OLENE WALKER HOUSING LOAN FUND - Utah



OLENE WALKER HOUSING LOAN FUND

QUARTERLY BOARD MEETING

Housing and Community Development Division

Salt Lake City, Utah

MINUTES

Thursday, October 27, 2016

Members Present Representing

Gloria Froerer Rental Housing

Garret Bangerter Home Builder

Marty Henrie Mortgage Lender

Mark Lundgren Manufactured Housing

Mike Glenn General Public

Tee Tyler Local Government

Dan Adams Mortgage Lender

Kip Paul Real Estate Interest

Mike Akerlow Local Government

Kelly Jorgensen HUD

Robert Snarr Human Services – State of Utah

Staff

Katherine Smith HCD

Shelli Glines HCD

Lora Rees HCD

Daniel Herbert-Voss HCD

Jess Peterson HCD

Steven Fox HCD

Robert Kohutek HCD

Annette Despain HCD

Lori Poll HCD

Elias Wise HCD

Kimberley Schmeling HCD

Mike Green AGO

Bryan Nalder AGO

Visitors

Steve Graham Borden Lofts

Peter Corroon Cornell Street Apts.

Matt Minkevitch The Road Home

Michelle Flynn The Road Home

Larry Kupfer The Road Home

Kirt Peterson Horizon Development & Management

Stephanie Mackay Columbus

Troy Hart Hub of Opportunity (Phase I)

Tony Dayish Utah Navajo Royalties

John Reidhead Utah Navajo Trust Fund

David Damschen Utah Navajo Trust Fund

Marion Willey Utah Nonprofit Corporation

Dave Johnson Western Region Nonprofit Housing Corp.

John Montgomery Western Region Nonprofit Housing Corp.

Mike Plazier UETOD

Carol Cohen RCAC

Martha Wunderli AAA Fair Credit

David Arbuce AAA Fair Credit

John Bureta PAB

Gerald Burt PBC

William Burt PBC

Welcome - The Olene Walker Housing Loan Fund (OWHLF) Quarterly Board Meeting was held at 1385 South State Street – Conference Room 157 - Salt Lake City, Utah. The meeting was called to order at 9:00 am, by Gloria Froerer, Vice-Chair.

OTHER BUSINESS

Item #1 - Vote for new Chair and Vice-Chair

Motion by Mike Glenn to appoint Gloria Froerer as Chair and second by Marty Henrie. The motion carried unanimously.

Motion by Mike Glenn to appoint Marty Henrie as Vice-Chair and second by Mark Lundgren. The motion carried unanimously.

Approval of Minutes

Quarterly Board Meeting on July 28, 2016

Motion by Marty Henrie and second by Tee Tyler to accept the minutes as written. With the exception to correct name spellings from Nadler to Nalder, from Logren to Lofgren, from Adam to Adams. The minutes have been corrected. The motion carried unanimously.

Item #1 – New Projects:

1. Borden Lofts – Alliance Capital, LLC

Project is the acquisition and adaptive reuse of the former Borden Milk plant in Logan originally constructed in 1914 into 51 total units – Four studios, 32 1BR, and 15 2BR units, of which 45 are affordable. Project is aimed at young college graduates, with 6 units designed to accommodate home-based businesses, and is located only five blocks from Logan’s central business district and other nearby amenities such as trails and community recreation centers. Project design will include open floor plans, nine-foot ceilings, balcony or patio, and a central social center. The project design has received conditional approval and meets the current zoning requirements for the Mixed-Use (ML) zoning district for up to 57 total units. Solar photovoltaic panels are also proposed. Project has applied for $267,801 in four percent LIHTC and $5.6M in T-E bonds for the October 12 PAB meeting. Other funding sources include Federal & state historic tax credits, Federal and state renewables energy credits, Logan RDA funding, Morrell Family Charities, and will seek 40-year permanent financing through RMCRC.

Staff’s recommendation is to table request for funds until review and approval of any changes to the current OWHLF per-unit subsidy limits has been completed.

