Council Provided Information - 6/23/2023STAFF REPORT
BOARD OF THE REDEVELOPMENT AGENCY of SALT LAKE CITY
TO:RDA Board Members
FROM: Jennifer Bruno, Deputy Director
DATE: July 11, 2023
RE: Releasing City ARPA Funds for
Perpetual Housing Fund (PHF) Investment
PROJECT TIMELINE:
Briefing: May 2, 2023 & July
11, 2023
Set Date: April 18, 2023
Public Hearing: May 2, 2023
Potential Action: TBD
ISSUE AT-A-GLANCE
The Board will receive a briefing from RDA staff regarding a draft term sheet creating a partnership
with the Perpetual Housing Fund of Utah (PHF) for a tenant wealth building program, using City
American Rescue Plan Act (ARPA) dollars. The Administration is requesting the Board review the
draft term sheet, and if acceptable, adopt a motion to release the $10 million from ARPA dollars
approved by the Council in Budget Amendment #6 of FY 23 for this purpose.
Goal of the briefing: Review the proposed term sheet and consider releasing funds previously
appropriated in conjunction with Budget Amendment #6.
Draft Term Sheet
Based on the Council’s discussion during Budget Amendment #6, and consistent with the motion
adopted by the Council in June 2023 (see attached), the Administration/RDA have returned with a
draft term sheet to formalize the City’s partnership with PHF and expectations as it relates to the
City’s $10 million investment. The project (515 East 100 South) and wealth building tools are detailed
in the Administration’s transmittal and in the previous staff report (starting on page 2 of this memo),
along with general goals of the PHF. The following are some key elements of the draft term sheet,
which is included as an attachment to the Administration’s transmittal:
•The funding is tied specifically to property at 515 East 100 South
•The $10 million in City funds will be used to purchase property by June 30, 2024
•RDA will be treated like an equity investor and receive a 2-6% annual return paid each year
•PHF commits to an additional 1,000 by year 20, although these additional projects are NOT
tied to the $10 m investment. From the term sheet: “These additional projects shall also
include the tenant wealth building initiative and, if new construction, will achieve an energy
star score of 90 or higher, participate in the City’s Elevate Buildings Program, and be designed
to operate without onsite fossil fuel combustion.”
•The term sheet allows for the waiver of the RDA’s Sustainability Policy if necessary, due to the
adaptive re-use element of the 515 project.
Page | 2
•It outlines the terms of a restrictive covenant and the plans for wealth-building opportunities
(which means these opportunities would be included in the contract)
•“Receive approval from the RDA and the City Attorney’s Office on all matters pertaining to
title, legality of the funding agreement, and the legality, sufficiency, and form and substance of
all other documents that are deemed reasonably necessary for the funding transaction.”
•PHF will provide biannual progress reports to the RDA
•Remedy if the project defaults (PHF fails to construct 515 project in timeframe, fails to
maintain affordability or reports, fails to comply with other city, state, federal requirements) –
RDA may file a breach of contract claim for damages, relief, or “any other remedy available at
law or equity”
➢The Board may wish to discuss elements of the term sheet with RDA Staff.
Concerted Community Revitalization Plan (CCRP)
The Perpetual Housing Fund is also planning to develop and submit a Concerted Community
Revitalization Plan (CCRP), which would outline and formalize it’s partnership with the City. This
would increase the scoring points for Perpetual Housing Fund LIHTC proposals into the future. The
transmittal indicates that the CCRP document “is a plan from a local jurisdiction which establishes
an active partnership between local government and a community=-based organization that
commits to measurable goals, actions, and timetables to foster the construction or rehabilitation of
affordable housing. This document must be approved by the local jurisdiction’s governing body…”.
Staff note: The CCRP is not yet before the Board/Council for consideration.
➢The Board may wish to discuss with the Administration if there are other
community partners that it would make sense to include in this kind of plan
before it is transmitted to the Board/Council for consideration.
Attachments
Attachment 1 – Budget Amendment #6 Motion Adopting $10 Million ARPA with contingency –
June 6, 2013
Attachment 2 – PHF Presentation to City Council - May 2, 2023
The following information was provided for the Council discussion on May 2. It is
provided again for reference.
Staff note: Council staff is working with the Administration to clarify exact figures referenced in this
report, as new information was received immediately prior to publishing.
The Administration has transmitted a proposal in Budget Amendment #6 that would invest $10
million of the City’s American Rescue Plan Act (ARPA) dollars to create “lasting, generational changes
for families in Salt Lake City”. These dollars would be provided to the Perpetual Housing Fund of
Utah, LLC, (PHF) an external non-profit housing developer. This non-profit would then leverage tax
credits and other private dollars to acquire properties and/or existing structures for the construction
of affordable units. The City’s investment would essentially be seed money for a portion of an initial
development (515 East 100 South), and profits in the form of both equity and cash flow, would shared
with residents on a 75% basis. 2-6% of cash flow would be paid to the City/RDA for administrative
expenses, and the remaining project profits would be used to construct additional projects in the City.
The Perpetual Housing Fund is a non-profit affordable housing developer with a mission to share
profits and equity with PHF project residents, unlike a typical non-profit housing development model
that uses profits to build more units. See www.perpetualhousing.org for more information.
Page | 3
The transmittal indicates that over a period of 15-20 years, the City’s partnership with PHF could
create as many as 1500 affordable units, whose profits and equity would be shared with the residents
(see Policy Question #1). The transmittal indicates that PHF’s first Salt Lake City project would create
just over 100 wealth/equity sharing units over multiple phases and break ground by 2024, with a
priority to acquire additional land in the City for subsequent projects. Staff note: Council Staff is
working with the Administration to clarify exactly how many units will be built with the City’s $10
million investment, and in which phases. See key elements section for more details on the first
project.
The PHF would share profits from the City’s component part of any project in the following ways
(note: these are not mutually exclusive, but amounts would be dependent on actual cash flow and
actual equity created. Accessing cash flow is a different tool than accessing equity in the sense that
Equity is based on the total value of the project in current and future years, whereas cash flow is
actual cash generated from the project after bills and operating expenses are paid):
•Annual Rent Rebate (funded from Cash flow) – a portion of the annual cash flow (after paying
all building operating expenses and debt service) would be allocated via cash payment
distributed on an annual basis. This would be paid to the tenant each year automatically.
•Profit Payout (funded from Equity) – If the developer refinances, or if there is another “event”
that generates profit, all the cumulative residents over time will receive a payment that
represents a proportional share (proportionate based on the length of time they lived in a PHF
unit). This would be paid to the tenant automatically. Note: if the property is financed with
LITHC this would not occur until at least 15 years into the life of the project b/c of LIHTC
investor exits.
•Profit advance (funded from Equity) – PHF will set aside a portion of its initial developer fee to
establish an account that a resident could access for a zero interest loan in the event of an
emergency or major life event (medical, educational, entrepreneurial, etc). This is an optional
benefit and each resident could access only their proportionate amount of equity accrued.
•Profit Tradeup (funded from Equity) – PHF will be partnering with the Rocky Mountain Homes
Fund to build missing-middle home ownership options for households at 60-120% AMI. The
first 100 units planned are in the 515 East 100 South project, although more are contemplated
in SLC. The transmittal indicates that PHF tenants could transfer accruals from a PHF project
for a reduction in purchase price on an RMHF home. This is an optional benefit and each
resident could access only their proportionate amount of equity accrued.
Goal of the briefing: Review the proposed Perpetual Housing Fund and consider appropriating
funds in conjunction with Budget Amendment #6.
KEY ELEMENTS
A.The Model – the following graphics from the PHF website illustrate the model in concept:
As compared to the typical funding model for projects:
Page | 4
B. Initial Projects - The Administration has provided information on the first two projects using
this model, so that ARPA funds can be expended by the middle of 2024.
