The Grande Hub)
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THE L M F J GRANDE HUB THE GRANARY DISTRICT SALT LAKE CITY, UT 2.162 ACRES 212 LIHTC UNITS 21,250 ft.2 COMMERCIAL 157,200 ft.2 LIHTC RESIDENTIAL 16.18% COMMERCIAL IRR $50,305,104 $12,933,126 $17,987,921 TOTAL COST TOTAL EQUITY FROM TAX CREDIT SALE VALUE TO TAX CREDIT INVESTOR [credits + tax losses] SITE EVALUATION Once stagnant and in a state of urban decay, the Granary District is currently transforming into a flourishing area of Salt Lake City. Though its character was once defined by blue collar grit, the District is now mixed with creative ambitions and entrepreneurial energy. As its redevelopment potential is exposed, the District is rapidly changing from static surfaces of pavement and underutilized buildings to a dynamic space full of investment opportunities. PROJECT PROPOSAL Based on market research, LMFJ proposes developing affordable housing under the LIHTC model [4% credits] ; a moderate sized, local pharmacy/grocery; and small-scale restaurant. With the current rapid growth and planned restoration projects, maintaining and preserving housing affordability throughout the Granary District must be imperative along with the provision of essential needs. The Granary District, Personal Photographs The basis of our development plan builds upon the vision of the Granary District — a thriving social hub of blue collar workers, entrepreneurs, and creatives who can live comfortably and actively contribute to its revitalization. LEGAL PROFILE The site contains two separate parcels located along 900S and Rio Grande St. To feasibly develop the site, LMFJ proposes purchasing the entire block these parcels are within, and demolishing all existing structures. This entire property Proposed BRT would need to be replatted into two lots; one adjacent to 900S for commercial Proposed BRT BicycleProposed Lane BRT use, and one on the south side of the block adjacent to Montague St. for Bicycle Lane RoadBicycle Infrastructure Lane Road Infrastructure BusRoad Routes Infrastructure residential use. This would simplify lending, property disposition and future Bus Routes Bus Routes ownership of each property, which is important given the 99 year restriction on Site the LIHTC property and the potential increased value of the commercial space. Site InterstateSite 15 Interstate 15 UTAInterstate Trax Line 15 UTA Trax Line RailUTA LineTrax Line Both lots are currently zoned General Commercial, and would need to be Rail Line Rail Line redesignated to the new zoning for the Fleet Block; known as “Form Based Resource Centers and Affordable Housing Urban Neighborhood-3” (FB-UN3). The new zoning would allow for expanded Resource Centers and AffordableResource Centers Housing and Affordable Housing Paxton 365 utilization of acreage given decreased setback requirements, an increase in Paxton 365 C9Paxton Flats 365 building height to 85 feet, and no restrictions on parking requirements. FB- C9 Flats ModaC9 Flats Granary Place Moda Granary Place Moda Granary Place UN3 also requires a commercial ground floor use along the face of 900S, which this proposal would provide in order to activate the street and solve the neighborhood’s lack of retail necessities. Rezoning the property would bring consistency to the District’s zoning, and supplement the City’s efforts. Introduction Page 01 SITE PLAN TENANT PROFILES Residential Income: In compliance with HUD and IRS restrictions for LIHTC housing, all residents will be required to make less than or equal to 60% of Area Median Income Occupation: The tenant’s occupation would be consistent with existing demographics in the Granary District of blue-collar and service workers. As the District’s demographic changes, the LIHTC restriction will support income diversity in the neighborhood while allowing for low earning artisans and makers to live in this community. Transit: While most tenants will likely own a vehicle, it is likely some will not and most won’t own more than one. The 9-line trail, bike lanes, less than three block proximity to a UTA Trax Station, and nearby Jordan River Trail would appeal to many within this tenant profile. Commercial Pharmacy/Market: The lack of service for basic needs in the neighborhood would be provided by this tenant. An ideal tenant for this property would be a small market that provides packaged goods, groceries and medication, such as a Walgreens, CVS or other national market chain. Given the moderate levels of existing traffic, this location may not yet appeal to these national players LIHTC DEMAND until the neighborhood further develops. If a national market chain is not yet interested, a local or regional operator that provides the same services would Multiple market sources (including CBRE, Marcus and Millichap, and Colliers) be