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Transmittal - 7/4/2021REDEVELOPMENT AGENCY OF SLC HOUSING POLICIES FOLLOW -UP RDA BOARD OF DIRECTORS MEETING –DECEMBER 8, 2020 Over the past several months, the RDA has been working to establish two housing policies: 1.RDA Housing Allocation Funds Policy Establishes guidelines for allocating and directing resources for the development and preservation of housing. 2.Housing Development Loan Program Policy Creates a program to centralize the application, underwriting, and approval process across all funding sources, providing a one-stop shop for community partners to access resources for the development and preservation of affordable housing. BACKGROUND HOUSING ALLOCATION FUNDS POLICY A draft policy resolution is available for the Board’s review. Highlights include: 1.Housing Funds Provides for the establishment of 4 housing funds based on the fund source, thereby allowing the RDA to comply with statutory requirements for each funding source and to allow for the prioritization within each funding source for a specific purpose, need, or policy objective. 2.Annual Budgeting Process Provides that on an annual basis, the RDA shall present for the Board’s consideration a Housing Development Funding Strategy that projects revenues for the upcoming fiscal year and proposes funding priorities and allocations. 3.Reporting The policy establishes standards for an annual report to the Board on housing expenditures, projects, and outcomes. PRIMARY HOUSING FUND SECONDARY HOUSING FUND STATUTE & REGULATORY REQUIREMENTS ELIGIBLE PROGRAMS & ACTIVITIES SOURCE OF FUNDING TI Statutory Housing - 9 Line: 10% - Depot District: 20% - Granary District: 20% - North Temple: 20% - Northwest Quadrant: 10% - State Street: 10% TI Supplemental Housing - Central Business District: Varies - Other Housing Allocations: Varies STATE STATUTE - 17C-1-412 - 17C-1-411 RDA HOUSING ALLOCATION FUNDS FRAMEWORK - 17C-1-412 NORTHWEST QUADRANT HOUSING FUND HOUSING DEVELOPMENT FUND Tax Differential - Northwest Quadrant: 10% Sales Tax & Other - FoF (housing development): Varies - Other revenues: Varies - n/a POLICY PRIORITIES - Geographic Area: Citywide - AMI: 80% < - Tracking: Separate Account - Geographic Area: Citywide - AMI (Citywide): RDA-determined - AMI (Project Areas): Unrestricted - Tracking: Separate Account - Geographic Area: Citywide - AMI: 80% AMI < - Tracking: Separate Account - Geographic Area: Citywide - AMI: 80% AMI < - Tracking: Separate Account Programs - Housing Development Loan Prog. - TI Reimbursement Program Other Activities - Property Disposition & Acquisition - Capital Improvements for Housing Programs - Housing Development Loan Prog. - TI Reimbursement Program Other Activities - Property Disposition & Acquisition - Capital Improvements for Housing Programs - Housing Development Loan Prog. - TI Reimbursement Program Other Activities - Property Disposition & Acquisition - Capital Improvements for Housing Programs - Housing Development Loan Prog. - Other Activities - N/A Priorities recommended by Admin & approved by the Board, such as the housing goals and objective identied in the City’s housing plan. Priorities recommended by Admin & approved by the Board, such as the housing goals and objective identied in the RDA’s project area plans. Priorities recommended by Admin & approved by the Board, such as - Geographic: NWQ Adjacent Neighborhoods - Activities: Projects that improve opportunity indicators The RDA shall present an Annual Housing Development Funding Strategy, that proposes the programs and activities to be funded over the upcoming fiscal year, for the Board’s consideration. The Strategy shall be in accordance with the polices established through the RDA Housing Allocation Fund Policy and also consider any current funding priorities or objectives. ANNUAL STRATEGY Annual housing allocations, in alignment with the RDA Housing Fund Allocation Policy and Annual Housing Development Funding Plan, and as adopted through the RDA’s annual budget. ANNUAL BUDGET ALLOCATIONS Administration of funds pursuant to RDA policies and procedures. IMPLEMENTATION Priorities recommended by Admin & approved by the Board, such as the housing goals and objective identied in the City’s housing plan. Establishes accounts by source of funding Clarifies statutory requirements Defines eligible activities and policy priorities within the paramaters of statute and regulatory confines Defines the process for allocating budget based on specific objectives or priorities for the upcoming fiscal year Administrative implementation - DRAFT - HOUSING DEVELOPMENT LOAN PROGRAM POLICY RDA Staff is in the process of preparing a draft Housing Development Loan Program Policy for the Board’s review at a future meeting. Highlights include: 1.Centralized Program Establishes a centralized program, regardless of the fund source, to provide low-cost financial assistance to incentivize the development and preservation of affordable housing. 2.Annual Funding & Priority Coordination On an annual basis, funding allocations and priorities for the HDLP will be proposed to the Board through the annual budget process as established in the RDA Housing Allocation Funds Policy. 3.Transparent NOFA Process Provides for the administration of funds through a transparent NOFA process. 4.Standardized Underwriting & Approval Process Establishes a standardized process for approving applications and a uniform set of underwriting policies to set expectations for both applicants and the Board. HOUSING DEVELOPMENT LOAN PROGRAM PRIMARY HOUSING FUND SECONDARY HOUSING FUND NWQ HOUSING FUND HOUSING DEVELOPMENT FUND FUNDING SOURCES ADMINISTRATION METHOD UNDERWRITING & APPROVAL POLICIES Loans provided through the HDLF shall be funded directly from an individual fund source, with revenues, expenditures, interest, payments and repayments accounted for from the fund source to comply with applicable State and Local statutes. The RDA shall administer funds through a transparent NOFA process. Funds from multiple fund sources may be combined into a consolidated NOFA or a NOFA may be issued from one fund source. - Generally be competitive and time-limited. - Open-ended NOFAs may be issued for specific policy priorities or to offer emergency gap financing. - NOFAs will specify terms, conditions, and policy priorities for the revenue sources being used for the NOFA. (I.e. to carry out priorities of the Northwest Quadrant Housing account, etc.) - NOFAs may include specific requirements and/or funding priorities based on current City/RDA polices and objectives. (i.e. a set aside for opportunity areas.) A permanent and annually renewable program that consolidates and centralizes resources for the development and preservation of affordable housing. PURPOSE NOTICE OF FUNDING AVAILABILITY (”NOFA”) APPLICATIONS Applications will be centrally located and uniform across all funding sources, providing a one-stop-shop to apply for affordable housing funds. The program will include a standardized process for approving applications and a uniform set of underwriting policies to set expectations for both applicants and the RDA Board. - DRAFT - - DRAFT - PROPOSED BOARD SCHEDULE December 2020 •RDA Housing Allocation Funds Policy –Board Review: The Board reviews the draft RDA Housing Allocation Funds Policy. RDA Staff will incorporate any feedback into the policy resolution for consideration and potential adoption by the Board in January 2021. January 2021 •RDA Housing Allocation Funds Policy –Board Adoption: The Board considers for potential adoption the draft RDA Housing Allocation Funds Policy, with applicable revisions. •Housing Development Loan Program Policy –Board Review: The Board reviews the draft HDLP Policy. RDA Staff will incorporate any feedback into the policy resolution for consideration and potential adoption by the Board in February 2021. February 2021 •Housing Development Program Policy –Board Adoption: The Board considers for potential adoption the draft HDLP Policy, with applicable revisions. DEPARTMENT of ECONOMIC DEVELOPMENT ERIN MENDENHALL MAYOR EXECUTIVE DIRECTOR, RDA BEN KOLENDAR DIRECTOR WWW.SLCGOV.COM WWW.SLCRDA.COM WWW.SALTLAKEARTS.ORG REDEVELOPMENT AGENCY STAFF MEMO DATE: November 20, 2020 PREPARED BY: Tammy Hunsaker RE: RDA Housing Policies Follow-up REQUESTED ACTION: Briefing on the draft RDA Housing Allocation Funds Policy and Housing Development Loan Program Policy POLICY ITEM: Briefing and policy discussion. BUDGET IMPACTS: N/A EXECUTIVE SUMMARY: Over the past several months, the Redevelopment Agency of Salt Lake City (“RDA”) has been working to establish two housing policies, as follows: 1. An RDA Housing Allocation Funds Policy that establishes guidelines for allocating and directing resources for the development and preservation of housing. 