RSG serves as the primary consultant for the County of San Diego Health & Human Services Agency, Housing and Community Development Services. Since 2016, RSG has provided the County with the following services:
Accessory Dwelling Unit (ADU) Subsidy Program
RSG researched existing ADU programs to identify requirements, determine outcomes and overall success of the program, identify how the program is funded, and develop best practices. Based on the information gathered, RSG determined if there was demand for the Program and then researched and analyzed ADU construction trends to assist the County in determining the financial feasibility of ADU product types. RSG prepared a detailed comprehensive report based on the collective research completed. The report provided RSG’s recommendations on the parameters, guidelines, and supporting analysis for the design of the Program.
Since 2016, RSG has conducted the underwriting and complete technical evaluations of multiple development proposals for affordable housing projects located throughout San Diego County. In this capacity, RSG has provided services including:
- Developer Reviews – San Diego County retained RSG to review and evaluate responses to multiple NOFAs that the County issued regarding funding available for eligible affordable housing projects. This engagement capitalizes on our experience with the HOME Investment Partnerships Program, Section 8 Rental Assistance Project-Based Vouchers (PBVs), and Project-Based Veterans Affairs Supportive Housing (VASH) Vouchers. For each project, RSG thoroughly reviews the developer’s pro forma, including construction cost estimates, proposed sources and uses of funding, income and expense assumptions, and cash flow projections.
- Subsidy Layering Analyses – For each application, RSG performs a subsidy layering analysis to determine the project’s compliance with the strictest requirements of the various proposed funding sources. For projects proposed to be funded with TCAC funding, RSG estimates the project’s competitiveness for tax credit funding.
- Memorandums – For each development proposal we review, RSG provides the County a memo providing our recommendation regarding the amount of County funding warranted for the project and a summary of the strengths and weakness of the project. Our memo also details the developer’s major pro forma assumptions and whether each assumption complies with County requirements and TCAC Guidelines (if applicable).
Ramona Market Study
RSG evaluated a site located in the Ramona community plan area to determine whether it was suitable for the development of an affordable senior group home. RSG conducted a site assessment to identify the parameters by which an affordable senior group home could be developed on the site, as well as a market assessment to determine the level of local demand for this type of development. Based on our site assessment and market assessment, RSG found the property suitable for an affordable senior group housing development. RSG estimated that the property could be developed with up to 245 living units, a 60,000-square foot senior center, and a parking lot of about 245 spaces. Based on RSG’s assessment, the County moved forward with issuing an RFP to select a developer for the project.
- The services provided to the County of San Diego have given RSG experience in evaluating both market studies and technical underwriting for low-income housing tax credit projects. We evaluate and help to substantiate market conditions for projects that are requesting funding from the County.
- Ramona Senior Housing RFP Review – After the County solicited proposals for development of a senior group housing project on a County-owned site, RSG analyzed the financial feasibility of each proposed project. For each proposal, RSG’s evaluation included assessing the reasonableness of the proposed total development budget; determining the accuracy of the developer’s assumptions regarding income, expenses, interest rates, and tax credit pricing; and auditing the developer’s 30-year cash flow projections. After reviewing all of the proposals, RSG assessed the strengths and weaknesses of each proposal and provided the County with a recommendation of the strongest proposal.
RSG assisted the County with review of a developer’s proposal to acquire a hotel for conversion into housing. The developer proposed to partially fund the Project with HCD Homekey Program funding, as well as County funding. RSG reviewed the developer’s pro forma and provided the County a memo detailing our recommendation regarding the County funding request. The memo also summarized strengths and weaknesses of the project and our review of the pro forma assumptions. RSG highlighted potential changes to the pro forma that could increase the project’s financial feasibility and result in less County funding needed.
Developer Capacity Evaluation
RSG performed analyses indicating the feasibility of potential projects, highlighting whether any gap financing is needed. RSG also scrutinized the developer’s assumptions to ensure that the anticipated costs, revenues, and operating and replacement reserves were realistic and not over/understated. This included a detailed look at developer fees and deferred fees. Additionally, RSG prepared a long-term cash flow to ensure that prospective developers could remain solvent as an operator throughout the duration of the affordability period. RSG delivered a peer review pro forma analysis, consisting of detailed construction and project phasing assessment, a phasing and post-stabilization 55-year operating forecast, and various measures of return on investment based on the proposed developer’s preferred disposition of the project once developed.
Analysis of Rental Income Assistance
RSG assisted the County in analyzing the need for rental income assistance among individual investor landlords in the county. The County used RSG’s analysis to inform the development of a new rental assistance program to support “mom and pop” landlords experiencing significant shortfalls in rental payments because of the COVID-19 pandemic. RSG collected data from various reputable sources and estimated the number of mom and pop landlords who lived and owned five or less residential rental units in the county, the number of their tenants who were significantly delinquent in rent and ineligible for existing rental assistance programs, and the average amount by which these tenants were delinquent.