REDEVELOPMENT AGENCY

Transcription

1 JACKIE BISKUPSKI EXECUTIVE DIRECTOR REDEVELOPMENT AGENCY O F S A L T L A K E C I T Y JUSTIN BELLIVEAU CHIEF ADMINISTRATIVE OFFICER REDEVELOPMENT AGENCY STAFF MEMO DATE: September 13, 2016 ITEM #: PREPARED BY: RE: Ben Davis Consideration and adoption of a resolution approving the affordable housing component and purchase price for RDA-owned property in the Central Business District project area (CBD) REQUESTED ACTION: RDA staff is seeking consideration and approval of the affordable housing component and associated purchase price (the Housing Matrix) (see Attachment B) for RDA-owned property located at 340 West 200 South (the Property ). POLICY ITEM: Central Business District Project Area Strategic Plan: Objectives o Contribute to the development of a high-quality housing stock that serves the needs of a population with mixed-incomes, multiple generations, and varying household sizes. o Support the development of public infrastructure that contributes to improved connectivity, quality urban design, innovative public art, and high-density development in Downtown Salt Lake City. o Develop new public open spaces that are creatively designed and located. o Support the construction of real estate projects that implement sustainable development principles and limit carbon emissions. Implementation Project Prioritization o Utah Paperbox Development: The RDA shall redevelop the Utah Paperbox site. Initial planning efforts will consider residential, commercial, and open space uses. BUDGET IMPACTS: Existing budget appropriations would only be affected if the Board of Directors (the Board ) selects Alternative C of the enclosed Housing Matrix. However, any proceeds derived from a sale of the Property would be available for future appropriation to projects in the CBD. EXECUTIVE SUMMARY: In January 2016, the Board meeting discussion focused on the relationship between the appropriate level of affordable housing for the Property and the associated public or RDA incentive that may be required to ensure an economically viable project. At that time, the Board authorized the RDA to enter into an Exclusive Negotiations 451 South State Street, Room 418 // Salt Lake City, UT // //

2 Agreement (the ENA ) with the joint venture of Property Enhancement Group Inc. dba PEG Development and Clearwater Homes LLC (the Developer ) and directed staff to determine alternatives that provide the Board-required number of affordable units, are consistent with the City s housing needs, and achieve the Developer s required financial returns. Since executing the ENA in March 2016, RDA staff has worked closely with the Developer, Urban Design Associates (UDA), Housing and Neighborhood Development (HAND), and the National Development Council (NDC) to arrive at Housing Matrix alternatives and development terms (see Attachment C) that are consistent with the criteria mentioned above. Additionally, RDA staff has worked with the Developer to create a concept plan (see Attachment D) that is consistent with the vision plan approved by the Board in June 2015 and compatible with project-specific design guidelines. An update on the concept plan and development schedule is provided below for the Board s information. ANALYSIS AND ISSUES: Deal Terms The attached Housing Matrix and Option to Purchase Agreement term sheet outline the terms that could be incorporated into an Option to Purchase Agreement. Terms of interest are the Housing Matrix, Purchase Price, and Outside Closing Date. Housing Matrix and Purchase Price In June 2015, the Board directed that 20% of the total units be affordable. In general, housing is affordable if a household spends no more than 30% of its income on gross housing costs, including utilities. Affordable housing, the parameters of which are determined by the federal Department of Housing and Urban Development (HUD), generally refers to housing units of various sizes that are affordable to the segment of society whose income is at or below the median household income. The current area median income (AMI) levels for a family of four living in Salt Lake County are as follows: o Median Income (100% AMI): $73,800 o Low Income (80% AMI): $59,050 o Very Low Income (50% AMI): $36,900 o Extremely Low Income*: $24,300 *Note: HUD defines Extremely Low Income to be the greater of 60 percent of the Section 8 very low-income limit or the poverty guideline. Whereas market forces dictate the amount that a landlord can typically charge a tenant in rent, the maximum rent for an affordable unit is fixed and therefore impacts the economics of the project. For example, the anticipated market rents on this project for a studio, one bedroom, and two bedroom unit are $1,100, $1,250, and $1550; while the effective rents, meaning AMI rent less utilities, for an affordable unit (a 60% of AMI unit in this example) are $713, $768, and $911, respectively. During discussion at the January 2016 meeting, the RDA asked the Developer and

