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Home My WebLink AboutSCC Grand Nexus MOU Amendment 1FIRST AMENDMENT TO MEMORANDUM OF UNDERSTANDING AMONG CITY OF GILROY, TOWN OF LOS ALTOS HILLS, TOWN OF LOS GATOS, CITY OF MOUNTAIN VIEW, CITY OF SANTA CLARA, CITY OF SUNNYVALE, AND BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING FOR THE SANTA CLARA COUNTY GRAND NEXUS AND FEASIBILITY STUDY This First Amendment to the Memorandum of Understanding, dated ___________________, 2025, is entered into by and among the City of Gilroy, the Town of Los Altos Hills, the Town of Los Gatos, the City of Mountain View, the City of Santa Clara, the City of Sunnyvale, and Baird + Driskell + Abrams Community Planning, dba Community Planning Collaborative, together referred to herein as the "PARTIES." WHEREAS, on November 1, 2024, the PARTIES entered into a Memorandum of Understanding (“MOU”) outlining the roles and funding obligation of the PARTIES for the Grand Nexus and Feasibility Study (“PROJECT”); and WHEREAS, the PARTIES desire to amend the term of the MOU, as well as the PROJECT’s scope of work, schedule, and budget; and WHEREAS, the PARTIES now agree that an Amendment to said MOU is advisable; NOW, THEREFORE, BE IT RESOLVED that the PARTIES enter into this First Amendment to the MOU: I.Exhibit A is hereby deleted in its entirety and replaced with Exhibit A-1, attached hereto and incorporated herein by this reference. All references to “Exhibit A” in the MOU are hereby replaced with references to “Exhibit A-1.” II.Exhibit C is hereby deleted in its entirety and replaced with Exhibit C -1, attached hereto and incorporated herein by this reference. All references to “Exhibit C” in the MOU are hereby replaced with references to “Exhibit C-1.” III.Section V of the MOU is amended in its entirety to read as follows: V.TERM This MOU shall remain in effect from November 1, 2024 to December 31, 2026, unless terminated sooner pursuant to Section XIII of the MOU. Amendment to Grand Nexus MOU Page 1 of 23 November 1 IV.Section XIII of the MOU is amended in its entirety to read as follows: XIII. TERMINATION Any PARTICIPATING JURISDICTION may terminate its participation in this MOU, with or without cause, upon thirty (30) calendar days' prior written notice to all PARTIES. Such PARTICIPATING JURISDICTION who terminates its participation in this MOU shall be responsible for its pro rata share of all Individual Task costs as set forth in Exhibit B that are incurred by the FISCAL AGENT up through the effective date of termination. Any PARTICIPATING JURISDICTION who terminates its participation in this MOU shall still be responsible for the entirety of its prescribed portion of all Shared Task costs as set forth in Exhibit C-1. This MOU shall continue in effect among the remaining PARTIES. In addition, the PARTICIPATING JURISDICTIONS may terminate this MOU at any time, with or without cause, by unanimous vote of the PARTICIPATING JURISDICTIONS. Any such action shall specify the date on which the termination shall be effective. V.Except as expressly set forth herein, the MOU shall remain unmodified and in full force and effect. IN WITNESS WHEREOF, the PARTIES have executed this First Amendment to the MOU as follows: [Remainder of the page is left blank. Signatures begin on the next page.] Amendment to Grand Nexus MOU Page 2 of 23 FIRST AMENDMENT TO MEMORANDUM OF UNDERSTANDING AMONG CITY OF GILROY, TOWN OF LOS ALTOS HILLS, TOWN OF LOS GATOS, CITY OF MOUNTAIN VIEW, CITY OF SANTA CLARA, CITY OF SUNNYVALE, AND BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING FOR THE SANTA CLARA COUNTY GRAND NEXUS AND FEASIBILITY STUDY The individuals executing this First Amendment to the MOU represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. The undersigned approve the terms and conditions of this First Amendment to the MOU. CITY OF GILROY By: ____________________________ Brad Kilger, Interim City Administrator ATTEST: By:_________________________________ Kim Mancera, City Clerk APPROVED AS TO FORM: By: ____________________________ Andy Faber, City Attorney Amendment to Grand Nexus MOU Page 3 of 23 FIRST AMENDMENT TO MEMORANDUM OF UNDERSTANDING AMONG CITY OF GILROY, TOWN OF LOS ALTOS HILLS, TOWN OF LOS GATOS, CITY OF MOUNTAIN VIEW, CITY OF SANTA CLARA, CITY OF SUNNYVALE, AND BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING FOR THE SANTA CLARA COUNTY GRAND NEXUS AND FEASIBILITY STUDY The individuals executing this First Amendment to the MOU represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. The undersigned approve the terms and conditions of this First Amendment to the MOU. TOWN OF LOS ALTOS HILLS By: ____________________________ Peter Pirnejad, City Manager ATTEST: By:_________________________________ Arika Birdsong-Miller, City Clerk APPROVED AS TO FORM: By: ____________________________ Steven Mattas, City Attorney Amendment to Grand Nexus MOU Page 4 of 23 FIRST AMENDMENT TO MEMORANDUM OF UNDERSTANDING AMONG CITY OF GILROY, TOWN OF LOS ALTOS HILLS, TOWN OF LOS GATOS, CITY OF MOUNTAIN VIEW, CITY OF SANTA CLARA, CITY OF SUNNYVALE, AND BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING FOR THE SANTA CLARA COUNTY GRAND NEXUS AND FEASIBILITY STUDY The individuals executing this First Amendment to the MOU represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. The undersigned approve the terms and conditions of this First Amendment to the MOU. TOWN OF LOS GATOS By: ____________________________ Joel Paulson, Community Development Director ATTEST: By:_________________________________ Wendy Wood, Town Clerk APPROVED AS TO FORM: By: ____________________________ Gabrielle Whelan, Town Attorney Amendment to Grand Nexus MOU Page 5 of 23 FIRST AMENDMENT TO MEMORANDUM OF UNDERSTANDING AMONG CITY OF GILROY, TOWN OF LOS ALTOS HILLS, TOWN OF LOS GATOS, CITY OF MOUNTAIN VIEW, CITY OF SANTA CLARA, CITY OF SUNNYVALE, AND BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING FOR THE SANTA CLARA COUNTY GRAND NEXUS AND FEASIBILITY STUDY The individuals executing this First Amendment to the MOU represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. The undersigned approve the terms and conditions of this First Amendment to the MOU. CITY OF MOUNTAIN VIEW By: ____________________________ Kimbra McCarthy, City Manager ATTEST: By:_________________________________ Heather Glaser, City Clerk APPROVED AS TO FORM: By: ____________________________ Montague Hung, Assistant City Attorney Amendment to Grand Nexus MOU Page 6 of 23 FIRST AMENDMENT TO MEMORANDUM OF UNDERSTANDING AMONG CITY OF GILROY, TOWN OF LOS ALTOS HILLS, TOWN OF LOS GATOS, CITY OF MOUNTAIN VIEW, CITY OF SANTA CLARA, CITY OF SUNNYVALE, AND BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING FOR THE SANTA CLARA COUNTY GRAND NEXUS AND FEASIBILITY STUDY The individuals executing this First Amendment to the MOU represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. The undersigned approve the terms and conditions of this First Amendment to the MOU. CITY OF SANTA CLARA By: ____________________________ Jōvan D. Grogan, City Manager ATTEST: By:_________________________________ Nora Pimentel, Assistant City Clerk APPROVED AS TO FORM: By: ____________________________ Glen R. Googins, City Attorney Amendment to Grand Nexus MOU Page 7 of 23 FIRST AMENDMENT TO MEMORANDUM OF UNDERSTANDING AMONG CITY OF GILROY, TOWN OF LOS ALTOS HILLS, TOWN OF LOS GATOS, CITY OF MOUNTAIN VIEW, CITY OF SANTA CLARA, CITY OF SUNNYVALE, AND BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING FOR THE SANTA CLARA COUNTY GRAND NEXUS AND FEASIBILITY STUDY The individuals executing this First Amendment to the MOU represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. The undersigned approve the terms and conditions of this First Amendment to the MOU. CITY OF SUNNYVALE By: ____________________________ Tim Kirby, City Manager ATTEST: By:_________________________________ David Carnahan, City Clerk APPROVED AS TO FORM: By: ____________________________ Rebecca Moon, City Attorney Amendment to Grand Nexus MOU Page 8 of 23 FIRST AMENDMENT TO MEMORANDUM OF UNDERSTANDING AMONG CITY OF GILROY, TOWN OF LOS ALTOS HILLS, TOWN OF LOS GATOS, CITY OF MOUNTAIN VIEW, CITY OF SANTA CLARA, CITY OF SUNNYVALE, AND BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING FOR THE SANTA CLARA COUNTY GRAND NEXUS AND FEASIBILITY STUDY The individuals executing this First Amendment to the MOU represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. The undersigned approve the terms and conditions of this First Amendment to the MOU. BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING By: ____________________________ Joshua Abrams, Principal Amendment to Grand Nexus MOU Page 9 of 23 EXHIBIT A-1 WORK PROGRAM and COST PROPOSAL from Strategic Economics Amended Scope of Work and Schedule for the Santa Clara County Grand Nexus and Feasibility Study dated August 14,2025. [Remainder of page is intentionally left blank. Work Program and Cost Proposal begin on following page] Amendment to Grand Nexus MOU Page 10 of 23 Strategic Economics Amended Scope to Prepare Nexus and Feasibility Studies | August 14, 2025 1 SANTA CLARA COUNTY GRAND NEXUS AND FEASIBILITY STUDY Amended Scope of Work and Schedule | August 14, 2025 SELECTED SERVICES BY PARTICIPATING JURISDICTION Residential Nexus Study Residential Feasibility / Inclusionary Study Residential In- Lieu Fee Study Commercial Nexus Study Commercial Feasibility Study Gilroy X X X X X Los Altos Hills X X X Los Gatos X X Mountain View X X Santa Clara (city) X X X X X Sunnyvale X X Total Jurisdictions 3 4 4 4 4 TASK 1: PROJECT INITIATION AND GROUP KICK-OFF MEETING 1.1: REVIEW OF BACKGROUND MATERIALS Strategic Economics will review background information provided by Community Planning Collaborative (CPC) on the demographics and housing conditions in Santa Clara County, as well as any recently completed nexus studies and financial feasibility studies. 