housing in the community.
If developers elect to pay an in-lieu fee instead of providing inclusionary units, EPS recommends
a per square foot fee as opposed to a percent-of-value fee. For for-sale residential, the
recommended fee level is $25 per square foot, while for rental units, the recommended fee level
is $20 per square foot. In-lieu fees are paid on a per square foot basis up to the per unit fee
maximum determined by the DRA Affordable Housing Nexus Study. Regarding fractional units
(i.e., the inclusionary requirement results in a non-whole number of affordable units), the City
currently requires that fractional units be rounded up to the nearest whole number of units.
Affordable Housing Commercial Linkage Fee Levels
For commercial developments, EPS recommends a commercial linkage fee as opposed to an
inclusionary program. The proposed fee amounts are $5.00 per square foot for office, service,
hotel, and retail uses, and $4.00 per square foot for industrial and institutional uses.
Page 208 of 381
Agreement Page 1
AGREEMENT
THIS AGREEMENT is made and entered into in the City of San Luis Obispo on
_____________________, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter
referred to as City, and HouseKeys, hereinafter referred to as Contractor.
W I T N E S S E T H:
WHEREAS, the City published a Request for Proposals to solicit an administrator for the City’s Below
Market Rate (BMR) Housing Programs.
WHEREAS, Contractor is qualified to perform this type of service and has submitted a proposal to do so
which has been accepted by City.
NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter
contained, the parties hereto agree as follows:
1. TERM. The term of this Agreement shall be from the date this Agreement is made and entered,
as first written above, until June 30, 2023, or acceptance or completion of said services.
2. INCORPORATION BY REFERENCE City Specification No. SLO-BMR-2021 is hereby
incorporated in and made a part of this Agreement as Exhibit A. The Contractor’s scope of work as mutually agreed
upon by the City and the Contractor is attached hereto as Exhibit B and incorporated by reference. The City’s terms
and conditions are hereby incorporated in and made a part of this Agreement as Exhibit C. To the extent that there
are any conflicts between the Contractor’s fees and scope of work and the City’s terms and conditions, the City’s
terms and conditions shall prevail, unless specifically agreed otherwise in writing signed by both parties.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
8/4/2021 | 4:15 PM PDT
Page 209 of 381
Agreement Page 2
3. CITY'S OBLIGATIONS. For providing services as specified in this Agreement, City will pay,
and Contractor shall receive therefor compensation in a total sum not to exceed $111,000 for Year 1 (defined as July
1, 2021 to June 30, 2022) and $96,000 for Year 2 (defined as July 1, 2022 to June 30, 2023) for a total of $207,000.
Contractor will bill the City on a monthly basis and will submit all invoices to ap@slocity.org. City understands
that any projects or requests of the Contractor that are defined out of the Scope of Work, as referenced in Exhibit B,
will equate to $200 per hour of the Contractor’s time.
4. CONTRACTOR'S OBLIGATIONS. For and in consideration of the payments and Agreements
herein before mentioned to be made and performed by City, Contractor agrees with City to provide services as set
forth in Exhibit B.
5. AMENDMENTS. Any amendment, modification, or variation from the terms of this Agreement
shall be in writing and shall be effective only upon approval by the Community Development Director of the City.
6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete Agreement between the parties hereto. No oral
Agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of
any force or effect, nor shall any such oral Agreement, understanding, or representation be binding upon the parties
hereto.
7. PROPERTY OF CITY. All reports, data, maps, models, charts, studies, surveys, photographs,
memoranda, or other written documents or materials prepared by Contractor pursuant to this Agreement will be
property of City hereunder and upon the maturation or termination of this Agreement.
8. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage
prepaid by registered or certified mail ad dressed as follows:
City Community Development Department
City of San Luis Obispo
919 Palm Street
San Luis Obispo, CA 93401
Attn: Community Development Director
HouseKeys Julius Nyanda
358 Digital Drive
Morgan Hill, CA 95037
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 210 of 381
Agreement Page 3
9. AUTHORITY TO EXECUTE AGREEMENT. Both City and Contractor do covenant that each
individual executing this Agreement on behalf of each party is a person duly authorized and empowered to execute
Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year
first above written.
CITY OF SAN LUIS OBISPO, A Municipal Corporation
By:_____________________________________
Derek Johnson, City Manager
APPROVED AS TO FORM: CONTRACTOR
By: ________________________________ By: _____________________________________
Christine Dietrick, City Attorney Julius Nyanda, CEO, HouseKeys Inc.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 211 of 381
The City of San Luis Obispo is committed to including disabled persons in all of our services, programs and activities.
Telecommunications Device for the Deaf (805) 781-7410.
Exhibit A
Notice Requesting Proposals for Below Market Rate Housing Program Administrator
Spec. No. SLO-BMR-2021
The City of San Luis Obispo is requesting sealed proposals for a Below Market Rate (BMR) Housing
Program Administrator over a 2-year term (with an option to extend for another 2 years). All proposals
must be received by the Department of Finance (990 Palm Street) by 3:00 p.m. on June 14, 2021.
All firms interested in receiving further correspondence regarding this Request for Proposals (RFP) will
be required to complete a free registration proposal using BidSync (https://www.bidsync.com/bidsync-
app-web/vendor/register/Login.xhtml).
All proposals must be received via BidSync by the Department of Finance at or before June 14, 2021, when
they will be opened electronically in BidSync.
Proposals received after said time may not be considered. The preferred method of submission is
electronically via BidSync, but if you wish to send a hard copy, to guard against premature opening, each
proposal shall be submitted to the Department of Finance in a sealed envelope plainly marked with the
proposal title, project number, proposer name, and time and date of the proposal opening. Proposals
shall be submitted using the forms provided in the project package.
Questions should be posted to BidSync where the City will answer.
Project packages and additional information may be obtained at the City’s BidSync website at
www.BidSync.com.
Please contact Dan Clancy at dclancy@slocity.org with any questions. For technical issues with BidSync,
please contact BidSync customer help at 800-990-9339.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 212 of 381
TABLE OF CONTENTS
A. INTRODUCTION .................................................................................................................................... 1
B. SCOPE OF WORK ................................................................................................................................... 2
C. PROJECT SCHEDULE .............................................................................................................................. 4
D. PROJECT BUDGET ................................................................................................................................. 4
E. GENERAL TERMS AND CONDITIONS .................................................................................................... 4
F. CONTRACT AWARD AND EXECUTION .................................................................................................. 6
G. CONTRACT PERFORMANCE .................................................................................................................. 6
H. SPECIAL TERMS AND CONDITIONS .................................................................................................... 10
I. PROPOSAL CONTENT .......................................................................................................................... 12
J. PROPOSAL REVIEW ............................................................................................................................. 13
K. FORM OF AGREEMENT ....................................................................................................................... 15
L. INSURANCE REQUIREMENTS ............................................................................................................. 17
M. PROPOSAL SUBMITTAL FORM – SAMPLE .......................................................................................... 19
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 213 of 381
Page | 1
A. INTRODUCTION
The City’s first Inclusionary Housing Ordinance was adopted in 1999 and since that time, the City has made
great strides in ensuring that a percentage of all new housing units are affordable to income-eligible
households, defined as extremely low, very-low, low, and moderate income. These homes remain at
Below Market Rate (BMR) prices for the required term through deed-restrictions, covenants, and
affordability agreements. Over the past several years, the City's BMR portfolio has grown substantially,
and staff has determined that the best way to effectively accomplish the management and administration
of BMR housing going forward is through a consultant. As a result, staff is recommending issuance of an
RFP to solicit outside consultant expertise to oversee BMR housing administration, including ownership
and rental units, and administration of the City’s First-Time Homebuyer Loan program.
BMR Ownership Units
There are approximately 73 BMR homeownership units within the City’s portfolio. The most recent
additions are five moderate-income units within the South Morros neighborhood, of which three have
sold in the past eight months and the other two are expected to sell by the end of summer. These units
are restricted through provisions included in the Deed of Trust, Promissory Note, and Resale Restriction
Agreement that are recorded on title of each property when it is sold. These documents, among other
items, dictate the sale/resale process, the allowable sales price, income qualifications of subsequent
buyers, refinancing provisions, and repayment requirements due upon sale or default.
Management of these units by a BMR Housing Administrator under contract with the City is expected to
provide a higher level of service to homeowners and potential homeowners under the program.
Currently, the City has one staff member who has the training and knowledge to assist with these
complex real estate transactions, while simultaneously engaging in other housing programs, including
the Housing Major City Goal workplan, Housing Element programs, and coordination of new affordable
housing development and financing. The use of a consultant to perform this work will ensure timely
processing of purchase and sale agreements, refinancing, subordination agreements, and other time
sensitive work.
BMR Rental Units
The City has approximately 106 affordable rental units scattered throughout the City. These units are
located within market-rate projects and require close oversight since they are not normally managed by
an experienced affordable housing administrator/provider. These units are typically built by private
developers, consistent with the Inclusionary Housing Ordinance, and are secured as affordable through
deed-restrictions (or affordability covenants/agreements) entered into by the City and the project
owners. The units subject to these agreements are proposed to be managed by the BMR Housing
Administrator.
The City also has a healthy inventory of rental units managed by non-profit housing agencies (i.e.,
HASLO, Peoples’ Self-Help Housing, etc.), which were partially developed by City financing mechanisms
(i.e., the Affordable Housing Fund, Community Development Block Grants, Impact Fee Deferral loans).
These units are within complexes that are 100% affordable due to tax credit and/or other subsequent
federal, state, and local requirements, and thus have multiple deed-restrictions recorded on title of the
properties due to the criteria stipulated by those various funding sources. Because these units are
managed by experienced affordable housing administrators, the City is not proposing to have the
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 214 of 381
Page | 2
proposed BMR Housing Administrator manage these units—compliance monitoring and coordination
with non-profit partners that manage these projects will stay within the scope of work of City staff.
First-Time Homebuyer/BEGIN Program Loans
The City also has various first-time homebuyer assistance loans utilizing the State grant BEGIN Program
and City Affordable Housing Fund dollars. Currently, there are 11 active loans and approximately
$200,000 available for issuance. Funds are issued as 30-year loans, that are executed via a Promissory
Note, evidenced by a Deed of Trust that is recorded on title of the property purchased. Repayment is
due upon sale, may be made at the request of the homeowner, or is due upon completion of the loan
term. The BMR Housing Administrator will monitor existing loans and improve City marketing of the
program to make additional loans within the City’s balance of available funding.
B. SCOPE OF WORK
The subject RFP solicits the services of a BMR Housing Program Administrator consultant to oversee the
administration of the City’s BMR ownership and rental units, as well as the First-Time Homebuyer Loan
program. It is anticipated that administrator will be responsible for the following:
1. BMR Program Administration Setup
a. Review, update (if necessary), and transfer the City’s existing BMR Interest List database to
consultant administration which will be owned by the City.
b. Review and organize San Luis Obispo BMR homeowner files, loan files, and the City’s existing
digital inventory and create a system for ongoing administration and monitoring.
c. Review existing BMR Agreement templates and suggest modifications that are in line with
industry best practices.
d. Update existing flow charts and protocols for BMR home transfers, loan payoff/subordination,
default remedies, and other processes associated with BMR ownership transactions.
e. Review and develop recommendations to establish new City fees associated with costs of BMR
Program transactions.
f. Update City Affordable Housing webpage with content and information pertaining to
updated/amended policies and procedures for the BMR program, online application forms and
other relevant information.
2. BMR Housing Program Administration
a. BMR Inquiries (ongoing): The BMR Housing Administrator will be responsible for handling calls,
emails, and in-person inquiries related to current housing portfolio loan holders and respond in
a timely manner.
b. BMR Eligibility and Interest List (ongoing): The BMR Housing Administrator will maintain a list
of qualified buyers and interested prospective buyers.
c. BMR Program Reports: The BMR Housing Administrator will provide semi-annual updates to
staff and the City Council on the general status of the BMR program administration, including:
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 215 of 381
Page | 3
i. General Program activity (e.g., BMR inquiries)
ii. BMR compliance. See item #3
iii. Loan activity. See item #4
iv. Current inventory of affordable units (subject to formal Agreement with the City)
v. Other information as needed for State reporting
vi. Performance Metrics (see Section E below)
3. Annual BMR Compliance Monitoring
a. Documentation: The BMR Housing Administrator will administer the program and assure
Affordability Deed Restrictions are recorded and followed by all parties as applicable for each
property.
b. BMR Homeowner Certification: The BMR Housing Administrator will coordinate with
homeowners on an annual basis to certify that the original buyer continues to comply with the
signed BMR Agreement including living in the BMR home as their principal residence. The BMR
Housing Administrator will work with the City to remedy potential BMR defaults in accordance
with the BMR Agreement.
c. BMR Renter Certification: The BMR Housing Administrator will coordinate with property
managers, tenants, and the Housing Authority of San Luis Obispo (HASLO) on an annual basis to
certify that all BMR units are occupied by renters who continue to meet income requirements.
The BMR Housing Administrator will also ensure that the appropriate rent and utilities are being
charged given annual updates to the City’s Affordable Housing Standards, based on State
income limits for our area.
4. Existing Loan Administration
a. The BMR Housing Administrator will maintain an updated database, to be owned by the City, of
all first-time-homebuyer and other housing loans (borrower name and address, loan amount,
interest rate, loan term, loan distribution date and due date). This database will also include
principal and interest received for loans that have been paid off, as well as any principal written
off as a result of foreclosure or other default.
b. The BMR Housing Administrator will monitor existing first-time-homebuyer and other housing
loans annually to ensure that the borrower remains in compliance with the loan agreement
(e.g., current homeowner insurance, original buyer continues to reside on property). In case of
default, the BMR Housing Administrator will contact the owner and work with the City to see
that the loan is repaid.
c. The BMR Housing Administrator will work with the City to process all paperwork and legal
recordings required when first-time homebuyer loans and other housing loans are paid off or
refinanced (as needed basis).
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 216 of 381
Page | 4
5. BMR Home Sales/Resales (as needed basis)
a. BMR Marketing: The BMR Housing Administrator will work with each Developer and/or the City
to market the availability of new and resale BMR homes to eligible households who have
expressed interest in the BMR program. BMR Housing Administrator will also be responsible
ensuring developers’ compliance with sale provisions dictated in recorded Development
Agreements (i.e. San Luis Ranch and Avila Ranch) and Affordable Housing Agreements. This task
will include providing marketing materials in both English and Spanish to City staff for the C ity’s
website.
b. Interest Rates, Homeowner’s Association Fees, and Sales Price: Upon request, the BMR Housing
Administrator will supply the City with current mortgage interest rates and other information
necessary to amend (if necessary) sales prices and/or interest rates of new BMR homes and
existing BMR homes being offered for resale.
c. Homeowner Eligibility: The BMR Housing Administrator will submit the data on each eligible
applicant to the City for approval prior to formalizing any Agreement.
6. BMR Programs: The BMR Housing Administrator will work with City staff to recommend, develop
and implement programs. City Council will approve any new programs under this task.
7. Administrator will regularly update program guidelines and program materials in conjunction with
City staff to reflect the Administrator’s administrative process for Program Administration
including, but not limited to: applications, program pamphlets, rent & resale calculations (i.e.
Affordable Housing Standards), selection processes, vacancies, sale and resale of units,
refinancing requests, collection of Agency fees and other applicable fees, and default
monitoring/resolution process. Administrator’s objective will be to work alongside Agency Staff
to incorporate “learnings” from the team’s collective history with housing affordability programs
in California.
C. PROJECT SCHEDULE
As this Project will be ongoing, no activity and scheduled dates are necessary. Instead, contractor will
comply with expectations and reporting deadlines outlined in the Scope of Work and subsequent
agreement to be executed upon selection of contractor. Please refer to Section I – Proposal Review
below for a tentative schedule regarding the review process for proposals received. Note that
administration of the BMR Program is perceived to commence on July 26, 2021.
D. PROJECT BUDGET
The administration of the City’s BMR Program is budgeted at $117,000 annually for the next two City
fiscal years (Year1: July 1, 2021 – June 30, 2022; Year 2: July 1, 2022 - June 30, 2023). Upon the end of
the two-year period, the City will consider extending contract budget for subsequent 2-year period.
E. PERFORMANCE MONITORING
The City holds the right to monitor performance of the BMR Housing Administrator, including but not
limited to, timeliness in response to inquiries and satisfaction of clients.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 217 of 381
Page | 5
F. GENERAL TERMS AND CONDITIONS
PROPOSAL REQUIREMENTS
1. Requirement to Meet All Provisions. Each individual or firm submitting a proposal (bidder) shall
meet all the terms, and conditions of the Request for Proposals (RFP) project package. By virtue
of its proposal submittal, the bidder acknowledges agreement with and acceptance of all
provisions of the RFP specifications.
2. Proposal Submittal. Each proposal must be submitted on the form(s) provided in the
specifications and accompanied by any other required submittals or supplemental materials.
Proposal documents shall be enclosed in an envelope that shall be sealed and addressed to the
Department of Finance, City of San Luis Obispo, 990 Palm Street, San Luis Obispo, CA, 93401. To
guard against premature opening, the proposal should be clearly labeled with the proposal title,
project number, name of bidder, and date and time of proposal opening. No FAX or emailed
submittals will be accepted.
3. Insurance Certificate. Each proposal must include a certificate of insurance showing:
a. The insurance carrier and its A.M. Best rating.
b. Scope of coverage and limits.
c. Deductibles and self-insured retention.
The purpose of this submittal is to generally assess the adequacy of the bidder’s insurance
coverage during proposal evaluation; as discussed under paragraph 12 below, endorsements are
not required until contract award. The City’s insurance requirements are detailed in Section E.
4. Proposal Quotes and Unit Price Extension. The extension of unit prices for the quantities
indicated and the lump sum prices quoted by the bidder must be entered in figures in the spaces
provided on the Proposal Submittal Form(s). Any lump sum bid shall be stated in figures. The
Proposal Submittal Form(s) must be totally completed. If the unit price and the total amount
stated by any bidder for any item are not in agreement, the unit price alone will be considered as
representing the bidder’s intention and the proposal total will be corrected to conform to the
specified unit price.
5. Proposal Withdrawal and Opening. A bidder may withdraw its proposal, without prejudice prior
to the time specified for the proposal opening, by submitting a written request to the Director of
Finance for its withdrawal, in which event the proposal will be returned to the bidder unopened.
No proposal received after the time specified or at any place other than that stated in the “Notice
Inviting Bids/Requesting Proposals” will be considered. All proposals will be opened and declared
publicly. Bidders or their representatives are invited to be present at the opening of the
proposals.
6. Submittal of One Proposal Only. No individual or business entity of any kind shall be allowed to
make or file, or to be interested as the primary submitter in more than one proposal, except an
alternative proposal when specifically requested; however, an individual or business entity that
has submitted a sub-proposal to a bidder submitting a proposal, or who has quoted prices on
materials to such bidder, is not thereby disqualified from submitting a sub-proposal or from
quoting prices to other bidders submitting proposals.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 218 of 381
Page | 6
7. Communications. All timely requests for information submitted in writing will receive a written
response from the City. Telephone communications with City staff are not encouraged but will
be permitted. However, any such oral communication shall not be binding on the City.
G. CONTRACT AWARD AND EXECUTION
8. Proposal Retention and Award. The City reserves the right to retain all proposals for a period of
60 days for examination and comparison. The City also reserves the right to waive non-substantial
irregularities in any proposal, to reject any or all proposals, to reject or delete one part of a
proposal and accept the other, except to the extent that proposals are qualified by specific
limitations. See the “special terms and conditions” in Section C of these specifications for
proposal evaluation and contract award criteria.
9. Competency and Responsibility of Bidder. The City reserves full discretion to determine the
competence and responsibility, professionally and/or financially, of bidders. Bidders will provide,
in a timely manner, all information that the City deems necessary to make such a decision.
10. Contract Requirement. The bidder to whom award is made (Contractor) shall execute a written
contract with the City within ten (10) calendar days after notice of the award has been sent by
mail to it at the address given in its proposal. The contract shall be made in the form adopted by
the City and incorporated in these specifications.
H. CONTRACT PERFORMANCE
11. Insurance Requirements. The Contractor shall provide proof of insurance in the form, coverages
and amounts specified in Section E of these specifications within 10 (ten) calendar days after
notice of contract award as a precondition to contract execution.
12. Business License & Tax. The Contractor must have a valid City of San Luis Obispo business license
& tax certificate before execution of the contract. Additional information regarding the City’s
business tax program may be obtained by calling (805) 781-7134.