3 RDA staff to evaluate during the negotiation period a range of affordable housing alternatives that considers the level of affordability, length of affordability, and the associated incentive/exchange of value required for each alternative. o Level of Affordability: Subsequent analysis by RDA and HAND staff determined that the optimal level of affordability for this portion of the CBD, based on need, is 60% of AMI and below. o Length of Affordability: During the negotiation period, it was mutually determined that a 30-year affordability period could be achieved and still maintain the financial viability of the project. Through an annual audit process, HAND will ensure that the Developer complies with the affordability requirements approved by the RDA. The income restricted rental rates could convert to market rates at the end of the 30-year affordability period. o Incentive/Exchange of Value: The table below outlines the proposed incentive/exchange of value for each alternative. The proposed purchase price of $3,220,000 is the result of the appraised value less the following considerations: the cost of the AMI deed restricted units to the Developer (if applicable), a functional utility adjustment due to certain site constraints and requirements, demolition costs, park improvement costs, the requirement to relocate parking stalls on the Property pursuant to an RDA agreement with an adjacent property owner, and costs to underground overhead power lines through the Property. In other words, the proposed purchase price is less than fair market value, because of the constraints the RDA is imposing on the development of the Property. See Attachment B for more details. Alternative A: Under this alternative, the Developer would provide 0 affordable units and pay $3,220,000 in exchange for the Property. If this alternative is selected, the sale proceeds could be appropriated to future RDA projects. Alternative B: Under this alternative, the Developer would provide 36 units at 60% of AMI for 30 years and pay $0 in exchange for the Property. Alternative C: Under this alternative, the Developer would provide 18 units at 50% of AMI and 18 units at 60% of AMI for 30 years and pay $0 in exchange for the Property. Additionally under this alternative, the RDA would grant the Developer $600,000 to offset revenue lost from the lower AMI units. Please note that a reduced incentive/exchange of value could be possible should the number of 60% of AMI units be increased

4 and the number of 50% of AMI units be decreased. Alternative D: Under this alternative, the RDA and the Developer would mutually agree to conclude negotiations and the RDA would seek another partner to redevelop the Property through a competitive process. It should be noted, however, that the economics of any project that achieves the level of affordability sought here would likely require a similar level of public support. Proposed Development Program: 183 Total Units (20% of which, or 36 units, are AMI Units) Alternative 50% AMI 60% AMI AMI Time Horizon Purchase Price A Years $3,220,000 B Years $0 C Years ($600,000) D Issue RFP for the Property Outside Closing Date The Outside Closing Date is August 3, 2017, and the Developer is typically required to begin construction shortly after closing. UPDATE: Concept Plan In June 2015, the RDA approved the final vision plan for the Property and provided policy direction to include the following project elements: midblock connections (through the block from 300 West to 400 West and into the interior of the block from 200 South), park space, a combined plaza space with the Hyatt Place hotel, screened and/or underground parking, loggias, a mix of commercial and residential uses, quality building materials, and affordable retail space. The attached concept plan incorporates each of these objectives of the vision Plan and RDA policy direction for this project. Development Schedule The Developer will need 12 months to complete the entitlement process (August 2016 August 2017) and 19 months to complete construction (August 2017 March 2019). PREVIOUS REDEVELOPMENT ADVISORY COMMITTEE (RAC) AND BOARD ACTION: May 2015 RAC and Board provided comments and development recommendations after reviewing the draft Vision Plan.

