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Home My WebLink AboutAGENDA REPORT 2015 1104 CCSA REG ITEM 10E ITEM 10.E. cry OF MOOR?;+Rft,CALIFORNIA City Council Meeting of 11"-1:010/5 MOORPARK CITY COUNCILACTION: qsaciusal • d i AGENDA REPORT o BY: TO: Honorable City Council FROM: Jessica Sandifer, Senior Management Analyst DATE: October 29, 2015 (CC Meeting of 11/04/2015) SUBJECT: Consider Amendment No. 2 to Agreement with Rafeh Real Estate and Investments, Inc. dba Century 21 Hilltop for Additional Broker Services for the First Time Home Buyer (FTHB) Program and Resolution Amending the Fiscal Year 2015/16 Budget BACKGROUND & DISCUSSION The City has utilized the services of Century 21 Hilltop as the real estate broker (Broker) for the FTHB program. The Broker performs a variety of tasks relevant to the purchase of homes through the City's FTHB Program. The Broker provides a connection between the developer's sales office, the buyers, and City staff responsible for managing the program. Some of the tasks the Broker performs include explaining the home buying process to the buyers, meeting with the buyers to review and prepare the purchase agreements, working with escrow and the lender on loan funding, and performing walk- throughs with the buyers. The current agreement and amendment have been signed under the City Manager's authorized signing authority. During the current processing period, the sheer volume of units require broker services that exceed the signing authority of the City Manager. To-date, $48,500 in broker services have been spent under the initial agreement and Amendment No. 1, signed under the City Manager's signing authority. There are 22 additional units that need to be sold under the FTHB program. All units, except one, will be sold by the end of the calendar year. The Broker has been performing the services for the FTHB program at a cost of $2,300 per transaction. This equates to an average of 1.1% of the affordable sales price for the unit. The industry standard is between 3% and 4% of the sales price of the home. The Broker performs the services at a reduced cost since the units are for a part of the City's First Time Home Buyer program. However, due to the current workload and increases in insurance costs, the Broker has requested an increase in the fee to $2,500. The Broker has also requested payment of a cancellation fee. There have been several instances when a purchase contract has been written and the buyer has fallen out of escrow. In these instances the Broker has spent time that they don't get paid for. The Broker has requested a $1,000 cancellation fee to cover these occurrences. Staff is 250 Honorable City Council November 4, 2015 Page 2 supportive of these increased fees. The new cost per closed transaction equates to an average of 1.2% of the affordable sales price for the unit, which is still below the industry average. FISCAL IMPACT The cost of the broker services for the remaining 22 units at the increased price is $55,000. Staff is also requesting an additional $10,000 for cancelled transaction fees. The City receives a processing fee of 2% of the affordable sales cost upon closing from the developer to pay for the City's costs to process the unit through the program. Staff anticipates receiving processing fees of $119,130 for the 22 remaining units. The processing fees received offset the cost of the Broker services. The processing fees are deposited into the City's Affordable Housing Fund and the Broker services are paid out of the affordable housing fund. After paying for the Broker services there is a remaining amount of fees totaling $54,130. Sufficient funds were not included in the FY 2015/16 budget for these services. Staff is requesting a budget amendment from the City Affordable Housing Fund (2201) for $60,000 to fund Broker services for the remaining 22 units and potential cancellations. STAFF RECOMMENDATION (ROLL CALL VOTE) 1. Approve Amendment No. 2 to Agreement with Rafeh Real Estate and Investments, Inc. dba Century 21 Hilltop for additional Broker Services for the First Time Home Buyer (FTHB) Program; and authorize the City Manager to sign the Agreement, subject to final language approval of the City Manager; and 2. Adopt Resolution No. 2015- , amending the Fiscal Year 2015-16 budget for broker services for the First Time Home Buyer Program. Attachment 1. Agreement 2. Resolution No. 2015- 251 ATTACHMENT 1 AMENDMENT NO. 2 TO AGREEMENT BETWEEN THE CITY OF MOORPARK AND RAFEH REAL ESTATE AND INVESTMENTS, INC. DBA CENTURY 21 HILLTOP FOR BROKER SERVICES This Amendment No. 2 to the Agreement between the City of Moorpark, a municipal corporation ("City"), and Rafeh Real Estate and Investments, Inc. dba Century 21 Hilltop, a corporation ("Consultant"), for broker services ("Agreement"), is made and entered into the day of , 2015. RECITALS WHEREAS, on April 14, 2015, the City and Consultant entered into an Agreement to have the Consultant provide broker services; and WHEREAS, on August 25, 2015, the City and Consultant amended the