1.2: DATA REQUESTS Strategic Economics will submit data requests for the project to CPC, including descriptions of recent development activity, local active residential developers, current affordable housing policy information in the participating cities, etc. 1.3: COLLECTION OF EXISTING POLICIES AND FEES Strategic Economics will research and summarize information on residential affordable housing impact fees, commercial linkage fees, inclusionary requirements, and in-lieu fees for the participating cities and other comparable communities in the Bay Area. This information provides context for current policies in the participating cities and for the relative policies and fee levels enacted by communities competing for development activity and affordable housing production. 1.2: GROUP KICK-OFF MEETING The purpose of this meeting is to finalize the scope of work and schedule, review the proposed methodologies, and obtain any additional background materials or key information. An agenda will be provided in advance of the meeting. It is assumed that CPC staff would convene the meeting and only Amendment to Grand Nexus MOU Page 11 of 23 Strategic Economics Amended Scope to Prepare Nexus and Feasibility Studies | August 14, 2025 2 one meeting would be held. At the kick-off meeting, the Strategic Economics team will discuss the types of deliverables that will be completed. The meeting will also be used to establish protocols for communication, project management, and timely review of deliverables, given the complexity of this multi-jurisdictional project. This meeting is envisioned to be conducted in-person but can also be held virtually if preferred by participants. TASK 2: CITY-SPECIFIC KICK-OFF MEETINGS Strategic Economics will conduct a virtual kick-off meeting with each participating jurisdiction— scheduled by CPC—to inquire about specific goals, needs, and context. The meeting will also be used to clarify data and document requests. TASK 3: STAKEHOLDER AND WORK-IN-PROGRESS MEETINGS DURING RESEARCH AND DATA GATHERING PHASE (TASKS 4 THROUGH 6) 3.1: TWO DEVELOPER STAKEHOLDER GROUP VIRTUAL MEETINGS Strategic Economics will conduct two virtual convenings of developers of rental and housing products in Santa Clara County, with participants identified based on input from participating cities and review of development activity. These convenings will be used to share information about the project, collect information about current development conditions by product type, and to vet relevant assumptions applied in the analyses. 3.2: HOUSING ADVOCATES VIRTUAL MEETING During a virtual meeting with local housing advocates, Strategic Economics will provide information about the goals and purpose of the study and solicit feedback about how inclusionary policies and affordable housing mitigation fees can help meet the housing affordability challenges in Santa Clara County. Strategic Economics will work with the participating cities to identify housing advocacy organizations and active citizens, and will then send invitations, organize, plan, and facilitate the meeting. 3.3: PUBLIC VIRTUAL MEETING Strategic Economics will conduct a public virtual meeting during the initial stages of the project. The meeting will provide information about the goals and purpose of the study and solicit feedback about how inclusionary policies and affordable housing mitigation fees can help meet the housing affordability challenges in Santa Clara County during a virtual meeting with the public. Strategic Economics will organize and facilitate the meeting, but CPC and individual cities will be responsible for publicizing and promoting the meeting. The virtual meeting is envisioned to consist of a presentation about the project, a question-and-answer period, and a follow-up survey that invites participants to provide information about their priorities and feedback on the project. 3.4: TWO WORK-IN-PROGRESS PRESENTATIONS FOR ALL PARTICIPATING CITIES Strategic Economics will facilitate up to two total virtual meetings, including all participating cities, to share interim information about project status and interim findings. CPC will organize the meeting dates/times. Amendment to Grand Nexus MOU Page 12 of 23 Strategic Economics Amended Scope to Prepare Nexus and Feasibility Studies | August 14, 2025 3 TASK 4: RESIDENTIAL NEXUS ANALYSIS TASK 4.1: SHARED BASE RESIDENTIAL NEXUS MODEL In this sub-task, Strategic Economics will prepare the residential nexus study components that are broadly applicable to all cities requesting this analysis. The purpose of the residential nexus model is to estimate the increase in demand for affordable housing associated with growth in new residential development for “missing middle” housing developments with fewer than ten housing units. The primary driver for this increase in demand for affordable housing is the growth in expenditures for goods and services attributable to buyers and renters of new market rate housing units in Santa Clara County cities. The residential nexus analysis assumes that an increase in household expenditures associated with new housing units results in employment growth. Some of these new employees can afford market rate housing (based on household income), and some will earn incomes below the level needed to afford market rate housing. It is this second group of employee-households