REPORT TO COUNCIL
SUBJECT
Title
Amend an Existing Consultant Services Agreement with Strategic Economics, Inc. for an Inclusionary Housing Feasibility Study for a New Not-to-Exceed Amount of $361,090 and to Extend the Agreement Through December 31, 2026 (F26-097) and Approve Budget Modification No. 4 in the Amount of $136,090
Report
REPORT IN BRIEF
Approval is requested to amend an existing Consultant Service Agreement with Strategic Economics, Inc. of Berkeley, CA, to increase the agreement amount by $136,090 for a new not-to-exceed total of $361,090 for consulting services related to the City’s inclusionary housing program and multi-jurisdictional feasibility study. Approval is also requested to extend the agreement end date through December 31, 2026. A draft amendment is attached to this report as Attachment 1.
EXISTING POLICY
Pursuant to Section 2.08.040 of the Sunnyvale Municipal Code (SMC), City Council approval is required for contracts for the procurement of goods and services exceeding $250,000 in any one transaction.
Section 2.08.070(b)(3) authorizes the purchase of goods and/or services to be exempted from the competitive bidding requirements when the solicitation of bids or proposals would be impractical, unavailing or impossible.
Sunnyvale General Plan
Housing Element
GOAL H-2: Affordable Housing and Home Buyer Assistance
Policy H-2.2: Continue to implement and consider revisions to the Below Market Rate (BMR) Housing program to increase the amount of affordable housing built in the city, while ensuring the program remains consistent with current market trends, does not impede development, and is appropriate for the Bay Area region.
Policy H-2.3: Utilize the BMR Housing requirements as a tool to integrate affordable units within market rate developments and increase the availability of affordable housing throughout the community.
Program H5. Complete a feasibility study to determine if an increase to the BMR percentage for rental and ownership projects can be supported. Review and refine the BMR program code requirements and amend the Guidelines periodically as needed to accommodate changing market conditions and improve overall program effectiveness.
Sunnyvale Municipal Code
Chapter 19.67 Inclusionary Below Market Rate Ownership Housing Program
Chapter 19.77 Inclusionary Below Market Rate Rental Housing
ENVIRONMENTAL REVIEW
The action being considered is funding to complete a study and does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it is a fiscal and administrative action that has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
BACKGROUND AND DISCUSSION
To help meet the affordable housing needs of the community, the City adopted an inclusionary housing ordinance in 2019 that requires 15% of units in most new residential developments to be deed-restricted affordable housing (RTC No. 19-0932). Subject to approval by the City Council, residential developers may also request alternative compliance to pay an in-lieu fee instead of providing the required affordable units within the development. Given changing economic conditions, the City should regularly analyze the inclusionary housing requirement and in-lieu fee structure to determine its impact on new residential development.
In 2023, the City Council approved Study Issue CDD 23-01 to consider increasing the inclusionary housing requirement to 20% in new residential development, and review and update the housing in-lieu fees for rental and ownership housing. To increase an inclusionary housing requirement above 15%, California law (Gov. Code, § 65850.01) requires jurisdictions to submit an economic feasibility study to the California Department of Housing and Community Development (HCD). HCD may review the feasibility study to determine whether the inclusionary requirement is a constraint on market-rate housing production. In that event, the feasibility study would provide technical justification for the inclusionary requirement.
Along with most Santa Clara County jurisdictions, the City participates in the Santa Clara County Planning Collaborative (SCCPC), which is coordinated by its consultant, Baird + Driskell + Abrams Community Planning. The SCCPC provides an opportunity for jurisdiction staff from across the County to collaborate and share resources on various housing and planning initiatives. Several other jurisdictions, including the City of Gilroy, Town of Los Altos Hills, Town of Los Gatos, City of Mountain View, and City of Santa Clara (collectively, the “Participating Jurisdictions”) expressed interest in collaborating on a multi-jurisdictional inclusionary housing feasibility study (the “Study”) to take advantage of shared resources and cost savings. The City volunteered to serve as the fiscal agent for the Study. As fiscal agent, the City would contract directly with the Study consultant, and the Participating Jurisdictions would pay the City their share of the Study costs.
Following a competitive bidding process conducted by Baird + Driskell + Abrams Community Planning, the City entered into a service agreement with Strategic Economics, Inc. for the completion of the Study on November 26, 2024. As the Study progressed, the City and the other Participating Jurisdictions determined that an amendment to the existing service agreement would be needed to modify the scope to add a public review period and additional public meetings. The amendment would also extend the agreement through 2026 to allow for additional time for all jurisdictions to complete the necessary public hearings.
FISCAL IMPACT
Budget Modification No. 4 has been prepared to appropriate $136,090 of General Fund Budget Stabilization Reserve to Project 836540 - Consider Increasing Inclusionary Housing Requirement to 20% in New Residential Developments.
This amendment increases Sunnyvale’s share by $19,592 to $55,567. The remaining $305,523 will be reimbursed by participating jurisdictions to the City’s General Fund. Any remaining unspent project budget at project completion will be returned to the General Fund Budget Stabilization Reserve.
Budget Modification No. 4
FY 2025/26
|
General Fund |
Current |
Increase/ (Decrease) |
Revised |
|
Revenues |
|
|
|
|
Contribution from Participating Jurisdictions |
$214,024 |
$91,499 |
$305,523 |
|
|
|
|
|
|
Expenditures |
|
|
|
|
Project 836540 - Consider Increasing Inclusionary Housing Requirement to 20% in New Residential Developments |
$225,000 |
$136,090 |
$361,090 |
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
|
|
Budget Stabilization Fund |
$90,473,192 |
($136,090) |
$90,337,102 |
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
RECOMMENDATION
Recommendation
Take the following actions:
- Approve an amendment to the Consultant Services Agreement with Strategic Economics, Inc., increasing the contract by $136,090 for a new not-to-exceed total of $361,090 and extending the agreement term through December 31, 2026;
- Authorize the City Manager to execute the amendment when all necessary conditions have been met; and
- Authorize the City Manager to increase compensation subject to budget availability through December 31, 2026, providing pricing and services remain acceptable to the City.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
_X_ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
___ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: David Battaglia, Purchasing Officer
Reviewed by: Matthew Paulin, Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Draft Amendment to Consultant Services Agreement
2. Project 836540 Budget Summary Sheet