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Transmittal - 6/9/2021 MARY BETH THOMPSON Chief Financial Officer ERIN MENDENHALL Mayor DEPARTMENT OF FINANCE 451 SOUTH STATE STREET, ROOM 245 SALT LAKE CITY, UTAH 84114 TEL 801-535-6403 CITY COUNCIL TRANSMITTAL _________________________ Date Received: __________________ Rachel Otto, Chief of Staff Date sent to Council: _____________ TO: Salt Lake City Council DATE: June 7, 2021 Amy Fowler, Chair FROM: Mary Beth Thompson, Chief Financial Officer ________________________________ SUBJECT: Utah State Infrastructure Bank Loan Application STAFF CONTACT: Marina Scott, City Treasurer 801-535-6565 DOCUMENT TYPE: Briefing/Discussion RECOMMENDATION: 1) That the City Council hold a discussion and consider obtaining a $7,000,000 loan from the Utah State Infrastructure Bank (SIB) to finance a neighborhood parking structure, a 926 stall garage, located between 400 and 500 West and 600 and 700 South in Salt Lake City, UT. BUDGET IMPACT: If approved, a loan will bear an interest rate at or above the market interest rate. The loan term will not exceed 15 years. The amortization schedule is attached. The date of the first payment will be no later than the completion date of the project or the date the facility is opened for public use. The City indicated to the State that it pledges all or a portion of sales tax revenue as a revenue source to the repayment of the loan. To secure the repayment of the loan, the City intends to pledge the funds allocated by HB244. HB 244 made two allocations to Salt Lake City: 1. A one-time distribution to Salt Lake City in the amount of $1,100,000, subject to availability of funds. This is for the fiscal year 2020-2021. 2. An annual distribution of $1,100,000 to Salt Lake City, for the next 15 years, subject to availability of funds. This is for a fiscal year beginning on or after July 1, 2021. rachel otto (Jun 8, 2021 14:36 MDT)06/09/2021 06/09/2021 Utah State Infrastructure Bank Loan Application Transmittal to City Council June 7, 2021 Page 2 of 5 To further secure the repayment of the loan, in a separate agreement between the RDA and the developer, the developer will pay to the RDA amounts equal to the amounts paid by the City to the State on the SIB loan. In turn, under an interlocal agreement between the City and the RDA, the RDA will transfer those developer payments to the City to reimburse the City for the City’s repayments to the State on the SIB loan. BACKGROUND/DISCUSSION: Overview Q Factor and BCG Holdings, along with Catalyst Investments as the primary capital partner, currently control over five acres of former industrial land between 400 and 500 West and 600 and 700 South in Salt Lake City, UT. Located in the heart of City’s Granary District and in one of Utah’s designated opportunity zones, this underutilized site is dubbed the INDUSTRY Neighborhood. The INDUSTRY Neighborhood is envisioned as a dense, mixed-use series of developments anchored by the adaptive- reuse INDUSTRY SLC, a modern office project. The INDUSTRY Neighborhood builds on the 2016 Salt Lake City Downtown Master Plan’s vision of “a district where historic grit and modern refinement meet”. The INDUSTRY Neighborhood will include over:  300,000 SF of modern office in a former Silver Foundry with 100,000 Complete as of March 2020.  375 units of mixed-income residential housing  68 key Hotel  40,000 SF Retail  926 parking stalls parking in addition to neighborhood retail and other amenities. Parking Structure Overview The INDUSTRY Neighborhood Parking Structure, a 926-stall garage, represents a key initial milestone in providing the parking necessary to accommodate INDUSTRY SLC’s ultimate buildout of 300,000 square feet by adaptively reusing an existing building. Critically, the parking structure will also serve to provide parking for several other projects in the neighborhood, including exclusive parking for a 60-80% AMI housing development directly to the North, market rate housing to the Southwest, and the adaptive reuse project currently being entitled and developed by Lake Union Partners and the Evo Group directly to the East. Recognizing the current demand for parking coupled with the anticipated underutilization of parking structures in the future due to transit improvements in the neighborhood with the 400 West UTA TRAX/Retail expansion, this structure is being designed and built to allow for future adaptive reuse. The total project cost for the INDUSTRY Neighborhood Parking Structure is anticipated to be $28,000,000M. The assistance requested for the structure is $7,000,000 – which will be used to allocate public parking and allow for an improved design that contemplates future diminished need Utah State Infrastructure Bank Loan Application Transmittal to City Council June 7, 2021 Page 3 of 5 for vehicular traffic in the neighborhood. The project currently sits shovel ready and is currently navigating the City’s entitlement process. Utah State Infrastructure Bank Application Prioritization Process The Utah State Infrastructure Bank provides loans and credit enhancement to local government for transportation or transit related projects. These loans and credit enhancements are prioritized based on the Utah State Infrastructure Bank’s following: application prioritization criteria: 1. Does the proposed transportation project encourage, enhance, or