R-008-2019 - Loan to Congregation Group, LLC; 25 North 900 West R 19-2
REDEVELOPMENT AGENCY OF SALT LAKE CITY
RESOLUTION NO. R-8-2019
Loan to Congregation Group,LLC
RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY
OF SALT LAKE CITY APPROVING THE TERM SHEET FOR THE LOAN TO
CONGREGATION GROUP, LLC FOR CONSTRUCTION OF CONGREGATION SPIRITS
DISTILLERY ON PROPERTY LOCATED AT 25 NORTH 900 WEST.
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 North Temple Project Area.
WHEREAS,the RDA has a revolving loan fund to provide construction loans for projects
located in its project areas.
WHEREAS, Congregation Group, LLC (the "Developer") will construct the
Congregation Spirits Distillery("Project")on property located at 25 North 900 West("Property").
The Project includes the adaptive reuse of the 12,000-square foot Utah Quality Service building
for the development of a distillery, bar and grill, and working urban fruit orchard.
WHEREAS,the Developer has applied for a loan from the RDA to assist with construction
costs for the Project.
WHEREAS, on May 20, 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.
Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this
11-day of June, 2019.
Amy Fowle� dai'rj
Approved as to form:
Salt Lake City Attorney's Office
Katherine N. Lewis
Date: SI- 3,
Transmitted to the Executive Director on June 12, 2019.
The Executive Director:
x does not request reconsideration
requests reconsideration at the next regular Agency meeting.
Jacqueline M. Biskupski, Executi Director
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HB_ATTY-#77732-v 1-RDA_Resolution_Congregation_Group
LOAN TERM SHEET
• Amount: Not to exceed $850,000
• Interest Rate:
RDA Loan Program Base Rate (U.S. Treasury Yield plus 3%) 5.37%
Public Benefit Interest Rate Reduction: Sustainability -0.5%
Public Benefit Interest Rate Reduction: Public Amenities -0.5%
Public Benefit Interest Rate Reduction: Adaptive Reuse -0.5%
Public Benefit Interest Rate Reduction: Permanent 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** 2.37%
*To be eligible for this interest rate reduction, the project will be required to provide showers, lockers, bike
storage,and a car/bike sharing program for employees for the entirety of the loan term.
"The interest rate provided is an estimate. The final 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 May 15,2019.
• Interest Accrual: Interest shall accrue during construction beginning upon the first
disbursement of funds.
• Term: 10 years, with a 2%increase in interest rate at the end of Year 5.
• Repayment: Principal and interest payments to the RDA based on a 20-year amortization
period shall commence at the beginning of the fourth month after the Project receives a
Certificate of Occupancy. 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.
• Equity Commitment: The anticipated equity amount is 13% of the project cost.
Developer's equity shall remain in the Project until the loan is paid off in full,meaning
that the equity investment cannot be repaid as long as the RDA loan has an outstanding
balance.
• Expenses: Applicant will pay all loan expenses and closing costs, including title
insurance.
• Assumption: The loan is not assumable.
• Recourse: The loan shall be full recourse.
• Prepayment: There are no prepayment penalties.
COLLATERAL AND GUARANTEES
• Subordinated mortgage lien on the property and future improvements located at 25, 35,
and 37 North 900 West.
• Corporate guaranty by Water Witch Bar.
• Personal guaranty by Sean Neves.
DESIGN REQUIREMENTS
The Applicant has received approval from the RDA's internal design review committee.
CONDITIONS FOR LOAN CLOSING
Prior to loan closing, the Applicant will complete the following:
• RDA approves all terms of the loan.
• Provide appraisal report for the Project and title report for the Property.
• Secure sufficient sources of project financing.
• 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.