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Transmittal - 8/9/2024
SALT LAKE CITY TRANSMITTAL - RDA To: Salt Lake City Redevelopment Agency Chair Start Date: 07/26/2024 Date Sent to RDA Board: 07/29/2024 From: Employee Name: Stine, Robyn E-mail robyn.stine@slc.gov Department Redevelopment Agency Mayor's Office Leadership * Mayor's Signed Date 07/29/2024 Subject: Salt Lake Central Housing and Transit Reinvestment Zone (HTRZ) Additional Staff Contact: Marcus Leemarcus.lee@slc.govKate Werrettkate.werrett@slc.govAshley Ogdenashley.ogden@slc.gov Presenters/Staff Table Document Type * Information Item Budget Impact * Yes No Budget Impact: Recommendation:* None Background/Discussion This memorandum provides an update on the Redevelopment Agency’s (“RDA”) pending application to the State to establish an HTRZ that is centered on the Utah Transit Authority’s (“UTA”) Salt Lake Central Station near 300 S. 600 West. Will the RDA Board need to hold a public hearing for this item?* Yes No Public Process Mayor's Comments Attachment(s) 08/09/2024 SL Central HTRZ_BOD Memo_FINAL.pdf 7.89MB SALT LAKE CITY CORPORATION 451 SOUTH STATE STREET, ROOM 118 WWW.SLC.GOV · WWW.SLCRDA.COM P.O. BOX 145518, SALT LAKE CITY, UTAH 84114-5518 TEL 801-535-7240 · FAX 801-535-7245 MAYOR ERIN MENDENHALL Executive Director DANNY WALZ Director REDEVELOPMENT AGENCY of SALT LAKE CITY STAFF MEMO DATE: July 26, 2024 PREPARED BY: Marcus Lee, Project Coordinator Kate Werrett, Project Manager Ashley Ogden, Senior Project Manager RE: Salt Lake Central Housing and Transit Reinvestment Zone (HTRZ) REQUESTED ACTION: N/A - Informational Briefing POLICY ITEM: Project Area Creation BUDGET IMPACTS: N/A EXECUTIVE SUMMARY: Housing and Transit Reinvestment Zones (“HTRZ”), first authorized by the State Legislature (“State”) in 2021 with subsequent amendments made in 2022, 2023, and 2024, are intended to help address Utah’s housing crisis and increase transit ridership by facilitating the development of mixed-use, multi-family, and affordable housing development within a given radius of light rail, bus rapid transit, or commuter rail stations. This memorandum provides an update on the Redevelopment Agency’s (“RDA”) pending application to the State to establish an HTRZ that is centered on the Utah Transit Authority’s (“UTA”) Salt Lake Central Station near 300 S. 600 West. The Salt Lake Central HTRZ, if approved, will be key to realizing the vision to establish an urban transit-oriented development (“TOD”) in this location via implementation of the RDA’s Rio Grande District Vision & Implementation Plan, as well as UTA’s planned redevelopment of the Salt Lake Central Station. ANALYSIS & ISSUES: Key Objectives: Per the authorizing legislation (Utah Code 63N-3-603(1)), key objectives of HTRZs include the following: • Promote higher utilization of public transit; • Increase availability of housing, including affordable housing and fulfillment of moderate-income housing plans; • Promote and encourage development of owner-occupied housing; • Improve efficiencies in parking and transportation, including walkability of communities near public transit facilities; • Overcome development impediments and market conditions that render a development cost prohibitive absent the proposal and incentives; • Conserve water resources through efficient land use; • Improve air quality by reducing fuel consumption and motor vehicle trips; • Encourage transformative mixed-use development and investment in transportation and public transit infrastructure in strategic areas; • Strategic land use and municipal planning in major transit investment corridors; and • Increase access to employment, educational opportunities and childcare. HTRZ Requirements and Specifications: The table below summarizes the HTRZ requirements that are specific and applicable to the Salt Lake Central Station site, which is located within a city of the 1st class with a population >150,000; within a county of the 1st class; within a Federal Opportunity Zone; and is served by commuter rail. Radius from station ≤1/2 mile Minimum acreage 10 Maximum acreage (may be noncontiguous) 125 Collection period 25 years maximum collection per parcel within 45- year HTRZ term Property tax increment capture 80% to RDA / 20% to remain with taxing entities Sales tax increment capture 15% to UDOT-administered Transit Transportation Investment Fund (TTIF) Residential share of developable land 51% # Dwelling units/acre ≥50 Share of housing required at 80% of AMI 9%* Share of housing required at 60% of AMI 3%* *Per the RDA’s HTRZ Tax Increment Reimbursement Policy, projects that incorporate housing must make 10% of units affordable to those earning 60% AMI and below, or, 20% of