Entity Staff Report - 8/26/20211
BOARD STAFF REPORT
THE REDEVELOPMENT AGENCY of SALT LAKE CITY
TO:RDA Board Members
FROM: Allison Rowland
Budget & Policy Analyst
DATE:August 24, 2021
RE: FY 2021-22 AFFORDABLE HOUSING DEVELOPMENT FUNDING PRIORITIES
FOLLOW-UP
ISSUE AT-A-GLANCE
The Board has engaged in discussions over the past few months on how to define the Housing Development
Funding Priorities for fiscal year 2022 (FY22). These Priorities are intended as policy direction for RDA staff as
they consider applications for City affordable housing development support offered through any Notice of
Funding Availability (NOFA) in this fiscal year. The goal of adopting priorities on an annual basis, according to
RDA staff is to “be able to direct resources to specific policy priorities depending on current resources,
community need, and policy objectives.” This process follows the Housing Funds Allocation Policy and Housing
Development Loan Program (HDLP) Policy adopted by the Board early in 2021. In future years the annual
Priorities discussion will be scheduled during March or April, for consideration well before budget discussions
begin.
The most recent RDA transmittal (August 9, 2021), proposes a revised FY22 Affordable Housing Priorities
strategy which that would consider two priorities from the list previously discussed—Fund Leveraging and
Environmental Sustainability—as thresholds required for consideration of any NOFA funding proposal. For each
funding proposal thus qualified, RDA staff would weigh the remaining 11 priorities according to a point scale
that ranges from one to three in terms of relative importance. The total points awarded to each project would
determine its ranking among the applications received, with Board approval needed for final decisions. In
addition, a 0.5% interest rate reduction would be available for each of the 11 priorities met, as well as for the
Sustainability threshold, with a maximum of four reductions on any RDA loan (that is, two full percentage points
below the base rate) for a specific project. Note that in all cases, RDA funding would be limited to 10% or less of
a project’s total financing sources.
Goal of the briefing: Discuss the revised funding priority strategy and consider adopting the Resolution
entitled FY 2021-22 Affordable Housing Funding Priorities.
Item Schedule:
Briefing: August 24, 2021
Set Date: n/a
Public Hearing: n/a
Potential Action: August 24, 2021
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POLICY QUESTIONS
1. The Board may wish to discuss whether to further divide the proposed top category of NOFA Ranking
Weights (that is, the five priorities that would receive three points) to further distinguish among them.
For example, certain of these priorities could receive four or more points.
2. Would the Board like to make any adjustments in the language for each Policy Objective listed in
Attachment A?
3. Does the Board wish to review the specific language proposed for the Sustainability threshold in
Attachment A, and below, to determine whether it meets their standards, and whether relatively small
projects (those with loans of $400,000 or less) would be discouraged by this definition?
“Sustainability: The threshold sustainability requirement will be as follows:
Enhanced Energy Performance – All affordable housing construction loans
of four hundred thousand dollars ($400,000) or more shall be designed to
achieve an energy use intensity (EUI) target that is 25% lower than the
median EUI of similar building types or a “Designed to Earn ENERGY
STAR” Score of 80 or higher and participate in the City Sustainability
Department’s Elevate Buildings Program. The EUI and ENERGY STAR
targets shall be based on ENERGY STAR or comparable source. A project
that has increased sustainability standards beyond the threshold requirement
will be eligible for an HDLP interest rate reduction.”
REDEVELOPMENT AGENCY OF SLC
FY 22 HOUSING FUNDING PRIORITIES FOLLOW-UP
RDA BOARD OF DIRECTORS MEETING –AUGUST 24, 2021
HOUSING BUDGET &
ADMINISTRATION
WORKFLOW
HOW ARE FUNDING PRIORITIES APPLIED?
Funding priorities are applied the following ways:
1)FUNDING ALLOCATIONS
The prioritization of projects during the application review/approval process.
2)INTEREST RATE REDUCTIONS
To provide interest rate reductions for projects selected for funding.
PRIORITIES FOR ALLOCATING FUNDS
•The Board has expressed interest in elevating certain priorities including Family Housing,
Sustainability, Homeownership, and Target Populations.
•The Board has expressed interest in making the Sustainability priority a threshold requirement. A
potential standard could be:
•Enhanced Energy Performance -All affordable housing construction loans of four hundred
thousand dollars ($400,000) or more shall be designed to achieve an energy use intensity
(EUI) target that is 25% lower than the median EUI of similar building types or a “Designed to
Earn ENERGY STAR” Score of 80 or higher and participate in the City Sustainability
Department’s Elevate Buildings Program. The EUI and ENERGY STAR targets shall be based
on ENERGY STAR or comparable source.
PRIORITIES FOR INTEREST RATE REDUCTIONS
•The HDLP policy provides for a 0.5% interest rate reduction for each funding priority a project
aligns with, down to a minimum of 1%. The interest rate typically begins at ~3%, and a project
would need to quality for 4 funding priorities to reduce the interest rate from 3% to 1%.
•On a $1,000,000 loan with a 30-year term, each 0.5% interest rate reduction would provide
$77,000 in savings over the term or $6,400 annually.
•Projects applying for gap financing are not financially viable and often require low interest rates to
adequately fill the gap. As such, the Board may wish to keep the list of priorities utilized for interest
rate reductions a bit more robust than the list of priorities utilized in the funding allocation/selection
process.
•These interest rate reductions not only help incentivize the development of affordable housing, but
can also incentivize other public benefits such as ground floor commercial or publicly -visible art.
FUNDING PRIORITIES –POSSIBLE SCENARIO
QUESTIONS &
DISCUSSION