create economic benefits to the State or political subdivision? Yes. a. Project Economic Impacts: The INDUSTRY Neighborhood Parking Structure will support over 300,000SF of office, 375 residential units, 68 key hotels, and 40,000SF of retail in Salt Lake City’s Granary District. This equates to over 200 temporary construction jobs between 2018-2022 and 500 permanent jobs and 500 residents. The total project cost of the parking structure, office, multifamily and retail is roughly $271,750,000. b. Political Subdivision Plans: Salt Lake City has had the Granary District identified as a CRA project area that began collecting tax increment in year 2000 wit h a planned expiration year of 2023. The Salt Lake City Redevelopment Agency’s 2015-2109 Strategic plan calls for active, mixed use, and multi modal corridors that emphasize transit, creative uses of the public right-of-way, and a high-quality pedestrian environment. The development goals of the Agency in this district are to support adaptive reuse of contributing structures with new infill development that supports commercial, residential, and light industrial uses. c. Transit Planning: Currently almost all the Granary District is more than ¼ mile from a bus or transit stop, with most of the housing and jobs in the neighborhood outside walking distance to transit. The parking structure is aligned with Salt Lake City’s 2008 Downtown in Motion, the 2015 Downtown Master Plan and the 2017 Salt Lake City Transit Master Plan, which identifies an extension of the TRAX Red Line along 400 South from Main Street to 600 West and a second loop along 400 West connecting to the 900 South TRAX station. Utah State Infrastructure Bank Loan Application Transmittal to City Council June 7, 2021 Page 4 of 5 *Taken from 2015 Downtown Master Plan. 2. Will the loan or assistance enable the project to proceed at an earlier date than otherwise possible? Yes. The estimated total project cost for the INDUSTRY Neighborhood Parking Structure sits at $28,000,000. Given the current economic climate with COVID-19 and other challenges in the debt markets – public assistance for the INDUSTRY Neighborhood Parking Structure would allow for the project schedule to proceed Spring 2021. 3. Will assistance from the SIB foster innovative public-private partnerships and attract private debt and equity investment? Yes. The parking structure currently is part of a larger qualified opportunity zone investment that has raised over $30M to-date in equity for the INDUSTRY Office, INDUSTRY Neighborhood Parking Structure, and mixed income multifamily projects. The project also includes a debt partner that is currently deploying on the INDUSTRY Office component and is anticipated to be attracted to the INDUSTRY Neighborhood parking Structure. 4. Does the transportation project provide benefit to the state highway system, including safety and mobility improvements? Yes. The parking structure is located just directly south of the 600 South I-15 off ramp entrance into Salt Lake City in between 400W and 500W. It is intentionally placed on the interior of new midblock private right-of-way, maximizing the current street frontage along 500 West, 600 South, and 700 Utah State Infrastructure Bank Loan Application Transmittal to City Council June 7, 2021 Page 5 of 5 South for a variety of mixed-use residential and retail projects, and intentionally wrapping or shielding the parking structure with other more aesthetically pleasing structures that also contribute to safety and mobility improvements along 600 South. 5. Does the project financing include local or private participation? Yes. It includes local private participation via the qualified opportunity zone fund that has been established for project area. It is anticipated that local public financing will be used to further support transportation and utility infrastructure upgrades and affordable housing. 6. Does the project provide intermodal connectivity with public transportation, pedestrian, or non-motorized transportation facilities?’ Yes. 500 West and the expansion of the existing Elder court will serve to create additional public space and new midblock connections for pedestrians, bicycles, scooters, and vehicles. In lieu of sprawling surface parking lots, this parking structure will allow for additional infill on the other sites immediately adjacent. The INDUSTRY Neighborhood Parking Structure will also include the Elder Court midblock connection between 600 and 700 South, creating a new pedestrian corridor with softscape improvements in an area with limited shade and greenways. While the INDUSTRY Neighborhood Parking Structure is more than ¼ mile from a bus or transit stop, the project is being purposefully built to anticipate the future TRAX expansion along 400 West. cc: Rachel Otto, Lisa Shaffer, Mary Beth Thompson, Boyd Ferguson, Danny Waltz, Steven Bagley 1 of 2 Loan Agreement for the State Infrastructure Bank Loan Fund 4/12/2021 State of Utah Department of Transportation Loan Agreement State Infrastructure Bank Loan Fund THIS LOAN AGREEMENT made and entered into on [Date], by and between the UTAH DEPARTMENT OF TRANSPORTATION, hereinafter referred to as “UDOT”, and Salt Lake City, a political subdivision of the State of Utah, hereinafter referred to as the “Local Agency.” RECITALS WHEREAS, the Local Agency has applied for an infrastructure loan from the Utah State Infrastructure Bank Fund. WHEREAS, the purpose of this infrastructure loan is to construct a new Salt Lake City parking structure within the Local Agency jurisdiction. WHEREAS, the Transportation Commission has approved the infrastructure loan application on [Month Day], 2021. THIS LOAN AGREEMENT is made to set out the terms and conditions of UDOT loaning the money from the Transportation Infrastructure Loan Fund to the Local Agency. AGREEMENT NOW THEREFORE, it is agreed by and between the parties hereto as follows: 1. UDOT will loan the Local Agency $7,000,000.00 from the Transportation Infrastructure Loan Fund to enable the Local Agency to construct the parking structure facilities referenced above within the Local Agency jurisdiction. 