1. The first project, which includes two to three phases, is an adaptive reuse of a 14 story
commercial office building and a new build residential tower into approximately 250
mixed-income units, and is located at 515 East 100 South. Construction estimated to begin
in late 2023/early 2024.
i. The City’s investment would initially build 38 equity-sharing units as the first phase
of the project, that would operate under the above-mentioned equity/wealth
sharing model.
ii. These units would be a mix of 1, 3 and 4 bedrooms, targeted to 25-50% Area
Median Income (AMI).
iii. The project is unique in its financing mechanism, as it is split into several
component parts and phases to ensure project profits from one area are tracked
separately from other areas. The City’s $10 million investment would be directed
solely towards those 38 equity/wealth sharing units. See attached cash flow which
illustrates one phase of the project. Staff is working with the Administration to get
information about how the City’s initial investment relates to the overall project
cash flow.
iv. The Administration and PHF notes that absent the City’s investment “…the overall
number of SLC households served…would be significantly reduced and [units
would] take far longer to come online…”.
v. Other components of the project – information from the Administration indicates
that the second phase would be constructed in partnership with the Rocky
Mountain Homes Fund, and would build 100 for-sale condominium units targeting
60-120% AMI, and two additional equity-sharing phases one in the office
conversion tower which would be around 40 units, one in a new-build tower which
would be around 48 units.
2. The Administration indicates that they have selected the June 2024 deadline for all the
City investment to be spent with the PHF, so that if there is a delay in construction for
some reason, the City can deploy those ARPA resources in other ways before the December
2024 federal deadline.
C.Conditions for funding – The Administration’s transmittal proposes a number of conditions,
with an invitation for Council feedback, that the Administration (via the RDA) would include in a
contract with the PHF:
1. PHF will deploy 100% of the City’s Rescue Plan Funds on eligible projects in Salt Lake City
and in compliance with ARPA requirements before June 30, 2024. More specifically, the
funds will be spent by PHF on the purchase of the condominium-ized affordable units and
construction costs for the project at 515 east 100 south.
2. The Rescue Plan Funds will be distributed concurrently with PHF closing on the
acquisition of the affordable units.
Page | 5
3. At the same time that the Rescue Plan Funds are distributed, PHF will record a restrictive
covenant requiring PHF to maintain affordable housing at the 515 east 100 south project at
25-50% AMI, construct and maintain a mix of unit sizes, and wealth building (as detailed
above) for a period of not less than 30 years. The restrictive covenant will also require PHF
to provide a quarterly report to the RDA.
4. The funding agreement will require PHF to commit to developing future projects in Salt
Lake City and ensure those projects contain units affordable to those at 65% AMI and
below.
5. PHF will implement an equitable process for tenant selection and, as permitted by law,
potentially prioritize certain applicants if the City desires.
6. As permitted by ARPA, the RDA, as a transformational seed funder, will be treated like an
equity investor and receive between a 2% and 6% return on its capital contribution, paid
annually every year.
7. RDA to approve all legal agreements as recommended by the City Attorney.
8. Prior to distributing the funds, PHF will have received all required City approvals for the
project to move forward.
9. Prior to distributing the funds, PHF will demonstrate sufficient construction financing for
the project to move forward.
10. Prior to distributing the funds, PHF will demonstrate compliance with the RDA’s
sustainability policy, which requires the project demonstrate that the units be designed to
achieve an energy star score of 90 or higher and participate in the City’s Elevate Buildings
Program. The units must also be designed to operate without on-site fossil fuel
combustion.
11. Adequate security and remedies should PHF default on their obligations under the funding
or restrictive use agreement.
D.Logistical Arrangements with tenants –
1. While the RDA would have a contract with the PHF containing the conditions above to
receive the $10 million, each project would create a tenant non-profit organization, who
would administer contracts with each tenant in order to receive their project benefits. The
RDA would receive quarterly reports.
2. The tenant non-profit would contract with a third party property management company to
handle day-to-day logistical issues and track/manage payments to tenants. The
Administration notes that it expects these tenant NPOs to have annual meetings to
establish rules of the fund and management of the payments.
3. Tenants would not be kicked out of the project if their income situation changed, and the
Administration notes that LIHTC rules allow incomes to increase by 40% before changing
rent categories.
4. The following graphic is provided on the perpetual housing fund’s website and illustrates
how the longer a resident stays in a unit, the greater their potential benefit is:
Page | 6
POLICY QUESTIONS
1.Timeline for projects/potential investment needed in the future – the Administration’s
information from the PHF indicates an aggressive financing and construction schedule, with 2-4
projects annually in the near terms, and 6-8 projects annually in the 5-10 year term. The Council
may wish to ask the PHF or Administration how inflation and increasing interest rates may impact
these projections, and whether the PHF will return to the City for additional funding.
2.Coordination with the City’s Community Land Trust or RDA’s Westside Community
Initiative – The Administration indicates that this model is well suited to both of those City
programs, although no official relationship has been proposed. The Council may wish to discuss
this further with the Administration, particularly as conversations about how to creatively
grow/maximize those City programs continue.
3. Questions relating to the 515 East 100 South project
a. The Council may wish to clarify if the 38 units will be spread around the building or if they
will be on floors 2-4. The pro forma indicates floors 2-4 while the transmittal indicates they
are on floors 9-11. Staff received information from the Administration immediately prior
to publishing that the attached pro forma relates to a future phase of the project. Staff is
working with the Administration to get information relating to the City’s initial
investment.
b. Separating project components. The Council may wish to discuss with the Administration
and PHF the legal logistics and reasoning for separating project components from within
the project (100 for sale units, 38 rental equity-sharing units, separately tracked mixed-
income units), and advantages and potential disadvantages this approach.
ATTACHMENTS
Attachment 1 – Cash flow for a future phase in 515 East 100 South conversion project –
38 Units within the project located at 515 East 100 South
Attachment – Motion for Budget Amendment #6 – Adopted June 6, 2023
(Staff note: both the main and optional motions were adopted by the Council)
MOTION 2 – ADOPT PERPETUAL HOUSING FUND ITEM
I move that the Council adopt an ordinance amending the Fiscal Year 2023 final budget of Salt
Lake City including the employment staffing document for item A-15 as shown on the motion
sheet.
Optional Additional Motion: I further move that funding for item A-15 is a contingent
appropriation subject to Council approval of a term sheet, and the adoption ordinance shall be
updated to reflect this condition.
Item Being Adopted A-15: ARPA Funding to Perpetual Housing Fund External Developer ($10
Million from ARPA
Solutions for Uta h’s Most
Intractable Housing
Problems
May 2, 2023
The Problem
Source: 2019 Federal Reserve Board’s
Survey of Consumer Finance
$255,000
Net Worth
40x
$6,300
Net Worth
Net Worth
2019
Average
Homeowner
2019
Average
Renter
Homeownership is vital to the American Dream.
The opportunity for homeownership is disappearing
for the average Utahn.
The Problem
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2015
77%
82%
77%
Percentage of Utah Home Sales
Aordable to Households Earning Area Median Income*
67%
48%45%
32%
11%
2016 2017 2018 2019 2020 2021 2022
Sources: Federal Reserve Economic Data; US Census Data;
Utah Multiple Listing Service; Freddie Mac HFA Advantage
*Include single family and multifamily. Five percent down payment, prevailing interest rate.
Mortgage is 80 percent of payment remaining 20 percent taxes, insurance, and PMI.
Ratio of mortgage to income 28%.
Current State of Utah Housing Market
Estimated $42B
Home ownership subsidized
RENTAL SUBSIDY
Rental costs stabilized, but no
pathways to wealth generation
Mortgage Interest
Tax Deduction
Housing Choice Vouchers &
Public Housing
LIHTC
Estimated $30B
High/Middle Income
Homeowners
Middle/Moderate Income
Renters
Moderate/Low Income
Renters
Wealth Generation
Wealth Stagnation
Can’t aord a home,
but makes too much to qualify
for assitance
Estimated $8B
Traditional ownership opportunities
are leaving most Utahns behind.
OWNERSHIP SUBSIDY
Wealth Stagnation
Density - A Potential Solution
Land
$150K/Unit
Construction Construction
$350K/Unit
Traditional
Single Family
Traditional
Multifamily
$315K/Unit
Density has the potential to create aordability by
lowering land costs per unit.
Land
$35K/Unit
Potential
Build Cost
$500,000
Potential
Build Cost
$350,000
Density - A Missed Opportunity
Apartments vs. Condos
• Condos are dicult to develop.
- Apartments are easier to conceptualize, finance, build, and
exit than condo projects.
• Architects, engineers, contractors, investors, and banks will
charge substantially more to be involved in condo projects.
- Insurance costs are much higher in condo projects for all
parties involved.
