Report to Mayor and City Council
Tuesday, December 06, 2016
Consent
SUBJECT:
Title
CONSIDER APPROVAL OF AN AGREEMENT WITH ROSENOW SPEVACEK GROUP, INC. TO PROVIDE INTERIM MOBILE HOME RENT REVIEW SERVICES (CITY COUNCIL)
Body
I. SUMMARY
In the City of Carson, the Mobile Home Rent Review program is administered by the Mobilehome Park Rent Review Board with staffing assistance from the Housing Program Manager. The Program Manager receives applications for mobile home park rent increases, reviews the applications and presents the applications to the Mobile Home Rent Review Board for approval. The Housing Program Manager has received some assistance with the review and processing of applications from Rosenow Spevacek Group, Inc. (RSG) on a contract services basis. Due to the imminent retirement of the Housing Program Manager, and in order to continue administering the City’s Mobile Home Rent Review program, it is necessary to contract with RSG to provide these services on an interim basis until the City can recruit and hire a new Housing Program Manager. This proposed agreement will provide the City with the required services through July 31, 2017.
II. RECOMMENDATION
Recommendation
TAKE the following actions:
1. APPROVE the agreement with Rosenow Spevacek Group, Inc. to provide interim Mobile Home Rent Review services in the amount not-to-exceed $75,000.00, through July 31, 2017.
2. AUTHORIZE the Mayor to execute the agreement, following approval as to form by the City Attorney.
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III. ALTERNATIVES
TAKE any other action the City Council deems appropriate that is consistent with the requirements of law.
IV. BACKGROUND
In the City of Carson, the Mobile Home Rent Review program is administered by a Housing Program Manager. The Program Manager receives applications for mobile home park rent increases, reviews the applications and presents the applications to the Mobile Home Rent Review Board for approval. Over the past two years, the Housing Program Manager has received some assistance with the review and processing of applications from Rosenow Spevacek Group, Inc. (RSG) on a contract services basis.
During 2016, the City received eight mobilehome park rent increase applications from park owners, a higher than normal number. The time taken for reviewing applications and then scheduling the public hearings - each park’s public hearing is the only matter scheduled on an agenda -- has extended the public hearings into early 2017. Due to the imminent retirement of the current Housing Program Manager, and in order to continue administering the City’s Mobile Home Rent Review program, it is necessary to contract with RSG to provide these services on an interim basis until the City can recruit and hire a new Housing Program Manager. This proposed agreement will provide the City with the required services through July 31, 2017.
Under the program, mobile home park owners (“Park Owner”) can apply for two types of rent increases:
• Base Rent - Permanent space rent increase to account for any changes in the Consumer Price Index (“CPI”), maintenance, service or amenities provided, and space rents in comparable mobile home parks in the City; and
• Capital Improvement - Temporary rent increase, not to exceed 10% of the Base Rent amount, to allow a Park Owner’s recovery of the capital expenditures plus interest thereon for a determinate period that is necessary for the reasonable amortization of the cost. Capital Improvement increases are separate from and in addition to Base Rent increases.
Beginning with a transition period overlapping with the Housing Program Manager’s final month at the City in December and ending July 31, 2017, RSG will complete the following:
• Application Review - RSG will review all applications to ensure that they are complete and adhere with the Program guidelines. This includes preparing and sending correspondence to the Park Owner informing them if their application has been accepted or rejected. If the application is rejected, RSG will detail the reason for the rejection and inform the Park Owner of any deficiencies. In the case of a Base Rent increase, the application process requires Property Owners to provide sufficient supporting documentation concerning income, operating expenses, and gross profit for each year since the last rental increase application was submitted to the Board. The application must also include information dating back to the purchase of the mobile home park such as: the date and purchase price of the mobile home park along with the rents and net operating income; appraisal and value; the down payment amount; and the total amount of equity in the park at the date of current application. In the case of Capital Improvement applications, RSG will work with the applicant to ensure that all capital improvements meet the definitions detailed in the Program. Determination of allowable Capital Improvement increases are based on amortization schedules identified in the Guidelines and any relevant factors affecting amortization such as the quality of the improvement and external factors that affect its longevity. The calculation of the allowable rent increase is based on the total improvement costs plus interest divided by amortization period (number of years) and then divided by 12 to reflect the monthly payment. A Capital Improvement increase should not be amortized over a period that would yield a monthly per space rent increase greater than 10%.
• Homeowner Noticing - Once an application is deemed complete, RSG will prepare and send on behalf of the City, required Homeowner notices and will be available to answer any question the Homeowners may have. RSG will be available on-site one day per week to allow Park Owner’s and Homeowner’s an opportunity to review files and ask in-person questions. All written responses must be received and included in the file no later than 10 days before the public hearing.
• Public Hearing - A public hearing must be held within 60 days RSG deems that an application is complete, unless the Park Owner accept a waiver. RSG will poll Board members to set dates and times for the public hearings if they do not fall on a regularly scheduled meeting date. RSG will prepare and send on behalf of the City public hearing notices to affected Homeowners at least 15 days prior to the public hearing date. RSG will also prepare staff reports that will be presented to the Board for consideration at the public hearings. The staff report must present all the material facts of each case. For the Base Rent increase applications, RSG will also prepare multiple analyses based on the MNOI, GPM, and CPI analyses to help the Board determine the amount of a potential increase and help them determine that their decision results in both a fair return to the Park Owners and avoids excessive rent increases for the tenants. For Capital Improvement increase applications, RSG will ensure that each file contains supporting documentation to justify the amount of the capital improvement expense. The staff report will detail options that will help the Board minimize the impact to the residents by selecting options that would reduce interest charges or allow for a one-time upfront fee, which has no interest payment. RSG will also attend all public hearings and present information to the Board.
• Project Management and Coordination - RSG will hold regular office hours at the City starting in December and would be at City Hall 2 days a week through December 23rd. RSG will work very closely with staff to transfer as much knowledge and information as possible during the review of the two remaining applications from this year. Between January through the end of July, RSG would be on site 1 day a week, approximately 4-6 hours depending on what is needed, to be available for drop-ins or meetings with Homeowners or Property Owners. RSG would be responsible for organization and maintenance of files on the applications as part of these administrative activities. Also, RSG will provide bi-weekly status updates to the City to keep them informed of Program activities.
Due to the complexity of the City’s Mobile Home Rent Review process and the amount of review and documentation, a specialized contractor with experience and an understanding of the City’s process is required to continue to provide this service. RSG is the only contractor that has both the necessary understanding and experience with the City’s process. Staff recommends approval of the agreement with RSG to provide these services on an interim basis until the City can recruit and hire a new Housing Program Manager.
V. FISCAL IMPACT
This agreement is for a not-to-exceed amount of $75,000.00. Employee compensation savings due to retirement of the Housing Program Manager will offset the professional services expenditure.
VI. EXHIBITS
1. Draft agreement with RSG. (pgs. 5-32)
Prepared by: John Raymond, Community Development Director