Loading...
Transmittal - 5/10/2022 MAYOR ERIN MENDENHALL Executive Director DANNY WALZ Director REDEVELOPMENT AGENCY of SALT LAKE CITY STAFF MEMO DATE: April 22, 2022 PREPARED BY: Tracy Tran RE: Consideration of a loan up to $1,750,000 to Bicycle Collective REQUESTED ACTION: Consider approving a $1,750,000 loan request from Bicycle Collective to fund construction of the nonprofit headquarters located at approximately 901 S Gale Street POLICY ITEM: Granary Project area development. BUDGET IMPACTS: Up to $1,750,000 from the revolving loan fund. EXECUTIVE SUMMARY: The Bicycle Collective (“Applicant”), a nonprofit organization, is requesting a $1,750,000 bridge loan through the Redevelopment Agency of Salt Lake City’s (“RDA”) Loan Program for the construction of a new building located within the RDA’s Granary District project area at approximately 901 S Gale Street (“Property”), as illustrated in Attachment A: Site Map. The project will contain about 15,000 square feet for a multi-use building that will house the retail, programming, and operations space for the Bicycle Collective. The terms are provided in Attachment D: Term Sheet and Attachment E: Resolution for consideration by the RDA Board of Directors (“Board”). The Applicant is seeking primary financing as a traditional bank loan would be cost-prohibitive for the nonprofit organization. The RDA Loan Program Policy (“Policy”) allows the RDA to provide primary financing if the project is an RDA project which involves RDA-owned property, is innovative in nature and financing is either unavailable or limited and cost-prohibitive to the project. The RDA currently owns the land. In November 2017, through a request for proposals (“RFP”) process, the RDA selected the Bicycle Collective with which to negotiate the development of the Property. In addition, in August 2018, the Board approved a land write-down for the property in exchange for incorporating public benefits within the development. The project will include public art, high quality façade materials and will be designed to at least a LEED Silver standard or equivalent level. RDA FINANCE COMMITTEE RECOMMENDATION: The RDA Finance Committee (“Committee”) is scheduled to review the proposed loan terms. The Committee’s recommendation will subsequently be forwarded to the Board. ANALYSIS & ISSUES: An overview of 1) property details, 2) primary financing, 3) RDA loan fund policy alignment, 4) Granary District project area alignment 5) proposed loan terms, 6) capability for loan repayment, and 7) developer’s experience is as follows: 1. Property Details The property is currently owned by the RDA and contains approximately .26 acres. Additionally, the Property is vacant and is zoned D-2 (Downtown Support) District. 2. Primary Financing The Applicant is requesting a $1,750,000 primary loan through the RDA Loan Program for construction of the Project. The applicant is seeking primary financing as a traditional bank loan would be cost-prohibitive and would be difficult to obtain due to the additional risk involved with the development of the nonprofit headquarters, which will primarily be based on fundraising. The Project’s capital stack also includes RDA land contribution and fundraising. 3. Policy Alignment: RDA Loan Program This loan request aligns with RDA Loan Program Policy (“Program”), as adopted by the RDA Board of Directors, with a clarification that although the loan amount is technically sized appropriately (using debt service coverage ratio and/or loan to value calculations) as per the Program, the projected repayment of the loan is based on the ability for the Applicant to adequately fundraise to cover the loan balance at the end of the term. The reliance on this fundraising to cover the loan makes this project riskier than others. The Applicant anticipates receiving donations from large donors once the project construction is underway. The projections show that the Applicant should be able to pay off their loan within the proposed 5-year term. The Applicant has requested an interest rate reduction to acknowledge four public benefits provided by the Project: • Public Amenities: The Project is located along 9 Line Corridor that connects the east with the west side neighborhoods. The Project will also include a public art amenity. • Transit Alternatives: The mission of the Bicycle Collective is to promote cycling as an effective and sustainable form of transportation. Additionally, the Project will include employee shower and lockers. • Architecture and Urban Design: The Project participated in an RDA design review process that reviewed the buildings materials, how the project fits in the with surrounding neighborhood, and how the project will enhance the public realm. • Sustainability: The Project will be an all-electric building that will include rooftop solar and the Project has been designed to a LEED-Silver equivalent standard. The Bicycle Collective was also recently awarded a Blue Sky Grant from Rocky Mountain Power. 