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Second Amendment to Grant Agreement with Virtual Velocity, LLC for the Rehabilitationof 1199 Central Avenue_HearingCity of Dubuque City Council Meeting Public Hearings # 02. Copyrighted November 6, 2023 ITEM TITLE: Second Amendment to Grant Agreement with Virtual Velocity, LLC for the Rehabilitation of 1199 Central Avenue SUMMARY: Proof of publication on notice of public hearing to consider City Council adoption of a resolution approving a Second Amendment to Grant Agreement including the issuance of 15-years of tax increment financing for the project with Virtual Velocity, LLC, and City Manager recommending approval. RESOLUTION Approving a Second Amendment to Grant Agreement by and between the City of Dubuque, Iowa and Virtual Velocity, LLC, including the proposed issuance of urban renewal tax increment revenue obligations relating thereto, and providing for the publication of notice thereof SUGGESTED Suggested Disposition: Receive and File; Adopt Resolution(s) DISPOSITION: ATTACHMENTS: Description Type MVM Memo City Manager Memo Staff Memo Staff Memo Second Amendment Supporting Documentation Resolution Resolutions THE C Dubuque DUj!BQTE WAWca 914 Masterpiece on the Mississippi YP pp aoo�•o 13 zai7*20*�oi9 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Second Amendment to Grant Agreement with Virtual Velocity, LLC for the Rehabilitation of 1199 Central Avenue DATE: November 1, 2023 Economic Development Director Jill Connors is recommending City Council adopt a resolution approving a Second Amendment to Grant Agreement including the issuance of 15-years of tax increment financing for the project with Virtual Velocity, LLC. I concur with the recommendation and respectfully request Mayor and City Council approval. v Mic ael C. Van Milligen MCVM:sv Attachment CC' Crenna Brumwell, City Attorney Cori Burbach, Assistant City Manager Jill Connors, Economic Development Director Dubuque THE CITY OF All -America My nni K xvni , nz: a:u�ir, DUB E 2007-2012.2013 Masterpiece on the Mississippi 2017*2019 TO: Michael C. Van Milligen, City Manager FROM: Jill M. Connors, Economic Development Director Economic Development Department 1300 Main Street Dubuque, Iowa 52001-4763 Office (563) 589-4393 TTY (563) 690-6678 http://www.cityofdubuque.org SUBJECT: Second Amendment to Grant Agreement with Virtual Velocity, LLC for the Rehabilitation of 1199 Central Avenue DATE: October 31, 2023 INTRODUCTION This memorandum presents for City Council review and approval a resolution approving a Second Amendment to Grant Agreement with Virtual Velocity, LLC. BACKGROUND The City of Dubuque previously entered into a Grant Agreement, dated October 3, 2022 by Resolution No. 325-22. This property is the former Prescott elementary school. Virtual Velocity, LLC is a local organization entering into building preservation and rehabilitation. Lloyd Singletary, organizer, is restoring the building's fagade while creating 14 new market -rate rental units. On October 2, 2023, the City of Dubuque amended the Agreement by Resolution No. 331-23 to include a Downtown Rehabilitation Loan in the amount of $300,000. DISCUSSION The dilapidated building is in a highly visible portion of the downtown area. As the building is located across the street from the current Prescott Elementary School, and adjacent to the Multicultural Family Center, it is critical to have this blight remedied. Substantial rehabilitation and adaptive reuse projects often operate under the constraints of large financing needs and material and labor shortages. Due to the critical need for housing throughout our community, as identified by City Council, a Second Amendment has been drafted to further support the project. Since the initial Grant Agreement was executed, the City Council has given additional support to the creation of housing in the Greater Downtown Urban Renewal Area. Multifamily housing creation projects are now eligible for either 10-years of tax abatement followed by 5-years of tax increment financing or 15-years of tax increment financing. The proposed Second Amendment to Grant Agreement includes 15-years of tax increment financing for the project. In August 2022 and again in August 2023 at the City Council Annual Goal Setting sessions the City Council identified the Central Avenue Corridor revitalization as a priority. In August 2022 the City Council established Housing Incentives as a priority. Previously the City Council has directed that the City should work on not having former school sites stay vacant and become blighting influences on neighborhoods. A Brief History of the Third Ward Schoolhouse In 1856, a new building was constructed at 12t" and Clay Streets (now Central Avenue) to house the Third Ward School. The structure had a cross plan and was of the Italianate style, popular at the time. It had load bearing masonry brick walls with a strong Dubuque limestone foundation and water table. The building had large windows affording light and ventilation for a healthy learning environment. The structure is a rare pre -Civil War public structure and eligible for the National Register of Historic Places based on Criterion C, due to its being a rare surviving early architectural type, and its association with