2. A Housing Development Loan Program Policy that creates a program to centralize the application, underwriting, and approval process across all funding sources, providing a one - stop-shop for community partners to access resources for the development and preservation of affordable housing. The formation of these polices has been several months in the making. During this time, RDA Staff has provided multiple briefings to the Board on various RDA housing topics, including housing activities, requirements, and outcomes. Additionally, in February of 2020, RDA Staff briefed the Board on the Draft Salt Lake City Housing Implementation Framework, jointly developed by the RDA, Department of Community and Neighborhoods (“CAN”) and Division of Housing and Neighborhood Development (“HAND”), that defined the roles and responsibilities of housing activities across City divisions and departments. This memorandum is a follow-up to the July 2020 briefing that provided a basic framework for the RDA Housing Allocation Funds Policy and Housing Development Loan Program Policy (previously referred to as the Housing Development Trust Fund). The following information includes an update on the formation of both polices, as well as a preliminary draft of the RDA Housing Allocation Funds Policy, Attachment A, for the Board’s review. ANALYSIS & ISSUES: Additional information on the housing policies is as follows: Draft RDA Housing Allocation Funds Policy A draft RDA Housing Allocation Funds Policy is provided as Attachment A for the Board’s review. Highlights of the policy include the following: • Housing Funds: The policy provides for the establishment of four housing funds based on the fund source. The revenues, expenditures, interest, payments and repayments for each fund source shall be separately accounted for. Maintaining separate Housing Funds will allow the RDA to provide control and oversight to comply with the various statutory requirements for each funding source and to allow for the prioritization within each funding source for a specific purpose, need, or policy objective. • Annual Budgeting Process: The policy provides that on an annual basis, the RDA shall present for the Board’s consideration a Housing Development Funding Strategy that projects revenues for the upcoming fiscal year and proposes funding priorities and allocations. This will allow the RDA to be flexible to address current needs, leverage current opportunities, coordinate with other city resources, and allow funding priorities to align with evolving plans and policies. • Reporting: The policy establishes standards for an annual report to the Board on housing expenditures, projects, and outcomes. Draft Housing Development Loan Program Policy RDA Staff is in the process of preparing a draft Housing Development Loan Program Policy for review by the Board at a future meeting. In a previous briefing, RDA Staff proposed that this program be called the Housing Development Trust Fund. However, the program will not be a n individual trust fund but rather be a centralized program for the administration of funding that may come from any of the funds as established through the RDA Housing Allocation Funds Policy. As such, RDA Staff is proposing that it be called the Salt Lake City Housing Development Loan Program (“HDLP”) to prevent confusion about the program being an individual fund. Currently, RDA Staff is working with HAND and the Redevelopment Advisory Committee (“RAC”) to receive input on the draft policy prior to transmitting it for the Board’s review. Highlights of the program include the following: • The purpose of the program is to provide low cost financial assistance to incentivize the development and preservation of affordable housing within Salt Lake City municipal boundaries. The HDLP shall provide a centralized application, underwriting, and approval process regardless of the fund source. • On an annual basis, funding allocations and priorities for the HDLP will be proposed to the Board through the annual budget process as established in the RDA Housing Allocation Funds Policy. Thereby establishing a process for HDLP resources to be directed to specific policy priorities depending on current needs and objectives. • Provides for the administration of funds through a transparent NOFA process. 5HYHQXH from the various funds may be combined into a consolidated NOFA or a NOFA may be issued for a specific funding source. NOFAs could be offered on an annual basis or multiple times per year and can be competitive or open-ended depending on availability of funds, priorities, and demand. • Establishes a standardized process for approving 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 for consideration. Applications are currently reviewed by either the RDA Finance Committee or Housing Trust Fund Advisory Board depending on the source of funding. Next Steps RDA Staff proposes the following schedule to finalize the housing policies: December 2020: • RDA Housing Allocation Funds Policy – Board Review: The Board reviews the draft RDA Housing Allocation Funds Policy. RDA Staff will incorporate any feedback into the policy resolution for consideration and potential adoption by the Board in January 2021. January 2021: • RDA Housing Allocation Funds Policy – Board Adoption: The Board considers for potential adoption the draft RDA Housing Allocation Funds Policy, with applicable revisions. • Housing Development Loan Program Policy – Board Review: The Board reviews the draft HDLP Policy. RDA Staff will incorporate any feedback into the policy resolution for consideration and potential adoption by the Board in February 2021. February 2021: • Housing Development Program Policy – Board Adoption: The Board considers for potential adoption the draft HDLP Policy, with applicable revisions. PREVIOUS BOARD ACTION: • December 2017: The Board adopted a motion directing RDA Staff to draft an RDA Housing Allocation Funds Policy. • June 2019 and June 2020: The Board and Salt Lake City Council allocated sales tax funds to the RDA with legislative intent of consolidating loan administration for the development of affordable housing into a single location. ATTACHMENTS: A. Draft RDA Housing Allocation Funds Policy Resolution B. Draft RDA Housing Allocation Funds Framework C. Draft Housing Development Loan Program Framework Attachment A: Draft RDA Housing Allocation Funds Policy Resolution REDEVELOPMENT AGENCY OF SALT LAKE CITY RESOLUTION NO. _______________ RDA Housing Allocation Funds Policy RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY ADOPTING A POLICY FOR THE ALLOCATION OF HOUSING FUNDS WITH RESPECT TO DEDICATING AND DIRECTING RESOURCES FOR THE DEVELOPMENT AND PRESERVATION OF HOUSING. WHEREAS, Salt Lake City has an adopted housing plan that identifies housing needs, priorities, and goals on a citywide basis (“Housing Plan”). WHEREAS, the Redevelopment Agency of Salt Lake City (“RDA”) has adopted project area plans that identify housing needs, priorities, and goals on a project area basis (“Project Area Plans”). WHEREAS, the RDA supports the implementation of the Housing Plan and Project Area Plans through various funding allocations that are