- Current tax law favors apartments over condos for investor
exit strategies.
• Condos are a risky product type.
- Selling individual condos is harder, takes longer, and is
generally more risky than leasing or selling a traditional
apartment building. Only high-end condos make enough
money to justify this additional risk.
Developers are building more multi-family than ever,
but almost none of it creates ownership for residents.
Traditional
Condo
Building residents own
and finance legally
separate units
Benefits of
Shared Ownership:
1. Shared ownership avoids
the additional liability, cost,
complexity, and risk of
traditional condos.
2. Residents enjoy the
flexibility and ease of
apartment living.
3. Residents gain benefits of
ownership without the
often prohibitive
requirements of
traditional mortgages.
Shared
Ownership
Building residents each
own shares of an entity that
owns their entire building
Density - Shared Ownership
Shared ownership oers residents the benets of both
apartments and condos.
Estimated $42B
RENTAL SUBSIDY
Housing Choice Vouchers &
Public Housing
LIHTC
Moderate/Low Income
Renters Wealth Stagnation
Potential Utah Housing Market
OWNERSHIP SUBSIDY
Mortgage Interest
Tax Deduction
Estimated $30B
High/Middle Income
Homeowners
Middle/Moderate Income
Renters
Wealth Generation
Wealth Generation
DENSE OWNERSHIP
Real Missing Middle
Shared ownership creates opportunities for more families,
but still leaves some behind.
Estimated $8B
Home ownership subsidized
Rental costs stabilized, but no
pathways to wealth generation
Can’t aord a home,
but makes too much to qualify
for assitance
OWNERSHIP SUBSIDY
Mortgage Interest
Tax Deduction
Estimated $30B
High/Middle Income
Homeowners Wealth Generation
Home ownership subsidized
Aordable Housing - Potential Solution
Low Income Housing Tax Credits (LIHTC), a federal
subsidy, can signicantly decrease rents for residents.
Debt
Market Return
Market Project
Capital Stack
LIHTC Project
Capital Stack
Debt
Market Return
Amount of Private
Capital Requires
Market Rents
Equity
Market Return
LIHTC
Gov. Subsidy
Reduced Debt
Service Allows
Affordable Rents
Aordable Housing - A Missed Opportunity
Aordable
Rent
Existing Tax
Credits
Investors
Residents
LIHTC
Apartment
Project
Project Equity &
Annual Return
Upfront
Construction
Subsidies
With LIHTC, residents benet from aordable rents, but
annual returns and wealth generation goes to investors.
Our Solution - The Perpetual Housing Fund
Aordable
Rent
Existing Tax
Credits
PHF
Project
Project Equity &
Annual Return
Upfront
Construction
Subsidies
PHF pairs existing LIHTC subsidies with shared ownership
to benet building residents.
Special
Purpose
Entity
PHF
Residents
25%
75%
Wealth Generation
Estimated $42B
RENTAL SUBSIDY
Housing Choice Vouchers &
Public Housing
LIHTC + PHF
Moderate/Low Income
Renters
Wealth Generation
Wealth Generation
Potential Utah Housing Market
OWNERSHIP SUBSIDY
Mortgage Interest
Tax Deduction
Estimated $30B
High/Middle Income
Homeowners
Middle/Moderate Income
Renters
DENSE OWNERSHIP
Real Missing Middle
The PHF will use this model to provide ownership
opportunities to low income households.
Estimated $8B
Home ownership subsidized
Rental costs stabilized, but no
pathways to wealth generation
Can’t aord a home,
but makes too much to qualify
for assitance
Wealth Generation
OWNERSHIP SUBSIDY
Mortgage Interest
Tax Deduction
Estimated $30B
High/Middle Income
Homeowners
Home ownership subsidized
SLC's Investment Projected Outcomes
Salt Lake City's $10MM ARPA Investment in PHF will provide:
•2-6% Return on Investment for 20+ Year Term
•1,000 Equity-Sharing PHF Units for individuals and families making 65% of AMI and below
•500 Condo Units in Salt Lake City affordable to individuals and families making 60%-120% of AMI
100 Units
515 New Tower
200 Units
Condo Project
200 Units
Condo Project
20
2
3
20
2
4
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
20
3
0
20
3
1
20
3
2
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
SLC Unit Delivery Schedule
9% Projects
25% to 50% AMI
4% Projects OR Combined 4% + 9%
25% to 60% AMI
Condo Projects
80% to 120% AMI
38 Unit
515 Conversion
38 Units
515 Conversion
39 Units
515 New Tower
50 Unit Project
200 Unit Project200 Unit Project200 Unit Project200 Unit Project
50 Unit Project 215 Units
800 Units
500 Units
Typical Future 200 Unit Project
10-Year PHF Projections
Year 1 2 3 4 5 6 7 8 9 10
Potential Gross Income 2,943,351 3,002,218 3,062,262 3,123,508 3,185,978 3,249,697 3,314,691 3,380,985 3,448,605 3,517,577
Additional Income 87,480 89,230 91,014 92,834 94,691 96,585 98,517 100,487 102,497 104,547
Cell Tower/Commercial Lease Income - - - - - - - - - -
Total Potential Income 3,030,831 3,091,448 3,153,276 3,216,342 3,280,669 3,346,282 3,413,208 3,481,472 3,551,101 3,622,123
Less Vacancy (151,542) (154,572) (157,664) (160,817) (164,033) (167,314) (170,660) (174,074) (177,555) (181,106)
Effective Gross Income 2,879,289 2,936,875 2,995,613 3,055,525 3,116,635 3,178,968 3,242,547 3,307,398 3,373,546 3,441,017
Operating Expenses (842,310) (867,580) (893,607) (920,415) (948,028) (976,469) (1,005,763) (1,035,936) (1,067,014) (1,099,024)
Capital Reserve (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000)
Net Operating Income 1,976,979 2,009,295 2,042,006 2,075,110 2,108,608 2,142,500 2,176,785 2,211,463 2,246,533 2,281,993
Debt Service 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543
Net Cash Flow 300,436 332,752 365,462 398,566 432,065 465,956 500,242 534,920 569,990 605,450
DSCR (all loans)1.18 1.20 1.22 1.24 1.26 1.28 1.30 1.32 1.34 1.36
Asset Value 35,945,072 36,532,645 37,127,374 37,729,265 38,338,321 38,954,537 39,577,906 40,208,416 40,846,051 41,490,788
Debt Reduction 123,794 156,185 165,030 174,460 195,239 206,677 218,879 231,898 245,790 260,615
Equity in Project 13,708,069 14,295,642 14,890,371 15,492,262 16,101,318 16,717,534 17,340,903 17,971,413 18,609,048 19,253,785
Cash Flow to Residents (75% of net)225,327 249,564 274,097 298,925 324,048 349,467 375,181 401,190 427,492 454,088
Annual Cash Flow per Resident 1,127 1,248 1,370 1,495 1,620 1,747 1,876 2,006 2,137 2,270
Residents' Share of Equity (75%)10,281,052 10,721,731 11,167,778 11,619,197 12,075,988 12,538,150 13,005,677 13,478,560 13,956,786 14,440,338
Avg New Equity Generated Per Resident 51,405 2,938 2,974 3,009 3,045 3,081 3,117 3,153 3,188 3,224
Accumulated Equity Per Resident 51,405 53,609 55,839 58,096 60,380 62,691 65,028 67,393 69,784 72,202
Pro Forma Assumptions:
2.00%Annual Increases in Rent & Additional Income
5.00%Vacancy Rate
3.00%Annual Increases in Operating Expenses
4,212 Operating Expenses/Unit Yr 1
300 Per Unit Capital Reserve Yr 1
6.75%Construction Loan Rate
6.75%Perm Loan Rate/40 Yr Am
Resident
Typical 200 Unit Project - Resident Perspective
$1,127
1/200 Share
YEAR 1
CASHFLOW
SHARE**
per person
EQUITY SHARE AT
STABILIZATION
$51,405*
1/200 Share
per person
*Asset appreciation will be distributed upon events such as a renance event or sale of building. Tenants will also have
the ability to "draw" on their equity for "allowed events" in a vehicle similar to a HELOC (funded and run by the PHF).
