Title
Recommendation to Authorize the Interim City Manager to Execute a Five-Year Service Provider Agreement with Cerda-Zein Real Estate, Inc. for Residential Property Management Services.
In accordance with the California Environmental Quality Act (CEQA), this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Section 15301 (Existing Facilities). (Base Reuse and Economic Development Dept. 29061821)
Body
To: Honorable Mayor and Members of the City Council
From: Adam W. Politzer, Interim City Manager
EXECUTIVE SUMMARY
The City of Alameda (City), through the Base Reuse and Economic Development Department (BRED) oversees approximately sixty-two (62) of the residential units in the Main Street Neighborhood of Alameda Point that are leased at market-rate rents. The day-to-day management, tenant interface and leasing of these units is performed by a local Residential Property Manager, as a contractor to the City, and their work is overseen by the City Commercial Property Manager, LPC West LP. In accordance with the City’s Purchasing Policy, BRED staff undertook a competitive public process to solicit new proposals for Residential Property Management Services, and after a rigorous evaluation process, staff recommends City Council authorize the Interim City Manager to enter into a new five-year Service Provider Agreement with Cerda-Zein Real Estate, Inc.
BACKGROUND
The City’s sixty-two unit (62) residential market-rate housing portfolio is comprised of a combination of historic homes known as the “Big Whites”, non-historic ranch style single-family and multi-unit homes within the Main Street Neighborhood. Since conveyance by the Navy, the City has relied upon a third-party service provider for day-to-day property management tasks including marketing available units, leasing activities, inspections, routine maintenance, emergency service-calls, collection of rents and other monies due, tenant communications, and uncomplicated unit turn-over work.
Since 2022, Cerda Zein Real Estate, Inc. (CZRE), a local Alameda based residential management company, has contracted with the City to provide these services, under a sub-management agreement with the City’s Commercial Property Manager, LPC West LP (LPC). This agreement (as amended earlier this year) will terminate August 31, 2026. As such, BRED staff have undertaken a competitive public process to solicit new proposals for these services with the goal of having a new negotiated agreement in place to begin on the new fiscal year.
The formal Request for Proposals (RFP) for Residential Property Management Services was published on February 6, 2026, and advertised in the Alameda Journal, City website, social media and circulated by the Building Owners and Managers Association (BOMA) of Oakland/East Bay.
A mandatory pre-proposal meeting and site visit was held for prospective proposers with proposals due on or before March 4, 2026.
The published RFP included instructions to which proposals must conform, required information and the scoring criteria that would be utilized in rating the firm’s qualifications and capability to perform the scope of work.
Staff received a total of five (5) proposals before the due date from the following firms: Horizon Realty Group (Horizon), CZRE, Bell Properties (Bell), Hopyard Property Management Inc. (Hopyard) and Drysdale Property Management (Drysdale). Of the five submissions, only four were complete. The Drysdale proposal was nonconforming, it did not include required content listed in the published RFP, thus considered nonresponsive and eliminated from consideration.
In alignment with the City’s procurement policy and published RFP selection process, the proposals were carefully reviewed and scored. The components scored included, the firm’s background, experience with other similar portfolios in the local area, a staffing plan and resumes of key personnel, sample reports (administrative, financial and operational), a full description of proposed fees and expenses, written acceptance of the City’s standard Service Provider Agreement and all insurance requirements therein, and the firm’s repair, maintenance and operations program and protocols. BRED staff and LPC also held multiple rounds of interviews with the firms that submitted complete and responsive proposals.
DISCUSSION
In House vs. Contracted Property Management Services
In preparing for the Residential Property Management RFP process, BRED staff reviewed data and reflected on the lessons learned from the 2024-25 competitive process to secure new Commercial Property Management Services for the City. At that time, City Council requested the process include an evaluation of the staffing structure and potential cost to bring commercial and residential property management services in-house (performed directly by City employees). As part of this effort, interviews were conducted with numerous other similar cities and public entities with real property portfolios that included residential units. The majority of the entities interviewed utilize a third-party service provider for residential property management services for several reasons but most importantly, for two reasons:
1. Understanding how to conduct operations in a manner aligned with local, State and Federal laws regulating residential leases, and
2. The ability to provide cost effective, immediate response to emergency residential tenant issues 24-hours per day, seven days per week. By sharing staff across a larger portfolio, contracted residential property managers are able to achieve a more cost effective per-unit solution to this 24-7 need.
As a result, BRED staff continues to recommend to City Council that property management services be contracted to third parties for performance with close oversight.
Evaluation Criteria
Two important factors in the analysis of the proposals received were 1) Cost and 2) Service Level, which are the basis for the staff recommendation, as summarized below.
Management Fees and Cost
Each of the firm’s proposals included similar categories of fees for management, maintenance, commission and after-hours response that is consistent within the professional property management industry. In summary, these include:
Management fees cover staffing, executive oversight, accounting, overhead, and other administrative costs. Average full-service residential property management fees in California range from 6% to 12% of the monthly rent.
