Loading...
HomeMy WebLinkAboutProposed Resolution - 9/29/2025 SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY RESOLUTION NO. _______________ Adopting the Amended and Restated Term Sheet for NeighborWorks Salt Lake for the Maltair Lanes and Stanbridge Projects RESOLUTION OF THE BOARD OF DIRECTORS OF THE SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY APPROVING AN AMENDED AND RESTATED TERM SHEET FOR NEIGHBORWORKS SALT LAKE FOR SHARED EQUITY WORKFORCE HOUSING WHEREAS, the Salt Lake City Community Reinvestment Agency (CRA) 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, NeighborWorks Salt Lake (NeighborWorks) is an affordable housing developer whose mission is to provide affordable homeownership opportunities. WHEREAS, NeighborWorks is developing two affordable housing projects at 1002 West 200 South (Maltair Lanes) and 319 North and 800 West (Stanbridge) in which they will develop 31 residential units to be affordable to those making 120% area median income or less. Additionally, the Maltair Lanes and Stanbridge properties will be owned by the NeighborWorks Community Land Trust (CLT), which will preserve the long-term affordability of the units. WHEREAS, on June 13, 2023, the CRA’s Board of Director’s (Board) approved Resolution R-12-2023 and set aside $2.1 million of CRA funds to be distributed to NeighborWorks on the condition that the Board approve the final Funding Agreement Term Sheet. WHEREAS, on June 10, 2025, the Board approved Resolution 9 of 2025 – Adopting the Term Sheet for NeighborWorks Salt Lake for the Maltair Lanes and Stanbridge Projects, including a provision allowing NeighborWorks to request a modification of the Term Sheet for the Maltair Lanes project if it were unable to meet the CRA’s Sustainable Development Policy threshold requirements. WHEREAS, the CRA staff has now determined that NeighborWorks will be unable to meet the CRA’s Sustainable Development Policy threshold requirements in its designs for the Maltair Lanes project. WHEREAS, the CRA staff recommends the Board approve the attached Amended and Restated Term Sheet for the funding agreement for NeighborWorks and the Maltair Lanes and Stanbridge projects, which amendments reflect a waiver of the Sustainable Development Policy requirements for the Maltair project. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Salt Lake City Community Reinvestment Agency that it approves the distribution of the funds pursuant to the terms outlined in the Amended and Restated Term Sheet attached hereto, subject to revisions that do not materially affect the rights and obligations of the CRA hereunder. The Board 2 authorizes the Executive Director to negotiate and execute the Funding Agreement and any other relevant documents consistent with the Amended and Restated 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 Salt Lake City Community Reinvestment Agency, this ____ day of October, 2025. _________________________________ Darin Mano, Chair Approved as to form: /s/ Sara Montoya Salt Lake City Attorney’s Office Sara Montoya Date: September 26, 2025 The Executive Director: ____ does not request reconsideration ____ requests reconsideration at the next regular Agency meeting. ________________________________ Erin Mendenhall, Executive Director Attest: ________________________ City Recorder 3 EXHIBIT A: AMENDED AND RESTATED FUNDING AGREEMENT TERM SHEET Amended and Restated Funding Agreement Term Sheet Partnership with NeighborWorks Salt Lake For Shared Equity Workforce Housing Purpose To provide $2.1 million in financial assistance to NeighborWorks Salt Lake for the development of two affordable homeownership projects and to incorporate them into the NeighborWorks Community Land Trust aimed at ensuring long-term affordability and community ownership of land. Parties NeighborWorks Salt Lake (“NeighborWorks”), NeighborWorks Community Land Trust (“CLT”), and the Salt Lake City Community Reinvestment Agency (“CRA”). Developments Projects (“Projects”) • Maltair Lanes: 1002 W 200 S, Salt Lake City, Utah 84104, 0.54 Acres, 13 Units • Stanbridge Property: 800 W 319 N, Salt Lake City, Utah 84116, 0.94 Acres, 18-20 Units Project Description NeighborWorks shall use the funds by June 30, 2027 to develop two sites in the Fairpark and Poplar Grove neighborhoods. Any funds not spent by this date shall be returned to the CRA. NeighborWorks may request one extension of up to one year to use the funds, which the CRA Board of Directors (“Board”) may approve or reject in its sole discretion. NeighborWorks will develop each project independently, with the purpose of creating affordable, for-sale townhome/rowhome units, with a minimum of 31 residential units. The land under the developments will be owned by the CLT and units will be sold to individual buyers with a ground lease agreement between each individual buyer and CLT. Eligible Activities • The funds shall be used for acquisition reimbursement, hard construction costs, site improvements, and related soft costs. Proposed Funding Terms $2,100,000 will be allocated in the form of two conditional grants for the development of affordable, for-sale housing units, as part of two affordable housing projects to be held in trust by the CLT. • Amount: A total of $2,100,000 o Maltair Lanes $850,000 4 o Stanbridge Property $1,250,000 The conditional grants will be disbursed for each Project upon meeting the requirements and conditions outlined in this term sheet. The conditional grants are intended to be disbursed concurrently with all other financing sources secured by the recipient