HomeMy WebLinkAbout18 RPM Company Contract AmendMEETING DATE:
PREPARED BY:
REQUEST:
Recommendation
STAFF REPORT
PALM DESERT HOUSING AUTHORITY
HOUSING DEPARTMENT
December 16, 2021
Jessica Gonzales, Senior Management Analyst
Approval of an Amendment to Contract No. HA35560 with Ray,
Douglas, Ann, and Patrick, Inc., a.k.a. RPM Company, for
affordable housing compliance/property management services for
the Housing Authority owned properties for a two-year term in an
amount not to exceed $601,560 for the calendar year 2022.
By Minute Motion, that the Authority Board,
1) Approve the Amendment ("Amendment") to Contract No. HA35560 with Ray,
Douglas, Ann, and Patrick, Inc., a.k.a. RPM Company ("RPM"), for affordable
housing compliance/property management services ("Agreement"), effective
January 1, 2022, for the Housing Authority owned properties ("Properties") for a
two-year term in an amount not to exceed $601,560 for the calendar year 2022,
with an allowable increase as noted in the Amendment; and
2) Authorize staff to finalize the Amendment with RPM consistent with the current
terms with non -substantive modifications concurred upon by the Executive
Director and legal counsel; and
3) Authorize the Chairman and/or the Executive Director to execute the Amendment
and any documents necessary to effectuate and implement the actions taken
herewith.
Monies have been included in the FY 2021/2022 approved Palm Desert Housing
Authority's operating budget, in the appropriate Authority account.
Housing Commission Recommendation
The Housing Commission will review this recommendation at its regular meeting of December
1, 2021. Upon request, a verbal report will be provided at the Authority's regular meeting of
December 16, 2021.
Strategic Plan
Although the services solicited do not apply to a specific City of Palm Desert strategic plan goal,
the Amendment to this Agreement will continue to provide the following objectives:
• Comprehensive services at the Palm Desert Housing Authority income -restricted
December 16, 2021 — STAFF REPORT
Housing Authority — Amendment to Contract No. HA35560 with RPM
Page 2 of 3
rental properties.
• Achieve high -quality, cost-effective services.
• Detail expectations for services at the Properties.
Executive Summary
RPM provides the day-to-day management and operation of the Properties, including but not
limited to, record keeping, leasing, overall maintenance, and repairs.
Authority Board approval of this request will authorize an Amendment to extend the Agreement
with RPM Company for an additional 24 months, beginning January 1, 2022, with an increase to
the current management fee of $40 to $45 per unit per month and a 3% increase for calendar
year 2023.
Background Analysis
On November 16, 2016, the Authority Board approved a contract with RPM for the purpose of
providing affordable housing compliance/property management services for the Properties for a
five (5) year term with two (2) two-year extensions. The operations of the Properties are subject
to visual inspections, annual audits and property performance analysis. RPM Company has
been the property management company for Palm Desert Housing Authority since 1998 and
has thirty-nine (39) years of experience in this industry. RPM has been performing satisfactorily
under its current Agreement obligations.
Pursuant to Section 28(d) of the Agreement the parties shall initiate negotiations at least ninety
(90) days prior to the termination for a new agreement for affordable housing
compliance/property management services. With the Properties continuing to be well
maintained and operate within budget, staff initiated negotiations on September 3, 2021, in
accordance with the Agreement, and notified RPM of the intent to Amend the existing
Agreement that terminates on December 31, 2021. This will be the first extension to the original
contract.
The proposed Amendment to RPM will continue to provide same scope of services consisting of
but not limited to the day-to-day operation of fifteen (15) affordable housing properties. Their
duties will include, but not be limited to: compliance with affordable housing rules and
requirements; respond to residents' concerns and complaints; enforcement of house rules and
regulations; application of fair housing laws and enforcement of the Housing Authority's
Administrative Policies and Procedures; qualifying applicants and tenants annually for income
certification; conducting credit, rental, employment, and criminal background checks; all leasing
activities; monitor day-to-day maintenance of the Properties and maintenance contracts;
perform property and unit inspections; collect and disburse funds; provide monthly accounting
reports that include receipts and expenditures; annual financial reporting/filings; occupancy
reporting; and administration of funds ("Services"). The Amendment can be terminated by for
unsatisfactory performance upon a 45-day written notice to Manager; in addition, the Housing
Authority may terminate for convenience with 120 days written notice.
