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HomeMy WebLinkAboutProposed Resolution - 5/4/2026 SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY RESOLUTION NO. _____ AFFORDABLE HOUSING – FY2025-2026 RESIDENTIAL WEALTH BUILDING PILOT PROGRAM FUNDING ALLOCATIONS RESOLUTION OF THE BOARD OF DIRECTORS OF THE SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY APPROVING CITYWIDE AFFORDABLE HOUSING PROJECT FUNDING ALLOCATIONS. 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 (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 CRA 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, on June 13, 2023, the Salt Lake City Council (“Council”) adopted Housing SLC, a plan to guide the City’s housing-related efforts over the next 5 years, highlighting the need for shared-equity models and homeownership opportunities. WHEREAS, on October 17, 2023, the Council adopted Thriving in Place, the City’s anti- displacement strategy, which calls for a broad set of tools to address the multiple factors that drive displacement and to create long-term solutions that can help residents and communities remain in place. WHEREAS, the Board has set aside $6,466,403 of Housing Funds for affordable housing wealth building opportunities through the CRA’s Residential Wealth Building Pilot Program (“RWB Pilot Program”). The allocation of funds is contingent upon an application and review process administered by the CRA to facilitate the funding of qualified projects that meet the goals established by the RWB Pilot Program. WHEREAS, through a Notice of Funding Availability (“NOFA”), the CRA administered an application and review process to fund affordable housing developments and proposals that help low-and-moderate-income individuals and families access affordable wealth building opportunities. This RWB Pilot Program was administered pursuant to the CRA’s Housing Funding Priorities for Fiscal Year 2025-2026 set forth in R-6-2025 (“Funding Priorities”) that resulted in two eligible requests for funding totaling $7,933,670 (the “Competitive RWB Pilot Program Applications”). 29 WHEREAS, on March 9, 2026, and on April 16, 2026, a Selection Advisory Committee reviewed the Competitive RWB Pilot Program Applications, and recommended funding allocations and preliminary terms as further described in Exhibit A. WHEREAS, based on the Selection Advisory Committee’s recommendations, CRA staff recommends that the Board approve the funding allocations and preliminary terms described in Exhibit A. WHEREAS, following the Board’s approval of the funding allocations and preliminary terms as set forth on Exhibits B1 and B2, the CRA shall provide a conditional commitment period 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 CRA, to finalize the terms. WHEREAS, applicants that successfully meet the requirements in Exhibit B1 and B2 shall be invited to close on the funding. NOW, THEREFORE, BE IT RESOLVED by the Board that it approves the funding allocations and preliminary terms as further described in Exhibits B1 and B2, subject to revisions that do not materially affect the rights and obligations of the CRA 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 funding agreements, and other relevant documents consistent with the funding allocations and preliminary terms contained on Exhibits B1 and B2 and incorporating such other terms and conditions 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 ____________, 2026. Dan Dougan, Chair Approved as to form: ____________________________________ Salt Lake City Attorney’s Office Jennifer Huntsman Date: ____________ The Executive Director: does not request reconsideration requests reconsideration at the next regular Agency meeting. April 30, 2026 30 Erin Mendenhall, Executive Director Attest: City Recorder 31 EXHIBIT A: THE SELECTION ADVISORY COMMITTEE RECOMMENDED RESIDENTIAL WEALTH BUILDING FUNDING ALLOCATIONS The Selection Advisory Committee recommends that funding be allocated to projects as outlined below: 32 EXHIBIT B1: GARBETT HOMES – BRIX ON TENTH PROPOSED TERM SHEET Purpose To allocate $3,998,403 million in funds to Garbett Homes (“Garbett”) for the development of 46 for- sale townhomes for owner occupancy at approximately 1549 S 1000 W (“Brix on Tenth” or “Project”). Parties Garbett Homes (“Garbett” or "Recipient"), Homium, Inc. (“Homium”), and the Salt Lake City Community Reinvestment Agency (“CRA”). Project Description Garbett will develop the project to create affordable, for-sale, owner-occupied homes, with 46 residential units, including a minimum of 23 affordable units. Homium will administer the Fair-Share Shared Appreciation Mortgages program (the “SAM Program”), funded from a CRA-designated investment vehicle (“UDF Brix”), which will be a newly created limited liability company for this Project. Garbett and Homium will partner with Community Development Corporation of Utah (“CDCU”) to