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Transmittal - 6/11/20241 MAYOR ERIN MENDENHALL Executive Director REDEVELOPMENT AGENCY of SALT LAKE CITY STAFF MEMO DANNY WALZ Director DATE:May 23, 2024 PREPARED BY:Tracy Tran, Senior Project Manager, and Marcus Lee, Project Coordinator RE:Consideration and Adoption of a Resolution Approving the Amendment of a Funding Allocation from the 2023 Notice of Funding Availability for Affordable Housing. REQUESTED ACTION:Consider approving an amendment to a loan and a conditional waiver of the deed restriction to 22 Communities for The Catherine Phase 1 and 2, located at approximately 1881 W North Temple. POLICY ITEM:Affordable housing. BUDGET IMPACTS:$1,134,232 total: $1,000,000 in HUD HOME funds and $134,232 in RDA funds EXECUTIVE SUMMARY: The Redevelopment Agency of Salt Lake City (“RDA”) issued a competitive Notice of Funding Availability (“NOFA”) on November 17, 2023, to solicit applications through the Housing Development Loan Program (“HDLP”). Through the HDLP, the RDA intends to commit low-cost financial assistance to projects to incentivize the development and preservation of affordable housing within city limits. The program provides flexibility to accommodate a wide range of projects that may be dependent upon a myriad of underwriting standards by outside lenders. The RDA Board adopted a policy for FY2023-2024 that required all projects applying for funding through the HDLP to include either deeply affordable housing units or affordable family-sized units in this competitive HDLP NOFA. In March 2024, the RDA Board allocated over $15 million to thirteen of the fifteen eligible affordable housing developments. Of those thirteen projects approved for funding, 22 Communities (“Developer”), proposed both The Catherine Phase 1 and The Catherine Phase 2, which both had a ranking of 10 out of the 15 projects. The Catherine Phase 1 received $1,000,000 in HOME Program Income Funds and The Catherine received $134,323 in RDA Funds for a construction to permanent loan for each phase. The Developer is seeking an amendment to the approval requesting to modify the loan type to an acquisition loan that could be converted to a construction to permanent loan with a conditional waiver of the deed restriction requirement within the HDLP policy. The conditional waiver could allow that the 30-year affordable deed restriction be removed by requiring that the Developer pay an 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 2 above market interest rate if the projects are unable to secure tax credits, financing, and meet conditions required to close on construction to permanent loan within 2 years. RDA FINANCE COMMITTEE RECOMMENDATION: The RDA Finance Committee (“Committee”) will review and provide a recommendation on the request on May 29, 2024. The Committee’s recommendation will subsequently be forwarded to the Board. ANALYSIS & ISSUES: Guiding Policy The subject loans are being administered pursuant to the Housing Allocation Funds Policy (“Funds Policy”) and the Housing Development Loan Program Policy (“HDLP Policy”). The Funds Policy establishes policies for allocating and directing resources for the development and preservation of housing by various funding sources and the HDLP Policy provides low-cost financial assistance to incentivize the development and preservation of affordable housing within Salt Lake City municipal boundaries. Overall, the HDLP Policy provides a centralized application, underwriting, and approval process. These loans applied in the FY2023-2024 competitive Notice of Funding Availability and are subject to the FY2023-2024 HDLP Annual Affordable Housing Funds Guidelines + Application Handbook. Overview of Proposal •Due to the limited amount of funds available through the State of Utah’s Private Activity Bond (“PAB”) and the number of applications, the Developer’s bond allocation for the 4% LIHTC request was not funded in the April 3, 2024, PAB meeting. With this delay, the Developer will need to re-apply as additional bond cap becomes available. This has altered the Developer’s ability to acquire the property by the end of 2024. In response, the Developer has executed a new purchase and sale agreement for the property that has a lower price, but a much quicker closing date than originally planned. •By purchasing the property earlier than anticipated, the Developer will secure financing from a senior lender for the acquisition and is requesting to amend their HDLP loans to allow them to use the funds for