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DATE: December 9, 2014 ITEM: 7.A.

RE: CONSIDERATION AND ADOPTION OF THE TERMS FOR THE

PURCHASE AND SALE AGREEMENT, DEVELOPMENT AGREEMENT, SPECIAL WARRANTY DEED, AND GUARANTY OF COMPLETION AND PERFORMANCE WITH BENCHMARK MODERN FOR THE DEVELOPMENT OF AGENCY-OWNED PROPERTY LOCATED AT 830 & 836 SOUTH JEFFERSON STREET, AND 833 & 839 SOUTH 200 WEST.

PROJECT AREA: West Temple Gateway PREPARED BY: Kort Utley EXECUTIVE SUMMARY: Staff requests the Board’s consideration of the attached term sheets, which outline the conditions for the sale and redevelopment of the Agency-owned properties that comprise the Jefferson Mid-block Walkway project. The RDA envisioned the project in 2011 during creation of the West Temple Gateway Redevelopment Strategy. The Board has since selected a developer and a redevelopment concept that—once constructed—will implement the RDA Board’s goals of making Salt Lake City’s large, 10-acre blocks more pedestrian friendly and walkable; constructing high-quality public spaces, and developing innovative housing types. The project includes a public mid-block walkway connecting Jefferson Street to the 900 South TRAX Station and seven, for-sale single-family homes along the walkway’s perimeter (“Project”). The enclosed terms include redevelopment incentives to make the Project marketable and compatible with the Central Ninth neighborhood. If the enclosed terms are approved, the RDA will proceed with the sale of the property to Benchmark Modern (“Developer”), who could begin construction on the Project as early as spring 2015. The attached term sheets—one for the Purchase & Sale Agreement, the other for the Development Agreement—are consistent with the parameters set forth in the Project’s request for qualifications that the Board approved in February 2014. ALTERNATIVES: 1) Approve the term sheets. 2) Do not approve the term sheets. 3) Approve the term sheets with revisions.

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REDEVELOPMENT ADVISORY COMMITTEE RECOMMENDATION: Staff presented the attached terms to the Redevelopment Advisory Committee at their December 3rd meeting. The Advisory Committee was very supportive of the Project and voted unanimously to recommend approval of the attached term sheets. ANALYSIS AND ISSUES: The RDA’s Jefferson Street Mid-block Walkway project is a pioneering effort to introduce a public mid-block walkway into an existing Salt Lake City neighborhood with the intent to make the area more pedestrian friendly and walkable. The attached terms will facilitate implementation of the Jefferson Walkway Project as depicted in the attached Approved Redevelopment Concept for the Property (Attachment “E”) that the Board approved in September of this year. In addition to the public walkway, the Project will feature new neighborhood-scaled housing constructed adjacent to the walkway. The housing will help activate the walkway and provide residents who can help keep this new neighborhood amenity safe and secure. The property consists of four adjacent parcels totaling 0.5 acres (“Property”). The RDA purchased the Property over a period of five years for a total of $412,000. That value has decreased over time as a result of changing market conditions, and because we will be removing some of the land area as a public amenity and three of the existing structures. Given these considerations, Bodell Appraisers recently estimated the market value of the Property to be $175,000 ($10.02 / sq. ft.). The Property contains four structures, all of which are currently vacant. Three of these structures are in very poor condition and the RDA will demolish them prior to selling the Property to Benchmark Modern (“Developer”). The fourth structure—the house currently located at 830 S. Jefferson Street—will be relocated approximately 60’ to the south, renovated, and sold as part of the Project as depicted in the Approved Redevelopment Concept for the Property (Attachment “E”). Redevelopment Incentives: Given the uniqueness of the redevelopment concept for this Project, the RDA has long understood that various incentives would be required to make the Project marketable for a private development partner, and compatible with the Central Ninth Neighborhood. This understanding was expressed in the Project’s request for qualifications (“RFQ”), which indicated the RDA’s willingness to provide low-interest financing, assist in funding necessary infrastructure improvements, write-down the land price, and pay for the design and construction of the public walkway and adjacent perimeter landscaping. Staff has reviewed the Developer’s budget and proforma for the Project and determined various RDA incentives will be necessary to complete the Project as envisioned in the concept that the Board approved in September (Exhibit “E”). To that end, staff has negotiated the following incentives to assist in the redevelopment of the Property:

1. A write-down of the purchase price of the Property from a market value of approximately $175,000 to $0; 2. A site utility extension allowance of $60,000 to construct water, sewer, and electrical line extensions necessary due to the Project’s unique layout, in which housing faces the public

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walkway instead of the street. As this particular layout and housing configuration was requested by the RDA, it seems appropriate for the Agency to cover these expenses.