13. Ability to Perform. The Contractor warrants that it possesses, or has arranged through
subcontracts, all capital and other equipment, labor, materials, and licenses necessary to carry
out and complete the work hereunder in compliance with all federal, state, county, city, and
special district laws, ordinances, and regulations.
14. Laws to be Observed. The Contractor shall keep itself fully informed of and shall observe and
comply with all applicable state and federal laws and county and City of San Luis Obispo
ordinances, regulations and adopted codes during its performance of the work.
15. Payment of Taxes. The contract prices shall include full compensation for all taxes that the
Contractor is required to pay.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 219 of 381
Page | 7
16. Permits and Licenses. The Contractor shall procure all permits and licenses, pay all charges and
fees, and give all notices necessary.
17. Safety Provisions. The Contractor shall conform to the rules and regulations pertaining to safety
established by OSHA and the California Division of Industrial Safety.
18. Public and Employee Safety. Whenever the Contractor’s operations create a condition hazardous
to the public or City employees, it shall, at its expense and without cost to the City, furnish, erect
and maintain such fences, temporary railings, barricades, lights, signs and other devices and take
such other protective measures as are necessary to prevent accidents or damage or injury to the
public and employees.
19. Preservation of City Property. The Contractor shall provide and install suitable safeguards,
approved by the City, to protect City property from injury or damage. If City property is injured
or damaged resulting from the Contractor’s operations, it shall be replaced or restored at the
Contractor’s expense. The facilities shall be replaced or restored to a condition as good as when
the Contractor began work.
20. Immigration Act of 1986. The Contractor warrants on behalf of itself and all subcontractors
engaged for the performance of this work that only persons authorized to work in the United
State pursuant to the Immigration Reform and Control Act of 1986 and other applicable laws shall
be employed in the performance of the work hereunder.
21. Contractor Non-Discrimination. In the performance of this work, the Contractor agrees that it
will not engage in, nor permit such subcontractors as it may employ, to engage in discrimination
in employment of persons because of age, race, color, sex, national origin or ancestry, sexual
orientation, or religion of such persons.
22. Work Delays. Should the Contractor be obstructed or delayed in the work required to be done
hereunder by changes in the work or by any default, act, or omission of the City, or by strikes, fire,
earthquake, or any other Act of God, or by the inability to obtain materials, equipment, or labor
due to federal government restrictions arising out of defense or war programs, then the time of
completion may, at the City’s sole option, be extended for such periods as may be agreed upon
by the City and the Contractor. In the event that there is insufficient time to grant such extensions
prior to the completion date of the contract, the City may, at the time of acceptance of the work,
waive liquidated damages that may have accrued for failure to complete on time, due to any of
the above, after hearing evidence as to the reasons for such delay, and making a finding as to the
causes of same.
23. Payment Terms. The City’s payment terms are 30 days from the receipt of an original invoice and
acceptance by the City of the materials, supplies, equipment, or services provided by the
Contractor (Net 30).
24. Inspection. The Contractor shall furnish City with every reasonable opportunity for City to
ascertain that the services of the Contractor are being performed in accor dance with the
requirements and intentions of this contract. All work done, and all materials furnished, if any,
shall be subject to the City’s inspection and approval. The inspection of such work shall not relieve
Contractor of any of its obligations to fulfill its contract requirements.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 220 of 381
Page | 8
25. Audit. The City shall have the option of inspecting and/or auditing all records and other written
materials used by Contractor in preparing its invoices to City as a condition precedent to any
payment to Contractor.
26. Interests of Contractor. The Contractor covenants that it presently has no interest, and shall not
acquire any interest—direct, indirect or otherwise—that would conflict in any manner or degree
with the performance of the work hereunder. The Contractor further covenants that, in the
performance of this work, no subcontractor or person having such an interest shall be employed.
The Contractor certifies that no one who has or will have any financial interest in performing this
work is an officer or employee of the City. It is hereby expressly agreed that, in the performance
of the work hereunder, the Contractor shall at all times be deemed an independent contractor
and not an agent or employee of the City.
27. Hold Harmless and Indemnification.
(a) Non-design, non-construction Professional Services: To the fullest extent permitted by law
(including, but not limited to California Civil Code Sections 2782 and 2782.8), Consultant shall
indemnify, defend, and hold harmless the City, and its elected officials, officers, employees,
volunteers, and agents (“City Indemnitees”), from and against any and all causes of action, claims,
liabilities, obligations, judgments, or damages, including reasonable legal counsels’ fees and costs
of litigation (“claims”), arising out of the Consultant’s performance or Consultant’s failure to
perform its obligations under this Agreement or out of the operations conducted by Consultant,
including the City’s active or passive negligence, except for such loss or damage arising from the
sole negligence or willful misconduct of the City. In the event the City Indemnitees are made a
party to any action, lawsuit, or other adversarial proceeding arising from Consultant’s
performance of this Agreement, the Consultant shall provide a defense to the City Indemnitees
or at the City’s option, reimburse the City Indemnitees their costs of defense, including reasonable
legal fees, incurred in defense of such claims.
(b) Non-design, construction Professional Services: To the extent the Scope of Services involve a
“construction contract” as that phrase is used in Civil Code Section 2783, this paragraph shall
apply in place of paragraph A. To the fullest extent permitted by law (including, but not limited to
California Civil Code Sections 2782 and 2782.8), Consultant shall indemnify, defend, and hold
harmless the City, and its elected officials, officers, employees, volunteers, and agents (“City
Indemnitees”), from and against any and all causes of action, claims, liabilities, obligations,
judgments, or damages, including reasonable legal counsels’ fees and costs of litigation (“claims”),
arising out of the Consultant’s performance or Consultant’s failure to perform its obligations
under this Agreement or out of the operations conducted by Consultant, except for such loss or
damage arising from the active negligence, sole negligence or willful misconduct of the City. In
the event the City Indemnitees are made a party to any action, lawsuit, or other adversarial
proceeding arising from Consultant’s performance of this Agreement, the Consultant shall provide
a defense to the City Indemnitees or at the City’s option, reimburse the City Indemnitees their
costs of defense, including reasonable legal fees, incurred in defense of such claims.
(c) Design Professional Services: In the event Consultant is a “design professional”, and the Scope
of Services require Consultant to provide “design professional services” as those phrases are used
in Civil Code Section 2782.8, this paragraph shall apply in place of paragraphs A or B. To the fullest
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 221 of 381
Page | 9
extent permitted by law (including, but not limited to California Civil Code Sections 2782 and
2782.8) Consultant shall indemnify, defend and hold harmless the City and its elected officials,
officers, employees, volunteers and agents (“City Indemnitees”), from and against all claims,
damages, injuries, losses, and expenses including costs, attorney fees, expert consultant and
expert witness fees arising out of, pertaining to or relating to, the negligence, recklessness or
willful misconduct of Consultant, except to the extent caused by the sole negligence, active
negligence or willful misconduct of the City. Negligence, recklessness or willful misconduct of any
subcontractor employed by Consultant shall be conclusively deemed to be the negligence,
recklessness or willful misconduct of Consultant unless adequately corrected by Consultant. In
the event the City Indemnitees are made a party to any action, lawsuit, or other adversarial
proceeding arising from Consultant’s performance of this Agreement, the Consultant shall provide
a defense to the City Indemnitees or at the City’s option, reimburse the City Indemnitees their
costs of defense, including reasonable legal fees, incurred in defense of such claims. In no event
shall the cost to defend charged to Consultant under this paragraph exceed Consultant’s
proportionate percentage of fault. However, notwithstanding the previous sentence, in the event
one or more defendants is unable to pay its share of defense costs due to bankruptcy or
dissolution of the business, Consultant shall meet and confer with other parties regarding unpaid
defense costs.
(d) The review, acceptance or approval of the Consultant’s work or work product by any
indemnified party shall not affect, relieve or reduce the Consultant’s indemnification or defense
obligations. This Section survives completion of the services or the termination of this contract.
The provisions of this Section are not limited by and do not affect the provisions of this contract
relating to insurance.
28. Contract Assignment. The Contractor shall not assign, transfer, convey or otherwise dispose of
the contract, or its right, title or interest, or its power to execute such a contract to any individual
or business entity of any kind without the previous written consent of the City.
29. Termination for Convenience. The City may terminate all or part of this Agreement for any or no
reason at any time by giving 30 days written notice to Contractor. Should the City terminate this
Agreement for convenience, the City shall be liable as follows: (a) for standard or off -the-shelf
products, a reasonable restocking charge not to exceed ten (10) percent of the total purchase
price; (b) for custom products, the less of a reasonable price for the raw materials, components
work in progress and any finished units on hand or the price per unit reflected on this Agreement.
For termination of any services pursuant to this Agreement, the City’s liability will be the lesser of
a reasonable price for the services rendered prior to termination, or the price for the services
reflected on this Agreement. Upon termination notice from the City, Contractor must, unless
otherwise directed, cease work and follow the City’s directions as to work in progress and finished
goods.
30. Termination. If, during the term of the contract, the City determines that the Contractor is not
faithfully abiding by any term or condition contained herein, the City may notify the Contractor in
writing of such defect or failure to perform. This notice must give the Contractor a 10 (ten)
calendar day notice of time thereafter in which to perform said work or cure the deficiency.
If the Contractor has not performed the work or cured the deficiency within the ten days specified
in the notice, such shall constitute a breach of the contract and the City may terminate the
contract immediately by written notice to the Contractor to said effect. Thereafter, neither party
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 222 of 381
Page | 10
shall have any further duties, obligations, responsibilities, or rights under the contract except,
however, any and all obligations of the Contractor’s surety shall remain in full force and effect,
and shall not be extinguished, reduced, or in any manner waived by the terminations thereof.
In said event, the Contractor shall be entitled to the reasonable value of its services performed
from the beginning date in which the breach occurs up to the day it received the City’s Notice of
Termination, minus any offset from such payment representing the City’s damages from such
breach. “Reasonable value” includes fees or charges for goods or services as of the last milestone
or task satisfactorily delivered or completed by the Contractor as may be set forth in the
Agreement payment schedule; compensation for any other work, services or goods performed or
provided by the Contractor shall be based solely on the City’s assessment of the value of the work-
in-progress in completing the overall work scope.
The City reserves the right to delay any such payment until completion or confirmed
abandonment of the project, as may be determined in the City’s sole discretion, so as to permit a
full and complete accounting of costs. In no event, however, shall the Contractor be entitled to
receive in excess of the compensation quoted in its proposal.
I. SPECIAL TERMS AND CONDITIONS
1. Contract Award. Subject to the reservations set forth in Paragraph 9 of Section B (General Terms
and Conditions) of these specifications, the contract will be awarded to the lowest responsible,
responsive proposer.
2. Sales Tax Reimbursement.
For sales occurring within the City of San Luis Obispo, the City receives sales tax revenues.
Therefore, for bids from retail firms located in the City at the time of proposal closing for which
sales tax is allocated to the City, 1% of the taxable amount of the bid will be deducted from the
proposal by the City in calculating and determining the lowest responsible, responsive proposer.
3. Labor Actions.
In the event that the successful proposer is experiencing a labor action at the time of contract
award (or if its suppliers or subcontractors are experiencing such a labor action), the City reserves
the right to declare said proposer is no longer the lowest responsible, responsive proposer and to
accept the next acceptable low proposal from a proposer that is not experiencing a labo r action,
and to declare it to be the lowest responsible, responsive proposer.
4. Failure to Accept Contract.
The following will occur if the proposer to whom the award is made (Contractor) fails to enter into
the contract: the award will be annulled; any bid security will be forfeited in accordance with the
special terms and conditions if a proposer's bond or security is required; and an award may be
made to the next lowest responsible, responsive proposer who shall fulfill every stipulation as if
it were the party to whom the first award was made.
5. Contract Term
The supplies or services identified in this specification will be used by the City for up to one year.
The prices quoted for these items must be valid for the entire period indicated above u nless
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 223 of 381
Page | 11
otherwise conditioned by the proposer in its proposal.
6. Contract Extension.
The term of the contract may be extended by mutual consent for an additional one-year, and
annually thereafter, for a total of four years.
7. Supplemental Purchases.
Supplemental Purchases. Supplemental purchases may be made from the successful proposer
during the contract term in addition to the items listed in the Detail Proposal Submittal Form. For
these supplemental purchases, the proposer shall not offer prices to the City in excess of the
amounts offered to other similar customers for the same item. If the proposer is willing to offer
the City a standard discount on all supplemental purchases from its generally prevailing or
published price structure during the contract term, this offer and the amount of discount on a
percentage basis should be provided with the proposal submittal.
8. Contractor Invoices
The Contractor may deliver either a monthly invoice to the City with attached copies of detailed
invoices as supporting detail, or one lump-sum upon completion.
9. Non-Exclusive Contract.
The City reserves the right to purchase the items listed in the Detail Proposal Submittal Form, as
well as any supplemental items, from other vendors during the contract term.
10. Unrestrictive Brand Names. Any manufacturer's names, trade names, brand names or catalog
numbers used in the specifications are for the purpose of describing and establishing general
quality levels. Such references are not intended to be restrictive. Proposals will be considered for
any brand that meets or exceeds the quality of the specifications given for any item. In the event
an alternate brand name is proposed, supplemental documentation shall be provided
demonstrating that the alternate brand name meets or exceeds the requirements specified
herein. The burden of proof as to the suitability of any proposed alternatives is upon the proposer,
and the City shall be the sole judge in making this determination.
11. Delivery. Prices quoted for all supplies or equipment to be provided under the terms and
conditions of this RFP package shall include delivery charges, to be delivered F.O.B. San Luis
Obispo by the successful proposer and received by the City within 90 days after authorization to
proceed by the City.
12. Start and Completion of Work. Work on this project shall begin immediately after contract
execution and shall be completed within 90 calendar days thereafter, unless otherwise negotiated
with City by mutual agreement.
13. Change in Work. The City reserves the right to change quantities of any item after contract award.
If the total quantity of any changed item varies by 25% or less, there shall be no change in the
agreed upon unit price for that item. Unit pricing for any quantity changes per item in excess of
25% shall be subject to negotiation with the Contractor.
14. Submittal of References. Each proposer shall submit a statement of qualifications and references
on the form provided in the RFP package.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 224 of 381
Page | 12
15. Statement of Contract Disqualifications. Each proposer shall submit a statement regarding any
past governmental agency bidding or contract disqualifications on the form provided in the RFP
package.
J. PROPOSAL CONTENT
Proposals must, at a minimum, contain the information listed below, and may include any other
information that the candidate feels will facilitate the City’s consideration.
1. Cover Letter. Please include a cover letter which includes your interest in administering the City
of San Luis Obispo’s BMR Program and any other information that you would like to highlight.
(MAXIMUM OF ONE PAGE)
2. Qualifications. Describe your firm’s experience and qualifications to administer San Luis Obispo’s
BMR Program, including processing Resale Restriction Agreements and Deeds of Trust; loan
subordination and payoff transactions; compliance monitoring and certification; transfers and
defaults. Include a list of jurisdictions for which you provide similar services. Provide an example
of your experience in dealing with compliance issues (i.e., steps taken, outcome, etc.). (MAXIMUM
OF THREE PAGES)
3. Program Administration. Provide a detailed discussion of how your firm will implement and
administer the BMR Program, including the protocol your firm will use for each of the tasks
identified in the Scope of Services. Include a description of the anticipated interaction between
your firm, the City, and BMR clients. Include an organizational chart which identifies the primary
role of each team member (e.g., BMR inquiries, document preparation, monitoring, etc.).
(MAXIMUM OF SIX PAGES, NOT INCLUDING EXAMPLES)
a. Provide example documents used to perform annual monitoring of both rental and
ownership units.
b. Provide example application forms (pre-qualification, etc.) and helpful documents (e.g.,
FAQs, process, etc.) that an applicant would access on the dedicated webpage that would
be set up for San Luis Obispo’s BMR program.
4. Cost.
a. Submit in a separate sealed envelope a cost estimate for each task in the Scope of Services
(e.g., fixed fee for basic services, fee per transaction / sale). See attachment for example.
b. Include any other costs associated with administering the BMR program.
c. Include the estimated hours for each staff member assigned to each task, including the
associated cost and hourly rate.
d. Include a not-to-exceed amount that would be contained in a potential agreement with
the City.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 225 of 381
Page | 13
e. Hourly rates may be used for pricing the cost of additional services (beyond the scope of
services), as needed.
5. Additional Information. Provide general suggestions regarding the City’s BMR program or the
requested scope of services. For example, provide suggestions on how the City might
improve San Luis Obispo’s BMR program or finance the BMR Housing Administrator
contract through a self-sustaining fee structure, etc.
6. Identify Key Staff. Provide a resume for the BMR Program Manager, main point of contact, and
any other key staff who will be involved in the day-to-day administration of the City’s BMR
program (e.g., interacting with applicants and city staff, preparing and recording legal
documents, submitting reports, etc.).
7. References. Include the name, address, phone number, and email for a minimum of three (3)
references for which you administer their affordable housing program.
8. Insurance Coverage. Provide a statement verifying that your firm meets the insurance
requirements contained in Attachment A, Article 5, Section D. Identify carriers, A.M. Best
ratings, types, and limits of insurance carried by your firm.
9. Terminated Contracts/Litigation. Please provide a list of contracts/agreements terminated for
convenience or default within the past three years, if any. List any litigation that now
affects or may affect the firm’s ability to perform work in the future.
10. Language Capabilities. Please describe your capacity to serve Spanish speaking clients in both
written and speaking form.
K. PROPOSAL REVIEW
1. Proposal Review and Award Schedule. The following is an outline of the anticipated schedule for
proposal review and contract award:
ACTIVITY CONSULTANT CITY SCHEDULE
RFP sent to qualified consultants/Legal Ad X May 26, 2021
Responses due X June 14, 2021
City response to consultants regarding
whether submittal will be considered through
subsequent interview
X
June 25, 2021
Interview consultants (If needed) X X June 28 – July 2, 2021
Consultant selection and contract execution X July 16, 2021
Initial kick-off meeting with staff team X X July 19 – 22, 2021
Transfer of Materials to Consultant X X July 19 - 23, 2021
Consultant Will Commence Administration X July 26, 2021
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 226 of 381
Page | 14
2. Ownership of Materials. All original drawings, plan documents and other materials prepared by
or in possession of the Contractor as part of the work or services under these specifications shall
become the permanent property of the City and shall be delivered to the City upon demand.
3. Release of Reports and Information. Any reports, information, data, or other material given to,
prepared by, or assembled by the Contractor as part of the work or services under these
specifications shall be the property of the City and shall not be made available to any individual
or organization by the Contractor without the prior written approval of the City.
4. Copies of Reports and Information. If the City requests additional copies of reports, drawings,
specifications, or any other material in addition to what the Contractor is required to furnish in
limited quantities as part of the work or services under these specifications, the Contractor shall
provide such additional copies as are requested, and City shall compensate the Contractor for the
costs of duplicating of such copies at the Contractor's direct expense.
5. Required Deliverable Products. The Contractor will be required to provide:
a. One electronic submission - digital-ready original .pdf of all final documents. If you wish
to file a paper copy, please submit in sealed envelope to the address provided in the RFP.
b. Corresponding computer files compatible with the following programs whenever possible
unless otherwise directed by the project manager:
Word Processing: MS Word
Spreadsheets: MS Excel
Desktop Publishing: InDesign
Virtual Models: Sketch Up
Digital Maps: Geodatabase shape files in
State Plan Coordinate System as
specified by City GIS staff
c. City staff will review any documents or materials provided by the Contractor and, where
necessary, the Contractor will be required to respond to staff commen ts and make such
changes as deemed appropriate.
ALTERNATIVE PROPOSALS
6. Alternative Proposals. The proposer may submit an alternative proposal (or proposals) that it
believes will also meet the City's project objectives but in a different way. In this case, the
proposer must provide an analysis of the advantages and disadvantages of each of the alternative
and discuss under what circumstances the City would prefer one alternative to the other(s).
7. Attendance at Meetings and Hearings. As part of the work scope and included in the contract
price is attendance by the Contractor at up to [number] public meetings to present and discuss
its findings and recommendations. Contractor shall attend as many "working" meetings with staff
as necessary in performing work-scope tasks.