4. Policy Alignment: Granary District Redevelopment Project Area Plan The Project aligns with the RDA’s goals for the neighborhood, as adopted through the Granary District Redevelopment Project Area Plan, as follows: • Commercial Objectives: o Provide a broad mixture of small and medium commercial tenants representing a variety of uses. o Promote commercial development on a neighborhood scale with an emphasis on specialty stores and neighborhood services. Neighborhood Revitalization: Return underutilized land to a productive use through a reduction in the number of neglected buildings and vacant lots to reduce crime and improve the physical environment of the neighborhood. • Housing Objectives: o Create attractive neighborhood environments that will reinforce the sense of community. o Require active, friendly and public-oriented ground-level uses that contribute to the pedestrian environment and serve the neighborhood. • Transportation Objectives: o Pedestrian and Bicyclist Circulation: Provide access with an emphasis on a friendly and safe environment for bicycles and pedestrians. • Urban Design o Create a pedestrian friendly streetscape that will establish a sense of neighborhood. 5. Summary of Proposed Loan Terms • Amount: The loan amount will be sized to the lower of $1,750,000 or a maximum of a 90% of value as per an as-completed appraisal. • Interest Rate: RDA Loan Program Base Rate (U.S. Treasury Yield plus 3%) 5.66% Public Benefit Interest Rate Reduction*: • Public Amenities • Transit Alternatives • Architecture and Urban Design • Sustainability -0.5% -0.5% -0.5% -0.5% Final Interest Rate**** 3.66% *To be eligible for interest rate reductions, the project will be required to meet the criteria outlined in section 3. **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. • Term: 5 years. • Amortization: 20 years. • Lien: A deed of trust lien, recorded in first position, on the Property 6. Loan Repayment The loan repayment for this Project is based on fundraising. The project is projected to pay off the loan through their capital campaign that will seek donations from individuals, organizations, and foundations. The Applicant has raised a large portion of funds and anticipates additional donations once the construction begins. These donations are expected to cover the debt service for the loan. 7. Developer’s Experience The development team consists of four members from the Applicant’s Building Committee with a range of experience in executive, project, and construction management. PREVIOUS BOARD ACTION: • In August 2018, the RDA Board approved a land write-down for the property in exchange for incorporating public benefits within the development (R-28-2018). ATTACHMENTS: A. Site Map B. Site Photos C. Project Renderings D. Term Sheet E. Resolution ATTACHMENT A: SITE MAP -" -' r ---_--~---------------------------------------- 1 I -i · i ' j '-1 i i I J 900 SOUTH ATTACHMENT B: SITE PHOTOS ATTACHMENT C: PROJECT RENDERINGS & ELEVATIONS I I [O □ i @ NORTI-A'IEST @SOUTHWEST GbFijf Fti I i 'i 1 @ NORTHEAST (~ SOUTHEAST ATTACHMENT D: TERM SHEET APPLICANT Bicycle Collective (“Applicant”), a nonprofit entity ADDRESS Property located at approximately 901 S Gale Street PROPOSED LOAN TERMS • Amount: $1,750,000 • Eligible Uses: Construction costs • Interest Rate: RDA Loan Program Base Rate (U.S. Treasury Yield plus 3%) 5.66% Public Benefit Interest Rate Reduction: • Public Amenities* • Transit Alternatives** • Architecture and Urban Design*** • Sustainability**** -0.5% -0.5% -0.5% -0.5% Final Interest Rate***** 3.66% RDA staff will confirm the Project qualifies for the applicable interest rate reductions. Any changes to the project could result in changes to the interest rate reductions: *To be eligible for this interest rate reduction, the project will include a public art amenity **To be eligible for this interest rate reduction, the