acquisition that could be converted to a construction to permanent loan. •The Developer is seeking a conditional waiver to the deed restriction requirement if they are unable to secure tax credits, financing, and meet conditions required to convert the loan to a construction to permanent loan within 2 years. •The project details such as total units, affordability levels, and public benefits are not anticipated to change. See Attachment B for updated Project Summaries. Loan Type The Developer applied for a construction to permanent loan for both The Catherine Phase 1 and The Catherine Phase 2. The Developer is requesting to modify the loan type for both phases to an acquisition loan that could convert to a construction to permanent loan within a 2-year term. HDLP Policy allows for both acquisition loans as well as construction to permanent loans. Although these loan types are allowed within the HDLP Policy, this proposed modification has a different set of loan terms that would provide funds earlier for acquisition and is a change from what was previously approved. The HDLP Standard Loan Terms and Conditions requires the following for funds used for property acquisition: 3 •Maximize Other Sources: Applicants must demonstrate that they have maximized other available financing sources thereby limiting HDLP funding to the lowest amount necessary to close the funding gap and assure project feasibility. •Loan to Value: Loans will be sized to a loan-to-value limit of 90% of the as-is appraised value inclusive of the RDA’s loan and all senior debt. The developer will obtain a loan from a senior lender and the requested loan amounts between the RDA and senior debt is less than 90% LTV. Conditional Waiver – Deed Restriction The HDLP Standard Loan Term and Conditions for property acquisition require: •A restriction shall be recorded against the property that requires continued use of the specified units as affordable housing for at least the same period as the senior financing or a minimum of 30 years, whichever is greater. In this case, a 30-year deed restriction would be placed upon the property to ensure that the continued use of the specified units would be for affordable housing. The HDLP Policy does not provide language about the ability to remove deed restrictions. The Developer has requested that the deed restriction could be removed in the case the Developer is unable to secure tax credits, financing, and meet closing conditions within two years. To ensure that the Developer commits to building affordable housing and does not flip the property to the market for a profit, the RDA suggests adding a provision that if the Developer is unable to secure tax credits, financing, and meet the conditions to convert to a construction to permanent loan, the 30-year deed restriction on the property could be removed and the RDA’s 1% acquisition interest rate would be replaced by the rate of the United States Treasury Yield Curve of the loan term at time of closing plus 800 basis points calculated from the time of interest accrual (i.e. 2-Year yield + 8%) for the repayment of the HOME and RDA funds. This provision is backed by existing RDA policies and guidelines within the RDA’s Revolving Loan Program. A comparison of the original approval and the proposed amendments can be found below: 4 THE CATHERINE PHASE 1 AND PHASE 2** ORIGINAL APPROVAL PROPOSED AMENDMENT Amount:Phase 1: $1,000,000 HUD HOME Funds Phase 2: $134,323 RDA Funds Phase 1: $1,000,000 HUD HOME Funds Phase 2: $134,323 RDA Funds Loan Type:Construction to Permanent Acquisition loan that may convert to Construction to Permanent loan Repayment Type:Cash flow Acquisition: Balloon payment or conversion to Construction to Permanent loan Construction to Permanent: Cash flow Interest Rate:2%*Acquisition: 1%*, may be subject to change. See “Other” section below. Construction to Permanent: 2%* Term/Am:16 yr/40 yr Acquisition: 2 years (24 months) Construction to Permanent: 16 year/40 year Other:Deed Restriction of 30 years or same period as senior financing, whichever is greater Deed restriction of 30 years with conditional waiver to requirement: If unable to secure tax credits and financing within 24 months and property cannot fulfill affordable housing obligation, developer could request removal of deed restriction. Removal of deed restriction will require the loan to be paid in full with an interest rate of the 2-Year US Treasury Yield at time of closing + 8% calculated from the time of interest accrual. *Interest rate after reductions from meeting project priorities. **See Summary Sheets in Attachment B for additional project details PREVIOUS BOARD ACTION: •March 19, 2024: The Board approved the FY2023-2024 Competitive Housing Development Loan Program funding allocations. •April 11, 2023: The Board adopted the Affordable Housing Funding Priorities for Fiscal Year 2023-2024. •March 8, 2022: The Board adopted revisions to the Housing Development Loan Program Policy to direct review of applications to the RDA Finance Committee. •February 9, 2022: The Board adopted revisions to the Housing Allocation Funds Policy. 