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Proposed Resolution - 5/28/2021 REDEVELOPMENT AGENCY of SALT LAKE CITY SALT LAKE CITY CORPORATION 451 SOUTH STATE STREET, ROOM 118 WWW.SLC.GOV · WWW.SLCRDA.COM P.O. BOX 145518, SALT LAKE CITY, UTAH 84114-5518 TEL 801-535-7240 · FAX 801-535-7245 MAYOR ERIN MENDENHALL Executive Director DANNY WALZ Director STAFF MEMO DATE: April 15, 2021 PREPARED BY: Lauren Parisi, RDA Project Manager RE: Consideration of $1,340,000 loan to Colony B LLC for an affordable housing development to be located at approximately 228 West 1300 South REQUESTED ACTION: Consider approval of resolution authorizing $1,340,000 loan to Colony B LLC for an affordable housing development located at approximately 228 West 1300 South POLICY ITEM: Affordable Housing BUDGET IMPACTS: $1,340,000 from Funding Our Future housing funds EXECUTIVE SUMMARY: Colony B LLC is requesting a $1,340,000 loan to accommodate the construction of a multi-family development (“Project”) at approximately 228 W. 1300 South. The Project will contain 140 residential units, with 106 units affordable to households earning 50% o f the area median income (“AMI”) and below for a minimum of 50 years. HOUSING TRUST FUND ADVISORY BOARD RECOMMENDATION: The Housing Trust Fund Advisory Board (“HTFAB”) reviewed this request at their meeting on April 7, 2021. The Board recommended approval of the $1,340,000 loan with the terms as proposed and included in Attachment A: Resolution and Term Sheet, including a reduced interest rate of 1.2%. ANALYSIS & ISSUES: Additional information on the Project and loan request is as follows: I. PROJECT OVERVIEW The proposed Colony B apartment project (“Project”) will be a primarily affordable housing development located at 228 W. 1300 South on a vacant piece of land. The Project will contain 140 residential units, with 106 units affordable to households earning 50% of the area median income (“AMI”) and below for a minimum of 50 years. The Project will initially lease to eleven young people aging out of foster care and include fifteen Type A ADA units to accommodate individuals with long-term mobility issues. The affordable unit breakdown is as follows: • 4 studios at 25% AMI ($351/month)* • 1 one-bedroom at 25% AMI ($379/month) • 16 studios at 39% AMI ($566/month) • 1 one-bedroom at 39% AMI ($610/month) • 60 studios at 45% AMI ($659/month) • 3 one-bedrooms at 45% AMI ($709/month) • 19 studios at 50% AMI ($736/month) • 2 one-bedrooms at 50% AMI ($792/month) • 34 market-rate units ($950-$1,200/month) *All rental rates reflect 2020 HUD data The studios or micro units will be approximately 324 square feet and the one-bedrooms will be approximately 520 square feet in size. Resident amenities will include a gym, indoor bicycle storage and community lounges. The Project abuts the 1300 South TRAX stop to the east and the 300 West commercial corridor to the west. If the funding request is approved, the Project is anticipated to break ground in July of 2021. This falls in line with the Housing Development Trust Fund Policy’s prioritization of projects that can break ground within three months of submittal. Construction will take approximately sixteen months, with the start of occupancy and lease-up beginning in Q4 2022 to Q1 2023. II. APPLICANT INFORMATION The organizations associated with this project are the Neighborhood Nonprofit Housing Corporation (NNHC), also known as Neighborhood Housing Solutions, acting as the applicant, sponsor, developer and owner. Defy I, LLC