utilized for the development and preservation of housing. WHEREAS, Utah Code Title 17C Community Reinvestment Agency Act (the “CRA Act”) provides that a portion of tax increment is required to be allocated for housing and used for the purposes described in Section 17C-1-412. WHEREAS, the CRA Act provides that additional tax increment may be allocated on a discretionary basis for housing and used for the purposes described in Section 17C-1-411. WHEREAS, Utah Code Title 11-58 Utah Inland Port Authority Act (the “Inland Port Act”) provides that a portion of tax differential generated within Inland Port Authority Jurisdictional Land shall be paid to the RDA to be allocated for housing and used for the purposes described in Section 11-58-601(6)(b). WHEREAS, the Salt Lake City Council and the RDA Board of Directors (“Board”) may allocate other revenue sources, including but not limited to sales tax revenues, for the development and preservation of housing. WHEREAS, the Board desires to establish a policy with respect to dedicating and directing resources for the development and preservation of housing. NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY, as follows: DRAFT 1. Scope. The RDA Housing Allocation Funds Policy (“Policy”) contains the processes and guidelines for coordinating and allocating tax increment, tax differential, sales tax, and other revenues for the development and preservation of housing. 2. RDA Housing Funds. The RDA shall establish and maintain multiple housing funds based on the fund source and separately account for the revenues, expenditures, i nterest, payments and repayments for each fund source (collectively the “Housing Funds”). Maintaining separate Housing Funds will allow the RDA to provide control and oversight to comply with the various statutory requirements for each funding source and to allow for the prioritization within each funding source for a specific purpose, need, or policy objective. The Housing Funds include: a. Primary Housing Fund i. Source of Funds: Tax increment required to be allocated for housing pursuant to the CRA Act. ii. Eligible Uses of Funds: Funds shall be utilized for the purposes described in Section 17C-1-412 of the CRA Act. iii. Policy Priorities: Funds shall be prioritized to address citywide housing goals and objectives as identified in the Housing Plan. b. Secondary Housing Fund i. Source of Funds: Additional tax increment that may be allocated on a discretionary basis for housing pursuant to the CRA Act. ii. Eligible Uses of Funds: Funds shall be utilized for the purposes described in Section 17C-1-411 of the CRA Act. iii. Policy Priorities: Funds shall be prioritized to address the housing goals and needs identified in Project Area Plans. c. Northwest Quadrant Housing Fund i. Source of Funds: A portion of the property tax differential collected by the Inland Port Authority to be allocated to the RDA for affordable housing. ii. Eligible Uses of Funds: Funds shall be utilized for the purposes described in Section 11-58-601(6)(b) of the Inland Port Act. iii. Policy Priorities: Funds shall be prioritized for the neighborhoods adjacent to the Inland Port Jurisdictional Land (generally defined as neighborhoods west of I-15) to 1) address and mitigate potential impacts from Inland Port development activities and 2) improve opportunity indicators within these neighborhoods. d. Housing Development Fund i. Source of Funds: Additional funds, including but not limited to sales tax revenues, that may be allocated to or obtained by the RDA for the development and preservation of housing. ii. Eligible Uses of Funds: Activities to promote the development and preservation of housing, including costs associated with site acquisition, site remediation, capital improvements, new construction, and rehabilitation. iii. Policy Priorities: Funds shall be prioritized to address the housing goals and needs of identified in the Housing Plan. DRAFT 3. Annual Budgeting Process. The following steps shall be utilized to budget Housing Funds on an annual basis: a. Funding Strategy: Prior to the annual budget process, the RDA shall annually present to the Board a Housing Development Funding Strategy (“Funding Strategy”) that includes: i. A projected amount of revenue to be allocated to the Housing Funds for the upcoming fiscal year. ii. Proposed funding allocations for housing activities (i.e. gap financing loans, property acquisition, etc.) and funding priorities for the upcoming fiscal year. Proposed funding allocations shall be targeted to address current needs, leverage available opportunities, be coordinated with other City resources, and align with the standards and priorities for the Housing Funds as established in Section 2 herein. b. Annual Budget Allocations: The Board shall consider the Funding Strategy as part of the annual budget adoption process. c. Implementation: Once budget allocations are finalized, the RDA will implement projects and programs according to applicable RDA policies and procedures. 4. Reporting Requirements. The RDA shall provide a written briefing to the Board, within 60 days of the end of each fiscal year, which contains the following information: a. The year-end balance of the Housing Funds. b. An accounting of programs and projects funded from the Housing Funds over the last fiscal year, including the following information itemized by project: i. Project address ii. Development partner iii. Amount of Housing Funds committed iv. Total project cost v. The scope and status of improvements vi. The total number of residential units with a corresponding accounting of affordability levels by area median income (AMI). DRAFT Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this _______ day of ________________, 20__. ________________________________ Amy Fowler, Chair Approved as to form: __________________________________ Salt Lake City Attorney’s Office Allison Parks Date:____________________________ The Executive Director: ____ does not request reconsideration ____ requests reconsideration at the next regular Agency meeting. ________________________________ Erin Mendenhall, Executive Director Attest: ________________________ City Recorder DRAFT PRIMARY HOUSING FUND SECONDARY HOUSING FUND STATUTE & REGULATORY REQUIREMENTS ELIGIBLE PROGRAMS & ACTIVITIES SOURCE OF FUNDING TI Statutory Housing - 9 Line: 10% - Depot District: 20% - Granary District: 20% - North Temple: 20% - Northwest Quadrant: 10% - State Street: 10% TI Supplemental Housing - Central Business District: Varies - Other Housing Allocations: Varies STATE STATUTE - 17C-1-412 - 17C-1-411 RDA HOUSING ALLOCATION FUNDS FRAMEWORK - 17C-1-412 NORTHWEST QUADRANT HOUSING FUND HOUSING DEVELOPMENT FUND Tax Differential - Northwest Quadrant: 10% Sales Tax & Other - FoF (housing development): Varies - Other revenues: Varies - n/a POLICY PRIORITIES - Geographic Area: Citywide - AMI: 80% < - Tracking: Separate Account - Geographic Area: Citywide - AMI (Citywide): RDA-determined - AMI (Project Areas): Unrestricted - Tracking: Separate Account - Geographic Area: Citywide - AMI: 80% AMI < - Tracking: Separate Account - Geographic Area: Citywide - AMI: 80% AMI < - Tracking: Separate Account Programs - Housing Development Loan Prog. - TI Reimbursement Program Other Activities - Property Disposition & Acquisition - Capital Improvements for Housing Programs - Housing Development Loan Prog. - TI Reimbursement Program Other Activities - Property Disposition & Acquisition - Capital Improvements for Housing Programs - Housing Development Loan Prog. - TI Reimbursement Program Other Activities - Property Disposition & Acquisition - Capital Improvements for Housing Programs - Housing Development Loan Prog. - Other Activities - N/A Priorities recommended by Admin & approved by the Board, such as the housing goals and objectives identied in the City’s housing plan. Priorities recommended by Admin & approved by the Board, such as the housing goals and objectives identied in the RDA’s project area