Proposed Resolution - 8/8/2023REDEVELOPMENT AGENCY OF SALT LAKE CITY
RESOLUTION NO. _______________
Adopting Term Sheet and Waiver of the Sustainable Development Policy
for The Perpetual Housing Fund of Utah, LLC at the 515 Project
RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY
OF SALT LAKE CITY APPROVING TERM SHEET AND WAIVING THE SUSTAINABLE
DEVELOPMENT POLICY FOR THE PERPETUAL HOUSING FUND OF UTAH, LLC AT
THE 515 EAST PROJECT
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, including the development of affordable housing.
WHEREAS, on April 11, 2023, the RDA’s Board of Director’s (Board) approved
resolution R-8-2023 adopting housing funding priorities, which among other things, prioritized
funding for housing projects that facilitate the ability for low to moderate income households to
build wealth.
WHEREAS, The Perpetual Housing Fund of Utah, LLC (PHF) is an affordable housing
developer whose mission is to reimagine existing affordable housing programs to share profits
with, and consequently build wealth for, PHF tenant residents.
WHEREAS, PHF is developing an affordable housing project at 515 East 100 South (515
Project) in which existing office spaces will be converted to residential apartments and will be
affordable to those at 25-55% of the area median income. Additionally, the 515 Project tenants
will participate in a tenant wealth building initiative, which shares the profits of the residential
project through rent rebates, profit payouts, profit advances, and profit trade-ups. PHF has also
committed to developing over 1,000 affordable units in Salt Lake City over the next 20 years.
WHEREAS, on June 6, 2023, the Salt Lake City Council amended the City’s final budget
for fiscal year 2023 and set aside $10 million of the City’s American Rescue Plan Act funds to be
distributed by the RDA to PHF on the condition that the Board approve the final Fundin g
Agreement Term Sheet.
WHEREAS, the RDA staff recommends the Board approve the attached Term Sheet for
the funding agreement for PHF and the 515 Project. Additionally, the RDA staff recommends
approving a waiver of the Sustainable Development Policy for the 515 Project as this project is an
adaptive reuse of an existing building and PHF has committed to incorporate the Sustainable
Development Policy standards into new construction of additional affordable housing projects.
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NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
Redevelopment Agency of Salt Lake City that it approves the distribution of the funds pursuant
to the terms outlined in the Term Sheet attached hereto, subject to revisions that do not
materially affect the rights and obligations of the RDA hereunder. Further, the Board authorizes
the waiver of the Sustainable Development Policy for the 515 Project. The Board authorizes the
Executive Director to negotiate and execute the Funding 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.
Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this
____ day of August, 2023.
_________________________________
Alejandro Puy, Chair
Approved as to form: __________________________________
Salt Lake City Attorney’s Office
Allison Parks
Date:_______________________
The Executive Director:
____ does not request reconsideration
____ requests reconsideration at the next regular Agency meeting.
________________________________
Erin Mendenhall, Executive Director
Attest:
________________________
City Recorder
July 21, 2023
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EXHIBIT A: FUNDING AGREEMENT TERM SHEET
Redevelopment Agency of Salt Lake City
Tenant Wealth Building Initiative
A Concerted Community Revitalization Plan between the Redevelopment Agency of Salt Lake
City and The Perpetual Housing Fund of Utah, LLC
Funding Agreement Term Sheet
Purpose
The purpose of this Tenant Wealth Building Initiative is to address the diminishing opportunities
for homeownership and historically unequal access to real estate wealth and equity within Utah’s
capital city. This initiative’s cooperation between the Redevelopment Agency of Salt Lake City
(RDA) and The Perpetual Housing Fund of Utah, LLC (PHF) seeks to foster the creation of
affordable, missing middle, and entry-level housing that aides in creating meaningful wealth and
financial equity for city residents.
Parties
The Perpetual Housing Fund of Utah, LLC, a Utah limited liability company (PHF), and the
Redevelopment Agency of Salt Lake City (RDA).