5 •March 2021: The Board adopted the Housing Development Loan Program Policy. •February 2021: The Board adopted the Housing Allocation Funds Policy. 6 ATTACHMENTS: •Attachment A: FY2023-2024 Competitive HDLP Funding Allocations •Attachment B: Project Summary Sheets – The Catherine Phase 1 and The Catherine Phase 2 •Attachment C: HOME Funds Requirements •Attachment D: Resolution 7 ATTACHMENT A: FY2023-2024 COMPETITIVE HDLP FUNDING ALLOCATIONS PROJECT/APPLICANT ADDRESS LIHTC Awarded? WEIGHTED PROJECT PRIORITY SCORE/INTEREST RATE REDUCTION* FUNDIN G REQUE ST PRELIMINARY TERMS** RDA Committ ed Funds Possible Additional RDA Funds HOME Program Income HOME Development Fund HOME ARP Development TOTAL FUNDING RECOMMENDATI ON FUNDIN G RANKIN G Norbridge Court Artspace 511 W 200 S Yes, 9% Target Populations: 3 Transportation Opportunities: 1 Neighborhood Safety: 1 Architecture & Urban Design: 1 Commercial Vitality: 1 Public Art: 1 TOTAL: 8 $895,000 Interest Rate: 1.0% Term: 30 year Amortization: 30 year Hard Repayments $895,000 $895,000 7 Bumper House SMH Builders 269 W Brooklyn Ave Yes, 4% Transportation Opportunities: 1 Neighborhood Safety: 1 Public Art: 1 TOTAL: 3 $3,000,000 Interest Rate: 1.5% Term: 17 year Amortization: 40 year Hard Repayments $0 14 New City Plaza Apartments Housing Connect 1966 S 200 E Yes, 4% Target Populations: 3 Commercial Vitality: 1 Historic Preservation/Adaptive Reuse: 1 TOTAL: 5 $895,000 Interest Rate: 2.5% Term: 40 year Amortization: 40 year Cash Flow Repayments $895,000 $895,000 5 515 Tower - Conversion Phase I Perpetual Housing Fund 515 E 100 S Yes, 9% Family Housing: 3 Target Populations: 3 Expand Opportunity: 1 Historic Preservation/Adaptive Reuse: 1 Transportation Opportunities: 1 Commercial Vitality: 1 TOTAL: 10 $2,650,000 Interest Rate: 2.0% Term: 15 year Amortization: 15 year Cash Flow Repayments $0***3 2nd South Apartments Hermes Affordable Services, LLC 934-948 W 200 S Yes, 4% Family Housing: 3 Target Populations: 3 Transportation Opportunities: 1 Public Art: 1 TOTAL: 8 $3,000,000 Interest Rate: 2.0% Term: 30 year Amortization: 30 year Cash Flow Repayments $2,420,000 $2,420,000 6 The Catherine Phase 1 22 Communities 1881 W N Temple Applying, 4% Transportation Opportunities: 1 Architecture & Urban Design: 1 Commercial Vitality: 1 Public Art: 1 TOTAL: 4 $2,524,802 Interest Rate: 2.0% Term: 16 year Amortization: 40 year Cash Flow Repayments $1,000,000 $1,000,000 10 The Catherine Phase 2 22 Communities 1881 W N Temple Applying, 4% Family Housing: 3 Transportation Opportunities: 1 Commercial Vitality: 1 Public Art: 1 TOTAL: 6 $1,569,441 Interest Rate: 2.0% Term: 16 year Amortization: 40 year Cash Flow Repayments $134,323 $134,323 10 Citizens West 4 Developed. By Women. & Ivan Carroll 515 W 300 N Yes, 9% Family Housing: 3 Target Populations: 3 Transportation Opportunities: 1 Architecture & Urban Design: 1 Commercial Vitality: 1 Public Art: 1 TOTAL: 10 $400,000 Interest Rate: 1.0% Term: 15 year Amortization: 30 year Hard Repayments $400,000 $400,000 2 Fairmont Heights I Lincoln Avenue Communities 2557 S 1100 E Applying, 9% Target Populations: 3 Expand Opportunity: 1 Transportation Opportunities: 1 Architecture & Urban Design: 1 TOTAL: 6 $3,200,000 Interest Rate: 1.0% Acquisition Term: 2- year Balloon or conversion to Permanent: Term: 16 year Amortization: 40 year $1,000,000 $1,000,000 13 Project Open 3 Perpetual Housing Fund 529 W 400 N No Family Housing: 3 Homeownership : 3 Missing Middle: 3 Transportation Opportunities: 1 Architecture & Urban Design: 1 Public Art: 1 TOTAL: 12 $710,000 Interest Rate: 1.0% Term: 18 month Balloon Repayment $710,000 $710,000 1 Pharos Apartments Housing Authority of Salt Lake City 915 W 200 N No Target Populations: 3 Transportation Opportunities: 1 Neighborhood Safety: 1 TOTAL: 5 $880,000 Interest Rate: 2.5% Term: 15 year Amortization: 40 year Cash Flow Repayments $47,101 $726,291 $106,608 $880,000 12 Book Cliffs Lodge Housing Authority of