Transmittal - 11/4/2022
REDEVELOPMENT AGENCY of SALT LAKE CITY
MAYOR ERIN MENDENHALL
Executive Director
DANNY WALZ
Director
DATE: November 4, 2022
PREPARED BY: Corinne Piazza, Senior Project Manager and Kate Werrett, Project Manager
RE: 1500 W. North Temple redevelopment project with Brinshore Development
REQUESTED ACTION: Approval of terms for a $4,000,000 gap loan request to Brinshore
Development for a mixed-use, affordable housing project located at 1500
W. North Temple in the North Temple Project Area.
POLICY ITEM: Affordable Housing
BUDGET IMPACTS: $4,000,000 Agency gap loan, paid back plus interest including $1,500,000
from the Primary Housing Fund, $1,500,000 from the North Temple
Strategic Intervention Fund, and $1,000,000 from the Housing
Development Loan Fund.
EXECUTIVE SUMMARY: The Redevelopment Agency of Salt Lake City (“Agency”) selected
Brinshore Development (“Brinshore”) through a Request for Proposals (“RFP”) process in 2018 to
redevelop the Agency’s property located at 1500 W. North Temple (“Property”), formerly the location of
the Overniter Motel. The Property is designated as an RDA Tier I Property due to it being over 2 acres (at
2.07 acres) and identified in a City adopted master plan, specifically as an “ideal spot for a signature transit -
oriented development” in the Cornell Station Area Plan. Please see Attachment A: Parcel Location Maps
for reference.
Brinshore’s concept for the project, known as Spark (“Project”) implements the Agency’s vision for the
Property based on the goals and objectives outlined in the North Temple Project Area Plan, the North
Temple Boulevard Plan, city priorities, and as outlined in the RFP. The Project is designed to deliver a total
of 200 units of workforce and family-size affordable housing, including 63 family-sized units ranging from
20-80% AMI and two, three, and four-bedroom units. Additionally, the Project includes neighborhood
serving commercial space, structured parking, a mid-block walkway that connects Cornell Street and 1460
West (to be publicly accessible and privately owned and maintained), a high level of concern for
architectural and urban design principles, transit-oriented design, maximized density, sustainable
construction and building design practices, as well meeting Davis Bacon fair wage requirements for
construction.
The Project began in 2018 and is now in the final due diligence stage with Brinshore finalizing their capital
stack in anticipation of closing by the end of the year. The Project received Low Income Housing Tax
Credits (“LIHTC”) and as such, has a closing deadline of March 1, 2023. The Project is anticipated to begin
construction in Spring 2023 with Project completion in 2024.
The proposed capital stack includes the following request from the developer:
• The Agency provide an additional $4,000,000 in loan proceeds (“Gap Loan”) to cover the
remaining financing gap that has occurred due to escalating construction costs and remains even
after the developer secured additional funding sources and implemented cost saving measures to
reduce Project costs.
This request is in addition to the $2,500,000 the Agency awarded Brinshore as part of the 2018 Notice of
Funding Availability (“NOFA”) for affordable housing, the $3,956,000 the Agency awarded Brinshore in
the 2019 NOFA, and the $4,000,000 Seller’s Note approved by the Board in October 2022.
RDA FINANCE COMMITTEE RECOMMENDATION:
On August 15, 2022 the Finance Committee (“Committee”) convened to review the $4,000,000 Gap Loan
request and Gap Loan terms. The Committee unanimously recommends approval of the funding request
and the terms as outlined in the following: Attachment B: 1500 W. North Temple – Gap Loan Term Sheet
and Attachment C: 1500 W. North Temple – Gap Loan Resolution.
