REPORT. Amendment to the Contract for Property Management Services for Hotel Sandford

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1 REPORT DATE ISSUED: October 23, 2014 REPORT NO: HCR ATTENTION: SUBJECT: Chair and Members of the San Diego Housing Commission For the Agenda of November 21, 2014 Amendment to the Contract for Property Management Services for Hotel Sandford COUNCIL DISTRICT: 3 REQUESTED ACTION Approval of the amendment of the San Diego Housing Commission s contract with Royal Property Management Group, Inc. for property management services for Hotel Sandford. STAFF RECOMMENDATION That the San Diego Housing Commission (Housing Commission) takes the following actions: 1) Approve a contract amendment increasing the annual amount of a one-year contract (Attachment 1) with two (2) one-year renewal options to Royal Property Management Group, Inc. (Royal) to the amount of $230,664 for property management services for Hotel Sandford. The total contract amount includes the following: a. $78,000 for management fees b. A not to exceed amount of $152,664 for reimbursable expenses 2) Authorize the President & Chief Executive Officer (President & CEO), or designee, to substitute the funding sources with other available sources provided that the total program/project budget amount after substitution does not exceed the approved total budget, should the operational need arise or should such actions be to the benefit of the Housing Commission and its mission. 3) Authorize the President & CEO, or designee, to execute all documents and instruments that are necessary and/or appropriate to implement these approvals, in a form approved by General Counsel, and take such actions as are necessary and/or appropriate to implement these approvals. 4) Authorize the President & CEO to increase the compensation up to and including $250,000 if contingencies occur that would justify such an increase, as approved by General Counsel. SUMMARY The Housing Commission acquired Hotel Sandford in February The hotel is a single-room occupancy hotel consisting of 130 units that are rent restricted as affordable housing for low-income seniors. The building was constructed in 1914 and has been designated as a local historical resource by the San Diego Historical Resource Board. Upon acquisition, the Hotel Sanford has been managed by a third-party property management company.

2 October 23, 2014 Amendment to the Contract for Property Management Services for Hotel Sandford Page 2 On July 24, 2014, the Housing Commission issued a Request for Proposal (RFP# PM-15-02) for this work. Advertisements were placed in the U-T San Diego, The Daily Transcript, La Prensa, and The San Diego Voice & Viewpoint. In addition, the RFP was posted in the Onvia Demandstar system where 34 notifications were sent as outreach to property management companies, 10 of which were small and minority/women-owned businesses. The solicitation was downloaded by 13 planholders from the Onvia Demandstar site. On August 1, 2014, a Pre-Proposal conference was held. Personnel from four companies attended the meeting. At the RFP closing date of August 12, 2014, three proposals were received. Proposals were submitted by Hyder & Company, Royal Property Management Group, Inc. and Sunway Systems, Inc. Subsequent to the closing, a responsiveness review was conducted of the three proposals received. All proposals were found to be responsive. A source selection committee evaluated, scored and ranked the responses based on the following criteria: cost (35), experience (40), past performance (20) and qualifications (5). The evaluation committee scored and ranked Royal as the most responsive and responsible proposal. Below is the Proposal ranking summary: Royal Property Management Group, Inc. Hyder & Company Sunway Systems, Inc. Final Ranking Royal Property Management Group, Inc. has a proven track record of successfully managing affordable SRO properties in the downtown San Diego area including high-profile buildings such as Island Village and The Metro Hotel. In addition, Royal also manages the transitional housing wing at Rachel s Women s Center. The total contract amount is $230,664. The amount includes a not to exceed amount of $78,000 for management fees (monthly fee of $50.00 per unit) and 2) a not to exceed amount of $152,664 for reimbursable expenses. The reimbursable expenses include payroll expenses for 1 on-site property manager, 1 assistant manager, 3 porters and 1 maintenance technician in addition to start-up costs, marketing/advertising costs and maintenance expenses. Staff requests a contingency of $19,336 to allow the contract to be increased up to and including the sum of $250,000, for items not anticipated in the original scope of work; President & CEO approval is required to expend this contingency. The proposed contract term is for one year with the Housing Commission s option to renew for two additional one-year terms. The agency entered into a contract with Royal for the management fee only to provide services to the property beginning October 1, This was necessary due to the termination of Hyder s contract, and Hyder not being awarded another contract as a result of this solicitation. FISCAL CONSIDERATIONS The proposed Fiscal Year 2015 funding sources and uses approved by this action were approved by the Housing Authority in the Fiscal Year 2015 Housing Commission Budget. Approving this action will not