that will face financial challenges, if they want to work and live in the same city. The list below provides a summary of the analytic steps involved. This analysis answers the question, “What is the maximum impact fee that can be charged?” This analysis does not address “At what level should the housing impact fee be set?” This second question is addressed in sub-task 4.2 for each relevant city. • Step 1. Define the residential prototypes that represent new market rate housing development with fewer than ten housing units in the applicable communities (or, if too few example projects are being built, the prototype can be based on generic examples of these products). • Step 2. Estimate household incomes of buyers and renters of new market rate units. • Step 3. Estimate economic impacts of new buyers and renters using a regional input/output model. • Step 4. Estimate the number of new worker households and annual household incomes. • Step 5. Estimate the demand for affordable housing from new worker households. • Step 6. Estimate the aggregate affordability gap of new households requiring affordable housing. • Step 7. Estimate the maximum nexus-based fee per unit and per square foot for the prototype. The methodology routinely used for the Step 6 affordability gap calculation is as follows: Step 1: Calculate affordable rents and sales prices for income groups to be served under proposed programs for participating cities. The team will confirm the target income groups with each city and establish four standardized income groups for purposes of all analyses. Most commonly, renter housing affordability gaps are calculated for very low, low, and moderate-income households. In most Bay Area cities, the housing affordability gap for ownership housing is calculated for moderate-income households (and possibly for low-income households as well). Affordable rents and sales prices will be calculated using standard methods used by state or local programs. Step 2: Calculate housing affordability gap for ownership housing, based on the difference between the cost of developing a new modest, residential unit (of the appropriate size for the household) and the amount a household can afford to pay at various income levels and household sizes. Amendment to Grand Nexus MOU Page 13 of 23 Strategic Economics Amended Scope to Prepare Nexus and Feasibility Studies | August 14, 2025 4 Step 3: Calculate the housing affordability gap for rental housing based on the difference between the annual capitalized value of the net affordable rent and the construction cost of the new rental unit. Again, separate calculations are made for each income group and household size included in the gap analysis. TASK 4.2: CITY-SPECIFIC RECOMMENDATIONS AND AB 602 ANALYSIS Strategic Economics will recommend a potential range of impact fees for each city based on the results of the financial feasibility analysis in Task 5, and review of the fees charged in similar or competing jurisdictions. The fee calculated under Task 4.1 or Optional Task C represents the maximum fee that can be levied on new residential units. Selecting the actual fee requires sensitivity to local conditions. Strategic Economics will review and consider the factors described below: Fees charged in neighboring jurisdictions. It is standard practice to consider the fee levels and requirements of neighboring and other peer jurisdictions. This analysis would compare recommended fees in Santa Clara County with those charged in other similar Bay Area jurisdictions (to be identified in conjunction with city staff). Financial Feasibility of Potential Fee Levels. The final recommendations for fees ideally are set so that they do not deter future development; the supportable fees determination will be informed by the financial feasibility analysis completed in Task 5. There are several ways to assess financial feasibility of potential fee levels: •Assess how much the imposition of a fee will add to current fees on new residential developments. •Determine the percentage of total development costs represented by fees. Strategic Economics will determine the financial feasibility of various fee options (including the maximum nexus justified fee resulting from this analysis and lower fee scenarios) by estimating the increase in total development costs resulting from the fees. •Conduct financial feasibility sensitivity analyses (as part of Task 5) to determine how changing rents/prices, required return, and construction costs would interact with the ability to support different fee levels. Based on efforts above, information on recommended fee levels for all cities included in the study will be provided. An AB 602 analysis will be completed for each participating city after that city selects a desired residential impact fee level. AB 602 requires the nexus study for a new fee to “identify the existing level of service for each public facility, identify the proposed new level of service, and include an explanation of why the new level of service is appropriate.” (Government Code § 66016.5). Strategic Economics will