Transmittal - 5/23/2022
SALT LAKE CITY CORPORATION
451 SOUTH STATE STREET, ROOM 118 WWW.SLC.GOV · WWW.SLCRDA.COM
P.O. BOX 145518, SALT LAKE CITY, UTAH 84114-5518 TEL 801-535-7240 · FAX 801-535-7245
MAYOR ERIN MENDENHALL
Executive Director DANNY WALZ
Director
REDEVELOPMENT AGENCY of SALT LAKE CITY
DATE: May 23, 2022
PREPARED BY: Ashley Ogden & Lauren Parisi, Project Managers
RE: RDA Commercial Assistance Opportunities
REQUESTED ACTION: Briefing on the Administration’s preliminary proposal to develop a package of
Commercial Assistance Programs
POLICY ITEM: Revision of existing RDA Loan and Granary Adaptive Reuse Loan Programs;
creation of new programming
BUDGET IMPACTS: None at this time
EXECUTIVE SUMMARY:
Salt Lake City is currently experiencing rapid population and economic growth, which is resulting in
unprecedented levels of real estate demand. While these trends contribute to a strong and thriving city,
studies show that they’re often followed by the displacement of our most vulnerable residents, many of
whom have called Salt Lake City home for generations. The City’s focus on the provision of affordable
housing is vital and necessary, but the RDA has identified a need to extend similar benefits to the local
businesses and non-profits that contribute so much to the health and vibrancy of our neighborhoods. To
address this need, the RDA is proposing to amend two (2) existing programs and potentially create two (2)
new programs to better support the real estate and financial needs of the local business and non-profit
sectors. The following memo outlines Staff’s preliminary proposal for a set of Commercial Assistance
Programs, which will be further refined through Board discussions and community engagement activities to
be conducted throughout summer 2022.
ANALYSIS & ISSUES:
Identifying the Challenges and Impacts
This section is a high-level summary of challenges faced by local retailers and impacts of their
displacement. The trends described below were assessed on a national level but likely apply to any city
experiencing high levels of real estate demand and redevelopment. Staff will continue to evaluate
challenges and impacts specific to Salt Lake City through community engagement and data analysis.
Challenge #1: Strong market forces are causing commercial rents to become increasingly
unaffordable.
• High Demand
o A global surplus of capital seeking higher returns is flooding into urban real estate, causing
a speculative run-up in prices.
o Cities are increasing in popularity as more people desire to live in walkable, mixed-use
urban districts. While this has increased opportunities for businesses, it has also driven
demand for small storefront space, with the rise in rents often outpacing sales growth.
o National chains have saturated the suburbs and face pressure from shareholders to show
market growth year over year, leading them to turn to cities to sustain their expansion.
• Limited Supply
o Older urban buildings are being redeveloped or razed, and the projects that replace them
either provide no retail space at all, or spaces designed for chains that are too large to be
suitable or affordable for local entrepreneurs.
o Banks and other lenders often provide lower interest rates or better terms if a property
developer has signed national, brand-name tenants.1
Challenge #2: COVID-19 severely impacted local businesses, especially those owned by people of
color.
• Since February 2020, a quarter (1/4) to one-third (1/3) of all U.S. small businesses have closed.2
• Studies show that businesses owned by people of color and immigrants tend to be concentrated
within the food, personal services, and retail sectors that are most vulnerable to economic
downturn. This led to disproportionate COVID impacts:
o In early months of the pandemic, the number of Black business owners fell by 41 percent
(41%).
o The number of Latinx business owners fell by 32 percent (32%).
o The number of Asian business owners fell by 26 percent (26%).
o The number of white business owners fell by 17 percent (17%).
o A November 2020 survey of Black and Latinx business owners indicated that one-fifth
(1/5) expected to close their businesses by mid-2021. 3
Much is lost through the closure or displacement of local businesses:
• Goods, services, and amenities that are geared toward the needs, tastes, and desires of residents
• Community landmarks and gathering spaces that foster relationship-building
• Business-sponsored programs and other investments
• Character and cultural identity that make each neighborhood a unique and interesting place to be
• Economic stability of the neighborhood (less local circulation of dollars, local employment)3
1 LaVecchia, O. & Mitchell, S. (2016). https://ilsr.org/wp-content/uploads/2018/03/ILSR-AffordableSpace-FullReport.pdf.
2 Voltolini, Patricia, Melissa Kim, David M. Greenberg, Julia Duranti-Martinez, and Michelle Harati. (2022).
https://nextcity.org/ebooks/equitable-pathways-to-small-business-recovery-an-all-hands-approach.
3 Lung-Amam. (2021). https://www.bloomberg.com/news/articles/2021-05-19/small-businesses-are-victims-of-
gentrification-too.
