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SR 06-13-2023 5G 407-000-03 / 400-001-03 City Council Report City Council Meeting: June 13, 2023 Agenda Item: 5.G 1 of 7 To: Mayor and City Council From: David Martin, Director, City Planning Subject: Approval of Fourth Modification to Professional Services Agreement with HR&A Advisors Inc. for 6th Cycle (2021-2029) Housing Element Implementation Recommended Action Staff recommends that the City Council take the following actions: 1. Make a determination that the proposed modification of the HR&A Advisors Inc. contract for fiscal analysis is statutorily exempt from CEQA pursuant to Section 15262 (Feasibility and Planning Studies) of the CEQA Guidelines. 2. Authorize the City Manager to negotiate and execute a fourth modification to agreement #108300 (formerly #10830) in the amount of $40,000 and extend the term for one additional year, with HR&A Advisors Inc.(“HR&A”) to prepare fiscal analysis for implementation of the City’s certified 6th Cycle (2021-2029) Housing Element. This will result in a five-year amended agreement with a new total amount not to exceed $494,900, with future year funding contingent on Council budget approval. Summary On October 14, 2022, the State of California’s Housing and Community Development Department (HCD) certified the City’s 6th Cycle (2021-2029) Housing Element. The certified Housing Element represents the City’s commitment to implement the Housing Element programs. The City Council held two study sessions regarding the first phase of implementation programs for the Housing Element on February 14 and February 28, 2023. On March 21, 2023, City Council adopted amendments to the Land Use and Circulation Element (LUCE), Bergamot Area Plan (BAP), and Downtown Community Plan (DCP), and on April 11, 2023, City Council adopted amendments to the Zoning Ordinance (ZO) to implement these programs. 5.G Packet Pg. 244 2 of 7 The first phase of implementation programs for the 6th Cycle Housing Element focused on programs necessary to ensure compliance with the Housing Element that are most relevant to housing production or are required for consistency with State law that is already in effect. These programs included key rezoning programs, Program 1F and Program 1J, which are necessary to accommodate the City’s Regional Housing Needs Allocation (“RHNA”) of 8,895 units between 2021 and 2029 with a buffer to address net loss of units. Program 1F (rezoning of Downtown) and Program 1J (rezoning of mixed- use areas outside of Downtown) commits the City to amending the Zoning Ordinance, LUCE, Downtown Community Plan, and the Bergamot Area Plan (BAP) to increase FAR and height standards to levels that can support the Affordable Housing Production Program (AHPP) inclusionary requirement and feasible housing projects. Based on prior HR&A analysis, the FARs and heights in the certified 6th Cycled Housing Element could support an on-site inclusionary requirement of 15% (i.e., housing projects could be feasible with 15% on-site affordable housing units). On March 21, 2023, Council adopted amendments to the LUCE, Downtown Community Plan, and the Bergamot Area Plan (BAP), and on April 11, 2023, the City Council adopted amendments to the Zoning Ordinance, to increase heights and FARs for housing projects and to establish an inclusionary affordable housing requirement of 15%. Additionally, Council gave direction to Staff to further review and analyze options to increase affordable housing in the City, including but not limited to, further modification of the AHPP 15% inclusionary requirement, particularly an increase over 15% in the Downtown Community Plan area. A modification to the agreement with HR&A Advisors Inc.(“HR&A”) for a total $40,000 is required to conduct additional feasibility analyses pursuant to Council direction. Background The RHNA is mandated by State Housing Law as part of the periodic process of updating local housing elements of the General Plan. The RHNA quantifies the need for housing within each jurisdiction during specified planning periods. For the 6th Cycle 5.G Packet Pg. 245 3 of 7 planning period of 2021-2029, Santa Monica’s RHNA is 8,895 units, of which 69% must be affordable. On March 26, 2019, Council authorized an agreement with HR&A Advisors, Inc. to provide financial feasibility analysis of potential affordable housing requirements and minimum density necessary to support housing projects. On November 12, 2019, Council authorized the acceptance of SB2 grant funds in the amount of $310,000 from the State of California Department of Housing and Community Development and a first contract modification in the amount of $179,000 with HR&A Advisors, Inc. for additional analysis related to housing production in the context of the 6th Cycle Housing Element. HR&A’s amended contract provided for a range of economic analyses, typical housing prototype modeling based on revised standards, and policy and program evaluation necessary to inform the preparation of the 6th Cycle Housing Element. During the City’s reorganization, Contract #10830 expired before the scope of work was completed and a new contract was executed for the remaining balance with contract #108300. A third modification to HR&A’s contract in the amount of $36,000 was authorized by Council in July 2022 to prepare a Ballot Measure Impact Report to model Measure GS and the potential funds that the measure might generate. Discussion Rezoning efforts for the adopted 6th Cycle Housing Element include establishing development standards that must be both feasible and sufficient for the City to support housing projects and accommodate the RHNA as required by HCD. Housing Element Program 1F (rezoning of Downtown) and Program 1J (rezoning of mixed -use areas outside of Downtown) commits the City to modifying the floor area ratios (FARs) and heights in the City to ensure they are set at levels that can support the minimum AHPP requirements and are feasible for housing projects. The City’s assumptions of feasibility in the adopted 6th Cycle Housing Element are based on the results of a feasibility analysis prepared by HR&A dated June 9, 2021 and updated in February 2022. As established in Programs 1F and 1J of the Housing Element, the feasible FARs for 5.G Packet Pg. 246 4 of 7 housing projects in the Downtown range from a minimum 2.75 to 4.0 with heights ranging from 55 feet to 84 feet and the feasible FARs for housing projects in the remaining areas of the City range from a minimum 2.75 to 3.25 with heights ranging from 55 feet to 65 feet. The FAR and height standards, as established in the Housing Element and presented to Council in February and March 2023, are based on the results of a feasibility analysis prepared by HR&A dated June 9, 2021 and updated in February 2022. The HR&A analysis accounted for affordability mix, reduced parking requirements, flexibility to allow ground floor residential, and replacement units that may be required by State Law (SB 330). As indicated in the HR&A analysis, the FARs and heights in the certified 6th Cycled Housing Element could support an on-site inclusionary requirement of 15% (i.e., housing projects could be feasible with 15% on-site affordable housing units). On March 21, 2023, Council adopted amendments to the LUCE, Downtown Community Plan, and the Bergamot Area Plan (BAP), and on April 11, 2023, City Council adopted amendments to the Zoning Ordinance, to increase heights and FARs for housing projects and to establish an inclusionary affordable housing requirement of 15%. Additionally, Council gave direction to Staff to further review and analy ze options to increase affordable housing in the City, including but not limited to, further modification of the AHPP 15% inclusionary requirement, particularly an increase over 15% in the Downtown Community Plan area. A modification to the agreement of $40,000 is required to conduct additional analyses pursuant to Council direction. A fourth modification to the agreement would expand HR&A’s scope of work to conduct updated analysis of the Housing Element programs. HR&A will provide supplemental research and/or analysis, including financial feasibility analysis, that pertains to proposed or adopted City policies, regulations, or projects. This may include, for example analysis on aspects of the City’s AHPP, General Plan and Zoning Ordinance changes, changes in local real estate market conditions, changes in other regulatory standards, impact fees, or project approval processes. Furthermore, this fourth modification to the agreement would extend the term of the contract to accommodate completion of this additional scope of work. 5.G Packet Pg. 247 5 of 7 Contractor Selection HR&A Advisors, Inc. was selected on March 21, 2019 to provide the following: • Update Financial Feasibility Analysis on the Downtown Community Plan (DCP) • Explore Revised Development Standards and Incentives for Housing Projects on Boulevards and in the Bergamot Area Plan • Multi-Unit Districts Affordable Housing Fee and Density Study This recommended award was made as an exception to the competitive bidding process pursuant to Section 2.24.80(d). Competition does not exist because HR&A has completed extensive feasibility analysis related to evaluating the feasibility of the City’s development standards, project requirements and fees including ongoing work on the Affordable Housing Production Program (AHPP) and Housing Element, as well as financial feasibility on the Downtown Community Plan, and 2015 Zoning Ordinance. Therefore, HR&A has the unique ability or capability to complete the abovementioned studies related to continued implementation of the Housing Element. Completing a competitive procurement process is highly unlikely to produce cost-competitive