HomeMy WebLinkAboutAgenda - Mail Packet - 03/25/2025 - Urban Renewal Authority (URA) Board Agenda – March 27, 2025 (2)Urban Renewal Authority
Urban Renewal Authority
Regular Meeting Agenda
March 27, 2025 at 5:00 PM
Jeni Arndt, Chair
Kristin Stephens, Vice-chair
Susan Gutowsky
Julie Pignataro
Tricia Canonico
Melanie Potyondy
Kelly Ohlson
Emily Francis
Matt Schild
Kristen Draper
Dan Sapienza
Council Information Center
300 Laporte Avenue, Fort Collins
& via Zoom at
https://zoom.us/j/98687657267
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Channel 14 and 881 on Xfinity
Caitlin Quander Josh Birks Amani Chamberlin
URA Attorney Acting Executive Director Secretary
URBAN RENEWAL AUTHORITY BOARD MEETING
5:00 PM
A) CALL MEETING TO ORDER
B) ROLL CALL
C) AGENDA REVIEW
Executive Director's Review of Agenda.
D) PUBLIC PARTICIPATION
E) PUBLIC PARTICIPATION FOLLOW-UP
F) COMMISSIONER REPORTS
G) DISCUSSION ITEMS
The method of debate for discussion items is as follows:
• Chair introduces the item number and subject; asks if formal presentation will be made by
staff
• Staff and/or Applicant presentation (optional)
• Chair requests public comment on the item (three minute limit for each person)
• Board questions of staff on the item
Urban Renewal Authority
• Board motion on the item
• Board discussion
• Final Board comments
• Board vote on the item
Note: Time limits for individual agenda items may be revised, at the discretion of the Chair, to ensure
all have an opportunity to speak. If attending in person, please sign in at the table in the back of
the room. The timer will buzz when there are 30 seconds left and the light will turn yellow. It will buzz
again at the end of the speaker’s time.
1. Consideration of a motion to approve a “term sheet” for a loan and a grant to support the
development of a middle-income housing project proposed to be constructed at 302
Conifer Street.
The purpose of this item is to consider authorizing the Acting Executive Director to sign a “term
sheet” describing the general terms and conditions of a loan from the URA North College Plan
Area fund to the developers of a proposed deed-restricted 76-unit multi-family community for low-
moderate and middle-income residents to be constructed at 302 Conifer Street. The proposed
loan amount is $3.22 million and will carry an interest rate of 3.0%. The proposed loan is designed
to “revolve” to support future middle-income housing projects, and will leverage other funding
sources, including a $7 million Proposition 123 Equity award from the State of Colorado.
Additionally, a Tax Increment Finance (“TIF”) grant of $100,000 funded by future property tax
payments is also proposed. Approval of the term sheet will authorize URA staff, legal counsel,
and a third-party loan administrator to negotiate a loan agreement with the developer, which will
be reviewed by the URA Board at a meeting in the near future.
H) OTHER BUSINESS
I) ADJOURNMENT
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A solicitud, la Ciudad de Fort Collins proporcionará servicios de acceso a idiomas para personas que no
dominan el idioma inglés, o ayudas y servicios auxiliares para personas con discapacidad, para que
puedan acceder a los servicios, programas y actividades de la Ciudad. Para asistencia, llame al
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anterior.
.
City Council Agenda Item Summary – City of Fort Collins Page 1 of 6
March 27, 2025
AGENDA ITEM SUMMARY
Urban Renewal Authority
STAFF
Andy Smith, Redevelopment Manager
Josh Birks, Acting Executive Director
SUBJECT
Consideration of a motion to approve a “term sheet” for a loan and a grant to support the
development of a middle-income housing project proposed to be constructed at 302 Conifer Street,
and to authorize the Acting Executive Director to sign the loan term sheet.