5 June 2015 Board provided staff with policy direction for the development of the Property. November 2015 RAC recommended that the Board authorize the RDA to enter into the ENA with the Developer. January 2016 Board authorized the RDA to enter into the ENA. February 2016 The Administration asks the Board to reconsider the housing component of the project. The Board re-approves to enter into the ENA. June 2016 Board authorizes extending the ENA for 30 days. July 2016 Board authorized extending the ENA until September 14, 2016 ATTACHMENTS: A. Resolution B. Housing Matrix C. Option to Purchase Agreement Term Sheet D. Concept Plan

6 RESOLUTION NO. : September 13, 2016 Utah Paperbox Housing Matrix RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY APPROVING A HOUSING MATRIX ALTERNATIVE FOR RDA- OWNED PROPERTY AT 340 WEST 200 SOUTH IN THE CENTRAL BUSINESS DISTRICT PROJECT AREA. WHEREAS, the Redevelopment Agency of Salt Lake City ( RDA ) was created to transact the business and exercise the powers provided for in the Utah Community Reinvestment Agency Act; and WHEREAS, the RDA adopted the C.B.D. Neighborhood Development Plan on May 1, 1982; and WHEREAS, the RDA adopted the Central Business District Project Area Strategic Plan; and WHEREAS, the joint venture of PEG Development and Clearwater Homes (the Developer ) executed an exclusive negotiations agreement (the Agreement ) with the RDA for the purpose of negotiating the terms upon which the RDA would be willing to sell its property located at 340 West 200 South (the Property, also known as Utah Paperbox) to Developer; and WHEREAS, the RDA has worked with the Developer during the exclusive negotiation period to arrive at alternatives to the affordable housing mix and associated purchase price (the Housing Matrix ) for the Property that provide the Board-required number of affordable units, are consistent with the City s housing needs, and achieve the Developer s required financial returns. WHEREAS, the Board has made the policy determination that the Property should be sold to Developer at less-than fair market value because Developer s proposed development of the Property meets the Board s goals for developing the CBD Project Area, including providing affordable housing and open space. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY, that we do hereby approve Housing Matrix alternative and authorize the RDA s sale of the Property at less than fair market value. Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this 13 th day of September, 2016.

7 Lisa R. Adams, Chairperson Transmitted to the Executive Director on. The Executive Director: does not request reconsideration requests reconsideration at the next regular Agency meeting. Jacqueline M. Biskupski, Executive Director Approved as to form: Salt Lake City Attorney s Office Katherine N. Lewis

8 Net Land Price Utah Paperbox RDA Land Matrix $3.5 MM A $3 MM $2.5 MM $2 MM $1.5 MM $1 MM $.5 MM $0 MM B $(.5 MM) C $(1 MM) $(1.5 MM) $(2 MM) $(2.5 MM) 40% 50% 60% 70% 80% No AMI AMI Percentage PSA AMI Unit Counts = 20% of Total 183 Units AMI Appraised AMI / Deed Functional Utility Park RDA Relocation High Voltage Net Option 40% 50% 60% 70% 80% Time Horizon Land Price Reduction Reduction (1) Demolition (2) Improvements (3) 14 Parking Stalls (4) Power Line (5) Land Price A No AMI $ 5,200,000 $ - $ (900,000) $ (300,000) $ (265,000) $ (280,000) $ (235,000) $ 3,220,000 B $ 5,200,000 $ (3,220,000) $ (900,000) $ (300,000) $ (265,000) $ (280,000) $ (235,000) $ - C $ 5,200,000 $ (3,820,000) $ (900,000) $ (300,000) $ (265,000) $ (280,000) $ (235,000) $ (600,000) D LIHTC RFP Appraisal Dated July 28, 2015 (1) Appraiser noted a reduction in the land value because of the unique shape and RDA design requirements for the proposed project (2) Demolition of Paperbox buidling estimated at $300,000 (3) Park Improvements are based on $25 PSF for 10,622 SF of park space. (4) The cost of the RDA requirement of 0-14 stalls in favor of Paragon Station on the Paperbox site. (5) The estimated cost to bury and relocate the high voltage power lines on the parcel.