Dubuque architect John Francis Rague (1799-1877). The cost for the structure was $25,000, constructed by builders Berry, Platert & Longhurst. It opened in January 1857, one month before construction began on nearby City Hall, which was also designed by Rague. By 1858 it also housed our first Dubuque Senior High School on the 3rd floor, with elementary grades below. The high school enrolled one hundred ten students and had a staff of two teachers and one principal. Students wishing to be admitted to the high school had to pass a test in arithmetic, geography, grammar and history. The first two floors were divided into four rooms each, with children separated by gender and the level of achievement. building was renamed to Prescott School after the American scientific historian William Hickling Prescott in 1889. In 1911, the old school housed 603 students from a 170 square block area in 19 rooms with 21 teachers. The high school had since moved to a new building kitty-corner to the northeast of the old school. In April 1912, merchants on Clay Street petitioned the board 2 of education to close the school because it was unsafe. The noise distracted the pupils, and the traffic was a hazard. A formal petition to build a new school was filed on August 8, 1912. In 1913 the "new" Prescott School made the first Prescott School obsolete. The listing in the city directories changes from "Prescott School" to "Prescott Apartments" between 1913 and 1915. In 2006, the current Prescott School was opened and demolition of the 1912 school ensued. Apartment rentals of 1199 Central tapered off in the early 21St Century and ended by 2015 according to our city directories. It has been licensed as a vacant and abandoned building since 2019. The other ward school buildings that resembled this structure are all gone, including the school that predated the former Franklin School at 39 Bluff, and the schools that predated the existing Lincoln and Audubon Schools. 1199 Central bears many resemblances to the old St. Mary's Jackson Street School, now Francis Apartments, which was successfully restored and converted to twelve apartments in 2017, serving as a model for the work being done at the old Third Ward School. This building has been vacant for many years and was a blighting influence on the neighborhood. Lloyd Singletary took it upon himself to acquire the building and begin a redevelopment project to create the market rate apartments. Not only does this project hit several City Council priorities, but this rehabilitation project is very important to the city because it is in a strategic location for the city in that it is directly across the street from the existing Prescott Elementary School, and it directly adjoins the Multicultural Family Center. RECOMMENDATION/ ACTION STEP Based on this project's alignment with the City Council's goal of having a Robust Local Economy and Livable Neighborhoods and Housing, I recommend the City Council adopt the attached resolution approving a Second Amendment to Grant Agreement including the issuance of 15-years of tax increment financing for the project. 3 SECOND AMENDMENT TO GRANT AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND VIRTUAL VELOCITY, LLC This Second Amendment to Grant Agreement, dated for reference purposes the 6th day of October , 2023, is made and entered into by the City of Dubuque, Iowa, a municipality (City), established pursuant to the Iowa Code and acting under authorization of Iowa Code Chapter 403, as amended (the Urban Renewal Act), and Virtual Velocity, LLC (Grant Recipient). WHEREAS, City and Grant Recipient entered into a Grant Agreement dated October 3, 2022 (the Grant Agreement); and WHEREAS, City and Grant Recipient previously amended the Grant Agreement to include a Downtown Rehabilitation Loan; and WHEREAS, City and Grant Recipient desire to further amend the Grant Agreement as set forth herein. NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL TERMS AND COVENANTS CONTAINED HEREIN, CITY AND GRANT RECIPIENT AGREE AS FOLLOWS: Section 1. Section 1.2 of the Grant Agreement is hereby amended to read as follows: 1.2 Completion of Minimum Improvements. Grant Recipient shall complete construction of the Minimum Improvements by June 1, 2024. City shall determine in its sole discretion (following an inspection by City's Inspection and Construction Services Department and/or Housing & Community Development Department, and/or Planning Department) when the Minimum Improvements have been completed. In order to be considered completed, the Minimum Improvements must be constructed in accordance with the terms of this Agreement, in compliance with the regulations of the Downtown Rehabilitation Grant Program, and in substantial conformity with Grant Recipient's application to that Program and the Design Letter attached hereto. Section 2. Section 3 of the Grant Agreement is hereby amended by adding the following: 3.7. Economic Development Grants to Developer. For and in consideration of Grant Recipient's obligations hereunder, and in furtherance of the goals and objectives of the urban renewal plan for the Project Area and the Urban Renewal Law, City agrees, subject to Grant Recipient being and remaining in compliance with the terms of this Agreement, to make thirty (30) consecutive semi-annual payments (such payments being referred to collectively as the Economic Development Grants) to Developer: November 1, 2026 May 1, 2027 November 1, 2027 May 1, 2028 November 1, 2028 May 1, 2029 November 1, 2029 May 1, 2030 November 1, 2030 May 1, 2031 November 1, 2031 May 1, 2032 November 1, 2032 May 1, 2033 November 1, 2033 May 1, 2034 November 1, 2034 May 1, 2035 November 1, 2035 May 1, 2036 November 1, 2036 May 1, 2037 November 1, 2037 May 1, 2038 November 1, 2038 May 1, 2039 November 1, 2049 May 1, 2040 November 1, 2040 May 1, 2041 pursuant to Iowa Code Section 403.9 of the Urban Renewal Law, in amounts equal to a portion of the tax increment revenues collected by City under Iowa Code Section 403.19 (without regard to any averaging that may otherwise be utilized under Iowa Code Section 403.19 and excluding any interest that may accrue thereon prior to payment to Developer) during the preceding six-month period in respect of the Minimum Improvements constructed by Grant Recipient (the Grant recipient Tax Increments). For purposes of calculating the amount of the Economic Development Grants provided in this Section, the Grant Recipient Tax Increments shall be only those tax increment revenues collected by City in respect of the increase in the assessed value of the Property above the assessed value on January 1, 2022 ($44,750). The Grant Recipient Tax Increments shall not include (i) any property taxes collected for the payment of bonds and interest of each taxing district, (ii) any taxes for the regular and voter -approved physical plant and equipment levy, (iii) the remaining actual amount of tax increment revenues collected by City in respect of the valuations of the Property prior to January 1, 2022 and (iv) any other portion required to be excluded by Iowa law, and thus such incremental taxes will not include all amounts paid by Developer as regular property taxes. 3.8. Non-appropriation/Limited Source of Funding. Notwithstanding anything in this Agreement to the contrary, the obligation of City to pay any installment of the Economic Development Grant shall be an obligation limited to currently budgeted funds, and not a general obligation or other indebtedness of City or a pledge of its full faith and credit under the meaning of any constitutional or statutory debt limitation, and shall be subject in all respects to the right of non -appropriation by the City Council as provided in this Section 2 3.7. City may exercise its right of non -appropriation as to the amount of the installments to be paid during any fiscal year during the term of this Agreement without causing a termination of this Agreement. The right of non -appropriation shall be exercised only by resolution affirmatively declaring City's election to non -appropriate funds otherwise required to be paid to Developer in the next fiscal year under this Agreement. (1) In the event the City Council elects to not appropriate sufficient funds in the budget for any future fiscal year for the payment in full of the installments on the Economic Development Grant due and payable in that fiscal year, then: (i) City shall have no further obligation to Developer for the payment of all installments due in the next fiscal year which cannot be paid with the funds then appropriated for that purpose; and, (ii) Developer shall be released from all further obligations under this Agreement during that same fiscal year. (2) Each installment of the Economic Development Grant shall be paid by City solely from funds appropriated for that purpose by the City Council from taxes levied on the Property that are allocated to the special fund pursuant to Iowa Code (2013) § 403.19(2). (3) The right of non -appropriation reserved to City in this Section 3.7 is intended by the parties, and shall be construed at all times, so as to ensure that City's obligation to pay future installments on the Economic Development Grants shall not constitute a legal indebtedness of City within the meaning of any applicable constitutional or statutory debt limitation prior to the adoption of a budget which appropriates funds for the payment of that installment or amount. In the event that any of the provisions of this Agreement are determined by a court of competent jurisdiction to create, or result in the creation of, such a legal indebtedness of City, the enforcement of the said provision shall be suspended, and the Agreement shall at all times be construed and applied in such a manner as will preserve the foregoing intent of the parties, and no event of default shall be deemed to have occurred as a result thereof. If any provision of this Agreement or the application thereof to any circumstance is so suspended, the suspension shall not affect other provisions of this Agreement which can be given effect without the suspended provision. To this end the provisions of this Agreement are severable. Section 3. Except as modified herein, the Grant Agreement shall remain in full force and effect. CITY OF DUBUQUE, IOWA _� :.• _� , Mayor VIRTUAL VELOCITY, LLC By: il+Cc� Lloyd irk let ry, Owher Attest: al�v7u-, kz��914 Adrienne N. Breitfelder, City Clerk Prepared by/Return to: Jill Connors, Economic Development. 