plans. Priorities recommended by Admin & approved by the Board, such as - Geographic: NWQ Adjacent Neighborhoods - Activities: Projects that improve opportunity indicators The RDA shall present an Annual Housing Development Funding Strategy, that proposes the programs and activities to be funded over the upcoming fiscal year, for the Board’s consideration. The Strategy shall be in accordance with the polices established through the RDA Housing Allocation Funds Policy and also consider any current funding priorities or objectives. ANNUAL STRATEGY Annual housing allocations, in alignment with the RDA Housing Allocation Funds Policy and Annual Housing Development Funding Plan, and as adopted through the RDA’s annual budget. ANNUAL BUDGET ALLOCATIONS Administration of funds pursuant to RDA policies and procedures. IMPLEMENTATION Priorities recommended by Admin & approved by the Board, such as the housing goals and objectives identied in the City’s housing plan. Establishes accounts by source of funding Clarifies statutory requirements Defines eligible activities and policy priorities within the paramaters of statute and regulatory confines Defines the process for allocating budget based on specific objectives or priorities for the upcoming fiscal year Administrative implementation - DRAFT - HOUSING DEVELOPMENT LOAN PROGRAM PRIMARY HOUSING FUND SECONDARY HOUSING FUND NWQ HOUSING FUND HOUSING DEVELOPMENT FUND FUNDING SOURCES ADMINISTRATION METHOD UNDERWRITING & APPROVAL POLICIES Loans provided through the HDLP shall be funded directly from an individual fund source, with revenues, expenditures, interest, payments and repayments accounted for from the fund source to comply with applicable State and Local statutes. The RDA shall administer funds through a transparent NOFA process. Funds from multiple fund sources may be combined into a consolidated NOFA or a NOFA may be issued from one fund source. - Generally be competitive and time-limited. - Open-ended NOFAs may be issued for specific policy priorities or to offer emergency gap financing. - NOFAs will specify terms, conditions, and policy priorities for the revenue sources being used for the NOFA. (I.e. to carry out priorities of the Northwest Quadrant Housing account, etc.) - NOFAs may include specific requirements and/or funding priorities based on current City/RDA polices and objectives. (i.e. a set aside for opportunity areas.) A permanent and annually renewable program that consolidates and centralizes resources for the development and preservation of affordable housing. PURPOSE NOTICE OF FUNDING AVAILABILITY (”NOFA”) APPLICATIONS Applications will be centrally located and uniform across all funding sources, providing a one-stop-shop to apply for affordable housing funds. The program will include a standardized process for approving applications and a uniform set of underwriting policies to set expectations for both applicants and the RDA Board. - DRAFT - - DRAFT - DEPARTMENT of ECONOMIC DEVELOPMENT ERIN MENDENHALL MAYOR EXECUTIVE DIRECTOR, RDA BEN KOLENDAR DIRECTOR WWW.SLCGOV.COM WWW.SLCRDA.COM WWW.SALTLAKEARTS.ORG REDEVELOPMENT AGENCY STAFF MEMO DATE: December 23, 2020 PREPARED BY: Tammy Hunsaker RE: RDA Housing Policies Follow-up REQUESTED ACTION: Consideration of an RDA Housing Allocation Funds Policy resolution and briefing on a draft Housing Development Loan Program Policy resolution. POLICY ITEM: Housing funds and programs. BUDGET IMPACTS: N/A. EXECUTIVE SUMMARY: Over the past several months, the Redevelopment Agency of Salt Lake City (“RDA”) has been working to establish two housing policies, as follows: 1. RDA Housing Allocation Funds Policy • Purpose: Establishes guidelines for allocating and directing resources for the development and preservation of housing. • Status: An RDA Housing Allocation Funds Policy Resolution is provided as Attachment A for the Board’s consideration. The Board voted on the draft policy in December of 2020, with the finalized policy attached for the Board’s official consideration. 2. Housing Development Loan Program Policy • Purpose: Creates a program to centralize the application, underwriting, and approval process across all funding sources, providing a one-stop-shop for community partners to access resources for the development and preservation of affordable housing. • Status: A Draft Housing Development Loan Program Policy Resolution is provided as Attachment B for the Board’s review and discussion. RDA Staff will incorporate the Board’s feedback and return with a finalized policy for the Board’s consideration at a future meeting. The formation of these polices has been several months in the making. During this time, RDA Staff has provided multiple briefings to the Board on various RDA housing topics, including housing activities, requirements, and outcomes. Additionally, in February of 2020, RDA Staff briefed the Board on the Draft Salt Lake City Housing Implementation Framework, jointly developed by the RDA, Department of Community and Neighborhoods (“CAN”) and Division of Housing and Neighborhood Development (“HAND”), that defined the roles and responsibilities of housing activities across City divisions and departments. REDEVELOPMENT ADVISORY COMMITTEE RECOMMENDATION: On December 2, 2020, the Redevelopment Advisory Committee (“RAC”) convened to review the RDA Housing Allocation Funds Policy (Attachment A), and recommended approval of the policy as presented. ANALYSIS & ISSUES: Additional information on the housing policies is as follows: I. RDA Housing Allocation Funds Policy An RDA Housing Allocation Funds Policy resolution is provided as Attachment A for the Board’s consideration. Highlights of the policy include the following: • Housing Funds: The policy provides for the establishment of four housing funds based on the fund source. The revenues, expenditures, interest, payments and repayments for each fund source shall be separately accounted for. Maintaining separate Housing Fun ds will allow the RDA to provide control and oversight to comply with the various statutory requirements for each funding source and to allow for the prioritization within each funding source for a specific purpose, need, or policy objective. • Annual Budgeting Process: The policy provides that on an annual basis, the RDA shall present for the Board’s consideration a Housing Development Funding Strategy that projects revenues for the upcoming fiscal year and proposes funding priorities and allocations. This will allow the RDA to be flexible to address current needs, leverage current opportunities, coordinate with other city resources, and allow funding priorities to align with evolving plans and policies. • Reporting: The policy establishes standards for an annual report to the Board on housing expenditures, projects, and outcomes. II. Draft Housing Development Loan Program Policy A draft Housing Development Loan Program Policy resolution is provided as Attachment B for the Board’s consideration. Once approved by the Board, this policy is intended to be utilized for the deployment of any housing funds allocated to the RDA for the construction and preservation of affordable housing. Due to the far reaching nature of this policy, the RDA is in the process of gathering feedback from the Redevelopment Advisory Committee (“RAC”), HAND, and various other stakeholders. Highlights of the policy include the following: • Purpose: The purpose of the program is to provide low cost financial assistance to incentivize the development and preservation of affordable housing within Salt Lake City municipal boundaries. The HDLP shall provide a centralized application, underwriting, and approval process regardless of the fund source. • Intent: While specific funding priorities shall be established on an annual basis, the policy provides several overarching intent statements to clarify the desired outcomes of the HDLP. These intent statements include items relating to the equitable distribution of affordable housing, that funding be provided as