provide sufficient analysis and findings to meet the AB 602 requirements by first identifying the existing ratio of deed-restricted, “family” affordable units in each city to the number of housing units in the city. Then Strategic Economics will calculate the level of service associated with the proposed residential impact fee, or the number of family affordable units that could be funded per household created by new development. Finally, Strategic Economics will prepare findings justifying the need for additional affordable housing funding. Amendment to Grand Nexus MOU Page 14 of 23 Strategic Economics Amended Scope to Prepare Nexus and Feasibility Studies | August 14, 2025 5 TASK 5: RESIDENTIAL FEASIBILITY STUDY AND INCLUSIONARY ANALYSIS TASK 5.1: SHARED BASE RESIDENTIAL FEASIBILITY STUDY In coordination with CPC and the participating cities, Strategic Economics will develop up to five development project prototypes, ensuring that they represent the ownership and rental residential development types being built in the cities. The prototypes will vary based on assumptions regarding building type, density, unit size, ground-floor retail area, parking ratios, etc. The prototypes will be shared with CPC and the cities for comment before arriving at a final set of assumptions for the pro forma feasibility analysis. Upon establishing the prototypes, Strategic Economics will research inputs and assumptions for the financial feasibility analysis. The key inputs into the pro forma model are the revenues (rents/sales prices), development costs, and land costs. Strategic Economics will collect and summarize data on construction costs in the county, using a combination of real estate industry publications, online information, and interviews with local developers and brokers. At this stage of the analysis, Strategic Economics will also research and apply generic rents/prices and land values, which will then be customized for the participating cities in sub-task 5.2. Strategic Economics will develop a pro forma model to test the financial feasibility of the prototypes. The analysis will first examine the feasibility of each prototype without any affordable housing requirements. The financial feasibility analysis of projects will be measured using a static pro forma model that will solve for the project’s rate of return and residual land value. The results will create a baseline understanding of prototype-specific project feasibility and ability to support on-site affordable housing requirements. TASK 5.2: CITY-SPECIFIC RESIDENTIAL FEASIBILITY STUDIES AND INCLUSIONARY ANALYSES Strategic Economics will then customize the pro forma analysis and test inclusionary requirements for each participating city. We will research and generate customized assumptions for land values and achievable rents and sales prices. We will also request that the cities provide applicable impact fees and permit fees for each prototype. Strategic Economics will work closely with City and CPC staff to create and test up to four scenarios of affordable housing requirements for each city. These policy alternatives will be informed by factors including the baseline feasibility results, findings from the analysis of nearby communities’ policies and performance, implications of AB 1505 requirements (including its guidance on affordability levels), and guidance from City staff. Strategic Economics will then adapt the development prototypes pro forma model to test the financial feasibility of varying the inclusionary housing requirements according to the policy alternatives. The pro forma analysis will be structured to understand what changes could be made to inclusionary requirements to support the continuing feasibility of projects while also incorporating affordable units. As part of this analysis, Strategic Economics will conduct sensitivity analyses based on potential changes in market rents and sales prices, variations in construction costs, variations in required return, or comparison of residual land value results against the range of actual land values. Based on the findings of these analyses, Strategic Economics will generate findings and recommendations regarding supportable inclusionary requirements both today and in the future, along with policy suggestions for balancing the requirements with any feasibility constraints. Amendment to Grand Nexus MOU Page 15 of 23 Strategic Economics Amended Scope to Prepare Nexus and Feasibility Studies | August 14, 2025 6 TASK 5.3: CITY-SPECIFIC IN-LIEU FEE ANALYSIS AND RECOMMENDATIONS Strategic Economics will calculate potential in-lieu fee levels corresponding to the applicable communities’ selected inclusionary requirements. Strategic Economics will identify the maximum in- lieu affordable housing fees that could reasonably be charged on market-rate developments by calculating the housing affordability gap. Unlike the affordability gap calculated for the impact fees, this gap will examine the difference between market rate rents/sales prices and affordable rents/sales prices. This approach reflects the equivalent cost for providing