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HomeMy WebLinkAboutProposed Resolution - 1/27/2026SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY RESOLUTION NO. __________ Amending and Restating Lease Rate and Terms for USA Climbing Headquarters and Training Facility at Approximately 500 West 300 South RESOLUTION OF THE BOARD OF DIRECTORS OF THE SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY AMENDING AND RESTATING THE LEASE RATE AND TERMS FOR THE USA CLIMBING HEADQUARTERS AND TRAINING FACILITY AT CRA-OWNED PROPERTY AT APPROXIMATELY 500 WEST 300 SOUTH IN THE DEPOT DISTRICT PROJECT AREA. WHEREAS, on July 9, 2024, the Board of Directors (Board) of the Salt Lake City Community Reinvestment Agency (CRA) passed Resolution No. 13 of 2024 authorizing the lease rate and terms (Approved Terms) for the development of a USA Climbing (USAC) headquarters and training facility (Project) at CRA-owned property at approximately 500 West 300 South in the Depot District Project Area (Property). WHEREAS, the Approved Terms include provisions for USAC to incorporate the historic Salt Lake Mattress Company Building (Mattress Building) into the Project. WHEREAS, the Approved Terms indicate that USAC will rehabilitate and activate the Mattress Building for the duration of the 99-year ground lease term. WHEREAS, the Approved Terms indicate that USAC will pay the up-front costs of rehabilitating the Mattress Building, and the CRA will reimburse USAC up to $6,000,000 for qualifying design and construction costs associated with the rehabilitation, unless a greater amount is approved by the Board. WHEREAS, following more detailed due diligence, the cost of Mattress Building rehabilitation is now estimated to be $7,300,000. USAC has indicated it is unable to pay additional costs beyond the $6,000,000 allocated in the Approved Terms. USAC has proposed an alternative option to reconstruct the Mattress Building utilizing its historic materials for an estimated cost of $6,250,000. WHEREAS, based on discussion during the informational briefing provided to the Board at the January 13, 2026, meeting, CRA staff has amended the Approved Terms (Amended and Restated Term Sheet) to clarify that CRA will provide an additional $250,000 in reimbursement for USAC’s reconstruction of the Mattress Building for a total maximum reimbursement allowance of $6,250,000. NOW, THEREFORE, BE IT RESOLVED by the Board that the Board approves the Amended and Restated Term Sheet attached hereto, and that the Board authorizes the CRA administration to negotiate the final agreements consistent with the Amended and Restated Term Sheet or more beneficial to the CRA, and execute the ground lease and any other relevant ATTACHMENT B documents consistent with this Resolution 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 on this day of , 2026, to be effective upon adoption. ________________________________ , Chair Approved as to form: /s/ Jennifer Huntsman___________________ Salt Lake City Attorney’s Office Jennifer Huntsman The Executive Director: ____ does not request reconsideration ____ requests reconsideration at the next regular Agency meeting _________________________________ Erin Mendenhall, Executive Director Attest: _________________________ City Recorder EXHIBIT A AMENDED AND RESTATED TERM SHEET 1 USA CLIMBING AT RIO GRANDE DISTRICT Development and Ground Lease Agreement Term Sheet Purpose The purpose of ground leasing Community Reinvestment Agency property to USA Climbing is to help facilitate the construction of their national headquarters and training facility as well as establish an exciting and catalytic anchor tenant for the Rio Grande District. Parties The Salt Lake City Community Reinvestment Agency (CRA) and USA Climbing. USA Climbing is the national governing body of the sport of competition climbing in the United States. USA Climbing is a non-profit entity that promotes the disciplines of bouldering, lead and speed climbing, as well as collegiate and paraclimbing series. Property to be Leased A portion of property near the southwest corner of 500 West 300 South, Salt Lake City, Utah 84101. The lease area shall encompass building footprints, setback areas between buildings and adjacent rights-of- way, and the outdoor plaza. An approximate depiction of the real property to be leased is shown in Exhibit 1 of this document and will be referred throughout as “Lease Area.” Project Description The project involves the construction of a headquarters and training facility for USA Climbing, which will include: 1. New construction of a primary structure that is about 65-75 feet tall with a roughly 45,000 sf footprint (exact specifications subject to further stakeholder engagement). This structure will include bouldering, lead, and speed climbing walls, as well as other support uses that are typical of a climbing facility. Most areas of the facility will be accessible by the community; some spaces will be reserved for the U.S. National Team’s exclusive use. The exterior building facades will include climbing walls. 