Property
515 East 100 South, Salt Lake City, Utah 84102
Project Description and Affordability
PHF will use the Rescue Plan Funds by June 30, 2024 to acquire real property that will have
been converted into large condominiums that will be subsequently subdivided into 60 or more
residential units in the existing building at 515 East 100 South (515 Project). These units will be
converted from office spaces to residential apartments and will be affordable to those at 25-55%
of the area median income (AMI). The 515 Project tenants will participate in the tenant wealth
building initiative, which shares the profits of the residential project through rent rebates, profit
payouts, profit advances, and profit trade-ups.
Proposed Funding Terms
•Amount: $10 million in America Rescue Plan Act funds (Rescue Plan Funds).
•Term: Concurrently with the distribution of the Rescue Plan Funds, PHF shall record a
restriction against the condominiumized portion of the building that obligates PHF to
develop 60 or more rent restricted apartments at 25-50% AMI that will be income
restricted for those at 25-55% AMI for 50 years. The restriction will also require the
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wealth building initiative to be maintained for a term of 50 years (the Restrictive
Covenant).
•Disbursement: One lump sum upon meeting the conditions for funding, as detailed
below. PHF will not be required to repay the funds like a traditional loan.
•Return on Investment: As permitted by the American Rescue Plan Act (ARPA), as a
transformational seed funder, the RDA will be treated like an equity investor in PHF and
receive a 2-6% return paid annually every year.
•Use of Funds: PHF must deploy 100% of the funds by June 30, 2024 on ARPA eligible
uses.
•Additional Projects: For non-monetary consideration in addition to the $10 million
investment, PHF will commit to developing additional affordable housing projects in Salt
Lake City. More specifically, by year 20, PHF or its affiliates and subsidiaries will have
developed 1,000 additional units in Salt Lake City that will be affordable for those
between 25% and 65% AMI. 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.
•Waiver of Sustainable Development Policy: PHF’s obligations to comply with the RDA’s
Sustainable Development Policy may be waived, if necessary, in part due to the adaptive
reuse element of the 515 Project as well as PHF’s commitment to incorporate these
standards into the new construction of the additional projects, even though such
incorporation is not required under the policy.
Conditions for RDA to Distribute Funds
Prior to dispersing the Rescue Plan Funds, the PHF will complete the following:
•PHF will be ready to close on the acquisition of the condominium spaces within which to
build 60 or more affordable apartments on or before June 30, 2024. Implied in this
requirement is that PHF’s predecessor-in-interest will have acquired the Property and
condominiumized the Property so the portions within which the residential apartments
will be constructed can be acquired by PHF.
•PHF and RDA will agree on the form of the Restrictive Covenant to be recorded against
the Property concurrently with funding. The Restrictive Covenant will require PHF to
maintain, for a term of 50 years, 60 or more affordable housing units at 25-55% AMI,
maintain a mix of unit sizes, and the following wealth building opportunities for tenants:
o Annual rent rebate – A portion of the project’s annual cash flow (profit after
collecting all rent and other income, paying all operating expenses, paying debt
service, and setting aside cash reserves for future operations and repairs) that
would typically be received by the owner will be allocated to current PHF project
residents as a rent rebate via cash payment to be distributed on an annual basis.