units affordable to those earning 80% AMI and below. This threshold requirement exceeds the affordability standards required by the State. In addition, the legislation requires that incentivized development projects include mixed-use components, and that a reasonable percentage of dwelling units contain more than one bedroom. Proposed HTRZ Location: The proposed HTRZ will include up to 125 acres of developable land within a ½-mile radius of UTA’s Salt Lake Central Station, located west of the Salt Lake City Central Business District near 300 S. 600 West (as mapped in Attachment A). The station provides access to Frontrunner commuter rail, TRAX light rail, local bus, Amtrak, and Greyhound services, and potential future TRAX extensions to the University of Utah and Granary District are currently being considered via the TechLink study. This wealth of existing and future transit service complements parallel initiatives happening within or adjacent to the HTRZ area, such as the planned redevelopment of approximately 15 acres of RDA-owned property and 38 acres of UTA-owned property, as well as Salt Lake City’s investment in alternative transportation modes via projects like the Green Loop linear park and urban trail and 400 South bikeway. While the ½-mile HTRZ radius encompasses areas west of I-15 that are predominantly single-family residential, the RDA will not designate those properties as collection parcels to avoid incentivizing the demolition of existing housing stock. Anticipated Use of Funds: Facilitation of Public-Private Development Partnerships - A key priority of the proposed HTRZ will be to facilitate the buildout of two downtown projects that together have the potential to serve as a model of urban TOD for the entire State: the RDA’s redevelopment of the Rio Grande District and UTA’s planned redevelopment of the Salt Lake Central Station site. Planning studies for both projects recommend dense, walkable, and sustainable development, which will require significant levels of public investment in infrastructure capacity upgrades and streetscapes. These efforts are envisioned as public-private partnerships and as such, it is anticipated that HTRZ tax increment would be used to support both public and private project components like the following: • Affordable Housing • Ownership and Wealth-Building Opportunities • Utility Upgrades • Transit-oriented Design and Density • Streetscape and Walkability Improvements • Structured and Shared Parking • Public Spaces • Land Acquisition & Remediation • Sustainable Development • Public Art • Other Public Benefits Large-scale Capital Investment - Separately, the RDA anticipates contributing funds to other public initiatives that would enhance private development planned within the HTRZ area, such as potential light rail improvements that may result from the in-progress TechLink TRAX Study, and design and implementation of the Green Loop project. Large-scale capital projects like these often require multiple funding sources and the contribution of HTRZ funds will be sized in proportion to the impact that the project will have on the HTRZ. Rationale - Without the funding provided by the proposed HTRZ, it will be a much greater challenge to realize the comprehensive vision for this important part of the city. Development would happen sporadically, existing infrastructure would not support an increased level of density, the neighborhood would remain unwalkable and disconnected from other areas, and there would be a missed opportunity to partner with the private sector to enhance the public benefit of planned development projects. NEXT STEPS: 1. RDA staff will incorporate feedback received from the RDA Board of Directors (“Board”) into the final application, to be submitted to the Governor’s Office of Economic Opportunity (“GOEO”). 2. GOEO will provide notice to all affected entities within 14 days of receipt of the HTRZ application. 3. Concurrent with the noticing, GOEO will forward the application to their contracted independent firm to review and conduct a gap analysis. 4. Once the analysis is complete, the RDA will have the opportunity to amend the proposal and resubmit it to GOEO, if desired. 5. When the RDA indicates that the application is in its final form, the HTRZ Committee, as defined by the legislation, will set a date to convene and consider the proposal. The Committee may approve, deny, or request changes to the proposal. 