Below Market Rate Program Administrator Request for Proposals Housing and Community Development 7351 Rosanna Street Gilroy, CA 95020 Page 1
Introduction and Important Dates The City of Gilroy is seeking a qualified Below Market Rate (BMR) Program Administrator to provide services to administer the City of Gilroy s (City) BMR Program. Proposals must be received no later than Tuesday, October 11, 2016 at 4:00 p.m. Proposals should be prepared in an 8 ½ x 11 format using a 12-point font text size. Please submit six (6) hard copies and one (1) electronic copy on a flash drive or CD to: Inga Alonzo, Purchasing Coordinator Finance Department, City of Gilroy 7351 Rosanna St. Gilroy, California 95020 Questions related to the RFP must be submitted via email to Daniel Murillo at: daniel.murillo@cityofgilroy.org Tentative Schedule October 17, 2016: Panel review of proposals and Consultant Interviews (if necessary) November 7, 2016: City Council Approval of Agreement December 1, 2016: Commence Administration of Portfolio Each candidate submitting a proposal acknowledges and agrees that the preparation and submittal of all materials to the City and all presentations, related costs and travel expenses are at the candidate s sole expense and the City shall not, under any circumstances, be responsible for any cost or expense incurred by the candidate. In addition, each candidate acknowledges and agrees that all documentation and/or materials submitted in response to this RFP shall remain the property of the City. The City reserves the right to reject all proposals. Page 2
BMR Program Overview and History The City has approximately 15,000 housing units with a population of approximately 55,000 residents. The Residential Development Ordinance Affordable Housing Exemption Procedure represents the primary mechanism for the development of affordable homeownership and rental housing in the City. BMR Homes: There are approximately 290 BMR homeownership units in the city. The most recent additions were 21 units that were completed in 2016. These units are restricted with a mix of Deeds of Trust, Promissory Notes and Resale Restriction Agreements that are recorded on the properties. These documents, among other items, dictate the sales process, the allowable sales price and income qualifications of prospective buyers. In addition, most of the homes include deferred loans (from local and state resources) that include various provisions for repayment that are due upon sale or default. BMR Rentals: The City has approximately 800 affordable multi-family units contained within 19 rental complexes. An additional 262 units are expected to be completed in 2017. The units are affordable due to tax credit and/or other federal, state, and local requirements. The method for securing affordability is through deed restrictions (also termed affordable covenants or resale restriction agreements ). Many of the complexes have multiple deed restrictions placed on the properties due to criteria stipulated by various funding sources. Some of these deed restrictions include those placed on the property by the City and require certain compliance requirements the properties must follow. Loan Portfolio First-Time Homebuyer Loans: The City has provided various downpayment assistance loans utilizing local Housing Trust Fund (HTF) dollars and state grants. Many of these loans are deferred while a small amount are repayment loans administered by a third-party processor. In addition, as noted above most of the BMR homes have deferred loans that are due upon sale or at the request of the homeowner. Intentionally left blank Page 3
Scope of Services The Scope of Services is presented as an initial outline to help each candidate proposal be competitive, based on the expected level of work. If the candidate identifies opportunities to improve the scope of services leading to a stronger more functional BMR Program, the candidate should submit an addendum to the proposal with options and associated costs. The BMR Administrator would perform the following tasks: 1. BMR Program Administration Setup: a. Design and set up a formal BMR interest list into a database administered by the consultant and owned by the City. b. Review and organize Gilroy 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. Create flow charts and protocols for BMR home transfers, loan payoff/subordination, default remedies, and other processes associated with the BMR program. e. Provide content for a dedicated webpage for the Gilroy BMR program with frequently asked questions, online application forms (e.g., pre-qualification) and other relevant information. 2. BMR Program Administration a. BMR Inquiries (ongoing): The BMR Administrator will be responsible for handling calls, emails, and in-person inquiries from current housing portfolio loan holders and respond in a timely manner. b. BMR Eligibility List (ongoing): The BMR Administrator will maintain a list of qualified buyers. c. BMR Program Reports: The BMR Administrator will provide semi-annual updates to staff and the City Council on the general status of the BMR program administration, including: 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. Current inventory of affordable units that are not subject to a formal Agreement vi. Resale value of all BMR homes as requested by the County, annually. vii. Other information as needed for County and State reporting Page 4
3. Annual BMR Compliance Monitoring a. BMR Homeowner Certification: The BMR 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 principle residence. The BMR Administrator will work with the City to remedy potential BMR defaults in accordance with the BMR Agreement. b. BMR Renter Certification: The BMR Administrator will coordinate with property managers on an annual basis to certify that all BMR units are occupied by renters who continue to meet income requirements. The BMR Administrator will also ensure that the appropriate rent is being charged given annual updates to HUD income limits and utility estimates. 4. Existing Loan Administration a. The BMR 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 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 Administrator will contact the owner and work with the City to see that the loan is repaid. c. The BMR 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). 5. BMR Home Sales/Resales (as needed basis) a. BMR Marketing: The BMR 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. This task will include providing marketing materials in both English and Spanish to City staff for the City s website. b. Sales Price: Upon request, the BMR Administrator will supply the City with current mortgage interest rates and other information necessary to set sales prices of new BMR homes and existing BMR homes being offered for resale. c. Homeowner Eligibility: The BMR Administrator will submit the data on each eligible applicant to the City for approval prior to formalizing any Agreement. Page 5
