HomeMy WebLinkAboutCouncil Provided Information - 1/13/2026SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY
ACCESSORY DWELLING UNIT (ADU)
FINANCING PROGRAM
TERM SHEET MODIFICATION
CRA BOARD OF DIRECTORS MEETING – JANUARY 13, 2026
REQUEST
After discussions with CDCU in negotiating
program documents, CRA staff and CDCU are
requesting to modify the term sheet. This memo
requests Board approval through resolution to
remove two program terms in the CRA’s Accessory
Dwelling Unit (ADU) Financing Program:
1.CDCU’s right of first refusal on all borrower
homes
2. Partial loan forgiveness
BACKGROUND
•Timeline
o NOFA released July 2024
o Proposals received September 2024
o Proposals ranked October 2024
o Applicant recommended November 2024 by CRA
Finance Committee
o Applicant selected December 2024 by CRA Board
o Program term sheet approved March 2025 by CRA
Board
•$2.9 million available
o $1.9 million - 9-Line only
o $1 million - Unrestricted
PROGRAM HIGHLIGHTS
•Program is managed by Community Development Corporation of Utah (CDCU)
•Program offers financing and income and affordability verification
•Program provides construction to second mortgage loan that is available to either:
o (1) homeowners earning up to 80% of AMI and renting their ADU at market rate, or
o (2) homeowners earning greater than 80% of AMI and renting their ADU at a rate affordable to
renters earning 80% of AMI or less.
•Program will utilize the full $2.9 million in CRA funds to pay for program servicing, a loan loss reserve
fund, and a revolving loan fund.
•Program will finance 15-20 ADUs.
CDCU PROGRAM DETAILS
Loan Terms
Up to $200,000
30-year amortization
5-year term with 5-year extension option
3% fixed rate
$2,000 origination fee
Interest only for first 12 months with a capitalized construction period interest reserve funded from loan
proceeds.
Forgiveness Terms Up to 10% of the loan balance forgiven for homeowners whose ADUs are rent-restricted to 80% AMI or
below
Other Services Included Required participation in good landlord training and financial counseling programs.
Use of RDA Funds
Revolving loan fund
Loan loss reserve
Program servicing
Affordability Compliance In-house, $200/yr fee paid by borrower
Marketing Web, social media, events, and community partnerships
ANALYSIS
1.Market rents for 1-bedroom ADUs in Glendale or Poplar
Grove are closer to 55% of Area Median Income (AMI)
affordability. Restricting rents to 80% AMI affordability is
unlikely to cause loss of potential rental income.
2.A homeowner renting at 55% AMI affordable rents
should be able to operate their rental ADU with an
acceptable market return.
3.Loan forgiveness results is a taxable event that would
require the CRA and CDCU to distribute IRS forms to
each borrower and result in additional administrative
burden.
ANALYSIS
CONSIDERATION
After discussions with CDCU in negotiating
program documents, CRA staff and CDCU are
requesting to modify the term sheet. This memo
requests Board approval through resolution to
remove two program terms in the CRA’s Accessory
Dwelling Unit (ADU) Financing Program:
1.CDCU’s right of first refusal on all borrower
homes
2. Partial loan forgiveness