Leasing commissions cover all costs associated with leasing a unit, including marketing, showing, performing tenant screening, and executing new and renewal lease documents. These are generally charged at either a flat rate per new lease or as a percentage of the 1st month’s rent.
Maintenance fees are charged for on-call basic maintenance and repair work carried out by in-house staff, at an hourly rate. For example, replacing a broken towel bar or window screen or preparing a vacant unit for turn-over to a new tenant. Necessary purchases of parts and materials are reimbursed. More extensive projects are generally contracted out to specialized vendors.
The table below depicts fees and commission rates from the four (4) complete and timely proposals the City received, for comparative purposes. The Management Fee is estimated based on current gross monthly rent. Most firms included a floor for the Management Fee of between $100 to $300 per unit or a percentage of gross rent, whichever is greater.
Note: Bell’s proposal did not include a set fee and hourly rates. Instead, they established their price on a combination of fees, salary reimbursement and mark-up for two positions, a full-time property manager (estimated at $65,000 per year) and maintenance technician (estimated at $55,000 per year).
While CZRE’s Monthly Management Fee is on the higher range of the proposals received, it is within the larger market range for residential management in California of 6 to 12% of gross rents. In this new proposal, CZRE is not increasing the Monthly Management Fee charged under their current contract with the City. They have negotiated a $10 per hour increase in the hourly Maintenance Rate from $65 to $75 per hour, which is consistent with the other proposals and commensurate with wages in the local area.
Staffing Plan and Customer Service
Staff determined that CZRE’s staffing plan and experience were the most comprehensive to meet the City’s needs. Their existing residential portfolio includes approximately 1,200 residential units under management in the Bay Area, and the staffing plan in their proposal included a deep bench of experienced professionals. The other three firms are based outside of East Bay (Milpitas, Crescent City and Arcadia). Staff also noted in the interview process that some firms had small existing portfolios, little experience with historic homes and limited existing staff included in their proposal. Staff considered local presence and experience, coupled with capable and responsive customer service, as important criteria in the selection of a Residential Property Manager for the City.
Contract Cost
The total not-to-exceed (NTE) cost for the new five-year Agreement with CZRE, with no extensions, are as follows:
|
5-Year Term |
Total Not To Exceed |
|
July 1, 2026-June 30, 2027 |
$278,000 |
|
July 1, 2027-June 30, 2028 |
$285,000 |
|
July 1, 2028-June 30, 2029 |
$292,000 |
|
July 1, 2029-June 30, 2030 |
$299,000 |
|
July 1, 2030-June 30, 2031 |
$306,000 |
|
Total over five years |
$1,460,000 |
The above NTE includes management fees and commissions, estimated annual hourly maintenance services, inspections, after hours response and reimbursable materials (at cost), and a three percent (3%) contingency. Staff recommends the award of a new five-year Agreement with Cerda-Zein Real Estate, Inc., the best qualified proposer, for a total not to exceed cost of $1,460,000.00. This cost is fully covered and offset by the revenues for leasing the City’s market-rate residential units in the Main Street Neighborhood.
ALTERNATIVES
• Authorize the Interim City Manager to execute an Agreement with Cerda-Zein Real Estate, Inc., for contracted residential property management services.
• Direct staff to negotiate different terms with Cerda-Zein Real Estate, Inc. or another property management firm. Changes will be dependent on Cerda-Zein Real Estate, Inc. or another firm’s willingness to accept new terms.
• Do not authorize the Interim City Manager to enter into a new residential property management agreement. This could cause a disruption in property management services, including rent collection, leasing and emergency repairs, and is not recommended.
FINANCIAL IMPACT
The Fiscal Year 2026-27 budget includes professional services within the Alameda Point Fund (29061821) for residential leasing and property management activities, and this agreement would fall within that budgeted amount. Property management fees, commissions, and other costs associated with this service contract are deducted from residential lease revenue and would not impact the City’s General Fund.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the 2040 General Plan, Land Use Element LU-19, and the 2025 Strategic Plan Update Project TIEH25 “Implement the City’s Alameda Point Disposition Strategy - renting and leasing City properties and evaluate renewal provisions” as it allows the City to continue leasing City-owned residential property at Alameda Point with no interruption in services. This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
In accordance with the California Environmental Quality Act (CEQA), this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Section 15301 (Existing Facilities).
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Authorize the Interim City Manager to execute an agreement with Cerda-Zein Real Estate, Inc., for contracted residential property management services for a total not to exceed cost of $1,460,000.00 over five years.
Respectfully submitted,
Abigail Thorne-Lyman, Base Reuse and Economic Development Director
By,
Alesia Strauch, Base Reuse Manager
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibit:
1. Cerda Zein Agreement