8. Accuracy of Specifications. The specifications for this project are believed by the City to be
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 227 of 381
Page | 15
accurate and to contain no affirmative misrepresentation or any concealment of fact. Bidders are
cautioned to undertake an independent analysis of any test results in the specifications, as City
does not guaranty the accuracy of its interpretation of test results contained in the specifications
package. In preparing its proposal, the bidder and all subcontractors named in its proposal sh all
bear sole responsibility for proposal preparation errors resulting from any misstatements or
omissions in the plans and specifications that could easily have been ascertained by examining
either the project site or accurate test data in the City's possession. Although the effect of
ambiguities or defects in the plans and specifications will be as determined by law, any patent
ambiguity or defect shall give rise to a duty of bidder to inquire prior to proposal submittal. Failure
to so inquire shall cause any such ambiguity or defect to be construed against the bidder. An
ambiguity or defect shall be considered patent if it is of such a nature that the bidder, assuming
reasonable skill, ability and diligence on its part, knew or should have known of the existence of
the ambiguity or defect. Furthermore, failure of the bidder or subcontractors to notify City in
writing of specification or plan defects or ambiguities prior to proposal submittal shall waive any
right to assert said defects or ambiguities subsequent to submittal of the proposal.
To the extent that these specifications constitute performance specifications, the City shall not be
liable for costs incurred by the successful bidder to achieve the project’s objective or standard
beyond the amounts provided there for in the proposal.
In the event that, after awarding the contract, any dispute arises as a result of any actual or alleged
ambiguity or defect in the plans and/or specifications, or any other matter whatsoever, Contractor shall
immediately notify the City in writing, and the Contractor and all subcontractors shall continue to
perform, irrespective of whether or not the ambiguity or defect is major, material, minor or trivial, and
irrespective of whether or not a change order, time extension, or additional compensation has been
granted by City. Failure to provide the hereinbefore described written notice within one (1) working day
of contractor's becoming aware of the facts giving rise to the dispute shall constitute a waiver of the
right to assert the causative role of the defect or ambiguity in the plans or specifications concerning the
dispute.
L. FORM OF AGREEMENT
AGREEMENT
THIS AGREEMENT is made and entered into in the City of San Luis Obispo on [day, date, year] by
and between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as City, and
[CONTRACTOR’S NAME IN CAPITAL LETTERS], hereinafter referred to as Contractor.
W I T N E S S E T H:
WHEREAS, on [date], City requested proposals for [______________], per Project No. [xxxx]
WHEREAS, pursuant to said request, Contractor submitted a proposal that was accepted by City
for said project;
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 228 of 381
Page | 16
NOW THEREFORE, in consideration of their mutual promises, obligations and covenants
hereinafter contained, the parties hereto agree as follows:
1. TERM. The term of this Agreement shall be from the date this Agreement is made and
entered, as first written above, until acceptance or completion of said project.
2. INCORPORATION BY REFERENCE. City Specification No. ______ and Contractor's
proposal dated [date] is hereby incorporated in and made a part of this Agreement and attached as Exhibit
A. The City’s terms and conditions are hereby incorporated in an made a part of this Agreement as Exhibit
B. To the extent that there are any conflicts between the Contractor’s fees and scope of work and the
City’s terms and conditions, the City’s terms and conditions shall prevail, unless specifically agreed
otherwise in writing signed by both parties.
3. CITY'S OBLIGATIONS. For providing the services as specified in this Agreement, City will
pay, and Contractor shall receive therefore compensation [xxxxxxx]. If there are installment payments?
Contractor shall be eligible for compensation installments after completion of milestone Tasks -E as shown
in the attached project schedule.
4. CONTRACTOR/CONSULTANT’S OBLIGATIONS. For and in consideration of the payments
and agreements hereinbefore mentioned to be made and performed by City, Contractor agrees with City
to do everything required by this Agreement and the said specifications.
5. AMENDMENTS. Any amendment, modification, or variation from the terms of this
Agreement shall be in writing and shall be effective only upon approval by the City Manager.
6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete agreement between the parties hereto.
No oral agreement, understanding or representation not reduced to writing and specifically incorporated
herein shall be of any force or effect, nor shall any such oral agreement, understanding or representation
be binding upon the parties hereto.
7. NOTICE. All written notices to the parties hereto shall be sent by United States mail,
postage prepaid by registered or certified mail addressed as follows:
City Name
Dept.
Address
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 229 of 381
Page | 17
Consultant Name
Title
Address
Address
8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Contractor do covenant that
everyone executing this agreement on behalf of each party is a person duly authorized and empowered
to execute Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be execu ted the day
and year first above written.
CITY OF SAN LUIS OBISPO:
By: _____________________________________
City Manager
APPROVED AS TO FORM: CONSULTANT:
________________________________ By: _____________________________________
City Attorney Name of CAO / President
Its: CAO / President
M. INSURANCE REQUIREMENTS - CONSULTANTS
Consultant shall procure and maintain for the duration of the contract insurance against claims for injuries
to persons or damages to property that may arise from or in connection with the performance of the work
hereunder by the Contractor, its agents, representatives, employees or subcontractors. General Liability,
Errors and Omissions and Pollution and/or Asbestos Pollution Liability coverages should be maintained
for a minimum of five (5) years after contract completion.
Minimum Scope of Insurance. Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001 or Claims
Made Form CG 0002).
2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, code 1 (any
auto), or code 8, 9 if no owned autos.
3. Workers' Compensation insurance as required by the State of California and Employer's Liability
Insurance.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 230 of 381
Page | 18
4. Pollution and/or Asbestos Pollution Liability and/or Errors & Omissions.
Minimum Limits of Insurance. Contractor shall maintain limits no less than:
1. General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If
Commercial General Liability Insurance or other form with a general aggregate limit is used, either
the general aggregate limit shall apply separately to this project/location or the general aggregate
limit shall be twice the required occurrence limit.
2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage.
3. Employer's Liability: $1,000,000 each accident, $1,000,000 policy limit bodily injury by disease,
$1,000,000 each employee bodily injury by disease.
4. Pollution and/or Asbestos Pollution Liability and/or Errors and Omissions: $1,000,000 each
occurrence/$2,000,000 policy aggregate.
Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to
and approved by the Entity.
Other Insurance Provisions. The following insurance provisions shall also apply:
1. The general liability, automobile liability, pollution and/or asbestos pollution and/or errors & omissions
policies are to contain, or be endorsed to contain, the following provisions:
a. The City, its officers, officials, employees, agents and volunteers are to be covered as additional insureds
as respects: liability arising out of activities performed by or on behalf of the Contractor;
products and completed operations of the Contractor; pollution and/or asbestos
pollution and/or errors or omissions, or automobiles owned, leased, hired or borrowed
by the Contractor. The coverage shall contain no special limitations on the scope of
protection afforded to the Entity, its officers, officials, employees, agents or volunteers.
Note: Automobile, Pollution, Asbestos Pollution and/or Errors and Omissions insurance carriers may not
name the City as Additional Insured. If the City cannot be named as Additional Insured, a
letter from the insurance company confirming their position required.
b. For any claims related to this project, the Contractor's insurance coverage shall be primary insurance
as respects the City, its officers, officials, employees, agents and volunteers. Any
insurance or self-insurance maintained by the City, its officers, officials, employees,
agents or volunteers shall be excess of the Contractor's insurance and shall not contribute
with it.
c. The Contractor's insurance shall apply separately to each insured against whom claim is made or suit is
brought, except with respect to the limits of the insurer's liability.
d. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be
canceled by either party except after thirty (30) days prior written notice has been given
to the City.
2. The automobile liability policy shall be endorsed to delete the pollution and/or the asbestos exclusion
and add the Motor Carrier Act endorsement (MCS-90).
3. If General Liability, Pollution and/or Asbestos Pollution Liability and/or Errors & Omissions coverages
are written on a Claims Made Form:
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 231 of 381
Page | 19
a. The "Retro Date" must be shown, and must be before the date of the contract or the beginning of
contract work.
b. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years
after completion of the contract or work.
c. If the coverage is canceled or non-renewed, and not replaced with another claims made policy form
with a "Retro Date" prior to the contract effective date, the Contractor must purchase
"extended reporting" coverage for a minimum of five years after completion of the
contract or work.
d. A copy of the claims reporting requirements must be submitted to the City for review.
4. The workers compensation policy shall be endorsed with a waiver of subrogation in favor of the 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. Since Pollution and/or Asbestos Pollution coverages may not be available from an
"Admitted" insurer, the coverage may be written by a Non-Admitted insurance company. A Non-admitted
company should have an A.M. Best's rating of A:X or higher. Pollution and/or Asbestos coverages may
also be written by a Captive Insurance Company or Risk Retention Group or Captive Insurance Company,
the City will check with its Insurance Advisor for further information before approval.
Verification of Coverage. Contractor shall furnish the City with certified copies of endorsements effecting
coverage required by this clause. The endorsements are to be signed by a person authorized by that
insurer to bind coverage on its behalf. The endorsements are to be on forms provided by the City, unless
the insurance company will not use the City's form. All endorsements are to be received and approved
by the City before work commences. As an alternative to the City's forms, the Contractor's insurer may
provide complete, certified copies of all required insurance policies, including endorsements affecting the
coverage required by these specifications.
Subcontractors. Contractor shall include all subcontractors as insured under its policies or shall furnish
separate certificates and endorsements for each subcontractor. All coverages for subcontractors shall be
subject to all of the requirements stated herein.
N. PROPOSAL SUBMITTAL FORM – SAMPLE
A complete proposal must include the forms in this section plus the required insurance certificate.
THESE REQUIRED PROPOSAL DOCUMENTS SHALL BE ENCLOSED IN TWO SEPARATE SEALED
ENVELOPES.
The first envelope shall be labeled “Qualification Proposal” and shall include the following proposal
documents completed in full:
1. Information about the Proposing Firm
2. References
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 232 of 381
Page | 20
3. Statement of Past Contract Disqualifications
4. Insurance Certificate
The second envelope shall be labeled “Price Proposal” and shall include the Price Proposal form.
These envelopes shall be enclosed in a larger envelope that shall be sealed and addressed to the
Department of Finance, City of San Luis Obispo, 990 Palm Street, San Luis Obispo, CA 93401. In order
to guard against premature opening, the larger envelope should be clearly labeled with the proposal
title, specification number, and name of the proposing firm.
INFORMATION ABOUT THE PROPOSER
Firm Name
Mailing
Address
City, State, ZIP
Phone Number
FAX Number
Business Type (proprietorship/partnership/corporation)
Years Operating under this Firm Name
Insurance Company’s A.M. Best Rating
Authorized Representative
Title of Authorized Representative
Signature of Authorized Representative and Date
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 233 of 381
Page | 21
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 234 of 381
Page | 22
REFERENCES
Number of years engaged in providing the services included within the scope of the specifications under
the present business name: .
Describe fully the last three contracts performed by your firm that demonstrate your ability to provide
the services included with the scope of the specifications. Attach additional pages if required. The City
reserves the right to contact each of the references listed for additional information regarding your firm's
qualifications.
Reference No. 1:
Agency Name
Contact Name
Telephone & Email
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
Reference No. 2:
Agency Name
Contact Name
Telephone & Email
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 235 of 381
Page | 23
Reference No. 3
Agency Name
Contact Name
Telephone & Email
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
CURRENT CONTRACTS:
1.
2.
3.
4.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 236 of 381
Page | 24
STATEMENT OF PAST CONTRACT DISQUALIFICATIONS
The proposer shall state whether it or any of its officers or employees who have a proprietary interest in
it, has ever been disqualified, removed, or otherwise prevented from bidding on, or completing a federal,
state, or local government project because of the violation of law, a safety regulation, or for any other
reason, including but not limited to financial difficulties, project delays, or disputes regarding work or
product quality, and if so to explain the circumstances.
◼ Do you have any disqualification as described in the above paragraph to declare?
Yes ❑ No ❑
◼ If yes, explain the circumstances.
Executed on at _______________________________________ under penalty of
perjury of the laws of the State of California, that the foregoing is true and correct.
______________________________________
Signature of Authorized Proposer Representative
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 237 of 381
Page | 25
PRICE PROPOSAL
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 238 of 381
Page 1 of 1 HouseKeys RFP Response – City of San Luis Obispo
Table of Contents
HouseKeys RFP Response
Solicitation Spec. No. SLO-BMR-2021
Below Market Rate Housing Program Administrator
Section Page Numbers
1. Cover Letter Page 1
2. Qualifications Pages 2-4
3. Program Administration Pages 5-11
4. Cost (Omitted and Uploaded Separately) See Separate Attachment
5. Additional Information Page 12
6. Key Staff Member Roster + Resumes Pages 13-23
7. References Pages 24-32
8. Insurance Coverage Page 33
9. Terminated Contracts / Litigation Page 34
10. Language Capabilities Page 35
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 239 of 381
June 13, 2021
Daniel Clancy
City of San Luis Obispo
dclancy@slocity.org
990 Palm Street
San Luis Obispo, CA 93401
Re: Request for Proposal No. Solicitation Spec. No. SLO-BMR-2021 – Below Market Rate Housing
Program Administrator
Dear Daniel,
This letter is to express our interest in serving as the City’s Below Market Rate Housing Program
Administrator. Per the instructions in the Request, we have included the following sections.
2. Qualifications
3. Program Administration Plan
4. Cost Breakdown and Fee Schedule
5. Additional Info
6. Key Staff + Resumes
7. References
8. Insurance
9. Litigation
10. Language Capabilities
If you should have any questions regarding this proposal, I may be contacted at (415) 846-8004 or by
email at Julius@HouseKeys.org.
Sincerely,
Julius Nyanda
CEO/Program Manager
HouseKeys Inc (a California C-Corporation)
358 Digital Drive
Morgan Hill, CA
HouseKeys RFP Response Page 1
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 240 of 381
2 Qualification (3 Pages Max)
1. Firm’s Experience and Qualifications
2. Processing RRA and DOTs
3. Loan Subordination and Payoffs
4. Compliance and Monitoring and Certification
5. Transfers and Defaults
6. Include Jurisdictions w/ similar services.
a. Compliance Examples
Describe Firm’s Experience and Qualifications as a Program Administrator
HouseKeys was started in April of 2015 in response to the void left by the wind down of several
Silicon Valley nonprofit housing, lending, and counseling service providers. Our team has been able
to create a sustainable service model through public agency contracts and transaction revenue. As
former employees of well-established nonprofit entities that folded after decades of service to the
community, we have reengineered the social enterprise model to ensure long-term sustainability
through a combination of economically conscious measures and market-driven solutions. Our
experienced team of housing, lending, financial services, and technology professionals each have
decades of experience working with public agencies and have collaborated over the last ten years to
complete nearly 1,000 program transactions. We have administered housing programs in three
categories: Homeownership, Rental, and Finance. Finance includes servicing Affordable Housing
Loan Portfolios that include First Mortgages and Subordinate Notes. The lessons learned from this
work have enabled us to rethink and refine the workflows associated with development, applicant
selection, participant compliance, and transaction management. In addition to our C-Corporation,
HouseKeys Inc, our management formed the nonprofit agency, HouseKeys Resource & Education
Center (Tax ID: 81-2880185) which obtained federal tax-exempt status in the summer of 2017.
HouseKeys Inc is also a DRE-licensed real estate brokerage.
Resale Restriction Agreements & Deeds of Trusts
The Resale Restriction Agreement is our specialty. Not only have we administered large programs
with multiple variations of Agreement language, but we have also worked with our legal teams to
create restriction agreement templates for both Inclusionary and Density Bonus Units. These
document packages include Excess Sales Notes and Deeds of Trust. Using these templates, we
have been able to craft language that is effective for day-to-day program operations and major
transactions, including compliance certifications, resales, refinances, and family transfers.
HouseKeys’ service offering is strengthened by both our legal team relationships and the
administration team members with deep lending, escrow, and real estate brokerage experience.
Loan Subordination and Payoff Transactions
HouseKeys RFP Response Page 2
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 241 of 381
HouseKeys oversees loan portfolios in the cities of Morgan Hill, Gilroy, Campbell, and most recently
with the City of Menlo Park. HouseKeys is a seasoned underwriter, processor, and servicing entity.
In the most recent round of CalHome funding made available by the State’s Department of Housing &
Community Development, HouseKeys assisted the cities of West Hollywood and Hayward to
complete their applications which required loan administration and servicing experience
requirements. HouseKeys also contracts with AmeriNat Community Services, a nationwide leader in
loan servicing for government portfolios.
Compliance Monitoring and Certification
HouseKeys has experience in compliance monitoring, annual owner compliance certifications, and
with crafting and administering enforcement policies. Given the size and age of our portfolios, there
are complicated legal matters involving defaults, bankruptcies, foreclosures, occupancy violations,
transfer violations, and financing violations. HouseKeys runs annual certifications by issuing several
rounds of correspondence to homeowners and using the Agreement Language and attached Exhibits
to obtain the documentation required annually on their agreement anniversary dates. Morgan Hill and
Campbell are good examples of well-resourced contracts with annual budgets commensurate to their
homeownership portfolio sizes. In both cities, we have been able to complete annual compliance
certifications and work with Staff, the City Attorney, and Council to deal with sensitive legal matters.
This work includes loan portfolios with covenants that require annual compliance certifications for the
borrowers.
For Rental Portfolios, we have been heavily involved in the cities of Campbell, Santa Clara, and
Burlingame. These large portfolios involve coordinating efforts with Property Owners and their
designated Property Management companies. During this process, we work with Property
Management to collect the project-level documentation (E.g., Rent Rolls) and contact families to get
the Tenant-Level documentation needed to certify the income-eligibility.
Property Transfers and Defaults
As stated above, Property Transfers involving inheritance, divorce, and other transfer types have
been a major part of our administration scope given the size and age of the portfolios we manage. As
with Transfers, defaults have been a more frequent occurrence as the economy cycles through
negative swings. The decrease in interest rates drove up the average number of refinances by 300%
year-over-year. Given the pandemic and related economic challenges, we expect an uptick in
defaults and are preparing to incorporate more of our tools to help tackle this challenge. This includes
running daily scans on all our portfolios to catch bankruptcy and foreclosure filings.
Case Study: Homeowner Violation Leads to Sale to Eligible Buyer in the
Applicant Pool
HouseKeys ran a Portfolio Surveillance Report and discovered that one of our homeowners was
receiving a property tax bill at an out-of-town address. Our Real Estate Project Manager and Asset
Manager visited the home and discovered the home was not owner occupied. HouseKeys informed
HouseKeys RFP Response Page 3
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 242 of 381
the City of the issue and began a correspondence campaign to issue three letters over a 90-Day
period offering the Owner a chance to remedy the violation.
After the 90-Day period passed, HouseKeys worked with the City Attorney and Council in closed
session to authorize the assignment of legal rights from the City to HouseKeys. This gave our team
legal standing in court and HouseKeys was able to file a Notice of Default, Lawsuit and Lis Pendens
to prevent any sales or transfers.
The Owner did finally reach out to HouseKeys and a Memorandum of Understanding was drafted that
gave the homeowner an opportunity to sell the property back to the program for the maximum
restricted sales price and avoid further legal action. HouseKeys acquired the property at the max
price and then worked with the Applicant Pool of 1,661 applicants to hold a Lottery and select a
buyer. The property was rehabbed by the HouseKeys Project Management Team for $27,000 and
the home was sold to an Eligible Buyer who signed a new 45-Year Restriction Agreement.
Jurisdictions with Similar Services
City of Campbell
• Client since 2016
• Ownership, Rental, and Loan Portfolio
• 87 Ownership Units in 15 Subdivisions
• 52 Rental Units in 5 Rental Complexes
• 42 Loan Units in a First-Homebuyer Program
• Budget: $137,200
City of Santa Clara
• Client Since 2019
• Ownership, Rental
• 1,255 Rental Units in 51 Rental Complexes
• 152 Ownership Units in 21 Subdivisions
• Budget: $225,000
City of Menlo Park
• Client Since 2021
• Ownership, Rental, Loan Portfolio
• 68 Homeownership Units
• 39 Rental Units
• 40 Finance Units
• Budget: $75,000
HouseKeys RFP Response Page 4
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 243 of 381
3 Program Administration
# Scope Subject Description Applicable Sections
1 Program Setup Lists, Files, Templates,
Flowcharts and Protocols, Fees
(see Fee Schedule), Web Page
Sections 1-6
2 Day-to-Day
Administration
Inquiries, Interest List, and
Reporting
Sections 1-6
3 Annual Compliance Doc Management (Including
Public Recordings), Homeowner
Certifications, Renter
Certifications, etc.
Section 12
4 Loan Administration Database, Loan Level Data,
Annual Monitoring, Doc
Management (including Public
Recordings)
Sections 1, 5, 8, 11 and 12
5 Sales and Resales Marketing, Calculations, Eligibility
Screening
Section 11
6 Program Updates Updating Program Guidelines,
Materials, etc.
Section 14
Onboarding
As described in the Project Cost Breakdown, HouseKeys would focus the onboarding effort on
two key action items: 1) Completing a full round of compliance certifications for homeowners
and 2) Setting up Property Owner/Management Firms for annual compliance and completing a
round of tenant certifications.