During the parties' negotiations over the Amendment, RPM respectfully requested an increase
to the management fee. Understanding that many industries have been impacted with rising
December 16, 2021 — STAFF REPORT
Housing Authority — Amendment to Contract No. HA35560 with RPM
Page 3 of 3
expenses of doing business, a general inquiry of cities and affordable communities in the local
Coachella Valley was made to quantify the industry standard rate for these Services in this area
and found it ranged from $27-$45 per door. In reviewing properties under the U.S. Department
of Housing and Urban Development (HUD), an acceptable management fee has been
established as $45 per door.
Therefore, to maintain continuity in the quality of services that currently exists, staff
recommends that the Authority Board approve an Amendment to Contract No. HA35560, which
amendment provides compensation for occupied units in the amount of $45 per unit per month
for the calendar year 2022 with an increase of 3% commencing on January 1, 2023. Based on
the current property portfolio, the annual fee for Services is approximately $601,560. This
amount will fluctuate based on downed units, vacancy and rehabilitations.
Fiscal Analysis
The fiscal impact to the Housing Authority of the Amendment extending Agreement is the same
as it is currently. Although there has been a slight increase in the per unit per month cost, staff
believes the not to exceed amount is sufficient to accommodate the needs of the complexes for
the extended contract period. Actual expenditures will be paid from the FY 2021/2022 Monies
have been included in the FY 2021/2022 approved Palm Desert Housing Authority's operating
budget, in the appropriate Authority account.
LEGAL REVIEW DEPT. REVIEW
,ciamicaEJ7
Robert
Hargreaves
Counsel to the
Authority
Morti,h. Al va re'z
Martin Alvarez Deputy
Director of Development
Services Department
FINANCIAL
REVIEW
141oou
Janet M. Moore
Director of Finance
Executive Director, Todd Hileman: I_, Topla itilevu.5w
CONTRACTOR: RPM COMPANY
1420 S. Mills Avenue, Ste. M
Lodi, CA 95240
ATTACHMENTS: Draft Contract No. HA35560, Amendment No. 1
ASSISTANT CITY
MANAGER
Andy Fires tine
Andy Firestine
Assistant City
Manager
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DRAFT FOR DISCUSSION
AMENDMENT NO. 1 TO THE AGREEMENT FOR PROPERTY MANAGEMENT SERVICES
BETWEEN THE PALM DESERT HOUSING AUTHORITY AND RPM COMPANY
CONTRACT NO. HA35560
1. Parties and Date.
This Amendment No. 1 to the AGREEMENT FOR AFFORDABLE HOUSING COMPLIANCE
AND PROPERTY MANAGEMENT SERVICES is made and entered into as of this 1ST day of January,
2022, by and between the PALM DESERT HOUSING AUTHORITY (the "Housing Authority") and
RAY, DOUGLAS, ANN & PATRICK, INC., a California corporation, dba RPM Company Apartment
Management Services with its principal place of business at 1420 S. Mills, Suite M, Lodi, California
95242 (the "Manager"). The Housing Authority and Manager are sometimes individually referred to
as "Party" and collectively as "Parties."
2. Recitals.
2.1 Agreement. The Housing Authority and Manager have entered into an agreement
entitled Affordable Housing Compliance and Property Management Services dated November 10,
2016 ("Agreement") for the purpose of retaining the services of the Manager to provide Affordable
Housing Compliance and Property Management Services for Housing Authority owned properties.
2.2 Amendment. The Housing Authority and the Manager desire to amend the Agreement
to extend the term and increase the manager's compensation.
2.3 Amendment Authority. This Amendment No. 1 is authorized pursuant to Section 28 of
the Agreement.
