Loading...
HomeMy WebLinkAboutCouncil Provided Information - 10/14/2025CITY COUNCIL OF SALT LAKE CITY 451 SOUTH STATE STREET, ROOM 304 P.O. BOX 145476, SALT LAKE CITY, UTAH 84114-5476 SLCCOUNCIL.COM TEL 801-535-7600 FAX 801-535-7651 BOARD STAFF REPORT THE COMMUNITY REINVESTMENT AGENCY of SALT LAKE CITY TO:CRA Board Members FROM:Allison Rowland Senior Budget & Policy Analyst DATE:October 14, 2025 RE: RESOLUTION: MODIFICATIONS OF LOAN TERMS FOR BOOK CLIFFS LODGE AFFORDABLE HOUSING CONSTRUCTION ISSUE-AT-A-GLANCE The Housing Authority Management Enterprise of Salt Lake City (HAME) has requested that their three existing City loans for the construction of the Book Cliffs Lodge affordable housing project, at 1159 South West Temple, be modified to 40-year terms. Working with HAME, the Community Reinvestment Agency (CRA) also has proposed to standardize and clarify the terms of these loans, which total $4.74 million, since they were awarded through different City processes in 2018, 2023 and 2024. As a result, if the Board approves, the loans would all have 40-year terms at 2.5% interest and cash-flow repayments, and they would comply with the CRA Housing Development Loan Program (HDLP) policy. Goal of the briefing: Discuss and consider adopting the Resolution to Approve Loan Term Modifications, which would consolidate the City’s three existing HAME loans for the Book Cliffs Lodge under the same terms and conditions. ADDITIONAL INFORMATION A. Background. Over the past several years, Salt Lake City has offered three separate loans to the Housing Authority Management Enterprise (HAME) for the construction of the Book Cliffs Lodge affordable housing project, at 1159 South West Temple. The City’s CRA and the Housing Stability Division in the Community and Neighborhoods Department (CAN) have worked together to offer additional loan funds to the Book Cliffs Lodge project (see summary below). The first loan, in 2018, was originally offered for a 30-year term at 1% interest with cash flow repayment. This loan is subject to the CRA’s NOFA policy at the time of its award, though this was replaced by the HDLP policy in 2021, and updated the following year. The 2023 loan was allocated from HUD HOME “dormant” income, and the Board indicated that this loan should be added to the 2018 loan and subject to CRA Housing Development Loan Program (HDLP) underwriting and Item Schedule: Page | 2 lending standards. The most recent loan for this project, in 2024, was approved for a 15-year term at 2.5% interest with cash flow repayment. Following HDLP guidelines, the interest rate is based on the number of Board priorities that the project plans to meet, which include servicing target populations, being located near public transit, and improving neighborhood safety. Award Date Source Amount Oct. 16, 2018 CRA Notice of Funding Availability (NOFA)$1,000,000 Nov. 7, 2023 HUD HOME allocation from “dormant” program income $3,000,000 Mar. 19, 2024 HUD HOME allocation $740,000 The development will have 55 one-bedroom units at a range of affordability levels. Income level Number of units <40% of AMI 9 41-60% of AMI 20 61-80% of AMI 20 Market rate 6 The Book Cliffs Lodge project has not been awarded tax credits over several rounds of annual applications, but it does anticipate receiving up to 55 project-based vouchers from the Housing Authority of Salt Lake City, of which HAME is a part. See Board policy question 1b, below. B. Terms of the Proposed New Agreement. After HAME requested that the CRA adjust the terms of the three loans to match the 40-year term of their senior lender, the CRA worked with the Housing Stability Division to simplify the three loans. They propose not only to extend the loan terms to 40 years, but also to set identical interest rates (2.5%) with cash flow repayment, and to update all other loan terms to comply with those of the 2024 loan. The elements of the proposed $18.1 million project budget can be found on page 4 of the CRA memo in the transmittal. The CRA would administer the $1,000,000 in CRA funds, and Housing Stability would administer the other $3,740,000 in HOME funds. POLICY QUESTIONS 1. In their memo, CRA staff alluded to several policy questions for the Board’s consideration: a. HAME uses HUD-approved metrics for modeling its cash flow projections. These assume a 3% vacancy rate and 35% operating expenses, and results in the repayment of the three loans in year 37 of the 40-year term. However, if vacancy averages 5% and operating expenses remain the same (35%), there would be an outstanding balance of over $600,000 at the end of the 40- year term. Is the Board comfortable with assuming that HAME will be able to make a ballon payment at the end of the loans’ term if vacancy rates turn out to average more than 3%? b. Projects that receive LIHTC funds offer some assurance of project viability both because of the rigorous standards that are applied to applicants and the additional funds they bring to a project. In addition, under the current proposal, the City is contributing 26% of total project cost through the HUD HOME loans and CRA loan. Would the Board like to request any Page | 3 additional information on the project to help mitigate potential concerns raised by these two factors? c. HAME plans to contribute $2,314,379 in land value as a Seller’s Note as part of the projects proposed funding sources. Does the Board accept HAME’s proposal to be repaid this amount with a 4.9% interest rate after cash flow debt payments are satisfied? 2.Does the Board agree with the revised terms of the three loans to HAME for the Book Cliffs Lodge project? CRA BOARD MEETING – OCTOBER 14, 2025 SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY BOOK CLIFFS LODGE LOAN AMENDMENT BOOK CLIFFS OVERVIEW BOOK CLIFFS LODGE APARTMENTS •Proposed project by Housing Authority Management Enterprise (HAME) •55 one-bedroom units •Mix of income ranges: •9 units <40% AMI •20 units 41-60% AMI •20 units 61-80% AMI •6 units Market Rate •55 project-based vouchers from HASLC LOCATION: 1159 S West Temple PRIOR BOARD & CITY COUNCIL ALLOCATIONS •$1,000,000 in CRA NOFA •1% interest rate, 30-year term, and cash flow repayment •NOFA replaced by the HDLP Policy in 2021 •$3,000,000 of HUD HOME Dormant funds •Direct allocation •Did not specify terms •Subject to underwriting and lending standards of CRA HDLP •$740,000 of HUD HOME Funding administered through the HDLP NOFA •2.5% interest rate, 15-year term and cash flow repayment BOOK CLIFFS LOAN AMENDMENT REQUEST 2018 2023 2024 REQUEST: EXTEND & ALIGN LOAN TERMS •Borrower requested to extend loan term to 40 years •Staff recommend aligning loan terms for all three loans BOOK CLIFFS LOAN AMENDMENT REQUEST Original Loan Terms Conditional Commitment 2018-19 NOFA $1,000,000 Interest Rate: 1% Term: 30 years Cash Flow Repayment 12 months 2023 HOME $3,000,000 N/A N/A 2023-24 HDLP NOFA $740,000 Interest Rate: 2.5% Term: 15 years Cash Flow Repayment 24 months Proposed Loan Terms Conditional Commitment Interest Rate: 2.5% Term: 40 years Cash Flow Repayment 24 Months from FY2023-24 HDLP approval (March 19,2026) BOOK CLIFFS LOAN AMENDMENT REQUEST CONSIDERATIONS: •Borrower shows 3% vacancy based on HUD-approved underwriting •Staff typically expect to see 5% vacancy •Project does not use LIHTC equity •City/CRA are contributing 26% of project cost in financing •HAME contributing land as Seller’s Note to be repaid at 4.9% interest, subordinated to other cashflow debt repayments Questions?