Consultant to South Salt Lake: Don't bond for Market Station
Redevelopment » A smaller project could be 'very viable' in a few years, report says.
By Rosemary Winters
The Salt Lake Tribune
Salt Lake Tribune
Updated:10/30/2009 05:14:39 PM MDT
South Salt Lake shouldn't go into debt to prop up the developer of a proposed urban village near a planned streetcar line.
That's the advice of city-hired consultant David Wilcox of Market & Feasibility Advisors.
In September, Steve Aste of Z Partners asked the city to issue a $9.5 million bond to buy nine-plus acres at his Market Station site, between State and Main streets and 2100 South and 2300 South. Aste hopes to build a vibrant housing, office and retail center along the route of the proposed Sugar House streetcar.
But the land his firm pieced together faces foreclosure by America First Credit Union. The consultant reports a $9.5 million loan -- that has grown to a $10.5 million debt -- received a default notice in June. Aste asked South Salt Lake to step in before the property is lost.
"I'm not asking for anything unrealistic," Aste says, adding that he believes the consultant's report contains errors. If the city buys the land, with or without a bond, he says, "the land itself is the security."
Earlier this week, the City Council delayed a discussion on Wilcox's report and a vote on possible land purchase to its next meeting. But, as of Friday, neither item was on Wednesday's agenda.
"It appears there's some time left to do some work here that would be favorable to the city's redevelopment initiative," Wilcox told the council via phone. "This very valuable asset should be saved in some way."
Wilcox suggests the city work with America First to market the project to a new development team, which could include Z Partners. South Salt Lake has a Community Development Area at the site, allowing the city to offer up to $24.4 million in property-tax incentives to a developer to build Market Station.
Bonding for the land purchase using Redevelopment Agency funds, Wilcox reports, would produce only $1.85 million in net proceeds -- a fraction of what is needed. Plus, public ownership would mean the city would not receive property taxes for the parcel until it could be resold into private hands.
In his report, Wilcox says Aste recently scaled back the $500 million vision for Market Station, slashing condos by 30 percent and dropping office and retail space by 50 percent. The consultant sees a first phase of the revised plan -- 276 condos, 60,000 square feet of offices and 15,000 square feet of retail in four buildings -- as "potentially very viable over the next three to four years."
All the city has to do is wait for the economy to recover.
A bond, backed by Redevelopment Agency funds, likely would generate only $1.85 million in net proceeds, far short of the $9.5 million-plus needed to buy the land.
The property facing foreclosure includes 1.2 acres of former city streets and an alley that were conveyed to the developer at no cost. The city also has invested $350,000 to $500,000 in sewer upgrades for the project.
Proposed buildings of 20-plus stories likely will be scaled back to five to seven stories.
Source: Market & Feasibility Advisors report