Salt Lake City 1159 S W Temple No Target Populations: 3 Transportation Opportunities: 1 Neighborhood Safety: 1 TOTAL: 5 $740,000 Interest Rate: 2.5% Term: 15 year Amortization: 30 year Cash Flow Repayments $740,000 $740,000 11 Liberty Corner Cowboy Partners 1265 S 300 W Yes, 4% Family Housing: 3 Target Populations: 3 Transportation Opportunities: 1 Neighborhood Safety: 1 Architecture & Urban Design: 1 Commercial Vitality: 1 TOTAL: 10 $4,500,000 Interest Rate: 2.0% Term: 40 year Amortization: 40 year Cash Flow Repayments $1,236,714 $1,530,677 $1,732,609 $4,500,000 4 8 9Ten West Great Lakes Capital 910 W N Temple Yes, 4% Target Populations: 3 Transportation Opportunities: 1 Neighborhood Safety: 1 Commercial Vitality: 1 Public Art: 1 TOTAL: 7 $2,000,000 Interest Rate: 2.0% Term: 16 year Amortization: 40 year Cash Flow Repayments $1,000,000 $1,000,000 9 Alliance House 1805 Rebuild Alliance House & Cowboy Partners 1805 S Main St No Target Populations: 3 Missing Middle: 3 Neighborhood Safety: 1 TOTAL: 7 $500,000 Interest Rate: 2.5% Term: 40 year Amortization: 40 year Cash Flow Repayments $500,000 $500,000 8 TOTAL $27,464,243 $4,241,714 $1,665,000 $6,939,710 $726,291 $1,501,608 $15,074,323 * Projects receive a 0.5% interest rate reduction for each included priority. Sustainability allows for a 1% or 2% reduction. The maximum reduction per development is 2%. The interest rate is calculated as follows: Base Interest Rate minus (-) Interest Rate Reductions (up to 2%) = proposed interest rate; Base interest rate shall be locked within a month of closing. Projects shall maintain project priorities and the same weighted score at closing. Deviation from Project Priorities met may require Board approval. ** Final Terms shall comply with the requirements, standard loan terms and conditions, interest- rate reductions, and all other details laid out within the FY2023-2024 Housing Development Loan Program ( HDLP) Guidelines. Changes to repayment type may occur ( hard repayment versus cash flow repayment) and shall be based on requirements listed in the HDLP Guidelines or it required by a senior lender. Changes in repayment type will cause a change in the base interest rate. Repayment priority and lien position shall be based on the size of the loan; consideration may be made for other government entity loans if required through their policies. Funds may be disbursed in a lump sum if required by senior lender(s). *** While reviewing applications, the Committee took into consideration their February 1, 2024 High Opportunity Area HDLP funding recommendation and agreed to maintain their submitted recommendation to fund 515 Tower – Conversion 1 with High Opportunity Area funds. The Committee’s competitive HDLP funding recommendations incorporate the previously submitted High Opportunity Area recommendation. NOTE: For all loan awards greater than $899,999, the Sustainable Development Policy requires buildings to be designed to operate without fossil fuels, but it would not restrict the ability to have backup generators for emergencies. Funding Recommended by Finance Committee Funds Availability Total Available Recommended Funding Funds Remaining RDA Committed Funds $4,241,714 $4,241,714 $ - Possible Additional RDA Funds $1,665,000 $1,665,000 $ - HOME Program Income $6,939,710 $6,939,710 $ - HOME Development Fund $726,291 $726,291 $ - HOME ARP Development $1,501,608 $1,501,608 $ - HOME Community Housing Development Organization Funds $351,841 $0 $351,84 1 Total Potential HDLP Funds $15,426,164 $15,074,323 $351,841 Legend: Grey box: Applicant qualifies for but doesn't want these funds. Black box: Applicant does not qualify for these funds. 9 ATTACHMENT B: PROJECT SUMMARY SHEETS – THE CATHERINE PHASE 1 AND THE CATHERINE PHASE 2 PROJECT NAME: 6 – The Catherine Phase I ADDRESS: 1881 W North Temple 10 OVERVIEW Developer 22 Communities Request Type HDLP Loan – Competitive Project Type New Construction Existing Land Use Industrial RDA FUNDING REQUEST Funding Request $1,000,000 (HUD HOME funds) Total Project Cost Acquisition: $7,250,000 Construction to Perm: $69,452,555 Loan to Cost Acquisition: 13.8% Construction: 1.4% PROPOSED TERMS Interest Rate Acquisition: 1%1 Construction to Perm: 2% Term, Amortization Acquisition: 2 Yr, Balloon or Conversion Construction to Perm: 16 Yr, 40 Yr Repayment Terms Acquisition: Balloon or Conversion Construction to Perm: Cash flow Lien Priority Subordinate to permanent debt HDLP THRESHOLDS AND PRIORITIES Family-Sized Units and/or Deeply Affordable Units Family-Sized