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7/20/2022 - Meeting Agenda (3) MEETING OF THE REDEVELOPMENT AGENCY FINANCE COMMITTEE Wednesday, July 20, 2022 2:00 pm To access and participate in the electronic meeting please visit https://saltlakecity.webex.com/saltlakecity/j.php?MTID=mab0968568be411c2dacdddec61780d1e This meeting will be an electronic meeting with no anchor location pursuant to the Chair's determination. Chair's determination: As the Chair of the Redevelopment Agency Finance Committee, I hereby determine that conducting the meeting at an anchor location presents a substantial risk to the health and safety of those who may be present. The decision to meet without an anchor location follows a recent increase in COVID-19 cases among the RDA staff and elsewhere. This change is a precautionary measure for the safety of the public and City employees. The Finance Committee will return with a hybrid or in-person meeting when appropriate. We encourage those interested in watching the meeting to do so by joining us at the link above. Revised Agenda 1. Roll Call 2. Approval of the minutes None 3. Business A. Granary District Adaptive Reuse Loan Request for Fisher Brewery—Kort Utley, Senior Project Manager The Committee will review the loan request from Fisher Brewery for$136,062 which would be funded through the Granary District Adaptive Reuse Program. The Committee would consider a recommendation to the RDA Board. 4. Adjournment People with disabilities may make requests for reasonable accommodation no later than 48 hours in advance in order to attend this Redevelopment Agency Finance Committee. Accommodations may include alternate formats, interpreters, and other auxiliary aids. This is an accessible facility. For questions, requests, or additional information, please contact the RDA at 801-535-7240. si' SLCRDA r CAKE6 RDA FINANCE COMMITTEE MEMORANDUM GRANARY DISTRICT ADAPTIVE REUSE LOAN REQUEST Fisher Brewing Wednesday, July 20,2022: 2:00PM,Webex meeting TO: RDA Finance Committee • Redevelopment Advisory Committee: Claudia O'Grady • Economic Development: Peter Makowski • Finance: Mary Beth Thompson • Redevelopment Agency: Danny Walz • Community and Neighborhoods: Blake Thomas • Housing Stability: Tony Milner FROM: Kort Utley, Senior Project Manager RE: Finance Committee Funding Recommendations for a $136,962 forgivable loan to Fisher Brewing from the Granary District Adaptive Reuse Program OVERVIEW: Staff is requesting the Finance Committee's recommendation regarding a $136,962 loan request from Fisher Brewing Company, LLC ("Applicant"). The loan would come from the RDA's Granary District Adaptive Reuse Program, which offers forgivable loans to help convert vacant and underutilized buildings in the Granary District to a more productive use ("Program"). The Applicant recently acquired properties adjacent to their current location at 320 West 800 South, and if their loan request is approved they will use the funding for construction costs associated with converting these newly-acquired buildings into new brewery and taproom space ("Project"). The Applicant's Project meets the eligibility requirements of the Adaptive Reuse Program and aligns with the RDA's goals for the Granary District Project Area. In addition, the Project aligns with the RDA's mission and core values of economic opportunity, equity and inclusion, and neighborhood vibrancy. This is the second time the Applicant has requested funding from the Program. The RDA previously awarded Fisher Brewing $75,000 in 2016, and per the terms of the Program, that loan converted into a grant in 2021. The Program does not prohibit the Applicant from a second round of funding, as this is a separate project from their first loan. Fisher Brewing opened in February 2017 and has been a successful and growing addition to the Granary District. PROJECT ELIGIBILITY: The Project meets the eligibility requirements found in the Granary District Adaptive Reuse Program Policy (Resolution No. R-8-2017): • The Project is located within the Granary District Project Area boundaries at 316-320 West 800 South. • The Project aligns with the Granary District Redevelopment Plan and other RDA policy. The mission of the Granary District Adaptive Reuse Program is as follows: The Granary District Adaptive Reuse Program provides forgivable loans to facilitate the conversion of vacant, underutilized, or economically challenged buildings for a new more productive purpose. By reducing the financial impact of building code requirements, the Program leverages private investment to reduce the number of distressed buildings while preserving the neighborhood's historical character. In addition, the Program facilitates the implementation of transformative projects that increase the number of residents living, working, and visiting the Granary District. The Project will support this mission through the conversion of underutilized buildings to commercial space occupied by a locally-owned business, which will attract visitors, increase the availability of retail goods and services, and strengthen the commercial vitality of the Granary District. • The Applicant has demonstrated the requested loan is necessary for the Project to succeed and that the request is reasonable. Program funds will provide critical gap financing, supplementing other sources of funding for the Project, including loans from First Utah Bank and Preservation Utah, as well as owner equity contributions. The RDA's funding is necessary to help ease the financial impact of renovating the buildings,particularly as construction costs are rising and unforeseen expenses are common in adaptive reuse projects. A table showing the Project's sources and uses of funding is included with this memo as Attachment B. • The requested