Public Walkway Improvements: The public walkway and its adjacent landscaping are improvements dictated by the RDA for the Project and as such the RDA will fund their design and construction. Since the Property will be owned by the Developer when these improvements are ready to be constructed, the RDA has asked the Developer to carry out the actual construction of the walkway in order to foster an integrated and seamless delivery of the overall Project. To that end, the attached terms include a public walkway allowance of up to $165,000, which the RDA will disburse to the Developer upon receipt of invoices for work completed. The RDA will monitor construction of the public improvements to ensure they are acceptable and installed as planned. Profit Sharing: The Board has expressed a concern in the past that developers not receive a “windfall” from RDA-incentivized projects. Although staff does not anticipate such a windfall on the Project, the Developer has agreed to share equally with the RDA net profits in excess of 13%. This margin is consistent with infill, single-family home development in the downtown and downtown periphery market place. The attached term sheets identify the non-standard terms that will be incorporated into the legal documents required for the sale and development of the Property. The Board’s approval of the attached term sheets is required before staff can finalize exclusive negotiations with the Developer. Other terms may also be required as deemed necessary by the Agency’s attorney. BACKGROUND:

- The RDA acquired the Property in 2009 and 2014. - The RDA issued a Request for Qualifications (RFQ) for the Project in February 2014. - A Selection Committee unanimously recommended Benchmark Modern as the Project’s

developer, April 25, 2014. - The RDA Board approved resolution 746.03 granting Benchmark Modern a six-month

right to negotiate the purchase of the property, May 13, 2014. - The RDA Board selected a redevelopment concept for the site, September 16, 2014. - The RDA Board approved resolution 750.04 granting Benchmark Modern a six-month

extension of the exclusive negotiation period. - The Jefferson Street Mid-block Walkway Project is identified as a Priority Project in the

West Temple Gateway Project Area Operations Plan. - The Project is identified in the West Temple Gateway and Granary District

Redevelopment Strategy that the Board approved in June 2011.

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ATTACHMENTS: A. Resolution B. Purchase & Sale Agreement Term Sheet C. Development Agreement Term Sheet D. Map of Property & Surrounding Neighborhood E. Approved Redevelopment Concept for the Property F. Approved Contingency Concept for the Property

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RESOLUTION NO. 752.__ December 9, 2014 RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY APPROVING THE TERMS FOR THE PURCHASE AND SALE AGREEMENT, DEVELOPMENT AGREEMENT, SPECIAL WARRANTY DEED, AND GUARANTY OF COMPLETION AND PERFORMANCE WITH BENCHMARK MODERN FOR THE DEVELOPMENT OF AGENCY-OWNED PROPERTY LOCATED AT 830 & 836 SOUTH JEFFERSON STREET, AND 833 & 839 SOUTH 200 WEST.

WHEREAS, the Redevelopment Agency of Salt Lake City (“Agency”) was created to transact the business and exercise the powers provided for in the Utah Community Development and Renewal Agencies Act; and

WHEREAS, the Agency adopted the “West Temple Gateway Neighborhood Development

Plan” on August 1, 1987; and

WHEREAS, the Salt Lake City Council adopted the Central Community Master Plan on November 1, 2005; and

WHEREAS, the Agency adopted the West Temple Gateway and Granary District

Redevelopment Strategy on June 7, 2011; and WHEREAS, the Agency owns property located at 830 & 836 South Jefferson Street, and 833

& 839 South 200 West (“the Property”) in the West Temple Gateway Project Area; and WHEREAS, the Agency plans to redevelop its property in the West Temple Gateway Project

Area in accordance with objectives set forth in the West Temple Gateway Neighborhood Plan, Central Community Master Plan, and West Temple Gateway and Granary District Redevelopment Strategy; and

