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Item 17 - Consderation of Amending Existing Contract with David Paul Rosen Afforable Housing Projects AGENDA REPORT T .I !"( Honorable Mayor and Members of the City Council Honorable Chairman and Members of the Redevelopment Agency Bowersox, City Manager/Executive Dire~~) FRO~: James L. INITIATED BY: ~-~ohn D. Fitch, Assistant City Manager/Assistant Executive Directo~L~ ~/Warren H. Sharer, Director of Redevelopment Services DATE: April 4, 1995 SUBJECT: Consideration of Amending an Existing Contract with David Paul Rosen and Associates which Provides for Services to Assist the Agency in the Development and Negotiations of Affordable Housing Projects ABSTRACT The Redevelopment Agency has approved a Five-Year Implementation Plan which includes development of affordable housing projects. In addition, the Smith Judgement further requires the Agency to develop these projects. The negotiation and development arrangements required for affordable housing requires expertise which is unavailable on staff. The Council/Agency approved an agreement with David Paul Rosen and Associates in November 1994. This amendment will increase the contract amount to $135,000. ENVIRONMENTAL REVIEW This item is not subject to CEQA review. FISCAL IMPACT The cost for these services under the revised contract would not exceed $135,000; an increase of $100,000 over the existing contract. There is approximately $20,000,000 of Housing Funds in the Implementation Plan to assist housing projects. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCF None. RECOMMENDATION It is recommended that the City Council/Redevelopment Agency approve an amendment to the contract for project services with David Paul Rosen and Associates to a revised amount of $I35,000, and authorize the City Manager/Executive Director to execute the amendment. ACTION c: \dar a\agenda\rosenl .cov )_ o:~ 7 APR A 1995 ITEM 17 -AGENDA REPORT CITY OF POWAY TO: Honorable Mayor and Members of the City Council Honorable Chairman and Members of the Redevelopment Agency FROH: James L. Bowersox, City Manager/Executive Dire tc~ INITIATED BY: /~_John D. Fitch, Assistant City Manager/Assistant Executive Dirtier ,-~q Warren H. Shafer, Director of Redevelopment Services DATE: ~L~'/April 4, 1995 SUBJECT: Consideration of Amending an Existing Contract with David Paul Rosen and Associates which Provides for Services to Assist the Agency in the Development and Negotiations of Affordable Housing Projects BACKGROUND According to the Redevelopment and Housing Implementation Plan approved by the Redevelopment Agency in November 1994, and the Judgement entered in the Case of Smith v All Persons, the Redevelopment Agency will be actively involved in the development of affordable housing. These projects will involve intricate financial negotiations and compliance with a complex set of regulations and laws. These negotiations will determine the Agency's role(s) and level of financial assistance in order to make the projects happen. In November 1994, we originally entered into an agreement with David Rosen to assist us. Based on this experience, we recommend increasing his contract to a level that will allow greater assistance. Under separate contract, we are also retaining Mr. Rosen to perform several specific tasks required under the Smith Settlement. FINDINGS In order to assure that the Agency negotiates the best possible agreement for the funds we intend to invest, it is critical that the Agency has available to it a firm with a thorough knowledge about all the financial aspects of affordable housing. The firm of David Paul Rosen and Associates has these skills and abilities. Staff is pleased with the work performed to date by Mr. Rosen. The feedback from the Redevelopment and Housing Advisory Committee has also been positive. All of this leads us to believe that the work performed by David Paul Rosen and Associates will be an asset to the Agency. Their knowledge of affordable housing requirements, sources of housing funds, structuring of affordable housing agreements, and the legal requirements provides the Agency with critical information. ACTION: 2 o~ 7 APR ,~ 1995 rJ'~:~ 17 Consideration of Amending an Existing Contract with David Paul Rosen & Associates April 4, 1995 Page 2 The amount of the contract is being increased since the original amount was for some initial work, and for the Agency to obtain first-hand experience with Mr. Rosen. During this time, Mr. Rosen has assisted in meetings with Retirement Housing Foundation (RHF) on the Gateway project. He has prepared a draft Memorandum of Understanding with RHFwhich is now being finalized. Mr. Rosen has also prepared several presentations for the Redevelopment and Housing Advisory Committee on affordable housing financing programs, the developer selection process, and preliminary proformas for the Bowron and Brookview sites. Finally, Mr. Rosen is preparing an analysis for the Redevelopment and Housing Advisory Committee and the Agency regarding the options for meeting the 60/40% housing balance per the Smith Judgement. In the future, Mr. Rosen will be working on the structure of the five major projects contained in the Implementation Plan. As noted in the proposal (Attachment 1), the estimated cost on a project basis is approximately $25,000 to $35,000 per project based on the complexities of each project. As amended, the contract amount equals about $27,000 per project. Considering the total dollars invested and the Agency's desire to assure well financed, managed, and constructed projects, the fee is considered to be reasonable. ENVIRONMENTAl REVIEW This item is not subject to CEQA review. FISCAL IMPACT The cost for these services under the revised contract would not exceed $135,000; an increase of $100,000 over the existing contract. There is approximately $20,000,000 of Housing Funds in the Implementation Plan to assist housing projects. