12/02/2020 - Minutes MINUTES
FROM THE MEETING OF THE
REDEVELOPMENT ADVISORY COMMITTEE
Wednesday, December 2, 2020
4:00 p.m.
This meeting was an electronic meeting pursuant to Salt Lake City Emergency
Proclamation No. 2 of 2020 (2)(b).
Chairperson Doughty read the following statement:
I, Brian Doughty, Redevelopment Advisory Committee Chair, hereby determine that conducting
the Redevelopment Advisory Committee meeting at the anchor location presents a substantial risk
to the health and safety of those who may be present at the anchor location. The World Health
Organization, the President of the United States, the Governor of Utah, the Salt Lake County
Health Department, Salt Lake County Mayor, and the Mayor of Salt Lake City have all recognized
a global pandemic exists related to the new strain of the coronavirus, SARS- CoV-2.
Due to the state of emergency caused by the global pandemic, I find that conducting a meeting at
an anchor location under the current state of public health emergency constitutes a substantial risk
to the health and safety of those who may be present at the location. Moreover,the City&County
Building, which is the anchor location for Redevelopment Advisory Committee meetings, is
presently closed for regular occupation due to damages sustained during the March 2020
earthquakes.
1. Roll Call
The following members were present:
Brian Doughty, Chairperson Mojdeh Sakaki, Vice-Chairperson
Claudia O'Grady Jason Head
Mark Isaac
The following members were absent:
None
Also Present:
Danny Walz, Chief Operating Officer; Tammy Hunsaker, Deputy Chief Operating
Officer; Robyn Stine, Office Facilitator; Allison Parks, Senior City Attorney; Kort Utley,
Senior Project Manager, Tracy Tran, Project Manager, Amanda Greenland,
Communications and Outreach Manager
2. Briefing by the Staff
A. Open Meetings Act Training Follow-Up
City Attorney Allison Parks gave a brief update to the changes within the Open Meetings Act
in 2020. She explained that the main change was that an anchor location is no longer required
when hosting an electronic meeting due to COVID-19. Ms. Parks asked if anyone had any
questions regarding the electronic training. No one having any questions, she ended her
presentation.
3. Approval of the minutes of the August 5, 2020 meeting
Mr. Head made a motion to approve the minutes from the August 5, 2020 meeting. Ms.
O'Grady seconded the motion. Upon roll call, the motion passed unanimously.
4. Business
A. Update on the RDA Housing Policies —Tammy Hunsaker
Ms. Hunsaker said that this is another housing briefing and gave a brief history of previous
briefings explaining that in 2017, the Redevelopment Agency Board of Directors (Board)
directed Redevelopment Agency(RDA) staff to create an RDA housing allocation policy that
would provide guidelines for how housing funds are allocated and disbursed through the RDA.
She said the Salt Lake City Council and the Board then allocated Funding Our Future (FOF)
sales tax funds for housing development to the RDA. Ms. Hunsaker said a final source of funds
came with the Inland Port legislation which includes 10% of all tax differential, which is
essentially tax increment collected across the entire Inland Port area, to be set aside for
affordable housing, and those funds will be allocated to the RDA.
Ms. Hunsaker said this first task has been to create the RDA Housing Allocation Funds Policy
which establishes accounts for the funding sources allocated to the RDA. She said the second
task for staff was to create a centralized program for community partners to access resources
efficiently, providing a one-stop-shop for the application, underwriting, and approval process
across all funding sources. This is the Housing Development Loan Program Policy.
Ms. Hunsaker said this is a follow up to the August 2020 briefing provided to the
Redevelopment Advisory Committee(RAC) which provided a basic framework of the two
policies, adding that these have now been turned into draft policy resolutions for RAC's
consideration and recommendation to the RDA Board. She explained that the first policy
resolution, the RDA Housing Allocation Funds Policy(attached), says that the RDA will create
and maintain four different funds for housing, broken down by the source of the funds, as
follows:
1. Primary Housing Funds which are the Tax Increment(TI) Statutory Housing required as
the set aside through typical RDA project areas, will go into one fund.
