09-057 Keyser Marston Assoc, IncCITY OF
A G REEWI EN T
CITY OF CUI'ERTINO
10300 Torre Avenue
Q~ ! Cupertino, CA 95014
C O P E RTI N O ,/U ` (408) 777-3200 ,~S / ,}
BY THIS AGREEMENT made and entered into on the 1 gt day of April, 2009 by and between the ~qC
CITY OF CUPERTINO (Hereinafter referred to as CITY) and Keyser Marston ~+d Associates," 55
Pacific Avenue Mall, San Francisco, CA 94111
(Hereinafter referred to as CONTRACTOR), in considc~ration of their mutual covenants, the parties hereto
agree as follows:
CONTRACTOR shall provide or furnish the following :specified services and/or materials: Update of the
Below Market Rate (BMR) Program Housing Mitigation Manual, preparation of a BMR Program
Monitoring and Compliance Administration Manual to be used by West Valley Community
Services (WVCS) in the administration of the City's program and update elements of the program
(such as restrictions on refinancing, deed restrictions, formulas etc) so that the program reflects
industry best practices.
EXHIBITS: The following attached exhibits hereby are' made part of this Agreement: Scope of Services
TERMS: The services and/or materials furnished und~sr this Agreement shall commence on
April 1, 2009 and shall be completed before April 1, 2010.
COMPENSATION: For the full performance of this Agreement, CITY shall pay CONTRACTOR: $76,259
GENERAL TERMS AND CONDITIONS: / ~DnSULTh~1T~s N~fiy~tC~ D,c.wi//Fw/~yISCO~I~UL7
Hold Harmless. CONTRACTOR agr s to save arn1 hold harmless the CITY, its officers, agents, and
employees from any and all dama and liability of every nature, including all costs of defending any -~
claim, caused by or arising out of a performance of this Agreement. CITY shall not be liable for acts of
CONTRACTOR in performing services described herein.
Insurance. Should the CITY require evidence of insurability, CONTRACTOR shall file with CITY a
Certificate of Insurance before commencing any services under this Agreement. Said Certificate shall be
subject to the approval of CITY'S Director of Administrative Services.
Non-Discrimination. It is understood and agreed that this Agreement is not a contract of employment in
the sense that the relation of master and servant exists between CITY and undersigned. At all times,
CONTRACTOR shall be deemed to be an independent contractor and CONTRACTOR is not authorized
to bind the CITY to any contracts or other obligations in executing this Agreement. CONTRACTOR
certifies that no one who has or will have any financial interest under this Agreement is an officer or
employee of CITY.
Changes. This Agreement shall not be assigned or transferred without the written consent of the CITY.
No changes or variations of any kind are authorized without the written consent of the CI
CONTRACT COORDINATOR and representative for CITY shall be: ~ ~,,,.~,
~~~~
NAME: Vera Gil, Senior Planner DEPARTMENT: Community Development
This Agreement shall become effective upon its execration by CITY. In witness thereof, the parties have
executed this Agreement the day and year first written above.
CONTRACTOR: CITY CUPERTI
~ ~ ~ ~. g
By: y:
Prin ed Name: glb' ~ ~i2rf Printe ame: Vera I
Title~~ Princi al U1 G~ ~l 6N Title: Senior Planner
Tax ID Number: 95r< ' d~363 7y/ ~ ~: - ! r ~ '
i
APPROVALS
EXPENDITURE DISTRIBUTION
ENT D , DATE
DE ACCOUNT NUMBER AMOUNT
~~
,hS' Ob 0,9 265-7405-7014 $76,259.00
CITY ERK DATE
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KEYSER MARSTlJN ASSOCIATES.
AnVl5UR5 IN 1'UE311C/1'RIVAT[ REA{. L-51A'ft bEVEl01'MFNf
March 19, 2009
Ms. Vera Gil
Senior Planner
City of Cupertino
rn~ t,., r;, r n
REA.LL.S1`ATE 10300 Torre Avenue
IZFnrvr.lorn+FNT Cupertino, CA 950114-3255
AFFh1iDAlSLF F1CHaSING
EC.(:,NC)bflC [)Fl'FLOI'MFN7
Re: Proposal to Assist City with Preparing BMR Administration Manuals
~;, Ll:.:,c„<~,
A. IER Ft1' KCYSER ' -
T1AAl7Tfi,'C. KELLY Dear Ms. Gil:
k.ATE EARLS FUNK
I~EIt61E M. KERN
RC)[SERT L\4'ET><~l)RE Thank you for requesting this letter proposal from Keyser Marston Associates, Inc.