Service Breakdown
1. Public Interface. Administrator will serve as the public-facing entity on behalf of the
Programs included in the contract scope. This includes taking initial inquiries, providing
information to third parties and any reporting requirements. This will include processing
servicing tickets as Applicants transition from buyers and renters to Participants in the
role of homeowner, borrower, and existing tenant.
2. Documentation. Administrator will administer the program and assure Affordability
Deed Restrictions are recorded and followed by all parties as applicable for each
property.
3. Support and Education. Administrator will provide offsite support for service requests.
HouseKeys RFP Response Page 5
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 244 of 381
Orientations and workshops will be held for residents of the Agency. Note: In Response
to COVID-19 restrictions, content is streamed online via webinars and pre-recorded
content available on HouseKeys-hosted program websites.
a. Administrator shall conduct introductory Home Buyer, Renter Education/Training
classes – Homebuyer/Renter Orientation Classes prior to Program application. A
minimum of 6 events will be held each year and at least 40 Weekly Live Online
Webinars are held where staff answers Frequently Asked Questions (FAQs) from
program applicants and participants.
4. Guidelines and Materials. Administrator will regularly update program guidelines and
program materials in conjunction with Agency staff to reflect the Administrator’s
administrative process for Program Administration including, but not limited to:
applications, program pamphlets, rent & resale calculations, selection processes,
vacancies, sale and resale of units, refinancing requests, collection of Agency fees and
other applicable fees, and default monitoring/resolution process.
5. Program Calculations. Administrator will provide materials and calculators for Initial
Purchase Price of For-Sale Units, Maximum Restricted Resale Price, Equity Share
Calculations, Initial and Subsequent Rent Schedules, including Utility Allowance
Calculations. All For-Sale Schedules will include assumptions for down payment, interest
rate (typically 10-Year Average of Freddie Mac National Rate), maintenance (if
applicable), Homeowner Association Dues, and any additional assumptions requested.
For loan portfolios, this includes payoffs, loan interest, penalties, escrow accounts, and
year-end reconciliations.
6. Website Presence. Administrator will maintain an affordability program website
presence that will link to the Agency’s housing website.
7. Performance Measures. Administrator and the Agency will agree to mutually
acceptable performance measures for program administration. These measures shall be
included in the quarterly program summary report.
a. General Inquiries: Respond within 48 business hours
b. Loan Requests: Respond within 48 business hours, Complete requests within
reasonable time, with weekly status updates for outstanding requests
c. Rental Vacancies: Fill vacancies within 60 days
d. Annual Ownership Monitoring: 1 Certification Per Year
e. Annual Rental Monitoring: 1 Project Certification per Project and 1 Tenant
Certification Per Unit
f. Eligibility List: Maintain a minimum buyer-to-property and renter-to-unit ratio of
5:1
g. Application ID issuance: Available online year-round 24/7 with troubleshooting
issues handled within 2 business days. Manual Application ID issuance will also
take up to 2 business days.
HouseKeys RFP Response Page 6
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 245 of 381
8. Recordkeeping. Administrator shall maintain the Agency’s existing records and files
through a proprietary database-driven information retention and management system for
the programs. All electronic records will be considered work products that are property of
the Agency and will be available via data export. The database shall contain all
important details for each Program, Ownership Unit, Rental Unit, and Financing Unit.
9. Reporting. Administrator shall provide a quarterly program summary report to the
Agency with the following information. An abbreviated monthly report will accommodate
each monthly invoice.
10. Services. Administrator will provide the following services:
a. Making minor revisions to the Agency’s existing program materials and legal
documents.
b. Overall management and implementation of specific program policies, including
required reporting.
c. Conducting income qualifications including review of assets, income,
Verifications of Employment, and all other necessary approvals to ensure
qualification for the Agency Programs (Ownership, Rental, Finance).
d. Underwriting program applications in accordance with program requirements.
e. Underwriting program compliance in accordance to restrictive covenants and
project-specific program agreements
f. Underwriting transaction compliance (e.g. refinances, transfers) to ensure they
conform with restricted covenants and project-specific program agreements
g. Preparing all program documents, overseeing proper execution thereof, and
conducting final program approval reviews.
h. Ensuring timely delivery of all necessary documents into escrow, and preparing
escrow demands and funding requests.
i. Preparation of program materials by revising the Agency’s current documents.
j. Calculating all pay off demands and issuing any disclosures and tax forms as
required by State and/or Federal Law.
k. Calculating the resale value of all ownership program homes as requested
annually by the County.
l. Work with Agency staff to ensure a seamless and coordinated development of
documents as it relates to the Affordability Program, including the Developer
application process where Restricted Affordability Units are included, reviewing
developer agreements, and ensuring that affordability requirements are outlined
in an Affordable Housing Agreement or equivalent document, and any
subsequent amendments to the development documentation.
Note 1: HouseKeys recommends that Agency Agencies include affordability
requirements, the Administrators roles, and any fees related to affordable unit
commitments in the conditions of approval to assure transparency at the
earliest possible point in the entitlement process. See Fee Schedule.
HouseKeys RFP Response Page 7
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 246 of 381
11. Transaction Coordination. Administrator shall act as transaction coordinator for all real
estate transactions and will provide the Agency with a Fee Schedule. Where there is a
conflict between the Administrator’s Fee Schedule and recorded Agreements (“Legacy
Agreements”), Administrator will adjust fees to compensate for the difference with the
understanding that newly drafted agreements will conform to the fee schedule.
Note 2: Transaction Fees charged for New Construction Sales are considered a
single transaction with a partial “side” of the real estate transaction to represent
the buyer pool. Administrator currently has builder-direct contracts that require
the Developer to pay 3% of the Sales Price. The goal is to continue this type of
arrangement as Administrator unless the Municipality objects to this approach.
During the resale of an ownership unit, there are two sides of the transaction –
one for the first-time home seller and two for the eventual buyer who completes
the selection process. The customary real estate fee of 6% of charged – with 3%
charged for listing and 3% charged for selling to a buyer. This two-sided
transaction has a higher cost as reflected on the fee schedule. As both a
licensed Real Estate Broker and Program Administrator, Administrator is taking
on duties that go beyond that of a typical real estate agent. The 6% fee accounts
not only for the work involved (eligibility, legal timelines, property condition), but
also accounts for the legal liability and risk. The Administrator uses the 6% fee to
control the transaction and then offers the Homeowner the opportunity to hire an
agent of their choosing for 2% in order to represent their interests as they
navigate the home-selling process including the max restricted price, marketing
requirements, capital improvement credit process, and any deferred maintenance
charges or repairs.
Note 3: Transaction fees charged to homeowners for refinance transactions are
charged for the time taken to ensure that proposed transaction complies with
restrictive covenants. This can include a refinance with a mortgage lender or
other types of transfers as referenced in the recorded document (E.g. Divorce,
Estates, Inheritance, etc.)
a. Administrator will coordinate document transmittals between buyers, renters,
borrowers, homeowners, tenants, developers, and Agency as needed.
Administrator will be responsible for ensuring all documents submitted for
Agency signatures are complete and accurate. Administrator will be responsible
for making any necessary corrections to documents.
12. Monitoring, Compliance, and Loss Mitigation. Administrator shall work alongside
Staff to conduct monitoring to annually evaluate Program Owners’ & Renters’
(“Counterparty’s”) compliance with the terms and conditions of the recorded deed
restrictions and program guidelines including the following:
HouseKeys RFP Response Page 8
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 247 of 381
a. Mailing monitoring letters to all the Program units.
b. Reviewing in conjunction with Agency staff, Agency or County Assessor data to
assist in the process (e.g., water utility bills, property records).
c. Review Agency’s preliminary monitoring list to identify follow up actions required.
d. Meet with Agency staff to develop guidelines for acceptable default remedies
(e.g., allowing rental of Program Units for hardship cases).
e. Administrator shall work alongside Staff to investigate and identify cure potential
program-related defaults including:
i. Conduct follow up of those Program Owners, Project Owners, and
Management Companies (collectively referred to as “Counterparties”)
who do not submit their compliance documentation.
ii. Reviewing information on calls from Program Unit neighbors and
interested parties.
iii. Conduct reasonable follow-up investigation to assess potential defaults
including unit site visits.
iv. Scheduled appointments with Counterparties to discuss compliance
issues.
f. For confirmed defaults, provide Counterparties with list of actions needed to
remedy the default and conduct follow-up to monitoring compliance.
i. Maintaining log of actions taken to remedy the defaults.
g. For those defaults in which the Counterparties choose not to remedy the situation
within a reasonable amount of time, Administrator will meet with Agency staff to
determine the course of action to pursue. Agency authorization will be sought for
any legal action taken.
h. Administrator will participate in legal deliberations at all Staff Levels and Council
Decisionmakers as needed.
i. Agency will provide a list of any current program participant defaults and actions
taken to date.
13. Marketing. HouseKeys continually grows its applicant pool through a series of outreach
efforts. This includes targeting the least likely to apply and working in compliance with
federal laws addressing Affirmative Fair Housing Marketing.
a. All Materials will include proper fair housing logo and other federal and state-
mandated disclosures
b. Initial Campaign to Introduce HouseKeys to key employers, community
organizations, religious organizations, trade associations, and small businesses
c. Mailers and other collateral that go out within a .25 to .5-mile radius of each
Opportunity listing featured in the HouseKeys Proprietary Software Platform
d. Local workshops targeting the groups above.
e. Participating in local events as public health restrictions (e.g. COVID-19) allow
f. Online and Social Media Campaigns to share available opportunities locally
g. Listings on popular websites and real estate aggregators (E.g. Craigslist, Local
HouseKeys RFP Response Page 9
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 248 of 381
MLS, etc.)
h. When appropriate and when the budget allows, Administrator will advertise in
local media (radio, print, etc.)
14. Additional Service Descriptions. Administrator will provide the following additional
services.
a. Administrator shall build and maintain a group of qualified and eligible Program
homebuyers and renters at a minimum Buyer/Renter-to-Property ratio of 5:1. For
Agencies that maintain an accruing Waitlist based on registration timestamp,
HouseKeys will assign Application ID using the Timestamp and assign a “Legacy
Applicant” Preference Assignment.
b. Administrator will partner with the Agency to create Program legal templates for
documents required for signature by the Program participants. Administrator shall
supply documents that are typically used in the Applicable County for residential
real estate transactions (e.g. purchase and sale, disclosure acknowledgements,
addendums, etc.)
c. Administrator will maintain a list of approved loan officers and lending operations
eligible to provide mortgage lending for purchase and refinance transactions
d. Administrator will maintain a list of approved real estate agents and brokers
eligible to provide listing services to sellers for resale transactions
e. Administrator will maintain a list of appraisers for fair market valuations
f. Administrator will maintain a list of escrow officers who are familiar with program
requirements and transaction compliance
g. Administrator will review individual program restrictions for terms and
requirements as needed including shared equity programs, down payment
assistance loans and any resale restriction agreements.
h. Administrator will prepare Agency staff reports and hold Council Study and
Closed Sessions to discuss complicated and sensitive program matters.
i. Administrator will enter contract with the Agency with the intention of adding the
Agency to the Model City Project that incorporates Industry Best Practices, A
Program Database, and a Regional Program Working Group. This Project will
improve efficiencies and reduce program costs to the Agency.
j. Administrator will provide training, analysis, and suggested improvements to the
Affordability Program.
HouseKeys RFP Response Page 10
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 249 of 381
k. Administrator will prepare a presentation for Staff and Council Members on the
Model City Project.
l. Special Projects. There will be cases where Administrator will be asked to
complete a Project that is outside of the contract scope. If project scope and
terms are defined in writing, Administrator will agree to complete project at a
specified billing rate.
HouseKeys Staffs its departments in the following Organization Structure.
Program
Manager
Program
Operations
Underwriting &
Compliance
Asset
Management
Software
Engineering Communications
Assistant
Program
Manager
Julius
Nyanda
Mandy
Israde
Angelica
Garcia
Kathie
Wells
Kamala
Loving
Christina
Enriquez
Katarina
Marusic
Kimberly
Ash
Consultant
Bobby
Gasper
Kunal
Bohra
Nathan
Hermens
Frank
Adams
Consultant
Teresa
Martinez TBD
Anna
Reynoso
Abraham
Valle
HouseKeys RFP Response Page 11
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 250 of 381
5 Additional Information
Provide general suggestions regarding the City’s Below Market Rate Program or the
requested scope of services.
Administrator Suggestions
1. During the Initial Sale, Price Units and Take a Fee for Maintenance and
Administration
Using Estimates of the Maximum Affordable Sales Price for the San Luis Obispo
Program, we came up with the following assessment.
2 Bedroom 3 Bedroom 4 Bedroom
Very Low $110,031 $127,960 $142,563
Low $174,909 $200,269 $220,453
Moderate $364,676 $411,169 $448,173
Based on the math used to generate the pricing chart above, a $50 Maintenance and
Administration allowance to the monthly payment would be worth $10,562 per unit. 10
New Construction Units being built and sold would generate $105,620 – which would be
enough to cover the annual program costs.
2. Taking a portion of the Excess Proceeds during Resale of an Inclusionary For-
Sale Unit
A percentage of units will sell between 7 and 15 years after the initial purchase. Each
time a home is sold, there is a cost associated with the resale. A portion of those costs
is borne by the homeowner who is selling. There is also a need to make repairs. These
costs make a resale a bit more complicated because there are maximum sale proceeds
due to the Owner upon sale and remaining Excess Proceeds that belong to the
City/Program/Unit. There is an opportunity, with each resale, to capture a portion of the
Excess Proceeds by increasing the final sales price to the new buyer.
Maximum Restricted
Price Owner can sell
Fair Market Value Repairs needed to
get home in sellable
condition
Resale Price to the
new buyer
$200,000 $300,000 $15,000 $215,000 and $0
to Program Fund
$230,000 and
$15,000 to
Program Fund
HouseKeys RFP Response Page 12
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 251 of 381
6 Key Staff Members
Administrator’s Key Staff
Position Name Department Email
Manager Julius Nyanda Management julius@housekeys.org
Accounting & HR Kimberly Ash Management kim@housekeys.org
Director,
Government
Relations
Teresa Martinez
[Starts 7/1] Administration teresa@housekeys.org
Director, Program
Operations
Anna Reynoso Administration anna@housekeys.org
Assistant
Manager,
Customer
Experience
Abraham Valle Administration abraham@housekeys.org
Program
Operations
Manager
Mandy Israde Administration mandy@housekeys.org
Program
Operations
Coordinator
Kamala Loving Administration kamala@housekeys.org
Underwriter &
Compliance
Manager
Kathie Wells Administration kathie@housekeys.org
Asset Manager Christina
Enriquez
Administration christina@housekeys.org
Senior Program
Officer
Martin Vergara Administration martin@housekeys.org
Analyst Angelica Garcia Administration angelica@housekeys.org
HouseKeys RFP Response Page 13
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 252 of 381
6a. Julius Nyanda
(415) 846-8004
julius@housekeys.org
EXPERIENCE
HOUSEKEYS INC, MORGAN HILL, CA
Founder, CEO & Program Manager, 2015 - Present
• Part of the Founding Team and hired the Founding Team Members to create a new Program Administration
Focused Consulting & Technology Company
• Set Strategic Direction of the Company
• Manage the Program Administration Team
• Manage the Technology Team
• Manage the Legal Strategy Team
NEIGHBORHOOD HOUSING SERVICES SILICON VALLEY (A NeighborWorks Chartered Member), SAN JOSE, CA
Chief Business Officer, 2012 - 2015
• Supervised a 22-Person Multi-Disciplinary Housing Team
• Managed the Lending Department that was a designated Community Development Financial Institution (CDFI)
and Fannie Mae Approved Seller & Servicer of First Mortgage Loans
• Managed the Loan Portfolio of Subordinate Loan Programs funded by Federal, State, and Local Government
sources
• Managed HUD Approved Counseling Agency Department
• Helped formalize and manage the Affordable Housing Program Administration Department whose client list
included the cities of Morgan Hill, Los Gatos, Los Altos, Santa Clara, Union City, and Burlingame
• Managed the Real Estate Brokerage and Property Acquisition Department whose activities included purchasing
market-rate housing and repurposing as affordable housing opportunities
GUILD MORTGAGE COMPANY, MORGAN HILL, CA
Senior Mortgage Consultant, 2009 - 2012
• Specialized in working with First-Time Homebuyers
• Worked with local governments to help allocate and package affordable lending programs
• Assisted local governments and nonprofits with setting up affordable homeownership projects
• Hosted first-time homebuyer workshops
• Participated as a lending expert for other affordable homeownership workshops
• Originated mortgages on 1-4 family residences that included FHA, Fannie Mae, and Freddie Mac Loan Products
• Originated subordinate mortgage loans including County Programs, California Housing Finance Agency Loans,
and Federal Home Loan Banks
HouseKeys RFP Response Page 14
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 253 of 381
HOMEOWNER RESCUE ALLANCE, SAN JOSE, CA
Executive Director, 2007-2009
• Oversaw the development of a web-based software platform to connect at-risk homeowners with mortgage
servicers
• State and Local Government Contract Services to provide foreclosure workshops and assistance
• Worked with mortgage loan servicers to determine workout plans for borrowers
• Held Secondary Market and Cross-Functional Workshops with Mortgage Investors, Servicers, and Regulators to
determine a path forward on mortgage-backed investments
• Testified at State Legislature on the Foreclosure Crisis
• Served on local thought-leadership panels
• Client List included Operation HOPE, Indymac Bank, City of Hollister, City of Salinas, City of Watsonville, all in
partnership with Assembly Member Anna Caballero of 28th Assembly District
EDUCATION/TRAINING/SKILLS
• Started in Financial Services Industry in 1998
• Started in Mortgage Lending Industry in 2000
• Started Managing Software Development Projects in 2005
• Education – San Diego State University – Information & Decision Systems
• Education – University of San Francisco – Degree in Business/Managerial Economics
• 1998 - Series 6, Series 63 Securities License, Life & Health Insurance Certification and State License
• 2004 - California Department of Real Estate Sales License
• 2006 - Financial Planning Certificate – Kaplan Financial
• 2006 - Accredited Mortgage Professional – Mortgage Bankers Association of America
• NeighborWorks Training Institute Certifications 2012-2016:
Lending Basics for Homeownership Counselors
Compliance with State and Federal Regulations
Community Development: Past, Present & Future
Using the HOME Program
Using the National Housing Trust Fund
Single Family Development: New Construction, From Foundation to Sale
Using the CDBG Program
Project Management for Construction and Rehab
Fundamentals of Micro and Small Business Underwriting
The Basic Steps of the Affordable Housing Development Process
Using New Markets Tax Credits
Financing Community Economic Development
Navigating Mortgage Practices: Terms & Disclosure Forms
Homeownership Counseling Certification for Program Managers and Executive Directors
Making Home Affordable: A Breakdown of Program Components
Financial Coaching: Helping Clients Reach Their Goals
Delivering Effective Financial Education for Today’s Consumer
HouseKeys RFP Response Page 15
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 254 of 381
Anna Elizabeth Reynoso
(408) 684-8712
anna@housekeys.org
EXPERIENCE
HOUSEKEYS INC, MORGAN HILL, CA
Director, Program Administration Operations, 2021 – Present
• Member of the Executive Leadership Team Leading Program Administration Operations
• Primary contact for Program Administration Inquiries, working alongside the
Government Relations and Builder Relations Team
• Lead Program Administration Teams on Weekly Objectives and Projects
• Design and Implement Program and Program Operations Modifications to Improve
Performance and Efficacy
NEIGHBORWORKS AMERICA, WASHINGTON, DC (Congressionally Chartered Nonprofit + National Network)
Director, NeighborhoodLIFT Program (Wells Fargo | NeighborWorks America), 2019-2021
• Led weekly staff meetings to ensure cross team planning and collaboration.
• Created plans for the evolving program and its staffing needs.
• Worked in and with the following markets: Sacramento, Omaha, Baltimore, Alaska, Dallas, New
Jersey, Montana, Pittsburg, Portland, Minneapolis, San Francisco Bay Area, Philadelphia, Austin,
Jacksonville, El Paso, Birmingham, Idaho, New York, South Dakota, Atlanta, New Mexico, Boston,
Kansas City, Chicago, Mississippi, Charlotte, Los Angeles, Orlando, Washington D.C., and Houston.
(Total capital- $145,027,800 total loans-9,546)
• In 2020, worked on a redesign of the LIFT program to make it a more consumer-centric model. Two
pilot markets were launched under this new model: Minneapolis St. Paul ($7 million) and the six
county Bay Area ($9.5 million) both markets on target to create 787 homeowners.
