Salt Lake City will loan another $1.15 million to a 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 plot for more than eight years now for a variety of reasons, from soil problems and contractor disputes to financial issues and now a pandemic.
The additional cash for Brinshore Development — on top of $13.4 million in lending and other guarantees the city has already chipped in — got approved Tuesday after the firm said its costs had leapt by 16% in one year, partly due to COVID-19.
The new loan makes 255 S. State one of the largest recipients of financial backing from city’s Redevelopment Agency in its history, city officials noted. The total price tag for the Brinshore project is now estimated at $88.5 million.
“It’s not cheap to put affordable housing in your downtown core,” RDA Chief Operating Officer Danny Walz said Tuesday. “We recognized going in this was going to be a tough project to pull off.”
(Photo courtesy of Brinshore, via FOX TV) Initial rendering of a proposed 14-story residential tower at 255 S. State Street in Salt Lake City, to be built by Chicago-based Brinshore in partnership with the city's Redevelopment Agency.
Plans at 255 S. State now call for 190 new studios and apartments and some 15,000 square feet of lower-floor commercial spaces to be built in two glass and steel towers on the city-owned site, with the project to be completed in two years according to Brinshore’s latest timetable.
Through its deal with the RDA, all but 22 of the new dwellings would be kept more affordable, with units set aside for renters at various incomes levels between 20% and 80% of the region’s average wages.
The developer has also promised to build a mid-block walkway between the two towers, connecting State Street to Edison Street and a sizable community plaza within the block. Brinshore will refurbish the adjacent and historic Cramer House, a two-story building to the south, as well as devote ground floor spaces in the finished buildings for use by Utah nonprofits.
In their role overseeing the RDA, members of the Salt Lake City Council were told Tuesday the additional loan would help Brinshore close what is likely a temporary gap in its financing, and would only be used if the firm exhausted all other funding sources.
And in any event, Walz said, “this is not a grant. This is not a write-down. This is a loan with interest.”
The RDA Board approved the loan 6-to-0 during Tuesday virtual meeting, with Councilwoman Ana Valdemoros, whose District 4 spans the site, absent — having delivered a baby days before, according to the board chair, Councilwoman Amy Fowler.
Whitney Weller, senior vice president for Brinshore, said new hesitancy from key lenders due to the pandemic; refinements in the project’s design; and unforeseen demolition and construction overruns at the cramped location had added $12 million in total costs since this time last year.
Brinshore has closed most of that shortfall on its own through other borrowing, trimming costs and doubled its own contribution to the project, from $1.5 million to $3 million, Weller and city officials said.
The developer also has found $4 million in savings through a redesign, realigned its mix of affordable apartments in the project and scaled back on parking, retail and other commercial spaces.
Yet without the emergency funding from the city, Weller said, Brinshore risked not closing its financing package with lenders by year’s end as planned — and could lose almost $30 million in crucial housing tax credits that has made the whole project pencil.
“We want to make sure we’ve got a little cushion if we need it,” Weller said.
David Brint, a principal in Brinshore, called the added loan “insurance” that the work would stay on schedule, though he said he apologized "that we have to come back to ask for something in addition.
“We will try our best not to have to draw it down,” Brint said.
Elected leaders, meanwhile, are trying to encourage more housing construction citywide to address an ongoing shortage at all price levels.
They’re also trying to revitalize that neighborhood downtown and some of them noted Tuesday that until Brinshore was chosen from a list of nine developers in late 2018, the project at 255 S. State Street had a bumpy history.
The high-profile property across State Street from the Marriott City Center to the west had sat dormant, rusting and covered in graffiti for years after a prior developer pulled out because of a host of engineering and financial problems. The RDA was even forced to buy the property back from Citibank at auction after the bank foreclosed on previous developer Ben Logue.
Logue and his company Tannach Properties purchased the land from the city in 2012 as part of ambitious plans for a housing and retail project centered there around an expansive European-style plaza — before costs ballooned, work was halted and Logue eventually withdrew.
Brinshore has since razed a decaying and vandalized steel eyesore left from that initial construction, leaving a hole until work can start.
The firm also pieced together a complex financing package for its new development from 12 separate sources, including a prior $8.4 million RDA loan and financial guarantees from the city regarding the land involved that are worth another $5 million.
In spite of the request for additional loan money, Councilwoman Fowler called 255 S. State “a feel-good project” for its housing, appealing design and potential benefits for the downtown area.
Councilman Dan Dugan also praised its inclusion of three- and four-bedroom apartments, saying that would add housing stock to the urban core for families. Officials with Brinshore, which ranks among the largest developers of affordable housing nationwide, also remain enthusiastic about a groundbreaking, possibly by Christmas.
“I love this project,” Brint said told the RDA Board. “I’m so desperate to build it and make something special out of it.”