Motion #1 by Mark Lundgren to fund $344,261 contingent on staff working with developer to reduce amount to $125,000 as a 15-year deferred loan, motion died. Motion #2 by Dan Adams and second by Mark Lundgren to fund $125,000 as a possible 15-year deferred loan subject to further staff review and final Board approval. Garret Bangerter opposed the vote. The majority passed the motion.

2. Cornell Street Apartments – Little Diamond Housing, LLC

Project is new construction of 146 total units – eight studios, 74 1BR, 64 2BR of which 131 are affordable – eight studios, 64 1BR, 59 2BR – on land comprised of seven individual parcels, two of which contain old, vacant single-family homes. All parcels but one previously purchased by Little Diamond Housing; the remaining parcel is under contract from Salt Lake City. The parcels will be combined into one single 1.64-acre parcel for the project, and two L-shaped five-story buildings will be constructed with 88 units of podium-style enclosed first-floor parking stalls, and 36 uncovered stalls. Project located one block north of the Power Station UTA TRAX station, and southwest of the Utah Public Health Department Cannon Building, all west of the Utah State Fairpark. Zoning was recently changed on August 16, 2016, from Business Park (BP) to Transit Station Area Mixed Use Employment Center Transition (TS-MUEC-T), for which multi-family housing is a permitted use. Developer has applied for $872,550 in four percent LIHTC and $15M in T-E bonds for the October 12 PAB meeting.

Staff’s recommendation is to table request for funds until review and approval of any changes to the current OWHLF per-unit subsidy limits has been completed.

Motion #1 by Marty Henrie second by Michael Akerlow to fund $1,000,000 subject to approval of new OWHLF subside limits, motion died. Motion #2 by Dan Adams to table as recommended by staff, motion died. Motion #3 by Marty Henrie and second by Kip Paul to fund $1,000,000 subject to approval of new OWHLF subsidy limits. The motion carried unanimously.

Marty Henrie left the meeting.

3. Midvale Shelter – The Road Home

The Road Home has operated a seasonal transitional shelter out of a 20,000 square-foot former warehouse at 529 West 7300 South in Midvale beginning in 1998 with a lease, then purchasing the building in 2012. The warehouse was originally constructed in 1946 and was demolished after the 2014-2015 winter season due to its poor condition, and a new 23,350 square-foot two-story facility with a 300-bed capacity was constructed and completed by November 2015 so it would be ready to open for the 2015-2016 winter season. TRH applied to OWHLF during the October 23, 2014 meeting for $1M of OWHLF funds but the request was tabled at that time by the OWHLF Board. Transitional clients are not charged any rent or fees for services provided, so public and private grants have been used to construct and operate the project. Since project does not collect rents and will not support hard amortizing debt, TRH is requesting funds from OWHLF as a 0% surplus cash flow loan to refinance the current Zions Bank loan, which will adjust to the current 2-year LIBOR rate, and is due in 2020 as a balloon payment.

Staff’s recommendation is to fund $1,000,000 for 30 years as a surplus cash flow loan as requested using state low-income funds as a statute-qualified “other activities” authorized activity under Utah Code 35A-8-505(1)(e), with a minimum payment of $1,000 per year to cover OWHLF loan servicing costs. State Homeless Coordinating Committee may recapture the net debt-servicing savings of $77,836/year in future grants.

Mike Glenn motion and Garret Bangerter to accept staff’s recommendation. The motion carried unanimously.

Marty returned to the meeting.

4. The Station at Pleasant View (Phase III) – Horizon Development and Management

Project is new construction of 128 total units – 64 2BR and 64 3BR – all of which are affordable in 32

four-plex buildings on vacant land immediately to the north of Phase I and II. The design will be similar to Phases I and II, except focus will be on 2- and 3BR units as supported by the market study. The project is within walking distance to the east of the Pleasant View UTA FrontRunner station, and is reasonably close to I-15 and retail/shopping areas to the west. Zoning is presently Transit Oriented Development (TOD), for which multi-family residential development is a conditional use. The project has applied for and received a conditional Use Permit (CUP) as of March 3, 2016 from Pleasant View City. Funding includes a $115,500 solar tax credit, although there is no mention of solar photovoltaic or others sources in application, $288,396 of funds are also committed from “interim incomes” while the project is under development. Developer has applied or $691,795 in four percent LIHTC and $14.9M in T-E bonds for the October 12 PAB meeting.