WHEREAS, the Agency adopted Resolution 739.01 approving the Request for Proposals

term sheet for the Property; and

WHEREAS, the RDA adopted Resolution 720.02 approving the terms for a Request for Qualifications for the development of the Property; and

WHEREAS, the Agency issued a Request for Qualifications for the Property on February 6, 2014; and

WHEREAS, responses to the Request for Qualifications were due on March 20, 2014; and WHEREAS, Benchmark Modern submitted a response to the Request for Qualifications on

March 20, 2014; and WHEREAS, a Selection Committee recommended Benchmark Modern as the first-ranked

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developer based upon its review and consideration of all submittals received in accordance with the Request for Qualifications; and

WHEREAS, the Agency concurred with the recommendations of the Selection Committee

and adopted Resolution 746.03 authorizing the Agency to enter into a six month exclusive negotiation period with Benchmark Modern for the acquisition of the Property; and

WHEREAS, the Agency approved a redevelopment concept for the Property September

16, 2014; and WHEREAS, the Agency adopted Resolution 750.04 granting Benchmark Modern a six-

month extension of the exclusive negotiation period October 14, 2014; and WHEREAS, the Agency and Benchmark Modern desire to enter into a Purchase and Sale

Agreement, Development Agreement, Special Warranty Deed, and Guaranty of Completion and Performance.

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE

REDEVELOPMENT AGENCY OF SALT LAKE CITY, that we do hereby approve the Term Sheets for Purchase & Sale Agreement, Development Agreement, Special Warranty Deed, and Guaranty of Completion and Performance attached hereto.

BE IT FURTHER RESOLVED, that we do hereby authorize the Chief Administrative

Officer and the Executive Director to negotiate the form of a Purchase and Sale Agreement, Development Agreement, Special Warranty Deed, and Guaranty of Completion and Performance between the Redevelopment Agency of Salt Lake City and Benchmark Modern for the Property in accordance with the Term Sheets attached hereto. The Agreements shall also incorporate such other terms as recommended by Agency legal counsel. Passed by the Board of Directors of the Redevelopment Agency of Salt Lake City, this 9th day of December, 2014.

__________________________________ Stan Penfold, Chairperson

ATTEST: ________________________________________ D. J. Baxter, Executive Director Transmitted to the Chief Administrative Officer on ______________. The Chief Administrative Officer

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___does not request reconsideration ___ requests reconsideration at the next regular Agency meeting.

____________________________________ Ralph Becker, Chief Administrative Officer

ATTEST: _________________________________________ D. J. Baxter, Executive Director Approved as to form:____________________________________

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Attachment “B” Jefferson Walkway

Purchase and Sale Agreement Term Sheet

Proposed Terms: The following terms will be incorporated into the Purchase and Sale

Agreement for the sale and development of the Property located at 830 & 836 South Jefferson Street, and 833 & 839 South 200 West, between Benchmark Modern (“Developer”) and the Redevelopment Agency of Salt Lake City (“Agency”).

Purchase and Sale Agreement:

(a) Purchase Price: $0

(b) Public Walkway Easement: The Agency shall record an easement

across the Property to allow for public access of the mid-block walkway. The easement will follow generally the orientation and size shown in the Approved Redevelopment Concept for the Property (Attachment “E”). Additional detailed specifications for the walkway will be determined through the design review process.

(c) Site Utility Allowance: The Agency will disburse payment to the

Developer up to $60,000 for the purpose of extending water, sewer, and electrical service necessary to redevelop the Property according to the Approved Redevelopment Concept for the Property(Attachment “E”). The disbursement of funds will be contingent on the Agency receiving invoices for work completed and lien releasesfrom the contractors who performed the work.

(d) Walkway Allowance: The Developer shall construct a public mid-

block walkway across the Property as part of the Project. The Agency will disburse payment to the Developer for these publicimprovements up to $165,000. These public improvements shallinclude the walkway and the accompanying landscaping, lighting, and a fence/wall along the walkway’s perimeter. The disbursement of funds will be contingent on the Agency receiving invoices forwork completed and lien releases from the contractors whoperformed the work.

(e) Subdivision & platting: Developer shall be responsible to

subdivide and re-plat the Property, in coordination with the Agency.