**Cashow Share will be distributed as rent rebates to the extent that LIHTC rules allow.
$1,500,000
$1,000,000
Dev. Fee Deferred to Project
Funding Resident HELOC Vehicle
$225,327
75% to Residents
Annual Rent
Per Resident
$10,281,052
75% to Residents
$2,500,000
To Project/
Resident Benet
Special Purpose
Entity
PHF
Residents
25%
75%
SPE Pro Forma Year 1
SPE Value + Equity Upon Stabilization
Rents + Additional Income
Less Op Expenses + Capital Reserve
Net Operating Income
Less Debt Service
Net Cash Flow
Asset Value
Owner’s Equity
Developer Fee Contribution
($902,310)
$14,396
$1,976,979
($1,676,543)
$300,436
$35,945,072
$13,708,069
$2,879,289
Typical 200 Unit Project - Developer Perspective
SPE Pro Forma Year 1
SPE Value + Equity Upon Stabilization
Rents + Additional Income
Less Op Expenses + Capital Reserve
Net Operating Income
Less Debt Service
Net Cash Flow
Asset Value
Owner’s Equity
Developer Fee Contribution
$1,500,000Dev. Fee Upon Groundbreaking
$1,500,000Dev. Fee Upon Stabilization
Forms SPE + Retains
25% Ownership
and Control
Special
Purpose
Entity
PHF
Residents
25%
75%
PHF
Develops and
Manages Project
YEAR 1
CASHFLOW
SHARE
$75,109
(25% Share)
EQUITY SHARE AT
STABILIZATION
$3,427,017
(25% Share)
DEVELOPER FEE
$3,000,000
(100% to PHF)
$2,879,289
($902,310)
$1,976,979
($1,676,543)
$300,436
$35,945,072
$13,708,069
Asset Appreciation + Debt Reduction
Conceptual Graph
Shared Ownership - How It Works (200 Unit Project)
25% PHF
Resident
Share
Annual
Cashflow
UNIT 1
UNIT 2
$19.3MM
$4.9MM
$14.4MM
$13.7MM
$3.4MM
$10.3MM
Ye
a
r
1
Ye
a
r
2
Ye
a
r
3
Ye
a
r
4
Ye
a
r
5
Ye
a
r
6
Ye
a
r
7
Ye
a
r
8
Ye
a
r
9
Ye
a
r
1
0
Re
n
a
n
c
e
E
v
e
n
t
Resident A - 10 Years
Resident B - 3 Years
Equity Share - $72,202
Cashflow Share - $16,559
Equity Share - $21,660
Cashflow Share - $3,745
Equity Share - $50,541
Cashflow Share- $13,152
Resident C - 7 Years
$225,327 $249,564 $274,097 $298,925 $324,048 $349,467 $375,181 $401,190 $427,492 $454,088
Example Resident Dividend
Typical PHF 9% Project
10-Year PHF Projections
Year 1 2 3 4 5 6 7 8 9 10
Potential Gross Income 433,169 441,832 450,669 459,682 468,876 478,253 487,818 497,575 507,526 517,677
Additional Income 17,059 17,400 17,748 18,103 18,465 18,834 19,211 19,595 19,987 20,387
Commercial Lease Income - - - - - - - - - -
Total Potential Income 450,227 459,232 468,417 477,785 487,341 497,087 507,029 517,170 527,513 538,063
Less Vacancy (22,511) (22,962) (23,421) (23,889) (24,367) (24,854) (25,351) (25,858) (26,376) (26,903)
Effective Gross Income 427,716 436,270 444,996 453,896 462,974 472,233 481,678 491,311 501,137 511,160
Operating Expenses (183,247) (188,745) (194,407) (200,239) (206,247) (212,434) (218,807) (225,371) (232,132) (239,096)
Capital Reserve (11,700) (11,700) (11,700) (11,700) (11,700) (11,700) (11,700) (11,700) (11,700) (11,700)
Net Operating Income 232,769 235,825 238,889 241,956 245,027 248,099 251,171 254,240 257,305 260,364
Debt Service 199,609 199,609 199,609 199,609 199,609 199,609 199,609 199,609 199,609 199,609
Net Cash Flow 33,160 36,217 39,280 42,347 45,418 48,490 51,562 54,631 57,696 60,755
DSCR (all loans)1.17 1.18 1.20 1.21 1.23 1.24 1.26 1.27 1.29 1.30
Asset Value 5,172,635 5,240,566 5,308,634 5,376,805 5,445,044 5,513,312 5,581,571 5,649,779 5,717,892 5,785,864
Debt Reduction 25,928 32,149 33,337 34,589 35,910 37,305 38,778 40,335 41,979 43,718
Equity in Project (Value less debt)1,830,781 1,904,934 1,974,189 2,043,612 2,113,172 2,182,835 2,252,567 2,322,331 2,392,089 2,461,801
Cash Flow to Residents (75% of net)24,870 27,163 29,460 31,761 34,064 36,368 38,671 40,973 43,272 45,566
Annual Cash Flow Per Resident 638 696 755 814 873 933 992 1,051 1,110 1,168
Residents' Share of Equity (75%)1,373,086 1,428,700 1,480,642 1,532,709 1,584,879 1,637,127 1,689,425 1,741,748 1,794,067 1,846,350
New Equity Generated Per Resident 35,207 1,426 1,332 1,335 1,338 1,340 1,341 1,342 1,341 1,341
Accumulated Equity Per Resident 35,207 36,633 37,965 39,300 40,638 41,978 43,319 44,660 46,002 47,342
2.00%Annual Increases in Rent & Additional Income
5.00%Vacancy Rate
3.00%Annual Increases in Operating Expenses
4,699 Operating Expenses/Unit Yr 1
300 Per Unit Capital Reserve/Yr
6.10%Construction Loan Rate
6.50%Perm Loan Rate/40 Yr Am
4.50%Cap Rate
Pro Forma Assumptions:
Solutions for Utah’s Most
Intractable Housing
Problems
May 2, 2023
Investor
Initial Capitalization Utilization
$10MM
$2MM Project Capital
Pre-Development
Reimbursement
Land Acquisition &
Pre-Development
Capital
Additional Capital for
Land Acquisition &
Pre-Development
Annual Cashflow &
Developer Fee at
Groundbreaking
2-6% Return on
Investment
Initial
Capitalization
Guarantor
Reserve
Interest-Bearing
Impact
Investments
(6% Return)
PHF
PHF Model
Project
PHF OF
UTAH
0-2% Return for
Operating Expenses
(501-c-3)
Tax credit equity & construction lenders require $12MM
(2MM liquid) to fund a meaningfully-sized LIHTC vehicle.
75%
Cashow
90%
Cashow
100% Developer Fee
to PHF of Utah
10%
Cashow
25%
Cashow
2-7%
Return on Initial
Investment
Remaining
Cashow
Initial
$12MM
Investment
How It Works - The Perpetual Housing Fund
200 Unit
PHF
Building
$2MM$10MM
Operating
Account
PHF of Utah
Interest
Bearing
Account*
Special Purpose
Entity
25% Owner (M.M.)
