Salt Lake City has new hopes for failed housing project on downtown State Street

(Chris Detrick | Tribune file photo) The Plaza on State Street project in Salt Lake City, as seen in September 2016. The city's Redevelopment Agency has selected a new developer, the Chicago-area firm Brinshore, to restart the stalled residential development after a prior developer, Tanach Properties, pulled out in 2015 and the site went to bank foreclosure.

Salt Lake City is taking another crack at developing much-needed housing at 255 S. State St., where a rusting shell of faulty steel girders and graffiti-clad walls stands today.

The city’s Redevelopment Agency (RDA) has chosen Chicago-area developer Brinshore from a list of nine companies that applied to help resurrect the project, which has sat dormant for years after a previous developer pulled out amid a host of engineering and financial problems.

RDA Chief Operating Officer Danny Walz said the city is entering contractual talks with Brinshore after accepting its qualifications and an initial proposal to build a 14-story residential tower at the downtown site, with the first floor devoted to offices for arts-focused nonprofits.

Walz said the RDA had also selected Brinshore as the developer to build a 200-unit mixed-income residential complex at the city-owned, 2.07-acre site of the Overniter Motel, at 1500 W. North Temple.

Founded in 1994, Brinshore has helped develop more than 80 housing projects in 11 states and the District of Columbia, with experience in partnering with city housing authorities and nonprofit groups, along with a focus on environmental conservation and affordability.

The firm's portfolio is valued at more than $1 billion, according to its website, and includes more than 6,500 residential dwellings, primarily in the Midwest.

(Al Hartmann | Tribune file photo) Remnants of the ‘Plaza at State Street’ development at 255 South State Street in Salt Lake City, which ground to a halt in 2015 after developer Tannach Properties ran into engineering and financial problems. The city’s Redevelopment Agency says it has selected a new developer, the Chicago-area company Brinshore, to take over the project.

Walz said Brinshore’s interest in the State Street and Overniter Motel projects reflected a desire by the company to get a foothold in Utah’s thriving real estate markets.

“We are really excited to have this partnership with them,” Walz said Thursday. “Anytime we can partner with someone who’s got the commitment and experience for affordable housing, we see that as a benefit.”

The State Street announcement brings new hope for one of the city’s more vexing attempts at urban renewal.

The previous developer — Utah-based architect Ben Logue and his company Tannach Properties — bought the 1.12-acre property from the city in April 2012 for about $2.7 million and broke ground on what was to be Plaza at State, a complex of shops and residential towers surrounding a European-style plaza reaching east to Edison Street.

About 136 of the project’s 180 apartments were meant to target low- and moderate-income tenants, partly to replace about 50 single-occupancy rooms of low-income housing demolished when crews removed the old Regis and Cambridge hotels from the property.

The city’s latest housing plan says Utah’s capital needs at least 7,500 affordable units for residents earning less than $20,000 yearly as rents citywide continue to rise faster than prevailing wages.

But what started as a $32.5 million project ran into trouble on many fronts, culminating in sizable cost overruns, lawsuits with suppliers and an engineering study that found flaws in the steel structure. Struggling with debt, the developer withdrew and the project’s primary lender, Citibank, declared Tannach in default in June 2015, according to RDA documents.

Citibank ultimately foreclosed on the property, and the RDA bought it back in October 2017 for $4 million.

Under its new proposal, the RDA will require that 60 percent or more of apartments in the new complex be affordable to residents making between 50 percent and 60 percent of the city’s median income, now hovering at around $46,711. Ten dwellings are to be set aside for low-income residents with HIV/AIDS and six for low-income disabled residents.

The affordable units are required to stay that way for at least 50 years, according to RDA documents.

(Steve Griffin | Tribune file photo) The Overniter Motel at 1500 west North Temple in Salt Lake City, as seen on Monday October 23, 2017. The city's Redevelopment Agency has selected Chicago-area developer Brinshore to convert the motel site into a residential complex.

Walz said Brinshore’s initial proposal calls for 190 housing units at State Street, 76 of which will be affordable. Plans also include 40,000 square feet of first-floor commercial space devoted to arts and entertainment groups with an educational focus, along with an outdoor performance venue.

In its request for qualified developers, the RDA said the aboveground portion of what’s left on the State Street site is being torn down. A future developer will have to fully assess and potentially fix or demolish and remove any remaining structures, the agency said, “as well as shoring up soils around the foundation.”

The city will also hold a future developer responsible for “designing and building the development in a manner that produces a high-quality, enduring living environment.” Brinshore is in charge obtaining financing for the project, though the RDA is offering to help with a series of city incentives.

Brinshore will be responsible for building and maintaining a midblock walkway linking State Street to Floral Street just east of Edison, and preserving the historic Cramer House, located on the State Street property’s eastern edge.

And while the RDA wants the new developer to ultimately buy the property, it is also insisting on a repurchase agreement, giving the city the option to buy it back if the project isn’t completed or used as agreed.

Initial plans are similar for the Overniter Motel, which the RDA moved to purchase in October 2017. Brinshore’s early plans call for making 89 of the 200 dwellings built there affordable and for putting a 10,000-square-foot day care center on the project’s first floor.

The city will also require construction of midblock walkways connecting Cornell Street, 1460 West and North Temple.