Council opts to buy motel to have more oversight of affordable housing project

In a special meeting, the Salt Lake City Council acting as the Redevelopment Agency of Salt Lake board of directors unanimously voted to purchase 2.07 acres located directly north of the Power Station TRAX station on North Temple.

The original purpose of the meeting was to approve a $4 million acquisition loan to Western Regional Nonprofit Housing Corporation (WRNHC) to purchase the property, currently a motel, at 1500 West North Temple into a 300 residential unit, mixed-income project the majority of which would be reserved for residents at or below 60 percent of the Area Median Income (AMI).

“The details are not necessarily all there… (but) we feel that we have set up the structure and the contingencies on which we can come back and address these issues,” said Danny Walz, the RDA chief operating officer, of the WRNHC proposal.

Council members expressed concerns about a lack of details on the proposal and a condition making the loan forgivable.  Additionally, council members were still familiarizing themselves with the five affordable housing development sites Mayor Biskupski announced last week.

Clustering affordable housing in the city’s west side has also been a council concern.  The motel property is a block south from the Cornell Street Apartments on the 200 North block of Cornell Street.  That project will include a five-story residential building with 146 units, 131 of which will be reserved for residents earning up to 60 percent AMI.

“We don’t know how many units, we have no idea what the affordability mix is and you heard from a community member today about affordability on the west side,” said Council Member Derek Kitchen.  “We also don’t have a final cost yet, these are some pretty big unanswered questions.  It kind of feels like we are going at this backward.”

“In the development community, it is quite common to not have all your eggs in your basket in terms of what the end product is,” countered Melissa Jensen, director of the city’s office of Housing and Neighborhood Development (HAND).  “We are presenting a unique partnership opportunity.”

Kitchen called for a project that would be transit-oriented with a mix of uses and be catalytic for the neighborhood.

Council members opted to purchase the property to require a Request for Proposal (RFP) process that would not have been required if they had approved the loan.  Under the RFP process, developers submit proposals to the agency for RDA-owned parcels.  The property is in the North Temple RDA project area.  Council members noted that the loan request was just for property acquisition and the development costs were still unknown.

HAND and RDA representatives described the loan proposal as the city putting skin in the game” and putting trust in private development.  Council member Stan Penfold expressed déjà vu on the language surrounding the loan proposal, comparing it to language in the original terms for the now failed State Street Plaza project.

“This idea of just trusting that it’s going to work out ok and that that the developer has good intentions, which I don’t doubt, doesn’t give me a lot of comfort that we are going to get what we want and that it’s going to be a good project,” said Penfold.  “There’s a lot of vagueness in this proposal.  We are taking a pretty risky position.”

Now that the property will be under RDA ownership, the agency will be the motel’s operator.  The next step will be to seek RFPs from the development community before selecting a final developer’s proposal for the site.  Under the RFP process, the RDA transfers property ownership to a developer after a proposal has been selected.  Council members expressed a desire to move quickly on the property and starting the RFP process.  They also referenced the Exchange, the proposed mixed-use redevelopment of the Barnes Bank, as the type of quality project the RFP process can produce.

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