Bakey Assumption MortgageMEMORANDUM
September 10, 2001
TO:
FROM:
SUBJECT:
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
Assumption and Subordination of Mortgage Obligation and Promissory
Note for Property Located at 231 W. 2nd Street
Acting Economic Development Director Pam Myhre is recommending approval of the
Assumption Agreement and a Mortgage Subordination Agreement to allow Frederick R.
and Patricia E. Bakey to transfer responsibility for a mortgage and promissory note to
Denis Gioletti and Richard L. Hatton who wish to purchase the Bakey property at 231
W. 2nd Street.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Pamela Myhre, Acting Economic Development Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
September 7, 2001
TO:
FROM:
SUBJECT:
Michael Van Milligen
Pamela Myhre, Acting Economic Development Director
Assumption and Subordination of Mortgage Obligation and
Promissory Note for Property Located at 231 W. 2nd Street.
INTRODUCTION
This memorandum presents for Council consideration a resolution consenting to an
Assumption Agreement and a Mortgage Subordination Agreement that would allow
Frederick R. and Patricia E. Bakey to transfer responsibility for a mortgage and
promissory note to Denis Gioletti and Richard L. Hatton who wish to pumhase the
Bakey property at 231 W. 2nd Street.
BACKGROUND
On November 20, 1995, the City provided a Downtown Rehabilitation Loan to the
Bakey's for rehabilitation purposes. Using loan proceeds, the building was renovated
and 4 new upper story housing units were created along with two retail storefronts. The
original loan amount of $100,000 now has an outstanding balance of approximately
$80,000. The City is currently in a second mortgage position.
DISCUSSION
The attached assumption agreement will facilitate the sale of the property to Gioletti
and Hatton. The agreement stipulates that Gioletti and Hatton will assume
responsibility for both the mortgage and promissory note signed on November 20, 1995
that secured the City's loan. The Bakey's will be released from liability.
Gioletti and Hatton will be borrowing $77,000 from Dubuque Bank & Trust to complete
the pumhase of property. The attached mortgage subordination agreement allows
Dubuque Bank & Trust to have a first mortgage position on this property. The City
remains in a second position.
Staff has met with the buyer, Gioletti and Hatton, and has reviewed their financial
statements with Dubuque Bank & Trust. An appraisal of the property dated August 12,
2001 indicates a value of $216,000. This exceeds the amount of outstanding principal
by $59,000.
RECOMMENDATION
I recommend that the City Council approve both the assumption agreement and the
mortgage subordination agreement and authorize the Mayor and City Clerk to sign both
agreements on behalf of the City.
The current property owners were the first Old Main building owners to take advantage
of the City's TIF-funded loan program to make substantial improvements to their
downtown property. They were risk takers who turned their vacant upper stories into
innovative living space. They now wish to sell their renovated property to new owners
who are excited about the opportunities for development in the Old Main area. Denis
Gioletti and Richard Hatton will be fully responsible for satisfying the terms, obligations
and conditions of the mortgage.
ACTION STEP
The action step for the City Council is to adopt the attached resolution.
attachments
Prepared by: Pamela Myhre
50 W. 13th Street, Dubuque, IA 52001
(319) 589-4393
RESOLUTION NO. 401-01
RESOLUTION AUTHORIZING AN ASSUMPTION AGREEMENT AND A MORTGAGE
SUBORDINATION AGREEMENT IN REGARD TO A MORTGAGE INTEREST IN THE
EASTERLY 40 FEET OF LOT 85 IN THE CITY OF DUBUQUE, DUBUQUE COUNTY,
IOWA.
Whereas, the City of Dubuque, Iowa holds a Mortgage on property legally
described as follows:
The Eastedy 40 feet of Lot 85 in the City of Dubuque, Dubuque County, Iowa;
and
Whereas, the City provided a Downtown Rehabilitation Loan to Frederick R.