and shall be made available at the time of financial close, contingent upon the fulfillment of all Conditions to Fund (as set forth below) in the CRA’s sole judgment. Residential Unit Requirements and Affordability • Minimum residential units required for each Project: o Maltair Lanes: 13 o Stanbridge Property: 18 • All units must be restricted to households earning no more than 120% of the area median income (AMI). • All units must remain affordable for a minimum period of 50 years. • NeighborWorks will maximize the number of units affordable to households earning 80% AMI and below as per guidelines established by HUD. o A minimum of 20% of units in each Project must be made affordable to households earning no more than 80% of AMI. • The number of affordable units and level of affordability for affordable homeownership developments will be evaluated on a case-by-case basis, subject to CRA approval prior to closing. • All affordability requirements must be memorialized in individual unit deed restrictions, ground lease agreements, or similar restrictive-use agreements. CRA will be a party to the recorded deed restrictions. o Subject to CRA approval, individual unit deed restrictions, ground lease agreements, or similar restrictive-use agreements must include re-sale restrictions, including re-sale and equity formulas, that ensure units sold in the future remain affordable to future buyers. • Per unit cost (including land, construction, and soft costs) shall not exceed an amount that impedes affordability for the units at or below 120% of AMI and the minimum required number of affordable units at or below 80% of AMI. Family-Sized Units • A minimum of 45% of the units in each Project shall have 3 or more bedrooms. Ownership Requirements 5 • Units must be developed, platted, and sold as individual units, enabling individual unit ownership. Sale of units may be conditioned upon execution of a ground lease agreement between each buyer of an individual unit and the CLT. • Units shall be restricted for primary owner-occupancy through deed restriction, ground lease agreements, or similar restrictive-use agreements. o Rental of entire units designed for owner-occupancy shall not be permitted. o Short-term rental of any portion of each unit (for periods of 30 days or less) shall not be permitted. o Exceptions to the owner occupancy and short-term rental restrictions above may be listed in the deed restriction for units retained by NeighborWorks or the CLT for the purposes of the CLT Advisory Board (“CLTAB”) oversight and governance, subject to the conditions described in the following CLT Advisory Board Oversight section. CLT Advisory Board Oversight • Subject to CRA review and approval, the ownership of no more than 20% of units in either Project may be retained by NeighborWorks or the CLT for the purposes of CLTAB oversight and governance. o NeighborWorks must demonstrate that the number of units retained for CLTAB oversight is the minimum required to ensure effective governance, subject to Utah Code (the Community Association Act, U.C.A. 57-8a-101 et seq.). Documentation outlining the structure of the CLTAB will be submitted for CRA review by April 30, 2026. o Oversight and governance of the CLTAB shall be memorialized in each project’s Covenants, Conditions & Restrictions (“CC&Rs”), including specifying NeighborWorks’ responsibility to oversee capital needs assessments, operating budgets, reserve budgets, and special assessments. o CC&Rs shall establish maximum CLTAB contributions to ensure the long-term affordability of owners’ CLTAB fee obligations. o Units retained by NeighborWorks for CLTAB oversight and governance shall be considered “sold to initial homeowner” when occupied by qualified households for the purposes of Obligation Milestones. • Any units with ownership retained by NeighborWorks must be leased at rates affordable to households making no more than 80% of AMI, with the affordability requirements to be memorialized in a restrictive use agreement and lease agreements. o Any units retained by NeighborWorks for CLTAB oversight may be leased in a lease-to-own arrangement, whereby a tenant is given the option to purchase the unit at a specified point in the future. o In the event that any units retained by NeighborWorks are sold to qualified households, NeighborWorks may replace the unit 1:1 through a right-of-first- 6 refusal on any of the other for-sale units within the project, to ensure the continued oversight and governance of the CLTAB. • The CRA shall have the right to review and approve all CLTAB governance documents. Sustainability • Projects, unless granted a project-specific waiver by the CRA Board of Directors, shall comply with the CRA Sustainable Development Policy and must meet the following: o Designed to Earn the ENERGY STAR target of 90 or higher o 100% electric building operation (no on-site fossil fuel combustion) o Participation in SLC’s Energy Benchmarking Program: Annual operational data must be submitted to Salt Lake City’s Elevate Buildings Program once the building is in operation. • Maltair Lanes will be granted two project-specific waivers by the CRA Board of Directors. o The project will not be required to meet the threshold requirement for Enhanced Energy Performance, including the requirement to participate in the City Sustainability Department’s Elevate Buildings Program. o The project will not be required to meet the threshold requirement for Emission- Free Building Operation to enable the use of natural gas for HVAC systems. All other appliances shall utilize