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R-005-2019 - Loan to Athens Hotel Development, LLC; 18 North Rio Grande Street R 19-2 REDEVELOPMENT AGENCY OF SALT LAKE CITY RESOLUTION NO. R-5-2019 Loan to Athens Hotel Development,LLC RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY APPROVING THE TERM SHEET FOR THE LOAN TO ATHENS HOTEL DEVELOPMENT, LLC FOR CONSTRUCTION OF A HOTEL LOCATED AT 18 NORTH RIO GRANDE STREET. 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,the RDA and the governing body of Salt Lake City adopted a redevelopment plan for the Depot District Project Area. WHEREAS,the RDA has a revolving loan fund to provide construction loans for projects located in its project areas. WHEREAS, Athens Hotel Development, LLC (the "Developer") will construct a hotel project that includes the adaptive reuse of the Union Pacific Station building and construction of a new mid-rise guestroom structure (the "Project") on the property consisting of approximately 1.7211 acres located at 18 North Rio Grande Street("Property"). WHEREAS,the Developer has applied for a loan from the RDA to assist with construction costs for the Project. WHEREAS, on March 14, 2019, the RDA Finance Committee reviewed the loan application. WHEREAS, based on the RDA Finance Committee's recommendations, the RDA staff recommends the attached set of terms(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 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. 23 Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this day of Apri 1 , 2019. =6 Fo er, Approved as to form: Salt L e ity Attorney's Office Kimbe I Chytra s Date: Transmitted to the Executive Director April 23, 2019. The Executive Director: �C does not request reconsideration requests reconsideration at the next regular Agency meeting. Ja quel ne M. Biskupski, Executive Director A ' off M NTq City Recorde r Date: Z•sgCT G`Cl��� ��7 L�K%���� LOAN TERM SHEET • Amount:Not to exceed $7,000,000 • Interest Rate: RDA Loan Program Base Rate(U.S.Treasury Yield plus 3%) 5.39% Public Benefit Interest Rate Reduction: Sustainability -o.5% Public Benefit Interest Rate Reduction: Public Amenities -0.5% Public Benefit Interest Rate Reduction: Adaptive Reuse -0.5% Public Benefit Interest Rate Reduction: Historic Preservation -0.5% Public Benefit Interest Rate Reduction: Job Creation -0.5% Public Benefit Interest Rate Reduction: Transit Alternatives* -0.5% Public Benefit Interest Rate Reduction: Economic Impact -0.5% Final Interest Rate" 1.89% *To be eligible for this interest rate reductions,the project will be required to provide a program that assists and encourages hotel employees to utilize transit passes for the entirety of the loan term. "The interest rate provided is tan estimate. The f nal interest rate will be based on the U.S. Treasury Yield Curve Rate,as determined by the term of the loan,at loan closing. The rate shown is the 10 year Treasury Yield Curve Rate on March 28,2019. • Interest Accrual: Interest accrual shall be waived for a 2-year period during construction. Interest shall accrue during a 2-year stabilization period following hotel opening. • Term: 12 years • Principal Amortization:Will begin 2 years after hotel opening and is based on a 20-year amortization schedule. • Repayment: The RDA shall be paid principal and interest payments beginning 2 years after hotel opening(4 years after closing)for 8 years.Any outstanding balance of the loan shall be payable in full at the end of the loan term. • Disbursement: Loan proceeds shall be disbursed through construction draws to begin once developer equity is fully drawn down. • Expenses: Applicant will pay all loan expenses and closing costs,including title insurance. • Assignment: The loan can be assigned to an approved affiliate of Developer. • Recourse: The loan shall be full recourse before project stabilization, converting to nonrecourse upon project stabilization. • Prepayment: There are no prepayment penalties. COLLATERAL AND GUARANTEES • The RDA will be provided a.subordinated interest in Developer's leasehold interest the existing historic Union Pacific Station building and future improvements at 18 South Rio Grande Street. RDA will be subordinate to a first leasehold mortgage no greater than 65%Loan-to-Cost, • The Hotel Venture will provide a corporate guaranty to the RDA for the full repayment of the loan. • The RDA will rely on the completion guaranty to the first mortgage lender,who will provide a confirmation letter of the conditional guaranty to the RDA. DESIGN REQUIREMENTS The RDA understands that the applicant has received conditional approval for the Union Station Hotel Planned Development and Conditional Building&Site Design Review.Prior to submittal for building permits,the Applicant shall submit project designs,plans,and specifications to the RDA.To be eligible for financing,the Project shall receive design approval from the RDA. CONDITIONS FOR LOAN CLOSING Prior to loan closing,the Applicant will complete the following; • Provide a detailed development budget and operating pro forma. • Provide Business lnforination required in Part B of loan application for the single purpose limited liability company(Hotel Venture). • Provide executed ground lease and parking agreement for the Property. • Provide appraisal report and title report for the Property. • Secure sufficient sources of project financing.The amount of the RDA loan shall not exceed$7,000,000 or 9% of the total project cost. Should the amounts of the first mortgage and the equity commitment change,the RDA's loan amount shall stay constant at$7,000,000 or 9%of the total project cost,whichever is less. • Execute loan documents(e.g.promissory notes, loan agreements,security documents, and guarantees) as deemed necessary by the RDA and its legal counsel. • Receive all necessary approvals from the City, as further defined in the loan agreement. • 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. • Such other terms as recommended by the RDA's legal counsel and staff.