2. The Secondary Housing Fund includes funds that the RDA can allocate above and
beyond what is required by law and allowed by the state statute.
3. Northwest Quadrant Housing Fund which includes the 10% Tax Differential from the
Inland Port.
4. Housing Development Fund which includes the Funding Our Future (FOF) sales tax and
other city funds.
Ms. Hunsaker said that both RAC and the Board encouraged the Northwest Quadrant(NWQ)
funds be prioritized for neighborhoods west of I-15 because those are the neighborhoods
adjacent to, and will be impacted most,by Inland Port development activities. She added that
specific policy priorities can be identified pursuant to each column on the chart.
Ms. Hunsaker said the policy resolution allows for a budgeting process on an annual basis that
will look at the dollar amount of funds projected available across all four of the funds. She said
RDA staff,with input from RAC, will look at those funds comprehensively and will develop an
annual strategy for how those funds should be spent allowing flexibility as needs and priorities
change. She said it would also allow the RDA to possibly take advantage of some development
or acquisition opportunities that might be readily available and structure the annual plan
accordingly. She said once the annual plan is presented to the Board and adopted, RDA staff
would then implement the projects accordingly.
Ms. Hunsaker stated that the policy resolution details all that she explained as well as outlines
RDA reporting requirements to the Board, and RAC, each year. This reporting includes an
accounting of the balance of housing funds and detailing what staff spent the funds on over the
previous fiscal year, including what projects, development partners, amount of housing funds,
total project cost, how much other investment was leverage, and the number of units in the AMI
that were constructed with those funds.
Ms. Hunsaker said RDA staff is asking RAC to provide a recommendation to the Board to
approve this resolution. She explained the options as:
1. Recommend approval of the policy resolution.
2. Recommend approval with modifications to the policy resolution.
3. Defer to a future meeting.
4. Recommend not approving this policy resolution.
Mr. Doughty asked for clarification regarding the chart of the Northwest Quadrant that says the
geographic area would be City wide. Ms. Hunsaker explained that per state statute it would be
City-wide,but the funds are prioritized under the policy priority for West of I-15. She added that
much of this policy is simply formalizing what is already required through state statute in terms
of keeping the funds separate, and also providing a process for the annual budgeting strategy and
how staff will propose to budget funds for housing on an annual basis.
Ms. Hunsaker said that RDA staff was directed by the Mayor and the City Council to establish a
new program that would provide a centralized application, underwriting, and approval process
regardless of the funding source. She said RDA Staff proposed the program be called the Salt
Lake City Housing Development Loan Program("HDLP"). Key points of this program would
include:
1. Provide low cost financial assistance to incentivize the development and preservation of
affordable housing within Salt Lake City.
2. Establish a process for HDLP resources to be directed to specific policy priorities
determined through the annual budget process as established in the RDA Housing
Allocation Funds Policy.
3. Provides for the administration of funds through a transparent NOFA process. Funds
from various sources may be combined into a consolidated NOFA or a specific funding
source. NOFAs could be offered on an annually or multiple times per year. They could be
competitive or open-ended depending on funding availability,priorities, and demand.
4. Establishes a standardized process for approval of applications and a uniform set of
underwriting policies to set expectations for both applicants and the Board. The approval
process will include a unified review committee that will review applications and provide
a recommendation to the Board. Applications are currently reviewed by either the RDA
Finance Committee or Housing Trust Fund Advisory Board depending on the source of
funding.
Ms. Hunsaker explained that the new program would use funds from the four sources in the
RDA Housing Allocation Funds Policy and the developer won't know that the funds are coming
from multiple accounts as that would all be done on the back end where staff would determine
which funding sources best served for each loan that's approved.
Ms. Hunsaker said RDA Staff is looking at establishing standard loan terms and conditions that
regardless of the source of financing there would be a standardized approval process and
standardized loan terms and conditions. She explained Exhibit A for the standard loan terms and
conditions which is below:
I. GAP FINANCING: RENTAL CONSTRUCTION TO PERMANENT
Limits to Assistance:
• Maximize Other Sources: Applicants must demonstrate that they have maximized
other available financing sources thereby limiting HDLP funding to the lowest
amount necessary to close the funding gap and assure project feasibility.