loan will be used to convert a vacant, underutilized, or economically challenged building into a commercial use. The Applicant's proposed Project is an expansion of Fisher Brewing into two, underutilized buildings located adjacent to their current facility. The expansion will repurpose these adjacent buildings into approximately 3,740 square feet of new tavern space and approximately 2,600 square feet of new brewing area. The Applicant will also add approximately 1,090 square feet of outdoor dining area. Program funding will be utilized for construction costs associated with building code requirements, including full electrical, HVAC and plumbing upgrades, as well as new accessible bathrooms and a fire suppression system. APPLICANT INFORMATION: The Applicants include the four owners of Fisher Brewing: Tim Dwyer, Steven Brown, Thomas Riemondy, and Kevin Frazier. They have owned and operated Fisher Brewing since 2016. 2 ADAPTIVE REUSE MATCH REQUIREMENT: The Program is intended to provide a forgivable loan to supplement a project's existing, secured financing and equity contributions. Up to $200,000 is available per project, depending on matching funds from other sources. The Applicant's overall project cost is $4,625,206, of which $1,411,206 is appropriated for construction improvements. Costs are recognized as contributing to the match requirement if they are allocated to site improvements, environmental remediation, architecture, engineering, or certain construction costs. Acquisition funds are not recognized as contributing to the match requirement. Staff has evaluated the Project budget and determined $980,510 of costs that are eligible as a funding match per the parameters of the Program, as shown in the table below. Eligible Match Amount Site Improvements $24,602 Environmental Remediation - Architecture& Engineering $64,787 Construction Costs $891,121 TOTAL: $980,510 Program funds must be matched by other investment at escalating ratios, as shown in the table below. Based on the Program's stepped matching requirements and the eligible costs identified by staff, the Applicant may apply for a Program loan of$136,962. MProgram Match Steps Match Ratio Program Matching Total (Program funds: other funds) Funds Funds 1:02 $ 50,000 $ 100,000 $ 150,000 1:06 $ 50,000 $ 300,000 $ 350,000 1:12 $ 36,962 $ 443,548 $ 480,510 TOTAL: $ 136,962 $ 843,548 $ 980,510 PROJECT VIABILITY: Since opening in 2017, Fisher Brewing has established itself in the local craft beer community, experiencing a growth in sales every year, except for a dip in sales in 2020 due to the COVID pandemic. As shown in Attachment C: Project Growth Following Expansion, the Project is anticipated to allow Fisher Brewing to continue growing into the near future. LOAN TERMS, CONDITIONS, & SECURITY: LOAN TERMS Amount: $136,962 Eligible Uses: Construction costs related to building code requirements Term: 5 years (60 months), commencing on execution of loan documents Amortization: N/A Interest Rate: 0% if all Conditions are met Payments: No payments if all Conditions are met 3 Disbursement: RDA funds will be disbursed through construction draws Loan Forgiveness: Principal shall be forgiven in equal annual installments over the five-year term if all Conditions are met. Default Rate: If the Project fails to meet Conditions, Borrower may be required to repay all or a portion of the loan as determined in the loan agreement. Interest shall be due on the portion deemed to be repaid, accrued as of the date Pro ram fundin_ was disbersed, at a default interest rate of 14%. CONDITIONS 1. Program funding shall be utilized for eligible uses only. 2. The Project shall be completed as intended within a reasonable timeframe. 3. The Project shall operate as the intended uses (neighborhood commercial) over the five- year term. 4. The Project shall remain in good financial and legal standing over the five-year term. The loan shall be secured by unconditional personal payment guarantees from the owners of Fisher Brewing: Tim Dwyer, Steven Brown, Thomas Riemondy, and Kevin Frazier. itegemeeresoM 1. Secure all other financing for the Project 2. Obtain all City approvals 3. Execute all loan documents as deemed necessary by the RDA 4. Provide evidence of insurance in such amounts and with such coverage as deemed necessary by the RDA for the Property. 5. Such other terms as recommended by RDA legal council and staff EVALUATION & APPROVAL PROCESS: The RDA Finance Committee will review the Applicant's request and make a recommendation to the RDA Board of Directors, which will determine whether to fund the Project as requested by the Applicant. ATTACHMENTS: A. Site Map B. Sources and Uses of Funding C. Projected Growth Following Expansion 4 ATTACHMENT A: Site Map o - ' y PROPOSED vIr ,.. :. , PROJECT ,.--• - , _ _- : • �•. s ,M WI el _�t� • „ 'ti I .- �F • �' "` it EXISTING ._ f - "1'_� . r . �, . • 2195 sq.ft.brewing area •v. ® '�— , - i • 1890 sq.ft.tavern space © ars J �_ a1i0 6Q,�,! " ' • 1800 sq.ft.outdoor dining 'I _�~ 4 ��~ 4A« 1 EXPANSION - `` 4' • Adding _1 sq f. of brewing area t, 6. • Addiria 4] �c; I. of tavern space - ' - - _ - ` - - ��► K. • Add ua 1 s ; It.of outdoor dining ` 840 s i 1 o 5 ATTACHMNET B: Sources & Uses of Funding Fisher Brewing Expansion Sources Uses Cash from Applicant $ 509,244 Property purchase $ 2,300,000 First Utah Bank Loan $ 3,744,000 Refinance 320 W.800 S. $ 444,000 Preservation Utah $ 235,000 Brewing equipment $ 350,000 RDA Adaptive Reuse Loan $ 136,962 Construction Improvements $ 1,411,206 Project contingency $ 120,000 Total Source of Funds $ 4,625,206 Total Uses of Funds 'lir4,625,206 6 ATTACHMENT C: Projected Growth Following Expansion PROJECTED I Projections GROWTH 3.5 FOLLOWING EXPANSION o u 0 H- 5 0 2018 2019 2020 2021 2022 2023 2024 ® SLCRDA 7