provide homebuyer education and support. Eligible Activities Funding for the SAM Program capital in an amount not to exceed $3,717,300, and Initial Fund Fees (defined below) in an amount not to exceed $281,103. Proposed Funding Terms & Fees $3,998,403 will be allocated to UDF Brix in the form of an investment by the CRA to be used for SAM Program capital and program administration fees (the “SAM Fund”). This investment will be segregated as a dedicated pool of funds for the Project. UDF Brix will allocate, and fully disclose to CRA, all program fees and expenses payable from the SAM Fund, including Homium’s initial program fee, fund setup fees, homebuyer education and support services through CDCU (collectively, the “Initial Fund Fees”), as well as the loan origination fee and the ongoing asset management fee. All fees, costs, and expenses charged to or deducted from the SAM Fund will fit one of the following categories: (a) Initial Fund Fees, (b) Ongoing Fund Fees, and (c) Pass-Through Expenses: a) Initial Fund Fees. The Initial Fund Fees will cover Homium’s initial program fee, in addition to all reasonable out-of-pocket costs incurred in connection with the initial set up, structuring, documentation, and launch of the SAM Fund and the SAM Program (which may include legal, tax, or third-party consulting expenses, if any), along with the costs of homebuyer education and support services to be procured through CDCU. Initial Fund Fees will be charged during the Closing Period–defined as the period commencing upon release of CRA funds and ending December 31, 2028, subject to extension as provided herein—and shall not exceed $281,103. Initial Fund Fees shall include a Homium’s Initial Program Fee of $185,865, $60,849 for fund setup costs, and up to $34,500 for CDCU homebuyer services. This fee cap applies to Initial Fund Fees only and does not limit other ongoing program 33 fees and expenses incurred after the Closing Period. b) Ongoing Fund Fees. Ongoing Fund Fees will consist of a fixed 5% origination fee per loan (to be paid by the SAM Fund upon its purchase of each closed SAM loan from Homium and 0.50% annual asset management fee for managing the SAM Fund and servicing the loan pool which will be expensed from the SAM Fund. The asset management fee will accrue quarterly but will be paid to Homium only when there is cash from SAM loan repayments available in the fund. The origination fee will compensate Homium for loan sourcing, underwriting, processing, and loan closing activities, including all related ongoing operational costs and expenses such as internal personnel costs and overhead. No origination or similar fee will be charged to the borrower by Homium, CRA or Garbett in connection with any SAM loan in the interest of maximizing affordability for borrowers. The annual asset management fee will cover all investment oversight and portfolio management, including routine monitoring and reporting, internal personnel costs for fund management, internal accounting and compliance, and general corporate overhead of the fund manager allocable to the SAM Fund. c) Pass-Through Expenses. The SAM Fund shall be responsible for reasonable, out-of-pocket third- party expenses incurred in the ordinary course of operations, including: (i) audit and tax preparation; (ii) expenses related to collections or foreclosure, including but not limited to legal expenses; and (iii) direct, third-party costs associated with loan origination and servicing (e.g., appraisals, title searches or title insurance, recording fees, credit reports, or limited underwriting support from vendors). All such expenses will be incurred on an arm’s length basis and, if paid to an affiliate of Homium or Garbett, will be at rates no less favorable than those available from unrelated third parties. In addition, under no circumstances will Pass-Through Expenses include any of the following: general overhead, office expenses, or employee compensation of Homium or UDF Brix, costs that are duplicative of amounts otherwise compensated through the Initial Fund Fee or the Ongoing Fund Fees; or any costs not expressly contemplated by the foregoing categories, without written prior approval from CRA. All administrative fees and expenses, both initial and ongoing, shall be fully itemized in Homium's quarterly reports to ensure transparency and accountability to the CRA throughout the 35-year affordability period. Funds generated from SAM loan payoffs over the term of the SAM Program will remain accessible to CRA through the Homium quarterly tender process. The CRA may, in its sole discretion, withdraw remaining funds through the Homium tender process, while 35-year deed restrictions remain in place. CRA shall provide SAM funds as described upon: (i) the Parties and the Project meeting all of the terms described in this term sheet (in the reasonable judgment of the CRA), and (ii) no later