6. If approved, the legislation outlines necessary steps to document and memorialize the creation of the new HTRZ. The RDA would administer the HTRZ in accord with the approved terms, as well as provisions of the Board-approved HTRZ Tax Increment Reimbursement Policy (Resolution No. 16 of 2023, Attachment C). PREVIOUS BOARD ACTION: • On December 12, 2023, the Board adopted the Housing and Transit Reinvestment Zone Tax Increment Reimbursement Policy, which outlines threshold requirements for RDA participation in reimbursement agreements associated with HTRZs. ATTACHMENTS: A. Map of Proposed Salt Lake Central HTRZ B. Rio Grande District Development Concept C. Resolution No. 16 of 2023 – HTRZ Tax Increment Reimbursement Policy ATTACHMENT A: MAP OF PROPOSED SALT LAKE CENTRAL HTRZ • 1/2-mile radius boundary shown in green • Proposed collection parcels shown in blue ATTACHMENT B: RIO GRANDE DISTRICT DEVELOPMENT CONCEPT 1.4 The Design Moves Establish Compact, Walkable Blocks Strategically break up the typical SLC block with new streets to ensure a walkable environment while promoting compact urban development. The Project Vision is distilled into 11 design moves informing the Vision and Implementation Plan. Restore the Site for All Living Things Streets, parks, plazas, and the spaces between buildings will be designed to heal the site, restoring the land back for all living things with native plants, fostering biodiversity, cleaning air, and water conservation. Enable Low Carbon Mobility With new streets comes an opportunity to champion low carbon modes of transportation via low-stress pedestrian and bicycle facilities that are seamlessly connected to the Salt Lake Central Station. Champion the Green Loop A critical part of the neighborhood’s mobility network is the Green Loop on 500 West. The Green Loop is more than just an urban trail, it’s envisioned as an inclusive community open space that activates the neighborhood at different times of the day and year. Ensure Functional Roadways While the Plan leads with people- ů¨©ª©ª¨ª©Ɣª©¨ª¢ªª©ª¨ª© also serve as functional roadways with two way vehicle travel lanes, ¥¤©ª¨ª¦¨¡¤Ɣ¦¡«¦ǁ¨¥¦¥ points, and ingress and egress for parking and loading. Lead with Shared Parking The shared parking strategy includes progressive parking ratios for new development, a shared, unbundled garage for all neighborhood uses, and opportunities to broker agreements to utilize existing but underutilized parking supply within the Depot District. Introduction Curate Public Places with Arts, Culture, and Performance Building on existing Artspace facilities, the Plan includes an Arts Campus plaza, a place for temporal art, cultural events, performances and maker spaces for emerging artisans. Strengthen Social Fabric The Rio Grande District’s horizontal and vertical development should ¢¬¨©¤ů¤ª¥££«¤ª¯ ¤ůª©ª¥©«¦¦¥¨ª£¥¨ equitable, resilient urban fabric and ensure that historically marginalized and underrepresented communities are the recipients of this new district. Catalyze Street Life and Mixed-Use Development A calibrated mix of uses fosters vibrant street life with spaces for shops and restaurants along 300 South and the Green Loop. New development consists of an array of different land uses ranging from ¨©¤ª¢Ɣª¥ª¥ůƔª¥¬ and cultural. Maximize the TOD Potential The Rio Grande District is the best transit-oriented development (TOD) site in the state of Utah, and therefore development has downtown height allowances to capitalize on this optimal location. Design Sustainable Buildings The design standards promote occupant connections to nature, preservation of key buildings to preserve embodied carbon; conserving water through outdoor irrigation and greywater systems, and harnessing the power of sun through high performing buildings, and renewable energy. 18 Rio Grande District Vision and Implementation Plan 19 Introduction Figure 1.4: Human-Centered Public Realm Diagram 20 Rio Grande District Vision and Implementation Plan 21 Introduction Figure 1.5: Mixed-Use Transit-Oriented Downtown District Diagram 22 Rio Grande District Vision and Implementation Plan 23 ATTACHMENT C: HTRZ TAX INCREMENT REIMBURSEMENT POLICY Redevelopment Agency of Salt Lake City RESOLUTION NO. _16_ Housing and Transit Reinvestment Zone Tax Increment Reimbursement Program Policy RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY ADOPTING THE RDA HOUSING AND TRANSIT REINVESTMENT ZONE TAX INCREMENT REIMBURSEMENT PROGRAM POLICY WHEREAS, the Utah Housing and Transit Reinvestment Zone Act (HTRZ Act) was enacted to further a number of objectives including promoting a higher utilization of public transit and increasing the availability of housing including affordable housing. WHEREAS, pursuant to the Act, the Redevelopment Agency of Salt Lake City (RDA) administers the tax increment, including entering into reimbursement agreements (also known as tax increment reimbursement agreements) with project developers or property owners associated with an HTRZ Committee approved Housing and Transit Reinvestment Zone (HTRZ) for the purpose of utilizing the funds as allowed by the HTRZ Act. WHEREAS, the Board of Directors of the Redevelopment Agency of Salt Lake City Board) supports the distribution of tax increment associated with an HTRZ pursuant to the process outlined below. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY, that we do hereby establish policy guidelines for the RDA HTRZ Tax Increment Reimbursement Program to include the following: 1. GENERAL a. Purpose The RDA HTRZ Tax Increment Reimbursement Program (Program) may provide project developers or property owners a tax increment reimbursement Reimbursement) for the development of improvements in or associated with an HTRZ that meet the goals and objectives of the HTRZ Act, the executed interlocal agreement between the RDA and Salt Lake City, and the RDA’s Mission and Values, and provides significant public benefit. The Program is designed to provide reimbursements that are calculated using Salt Lake County’s assessed property value. The developer or property owner will receive a percentage of the tax increment generated from its project for a specified timeframe, and the RDA will receive the residual tax increment generated by the project. b. Authorization The RDA shall determine whether a project meets the goals and objectives of the HTRZ Act, the executed interlocal agreement between the RDA and Salt Lake City, the approved HTRZ, and the RDA’s Mission and Values. As provided in the HTRZ Act, a Reimbursement can only be authorized pursuant to a Reimbursement Agreement (Agreement), the terms of which are approved by the Board. The Board reserves the right to modify or deny a tax increment reimbursement application at any time for any reason. The Board’s approval of an Agreement shall be made by resolution and include a description of the development the applicant will undertake, the amount of funds the applicant may receive, and the terms and conditions under which the applicant may receive the funds. c. Tax Increment Calculation The formula to calculate the Reimbursement generated from the proposed improvements shall be as follows: i. Step 1: Estimate the Total Annual Tax Increment. o Determine the property's taxable value as shown upon the assessment roll last equalized prior to the construction of improvements on the property. This value is referred to as the property’s Base Taxable Value. o Calculate the difference between the Base Taxable Value of the property prior to improvements and the property’s estimated taxable value after the improvements have been made. This difference is referred to as New Growth. o Multiply New Growth by the current effective tax rate. New Growth) x (Effective Tax Rate) = Total Annual Tax Increment TI) ii. Step 2: Estimate the Annual TI Received by the RDA. o Total Annual TI multiplied by the percentage of TI received by the RDA. (Total Annual TI) x (% of TI received by the RDA) = Total Annual TI Received by the RDA. iii. Step 3: Estimate the Annual Reimbursement Payment. o Using the developer/property owner reimbursement rate Reimbursement Rate) established in the Agreement, calculate the estimated annual reimbursement payment. o (Total Annual TI Received by the RDA) x (Reimbursement Rate) = Estimated Annual TI Reimbursement Payment. Refer to Section 2 for more information on calculating the participation rate between the RDA and the developer. iv. Step 4: Calculate the Maximum Amount of Tax Increment Available to the Developer or Property Owner Over the Term of the Agreement. o (Estimated Annual TI Reimbursement Payment) x (the Term of the Reimbursement Agreement) = Total TI Available to Developer or Property Owner Over the Term. An annual growth multiplier based on current economic conditions may be applied to this calculation, at the RDA’s sole discretion. Actual Reimbursement is dependent on the increment being generated by the project. d. Eligible Costs The tax increment reimbursement will be limited by state law as indicated by Section 63N-3-607(4) of the HTRZ Act and Section 11-41-103 of the Prohibition on Retail Facility Incentive Payments Act. The RDA may determine, in its sole discretion, if the entire project or only specific project elements are eligible. e. Design Review Projects approved for Reimbursement must follow the RDA’s administrative design review process. Projects will be required to be in conformance with all Salt Lake City policies, ordinances, and codes. 