• With enhancements from the redesign, markets in Minnesota and California were able to increase
access to homebuyers by over 15%
NEIGHBORWORKS ORANGE COUNTY, ORANGE, CA (NeighborWorks-Chartered Member)
VP, Community Impact, 2016-2019
• Member of Executive Leadership Team reporting to CEO
• Project Lead for organization participation in the National Sustainable Business Initiative, where the
cohort consisted of 35 organizations from across the nation to implement and execute principles,
framework and production designed to move organizations from non-profit model to social
enterprise model.
HouseKeys RFP Response Page 16
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 255 of 381
• Work with organizations in the SBI cohort from Arizona, Washington D.C., Massachusetts, Boston,
Utah, Alaska, Texas, Wisconsin, California, Oregon, Nevada, Minnesota, Illinois, Florida, Tennessee,
South Carolina to name a few.
• Build program strategy, infrastructure and systems that would support geographic expansion into
six new counties and provide services remote. This includes staff capacity building and technology.
THE UNITY COUNCIL, OAKLAND, CA (NeighborWorks-Chartered Member)
Interim Homeownership Center Director, 2013-2015
• Reported to the Executive Vice President and COO and working closely with staff across the
organization to integrate homeownership and financial capability programs in other departments.
Oversee educational and counseling services in the areas of: pre and post purchase, foreclosure
prevention, credit, and financial capability. Also lead all fundraising efforts to ensure program is
fully funded. Annual program budget of 1 million out of organizations 20 million budget.
• Project Lead for organization’s participation in the National Sustainable Business Initiative
• Program development and implementation for various government and privately funded
homebuyer assistance programs
• Served as Development Management from June 2014 to October 2014
• Served as Business Development / Grants Administrator June 2013 to June 2014
NEIGHBORHOOD HOUSING SERVICES SILICON VALLEY, SAN JOSE, CA (NeighborWorks-Chartered Member)
Development Director, 2009-2013
• Collaborated with Homeownership Center Director and senior staff to establish priorities and
strategies, efforts for capital campaigns and major donors, with a focus on proactively securing
operational grants.
• Assist in formulation and implementation of public relations plan.
• Served as Homeownership Center Program Manager from April 2009 to 2011
• Oversee operations of the Homeownership Center, including the HUD-Approved Counseling
Agency, providing Group Education for first-time homebuyers and foreclosure prevention
counseling and loan modification assistance for homeowners.
EDUCATION/TRAINING
• Bi-lingual Spanish
• University of California Santa Cruz – 2008
• Deanza College – 2006
• NeighborWorks America Certifications
• HUD-Approved Counseling Certifications
HouseKeys RFP Response Page 17
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 256 of 381
Mandy Israde
(408) 684-8830
mandy@housekeys.org
EXPERIENCE
HOUSEKEYS INC, MORGAN HILL, CA
Program Operations Manager, 2015 - Present
• Founding Team Member of HouseKeys, a specialized program administration services and technology company
• Helped with the onboarding and transition for municipal clients in the aftermath of the NHS Silicon Valley wind
down, including Morgan Hill, Los Gatos, Los Altos, and Santa Clara
• Led the development of policies and procedures to formalization of program administration infrastructure for
HouseKeys Clients
• Helped to redesign program materials and work on the program standardization initiative at HouseKeys
• Worked with the technology team to develop the product releases for the key areas of administration
streamlined and automated in the MyHouseKeys 1.0 Platform
• Designed Program Workflows for homeownership, rental, and finance programs
• Oversee the implementation of workflows into software requirements delivered to the technology team for
modeling and coding
• Working with the technology team to test and debug software
• Coordinate user experience interviews and demonstrations for the company’s software platform to ensure users
understand how to utilize the system
• Oversee implementation of software driven workflows initiated by internal administration staff, municipal
agencies, and property managers
• Coordinate with property management companies on rental projects, both during the new construction phase
and during the compliance phase, to complete tenant eligibility reviews
• Team and Clients Trainings and Workshops
• Manage Operations Team Objectives and Evaluate Workflow Efficiencies
NEIGHBORHOOD HOUSING SERVICES SILICON VALLEY, SAN JOSE, CA
Affordable Housing Program Processor, 2012 - 2015
• Helped create the policies and procedures to formalize program administration in the cities of Morgan Hill, Los
Gatos, Los Altos, Santa Clara, and Burlingame
• Process and underwrite loan application packets for down payment assistance
• Screen and pre-qualify applicants according to eligible household guidelines as defined by local policies
• Report to Local Government Staff Members
• Manage applicant pipeline for affordable homeownership, affordable rental, and down payment/closing cost
assistance programs
• Working with the team to design Program Materials including forms, manuals, and workflow documents
HouseKeys RFP Response Page 18
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 257 of 381
SOUTH COUNTY HOUSING CORPORATION, GILROY, CA
Loan Packager II/Group Worker, 2000-2012
• Screen and pre-qualify applicants under applicable Federal and State rules and regulations (Review and evaluate
loan application for program eligibility: calculate income vs. debt ratio, credit criteria, compute amount of
assistance needed).
• Process and underwrite loan application packets for down payment assistance programs.
• Assist in development of marketing and recruitment plan, including all mass mails and community outreach.
• Responsible for the maintenance, accuracy, completeness, confidentiality of all clients’ escrow files, databases
and records.
• Draw loan documents for SCH down payment programs (Promissory Notes and Deeds of Trusts)
• Loan signing appointments
• Translate and coordinate meetings; prepare hand-outs and orientation materials.
• Work with community-based organizations, developers, and public entities targeting low income communities
to develop and achieve affordable housing and provide community services.
EDUCATION/TRAINING
• Bi-lingual Spanish
• New Construction of 100% Affordable Housing Projects
• Mobile Home Park Conversions and Sales
• New Construction of Inclusionary Housing Projects (including Redevelopment Agencies)
• Federal Finance Program Guidelines (CDBG, HOME)
• State Finance Program Guidelines (BEGIN, CalHOME)
• Fair Housing
• USDA training
• SAFE Act
• Passed Federal and State Exams for Loan Origination
• State of California appointed Notary Public. Member of the National Notary Association
HouseKeys RFP Response Page 19
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 258 of 381
Christina Enriquez
(408) 684-8831
christina@housekeys.org
EXPERIENCE
HOUSEKEYS INC, MORGAN HILL, CA
Program Asset Manager, 2015 - Present
• Founding Team Member of HouseKeys, a specialized program administration services and technology company
• Manage New Construction Affordability Unit Commitments for Ownership and Rental Programs
• Legal Agreement Processing for Developers, Municipal Agencies, and Program Administrators
• Manage Unit Delivery and Buyer/Renter Procurement Pipelines
• Coordinate with Title and Escrow to Finalize Escrow Instructions
• Coordinate Routing Packages involving Municipal Administrators, Attorneys, Clerks, Housing Staff, and Planning
Staff
• Public Recording of Documents and Final Funding of Escrow Accounts (verifying final closing statements)
• Monitoring and Compliance of Units, Occupants, and Legal Agreements
• Forensic Review of Existing Affordable Unit Portfolios to Determine Compliance Status
• Tax Assessor Reporting for Affordable Ownership Units
• Review and Categorize Housing Portfolios Across Federal (HOME, CDBG), State (CalHOME, BEGIN),
Redevelopment and Locally Supported Rental Projects
• Forensic Research of Note, Loan Agreement, Deeds of Trust, Assumptions, Loan Modifications, etc. for
Affordable Finance Portfolios involving Federal, State, and Loan Finance Sources
• Oversee Asset Transfers between Government and Nonprofit Agencies involving Loan Portfolios (e.g. Housing
Authority to Local Municipality and Nonprofit Wind downs and asset transfers)
• Transaction Management from initial ticket to close of escrow (new construction, resales, refinances, and other
transfers)
• Resale Price Calculations, Payoffs, Estimated Closing Statements, and Final Closing Statements
• Coordinate legal strategies and timelines involving out-of-compliance properties that require state, probate, or
bankruptcy court filings
• Manage response to subpoenas and opposing counsel discoveries in prep for mediation and/or court hearings
• Manage portfolio records through multiple phases and event types: initial purchase, sale, death of owner,
divorce, inheritance, and other transfer types
NEIGHBORHOOD HOUSING SERVICES SILICON VALLEY, SAN JOSE, CA
Program Transaction Coordinator, 2013 - 2015
• Helped create the policies and procedures to formalize program administration in the cities of Morgan Hill, Los
Gatos, Los Altos, Santa Clara, and Burlingame
• Coordinate Transactions on Resale Restricted Properties at Initial New Construction Sale and Resale
• Resale Price Calculations, Payoffs, Estimated Closing Statements, and Final Closing Statements
• Work with Escrow Companies to draft and finalize escrow instructions
• Manage Transaction Pipeline across mortgage lending, below market rate administration, acquisition-rehab, and
real estate brokerage departments
CHICAGO TITLE COMPANY, MULTIPLE OFFICES (MORGAN HILL, SAN JOSE), CA
HouseKeys RFP Response Page 20
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 259 of 381
Escrow Officer, 2004-2013
• Establish and document new escrow accounts
• Determine requirements and complete real estate transactions
• Order title reports / resolve title defects
• Establish new escrow accounts: deposit funds, maintain records, prepare transaction documents
• Review documents by prorating taxes and interest
• Complete closing transaction documents
• Manage closing caseload and coordinated closings with lenders, asset managers, agents, buyers, sellers, and
other interested parties
• Address and clear conditions in the title searches including but not limited to: payoff liens, judgments, probate
matters
• Obtain clearance from lenders performed closings, disbursed the transaction, initiate wires, and forwarded
closing packages to lenders, agents, buyers, and sellers
FIDELITY NATIONAL TITLE, MORGAN HILL, CA
Escrow Assistant, 2001-2004
• Establish and document new escrow accounts
• Determine requirements and complete real estate transactions
• Order title reports / resolve title defects
• Establish new escrow accounts: deposit funds, maintain records, prepare transaction documents
• Review documents by prorating taxes and interest
• Complete closing transaction documents
• Manage closing caseload and coordinated closings with lenders, asset managers, agents, buyers, sellers, and
other interested parties
• Address and clear conditions in the title searches including but not limited to: payoff liens, judgments, probate
matters
• Obtain clearance from lenders performed closings, disbursed the transaction, initiate wires, and forwarded
closing packages to lenders, agents, buyers, and sellers
EDUCATION/TRAINING/SKILLS
• Bi-Lingual
• Escrow and Title
• Escrow Accounting, Reconciliation, and Forensic Review
• New Account, Re-Use Account Management and Oversight
• Asset Management Accounts and Cost Breakdowns for Acquisition, Rehab, and Resale Projects
• Portfolio Management: Ownership and Rental Housing
• Federal Finance Program Guideline and Asset Management
• State Finance Program Guideline and Asset Management
• Portfolio Monitoring, Forensic Research
• Legal Strategy Development for State, Bankruptcy, and Probate Cases involving resale restricted units
• Tax Assessor Reporting on resale restricted properties
HouseKeys RFP Response Page 21
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 260 of 381
Kathie Wells
(408) 684-8831
kathie@housekeys.org
EXPERIENCE
HOUSEKEYS INC, MORGAN HILL, CA
Program Underwriter & Compliance Manager, 2015 - Present
• Founding Team Member of HouseKeys, a specialized program administration services and technology company
• Research and compare program manuals from various municipal agencies to create and update the HouseKeys
Template
• Establish Audit and Reporting Protocols for Finance Programs funded by the State of California (e.g. CalHOME,
BEGIN)
• Establish Audit and Reporting Protocols for Finance Programs funded by the Department of Housing and Urban
Development
• Underwrite eligibility and compliance for program applicants and participants
• Establish escalation protocols involving program underwriters, managers, and municipal staff members
• Manage the Loan Packaging, Subordination Agreement Drafting, Routing Packages, and other tasks associated
with Refinances, Title Changes, Divorces, etc.
• Coordinate with Finance and Accounting Teams at Local Municipal Agencies to synchronize records and
complete audit reviews
NEIGHBORHOOD HOUSING SERVICES SILICON VALLEY, SAN JOSE, CA
Program Underwriter, 2012 - 2015
• Helped create the policies and procedures to formalize program administration in the cities of Morgan Hill, Los
Gatos, Los Altos, Santa Clara, and Burlingame
• Underwrite the Eligibility of Applicants for Ownership, Rental, and Finance Programs
• Screen and pre-qualify applicants according to eligible household guidelines as defined by local policies
• Report to Local Government Staff Members
• Underwrite applicant pipeline for affordable homeownership, affordable rental, and down payment/closing cost
assistance programs
• Manage the Loan Packaging, Subordination Agreement Drafting, Routing Packages, and other tasks associated
with Refinances, Title Changes, Divorces, etc.
SOUTH COUNTY HOUSING CORPORATION, GILROY, CA
Program Processor, 2011-2012
• Submitted completed applications to Underwriter for approval
• Managed Applicant Pipelines for New Construction Projects
• Worked with loan officers at various mortgage companies to package files for review
• Assisted with due diligence and putting together post-close binders for each development project
HouseKeys RFP Response Page 22
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 261 of 381
DIRECT MORTGAGE SERVICES, SARATOGA, CA
Loan Processor, 1999-2011
• Submitted completed applications to Underwriter for approval
• Entered new loan information into database
• Ran loan files through automated underwriting engines as appropriate (e.g. DU, LP)
• Prepared/Managed files with title company to ensure closing deadline was met
• Ordered and reviewed credit reports and prepared pre-approval/approval letters
• Collected/Verified all documentation provided by borrower
• Submitted loan file to investor prior to commitment date
• Provided escrow analysis to loan officer
• Ordered appraisals, title reports, insurance, flood, and other documents needed to clear for closing
• Ordered and analyzed legal documents from various agencies
• Worked with various mortgage companies and banks to place loans according to underwriting guidelines
• Prequalified clients with multiple layers of financing
• Checked eligibility to meet government underwriting criteria
• Maintained and updated process pipeline
C.WATTS FINANCIAL INC, LOS GATOS, CA
Loan Processor, 1984-1999
• Submitted completed applications to Underwriter for approval
• Entered new loan information into database
• Ran loan files through automated underwriting engines as appropriate (e.g. DU, LP)
• Prepared/Managed files with title company to ensure closing deadline was met
• Ordered and reviewed credit reports and prepared pre-approval/approval letters
• Collected/Verified all documentation provided by borrower
• Submitted loan file to investor prior to commitment date
• Provided escrow analysis to loan officer
• Ordered appraisals, title reports, insurance, flood, and other documents needed to clear for closing
• Ordered and analyzed legal documents from various agencies
• Worked with various mortgage companies and banks to place loans according to underwriting guidelines
• Prequalified clients with multiple layers of financing
• Checked eligibility to meet government underwriting criteria
• Maintained and updated process pipeline
EDUCATION/TRAINING
• Automated Underwriting Systems
• Former Redevelopment Agency and Successor Agency Programs
• HCD Finance Programs (e.g. BEGIN, CalHOME)
• Tax and Bond Programs (CTCAC, CDLAC)
• HUD Programs (CDBG, HOME)
• Federal, State, and Local Audit Review and Reporting Experience
HouseKeys RFP Response Page 23
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 262 of 381
7.References
92-1 City of Morgan Hill
Role: Program Administrator
Program(s): Ownership, Rental, Lending
Timeline: June 2015 to Present (Note: 4 Team Members were employed by previous
Program Administrator from 2012-2015)
Scope of Services Includes (see full scope of work in the attachment):
• Homebuyer Orientation
• Homeowner Workshops and “Town Hall” Listening Sessions
• Applicant Eligibility (Processing and Underwriting)
• Participant Compliance
• Asset Management
• Administering Ownership Program, Loan Portfolio, and Rental Program
• Real Estate Acquisition, Rehabilitation, and Sales
• Program Development (Marketing Materials, Guideline Creation, and Municipal
Code Modifications)
Description Relevant Experience:
Morgan Hill has a well-established ownership program that has been in place for over
40 years and includes over 568 units spread out across nearly 84 residential
development projects. Due to the varying nature of each restriction agreement, this has
been the training ground on which the HouseKeys team continues to hone its skills.
Resale Restriction Agreements include mutual self-help homes, forgivable notes that
lock up equity for the first 20 years before passing it to the owner by year 30, and index-
based restricted resale prices. Affordable Properties have been built through the City’s
former Redevelopment Agency and through its Residential Development Control
System, whereby developers compete for allocations and earn points for affordable
units. In 2016, HouseKeys took on the cities loan portfolio and works alongside the
finance team to service program loans. In 2018, the City enacted an Inclusionary
Housing Ordinance that includes ownership and rental units. HouseKeys has dealt with
a variety of compliance challenges and transaction types, all while handling a healthy
volume of new construction and resale transactions.
Budget: $550,000 per year
Morgan Hill Contact: Rebecca Garcia, Housing Manager
City of Morgan Hill
408-310-4637 /rebecca.garcia@morganhill.ca.gov
HouseKeys RFP Response Page 24
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 263 of 381
92-2 City of Campbell
Role: Program Administrator
Program(s): Ownership, Rental, Lending
Timeline: June 2016 to Present (Note: 4 Team Members were employed by
Affordable First Mortgage Lender that financed many of the affordable ownership units
in the city’s program)
Applicable Scope of Services Includes:
• Homebuyer Orientation
• Applicant Eligibility (Processing and Underwriting)
• Participant Compliance
• Asset Management
• Overseeing Ownership Program, Loan Portfolio, and Rental Program
• Real Estate Acquisition, Rehabilitation, and Sales
• Program Development (Marketing Materials and Guideline Creation)
Description of Relevant Experience:
The HouseKeys team’s experience in the City of Campbell started with an early
partnership on one of their largest affordable ownership projects. At our previous
employer, we used our Fannie Mae Seller Servicer status to serve as the primary first
mortgage lender for 40 affordable homeownership units. We coordinated with the City
of Campbell, Charities Housing, and Housing Trust Silicon Valley. Years later, when
the City of Campbell was looking for a Program Administrator, HouseKeys was invited
to propose in response to the city’s 2016 RFP. Our onboarding process including
ownership units, rentals, and the first-time homebuyer loan portfolio. After a rocky start
during the first year, HouseKeys was able to gain the trust of staff and council and got a
renewal in 2017 and has continued to do so. The strength that shined through in this
contract, was our ability to tackle difficult compliance enforcement activities that
culminated with the acquisition of a BMR Unit and a resale to an eligible subsequent
purchaser.
Budget: $137,200 per year ($30,000 Onboarding)
City of Campbell Contact: Stephen Rose, Senior Planner
City of Campbell
408-866-2142 / stephenr@campbellca.gov
HouseKeys RFP Response Page 25
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 264 of 381
92-4 City of Burlingame
Role: Program Administrator
Program(s): Rental
Timeline: June 2018 to Present
Scope of Services Includes:
• Renter Orientation
• Applicant Eligibility (Processing and Underwriting)
• Participant Compliance
• Asset Management
• Overseeing Rental Program
• Initial Lease-Ups and Vacancies
• Program Development (Marketing Materials and Municipal Code Modifications)
Description of Relevant Experience:
Like Los Gatos, Burlingame was a legacy client from the team’s time at Neighborhood
Housing Services Silicon Valley. We reconnected in 2018 to provide assistance with the
existing rental portfolio and then added a formalized contract in 2020 to assist with the
new construction pipeline. We are presently working
Budget: $96,000 ($40,000 onboarding)
City of Burlingame Contact: Ruben Hurin, Planning Manager
City of Burlingame
650-558-7256
rhurin@burlingame.org
HouseKeys RFP Response Page 26
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 265 of 381
92-5 City of Gilroy
Role: Program Administrator
Program(s): Ownership, Rental, Lending
Timeline: June 2017 to Present
Scope of Services Includes:
• Homebuyer Orientation
• Applicant Eligibility (Processing and Underwriting)
• Participant Compliance
• Asset Management
• Overseeing Ownership Program, Loan Portfolio, and Rental Program
• Real Estate Acquisition, Rehabilitation, and Sales
• Program Development (Marketing Materials and Municipal Code Modifications)
Description of Relevant Experience:
Gilroy is a multi-faceted contract whereby the HouseKeys team has a longstanding
relationship through its work with South County Housing. Members of the HouseKeys
Team were part of the first mortgage lending teams that provided financing to many of
the homeowners in the project. As we continue to rebuild the database of existing units
and determine which units are still in the program, we will rely on this experience as we
work to facilitate transactions and perform compliance reviews. The City of Gilroy has
over 480 ownership units, spread across 10 residential development projects. These
were made possible through nonprofit developer financing and the Residential
Development Ordinance. HouseKeys has been holding orientation classes each month
to build the buyer pool and our team is working alongside staff to refine the scope as we
work through the onboarding.