a loan and not a grant, anti-displacement, and sustainability among others. • Funding Allocations & Priorities: On an annual basis, funding allocations and priorities for the HDLP shall be proposed to the Board through the annual budget process as established in the RDA Housing Allocation Funds Policy. Thereby establishing a process for HDLP resources to be directed to specific policy priorities depending on current needs and objectives. • Administration of Funds: Provides for the administration of funds through a transparent notice of funding availability (“NOFA”) process. Various sources of funds may be combined into a consolidated NOFA or a NOFA may be issued for a specific funding source. NOFAs could be offered on an annual basis or multiple times per year and can be competitive or open-ended depending on availability of funds, priorities, and demand. • Underwriting Guidelines: Creates standardized underwriting guidelines for three types of loans: 1) Gap Financing: Rental Construction to Permanent, 2) Property Acquisition, and 3) Gap Financing: Homeownership Construction. A uniform set of underwriting policies shall set expectations for both applicants and the Board. • Approval Process: Establishes a standardized approval process that includes a unified review committee that will evaluate applications and provide a recommendation to the Board for consideration. Previously, the review and approval process for affordable housing development loans has varied based on the source of funds and/or program. In moving forward to finalize the HDLP policy, RDA Staff, along with the Administration, is working through the following considerations of which the Board may wish to offer policy direction: 1. RDA Staff and the Administration are determining the structure of the review committee and how that committee shall incorporate the RDA Finance Committee and/or the Housing Trust Fund Advisory Board. 2. RDA Staff and the Administration are determining if updates may be needed and/or desired to City Code Chapter 2.80 Housing Trust Fund Advisory Board that establishes the Housing Development Trust fund and corresponding review board. 3. RDA Staff is evaluating the feasibility of allowing loans to specific homeowners through the HDLP to further incentivize homeownership. Currently, the draft policy is limited to supporting homeownership through the construction of for sale housing that is deed-restricted as affordable rather than to specific homeowners. Next Steps RDA Staff proposes the following schedule to finalize the housing policies: January 2021: • RDA Housing Allocation Fund Policy – Board Adoption: The Board considers the policy for adoption. • Draft Housing Development Loan Program Policy – Board Review: The Board reviews the draft policy. RDA Staff will incorporate any feedback into the policy resolution for consideration and potential adoption by the Board in February 2021. February 2021: • Housing Development Program Policy – Board Adoption: The Board considers the policy, with applicable revisions, for adoption. PREVIOUS BOARD ACTION: • December 2017: The Board adopted a motion directing RDA Staff to draft an RDA Housing Allocation Policy. • May 2018 to March 2019: RDA Staff presented a series of briefings to the Board regarding housing, including on topics such as historical practices and funding allocations, statutory requirements, and interdepartmental coordination. • June 2019 and June 2020: The Board and Salt Lake City Council allocated sales tax funds to the RDA with legislative intent of consolidating loan administration for the development of affordable housing into a single location. • February 2020: RDA Staff briefed the Board on the Draft Salt Lake City Housing Implementation Framework, a framework that outlines the various roles and responsibilities across City divisions and departments for the implementation of housing. • July 2020: RDA Staff proposed two draft frameworks that were envisioned to be expanded into legislative policies that would carry out the Board’s direction and intent to 1) direct the allocation of resources for affordable housing development and preservation and 2) consolidate loan administration for the development of affordable housing into a single location. • December 2020: RDA Staff presented a draft RDA Housing Allocation Funds Policy Resolution and briefed the board on the forthcoming draft Housing Development Loan Program Policy. ATTACHMENTS: A. RDA Housing Allocation Funds Policy Resolution – final for consideration B. Draft RDA Housing Development Loan Program Policy – draft for review C. Draft RDA Housing Allocation Funds Framework D. Draft Housing Development Loan Program Framework REDEVELOPMENT AGENCY OF SALT LAKE CITY RESOLUTION NO. _______________ RDA Housing Allocation Funds Policy RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY ADOPTING A POLICY FOR THE ALLOCATION OF HOUSING FUNDS WITH RESPECT TO DEDICATING AND DIRECTING RESOURCES FOR THE DEVELOPMENT AND PRESERVATION OF HOUSING. WHEREAS, Salt Lake City has an adopted housing plan that identifies housing needs, priorities, and goals on a citywide basis (“Housing Plan”). WHEREAS, the Redevelopment Agency of Salt Lake City (“RDA”) has adopted project area plans that identify housing needs, priorities, and goals on a project area basis (“Project Area Plans”). WHEREAS, the RDA supports the implementation of the Housing Plan and Project Area Plans through various funding allocations that are utilized for the development and preservation of housing. WHEREAS, Utah Code Title 17C Community Reinvestment Agency Act (the “CRA Act”) provides that a portion of tax increment is required to be allocated for housing and used for the purposes described in Section 17C-1-412. WHEREAS, the CRA Act provides that additional tax increment may be allocated on a discretionary basis for housing and used for the purposes described in Section 17C-1-411. WHEREAS, Utah Code Title 11-58 Utah Inland Port Authority Act (the “Inland Port Act”) provides that a portion of tax differential generated within Inland Port Authority Jurisdictional Land shall be paid to the RDA to be allocated for housing and used for the purposes described in Section 11-58-601(6)(b). WHEREAS, the Salt Lake City Council and the RDA Board of Directors (“Board”) may allocate other revenue sources, including but not limited to sales tax revenues, for the development and preservation of housing. WHEREAS, the Board desires to establish a policy with respect to dedicating and directing resources for the development and preservation of housing. NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY, as follows: 1. Scope. The RDA Housing Allocation Policy (“Policy”) contains the processes and guidelines for coordinating and allocating tax increment, tax differential, sales tax, and other revenues for the development and preservation of housing. 