proposals from other sources, given HR&A’s experience and knowledge with preparing modeling for the City. Environmental Review The proposed modification to HR&A’s contract is statutorily exempt from CEQA pursuant to Section 15262 (Feasibility and Planning Studies) of the CEQA Guidelines, which exempts feasibility and planning studies for possible future actions which the agency, board, or commission has not approved, adopted, or funded. HR&A’s updated feasibility analysis would provide information on the level of supportable inclusionary housing and therefore, is exempt pursuant to Section 15262. Past Council Actions Meeting Date Description 5.G Packet Pg. 248 6 of 7 03/26/2019 Council approved a contract with HR&A Advisors, Inc to provide empirical testing of prototypical private developments to help increase the City’s supply of affordable housing 06/11/2019 Council adopted a resolution authorizing application for, and receipt of, SB2 grant funds in an amount not to exceed $310,000 from the California Housing and Community Development Department (HCD) 11/12/2019 Council authorized the City to accept the SB2 grant in the amount of $310,000 and to authorize the City Manager to negotiate and execute a first modification with HR&A in the amount of $179,000 for further prototype testing in support of the 6th Cycle Housing Element 10/12/2021 Council adopted the 2021-2029 6th Cycle Housing Element 06/14/2022 Council approved a second modification with HR&A in the amount of $89,900 and extension of the contract for one additional year to provide additional financial analyses in support of the City’s Housing Element 07/12/2022 Council approved a third modification in the amount of $36,000 to conduct financial modeling for the Affordable Housing Tax Ballot Measure Financial Impacts and Budget Actions Staff seeks authority to approve funding from the General Fund to increase the amount of the agreement with HR&A Advisors Inc for preparation of fiscal analysis for implementation of the City’s certified 6th Cycle (2021-2029) Housing Element. Funds are including the FY 2023-25 Proposed Biennial Budget. Contract Modification Request Amount Agreement # Current Authorized Amount FY 2023-24 Request Amount Account # Total Revised Contract Amount 5.G Packet Pg. 249 7 of 7 10830/108300 $268,900 20700002.556420 $268,900 10830/108300 $150,000 01700001.552010 $150,000 10830/108300 $36,000 01300001.552010 $36,000 10830/108300 $40,000 01700002.552010 $40,000 TOTAL $454,900 $40,000 $494,900 Future year funding is contingent on Council budget approval. Prepared By: Rachel Kwok, Environmental Planner Approved Forwarded to Council Attachments: A. HR&A Original Agreement B. HR&A Agreement First Modification C. HR&A Agreement Second Modification D. HR&A Agreement Third Modification E. HR&A Oaks Initiative Form 2023 5.G Packet Pg. 250 - 1 -   Contract No. 108300 (CCS) PROFESSIONAL SERVICES AGREEMENT This Professional Services Agreement (“Agreement”), entered into as of _________________(“Execution Date”), by and between the City of Santa Monica (“City”) and HR&A Advisors, Inc. (“HR&A”), is made with reference to the following: RECITALS: A. The City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of the City. B. HR&A is qualified to do business, and is doing business, in the State of California. HR&A represents it has the background, knowledge, experience and expertise necessary to provide the services set forth in this Agreement. C. The City and HR&A now desire to enter into an agreement for HR&A to provide professional services to the City. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: TERMS AND CONDITIONS 1. Term. This Agreement begins on the Execution Date and terminates on June 30, 2022, unless sooner terminated in accordance with Section 14. 2. HR&A Services. HR&A will perform all of the services (“Services”) described in Exhibit A, Scope of Services. HR&A will complete the Services in accordance with Exhibit B, Budget. 3. City Services. The City agrees to: 3.1 Make available to HR&A any currently existing documents, data or information required for the performance of the Services. 3.2 Designate a representative authorized to act on behalf of City. 3.3 Promptly examine and render findings on all documents submitted for staff review by HR&A. 4. Compensation. The City will compensate HR&A for the Services performed in an amount not to exceed $219,000.00, as set forth in Exhibit B. 5. Invoices. HR&A will invoice the City for the Services in accordance with Exhibit B and the City will pay any undisputed amount within 30 days of receipt. 6. Notices. All notices, demands, requests or approvals to be given under this Agreement, must be in writing and will be deemed served when delivered personally, DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 11/23/2020 5.G.a Packet Pg. 251 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) - 2 -   by email, or on the third business day after deposit in the United States mail, postage prepaid, registered or certified, addressed as follows: 6.1 All notices, demands, requests or approvals to the City: City Planning Division City of Santa Monica 1685 Main Street, Mail Stop 28 Santa Monica, California 90401 Attention: Rachel Kwok Re: Contract No. 108300 (CCS) with a copy to: Santa Monica City Attorney’s Office 1685 Main Street, Third Floor Santa Monica, California 90401 Attention: City Attorney Re: Contract No. 108300 (CCS) 6.2 All notices, demands, requests or approvals to HR&A: HR&A 700 South Flower Street, Suite 2995 Los Angeles, California, USA Attention: Paul J. Silvern, Vice President psilvern@hraadvisors.com Re: Contract No. 108300 (CSS) 7. Independent Parties. Both parties to this Agreement will be acting in an independent capacity and not as agents, employees, partners, or joint venturers of one another. Neither the City nor its officers or employees will have any control over the conduct of HR&A or any of HR&A’s agents, employees, or subconsultants, except as otherwise provided in this Agreement. 8. Integrated Contract. This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties. Any preliminary negotiations and agreements of any kind or nature are merged into this Agreement. No oral agreement or implied covenant may be held to vary the provisions of this Agreement. This Agreement may be modified only by written agreement signed by City and HR&A, and approved as to form by the City Attorney. 9. Insurance. Prior to commencing work, HR&A must procure, maintain and pay for insurance against claims for injuries to persons or damage to property that may arise from or in connection with the performance of the Services by HR&A or HR&A’s agents, representatives, employees or subconsultants for the duration of this DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 252 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) - 3 -   Agreement. HR&A must obtain insurance that, at a minimum, meets the requirements for insurance set forth in Exhibit C, Insurance Requirements and Verifications. 10. Defense and Indemnification. 10.1 Indemnification. As to HR&A’s Services produced under this Agreement, HR&A agrees to defend, indemnify, protect, and hold harmless the City, its agents, officers, boards and commissions, and employees (collectively, “City”) from and against any and all liability, claims, demands, damages, or costs, including but not limited to attorney’s fees, or payments for injury to any person or property (collectively, “Losses”) caused or claimed to be caused by the acts, errors and/or omissions of HR&A, or HR&A’s employees, agents, officers, and subconsultants. HR&A’s responsibilities under this Section 10.1 include liability arising from, connected with, caused by, or claimed to be caused by the active or passive negligent acts or omissions of the City, which may be in combination with the acts or omissions of HR&A, its employees, agents or officers, or subconsultants; provided, however, that HR&A’s duty to defend, indemnify, protect and hold harmless shall not include any Losses arising from the sole negligence or willful misconduct of the City. Notwithstanding HR&A’s obligation to defend City hereunder, City has the right to conduct its own defense and seek reimbursement for reasonable costs of defense from HR&A, if City chooses to do so. 10.2 Enforcement Costs. HR&A agrees to pay any and all costs the City incurs enforcing the indemnity, defense and hold harmless provisions set forth in Section 10.1. 11. Prohibition Against Transfers. 11.1 HR&A may not assign, hypothecate, or transfer this Agreement or any interest therein directly or indirectly, by operation of law or otherwise without the prior written consent of City. Any attempt to do so without the City’s consent will be null and void, and any assignee, hypothecatee or transferee acquires no right or interest by reason of such attempted assignment, hypothecation or transfer. 11.2 The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of HR&A or of any general partner or joint venturer or syndicate member of HR&A, if a partnership or joint venture or syndicate exists, which results in changing the control of HR&A, will be construed as an assignment of this Agreement. Control means 50% or more of the voting power of the corporation. DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 253 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) - 4 -   12. Permits and Licenses. HR&A, at its sole expense, must obtain and maintain during the term of this Agreement all required business and professional permits, licenses and certificates. 13. Waiver. A waiver of any breach of this Agreement may not be deemed a waiver of any subsequent breach of the same or any other term, covenant, or condition of this Agreement. 14. Default and Termination. 