2. The Local Agency shall only use funds for transportation projects as described in Utah Code Section 72-2-201. 3. At the end of the transportation project, all unused funds will be applied to the principal amount. 4. The interest rate will be 1.96% per annum interest with a loan duration of FIFTEEN years. 5. Local Agency will pay the principal and interest according to Exhibit A, which is incorporated by reference. The Local Agency will use funds from Utah Code Section 72-2-121(4)(l) to pay the loan. The first payment referenced in Exhibit A will be made on or before May 31, 2022. All subsequent payments will be made on or before May 31 of each year until the loan is paid in full. 6. In the event the Local Agency is 30 days delinquent with a payment on a due date as shown in Exhibit A, UDOT will request that the State of Utah withhold B&C road funds allocated to the Local Agency and deposit the money into the Transportation Infrastructure Loan Fund until the payment or loan has been satisfied. UDOT will not issue any more loans to Local Agency while the loan is in default. 7. If Local Agency breaches any terms of this Agreement, UDOT may seek any legal or equitable remedy to obtain compliance or payment of damages. In the event an action is filed in district court, the venue shall be Salt Lake County, Third District Court. 2 of 2 Loan Agreement for the State Infrastructure Bank Loan Fund 4/12/2021 8. Local Agency represents that notice was published of its intention to obtain an infrastructure loan at least once in accordance with the publication of notice requirements under Section 11-14-316; and adopted an ordinance or resolution authorizing the infrastructure loan in compliance with Utah Code Section 72-2-204(4). 9. Each party to this Agreement shall designate a representative as the contact to address questions and issues as they arise under this agreement. 10. This Agreement shall be governed by the laws of the State of Utah both as to interpretation and performance. 11. This Agreement may be executed in counter parts by the parties. 12. Each party represents that it has the authority to enter into this Agreement. 13. This Agreement shall constitute the entire agreement and understanding of the Parties with respect to the subject matter hereof, and shall supersede all offers, negotiations and other agreements with respect thereto. Any amendment to this Agreement must be in writing and executed by an authorized representatives of each party. This Agreement will become effective when all parties have signed. The effective date of this agreement is the date this Agreement was signed by the last party. [LOCAL AGENCY Utah Department of Transportation By Date By Date Becky Bradshaw, UDOT Finance Director By Date By Date Recommended for approval Lyle McMillan, UDOT Director of Strategic Investments By Date By Date Title/Signature of additional official if required UDOT Comptroller Office Page 1 of 1 Amortization Chart HELP © 2008 Vertex42 LLC Loan Amount (pv)7,000,000 Interest Rate (rate)1.96% Total # of Periods (Nper)15 Payment per Period 543,149.39$ Total Interest Paid 1,147,240.91$ [42] Period Payment Amount Interest Cumulative Interest Principal Principal Paid Balance 7,000,000.00$ 1 543,149.39 137,200.00 137,200.00 405,949.39 405,949.39 6,594,050.61 2 543,149.39 129,243.39 266,443.39 413,906.00 819,855.40 6,180,144.60 3 543,149.39 121,130.83 387,574.23 422,018.56 1,241,873.96 5,758,126.04 4 543,149.39 112,859.27 500,433.50 430,290.12 1,672,164.08 5,327,835.92 5 543,149.39 104,425.58 604,859.08 438,723.81 2,110,887.89 4,889,112.11 6 543,149.39 95,826.60 700,685.68 447,322.80 2,558,210.68 4,441,789.32 7 543,149.39 87,059.07 787,744.75 456,090.32 3,014,301.01 3,985,698.99 8 543,149.39 78,119.70 865,864.45 465,029.69 3,479,330.70 3,520,669.30 9 543,149.39 69,005.12 934,869.57 474,144.28 3,953,474.98 3,046,525.02 10 543,149.39 59,711.89 994,581.46 483,437.50 4,436,912.48 2,563,087.52 11 543,149.39 50,236.52 1,044,817.97 492,912.88 4,929,825.36 2,070,174.64 12 543,149.39 40,575.42 1,085,393.40 502,573.97 5,432,399.33 1,567,600.67 13 543,149.39 30,724.97 1,116,118.37 512,424.42 5,944,823.75 1,055,176.25 14 543,149.39 20,681.45 1,136,799.82 522,467.94 6,467,291.69 532,708.31 15 543,149.39 10,441.08 1,147,240.91 532,708.31 7,000,000.00 0.00 #N/A ------ -1,000,000 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 0 5 10 15 20 $ Period (Payment Number) Loan Amortization Chart Balance Cumulative Interest Principal Paid http://www.vertex42.com/ExcelTemplates/simple-amortization.html © 2005 Vertex42 LLC Signature: Email:Garrett.Danielson@slcgov.com