will work in partnership with NNHC, acting as the developer, owner. Together these organizations formed the joint venture partnership, Colony B LLC. The team has extensive experience in real estate finance, affordable housing projects, multi-family and mixed-use development projects as well as housing counseling. NNHC and Defy I, LLC are, “dedicated to housing for the greater good and [their] mission is to create quality affordable housing opportunities, strengthen and enhance communities, and provide households with the skills to become self-sufficient.” III. FINANCIAL OVERVIEW An overview of the Project’s sources and uses is provided below. SOURCES: Enterprise Green Energy Rebates $168,064 1% Federal LIHTC Equity Investor $9,599,040 46% State Equity Investor $701,930 3% Rocky Mountain CRC Perm. Loan $8,238,773 39% SLC HDTF $1,340,000 6% Olene Walker Housing Loan Fund $1,000,000 5% TOTAL SOURCES $21,047,807 100% *Note: The Project was awarded $1,000,000 in LIHTC. With a syndication rate of $.96, this equates to $9,599,040 in equity for the Project. USES: Land $3,700,000 18% Site Work $545,280 3% Hard Costs $11,469,097 54% 2 Architectural and Engineering Fees $415,845 2% Additional Soft Costs $112,210 1% Contractor Fee $577,848 3% Developer Fee $1,275,062 6% Financing Expenses $1,004,965 5% Syndication Costs $67,500 .32% Contingency* $1,475,000 7% Reserves $405,000 2% TOTAL USES $21,047,807 100% *Note: Contingency 13% of hard costs IV. PROPOSED TERMS The Applicant is requesting a Housing Development Trust Fund (“HDTF”) loan to fill a financial gap that remains on the Project. The applicant has explained that the gap has been caused by “a reduction in tax credit value as well as elevated construction co sts. The national CRA rules have changed over the last 12 months which has caused a decrease in value to Utah tax credits. Our pricing at application in September was at $0.99 and it is now at $0.96, which lowered our equity investment. We are also experiencing elevated construction costs which are currently at all-time highs across the industry. Incomes have not kept pace with these increases in costs and thus revenues are not sufficient to cover those cost increases.” The funding request aligns with HDTF policy, with proposed terms as follows: - Term: – 16 years - Amortization: 40-year period - Interest rate: requesting 1.2%, calculated as follows: Base Rate 3% Qualifying Interest Rate Reductions Transit Proximity* -0.25% Interest Rate w/ Reductions 2.75% *Note: To be eligible for the Transit Proximity interest rate reduction, the Project shall be located within 1/2 mile of a transit station. The Project is within ½ mile of the Ballpar k Station. Policy Waiver - Further Interest Rate Reduction: The applicant has requested that the interest rate be reduced further to 1.2% due to the senior lender’s debt coverage ratio (“DCR”) requirement of 1.15. An interest rate from the RDA higher than 1.2%, would decrease the DCR below the 1.15 threshold. The Housing Development Trust Fund Policy states that exceptions from the standard loan terms may be recommended on a case -by-case basis based on requirements of senior lenders. In this case, RDA staff recommends approval of this reduced interest rate – though not below the HDTF Policy’s 1% threshold – as the Project has a high number of deeply affordable units (15 of those reserved for individuals with long-term mobility issues), is ready to break ground this summer, has secured 9% Low Income Housing Tax Credits and the applicant is a housing nonprofit that will make hard repayments to the RDA with a balloon payment at the end of the 16-year loan term. - Repayment type: Annual hard repayments, with principal and interest payments beginning at the date of project stabilization, estimated to be Q1 of 2023. 