14.1 If HR&A fails or refuses to perform any of the provisions of this Agreement, and if the default is not cured within a period of five days after the City’s written notice of default specifying the nature of the default, City may immediately terminate this Agreement by written notice to HR&A. 14.2 The City has the option, at its sole discretion and without cause, of terminating this Agreement by giving ten days’ written notice to HR&A. Upon termination of this Agreement, City will pay HR&A any compensation earned and unpaid up to the effective date of termination. 15. Compliance with Law. HR&A must comply with all laws of the State of California and the United States, and all ordinances, rules, and regulations enacted or issued by City. 16. Discrimination. HR&A may not discriminate in the provision of services hereunder because of race, color, religion, national origin, ancestry, sex, age, sexual orientation, marital status, AIDS or disability. 17. Nuisance. HR&A may not maintain, commit, or permit the maintenance or commission of any nuisance in connection with the performance of services under this Agreement. 18. Records. 18.1 HR&A must maintain complete and accurate records with respect to costs, expenses, receipts and other such information required by the City for any services provided where compensation is on the basis of hourly rates, subconsultant costs, or other direct costs. HR&A must keep the records, together with supporting documents, separate from other documents and records and maintain them for a period of three years after receipt of final payment. 18.2 HR&A must maintain records in sufficient detail to permit an evaluation of the Services and in accordance with generally accepted accounting principles. HR&A must clearly identify all records and make them readily accessible to the City. At the City’s request, HR&A must provide records in an electronic format and, if necessary, access to any proprietary software to view such electronic records. DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 254 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) - 5 -   18.3 HR&A must allow the City to have free access to HR&A’s books and records and to inspect all work, data, documents, proceedings and activities related to this Agreement. The City has the right to examine or audit HR&A’s records, and HR&A agrees to cooperate with any examination or audit of its records. If a City audit discloses an error of 5% or more in information reported by HR&A, HR&A agrees to pay the cost of the City’s audit computed on the basis of four times the direct payroll of the audit staff completing the audit and audit report. 19. Work Product; Reports. 19.1 Any work product prepared or caused to be prepared by HR&A or any subconsultant for this Agreement will be the exclusive property of City. No work product given to or prepared by HR&A or any subconsultant pursuant to this Agreement may be made available to any individual or organization by HR&A without prior written approval by City. 19.2 At the City’s request, HR&A must furnish reports concerning the status of the Services. 20. Standard of Care. HR&A agrees to provide all Services, including services performed by any subconsultant, in a manner consistent with the level of care and skill ordinarily exercised by members of HR&A’s profession currently practicing in the same locality under similar conditions. 21. Subconsultants. 21.1 If HR&A proposes to have any subconsultant perform any part of the Services, HR&A must submit a request for approval in writing, describing the scope of work to be subcontracted, the name of the proposed subconsultant, and the total price or hourly rates used in preparing an estimated cost for the subconsultant’s services. The City, in its sole discretion, may grant or deny the request. 21.2 HR&A will be responsible for the quality of any subconsultant’s work. Every subcontract or agreement of any kind entered into between HR&A and any subconsultant (or between any subconsultant and others) must contain the following provision: This agreement is consistent with all terms and conditions of the Agreement No. 108300 (CCS) entered into between the City of Santa Monica and HR&A on^^___________. 22. Governing Law. The laws of the State of California, without regard to any choice of law provisions, will govern this Agreement. 23. Venue and Jurisdiction. The City and HR&A agree that the Services will take place in Los Angeles County. Any litigation arising out of this Agreement may only be DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 11/23/2020 5.G.a Packet Pg. 255 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) - 6 -  brought in either the United States District Court, Central District of California, or the Superior Court of California, County of Los Angeles, West District, as appropriate. The parties agree that venue exists in either court, and each party expressly waives any right to transfer to another venue. The parties further agree that either court will have personal jurisdiction over the parties to this Agreement. 24. Survival of Provisions and Obligations. Any provision of this Agreement, which by its nature must be exercised after termination of this Agreement, will survive termination and remain effective for a reasonable time. Any obligation that accrued prior to termination of this Agreement will survive termination of this Agreement. 25. Exhibits. The following exhibits are incorporated by reference into this Agreement as though fully set forth herein. Exhibit A Scope of Services Exhibit B Budget Exhibit C Insurance Requirements In witness whereof, the parties have caused this Agreement to be executed the day and year first above written. ATTEST: ______________________________ DENISE ANDERSON-WARREN City Clerk APPROVED AS TO FORM: ______________________________ LANE DILG City Attorney CITY OF SANTA MONICA, a municipal corporation By: ______________________________ RICK COLE City Manager ABC Corporation #VENDOR By: ________________________________ DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E George Cardona Interim City Attorney 11/19/2020 Paul J. Silvern, Vice President HR&A Advisors, Inc. Paul J. Silvern 11/19/2020 11/23/2020 Lane Dilg Interim City ManagerCity Clerk Denise Anderson-Warren 11/30/2020 5.G.a Packet Pg. 256 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) Exhibit A Scope of Services DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 257 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) New York | Dallas | Los Angeles | Raleigh | Washington DC Revised: October 21, 2020 via email to: jing.yeo@smgov.net Jing Yeo Planning Manager Community Development Dept. City Hall, Room 212 1685 Main Street Santa Monica, CA 90404 Re: Proposal to Update 2019 AHPP Analysis and Analyze New Prototypes in Additional Commercial Areas Dear Jing: Per your request, HR&A Advisors, Inc. (HR&A) is pleased to provide this proposal to provide additional prototype testing to determine whether increased development standards and/or new affordable housing requirements (i.e., in terms of percentages, unit mix and affordability levels) can accelerate development of mixed-income housing. This effort will include updating feasibility analysis for 14 prototypes from our previous analysis, modelling 14 new prototypes in additional commercial areas, and updating real estate market and construction cost assumptions for selected market areas. Similar to previous analysis completed by HR&A, the assignment involves empirical testing of prototypical private developments to establish the financially-feasible limits of modified affordable housing requirements and development fees, utilizing static pro forma financial feasibility Excel models to test the developer investment return implications of revised affordable housing requirements on prototypical developments. The assignment is also similar to a financial feasibility analysis that we are currently completing for the Los Angeles City Planning Department, wherein our analytic model was re-designed to evaluate the development capacity (in terms of incremental stories or FAR) that would be required to support Transit- Oriented Communities affordability percentages and income levels in Downtown Los Angeles. Our proposed approach to the new assignment will build on these prior efforts. PROPOSED SCOPE OF WORK HR&A will undertake the following tasks in a generally sequential order: Task 1. Kick-off Meeting and Discussion About Modeling Assumptions. HR&A will meet with City staff to discuss various elements of the analysis, obtain certain data and clarify certain modeling assumptions. These include, but are not necessarily limited to the following:  Confirm the general objectives for performing this analysis and review the scope and schedule for completing it;  Confirm communication protocols between HR&A and the City staff team, including the City Attorney’s office;  Confirm the 24 prototypical mixed-use development scenarios for Bergamot, Boulevards, Lincoln, Downtown, General Commercial - Santa Monica Boulevard and Neighborhood Commercial (see Task 2 for the list of prototypes to be confirmed), including a range of flexibility in terms of changes to existing Tier structures, FAR, or height; DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 258 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) HR&A Advisors, Inc. Proposal re: Santa Monica Community Benefit Fee Structures | 2  Confirm that HR&A will first test each prototype with the exact affordable housing requirements in the Zoning Code (i.e., base case) and then a set of requirements (i.e., household income levels, minimum unit sizes and affordable unit mix) provided by City staff;  Confirm that HR&A should use FY 2020-21 City development impact fee, permit charges