Budget: Updated Contract Pending - $240,000 with $30,000 Onboarding
City of Gilroy Contact: Karen L. Garner, Community Development Director
City of Gilroy
408-846-0451
Karen.garner@ci.gilroy.ca.us
HouseKeys RFP Response Page 27
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 266 of 381
92-6 City of San Ramon
Role: Program Administrator
Program(s): Ownership
Timeline: June 2019 to Present
Scope of Services Includes:
• Buyer Orientation
• Applicant Eligibility (Processing and Underwriting)
• Overseeing Ownership Program
• New Construction Project setup
• Program Development (Marketing Materials and Municipal Code Modifications)
Description of Relevant Experience:
Lennar built the first affordable homeownership project in the City of San Ramon in
nearly 15 years. Knowing that staff needed assistance with getting their
homeownership program materials updated and in place, HouseKeys signed a contract
to assist Lennar with its 28 affordable homeownership units and a contract with the City
of San Ramon exclusively to assist with the Lennar Project.
Budget: $30,000 Onboarding – Fee Agreement with Developer (Faria Preserve by
Lennar)
City of San Ramon Contact: Cindy Yee, Senior Planner
City of San Ramon
925-973-2562
cyee@sanramon.ca.gov
HouseKeys RFP Response Page 28
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 267 of 381
92-7 City of Santa Clara
Role: Program Administrator
Program(s): Rental with Ownership added in the 4th quarter of 2020
Timeline: June 2019 to Present
Scope of Services Includes:
• Renter Orientation
• Applicant Eligibility (Processing and Underwriting)
• Participant Compliance
• Asset Management
• Overseeing Rental Program
• Initial Lease-Ups and Vacancies
• Program Development (Marketing Materials and Municipal Code Modifications)
Description of Relevant Experience:
In 2019, City of Santa Clara brought in HouseKeys to be the first 3rd party program
administrator to oversee its rental program. This includes a large pipeline of new
construction rental units that are being built, along with over 1,400 rental units in its
existing inventory. In October of 2020, HouseKeys took over the homeownership
program that has new construction pipeline and approximately 140 ownership units.
Budget: $166,000 ($55,000 onboarding) – Rental
$75,000 ($15,000 onboarding) – Ownership
$241,000
City of Santa Clara Contact: Jonathan Veach, Housing Division Manager
City of Santa Clara
408-615-2297
jveach@santaclaraca.gov
HouseKeys RFP Response Page 29
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 268 of 381
92-8 City of Hayward (Non-Administrator Engagement)
Role: Program Administrator
Program(s): Ownership (Builder Contract Only)
Timeline: July 2020 to Present
Scope of Services Includes:
• Buyer Orientation
• Applicant Eligibility (Processing and Underwriting)
• Overseeing Ownership Program
• New Construction Project setup
• Program Development (Marketing Materials and Municipal Code Modifications)
• Assisted the City to apply for CalHome Funding for the 2020 HCD NOFA
Description of Relevant Experience:
Taylor Morrison (formerly William Lyon Homes) has built an ownership project that
contains 28 affordable ownership units. HouseKeys was commissioned to interface with
the City of Hayward and help them formalize program materials and facilitate the
marketing, application, and transaction process for income-eligible buyers. This is a
tough project that we have been struggling with as they are 1-bedroom (429 Square
Feet) Moderate-Income Units for $371,148 with a market-rate that was initial in the low
$400,000. The market is starting to push up and now market-rate is up to $480,000, but
the units have not been selling and the Sales Manager now works for another builder.
HouseKeys did compete in an RFP that was released October 16, 2020. HouseKeys
was selected, but the City has made the engagement contingent upon receipt of
CalHome Funding.
Budget: Fee Agreement with Developer (SoHay by Taylor Morrison)
City of Hayward Contact: Christina Morales, Housing Division Manager
City of Hayward
510-583-4243
Christina.morales@hayward-ca.gov
HouseKeys RFP Response Page 30
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 269 of 381
92-9 City of West Hollywood
Role: Program Administrator
Program(s): Ownership, Rental, and Finance
Timeline: October 2020 to June 2021 – with new contract pending
Scope of Services Includes:
• Creating Homeownership Program Materials for the City’s attempt at putting an
affordable homeownership program in place (it is not in place now)
• HouseKeys assisted the City to apply for the 2020 HCD NOFA for CalHome
Funds
• HouseKeys will take over administration of the Rental Program as well
Description of Relevant Experience:
HouseKeys has been consulting the City since the 4th quarter of 2020. Our plan is to go
to City Council and assist staff to establish their homeownership program and further
formalize the policies for their rental program. There has been some staff change over
since we initial signed the interim contract that runs from December to June 30, 2021.
We plan on entering a formal contract for July 1, 2020.
Budget: $120,000
City of West Hollywood Contact: Alicen Bartle
Project Development Administrator
City of West Hollywood
323-438-1949
abartle@weho.org
Jonathan Holub (recently took over)
Acting Department Director
City of West Hollywood
jholub@weho.org
HouseKeys RFP Response Page 31
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 270 of 381
92-10 City of Menlo Park
Role: Program Administrator
Program(s): Ownership, Rental, and Finance
Timeline: January 2021 to Present
Scope of Services Includes:
• Transition services from Previous Administrator (Hello Housing)
• Onboard and Manage Loan Portfolio
• Onboard and Manage Rental Portfolio
• Onboard and Manage Ownership Portfolio
• Setup Orientation Classes throughout the Year
• Facilitate Applicant Pools for Ownership and Rental Housing
Description of Relevant Experience:
HouseKeys won the RFP in 2020 in competition with several other agencies. We are in
the process of onboarding the city’s portfolio that includes existing housing units and
several new construction projects. We are still in the onboarding phase of this contract.
Budget: $90,000
City of West Hollywood Contact: Michael R. Noce
Management Analyst
City of Menlo Park
650-330-6624
MRNoce@menlopark.org
Rhonda L. Coffman
Deputy Community Development Director
650-330-6614
RLCoffman@menlopark.org
HouseKeys RFP Response Page 32
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 271 of 381
8.Insurance Coverage
Minimum Scope of Insurance
Stated Minimums HouseKeys
Insurance Services Office
Commercial Liability
1,000,000 per
occurrence
$2,000,000 per
occurrence
Insurance Services Office
covering Auto Liability
1,000,000 $2,000,000 combined
single limit
Worker’s Compensation
Insurance
1,000,000 $1,000,000 each
incident
Errors and Omissions 1,000,000 $1,000,000
Based on the required minimums stated in the RFP, HouseKeys has adequate coverage
for this contract.
HouseKeys RFP Response Page 33
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 272 of 381
9.Terminated Contracts / Litigation
No contracts were terminated for convenience or default within the past 3
years.
No litigation affects our firm’s ability to perform work now or in the future.
HouseKeys RFP Response Page 34
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 273 of 381
10. Language Capabilities
The Team Members below speak and write Spanish. HouseKeys also
utilizes translation services for web and printed content.
# Position Name Department Email
1 Director, Program
Operations
Anna Reynoso Administration anna@housekeys.org
2 Assistant Manager,
Customer
Experience
Abraham Valle Administration abraham@housekeys.org
3 Program Operations
Manager
Mandy Israde Administration mandy@housekeys.org
4 Asset Manager Christina
Enriquez
Administration christina@housekeys.org
5 Senior Program
Officer
Martin
Vergara
Administration martin@housekeys.org
6 Analyst, File
Coordinator
Angelica
Garcia
Administration angelica@housekeys.org
HouseKeys RFP Response Page 35
HouseKeys RFP Response - San Luis ObispoDocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 274 of 381
356 Digital Drive | Morgan Hill, CA 95037 | Phone: 1-877-460-KEYS | www.housekeys.org
Page 1 of 2
4.Cost
Project Description – City of San Luis Obispo – June 2021
City of San Luis Obispo is seeking a proposal for professional program administration of its BMR Ownership and
Rental Units, as well as the First-Time Homebuyer Loan Program.
# Key Program Notes
1 City’s first Inclusionary Housing Ordinance was adopted in 1999.
2 There are approximately 73 BMR homeownership units within the City’s portfolio. Management of
the units is expected to bring a higher level of service to applicants and existing homeowners. The City
currently has one staff member overseeing this scope that includes: purchase and sale agreements,
refinancing, subordination agreements, and other sensitive work.
3 City has approximately 106 affordable rental units that require close oversight since they are not
normally managed by an experienced administrator/provider.
4 The City has various first-time homebuyer assistance loan utilizing the BEGIN and Affordable Housing
Fund Dollars. Currently there are 11 active loans. There is approximately $200,000 available to make
new loans. Administrator is expected to service and monitor existing loans and market the program to
make additional loans.
HouseKeys has the experience and background to manage all three programs.
Proposal Pricing
1 Onboarding
Title Role & Rate Total Cost
Julius Nyanda,
Program
Manager
$200/hour
Engagement
Oversight
20 Hours
$4,000
Christina
Enriquez, Asset
Manager
$125/hour
Onboarding of
Existing Homes
and Loan
Portfolio
32 Hours
$4,000
Mandy Israde,
Program
Operations
$125/hour
Compliance
Manual, Update
Applicant
Manual and
Forms
32 Hours
$4,000
$15,000
One-Time Fee
Billed Up Front
The full 14-Member HouseKeys Team of
Administration Specialist and Software
Engineers will be working on this contract, but
these team members will lead the initial
onboarding.
Onboarding Includes connecting with
developers who have approved projects to line
up agreements, protocols, and marketing plans
for new units.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 275 of 381
356 Digital Drive | Morgan Hill, CA 95037 | Phone: 1-877-460-KEYS | www.housekeys.org
Page 2 of 2
Anna Reynoso,
Program
Operations
$125/hour
Team Oversight
and Program
Setup
20 hours
$3,000
2 Ongoing Program Administration
Program Type Current Portfolio Count
Ownership Program 73 Units
Rental Program 106 Units
Finance Program 11 Units
Total Units 190
$96,000/year billed monthly
HouseKeys will check-In on the anniversary
date to do a cost analysis. The annual fee
(billed monthly) is an “all-inclusive” rate that
includes all services itemized in our most
recent Scope of Services document. Please
note: On transactions, HouseKeys typically bills
3rd parties or adds to the sales price. See the
“billed to” column on the fee schedule.
3 Special Project Rate $200 Per Hour for “Out of Scope” Projects
Any special projects will be agreed to in
advance to avoid confusion.
4 Transaction Fees See Fee Schedule
Note: Any “legacy agreements” with
developers, property managers, or existing
homeowners can be used to augment the fee
schedule pricing.
Note 2: Fees are charged to third parties
(Homebuilders, Homeowners, etc.). The
$96,000 annual and $15,000 one-time fee – are
the only fees that will be invoiced to the city.
5 Total First Year Cost $111,000.00
6 Recurring Annual Cost (Year 2) $96,000
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 276 of 381
HOUSEKEYS STANDARD FEE SCHEDULE 2021 (June 2021)
4b. COST
# Description Fee 1 Fee Cap / Max Billed To
1 Program Administration Base Fee to be Determined at
Contract (minimum $75,000/year) Agency
2
Rental Unit Processing Fee $1,500.00 per
lease transaction
$1,500 per
lease
transaction
Developer
[Agreement]
3 Loan Processing
Transaction Fee
$1,250.00 per
transaction 2
$1,250.00 per
transaction Owner / Lender
4 Refinance & Document
Processing Fee
$500 per
transaction2
$500 per
transaction
Homeowner
[Agreement]
5 New Ownership Sales
Transaction Fee
3% of
Sales Price
Maximum
$18,000.00
Developer
[Agreement]
6
Ownership Resale
Transaction Fee
6% of
New Sales Price
Maximum
$36,000.00
Homeowner /
Added to Sales
Price
[Agreement]
7 Acquisition and
Ownership Resale / Rehab
Transaction Fee
5% of Resale
Restriction Price
plus 5% of
New Sales Price
Maximum
$60,000.00
Homeowner /
Added to Sales
Price
[Agreement]
8 Billing Rate for Projects
Outside of Contract Scope $250.00 / hour $250.00 / hour
Up-Front
Scope /
Agency
9 Training Program for Real
Estate Professionals $35 per class $35.00
Real Estate
Agents & Loan
Officers
10 Annual Registration for
Loan Officers and RE
Agents who participate in
Program Transactions
$350 per agent
per year $350
Real Estate
Agents & Loan
Officers
1 Fees may be lowered pursuant to previously executed Agreements (e.g., developer agreement, resale
restriction agreement, promissory note, etc.) with lower fee schedules or stated fee limitations. These are
collectively referred to as “Legacy Agreements.”
2 A percentage of the Loan Processing Fee and Refinance Fee will be transferred to the Agency Client for
administration and internal processing of finance transactions (Items 3 and 4 above).
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 277 of 381
Page | 20
3. Statement of Past Contract Disqualifications
4. Insurance Certificate
The second envelope shall be labeled “Price Proposal” and shall include the Price Proposal form.
These envelopes shall be enclosed in a larger envelope that shall be sealed and addressed to the
Department of Finance, City of San Luis Obispo, 990 Palm Street, San Luis Obispo, CA 93401. In order
to guard against premature opening, the larger envelope should be clearly labeled with the proposal
title, specification number, and name of the proposing firm.
INFORMATION ABOUT THE PROPOSER
Firm Name
Mailing
Address
City, State, ZIP
Phone Number
FAX Number
Business Type (proprietorship/partnership/corporation)
Years Operating under this Firm Name
Insurance Company’s A.M. Best Rating
Authorized Representative
Title of Authorized Representative
Signature of Authorized Representative and Date
Bid Spec. No.
SLO-BMR-2021
City of San Luis Obispo
5/26/2021 7:32 PM p. 25
HouseKeys Inc
358 Digital Drive
Morgan Hill, CA 95037
408-684-8202
408-684-8202
6
California C-Corporation
A+
Julius Nyanda
CEO
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 278 of 381
Page | 21
Bid Spec. No.
SLO-BMR-2021
City of San Luis Obispo
5/26/2021 7:32 PM p. 26
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 279 of 381
Page | 22
REFERENCES
Number of years engaged in providing the services included within the scope of the specifications under
the present business name: .
Describe fully the last three contracts performed by your firm that demonstrate your ability to provide
the services included with the scope of the specifications. Attach additional pages if requi red. The City
reserves the right to contact each of the references listed for additional information regarding your firm's
qualifications.
Reference No. 1:
Agency Name
Contact Name
Telephone & Email
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
Reference No. 2:
Agency Name
Contact Name
Telephone & Email
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
Bid Spec. No.
SLO-BMR-2021
City of San Luis Obispo
5/26/2021 7:32 PM p. 27
Stephen Rose, Senior Planner
70 N. First Street
Campbell, CA 95008
Ownership, Rental, Lending Program Administration
Annual Budget: $137,200
City of Santa Clara
City of Campbell
Jonathan Veach
408-615-2297 / jveach@santaclara.gov
408-866-2142 / stephenr@campbellca.gov
1500 Warburton Avenue
Santa Clara, CA 95050
Ownership, Rental
Annual Budget: $241,000
6
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 280 of 381
Page | 23
Reference No. 3
Agency Name
Contact Name
Telephone & Email
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
CURRENT CONTRACTS:
1.
2.
3.
4.
Bid Spec. No.
SLO-BMR-2021
City of San Luis Obispo
5/26/2021 7:32 PM p. 28
City of Menlo Park
Michael R. Noce
650-330-6624 / MRNoce@menlopark.org
701 Laurel Street
Menlo Park, CA 94025
Ownership, Rental, Loan Administration
Annual Budget: $90,000
Please see Reference Breakdown
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 281 of 381
Page | 24
STATEMENT OF PAST CONTRACT DISQUALIFICATIONS
The proposer shall state whether it or any of its officers or employees who have a proprietary interest in
it, has ever been disqualified, removed, or otherwise prevented from bidding on, or completing a federal,
state, or local government project because of the violation of law, a safety regulation, or f or any other
reason, including but not limited to financial difficulties, project delays, or disputes regarding work or
product quality, and if so to explain the circumstances.
◼ Do you have any disqualification as described in the above paragraph to declare?
Yes ❑ No ❑
◼ If yes, explain the circumstances.
Executed on at _______________________________________ under penalty of
perjury of the laws of the State of California, that the foregoing is true and correct.
______________________________________
Signature of Authorized Proposer Representative
Bid Spec. No.
SLO-BMR-2021
City of San Luis Obispo
5/26/2021 7:32 PM p. 29
June 13, 2021 Morgan Hill, CA
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 282 of 381
Page | 25
PRICE PROPOSAL
Bid Spec. No.
SLO-BMR-2021
City of San Luis Obispo
5/26/2021 7:32 PM p. 30
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 283 of 381
Question and Answers for Bid #Spec. No. SLO-BMR-2021 - Notice Requesting Proposals for
Below Market Rate Housing Program Administrator
Overall Bid Questions
There are no questions associated with this bid.
Question Deadline: Jun 7, 2021 5:00:00 PM PDT
Bid Spec. No.
SLO-BMR-2021
City of San Luis Obispo
5/26/2021 7:32 PM p. 31
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 284 of 381
CONTRACT FOR HOUSEKEYS – BELOW MARKET RATE HOUSING PROGRAM
ADMINISTRATIVE SERVICES
EXHIBIT B
SCOPE OF SERVICES
Contractor Obligation. The contractor shall perform the following duties.
1. Public Interface. Administrator will serve as the public-facing entity on
behalf of the Programs included in the contract scope. This includes taking
initial inquiries, providing information to third parties and any reporting
requirements. This will include processing servicing tickets as Applicants
transition from buyers and renters to Participants in the role of homeowner,
borrower, and existing tenant.
2. Documentation. Administrator will administer the program and assure
Affordability Deed Restrictions are recorded and followed by all parties as
applicable for each property.
3. Support and Education. Administrator will provide offsite support for
service requests. Orientations and workshops will be held for residents of
the Agency. Note: In Response to COVID-19 restrictions, content is
streamed online via webinars and pre-recorded content available on
HouseKeys-hosted program websites.
a. Administrator shall conduct introductory Home Buyer, Renter
Education/Training classes – Homebuyer/Renter Orientation
Classes prior to Program application. A minimum of 6 events
will be held each year and at least 40 Weekly Live Online
Webinars are held where staff answers Frequently Asked
Questions (FAQs) from program applicants and participants.
4. Guidelines and Materials. Administrator will regularly update program guidelines
and program materials in conjunction with Agency staff to reflect the Administrator’s
administrative process for Program Administration including, but not limited to:
applications, program pamphlets, rent & resale calculations, selection processes,
vacancies, sale and resale of units, refinancing requests, collection of Agency fees and
other applicable fees, and default monitoring/resolution process. Administrator’s
objective will be to work alongside Agency Staff to incorporate “learnings” from the
team’s collective history with housing affordability programs in California.
5. Program Calculations. Administrator will provide materials and
calculators for Initial Purchase Price of For-Sale Units, Maximum
Restricted Resale Price, Equity Share Calculations, Initial and Subsequent
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 285 of 381
Rent Schedules, including Utility Allowance Calculations. All For-Sale
Schedules will include assumptions for down payment, interest rate
(typically 10-Year Average of Freddie Mac National Rate), maintenance (if
applicable), Homeowner Association Dues, and any additional assumptions
requested. For loan portfolios, this includes payoffs, loan interest, penalties,
escrow accounts, and year-end reconciliations.
6. Website Presence. Administrator will maintain an affordability program
website presence that will link to the Agency’s housing website.
7. Recordkeeping. Administrator shall maintain the Agency’s existing
records and files through a proprietary database-driven information
retention and management system for the programs. All electronic records
will be considered work products that are property of the Agency and will
be available via data export. The database shall contain all important details
for each Program, Ownership Unit, Rental Unit, and Financing Unit.
8. Reporting. Administrator shall provide a quarterly program summary
report to the Agency with the following information. An abbreviated
monthly report will accommodate each monthly invoice.