RFe~ T. KA~VAwARA (KMA) to assist the City in updating components of its Below Market Rate (BMR)
t4,.A,,tlt, Housing Program. Based on my conversation with you
it is my understandin
that KMA
KATIi t_FEN H. 1'11:AD
IAMhn.R,,I,E ,
g
is being asked to undertake the following:
PAUL L. AN[JFRSUN
C7RFi:OItY 1~. s~X)-[~-«,
^ Update the City's existing Housing Mitigation Procedural Manual;
KFVtN &. LNCiS r[:una
~UL,EL..R[?MEY ^ Prepare a "BMR Program Monitoring and Compliance Administration Manual" to
r'EN['E 13R",K[RSTAFE be used by the City's agent to effectively administer the on-going compliance
s.~` I~FI,~=~~ efforts and implement resale and retenanting procedures; and
GFRALI] M. TItIMBLE
rAUL c MARru • Update elements of the City's Program (such as restrictions on refinancing, deed
restrictions, formulas for ensuring adequate maintenance of units, and possibly
updating in-lieu fees) as needed :~o that the Program reflects industry best
practices.
We have prepared the attached draft scope of services to complete these tasks and
anticipate modifying the scope based on further discussions with you to meet your
precise needs.
We have thoroughly enjoyed working with you on prior BMR program updating tasks and
look forward to assisting you with this effl~rt. Please call me to discuss any aspect of this
proposal or draft scope of services.
Sincerely,
KEYSER MARSTON ASSOCIATES, INC:.
--",
'~
.-, , r
Debbie Kern
$5 PACL<'1CAVENUE MAIL) 5AN f~aANCISCO, CALIrORIJIA 94l li > PHC)NE:41J 398.;0)U > I'A.X: 41i 397 SODS
900b-924.doc; jf
W W W. KfYSE RM A IiSTON.COM 99900
DRAFT SCOPE OF SERVICES
Task A -Update BMR Program Elements
This task is designed to evaluate and assist with aspects of maintaining the inventory of BMR
units produced in the program over time. It is common for BMR programs to be adopted with
primary focus on impacts on the development transactions and little focus on issues related to
the long term aspects of managing resales, maintaining the units, and enforcing the affordability
covenants. From our experience, we suggest the following, but anticipate modifying the list
based on further discussion:
Refinance Restrictions: The current Procedural Manual does not make reference to any
restrictions on homeowners refinancing units and taking cash out. This has been a significant
problem in other programs. KMA will advise the City on provisions that will protect the City's
affordability covenants and prohibit overleveraging of properties.
Appreciation Schedule: In work undertaken in 2004 for the City, KMA provided
recommendations for adjusting the Program's appreciation schedule. In reviewing the manual, it
doesn't appear that the recommendations were adopted. KMA will revisit the issue, if
appropriate, with the City. The appreciation terms can then be incorporated into the deed
restrictions.
Maintenance and Treatment of Capital Improvements on Resale: The focus of this task is to
evaluate mechanisms by which the homeowners, buyers, and the City maintain and upgrade
the BMR units in good, marketable condition through repairs, rehabilitation, and capital
improvements. KMA, will review of the existing program and deed restrictions, available outside
funding sources for repairs, rehabilitation, and capital improvements grants and loans, and
information gathered by the homeowner survey. KMA's recommendations will be provided in
sufficient detail to be incorporated into the deed restrictions and/or the Administration Manual.
Special Assessments: Uncontrolled HOA dues and major special assessments are issues
facing many BMR programs. Based on our experience, there will likely be two recommendations
for addressing these issues: one solution for future projects and one solution for existing
projects. KMA will evaluate alternative techniques and ease of administration for handling major
special assessments and major increases in monthly homeowner association fees, potential
sources of ongoing funds, and information gathered from the owner survey.
Consistency of Deed Restrictions with Buyer Financing: There has been considerable
movement on the part of lending institutions regarding the priority position of the affordability
covenants vis-a-vis the lender's first deed of trust. KMA will evaluate the covenants in light of
these recent changes and will work with the City's legal counsel to identify conceptual deed
restrictions that meet the City's needs and are likely to be accepted by the lending community
Keyser Marston Associates, Inc.
\\Sf-fs1\wp\99\99900\900b-901 to 950\900b-924a.doc; 3/20/2009
DRAFT BUDGET
UPDATE TO BMR PROGRAM AND PREPARE ADMINISTRATION MANUAL
CUPERTINO, CA
KMA Hours
Debbie Harriet
Kern Ragozin
Senior
Principal Assoc. Admin.
