Sign up to get free Building Salt Lake emails in your inbox.
Building Salt Lake Pro and Premium Members can search for any building permit in Salt Lake City. Stay in the know in the market by becoming a Member today.
The scuffle between a local climbing gym trying to expand its flagship location in the Ballpark neighborhood and its public financing partner, the city’s Redevelopment Agency, may be cooling down.
After approving The Front Climbing Club’s $2 million loan in December, RDA leadership told The Front’s owner in January that “you have taken actions that are incompatible with the public benefits and community-building we aim to support” – and tabled the loan application.
The Front’s owner, Dustin Buckthal, had spoken out against the RDA’s sizable subsidy to USA Climbing for its proposed National Training Center (NTC) at 300 South and 500 West in the Depot District. USA Climbing’s plans include commercial elements open to the public that would compete with other climbing gyms locally.
The Front said that would put them out of business. In April the RDA responded, ‘If that’s the case, it means you’re a bad risk and can’t lend you the money. Unless…you give us revenue projections that show otherwise so you can pay off your loan.’
It looks like that’s what the Front did. RDA Director Danny Walz informed Buckthal on May 10 that the Agency would resume processing his loan approval.
The loan
Buckthal told us this week that although the loan was “unpaused” two weeks ago, he is still awaiting loan documents and other closing details to be provided by the Agency.
In December the RDA Board approved a $2 million loan at 5.10% to Buckthal’s Rocky Ventures, a climbing-wall manufacturer and gym operator.
The 60% equity contribution by the business, and its good payment history with the city’s Economic Development Loan Fund on a $350,000 note on its 2016 construction project, helped secure the RDA as the project’s primary lender. It passed both the RDA’s Loan Committee and Board with unanimous votes.
The unpausing
RDA Director Walz informed Buckthal earlier this month that “we have made the decision to resume the processing of your loan application and proceed towards closing.”
Walz continued, “The financial metrics you provided and which RDA staff used to underwrite your loan are robust. The Front’s debt service coverage ratio, profit margin, and loan-to-value ratio for your project are all at levels at which RDA staff is comfortable recommending the loan move forward, even in light of your concerns about competition.”
Buckthal is hoping that he receives closing loan documents soon, and that requirements beyond the basic terms already agreed upon “aren’t too burdensome.”
We asked whether he would recommend doing business with the RDA to other local businesses.
He told us that “I hope that my experience with the RDA was atypical in regard to the RDA’s willingness to leverage the purse-strings to demand business owners’ support of RDA projects and the RDA itself. Yet, in a recent meeting with RDA leadership, I was pressed multiple times to agree to limit what I would say to the media about the future of my business and the RDA’s potential support of the USAC NTC.”
USA Climbing’s search partners narrows
USA Climbing’s Request for Inquiry (RFI), soliciting a commercial gym operator concluded last week.
USAC’s CEO Marc Norman told us, “USA Climbing has decided to advance discussions with Momentum and Touchstone Climbing. USA Climbing has not made any additional determinations at this point.”
Rocky Ventures, not surprisingly, did not make the cut.
Buckthal said his company “provided a thoughtful and compelling response that proposed to move the NTC down to Lehi,” even though USA Climbing is publicly committed to the Depot District site.
Lehi is also one of Momentum’s locations in Utah, along with Millcreek and Sandy.
Momentum operates six gyms nationwide, three in Utah. Touchstone is a California company with 18 locations all in the Golden State.
Those “additional determinations” likely have to do with a wall manufacturer to build terrain.
Although unconfirmed by USA Climbing, that manufacturing partner is likely Walltopia, a Bulgarian company that has built walls for all six of Momentum’s facilities, according to the company’s website. Momentum also has a gym in Sofia, Bulgaria, and claims to have completed over 2400 projects worldwide.
What is still unclear is USAC’s financing structure. There are indications that the nonprofit is seeking equity partners, in addition to operating partners for the project. USAC told RFI applicants that the $15 million grant from the state of Utah is contingent on USAC bringing equity to the table – which RFI respondents had to have as part of their offer.
If so, it means that the RDA will be subsidizing not just a nonprofit organization, but its private equity partner(s) whose business model is centered on competing with existing climbing gyms.
We’ll continue to keep readers posted on this story.
Interested in seeing where developers are proposing and building new apartments in Salt Lake, or just want to support a local source of news on what’s happening in your neighborhood? Subscribe to Building Salt Lake.