3 Simple interest shall accrue on all loan proceeds disbursed commencing on the date of disbursement at a rate of 1.2%. -Security: A deed of trust on the property that may be subordinated to senior financing. -Affordable Housing Covenant: A restriction shall be recorded against the property that requires continued use of the specified units as affordable housing for 50 years. -Disbursement: Loan proceeds shall be disbursed through construction draws. Refer to Attachment A: Resolution and Term Sheet for additional detail on proposed loan terms and conditions. V.PROJECT’S ABILITY TO REPAY DEBT The Project is projected to generate positive cash flow for the entire 16-year investor period and maintain a DCR of 1.15. This falls within HDTF policy, which requires a 1.1 DCR. VI.POLICY ALIGNMENT - GROWING SLC: A 5-YEAR HOUSING PLAN This Project aligns with Growing SLC: A 5-Year Housing Plan as follows: 1.Encourage a mix of income in individual projects and neighborhoods. 2.Create a net increase in affordable housing units while: a.Avoiding displacement of existing affordable housing. b.Retaining and expanding the diversity of AMI and innovative housing types. 3.Keep publicly-funded housing projects affordable as long as possible. 4.Provide a spectrum of housing options for people of all backgrounds and incomes. 5.Include affordable housing in transit-oriented developments because access to public transit increases access to opportunities. Moderate increases in density should be encouraged along transit corridors. VII.FUNDS AVAILABILITY Through the 2019-20 budget process, $2,590,000 in sales tax funding was transferred to the RDA for the HDTF. $1,000,000 was allocated to the Diamond Rail apartment project and $250,000 was allocated to the Wasatch Community Gardens housing project, leaving $1,340,000 to accommodate this request. ATTACHMENTS: A.Resolution and Term Sheet B.Aerial View of Site C.Site Plan D.Elevations 4 REDEVELOPMENT AGENCY OF SALT LAKE CITY RESOLUTION NO. _______________ Loan to Colony B LLC RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY APPROVING THE TERM SHEET FOR A LOAN TO COLONY B LLC FOR AN AFFORDABLE HOUSING DEVELOPMENT PROJECT LOCATED AT APPROXIMATELY 228 WEST 1300 SOUTH WHEREAS, the Redevelopment Agency of Salt Lake City (“RDA”) was created to transact the business and exercise the powers provided for in the Utah Community Reinvestment Agency Act. WHEREAS, in the FY 2020 budget, the Salt Lake City Council (“Council”) allocated $2,590,000 in Funding Our Future revenues to the RDA to be provided as loans for the development of affordable housing. WHEREAS, pursuant to legislative intent provided by the Council when the FY 2020 budget was adopted, the Council established a housing trust fund within the RDA and any application that comes to Salt Lake City will be handled by the RDA in a manner that is consistent with the current rules and purposes guiding the Salt Lake City Housing Trust Fund and the Housing Trust Fund Advisory Board as established by Salt Lake City code Chapter 2.80. WHEREAS, Colony B LLC, whose majority member is Neighborhood Nonprofit Housing Corporation, (the “Developer”) will construct an affordable housing development which consists of the new