PHF
0.01% Owner, M.M. (PHFU)
501(c)(3)
Investor
99.9% Owner (PHFU)
Impact Investor
Resident Entity
75% Owner
(200 Shareholders)
Managing
Member
0.01% Owner (SPE)
Tax Credit
Investor
99.9% Owner (SPE)
515 Use + Unit Mix
PHF Portion of New Building48 Units
AMI
25%-65%38
25%-65%40
PHF Phase 1
PHF Phase 2*
78Total
Existing Tower Residential
Units
AMI
80%-120%100+
25%-65%48
Condo Portion
PHF Portion
148+Total
Addition Tower Residential
Units
100+ Condo Unitsin partnership with RMHF
Mixed-Income Childcareand Playground
Impact Oce &Building Amenities
PHF Conversion Phase 138 Units
PHF Phase 2 of Conversion~40 Units
Impact Food &Retail
Break Ground in 2024
Units Completed in 2026
(Break Ground Q4 2023,
Units Completed Q4 2024)
(Phase & timing dependent
on U of U leasing plans)
515 Tower - Conversion of Floors 9-11
10-Year PHF Projections - Projected Groundbreak Q4 2023/Q1 2024
Year 1 2 3 4 5 6 7 8 9 10
Potential Gross Income 372,358 379,805 387,401 395,149 403,052 411,113 419,335 427,722 436,276 445,002
Additional Income 16,621 16,954 17,293 17,639 17,991 18,351 18,718 19,093 19,474 19,864
Commercial Lease Income - - - - - - - - - -
Total Potential Income 388,979 396,758 404,694 412,787 421,043 429,464 438,053 446,814 455,751 464,866
Less Vacancy (19,449) (19,838) (20,235) (20,639) (21,052) (21,473) (21,903) (22,341) (22,788) (23,243)
Effective Gross Income 369,530 376,920 384,459 392,148 399,991 407,991 416,151 424,474 432,963 441,622
Operating Expenses (162,770) (167,653) (172,683) (177,863) (183,199) (188,695) (194,356) (200,187) (206,192) (212,378)
Capital Reserve (11,400) (11,400) (11,400) (11,400) (11,400) (11,400) (11,400) (11,400) (11,400) (11,400)
Net Operating Income 195,360 197,867 200,376 202,885 205,392 207,896 210,395 212,887 215,371 217,844
Debt Service 168,677 168,677 168,677 168,677 168,677 168,677 168,677 168,677 168,677 168,677
Net Cash Flow 26,683 29,191 31,699 34,208 36,715 39,219 41,718 44,210 46,694 49,168
DSCR (all loans)1.16 1.17 1.19 1.20 1.22 1.23 1.25 1.26 1.28 1.29
Asset Value 4,341,330 4,397,053 4,452,804 4,508,553 4,564,265 4,619,906 4,675,439 4,730,824 4,786,022 4,840,988
Debt Reduction 26,928 33,321 34,471 35,675 36,939 38,264 39,654 41,114 42,646 44,256
Equity in Project (Value less debt)1,250,612 1,312,728 1,369,629 1,426,582 1,483,558 1,540,524 1,597,447 1,654,292 1,711,022 1,767,598
Cash Flow to Residents (75% of net)20,012 21,893 23,775 25,656 27,536 29,414 31,288 33,158 35,021 36,876
Annual Cash Flow Per Resident 527 576 626 675 725 774 823 873 922 970
Residents' Share of Equity (75%)937,959 984,546 1,027,221 1,069,937 1,112,669 1,155,393 1,198,086 1,240,719 1,283,266 1,325,698
New Equity Generated Per Resident 24,683 1,226 1,123 1,124 1,125 1,124 1,123 1,122 1,120 1,117
Accumulated Equity Per Resident 24,683 25,909 27,032 28,156 29,281 30,405 31,529 32,651 33,770 34,887
2.00%Annual Increases in Rent & Additional Income
5.00%Vacancy Rate
3.00%Annual Increases in Operating Expenses
4,274 Operating Expenses/Unit Yr 1
300 Per Unit Capital Reserve Yr
6.10%Construction Loan Rate u
5.75%Perm Loan Rate/40 Yr Am
4.50%Cap Rate
Pro Forma Assumptions:
515 New Tower - Floors 2-4
10-Year PHF Projections - Projected Groundbreak 2024
Year 1 2 3 4 5 6 7 8 9 10
Potential Gross Income 433,169 441,832 450,669 459,682 468,876 478,253 487,818 497,575 507,526 517,677
Additional Income 17,059 17,400 17,748 18,103 18,465 18,834 19,211 19,595 19,987 20,387
Commercial Lease Income - - - - - - - - - -
Total Potential Income 450,227 459,232 468,417 477,785 487,341 497,087 507,029 517,170 527,513 538,063
Less Vacancy (22,511) (22,962) (23,421) (23,889) (24,367) (24,854) (25,351) (25,858) (26,376) (26,903)
Effective Gross Income 427,716 436,270 444,996 453,896 462,974 472,233 481,678 491,311 501,137 511,160
Operating Expenses (183,247) (188,745) (194,407) (200,239) (206,247) (212,434) (218,807) (225,371) (232,132) (239,096)
Capital Reserve (11,700) (11,700) (11,700) (11,700) (11,700) (11,700) (11,700) (11,700) (11,700) (11,700)
Net Operating Income 232,769 235,825 238,889 241,956 245,027 248,099 251,171 254,240 257,305 260,364
Debt Service 199,609 199,609 199,609 199,609 199,609 199,609 199,609 199,609 199,609 199,609
Net Cash Flow 33,160 36,217 39,280 42,347 45,418 48,490 51,562 54,631 57,696 60,755
DSCR (all loans)1.17 1.18 1.20 1.21 1.23 1.24 1.26 1.27 1.29 1.30
Asset Value 5,172,635 5,240,566 5,308,634 5,376,805 5,445,044 5,513,312 5,581,571 5,649,779 5,717,892 5,785,864
Debt Reduction 25,928 32,149 33,337 34,589 35,910 37,305 38,778 40,335 41,979 43,718
Equity in Project (Value less debt)1,830,781 1,904,934 1,974,189 2,043,612 2,113,172 2,182,835 2,252,567 2,322,331 2,392,089 2,461,801
Cash Flow to Residents (75% of net)24,870 27,163 29,460 31,761 34,064 36,368 38,671 40,973 43,272 45,566
Annual Cash Flow Per Resident 638 696 755 814 873 933 992 1,051 1,110 1,168
Residents' Share of Equity (75%)1,373,086 1,428,700 1,480,642 1,532,709 1,584,879 1,637,127 1,689,425 1,741,748 1,794,067 1,846,350
New Equity Generated Per Resident 35,207 1,426 1,332 1,335 1,338 1,340 1,341 1,342 1,341 1,341
Accumulated Equity Per Resident 35,207 36,633 37,965 39,300 40,638 41,978 43,319 44,660 46,002 47,342
2.00%Annual Increases in Rent & Additional Income
5.00%Vacancy Rate
3.00%Annual Increases in Operating Expenses
4,699 Operating Expenses/Unit Yr 1
300 Per Unit Capital Reserve/Yr
6.10%Construction Loan Rate
6.50%Perm Loan Rate/40 Yr Am
4.50%Cap Rate
Pro Forma Assumptions:
515 Tower - Conversion of Floors 6-8
10-Year PHF Projections - Projected Groundbreak 2027
Year 1 2 3 4 5 6 7 8 9 10
Potential Gross Income 372,358 379,805 387,401 395,149 403,052 411,113 419,335 427,722 436,276 445,002
Additional Income 16,621 16,954 17,293 17,639 17,991 18,351 18,718 19,093 19,474 19,864
Commercial Lease Income - - - - - - - - - -
Total Potential Income 388,979 396,758 404,694 412,787 421,043 429,464 438,053 446,814 455,751 464,866
Less Vacancy (19,449) (19,838) (20,235) (20,639) (21,052) (21,473) (21,903) (22,341) (22,788) (23,243)
Effective Gross Income 369,530 376,920 384,459 392,148 399,991 407,991 416,151 424,474 432,963 441,622
Operating Expenses (162,770) (167,653) (172,683) (177,863) (183,199) (188,695) (194,356) (200,187) (206,192) (212,378)
Capital Reserve (11,400) (11,400) (11,400) (11,400) (11,400) (11,400) (11,400) (11,400) (11,400) (11,400)
Net Operating Income 195,360 197,867 200,376 202,885 205,392 207,896 210,395 212,887 215,371 217,844
Debt Service 168,677 168,677 168,677 168,677 168,677 168,677 168,677 168,677 168,677 168,677
Net Cash Flow 26,683 29,191 31,699 34,208 36,715 39,219 41,718 44,210 46,694 49,168
DSCR (all loans)1.16 1.17 1.19 1.20 1.22 1.23 1.25 1.26 1.28 1.29
Asset Value 4,341,330 4,397,053 4,452,804 4,508,553 4,564,265 4,619,906 4,675,439 4,730,824 4,786,022 4,840,988
Debt Reduction 26,928 33,321 34,471 35,675 36,939 38,264 39,654 41,114 42,646 44,256
Equity in Project (Value less debt)1,250,612 1,312,728 1,369,629 1,426,582 1,483,558 1,540,524 1,597,447 1,654,292 1,711,022 1,767,598
Cash Flow to Residents (75% of net)20,012 21,893 23,775 25,656 27,536 29,414 31,288 33,158 35,021 36,876
Annual Cash Flow Per Resident 527 576 626 675 725 774 823 873 922 970
Residents' Share of Equity (75%)937,959 984,546 1,027,221 1,069,937 1,112,669 1,155,393 1,198,086 1,240,719 1,283,266 1,325,698
New Equity Generated Per Resident 24,683 1,226 1,123 1,124 1,125 1,124 1,123 1,122 1,120 1,117
Accumulated Equity Per Resident 24,683 25,909 27,032 28,156 29,281 30,405 31,529 32,651 33,770 34,887
2.00%Annual Increases in Rent & Additional Income
5.00%Vacancy Rate
3.00%Annual Increases in Operating Expenses
4,274 Operating Expenses/Unit Yr 1
300 Per Unit Capital Reserve Yr
6.10%Construction Loan Rate u
5.75%Perm Loan Rate/40 Yr Am
4.50%Cap Rate
Pro Forma Assumptions:
REDEVELOPMENT AGENCY OF SLC
PERPETUAL HOUSING FUND
RDA BOARD OF DIRECTORS MEETING – JULY 11, 2023
PERPETUAL HOUSING FUND OF UTAH (PHF)
Utah non-profit affordable housing organization with mission
of reimagining housing programs to share profits with
project residents.