an on-site inclusionary unit and equivalent benefit to a lower-income household. Strategic Economics will also determine the community’s typical cost to subsidize a unit of affordable housing by reviewing the community’s average local contribution toward recently built or proposed affordable housing development projects. The affordability gap and local contribution respectively represent the maximum reasonable in-lieu fee (directly equivalent to the inclusionary requirement) and the actual typical City cost to leverage outside funds to produce a unit of affordable housing. After delivery of the administrative draft report, Strategic Economics will participate in a phone call with City staff to walk through the results and explain how to evaluate them for the purpose of establishing an in-lieu fee. TASK 5A: GILROY RESIDENTIAL ADD-ON This task includes additional work associated with inclusion of the City of Gilroy in the residential nexus, inclusionary, and feasibility analyses described in Task 4 and Task 5. All shared scope items in Tasks 4 and 5 will include Gilroy. All City-specific scope items in Tasks 4 and 5 will also include Gilroy, including delivery of city-specific drafts of the residential nexus and inclusionary and feasibility reports. In addition, Strategic Economics will conduct additional residential market research, perform additional residential nexus analyses, and customize aspects of the financial feasibility model for the City of Gilroy. This is necessary because Gilroy’s residential market and development patterns significantly differ from the other five participating cities. TASK 6: COMMERCIAL NEXUS STUDY AND FEASIBILITY ANALYSIS TASK 6.1: SHARED BASE COMMERCIAL NEXUS MODEL AND FEASIBILITY ANALYSIS Strategic Economics will complete an initial shared commercial nexus model and financial feasibility analysis. Strategic Economics will analyze information about recent and pipeline nonresidential development projects in the participating cities to establish five prototypes including office, industrial, life science/R&D, retail, and hotel uses. The prototypes will be shared and discussed with CPC and city staff to arrive at a final set of assumptions for the nexus and feasibility analyses. The nexus analysis and subsequent affordability gap calculation will together allow Strategic Economics to identify the maximum possible commercial linkage fee that could be charged to net new nonresidential development. The nexus analysis will demonstrate the impact of new commercial development on affordable housing needs. The nexus analysis is completed with the following steps: 1)Calculate the number of employees that will work in the space associated with the development prototypes. 2)Calculate the number of new households associated with this employment growth. 3)Estimate the incomes of the new employee-households. Amendment to Grand Nexus MOU Page 16 of 23 Strategic Economics Amended Scope to Prepare Nexus and Feasibility Studies | August 14, 2025 7 4)Identify the number of associated moderate-, low-, very low-income households, all of which would reflect additional need for affordable housing. The affordability gap calculation described in sub-task 4.1 (and potential local adjustments in Optional Task D) will generate a maximum fee that can be levied on new nonresidential developments. Selecting the actual fee requires sensitivity to local market conditions. A base financial feasibility analysis will be prepared to examine development feasibility and assess the sensitivity of the feasibility model to changes in development costs, revenues, and required return. Strategic Economics will conduct a financial feasibility analysis for the nonresidential prototypes by employing a similar methodology as in sub-tasks 5.1 and 5.2 TASK 6.2: CITY-SPECIFIC FEASIBILITY ANALYSES AND AB 602 JUSTIFICATION ANALYSIS Strategic Economics will recommend a potential range of impact fees for each city based on the results of the financial feasibility analysis in sub-task 6.1 and review of the fees charged in similar or competing cities. The affordability gap calculation, feasibility analysis, and process for establishing recommended impact fees for each prototype and community will be completed using a similar approach and methodology as that described for the residential impact in sub-task 4.2. An AB 602 analysis will be completed for each participating city after that city selects a desired commercial linkage fee level. AB 602 requires the nexus study for a new fee to “identify the existing level of service for each public facility, identify the proposed new level of service, and include an explanation of why the new level of service is appropriate.” (Government Code § 66016.5). Strategic Economics will provide sufficient analysis and findings to meet the AB 602 requirements by first identifying the existing ratio of deed-restricted, “family” affordable units in each city to the number of worker households associated with employment in the city. Then Strategic Economics will calculate the level of service associated with the proposed commercial