9 Utah Paperbox Option to Purchase Agreement Term Sheet Proposed Terms: Option to Purchase Agreement: The following terms will be incorporated into a Option to Purchase Agreement ( Agreement ) for the sale and development of real property located at 340 West 200 South ( Property ) between and the Redevelopment Agency of Salt Lake City ( RDA ) and a limited liability company ( Developer ) owned by Property Enhancement Group Inc. dba PEG Development ( PEG ) and Clearwater Homes LLC ( Clearwater ). (a) Option to Purchase: Subject to compliance with the required terms and conditions in the Agreement, the RDA grants to the Developer the exclusive right and option to purchase the Property (the Option ). (b) Option Fee: Within ten (10) business days of the execution of the Agreement, the Developer shall pay to the RDA a non-refundable Option Fee of $10,000 in consideration of the Option. The Option Fee shall be applicable to the Purchase Price in the event of a Closing. (c) Option Period: The Option must be exercised, if at all, during the period (the Option Period ) which ends on March 13, 2017 (the Option Period Expiration Date ). (d) Closing: Developer must close on the purchase of the Property no later than August 3, 2017 (the Outside Closing Date ). (e) Affordable Housing: The project shall include affordable housing, and specifically 20% of the residential units shall be reserved as affordable/workforce housing for households that make 60% of the Area Median Income or below. Developer shall provide a matrix of alternatives, each of which shall include: the length of time that the affordability of each alternative is maintained and the dollar amount of incentive, if any, that Developer requires for each alternative (the Housing Matrix ). The Housing Matrix will be based on the alternatives shown on Exhibit A attached hereto. Developer acknowledges that the Agreement shall contain a requirement of a postclosing agreement regarding affordable housing that implements one of the alternatives in the Housing Matrix approved by the RDA, unless none of the alternatives in the Housing Matrix are approved by the RDA, in which case the negotiation period will expire on September 14, Developer also acknowledges that the Agreement shall contain a requirement of a post-closing agreement ensuring on-going compliance to the affordability requirements pursuant to the alternative of the Housing Matrix approved by the RDA. (f) Purchase Price: The Purchase Price is pursuant to the alternative of the Housing Matrix approved by the RDA. (g) Developer Improvements: Developer acknowledges that the RDA

10 expects that the Property will be developed generally in accordance with Exhibit B and Exhibit C attached hereto. (h) Purchase As Is : In the event of a Closing, the Developer agrees that the purchase of the Property from the RDA shall be on an as-is basis as specified in the Agreement. (i) No Inspection Period: Developer acknowledges that it has completed its due diligence with respect to the physical properties, title, zoning, and entitlement of the Property, and it has determined the Property is satisfactory for its purposes, and that there will be no inspection period under the Agreement. (j) Title and Title Insurance: Agency shall pay for a standard form owner s policy of title insurance. Developer shall pay for any extended policy and requested endorsements. In the event of a Closing, the Developer agrees that the purchase of the Property from the RDA will be subject to the Permitted Exceptions. (k) Conditions to Closing: Agency s obligation to sell the Property shall be subject to the conditions specified in the Agreement, including without limitation the condition that Developer and Agency shall have identified and established a mechanism to maintain the common open space areas in a condition agreeable to the Agency. (l) Approval of Other Agreements: Agency and Developer acknowledge and agree that the Parties must negotiate and approve the forms of the following documents, which will be attached to the Agreement as exhibits: 1) Description of Developer Improvements 2) Schedule of Development 3) Special Warranty Deed (and Exhibits) 4) Guaranty of Completion and Performance 5) Development Agreement (and Exhibits) 6) Option to Repurchase Agreement 7) Such other documents as may be recommended by Agency Counsel. (m)acknowledgement of Receipt of Forms: Developer acknowledges having received a copy of a form of an Option to Purchase Agreement and its exhibits, which shall be the starting point for the negotiations

11 Guarantor: The Guarantor of all of the Developer s obligations shall be PEG and Clearwater. Deadline for Execution of Agreement: In the event that the Option (with all exhibits) is not executed by March 13, 2017 then either Party may give notice of termination to the other Party, in which event neither Party shall have any further obligations or liabilities to the other Party

