AGENDA ITEM I-2 Community Development STAFF REPORT City Council Meeting Date: 3/23/2021 Staff Report Number: 21-065-CC Regular Business: Authorize the city manager to negotiate a scope of work and fee and execute an agreement with the M- Group for the housing element (2023-2031) update and related work Recommendation Staff recommends that the City Council authorize the city manager to negotiate a scope of work and fee, not to exceed $982,000, and execute a contract with the M-Group for the housing element (2023-2031) update and related rezonings, and the preparation of an environmental justice element, safety element update, Fiscal Impact Analysis and environmental impact report. Policy Issues The components of the housing element update will consider a number of land use, environmental and housing policies. Background Under California law every jurisdiction in the State is required to update the housing element every eight years and have it certified by the California Department of Housing and Community Development (HCD.) The housing element is one of seven State-mandated elements (or topic areas) of a General Plan for all jurisdictions in California, and requires local governments to adequately plan to meet their existing and project housing needs for all income levels. The City’s current housing element was last adopted in April 2014 and covers the planning period from 2015-2023. The next cycle’s deadline for jurisdictions in the Bay Area, which is set by HCD, is January 2023, and covers planning period for 2023-2031. Recognizing the complexity, importance and time-intensive nature of the housing element process and its related work, the City Council unanimously supported the initiation of the housing element as one of its top five project priorities for fiscal year (FY) 2020-21 August 18, 2020. Subsequently, on November 10, 2020, the City Council amended the FY 2020-21 budget by $1.69 million for the housing element and its work related. This expenditure includes up to $1.5 million for the project components and the partial-year funding for 2.0 full-time equivalent (FTE) personnel, including recruitment for the community development director position. The City Council has continued to express support for the housing element as a priority, most recently during its discussion on goals and priorities March 9, 2021. The housing element must be consistent with the City’s general plan and updated for compliance with State law and include City goals, policies and implementing programs to facilitate the construction of new housing and preservation of existing housing to meet the needs across all economic levels of the City. The City’s anticipated housing allocation for the next planning period is approximately 3,000 units, which is a 358 percent increase from the last housing element cycle. Menlo Park is not alone in seeing a large increase in City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 www.menlopark.org Page I-2.1 Staff Report #: 21-065-CC its housing allocation. The project is complex and is anticipated to consist of multiple components, including the following: • Conduct robust public engagement process to ensure that the project reflects the community’s goals and values; • Update the housing element, including addressing affirmatively furthering fair housing (AFFH) and other State mandates; • Amend the land use element, the zoning ordinance and/or rezone property to demonstrate compliance with the City’s regional housing needs allocation (RHNA); • Develop an environmental justice element (SB 1000) to advance equity and address potential environmental health risks in the City; • Update safety element to address climate adaptation and resiliency strategies in compliance with State law (SB 379); and • Prepare a fiscal impact analysis and environmental impact report to inform the public and decision- makers of potential financial and environmental impacts of the project. The housing element update process must be inclusive, and develop policies and programs that are measurable and achievable. This update process is an opportunity to take a deeper dive at historical land use practices and look toward the future through a lens of equity and sustainability while still achieving a certified housing element. Analysis Consultant selection process Choosing the right consultant to lead this effort is a key first step. The consultant team must not only be subject matter experts, but also be able build trust, effectively communicate ideas, and use innovative strategies to engage a diverse set of community stakeholders. In December 2020, staff issued a request for qualifications (RFQ) to seek a “prime consultant” to work with the City to assemble and manage a team of qualified subconsultants to accomplish the project. The City received statement of qualifications from two highly qualified firms and then requested proposals from each firm. The housing element update consultant request for proposals (RFP) is included as Attachment A. In February 2021, the City Council authorized the creation of a housing element interview panel, which represented varied community interests and perspectives from the City Council, Commissions and staff. The objective of the interview panel was to provide a recommendation on a preferred consultant to the City Council. The panel was comprised of the following members: • City Councilmember Cecilia Taylor • City Councilmember Jen Wolosin • Planning Commission Chair Henry Riggs • Planning Commissioner Chris DeCardy • Housing Commission Chair Karen Grove • Deputy Director of Community Development – Housing Rhonda Coffman • Assistant Community Services Director Adriane Lee-Bird The panel interviewed each firm and subsequently sought additional information from each firm based upon aspects of their proposal and a need to dive deeper into key topic areas. Each team brought great experience and different strengths, making a recommendation very difficult. The panel believed that additional community input would be valuable in the process, and follow-up meetings with the firms were City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 www.menlopark.org Page I-2.2 Staff Report #: 21-065-CC scheduled. The following members formed the smaller interview group, which participated in a focus group exercise with each firm: • City Councilmember Taylor • City Councilmember Wolosin • Planning Commissioner Michele Tate • Pastor Arturo Arias Following the exercise, the smaller group recommended the M-Group as the preferred consultant for not only their experience, but also their new perspectives it could bring to the process. The group also highlighted areas of the scope that should be enhanced and further developed as staff negotiates the scope of work, keeping in mind the overall budget. The two key areas are public engagement and the creation of an advisory committee, which are discussed in more detail in the proposed scope of work and budget section below. Proposed scope of work and budget The project is proposed to be led by the M-Group, who will manage a number of subconsultants to provide technical expertise for the various components. Table 1 identifies the consultant team members proposed by the M-Group and Attachment B is the draft scope of work that was included in the firm’s proposal. The proposed fee, inclusive of a 10% administrative fee for managing subconsultants and a 10 percent contingency fee to be used only with City approval, is $982,011. The proposal also includes a variety of optional items for an all-inclusive fee total of $1,195,216. By comparison, the proposal submitted by Baird + Driskell totaled $799,101 without a contingency or administrative fee. Table 1: Consultant team Consultant Project components Lead consultant; housing element, M-Group environmental justice element and safety element ESA Environmental impact report Hexagon Transportation (EIR) BAE Fiscal impact analysis The proposed work plan consists of five major tasks, which is further detailed by subtasks and deliverables. To successfully complete the project by December 2022, the timeline assumes that tasks will be conducted concurrently. The five major tasks are: • Task 1 – Project administration • The lead consultant will manage the project and subconsultants and collaborate with staff to deliver the project on time and within budget. • Task 2 – Community engagement strategy • Staff and the consultant team will develop a robust community engagement plan that includes strategies and techniques for broad participation, a list of expected meetings, events and activities, and their desired outcomes. The community engagement strategy needs to be innovative and inclusive, making sure that information is accessible and input can be provided in multiple ways. • Task 3 – Housing element and related work • The City is working in collaboration with other jurisdictions in San Mateo County as part of 21 elements on the preparation of the housing element. The M-Group will coordinate with staff and 21 City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 www.menlopark.org Page I-2.3 Staff Report #: 21-065-CC elements to prepare, at a minimum, the required components for a certified housing element. These tasks include, but are not limited to, a review and evaluation of current housing element, a housing needs assessment, an assessment of fair housing, analysis of non-governmental and governmental constraints, site inventory and analysis, and rezoning of sites to accommodate the City’s housing allocation. • Task 4 – Environmental justice and safety elements • The preparation of the environmental justice element is a new chapter of the general plan and will address past practices that have disproportionately affected low-income residents, communities of color and immigrant communities, and focus on strategies and polices to help ensure the future health and well-being of the entire community. The environmental justice element is anticipated to encompass topics related to pollution, food access, access to public parks and other community facilities, public transit, climate change, education, housing and civic engagement.