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o Profit payout – When there is a capital transaction event that generates profit, or
further cashflow (refinance, exit of the limited partner, etc.), all the cumulative
residents over time will receive a payment that represents a proportionate share of
the available profit. The proportion of the profit a household receives will depend
on the length of time they lived in a 515 Project unit. With projects that involve
Low Income Housing Tax Credits (LIHTC), the profit generating event will often
happen at the end of the LIHTC compliance period, which is typically 15 years
after the project is placed into service.
o Profit advance – PHF will set aside a portion of its initial developer fee for the
project to fund a 0%, zero payment revolving fund to help PHF project residents
access a portion of their anticipated profits early in the event of an emergency or
major life event (medical, educational, entrepreneurial, etc.). Disbursements
made to a PHF project resident from this revolving fund will be replenished from
the PHF project resident’s share of profit whenever a profit payout would
naturally happen.
o Profit tradeup – PHF will be co-developing hundreds of units with other impact
partners that target missing middle home ownership opportunities for households
making 60%-120% AMI (and occasionally less). Subject to availability, PHF
tenants will be able to transfer their accruals from a PHF project for a 1:1
reduction in purchase price on these homes.
•PHF shall establish all required legal entities to fulfill the profit-sharing obligations and
demonstrate such establishment to RDA’s satisfaction.
•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.
•Provide evidence of insurance in such amounts and with such coverage as deemed
necessary by the RDA.
PHF’s Obligations after the Funds are Distributed
•Prior to the Rescue Plan Funds being distributed, PHF and RDA will agree on the form of
a funding agreement. The funding agreement will require PHF to do the following after
the funds are distributed:
o PHF shall demonstrate to RDA’s satisfaction, sufficient sources of project
financing for the 515 Project. Sources of financing must equal the total project
cost.
o PHF shall disclose identity of interest relationships within the 515 Project.
o PHF will have applied for Low Income Housing Tax Credits for the 515 Project
by June 30, 2024.
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o PHF shall obtain all required city approvals to convert the 515 Project office
spaces to residential units, including all necessary approvals from the City’s
Planning and building services’ division. Additionally, PHF will commit to
commencing and diligently pursing the completion of construction.
o PHF will provide RDA biannual progress reports on the construction and
operation of the units.
o PHF will agree to implement an equitable process for tenant selection and as
permitted by law, potentially prioritize certain applications.
o PHF agrees to commit an additional $500,000.00 in additional funds to the 515
Project for assets beneficial to the greater neighborhood such as retail services,
childcare services, and/or impact-focused office space that directly increases jobs
in the area. PHF agrees that it will make a financial investment into community
assets in each of its future projects that address a need of the greater community.
o PHF will commit to develop additional affordable housing projects in Salt Lake
City to meet the following terms and conditions:
▪Within 20 years, PHF or its affiliates and subsidiaries will have developed
1,000 affordable housing units within Salt Lake City for those at 65%
AMI and below.
▪These additional housing units must also participate in the tenant wealth
building initiative as detailed above.
▪All newly constructed PHF projects shall 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.
▪All PHF developed projects above $10M in total cost shall build
community retail, workspace, community centers, childcare facilities, or
other catalytic neighborhood amenities within their developments, and
especially along their main floor public frontages.
▪Economic Development Impact: Over the course of 20 years, this
initiative will generate hundreds of millions of dollars in development
activity within Salt Lake City and invest tens of millions of dollars directly
into low and moderate income households that reside in the City’s
neighborhoods.
Defaults and Remedies
Events of default under the restrictive use or funding agreements may include, but are not limited
to:
•PHF fails to construct the 515 Project within the timeframe provided in the funding
agreement.
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•PHF fails to maintain the affordability (as required under the Restrictive Covenant) of the
515 Project units or the tenant wealth building initiative in the 515 Project.
•PHF fails to provide regular development reports.
•PHF fails to develop and maintain the additional affordable housing/tenant wealth
building projects in Salt Lake City.
•PHF fails to comply with any other city, state, or federal requirements.
Remedies if PHF fails to cure in the event of a default may include, but are not limited to:
•If PHF does not meet the initial conditions for funding, the RDA will not distribute the
funds.
•Once funds are distributed and upon an event of default, the RDA may:
o File a breach of contract claim, which may include claims for:
▪Liquidated damages,
▪Injunctive relief, and/or
▪Specific performance.
o File a direct action against PHF to comply with their obligations.
o Any other remedies available at law or equity.
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