than six months after the Project receives building permits on vertical construction for the first building. In the event the CRA does not provide SAM funds within six months of meeting the outlined conditions, the December 31, 2028 deadline shall be extended by one day for each calendar day beyond the six-month period that CRA’s funding is delayed. All such funds, net of fees, shall be used to fund SAMs for 34 Project homes by December 31, 2028. Any CRA funds not utilized for closed SAM loans, or otherwise earmarked for buyer support in the form of homebuyer services provided by CDCU (as part of the Initial Fund Fees), by December 31, 2028, shall be immediately returned to the CRA. A one-time, six- month extension to this deadline may be requested by the Project team and granted at the sole discretion of the CRA, provided that the request is submitted in writing no later than 90 days prior to the December 31, 2028 deadline. Such an extension may be granted or denied for any reason deemed acceptable by the CRA, including but not limited to: construction or permitting delays, changes in applicable law or program requirements, market conditions materially impacting homebuyer eligibility or demand, CRA or governmental processing delays, or other reasons deemed acceptable by the CRA. Any approved extension shall be memorialized in a written amendment signed by all Parties, and all remaining conditions of this term sheet, including the requirement to return unused funds, shall apply as of the extended deadline. Affordability and Compliance • At least 23 units must be dedicated to households earning at or below 120% of the area median income (“AMI”). o The initial unit mix during the 35-year affordability period includes:  80% of AMI: 1 unit  90% of AMI: 21 units  100% of AMI: 1 unit • Affordability must be ensured through recorded covenants, conditions, and restrictions (“CC&Rs”), deed restrictions, and SAM covenants, with ongoing compliance monitoring of SAM covenants and borrower criteria administered by Homium, including income and occupancy monitoring, refinancing reviews, and payoff oversight. In instances where a homebuyer does not utilize a UDF Brix SAM, Homium will not be responsible for compliance monitoring; instead, CDCU will assume responsibility for income verification and buyer compliance prior to closing. Homium will provide structured annual program reports covering SAM performance, resale activity, revolving capital status, current affordability calculations, and any recommendations for AMI adjustment necessary to preserve the viability of the CRA’s allocation within the UDF Brix. • If Homium recommends an AMI adjustment, the CRA, at its own discretion, can permit the AMI limits on the minimum number of units to increase (up to, but not exceeding 120% AMI) at the time of resale, to ensure that the fund does not fall short of the required capital to maintain the affordability of the 23 units. • Garbett and its partners shall ensure homebuyers understand the opportunities and risks associated with the resale of income-restricted units. • Homebuyer support and education shall be provided by CDCU, or another similar provider, to the buyers of income-restricted residential units prior to the home closing and throughout the affordability period. Ownership Requirements • Units must be developed, platted, and sold as individual units. • AMI restricted units shall be restricted for primary owner-occupancy through deed restriction or 35 similar restrictive-use agreements (in a form approved by CRA) recorded against the units. Homeowners Association (HOA) Oversight The CRA shall have the right to review and recommend revisions to the HOA governance documents and to approve or withhold its approval of such documents, in its reasonable discretion, to the extent any terms therein that affect (or could reasonably be expected to affect) the ownership, maintenance, marketability, or affordability of the affordable units. Sustainability The CRA Sustainable Development Policy requires all new construction projects to meet specific criteria to receive funding. However, due to the low-density residential nature of this project, it will be ineligible for Salt Lake City’s Energy Benchmarking Program. All other CRA Sustainable Development Policy requirements must still be met, specifically: • Designed to Earn the ENERGY STAR target of 90 or higher • 100% electric building operation (no on-site fossil fuel combustion) • The project will be granted one waiver by the CRA Board of Directors: o The project will not be required to participate in Salt Lake City’s Energy Benchmarking Program and will not be required to submit annual operational data to Salt Lake City’s Elevate Buildings Program once the building is in operation. Reporting and Accountability Recipient shall provide to CRA quarterly progress reports throughout the period of construction