d. BMR Homeowner Documents: The BMR Administrator will coordinate with the Developer, lender, Title Company, and homeowner and review all required documents to ensure that each BMR household meets the requirements of the BMR program. The BMR Administrator will prepare and record all legal documents required for each BMR homebuyer. The Developer and/or homeowner will pay the BMR Administrator directly for the cost of recording these documents. The BMR Administrator will create both a hard file and electronic copy of pertinent documents for each homeowner. The original files, including all recorded documents will be kept in Gilroy s office of Housing and Community Development. 6. Housing Fund / BMR Programs: The BMR Administrator will work with City staff to recommend, develop and implement programs using City of Gilroy Housing Trust Fund (e.g., loan payoff). City Council will approve any new programs under this task. Intentionally left blank Page 6
Submittal Information 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 Gilroy 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 Gilroy 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 Gilroy 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. e. Hourly rates may be used for pricing the cost of additional services (beyond the scope of services), as needed. Page 7
PLEASE NOTE: The City will not open the cost estimate envelope until a final staff recommendation is made. Should the costs be excessive and a reasonable agreement at a lower cost cannot be made, the City will move to the next recommended consultant to attempt to arrive at a reasonable cost and scope. 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 Gilroy s BMR program or finance the BMR 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. Intentionally left blank Page 8
Review of Proposals All proposals received by 4pm on October 11, 2016 will be scheduled for review by the BMR Administrator RFP Sub-Committee for recommendation to the City Council. BMR Review Panel: The Review Panel will consist of City staff and/or other housing professionals from other cities and/or affordable housing providers. The Review Panel will evaluate all proposals prior to approval by the City Council. If the proposals do not meet the expectations of the Review Panel and/or the costs are too high, the City reserves the right to terminate any further discussion. Following a Review Panel recommendation, City staff will forward a recommendation of approval to the City Council. Interviews: The Review Panel will reserve the right to invite applicants to an interview. This interview will allow the applicant to conduct a formal presentation of their proposal and allow the panel to ask questions of applicants and may affect the final recommendation of the Review Panel. Formal presentations to the interview panel should be approximately 15 minutes with an additional 15 to 30 minutes for discussion. The presentation should focus on the candidate s BMR Administration experience; protocol for processing new developments, transferring existing properties, refinancing and paying off existing loans, monitoring the City s existing BMR inventory for compliance; and the proposed coordination and communication between your firm and the City and BMR stakeholders (households, developers, non-profit agencies, etc.). Other factors that could be discussed include administration philosophy and program suggestions. The presentation should be led by the individual(s) who will be most involved in the day-to-day administration of the City s BMR program. All key staff should be present. City Council: Following Review Panel application review and recommendation, City staff will forward to the City Council for their final approval. Intentionally left blank Page 9
Selection Criteria The ideal BMR Administrator will have relevant experience in the administration of affordable housing programs (preferably for similarly sized cities), more substantive experience related to the provided scope of services and have excellent customer service skills. Proposal ranking will take into consideration experience administering BMR programs in nearby or similar communities, and overall qualifications associated with the scope of services described in this RFP. Final selection of candidates will be based on the submitted proposal, the interview, and the results of reference checks. The following selection criteria, listed in no particular order, will be used to rank both the Proposal and interview of the finalists. 1. Demonstrated communication skills, excellent customer service skills, technical skills, expertise, and experience executing the scope of services identified in the RFP. 2. Relevant experience administering a BMR program for similarly sized cities. 3. Reputation for personal and professional integrity and competence, and key personnel s professional background and ability to administer the BMR program. 4. Familiarity with and proximity to the City of Gilroy. 5. Review of the candidate s current and projected workload. 6. Proposed cost to administer the BMR Program, including any self-sustaining fee structure which limits impact to the City s general fund. 7. Succession plan should key individuals leave employment. BMR Administrator Selection and Contract Negotiation The City will proceed with negotiating a contract with the highest-ranked candidate. If the City and candidate cannot reach agreement in the negotiation, the City will terminate negotiation and, at its option, negotiate with the next-ranked candidate. Upon completion of negotiations, the agreement must be approved by the City Council in order to formerly award the contract. The City s standard form of contractor agreement will form the basis of the contract between the parties (see Attachment A). The City reserves the right to accept or reject any or all Request for Proposal(s); to alter the selection process in any way; to postpone the selection process at any time; to waive any defects in the Request for Proposal; and/or to withdrawal consideration of a BMR Administrator. The This RFP and the review/interview process shall in no way be deemed to create a binding agreement of any kind between the City and the candidate. Page 10