EXECUTIVE SUMMARY
The purpose of this item is to consider authorizing the Acting Executive Director to sign a “term sheet”
describing the general terms and conditions of a loan from the URA North College Plan Area fund to the
developers of a proposed deed-restricted 76-unit multi-family community for low-moderate and middle-
income residents to be constructed at 302 Conifer Street. The proposed loan amount is $3.22 million and
will carry an interest rate of 3.0%. The proposed loan is designed to “revolve” to support future middle -
income housing projects, and will leverage other funding sources, including a $7 million Proposition 123
Equity award from the State of Colorado. Additionally, a Tax Increment Finance (“TIF”) grant not to exceed
$100,000 funded by future property tax payments is also proposed. Approval of the term sheet will
authorize URA staff, legal counsel, and a third-party loan administrator to negotiate a loan agreement with
the developer, which will be reviewed by the URA Board at a meeting in the near future.
STAFF RECOMMENDATION
Staff recommends approval of the term sheet and to authorize the Acting Executive Director to sign the
term sheet.
BACKGROUND / DISCUSSION
A 76-unit deed-restricted multi-family community for low-moderate and middle-income residents is
proposed to be constructed at 302 Conifer Street (“Project”). The Project site is within the North College
Urban Renewal Plan Area boundaries. The Project was awarded Prop 123 equity funding, and has
attracted additional investments, however a financial gap remains. URA staff have worked with potential
financial partners to develop a novel arrangement that may fill the gap and enable the Project to proceed
if approved by the URA Board.
The Project is proposed to be a 76-unit multi-family rental community for low-moderate and middle-income
residents. 100% of the dwelling units will be income-restricted, with 59 units (77% of the total) restricted to
household incomes at 80% or less of AMI. Because these 59 units fit within the City’s definition of affordable
City Council Agenda Item Summary – City of Fort Collins Page 2 of 6
housing, this project may be an affordable housing project for purposes of Land Use Code incentives, if
desired by the developer. However, this project will not qualify for traditional affordable housing programs
such as Low-Income Tax Credit (LIHTC) financing.
The Szanton Companies (“Szanton”) is the Project developer, an experienced Low Income Housing Tax
Credit (LIHTC) developer from Maine who recently relocated their business to Colorado. The estimated
total development cost is $26.2 million, or approximately $340,000 per dwelling unit. The Project is
proposed to be a single 4-story, highly efficient all-electric building.
Financial Gap
The Project currently has a funding gap of $4.2 million and since June 2024, URA staff have engaged in
discussions with Szanton and potential funding partners exploring innovative potential solutions to enable
the Project to proceed.
Initially, URA staff considered typical financial arrangements, such as a standard reimbursement of
incremental property taxes generated by the project if completed. However, with only five years remaining
in the Plan Area’s tax increment revenue collection period and two years (at best) before the Project is
actually built, a meaningful impact would be highly unlikely. Thus, given that promotion of new affordable
housing in URA plan areas is understood to be a high priority, URA staff continued to explore creative
alternatives based on partnerships.
Proposition 123 Equity
The Proposition 123 Equity program (Prop 123) was approved by Colorado voters in November 2022 and
authorizes the state to retain money from existing state tax revenue to support affordable housing
investment. These funds are split 60/40 between the Office of Economic Development and International
Trade (OEDIT) and the Department of Local Affairs (DOLA) through its Division of Housing (DOH),
respectively. OEDIT manages the Affordable Housing Financing Fund, in partnership with Colorado
City Council Agenda Item Summary – City of Fort Collins Page 3 of 6
Housing and Finance Authority (CHFA), which serves as Contract Administrator. DOH manages the
Affordable Housing Support Fund.
In July 2024, the Project was initially awarded $5.8 million in the inaugural round of Prop 123 funding by
the State of Colorado. Out of 36 applications, the Project was one of six from across Colorado to earn an
award, and the only one from Larimer County. Interestingly, as potential gap funding partners (including
the URA) have held discussions over the past few months, CHFA agreed to increase the award to $7.0
million to free-up additional cash flow to service debt provided by potential gap funders such as the URA.