• Loan to Value: A loan-to-value limit is not applicable. However, land and project
costs shall be reasonable as compared similar projects in size, scope, and location.
• Debt Service Coverage Ratio (DSCR): Repayment terms for amortizing HDLP loans
will be calculated as described herein and will be based on a DSCR of 1.10 inclusive
of the RDA's loan and all senior debt.
• Cash Flow: For loans that qualify for a cash flow repayment structure,pursuant to the
standards contained herein, applicants must demonstrate an that the HDLP loan can
be repaid within its scheduled term or at the end of the term.
Repayment:
• Depending on the project's capacity for repayment, loans may be repaid as an
amortized loan, a cash flow loan based on available cash flow, or a combination of
both types of loan.
o Amortized Loan: The RDA will determine what portion of its loan can be paid
on an amortized schedule with required payments using the DSCR standards
contained herein.
o Cash Flow Loan: If full amortization is not feasible due to limited cash flow,
funds shall be repaid from an agreed upon percentage split of surplus cash
flow. Cash flow loans shall be considered only for projects that provide a high
level of affordability, target a difficult to serve population, or include other
significant public benefit.
• At the RDA's discretion,payments may not be required, and interest may not accrue
or accrue at a reduced interest rate during the construction and lease-up phase. Upon
completion of construction, lease-up, project stabilization, or other fixed date, loans
shall begin to accrue interest and shall be subject to repayment.
• Any accrued but unpaid interest and principal is due in full at loan maturity.
• Loans can be prepaid in whole or in part at any time without penalty. Prepayment
does not end the affordability period before its original end date.
Term:
• RDA loan terms will generally match the term of permanent senior debt, generally up
to a maximum of 30-years for projects with non-HUD financing and up to a
maximum of 40 years for projects with HUD financing.
• Commencement of the loan term and/or repayment period may be deferred for a
period of time to allow for completion of construction and lease-up phase.
Interest Rate:
• Base Interest Rate: The base interest rate shall be as follows:
o Amortized Loans: 3%
o Cash Flow Loans: 4%
• Funding Priority Incentives: Projects shall have the ability to reduce the Base Interest
Rate if the project meets the current funding priorities as established through the
annual Funding Strategy. For each funding priority met, the project is eligible to
receive a .5%reduction from the Base Interest Rate, with the ability to reduce the
interest rate to a minimum of 1%.
• Interest rates are subject to an adjustment, of up a 1% deviation, based on project cash
flow and debt coverage ratio calculated at time of application and underwriting.
Affordability Restriction:
• Affordability covenant shall be recorded on the property and shall extend for at least
the same period as the senior financing or a minimum of 30 years,whichever is
greater.
Subordination to Senior Debt:
• HDLP loans may be subordinated to leverage private financing, with the priority
among subsidy lenders typically established based upon size of the loans.
Security:
• Adequate security shall be required, generally in the form of a deed of trust,
promissory note, and guarantees.
Developer Fee:
• Given the rent restrictions on affordable housing projects, affordable housing
developers do not make the majority of their profit through project cash flow like
developers of market-rate rental housing. As such, developer fees are recognized as a
significant part of the income on which affordable housing organizations depend for
their operations. The calculation to determine a maximum developer fee shall be
consistent with Utah Housing Corporation's policy, which caps the maximum
developer fee as a percentage of total development cost generally excluding
land/property acquisition, developer's fees, consultant fees,permanent financing fees,
marketing fees, tax credit fees, and reserves. Percentages are as follows:
Number of Units Maximum Developer Fee %
o 1-40 15%
o 41-100 12%
o 101-200 11%
o 201+ 10%
Borrower Contribution:
• Borrowers shall contribute a source of financing to the project, whether through an
equity contribution or a deferred developer fee or a combination of both. The level of
borrower contribution will be considered on a case-by-case basis and will be
evaluated based on the type of ownership entity and level of public benefit provided
by the project.
• For Low Income Housing Tax Credit ("LIHTC")projects, the borrower shall
maximize the amount of deferred developer fee allowed under Utah Housing
Corporation's standards to be allowed in tax credit basis, this amount must be payable
within a time frame allowed by the LIHTC program as approved by the project's tax
counsel.