•RENT-RESTRICTED UNITS – serve those at 25% to 125% AMI
•ANNUAL RENT REBATES – from project's cashflow
•PROFIT PAYOUTS – at time of refinancing or exit of partner
•PROFIT ADVANCE – funds available for major life events
•PROFIT TRADEUP – funds applied to home purchase
GOALS & OBJECTIVES – 515 EAST 100 SOUTH
•$10M in ARPA Funds for acquisition and development of affordable housing
•Adaptive reuse of existing office building will include 60+ housing units
•All 60 units affordable between 25%-50% Area Median Income (AMI)
•Overall project will also include additional housing, co-working, retail, and daycare space
•Family housing with 3-4 bedroom units
•Significant opportunity to promote wealth building for Salt Lake City residents
RDA GUIDING FRAMEWORK
RDA GUIDING FRAMEWORK
515 PROJECT BENCHMARKS MET:
•LEVERAGING: Our investment will help project secure tax credits
•OWNERSHIP: Project will provide an opportunity for residents to build wealth
•RETURN OF INVESTMENT: The initial investment will garner 2-6% RDA return
through the PHF
•HOUSING FOR EVERYONE: Project provides 3- and 4-bedroom units for families and
targets underserved populations at 25-50% AMI
•MIXED-INCOME NEIGHBORHOODS: The larger 515 project will include a mix of
affordable AMIs and market rate housing units
•BUILDING PRESERVATION, REHABILITATION, OR ADAPTIVE REUSE: The project will
repurpose and rehabilitate an existing office building for housing.
FY24 ANNUAL HOUSING PRIORITIES
AFFORDABLE
FAMILY
HOUSING
DEEPLY
AFFORDABLE
HOUSING
MISSING
MIDDLE
HOUSING
WEALTH
BUILDING
OPPORTUNITY
Project meets priority
PROPOSED TERMS
AMOUNT: $10,000,000 in American Rescue Plan Act funds
TERM: 50-year deed-restriction recorded against portion of property that obligates PHF to develop 60
or more rent and income restricted units at 25-50% AMI
DISBURSEMENT: One lump sum to be paid as part of acquisition of units subject to recording of
restrictive covenant on the property and associated subdivision plat process.
USE OF FUNDS: PHF must deploy 100% of funds by June 30, 2024 of ARPA eligible uses
SUSTAINABILITY: PHF will work to comply with RDA's sustainability policy, but may be waived if
necessary due to the adaptive reuse element of the 515 project
RETURN:RDA to receive 2-6% return paid annually every year
ADDITIONAL PROJECTS: Develop 1,000 additional units in Salt Lake City that will be affordable for
those between 25% and 65% AMI
NEXT STEPS
•The RDA Board may wish to discuss the proposed terms to determine if any
additional considerations should be made for funding
•Upon approval of Term Sheet, staff will negotiate the necessary agreements
Solutions for Uta h’s Most
Intractable Housing
Problems
July 11, 2023
The Problem
Source: 2019 Federal Reserve Board’s
Survey of Consumer Finance
$255,000
Net Worth
40x
$6,300
Net Worth
Net Worth
2019
Average
Homeowner
2019
Average
Renter
Homeownership is vital to the American Dream.
The opportunity for homeownership is disappearing
for the average Utahn.
The Problem
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2015
77%
82%
77%
Percentage of Utah Home Sales
Aordable to Households Earning Area Median Income*
67%
48%45%
32%
11%
2016 2017 2018 2019 2020 2021 2022
Sources: Federal Reserve Economic Data; US Census Data;
Utah Multiple Listing Service; Freddie Mac HFA Advantage
*Include single family and multifamily. Five percent down payment, prevailing interest rate.
Mortgage is 80 percent of payment remaining 20 percent taxes, insurance, and PMI.
Ratio of mortgage to income 28%.
Current State of Utah Housing Market
Estimated $42B
Home ownership subsidized
RENTAL SUBSIDY
Rental costs stabilized, but no
pathways to wealth generation
Mortgage Interest
Tax Deduction
Housing Choice Vouchers &
Public Housing
LIHTC
Estimated $30B
High/Middle Income
Homeowners
Middle/Moderate Income
Renters
Moderate/Low Income
Renters
Wealth Generation
Wealth Stagnation
Can’t aord a home,
but makes too much to qualify
for assitance
Estimated $8B
Traditional ownership opportunities
are leaving most Utahns behind.
OWNERSHIP SUBSIDY
Wealth Stagnation
Density - A Potential Solution
Land
$150K/Unit
Construction Construction
$350K/Unit
Traditional
Single Family
Traditional
Multifamily
$315K/Unit
Density has the potential to create aordability by
lowering land costs per unit.
Land
$35K/Unit
Potential
Build Cost
$500,000
Potential
Build Cost
$350,000
Density - A Missed Opportunity
Apartments vs. Condos
• Condos are dicult to develop.
- Apartments are easier to conceptualize, finance, build, and
exit than condo projects.
• Architects, engineers, contractors, investors, and banks will
charge substantially more to be involved in condo projects.
- Insurance costs are much higher in condo projects for all
parties involved.
- Current tax law favors apartments over condos for investor
exit strategies.
• Condos are a risky product type.
- Selling individual condos is harder, takes longer, and is
generally more risky than leasing or selling a traditional
apartment building. Only high-end condos make enough
money to justify this additional risk.
Developers are building more multi-family than ever,
but almost none of it creates ownership for residents.
Traditional
Condo
Building residents own
and finance legally
separate units
Benefits of
Shared Ownership:
1. Shared ownership avoids
the additional liability, cost,
complexity, and risk of
traditional condos.
2. Residents enjoy the
flexibility and ease of
apartment living.
3. Residents gain benefits of
ownership without the
often prohibitive
requirements of
traditional mortgages.
Shared
Ownership
Building residents each
own shares of an entity that
owns their entire building
Density - Shared Ownership
Shared ownership oers residents the benets of both
apartments and condos.
Estimated $42B
RENTAL SUBSIDY
Housing Choice Vouchers &
Public Housing
LIHTC
Moderate/Low Income
Renters Wealth Stagnation
Potential Utah Housing Market
OWNERSHIP SUBSIDY
Mortgage Interest
Tax Deduction
Estimated $30B
High/Middle Income
Homeowners
Middle/Moderate Income
Renters
Wealth Generation
Wealth Generation
DENSE OWNERSHIP
Real Missing Middle
Shared ownership creates opportunities for more families,
but still leaves some behind.
Estimated $8B
Home ownership subsidized
Rental costs stabilized, but no
pathways to wealth generation
Can’t aord a home,
but makes too much to qualify
for assitance
OWNERSHIP SUBSIDY
Mortgage Interest
Tax Deduction
Estimated $30B
High/Middle Income
Homeowners Wealth Generation
Home ownership subsidized
Aordable Housing - Potential Solution
Low Income Housing Tax Credits (LIHTC), a federal
subsidy, can signicantly decrease rents for residents.