3. Terms.
3.1 Professional Management Standards and the Administrative Plan. Section 3(f) of the
Agreement is hereby amended in its entirety to read as follows:
Each of the Properties having sixteen (16) or more units shall have a member of Manager's
management staff that shall live on -site provided, however, that the Housing Authority shall not be
responsible for furnishings, equipment, supplies, postage, utilities, telephone, or such other ancillary
costs of the on -site staff without a Housing Authority representative's written approval. The specific
apartment shall be approved by a Housing Authority representative prior to occupancy by staff. All
other Properties having less than sixteen (16) units shall have an emergency contact available seven
days a week, 24 hours a day. Manager's management staff is defined as an on -site property
manager, assistant manager, leasing agent, maintenance technician, porter, housekeeper, or other
responsible person of the Manager's staff.
3.2 Term. Section 6 of the Agreement is hereby amended in its entirety to read as follows:
The Parties agree that the term ("Term") of this Agreement shall be extended for two (2) years,
commencing January 1, 2022 and ending December 31, 2023. Following the extended term of this
Agreement, the Housing Authority may opt to extend the contract for one (1) additional term of two
(2) years and expiring December 31, 2025. Contract extensions may be exercised contingent upon
satisfactory performance and at the sole discretion of the Housing Authority, and in accordance with
the provisions of Section 28 below.
3.3 Insurance for Subcontractors. Section 25(f)(i) of the Agreement is hereby amended
in its entirety to read as follows:
DRAFT FOR DISCUSSION
Contract No.
(1) Subcontractors Performing Recurring Work or Work in Excess
of $5,000. The Manager shall require all subcontractors or other parties which provide (i) recurring
services to the Properties, or (ii) services in excess of $5,000 in a six-month period (a "Major
Subcontractor") to the Properties to provide the same minimum insurance coverage required of the
Manager and Workers Compensation insurance to conform with the requirements of this Section.
Manager agrees to monitor and review all such coverage and assumes all responsibility for ensuring
that such coverage is provided in conformity with the requirements of this Section. The Manager
agrees that upon request, all agreements with Major Subcontractor, or others with whom Manager
contracts with on behalf of the Housing Authority, will be submitted to the Housing Authority for review.
For purposes of this Section a contractor or party hired for the work shall be deemed to be performing
"recurring work" in the event that contractor or party hired performs in excess of a single segregated
or discrete project in any six-month period. The Manager agrees to obtain certificates evidencing
such coverage and to make reasonable efforts to ensure that such coverage is provided as required
herein. Failure of the Housing Authority to request copies of such agreements will not impose any
liability on or constitute waiver by the Housing Authority of its rights hereunder. Manager agrees to
require that no contract used by any Major Subcontractor, or contracts the Manager enters into on
behalf of the Housing Authority, will reserve the right to charge back to the Housing Authority the cost
of insurance required by this Agreement.
(2) Subcontractors Performing Nonrecurring Work or Work Less
Than or Eaual to $5,000. The Manager shall require all subcontractors or other parties which provide
(i) nonrecurring services to the Properties, and (ii) services in an amount not to exceed $5,000 in a
six-month Period (a "Nonrecurring Subcontractor") to provide Commercial General Liability insurance
in the amounts set forth below and Workers Compensation insurance to conform with the
requirements of this Section. For purposes of Section 25, a contractor or party hired for the work
shall be deemed to be providing "nonrecurring work," so long as that contractor or party hired for the
work does not perform more than a single segregated or discrete project in a six-month period. In
the event a Nonrecurring Subcontractor performs more than a single discrete project in a six-month
period or work exceeding $5,000 in value, that Nonrecurring Subcontractor shall lose its status as a
"Nonrecurring Subcontractor" and shall be automatically deemed a "Major Subcontractor". The
liability limits for Nonrecurring Subcontractors shall provide no less than $1,000,000 per occurrence
for all coverages and $2,000,000 in the general aggregate. The Manager agrees to verify such
coverage and make reasonable efforts to ensure that such coverage is provided as required herein.
The Manager agrees to require that no contract used by any Nonrecurring Subcontractor, or contracts
the Manager enters into on behalf of the Housing Authority, will reserve the right to charge back to
the Housing Authority the cost of insurance required by this Agreement. The Manager agrees that
upon request, all agreements with Nonrecurring Subcontractors, or others with whom Manager
contracts on behalf of the Housing Authority, will be submitted to the Housing Authority for review.
Failure of the Housing Authority to request copies of such agreements will not impose any liability on
the Housing Authority nor constitute a waiver of the rights of the Housing Authority hereunder.