all-electric operations. Reporting and Accountability • NeighborWorks shall provide quarterly progress reports through construction and sale of the units, and reports at each Obligation Milestone to the CRA detailing the use of funds, project development status, and CLT formation progress. Compliance and Legal Requirements NeighborWorks is required to take the following actions to meet the CRA’s compliance and legal requirements: • Comply with all local, state, and federal regulations, including but not limited to zoning, environmental, and fair housing laws. • Execute loan documents (e.g. promissory notes, loan agreements, security documents, restrictive use agreements) as deemed necessary by the CRA and its legal counsel. • Receive approval from the CRA 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. CRA will work diligently to expedite review of the documents to prevent any delay in loan approvals. • Provide evidence of insurance in such amounts and with such coverage as deemed necessary by the CRA for the Projects. • Such other terms as recommended by the CRA’s legal counsel and staff. 7 • Use grant funds solely for the purposes outlined in this term sheet. Any deviation requires prior written approval from the CRA which may be granted or denied at CRA’s sole discretion. Conditions to Fund Each grant is provided with the following pre-conditions for the Project that NeighborWorks must meet, to the satisfaction of CRA, to receive funding: • Evidence of site/location control as demonstrated through ownership, option, sale agreement, or long-term lease. • Disclosure of identity of interest relationships with the Project. • Sufficient sources of project funding/financing for the Project, including letters of commitment for additional funding/financing. • Per unit cost (including land, construction, and soft costs) that does not exceed an amount that impedes affordability for the units at or below 120% of AMI and the minimum required number of affordable units at or below 80% of AMI. • CRA subsidy that does not exceed 15% of the median sales price or $70,000 per unit, whichever is less. • CRA review and approval of proforma including capital stack for construction of units and projected sale prices. • CRA review and approval of Building plans. • Evidence and CRA approval of a home-owner selection plan/tenant selection process. • Use of funds strictly for Eligible Activities related to the Project. • Land placed in trust for the purpose of the long-term sustainability and affordability of homeownership on the site. • All required city approvals and building permits for the Project issued prior to funding. • All necessary funding secured to construct and sell the units with the required affordability levels. NeighborWorks’ Obligations after Funds are Distributed • Project groundbreaking: Project must break ground within 6 months of grant funding. • Subdivision Plat, CC&R, and Deed Restriction Recordation: All required documents ensuring the completion, operation, sustainability and affordability of units must be recorded with the Salt Lake City Recorder’s and the Salt Lake County Recorder’s Offices. • Project Completion: Project construction is deemed to be complete by the issuance of a Certificate of Occupancy on all units. Each project shall be completed within 24 months of construction commencement. • Absorption of units: All units must be sold to initial homeowners within 36 months of Project Completion. 8 Events of Default The following occurrences will constitute an event of default: • Failure to meet Project obligations or completion deadlines. • Failure to construct the Project within the timeframe provided in the funding agreement. • Failure to maintain the affordability, including resale price restrictions, as required under the restrictive use agreements and covenants. • Failure to provide regular development reports. • Failure to comply with any other City, State, or Federal requirements. • Misuse or misappropriation of funds. • Insolvency, bankruptcy, or cessation of Project activities. • Any material misrepresentation or breach of the terms of the grant agreement. Conversion of Grant to Loan Upon the occurrence of an Event of Default on either Maltair Lanes or Stanbridge Property Projects, NeighborWorks will have 180 days after CRA provides written notice of such Event of Default to cure; if NeighborWorks fails to cure any Events of Default within the specified time frame, the respective grant will automatically convert into a loan with the following terms: • Amortized Repayment: The principal amount of the loan will equal the total disbursed grant funds as of the date of default. Amortized interest shall accrue on the principal outstanding calculated at the time of default at a per annum rate. • Term: 15 years • Interest Rate: 3% interest • Security: The CRA shall be provided with a lien on the property that may be subordinated to senior lender(s). Lien priority shall be based upon the size of loans with greater loan amounts yielding higher lien priorities. Remedies Remedies if NeighborWorks fails to cure in the event of a default may include, but are not limited to: • If NeighborWorks does not meet the initial conditions for funding, the CRA will not distribute funds. • Any unspent or improperly used funds must be returned to the CRA within 90 days. • Once funds are distributed and upon an event of default, the CRA 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 NeighborWorks to comply with their obligations. 9 o Pursue any other remedies available at law or equity.