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE None. RECOMMENDATION It is recommended that the City Council/Redevelopment Agency approve an amendment (Attachment 2) to the contract for project services with Oavid Paul Rosen and Associates to a revised amount of $135,000, and authorize the City Manager/Executive Director to execute the amendment. Attachments: I. Proposal-David Paul Rosen & Associates 2. Contract Amendment c: \data\agenda\rosen1. rpt APR 4 1995 :~ DAVID PAUL ROSEN & ASSOCIATES ~OUS~NG. COMMUNITY ~ RECEIVED ECONOM'C DEVEL©PMEN- MAR 1 3 RO*DWA OAKLAND CALIFORNIA 9&612 2509 TEL 510/45~-2552 March 10, 1995 Via Fax (619/748-1455); odginal to follow by mail Mr. Warren H. Shafer Director of Redevelopment Services City of Poway 13325 Civic Center Drive Post Office Box 789 Poway, CA 92074-0789 Dear Warren: This letter, as requested, clarifies the affordable housin§ development and finance consulting services contract extension request which we submitted to you on March 3, 199,5. As indicated in that letter, we estimate that for the comin§ twelve-month period a $100,000 extension to our contract scope of services will be necessary, §iven the intensive affordable housin§ development and finance efforts anticipated over the comin§ year. Followin§ is a description of the affordable housin§ development and finance consultin§ services we expect to provide to the A§ency over the comin§ twelve-month period on projects assisted by the A§ency: review project financial and economic feasibility studies and sensitivity analyses prepared by developers, advise A§ency and conduct revisions as necessary; · clarify and recommend credit and underwritin§ standards for projects receivin§ A§ency financial assistance. Such standards include, but will not be limited to: replacement reserves; operatin§ reserves; developer fees; profit, overhead, and §eneral requirements pricin§ for §enera[ contractin§ services; parameters for consultant fees char§ed by developer team members; finance char§es; guarantee fees and others; · represent and advise the A§ency on business and deal points and ne§otiations for project development. Such issues include, but may not be limited to, terms and conditions of A§ency financial assistance, financial assistance provided by other public sector entities, private sector construction and permanent financin§ terms and conditions, partnership a§reements, re§ulatory a§reements, notes, deeds of trust and loan a§reements; APR A 1995 rrEM !7 DAVID PAUL ROSEN & ASSOCIATES Mr. Warren H. Sharer March 10, 1995 Page 2 · review documents associated with project development as described above, including applications for financing, both private and public sector. Such review will be conducted through permanent loan closing; and · prepare and/or review marketing analyses and data, marketing plans, compliance with Fair Housing requirements, and lease up and operation plans and budgets. Depending upon project complexity, the nature and extent of negotiations, we expect these consulting services to run approximately from $25,000 to $35,000 per project. Were we asked to prepare additional analyses directly, rather than review and comment on the developer's preparations, these expenses could double on a per-project basis. Examples of direct preparations include: · pro forma, cash flow, capital account and tax credit analyses; · TCAC applications; · CHFA applications; · CDLAC applications; · AHP applications; and ,, MCC applications. In either case, ! should note that the cost of our project-based services may be includable in project basis and reimbursed to the Agency, or alternatively included in overall Agency project- based gap financing. Thus, DRA's project-based consulting services may effectively be reimbursed through total project proceeds. As has been the case in our work to date for the Agency, DRA expects to provide additional affordable housing development and finance consulting services to the Agency. These services include research, advice and guidance on a variety of affordable housing finance and program issues, preparation and presentation of research material, recommendations and actions to support decisions before the Redevelopment and Affordable Housing Advisory Committee, the Affordable Housing Commission, the Agency, and the City Council. Other issues requiring review may include mobile home park property management and ownership, and the Agency - option agreement on Haley Park Estates. 5 of 7 APR J, 1995 ri'EM 17 DAVID PAUL ROSEN & ASSOCIATES Mr. Warren H. Shafer March 10, 1995 Page 3 Finally, other services associated with affordable housing development in Poway may arise as opportunities occur. As a]ways, we will work in close cooperation with you and your colleagues at the City, and under your'direction. [ hope this clarifies the nature and extent of both project based and generalized affordable housing development and finance consulting services which DRA will continue to provide to the City of Poway. Please call with any questions. David Rosen Principal DR:smf APR4 1995 ITEM !7 6 of 7 POWAY R-DEVELOPMENT 2XGENCY AMENDMENT TO STANDARD AGREEMENT FOR CONSULTANT SERVICES WITH DAVID PAUL ROSEN & ASSOCIATES This amendment revises the contract amount under the existing Standard Agreement for Consultant Services between the Poway Redevelopment Agency and David Paul Rosen & Associates entered into the 15th day of November 1994 for services related to affordable housing development. Specifically, Exhibit A, Special Provisions, Item B, Paragraph 1, is changed to read: "Agency shall pay Consultant a fee not to exceed One Hundred Thirty-five Thousand Dollars ($135,000) as compensation for consulting services. These services will be billed on a time and expense basis, pursuant to the_.attached Professional Fee Schedule (Attachment 2). Consultant's fee shall include and Consultant shall be responsible for the payment of all federal, state, and local taxes of any kind which are attributable to the compensation received." POWAY REDEVELOPMENT AGENCY Date: By: James L. Bowersox, Executive Director DAVID PAUL ROSEN & ASSOCIATES Date: By: David Paul Rosen, Principal ATTEST: Marjorie K. Wahlsten, Secretary L APR J~ 1995 13325 Civic Center Drive 7 of 7 ~§Address: P.O. Box 789, Poway, California 92074-0789 · {619) 748-6600,695-I400