Debt
Market Return
Market Project
Capital Stack
LIHTC Project
Capital Stack
Debt
Market Return
Amount of Private
Capital Requires
Market Rents
Equity
Market Return
LIHTC
Gov. Subsidy
Reduced Debt
Service Allows
Affordable Rents
Aordable Housing - A Missed Opportunity
Aordable
Rent
Existing Tax
Credits
Investors
Residents
LIHTC
Apartment
Project
Project Equity &
Annual Return
Upfront
Construction
Subsidies
With LIHTC, residents benet from aordable rents, but
annual returns and wealth generation goes to investors.
Our Solution - The Perpetual Housing Fund
Aordable
Rent
Existing Tax
Credits
PHF
Project
Project Equity &
Annual Return
Upfront
Construction
Subsidies
PHF pairs existing LIHTC subsidies with shared ownership
to benet building residents.
Special
Purpose
Entity
PHF
Residents
25%
75%
Wealth Generation
Estimated $42B
RENTAL SUBSIDY
Housing Choice Vouchers &
Public Housing
LIHTC + PHF
Moderate/Low Income
Renters
Wealth Generation
Wealth Generation
Potential Utah Housing Market
OWNERSHIP SUBSIDY
Mortgage Interest
Tax Deduction
Estimated $30B
High/Middle Income
Homeowners
Middle/Moderate Income
Renters
DENSE OWNERSHIP
Real Missing Middle
The PHF will use this model to provide ownership
opportunities to low income households.
Estimated $8B
Home ownership subsidized
Rental costs stabilized, but no
pathways to wealth generation
Can’t aord a home,
but makes too much to qualify
for assitance
Wealth Generation
OWNERSHIP SUBSIDY
Mortgage Interest
Tax Deduction
Estimated $30B
High/Middle Income
Homeowners
Home ownership subsidized
SLC's Investment Projected Outcomes
Salt Lake City's $10MM ARPA Investment in PHF will provide:
•2-6% Return on Investment for 20+ Year Term
•1,000 Equity-Sharing PHF Units for individuals and families making 65% of AMI and below
•500 Condo Units in Salt Lake City affordable to individuals and families making 60%-120% of AMI
515 Tower Phase I
AMI
25%-65%25
25%-65%5
Studio
1 Bedroom
60Total
Phase 1 Unit Mix
Units
3 Bedroom
4 Bedroom
25%-65%
25%-65%
20
10
Future Mixed-Income Childcare &Playground
Impact Oce & Building Amenities
PHF Conversion Phase 160 Units
RMHF or PHF Phase 246 Units
Impact Food & Retail
Inline AdditionPhase II
515 Tower - Floors 7-11
10-Year PHF Projections
Year 1 2 3 4 5 6 7 8 9 10
Potential Gross Income 699,650 713,643 727,916 742,474 757,324 772,470 787,919 803,678 819,751 836,146
Additional Income 38,244 39,009 39,789 40,585 41,397 42,224 43,069 43,930 44,809 45,705
Commercial Lease Income - - - - - - - - - -
Total Potential Income 737,894 752,652 767,705 783,059 798,720 814,695 830,988 847,608 864,560 881,852
Less Vacancy (36,895) (37,633) (38,385) (39,153) (39,936) (40,735) (41,549) (42,380) (43,228) (44,093)
Effective Gross Income 700,999 715,019 729,320 743,906 758,784 773,960 789,439 805,228 821,332 837,759
Operating Expenses (282,179) (290,644) (299,363) (308,344) (317,595) (327,123) (336,936) (347,044) (357,456) (368,179)
Capital Reserve (18,000) (18,000) (18,000) (18,000) (18,000) (18,000) (18,000) (18,000) (18,000) (18,000)
Net Operating Income 400,820 406,375 411,956 417,562 423,189 428,837 434,503 440,183 445,877 451,580
Debt Service 349,809 349,809 349,809 349,809 349,809 349,809 349,809 349,809 349,809 349,809
Net Cash Flow 51,011 56,566 62,147 67,753 73,380 79,028 84,694 90,374 96,068 101,771
DSCR (all loans)1.15 1.16 1.18 1.19 1.21 1.23 1.24 1.26 1.27 1.29
Asset Value 8,907,121 9,030,557 9,154,581 9,279,147 9,404,209 9,529,717 9,655,617 9,781,855 9,908,371 10,035,104
Debt Reduction 38,974 48,654 50,820 53,108 55,525 58,081 60,783 63,641 66,663 69,860
Equity in Project (Value less debt)3,211,888 3,345,003 3,471,192 3,598,047 3,725,527 3,853,590 3,982,193 4,111,288 4,240,826 4,370,756
Cash Flow to Residents (75% of net)38,259 42,425 46,610 50,814 55,035 59,271 63,520 67,781 72,051 76,328
Annual Cash Flow Per Resident 638 707 777 847 917 988 1,059 1,130 1,201 1,272
Residents' Share of Equity (75%)2,408,916 2,508,752 2,603,394 2,698,535 2,794,145 2,890,193 2,986,644 3,083,466 3,180,619 3,278,067
New Equity Generated Per Resident 40,149 1,664 1,577 1,586 1,593 1,601 1,608 1,614 1,619 1,624
Accumulated Equity Per Resident 40,149 41,813 43,390 44,976 46,569 48,170 49,777 51,391 53,010 54,634
2.00%Annual Increases in Rent & Additional Income
5.00%Vacancy Rate
3.00%Annual Increases in Operating Expenses
4,274 Operating Expenses/Unit Yr 1
300 Per Unit Capital Reserve Yr
6.10%Construction Loan Rate
6.10%Perm Loan Rate/40 Yr Am
4.50%Cap Rate
Pro Forma Assumptions:
Resident
515 Phase I - Resident Perspective
$638
1/60 Share
YEAR 1
CASHFLOW
SHARE**
per person
EQUITY SHARE AT
STABILIZATION
$40,149*
1/60 Share
per person
*Asset appreciation will be distributed upon events such as a renance event or sale of building. Tenants will also have
the ability to "draw" on their equity for "allowed events" in a vehicle similar to a HELOC (funded and run by the PHF).
**Cashow Share will be distributed as rent rebates to the extent that LIHTC rules allow.
$250,000
$500,000
Dev. Fee Deferred to Project
Funding Resident HELOC Vehicle
$38,259
75% to Residents
Annual Rent
Per Resident
$2,408,916
75% to Residents
$750,000
To Project/
Resident Benet
Special Purpose
Entity
PHF
Residents
25%
75%
SPE Pro Forma Year 1
SPE Value + Equity Upon Stabilization
Rents + Additional Income
Less Op Expenses + Capital Reserve
Net Operating Income
Less Debt Service
Net Cash Flow
Asset Value
Owner’s Equity
Developer Fee Contribution
($300,179)
$11,683
$400,820
($349,809)
$51,011
$8,907,121
$3,211,888
$700,999
515 Phase I - Developer Perspective
SPE Pro Forma Year 1
SPE Value + Equity Upon Stabilization
Rents + Additional Income
Less Op Expenses + Capital Reserve
Net Operating Income
Less Debt Service
Net Cash Flow
Asset Value
Owner’s Equity
Developer Fee
$500,000Dev. Fee Upon Groundbreaking
$500,000Dev. Fee Upon Stabilization
Forms SPE + Retains
25% Ownership
and Control
Special
Purpose
Entity
PHF
Residents
25%
75%
PHF
Develops and
Manages Project
YEAR 1
CASHFLOW
SHARE
$12,752
(25% Share)
EQUITY SHARE AT
STABILIZATION
$802,972
(25% Share)
DEVELOPER FEE
$1,000,000
(100% to PHF)
$700,999
($300,179)
$400,820
($349,809)
$400,820
$8,907,121
$3,211,888
Asset Appreciation + Debt Reduction
Conceptual Graph
Shared Ownership - How It Works (515 Phase I)
25% PHF
Resident
Share
Annual
Cashflow
UNIT 1
UNIT 2
$4.37MM
$1.09MM
$3.28MM
$3.2MM
$.8MM
$2.4MM
Ye
a
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1
Ye
a
r
2
Ye
a
r
3
Ye
a
r
4
Ye
a
r
5
Ye
a
r
6
Ye
a
r
7
Ye
a
r
8
Ye
a
r
9
Ye
a
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1
0
Re
n
a
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c
e
E
v
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n
t
Resident A - 10 Years
Resident B - 3 Years
Equity Share - $54,634
Cashflow Share - $9,535
Equity Share - $16,390
Cashflow Share - $2,122
Equity Share - $38,244
Cashflow Share- $7,413
Resident C - 7 Years
$38,259 $42,425 $46,610 $50,814 $55,035 $59,271 $63,520 $67,781 $72,051 $76,328
Example Resident Dividend
Solutions for Utah’s Most
Intractable Housing
Problems
July 11, 2023
Investor
Initial Capitalization Utilization
$10MM
$2MM Project Capital
Pre-Development
Reimbursement
Land Acquisition &
Pre-Development
Capital
Additional Capital for
Land Acquisition &
Pre-Development
Annual Cashflow &
Developer Fee at
Groundbreaking
2-6% Return on
Investment
Initial
Capitalization
Guarantor
Reserve
Interest-Bearing
Impact
Investments
(6% Return)
PHF
PHF Model
Project
PHF OF
UTAH
0-2% Return for
Operating Expenses
(501-c-3)
Tax credit equity & construction lenders require $12MM
(2MM liquid) to fund a meaningfully-sized LIHTC vehicle.