12 Unit Mix Parking Schedule Area Schedule (Rentable) Area Schedule (Rentable) Area Schedule (Rentable) E Department Count Unit Mix Actual SF.Studio 28 15% 15,760 SF 1 Bedroom 68 37% 51,390 SF 1 Bedroom Plus 33 18% 27,663 SF 2 Bedroom 22 12% 22,392 SF 2 Bedroom Plus 16 9% 17,619 SF Live/Work 1 Bed 10 5% 8,624 SF Live/Work Walkup 2 Bed 6 3% 2,895 SF Grand total: ,343 SF 9' x 18' (5' Aisle) 6 9' x 18' (8' Aisle) 6 9' x 18' - 45 deg S 9' x 18' 88 Basement 9' x 18' 160 Hyatt Garage 9' x 18' 29 Street 9' x 20' Name Level Area BLDG A LEVEL 01 16,005 SF BLDG A LEVEL 02 19,738 SF BLDG A LEVEL 03 17,757 SF BLDG A LEVEL 04 17,722 SF BLDG A LEVEL 05 18,356 SF BLDG A LEVEL 06 17,708 SF BLDG A: 6 107,286 SF BLDG A EXT LEVEL 03 BLDG A EXT LEVEL 03 BLDG A EXT LEVEL 03 BLDG A EXT LEVEL 06 BLDG A EXT LEVEL 06 BLDG A EXT: SF 1,129 SF 221 SF 221 SF 661 SF 2,862 SF Name Level Area BLDG B LEVEL 01 13,372 SF BLDG B LEVEL 02 14,162 SF BLDG B LEVEL 03 14,162 SF BLDG B LEVEL 04 14,162 SF BLDG B LEVEL 05 14,162 SF BLDG B LEVEL 06 13,351 SF BLDG B: 6 83,370 SF BLDG B EXT LEVEL 06 BLDG B EXT: SF 866 SF Name Level Area BLDG C LEVEL 01 COMMERCIAL BLDG C COMMERCIAL: 1 BLDG C RES LEVEL 01 BLDG C RES LEVEL 02 BLDG C RES LEVEL 03 BLDG C RES: 3 2,029 SF 2,029 SF 2,955 SF 4,984 SF 4,984 SF 12,924 SF PARKING LEVEL 00 17,951 SF PARKING LEVEL 00 14,150 SF PARKING LEVEL 00 6,199 SF PARKING LEVEL 00 19,983 SF PARKING: 4 58,284 SF 267,620 SF E 524 SOUTH 600 EAST SALT LAKE CITY, UT VCBO.COM SUBSTATION PARKING GARAGE D 3 D A4 2 C 400 WEST 77' - 6" 12' - 0" A4 BLDG B 13,372 SF 15' - 2" 20' - 0" 6' - 0" 4' - 0" 20' - 0" BLDG C COMMERCIAL 2,029 SF 6' - 0" 199' - 8" 10' - 0" 96' - 8 1/2" 310' - 7 1/2" LOBBY EDGE OF PARKING BELOW EDGE OF PARKING BELOW CLUBHOUSE 1968 SF WILM SQFT 242' - 5" 28' - 5" BLDG C RES 2,955 SF BLDG A 18' - 8" 16,005 SF 52' - 4 1/2" 15' - 2" 20' - 0" OFFICE / LOBBY 1087 SF WILM SQFT RETAIL / RESTURANT 51' - 9" 1053 SF 20' - 4 1/2" 130' - 3" 300 WEST C REV DATE DESCRIPTION VCBO NUMBER: CLIENT NUMBER: DATE: 20## XXX ## 4 A4 4 A4 2 A4 10' - 0" PARKING ENTRY TRANS PARKING ENTRY TRASH TRANS TRASH 3 A4 B A DAKOTA FUTURE BUILDING 10' - 0"6' - 0" 20' - 0" LANDSCAPE LANDSCAPE WESTGATE 200 SOUTH WESTGATE US TRANSLATION PARAGON B A UTAH PAPERBOX OWNER NAME PROJECT ADDRESS PROJECT PHASE 1 LEVEL 01 RENTABLE AREA PLANS 0' 10' 20' 40' SCALE: 1" = 20'-0" 7/1/2016 2:32:19 PM A1