and sale of the units detailing the use of funds, project development status, and HOA formation progress. Conditions to Fund Garbett and Homium must meet the following conditions to close on the funding: • Garbett to provide evidence of site/location control as demonstrated through a deed evidencing fee ownership. • Garbett and Homium to disclose all identity of interest relationships within the Project. • Garbett to provide evidence, to the reasonable satisfaction of CRA, of sufficient and appropriate sources of project financing for the Project, including but not limited to letters of commitment for additional funding. • Garbett and Homium to provide evidence, to the reasonable satisfaction of CRA, that the sales price of each of the 23 affordable units will meet the initial affordability mix. • Garbett to provide and CRA to review and approve the proforma, including capital stack for construction of units and projected sale prices. • Homium to provide evidence that CRA funds will be recoverable through the UDF Brix tender process. • Garbett to provide and CRA to review and approve Building plans. • Homium to provide evidence of and CRA to review and approve of a homeowner program eligibility screening process. • Provisions in the definitive agreements requiring that funds will be used strictly for Eligible 36 Activities related to the Project. • Garbett to obtain all required city approvals and building permits for the project. • Project to secure all necessary funding to construct and sell the units within the required affordability levels. • Parties to execute funding documents as deemed necessary by the CRA and its legal counsel. • Garbett to receive approval from the CRA and its legal counsel of all matters pertaining to title, legality of the funding, and the legality, sufficiency, and the form and substance of all documents that are deemed reasonably necessary for funding the transaction. • Homium to provide evidence of insurance in such amounts and with such coverage as deemed necessary by the CRA. • Any obligation of CRA to fund the transaction is expressly conditioned upon the satisfactory completion of due diligence and the negotiation, execution, and delivery of definitive agreements, in form and substance acceptable to CRA in its sole and absolute discretion, which shall reflect the terms set forth in this Term Sheet. • CRA shall have no obligation to proceed with or consummate the transaction if (a) the definitive agreements deviate in any material respect from the terms contemplated herein, (b) any fact, circumstance, or issue arises (whether or not expressly addressed in this Term Sheet) that, in CRA’s sole judgment, increases the risk associated with the transaction or increases CRA’s financial exposure, or (c) the Project deviates in any material respects from the descriptions in this term sheet or Garbett’s representations to CRA prior to approval of the term sheet by the Board. In any such case, CRA may terminate discussions and withdraw from the transaction without liability of any kind. Events of Default The following occurrences will constitute an event of default, as will be described more fully in the final documents: • Failure to meet project obligations or completion deadlines. • Failure to construct one or more of the projects 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. Remedies Remedies in the event of a default may include, but are not limited to: • If Garbett or Homium do not meet the initial conditions for funding, the CRA will not distribute funds. • Any unspent or improperly used funds must be immediately returned to the CRA. • 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: 37  Liquidated damages  Injunctive relief, and/or  Specific performance o File a direct action against Garbett or Homium to comply with their obligations. • Any other remedies available at law or equity. 38 EXHIBIT B2: CDCU – GLADHOUSE 3 PROPOSED TERM SHEET Purpose To allocate $2,468,000 million in funds to the Community Development Corporation of Utah (“CDCU”, or “Recipient”) for the development of 8 for-sale single-family homes for owner occupancy at 1084 W 1700 S in Salt Lake City, Utah, in the Glendale neighborhood (“Gladhouse 3” or “Project”). Parties CDCU, Community Development Land Trust (“CDLT”), and the Salt Lake City Community Reinvestment Agency (“CRA”). Project Description CDCU shall close on the funds by May 31, 2028, in conjunction with the development of the Project site in the Glendale neighborhood. Any funds not closed by this date shall be returned to the CRA. CDCU will develop the Project to create affordable, for-sale, owner-occupied homes, with a minimum of 8 affordable residential units. CDCU, through its affiliate CDLT, will retain ownership of the land and common space and serve as the community's management company. CDCU will administer the project’s revolving downpayment assistance