2. Reconstruction and activation of the historic Salt Lake Mattress Company building, anticipated to include publicly facing and accessible food, beverage, and retail uses, as well as private spaces for USA Climbing offices. 3. New construction of an outdoor plaza that will be utilized for USA Climbing-hosted competitions as well as other non-USA Climbing events (will be designed to accommodate 3,500 – 5,000 spectators). Lease Terms 1. Term: 99 years, to commence upon execution of a ground lease agreement. Execution of a ground lease agreement is contingent on both parties satisfying the conditions outlined in the last section of this document. Ownership of the improvements constructed on the Lease Area will revert to CRA ownership at the end of the term. In the last five years of the term, USA Climbing may exercise an option to renew the lease for an additional 50 years. The lease rate for the additional lease period will be fair market value, unless otherwise negotiated and approved by the administration and legislative body. 2 2. Lease Rate: As set forth in more detail below, the lease rate will be based on a portion of the fair market value of the Lease Area and will be increased incrementally over time. The outdoor plaza space shall not be included in the calculation of the lease rate. Stated another way, the outdoor plaza shall be leased at no cost. a. The annual lease rate will be the fee simple, fair market value of the Lease Area (not including the outdoor plaza space, as determined by a CRA-commissioned appraisal) multiplied by 5% (Annual Lease Rate). b. The Annual Lease Rate will be increased, or escalated, every five years. This escalator is based on the average consumer price index (CPI) rate over the previous five years, with a minimum escalation rate of 2% and a maximum escalation rate of 5%. The first escalation will take place at the start of the 6th year of the lease and be based on the average CPI rate calculated for the first 1-5 years of the lease. The Annual Lease Rate, inclusive of the escalation, shall be referred to as the “Escalated Annual Lease Rate.” c. The Escalated Annual Lease Rate shall be reduced according to the following schedule: i. Years 1-6: USA Climbing will not make any lease payments during the first six years to account for construction and stabilization. ii. Year 7: USA Climbing shall make a payment that is equal to 45% of the Escalated Annual Lease Rate. iii. Year 8: USA Climbing shall make a payment that is equal to 50% of the Escalated Annual Lease Rate. iv. Year 9: USA Climbing shall make a payment that is equal to 55% of the Escalated Annual Lease Rate. v. Years 10-99: USA Climbing shall make annual payments that are equal to 60% of the Escalated Annual Lease Rate. 3. Common Area Maintenance (CAM) Fees: CAM fees will be collected from Rio Grande District property lessees to contribute to the cost of maintaining public spaces in the neighborhood. The annual CAM fee for USA Climbing will be $1.50 per square foot of the gross floor area of their project, inclusive of the new structure and the reconstructed Salt Lake Mattress Company Building (Annual CAM Fee). Gross floor area shall be interpreted to mean the sum in square feet of all floors of the building, measured from the exterior face of the exterior walls. The Annual CAM Fee will be assessed upon USA Climbing receiving its occupancy permit, be charged at the same reduced rate as the schedule provided in 2.c.i-v, and escalated in the same manner as outlined in 2.b. 4. Community Benefits: During the term of the lease, USA Climbing is committed to providing the community benefits described below. The lease rate outlined above is tied to USA Climbing providing these benefits, and as such, should USA Climbing not provide these benefits, the lease rate will increase as specified in more detail in the agreements. a. Equitable and inclusive programming that may include offerings such as youth programming, workforce development opportunities, and access to the facility for community members who may not otherwise have access to the sport of climbing, based on income or other key measures. b. Transportation demand management strategies to reduce auto dependency of employees and visitors and encourage the use of alternative modes of transportation. This may include discounted day passes for those that utilize public transit, and inclusion of shower, locker, and bicycle storage facilities. 