Affordable housing projects in our community are eligible for Prop 123 funding, because on June 12, 2023,
the City of Fort Collins filed a commitment with the State of Colorado pledging to increase our local
affordable housing supply by 3% each year for three years, for a total of 555 new dwelling units. That
commitment was accepted by the State, and the Project will contribute towards that commitment.
General Strategy
Prop 123 funding presents a unique and significant opportunity to develop affordable housing beyond the
highly competitive LIHTC process. Specifically, middle-income housing for incomes in the 80-120% AMI
range is in very high demand, yet it is not eligible for LITHC funding which is reserved for projects targeted
to household incomes at or below 80% of AMI. With Housing Catalyst being the City’s primary developer
of LIHTC housing, URA Staff has worked diligently to identify a distinct strategic “lane” and functional role
for it to complement the work that Housing Catalyst does well in our community.
Building upon the $7 million foundation provided by Prop 123 funding, the URA worked with Szanton and
following organizations to come up with a potential gap funding plan:
• CHFA
• Community Foundation of Northern Colorado (now NoCo Foundation)
• Weave Social Finance / Colorado Housing Accelerator Initiative (“CHAI”)
• Impact Development Fund (“IDF”)
It is important to note that while CHAI and NoCo Foundation are not currently involved in the deal, they are
mentioned here as an acknowledgement of the time and commitment of all stakeholders to identify a
creative solution, as well as a belief they may be involved in future projects.
From these discussions, a conceptual deal structure emerged whereby the URA may contribute money
from the North College Urban Renewal Plan Area fund in the following manner:
• $3.22 million from the URA. The loan would carry a 3% interest rate, and the principal loan amount
would be returned to the URA upon the sooner of an approximate 12.5-years term or a significant
capital event, such as a sale of the property or cash-out refinance. The returned principal amount
is intended to then “revolve” back into other similar deed-restricted affordable or middle-income
housing projects
• An amount not to exceed $100,000 in the form of a Tax Increment Finance (TIF) grant paid to
Szanton, funded by forecasted incremental property taxes generated by the project after completion
and through the sunset of the North College Urban Renewal Plan Area TIF revenue collection
period. The amount of forecasted TIF revenue generated by the project from the anticipated
completion (2027) to the sunset (2029) is approximately $95,000 and will be finalized prior to actual
disbursement to occur at the issuance of a Certificate of Occupancy.
It should be noted that in addition to Prop 123 capital, CHFA is also providing a $3,000,000 loan to the
Project through the Middle-Income Access Program (“MIAP”)
City Council Agenda Item Summary – City of Fort Collins Page 4 of 6
Finally, Housing Catalyst has independently agreed in principle to enter into a Special Limited Partnership
agreement with Szanton to provide property tax abatement on the 59 dwelling units restricted to 80% and
less AMI households. The 17 dwelling units not eligible for property tax abatement would generate property
taxes constituting the TIF reimbursement grant pledged by the URA as described above.
Capital Stack Details
SOURCE $$$ TERMS
Mortgage - Amortizing - Freddie non-LIHTC
Forward 10,651,727 6.35%, 10-year term, Amortizing
Mortgage - Amortizing - CHFA MIAP 3,000,000 6%, 30-year term, Amortizing
Mortgage - URA (Administered by IDF) 3,220,000 3%, 12.5-year term, Interest-only
Deferred/Forgone Developer Fee 340,000 No repayment
Federal and State Tax Credits for Energy
Efficiency 400,000 No repayment
Proposition 123 Program Equity 7,000,000 Principal must be repaid in 30
years
Sponsor (Developer) Equity 645,176 Repaid through available cash flow
Residual Gap 1,028,340
TOTAL 26,285,243
Impact Development Fund’s Role
Impact Development Fund (“IDF”) will underwrite, administer, and service the loan on behalf of the URA.