2. RDA Housing Funds. The RDA shall establish and maintain multiple housing funds based on the fund source and separately account for the revenues, expenditures, interest, payments and repayments for each fund source (collectively the “Housing Funds”). Maintaining separate Housing Funds will allow the RDA to provide control and oversight to comply with the various statutory requirements for each funding source and to allow for the prioritization within each funding source for a specific purpose, need, or policy objective. The Housing Funds include: a. Primary Housing Fund i. Source of Funds: Tax increment required to be allocated for housing pursuant to the CRA Act. ii. Eligible Uses of Funds: Funds shall be utilized for the purposes described in Section 17C-1-412 of the CRA Act. iii. Policy Priorities: Funds shall be prioritized to address citywide housing goals and objectives as identified in the Housing Plan. b. Secondary Housing Fund i. Source of Funds: Additional tax increment that may be allocated on a discretionary basis for housing pursuant to the CRA Act. ii. Eligible Uses of Funds: Funds shall be utilized for the purposes described in Section 17C-1-411 of the CRA Act. iii. Policy Priorities: Funds shall be prioritized to address the housing goals and needs identified in Project Area Plans. c. Northwest Quadrant Housing Fund i. Source of Funds: A portion of the property tax differential collected by the Inland Port Authority to be allocated to the RDA for affordable housing. ii. Eligible Uses of Funds: Funds shall be utilized for the purposes described in Section 11-58-601(6)(b) of the Inland Port Act. iii. Policy Priorities: Funds shall be prioritized for the neighborhoods adjacent to the Inland Port Jurisdictional Land (generally defined as neighborhoods west of I-15) to 1) address and mitigate potential impacts from Inland Port development activities and 2) improve opportunity indicators within these neighborhoods. d. Housing Development Fund i. Source of Funds: Additional funds, including but not limited to sales tax revenues, that may be allocated to or obtained by the RDA for the development and preservation of housing. ii. Eligible Uses of Funds: Activities to promote the development and preservation of affordable and mixed-income housing, including costs associated with site acquisition, site remediation, capital improvements, new construction, and rehabilitation. iii. Policy Priorities: Funds shall be prioritized to address the housing goals and needs of identified in the Housing Plan. 3. Annual Budgeting Process. The following steps shall be utilized to budget Housing Funds on an annual basis: a. Funding Strategy: Prior to the annual budget process, the RDA shall annually present to the Board a Housing Development Funding Strategy (“Funding Strategy”) that includes: i. A projected amount of revenue to be allocated to the Housing Funds for the upcoming fiscal year. ii. Proposed funding allocations for housing activities (i.e. gap financing loans, property acquisition, etc.) and funding priorities for the upcoming fiscal year. Proposed funding allocations shall be targeted to address current needs, leverage available opportunities, be coordinated with other City resources, and align with the standards and priorities for the Housing Funds as established in Section 2 herein. b. Annual Budget Allocations: The Board shall consider the Funding Strategy as part of the annual budget adoption process. c. Implementation: Once budget allocations are finalized, the RDA will implement projects and programs according to applicable RDA policies and procedures. 4. Reporting Requirements. The RDA shall provide a written briefing to the Board, within 60 days of the end of each fiscal year, which contains the following information: a. The year-end balance of the Housing Funds. b. An accounting of programs and projects funded from the Housing Funds over the last fiscal year, including the following information itemized by project: i. Project address ii. Development partner iii. Amount of Housing Funds committed iv. Total project cost v. The scope and status of improvements vi. The total number of residential units with a corresponding accounting of affordability levels by area median income (AMI). Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this _______ day of ________________, 20__. ________________________________ Chair Approved as to form: __________________________________ Salt Lake City Attorney’s Office Allison Parks Date:____________________________ The Executive Director: ____ does not request reconsideration ____ requests reconsideration at the next regular Agency meeting. ________________________________ Erin Mendenhall, Executive Director Attest: ________________________ City Recorder December 20, 2020 Page 1 – Attachment B: Draft Housing Development Loan Program Policy REDEVELOPMENT AGENCY OF SALT LAKE CITY RESOLUTION NO. _____________ Housing Development Loan Program Policy RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY ADOPTING A HOUSING DEVELOPMENT LOAN PROGRAM POLICY WHEREAS, Salt Lake City has an adopted housing plan that identifies housing needs, priorities, and goals on a citywide basis (“Housing Plan”). WHEREAS, the Redevelopment Agency of Salt Lake City (“RDA”) has adopted project area plans that identify housing needs, priorities, and goals on a project area basis (“Project Area Plans”). WHEREAS, the RDA supports the implementation of the Housing Plan and Project Area Plans through various funding sources that are further described in the RDA Housing Allocation Funds Policy. WHEREAS, through the RDA Housing Allocation Funds Policy, the Board may dedicate funds to be administered for the development and preservation of affordable housing. WHEREAS, the Board of Directors of the Redevelopment Agency of Salt Lake City (“Board”) desires to create a program to centralize the application, underwriting, and approval process across all funding sources, providing a one-stop-shop for community partners to access resources for the development and preservation of affordable housing. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTO RS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY, that the following policy for a Housing Development Loan Program are adopted: 1. PURPOSE The purpose of the Housing Development Loan Program (“HDLP”) is to provide low cost financial assistance to incentivize the development and preservation of affordable housing within Salt Lake City municipal boundaries. The HDLP shall provide a centralized application, underwriting, and approval process regardless of the fund source. 2. INTENT The Board intends that funds allocated through the HDLP: Page 2 – Attachment B: Draft Housing Development Loan Program Policy a. Provide a mix of affordable housing, serving a range of households and income levels, consistent with income limits and affordability requirements for each fund source, to promote housing opportunity and choice throughout the City. b. Foster a mix of household incomes in projects and neighborhoods and to disperse affordable housing projects throughout the City to achieve a balance of incomes in all neighborhoods and communities. c. Promote equity and anti-displacement efforts through the development and preservation of affordable housing in low-income neighborhoods where underserved groups have historic ties, including neighborhoods where low income individuals and families are at high risk of displacement. d. Contribute to the development of sustainable, walkable neighborhoods to expand housing choice near transportation, services, and economic opportunity. e. Incorporate green-building elements and energy efficiency to lower housing expenses, conserve resources, and promote resiliency. f. Leverage private and non-city funding sources to ensure the greatest number of quality affordable housing units are preserved or produced. g. Be provided as loans that are repaid over time and not grants, forgivable loans, or indefinitely deferred loans. 3. SOURCE OF FUNDS HDLP activities shall be funded through a combination of fund sources (collectively the “Housing Funds”) as established through the RDA Housing Allocation Funds Policy. Funding allocations shall be administered through the HDLP to a project directly from an individual fund source with revenues, expenditures, interest, payments and repayments accounted for from the fund source. Each of the individual fund sources that comprise the Housing Funds operates under separate state or local laws and regulations. Laws and regulations include restrictions on the incomes of households served, maximum allowable rents, and eligible activities. 4. ANNUAL BUDGET PROCESS As further described in the RDA Housing Allocation Funds Policy, the RDA shall present an Annual Housing Development Funding Strategy “Funding Strategy” prior to the annual budget process that shall include proposed funding priorities and revenues to be administered through the HDLP for the next fiscal year. The Board shall consider the Funding Strategy as part of the annual budget adoption process. 