(f) Profit Sharing: Developer shall equally share with the RDA any profits in excess of 13%. Profits are defined as revenue from the sales of all units minus costs.

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(g) Guarantor: The Guarantor shall be Benchmark Modern, the Project’s Developer.

(h) Delivery Condition: The Agency will provide the Property clear of any improvements.

(i) Purchase “As Is”: The purchase of Property shall be on an “as-is”

basis at the time of closing, and the Purchase and Sale Agreement shall specify that Agency has made no representation or warrantywith respect to title matters (other than ownership) or the complianceof the Property with applicable zoning and use regulations or theability of Developer to obtain any necessary governmental approvals and permits. Agency shall be under no obligation to assist Developerin obtaining any of the foregoing.

(j) Deadline for Execution of Agreement: In the event that the

Purchase and Sale Agreement (with all exhibits) is not executed byApril 9, 2015, then either Party may give notice of termination to theother Party, in which event neither Party shall have any furtherobligations or liabilities to the other Party.

(k) Closing: Developer must close on the purchase of the Property no

more than six months from execution of the Purchase and Sale Agreement.

(l) 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 determinedthe Property is satisfactory for its purposes, and that there will be noinspection period under the Purchase and Sale Agreement.

(m) Title Insurance: Agency shall pay for a standard owner’s policy of

title insurance. Developer shall pay for any extended policy and requested endorsements.

(n) Conditions to Closing: Agency’s obligation to sell the Property is

subject to the following conditions:

1) Design review process: Agency staff must approve the Conceptual Design drawings, Schematic Design Drawings, Design Development Drawings, and Final Construction Documents.

2) Agency shall have reviewed and approved the Construction

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Contract and Architectural Contract.

3) Agency shall have approved the Construction Financing. Thedocuments evidencing the Construction Financing mustprovide that, in the event of a default by Developer, they maybe assigned and assumed by a designee of Agency orpurchased at par (with no prepayment premium) by Agency ora designee of Agency, and that Agency is a third partybeneficiary of such obligations. Developer shall have provided written evidence to the Agency that all conditionsnecessary for the closing of the Construction Financing havebeen satisfied excepting only the closing of the PurchaseAgreement, and that the Developer’s lender is ready to close on the Construction Financing in connection with the Closinghereunder.

4) Developer shall have satisfied all of the legal and contractual

requirements necessary for the commencement of sitepreparation and construction of the Developer Improvements.Developer shall provide satisfactory evidence that it is in aposition to commence such construction within five business days of closing.

5) Developer shall provide a performance bond and payment

bond naming the Contractor as principal and Agency andDeveloper as dual obliges, jointly and severally, written onbond forms, approved by Agency and Developer in a penalamount of not less than $200,000, together with (i) a certified and current copy of the power of attorney for the attorney-in-fact who executes the bonds on behalf of the surety and (ii) evidence that the penal sum shall be within the maximumspecified for such surety.

6) Developer and Agency will have identified and established a

mechanism to maintain the mid-block walkway and other common areas in a condition agreeable to the Agency.

7) Developer shall be responsible to subdivide and re-plat the

Property, in coordination with the Agency, prior to closing.

(o) Reports: In the event the transaction contemplated herein fails toclose for any reason other than a default by the Agency under the Purchase and Sale Agreement, at the request of Agency, Developershall deliver to the Agency (at no expense to Agency) copies of allstudies and reports prepared in connection with this transaction orotherwise pertaining to the Property whether such studies and reports

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were prepared for or on behalf of the Developer, the Agency or anythird party, including environmental, soils and hydrology reports, butnot architectural plans or financial information related to Developer.

(p) Approval of Other Agreements: The Agency and the Developer

acknowledge and agree that the Parties must negotiate and approvethe forms of the following documents, which will be attached to thePurchase and Sale Agreement as exhibits:

1) Special Warranty Deed and Right of Reverter Agreement

2) Guaranty of Completion and Performance

3) Development Agreement (Including all exhibits and the

schedule of development)

4) Developer will create an owner’s association or other mechanism to ensure that the walkway easement and landscaping are adequately and consistently maintained. Developer is solely responsible for how association anddocuments are structured, provided they comply with relevant codes and achieve the objective of creating a viable legalmechanism to ensure homeowners adequately and consistently maintain walkway easement and landscapeimprovements. The Agency must review and approve of this mechanism.