IDF is “a nonprofit Community Development Financial Institution (CDFI) certified by the United States
Treasury, and as an approved CRA (Community Reinvestment Act) institution, IDF works with social impact
investors, local municipalities, housing and financing authorities, nonprofit organizations such as Habitat
for Humanity, partner CDFIs and traditional banks. Impact Development Fund supports projects that bring
together multi-faceted community stakeholders including nonprofit organizations, developers, community
banks, individuals and local and state government. Starting with strategic planning for future projects,
through the application process to ultimately securing financing, we help overcome obstacles to ensure
critical community projects can break ground.”
IDF began in Fort Collins more than 20 years ago, known then as Funding Partners. IDF is nationally
regarded as a proven leader in affordable housing finance, with significant experience working in
partnership with public and private entities.
Big Picture
URA staff began discussions with Szanton and potential funding partners intending to fill the gap faced by
the Project at 302 Conifer Street. However, as discussions progressed, it became evident that a replicable
tool and partnership model was emerging, potentially paving the way for the URA to support new affordable
and middle-income housing as a reliable blight prevention and mitigation tactic. Specifically, a revolving
social impact loan fund magnified by financial partners and administered by professionals may provide a
legacy for the URA that continues after TIF revenue expires.
City Council Agenda Item Summary – City of Fort Collins Page 5 of 6
Finally, in terms of the housing crisis, the URA may have finally identified a way to promote new workforce
housing that does not compete with traditional affordable housing providers for resources such as property
tax abatement or tax credit financing. In the broader spectrum of housing affordability, the middle-income
segment is critical for economic and community stability but is still in the early stages of financial
innovation.
Next Steps
To prepare for the May 22, 2025, URA Board meeting, URA staff and legal counsel will work with IDF and
Szanton to negotiate and finalize loan terms generally described in the attached draft term
sheet. Additionally, URA staff and legal counsel will negotiate a final agreement with IDF for their
administrative assistance.
• March 27, 2025: URA Board – Approve general terms
• May 22, 2025: URA Board – Approve final documents
• Summer 2025: Project Groundbreaking
• Summer 2026: Project Ribbon-Cutting
URA FINANCIAL IMPACTS
The North College Urban Renewal Plan Area fund currently has an estimated $8.1 million in unrestricted
funds. A potential bond issuance was discussed confidentially in URA Finance Committee Executive
Session on January 9, 2025, and will be presented to the URA Board for consideration in April or May.
BOARD / COMMISSION / COMMITTEE RECOMMENDATION
URA staff presented evolving working drafts of the proposed loan and grant to the URA Finance Committee
on December 12, 2024, and again on February 13, 2025. The URA Finance Committee indicated general
support for the proposal and directed staff to continue negotiations and refinements for consideration by
the full board.
Notable differences between terms previously presented to the URA Finance Committee and terms
currently under consideration by the URA Board include:
Payments: Previously, the interest payments to the URA were considered “hard” loan debt service,
meaning that payments were due regardless of Project cash flow. However, the senior lender, Freddie,
counts hard debt payments against debt service coverage ratios, and in this case, would jeopardize the
ability to obtain Freddie financing. The current term sheet calls for the annual interest payment to be based
on cash flow, and senior (before) equity partners (Szanton and Prop 123) receive distributions. In the event
Szanton is unable to make a full annual interest payment, the amount due will be added to the payment
due the following year. In other words, Szanton and the Prop 123 program receive no payments until URA
interest payments due have a zero balance.
The URA will receive tax returns on an annual basis and will also receive Project financial statements if a
loan payment is not made.
Term: Previously, a 10-year term had been contemplated. However, Freddie, the senior lender requires
subordinate debt to not mature (become due) until after their debt matures. Since the Freddie loan does
not mature until 10 years after Project completion (which is approximately 12-18 months after construction
City Council Agenda Item Summary – City of Fort Collins Page 6 of 6
begins), the URA loan will mature approximately 6 months after the Freddie loan matures, estimated to be
12.5 years.