and other fee schedules for development costs, and obtain the applicable schedules of all such fees, including recently approved standards for Tier 2 and Tier 3 developments;  Obtain the most current AHPP household income, maximum rent and maximum sale price schedule; and  Discuss what types of City land use permits and environmental documentation should be assumed for each prototype (if different), and their related average approval schedules and costs; and  Discuss alternative means to improve construction cost estimates for the prototypes. Deliverables: Meeting agenda and meeting summary memo. Task 2. Develop the Specifications of All Development Prototypes. Based on the results of the above meeting, HR&A will collaborate with City Planning staff to prepare a general profile for each of 24 prototypical development scenarios, including total site area (if different from 15,000 s.f. for the Boulevards), acceptable range of gross building floor area, total net floor area and related building efficiency factors, net floor area by land use, acceptable range of total building height and number of stories, average unit sizes for both market rate and affordable units, dwelling unit counts by type, parking counts and number of subterranean levels, among other modeling assumptions. This analysis will vary from our previous analyses, assuming concurrence from City staff, wherein we will design our model to test incremental development capacity (in terms of additional floors/FAR of multifamily housing and additional floors of subterranean parking) within a reasonable set of parameters (i.e., setbacks, construction type, etc.). These specifications should reflect all recent changes to development standards approved by the City Council. This will allow HR&A to rapidly and incrementally test additional development capacity required to support certain affordable housing requirements while maintaining acceptable developer profit margin to incentivize development. Analyze a total of 24 prototypes including:  Bergamot Area Plan – Mixed-Use CD and Bergamot Transit Village  Boulevards – Mixes Use Boulevard – Wilshire and Mixed-Use Boulevard Low - Santa Monica  General Commercial – Lincoln  R2/R3 Zones  Downtown – Transit Adjacent and Neighborhood Village  General Commercial – Santa Monica Boulevard  Neighborhood Commercial Deliverable: Final specification of physical characteristics and related assumptions for all prototypes. Task 3. Update Current Real Estate Market Conditions for the Most Sensitive Financial Feasibility Modeling Assumptions. This includes updating relevant assumptions used in prior related HR&A financial feasibility modeling to pre- COVID-19 conditions, specifically for up to 5 submarkets (potentially including Downtown, the Boulevards, Bergamot, Ocean Park, and Montana). In doing so HR&A will utilize a variety of third-party data sources available to HR&A, including Co-star, Reis, quarterly real estate market surveys prepared by several real estate brokerages and other real estate services that include either Santa Monica-specific or more general Westside rents, absorption and vacancy data, operating expenses, income capitalization rates, and project financing terms and pricing. Optional Task 12 below addresses various sensitivities that HR&A can run to demonstrate the potential impact of long-term impacts of the COVID-19 pandemic. DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 259 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) HR&A Advisors, Inc. Proposal re: Santa Monica Community Benefit Fee Structures | 3 HR&A will consult with local developers and architects to confirm the development cost assumptions during the course of the analytic process, as described in Task 10. HR&A can subcontract with an independent professional construction cost estimator to provide assumptions about above-grade and below grade hard construction costs for each prototype if required. To support this work, City staff will supply HR&A with an updated inventory of recent multi-family projects that have been completed or still have active applications under review during the past five years, as applicable to all prototypes. Deliverable: The assumptions derived from this Task will be incorporated into the deliverables for Task 4. Task 4. Prepare Financial Feasibility Pro Forma Models for Each Prototype. HR&A will first prepare two base case financial feasibility models for each retail/apartment prototype assuming the Tier 2 affordable housing options most frequently used by developers (i.e., first at 7.5% of the units affordable to 30% income households; then 15% affordable to 50% income households; each using the unit mix by bedrooms per unit and other requirements specified in the Zoning Code). HR&A will then prepare an analysis case for each prototype using a new set of affordable housing requirements determined through discussion with City staff. These feasibility models (both base cases and analysis case) will resemble the type of Excel workbook pro formas prepared by HR&A for previous analyses of this type. Central to this analysis are the feasibility thresholds employed. Again, building on previous work of this type, HR&A will use two different, but related measures, both of which would have to be met for the results to be considered “financially feasible.” These are: 1) Return on Total Development Cost1, which is calculated as Net Operating Income divided by Total Development Cost, the result of which should be at least one to two percentage points above the weighted average of the income capitalization rates for each land use in the prototype; and 2) Developer Profit Margin, which is calculated as Capitalized Project Value minus Total Development Cost, the result of which should be at least equal to 10 percent of net Capitalized Project Value. The pro forma models will be designed in a way that will make it relatively easy to test the implications of changing the key elements of a set of assumed affordable housing standards (i.e., percentage requirements by income level and unit mix), should any of the initial analysis cases prove to be financially infeasible. But HR&A will not make any such changes until the feasibility results for the base cases and initial analysis cases have been reported to City staff. Deliverable: Pro forma model results for each prototype and associated affordable housing assumptions. Task 5. Document 100% Affordable Housing Opportunities and Constraints. HR&A will review and document development standards applicable to 100% affordable housing projects across the City, and will engage non-profit affordable housing developers to determine the impact of development standards on the feasibility of affordable housing projects. Because 100% affordable housing projects, which are typically funded through the use of Low-Income Housing Tax Credits (“LIHTC”) and other sources, are not well-suited to conventional financial feasibility pro forma analysis, HR&A will develop a list of opportunities and constraints for affordable housing projects Citywide and within individual zoning districts. This documentation will be focused on the impact of development standards and physical location on the availability of land, pursuit of funding/financing, and other relevant criteria. These findings will be summarized in the deliverable associated with Task 6. 1 Assuming rental projects only. Analysis for condo scenarios will require additional budget depending on the scope. DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 260 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) HR&A Advisors, Inc. Proposal re: Santa Monica Community Benefit Fee Structures | 4 Task 6. Preliminary Results Briefing. At the end of the preceding task, HR&A will prepare a presentation-style briefing summary to support a discussion meeting with City staff. The purposes of this meeting are to report on: (1) the degree to which the prototypes are financially feasible; (2) the degree to which any new affordable housing requirements appear to be feasible; (3) if not, what adjustments to the modeling should be pursued to achieve financial feasibility, and in what order of policy priority (i.e., percentages of affordable units, affordability level and unit mix). Deliverable: Briefing book summarizing pro forma modeling approach, assumptions and preliminary results. Task 7. (Optional) Allowance for Further Feasibility Testing. This is an as-needed task for any further sensitivity testing that may be required, should the initial analysis case results indicate that modifications of new affordable housing requirements or development standards would be needed to achieve financial feasibility for one or more of the prototypes. A general schedule and budget allowance are included for this task, but it may require augmentation if more than one round of sensitivity testing is required. Deliverable: Additional pro forma model results, as needed. Task 8. (Optional) Revised Results Briefing. This is another as-needed task for summarizing and discussing the results with City staff about any needed sensitivity testing as described above. Deliverable: Updated briefing book summarizing any additional pro forma modeling. Task 9. Memorandum Report. Once the analysis has been finalized and all questions and issues of concern to City staff have been addressed, HR&A will prepare a memorandum report describing the analysis approach, assumptions, findings and conclusions. The memorandum will include a concise executive summary, a narrative explanation of approach and key assumptions, and conclusions. It will also include attachments with the output from the financial feasibility models. The memorandum will be prepared first in draft for review and comment by the City staff project team, and