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Proposed Resolution - 11/22/2023REDEVELOPMENT AGENCY OF SALT LAKE CITY RESOLUTION NO. _____ LOAN TO ROCKY VENTURES, INC. (DBA THE FRONT CLIMBING CLUB) RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY APPROVING THE TERM SHEET OF A LOAN TO ROCKY VENTURES, INC. FOR CONSTRUCTION OF AN EXPANSION OF THE FRONT CLIMBING GYM 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 (the “Act”). WHEREAS, the Act grants the RDA powers to use funds to provide for project area development within project area boundaries. WHEREAS, the RDA has an RDA Loan Program (“Program”), the purpose of which is to promote economic development, encourage private investment, and enhance project area vitality. WHEREAS, on October 18, 2016, the RDA Board adopted Resolution No. R-37-2016, establishing policy guidelines for the RDA Loan Program (the “Policy”). WHEREAS, pursuant to the Policy, Rocky Ventures, Inc. (the “Borrower”) submitted an application for a loan to expand The Front Climbing Club, a climbing gym located within the RDA’s State Street project area, by remodeling the existing structure and adaptively reusing an adjacent vacant warehouse (the “Project”). WHEREAS, the Project requires two waivers for aspects of the Project that do not follow RDA policies: one waiver from the Sustainable Development Policy because this Project does not meet the threshold requirements, and one waiver from the RDA Loan Program Policy that requires the Project to meet six or more Public Benefit Criteria to receive a primary loan from the RDA. WHEREAS, the RDA Finance Committee reviewed the proposed loan application in a meeting on November 15, 2023 and voted to recommend the loan to the RDA Board for approval. WHEREAS, in conjunction with the RDA Finance Committee’s recommendations, the RDA staff recommends the attached set of terms (the “Term Sheet”) for a loan in the amount of $2,000,000 to the Borrower for construction of the Project (the “Construction Loan”). WHEREAS, RDA staff further requests the RDA Board approve the two policy waivers from the for the Project, as also described in the Term Sheet. NOW, THEREFORE, BE IT RESOLVED by the Board that it approves the two policy waivers for the Project, and further approves the Construction Loan as outlined in the Term Sheet attached hereto, subject to revisions that do not materially affect the rights and obligations of the RDA hereunder. The Board authorizes the Executive Director to negotiate and execute the loan agreement and any other relevant documents consistent with the Term Sheet, and incorporating such other terms and agreements as recommended by the City Attorney’s office. Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this day of , 2023. Alejandro Puy, Chair Approved as to form: Sara Montoya Salt Lake City Attorney’s Office Date: November 22, 2023 The Executive Director: does not request reconsideration requests reconsideration at the next regular Agency meeting. Erin Mendenhall, Executive Director Attest: City Recorder LOAN TERM SHEET ROCKY VENTURES, INC. (DBA THE FRONT CLIMBING CLUB) 1470 South 400 West The terms described on this Term Sheet represent the terms for a primary construction loan to fund Rocky Ventures, Inc.’s (“Borrower’s”) expansion project of their climbing gym located in the RDA’s State Street Project Area. The project will allow the Borrower to remodel the existing structure and adaptively reuse an adjacent vacant warehouse, combining three buildings into one single facility that will offer approximately 70,000 square feet of space. This expansion project will add climbing walls, fitness studios, bathrooms and showers, a staff break room, storage space, and various mechanical, electrical, and fire suppression systems. The loan, as requested from the Borrower, requires two waivers for aspects of the project that do not follow RDA policies: a waiver from the Sustainable Development Policy that prohibits on-site natural gas combustion and requires the project to achieve a Designed to Earn ENERGY STAR score of 90 or higher or an Energy Use Intensity that is comparable to this score (the project will include on-site natural gas combustion, and an ENERGY STAR score cannot be calculated for this facility type), and a second waiver from the Loan Program Policy that requires projects receiving primary loans to meet six or more Public Benefit Criteria (the project meets five). LOAN TERMS Borrower: Rocky Ventures, Inc. Property: 1420 South 400 West and 1450 South 400 West Amount: Not to exceed $2,000,000 Source of funds: Revolving Loan Fund Project Description: The project will include remodeling the existing structures at 1420 South 400 West and 1450 South 400 West, combining three buildings into one single facility that will offer approximately 70,000 square feet of space. This expansion project will add climbing walls, fitness studios, bathrooms and showers, a staff break room, storage space, and various mechanical, electrical, and fire suppression systems. Public Benefits: Public Amenities: The project must include a significant public art amenity on the exterior of the buildings, using at least 1.5% of the RDA contribution ($30,000) for such art. Adaptive Reuse: The project’s expansion must repurpose two existing cinder block warehouse buildings along 400 West, integrating them with the existing facility and resulting in a positive contribution to the surrounding neighborhood. Permanent Job Creation: The project’s expansion must create opportunities for 40 new jobs, all starting at $15/hour or higher. Transit Alternatives: The project will add employee showers, lockers, and indoor bicycle parking, as well as incentivize car share with a dedicated parking stall. Economic Impact: The project will rehabilitate two older warehouse buildings and dedicate 100% of the space to locally owned business operations. Term: 3 years Amortization: 20 years Interest Rate: 5.10% Interest Rate* Interest shall accrue during construction, beginning upon the first disbursement of funds. Accrued interest during construction to be added to the loan balance. Repayment Monthly amortized payments commence following receipt of Certificate of Occupancy. A balloon payment of any outstanding balance shall be due upon maturity. Collateral: A second-position mortgage lien on the properties located at 1450 South 400 West and 1420 South 400 West. Guarantors: Unconditional repayment personal guarantee from Dustin Buckthal, 100% owner of Rocky Ventures, Inc.. Disbursement: Loan proceeds shall be disbursed through construction draws. Any funds not disbursed 24 months after closing will be applied to outstanding interest and principal on the loan. Fees: Closing costs and legal fees shall be paid by the Borrower including, but not limited to, the cost of title search and insurance, credit reports, and attorney fees. Fees will be payable at loan closing. Use of Funds Funds shall be used for construction costs associated with the renovation of 1420 South 400 West and 1450 South 400 West. *Interest rate to be determined on closing day based on current 3-year US Treasury Par Yield Curve Rate CONDITIONS FOR LOAN CLOSING • Borrower meets all terms of the loan. • RDA approves final schedule of sources and uses and the project proforma. • The parties agree on the form of the loan documents (e.g. promissory notes, loan agreements, security documents, and guarantees) as deemed necessary by the RDA and its legal counsel. • Borrower receive and comply with all necessary approvals from the City, as further defined in the loan agreement. • Borrower to receive approval from the RDA and its legal counsel of all matters pertaining to title, legality of the loan, and the legality, sufficiency, and the form and substance of all documents that are deemed reasonably necessary for the loan transaction. • Borrower to provide evidence of insurance in such amounts and with such coverage as deemed necessary by the RDA for the Property. • Such other terms as recommended by the RDA’s legal counsel and staff.