3 c. Activation of the reconstructed Salt Lake Mattress Company Building, anticipated to include – at ground level - food and beverage and retail components that are open and clearly accessible by the general public during regular operating hours. The second floor will house private USA Climbing offices. d. Design, construction, and management of the outdoor plaza, which will primarily be used for USA Climbing-hosted events and made available for use by other entities for additional events. i. Design – USA Climbing shall work collaboratively with the CRA to develop the design for the outdoor plaza, which shall be incorporated into the construction drawings for the larger project at USA Climbing’s sole expense. ii. Construction – The plaza shall be constructed by USA Climbing and built at the same time as the rest of the project. Prior to construction, USA Climbing and the CRA will determine a cost-sharing formula and the CRA will reimburse USA Climbing for agreed-upon plaza construction costs, in an amount not to exceed $1 million, unless a greater amount is approved by the CRA Board of Directors. iii. Management – USA Climbing will be responsible for managing the use of the plaza, for both USA Climbing and non-USA Climbing-hosted events. It is anticipated that USA Climbing will host six (6) multi-day competition events per year, in addition to smaller events associated with their programming. USA Climbing events may take precedence over other plaza uses but when there is no scheduling conflict, USA Climbing shall allow all reasonable requests by outside parties to utilize the plaza for special events. USA Climbing shall not charge the City or CRA for the use of the plaza. Other Rio Grande District property lessees that contribute to the CAM fund will be charged a reduced rental rate for the use of the plaza. iv. Maintenance – USA Climbing shall contribute to a CAM fund that will be utilized to fund maintenance of the outdoor plaza, as well as other publicly owned parks, plazas, park strips, public art, alleyways, parking facilities, etc., within the neighborhood. CAM fees will also be used to fund enhanced street and sidewalk maintenance beyond the baseline City maintenance level. The CRA shall be responsible for implementing maintenance activities funded by the CAM assessment. e. Tracking and Reporting. Some of the community benefits described above are physical improvements that will be memorialized in construction drawings, development agreements, cost-sharing agreements, and/or use agreements. Others are programmatic and ongoing in nature and shall be memorialized in a 5-year community benefits plan that is provided by USA Climbing to CRA Staff for their approval, and which may be amended from time to time with prior Staff approval. CRA Staff will present USA Climbing’s informational progress report to the CRA Board of Directors at the conclusion of each 5-year plan period. 5. Additional Terms: a. Parking: The CRA is exploring the feasibility of financing and developing a shared parking structure on the south block of the neighborhood. i. If developed, the CRA will lease parking privileges to interested property owners and tenants, including USA Climbing, based on operational needs, estimated demand, and parking management best practices. 4 ii. If the parking structure is not completed by the time the USA Climbing project is operational, the CRA shall lease adjacent CRA-owned property to USA Climbing at no cost for a temporary surface parking lot. USA Climbing shall be responsible for funding and constructing all site improvements necessary for the surface parking lot. The planned location of the parking structure and temporary surface parking lot (if needed) is shown in Exhibit 2. iii. Should the parties need surface parking for an extended period, or if the proposed temporary parking location becomes unavailable for this use, the parties will work together to negotiate a solution to accommodate USA Climbing’s parking needs within one block of their facility, with the goal of ultimately eliminating the surface parking lot. b. Salt Lake Mattress Company Building: USA Climbing shall expend all reasonable efforts to reconstruct the Salt Lake Mattress Company Building to match historic conditions, including building placement, massing, and fenestration patterns, with exceptions subject to approval by CRA staff. The building shall be carefully deconstructed, and the historic bricks cleaned, safely stored, and reappointed to clad the interior and exterior of the structure. USA Climbing will take on the responsibility of paying the up-front costs of design, demolition, and reconstruction, and the CRA will reimburse USA Climbing up to $6,250,000 for these costs. c. Demolition of Existing Buildings: The Lease Area contains multiple structures that are currently being leased to the State of Utah and will be demolished to accommodate the project. USA Climbing will take on the responsibility of paying the up-front costs of demolition. The CRA will reimburse USA Climbing up to $120,000 for these costs, unless a greater amount is approved by the CRA Board of Directors. d. Contaminated Soil Disposal: It is possible that USA Climbing will encounter soils contaminated with semi-volatile organic compounds (SVOCs) during excavation for their building. Potentially contaminated soils should be screened and stockpiled