linkage fees, or the number of family affordable units that could be funded per worker household created by new development. Finally, Strategic Economics will prepare findings justifying the need for additional affordable housing funding. TASK 7: ADMINISTRATIVE DRAFT SUITE OF REPORTS Strategic Economics will prepare four draft “model” reports representing the range of analyses and policy recommendations completed under tasks four through six. These draft reports will summarize methodology, findings, and recommendations for one city, along with standardized appendices for use in all reports. The participating cities would then provide comments on the model reports, and Strategic Economics would then author draft reports for all participating cities. TASK 8: GROUP MEETING TO DISCUSS RESULTS Strategic Economics will conduct a meeting with all participating cities to present the model draft reports and provide an overview of the recommendations. This meeting can be conducted either in - person or virtually, with CPC responsible for scheduling the meeting. TASK 9: ONE-ON-ONE MEETINGS TO PRESENT RECOMMENDATIONS Strategic Economics will conduct an additional virtual meeting with each city to present city -specific findings and recommendations, and to receive input and further direction. TASK 9A: ADDITIONAL ONE-ON-ONE MEETINGS Amendment to Grand Nexus MOU Page 17 of 23 Strategic Economics Amended Scope to Prepare Nexus and Feasibility Studies | August 14, 2025 8 At the request of Gilroy and Los Altos Hills, this task includes one-on-one virtual meetings in addition to the meetings in Task 9 to refine the recommendations and findings for these cities. Strategic Economics will conduct up to three additional meetings for Gilroy and one additional meeting for Los Altos Hills. TASK 9B: PUBLIC DRAFT REPORTS Strategic Economics will revise the administrative draft city-specific reports in response to a single consolidated set of comments and direction provided from the participating cities on their respective draft reports. The revised drafts will then be made available for public review and comment for a period of 30 days. TASK 9C: PUBLIC VIRTUAL MEETING TO PRESENT RESULTS A public virtual meeting will accompany the release of the public review drafts. At this meeting, Strategic Economics will review the results of the analysis and recommendations, with opportunities for questions and comments from meeting participants. The meeting will also include information directing participants to submit any additional feedback during the 30-day public comment period. Strategic Economics will organize and facilitate the meeting, but CPC and individual cities will be responsible for publicizing and promoting the meeting. TASK 10: FINAL DRAFT REPORTS Strategic Economics will consolidate public comments into a single document, briefly describe suggested changes to the draft reports in response to public comments, and circulate this summary among City staff from the participating jurisdictions for review and confirmation of the suggested report edits. Strategic Economics will then complete report revisions—as deemed necessary by Strategic Economics and the participating jurisdictions—and produce Final Draft Reports. TASK 10A: PUBLIC HEARINGS As requested by participating cities, Strategic Economics will participate in public hearings with decision-makers such as city councils, planning commissions, and housing oversight bodies. For each requested hearing, Strategic Economics will coordinate with City staff, prepare presentations as needed, and participate in the hearing. The number of public hearings budgeted for each city is shown in the table below. Jurisdiction Number of Hearings Gilroy 3 Los Altos Hills 1 Los Gatos 2 Mountain View 2 Santa Clara 4 Sunnyvale 5 Total Hearings 17 Amendment to Grand Nexus MOU Page 18 of 23 Strategic Economics Amended Scope to Prepare Nexus and Feasibility Studies | August 14, 2025 9 Schedule The following schedule is contingent on prompt responses by participating jurisdictions to requests for information and reviews of reports, presentations, etc. ◊Meetings ▪Deliverables Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Task 1 Project Initiation and Group Kick-Off Meeting Task 2 City-Specific Kick-Off Meetings ◊◊ ◊◊ ◊ ◊ Task 3 Stakeholder and Work-In-Progress Meetings 3.1 Developer Stakeholders ◊◊ 3.2 Housing Advocates ◊ 3.3 Public Virtual Meeting ◊ 3.4 Work-in-Progress Meetings ◊◊ Task 4 Residential Nexus Analysis Task 5 Residential Feasibility Study and Inclusionary Analysis Task 5A Gilroy Residential Add-on Task 6 Commercial Nexus Study and Feasibility Analysis Task 7 Administrative Draft Suite of Reports ▪▪ Task 8 Group Meeting to Discuss Results ◊ Task 9 One-On-One Meetings to Present Recommendations ◊◊◊◊◊◊ Task 9A*Additional One-on-one Meetings Task 9B Public Draft Reports ▪ Task 9C Public Virtual Meeting ◊ Task 10 Final Reports ▪ Task 10A*Public Hearings * Tasks 9A and 10A will be scheduled as needed. Amendment to Grand Nexus MOU Page 19 of 23 Strategic Economics Amended Scope to Prepare Nexus and Feasibility