Staff’s recommendation is to table request for funds until review and approval of any changes to the current OWHLF per-unit subsidy limits has been completed.

Motion by Dan Adams second by Garret Bangerter to Fund $1,000,000 as a fully-amortizing 30-year loan at 3% subject to review and approval of the new OWHLF subsidy limits. The motion carried unanimously.

Marty Henrie left the meeting.

5. The Hub of Opportunity (Phase I) – Columbus/HACSL

Phase I of 157-unit total new-construction project consists of 99 units – 71 1BR, 26 2BR, 2 3BR – of which 89 are affordable (64 1BR, 23 2BR, 2 3BR) on land currently used as parking for the UTA Meadowbrook TRAX station in a single five-story building constructed donut-style around a two-level parking garage and outdoor plaza on top of the parking garage. Land to be leased from UTA to Columbus Foundation, Inc. for 99 years. The first floor will contain retail and office space, common-area amenity space, and nine residential units. Amenities will include a tot lot, workout facility, computer room, garden area, community room with full kitchen and barbecue areas. Zoning is presently Transit Oriented Development Overlay – Core District (MJ), for which multi-family housing is a conditional use. UTA has submitted a CJP request on behalf of HACSL/CCC to South Salt Lake during August 2016, which is currently under review by South SLC Community Development. Second phase of 58 units will apply for 2017 nine percent LIHTC.

Staff’s recommendation is to table request for funds until review and approval of any changes to the current OWHLF per unit subsidy limits has been completed.

Motion by Dan Adams second by Garret Bangerter to fund $300,000 as a possible 15-year deferred loan subject to approval of the new OWHLF subsidy limits and further staff review. The motion carried unanimously.

Marty returned to the meeting.

Item #2 – Existing Projects

1. Blue Mountain Dine - Navajo Royalties Holding Fund

This project consists of 20 single-wide manufactured-housing units – 17 2BR and 3 3BR – placed on permanent foundations on vacant land donated to the project by the Utah Navajo Trust Fund. OWHLF HOME and LIH funds were awarded in 1995 and 1996, and both Federal and state LIHTC were awarded in 1995-1996, but those allocations were canceled and then reissued in 1999 by UHC. The project was completed during 1999. Both OW loans were originally set up as 30-yr fully-amortizing, but were modified to 15-yr interest-only during 1999. The payment amounts set at the time of modification were not equal to the amount of monthly interest at 5% per loan, which has been accruing on each loan since, and the revised trust deeds also set the maturity date of the OWHLF loans to November 1, 2016. Project owner is requesting that the OWHLF loans and deferred interest be forgiven to improve the project’s cash flow and enable future planned rehabilitation.

Staff’s recommendation is to combine principal balances of existing OWHLF loans HMO034 and WHO043 into a single new fully-amortizing loan of $296,475 at 0% for 15 years, with the first payment to begin after payoff of existing UNTF loan in April 2017. Convert deferred interest balance into a grant that will be forgiven after 15 years unless property is sold or refinanced.

Motion by Garret Bangerter and second by Mark Lundgren to accept staff’s recommendation. The motion carried unanimously.

2. Ashby - Western Region NPHC

Project is 27 units – 9 studio and 18 1BR, with all affordable – in a single three-story building constructed in 1926 and acquired/rehabilitated by La Porte in 2004 with Federal and state LIHTC and two OWHLF loans of $100,000 (state LIH) and $52,396 (HOME PI). Property is located just east of downtown Salt Lake city. Due to default, Wells Fargo initiated foreclosure procedures earlier this year, for which Richman Group (LIHTC Investor) and WRNPHC arranged to buy the Wells Fargo note; however, due to maintenance neglect and fairly high vacancy, the project’s debt needs restructuring to ensure future cash flow and complete needed rehab/repairs. RMCRC is proposing to issue a new first mortgage to pay off the Well Fargo note and provide additional funds for rehab/repairs, and the new owner WRNPH proposes to restructure and increase the outstanding OWHLF loans. Together about $155K of new funds for repairs/rehab ($5,740/unit) will be provided by this proposal, and $27K to replenish the project’s reserves for replacement fund. Building has photovoltaic solar panels on roofs.

