Report to Mayor and City Council
Tuesday, July 16, 2019
Consent
SUBJECT:
Title
CONSIDER APPROVAL OF AMENDMENT NO. 3 TO A CONTRACT SERVICES AGREEMENT WITH NATIONWIDE COST RECOVERY SERVICES FOR ADMINISTRATION AND IMPLEMENTATION OF THE CITY'S FORECLOSURE REGISTRATION PROGRAM (CITY COUNCIL)
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I. SUMMARY
In 2013, the Carson City Council passed the Foreclosure Registration Program Ordinance (Ordinance No. 13-1510), which was subsequently incorporated into Chapter 7 and Chapter 9 of the Carson Municipal Code (Exhibit No. 1). The Foreclosure Registration Program (“FRP”) establishes a mechanism to protect neighborhoods from blight resulting from the foreclosures and unmaintained properties. Owners of foreclosed residential properties (primarily financial institutions; or “Real Estate Owned”) are required by the City to register their vacant foreclosed properties until the property is occupied. Due to the specialized nature of the program, cities that have a foreclosure registration program equivalent, typically contract with consultants to facilitate the tracking, billing and compliance of Real Estate Owned (REO) properties through the foreclosure process.
Since the program’s inception, the City has utilized Nationwide Cost Recovery Services (“NCRS”) to administer and implement the City’s Foreclosure Registration Program. Other cities with municipal foreclosure registration programs also utilize NCRS and are not aware of another provider of these unique services. The current contract provides NCRS with 40% of fees collected under the FRP, while the City receives the remaining 60%. Because NCRS is a unique service provider, staff is requesting the City Council waive the City’s bidding requirements and approve a three year term extension under the current arrangement whereby 40% of collected registration fees and penalties are provided to NCRS and the remaining 60% are provided to City.
II. RECOMMENDATION
Recommendation
1. DETERMINE Nationwide Cost Recovery Services (NCRS) to be a sole source vendor for the unique services required for the administration of the City’s Foreclosure Registration Program, as authorized under Carson Municipal Code Section 2611(e) (“Sole Source Purchasing”);
2. WAIVE the bidding requirements in Chapter 6 (“Purchasing System”) of Title II of the Carson Municipal Code, pursuant to Carson Municipal Code Section 2611(e) (“Sole Source Purchasing”);
3. APPROVE Amendment No. 3, to the Contract Services Agreement with NCRS to extend the contract term through June 30, 2022 in the amount of $255,000, for a total not to exceed amount of $521,620; and
4. AUTHORIZE the Mayor to execute the Amendment No. 3, following approval as to form by the City Attorney.
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III. ALTERNATIVES
TAKE any other action(s) deemed appropriate by the City Council.
IV. BACKGROUND
The City Council adopted Foreclosure Registration Program Ordinance No. 13-1510 (“Ordinance”) on February 19, 2013. The FRP includes a cost recovery component wherein a registration fee and annual re-registration fee are to be paid to cover the registration effort and addressing issues arising from foreclosed properties. The FRP also includes the City’s ability to establish and assess penalties for violations with the Ordinance. The fees would be used to offset City staff and consultant time for tasks including researching beneficiaries, trustees and/or other agents’ beneficiaries maintaining the database, documenting existing conditions, conducting regular windshield survey of condition, property condition reports, mailing and notification, collection of fees, initiating the fines process, and addressing other related issues from foreclosed properties in accordance to the Ordinance. Since 2013, the FRP has registered 2,776 properties (including annual re-registrations) for $1,249,200 in registration fees. The FRP has also collected $405,695 in penalty fees. Overall, the program has collected a total of $1,639,275. Last year (2018), 269 registrations/re-registrations and penalties filings were received. The City collects $450 per filing. Therefore, based on the 60/40 split, the City received $72,630 last year from this program as its 60% share. This calendar year the City has received 132 filings to date. NCRS has reported that region-wide there is an increase in foreclosures due to the expiration of 10 year loans dating from 2008.
Properties going through foreclosure often end up vacant, neglected, and abandoned for prolonged periods of time. The lack of security and maintenance of abandoned residential properties can result in many detrimental effects for the community, including unsightly appearance, blighted residential neighborhoods, increased crime, and reduction in local tax base and property values for surrounding residences. The City’s FRP provides a mechanism to protect residential neighborhoods from becoming blighted through the lack of maintenance and security of abandoned properties. Specifically, the program allows staff to track properties before they enter into foreclosure to proactively identify potential nuisance areas. The specialized nature of this program, which requires early access to reliable foreclosure information, necessitates the use of a qualified consultant.
Nationwide Cost Recovery Services
The City Council is being asked to approve the award of a three-year service contract to NCRS. NCRS is recognized expert in the area of municipal foreclosure registration programs. NCRS uses proprietary technologies to provide integrated registration, monitoring, and compliance (including collections) services. The jurisdictions that administer similar foreclosure registration programs (Azusa, Eastvale, El Monte, Lynwood, Pico Rivera, South El Monte, and West Covina) use NCRS and are not aware of any other entity with their unique service.
NCRS began providing services to the City in July 2015. The initial contract was originally for a one-year term, and was subsequently extended by three years to June 30, 2019. This proposed amendment (“Amendment No. 3”) would extend the Term by an additional three years from June 30, 2019 to June 30, 2022 and increase the contract by $255,000, from $266,620 to $521,620 (Exhibit No. 2). Approval of Amendment No. 3 would allow the continued use of NCRS to perform inspections, monitoring, and fee collections of foreclosed REO properties in accordance to the adopted Ordinance. Benefits of the services provided by NCRS include:
• Minimized neighborhood blight through proactive collaboration with the Code Enforcement Division.
• Increased property value and quality of life for residents.
• No upfront cost to the City - NCRS is paid based on percentage collected.
• Reduction in staff time and duties.
• Specialized knowledge and expertise in foreclosure programs and processes.
• Access to integrated technology for registration, monitoring, and compliance.
Waiver of Bidding Requirements
Staff recommends waiving the bidding requirements in Chapter 6 (“Purchasing System”) of Title II of the Carson Municipal Code (C.M.C), pursuant to the exemption in C.M.C. Section 2611(e) which reads as follows:
“Sole Source Purchasing. The City Manager may dispense with this Chapter’s bidding requirements if he or she finds that the materials, supplies, equipment, or services are unique because of their quality, durability, availability, or fitness for a particular use and are available only from one (1) source, or, if available from more than one (1) source, can be purchased from the manufacturer or service provider for a lower price. If the cost of such sole source purchasing is $25,000 or greater, then the City Council’s approval shall be required.”
Based on staff’s research on cities with equivalent foreclosure registration programs, staff believes that the above cited section of the Carson Municipal Code is applicable and that a determination that NCRS is a “sole-source” provider of the services being sought is justifiable. Specifically, the City of West Covina, City of Azusa, and City of Moreno Valley have all determined that NCRS is uniquely qualified and the only company found to specialize in registration of foreclosed properties.
V. FISCAL IMPACT
Amendment No. 3 extends the contract term by three additional years to June 30, 2022 and will cost up to an additional $255,000, paid only if registration fees and penalties are collected by the City. NCRS receives 40% of the fees from owners of foreclosed properties, while the City receives the remaining 60%. The funds have been allocated in the proposed budget for FY 2019-2020 in account number: 101-70-720-964-6004 (Housing Division Professional Services Contract).
VI. EXHIBITS
1. Foreclosure Registration Program Ordinance No. 13-1510 (pgs. 5-12)
2. Proposed NCRS Contract Amendment No. 3 (pgs. 13-18)
Prepared by: James Nguyen, Project Manager