Refinance: Senior loans may only be refinanced with URA approval, and only for improvement in interest
rate and/or terms. No equity can be withdrawn without URA approval.
PUBLIC OUTREACH
Briefing with the North College CAG (Citizen Advisory Group)
Internal discussions and consultations with City of Fort Collins housing staff have been ongoing.
ATTACHMENTS
1. Attachment A: Final Draft Term Sheet
32747597.6
Term Sheet _302 Conifer Street Development 3/21/2025
Urban Renewal Authority
222 Laporte Avenue
PO Box 580
Fort Collins, CO 80522
970.416.2517
asmith@fcgov.com
fcgov.com
March 20, 2025
The Szanton Company
4100 E. Mississippi Ave.
4th Floor,
Denver, CO 80246
RE: Term Sheet --302 Conifer Street Development
Dear Partners at Szanton Company,
Thank you for the opportunity to discuss the permanent financing structure needed to complete the 302
Conifer Street, middle income development (the “Project”), located in Fort Collins, Colorado. The terms
and conditions presented herein represent those under which the project loan application is eligible. Final
approval of the proposal is solely at the discretion of the Fort Collins URA Board of Commissioners and
will be based on the availability of funds.
SUMMARY OF PROPOSED TERMS AND CONDITIONS
1.Lender: Fort Collins Urban Renewal Authority.
2.Borrower: The Szanton Company, or a single asset entity owned by the Szanton Company.
3.Administrator: Impact Development Fund (“IDF”)
4.Loan Amount: $3,220,000 (Three Million Two Hundred Twenty Thousand Dollars and No
Hundreds) (the “Total Loan Amount”).
5.Loan Purpose: Borrower will use the loan proceeds for the construction and permanent financing
of 76 income-restricted units, collectively known as 302 Conifer.
6.Property: The Property is located at 302 Conifer in Fort Collins, CO 80524 (the “Property”).
7.Closing: Occurs upon the exchange of all executed Loan Documents (defined below) following
Lender’s satisfaction of all conditions precedent to the making of the Loan to Borrower. Closing
shall occur on a date determined by Lender and Borrower prior to the Loan Closing Deadline
(defined below).
8.Loan Closing Deadline: Not later than December 31, 2025.
9.Disbursement Schedule: At Closing, the loan proceeds will be placed in an escrow account
controlled by Lender and IDF. Incremental draws will be permitted monthly upon presentation and
satisfactory review of draw requests by Lender and any inspecting architect engaged by IDF, and
subject to other terms and conditions as set forth in the Loan Documents.
10.Commitment Fee, Paid to IDF: 1.00% of the Total Loan Amount.
ATTACHMENT A
32747597.6
Term Sheet _302 Conifer Street Development 3/21/2025
11. Withdrawal/Denial Fee: Paid to IDF: In the event of loan withdrawal or denial, Borrower shall
remit the full commitment fee.
12. Loan Term: An estimated 150 months (12.5 years), interest-only.
13. Maturity Date: The earlier of a) a capital event such as a sale or refinance, or b) 180 days (6
months) after the Maturity Date of the senior loan issued by Freddie (“Freddie”) estimated to
occur approximately 150 months (12.5 years) from the Date of Loan Closing. A refinance of the
Senior Loans (defined below) solely intended to secure a lower interest rate or improved loan
terms (aka, “rate and term”, or “no cash out” refinance) shall not be considered an event deemed to
have caused the Maturity Date. The Maturity Date, as defined by the original Freddie loan, may
not be extended without consent of Lender.
14. Extension of Maturity: If approved by Lender, up to 24 months, with a 0.25% extension fee
payable to IDF.
15. Interest Rate: 3.00% fixed
16. Default Rate: Unpaid principal and interest, to the extent due and owing, shall bear interest at an
additional 2.00% above the Interest Rate upon the occurrence of an event of default, as set forth and
defined in the Loan Documents (“Event of Default”).