Billing Rate $270 $187.50 $80
A Update Program Elements
Appreciation Schedule
Deed Restrictions
Maintenance and Treatment of Capital Improvemenf:~
Special Assessments
In-lieu Fees
Two Meetings with City Staff
Total Task A
B Update Mitigation Procedural Manual
,Update Manual
Two Meetings with City Staff
Total Task B
C Prepare Monitoring and Compliance Procedural
Manual
Establish Data Base for Properties
Prepare Manual
Two Meetings with Agent and One Meeting with Staff`
One City Council Meeting
Total Task C
D Contingency 0.15
Total
KMA
Budget
Totals
4 0 1 $1,160
20 6 1 $6,605
8 3 1 $2,803
5 3 1 $1,993
20 30 $11,025
8 8 0 3 660
65 50 4 $27,245
10 35 3 $9,503
8 4 0 2 910
18 39 3 $12,413
8 20 1 $5,990
16 50 5 $14,095
12 12 0 $5,490
4 ~ 0 0 $1,080
40 82 6 $26,655
$9,947
123 171 13 $76,259
Prepared by: Keyser Marston Associates, Inc.
Filename: \\Sf-fs1\wp\99\99900\900b-901 to 950\900b-924c.xls; Budget; 3/20/2009
SAMPLE
Below Market Rate Housing Program
Administrative Policies and Procedures
TABLE OF CONTENTS
I. HOME OWNERSHIP PROGRAM
A. Buying a BMR Unit
i. Eligibility of Buyers
- Income and Asset Limits
- Household Composition
- Citizenship/Permanent Legal Residency Requirement
- Mortgage Readiness and Down Payment Requirements
- Resident Selection Plan
- Verifiable Documentation to Support Priority Preferences within Resident
Selection Plan
ii. Sales Process
- Initial Sales Prices of Units
- Establishment of Initial Sales Price
- Applying to the Waiting List
- Household Minimum and/or Maximum Size to Occupy the Unit
- Random Drawing for Initial Sales
- Housing Constructed for People with Disabilities -Allowable Income for
Purchase of BMR Unit
- Income Exclusions
- Allowable Assets
- Required Pre-Purchase Education
- Updating of Information on Waiting List
- Annual Certification of Continuing Eligibility
iii. Application to Purchase
- Application Requirements and Review
- Income and Assets
- Documentation of Income and Assets
- Filing Fee
- Co-applicants and Co-signers
- Minimum Cash Available
- Documentation to Support Citizenship/Permanent Legal Residency
- Filing Fee
- Certification of Occupancy
- False Statements or Misrepresentations
- Contract Requirement and BMR Disclosures
- Financing
based on past experience while preserving the priority of the deed restrictions in foreclosure
situations.
Enforcement of Program Requirements with Deed Restrictions: KMA will research and propose
provisions in the deed restrictions that will prevent and enforce BMR program requirements, in
particular: owner occupancy of unit, prohibition ~~f rental of unit, and prohibition of transfer
without City review and consent.
Implementing New Deed Restrictions: KMA will collaborate with City staff and legal counsel
regarding establishing the elements of new dee~~ restrictions, including securing the City's
position with a silent second deed of trust, and F~roviding for a sale to an income-eligible buyer
and a sale at Fair Market Value.
In-Lieu Fee Revisions: As part of this BMR upd~rte program, the City may wish to reexamine in-
lieu fees amounts. The reexamination could be limited to an update to reflect the spread
between current development costs/market values of new rental and ownership units and
affordable units. This task would require a survey of recent residential construction to ascertain
market pricing by unit size, type of unit and pos:;ibly geographic area within the City. For rental
projects, we would survey recently constructed rental properties and ascertain market rent
levels by unit size. To convert rental income to unit value for purposes of the affordability gap
and in-lieu amounts, we would research current operating expense experience as well. An
expanded version of this task could include reexamination of the application of in-lieu fees to
smaller projects, including single detached units, and other variations that would enhance fee
revenue potential.
Product: Technical memorandum focusing on the analysis of each issue and KMA
recommendations
Task B -Update Existing Housing Mitigation Procedural Manual
In reviewing the Manual, it appears that the text regarding BMR prices and rental rates has not
been updated to reflect the changes made to the' formulas as a result of our work in 200.4. KMA
will update the Manual so that it reflects all of thE: City's current policies (including any policy
changes made as a result of Task A). The Manual will also be expanded so that it provides
comprehensive direction for administrators. All application and forms needed to administer the
initial sale/tenanting of the units will be prepared. A possible table of contents for the manual is
attached to this letter proposal.
Product: Draft and Final updated manual.
Keyser Marston Associates, Inc.
\\Sf-fs1\wp\99\99900\900b-901 to 950\900b-924a.doc; 3/202009
Task C -Prepare New BMR Program Monitoring and Compliance Manual
This manual will focus on the on-going administration of the deed-restricted units, including
maintaining a database of the units, certifying annual compliance with occupancy, income, and
rent limits, maintenance of waiting lists for rental and ownership properties, resale procedures,
refinancing procedures, and tenanting procedures.
A possible table of contents for the manual is attached to this letter proposal.
Product: Draft and Final updated manual.