5) Such other documents as may be recommended by Agency

Counsel.

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Attachment “C” 868 South Jefferson Street Development Agreement

Term Sheet

The Development Agreement will govern the construction of the Developer Improvements, and shall include the following terms and conditions: Developer Improvements:

The Developer will be responsible for the construction and development of all aspects of the Project, including site preparation and coordination with neighboring property owners. These responsibilities shall be governed by the Development Agreement, which shall include the following terms and conditions:

a. Subdivision & platting: Developer shall subdivide and re-plat the Property, in coordination with the Agency.

b. Public Walkway Easement: The Agency shall record an easement across the Property to allow for public access of the mid-block walkway. The easement will follow generally the orientation and sizeshown in the Approved Redevelopment Concept for the Property(Attachment “E”). Additional detailed specifications for the walkwaywill be determined through the design review process.

c. Public Walkway: Developer shall construct a public walkway connecting Jefferson Street to 200 West, as depicted in the attachedApproved Redevelopment Concept for the Property (Attachment “E”).

1) Walkway shall maintain a clear, open view through theProject to enhance visibility and safety;

2) Walkway shall include lighting, as approved by Agency staff;3) Walkway shall include perimeter landscaping, as approved by

Agency staff; 4) Walkway shall include a perimeter wall/fence, as approved by

Agency staff;

d. Housing Improvements: Developer shall construct seven, for-sale homes on the Property as depicted in the attached Approved Redevelopment Concept for the Property (Attachment “E”). All improvements are subject to Agency design review approval. Newstructures include the following:

1) Construct six, new, two-story, single-family houses not to exceed 1,600 sq. ft. each;

2) Relocate and renovate the home currently located at 830 S.

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Jefferson Street and construct a new garage for this home atthe rear of the property next to the alley. The garage shall be comprised of a two-car garage on the main level and an approximately 600 square foot dwelling unit on the second story. This structure shall have at least two lights along thewestern façade of the structure to illuminate the alley.

i. During the relocation process, if a structural engineer

selected by the Agency determines that the housecurrently located at 830 S. Jefferson Street cannot survive the relocation process, or if the relocation expenses become excessive—as determined by the RDA Director—Developer shall demolish the home at 830 S. Jefferson Street and construct two, new single-family houses in its stead, according to the attached Approved Contingency Concept for the Property(Exhibit “F”).

e. Landscaping: Developer shall install full landscaping for the front,

side, and rear yards of each home.

f. Walls / Fencing: Developer shall construct a privacy fence and/or wall enclosing each yard.

g. Parking: Developer shall construct at least six shared parking stallson the Property as depicted in the attached Approved Redevelopment Concept for the Property (Attachment “E”).

h. Schedule for Construction: Developer shall commence site preparation and construction of the Developer Improvements within five business days following the closing. Developer shall complete the construction of the Developer Improvements within 18 months ofthe developer closing on the Property with the Agency.

i. Change Orders: Developer agrees to provide Agency with notice of each change order. Agency’s approval is required for all construction change orders that (either individually or together with any previouschange orders) reduce the size of any element of the Project (morethan 5%) involve the substitution of any materials or design specifiedin the Final Construction Documents that have a lower cost, or otherwise constitutes a material change from the Final ConstructionDocuments.

j. Guaranty of Completion and Performance: The Guarantor will guarantee Developer’s obligations.

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k. Access to Records: Developer will provide access to records of the

Project with five business days’ notice. Recordation of Documents:

The Development Agreement will be recorded immediately after Agency’sdeed and must not be subject to any deed of trust or other financial lien.

All Documents: All documents shall have such other terms and conditions not inconsistent

herewith as may be advised by Agency’s legal counsel.

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Attachment “D” Map of Property & Surrounding Neighborhood

Attachment “E”

900 South

200

Wes

t

North

Jeff

erso

n S

t.

Map Key 836 South Jefferson Street

833 South 200 West

839 South 200 West 830 South Jefferson Street

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Approved Redevelopment Concept for the Property

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Attachment “F” Approved Contingency Concept for the Property