75%
Cashow
90%
Cashow
100% Developer Fee
to PHF of Utah
10%
Cashow
25%
Cashow
2-7%
Return on Initial
Investment
Remaining
Cashow
Initial
$12MM
Investment
How It Works - The Perpetual Housing Fund
200 Unit
PHF
Building
$2MM$10MM
Operating
Account
PHF of Utah
Interest
Bearing
Account*
Special Purpose
Entity
25% Owner (M.M.)
PHF
0.01% Owner, M.M. (PHFU)
501(c)(3)
Investor
99.9% Owner (PHFU)
Impact Investor
Resident Entity
75% Owner
(200 Shareholders)
Managing
Member
0.01% Owner (SPE)
Tax Credit
Investor
99.9% Owner (SPE)
Resident
Typical 200 Unit Project - Resident Perspective
$1,127
1/200 Share
YEAR 1
CASHFLOW
SHARE**
per person
EQUITY SHARE AT
STABILIZATION
$51,405*
1/200 Share
per person
*Asset appreciation will be distributed upon events such as a renance event or sale of building. Tenants will also have
the ability to "draw" on their equity for "allowed events" in a vehicle similar to a HELOC (funded and run by the PHF).
**Cashow Share will be distributed as rent rebates to the extent that LIHTC rules allow.
$1,500,000
$1,000,000
Dev. Fee Deferred to Project
Funding Resident HELOC Vehicle
$225,327
75% to Residents
Annual Rent
Per Resident
$10,281,052
75% to Residents
$2,500,000
To Project/
Resident Benet
Special Purpose
Entity
PHF
Residents
25%
75%
SPE Pro Forma Year 1
SPE Value + Equity Upon Stabilization
Rents + Additional Income
Less Op Expenses + Capital Reserve
Net Operating Income
Less Debt Service
Net Cash Flow
Asset Value
Owner’s Equity
Developer Fee Contribution
($902,310)
$14,396
$1,976,979
($1,676,543)
$300,436
$35,945,072
$13,708,069
$2,879,289
Typical 200 Unit Project - Developer Perspective
SPE Pro Forma Year 1
SPE Value + Equity Upon Stabilization
Rents + Additional Income
Less Op Expenses + Capital Reserve
Net Operating Income
Less Debt Service
Net Cash Flow
Asset Value
Owner’s Equity
Developer Fee Contribution
$1,500,000Dev. Fee Upon Groundbreaking
$1,500,000Dev. Fee Upon Stabilization
Forms SPE + Retains
25% Ownership
and Control
Special
Purpose
Entity
PHF
Residents
25%
75%
PHF
Develops and
Manages Project
YEAR 1
CASHFLOW
SHARE
$75,109
(25% Share)
EQUITY SHARE AT
STABILIZATION
$3,427,017
(25% Share)
DEVELOPER FEE
$3,000,000
(100% to PHF)
$2,879,289
($902,310)
$1,976,979
($1,676,543)
$300,436
$35,945,072
$13,708,069
Asset Appreciation + Debt Reduction
Conceptual Graph
Shared Ownership - How It Works (200 Unit Project)
25% PHF
Resident
Share
Annual
Cashflow
UNIT 1
UNIT 2
$19.3MM
$4.9MM
$14.4MM
$13.7MM
$3.4MM
$10.3MM
Ye
a
r
1
Ye
a
r
2
Ye
a
r
3
Ye
a
r
4
Ye
a
r
5
Ye
a
r
6
Ye
a
r
7
Ye
a
r
8
Ye
a
r
9
Ye
a
r
1
0
Re
n
a
n
c
e
E
v
e
n
t
Resident A - 10 Years
Resident B - 3 Years
Equity Share - $72,202
Cashflow Share - $16,559
Equity Share - $21,660
Cashflow Share - $3,745
Equity Share - $50,541
Cashflow Share- $13,152
Resident C - 7 Years
$225,327 $249,564 $274,097 $298,925 $324,048 $349,467 $375,181 $401,190 $427,492 $454,088
Example Resident Dividend
Typical Future 200 Unit Project
10-Year PHF Projections
Year 1 2 3 4 5 6 7 8 9 10
Potential Gross Income 2,943,351 3,002,218 3,062,262 3,123,508 3,185,978 3,249,697 3,314,691 3,380,985 3,448,605 3,517,577
Additional Income 87,480 89,230 91,014 92,834 94,691 96,585 98,517 100,487 102,497 104,547
Cell Tower/Commercial Lease Income - - - - - - - - - -
Total Potential Income 3,030,831 3,091,448 3,153,276 3,216,342 3,280,669 3,346,282 3,413,208 3,481,472 3,551,101 3,622,123
Less Vacancy (151,542) (154,572) (157,664) (160,817) (164,033) (167,314) (170,660) (174,074) (177,555) (181,106)
Effective Gross Income 2,879,289 2,936,875 2,995,613 3,055,525 3,116,635 3,178,968 3,242,547 3,307,398 3,373,546 3,441,017
Operating Expenses (842,310) (867,580) (893,607) (920,415) (948,028) (976,469) (1,005,763) (1,035,936) (1,067,014) (1,099,024)
Capital Reserve (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000)
Net Operating Income 1,976,979 2,009,295 2,042,006 2,075,110 2,108,608 2,142,500 2,176,785 2,211,463 2,246,533 2,281,993
Debt Service 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543 1,676,543
Net Cash Flow 300,436 332,752 365,462 398,566 432,065 465,956 500,242 534,920 569,990 605,450
DSCR (all loans)1.18 1.20 1.22 1.24 1.26 1.28 1.30 1.32 1.34 1.36
Asset Value 35,945,072 36,532,645 37,127,374 37,729,265 38,338,321 38,954,537 39,577,906 40,208,416 40,846,051 41,490,788
Debt Reduction 123,794 156,185 165,030 174,460 195,239 206,677 218,879 231,898 245,790 260,615
Equity in Project 13,708,069 14,295,642 14,890,371 15,492,262 16,101,318 16,717,534 17,340,903 17,971,413 18,609,048 19,253,785
Cash Flow to Residents (75% of net)225,327 249,564 274,097 298,925 324,048 349,467 375,181 401,190 427,492 454,088
Annual Cash Flow per Resident 1,127 1,248 1,370 1,495 1,620 1,747 1,876 2,006 2,137 2,270
Residents' Share of Equity (75%)10,281,052 10,721,731 11,167,778 11,619,197 12,075,988 12,538,150 13,005,677 13,478,560 13,956,786 14,440,338
Avg New Equity Generated Per Resident 51,405 2,938 2,974 3,009 3,045 3,081 3,117 3,153 3,188 3,224
Accumulated Equity Per Resident 51,405 53,609 55,839 58,096 60,380 62,691 65,028 67,393 69,784 72,202
Pro Forma Assumptions:
2.00%Annual Increases in Rent & Additional Income
5.00%Vacancy Rate
3.00%Annual Increases in Operating Expenses
4,212 Operating Expenses/Unit Yr 1
300 Per Unit Capital Reserve Yr 1
6.75%Construction Loan Rate
6.75%Perm Loan Rate/40 Yr Am