5. FUNDING PRIORITIES To provide flexibility to address current needs and policies, funding priorities will be proposed on an annual basis through the Funding Strategy, subject to approval by the Board. Funding priorities shall align with policies as adopted by the Board and Salt Lake Page 3 – Attachment B: Draft Housing Development Loan Program Policy City Council including the Housing Plan, Project Area Plans, RDA Guiding Framework, and RDA Housing Allocation Funds Policy. 6. FUNDS ADMINISTRATION PROCESS Funding shall be administered through a transparent notice of funding availability (“NOFA”) process and shall incorporate the funding priorities as determined annually by the Board. Funds from multiple fund sources may be combined into a consolidated NOFA or a NOFA may be issued from one fund source. NOFAs may be offered on an annual basis or multiple times per year and can be competitive or open-ended depending on availability of funds, priorities, and demand. 7. BASIC ELIGIBILITY Projects eligible for funding through the HDLP shall at a minimum meet these basic eligibility requirements, as well as specific requirements that may be set forth in individual NOFAs as they are issued. a. Applicant Types: Eligible applicants include entities and organizations with affordable housing development experience, as follows: i. For-profit corporations, partnerships, joint ventures, or sole proprietors. ii. Private incorporated non-profit agencies with IRS 501(c) designation. iii. Public housing agencies or units of local government. b. Project Types: The new construction or substantial rehabilitation of affordable, mixed-use and/or mixed-income housing. c. Uses of Funds: Land/property acquisition, hard construction costs, site improvements, and related soft costs. d. Affordability Restrictions: Minimum affordability restrictions shall reflect the policies and regulations of the Housing Funds as defined through the RDA Housing Allocation Funds Policy. e. Financing Gap: Projects shall demonstrate that RDA funding is necessary for the project to succeed and that the request is reasonable. Applicants must obtain commercial loans sized with the highest loan-to-value and lowest debt service parameters that are commercially available in the marketplace and aggressively pursue other funding sources to the fullest extent possible to minimize the HDLP funding request. f. Site Control: Evidence of site control must be demonstrated through ownership, option, sale agreement, or long-term lease. g. Policies and Master Plans: Projects shall align with the Housing Plan, Project Area Plans, Master Plans, and other adopted plans and policies. h. Good Standing: Applications and all of their affiliated entities must be in good standing on all existing contracts administered by Salt Lake City, the RDA, Utah Housing Corporation, and other State and local entities. Page 4 – Attachment B: Draft Housing Development Loan Program Policy i. Relocation Plan (if applicable): Displacement is strongly discouraged. However, if it is necessary and unavoidable, the developer must submit a relocation plan that complies with applicable federal, state, and local policies for temporary or permanent displacement. j. Design: Projects shall align with applicable design guidelines and comply with all applicable Salt Lake City building and zoning codes and ordinances. k. Affordable Housing Restriction: A restriction shall be recorded against the property that requires continued use of the specified units as affordable housing for a minimum of 30 years. 8. UNDERWRITING STANDARDS Funding shall expand housing opportunities for low-and moderate-income households by reducing a project’s financing cost. Flexibility shall be provided to accommodate a wide range of projects that may be dependent upon myriad of underwriting standards by outside lenders. With this flexibility in mind, funding shall generally be provided as loans pursuant to the terms and conditions outlined in Exhibit A. 9. EVALUATION & APPROVAL PROCESS For each issued NOFA, the RDA shall evaluate and consider applications for approval as follows: a. Eligibility Review: Funding applications are initially reviewed and evaluated in detail by RDA staff based on the requirements listed herein, specific Housing Funds requirements, and additional criteria published in the relevant NOFA. b. Review Committee: For applications that meet the basic eligibility requirements, applications and supporting materials shall be forwarded to a review committee that shall be comprised of RDA/City staff, finance professionals, affordable housing experts, and/or real estate development professionals. The review committee will analyze and rank applications based on the criteria published in the NOFA. Projects that the Committee finds to rank competitively compared with other proposed projects of similar type shall be recommended to the RDA Board for a funding allocation. c. RDA Board of Directors: The RDA Board of Directors shall make the final selection of projects to receive a funding allocation. d. Funding Commitment: The project funding process shall be carried out in two subparts as follows: i. Conditional Commitment Period: The RDA shall issue a Conditional Commitment letter to those applications that are selected for a funding allocation by the RDA Board. The Conditional Commitment letter between the RDA and the applicant shall contain the covenants, terms and conditions upon which the RDA may provide financial assistance to the proposed project once financial, legal, and regulatory approvals are obtained. Page 5 – Attachment B: Draft Housing Development Loan Program Policy ii. Firm Commitment & Loan Closing: Projects that successfully meet conditions shall be invited to execute a Letter of Commitment that finalizes the loan terms, subject to a set of conditions precedent to closing. 7. MONITORING AND COMPLIANCE The RDA shall be required to monitor, or contract with a third party to monitor, the projects funded through the HDLP. Monitoring shall evaluate and ensure that projects are complying with affordability requirements and other requirements as determined in the loan agreement. Page 6 – Attachment B: Draft Housing Development Loan Program Policy EXHIBIT A: Standard Loan Terms and Conditions Standard loan terms and conditions for I) Gap Financing: Rental Construction to Permanent, II) Property Acquisition, and III) Gap Financing: Homeownership Construction are as follows: 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% simple interest Page 7 – Attachment B: Draft Housing Development Loan Program Policy o Cash Flow Loans: 4% simple interest • Funding Priority Incentives: Projects shall have the ability to reduce the Base Interest Rate if the project meets the current funding priorities as established annually pursuant to the RDA Housing Allocation Funds Policy. 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. For projects utilizing a low income housing tax credit (“LIHTC”) program, 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. The maximum developer fee for projects not utilizing LIHTC will be evaluated on a case-by-case basis in the context of the proportion of affordable units and AMIs. 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. Page 8 – Attachment B: Draft Housing Development Loan Program Policy 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. Page 9 – Attachment B: Draft Housing Development Loan Program Policy II. PROPERTY ACQUISITION 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: Loans will be sized to a loan-to-value limit of 90% of the as-is appraised value inclusive of the RDA’s loan and all senior debt. Repayment: • Depending on the applicant’s capacity for repayment, loans may be repaid as a deferred or interest-only loan. • 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: • The maximum loan term shall be 24-months. Interest Rate: • Base Interest Rate: The base interest rate shall be 3% simple interest. • Funding Priority Incentives: Projects shall have the ability to reduce the Base Interest Rate if the project meets the current funding priorities as established pursuant to the RDA Housing Allocation Funds Policy. 