Salt Lake City to lend an additional $ 1.15 million to Chicago developer in hopes of keeping afloat the long-delayed affordable housing project at 255 S. State Street.
Different developers have struggled to build on the key downtown land for over eight years now for a variety of reasons, from soil issues and disputes between entrepreneurs to financial issues and now to a pandemic.
The additional money for Brinshore Development – on top of the $ 13.4 million in loans and other guarantees the city has already provided – was approved on Tuesday after the company said its costs had jumped by 16 % in one year, in part due to COVID-19.
The new loan makes 255 S. State one of the largest recipients of City Redevelopment Agency financial support in its history, city officials noted. The total price of the Brinshore project is now estimated at $ 88.5 million.
“It’s not cheap to bring affordable housing to your downtown area,” RDA COO Danny Walz said on Tuesday. “We recognized that this was going to be a difficult project to achieve.”
Plans at 255 S. State now call for the construction of 190 new studios and apartments and some 15,000 square feet of ground-floor retail space in two glass and steel towers on the city-owned site. , the project to be completed in two years. according to the latest Brinshore calendar.
Thanks to its deal with the RDA, all but 22 new homes would be kept more affordable, with units reserved for tenants at varying income levels between 20% and 80% of the region’s average wage.
The developer also promised to build a walkway midway between the two towers, connecting State Street to Edison Street and a major community plaza in the block. Brinshore will renovate the adjacent and historic Cramer House, a two-story building to the south, and dedicate space on the ground floors of the finished buildings for the use of Utah nonprofits.
In their role overseeing the RDA, members of the Salt Lake City council were told on Tuesday that the additional loan would help Brinshore close what is likely a temporary gap in its funding, and would only be used if the company runs out. all other sources of funding.
And in any event, said Walz, “it’s not a grant. It is not a depreciation. This is a loan with interest.
The GDR board approved the 6-0 loan at Tuesday’s virtual meeting, with city councilor Ana Valdemoros, whose District 4 spans the site, absent – having delivered a baby a few days ago, according to council chair, city councilor Amy Fowler.
Whitney Weller, senior vice president of Brinshore, said major lenders reluctance due to pandemic again; improvements in project design; and unplanned demolition and cramped construction overruns had added $ 12 million to total costs since the same period last year.
Brinshore made up most of this shortfall through other borrowing, cutting costs and doubling its own contribution to the project from $ 1.5 million to $ 3 million, Weller said and the city officials.
The developer also saved $ 4 million from a redesign, realigned its mix of affordable apartments in the project, and cut parking, retail and other commercial space.
Yet without the city’s emergency funding, Weller said, Brinshore risked not completing its finance package with lenders by year-end as planned – and could lose nearly $ 30 million in crucial housing tax credits that made the whole project pencil.
“We want to make sure we have a little cushion if we need it,” Weller said.
David Brint, a director at Brinshore, called the additional loan “assurance” that the work would stay on schedule, although he said he apologized “that we have to come back and ask for something more.
“We’ll do our best not to have to reduce it,” Brint said.
Elected leaders, meanwhile, are trying to encourage more housing construction across the city to deal with a lingering shortage at all price points.
They are also trying to revitalize this downtown neighborhood and some of them noted on Tuesday that until Brinshore was chosen from a list of nine developers in late 2018, the 255 S. State Street project had a checkered history. .
The high-profile property across State Street, from the Marriott City Center to the west, had sitting dormant, rusty and covered in graffiti for years after a previous developer withdrew due to numerous technical and financial issues. The GDR was even forced to buy the property back from Citibank at auction after the bank seized previous developer Ben Logue.
Logue and his company Tannach Properties bought the town’s land in 2012 as part of ambitious plans for a housing and retail project centered around a sprawling European-style plaza – before costs skyrocketed , work was interrupted and Logue eventually withdrew.
Brinshore has since razed a decaying and vandalized steel horror left behind by that initial construction, leaving a hole until work can begin.
The company has also put together a complex financial package for its new development from 12 separate sources, including an earlier RDA loan of $ 8.4 million and financial guarantees from the city on the affected land worth $ 5 million. additional dollars.
Despite the additional loan request, City Councilor Fowler called 255 S. State a “wellness project” for its housing, attractive design, and potential downtown benefits.
City Councilor Dan Dugan also praised its inclusion of three and four bedroom apartments, saying it would add housing stock to the urban core for families. Officials at Brinshore, which ranks among the largest developers of affordable housing nationwide, also remain excited about an innovation, perhaps by Christmas.
“I love this project,” Brint told the RDA board of directors. “I’m so desperate to build it and make it something special.”