Entity Staff Report - 7/4/2021CITY 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 REDEVELOPMENT AGENCY of SALT LAKE CITY
TO:RDA Board Members
FROM:Allison Rowland
Budget & Policy Analyst
DATE:May 4, 2021
RE: RESOLUTION: LOAN TO COLONY B, LLC, FOR AN AFFORDABLE HOUSING
DEVELOPMENT AT APPROXIMATELY 228 WEST 1300 SOUTH
ISSUE-AT-A-GLANCE
The Board is asked to consider a $1.3 million loan request from Colony B, LLC, to help fund a $21.0 million
mixed-income affordable housing project at approximately 228 West 1300 South. This project would provide
approximately 140 residential units, of which 106 would be deed-restricted as affordable for 50 years. The units
would be a mix of studios (each approximately 324 square feet) and one-bedroom apartments (each about 520
square feet), with rents for the affordable units set between 25% AMI and 50% AMI. Eleven units will be initially
available for young people aging out of foster care, and the developers intend to continue to seek young people in
this situation to the extent possible in the future through a partnership with the VOA and their youth resource
center. In addition, 15 units will accommodate people with long-term mobility challenges.
The developer, Colony B, LLC, is a joint venture between the Neighborhood Nonprofit Housing Corporation
(NNHC, also known as Neighborhood Housing Solutions) and Defy CoLabs, LLC, which is based in Bountiful.
The proposed loan’s interest rate would be 1.2%, with a term of 16 years and a 40-year amortization period. The
City would be in second position for repayment. The project would break ground in July 2021, with occupancy
and lease-up beginning in late 2022 and early 2023.
The project aligns with five goals listed in Growing SLC: A 5-Year Housing Plan. The Housing Trust Fund
Advisory Board unanimously recommended approval of this loan as presented in the transmittal at their April 7,
2021 meeting.
Goal of the briefing: Discuss and consider approving a $1,340,000 loan to Colony B, LLC, for an affordable
housing project at approximately 228 West 1300 South.
Item Schedule:
Briefing: May 4, 2021
Set Date: N/A
Public Hearing: N/A
Potential Action: May 18, 2021
Page | 2
ADDITIONAL INFORMATION
A. Project Deed-Restricted Apartments: Types and Affordability Levels
Studio
One-
Bedroom
25% AMI 4 1
39% AMI 16 1
45% AMI 60 3
50% AMI 19 2
TOTAL 99 7
B. Funding Gap
The $1.3 million loan is intended to cover a funding gap created by increased construction costs, as well
as a drop in the value of Utah’s LIHTC tax credits since they were awarded last September. The drop
from $0.99 to $0.96 would account for about $300,000, so the balance of the loan is presumably
requested to cover construction cost increases.
C. Proposed Interest Rate Reduction
The base interest rate for the Housing Development Loan Program (HDLP) is set at 3%. Proximity to the
Ballpark Station Trax line would allow for a reduction of -0.25%, and another -0.25% was awarded for
affordability, reducing the rate to 2.50%. [Council staff note: This differs from the information in the
text of the revised transmittal, which was sent on April 28, 2021. However, the resolution was updated
to reflect an additional interest rate reduction of -0.25% for affordability.]
The developers have requested the rate be reduced to 1.2% because the senior lender’s required debt
coverage ratio (DCR) is 1.15. HDLP’s minimum DCR is 1.1.
RDA staff recommends this reduction be approved by the Board, which is permitted by program policy
on a case-by-case basis when required by senior lenders.
“In this case, RDA staff recommends approval of this reduced interest rate – though
not below the HDTF Policy’s 1% threshold – as the Project has a high number of
deeply affordable units, is ready to break ground this summer, has secured 9% Low
Income Housing Tax Credits and the applicant is a housing nonprofit that will make
hard repayments to the RDA with a balloon payment at the end of the 16-year loan.”
D. Source of Funding
FY20 HDTF transfer to RDA $2,590,000
Diamond Rail Loan - $1,000,000
Wasatch Cmty. Gardens Loan - $250,000
Colony B Loan - $1,340,000
FY20 HDTF Balance $0
POLICY QUESTION
1. While this project accomplishes several goals in Growing SLC: A 5-Year Housing Plan, the Board may wish
to ask the Administration how future investments can incentivize projects with affordable family-sized units
(2+ bedrooms).