ANALYSIS & ISSUES:
Since entering into a Purchase and Sale Agreement with the Agency in 2018, Brinshore has been actively
pursuing financing for the Project, which is estimated at ~$93 million. To date, Brinshore has secured
funding through 4% Low Income Housing Tax Credits and received ~$42.5 million in the competitive
application process. Additionally, Brinshore has secured the following*:
Source Amount
4% Low Income Housing Tax Credits (LIHTC) ~$42,540,000
State Tax Credits ~$1,280,000
Permanent Loan ~$26,700,000
Seller’s Note Financing ~$4,000,000
RDA Loan (Including Gap Financing Request) ~$10,456,000
SLC HOME Funds (SLC Housing Sustainability) ~$1,000,000
State Olene Walker HOME Funds ~$1,000,000
State Olene Walker HTF Funds ~$1,000,000
Salt Lake County HOME Funds ~$700,000
Philanthropic Money ~$1,500,000
Rocky Mountain Power Rebate ~$100,000
Deferred Developer Fee ~$3,000,000
Total ~$93,276,000
*Please note that the financing information is high level and represents only general commitments or
estimates at this time and is subject to change as Project financing progresses.
GAP FUNDING REQUEST:
Due to escalating construction costs, the Project has seen a significant cost increase which has created a
funding gap. In order to move forward with a financially feasible Project, Brinshore has addressed the
funding gap in the following ways:
Additional Funding Sources: Brinshore has applied for and received $500,000 in Utah Housing Corporation
increased basis. They’ve also applied for philanthropic funds as well as an additional $1,400,000 from
Olene Walker, neither of which have been finalized or awarded.
Value Engineering: Brinshore has worked with their design, engineering, and construction team to identify
approximately ~$6,100,000 in cost savings, while still preserving the overall goals for the Project.
Modifications include the removal of a level of underground parking reducing spaces from 134 to 100,
removing the balconies, reconfiguring a portion of the units, and reducing the green roof space.
Developer Contribution: As the Agency’s selected private-sector partner, Brinshore brings extensive
development expertise and borrowing capacity to invest into the Project and carries significant risk to
complete the Project that the Agency does not have to assume. Brinshore’s equity contribution includes the
following:
• Funding predevelopment (~$1,600,000)
• Deferred developer fee ($3,000,000)
• Guarantees (construction completion, operating deficit, tax credit compliance)
• Commercial Master Lease (~$70,000/year)
After securing the additional sources of funds listed above and implemen ting cost saving measures, the
Project still faces a $4,000,000 funding gap. Brinshore’s request for a Gap Loan allows the Project to
continue toward a year-end closing.
Agency staff has identified the following potential sources the Board may wish to consider reallocating for
the Gap Loan request. The potential option(s) below aim to leave funding in each program so that
reallocating funds to support the Project does not empty any one account.
Fund Program Amount
Available
Project Gap
Loan
Amount
Remaining
Primary Housing Fund Property Acquisition $1,599,880 $1,500,000 $99,880
Multiple North Temple Strategic
Intervention Funds
$2,936,762 $1,500,000 $1,436,762
Housing Development Loan
Fund (HDLP)
Fall 2022 NOFA $7,000,000 $1,000,000 $6,000,000
Total for Project Gap Loan - - $4,000,000 -
The requested interest rate for the Gap Loan is 2%. Agency staff has negotiated this rate with Brinshore
based on Project financials and full repayment of the Gap Loan, with interest, within a 30 -year timeframe
and cash flow repayment. The Gap Loan terms also match those of the previously awarded NOFA funds
allowing the Agency to combine the funds into one loan, reducing complication and allowing the Agency
to issue and manage one loan total for efficiency. For full terms and details of the Gap Loan, please see:
Attachment B: 1500 W. North Temple – Gap Loan Term Sheet.
If the Gap Loan is approved, total Agency participation in the Project would be $14,456,000. The initial
total development cost in August 2020 was ~$60 million and the Agency committed $6,456,000 in NOFA
funds as well as the $4,000,000 Seller’s Note for a total of $10,456,000 putting Agency participation at
17.5% of the total development cost. Currently, with the total development cost at ~$93 million, and the
Agency’s potential addition of the $4,000,000 Gap Loan, the Agency’s participation would be 15.5% of
the total development cost.
