Salt Lake City — Providence Place Apartments goes a long way toward filling the need for workforce housing in downtown Salt Lake City.
The large 125-unit development is reserved for households earning no more than 60 percent of the area median income (AMI).
“We felt the needs of the 60 percent market were not being met,” says Kip Sheppard, president and CEO of Wasatch Advantage Group, LLC, explaining that many of the other affordable housing communities in the region are restricted to residents earning about 40 percent of the AMI.
He says the demand for affordable housing at the higher level is only going to grow with a $1.5 billion redevelopment effort taking place just two blocks away. Spearheaded by the real estate development arm of The Church of Jesus Christ of Latter-day Saints, the nearby City Creek Center will feature destination retail, office, and residential components, creating a number of jobs in the neighborhood.
Because the new apartments are reserved at the 60 percent level, the allowable income for a family of two is $33,060. For a family of three, it is $37,200.
Although Wasatch leaders felt good about their plan from the beginning, they nearly had to change course when construction prices spiked 25 percent to 30 percent around 2007.
“We had to decide whether to wait out the construction balloon or go market-rate,” Sheppard says.
After weighing different options, the Wasatch team remained convinced that the best use for the site was affordable workforce housing and was prepared to hold on to those plans. Fortunately, the wait wasn't too long.
Inside the financing
The American Recovery and Reinvestment Act passed in 2009, creating new funding programs, such as the New Issue Bond Program (NIBP) and the Tax Credit Assistance Program (TCAP), to help spur affordable housing production during the economic downturn.
A combination of NIBP and TCAP funds, help from local leaders, and falling construction costs allowed the $18.7 million housing development to move forward.
“Centrally located in downtown, Providence Place is providing workforce housing for the folks who work in the support industry around downtown,” says Claudia O'Grady, vice president of multifamily finance at Utah Housing Corp. (UHC). “It is an important component of the housing piece that was missing.”
UHC provided financing through several sources, including the NIBP, TCAP, and low-income housing tax credits (LIHTCs).
The local support also included an $800,000 loan from the Olene Walker Housing Loan Fund and a $200,000 loan from the Salt Lake City Housing Trust Fund. The fund administrators understood the need for workforce housing in downtown and recognized that they had a one-time opportunity to leverage $2 million in federal stimulus money.
The Goldman Sachs Urban Investment Group (UIG) also played a key role as the direct LIHTC investor, providing $5 million in equity.
“There are two critical investment features that drive us and were present in abundance in the Providence Place project,” says Rachel Diller, vice president at Goldman Sachs UIG. “We're always focused on the partners and the project impact. On the partners' side, this project is a great example of the value that is created through private and public partnerships. The financing involved a coalition of public support from multiple agencies and levels of government, brought together by a strong and accomplished development partner in Wasatch.”
“The other compelling aspect is project impact,” Diller adds. “Providence Place is not just providing much-needed affordable housing but is also supporting the city's downtown revitalization efforts. It's an opportunity to create workforce housing that helps preserve an economically integrated urban community. Having families close to transit, downtown, and jobs is good for the economic development efforts of the city and important to the families who are housed there.”
Salt Lake City is also a market that the UIG team has focused on, helping finance the creation of more than 400 affordable housing units and several community facilities in the past two years alone.
The first residents moved into Providence Place in December, and the ribbon-cutting ceremony was held this January, exactly one year after its groundbreaking.
The seven-story development features five levels of housing and two levels of parking. The building offers a clubhouse, a media/business center, a fitness center, and an open-air atrium.
$9.8 MILLION in tax-exempt bonds through the New Issue Bond Program and issued by Utah Housing Corp. (UHC)
$5 MILLION in low-income housing tax credit equity from Goldman Sachs
$2 MILLION in Tax Credit Assistance Program funds from UHC
$800,000 loan from the Olene Walker Housing Loan Fund
$200,000 loan from the Salt Lake City Housing Trust Fund
$921,000 in developer equity