then put into final form after considering any comments on the draft. HR&A acknowledges that all preliminary and revised analysis, internal briefings and other communications with City staff will be treated as strictly confidential, and possibly subject to attorney-client privilege, until City staff approves public release of the Final Memorandum Report. Deliverables: Draft and Final Memorandum Report. Task 10. Stakeholder Briefings. This task consists of: up to two roundtable briefings with developers (including non-profits), architects and property owners, which may be convened by the Santa Monica Area Chamber of Commerce, to provide input on key assumptions and to review HR&A’s draft findings, conclusions and recommendations; and up to two meetings with other local stakeholders to be determined in coordination with City staff, also to review HR&A’s draft findings, conclusions and recommendations. The specific schedule and format for these meetings will be determined after consultation with City staff but are intended to occur before Task 10 (Public Presentations). Deliverables: Meeting presentation briefing materials and meeting results summary memos. Task 11. Public Presentations. This task is an allowance for HR&A to appear at public meetings to present and discuss the results of this analysis. For budgeting purposes, the schedule and budget assume two meetings with the Housing DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 261 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) HR&A Advisors, Inc. Proposal re: Santa Monica Community Benefit Fee Structures | 5 Commission, two with the Planning Commission and two with the City Council, including time to prepare materials for the meetings, contribute to relevant sections of staff reports and PowerPoint presentations, and participate in the meetings. The schedule for these meetings will be determined in consultation with City staff, but it is intended that one set of public meetings will occur prior to Task 8 (Memorandum Report) and one after Task 9 (Stakeholder Briefings). Deliverables: HR&A presentation briefing materials and, as needed, written comments on companion City staff presentation. Task 12. (Optional) COVID-19 Updates Because our modeling will not yet account for the full near-term impacts of COVID-19 on the real estate market, we can update our analysis at a later date once the longer-term impacts are clear, or run subsequent sensitivity models. This task would assess the impact of various changes to real estate revenues, financing costs and construction costs on supportable levels of affordable housing. PROPOSED STAFFING AND SCHEDULE All the work described above will be prepared by qualified HR&A professional staff working under the direct supervision of Paul J. Silvern, Vice President. This includes Thomas Jansen, a Principal (as Project Manager), Ada Peng, a Senior Analyst and Jenna Gray, a Research Analyst. Subject to further discussion with City staff, subsequent decisions about whether multiple rounds of sensitivity testing may be required, and assuming timely City staff input during the progress of the work, HR&A will complete the above-described tasks on approximately the following schedule, including overlaps between individual tasks to the degree possible, but also allowing for the further feasibility testing and related discussion tasks, if needed: Task Cumulative Time Task 1. Kick-off Meeting Week 1 Task 2. Specify 24 Prototypes Week 4 Task 3. Update Market Assumptions Week 6 Task 4. Base Case & Initial Analysis Case Feasibility Models Week 9 Task 5. Document 100% Affordable Housing Opportunities & Constraints Week 9 Task 6. Preliminary Results Briefing & Meeting Week 10 Task 7. Allowance for Further Feasibility Testing Week 12 Task 8. Allowance for Revised Results Briefing Week 14 Task 9. Draft & Final Memorandum Report To Be Determined Task 10. Stakeholder Briefings To Be Determined Task 11. Presentations to Commissions & City Council To Be Determined Task 12. COIVD-19 Updates To Be Determined PROPOSED BUDGET Based on our experience with comparable projects, and taking into account certain economies available from our previous related assignments for the City, we estimate that the completion of the above scope of work will require a budget of $219,000.00, excluding customary reimbursable expenses (which we expect to be limited). This total is allocated among individual tasks approximately as follows. DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 262 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) HR&A Advisors, Inc. Proposal re: Santa Monica Community Benefit Fee Structures | 6 Task Cost Task 1. Kick-off Meeting $4,000 Task 2. Specify 24 Prototypes $26,000 Task 3. Update Market Assumptions $24,000 Task 4. Base Case & Initial Analysis Case Feasibility Models $50,000 Task 5. Document 100% A.H Opportunities & Constraints $5,000 Task 6. Preliminary Results Briefing & Meeting $8,000 Task 7. Allowance for Further Feasibility Testing $24,000 Task 8. Allowance for Revised Results Briefing $8,000 Task 9. Draft & Final Memorandum Report $12,000 Task 10. Stakeholder Briefings $8,000 Task 11. Presentations to Commissions & City Council $20,000 Task 12. COVID-19 Updates $15,000 Subtotal Fees $204,000 Contingency $15,000 Total $219,000 The proposed budget includes a roughly 7.5 percent contingency, based on our experience that these kinds of analyses frequently require mid-term changes in assumptions that require additional work beyond the original scope of the assignment. Customary expenses should be limited to third party data acquisition and local travel to meetings; these are charged at their direct cost to HR&A without mark-up. Any additional services that may be requested can be provided on a time and materials basis, per the hourly rate schedules shown in Attachment A to this proposal letter, or on a mutually agreeable fixed fee basis, as City staff may prefer. We propose to invoice the City on a monthly basis for the percentage of each task completed during the prior month. ********************** We hope you find the foregoing proposal responsive to the City’s needs. Once finalized, we assume City staff will prepare a standard City professional services contract using this proposal letter to define the scope of work, schedule and compensation. We are very familiar with the City contract, and related City contract requirements, and take no exceptions to their terms or conditions. We can be available to discuss this proposal with you and your colleagues as needed to clarify any issues or discuss any amendments that may be required. We look forward to the possibility of working with you and the other members of the City project team on this assignment. Sincerely, PAUL J. SILVERN, Vice President Attachment A: 2020 HR&A Hourly Rate Schedule for Public Sector and Non-Profit Clients DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 263 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) HR&A Advisors, Inc. Proposal re: Santa Monica Community Benefit Fee Structures | 7 Attachment A HR&A Advisors, Inc. 2020 Hourly Rate Schedule for Public Sector & Non-Profit Clients Hourly rates for HR&A staff are as follows: Personnel Hourly Rate Chair / Vice Chair $ 535 Partner $ 395 Principal $ 350 Director $ 315 Senior Analyst $ 240 Analyst $ 190 Research Analyst $ 150 Admin $ 105 HR&A bills for customary out-of-pocket expenses (e.g., travel costs, mass reproduction, specialized graphics, long-distance telephone, messenger and overnight delivery) at their direct cost to HR&A without mark-up. Depositions, mediations, arbitration hearing or trial testimony hours are billed at time and one-half. DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 264 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) Exhibit B Budget DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 265 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) Exhibit C Insurance Requirements and Verifications Consultant shall procure and maintain for the duration of the Agreement insurance against claims for injuries to persons or damages to property that may arise from or in connection with the performance of the work hereunder by the Consultant, its agents, representatives, employees or subcontractors. Minimum Scope and Limits of Insurance Coverage shall be at least as broad as: 1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal and advertising injury, with limits of no less than $1,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (Insurance Services Office Form CG 25 04) or the general aggregate limit shall be twice the required occurrence limit. 2. Automobile Liability: Insurance Services Office Form CA 00 01 covering Code 1 (any auto), or if Consultant has no owned autos, Code 8 (hired) and Code 9 (non-owned), with limits of no less than $1,000,000 per accident for bodily injury and property damage. 3. Workers’ Compensation: Workers’ Compensation insurance as required by the State of California, with Statutory Limits and Employers’ Liability Insurance with limits of no less than $1,000,000 per accident for bodily injury or disease (see footnote #1). 4. Professional Liability: Insurance appropriate to the Consultant’s profession with limits of no less than $1,000,000 per occurrence or claim/$2,000,000 in the annual aggregate. If the Consultant maintains broader coverage or higher limits than the minimums shown above, the City of Santa Monica requires and shall be entitled to any broader coverage and higher limits maintained by the Contractor. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City of Santa Monica. Other Insurance Provisions 1. The insurance policies are to contain, or be endorsed to contain, the following provisions: a. Additional Insured Status: The City of Santa Monica, its officers, officials, employees and volunteers are to be covered as additional insureds on the CGL DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 266 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) policy with respect to liability arising out of work or operations performed by or on behalf of Consultant including materials, parts, or equipment furnished in connection with such work or operations. CGL coverage can be provided in the form of an endorsement to the Consultant’s insurance (at least as broad as Insurance Services Office Form CG 20 10 11 85, or if not available, through the addition of a combination of (1) CG 20 10, CG 20 26, CG 20 33, or CG 20 38 and (2) CG 20 37). b. Primary Coverage: For any claims related to this Agreement, the Consultant’s insurance shall be primary coverage at least as broad as Insurance Services Offices Form CG 20 01 04 13 as respects the City of Santa Monica, its officers, officials, employees and volunteers. Any insurance or self-insurance maintained by the City of Santa Monica, its officers, officials, employees or volunteers shall be in excess of the Consultant’s insurance and shall not contribute with it. c. Notice of Cancellation: Each insurance policy required herein shall state that coverage shall not be cancelled except after notice has been given to the City of Santa Monica. d. Waiver of Subrogation: Consultant hereby grants to the City of Santa Monica a waiver of any right of subrogation which any insurer of said Consultant may acquire against the City of Santa Monica by virtue of payment of any loss. Consultant agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City of Santa Monica has received a waiver of subrogation endorsement from the insurer. Self-Insured Retentions Self-insured retentions must be declared to and approved by the City of Santa Monica. The City of Santa Monica may require the Consultant to purchase coverage with a lower retention or provide satisfactory proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City of Santa Monica. Acceptability of Insurers Insurance is to be placed with insurers authorized to conduct business in California with a current A.M. Best rating of no less than A:VII, unless otherwise acceptable to the City of Santa Monica. Claims Made Policies 1. If the Professional Liability policy provides “claims made” coverage: DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 267 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) a. The Retroactive Date must be shown and must be before the date of this Agreement or the start of work. b. The insurance must be maintained, and evidence of insurance must be provided for at least 5 years after completion of work. c. If the policy is cancelled or not renewed, and not replaced with another “claims made” policy form with a Retroactive Date prior to the effective Agreement date, the Consultant must purchase “extended reporting” coverage for a minimum of 5 years after completion of work. Verification of Coverage Consultant shall furnish the City of Santa Monica with original certificates and amendatory endorsements (or copies of the applicable policy language effecting coverage provided by this clause). All certificates and endorsements are to be received and approved by the City of Santa Monica before work commences. However, failure to obtain required documents prior to the work beginning shall not waive the Consultant’s obligation to provide them. The City of Santa Monica reserves the right to require complete, certified copies of all required insurance policies, including the endorsements required herein, at any time. Failure to Maintain Insurance Coverage If Consultant, for any reason, fails to maintain insurance coverage which is required pursuant to this Agreement, the same shall be deemed a material breach of contract. The City of Santa Monica, at its sole option, may terminate this Agreement and obtain damages from the Consultant resulting from said breach. Subcontractors Consultant shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein. All exceptions must be approved in writing by the Risk Manager. Footnotes # 1: Workers’ Compensation insurance coverage is not required if the Consultant does not have employees. The Consultant must, however, execute the City’s Workers’ Compensation Coverage Exemption Declaration Form. DocuSign Envelope ID: E40D9E3E-2795-4CBE-85C6-23137938095E 5.G.a Packet Pg. 268 Attachment: HR&A Original Agreement (5747 : Fourth Modification to HR&A Contract) 1 FIRST MODIFICATION OF AGREEMENT NO. 108300 (CCS) This First Modification of Agreement Number 108300 (CCS) (“First Modification”), entered into as of _________________(“Execution Date”), by and between the City of Santa Monica, a municipal corporation (“City”), and HR&A Advisors, Inc (“HR&A”) is made with reference to the following: RECITALS A. On or about November 23, 2020, the City and HR&A entered into Agreement Number 108300 (CCS) for professional services to support drafting and approval of the pending Housing Element Update (“Original Agreement”). B. The City and HR&A desire to modify the Original Agreement to extend the con- tract term, include additional services to be performed by HR&A, and increase the contract price to pay for those additional services. TERMS AND CONDITIONS Now, therefore, the undersigned parties do hereby mutually agree to modify the Origi- nal Agreement as follows: 1. Section 1 of the Original Agreement entitled “Term” shall be deleted in its entirety and replaced with the following paragraph: Term. This Agreement begins on the Execution Date and terminates on June 30, 2022, unless terminated earlier as set forth in the Original Agreement or extended by the parties in writing. 2. Section 2 of the Original Agreement entitled “HR&A Services” shall be modified by adding the following paragraph: Additional Services. HR&A will perform all of the additional services (“Additional Services”) described in Exhibit A-1, Scope of Services and Budget. HR&A will complete the Additional Services in accordance with Exhibit A-1. 3. Section 4 of the Original Agreement entitled “Compensation” shall be modified by adding the following paragraph: Compensation. The City will compensate HR&A for the Additional Services in an amount not to exceed $39,900.00, as set forth in Exhibit A-1. The total contract price for services pursuant to the Original Agreement and this First Modification shall not exceed $258,900.00. 4. Exhibit A-1 is attached hereto and incorporated herein by this reference. DocuSign Envelope ID: C2B2F9C2-38F8-400B-ABC8-B4117AA919C5 8/10/2021 5.G.b Packet Pg. 269 Attachment: HR&A Agreement First Modification (5747 : Fourth Modification to HR&A Contract) 2 5. Except as expressly modified by this First Modification, all other terms and condi- tions of the Original Agreement shall be and remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this First Modification as of the date and year first written above. ATTEST: ______________________________ DENISE ANDERSON-WARREN City Clerk APPROVED AS TO FORM: ______________________________ LANE DILG City Attorney CITY OF SANTA MONICA, a municipal corporation By: ______________________________ RICK COLE City Manager HR&A Corporation #VENDOR By: _______________________________ DocuSign Envelope ID: C2B2F9C2-38F8-400B-ABC8-B4117AA919C5 Interim City Attorney George S. Cardona 8/10/2021 HR&A Advisors, Inc. Paul J. Silvern, Vice President 8/10/2021 Paul J. Silvern 8/10/2021 John Jalili Interim City Manager 9/7/2021 City Clerk Denise Anderson-Warren 5.G.b Packet Pg. 270 Attachment: HR&A Agreement First Modification (5747 : Fourth Modification to HR&A Contract) 3 Exhibit A-1 Scope of Services and Budget DocuSign Envelope ID: C2B2F9C2-38F8-400B-ABC8-B4117AA919C5 5.G.b Packet Pg. 271 Attachment: HR&A Agreement First Modification (5747 : Fourth Modification to HR&A Contract) New York | Dallas | Los Angeles | Raleigh | Washington DC June 7, 2021 via email to: jing.yeo@smgov.net Jing Yeo Planning Manager Community Development Dept. City Hall, Room 212 1685 Main Street Santa Monica, CA 90404 Re: Additional Services for Housing Element Update Support Dear Jing: Per your request, HR&A Advisors, Inc. (HR&A) is pleased to provide a scope and budget for additional services under Professional Services Agreement #108300 (CCS) entered into as of November 23rd, 2020, by and between the City of Santa Monica (City) and HR&A, to support drafting and approval of the pending Housing Element Update. The additional services include feasibility testing to determine whether increased development standards and/or new affordable housing requirements (i.e., in terms of percentages, unit mix and affordability levels) can accelerate development of mixed-income housing in R-1 neighborhoods. HR&A has already engaged John Kaliski Architects (JKA), Danielian Associates, and MGAC as subconsultants using our contingency as originally budgeted. We are requesting budget authorization to provide this additional support, along with preparation for and participation in additional public meetings. The following sections of this letter present HR&A’s proposed additional services and updated budget to support the City’s Housing Element update. PROPOSED ADDITIONAL SERVICES Task 13: R-1 Diagrams (Reimbursement to JKA and Danielian Associates - $9,900) HR&A will engage John Kaliski Architects and Danielian Architects to develop alternative diagrams illustrating massing prototypes on typical City of Santa Monica R1 parcels of 7,500 Sq. Ft. in size and illustrating the immediate neighborhood context. The development programs for each of the alternatives will be based on program and zoning constraint information developed collaboratively between City staff and HR&A. Deliverables: R-1 