Cooper Bldg Rehab Loan,299 MainTO:
FROM:
CITY OF DUBUQUE, IOWA
MEMORANDUM
June 27, 2001
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
SUBJECT: Downtown Rehabilitation Loan for Cooper Building 299 Main Street
On March 19, 2001, the City Council approved a Commitment Letter of $300,000 for a
Downtown Rehabilitation Loan for the Cooper Building at 299 Main Street. That
Commitment Letter referenced the Dubuque Bank and Trust's March 1, 2001 loan
commitment letter as a condition of the City's commitment. The bank, after further
refining the financial structuring of the project, has issued a revised loan commitment
letter. The City's Commitment Letter also has lapsed since no loan closing occurred
before June 30, 2001.
The bank's revised loan commitment letter acknowledges a delay in approval of SBA
504 funding for up to 35 percent of the permanent loan for this project. To enable this
project to move forward in a timely manner, the bank has proposed fully funding the
project with certain additional security conditions. These include private party
guarantors and a $200,000 escrow account to cover any construction overruns and/or
working capital needs during the first 18 months after permanent financing is in place.
The City's revised Commitment Letter requires the City to become a party to the escrow
agreement in that we would have approval to release these funds. The City has also
added a provision that releases our funds into the project on a pro rata basis with the
bank's funds.
Acting Economic Development Director Pam Myhre is recommending approval of the
revised loan agreement.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM/jh
Attachment
CC:
Michael C. Van Milligen
Barry Lindahl~ Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Pamela Myhre, Acting Economic Development Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
TO:
FROM:
SUBJECT:
June 27, 2001
Michael Van Milligen, City Manager
Pamela Myhre, Acting Economic Development Director
Downtown Rehabilitation Loan for Cooper Building
299 Main Street
INTRODUCTION
This memorandum presents for City Council consideration a resolution approving a
revised Letter of Commitment for The Cooper Development Company, LLC for funding
from the City's TIF-funded Downtown Rehabilitation Loan Program to renovate the
former Cooper Wagon Works building at 299 Main Street.
BACKGROUND
On March 19, 2001, the City Council approved by Resolution #104-01 a Commitment
Letter of $300,000 for this project. That commitment letter referenced the Dubuque
Bank and Trust's March 1, 2001 loan commitment letter as a condition of the City's
commitment. The bank, after further refining the financial structuring of the project, has
issued a revised loan commitment letter. The City's Commitment Letter also has lapsed
since no loan closing occurred before June 30. 2001.
DISCUSSION
The bank's revised loan commitment letter acknowledges a delay in approval of SBA
504 funding for up to 35 percent of the permanent loan for this project. To enable this
project to move forward in a timely manner, the bank has proposed fully funding the
project with certain additional secudty conditions. These include private party
guarantors and a $200,000 escrow account to cover any construction overruns and/or
working capital needs during the first 18 months after permanent financing is in place.
The City's revised Commitment Letter requires the City to become a party to the escrow
agreement in that we would have approval to release these funds. The City has also
added a provision that releases our funds into the project on a pro rata basis with the
bank's funds.
RECOMMENDATION
I recommend that the City Council adopt the revised resolution approving The Cooper
Development Company, LLC's request for a $300,000 loan and authorizing the
preparation and execution of the necessary loan agreement. The resolution directs the
City Manager to prepare and execute the final documents as per the terms and
conditions of the revised commitment letter which continues to be subject to the bank's
conditions of approval.
ACTION STEP
The action step for the City Council is to adopt the attached resolution.
attachments
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RESOLUTION 293-01
A RESOLUTION AUTHORIZING A REVISED LETTER OF COMMITMENT AND
ADDITIONAL ACTIONS CONCERNING A DOWNTOWN REHABILITATION LOAN TO
THE COOPER DEVELOPMENT COMPANY, LLC.
Whereas, the City of Dubuque, Iowa, has created a Downtown Rehabilitation Loan
Program for the purpose of stimulating reinvestment in the Downtown Dubuque Urban Renewal
District; and
Whereas, the City of Dubuque, Iowa is encouraging the use of this loan program to
finance code compliance activities and to spur job creation activities; and
Whereas, the loan application from The Cooper Development Company, LLC meets the
requirements of this program; and
Whereas, a Commitment Letter, hereto attached and by this reference made a part
hereof, sets forth the terms and conditions of The Cooper Development Company, LLC's
participation in the Downtown Rehabilitation Loan Program.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. That the application of The Cooper Development Company, LLC for
participation in the Downtown Rehabilitation Loan Program is hereby accepted and approved.
Section 2. That the Mayor is hereby authorized to execute, on behalf of the City
Council of the City of Dubuque, Iowa, the attached revised Commitment Letter and to forward
said letter to The Cooper Development Company, LLC for review and approval.
