R-024-2019 - Block 67 North Project Area Tax Increment Reimbursement Agreement; West Quarter Residential I, LLC & R 19-2
REDEVELOPMENT AGENCY OF SALT LAKE CITY
RESOLUTION NO. R-24-2019
Block 67 North Project Area Tax Increment Reimbursement Agreement
RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY
OF SALT LAKE CITY APPROVING A TAX INCREMENT REIMBURSEMENT
AGREEMENT WITH WEST QUARTER RESIDENTIAL 1, LLC AND WEST QUARTER
LODGING I, LLC
WHEREAS, the Redevelopment Agency of Salt Lake City ("Agency") was created to transact
the business and exercise the powers provided for in the Utah Community Reinvestment Agency
Act.
WHEREAS,the Agency's Board of Directors and the Salt Lake City("City")Council created the
Block 67 North Community Reinvestment Area("Project Area").
WHEREAS, West Quarter Residential 1, LLC and West Quarter Lodging 1, LLC (collectively,
"Owners") own or will own (or their affiliates will own) real property located in the Project Area
("Property"),which Project Area and Property boundaries are depicted on the map attached hereto
as Exhibit B.
WHEREAS, Owners are building the Project in two phases and the completed project with both
phases will include a public walkway,hotel, residential and retail properties (the "Project").
WHEREAS, the Agency has executed interlocal agreements with Salt Lake County ("County")
and the City authorizing the Agency to receive a certain percentage of the tax increment for the
Project Area and setting the base taxable value for the Property at$2,514,700.
WHEREAS,the County received$15,000,000 in transportation funds from the State of Utah(the
"Transportation Funds"), which it desires to use to support Owners' construction of an
underground parking facility in the Project,and the County has requested that after Owners receive
such funds, the County will be repaid (to the extent available) from the tax increment generated
from the Lot I and 2 of the Property.
WHEREAS, Owners and the County have requested (i) Agency participation as a pass-through
for the Transportation Funds to Owners, and(ii)that Agency and Owners execute a tax increment
reimbursement agreement to commit the tax increment generated from Lots 1 and 2 to repay the
Transportation Funds to the County subject to the conditions set forth in this Agreement.
WHEREAS, Agency is willing to act as a pass-through for the Transportation Funds if certain
public benefits are included in the Project and if Owners commit to (a) provide certain
improvements to the Property that will benefit the Intermountain Buddhist Church and the
Japanese Church of Christ (the "Churches"), which own real property adjacent to the Property;
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and (b) make certain commitments to cooperate with the Churches, which commitments are more
fully described in Exhibit C attached hereto.
NOW, THEREFORE. BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE
REDEVELOPMENT AGENCY OF SALT LAKE CITY, that the term sheet for the tax
increment reimbursement between the Agency and Owners which attached hereto as Exhibit A is
hereby approved.
The Board hereby authorizes the Executive Director to negotiate and execute a tax increment
reimbursement agreement with Owners pursuant to the terms of the attached term sheet. The
documents shall also incorporate such other terms as recommended by the Salt Lake City
Attorney's Office.
Passed by the Board of Directors of the Re evelopme cy of Salt Lake City, this
loth day of Dec,.2019
Amy owler, h
Transmitted to the Executive Director on
December 10, 2019
The Executive Director:
does not request reconsideration
requests reconsideration at the next regular Agency meeting.
Jac4ueliA M. Biskupski, Executive Director
Approved as to form:
Salt Lake City Attorney's Office �'wo VOApORgrF F20
Katherine N. Lewis i SEAL O a
Date: L cl �ti�� '►►►�
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ATTEST: '•�e��•'�
CITY RECORDER
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EXHIBIT A TO RESOLUTION
Term Sheet for Tax Increment Reimbursement Agreement between Agency and Owners
Location
• The Project Area is located on the northern portion of the block between 100 South and 200 South
Streets and 200 West and 300 West Streets.
• Reimbursement Area: The tax increment repayment to the County is based on the parcels owned
by the Owner's within the Project Area, Lots 1 and 2.
• The Owners own:
o Lots 1 and 2 located within the Project Area.
o Lots 3,4, and 5 located within Phase I.
• The Owners do not currently own the land slated for Phase II, but have the right to acquire it on or
before January 15, 2022.
• Please see Attachment:Block 67 North Area Map for all lot number references above.
Transfer of Funds and Indemnification
• The County received $15,000,000 in Transportation Funds from the State per legislation SB 128
that was passed in 2018 to be used for"Regionally Significant Parking Structures."
• The County requested that the Transportation Funds be passed through the Agency so that tax
increment repayment may be utilized to create a revolving loan fund for the County.
• The County requested that the Agency transfer the Transportation Funds to the Owners in an up-
front lump sum payment of$15,000,000.
• The Owners requested the Agency transfer the Transportation funds to West Quarter Holdings,
LLC, who will then transfer the funds to the Owners within 30 days of receipt.