13 Unit Mix Parking Schedule Area Schedule (Rentable) Area Schedule (Rentable) Area Schedule (Rentable) E Department Count Unit Mix Actual SF.Studio 28 15% 15,760 SF 1 Bedroom 68 37% 51,390 SF 1 Bedroom Plus 33 18% 27,663 SF 2 Bedroom 23 13% 23,242 SF 2 Bedroom Plus 16 9% 17,619 SF Live/Work 1 Bed 9 5% 7,868 SF Live/Work Walkup 2 Bed 6 3% 2,895 SF Grand total: ,437 SF 9' x 18' (5' Aisle) 3 9' x 18' (8' Aisle) 3 9' x 18' - 45 deg 23 Basement 9' x 18' 113 Hyatt Garage 9' x 18' 29 Street 9' x 20' Name Level Area BLDG A LEVEL 01 16,005 SF BLDG A LEVEL 02 19,738 SF BLDG A LEVEL 03 17,757 SF BLDG A LEVEL 04 17,722 SF BLDG A LEVEL 05 18,356 SF BLDG A LEVEL 06 17,708 SF BLDG A: 6 107,286 SF BLDG A EXT LEVEL SF BLDG A EXT LEVEL 03 1,129 SF BLDG A EXT LEVEL SF BLDG A EXT LEVEL SF BLDG A EXT LEVEL SF BLDG A EXT: 5 2,862 SF Name Level Area BLDG B LEVEL 01 13,372 SF BLDG B LEVEL 02 14,162 SF BLDG B LEVEL 03 14,162 SF BLDG B LEVEL 04 14,162 SF BLDG B LEVEL 05 14,162 SF BLDG B LEVEL 06 13,351 SF BLDG B: 6 83,370 SF BLDG B EXT LEVEL SF BLDG B EXT: SF Name Level Area BLDG C LEVEL 01 COMMERCIAL BLDG C COMMERCIAL: 1 2,029 SF 2,029 SF BLDG C RES LEVEL 01 2,955 SF BLDG C RES LEVEL 02 4,984 SF BLDG C RES LEVEL 03 4,984 SF BLDG C RES: 3 12,924 SF PARKING LEVEL 00 17,951 SF PARKING LEVEL 00 14,150 SF PARKING LEVEL 00 6,199 SF PARKING LEVEL 00 19,983 SF PARKING: 4 58,284 SF 267,620 SF E 524 SOUTH 600 EAST SALT LAKE CITY, UT VCBO.COM SUBSTATION PARKING GARAGE D D C 400 WEST 77' - 6" 12' - 0" BLDG B 13,372 SF 15' - 2" 20' - 0" 6' - 0" 4' - 0" 20' - 0" BLDG C COMMERCIAL 2,029 SF 6' - 0" 199' - 8" 10' - 0" 96' - 8 1/2" 310' - 7 1/2" LOBBY EXERCISE / CLUBHOUSE 242' - 5" 28' - 5" 15' - 5 1/2" BLDG C RES 2,955 SF BLDG A 18' - 8" 16,005 SF 52' - 4 1/2" 15' - 2" 20' - 0" RENTAL, OFFICE, AND LOBBY 130' - 3" 300 WEST C REV DATE DESCRIPTION VCBO NUMBER: CLIENT NUMBER: DATE: 20## XXX ## 3 A6 3 A6 10' - 0" PARKING ENTRY TRANS PARKING ENTRY TRASH TRANS TRASH B 6' - 0" 20' - 0" LANDSCAPE B A DAKOTA FUTURE BUILDING WESTGATE 200 SOUTH WESTGATE US TRANSLATION PARAGON A UTAH PAPERBOX OWNER NAME PROJECT ADDRESS PROJECT PHASE 1 LEVEL 01 RENTABLE AREA PLANS 0' 10' 20' 40' SCALE: 1" = 20'-0" 5/3/ :51:58 AM A1

14 View of Proposed Project, Looking West

15 View of Proposed Project, Looking North

16 View of Proposed Project, Looking Northwest

17 View of the Proposed Project, Looking East