diagrams and zoning analysis based on eight development scenarios Task 14: Additional Public Meeting Support This task is an allowance for HR&A to prepare for and participate in public meetings to present and discuss the results of HR&A analysis for the Housing Element Update. For budgeting purposes, the schedule and budget assume two meetings with the Housing Commission, two with the Planning Commission and one with the City Council, including time to prepare materials for the meetings, contribute to relevant sections of staff reports and PowerPoint presentations, and participate in the meetings. The schedule for these meetings will be determined in consultation with City staff. Deliverables: HR&A presentation briefing materials and, as needed, written comments on companion City staff presentation. DocuSign Envelope ID: C2B2F9C2-38F8-400B-ABC8-B4117AA919C5 5.G.b Packet Pg. 272 Attachment: HR&A Agreement First Modification (5747 : Fourth Modification to HR&A Contract) HR&A Advisors, Inc. Proposal re: Santa Monica AHPP Update and Housing Element Support | 2 PROPOSED REVISED BUDGET HR&A will complete the additional services with a revised contract total amount of $258,900 allocated by task approximately as follows: TASKS BUDGET TASK 1: KICK-OFF MEETING 4,000 TASK 2: SPECIFY 24 PROTOTYPES 26,000 TASK 3: UPDATE MARKET ASSUMPTIONS 24,000 TASK 4: BASE CASE AND INITIAL ANALYSIS CASE FEASIBILITY MODELS 50,000 TASK 5: DOCUMENT 100% A.H OPPORTUNITIES AND CONSTRAINTS 5,000 TASK 6: PRELIMINARY RESULTS BRIEFING AND MEETING 8,000 TASK 7: ALLOWANCE FOR FURTHER FEASIBILITY TESTING 24,000 TASK 8: ALLOWANCE FOR REVISED RESULTS BRIEFING 8,000 TASK 9: DRAFT AND FINAL MEMORANDUM REPORT. 12,000 TASK 10: STAKEHOLDER BRIEFINGS 8,000 TASK 11: PRESENTATIONS TO COMMISSIONS & CITY COUNCIL 20,000 TASK 12: COVID-19 UPDATES 15,000 CONTINGENCY (SUBCONTRACTOR SERVICES) 15,000 TOTAL: $219,000 ADDITIONAL SERVICES: TASK 13: R -1 DIAGRAMS 9,900 TASK 14: ADDITIONAL PUBLIC MEETING SUPPORT 30,000 REVISED TOTAL: $258,900 ********************** We hope you find the foregoing proposal responsive to the City’s needs. Once finalized, we assume City staff will amend our existing contract with the revised scope of work and compensation. We can be available to discuss this proposal with you and your colleagues as needed to clarify any issues or discuss any changes that may be required. Sincerely, PAUL J. SILVERN, Vice President DocuSign Envelope ID: C2B2F9C2-38F8-400B-ABC8-B4117AA919C5 5.G.b Packet Pg. 273 Attachment: HR&A Agreement First Modification (5747 : Fourth Modification to HR&A Contract) 1 SECOND MODIFICATION OF AGREEMENT NO. 108300 (CCS) This Second Modification of Agreement Number 108300 (CCS) (“Second Modifica- tion”), entered into as of _________________ (“Execution Date”), by and between the City of Santa Monica, a municipal corporation (“City”), and HR&A Advisors, Inc. (“HR&A”) is made with reference to the following: RECITALS A. On or about September 23, 2020, the City and HR&A entered into Agreement Number 108300 (CCS) for professional services to support drafting and approval of the pending Housing Element update (“Original Agreement”). B. On or about August 10, 2021, the City and HR&A entered into a First Modifica- tion of Agreement Number 108300 (CCS) (“First Modification”) for additional services and to extend the term of the contract. The Original Agreement and First Modification may be referred to collectively herein as “the Agreement.” C. The City and HR&A desire to modify the Agreement to include additional ser- vices to be performed by HR&A, increase the agreement price to pay for those ad- ditional services and extend the term of the agreement. TERMS AND CONDITIONS Now, therefore, the undersigned parties do hereby mutually agree to modify the Agree- ment as follows: 1. Section 1 of the Agreement entitled “Term” shall be deleted in its entirety and re- placed with the following paragraph: Term. This Agreement begins on the Execution Date and terminates on June 30, 2023, unless terminated earlier as set forth in the Agree- ment or extended by the parties in writing. 2. Section 2 of the Agreement entitled “HR&A Services” shall be modified by adding the following paragraph: Additional Services. HR&A will perform and complete all of the addi- tional services (“Additional Services”) described in and in accordance with Exhibit A-2, Scope of Services and Budget. 3. Section 4 of the Agreement entitled “Compensation” shall be modified by adding the following paragraph: Compensation. The City will compensate HR&A for the Additional Services in an amount not to exceed $50,000, as set forth in Exhibit A- 2. The total agreement price for services pursuant to the Original Agreement, the First Modification, and this Second Modification shall not exceed $308,900. 4. Exhibit A-2 is attached hereto and incorporated herein by this reference. DocuSign Envelope ID: C653D505-FE4B-4228-ACBF-8E27073A1A71 7/14/2022 5.G.c Packet Pg. 274 Attachment: HR&A Agreement Second Modification (5747 : Fourth Modification to HR&A Contract) 2 5. Execution in Counterparts. This Second Modification may be executed in coun- terparts with the same effect as if both parties hereto had executed the same docu- ment. All counterparts shall be construed together and shall constitute a single modification. Any signature to this Second Modification transmitted electronically through DocuSign or PDF shall be deemed an original signature and be binding upon the parties hereto (it being agreed that such electronic signature shall have the same force and effect as an original signature). 6. Except as expressly modified by this Second Modification, all other terms and con- ditions of the Agreement shall be and remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Second Modification as of the date and year first written above. ATTEST: ______________________________ DENISE ANDERSON-WARREN City Clerk APPROVED AS TO FORM: ______________________________ LANE DILG City Attorney CITY OF SANTA MONICA, a municipal corporation By: ______________________________ RICK COLE City Manager ABC Corporation #VENDOR By: _______________________________ DocuSign Envelope ID: C653D505-FE4B-4228-ACBF-8E27073A1A71 7/12/2022 City Attorney DOUGLAS SLOAN 7/12/2022 Paul J. Silvern, Vice President Paul J. Silvern HR&A Advisors, Inc. City Manager 7/14/2022 David White City Clerk 7/19/2022 Denise Anderson-Warren 5.G.c Packet Pg. 275 Attachment: HR&A Agreement Second Modification (5747 : Fourth Modification to HR&A Contract) 3 Exhibit A-2 Scope of Services and Budget DocuSign Envelope ID: C653D505-FE4B-4228-ACBF-8E27073A1A71 5.G.c Packet Pg. 276 Attachment: HR&A Agreement Second Modification (5747 : Fourth Modification to HR&A Contract) New York | Dallas | Los Angeles | Raleigh | Washington DC January 19, 2022 via email to: jing.yeo@smgov.net Jing Yeo Planning Manager Community Development Dept. City Hall, Room 212 1685 Main Street, Santa Monica, CA 90404 Re: Additional Services to Update 2019 AHPP Analysis Dear Jing: Per your request, HR&A Advisors, Inc. (HR&A) is pleased to provide additional services and revise our scope of work under the Professional Services Agreement entered into as of November 23rd, 2020, by and between the City of Santa Monica (City) and HR&A. This effort includes updating feasibility analysis for 14 prototypes from our previous analysis, modelling 14 new prototypes in additional commercial areas, and updating real estate market and construction cost assumptions for selected market areas. The new prototypes also include examining the development capacity of city-owned sites and feasibility testing to determine whether increased development standards and/or new affordable housing requirements (i.e., in terms of percentages, unit mix and affordability levels) can accelerate development of mixed-income housing on city- owned sites and R-1 neighborhoods. HR&A has engaged John Kaliski Architects (JKA), Danielian Associates, and MGAC as subconsultants to provide support on design services, cost estimating and public meetings. The following sections of this letter present an overview of HR&A’s proposed additional services and updated budget to update 2019 AHPP Analysis and support your Housing Element update. PROPOSED ADDITIONAL SERVICES Additional Feasibility Testing ($28,020) HR&A will conduct a series of additional feasibility testing for the minimum floor-area-ratio (FAR) and building height with different assumptions regarding affordability mix and requirements, parking requirements, ground floor program, replacement unit requirement, as well as the amount of on-site and off- site affordable units a 20-unit project can support in Commercial Zones with both condo and rental programs. Deliverables: HR&A presentation briefing materials with the results of feasibility testing Allowance for Design Consultant (Reimbursement to JKA - $6,980) The additional services are for John Kaliski Architects (JKA) to review daylight plane requirements and provide illustration of viable options in plan and sections. JKA shall illustrate options in relationship to a maximum of three (3) different lot depths and three (3) height above-grade options. JKA will also review height and FAR requirements in discussion with HR&A based on the results of the feasibility testing. Deliverables: Illustration of daylight plane requirements based on different lot depths and building heights Additional Public Meeting Support ($15,000) This task is an allowance for HR&A to appear at public meetings to present and discuss the results of this analysis. For budgeting purposes, the schedule and budget assume two with the Planning Commission and one with the City Council, including time to prepare materials for the meetings, contribute to relevant sections of staff reports and PowerPoint presentations, and participate in the meetings. The schedule for these meetings will be determined in consultation with City staff. Deliverables: HR&A presentation briefing materials and, as needed, written comments on companion City staff presentation. DocuSign Envelope ID: C653D505-FE4B-4228-ACBF-8E27073A1A71 5.G.c Packet Pg. 277 Attachment: HR&A Agreement Second Modification (5747 : Fourth Modification to HR&A Contract) HR&A Advisors, Inc. Proposal re: Santa Monica AHPP Update and Housing Element Support | 2 PROPOSED REVISED BUDGET HR&A will complete the additional services with a revised contract total amount of $308,900 allocated by task approximately as follows: TASKS BUDGET TASK 1: KICK-OFF MEETING 4,000 TASK 2: SPECIFY 24 PROTOTYPES 26,000 TASK 3: UPDATE MARKET ASSUMPTIONS 24,000 TASK 4: BASE CASE AND INITIAL ANALYSIS CASE FEASIBILITY MODELS 50,000 TASK 5: DOCUMENT 100% A.H OPPORTUNITIES AND CONSTRAINTS 5,000 TASK 6: PRELIMINARY RESULTS BRIEFING AND MEETING 8,000 TASK 7: ALLOWANCE FOR FURTHER FEASIBILITY TESTING 24,000 TASK 8: ALLOWANCE FOR REVISED RESULTS BRIEFING 8,000 TASK 9: DRAFT AND FINAL MEMORANDUM REPORT. 