17. Loan Payments: Upon project stabilization, as defined by Freddie’s loan documents, which occurs
at the conversion of the construction loan to a permanent loan, interest shall accrue based upon daily
outstanding balance and shall not compound. Borrower shall make annual interest payments with
payments due on the first day of July each year (“Loan Payments”), which shall commence upon
project stabilization. All outstanding principal, accrued but unpaid interest, and any applicable fees,
costs, or charges, shall be due and payable upon the Maturity Date. Loan Payments will be paid
from cash flow, before any cash flow is distributed to equity providers (sponsor and Prop 123). If
Borrower fails to make a Loan Payment due to insufficient cash flow, such failure to pay shall not
be considered an Event of Default, the amount due will be added to the outstanding principal
balance, and Loan Payments will be made from future cash flow before any cash flow is distributed
to equity providers. In the event of failure to make Loan Payments, Borrower will provide a 12-
month profit and loss statement, rent roll, and a current balance sheet to Lender. Borrower agrees
to provide tax returns to Lender annually, within 60 days of filing.
18. Prepayment Penalty: None; provided, however, Borrower must provide 45 days’ prior written
notice of each prepayment.
19. Principal Amortization Schedule: Up to 40 years.
20. Recourse: The loan shall be full recourse to the Borrower throughout the construction period only,
with personal and corporate guarantees as required.
21. Guarantor: The guarantor for this loan will be both personal (all personal parties with 20% or
greater ownership interest in the borrowing entity), as well as corporate, contingent on the
borrower’s organizational chart; final determination based on underwriting. Guarantor(s) shall be
responsible for project completion and financial compliance during the construction term.
22. Real Property Collateral/Deed of Trust: Borrower will grant to Lender a deed of trust
encumbering the Property. The deed of trust will be in third priority, junior to a loan from Colorado
Housing and Financing Authority (“CHFA”) and a loan from Freddie (collectively, the “Senior
32747597.6
Term Sheet _302 Conifer Street Development 3/21/2025
Loans”). Lender will enter into a subordination agreement with CHFA and Freddie with respect to
the Project. As a condition precedent to closing, Lender must enter into an intercreditor agreement
satisfactory to Lender with any senior lender. Maximum CLTV of 90%. *Lien will not be
subordinated to equity providers.
23. Other Closing Conditions: All other customary closing conditions apply.
24. Documents and Legal Requirements: Borrower will be required to execute a Note, Deed of Trust,
Loan Agreement, and all applicable Affordability Covenants (Land Use Restriction Agreements),
and customary closing incumbency or similar certificates (collectively, with the guarantees, “Loan
Documents”) associated with the specific terms and conditions of the comprehensive capital stack,
and to furnish these and such other documents and made a part hereof. Borrower agrees that the
Loan and this Term Sheet are subject to such additional documentation and legal requirements as
may be deemed necessary by Lender's counsel.
25. Affordability Requirements: The Property must meet the minimum affordability requirements as
stipulated in the awarded Proposition 123 equity award guidance, and any other applicable
affordability conditions, requirements, and use covenants imposed by governing bodies with
jurisdiction over the Project.
26. Senior Loan Refinancing: Buyer may not incur additional indebtedness secured by the Project to
refinance one or more of the Senior Loans without the consent of Lender, which consent shall not
be unreasonably conditioned or denied
27. Equity Withdrawal: Borrower may not withdraw any equity from the Project without the consent
of Lender. For the avoidance of doubt, repayment of deferred developer fee and cash flow
distributions to Borrower, after current and outstanding loan payments have been satisfied, shall not
constitute the withdrawal of equity from the Project.
The above outlines the proposed terms we intend to administer on behalf of the Fort Collins Urban
Renewal Authority and any additional future investors. These terms are contingent on formal review and
approval by all contemplated investors and do not constitute any form of financial investment commitment
on behalf of IDF.
Sincerely,
__________________________
Josh Birks, Acting Executive Director