loans, homebuyer match savings program, homebuyer housing counseling, and program administration. Eligible Activities CRA funds will be used for a 0% interest construction loan with a maximum term of 36 months, revolving downpayment assistance loans, homebuyer matched savings, housing counseling, and program administration. Proposed Funding Terms $2,468,000 will be allocated as follows. • $2,000,000 construction loan (loan) o 0% interest with a maximum loan term of 36 months o Lien on property that may be subordinated to senior lender(s) o Repayment shall be made upon sale of each unit o The loan shall be disbursed through construction draws • Up to $468,000 resident assistance funds(grant): $400,000 ($50,000 maximum for each residential unit) for revolving downpayment assistance loans, $60,000 for a homebuyer matched savings ($7,500 maximum for each residential unit), $8,000 ($1,000 maximum for each residential unit) for housing counseling and program administration o These funds shall be disbursed after commencement of construction, at the time of sale of each unit. Affordability and Compliance • All 8 units must be dedicated to households earning at or below 80% of the area median income (“AMI”). 39 • Affordability is proposed to be in perpetuity and will be ensured through a 99-year renewable land lease to property owners and deed restrictions. Ownership Requirements • Units must be developed, platted, and sold as individual units. CDLT will retain ownership of the land and will offer 99-year renewable land leases to property owners. • Units shall be restricted for primary owner-occupancy through deed restriction or similar restrictive-use agreements. Sustainability The CRA Sustainable Development Policy requires all new construction projects to meet specific criteria to receive funding. However, due to the low-density, residential ownership nature of this project, it will be unable to participate in Salt Lake City’s Energy Benchmarking Program. All other Sustainable Development Policy requirements must still be met. • The project shall comply with portions of 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) • The project will be granted one waiver by the CRA Board of Directors: o The project will not be required to participate in SLC’s Energy Benchmarking Program and will not submit annual operational data to Salt Lake City’s Elevate Buildings Program once the building is in operation. Reporting and Accountability Recipient shall provide to the CRA quarterly progress reports through construction and sale of the units detailing the use of funds, project development status, and CDLT formation, land lease restriction agreement, and policy and procedures progress. Conditions to Fund CDCU and CDLT must meet the following conditions to close on the funding: • CDLT to provide evidence of site/location control as demonstrated through a deed evidencing ownership, fully executed option agreement recorded against the property, or executed long- term ground lease. • CDCU and CDLT to disclose all identity of interest relationships within the Project and all related financing. • CDCU and CDLT to provide evidence of sufficient and appropriate sources of project financing for the Project. • CDCU and CDLT to provide evidence that the sales price of each of the 8 units will be affordable to households at or below 80% AMI. • CRA to review and approve the proforma, including capital stack for construction of units and projected sale prices. Project must secure all necessary funding to construct and sell the units within the required affordability levels. 40 • CDCU to provide evidence of a homeowner selection plan/tenant selection process for CRA’s approval. • CDCU and CDLT to provide proof that funds will be used strictly for Eligible Activities related to the Project. • Project to obtain all required city approvals and building permits for the Project. • Parties to execute loan documents (e.g. promissory notes, loan agreements, security documents, and guarantees) and other funding agreements as deemed necessary by the CRA and its legal counsel. • Parties to 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. • CDCU and CDLT to provide evidence of insurance in such amounts and with such coverage as deemed necessary by the CRA. Events of Default The following occurrences will constitute an event of default, as will be described more fully in the final documents: • Failure to meet project obligations or completion deadlines. • Failure to construct one or more of the projects 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. Remedies Remedies in the event of a default may include, but are not limited to: • If CDCU or CDLT do 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. • 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 CDCU or CDLT to comply with their obligations. • Any other remedies available at law or equity. 41