2. REQUIREMENTS AND STRUCTURE a. Threshold Requirements of Projects that Incorporate Housing i. Projects must meet all applicable standards and objectives of the HTRZ Act and the approved HTRZ; and, ii. At least 10% of housing units within a project must be affordable to those earning 60% the Area Median Income (AMI) and below, or, 20% of units must be affordable to those earning 80% AMI and below. Income averaging of units within a single project may be utilized to achieve AMI thresholds; and, iii. Projects must include activated, ground floor space if not a private residence. Activated, ground floor space means a minimum of 50% of all ground floor, street-facing building facades must contain an active (commercial, retail, or office) use that is not exclusive to the tenants of the building; and, iv. Projects must comply with the RDA’s Sustainable Development Policy; and, v. The applicant must provide sufficient evidence (including, but not limited to the project pro forma, senior lender agreement(s), equity investor agreements, etc.) that tax increment funding is necessary for the project to succeed and to verify that the request is reasonable. b. Threshold Requirements of Projects that Do Not Incorporate Housing i. Projects must meet all applicable standards and objectives of the HTRZ Act and the approved HTRZ; and, ii. Projects must meet at least two (2) of the RDA’s qualifying livability benchmarks: permanent job creation; affordable commercial spaces; ownership; transportation opportunities; neighborhood safety; community engagement and support; public art; public space; walkability; and building preservation, rehabilitation, or adaptive reuse (collectively, Qualifying Livability Benchmarks). iii. Projects must include activated, ground floor space; and, iv. Projects must comply with the RDA’s Sustainable Development Policy; and, v. The applicant must provide sufficient evidence (including, but not limited to the project pro forma, senior lender agreements, equity investor agreements, etc.) that the Reimbursement is necessary for the project to succeed and to verify that the request is reasonable. c. Affordable Housing Requirements. i. Deed Restriction – If the project qualifies for a Reimbursement based on the incorporation of housing, prior to executing an Agreement, a restriction shall be recorded against the property that requires continued use of the specified units as affordable housing for at least 30 years. Both rent and income restrictions shall be included to limit the maximum rent that can be charged for a unit and to require that the unit be made available only to households with qualifying incomes. ii. Bedroom Count Mix – The affordable units shall be located on different floors of the building and spread among bedroom counts (1-bedroom, 2- bedroom, 3-bedroom, etc.) in the same proportion as the units available within the rest of the project. d. Eligible Project Locations Eligible projects shall be located in or associated with an active HTRZ that allows tax increment reimbursements pursuant to the HTRZ Act. e. Maximum Reimbursement Term The Reimbursement term will be negotiated based upon a project’s level of public benefits and demonstrated financial need and shall be consistent with the HTRZ Act. f. Maximum Reimbursement Rate i. Base Level Reimbursement – The maximum reimbursement rate for Projects that only meet the Threshold Requirements is 60%. ii. Increased Reimbursement Incentives – Projects may be eligible to receive an additional 10% increase in the reimbursement rate for meeting elements listed below, with each element being worth an additional 10%. The possible total maximum reimbursement rate is 90%. The elements are: 1. Incorporating Qualifying Livability Benchmarks in the project beyond the Threshold Requirements. 2. Providing an additional 10% of total affordable units at 60% AMI and below beyond the Threshold Requirements. 3. The inclusion of 3- and 4-bedroom units in projects that incorporate housing. 4. Meeting a priority identified in the RDA’s Annual Housing Funding Strategy established pursuant to the Housing Allocation Funds Policy. g. Maximum Reimbursement Amount The maximum Reimbursement amount will be negotiated based upon a project’s eligible costs, level of public benefits, and demonstrated financial need, and shall be consistent with the HTRZ and HTRZ Act. 3. EVALUATION AND APPROVAL PROCESS a. Applications that meet the requirements detailed in Section 2 will be evaluated and processed as detailed below. i. Step 1: Application Processing and RDA Staff Review. All applications shall be made to RDA staff, on standard RDA forms. All applications must be complete to be evaluated, and if either the applicant or proposed project fails to demonstrate the ability to meet application requirements, RDA staff may deny the application. ii. Step 2: RDA Finance Committee Review. RDA staff shall forward complete applications that meet the