Preliminary Proposal
The RDA will rely heavily on feedback received from the local business and non-profit community to
inform the final proposal. In this early stage, Staff envisions the creation of a package of Commercial
Assistance Programs where RDA tools are more intentionally utilized to:
• Provide opportunities to establish new services, amenities, or underrepresented business types
within a neighborhood
• Incentivize the construction of right-sized commercial spaces in new projects
• Activate existing, underutilized commercial spaces
• Create affordable rental or ownership opportunities for local businesses and non-profits
• Counter the displacement of existing local businesses from their neighborhoods
• Implement tenant preferences for local businesses, especially those that are women/minority-
owned, and community-serving non-profits
• Promote the preservation, rehabilitation, or adaptive reuse of existing building stock
• Enhance the capacity for non-traditional applicants to apply for and utilize RDA programs
1. Revolving Loan Fund (RLF): The existing RDA Loan Program is flexible with gap financing
available to facilitate development projects that:
• are located within an RDA Project Area and meet at least one Project Area Objective as provided in
most recent Project Area Strategic Plan; or
• are located within Salt Lake City and provide affordable (80% AMI and below) or mixed-income
housing.
Staff would like to amend the existing program to provide funding for projects that include a commercial
component, with threshold eligibility criteria that are specific to the objectives outlined above. Threshold
criteria could include:
• Projects being developed by local businesses or non-profits for their own end use;
• Projects that dedicate commercial space to independent businesses or non-profits, with additional
incentives for those that lease or sell:
o To minority and/or women-owned local businesses
o Below market rates;
• Mixed-use developments that include ground-floor commercial uses and residential units affordable
for those earning 80% AMI and below;
• Projects that involve the reuse of existing building stock.
Interest rate reductions could be utilized to encourage the implementation of additional criteria, beyond the
initial threshold requirement.
2. Adaptive Reuse Loan Program: There is currently an adaptive reuse forgivable loan program in place in
the Granary Project Area. Four adaptive reuse projects have been completed with RDA assistance,
including Atmosphere Studios, Fisher Brewing Company, T.F. Brewing and Orchid Dynasty. To further
promote the preservation of existing buildings and unique character of Salt Lake City neighborhoods, this
proposal includes expanding the adaptive reuse program to all RDA Project Areas. To be more intentional
with funding, eligible projects may be limited to particular corridors within Project Areas that have a higher
concentration of historic building stock, including along State Street, Main Street, 900 West, the new
Folsom Trail, etc. Eligible corridors may change over time depending on the need.
In addition to expanding the program to all Project Areas, revisions may be proposed to the terms of the
program to increase its effectiveness. Contemplated revisions include:
• Expanding the definition of adaptive reuse to include the rehabilitation of underutilized buildings
50 years or older, and removing the requirement for projects to result in a change in land use;
• Removing the escalating ratio match of private funds and instead requiring an equal match of RDA
to private funds;
• Exploring alternative collateral requirements that would allow tenants to apply for the program, in
addition to property owners.
3. Affordable Storefront Activation Program: This would be a new program that is intended to support the
development or activation of affordable (i.e., below market rate) commercial spaces that are reserved for
local businesses and community-supporting non-profits (“preferred tenant types”). In today’s market,
public ownership or control of commercial spaces may be one of the most effective ways to provide
affordable commercial ownership or rental opportunities. Staff has identified the following ways that RDA
tools could be used to achieve this goal:
RDA Ownership:
The RDA could gain ownership of commercial spaces through property acquisition or
disposition efforts, then lease or sell spaces to preferred tenant types at affordable rates. In
addition to the preferred tenant and affordability goals, this could also support the reuse of
existing commercial building stock (through acquisition and rehabilitation), as well as the
inclusion of right-sized commercial spaces within new construction projects on RDA-
owned property (via disposition and RFP processes).
RDA Master Lease:
The RDA could master lease commercial spaces in new or struggling developments, then
sub-lease to preferred tenant types at affordable rates. This would involve an ongoing lease
obligation for the RDA, which may operate at a loss. However, it could serve as an
intervention tactic to spur developers to include commercial space that they wouldn’t
otherwise plan for in new construction projects.
4. Education & Technical Assistance: Staff will explore ways to make RDA programming more accessible
to non-traditional applicants who may not have development experience. Ideally, this would involve
partnering with local organizations that provide capacity-building services to entrepreneurs who are
looking to start a business or establish a physical location.
NEXT STEPS:
The purpose of this memo is to present the preliminary proposal for a set of Commercial Assistance
Programs and identify any additional priorities or concerns from the Board. Next steps in the program
creation process include the following:
Community Engagement Strategy: While Staff have preliminary ideas for how RDA tools could be utilized
to meet program objectives, it is vital to connect with the local business and non-profit communities to get
a better idea of how the programs can be tailored to meet their needs. In addition, Staff will meet with
commercial developers and brokers to understand the issues from their perspective. Community
engagement efforts will begin immediately and are anticipated to last the summer.
Data Collection/Case Study Analysis: Staff has begun collecting relevant data points to learn more about
demographic and small business trends within RDA Project Areas. Staff has also been studying other
cities’ programs that have similar commercial objectives. This information will inform program design.
Proposal and Adoption: When the above tasks have been completed, Staff will provide an overall update
to the Board. Following that discussion, Staff will incorporate what has been learned into a final program
proposal that will be presented to the Board for consideration.
PREVIOUS BOARD ACTION: N/A