Units 90+ Energy Star Score Condition of Approval 100% Electric Yes Priorities Met Transportation Opportunities, Architecture & Urban Design, Commercial Vitality, Public Art TIMELINE Acquisition June 2024 Construction Start March 2025 1 Conditional waiver to affordable deed restriction of 30 years: if unable to secure tax credits and financing within 24 months and property cannot fulfill affordable housing obligation, developer could request removal of deed restriction. Removal of deed restriction will HOUSING UNITS Bedroom Count Total Units Market Rate 61-80% AMI 41- 60% AMI <40% AMI Studio 80 --80 - 1 Bed 44 --44 - 2 Bed 80 --80 - 3 Bed 24 --24 - 4 Bed ----- Total 228 --228 - LOW-INCOME HOUSING TAX CREDIT Applying for Tax Credits (Y/N)Yes, 4% Tax Credits Reserved (Y/N)No ACQUISITION SOURCES Source Amount % of Total RDA -HDLP Phase 1 $1,000,000 13.8% RDA -HDLP Phase 2 $134,323 1.8% Seller’s Note $741,238 10.2% Senior Debt $5,374,439 74.1% Total $7,250,000 100% ACQUISITION USES Source Amount % of Costs Acquisition $7,250,000 100% Total $7,250,000 100% CONSTRUCTION DEBT AHEAD OF RDA Source Amount Senior Debt $21,767,665 require the loan to be paid in full with an interest rate of the 2-Year US Treasury Yield at time of closing + 8% calculated from the time of interest accrual. PROJECT NAME: 6 – The Catherine Phase I ADDRESS: 1881 W North Temple 11 PERMANENT SOURCES Source Amount % of Total Senior Debt $27,541,202 39.7% OWHLF $3,000,000 4.3% SLC HOME Funds $1,000,000 1.4% Other Sources $1,524,802 2.2 LIHTC Equity $30,627,027 44.1% State Tax Credit Equity $4,759,524 6.9% Deferred Fee $1,000,000 1.4% Total $69,452,555 100% USES Use Amount % of Cost Land2 $5,710,000 8.2% Hard Costs $43,906,872 63.2% Soft Costs $3,225,662 4.6% Developer Fee $5,636,749 8.1% Financing Expense $7,889,000 11.4% Contingency $2,504,272 3.6% Reserves $580,000 0.8% Total $69,452,555 100% 2 Land cost is based on appraised value. PROJECT NAME: 6 – The Catherine Phase I ADDRESS: 1881 W North Temple 12 PROJECT SUMMARY From Developer: “This phase of the project will include 228 units, all of which will be restricted units. There will be 80 studio units, 44 one-bedroom units, 80 two-bedroom units, and 24 three-bedroom units. The units will be available to tenants living at 60% AMI or below. The project will provide eighteen (18) "Type A" units for persons with long-term mobility impairments.” DEVELOPER SUMMARY From Developer: “Jake has over a decade of development, design, and project management experience with public, for-profit, and nonprofit entities. While at the Salt Lake City Housing and Neighborhood Development Department, Jake planned the disposition and redevelopment of city-owned assets and oversaw CDBG funded construction projects. Following that, Jake spearheaded the creation and early growth of CW Urban, a fast-growing Utah development company. He stayed on as the Director of Acquisition and Development, overseeing acquisitions, entitlements, and design for all infill and mixed-use developments. Next, Jake was the Director of Real Estate Development at Neighborhood Housing Solutions, a non-profit Real Estate Development company. He was responsible for all single-family subdivisions and multi-family tax credit developments. This work included the acquisition and initial concept planning for a 100-acre master-planned community in Smithfield Utah, and the development and management of a LIHTC multi-family portfolio. Most recently he was a managing member of Defy Co.labs where he was the Director of Development and Design and spearheaded a 140- unit LIHTC project called Colony B along with multiple other entitlement projects. Jake has been the development lead on over 20 development projects and underwritten hundreds more equating to over 1000 units over multiple Utah communities. Each project has had its unique challenges from environmental clean up to mechanical parking garages or unique entitlement processes. Jake has faced each challenge with creativity, passion and joy for the privilege to participate in the building of communities where people will live out their lives. Jake holds a bachelor’s degree in Business Management, a master’s degree in Real Estate Development, and an Urban Planning Certificate from the University of Utah.” PROJECT NAME: 6 – The Catherine Phase I ADDRESS: 1881 W North Temple 13 SITE MAP PROJECT RENDERINGS PROJECT NAME: 6 – The Catherine Phase I ADDRESS: 1881 W North Temple 14 PROJECT NAME: 7 – The Catherine Phase II ADDRESS: 1881 W North Temple 15 OVERVIEW Developer 22 