3.4 Manager's Compensation. Section 27 of the Agreement is hereby amended in its
entirety to read as follows:
The Manager will be compensated for its services under this Agreement by monthly
management fees. Such fees will be payable on the first day of each month, in arrears, for the
services provided in the prior month for the term of this Agreement. For the purpose of this Section,
the term 'occupied units' shall include those Units which are currently leased, on notice to vacate, or
temporarily vacant due to a move out. The Management Fee ("Fee") shall be calculated monthly
according to the following schedule:
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(a) In the case of occupied units, each such monthly fee shall be in the amount of
$45.00 per Unit per month commencing on January 1, 2022 and an increase of 3% commencing on
January 1, 2023 and every January 1st thereafter for the remainder of the Term of this Agreement
(including contract extensions, if any); except as follows:
(i) For Units where a Notice of Termination of Tenancy ("Notice") was
provided by the tenant as required (30 calendar day notice) and a Unit remains vacant for 30 calendar
days or more, Manager will not be entitled to the monthly fee, except in those circumstances where
the vacancy is the result of the Housing Authority's leasing process for affordable Units.
(ii) For Units where no Notice was given, the tenant chose to `quit' or the
tenant skipped, and a Unit remains vacant for 45 calendar days or more, Manager will not be entitled
to the monthly fee.
(b) In the case of unoccupied Units (except those Units described in Section 27(c-
e) below), each such monthly fee shall be as follows:
(i) $45 per Unit per month for the first four months for Units that have been
determined, in the Housing Authority's sole and absolute discretion, to be `unrentable' or `down' due
to physical condition or damage. Unless otherwise determined by the Housing Authority, Manager is
expected to repair said Units within the four months. If Manager fails to repair Units within the given
time, no fee will be paid until the Unit is available for occupancy.
(ii) No Fee will be paid for Units that are unrentable or down due to action
or inaction by the Manager.
(iii) $45 per Unit per month for those Units specifically identified in Item No.
16 of Exhibit A and any amendments thereto. These Units are typically owned by the Housing
Authority and are considered `for -sale' units. Said Units are to remain unoccupied unless, in the
Housing Authority's sole and absolute discretion it determines otherwise. Manager is expected to
maintain said Units in the same condition as when originally assigned as well as visually inspect,
coordinate services, complete any minor repairs, and respond to emergencies. Fees for these Units
shall be payable monthly in arrears until the date of the close of escrow wherein the ownership is no
longer the Housing Authority or at such time as the Housing Authority notifies Manager otherwise.
(c) In the case of Units that are newly constructed or newly renovated which will
be added to Exhibit A, the Fee shall be $10 per Unit per month commencing at such time as the
construction/renovation has reached 90% completion as determined by the Contractor's billing until
Certificate of Occupancy, in the case of new Units, or Certificate of Completion, in the case of
renovated Units, is issued.
(d) In the case of Units which were `downed', as described in Section 27(b)(i) and
direction has been given to the Manager by the Housing Authority not to repair said Units,
commencing with the fifth month, the Fee shall be reduced to $20 per Unit per month until Manager
is no longer responsible for said Units.
(e) Except as otherwise expressly provided in this Agreement, all employees not
identified in Exhibit F and other overhead expenses of the Manager (including but not limited to costs
of office supplies and equipment, postage, transportation, travel expenses for managerial personnel
and telephone services) will be borne by the Manager. All services for management, accounting, and
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reporting, with exception of the Housing Authority's requested annual audit, shall be borne by the
Manager.
In addition to the Management Fee, the site employees for the Properties shall be paid
based on the Employee Salaries listed on Exhibit F attached hereto and incorporated herein by this
reference.
3.5 Notices. Section 31 of the Agreement is hereby amended in its entirety to read as
follows:
Except as otherwise provided by law, any and all notices or other communications required
or permitted by this Agreement or by law to be served on or given to either Party to this Agreement
by the other Party shall be given in writing. All such notices or other communications shall be deemed
duly served and given when personally delivered to the Party to whom they are so directed, or in lieu
of personal service when deposited in the United States mail, first-class postage prepaid, addressed
to the respective Party as set forth below:
To the Housing Authority:
Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, California 92260-2578
Attention: Martin Alvarez
With a copy to:
Richards, Watson & Gershon
355 South Grand Avenue, 40th Floor
Los Angeles, California 90071-3101
Attention: William L. Strausz
To the Manager:
RPM Company
1420 S. Mills Avenue, Ste. M
Lodi, CA 95240
Attention: Donnie Garibaldi
Either Party may change its address for the purpose of this Section 31 by giving written notice
of the change to the other Party in the manner provided in this Section.
