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HomeMy WebLinkAbout004 of 2020 - Loan to Diamond Rail Apartments LLC for a Mixed-use, Mixed-income Housing Development at 535 West 30 R 20-2 REDEVELOPMENT AGENCY OF SALT LAKE CITY RESOLUTION NO. R-4-2020 Diamond Rail Apartments LLC RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY APPROVING THE TERM SHEET FOR A LOAN TO DIAMOND RAIL APARTMENTS LLC FOR AN AFFORDABLE HOUSING DEVELOPMENT PROJECT LOCATED AT APPROXIMATELY 535 WEST 300 NORTH WHEREAS,the Redevelopment Agency of Salt Lake City ("RDA") was created to transact the business and exercise the powers provided for in the Utah Community Reinvestment Agency Act. WHEREAS, in the FY 2020 budget, the Salt Lake City Council ("Council") allocated $2,590,000 in Funding Our Future revenues to the RDA to be provided as loans for the development of affordable housing. WHEREAS, pursuant to legislative intent provided by the Council when the FY 2020 budget was adopted,the Council intends to establish a housing trust fund within the RDA and any application that comes to Salt Lake City be handled by the RDA in a manner that is consistent with the current rules and purposes guiding the Salt Lake City Housing Trust Fund and the Housing Trust Fund Advisory Board as established by Salt Lake City code Chapter 2.80. WHEREAS, Diamond Rail Apartments LLC (the "Developer") will construct a development called Diamond Rail Apartments which consists of the new construction of a six- story, mixed-income, mixed-use project with approximately 80 residential units, with 55 of the units deed restricted as affordable housing for 50-years (the "Project") on approximately one acre of property located at approximately 535 West 300 North(the"Property"). WHEREAS,the Developer has applied for a loan from the RDA to assist with construction costs for development of the Project. WHEREAS,on September 23,2020,the Housing Trust Fund Advisory Board("HTFAB") reviewed and recommended approval of the loan application. WHEREAS, the RDA staff recommends the attached set of terms (the "Term Sheet") for a loan to the Developer, as borrower, for the Project. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Redevelopment Agency of Salt Lake City (the"Board") that it approves the loan outlined in the Term Sheet attached hereto, subject to revisions that do not materially affect the rights and obligations of the RDA hereunder. The Board authorizes the Executive Director to negotiate and execute the loan agreement and any other relevant documents consistent with the Term Sheet, and incorporating such other terms and agreements as recommended by the City Attorney's office. Passed by the Board of Directors of the Redevelopment A.ency of Salt Lake City, this 11th day of February, 2020. A k Amy 'o 1- r \ Approved as to form: ''4,1W717-C-• Sa t Lak qty Attorney's Office Kimberly�K.;h ytraus Date: y Vvi I" Z 3 J 2A2.-0 The Executive Director: does not request reconsideration requests reconsideration at the next regular Agency meeting. . i2 "mob Erin Mendenhall, Executive Direct r �0 0i5MENl,9 Attest: : �'�o�J4��PORgTF c�2 Vti Ac ity Recorder Zi SERE s 6t! %‘.6.44T LAKE a' �••o�osir�g9 Term Sheet Diamond Rail Apartments BORROWER Diamond Rail Apartments LLC PROPERTY 1.08 acres of land located at 535 West 300 North PROJECT DESCRIPTION& AFFORDABILITY The project consists of the new construction of a six-story,mixed-income,mixed-use project with approximately 80 residential units, 73 parking spaces, and 1,350 square feet of commercial space. Of the 80 residential units, 55 will be deed restricted for 50-years as follows: • 41%- 50%AMI rent and income limits, 44 units • 40%AMI and below rent and income limits, 11 units PROPOSED LOAN TERMS • Amount: $1,000,000 • Interest Rate: Base Rate 3% Qualifying Interest Rate Reductions Transit Proximity* -0.25% Geographic Distribution** -0.50% Final Interest Rate 2.25% • Term: 30 years • Amortization: 30 years • Repayment: Hard payments, with interest and payments beginning as of the date of project stabilization,projected to be August 1, 2021. Stabilization shall be defined as the lease up of every deed-restricted unit and a 93%, or higher, occupancy 3 months in a row. • Disbursement: Loan proceeds shall be disbursed through construction draws. • A deferred developer fee of approximately$475,000 shall be utilized as a source of financing for the project, to be repaid to the developer as follows: (i) a portion of which may be paid down in accordance with UHC rules at the time of permanent loan conversion, and(ii) afterwards to be repaid in accordance with the terms of a development fee note to be executed by Borrower and the project's developer,provided that, subject to subsection(i) above, in no circumstance will deferred developer fee be repaid to the developer before payment of the monthly debt service on all project loans • Recourse: The loan shall be full recourse before the receipt of certificate of occupancy, converting to nonrecourse upon the receipt of certificate of occupancy. COLLATERAL AND GUARANTEES • Second position deed of trust on the Property subject to subordination agreements reasonably satisfactory to RDA in favor of senior construction and permanent lenders. • Personal Guarantees: An unconditional personal guarantee,through project stabilization, from Andrew Hiller. • Corporate Guarantees:Unconditional corporate guarantees,through project stabilization, from BAM Development and Diamond 300 LLC. CONDITIONS FOR LOAN CLOSING Prior to loan closing, the Applicant will complete the following: • RDA approves all terms of the loan. • Secure sufficient sources of project financing. Sources of financing must equal the total project cost. • Obtain all required City approvals. • Execute loan documents (e.g.promissory notes, loan agreements, security documents, and guarantees) as deemed necessary by the RDA and its legal counsel. • Receive approval from the RDA and its legal counsel of all matters pertaining to title, legality of the loan, and the legality, sufficiency, and the form and substance of all documents that are deemed reasonably necessary for the loan transaction. • Provide evidence of insurance in such amounts and with such coverage as deemed necessary by the RDA for the Property. • Procure and deliver to RDA at Closing a satisfactory binding commitment on ALTA extended coverage form for a mortgagee's(deed of trust)title insurance policy, or equivalent, in the amount of the Loan. • Such other terms as recommended by the RDA's legal counsel and staff.