12,000 TASK 10: STAKEHOLDER BRIEFINGS 8,000 TASK 11: PRESENTATIONS TO COMMISSIONS & CITY COUNCIL 20,000 TASK 12: COVID-19 UPDATES 15,000 SUBCONTRACTOR SERVICES 15,000 SUBTOTAL: $219,000 APPROVED ADDITIONAL SERVICES: R -1 DIAGRAMS 9,900 ADDITIONAL PUBLIC MEETING SUPPORT 30,000 SUBTOTAL: $258,900 PROPOSED ADDITIONAL SERVICES: ADDITIONAL FEASIBILITUY TESTING 28,020 ALLOWANCE FOR DESIGN CONSULTANT 6,980 ADDITIONAL PUBLIC MEETING SUPPORT 15,000 REVISED TOTAL: $308,900 ********************** We hope you find the foregoing proposal responsive to the City’s needs. Once finalized, we assume City staff will update our existing contract with the revised scope of work and compensation. We are very familiar with the City contract, and related City contract requirements, and take no exceptions to their terms or conditions. We can be available to discuss this proposal with you and your colleagues as needed to clarify any issues or discuss any amendments that may be required. We look forward to the possibility of working with you and the other members of the City project team on this assignment. Sincerely, PAUL J. SILVERN, Vice President DocuSign Envelope ID: C653D505-FE4B-4228-ACBF-8E27073A1A71 5.G.c Packet Pg. 278 Attachment: HR&A Agreement Second Modification (5747 : Fourth Modification to HR&A Contract) 1 THIRD MODIFICATION OF AGREEMENT NO. 108300 (CCS) This Third Modification of Agreement Number 108300 (CCS) (“Third Modification”), entered into as of _________________ (“Execution Date”), by and between the City of Santa Monica, a municipal corporation (“City”), and HR&A Advisors, Inc. (“HR&A”) is made with reference to the following: RECITALS A. On or about September 23, 2020, the City and HR&A entered into Agreement Number 108300 (CCS) for professional services to support drafting and approval of the pending Housing Element update (“Original Agreement”). B. On or about August 10, 2021, the City and HR&A entered into a First Modification of Agreement Number 108300 (CCS) (“First Modification”) for additional services and to extend the term of the contract. The Original Agreement and First Modification may be referred to collectively herein as “the Agreement.” C. On or about July 14, 2022, the City and HR&A a Second Modification of Agreement Number 108300 (CCS) (“Second Modification”) for additional services and to extend the term of the contract. The Original Agreement, the First Modification, and the Sec- ond Modification may be referred to collectively herein as “the Agreement.” D. The City and HR&A desire to modify the Agreement to include additional services to be performed by HR&A and to increase the agreement price to pay for those additional ser- vices. TERMS AND CONDITIONS Now, therefore, the undersigned parties do hereby mutually agree to modify the Agreement as follows: 1. Section 2 of the Agreement entitled “HR&A Services” shall be modified by adding the following paragraph: Additional Services to Prepare Report Required by Elections Code § 9212. HR&A will perform and complete all of the additional services (“Additional Services”) described in and in accordance with Exhibit A-3, Additional Scope of Services. 2. Section 4 of the Agreement entitled “Compensation” shall be modified by adding the following paragraph: Compensation. The City will compensate HR&A for the Additional Services described in Exhibit A-3 in an amount not to exceed $36,000, as set forth in Exhibit B-3. The total agreement price for services pursuant to the Original Agreement, the First Modification, the Second Modification, and this Third Modification shall not exceed $344,900. 3. Exhibits A-3 and B-3 are attached hereto and incorporated herein by this reference. DocuSign Envelope ID: D1B408F6-B572-4884-A072-69BB876C5546 8/8/2022 5.G.d Packet Pg. 279 Attachment: HR&A Agreement Third Modification (5747 : Fourth Modification to HR&A Contract) 2 4. Execution in Counterparts. This Third Modification may be executed in counterparts with the same effect as if both parties hereto had executed the same document. All coun- terparts shall be construed together and shall constitute a single modification. Any signa- ture to this Third Modification transmitted electronically through DocuSign or PDF shall be deemed an original signature and be binding upon the parties hereto (it being agreed that such electronic signature shall have the same force and effect as an original signature). 5. Except as expressly modified by this Third Modification, all other terms and conditions of the Agreement shall be and remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Third Modification as of the date and year first written above. ATTEST: ______________________________ DENISE ANDERSON-WARREN City Clerk APPROVED AS TO FORM: ______________________________ LANE DILG City Attorney CITY OF SANTA MONICA, a municipal corporation By: ______________________________ RICK COLE City Manager ABC Corporation #VENDO R By: _______________________________ DocuSign Envelope ID: D1B408F6-B572-4884-A072-69BB876C5546 City Attorney 8/6/2022 DOUGLAS SLOAN Paul Silvern Paul J. Silvern, Vice President HR&A Advisors, Inc. 8/6/2022 City Manager David White 8/8/20228/9/2022 City Clerk Denise Anderson-Warren 5.G.d Packet Pg. 280 Attachment: HR&A Agreement Third Modification (5747 : Fourth Modification to HR&A Contract) 3 Exhibit A-3 Additional Scope of Services Prepare a report, as described in Section 9212 of the California Elections Code, on the impact of the citizens’ initiative measure to Establish Added Funding For Homelessness Prevention, Affordable Housing, And Schools By Amending Santa Monica Municipal Code Chapter 6.96 To Provide A Third Tier Transfer Tax Rate For Property Transfers Of $8,000,000 Or More With An Eleven Member Resident Oversight Committee, seeking to qualify and be placed on the November 8, 2022 ballot. Per the elections code, the report could include any or all of the following items: (1) Its fiscal impact. (2) Its effect on the internal consistency of the city’s general and specific plans, including the housing element, the consistency between planning and zoning, and the limitations on city actions under Section 65008 of the Government Code and Chapters 4.2 (commencing with Section 65913) and 4.3 (com- mencing with Section 65915) of Division 1 of Title 7 of the Government Code. (3) Its effect on the use of land, the impact on the availability and location of housing, and the ability of the city to meet its regional housing needs. (4) Its impact on funding for infrastructure of all types, including, but not lim- ited to, transportation, schools, parks, and open space. The report may also discuss whether the measure would be likely to result in increased infrastruc- ture costs or savings including the costs of infrastructure maintenance, to cur- rent residents and businesses. (5) Its impact on the community’s ability to attract and retain business and em- ployment. (6) Its impact on the uses of vacant parcels of land. (7) Its impact on agricultural lands, open space, traffic congestion, existing busi- ness districts, and developed areas designated for revitalization. (8) Any other matters the legislative body requests to be in the report. DocuSign Envelope ID: D1B408F6-B572-4884-A072-69BB876C5546 5.G.d Packet Pg. 281 Attachment: HR&A Agreement Third Modification (5747 : Fourth Modification to HR&A Contract) 4 The report will include the following: • A summary of the tax measure • Background on Real Property Transfer Taxes in the City, other cities, and other ballot measures seeking to accomplish similar goals • Potential revenue estimates based on historical sales trends • Discussion of potential revenue uses and their impacts • Discussion of potential risks and impacts of such a tax measure on the local economy and on the City’s finances The report will be completed in time to be presented to the City Council on July 26, 2022. DocuSign Envelope ID: D1B408F6-B572-4884-A072-69BB876C5546 5.G.d Packet Pg. 282 Attachment: HR&A Agreement Third Modification (5747 : Fourth Modification to HR&A Contract) 5 Exhibit B-3 Budget HR&A Advisors, Inc. shall be compensated for all services as set forth in Exhibit A-3, Scope of Services, in an amount net to exceed $36,000. The total amount of compensation paid to HR&A Advisors, Inc. under the Agreement as modified by this Third Modification shall not exceed $344,900. DocuSign Envelope ID: D1B408F6-B572-4884-A072-69BB876C5546 5.G.d Packet Pg. 283 Attachment: HR&A Agreement Third Modification (5747 : Fourth Modification to HR&A Contract) 5.G.e Packet Pg. 284 Attachment: HR&A Oaks Initiative Form 2023 (5747 : Fourth Modification to HR&A Contract)