construction of a five-story structure with approximately 140 residential units, 106 of which are deed restricted as affordable housing for 50-years (the “Project”) on 0.5 acres of property located at approximately 228 West 1300 South (the “Property”). WHEREAS, the Developer has applied for a loan from the RDA to assist with construction costs for development of the Project. WHEREAS, on April 7, 2021, the Housing Trust Fund Advisory Board (“HTFAB”) reviewed the loan application and approved the attached set of terms (the “Term Sheet”). WHEREAS, the RDA staff recommends approval of the Term Sheet for a loan to the Developer, as borrower, for the Project. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Redevelopment Agency of Salt Lake City (the “Board”) that it approves the loan outlined in the Term Sheet attached hereto, subject to revisions that do not materially affect the rights and obligations of the RDA hereunder. The Board authorizes the Executive Director to negotiate and execute the loan agreement and any other relevant documents consistent with the Term Sheet, and incorporating such other terms and agreements as recommended by the City Attorney’s office. Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this ____ day of May, 2021. _________________________________ Ana Valdemoros, Chair Approved as to form: __________________________________ Salt Lake City Attorney’s Office Kimberly K. Chytraus Date:____________________________ The Executive Director: ____ does not request reconsideration ____ requests reconsideration at the next regular Agency meeting. ________________________________ Erin Mendenhall, Executive Director Attest: ________________________ City Recorder April 13, 2021 EXHIBIT A: APPROVED LOAN TERM SHEET Colony B LLC BORROWER Colony B LLC, a Utah limited liability company PROPERTY 0.5 acres of land located at approximately 288 W. 1300 South PROJECT DESCRIPTION & AFFORDABILITY The project consists of the new construction of a five-story apartment building with one hundred and forty (140) residential units total and one hundred and six units (106) that will be deed restricted for 50 years as follows: • 4 studios at 25% AMI • 1 one-bedroom at 25% AMI • 16 studios at 39% AMI • 1 one-bedroom at 39% AMI • 60 studios at 45% AMI • 3 one-bedrooms at 45% AMI • 19 studios at 50% AMI • 2 one-bedrooms at 50% AMI PROPOSED LOAN TERMS • Amount: $1,340,000 • Interest Rate: 1.2% Base Rate 3% Qualifying Interest Rate Reductions Transit Proximity -0.25% Additional Reduction to meet Senior Lender Requirements -1.55% Final Interest Rate 1.2% • Term: 16 years • Amortization Period: 40 years • Repayment: Annual hard repayments, with principal and interest payments due the date of project stabilization, estimated to be Q1 of 2023. Simple interest shall accrue on all loan proceeds disbursed commencing on the date of disbursement at a rate of 1.2%. All interest accrued through project stabilization shall be added to the principal of the loan as capitalized interest, thereby triggering the capitalization date. Interest shall be amortized from the date of capitalization over a 40-year period. The first payment shall be due 30 days after the capitalization date. • Affordable Housing Covenant: A restriction shall be recorded against the property that requires continued use of the 106 units as affordable housing for 50 years. • Disbursement: Loan proceeds shall be disbursed through construction draws. COLLATERAL AND GUARANTEES • Security: A deed of trust on the property that may