3 October 23, 2014 Amendment to the Contract for Property Management Services for Hotel Sandford Page 3 change the Fiscal Year 2015 budget. Funding sources for portions of the contract term and any option years exercised will be budgeted in future fiscal years. FY 2015 funding sources approved by this action will be as follows: Rental Income - $230,664 FY 2015 funding uses approved by this action will be as follows: Operating Expenses - $230,664 EQUAL OPPORTUNITY/CONTRACTING Royal Property Management Group, Inc. is a Woman-Owned business enterprise. Certificates of Compliance and Workforce Reports have been provided and show that the contractor is in compliance with the Housing Commission Equal Opportunity Program and demonstrate no issues with diversity. KEY STAKEHOLDERS and PROJECTED IMPACTS Stakeholders include the Housing Commission Real Estate Division, Property Management Department and Royal Property Management Group, Inc. ENVIRONMENTAL REVIEW This activity is not a project as defined by the California Environmental Quality Act Section and State CEQA Guidelines Section 15378(b)(5), as it is an administrative activity of government that will not result in direct or indirect physical changes in the environment. The determination that this activity is not subject to CEQA, pursuant to Section 15060(c)(3), is not appealable and a Notice of Right to Appeal the Environmental Determination (NORA) is not required. Processing under the National Environmental Policy Act is not required as no federal funds are involved in this action. Respectfully submitted, Jennifer McKinney Jennifer McKinney Vice President of Operations Real Estate Division Approved by, Deborah N. Ruane Deborah N. Ruane Senior Vice President Real Estate Division Attachments: 1) Royal Property Management Group, Inc. Contract Hard copies are available for review during business hours in the main lobby of the San Diego Housing Commission offices at 1122 Broadway, San Diego, CA and at the Office of the San Diego City Clerk, 202 C Street, San Diego, CA You may also review complete docket materials on the San Diego Housing Commission website at

4 FIRST AMENDMENT TO SAN DIEGO HOUSING COMMISSION AGREEMENT FOR PROPERTY MANAGEMENT SERVICES FOR HOTEL SANDFORD WITH ROYAL PROPERTY MANAGEMENT GROUP, INC. Contract No. PM WHEREAS, the San Diego Housing Commission ( Commission ) and Royal Property Management Group, Inc. ( Contractor ) entered into that certain Agreement For Property Management Services at Hotel Sanford (the Agreement ), dated October 7, 2014 and effective October 1, WHEREAS, on July 24, 2014, the San Diego Housing Commission published a Request for Proposal (PM-15-02) seeking businesses for property management services for Hotel Sanford. On August 28, 2014, Royal Property Management Group, Inc. was selected as the most responsible and responsive proposal. Hyder & Company was the current property management provider, and Hyder s proposal was not selected for contract award. Hyder s contract was due to expire on September 30, In order to prevent an interruption of service and since the Royal contract was not able to be heard on the Housing Commission Board agenda for September, the Commission contracted with Royal for a not to exceed amount of $78,000 which is the cost for management services only. WHEREAS, the Commission and Contractor desire to amend the Agreement in order to allow for the disbursement of compensation for management services as well as for on-site maintenance and office personnel. The total contract amount is $230,664. NOW THEREFORE, the Commission and Contractor hereby amend the Agreement and agree as follows: 1. Section 104(b). Section 104(b) of the Agreement is hereby deleted and the following is substituted in its place and stead: b. Maximum Compensation The total compensation for all services performed pursuant to this Agreement shall be paid as set forth in Contract Attachment No. 3 and shall not exceed the sum of TWO HUNDRED THIRTY THOUSAND SIX HUNDRED SIXTY-FOUR AND NO/100 DOLLARS ($230,664.00). Contractor and Commission agree that $78, of said sum is for compensation paid to Contractor for management services rendered and the balance is for payment for onsite maintenance and office personnel, as pass through billings with no mark up to the Commission. Contractor acknowledges that the Commission is under no obligation to compensate Contractor Page 1 of 2 First Amendment to Agreement with Royal Property Management Group, Inc.

5 for services rendered or expenses accrued under this Agreement in excess of the maximum compensation specified above. It shall be the responsibility of the Contractor to monitor its activities to ensure that the scope of services specified in Contract Attachment No. 2 (Specifications) may be completed and no charges accrued in excess of the maximum compensation during the term of this Agreement. In the event that the work required cannot be completed within the amount specified, or it appears that the maximum compensation provided may be exceeded before the term of the Agreement expires, Contractor shall promptly notify the Commission. Further, the Commission may cancel the Agreement, without cause, by written notice to the Contractor at any time during the term of the Agreement, or any extension thereto, in the event that the Commission and/or the Housing Authority of the City of San Diego fails to appropriate funds for the rendition of services set forth in this Agreement. This right to cancel is in addition to the rights of the Commission to terminate the Agreement as set forth in Section 214 of this Agreement. 5. No Novation. The parties hereto acknowledge and agree that except for the changes set forth herein to exercise the option under the Agreement, all of the terms and provisions of the Agreement are hereby acknowledged by the parties to be valid and are hereby recognized, renewed, extended and continued in full force and effect. Dated: Contractor: Royal Property Management Group, Inc. By: Wende King President/CEO Commission: San Diego Housing Commission Approved as to Form: Christensen & Spath LLP By: Richard C. Gentry President & Chief Executive Officer By: Charles B. Christensen, General Counsel San Diego Housing Commission Page 2 of 2 First Amendment to Agreement with Royal Property Management Group, Inc.

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