Staff’s recommendation is to fund an additional $133,392 as requested and refinance balance of WHP749, combining the two as a new fully-amortizing 30-year loan of up to $213,532 at 1.5%, with payments to begin November 1, 2017. All HPO748 loan terms to remain as originally approved.

Motion by Kip Paul and second by Marty Henrie to accept Staff’s recommendation. The motion carried unanimously.

3. Fairview - Western Region NPHC

This project is 32 units – 15 studio, 10 1BR, and 7 2BR with all affordable – in four buildings. Building #1 is a historical 4-story 14-unit brick building constructed in 1916; buildings #2 and #3 were constructed in 1944 as wartime officer housing; building #4 is a one-story brick building constructed in 1918. All buildings were acquired/rehabilitated by La Porte in 2000 with Federal and state LIHTC and two OWHLF loans of $160,-000 each. Both were listed as HOME PI funds in source, but not funds were ever drawn from IDIS. Property is located just east of downtown Ogden. Due to maintenance neglect and fairly high vacancy, the project’s debt needs restructuring to ensure future cash flow and complete needed rehab/repairs. RMCRC is proposing to refinance the balance of the existing UCRC first mortgage over the remaining 15-yr term, and the new owner WRNPH proposes to restructure and increase the outstanding OWHLF loan. Together about $338K of new funding for repairs/rehab ($5.740/unit) will be provided by this proposal, and $32K to replenish the project’s reserves for replacement fund.

Staff’s recommendation is to fund an additional $351,000 as requested and restructure balances of HPO083 and HPO083A, combining all as a new fully-amortizing 30-year loan of up to $555,105 at 1.5%, with payments to begin November 1, 2017.

Motion by Mike Glenn and second by Tee Tyler to accept staff’s recommendation. The motion carried unanimously.

4. Ritz Apartments – Western Region NPHC

This project is 30 units – 27 studio and 3 1BR, with all affordable – in a single three-story building constructed in 1923 and acquired/rehabilitated by La Porte in 2005 with Federal and state LIHTC and two OWHLF loans of $183,724 (HOME PI) and $102,362 (non-HOME). Property is located just east of downtown Salt Lake City. Due to default, Wells Fargo initiated foreclosure procedures earlier this year, for which Richman Group (LIHTC investor) and WRNPHC arranged to buy the Wells Fargo note; however, due to maintenance neglect and fairly high vacancy, the project’s debt needs restructuring to ensure future cash flow and complete needed rehab/repairs. RMCRC is proposing to issue a new first mortgage to pay off the Wells Fargo note and provide additional funds for rehab/repairs, and the new owner WRNPH proposes to restructure and increase the outstanding LOWHLF loan. Together about $164K of new funding for repairs/rehab ($5,459/unit) will be provided by this proposal, and $30K to replenish the project’s reserves for replacement fund. Building has photovoltaic solar panels on the roof.

Staff’s recommendation is to fund an additional $91,039 as requested and restructure balance of RPO764, combining the two as a new fully amortizing 30-year loan of up to $302,427 at 1%, with payments to begin November 1, 2017. All HPO764 loan terms to remain as originally approved.

Motion by Marty Henrie and second by Kip Paul to accept staff’s recommendation. The motion carried unanimously.

5. Valencia – Western Region NPHC

Project is 122 units – 2 studio, 118 1BR, and 2 2BR, with all affordable – in two three-story buildings constructed in 1927 along with a single-family home on the east side of the property (used as a management office), all of which was acquired/rehabilitated by La Porte in2003 with Federal LIHTC and

three OWHLF loans of $226,000 (HOME), $86,000 (state LIH PI), and $140,000 (state LIH). Property is located east of downtown Ogden. The project has always struggled with cash flow and high vacancy issues since its completion; along with maintenance neglect and fairly high vacancy, the project’s debt needs restructuring to ensure future cash flow and complete needed rehab/repairs. RMCRC is proposing to refinance the balance of the existing UCRC first mortgage over the remaining 15-year term, and the new owner WRNPH proposes to restructure and increase the outstanding OWHLF loan. Together about $1.3M of new funding for repairs/rehab ($10,500/unit) will be provided by this proposal, and $122K to replenish the project’s reserves for replacement fund.