At the September 13, 2022 Board meeting, the Board gave a unanimous straw poll in support of the Gap
Loan request giving direction to include it in Budget Amendment 2, which Agency staff subsequently
brought to the Board on October 11, 2022. As the final step in the process, the Gap Loan resolution is
included in Attachment C: 1500 W. North Temple – Gap Loan Resolution.
PROJECT OVERVIEW & PUBLIC BENEFITS:
The proposed Spark mixed-use Project will include 200 residential units including affordable workforce
and family-size housing, structured parking, a mid-block walkway that connects Cornell Street and 1460
West (to be publicly accessible and privately owned and maintained), a high level of concern for
architectural and urban design principles, transit-oriented design, maximized density, sustainable
construction and building design practices, as well meeting Davis Bacon fair wage requirements for
construction.
Timeline:
• Brinshore is currently finalizing the Project’s financing and is progressing towards a year-end
closing with construction anticipated to begin in Spring 2023 and Project completion in 2024. At
the latest, the Project must close by March 1, 2023 per LIHTC requirements, or i t will forfeit the
~$42.5 million LIHTC allocation, making it no longer financially feasible.
Developer Experience:
• Brinshore is an Illinois-based developer founded in 1995 with a focus on strengthening
neighborhoods and a development track record of over 7,000 units over the last 27 years. Brinshore
is one of the largest developers of affordable housing in the United States and specializes in creating
authentic projects that encourage an active, healthy lifestyle and serve as a catalyst for other
development.
Housing Affordability:
• The Project has 200 units including 63 family-sized units that range from 20-80% AMI and two,
three, and four-bedroom units. Per the 2017 Board resolution, 50% of the units are affordable to
households at or below 60% AMI. Additionally, 50% of the units are affordable to households at
70-80% AMI per LIHTC standards, which are currently market rate rents for the North Temple
area.
• The unit mix allows the Project to generate as much LIHTC equity as possible, lowering the
financing gap as all 200 units are income and rent restricted. However, due to the naturally
occurring lower rents in the North Temple Area, the 70 and 80% restricted units are above current
market rate rents for the neighborhood. This allows the Project mix to have all restricted units to
maximize LIHTC equity, meet the Board’s goals that 50% of the units be in market rate range,
while also restricting the 70 and 80% units to ensure affordability over the long term as the North
Temple Project Area continues to grow.
Neighborhood Serving Commercial Space:
• As currently designed, there is a proposed ~4,000 square foot daycare facility which will serve
Spark residents and low-income members of the community at a sliding scale cost. There is also a
~5,000 square foot retail space and Brinshore is currently working with local organizations to lease
the commercial space, including reaching out to the Economic Development department to connect
with potential local tenants.
Structured Parking:
• The Project includes 100 structured parking spaces that are free to low-income residents per LIHTC
requirements and are designed to be safe, functional, and attractive for residents and visitors.
Mid-Block Walkway:
• The mid-block walkway that connects Cornell Street and 1460 West is consistent with the North
Temple Boulevard Plan and will be publicly accessible and privately owned and maintained.
Architecture, Sustainable Construction, and Building Design Practices:
• The Project incorporates a high level of concern for architectural and urban design principles
including a transit-oriented design and maximized density. It also incorporates sustainable
construction practices and building design including Enterprise Green Communities and ENERGY
STAR Multifamily New Construction, ~24 bicycle parking spaces, ~10 EV charging stations, as
well as Davis Bacon fair wages for construction.
ATTACHMENTS:
• Attachment A: Parcel Location Maps
• Attachment B: 1500 W. North Temple – Gap Loan Term Sheet
• Attachment C: 1500 W. North Temple – Gap Loan Resolution
• Attachment D: Spark Project Conceptual Renderings
ATTACHMENT A: Parcel Location Maps
ATTACHMENT B: 1500 W. North Temple – Gap Loan Term Sheet
ATTACHMENT C: 1500 W. North Temple – Gap Loan Resolution
ATTACHMENT D: Spark Project Conceptual Renderings (Subject to Change)