Resolution Setting a Public Hearing on a Proposed Subordination Agreement for DRLP Loan #2-23 - 1199 Central Avenue Copyrighted
May 20, 2024
City of Dubuque Items to be set for Public Hearing #
City Council Meeting 02.
ITEM TITLE: Resolution Setting a Public Hearing on a Proposed Subordination
Agreement for DRLP Loan#2-23 - 1199 Central Avenue
SUM MARY: City Manager recommending City Council adopt the attached resolution
setting a public hearing for June 3, 2024 on a proposed Subordination
Agreementwith Virtual Velocity, LLC (Developer), Dubuque Initiatives,
Michael and Denise Erschen (Erschens), and the City of Dubuque, lowa
(City).
RESOLUTION Setting a public hearing for a Subordination Agreement
by and among Virtual Velocity, LLC, Dubuque I nitiatives, Michael and
Denise Erschen, and the City of Dubuque, lowa for interest in property
located at 1199 Central Avenue
SUGGESTED Receive and File;Adopt Resolution(s), Set Public Hearing for June 3,
DISPOSITION: 2024Suggested Disposition:
ATTACHMENTS:
Description Type
MVM Memo City Manager Memo
Staff Memo Staff Memo
Notice of Hearing Supporting Documentation
Resolution to Set Public Hearing Supporting Documentation
Dubuque
THE CITY QF �
All-Meriea Ciry
DLT B E ; . � . �
�� � �
MaSt� Z�C� aYd t�Q Mt55ZSSZ Z zoa�•zoiz•�ai3
YP pp za��*zai�
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Resolution Setting a Public Hearing on a Proposed Subordination
Agreement for DRLP Loan #2-23 - 1199 Central Avenue
DATE: May 16, 2024
Economic Development Director Jill Connors is recommending City Council adopt the
attached resolution setting a public hearing for June 3, 2024 on a proposed Subordination
Agreement with Virtual Velocity, LLC (Developer), Dubuque Initiatives, Michael and
Denise Erschen (Erschens), and the City of Dubuque, lowa (City).
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 Economic Development
Department
THE CITY OF ' ' 1300 Main Street
All-America City Dubuque,lowa 52001-4763
U� � n'�N",`�""""�� Office(563)589-4393
� �
TTY(563)690-6678
� http://www.cityofdubuque.org
2007*2012�2013
Masterpiece on the Mississippi zoi�*zoi9
TO: Michael C. Van Milligen, City Manager
FROM: Jill M. Connors, Economic Development Director
SUBJECT: Resolution Setting a Public Hearing on a Proposed Subordination
Agreement for DRLP Loan #2-23 - 1199 Central Avenue
DATE: May 14, 2024
INTRODUCTION
This memorandum a request for the City Council to adopt the attached resolution setting a
public hearing for June 3, 2024 on a proposed Subordination Agreement with Virtual
Velocity, LLC (Developer), Dubuque Initiatives, Michael and Denise Erschen (Erschens),
and the City of Dubuque, lowa (City).
BACKGROUND
The City entered into a Grant Agreement with Virtual Velocity, LLC, dated October 3, 2022
for the rehabilitation of property located at 1199 Central Avenue (the Project). The Project
includes the rehabilitation of the historic fa�ade of the structure and the creation of 14 new
residential rental units. The Grant Agreement has since been amended to include a
$300,000 loan to be repaid over a five-year period at zero percent interest as well as 15
years of tax increment financing.
DISCUSSION
The Project, while near completion, has required additional capital to complete the
residential rental units in the building. While the internal mechanics, floors, windows, and
general buildout of the units are complete, the finishing cabinetry and other small finishes
still need to be completed.
The Developer reached out to Dubuque Initiatives, a local nonprofit, for a final loan to
complete the Project. Dubuque Initiatives agreed to loan Developerthe remaining$300,000
to finish the residential rental units conditioned upon the City and other investors
subordinating their repayment positions to Dubuque Initiatives. The first repayment position
is the initial construction loan lender, New Silver Lending, LLC. Under the attached
Subordination Agreement, the positions of repayment are as follows:
Repayment
Position Pa Amount
1 st New Silver $ 1,046,000.00
2nd DI $ 300,000.00
3rd Erschens $ 200,000.00
4th Cit $ 300,000.00
$ 1,846,000.00
An independent appraisal has valued the building at approximately $2 million dollars once
completed and approximately $3 million dollars once all units have been rented.
RECOMMENDATION
I recommend the City Council adopt the attached resolution setting a June 3, 2024 public
hearing on the Subordination Agreement.