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 shall accrue on all loan proceeds disbursed commencing on the date of disbursement. • 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 a minimum of 30 years. Subordination to Senior Debt: • HDLP loans may be subordinated to leverage private financing, with the priority among subsidy lenders is 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: • Developer fees are not an eligible cost for a property acquisition loan. Disbursement of Funds: • Funding may be disbursed at loan closing. Other • Loans are non-assumable without written permission from the RDA. Page 10 – Attachment B: Draft Housing Development Loan Program Policy III. GAP FINANCING: HOMEOWNERSHIP CONSTRUCTION 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: Loans will be sized to a loan-to-value limit of 90% of the as-is appraised value inclusive of the RDA’s loan and all senior debt. Repayment: • Loans shall be repaid from the sale of housing units in the project. HDLP funds may be repaid after payout to senior loans have been accounted for. • 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: • The maximum loan term shall be 36-months. Interest Rate: • Base Interest Rate: The base interest rate shall be 3% simple interest. • Funding Priority Incentives: Projects shall have the ability to reduce the Base Interest Rate if the project meets the current funding priorities as established pursuant to the RDA Housing Allocation Funds Policy. 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 shall accrue on all loan proceeds disbursed commencing on the date of disbursement. • 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 a minimum of 30 years. Subordination to Senior Debt: • HDLP loans may be subordinated to leverage private financing, with the priority among subsidy lenders is 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: • Developer fees will be considered on a case-by-case basis and will be evaluated based on the affordability levels of the project, type of ownership entity, and level of public benefit provided by the project. 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 Page 11 – Attachment B: Draft Housing Development Loan Program Policy based on the affordability levels of the project, type of ownership entity, and level of public benefit provided by the project. • Deferred developer fees shall be paid after the HDLF loan has been fully repaid. 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. Page 12 – Attachment B: Draft Housing Development Loan Program Policy Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this _______ day of ________________, 2021. ________________________________ ___________________________, Chair Approved as to form: __________________________________ Salt Lake City Attorney’s Office Allison Parks Date:____________________________ The Executive Director: ____ does not request reconsideration ____ requests reconsideration at the next regular Agency meeting. ________________________________ Erin Mendenhall, Executive Director Attest: ________________________ City Recorder PRIMARY HOUSING FUND SECONDARY HOUSING FUND STATUTE & REGULATORY REQUIREMENTS ELIGIBLE PROGRAMS & ACTIVITIES SOURCE OF FUNDING TI Statutory Housing - 9 Line: 10% - Depot District: 20% - Granary District: 20% - North Temple: 20% - Northwest Quadrant: 10% - State Street: 10% TI Supplemental Housing - Central Business District: Varies - Other Housing Allocations: Varies STATE STATUTE - 17C-1-412 - 17C-1-411 RDA HOUSING ALLOCATION FUNDS FRAMEWORK - 17C-1-412 NORTHWEST QUADRANT HOUSING FUND HOUSING DEVELOPMENT FUND Tax Differential - Northwest Quadrant: 10% Sales Tax & Other - FoF (housing development): Varies - Other revenues: Varies - n/a POLICY PRIORITIES - Geographic Area: Citywide - AMI: 80% < - Tracking: Separate Account - Geographic Area: Citywide - AMI (Citywide): RDA-determined - AMI (Project Areas): Unrestricted - Tracking: Separate Account - Geographic Area: Citywide - AMI: 80% AMI < - Tracking: Separate Account - Geographic Area: Citywide - AMI: 80% AMI < - Tracking: Separate Account Programs - Housing Development Loan Prog. - TI Reimbursement Program Other Activities - Property Disposition & Acquisition - Capital Improvements for Housing Programs - Housing Development Loan Prog. - TI Reimbursement Program Other Activities - Property Disposition & Acquisition - Capital Improvements for Housing Programs - Housing Development Loan Prog. - TI Reimbursement Program Other Activities - Property Disposition & Acquisition - Capital Improvements for Housing Programs - Housing Development Loan Prog. - Other Activities - N/A Priorities recommended by Admin & approved by the Board, such as the housing goals and objective identied in the City’s housing plan. Priorities recommended by Admin & approved by the Board, such as the housing goals and objective identied in the RDA’s project area plans. Priorities recommended by Admin & approved by the Board, such as - Geographic: NWQ Adjacent Neighborhoods - Activities: Projects that improve opportunity indicators The RDA shall present an Annual Housing Development Funding Strategy, that proposes the programs and activities to be funded over the upcoming fiscal year, for the Board’s consideration. The Strategy shall be in accordance with the polices established through the RDA Housing Allocation Fund Policy and also consider any current funding priorities or objectives. ANNUAL STRATEGY Annual housing allocations, in alignment with the RDA Housing Fund Allocation Policy and Annual Housing Development Funding Plan, and as adopted through the RDA’s annual budget. ANNUAL BUDGET ALLOCATIONS Administration of funds pursuant to RDA policies and procedures. IMPLEMENTATION Priorities recommended by Admin & approved by the Board, such as the housing goals and objective identied in the City’s housing plan. Establishes accounts by source of funding Clarifies statutory requirements Defines eligible activities and policy priorities within the paramaters of statute and regulatory confines Defines the process for allocating budget based on specific objectives or priorities for the upcoming fiscal year Administrative implementation - DRAFT - HOUSING DEVELOPMENT LOAN PROGRAM PRIMARY HOUSING FUND SECONDARY HOUSING FUND NWQ HOUSING FUND HOUSING DEVELOPMENT FUND FUNDING SOURCES ADMINISTRATION METHOD UNDERWRITING & APPROVAL POLICIES Loans provided through the HDLF shall be funded directly from an individual fund source, with revenues, expenditures, interest, payments and repayments accounted for from the fund source to comply with applicable State and Local statutes. The RDA shall administer funds through a transparent NOFA process. Funds from multiple fund sources may be combined into a consolidated NOFA or a NOFA may be issued from one fund source. - Generally be competitive and time-limited. - Open-ended NOFAs may be issued for specific policy priorities or to offer emergency gap financing. - NOFAs will specify terms, conditions, and policy priorities for the revenue sources being used for the NOFA. (I.e. to carry out priorities of the Northwest Quadrant Housing account, etc.) - NOFAs may include specific requirements and/or funding priorities based on current City/RDA polices and objectives. (i.e. a set aside for opportunity areas.) A permanent and annually renewable program that consolidates and centralizes resources for the development and preservation of affordable housing. PURPOSE NOTICE OF FUNDING AVAILABILITY (”NOFA”) APPLICATIONS Applications will be centrally located and uniform across all funding sources, providing a one-stop-shop to apply for affordable housing funds. The program will include a standardized process for approving applications and a uniform set of underwriting policies to set expectations for both applicants and the RDA Board. - DRAFT - - DRAFT -