Section 3. That the City Manager be and he is hereby directed to prepare, upon
execution and receipt of the attached Commitment Letter by the applicant, the necessary Ioa~
documents in accordance with the terms and conditions set forth in said Commitment Letter.
Section 4. That the City Manager is hereby authorized to execute, on behalf of the
City Council of the City of Dubuque, Iowa, all necessary loan documents and is further
authorized to disburse loan funds from the Downtown Rehabilitation Loan Program, in
accordance with the terms and conditions of the executed agreement.
Passed, approved and adopted this 2nd day of July, 2001
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider, City Clerk
F:\USERS\Pmyhre\LOANDOC\CooperWW~revcooperbldg.res.rff
Office of the Mayor
and City Council
City Hall, 50 West 13th S~xeet
Dubuque, Iowa 52001-4864
July 2, 2001
The Cooper Development Company, LLC
475 Valeria Street
Dubuque, Iowa 52001
RE: Revised Letter of Commitment/Downtown Rehabilitation Loan Program
Cooper Building, 299 Main Street
Dear Sirs:
I am please to inform you that your application for financial assistance for the historic renovation
of the Cooper Building has been accepted and approved by the Dubuque City Council.
The following offer is made:
Borrower:
The Cooper Development Company, LLC
Purpose of the Loan:
Histodc renovation of the exterior facade and historically
significant elements of the interior with remodeling of the
remainder of the interior.
Source of Funds:
Downtown Rehabilitation Loan Program
Amount of Commitment: $300,000
Interest Rate:
Three pement (3%) per annum
Term of Loan:
Twenty (20) years
Payment Schedule:
Monthly interest only payments shall be required for the first sixty
(60) months of the loan. Monthly principal and interest payments,
amortized over an additional fifteen (15) year period, shall begin
the sixty-first month of the loan.
You may prepay this loan in whole or in part at any time without
penalty.
Form of Security:
The loan shall be secured by a second mortgage lien on the
property and a First priority security interest in equipment.
Service People lnteg/rity Responsibilit) Innovation Teamwork
Page 2
Commitment Letter
Cooper Building
Conditions of this Commitment:
(a) This commitment shall be subject to the developers meeting each of the terms and
conditions of a loan commitment letter dated June 12, 2001 from Dubuque Bank and
Trust Company and actually receiving the funding offered in said letter.
(b)
An "after rehab'' appraisal satisfactory to the Economic Development Department prior to
loan closing. The cost of said appraisal shall be incurred by the property owner.
(c)
A title opinion satisfactory to the Economic Development Department completed at the
expense of the property owner. A copy of said document must be provided prior to loan
closing.
(d) All exterior work must be reviewed and approved by the City's Historic Preservation
Commission.
(e) A loan agreement must be signed no later than August 31, 2001.
(f)
The project must be completed in accordance with the regulations set forth for the City of
Dubuque's Downtown Rehabilitation Loan Program.
(g)
Loan proceeds shall be disbursed on a pro rata basis with Dubuque Bank and Trust
Company loan disbursements (e.g., one (1) City loan dollar for each five (5) Dubuque
Bank and Trust loan dollars).
(h)
City must also be a party to the $200,000 escrow agreement required by Dubuque Bank
and Trust and specifically consent to any release of escrowed funds.
Additional Commitments:
(a) A grant not to exceed ten thousand dollars ($10,000) will be available to offset
documented predevelopment costs, architectural and engineering fees and other
miscellaneous soft costs. A determination must be made by the City that the project is
substantially complete and satisfies the conditions of the loan prior to the release of any
grant monies.
(b)
Two thousand dollars ($2,000) of this loan will be forgiven for each new full-time job or
full-time equivalent created within two years of the execution of the loan documents and
maintained by the applicant or his/her tenant for a period of not less than three years.
The amount of the loan to be forgiven shall be determined by the City on the fifth
anniversary of the loan based on documented evidence of job creation.
This commitment is valid for twenty-one (21) days from the date of this letter. If you wish to
accept the offer, you must retum the acknowledgment. Failure to return written
acknowledgment Will be cause for the commitment to lapse. This commitment offer shall lapse
if construction onthe proposed project does not start within ninety (90) days of the loan closing,
Page 3
Commitment Letter
Cooper Building
If the terms offered do not meet your approval, or if you have any questions regarding the
conditions of this commitment, please contact Pamela Myhre, Economic Development
Department, at 319/589-4393.
Sincerely,
Terrance M. Duggan
Mayor
We have reviewed the above offer and accept the Downtown Rehabilitation Loan and all of the
terms of this commitment letter.
Scott A. Neuwoehner, Managing Partner
The Cooper Development Company, LLC
Date
Greg A. Prehm
The Cooper Development Company, LLC
Date
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