Studies | August 14, 2025 10 Budget Tasks Cost Task 1 $8,680 Task 2 $4,690 Task 3 3.1 $3,395 3.2 $4,220 3.3 $4,220 3.3 $5,410 Task 4 Residential Nexus Analysis 4.1 Shared Base Residential Nexus Model $9,550 4.2 City-Specific Recommendations, AB 602 Analysis $12,540 Task 5 Residential Feasibility Study and Inclusionary Analysis 5.1 Shared Base Residential Feasibility Study $23,220 5.2 City-Specific Residential Feasibility & Inclusionary Analyses $22,655 5.3 City-Specific In-Lieu Fee Analysis and Recommendations $17,010 Task 6 Commercial Nexus Study and Feasibility Analysis 6.1 Shared Base Commercial Nexus Model and Feasibility Analyses $26,535 6.2 City-Specific Feasibility and AB 602 Analyses $17,365 Task 7 Administrative Draft Suite of Reports $37,780 Task 8 Group Meeting to Discuss Results $2,490 Task 9 One-On-One Meetings to Present Recommendations $8,620 Task 10 Final Reports $12,965 Task Subtotal (from original SOW)$221,345 Add-on Tasks Task 5A Gilroy Residential Add-on $22,175 Task 9A Additional One-on-one Meetings $4,760 Task 9B Public Draft Reports $10,000 Task 9C Public Virtual Meeting to Present Results $4,220 Task 10A Public Hearings $68,935 Add-on Task Subtotal $110,090 Contingency $27,055 Expenses Original Expense Budget (data, travel)$1,600 Data Expense Add-on (Gilroy)$1,000 Expenses Subtotal $2,600 TOTAL BUDGET $361,090 City-Specific Kick-Off Meetings Public Virtual Meeting Two Work-In-Progress Presentations to Cities Stakeholder and Work-In-Progress Meetings Two Developer Stakeholder Group Virtual Meetings Housing Advocates Virtual Meeting Project Initiation and Group Kick-Off Meeting Amendment to Grand Nexus MOU Page 20 of 23 EXHIBIT C-1 PROJECT BUDGET and COST ALLOCATION FOR PARTICIPATING JURISDICTIONS For a breakdown of the Strategic Economics Work Program budget by task, see Exhibit A-1. TOTAL PROJECT COST TECHNICAL CONSULTANT – STRATEGIC ECONOMICS $361,090 PROJECT MANAGER – BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING Silicon Valley Community Foundation is providing funding for BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING’s Scope of Work $0 TOTAL NOT-TO-EXCEED PROJECT COST $361,090 Amendment to Grand Nexus MOU Page 21 of 23 BY JURISDICTION: PROJECT COST for CITY OF GILROY TECHNICAL CONSULTANT – STRATEGIC ECONOMICS CITY OF GILROY Updated Share of Total Contract $63,558 CITY OF GILROY Updated Share of Contingency $6,987 CITY OF GILROY Additional Scope $18,105 PROJECT MANAGER – BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING Silicon Valley Community Foundation is providing funding for BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING’s Scope of Work $0 TOTAL COST $88,650 PROJECT COST for TOWN OF LOS ALTOS HILLS TECHNICAL CONSULTANT – STRATEGIC ECONOMICS TOWN OF LOS ALTOS HILLS Updated Share of Total Contract $42,527 TOWN OF LOS ALTOS HILLS Updated Share of Contingency $4,675 TOWN OF LOS ALTOS HILLS Additional Scope $7,615 PROJECT MANAGER – BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING Silicon Valley Community Foundation is providing funding for BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING’s Scope of Work $0 TOTAL COST $54,817 PROJECT COST for TOWN OF LOS GATOS TECHNICAL CONSULTANT – STRATEGIC ECONOMICS TOWN OF LOS GATOS Updated Share of Total Contract $25,022 TOWN OF LOS GATOS Updated Share of Contingency $2,751 TOWN OF LOS GATOS Additional Scope $10,480 PROJECT MANAGER – BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING Silicon Valley Community Foundation is providing funding for BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING’s Scope of Work $0 TOTAL COST $38,253 Amendment to Grand Nexus MOU Page 22 of 23 PROJECT COST for CITY OF MOUNTAIN VIEW TECHNICAL CONSULTANT – STRATEGIC ECONOMICS CITY OF MOUNTAIN VIEW Updated Share of Total Contract $25,022 CITY OF MOUNTAIN VIEW Updated Share of Contingency $2,751 CITY OF MOUNTAIN VIEW Additional Scope $10,480 PROJECT MANAGER – BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING Silicon Valley Community Foundation is providing funding for BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING’s Scope of Work $0 TOTAL COST $38,253 PROJECT COST for CITY OF SANTA CLARA TECHNICAL CONSULTANT – STRATEGIC ECONOMICS CITY OF SANTA CLARA Updated Share of Total Contract $60,328 CITY OF SANTA CLARA Updated Share of Contingency $6,632 CITY OF SANTA CLARA Additional Scope $18,590 PROJECT MANAGER – BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING Silicon Valley Community Foundation is providing funding for BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING’s Scope of Work $0 TOTAL COST $85,550 PROJECT COST for CITY OF SUNNYVALE TECHNICAL CONSULTANT – STRATEGIC ECONOMICS CITY OF SUNNYVALE Updated Share of Total Contract $29,661 CITY OF SUNNYVALE Updated Share of Contingency $3,261 CITY OF SUNNYVALE Additional Scope $22,645 PROJECT MANAGER – BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING Silicon Valley Community Foundation is providing funding for BAIRD + DRISKELL + ABRAMS COMMUNITY PLANNING’s Scope of Work $0 TOTAL COST $55,567 Amendment to Grand Nexus MOU Page 23 of 23