threshold requirements to the RDA Finance Committee. The RDA Finance Committee shall evaluate applications, supplemental materials, and other documentation necessary to thoroughly review the application and formulate a recommendation to the Board. iii. Step 3: Board Consideration of the Tax Increment Reimbursement Agreement Terms. Upon review of the application and supporting material, the Board may consider for approval a resolution detailing the Agreement terms. iv. Step 4: Agreement Finalization. Once the terms of an agreement have been authorized by the Board through an approved resolution, the RDA and developer will execute an Agreement consistent with the terms approved by the Board, and any other legal agreements (including an affordable housing restriction) deemed necessary by the City Attorney’s Office. 4. AGREEMENT TERMS a. Participation and Reimbursement Agreement Terms In addition to any other terms as recommended by legal counsel, the following terms shall be included in the Agreement: i. Reimbursement to Benefit Owner: RDA Discretion The RDA intends that the beneficiary of the Reimbursement will be the owner of the project for the life of the Agreement. In the event of a transfer or sale of the project or property, the Agreement and all benefits conferred under the Agreement shall benefit the project and be recorded against the property to run with the land, with the intent that all Reimbursements will remain with the owner of the real property and project. In the event that the ownership of the real property and improvements are severed, the RDA will have sole discretion to determine the beneficiary of the tax increment. If the Agreement is executed and the real property and project are conveyed to a third party while the improvements are still being constructed, the RDA will retain the right to consent to the transfer the Agreement to the new owner, in order to ensure that the benefits the RDA anticipated receiving under the original Agreement with the original developer are consistent with the new developer. If RDA does not consent to the transfer of the Agreement, the Reimbursement will cease and the Agreement will terminate. ii. Tax Appeals All reimbursement recipients shall be required to notify the RDA if they have applied for a property tax appeal with Salt Lake County. In the event that any such appeal results in a reduction in property taxes, the percentage share of the Reimbursement payable by the RDA to the recipient will decrease, and the percentage share of the tax increment received by RDA shall be increased, so that the dollar amount received by the RDA is the same as if no appeal of the assessed value had been made. iii. Recapture Provisions in the Event of Default Agreements shall require the recapture of Reimbursement funds allocated to a project that fails to meet the requirements as provided in the Agreement. iv. Participant Reporting Requirements Agreements shall require the following reporting from Reimbursement recipients as per the following: 1. Project Completion: Upon project completion, Reimbursement recipients shall provide a report that includes, but is not limited to, the total cost of improvements, a summary of completed improvements, and outcome metrics relating to project-specific requirements. 2. Annual Pre-Reimbursement: Contingent upon receiving an annual Reimbursement, Reimbursement recipients shall provide a report that includes a notification of any tax appeals and outcome metrics relating to project-specific requirements. As applicable, the report shall include relevant data that is certified by a financial officer or public accountant. b. Interest Interest will not accrue against the RDA on the anticipated or projected tax increment to be reimbursed to the developer. 5. REPORTING REQUIREMENTS a. Reporting The RDA shall provide a written briefing to the Board once per fiscal year, which contains an update on the RDA’s Reimbursement portfolio. Such briefing shall include a summary of new Agreements, anticipated budget impacts, and project metrics. 6. EXCEPTIONS The Board, by a majority vote of those present, may waive requirements or make exceptions to the foregoing criteria and procedures with a finding that the RDA’s mission and values will be furthered by such waiver or exception. RDA staff will prepare a written recommendation and statement regarding the waiver or exception. The statement will be placed in the project file. Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this day of December 12th, 2023. 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 Allison Parks (Dec 15, 2023 10:51 MST) Dec 15, 2023 Daniel Dugan (Dec 20, 2023 13:09 MST) Erin Mendenhall (Dec 20, 2023 14:01 MST) 4