Tax Increment Reimbursement Terms and Conditions to Fund
• Term: 20 Years.
• Maximum Reimbursement: $15,000,000 in tax increment paid directly to the County on behalf of
the Owners.
• The Agency is not held responsible for any short fall in tax increment generated by Phase I.
• The Owners are expected to execute an agreement with the County obligating them to cover up to
$5,000,000 of any shortfall.
• The Agency makes no commitments to provide funding or participate in Phase II.
• Phase I Trigger to Transfer$15,000,000
o Conditions to trigger the payment of$15,000,000 in Transportation Funds must include
the following triggering events:
1. Owners must provide proof of Phase I via construction documents and securing the
required permits and licenses for permits on Lot 1 through 4 and the Phase I underground
parking garage. Please see Attachment: Block 67 North Area Map for reference.
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■ Agency shall have the right to verify through construction documents the Design
Improvements and that the opportunity for the Adjacent Property Improvements
and connection to the midblock walkway remains intact.
2. Owners have obtained all required financing to construct Phase I.
3. Owners must execute and record the Covenant to Cooperate against the Property to ensure
that the commitments offered by the Owners to the Churches through the facilitation
process the Agency established are completed. Please see Attachment: Cooperation
Requirements for a list of items.
Phase I Payment
o The Agency will pay up to$3,000,000 in tax increment to the County which represents the
public benefit Phase I provides the Project Area.
o Owners must diligently pursue completion of Phase I for the Agency to continue to pay the
County tax increment up to the$3,000,000 cap.
o If the Agency collects and pays to the County the entire Phase I repayment prior to 2026,
the Agency shall continue to collect tax increment from the Project Area but will not be
required to pay such additional tax increment to the County unless Phase II is triggered.
o If Owners fail to obtain a certificate of occupancy for Phase I, Owners will repay the
County the full $15,000,000 in Transportation Funds.
o Phase I requirements include:
Residential One tower,240 units
Retail Approximately 20,000 square feet
Hotel 270 keys
Parking 46 public stalls*
Office x
Midblock Walkway CRA portion
*Shall be made available to the general public after S pm weekdays, all day on weekends, and at a rate
comparable to the going market rate. "Available to the public"means stalls not reserved or sold but available
to all.
Phase I Adjacent Property Improvements
o It is a fundamental condition of the Agreement that the Owners work with the Japanese
American community to regrade, repave, and connect storm drains to the Adjacent
Properties that are owned by the Japanese Church of Christ and Salt Lake Buddhist Temple.
Please see Attachment:Block 67 North Area Map for reference.
o These improvements are a result of the facilitation process with the Churches and will be
made in lieu of an approximately 12 foot grade separation/wall so that the Churches'
properties and 100 South are not cut off from the Project development, but the opportunity
is provided for midblock access.
o If the Adjacent Property Improvements are not completed by 2026,the Agency may retain
$250,000 in Tax Increment that would otherwise be paid to the County, to be used for
projects that the Agency determines will benefit the Japantown neighborhood.
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o If the Owners and Churches enter into an agreement to complete the Adjacent Property
Improvements:
■ The Agency will have the right to review the agreement(s).
■ The Agency will have the right to enforce the terms agreed upon between the
Owners and Churches via the agreement(s).
o Additionally, it is a requirement of the Phase I trigger to transfer the $15,000,000 that the
Owners verify that Phase I will be built so that the opportunity to grade and connect with
the Adjacent Property remains intact.
• Phase H Trigger
In order to trigger the continued payment of tax increment to the County beyond the initial
$3,000,000 cap,the Owners must provide the following by December 31, 2026:
1. Proof that construction will commence on Phase II including construction documents and
the application for the building permit for the Phase II underground parking structure.
2. Evidence they have obtained all required financing to construct Phase II.
• Phase H Payment
In order for the Agency to continue to pay the county tax increment up to the full $15,000,000:
1. The Owners must continue the construction of Phase II through completion.
2. If the Owners commence construction of Phase II but will not, for reasons outside of
Owner's control, complete Phase II by December 31, 2029, Agency may, in its sole
discretion,extend the deadline in writing to complete Phase II and the Agency/County ILA
will not terminate.
3. If the Owners cease construction of Phase II or does not complete Phase II by 2029, the
Agency's obligation to continue making the Phase II payment shall cease, the
Agency/County ILA will terminate,and the Agency may take reasonable steps to terminate
the Project Area.
4. The County has agreed and acknowledged in the Agency/County Interlocal Agreement that
the Agency has no obligation to make more than the Phase I Payment if the following are
not completed on Phase II:
Residential 400 Units
Retail 50,000 square feet
Hotel 308 keys
Parking 1,200 public stalls*
Office 465,000 square feet
Midblock Walkway Completed midblock walkway from 300 West to 200
South,and 300 West to 200 West
*Shall be made available to the general public after 5 pm weekdays, all day on weekends, and at a rate
comparable to the going market rate. "Available to the public"means stalls not reserved or sold but available
to all.