3.6 Continuina Effect of Aareement. Except as amended by this Amendment No. 1, all
other provisions of the Agreement remain in full force and effect and shall govern the actions of the
parties under this Amendment No. 1. From and after the date of this Amendment No. 1, whenever
the term "Agreement" or "Contract" appears in the Agreement, it shall mean the Agreement as
amended by this Amendment No. 1.
3.7 Adeauate Consideration. The Parties hereto irrevocably stipulate and agree that they
have each received adequate and independent consideration for the performance of the obligations
they have undertaken pursuant to this Amendment No. 1.
3.8 Severabilitv. If any portion of this Amendment No. 1 is declared invalid, illegal, or
otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue
in full force and effect.
3.9 Counterparts. This Amendment No. 1 may be executed in duplicate originals, each of
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which is deemed to be an original, but when taken together shall constitute but one and the same
instrument.
[SIGNATURES ON FOLLOWING PAGE]
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Contract No.
SIGNATURE PAGE FOR AMENDMENT NO. 1 TO AFFORDABLE HOUSING COMPLIANCE
AND PROPERTY MANAGEMENT SERVICES BETWEEN THE PALM DESERT HOUSING
AUTHORITY AND RPM COMPANY
IN WITNESS WHEREOF, the Parties have entered into this Amendment No.1 to the
Affordable Housing Compliance and Property Management Services as of the day and year first
above written.
PALM DESERT HOUSING AUTHORITY
Approved By:
L. Todd Hileman, Executive Director
Attested By:
Norma I. Alley, Secretary
Approved As To Form:
By:
Best Best & Krieger LLP
City Attorney
RAY, DOUGLAS, ANN & PATRICK, INC.,
dba RPM Company Apartment
Management Services
Signature
Name
Title
Signature
Name
Title
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Notary Acknowledgment
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy,
or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On . 20, before me, , Notary Public,
personally appeared , who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
I certify under PENALTY OF PERJURY under the laws of
the State of California that the foregoing paragraph is true
and correct.
WITNESS my hand and official seal.
Signature of Notary Public
OPTIONAL
Though the information below is not required by law, it may prove valuable to persons relying on the
document and could prevent fraudulent removal and reattachment of this form to another document.
CAPACITY CLAIMED BY SIGNER
J Individual
❑ Corporate Officer
Partner(s)
Title(s)
Limited
General
Attorney -In -Fact
Trustee(s)
❑ Guardian/Conservator
❑ Other:
Signer is representing:
Name Of Person(s) Or Entity(ies)
Page 7 of 8
DESCRIPTION OF ATTACHED DOCUMENT
Title or Type of Document
Number of Pages
Date of Document
Signer(s) Other Than Named Above
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BBK 72500.00001 \32445060.1
DRAFT FOR DISCUSSION
Contract No.
Notary Acknowledgment
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy,
or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On , 20, before me, , Notary Public,
personally appeared , who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
I certify under PENALTY OF PERJURY under the laws of
the State of California that the foregoing paragraph is true
and correct.
WITNESS my hand and official seal.
Signature of Notary Public
OPTIONAL
Though the information below is not required by law, it may prove valuable to persons relying on the
document and could prevent fraudulent removal and reattachment of this form to another document.
CAPACITY CLAIMED BY SIGNER
▪ Individual
▪ Corporate Officer
Partner(s)
Title(s)
❑ Limited
General
❑ Attorney -In -Fact
❑ Trustee(s)
❑ Guardian/Conservator
• Other:
Signer is representing:
Name Of Person(s) Or Entity(ies)
Page 8 of 8
DESCRIPTION OF ATTACHED DOCUMENT
Title or Type of Document
Number of Pages
Date of Document
Signer(s) Other Than Named Above
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BBK 72500.00001 \32445060.1