R-032-2018 - Loan to Downtown SLC B LLC for a Citywide Affordable Housing Project; The Exchange; 340 East 400 SouR 18-2
REDEVELOPMENT AGENCY OF SALT LAKE CITY
RESOLUTION NO. R-32-2018
Citywide Affordable Housing — The Exchange - $3M Loan
RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY
OF SALT LAKE CITY APPROVING THE TERM SHEET FOR A LOAN TO DOWNTOWN
SLC B LLC FOR A CITYWIDE AFFORDABLE HOUSING PROJECT LOCATED AT 340
EAST 400 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 (the "Act").
WHEREAS, the Act provides that tax increment funds may be used outside of a project
area for the purpose of increasing the affordable housing supply within the boundaries of Salt Lake
City.
WHEREAS, pursuant to a motion adopted by the RDA Board of Directors (the "Board")
on December 5, 2017, the Board set aside $1,400,000 ("$1.4M Loan"), contingent upon an
application and review process, to facilitate the redevelopment of the Barnes Bank assemblage
located at 340 East 400 South.
WHEREAS, the RDA facilitated a loan application and review process pursuant to the
RDA's loan program policy for the $1.4M Loan for a proposed mixed -income housing
development at 340 East 400 South ("Project"), to be constructed by Downtown SLC B LLC
("Borrower").
WHEREAS, on September 12, 2018, the RDA's Finance Committee reviewed Borrower's
$1.4M Loan application.
WHEREAS, Borrower sought an additional $1,600,000 loan for the Project ("$1.6M
Loan"), and following a loan application and review process, the RDA's Finance Committee and
the RDA staff recommended that the $1.6M Loan to Borrower be funded through the Notice of
Funding Availability (the "NOFA") administered by the RDA.
WHEREAS, at the RDA Board of Directors' meeting on October 9, 2018, the RDA Board
of Directors (the "Board") decided not to fund the $1.6M Loan from the NOFA and instead
approved the $1.6M to Borrower from the RDA's revolving loan fund.
WHEREAS, the $1.6M Loan and the $1.4M Loan will be provided to Borrower on the
same terms and conditions, as described on the term sheet ("Term Sheet") attached hereto as
Exhibit A.
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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 consiste• • th t - Term Sheet, and incorporating
such other terms and agreements as recommended . the City A 1 orney's office.
Passed by the Board of Directors o he R; develo men Agency of alt Lake City, this
9th day of October, 2018.
Approved as to form:
Chairman
N n�
Salt Lake City Attorney's Office
Katherine N. Lewis
Date: (0(21lg
Transmitted to the Executive Director on
The Executive Director:
p< does not request reconsideration
requests reconsideration at the next regular Agency meeting.
October 26, 2018
Jquel4ne M. Biskupski, Executive Director
Attest:
blet
City Recorder
HB_ATTY-#72949-v4-RDA Resolution Exchange_Loan_Downtown_SLC B_LLC.docx
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EXHIBIT A
TO
RESOLUTION NO. R-32-2018
[Term Sheet for $3M Loan]
APPLICANT
• Downtown SLC B LLC
ADDRESS
• 340 East 400 South
PROJECT DESCRIPTION
The project consists of the new construction of a five -story , mixed -income, mixed -use project
with approximately 126 housing units, 63 parking spaces, and 32,700 square feet of co -working
and retail space. The commercial space will be underwritten separately from residential space.
RDA financing shall be provided for the residential component, of which details are as follows:
• Estimated Cost: $19,332,255
• Affordability: The proposed project will have 64% of the 126 units as deed restricted
affordable housing. Each (micro) unit will be 382 square feet with one bedroom. The
following ratios of affordability are broken down as such:
o Deed Restricted - 50 years
• 40% AMI rent and income limits, 40 units (32%)
• 80% AMI rent and income limits, 40 units (32%)
PROPOSED LOAN TERMS
• Amount: $3,000,000.
• Interest Rate: 2% fixed rate per annum. Interest shall accrue during construction
beginning upon the first disbursement of funds. Payments shall commence at conversion
to permanent financing.
• Term: 35 years.
• Amortization: 35 years.
• Repayment: Repayment shall be based on available cash flow prioritized before the
repayment of the seller's note and deferred developer fee.
• Disbursement: Loan proceeds shall be disbursed through construction draws. Any funds
not disbursed 24 months after closing will be used to pay all outstanding interest and
principal from the loan. To the extent that project sources exceed project uses at project
close out as documented by the cost certification, savings would be allocated to the
subordinate financing sources on a pro-rata basis
• Expenses: Applicant will pay all loan expenses and closing costs, including title
insurance.
• Assumption: The loan shall be assumable subject to the review and approval by the RDA
of the new borrower's capacity and experience.
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• Recourse: The loan shall be fully recourse before project stabilization, converting to
nonrecourse upon project stabilization.
COLLATERAL AND GUARANTEES
• A mortgage lien, that may be subordinated to the senior lender on properties located at
340 East 400 South. Should Olene Walker Housing Trust Funds which the Applicant is
applying for be approved, the RDA's preference would be for a superior or shared lien
position.
• Personal guarantees from persons maintaining 20% or more ownership in the ownership
entity.
DEFERRED FEE
• Applicant will maximize deferred developer fee contributed as a source to fund the
project.
CONDITIONS FOR LOAN CLOSING
Prior to loan closing, the Applicant will complete the following:
• Successfully resolve planning and land survey issues and accordingly finalize the
building design. RDA approval is required for any changes to the unit composition and/or
affordability levels.
• Close on the purchase of the Property.
• Secure sufficient sources of project financing.
• Obtain all required City approvals.
• Execute loan documents (e.g. promissory notes, loan agreements, security documents,
and guarantees) 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.
• Such other terms as recommended by the RDA's legal counsel and staff.
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