Agreement to increase the compensation for services to be performed by Consultant by a value of twenty-five thousand three hundred dollars ($25,300.00) for a new total contract value of forty-eight thousand three hundred dollars ($48,300.00) for additional broker services for the First Time Home Buyer Program; and WHEREAS, on November 4, 2015, the City Council authorized an increase in the Consultant's rate from $2,300 per transaction to $2,500 per transaction and a $1,000 fee for cancelled transactions, as depicted in Exhibit C, attached hereto and incorporated herein; and WHEREAS, the City and Consultant now desire to amend the Agreement and increase the compensation for services to be performed by Consultant from forty-eight thousand three hundred dollars ($48,300.00) by a value of fifty-five thousand dollars ($65,000.00) for a new total contract value of one hundred thirteen thousand three hundred dollars ($113,300.00) and document said agreement to amend by jointly approving Amendment No. 2 to the Agreement. NOW, THEREFORE, it is mutually agreed by and between the parties to the Agreement as follows: I. Section 2, SCOPE OF SERVICES, is amended by replacing the third paragraph in its entirety as follows: "Compensation is increasing for the additional services by sixty-five thousand dollars ($65,000.00) from a total contract value of forty-eight thousand three hundred dollars ($48,300.00), for a total Agreement amount of one hundred thirteen thousand three hundred dollars ($113,300.00). Compensation shall not exceed the rates or total contract value, as depicted on Exhibit C, without a written amendment to the Agreement executed by both parties. Payment by City to Consultant shall be in accordance with the provisions of this Agreement" 252 II. Remaining Provisions: Except as revised by this Amendment No. 2, all of the provisions of the Agreement shall remain in full force and effect. In Witness Whereof, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF MOORPARK RAFEH REAL ESTATE AND INVESTMENTS, INC. dba CENTURY 21 HILLTOP Steven Kueny Sam Rafeh City Manager Broker Attest: Maureen Benson, City Clerk Amendment No.2 to Agreement between City of Moorpark and Rafeh Real Estate and Investments, Inc.dba Century 21 Hilltop Page 2 2 5 3 EXHIBIT C Jessica Sandifer To: Jessica Sandifer Subject: RE:Amendment From: Linda Toth (mailto:linda toth 4re(ayahoo.com] Sent: Wednesday, October 28, 2015 10:11 PM To: Jessica Sandifer Subject: Re: Amendment Amendment to my Agreement Going forward I am requesting that the balance of the proposed, Moorpark City First Time Homebuyer Program, to be $2500. In addition, in the event a purchase contract is executed with the buyer and for whatever reason the transaction does not close, a cancellation fee of$1000 will be paid. Respectfully and gratefully, Linda Toth Century 21 Hilltop and Home Sweet Home Prop. Mgmt DRE#00848451 BEST#to reach me 805-443-1396 cell linda toth 4reCa.vahoo.com or homesweethomepm(a vahoo.com www.facebook.com/Lind aTothRealEstateProfessionalMoorparkCA93021 14711 Princeton #3 Ave. Moorpark, CA. 93021 805-552-0199 fax 1 254 ATTACHMENT 2 RESOLUTION NO. 2015- A RESOLUTION OF CITY COUNCIL OF THE CITY OF MOORPARK, CALIFORNIA, AMENDING THE FISCAL YEAR 2015/2016 BUDGET BY APPROPRIATING $65,000.00 FROM THE CITY AFFORDABLE HOUSING FUND (2201) FOR BROKER SERVICES FOR THE FIRST TIME HOME BUYER PROGRAM WHEREAS, on June 17, 2015, the City of Moorpark adopted the Operating and Capital Improvement Projects budget for Fiscal Year (FY) 2015/16; and WHEREAS, a staff report has been presented to the City Council recommending approval of Amendment No. 2 with Rafeh Real Estate Investment, inc. dba Century 21 Hilltop for Broker Services for the First Time Home Buyer Program. The total compensation for the contract term is $113,300.00; and WHEREAS, an aggregate budget amendment of $65,000.00 is requested to fund the Broker Services from the City Affordable Housing Fund (2201); and WHEREAS, Exhibit "A", attached hereto and made a part hereof, describes said budget amendment and the resultant impact to the budget line items. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. A budget amendment in the amount $65,000 from the City Affordable Housing Fund, as more particularly described in Exhibit "A", attached hereto, is hereby approved. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the book of original resolutions. PASSED AND ADOPTED this 4th day of November, 2015. Janice S. Parvin, Mayor ATTEST: Maureen Benson, City Clerk Exhibit A— Budget Amendment 255 EXHIBIT A BUDGET AMENDMENT FOR City Affordable Housing Fund for Broker Services for the First Time Home Buyer Program 2015/16 FUND ALLOCATION FROM: Fund Account Number Amount City Affordable Housing Fund 2201-5500 $ 65,000.00 $ Total $ 65,000.00 DISTRIBUTION OF APPROPRIATION TO EXPENSE ACCOUNTS: Account Number Current Budget Revision Amended Budget 2201.2430.5025.9102 $ 46,000.00 $ 65,000.00 $ 111,000.00 $ - $ - $ $ - $ - $ $ Total $ 46,000.00 $ 65,000.00 $ 111,000.00 Approved as to Form: Qib--}� 256