9. Services. Administrator will provide the following services:
a. Making minor revisions to the Agency’s existing program
materials and legal documents.
b. Overall management and implementation of specific program
policies, including required reporting.
c. Conducting income qualifications including review of assets,
income, Verifications of Employment, and all other necessary
approvals to ensure qualification for the Agency Programs
(Ownership, Rental, Finance).
d. Underwriting program applications in accordance with
program requirements.
e. Underwriting program compliance in accordance to restrictive
covenants and project-specific program agreements.
f. Underwriting transaction compliance (e.g. refinances,
transfers) to ensure they conform with restricted covenants and
project-specific program agreements.
g. Preparing all program documents, overseeing proper execution
thereof, and conducting final program approval reviews.
h. Ensuring timely delivery of all necessary documents into
escrow, and preparing escrow demands and funding requests.
i. Preparation of program materials by revising the Agency’s
current documents.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 286 of 381
j. Calculating all pay off demands and issuing any disclosures
and tax forms as required by State and/or Federal Law.
k. Calculating the resale value of all ownership program homes as
requested annually by the County.
l. Work with Agency staff to ensure a seamless and coordinated
development of documents as it relates to the Affordability
Program, including the Developer application process where
Restricted Affordability Units are included, reviewing
developer agreements, and ensuring that affordability
requirements are outlined in an Affordable Housing Agreement
or equivalent document, and any subsequent amendments to
the development documentation.
10. Transaction Coordination. Administrator shall act as transaction coordinator
for all real estate transactions and will provide the Agency with a Fee
Schedule. Where there is a conflict between the Administrator’s Fee Schedule
and recorded Agreements (“Legacy Agreements”), Administrator will adjust
fees to compensate for the difference with the understanding that newly
drafted agreements will conform to the fee schedule.
a. Administrator will coordinate document transmittals between
buyers, renters, borrowers, homeowners, tenants, developers,
and Agency as needed. Administrator will be responsible for
ensuring all documents submitted for Agency signatures are
complete and accurate. Administrator will be responsible for
making any necessary corrections to documents.
11. Monitoring, Compliance, and Loss Mitigation. Administrator shall work
alongside Staff to conduct monitoring to annually evaluate Program Owners’
& Renters’ (“Counterparty’s”) compliance with the terms and conditions of
the recorded deed restrictions and program guidelines including the following:
a. Mailing monitoring letters to all the Program units.
b. Reviewing in conjunction with Agency staff, Agency or
County Assessor data to assist in the process (e.g., water utility
bills, property records).
c. Review Agency’s preliminary monitoring list to identify follow
up actions required.
d. Meet with Agency staff to develop guidelines for acceptable
default remedies (e.g., allowing rental of Program Units for
hardship cases).
e. Administrator shall work alongside Staff to investigate and
identify cure potential program-related defaults including:
i. Conduct follow up of those Program Owners, Project
Owners, and Management Companies (collectively
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 287 of 381
referred to as “Counterparties”) who do not submit their
compliance documentation.
ii. Reviewing information on calls from Program Unit
neighbors and interested parties.
iii. Conduct reasonable follow-up investigation to assess
potential defaults including unit site visits.
iv. Scheduled appointments with Counterparties to discuss
compliance issues.
f. For confirmed defaults, provide Counterparties with list of
actions needed to remedy the default and conduct follow-up to
monitoring compliance.
i. Maintaining log of actions taken to remedy the defaults.
g. For those defaults in which the Counterparties choose not to
remedy the situation within a reasonable amount of time,
Administrator will meet with Agency staff to determine the
course of action to pursue. Agency authorization will be sought
for any legal action taken.
h. Administrator will participate in legal deliberations at all Staff
Levels and Council Decisionmakers as needed.
i. Agency will provide a list of any current program participant
defaults and actions taken to date.
12. Marketing. HouseKeys continually grows its applicant pool through a series
of outreach efforts. This includes targeting the least likely to apply and
working in compliance with federal laws addressing Affirmative Fair Housing
Marketing.
a. All Materials will include proper fair housing logo and other
federal and state-mandated disclosures.
b. Initial Campaign to Introduce HouseKeys to key employers,
community organizations, religious organizations, trade
associations, and small businesses.
c. Mailers and other collateral that go out within a .25 to .5-mile
radius of each Opportunity listing featured in the HouseKeys
Proprietary Software Platform.
d. Local workshops targeting the groups above.
e. Participating in local events as public health restrictions (e.g.
COVID-19) allow.
f. Online and Social Media Campaigns to share available
opportunities locally.
g. Listings on popular websites and real estate aggregators (E.g.
Craigslist, Local MLS, etc.)
h. When appropriate and when the budget allows, Administrator
will advertise in local media (radio, print, etc.)
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 288 of 381
13. Additional Service Descriptions. Administrator will provide the following
additional services.
a. Administrator shall build and maintain the City’s group of
qualified and eligible Program homebuyers and renters at a
minimum Buyer/Renter-to-Property ratio of 5:1. For Agencies
that maintain an accruing Waitlist based on registration
timestamp, HouseKeys will assign Application ID using the
Timestamp and assign a “Legacy Applicant” Preference
Assignment.
b. Administrator will partner with the Agency to create Program
legal templates for documents required for signature by the
Program participants. Administrator shall supply documents
that are typically used in the Applicable County for residential
real estate transactions (e.g. purchase and sale, disclosure
acknowledgements, addendums, etc.)
c. Administrator will maintain a list of approved loan officers and
lending operations eligible to provide mortgage lending for
purchase and refinance transactions.
d. Administrator will maintain a list of approved real estate agents
and brokers eligible to provide listing services to sellers for
resale transactions.
e. Administrator will maintain a list of appraisers for fair market
valuations.
f. Administrator will maintain a list of escrow officers who are
familiar with program requirements and transaction
compliance.
g. Administrator will review individual program restrictions for
terms and requirements as needed including shared equity
programs, down payment assistance loans and any resale
restriction agreements.
h. Administrator will prepare Agency staff reports and hold
Council Study and Closed Sessions to discuss complicated and
sensitive program matters.
14. Special Projects. There will be cases where Administrator will be asked to
complete a Project that is outside of the contract scope. If project scope and
terms are defined in writing, Administrator will agree to complete project at a
specified billing rate of no greater than $200.00 Per Hour.
15. Performance Measures. Administrator and the Agency will agree to
mutually acceptable performance measures for program administration. These
measures shall be included in the quarterly program summary report.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 289 of 381
a. General Inquiries: Respond within 2 business days.
b. Loan Requests: Respond within 2 business days, Complete
requests within 3 weeks, with weekly status updates for
outstanding requests.
c. Rental Vacancies: Fill vacancies within 60 days.
d. Annual Ownership Monitoring: 1 Certification Per Year.
e. Annual Rental Monitoring: 1 Project Certification per Project
and 1 Tenant Certification Per Unit.
f. Eligibility List: Maintain a minimum buyer-to-property and
renter-to-unit ratio of 5:1.
g. Application ID issuance: Available online year-round 24/7
with troubleshooting issues handled within 2 business days.
Manual Application ID issuance will also take up to 2 business
days.
DocuSign Envelope ID: 75625E07-5FE2-44F2-9801-51D27F6F62FA
Page 290 of 381
Page 1 of 3
Background
Donna Lewis, Branch Manager and SVP of Mortgage Lending at Guaranteed Rate, reached out to City of San Luis
Obispo Staff on November 1, 2021 to provide input on the HouseKeys contract. Staff has asked HouseKeys to
respond since the questions directly address HouseKeys model and contract.
Preamble
I want to first thank Donna Lewis for her input. Each Agency engagement is a new opportunity for HouseKeys
to learn. I am so grateful to the San Luis Obispo staff for coordinating our “listening tour” and giving us a chance
to hear from the public directly in three separate sessions. Donna’s input goes a long way in helping to show
how a partner like HouseKeys can be helpful in responding to requests from the public and for communicating
the purpose and intent of the city’s affordable housing programs, including homeownership, rental, and first -
time homebuyer down payment assistance.
The benefits of a Program Administrator wholistically manage the program are as follows:
• Transparency (outward face for the program with visibility into to all transactions)
• Efficiency (allows program to scale up effectively without building a new city department)
• Accountability and compliance (through a variety of methods, ensures that all transactions are accomplished
in compliance with State law)
• Equity and Inclusion (improves public awareness and ability to engage and participate in the program)
• Customer Service (improves our ability to respond to and support the needs of buyers, sellers, agents, lenders,
developers)
Below are some key questions raised by Donna Lewis and responses from HouseKeys:
1. Intended role of Program Administrator
It appears that it is Housekey’s intention to act as the City’s Agent for each and every low/moderate new sale
or resale transaction. Was that the purpose and intent of the City?
HouseKeys Response: City’s intent was always to have a third-party take over the program in its entirety.
This includes the Homeownership, Rental, and First-Time Homebuyer Program. While it took 20 years for
the city to accumulate a homeownership program inventory of approx. 80 units, it is projected to more
than double this count over the next few years. Formalizing the role of the Administrator – whether
staffed by a Third-Party or by internal staff – is a critical component to creating a standardized, scalable
and sustainable program.
2. Fees
Housekeys is proposing additional fees that are significant relative to what’s been charged in the past. Keeping
in the mind that these transactions are for low and moderate -income buyers, it seems not reasonable to pass
these fees on to the buyer, nor is it reasonable to assume these fees can be charged to the lender or seller of
these units (whether resale or new development).
HouseKeys Response: There are specific workflows and costs borne by staff across the city’s
organizational chart. This is not always obvious to the public. A developer agreement and resale
Page 291 of 381
Page 2 of 3
restriction agreement has legal workflows involving the City Attorney, the excess sale proceeds created
when a restricted home is sold has accounting implications, and all marketing is subject to fair housing
considerations that escalate up to management and council.
The regulatory landscape, and the oversight from the state has also changed with increasing scrutiny and
oversight. In order to maintain program transparency and accountability on all levels (marketing,
procurement, transactions, accounting) service costs must be modified to account for true costs of
services.
Housekeys require the developer pay 3% to Housekeys to represent the buyer’s side of new build transactions
& they propose to act as the listing agent for all resale transactions at a fee of 6%, offering only 2% to the buyers
side agent. The City does not benefit from the fee structure.
Generally the developer markets affordable units at the max sales price as determined by the City and they may
or may not cooperate with a “buyer’s side agent” because most buyers have already registered on an interest
list with the developer (procurement of the buyer/lead) which is common in all new development. If the buyer
is working with an agent, the buyer registers their agents name with the developer at the same time the buyer
is added to an interest list, and the de veloper may pay a 1.5%-2.5% referral fee to the buyer’s agent. Most
buyer’s agents stay engaged in the process but the buyer generally works with the builder’s sales office going
forward and throughout the transaction. The developer works with someone li ke myself to facilitate the vetting
of buyer prequalification and the buyer’s ability to be certified by the City as a low/moderate income buyer.
HouseKeys Response: The City Inclusionary Housing Program has never been a financial benefit to the
City. It’s been subsidized by the General Fund and was not enough to cover the full cost of administration.
The full benefits of having a Program Administrator are described above in the preamble.
Additionally, the fees generated by the local ecosystem (developer, realtor lender, buyer) do not
contribute to the cost of program administration. For e.g. fees related to the City’s BMR homeownership
program also provide for management of the City’s BMR rental program. With HouseKeys, whatever
revenue is generated is contributing to the cost of administration.
Up to this point, the only fee charged to an affordable buyer related to the City’s vetting process has been a
$350 certification fee (charged by an entity such as HASLO or PSHHC).
HouseKeys Response: Related to Income Certifications, HASLO is no longer providing this service and
PSHHC is only providing this service on a temporary basis until an Administrator takes over this service.
3. Procurement:
Procurement of those interested in affordable housing is not the difficult part. It’s keeping those who are
interested informed about all opportunities and then letting them seek those on their own whether it be
working with a new development/builder’s sales office or working with a local Real Estate Agent of their
choosing. Housekey’s seems to be proposing or creating a structure for itself that controls the process entirely,
while generating significant revenue for Housekeys with no financial benefit to the City.
Does it make sense for the City to allow Housekeys to become the “marketer” of these units in the name of
Housekey’s vs solely marketing the City of SLO Affordable Housing program?
Housekeys proposes to maintain a list of buyers – procuring the buyer for the right to collect a commission –
and they propose to require all real estate agents, lenders, title & escrow companies, to become certified AND
Page 292 of 381
Page 3 of 3
pay an annual fee for the privilege of being on their list of certified vendors. While I don’t think it’s a bad idea
to put real estate agents, lenders, and title companies through a certification process to make sure they are
clear on the process and flow on these transactions, it seems a reach to charge an annual fee to remain on the
list and this fee goes to Housekey’s and not the City.
HouseKeys Response
Standardization of procurement is critical. At the Federal and State Level the City is being evaluated for
how equitable and transparent any outreach effort is.
The procurement process for how buyers are introduced to the program and how the program is operated
is being scrutinized by HCD (e.g., ensuring that properties are priced properly, buyers can afford the
housing payment). Finally, the City’s own Diversity, Equity, and Inclusion goals are being used as a
performance measure.
Lastly, the Administrator will ensure that all parties involved (real estate agents, lenders, etc.) know how
to comply with the program and there is a third-party to provide oversight and better customer service.
Management of an approved vendor list includes creating a fair process to get on the list, hosting group
and 1-on-1 trainings, creating content, updating materials, and fielding input from the public as
complaints arise about response from individual providers. The annual fee is used both to contribute to
costs and to establish commitment by the professionals who are on the list.
4. Infringement into local ecosystem
There is an entire real estate eco-system locally which already exists and Housekey’s seeks to replace this,
costing the developer a significant amount more on units they are already selling at way below market (losing
money on) and cutting out buyer’s agents locally so that the buye r doesn’t have the hands-on representation
they may desire and often need. (Side note – 6% is not the customary listing fee in SLO…it is 5% in general and
may be even lower in total for new construction; 2.5% or 50% is commonly offered to the buyer’s agen t).
HouseKeys Response
The local ecosystem of loan officers, real estate agents, housing counselors, community organizations,
and homebuilders play and will need to continue to play a critical role in providing housing to residents.
However, the ecosystem that exists is not able to provide the full range of benefits of a third party
administrator as outlined in the preamble.
Housekeys provides a centralized marketplace, training and the standardization required for a program
that needs to substantially scale up as soon as possible to meet the anticipated market and customer
service demands associated with all the new affordable housing units in the City’s development pipeline.
Finally, a fee schedule was submitted with the RFP for consideration in response to the City’s request.
Housekeys is committed to ensuring that listing fees are customary and commensurate with the local
market.
Page 293 of 381
Page 294 of 381
Attachment D - SUMMARY BMR Housing Lifecyle and BMR Management Steps (information from
January/February 2022 Stakeholder Presentations)
1. Affordable Housing Lifecycle Slide
1. Rental Workflows (Eligible Renter to Compliant Project & Tenant)
1. Rental Rate Calculations
2. Marketing Requirements
3. Local Preferences (if applicable)
4. Varying Income Levels
5. Selection Process
6. Eligibility Certification File
7. Lease Addendum
8. Project Level Compliance
9. Tenant Annual Income Certification File
2. Homeownership Workflows (Eligible Buyer to Compliant Homeowner)
1. Sales Price Calculations
2. Marketing Requirements
3. Local Preferences
4. Varying Income Levels
5. Selection Process
6. Eligibility Certification File
7. Compliant Finance Package
8. Resale Restriction Agreement
9. Compliant Transactions (Refinance, Resale, Remodel, Transfers, etc.)
10. Capital Improvements & Deferred Maintenance
11. Annual Occupancy Certification File
2. Onboarding Process Slide
1. Directory & Inventory Management
2. Handling Tasks and Fires
3. Communications
4. Policies and Procedure Development
5. Compliance Reviews & Monitoring
3. The "Program Canvas" that shows how the HouseKeys Approach adds
structure to the Housing Programs
1. Creating or Formalizing the Program
1. Setup
2. Directory of contacts (Applicants, Owners, Builders, etc.)
3. Inventory
2. Running the Program
1. Operations (Drawings, Lotteries)
2. Activity (Refinances, Resales, etc.)
3. Accounting (Fund Allocation, Tracking Excess Sales Proceeds)
3. Public Facing Presence and Tracking External Factors
1. Program Information Management (data, market info, demographics)
2. Program Public Relations (The 3 Sessions we held)
3. Public Facing Assets & Media (Orientation Class Videos, Websites, Flyers,
Advertising, etc.
Page 295 of 381
Page 296 of 381
City of San Luis Obispo, Council Memorandum
Council Agenda Correspondence
DATE: March 1, 2022
TO: Mayor and Council
FROM: Michael Codron, Community Development Director
VIA: Derek Johnson, City Manager DJ
SUBJECT: Item 6b – Inclusionary Housing Ordinance Update and Below Market Rate
Housing Administration Study Session
A Council member has asked staff what would happen if the City were to establish an
Inclusionary Housing Ordinance (IHO) requirement based on the maximum nexus fees
identified in the 2020 Affordable Housing Nexus Study.
The Economic & Planning Systems, Inc. (EPS) Feasibility Memo makes it clear that
utilizing the maximum percentage identified in the Nexus Study would “render new
development infeasible” (Agenda packet page 193). EPS notes that “developers would
require at least a 15 percent profit margin in order to accept the risk” associated with a
new development project (Agenda packet page 199). The Nexus Study also supports
EPS’ findings and on page 7 states:
These maximum fees are not the recommended fees for adoption by the City of San
Luis Obispo. DRA recommends that jurisdictions adopt fees less than the maximums
indicated in Tables ES-3 and ES-4, because fees at these high levels will affect the
financial feasibility of development as well as the competitiveness of development in
the City with neighboring jurisdictions with much lower fees.
The proposed preliminary recommendation includes three significant changes to the
City’s existing IHO that would increase the total number of affordable units per each
development project compared to the City’s existing ordinance.
1. The biggest change is the removal of Table 2A. Table 2A reduces the required
number of units per project based on the average unit size and project density.
Without this Table, projects would no longer have the ability to reduce their
inclusionary requirement, thus netting an increase in units.
Example (For-sale): A 100-unit project with an average unit square footage of
1,500 square feet and density of at least 24 units or more per acre can utilize Table
2A and would be required to only provide 1 low-income unit. Without Table 2A and
applying the preliminary recommendation, the project would be required to provide
10 affordable units (5 low-income and 5 moderate-income units).
Page 297 of 381
Item 6b – Inclusionary Housing Ordinance Update and Below Market Rate Housing Administration
Study Session Page 2
2. Another recommendation is the best practice of calculating the inclusionary
requirement based on land use rather than zoning. This would require an
inclusionary housing calculation for both residential and com mercial development
of a project.
Example (Rental): A 2-acre commercially zoned site is required to provide a base
IHO requirement of 4 affordable units under the current IHO and can utilize Table
2A to reduce the requirement to 1 affordable unit based o n the project’s average
unit size and density. Under the preliminary recommendation, a mixed -use project
on a 2-acre site (with a density of 36 units per acre) that includes 72 units, and
10,000 square feet of commercial space would be required to provide 5 low and
very low rental units plus pay a $50,000 linkage fee that goes into the City’s
affordable housing fund.
3. Lastly, the preliminary recommendation includes an increase in affordable units
from the current IHO. From 3% low or 5% moderate to 6% (3% very low and 3%
low) for rental projects and 10% (5% low and 5% moderate) for for-sale projects.
Example (For-sale): A 100-unit project would be required to provide 5 moderate
income units under the City’s current IHO. With the proposed preliminary
recommendation, the same 100-unit project would be required to provide 10 units
(5 low income and 5 moderate); this recommended percentage effectively doubles
the unit count and also deepens the affordability levels compared to the current
IHO.
Taken together, all of these changes mean that staff’s preliminary recommendation
would more than double the unit count and deepen the affordability levels of
Inclusionary Housing units produced through the City’s ordinance.
Additional Information regarding BMR Administration
Video available from Housekey’s “Meet and Greet” on February 3, 2022.
For Council’s information, please see the video link below that is included on the
Community Development Department website of the third “meet and greet” informational
meeting with members of the real estate community and Housekeys.
https://www.slocity.org/government/department-directory/community-development
Page 298 of 381
City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: March 1, 2022
TO: Mayor and Council
FROM: Michael Codron, Community Development Director
VIA: Derek Johnson, City Manager
SUBJECT: Item 6b – Inclusionary Housing Ordinance Update and Below Market Rate
Housing Administration Study Session
Staff received the following questions, regarding the Inclusionary Housing Ordinance
Update and Below Market Rate Housing Administration Study Session staff report. The
questions are below with staff’s response shown in italics:
1) On page 175 of the Agenda Packet, it states that the Nexus Study recommends a
minimum inclusionary requirement of one unit for projects of five or more. What is
the basis or history of this recommended number?
Per California Density Bonus Law (Government Code Section 65915) a “Housing
development” is defined as a development project for five or more residential units,
including mixed-use developments. The use of 5 or more units is consistent with
this definition. It is also consistent with the break between a minor subdivision (up
to 4 residential lots) and a tract map (5 or more residential lots).