Staff’s recommendation is to fund an additional $690,000 as requested and restructure balances of WHP525 and WHO588, combining the three as a new fully-amortizing 30-loan of up to $826,277.56 at 1.5%, with payments to begin November 1, 2017. All HMO517 loan terms to remain as originally approved. Funding conditional on successful transfer of property from Enterprise to WRNPC.

Motion by Marty Henrie and second by Mike Glenn not to accept staff’s recommendation at this time, but to table until additional information has been received from Enterprise regarding new partnership and project owner; an electronic OWHLF board meeting to be scheduled at that time. The motion carried unanimously.

6. Villa South – Western Region NPHC

Project is 120 units – all 2BR, with all affordable – in five 24-plex buildings with separate club house/office building constructed in 1972 and acquired/rehabilitated by La Porte in 2003 with Federal and state LIHTC and $960,000 of OWHLF (HOME) funds. Property is located southwest of the Washington Blvd/Riverdale Road junction in South Ogden. Due to default, Wells Fargo initiated foreclosure procedures earlier this year, for which Richman Group (LIHTC investor) and WRNPH arranged to buy the Wells Fargo note; however, due to the light level of rehab completed in 2003, maintenance neglect, and a fairly high vacancy, the project’s debt needs restructuring to restore positive cash flow and complete needed rehab/repairs. RMCRC is proposing to issue a new first mortgage to pay off the Wells Fargo note and provide additional funds for rehab/repairs, and the new owner WRNPH proposes to restructure and increase the outstanding OWHLF loan. Together about $1.3M of new funding for repairs/rehab ($10,900/unit) will be provided by this proposal, and $60K to replenish the project’s reserves for replacement fund.

Staff’s recommendation is to fund an additional $346,000 as requested as a new 30-year loan of up to $346,000 at 0%, with deferred payments to begin November 1, 2017. Existing loan HMO523 modified to reduce rate to 0%, with deferred payments to resume November 1, 2017. Annual project financials to be submitted, as project cash flow and loan terms will be reviewed by OWHLF staff during 2018 for possible adjustments.

Motion by Mike Glenn and second by Garret Bangerter to accept staff’s recommendation. The motion carried unanimously.

Item #3 – Write Offs

1. Arcenaux Property

SUMMARY: Zions Bank had a first mortgage, OWHLF had a second mortgage. The loan went into a default and Zions foreclosed. The sale went for less than the note obligation on the first mortgage. There were no proceeds to come to OWHLF. Thus, the note deed of trust was extinguished at the sale. Moreover, OWHLF loans are non-recourse and no deficiency could be pursued. OWHLF should write of the balance as a loss.

STAFF RECOMMENDATION (RATIFICATION): Staff requests a ratification vote and recommends writing off the remaining balance of $6,605.

Motion by Marty Henrie and second by Tee Tyler to accept staff’s recommendation. The motion carried unanimously.

2. Jackson Property

SUMMARY: Wells Fargo had a first mortgage, and OWHLF had the second. The first mortgage was sold from Wells to HUD; the property owner went into default. HUD foreclosed on the sale, that sale then extinguished OWHLF second mortgage; there were no proceeds. The Attorney General’s office attempted to collect title insurance claim, but because it was sold without release of our deed of trust. Further research found from the trustee sale that it voided out OWHLF interest. Moreover, OWHLF loans are non-recourse and no deficiency could be pursued. OWHLF should write off the balance as a loss.

STAFF RECOMMENDATION (RATIFICATION): Staff requests a ratification vote and recommends writing off the remaining balance of 25,000.00.

Motion by Dan Adams and second by Kip Paul to accept staff’s recommendation. The motion carried unanimously/

The next Olene Walker Housing Loan Fund Quarterly Board Meeting will be held on January 26, 2017

Adjourn: 1:00 pm.

Submitted by:

Lora Rees

Olene Walker Housing Loan Fund

Housing and Community Development

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