Resolution Setting Public Hearing on a Subordination Agreement for DRLP Loan #2-23 - 1199 Central AvenueCity of Dubuque
City Council
Copyrighted
March 17, 2025
ITEMS SET FOR PUBLIC HEARING # 2.
ITEM TITLE: Resolution Setting Public Hearing on a Subordination
Agreement for DRLP Loan #2-23 - 1199 Central Avenue
SUMMARY: City Manager recommending City Council adopt a resolution
setting a public hearing for April 7, 2025, for the approval of a
Subordination Agreement with New Silver Lending, LLC
related to a refinancing of the redevelopment project at 1199
Central Ave.
RESOLUTION Setting A Public Hearing For A Subordination
Agreement By And Among The City Of Dubuque, Iowa,
Virtual Velocity, LLC, And New Silver Lending LLC For
Interest In City Property Located At 1199 Central Avenue
SUGGUESTED Receive and File; Adopt Resolution(s), Set Public Hearing for
DISPOSITION: April 7, 2025
ATTACHMENTS:
1. MVM Memo
2. Staff Memo
3. Subordination Agreement
4. Resolution
5. Notice of Hearing
Page 503 of 848
Dubuque
THE CITY OF
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TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Resolution Setting Public Hearing on a Subordination Agreement for
DRLP Loan #2-23 - 1199 Central Avenue
DATE: March 12, 2025
Economic Development Director Jill Connors is recommending City Council adopt a
resolution setting a public hearing for April 7, 2025, for the approval of a Subordination
Agreement with New Silver Lending, LLC related to a refinancing of the redevelopment
project at 1199 Central Ave.
The Project is now complete, and the building is listed for sale. The primary construction
loan has reached maturity and needs to be refinanced. The attached Agreement
maintains the parties' subordination positions under the refinanced loan.
The first repayment position will be New Silver Lending LLC. The City still has a
subordination agreement with DI, placing DI in front of the City in the chain of
subordination. Under the attached Subordination Agreement, the positions of
repayment are as follows:
Repayment
Position
Party
Amount
I st
New Silver
$ 1,046,000.00
2nd
DI
$ 300,000.00
3rd
City
$ 300,000.00
4th
Erschens
$ 200,000.00
$1,846,000.00
An independent appraisal has valued the building at approximately $3.1 million dollars.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
v
Mic ael C. Van Milligen
Page 504 of 848
MCVM:sv
Attachment
cc: Crenna Brumwell, City Attorney
Cori Burbach, Assistant City Manager
Jill Connors, Economic Development Director
Page 505 of 848
Dubuque Economic Development
Department
THE CITY OF 1300 (wain street
All•Ameria10V Dubuque, Iowa 52001-4763
UB E I k"I""`"I""q Office (563) 589-4393
1 I I TTY (563) 690-6678
I® http://www.cityofdubuque.org
2007-2012*2013
Masterpiece on the Mississippi 2017*2019
TO: Michael C. Van Milligen, City Manager
FROM: Jill M. Connors, Economic Development Director
SUBJECT: Resolution Setting Public Hearing on a Subordination Agreement for
DRLP Loan #2-23 - 1199 Central Avenue
DATE: March 12, 2025
INTRODUCTION
This memorandum presents for your review and approval a resolution setting a public
hearing for approval of a Subordination Agreement with New Silver Lending, LLC related
to a refinancing of the redevelopment project at 1199 Central Avenue.
:J_TeJ:(r]:lomk,Ic'
The City entered into a Grant Agreement with Virtual Velocity, LLC (Developer), dated
October 3, 2022 for the rehabilitation of property located at 1199 Central Avenue (the
Project). The Project includes the rehabilitation of the historic fagade of the structure and
the creation of 14 new market rate residential rental units. The Grant Agreement was
subsequently amended to include a $300,000 loan from the City to be repaid over a five-
year period at zero percent interest, as well as 15 years of tax increment financing. The
City held the second secured position of repayment behind the construction loan lender,
New Silver Lending, LLC (New Silver). New Silver was the first to issue a loan to the
Project. After the City issued a loan to the Project, the Developer received an additional
$200,000 loan from Michael and Denise Erschen (Erschens), giving them the third secured
position of repayment.
The Project, when nearing completion, required additional capital to complete the
residential rental units in the building. The Developer reached out to Dubuque Initiatives
(DI), a local economic development nonprofit, for a final loan to complete the Project. DI
agreed to loan Developer $300,000 to finish the residential units conditioned upon the other
investors subordinating their repayment positions to DI.
Page 506 of 848
DISCUSSION
The Project is now complete, and the building is listed for sale. The primary construction
loan has reached maturity and needs to be refinanced. The attached Agreement maintains
the parties' subordination positions under the refinanced loan.
The first repayment position will be New Silver Lending LLC. The City still has a
subordination agreement with DI, placing DI in front of the City in the chain of subordination.
Under the attached Subordination Agreement, the positions of repayment are as follows:
Repayment
Position
Party
Amount
1 st
New Silver
$ 1,046,000.00
2nd
DI
$ 300,000.00
3rd
City
$ 300,000.00
4th
Erschens
$ 200,000.00
$1,846,000.00
An independent appraisal has valued the building at approximately $3.1 million dollars.
It is critical that the primary lender not foreclose on the original construction loan. In the
event of a foreclosure, the primary lender would most likely begin proceedings for a
foreclosure sale ultimately selling the property at a price to recover its $1,046,000 lien.
Other mortgage holders might not recover their interest in the property.