during excavation and disposed of in accordance with applicable laws. USA Climbing will take on the responsibility of paying the up-front costs of disposing of contaminated soils, and the CRA will reimburse USA Climbing for the cost differential associated with transporting and disposing of contaminated soil versus non-contaminated soil. It is anticipated that the cost differential will not exceed $200,000. e. CRA to Develop Certain Adjacent Public Improvements: As part of the planned redevelopment of the neighborhood, CRA will design and install utilities with increased capacity to support increased density, reconstruct 300 South between 500 West and 600 West, and extend the City grid by building out new midblock street connections, as illustrated in Exhibit 3. It is the CRA’s intent to coordinate with USA Climbing, the design consultants, and pertinent City divisions when developing plans for the public improvements adjacent to USA Climbing’s lease area. i. Accessible Parking Spaces – The CRA recognizes that USA Climbing works with paraclimbing athletes who may require special accommodation. As such, the CRA commits to working with USA Climbing to identify opportunities to incorporate accessible on-street parking spaces near the project, along the planned Market Street alignment. 5 Conditions to Execution of Lease and Development Agreements • USA Climbing to receive approval of these development agreement and lease terms by the CRA Board of Directors. • Compliance with all applicable laws and regulations, including any applicable CRA policies such as the Sustainable Development and Public Art policies. If any waivers of CRA policies are requested, such waivers must be considered by the CRA Board of Directors. • The Project shall align with the CRA’s administrative design review process, which shall require CRA’s review and approval to ensure the design and development plans are consistent with the term sheet. • USA Climbing to receive all City approvals required to construct the Project, including obtaining any necessary zoning approvals from the City’s Planning Division and a will-issue demolition and building permit from the City’s Building Services Division. • USA Climbing to provide evidence of insurance in such amounts and coverage as deemed necessary by the CRA. • CRA to review USA Climbing’s projected operating pro forma to ensure that future ground lease payments are supported and the Project will be maintained, during the term, consistent with the CRA Board-approved term sheet. • Parties agree on the form of a Development Agreement, which shall include, but is not limited to: o USA Climbing’s commitment to construct the Project consistent with the CRA Board- approved term sheet, all City approvals, and a schedule of development. o An CRA-approved community benefit plan/strategy. o CRA to approve USA Climbing’s financial sources and uses and firm financial commitments for sources of funding and donations consistent with the schedule of development. o USA Climbing’s commitment to comply with all applicable laws and regulations. o An obligation for USA Climbing to provide the CRA quarterly progress reports on the construction of the Project. o Remedies should USA Climbing not comply with the terms of the Development Agreement may include, but not be limited to, filing a breach of contract claim, terminating the ground lease, damages, injunctive relief, or any other remedies available at law. • Parties to agree on the form of a Lease Agreement, which shall include, but is not limited to: o USA Climbing’s obligation to pay the applicable Lease Rate and CAM fees. o USA Climbing’s commitment to maintain the Project, during the term, consistent with the CRA Board approved term sheet. o USA Climbing shall not be permitted to assign the lease to an unaffiliated entity without the CRA’s consent, which may be withheld at the CRA’s sole discretion. o Submission and approval of the community benefits plan. o An obligation for USA Climbing to provide the CRA annual progress reports on the performance of the public benefits. o Continual operation of USA Climbing’s headquarters, outdoor plaza, and activation of the reconstructed Salt Lake Mattress Company Building consistent with the term sheet and the community benefits plan. o Remedies should USA Climbing not comply with the terms of the Lease Agreement may include, but not be limited to, filing a breach of contract claim, terminating the ground lease, increasing the Lease Rate, damages, injunctive relief, or any other remedies available at law. 6 • Receive approval from the CRA and City Attorney’s Office on all matters pertaining to the legality, sufficiency, and form and substance of all other documents that are deemed reasonably necessary for the execution of the transaction. 7 Exhibit 1: Lease Area 8 Exhibit 2: Proposed Future Parking Areas Temporary Surface Parking Lot Structure 9 Exhibit 3: Planned Neighborhood Midblock Street Connections