be subordinated to senior financing. CONDITIONS FOR LOAN CLOSING Prior to loan closing, the Applicant will complete the following: • RDA approves all terms of the loan. • Secure and provide evidence of sufficient sources of project financing. Sources of financing must equal the total project cost. • Obtain all required City approvals. • Execute loan documents (e.g. promissory notes, loan agreements, security documents) as deemed necessary by the RDA and its legal counsel. • Receive approval from the RDA and its legal counsel of all matters pertaining to title, legality of the loan, and the legality, sufficiency, and the form and substance of all documents that are deemed reasonably necessary for the loan transaction. • Provide evidence of insurance in such amounts and with such coverage as deemed necessary by the RDA for the Property. • Procure and deliver to RDA at Closing a satisfactory binding commitment on ALTA extended coverage form for a mortgagee’s (deed of trust) title insurance policy, or equivalent, in the amount of the Loan. • Such other terms as recommended by the RDA’s legal counsel and staff. ATTACHMENT B: AERIAL VIEW OF SITE 3 STANDARDPARKING STALLSNOT IN SCOPE9 STANDARD PARKING STALLSNOT IN SCOPE10 STANDARD PARKING STALLSNOT IN SCOPE12/3/2020NORTHATTACHMENT C: SITE PLAN COLONY B MICRO APARTMENTS SALT LAKE CITY 10/02/2020 BID SET ATTACHMENT D: ELEVATIONS MAIN LEVEL 100' - 0" LEVEL 02 110' - 1" LEVEL 03 120' - 2" 05 A6.01 01 A6.02 7' - 4 5/8" 108' - 11 1/2" 09 A4.10 MAIN LEVEL 100' - 0" LEVEL 02 110' - 1" LEVEL 03 120' - 2" MAIN LEVEL 100' - 0" LEVEL 02 110' - 1" LEVEL 03 120' - 2" E 05 A6.01 01 A6.02 A5.02/04A5.02/05E A5.02/03A3.11/0605 A6.01 01 A6.02 E /A5.03 011' - 4"1' - 0"1' - 6" JSF LLC KAYSVILLE, UT 84037 ARCHITECT 1576 WILLOW DR REVISION DATE SHEET TITLE SHEET NO. ISSUE COLONY B212 W 1300 S STAMP SALT LAKE CITY, UTMICRO APARTMENTSSILVERPEAK ENGINEERING LAYTON, UT 84041 STRUCTURAL 177 E. ANTELOPE DR. #B LANDCURVE SALT LAKE CITY, UT 84106 LANDSCAPE 2846 BEVERLY ST MCCLOY ENGINEERING SANDY, UT 84092 MECHANICAL 2057 EAST 10140 SOUTH SPECTRUM ENGINEERING SALT LAKE CITY, UT 84111 ELECTRICAL 3324 S STATE #400 PEPG CONSULTING SANDY, UT 84070 CIVIL 9270 S 300 W SUITE A-2 10/02/2020 A5.02 SOUTH ENTRY + PERSPECTIVES 01/21/2021 BID SET 08 SOUTHEAST VIEW 09 SOUTHWEST VIEW 10 NORTHEAST VIEW 11 NORTHWEST VIEW 1/4" = 1'-0"03 SOUTH ENTRY - NORTH 1/4" = 1'-0"04 SOUTH ENTRY - EAST 1/4" = 1'-0"05 SOUTH ENTRY - WEST07SOUTH ENTRY APPROACH 1/4" = 1'-0"02 SOUTH ENTRY - ENLARGED RCP 1/4" = 1'-0"01 SOUTH ENTRY - ENLARGED PLAN NO. DESCRIPTION DATE MAIN LEVEL100' - 0"LEVEL 02110' - 1"LEVEL 03120' - 2"LEVEL 04130' - 3"LEVEL 05140' - 4"ROOF150' - 5"16' - 5"10' - 1"10' - 1"10' - 1"10' - 1"10' - 1"WINDOW SHROUDTYP.DOOR SHROUDHORZ. RAILING SYSTEM01A6.0102A6.0104A6.0103A6.0105A6.0101A6.0202A6.0203A6.026' - 0"6' - 4"1' - 1 1/2"BB AABB AABB AABB AACCCCBB AABB AABB AABB AA CCCCCCCCBB AABB AABB AABB AA CCCCAAAAAABB AABB AABB AABB AACCAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAADDEEDDEEDDEEDDEEDDDDDDDDDDDDCC10' - 8 1/2"/A5.020301A6.01SIM02A6.01SIM3214156' - 5"151' - 11"03A0.03IAFSD10' - 1"FSD9' - 3 1/4"FSDFSD10' - 7"FDCLINE OF GRADE PLANEALLOWABLE BUILDING HEIGHT56' - 11"MAIN LEVEL100' - 0"LEVEL 02110' - 1"LEVEL 03120' - 2"LEVEL 04130' - 3"LEVEL 05140' - 4"ROOF150' - 5"3' - 9 1/4"10' - 1"10' - 1"10' - 1"10' - 1"10' - 1"04A6.0205A6.0201A6.03GGGGGGGGCDBEA156' - 5"151' - 11"03A6.02SIMIBICFSD20' - 8"FSD16' - 8"FSDLINE OF GRADE PLANEALLOWABLE BUILDING HEIGHT56' - 11"ELEVATION