ESTIMATED BUDGET
As shown on the attached spreadsheet, we estimate cost to provide the services identified
above at approximately $76,300. The budget includes attendance at 7 meetings with City staff
and attendance at one City Council meeting.
Keyser Marston Associates, Inc.
\\Sf-fs1\wp\99\999001900b-901 to 950\900b-924a.doc; 3/20/2009
- Closing Costs
- Professional Real Estate Agent Assistance
iv. Close of Escrow
- Certification of Receipt of Administrative Procedures
- Recorded Resale Restrictions, Promissory Note, and Deed of Trust
- Notice of Affordability Restrictions on Transfer of Property
B. Living in the BMR Unit
i. Length of Affordability Covenants
ii. Occupancy and Leasing
- Occupying the Unit
- Requirements for Temporary Rentals
- Use of BMR Unit As Non-Resiaence
iii. Maintenance
iv. Improvements
v. Maintenance of Hazard Insurance
vi. Required Continuing Education for Owners
vii. Refinancing/Liens
viii. Reverse Mortgages
ix. Annual Certification
- Failure to Submit Annual Certifi~:ation
x. Penalties for Violation of BMR Requirements
- Violation/Breach/Default of Buy~~rs Occupancy and Resa/e Restriction
Agreement
- Forced Sale due to Breach of Buyers Occupancy and Resale Restriction
Agreement
- Foreclosure
C. Sale of the BMR Unit
i. Transfers of Title for Non-Workforce Units
- Permissible Transfers
- Non-permissible Transfers
ii. Eligible Purchasers
iii. Owner Decision to Sell and Notification of City
- Owner Decision to Sell or Trans~`er Unit
- Notify City
- Compile Receipts for Capital lml~rovements
iv. Make Unit Available for Inspection and Inspection Report
v. Pest Inspection and Repair of Damage
vi. City's Option to Purchase and Escrow Time Period
vii. Preparing Unit for Sale
- Condition of Unit at Time of Sale
-- ---
- Owner's Obligation to Cooperate with City
viii. Sales Process for Workforce Units
- Determine Sales Price
- Non-workforce Affordable Units
- Upgrades, Assessments, Capital Improvement Expenditures
- Workforce Units: Sa/es Price and Shared Appreciation
ix. Procedures for Sales
D. Program Administration
i. Exceptions and Special Circumstances
ii. Appeals Procedure
II. RENTAL PROGRAM
A. Tenant Eligibility Policies
i. Income Limits
ii. Annuallncome
iii. Incomes Exclusions
iv. Resident Selection Plan
B. Documentation of Eligibility
i. Documentation of Income and Assets
ii. Documentation to Support Preferences
C. Waiting Lisf Procedures
i. Household composition
ii. Eligibility for Unit Size according to Household Size
iii. Annual Recertification on the Waiting List
D. Renting a BMR Unit
i. Rents
ii. Lease Requirements and Restrictions
iii. Changes in Occupancy
iv. Annual Re-certification of Renter's Occupancy and Income
E. Requirements of BMR Property Owners and Managers
i. Affordable Housing Agreement
ii. Rents
iii. Rent Increases and Adjustments
iv. Transfer to Future Buyers
v. Owner/Manager certifications
F. Management of BMR Rentals
i. Waiting Lists
ii. Resident Selection Plan
iii. Filling Vacancies
iv. Lease Addendum
v. Changes in Occupancy
vi. Annual .Certification of Tenants
G. Management Responsibilities
i. Annual Reports
ii. -City Audits and Monitoring
iii. Enforcement
iv. Retention of Records
v. Changes in Management and Ownership
APPENDIX
A. Maximum Incomes and Rents
B. Random Drawing Process for Establishing Waiting List of BMR Buyers
FORMS
OWNERSHIP PROGRAM
O-1 Application for Random Drawing
O-2 Recertification of Eligibility on Waiting Lisi:
O-3 Application for Home Purchase
O-4 Addendum to Purchase Agreement
O-5A BMR Borrower Disclosure Statement
0-56 BMR Borrower Disclosure Statement -Equity Sharing
O-6 Buyers Occupancy and Resale Restriction Agreement with Option to Purchase -
Non-Workforce
O-7A Promissory Note -Non-Workforce/Bridge
O-7B Promissory Note -Workforce/Bridge
O-8A Deed of Trust and Security Agreement- Non-Workforce/Bridge
O-8B Deed of Trust and Security Agreement -V'/orkforce/Bridge
O-9 Form of Owner Occupancy Certification
0-10 Form of Owner's Notice of Intent to Transfer
0-11 Form of Owner Acknowledgement of City Response Notice
0-12 Form of Request for City Approval of Improvements to the Home
0-13 Form of Owner Request for City Subordin~~tion to Refinanced First Mortgage Loan
~'I-4 A~98 once of Affordability Restrictions on Transfer of Property