50 W. 131h Street, Dubuque IA 52001, 563 589-4393 RESOLUTION NO. 371-23 APPROVING A SECOND AMENDMENT TO GRANT AGREEMENT BY AND BETWEEN THE CITY OF DUBUQUE, IOWA AND VIRTUAL VELOCITY, LLC, INCLUDING THE PROPOSED ISSUANCE OF URBAN RENEWAL TAX INCREMENT REVENUE OBLIGATIONS RELATING THERETO, AND PROVIDING FOR THE PUBLICATION OF NOTICE THEREOF WHEREAS, City and Virtual Velocity, LLC entered into a Grant Agreement, dated the 31d day of October 2022, providing for a Facade Grant, a Planning & Design Grant, a Financial Consultant Grant, and a Housing Creation Grant; and WHEREAS, the City Council, by Resolution No. 342-23, dated October 16, 2023, declared its intent to approve a Second Amendment to Grant Agreement by and between the City of Dubuque, Iowa and Virtual Velocity, LLC, including the issuance of Urban Renewal Tax Increment Revenue Obligations; and WHEREAS, pursuant to published notice, a public hearing was held on the proposed Second Amendment to Grant Agreement on November 6, 2023 at 6:30 p.m.; and WHEREAS, it is the determination of the City Council that approval of the Second Amendment to Grant Agreement for redevelopment of the Property by Virtual Velocity, LLC, according to the terms and conditions set out in the Grant Agreement, is in the public interest of the City of Dubuque. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Second Amendment to Grant Agreement by and between the City of Dubuque, Iowa, and Virtual Velocity, LLC, a copy of which is attached hereto, including the issuance of Urban Renewal Tax Increment Revenue Obligations, is hereby approved. Section 2. That the Mayor is hereby authorized and directed to execute the Second Amendment to Grant Agreement on behalf of the City of Dubuque and the City Clerk is authorized and directed to attest to his signature. Section 3. That the City Manager is authorized to take such actions as are necessary to comply with the terms of the Second Amendment to Agreement as herein approved. Passed, approved and adopted this 6th day of November, 2023. Attest: t 4/w, �' I Adrienne N. Breitfelder, City Clerk 2 STATE OF IOWA SS: DUBUQUE COUNTY CERTIFICATE OF PUBLICATION I, Kathy Goetzinger,.a,Billing Clerk for Woodward Communications, Inc., an Iowa corporation, publisher of the Telegraph Herald, a newspaper of general circulation published in the City of Dubuque, County of Dubuque and State of Iowa; hereby certify that the attached notice was published in _said newspaper on the following dates: 10/20/2023 and for which the charge is 45.26 Subscribed to before me, a Notary Public in and for Dubuque County, Iowa, this 23rd day of October, 2023 Notary P li in and for Dubuque County, Iowa. PtAi JANET K. PAPE 0' sy Commission Number 199659 - My Commission Expires Iowa 12/11/2025 Ad text : CITY OF DUBUQUE, IOWA OFFICIAL NOTICE PUBLIC NOTICE is hereby given that the Dubuque City Council will conduct a public hearing on the 6th day of November, 2023, at 6:30 p.m., in the Historic Federal Building, 350 W. 6th Street, 2nd floor, Dubuque, Iowa, at which meeting the City Council proposes to take action to approve a Second Amendment to Grant Agreement between the City of Dubuque, Iowa and Virtual Velocity, LLC, a copy of which is now on file at the Office of the City Clerk, City Hall, 50 W 13th Street, Dubuque, Iowa, providing for the issuance of economic development grants (Urban Renewal Tax Increment Revenue Grant Obligations): described :therein-in"order,to carry out the purposes and objectives of the Urban Renewal Plan for the Greater Downtown Urban Renewal Area Economic Development District, consisting of the funding of economic development grants for Virtual Velocity, under the terms and conditions of the Urban Renewal Plan for the Greater Downtown Urban Renewal Area Economic Development District. The aggregate amount of the Urban Renewal Tax Increment Revenue Grant Obligations cannot be determinedat the present time but is not expected to exceed $251',082: At the meeting, the City Council will 'receive oral and written comments from any resident or property owner of said City to the above action. The official agend`a'will be posted the Friday" before the meeting'and will contain public input options. The City -Council agenda can be accessed at https://cityofdubugUe.noVUgagenda'.com/AgendaPublic/"or by contacting the "City'Clerks Office at 563-589-4100; ctyclerk@cityofdiibtique.org. Written comment' -regarding the above public hearings may be submitted to'the'City'Clerk's Office`via'email at ctyclerk@'cityofdubuque:'org or by niail to"City Clerk's'Office, City Hall, 50 W. 13th St., Dubuque, IA '52001, before said time of public hearing. At said time and place of public hearings the City Council will receive any written comments. Copies of supporting documents for the public hearings are on file in the City Clerk's Office and may be viewed Monday through Friday between 8:00 a.m. and 5:00 p.m. Individuals with limited English proficiency, vision, hearing, or speech impairments requiring special assistance should contact the City Clerks Office at (563) 589-4100, ctyclerk@cityofdubuque.org as soon as feasible. Deaf or hard -of -hearing individuals can use Relay Iowa by dialing 711 or (800) 735-2942. Published by order of the City Council given on the 16th day of October 2021 /s/Trish L. Gleason, Assistant City Clerk It 10/20