Communities Request Type HDLP Loan – Competitive Project Type New Construction Existing Land Use Industrial RDA FUNDING REQUEST Funding Request $134,323 (RDA funds) Total Project Cost Acquisition: $7,250,000 Construction to Perm: $45,194,612 Loan to Cost Acquisition: 1.9% Construction to Perm: .3% PROPOSED TERMS Interest Rate Acquisition:1%1 Construction to Perm: 2% Term, Amortization Acquisition: 2 Yr, Balloon or Conversion Construction to Perm: 16 Yr, 40 Yr Repayment Terms Acquisition: Balloon or Conversion Construction to perm: Cash flow Lien Priority Subordinate to permanent debt HDLP THRESHOLDS AND PRIORITIES Family-Sized Units and/or Deeply Affordable Units Family Sized Units 90+ Energy Star Score Condition of Approval 100% Electric Yes Priorities Met Family Housing, Transportation Opportunities, Commercial Vitality, Public Art TIMELINE Acquisition June 2024 Construction Start March 2025 HOUSING UNITS 1 Conditional waiver to affordable deed restriction of 30 years: if unable to secure tax credits and financing within 24 months and property cannot fulfill affordable housing obligation, developer could request removal of deed restriction. Removal of deed restriction will Bedroom Count Total Units Market Rate 61-80% AMI 41- 60% AMI <40% AMI Studio 45 --45 - 1 Bed 30 --30 - 2 Bed 45 --45 - 3 Bed 24 --24 - 4 Bed ----- Total 144 --144 - LOW-INCOME HOUSING TAX CREDIT Applying for Tax Credits (Y/N)Yes, 4% Tax Credits Reserved (Y/N)No ACQUISITION SOURCES Source Amount % of Total RDA -HDLP Phase 1 $1,000,000 13.8% RDA -HDLP Phase 2 $134,323 1.8% Seller’s Note $741,238 10.2% Senior Debt $5,374,439 74.1% Total $7,250,000 100% ACQUISITION USES Source Amount % of Costs Acquisition $7,250,000 100% Total $7,250,000 100% CONSTRUCTION DEBT AHEAD OF RDA Source Amount Senior Debt $37,095,412 PERMANENT SOURCES Source Amount % of Total Senior Debt $17,033,754 37.7% OWHLF $2,500,000 5.5% SLC RDA Funds $134,323 .3% Other Funds $1,435,118 3.2% LIHTC Equity $20,011,725 44.3% State Tax Credit Equity $3,079,692 6.8% Deferred Fee $1,000,000 2.2% Total $45,194,612 100% require the loan to be paid in full with an interest rate of the 2-Year US Treasury Yield at time of closing + 8% calculated from the time of interest accrual. PROJECT NAME: 7 – The Catherine Phase II ADDRESS: 1881 W North Temple 16 PERMANENT USES Use Amount % of Cost Land2 $3,600,000 8.0% Hard Costs $29,314,459 64.9% Soft Costs $2,169,453 4.8% Developer Fee $4,014,863 8.9% Financing Expense $4,062,000 9.0% Contingency $1,733,837 3.8% Reserves $300,000 0.7% Total $45,194,612 100% PROJECT SUMMARY From Developer: “22 Communities LLC (22) (Applicant, Sponsor, Developer, Owner) and KTG Holdings, LLC (KTG) acting as the Sponsor, and Developer, Owner (collectively as "Parties”) are pleased to apply for the April 2024 Private Activity Bond round for the new construction of The Catherine Phase 1. The Catherine will be a 2-phase 2-building 378 unit apartment project directly southeast of the 1940 W North Temple Trax station at 1881 W North Temple, Salt Lake City, Utah. Of the 378 units listed above,144 units will be a part of this Phase 2 Application and will be restricted to incomes at 60% of the Area Median Income (AMI). DEVELOPER SUMMARY From Developer: “Jake has over a decade of development, design, and project management experience with public, for-profit, and nonprofit entities. While at the Salt Lake City Housing and Neighborhood Development Department, Jake planned the disposition and redevelopment of city-owned assets and oversaw CDBG funded construction projects. Following that, Jake spearheaded the creation and early growth of CW Urban, a fast-growing Utah development company. He stayed on as the Director of Acquisition and Development, overseeing acquisitions, entitlements, and design for all infill and mixed-use developments. Next, Jake was the Director of Real Estate Development at Neighborhood Housing Solutions, a non-profit Real Estate Development company. He was responsible for all single-family subdivisions and multi-family tax credit developments. This work included the acquisition and initial concept planning for a 100-acre master-planned community in Smithfield Utah, and the development and management of a LIHTC multi-family portfolio. Most recently he was a managing member of Defy Co.labs where he was the Director of Development and Design and spearheaded a 140- unit LIHTC project called Colony B along with multiple other entitlement projects. Jake has been the development lead on over 20 development projects and