project will be required to provide employee shower, locker, and bicycle facilities as part of their overall development. ***The project participated and received approval through an RDA Design Review process. ****The project will be an all-electric building that will include rooftop solar and the Project has been designed to a LEED-Silver equivalent standard. *****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. • Term: 5 years • Amortization: 20 years • Payments: Hard repayments with balloon payment due at the end of the term. • Security: A first position lien on the property. • Disbursement: Loan proceeds shall be disbursed through construction draws. LOAN TERM SHEET Bicycle Collective CONDITIONS FOR LOAN CLOSING Prior to loan closing, the Applicant will complete the following: • RDA approves all terms of the loan. • 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. OTHER CONDITIONS • The Project shall operate as the intended use over the term. • The Project shall remain in good financial and legal standing over the term. REDEVELOPMENT AGENCY OF SALT LAKE CITY RESOLUTION NO. _______________ Loan to Bicycle Collective RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY APPROVING THE TERM SHEET FOR A LOAN TO THE BICYCLE COLLECTIVE FOR A COMMERCIAL DEVELOPMENT PROJECT LOCATED AT APPROXIMATELY 901 SOUTH GALE 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 (the “City”) adopted the Granary District Redevelopment Project Area Plan on April 15, 1999. WHEREAS, the RDA has a revolving loan fund to provide construction loans for projects located in its project areas. WHEREAS, Bicycle Collective, a Utah nonprofit entity, (the “Developer”) will construct a commercial development to house its headquarters (the “Project”) on the property consisting of approximately 0.26 acres located at approximately 901 South Gale Street (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 May 5, 2022, 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 (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. ATTACHMENT E: RESOLUTION Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this ____ day of May, 2022. _________________________________ Ana Valdemoros, Chair Approved as to form: __________________________________ Salt Lake City Attorney’s Office Sara Montoya Date: April 21, 2022 The Executive Director: ____ does not request reconsideration ____ requests reconsideration at the next regular Agency meeting. ________________________________ Erin Mendenhall, Executive Director Attest: ________________________ City Recorder r i ~ EXHIBIT A: LOAN TERM SHEET APPLICANT Bicycle Collective (“Applicant”), a nonprofit entity ADDRESS Property located at approximately 901 S Gale Street PROPOSED LOAN TERMS  Amount: $1,750,000  Eligible Uses: Construction costs  Interest Rate: RDA Loan Program Base Rate (U.S. Treasury Yield plus 3%) 5.66% Public Benefit Interest Rate Reduction:  Public Amenities*  Transit Alternatives**  Architecture and Urban Design***  Sustainability**** -0.5% -0.5% -0.5% -0.5% Final Interest Rate***** 3.66% RDA staff will confirm the Project qualifies for the applicable interest rate reductions. Any changes to the project could result in changes to the interest rate reductions: *To be eligible for this interest rate reduction, the project will include a public art amenity **To be eligible for this interest rate reduction, the project will be required to provide employee shower, locker, and bicycle facilities as part of their overall development. ***The project participated and received approval through an RDA Design Review process. ****The project will be an all-electric building that will include rooftop solar and the Project has been designed to a LEED-Silver equivalent standard. *****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.  Term: 5 years  Amortization: 20 years  Payments: Hard repayments with balloon payment due at the end of the term.  Security: A first position lien on the property.  Disbursement: Loan proceeds shall be disbursed through construction draws. CONDITIONS FOR LOAN CLOSING Prior to loan closing, the Applicant will complete the following:  RDA approves all terms of the loan. LOAN TERM SHEET Bicycle Collective RDA LOAN RDA LOAN PROGRAM  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. OTHER CONDITIONS  The Project shall operate as the intended use over the term.  The Project shall remain in good financial and legal standing over the term.