GENERAL NOTES1. REFER TO ELECTRICAL PLANS FOR EXTERIOR LIGHTING LOCATIONS2. SLOPE EXTERIOR FINISH GRADE AWAY FROM PERIMETER OF BUILDING FOR PROPER DRAINAGE, TYP.3. REFER TO SHEETS A3.50 FOR DOOR TYPES AND SCHEDULES.4. REFER TO SHEET A5.06 FOR WINDOW TYPES5. REFER TO MECHANICAL DRAWINGS FOR GAS METER LOCATIONS AND CONFIGURATIONS6. REFER TO ELECTRICAL DRAWINGS FOR ELECTRICAL METER LOCATIONS AND CONFIGURATIONS7. ALL EXTERIOR RAILINGS TO BE 42" HIGH, BALLASTERS @ 4 O.C. PER CODE, REFER TO DETAIL 01/A7.038. REFER TO SHEETS A7.10 THRU A7.16 FOR BALCONY ENLARGED PLANS AND DETAILS9. REFER TO SHEET A7.11 AND A7.14 FOR TYPICAL EXTERIOR BALCONY GUARDRAIL DETAILS.ELEVATION FINISH MATERIALSALUMINUM STOREFRONT SYSTEMALUMINUM MULLIONSCOLOR: ANNODIZED ALUM.MANUFACTURER: MANKO OR EQUALBALCONY SOFFIT/FASCIAMANUFACTURER: FIRESTONE - UC-501FINISH: KYNAR 500 / HYLAR 5000 FLUOROCARBON STEELCOLOR: TO BE APPROVED BY ARCHITECTSTYLE: FLUSH ALUMINUM PANELSRAILINGSHORIZ CABLING SYSTEMSHIPLAP METAL PANEL MANUFACTURER: BRIDGERSTEELPRODUCT: SHIPLAP WALL, 12" FLUSH WALL PANEL, CONCEALED FASTENERCOLOR: WHITE (EXACT COLOR TO BE SELECTED BY ARCHITECT)CEMENT PLASTERMANUFACTURER: MASTERWALLPRODUCT: CEMPLASTERCOLOR: WHITE (EXACT COLOR TO BE SELECTED BY ARCHITECT)TEXTURE: FINE SAND 1.0 WHITECEMENT PLASTERMANUFACTURER: MASTER WALLPRODUCT: CEMPLASTERCOLOR: GREY (EXACT COLOR TO BE SELECTED BY ARCHITECT)TEXTURE: FINE SAND 1.0 WHITE VERTICAL WOOD CLADDING MANUFACTURER: THERMORYPRODUCT: BENCHMARK WHITE ASH CLADDING, 1x4 T/G FINISH: UNOILEDSNAP BATTEN METAL PANEL MANUFACTURER: BRIDGERSTEELPRODUCT: SNAP BATTEN PANEL, 22 GA, WIDTHS VARY - REF TO ELEVSCOLOR: GREY (EXACT COLOR TO BE SELECTED BY ARCHITECT)EXTRUDED ALUMINUM FINMANUFACTURER: COLOR: WHITENOTE: REF TO ARCH DETAILSVISION GLAZING (GL-01)MANUFACTURER: NBI GLASSTYPE: 1" O.A. CLEAR LOW-E, SNX 62/27 LOW-ESPANDREL GLAZING (GL-02)MANUFACTURER: NBI GLASSTYPE: 1" O.A. CLEAR LOW-E, SNX 62/27 LOW-EMAIN LEVEL100' - 0"LEVEL 02110' - 1"LEVEL 03120' - 2"LEVEL 04130' - 3"LEVEL 05140' - 4"ROOF150' - 5"TYP16' - 5"10' - 1" 10' - 1" 10' - 1" 10' - 1" 10' - 1"WINDOW SHROUDHORZ. RAILING SYSTEM03A6.0304A6.03AABBAABBAABBAABBAABBAABBAABBAABBAABBAABBAABBAABBAABBAABBAABBAA AA AA AA AA AA AA AAAA AA AA AA AA AA AA AAAA AA AA AA AA AA AA AAAA AA AA AA AA AA AA AAAA AA AA AA AA AA AA AA02A6.02SIM03A6.02SIM60'-0" MAX PER ZONING CODE52' - 9 1/2"3214156' - 5"152' - 9 1/2"02A6.02SIM03A6.02SIM03A0.03IDIEIGIF09A4.10IDIDIDALLOWABLE BUILDING HEIGHT56' - 11"LINE OF GRADE PLANEMAIN LEVEL100' - 0"LEVEL 02110' - 1"LEVEL 03120' - 2"LEVEL 04130' - 3"LEVEL 05140' - 4"ROOF150' - 5"10' - 1"10' - 1"10' - 1"10' - 1"10' - 1"HORZ. RAILINGSYSTEM03A6.02SIM04A6.02GGGGGGGGCDBEA151' - 11"156' - 5"02A6.03IB45' - 6"1' - 6"ICALLOWABLE BUILDING HEIGHT56' - 11"LINE OF GRADE PLANEJSF LLCKAYSVILLE, UT 84037ARCHITECT1576 WILLOW DRREVISIONDATESHEET TITLESHEET NO.ISSUECOLONY B212 W 1300 S STAMPSALT LAKE CITY, UTMICRO APARTMENTSSILVERPEAK ENGINEERINGLAYTON, UT 84041STRUCTURAL177 E. ANTELOPE DR. #BLANDCURVESALT LAKE CITY, UT 84106LANDSCAPE2846 BEVERLY STMCCLOY ENGINEERINGSANDY, UT 84092MECHANICAL2057 EAST 10140 SOUTHSPECTRUM ENGINEERINGSALT LAKE CITY, UT 84111ELECTRICAL3324 S STATE #400PEPG CONSULTINGSANDY, UT 84070CIVIL9270 S 300 W SUITE A-210/02/2020A5.01EXTERIORELEVATIONS01/21/2021BID SET3/32" = 1'-0"01EXTERIOR ELEVATION - SOUTH FACADE3/32" = 1'-0"03EXTERIOR ELEVATION - EAST FACADE3/32" = 1'-0"02EXTERIOR ELEVATION - NORTH FACADE3/32" = 1'-0"04EXTERIOR ELEVATION - WEST FACADENO. DESCRIPTION DATE1 ADDENDUM 01 01/18/2020