Transfer of Property
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• The Owners do not yet own the Phase II property but currently is in a lease and has the right to
acquire it by January 15,2022.
• The TIRA requires that the Owners record a notice of participation and reimbursement agreement
on the Phase 11 property so that the requirements of the TIRA run with the land.
• In particular,that the tax increment payments made by the Agency to the County will cease unless
Phase II is built as provided in the TIRA.
• Owners shall not,without Agency's prior written consent, sell,transfer,or assign this Agreement.
Reporting
• The Owners are required to report in writing to the Agency the parking stalls in the Project that are
provided to the public, including the location and number of stalls, on or before December 31" of
each year during the Reimbursement Term. The Agency shall have the right to inspect the Project
to ensure compliance with this requirement.
Conditions of Agreement for Execution
1. The Agency approves all terms of the agreement.
2. Owners obtain all required City approvals.
3. Owners and Agency execute legal documents as deemed necessary by the Agency and its legal
counsel.
4. Such other terms as recommended by the Agency's legal counsel.
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EXHIBIT B TO RESOLUTION
Block 67 North Area Map
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Block 67 North CRA Property Owner:Salt Lake Buddhist Temple
Parcel Lines Property Owner:Japanese Church of Christ
Reimbursement Area
EXHIBIT C TO RESOLUTION
Owners' Commitments to the Churches
Design Improvements
1. In the building(the"Building")with an address of I I I South 300 West, exterior doors for loading
functions facing 100 South shall be set back at least 20 feet from 100 South and recessed inside the
Building.
2. High speed Rytek doors that are designed to be quiet and that allow box trucks to pull completely
inside the Building to perform loading and garbage pickup behind closed doors will be used on the
exterior Building doors that face the Churches' Property or 100 South; provided, that the trash
compactor will need to be pulled out of the dock to be emptied.
3. Any Building rooms that store garbage and open to the Churches' property or 100 South will have
a trash compaction system to reduce the number of days a week trash pickup needs to occur for the
Building.
4. All indoor loading rooms and garbage rooms of the Building will include installation of ventilation
and deodorizing functions.
5. The Northwest corner of the Building shall be designed with a setback to add outdoor seating and
encourage activation of 100 South.
6. The eastern wall of the parking garage serving the Building that abuts the Churches' property to
the East will include knock out panels so that future development may connect to the parking
garage. Future connection to the parking garage will take place if the Owners and Churches enter
into an agreement for use of the ramp.
Good Faith Conditions
1. Schedule trash pick-up so as not to interfere with festivals and church services or any other regularly
scheduled activities. Churches and Owners will work together to provide notice of activities and
trash pick-up scheduling.
2. Temporarily relocate or reschedule deliveries during festivals and church services.
3. Act in good faith to consider potential storefront options for the Building in collaboration with the
Churches for the Building's retail facing 100 South or other retail within the Building.
4. Receive and take into account input from the Churches regarding the landscape design along 100
South adjacent to the Project and Japantown, recognizing that such design must be in accordance
with applicable City ordinances.
Design Improvements and Good Faith Conditions Implementation:
• The Design Improvements and Good Faith Conditions are included in the Covenant to Cooperate.
• The Design Improvements will be verified in construction documents.
• Both the Covenant to Cooperate and construction documents are included in the TIRA as
Triggering Events and are required for the Owners to receive the $15,000,000 transfer of
Transportation Funds.
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Adjacent Property Improvements
1. Owners will regrade and repave on, and reconnect storm drains to, the Adjacent Property. Please
see Attachment: Block 67 North Area Map for reference. For the avoidance of doubt, Owners are
not constructing any underground improvements on the Adjacent Property; any such underground
improvements would be constructed, if at all, by the Churches.
2. The Adjacent Property Improvements will be made in lieu of an approximately 12-foot grade
separation/wall and will provide stairs, if necessary, for pedestrian access between the properties
and between the Project and 100 South.
Adjacent Property Improvements Implementation:
• The opportunity for the Adjacent Property Improvements to be made and that future connection to
the midblock walkway remains intact will be verified in construction documents which are required
for the Owners to receive the$15,000,000 transfer of Transportation Funds.
• If the Churches choose to enter into an agreement with the Owners to complete the Adjacent
Property Improvements,the Agency has the right to review the agreement and enforce the terms.
• If the Adjacent Property Improvements are not completed by 2026, the Agency may retain
$250,000 in Tax Increment that would otherwise be paid to the County,to be used for projects that
the Agency determines will benefit the Japantown neighborhood.
• Of Note: The Owners have tied their proposal to complete the Adjacent Property Improvements to
the request that the Churches sign soil and nails agreement(s)for shoring and crane air access over
the property during construction of the Project It is up to the Churches to determine their
participation.
Additional Benefit for Japantown
• The CRA budget allocates 10% of tax increment to be used for Japantown improvements within
the 100 South right of way, administered by the Agency.
• The Japantown Design Strategy consultant process will align with this potential funding stream.
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