underwritten hundreds more equating to over 1000 units over multiple Utah communities. Each project has had its unique challenges from environmental clean up to mechanical parking garages or unique entitlement processes. Jake has faced each challenge with creativity, passion and joy for the privilege to participate in the building of communities where people will live out their lives. Jake holds a bachelor’s degree in Business Management, a master’s degree in Real Estate Development, and an Urban Planning Certificate from the University of Utah.” 2 Land cost is based on appraised value. PROJECT NAME: 7 – The Catherine Phase II ADDRESS: 1881 W North Temple 17 SITE MAP PROJECT RENDERINGS PROJECT NAME: 7 – The Catherine Phase II ADDRESS: 1881 W North Temple 18 ATTACHMENT C: HOME FUNDS REQUIREMENTS 19 As part of the FY2023-2024 NOFA, Numerous HUD HOME funds are available. An overview of the HOME Program is available here: https://www.hudexchange.info/programs/home/home-overview/ and is located within 24 CFR 92.1 of the Code of Federal Regulations. Details on the different categories of funds are available here: FUNDS CATEGORY AMOUNT*ADDITIONAL DETAILS HOME Program Income**$6,939,710 24 CFR 92 (F) https://www.hudexchange.info/programs/home/home-overview/ HOME ARP Development**$1,501,608 https://www.hudexchange.info/programs/home-arp/overview/ HOME Development Fund**$726,291 24 CFR 92.206(a): https://www.ecfr.gov/current/title-24/subtitle- A/part-92/subpart-E/subject-group-ECFRf448ea7bbdfb69a/section- 92.206 HOME Community Housing Development Organization Funds** $351,841 Additional Requirements are located here: •24 CFR 92.208 •24 CFR 92.300 •24 CFR 92.301 ATTACHMENT D: RESOLUTION 20 21 REDEVELOPMENT AGENCY OF SALT LAKE CITY RESOLUTION NO. AMENDMENT: Affordable Housing – FY2023-2024 Competitive Housing Development Loan Program (HDLP) Funding Allocation Amendments RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY AMENDING CERTAIN CITYWIDE AFFORDABLE HOUSING PROJECT FUNDING ALLOCATIONS. 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 provides that tax increment funds may be used for the purpose of increasing the affordable housing supply within the boundaries of Salt Lake City. WHEREAS, the RDA Board of Directors (“Board”) approved the Housing Funds Allocation Policy (“Funds Policy”), Resolution R-1-2022, which establishes policies with respect to dedicating and directing resources for the development and preservation of housing based on funding source (“Housing Funds”). WHEREAS, through a Notice of Funding Availability (“NOFA”), the RDA administered a loan application and review process for the Competitive Housing Development Loan Program (“HDLP”) funds pursuant to the HDLP policy set forth in resolution R-2-2022 (the “HDLP Policy”) and the RDA’s Housing Funding Priorities for Fiscal Year 2023-2024 set forth in R-8- 2023. WHEREAS, pursuant to Resolution R-1-2024, passed by the Board on March 19, 2024, the Board previously allocated $15,426,164 of Competitive HDLP funds to a number of affordable housing development applicants (“2024 HDLP Allocation”). WHEREAS, as part of the 2024 HDLP Allocation, the Board approved a $1,000,000 allocation to The Catherine Phase 1 and a $134,323 allocation to The Catherine Phase 2 (collectively with The Catherine Phase 1, the “Catherine Project”) to fund construction of affordable housing located at 1881 West North Temple in Salt Lake City. WHEREAS, following the Board’s approval of the HDLP funding allocations, RDA staff received a request to amend the proposed loan terms for the Catherine Project to accommodate use of the funds for property acquisition in addition to construction, along with changes to the terms. WHEREAS, the Finance Committee has reviewed the amendment request and recommends the term amendments described in Exhibit A be approved by the Board. 1 22 WHEREAS, following the Board’s approval of the proposed amendments set forth on Exhibit A, the RDA shall provide a 24-month conditional commitment period, starting from March 19, 2024, during which the approved applicant shall have the opportunity to obtain needed financial, legal, and regulatory approvals, as well as satisfy other conditions determined by the RDA, to finalize the loan terms. WHEREAS, pursuant to the HDLP Policy, applicants that successfully meet the conditions of the conditional commitment shall be invited to execute a Letter of Commitment to finalize the loan terms, subject to a set of conditions precedent to closing of the loan. NOW THEREFORE, BE IT