RECOMMENDATION
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 approving the attached
resolution setting a public hearing for April 7, 2025 on the proposed Subordination
Agreement.
011
Page 507 of 848
Prepared by & Return to:
New Silver Lending LLC
28 N Main St, Suite 202
West Hartford, CT 06107
SUBORDINATION AGREEMENT
This Subordination Agreement ("Agreement") is made and entered into this day of March,
2025, by and among:
1. New Silver Lending LLC, a Delaware Limited Liability Company ("Senior Lender");
2. City of Dubuque, Iowa ("Junior Lien Holder"); and
3. Virtual Velocity, LLC, a Pennsylvania Limited Liability Company ("Borrower")
RECITALS
WHEREAS, Borrower is the owner of the real property located at 1199 Central Avenue,
Dubuque, IA 52001 (the "Property");
WHEREAS, Borrower currently has an existing loan with New Silver Lending LLC in the amount
of $1,046,000.00 (the "Existing Loan");
WHEREAS, Borrower is refinancing the Existing Loan with a new loan from New Silver Lending
LLC in the principal amount of $1,165,000.00 (the "New Loan") dated and
recorded on at Instrument Number.
WHEREAS, Junior Lien Holder holds a lien against the Property as evidenced by a mortgage
recorded as Instrument No. 2023-00009845 dated October 17, 2023 in the amount of
$300,000.00;
WHEREAS, it is a condition of the New Loan that the Junior Lien Holder's lien be subordinated
to the New Loan held by the Senior Lender;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein,
the parties agree as follows:
1. Subordination of Junior Lien Junior Lien Holder hereby subordinates its lien to the lien
of the Senior Lender for the New Loan in all respects, including but not limited to
priority of repayment and foreclosure rights.
Page 508 of 848
2. No Modification of Junior Lien Terms Except as expressly provided in this Agreement,
the execution of this Agreement shall not be deemed to modify or amend any of the
terms and conditions of the Junior Lien Holder's original loan documents.
3. Consent to Refinancing Junior Lien Holder agrees and acknowledges that this
subordination is necessary to facilitate the refinancing and that such refinancing is in the
best interest of all lienholders to prevent foreclosure and allow the Borrower time to
market the Property.
4. Binding Effect This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
5. Governing Law This Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa.
Page 509 of 848
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
a bove.
New Silver Lending LLC
:,
Name: Alex Shvayetsky
Title: Partner
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of CT
County of Hartford
On , before me, , (insert name of
notary) Notary Public, personally appeared, Alex Shvayetsky, partner of New Silver Lending LLC.,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of CT that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
Notary Public
Page 510 of 848
City of Dubuque, Iowa
M
Name:
Title:
IeTo] C/ Z 191TiV/ 4 41Zh LTA 19 0 k I
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of
County of
On , before me, (insert name of
notary) Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of Iowa that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
Notary Public
Page 511 of 848
Virtual Velocity, LLC
By:
Name:
Title:
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of
County of
On , before me, ,
(insert name of notary) Notary Public, personally appeared Lloyd G. Singletary III., member of
VIRTUAL VELOCITY, LLC., who proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of Iowa that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
Notary Public
Page 512 of 848
Page 513 of 848
Prepared by Ian Hatch, Assistant Economic Development Director, 1300 Main Street Dubuque IA 52001 (563) 589-4105
Return to Adrienne N. Breitfelder, City Clerk, 50 W. 131h St., Dubuque, IA 52001, (563) 589-4100
RESOLUTION NO. 100-25
SETTING A PUBLIC HEARING FOR A SUBORDINATION AGREEMENT BY AND
AMONG THE CITY OF DUBUQUE, IOWA, VIRTUAL VELOCITY, LLC, AND NEW
SILVER LENDING LLC FOR INTEREST IN CITY 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, New Silver Lending LLC has refinanced the primary construction loan
which includes a mortgage (the New Silver LLC Mortgage) and requires that the City
Mortgage be subordinate to the New Silver LLC 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 7th day
of April, 2025, at 6:30 p.m. The official agenda will be posted the Friday before the
meeting and will contain listening, viewing, and public input options. The agenda can be
accessed at https://dubuqueia.portal.civicclerk.com/ or by contacting the City Clerk's
Office at 563-589-4100, ctyclerkacityofdubugue.org.
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 17t" day of March, 2025.
Bi`!A�vanagh-,- Mayor
Attest:
Adrienne N. Breitfelder, tity Clerk
CITY OF DUBUQUE, IOWA
OFFICIAL NOTICE
PUBLIC NOTICE is hereby given that the Dubuque City Council will conduct a public
hearing on the 7th day of April, 2025, 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
approve a Subordination Agreement by and among the City of Dubuque, Iowa, Virtual
Velocity, LLC, and New Silver Lending LLC for interest in property located at 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 City Council agenda will be
posted the Friday before the meeting and will contain public input options. The agenda
can be accessed at https://dubugueia.portal.civicclerk.com/ or by contacting the City
Clerk's Office at 563-589-4100, ctyclerk@cityofdubuque.org.
Written comments on the public hearing may be submitted to the City Clerk's Office by
email at ctyclerk@cityofdubuque.org or by mail to City Hall, 50 W. 13th St., Dubuque, IA
52001, before the scheduled hearing. The City Council will review all written comments
at the time of the hearing.
Documents related to the public hearing 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 requiring special assistance should contact the City Clerk's Office 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 17th day of March 2025.
Adrienne N. Breitfelder, CMC, City Clerk
Page 516 of 848