• Projects that have not maximized a developer fee, pursuant to the standards contained
herein, or that serve lower AMIs or special populations, such as permanent supportive
housing, may have the ability to waive the borrower contribution.
Disbursement of Funds:
• Funding shall be disbursed as construction draws evidenced by supporting
documentation demonstrating that work has been completed and that the project is in
good financial and legal standing.
Other
• Loans are non-assumable without written permission from the RDA.
Ms. O'Grady asked how far down can a project drive the interest rate and what are the conditions
under which an applicant could get a cash flow loan, what would warrant a cash flow loan?
Ms. Hunsaker said the interest rate could be as low as a minimum of 1%. She said the policy
states that Staff would consider a cash flow loan on a case by case basis. She added that projects
considered for a cash flow loan must meet a high level of public benefit, including serving lower
AMIs or special populations.
Mr. Head requested clarification on the amortization and the cash flow balloon payment.
Ms. Hunsaker said the policy says under any loan scenario, if there is an outstanding principal
and interest balance due at the end of the loan term, there is a balloon payment to pay that off.
Because the City Council/RDA board are really prioritizing the revolving of affordable housing
funds and don't want to see the funds be forgiven.
Ms. O'Grady asked if all the RDA loans are due upon refinance.
Ms. Hunsaker said that this is not detailed in the policy but in the loan documents for every loan
it is made clear that loans are due upon refinance.
Mr. Doughty asked what kind of recourse the RDA has if it is discovered that developer is not
complying with the affordability requirements.
Ms. Hunsaker said in the event of default and it is not remedied, the RDA could foreclose. She
added all of this is detailed in the loan documents.
Ms. Sakaki commented that she did not see the word diversity within the document or anything
about green spaces. She also asked about sustainability within the policy.
Ms. Hunsaker explained that both policies intentionally stayed away from specific policy
priorities in terms of different public benefits, because those are established through the RDA
Guiding Framework and the City's housing plan. The policies are intentionally vague because
funding priorities will be determined through the annual funding strategy and be supported by
different policies that HAND or RDA works on which will change over time.
Mr. Walz said the RDA is actively working, not just within the City context, but independently
within the RDA and working with consultants on first, how to infuse our policies and programs
with diversity in the equity as well as sustainability. He added that staff is reaching out to
consultants and the Sustainability Department to define the policies which will be brought before
RAC for feedback and recommendation.
Ms. Sakaki recommended adding how affordable housing is defined within the policy as well as
explain what adequate means regarding security.
Ms. Hunsaker said that the language regarding the guarantees or security is intentionally vague
because it varies for each loan and determined on a case by case basis.
Mr. Head asked if it would make sense to build flexibility in the interest rates so the RDA would
have some sort of benchmark where staff can adjust if interest rates were to go up.
Ms. Hunsaker said that Staff had been thinking along the same lines and she wrote into the
policy that interest rates are subject to an adjustment of up to 1%deviation. She added that she
will take Mr. Head's feedback and discuss with RDA staff
Ms. Hunsaker said if there were no further questions, RDA staff is looking for a recommendation
for the RDA Housing Allocation policy from RAC.
Mr. Doughty asked for a motion to recommend approval by the RDA for the RDA housing
allocation funds policy.
Ms. Sakaki made a motion to recommend the RDA Housing Allocation Funds Policy as
presented. Ms. O'Grady seconded the motion. Upon roll call, the motion passed unanimously.
5. Adjournment.
There being no further business the meeting was adjourned.
Brian r7 2021t1q MDT)
Brian Doughty, Chairperson
This document along with the digital recording constitute the official minutes of the
Redevelopment Advisory Committee held December 2, 2020.
December & March RAC Minutes
Final Audit Report 2021-04-07
Created: 2021-04-07
By: Robyn Stine(robyn.stine@slcgov.com)
Status: Signed
Transaction ID: CBJCHBCAABAA42mMjS4LB_sDay3RlQjtb_ycMmHmFPos
"December & March RAC Minutes" History
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