2) On Agenda Packet page 181, Table 4 references a “Table 2;” I do not see Table
2.
Table 2 is referring to Table 2 of the City’s current IHO. You can find Table 2 online
here: https://sanluisobispo.municipal.codes/Code/17.138.040
Page 299 of 381
Item 6b – Inclusionary Housing Ordinance Update and Below Market Rate Housing Administration
Study Session Page 2
3) In consideration of the first Study Session question regarding fractional units and
Table 5 on page 182 of the Agenda Packet…why 20 units as a “cut-off point” for
allowing payment of fees instead of building another affordable unit? Seems like
there are community design guidelines (and maybe zoning codes too) that use 10
as a cut-off number.
20 was recommended as a “cut-off” number based on the results of Table 5 and
how much of the project would be affordable. This is not a hard and fast
recommendation, but rather was presented as an example. The Zoning
Regulations were recently updated and the development review process is broken
into three levels based on the size of the project: minor level of review - 10 units
or less; moderate level of review - 11-49 units; and major level of review - 50 or
more units.
4) Community input states that the customary commission locally is 5%...lower than
the 6% proposed by Housekey. Can you discuss why this amount is fair and how
it does not unduly impact local realtors?
HouseKeys is agreeable to charging 5% as we have heard that is the local
customary fee.
5) Will Housekeys provide any local preference in their selection of customers?
This question can be further evaluated if desired by the Council. HouseKeys will
market the City’s Below Market Rate housing inventory regionally in order to
ensure a sufficient number of qualified buyers to match with any available units
that come online. However, if the Council is interested in providing preference to
City residents and employees, staff can work with HouseKeys to evaluate this as
a program feature.
6) Please provide clarity on:
a. How fees will be covered for all Housekey’s transactions, if they won’t be
funded by the city or the low-income customers?
It is important to understand that there are no new costs associated with
HouseKeys services. All of these costs are currently borne by the City, local
developers and households that are participating in the program. Revenues
go to local realtors and developers and do not come back to the City.
Currently, the City’s program does not recover costs and there are
numerous charges, such as commissions, that do not benefit the City’s
program. HouseKeys model ensures that the City is able to benefit from
these customary charges because HouseKeys leverages that revenue to
provide the City with significantly improved services over what is possible
today.
Page 300 of 381
Item 6b – Inclusionary Housing Ordinance Update and Below Market Rate Housing Administration
Study Session Page 3
b. If Housekeys will essentially be representing the buyer and the seller in all
these situations, how will this not negatively impact the local realtor market?
Local realtors can participate in these transactions, however, they must be
signed up with HouseKeys and go through annual training to ensure that
they understand the ins and outs of the City’s program requirements, State
law, and other details of working with Below Market Rate housing – which
is far more complicated than a regular market transaction.
7) What happens when someone is living in a deed restricted unit and through
compliance checks, it is determined that they no longer have an income that
qualifies them to live there? Do they have to sell if they were the “owners”?
Owners and Renters do not need to go through income certification after they
occupy their unit – that is only required on the front end so there is no disincentive
to improving their incomes over time.
Page 301 of 381
Page 302 of 381
Inclusionary Housing Ordinance Update & Below Market Rate Housing AdministrationStudy Session
Inclusionary Housing Ordinance2
IHO Background3The City’s first Inclusionary Housing Ordinance was adopted in1999.Over 1,201 deed-restricted or otherwise secured affordabledwellings have been planned for, entitled, or built.The City has granted, loaned, or committed over $10 million ofin-lieu funds to assist with the development of new deed-restricted affordable housing units.Inclusionary Housing Requirements were last updated in 2007.
A Nexus Study completed 2020 and presented toCouncil in April 2020.Establishes the relationship between market-rateresidential development and non-residentialdevelopment and the need to support and constructnew affordable housing in the City.Determined that both residential and commercialdevelopment are creating demand for affordablehousing that is not being met by the housing market.Recommended a financial feasibility analysis beconducted.Nexus Study4
2020 Housing Element Update5In 2020 the City updated the Housing Element of theGeneral Plan for the 6th Cycle Regional Housing NeedsAllocation (RHNA).Based on the findings and recommendations of the NexusStudy and the need for additional affordable housing, theHousing Element Update included Program 2.13 to updatethe City’s IHO.In April 2021, the City hired EPS, Inc. to conduct a feasibilityanalysis based on the findings and recommendationsprovided by the Nexus Study.
1.Review City’s current Inclusionary Housing Ordinance2.Review David Rosen Associates (DRA) Nexus Study (2019)3.Survey affordable housing impact fees and inclusionary housing requirements among comparable jurisdictions4.Test feasibility of fees and inclusionary requirements to inform program and policy recommendations5.Recommend program structure and associated fee levelsEPS Scope of Services
◦AB 1505 clarified that cities may adopt inclusionary requirements for both ownership and rental residential developments◦In-lieu fee can be set within the nexus-allowed maximum to align with the inclusionary requirement and remain feasible◦Commercial linkage fees are authorized under the mitigation fee act (AB 1600)◦Under SB 330, the City cannot adopt a more restrictive affordable housing inclusionary requirement or affordable housing fee unless it is feasibleLegal Context
Current Affordable Housing OrdinanceTABLE 2: NONRESIDENTIAL• Commercial developments both within the City limits and in the Expansion Area must build 2 affordable units per acre• not less than one affordable unit per project• Commercial projects of fewer than 2,500 square feet are exempt• Nonresidential developments may contribute an in-lieu fee equal to 5 percent of the development’s construction value instead of physically constructing the inclusionary unitsSource: Crexi
• Residential developments of fewer than four units are exempt• Table 2a provides adjustment factors to be applied to the base inclusionary requirements for residential developmentTABLE 2: RESIDENTIAL• Set aside 3% of units affordable to low-income households OR5% of units affordable to moderate income households • not less than one affordable unit per project • In-lieu fee is equal to 5% of the value of construction work• Set aside 5% affordable to low-income households AND 10% affordable to moderate income households• not less than one affordable unit per project • In-lieu fee is equal to 15% of the value of construction workIN CITY LIMITSIN EXPANSION AREACurrent Affordable Housing Ordinance
Current Program ConsiderationsRESIDENTIAL• Table 2A is intended to encourage smaller, ‘affordable by design’ units• In today’s market, Table 2A is exempting smaller units that are renting or selling at prices requiring “Above Moderate” incomes• e.g., 1,500 sq. ft. units exempted from inclusionary requirement if development consists of 24 or more units but selling for more than $800,000 per unit• In-lieu fee is calculated as a percent of construction value; value is self-reported by the applicant with staff verification• Results in inconsistent valuation (and fees), even among similar projects
NON-RESIDENTIAL• An inclusionary program for commercial development is not standard• In-lieu fee is calculated as a percent of value, resulting in higher-than-typical feesCurrent Program Considerations
• Inclusionary Housing Requirement• Citywide, eliminate Expansion Area • For sale: 10% inclusionary (½ Moderate, ½ Low (or below))• Rental: 6% inclusionary (½ Moderate, ½ Low (or below))• Fractional units continue to be rounded up to nearest whole number• Eliminate Table 2A• In-lieu fee calculated as equivalent to onsite requirement and charged per sq.ft.RESIDENTIAL NONRESIDENTIAL• Commercial Linkage Fee (Nexus Methodology)• Fee based on land use (not zoning)• Charged per sq. ft.Preliminary Program Recommendations
DAVID ROSEN AND ASSOCIATES AFFORDABLE HOUSING NEXUS STUDY RESULTS (2019)Maximum Allowable Nexus FeesUse Per Unit Per Sq. Ft.ResidentialOwner-Occupied Single-Family $106,128 $113.99Owner-Occupied Townhomes $67,200 $48.33Renter-Occupied Multifamily $36,582 $55.31CommercialRetail N/A $69.60Hotel N/A $86.12Service N/A $65.85Office N/A $173.09Industrial N/A $84.47Institutional N/A $151.64Source: David Rosen and Associates (2019)
USING DAVID ROSEN & ASSOCIATES’ DEVELOPMENT COST ESTIMATES$530,000$451,500$304,400$0$100,000$200,000$300,000$400,000$500,000$600,000Very Low Low Moderate2-Bedroom For-Sale Unit$386,800$360,900$300,400$0$100,000$200,000$300,000$400,000$500,000$600,000Very Low Low Moderate2-Bedroom Rental UnitGap Analysis
◦Nexus results indicate maximum fee/inclusionary requirement that can be adopted. BUT, the nexus results typically cannot reasonably be absorbed by new development◦i.e., the maximum fee/inclusionary requirement will likely render new residential development infeasible◦Feasibility analysis seeks to determine what level of fee/inclusionary requirement can be absorbed by developers while still allowing a reasonable returnNexus Results vs. Feasibility
SURVEY OF OTHER JURISDICTIONS’ COMMERCIAL LINKAGE FEESOffice Industrial Retail Hotel R&DOther Non-ResBerkeley $4.50 - $4.50 $4.50 $4.50 -Oakland $5.90$5.90----Petaluma $2.93 $3.02 $5.07 - - -SLO County $2.46 $0.98 $2.11 $2.11 - $1.84Jurisdiction2021 Commercial Linkage Fee AmountSources: David Rosen and Associates; Keyser Marston Associates; City of Berkeley; City of Oakland; City of Petaluma; County of San Luis Obispo; Economic and Planning Systems, Inc.Feasibility Analysis
$4.50 $4.50 $2.25 $4.50 $5.90 $5.90 $2.93 $5.07 $3.02 $2.46 $2.11 $0.98 $2.11 $5.00 $5.00 $4.00 $4.00 $0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00Office Retail Industrial HotelBerkeleyOaklandPetalumaSLO CountyCity of San Luis ObispoCOMPARISON OF SELECTED COMMERCIAL LINKAGE FEESFeasibility Analysis
Scenario DescriptionCurrent Inclusionary OrdinanceAssumes 5% of units priced for Moderate income HHsCurrent In-Lieu FeeIn-lieu fee equal to 5% of total cost of constructionNo Inclusionary or FeeNo fee paid or inclusionary units providedMaximum Nexus-Based FeeFee of $55.31, based on DRA Nexus StudyMaximum Feasible FeeMaximum fee that still allows developer to achieve 5% yield-on-cost. Calculated to be $22.50 per sq. ft.Recommended In-lieu FeeIn-lieu fee of $20.00 per sq. ft.Recommended Inclusionary6% provided onsite - assumes ½ of units are priced for Moderate income HHs and ½ are priced for Low income HHsFeasibility Scenarios: Rental
5.21%4.98%5.23%4.70%5.00%5.02%5.16%4.50%4.60%4.70%4.80%4.90%5.00%5.10%5.20%5.30%CurrentInclusionaryOrdinanceCurrent In-LieuFeeNo Inclusionary orFeeMaximum NexusFeeMaximumFeasible FeeRecommendedFeeRecommendedInclusionaryFeasibleNot Feasible5.00% Yield on Cost required for feasibilityFeasibility Scenarios: RentalDifference between Maximum Nexus Fee and Recommended Fee equates to $30,000 in savings per door
Scenario DescriptionCurrent Inclusionary OrdinanceAssumes 5% of units priced for moderate income HHsCurrent In-Lieu FeeIn-lieu fee equal to 5% of total cost of constructionNo Inclusionary or FeeNo fee paid or inclusionary units providedMaximum Nexus-Based FeeFee of $48.33 per sq. ft., based on results of DRA Nexus StudyMaximum Feasible FeeMaximum fee that still allows developer to achieve 15% return. Calculated to be $34.60 per sq. ft.Recommended In-lieu FeeIn-lieu fee of $25.00 per sq. ft.Recommended Inclusionary10% provided onsite – assumes ½ of units are priced for Moderate income HHs and ½ are priced for Low income HHsFeasibility Scenarios: For-Sale
20.90%19.09%22.94%13.99%15.00%16.38%18.03%0.00%5.00%10.00%15.00%20.00%25.00%Current InclusionaryOrdinanceCurrent In-Lieu Fee No Inclusionary orFeeMaximum Nexus Fee Maximum FeasibleFeeRecommended Fee RecommendedInclusionaryFeasibleNot Feasible15% Profit Margin required for feasibilityFeasibility Scenarios: For-Sale
SURVEY OF OTHER JURISDICTIONS’ PROGRAMSFeasibility Analysis◦County of San Luis Obispo = 8% Inclusionary◦Arroyo Grande = varies from 5% to 15% Inclusionary◦Morro Bay = 10% Inclusionary◦Atascadero = 20% Inclusionary (update underway)◦Pismo Beach = 10% Inclusionary◦Santa Barbara = 15% Inclusionary (for Ownership)◦Davis = 10% to 25% Inclusionary for Single Family; 5% to 35% Inclusionary for Multifamily
◦Maximum fees from the DRA nexus study appear to be infeasible for both residential and nonresidential development◦An inclusionary program encourages affordable units to be built onsite as part of market rate developments◦Proposed onsite requirements meet feasibility tests◦Residential in-lieu fees align with the onsite inclusionary requirement and are set within the nexus-allowed maximums◦Reducing the commercial linkage fees from the nexus-allowed maximums brings fee levels into greater alignment with other jurisdictions◦Proposed linkage fees represent a reduction from current approach to calculating fees (at 5% of construction value)Feasibility and Policy Implications
• Citywide• For sale: 10% inclusionary• ½ Moderate, ½ Low (or below)• Rental: 6% inclusionary• ½ Moderate, ½ Low (or below)• Eliminate Table 2A• In-lieu fee, charged per sq.ft.• For sale: $25.00 per sq.ft.• Rental: $20.00 per sq.ft.NON-RESIDENTIAL, COMMERCIAL LINKAGE FEE• Fee based on land use • Office, retail, service, hotel = $5.00 per sq.ft. • Institutional and industrial = $4.00 per sq.ft.RESIDENTIAL: INCLUSIONARY REQUIREMENT AND IN-LIEU FEEPreliminary Program Recommendations
1. The current requirement could be retained,and all projects would be required to roundup no matter the fractional unit; or2. If requirements result in less than oneaffordable unit or fractions of units, anapplicant may pay the in-lieu fee for thosefractional units or round up and provide theunit. The applicant may treat the fractionalunit as Moderate; or3. Apply option #2 to a certain size ofresidential projects (e.g., only residentialprojects that contain 20 units or less).Discussion Items – Fractional Units25Total affordable per preliminary recommendationRounded up to next whole number% of Project Affordable (based on whole numbers)No. of Units in ProjectRent (6%)For Sale (10%)Rent (6%)For Sale (10%)Rent (6%)For Sale (10%)6 0.36 0.60 1 1 16.67 16.6712 0.72 1.20 1 2 8.33 16.6715 0.9 1.50 1 2 6.67 13.3318 1.08 1.80 2 2 11.11 11.1120 1.2 2.00 2 2 10.00 10.0024 1.44 2.40 2 3 8.33 12.5030 1.8 3.00 2 3 6.67 10.0043 2.58 4.30 3 5 6.98 11.6350 3 5.00 3 5 6.00 10.0073 4.38 7.30 5 8 6.85 10.96100 6 10.00 6 10 6.00 10.00141 8.46 14.10 9 15 6.38 10.64200 12 20.00 12 20 6.00 10.00333 19.98 33.30 20 34 6.01 10.21500 30 50.00 30 50 6.00 10.00
The Nexus Study and the Feasibility Analysis both recommend that Table 2Abe eliminated from the IHO.Table 2A was established to encourage the development of projects withhigher density and smaller unit sizes,that would be considered affordable-by-design, however it is no longer achieving affordability in the current market.Discussion Items – Table 2A26
The preliminary recommendation proposes that inclusionary requirementsbecalculated based on the land use, rather than the zoning of the site.Discussion Items – Zoning vs. Land Use27ProjectNo. of UnitsAcresSquare FeetCurrent IHO Affordable Unit TotalPreliminary RecommendationAffordable Unit TotalTable 2 Table 2A For Rent (6%)For Sale (10%)Commercial ($5/s.f.)600 Tank Farm 280 11.69 12,500 23.38 1 16.8 (17) 28 $62,500.00650 Tank Farm 249 9.89 18,600 19.78 1 14.94 (15) 24.9 (25) $93,000.002800 Broad 20 0.61 7,818 1.22 1 1.2 (2) 2 $39,090.001030 Orcutt 15 0.49 1,714 0.98 1 0.9 (1) 1.5 (2) $8,570.002120 Santa Barbara69 1.64 3,000 3.28 1 4.14 (5) 6.9 (7) $15,000.00950 Orcutt 78 2.00 6,800 4 1 4.68 (5) 7.8 (8) $34,000.00
Develop a rough draft of the IHO update for public feedback (March 2022).Coordinate and execute outreach with local stakeholders and the public (March – May 2022). Present stakeholder/public feedback and draft IHO for Planning Commission review and recommendation (May 25, 2022). Present Final Draft IHO to Council for review and adoption (July 19, 2022).Next Steps28
Below Market Rate (BMR) Housing Program Administration (HouseKeys)29
The City has developed a cumulative inventory of BMR housing units since 1999. New BMR units are being added at increased rate.Growing challenges of in-house administrationIn 2020 the Council authorized an RFP for a BMR Housing AdministratorHousekeys was the successful firm and the contract was singed last August and are currently being onboarded. Below Market Rate Housing Administration30
Departure from past City practiceHistorically, the local ecosystem of professionals and organizations have played an important role to connect eligible households with BMR units. Housekeys are expected to act as the City’s agent in all BMR transactions. Staff have engaged stakeholders with Housekeys to learn about new processesOnboarding Housekeys31
32Program Direction and BenefitsTransparency Efficiency AccountabilityEquity and InclusionCustomer Service
Housekeys –structure and costs331.$75,000 for up to 150 Units in any combination of Homeownership, Rental, and Finance2.Fee Schedule (Billed at Escrow)New Construction Sales (3% up to $18,000)Resales (6% up to $36,000)2% (up to $12,000 to Cooperating Agents)Refinance Processing ($500)3.These fees “subsidize” the Program Administration Costs
Housekeys – program process including procurement341.Program Formalization & StandardizationData, Guidelines, Pricing, Processes2.Program Inventory ManagementProjects, Units, Agreements3.Program Relationship Management (e.g., Meet & Greets)Applicants, Participants, Builders, “Vendors”4.Program Operations ManagementFiles (Applicants, Participants), Lotteries, etc.5.Program Activity ManagementTickets, Transactions (Escrows), Cases
Discussion Items351.Rounding of Fractional Units2.Elimination of Table 2A3.Basing Inclusionary Requirements on Land Use rather than Zoning4.Codify Role of BMR Administration in IHO
Additional Slides36
1.Building affordable dwellings as part of adevelopment project,2.Dedicating real property, improved or not,for development of affordable housing bytheCity’sHousingAuthorityorbyanon-profit housing provider,3.Payinganin-lieufeewhichisusedtoassistwith the development of new affordablehousing throughout the City, or4.A combination of the above methods, to theapproval of the Community DevelopmentDirector.Current IHO Requirement37The current inclusionary housing requirement can be met by:
Current IHO Requirement38
The Study provided the following recommendations:1.Consider different requirements for units that are for sale or rent and discontinuedifferentiating between projects located within City Limits and Expansion Areas.2.Maximum City-Wide Affordable Housing Requirement for Residential Development:Rental: Build 15% affordable units (5% of units at very low income and 10% ofunits atlow income)Owner: Build 15% affordable units (5% of units at low income and 10% of unitsatmoderate income)3.Include utility costs as part of rent and HOA fees as part of the affordable sales prices.4.Eliminate Table 2A and set a minimum inclusionary requirement of one unit forprojects of five or more units.5.Apply in-lieu fees on a per square foot basis.6.Set non-residential in-lieu affordable housing fees in the range of $1 to $4 per squarefoot for industrial uses and $2 to $5 per square foot for other non-residential uses.Nexus Study39
Affordable Housing Lifecycle40Affordable Homes for RentMarketing RequirementsAffordable Homes for SaleLocal PreferencesVarying Income LevelsSelection ProcessEligibility Certification FileLease AddendumProject Level ComplianceTenant Annual Income Certification FileEligible RenterCompliant TenantEligible BuyerCompliant OwnerMarketing RequirementsLocal PreferencesVarying Income LevelsSelection ProcessEligibility Certification FileCompliant Finance PackageResale Restriction AgreementCompliant Transactions (Refinance, Resale, Transfers)Capital Improvements & Deferred MaintenanceAnnual OccupancyCertification FileRental Rate CalculationsSales Price Calculations1234567891234567891011