the target tenant. have shown consistent rent growth year over year for the last decade. The average rent in Salt Lake City is around $1,200 per month, equating to $14,400 Restaurant: The rooftop restaurant tenant should serve as an affordable option per year. HUD recommends only 30% of an individual’s annual income to go to the residential tenants, a social place to create activity in the neighborhood, toward housing. To achieve this in Salt Lake City, the individual would need to and suitable for all ages/demographics. make $48,000 annually. Approximately 42% of residents in Salt Lake City make less than $50,000 annually, while about 9% of residents live below poverty PROJECTED INCOME levels. The combination of rent increases, low income residents and increase IRS Section 42 has set rental rates for restricted LIHTC properties. These in population growth present a need for low income housing. As the existing established rates for 2020 have been assumed for the project’s income. Area Granary District demographic transitions from blue-collar and service workers comparisons outside of downtown found commercial spaces between $20 and to its new image of makers and artisans, the annual income level is likely to $25/Sq. Ft. +NNN. This proposal sets rental rates at a competitive $20/Sq. Ft. remain at a similar level. for restaurant space and $23/Sq. Ft. for grocer/pharmacy space. Community Page 02 SITE ACCESS EXPENSES Construction costs were derived from RS Means software and database of construction costs. In order to serve the market with low income housing, residential construction costs must be controlled. This will be achieved by using prefabricated wood wall panels, which lower costs by reducing waste and increasing efficiency using factory fabrication over on-site stick building.01 Other construction materials will also be prefabricated and prefinished, to reduce labor costs. Additionally, economy grade finishes, fixtures and appliances will be installed. Site landscaping will use local plants to accomplish a low water demand xeriscape. Some rainwater will be captured and diverted to the landscaping to eliminate the need for irrigation. Estimated operating expenses per unit are consistent with averages of over half a dozen Wasatch Front LIHTC properties. Due to utility allowance restrictions in LIHTC properties, the entire roof of the residential building will host commercial grade solar panels. A 49,000 Sq. Ft. (roof area) 500kW system will greatly offset, and nearly eliminate, average daily electrical consumption of apartment units. PROGRAMMATIC SITE PLAN 01 LMFJ recognizes lumber prices have increased 73% year-over-year as of January 2021. Assuming this project won’t break ground until late 2021 at the earliest, it is assumed that lumber prices will normalize by the time of project material procurement. SUSTAINABILITY • Prefabricated wood panels: renewable resource, less carbon footprint than steel or concrete, less waste when fabricated in factory, biodegradable • Recycled steel: sustainable recycled product for commercial space construction, residential siding and garage screen, recyclable product • Xeriscape and rainwater capture: use native plants, capture rainwater/ snowmelt and divert to landscaping before city stormwater system, eliminate need for irrigation system • Solar panels: decrease building carbon footprint by offsetting demand for energy produced by nonrenewable resources • Low flow fixtures • Economically efficient appliances Sustainability Page 03 Commercial Pro Forma NOI Factor Annual DEVELOPMENT COSTS Revenue CAPITAL STACK Gross Potential Income $ 476,000 Less: Vacancy HARD COST ASSUMPTIONS5.00% (23,800) Development Costs Multifamily EffectiveCommercial Gross Income 452,200 Financing Assumptions Land $75.00 per SF $ 4,811,100 $ 2,251,500 Hard Cost Inputs: Residential Commercial Approval Fees 0.5% of hard costs 150,430 14,031 Expenses Multifamily Hard Costs/SF $ 132.00 Total Project Cost $ 44,398,036 $ 5,907,068 Construction Hard Cost Varies by use per SF 30,086,000 2,806,275 Property ManagementParking Cost /SF 3.00% of EGI $ 43.00 13,566 Total Soft Costs 7.50% of hard costs 2,256,450 Controllable210,471 Costs Retail Hard Costs/SF 25.00% of EGI $ 92.20 113,050Equity 15,271,561 1,476,767 Contingency 8.00% of hard cost 2,406,880 Replacement224,502 ReserveRestaurant Hard Costs/SF$5,000 per year$ 291.50 5,000LIHTC Investor Equity 12,933,126 Total Development Cost before Interest, Dev Fee, and Operating Reserve $ 39,710,860 Total$ 5,506,779 Operating Expenses 131,616HUD Home Grant 750,000 Net Operating IncomeMARKET (NOI) COMPS $ 320,584Deferred Developer Fee 1,588,434 Developer Fee 8%/4% of total project cost 3,176,869 220,271 Total Development Cost before Interest and Operating Reserve $ 42,887,729 $ 5,727,050 Paxton 365 Debt