2
CITY OF DUBUQUE, IOWA
OFFICIAL NOTICE
PUBLIC NOTICE is hereby given that the Dubuque City Council will conduct a public
hearing on the 3rd day of June, 2024, at 6:30 p.m., in the Historic Federal Building, 350
W. 6th Street, 2"d floor, Dubuque, lowa, at which meeting the City Council proposes to
take action to approve a Subordination Agreement between the City of Dubuque, lowa,
Virtual Velocity, LLC, Dubuque Initiatives, and Michael and Denise Erschen, a copy of
which is now on file at the Office of the City Clerk, City Hall, 50 W 13th Street, Dubuque,
lowa, subordinating the City's mortgage securing its interest in the real estate legally
described as follows:
NLY 87' 1.2" OF N 3/5 OF CITY LOT 447; locally known as 1199 Central Avenue
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 agenda will be posted the
Friday before the meeting and will contain public input options. The City Council agenda
can be accessed at https://cityofdubuque.novusagenda.com/AgendaPublic/ or by
contacting the City Clerk's Office at 563-589-4100, ctyclerk@cityofdubuque.org.
Written comments regarding the above public hearings may be submitted to the City
Clerk's Office via email at ctyclerk@cityofdubuque.org or by mail to City Clerk's Office,
City Hall, 50 W. 13t" 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 Clerk's Office at (563)589-4100, TDD
(563)690-6678, ctyclerk@cityofdubuque.org as soon as feasible. Deaf or hard-of-hearing
individuals can use Relay lowa by dialing 711 or (800) 735-2942.
Published by order of the City Council given on the 20th day of May, 2024.
Adrienne N. BreitFelder, City Clerk
Prepared by Jill Connors Economic Development, 1300 Main 5t. Dubuque, IA 52001 563 589-4393
Return to Adrienne N. Breitfelder, City Clerk, 50 W. 131h St., Dubuque, IA 52001, (563) 589-4100
RESOLUTION NO. 143-24
SETTING A PUBLIC HEARING FOR A SUBORDINATION AGREEMENT BY AND
AMONG VIRTUAL VELOCITY, LLC, DUBUQUE INITIATIVES, MICHAEL AND DENISE
ERSCHEN, AND THE CITY OF DUBUQUE, IOWA FOR INTEREST IN PROPERTY
LOCATED AT 1199 CENTRAL AVENUE
WHEREAS, the City of Dubuque, Iowa, (City) and Virtual Velocity, LLC have
entered into a Grant Agreement (the Agreement) for the rehabilitation of 1199 Central
Avenue (the Project) legally described as follows:
NLY 87' 1.2" OF N 3/5 OF CITY LOT 447; locally known as 1199 Central Avenue
(the Property); and
WHEREAS, the Agreement includes the award of a $300,000 Downtown
Rehabilitation Loan (the Loan) for the purpose of stimulating reinvestment in the Greater
Downtown Urban Renewal District; and
WHEREAS, the Project meets the requirements of the Loan; and
WHEREAS, as security for the Loan, Virtual Velocity, LLC previously granted to
City a mortgage on the Property (the City Mortgage); and
WHEREAS, the Dubuque Initiatives financing of the Project includes a mortgage
(the DI Mortgage) and requires that the City Mortgage be subordinate to the DI Mortgage
pursuant to a Subordination Agreement; and
WHEREAS, the City Council has tentatively determined that approval of the
Subordination Agreement is in the public interest of the City of Dubuque; and
WHEREAS, before said Subordination Agreement may be approved, Iowa Code
364.7 requires that the City Clerk publish a notice of the proposal and of the time and
place of the meeting at which the City Council proposes to take action thereon and at
which meeting the City Council shall receive oral and/or written objections from any
resident or property owner of said City to such proposed action.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. The City Clerk is hereby authorized and directed to cause a notice to
be published as prescribed by Iowa Code Section 364.7 of a public hearing on the City's
intent to subordinate a mortgage securing interest in real estate, to be held on the 3rd day
of June, 2024, at 6:30 p.m. The official agenda will be posted on Friday, May 31, 2024
and will contain listening, dewing, and public input options. The City Council agenda can
be accessed at https://cityofdubuque.novusagenda.com/AgendaPublicl or by contacting
the City Clerk's Office at 563-589-4100, ctyclerk(a_cityofdubuque.orcg.
Section 2. The City Council will meet at said time and place for the purpose of
taking action on the matter of subordinating a mortgage securing interest in real estate.
Section 3. The Clerk is hereby directed to cause at least one publication to be
made of a notice of said meeting, in a newspaper, printed wholly in the English language,
published at least once weekly, and having general circulation in said City, said
publication to be not less than four days nor more than twenty days before the date of
said meeting on the subordination of a mortgage securing interest in real estate.
Section 4. That the notice of the proposed action to subordinate shall be in
substantially the form attached hereto.
Passed, approved and adopted this 20th day of May, 2024.
Ric WAo�es, Mayor Pro Tern
Attest:
Adrienne N. Breitfelder, City Clerk