RESOLVED BY THE BOARD that it approves the funding allocation and amended preliminary terms as further described in Exhibit A, subject to revisions that do not materially affect the rights and obligations of the RDA hereunder. For approved applicants that successfully meet the required conditions, the Board authorizes the Executive Director to negotiate and execute the conditional commitment letter, the Letter of Commitment, the loan agreements, and other relevant documents consistent with the funding allocations and preliminary terms contained on Exhibit A and incorporating such other terms and conditions 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 June 2024. Alejandro Puy, Chair Approved as to form: Salt Lake City Attorney’s Office Sara Montoya Date:May 24, 2024 The Executive Director: does not request reconsideration requests reconsideration at the next regular Agency meeting. Erin Mendenhall, Executive Director Attest: City Recorder 2 23 EXHIBIT A: THE CATHERINE PROJECT PROPOSED TERM AMENDMENTS PROJECT/APPLICA NT ADDRESS LIHTC Awarded? WEIGHTED PROJECT PRIORITY SCORE/INTEREST RATE REDUCTION* FUNDIN G REQUE ST AS- APPROVED PRELIMINAR Y TERMS*** PROPOSED PRELIMINA RY TERMS** RDA FUNDS HOME Progra m Incom e TOTAL FUNDING RECOMMENDATI ON FUNDIN G RANKIN G The Catherine Phase 1 22 Communities 1881 W N Temple Applying, 4% Transportation Opportunities: 1 Architecture & Urban Design: 1 Commercial Vitality: 1 Public Art: 1 TOTAL: 4 $1,000,000 Interest Rate: 2.0% Term: 16 year Amortization: 40 year Cash Flow Repayments Interest Rate: 1.0%**** Acquisition: 2 Yr Term, Balloon or Conversion. Construction to Perm: Term: 16 year Amortization: 40 year Cash Flow Repayments $1,000,00 0 $1,000,000 10 The Catherine Phase 2 22 Communities 1881 W N Temple Applying, 4% Family Housing: 3 Transportation Opportunities: 1 Commercial Vitality: 1 Public Art: 1 TOTAL: 6 $134,323 Interest Rate: 2.0% Term: 16 year Amortization: 40 year Cash Flow Repayments Interest Rate: 1.0%**** Acquisition: 2 Yr Term, Balloon or Conversion. Construction to Perm: Term: 16 year Amortization: 40 year Cash Flow Repayments $134,323 $134,323 10 TOTAL $1,134,323 $134,323 $1,000,00 0 $1,134,323 * Projects receive a 0.5% interest rate reduction for each included priority. Sustainability allows for a 1% or 2% reduction. The maximum reduction per development is 2%. The interest rate is calculated as follows: Base Interest Rate minus (-) Interest Rate Reductions (up to 2%) = proposed interest rate; Base interest rate shall be locked within a month of closing. Projects shall maintain project priorities and the same weighted score at closing. Deviation from Project Priorities met may require Board approval. ** Final Terms shall comply with the requirements, standard loan terms and conditions, interest- rate reductions, and all other details laid out within the FY2023-2024 Housing Development Loan Program ( HDLP) Guidelines. Changes to repayment type may occur ( hard repayment versus cash flow repayment) and shall be based on requirements listed in the HDLP Guidelines or it required by a senior lender. Changes in repayment type will cause a change in the base interest rate. Repayment priority and lien position shall be based on the size of the loan; consideration may be made for other government entity loans if required through their policies. Funds may be disbursed in a lump sum if required by senior lender(s). *** While reviewing applications, the Committee took into consideration their February 1, 2024 High Opportunity Area HDLP funding recommendation and agreed to maintain their submitted recommendation to fund 515 Tower – Conversion 1 with High Opportunity Area funds. The Committee’s competitive HDLP funding recommendations incorporate the previously submitted High Opportunity Area recommendation. ****If the Developer is unable to secure tax credits, financing, or meet conditions to convert the loan to a construction to permanent loan, and cannot fulfill the affordable housing obligation, the 30-year deed restriction on the property could be removed and the RDA’s 1% acquisition interest rate would be replaced by the rate of the United States Treasury Yield Curve of the loan term at time of closing plus 800 basis points (i.e. 2-Year yield + 8%) of the repayment of the HOME and RDA funds. NOTE: For all loan awards greater than $899,999, the Sustainable Development Policy requires buildings to be designed to operate without fossil fuels, but it would not restrict the ability to have backup generators for emergencies.