Bakey and Patdcia E. Bakey on November 20, 1995 for the renovation of said property
located at 231 W. 2"d Street; and
Whereas, Frederick R. and Patricia E. Bakey are proposing to sell said property
to Denis Gioletti and Richard L. Hatton; and
Whereas, Frederick R. and Patdcia E. Bakey have asked the City to transfer
their liability for the mortgage and promissory note associated with said property to
Denis Gioletti and Richard L. Hatton; and
Whereas, the Assumption Agreement, hereto attached and by this reference
made a part hereof, sets forth the terms and conditions of the agreement; and
Whereas, Dubuque Bank & Trust Company requests the City subordinate its
interest in said property by executing a Mortgage Subordination Agreement for a Real
Estate Mortgage filed November 22, 1995, as Instrument No. 12265-1995, and;
Whereas, the Mortgage Subordination Agreement, hereto attached and by this
reference made a part hereof, sets forth the terms and conditions of the agreement.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the Assumption Agreement attached hereto is hereby approved
and the Mayor and City Clerk are hereby authorized and directed to execute said
Assumption Agreement on behalf of the City of Dubuque, Iowa.
Section 2. That the Mortgage Subordination Agreement attached hereto is
hereby approved and the Mayor and City Clerk are hereby authorized and directed to
execute said Mortgage Subordination Agreement on behalf of the City of Dubuque,
Iowa.
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider, City Clerk
Passed, approved and adopted this 17th day of September, 2001.
Prepared by Leo A, McCarthy, 222 Fischer Bldg., Dubuque, IA 52004A)239 563~56-8000
ASSUMPTION AGREEMENT
THIS Agreement is made as of the __ day of ,2001,
between FREDERICK R. BAKEY AND PATRICIA E. BAKEY, Sellers, and DENIS
G!OLETTI AND RICHARD HATTON, Buyers, and the CITY OF DUBUQUE, IOWA (City).
WHEREAS, Buyers wish to buy and Sellers wish to sell certain real estate
legally described as follows, to-wit:
The Easterly 40 feet of Lot 85 in the City of Dubuque, Iowa, according to the
United States Commissioner's Map of the City of Dubuque, Iowa; and,
WHEREAS, this property is currently subject to a Mortgage held by the City
of Dubuque, Iowa;
NOWTHEREFORE, in consideration of the mutual promises set forth herein,
the parties agree as follows:
1. Buyers assume and agree to pay as part of the purchase pdce for the above-
described real property, the balance owing on a certain Promissory Note to the City dated
the November 20, 1995 secured by a Mortgage made to the City dated November 20,
1995, which Mortgage was filed on November 22, 1995, as Instrument #12265-95 of the
records of Dubuque County, Iowa, which Buyers hereby assume.
2. Buyers agree to pay said Note according to its face and terms and comply with
the terms, obligation and conditions of the Mortgage.
3. Sellers agree to transfer the above-described real property to Buyers on the
terms and condition previously agreed.
4. City releases Sellers from any further liability on said Note and Mortgage.
~ ~:: -,<./,,~x~.,,~_~-'~'~' / ' CITY Of DUBUQUE, IOWA
,Prede, rick R. Bakey,3~kP-v .~;~Sell~/ ~
· 'a . Bake Seller -~' Terrance M. Duggan, Mayor
Den~, Gi~letti, B~uy~r/1. Jeanne F. Schneider, City Clerk
Richard Hatton, Buyer
PILEPARED BY: DAVID L. CLEMENS, 222 FISCHER BLDG., DUBUQUE, IA 52004-0239 319-556-8000
MORTGAGE SUBORDINATION AGREEMENT
On the day of September, 2001, it is agreed between the City of Dubuque Iowa
(h~reinafter referred to as "City"), and Dubuque Bank and Trust Company (hereinafter referred to
as "Bank"), that,
WHEREAS, the City holds a Mortgage on property legally described as follows:
The Easterly 40 feet of Lot 85 in the City of Dubuque, Iowa, according to the United
States Commissioner's Map of the City of Dubuque, Iowa.
Said Mortgage being dated on November 20, 1995, filed for record November 22, 1995, as
Instrument No. 12265-1995 of the records of Dubuque County, Iowa.
WHEREAS, the City has been advised that Denis Gioletti and Richard L. Hatton are
purchasing said property fi.om Frederick R. Bakey and Patricia E. Bakey.
WHEREAS, the Bank is desirous of having a Purchase Money Mortgage on said property
in the amount ot'$77,000.00. The Bank will not accept said Mortgage unless the prior Mortgage
held by the City is subordinated to the new Mortgage.
THEREFORE, IT IS AGREED THAT:
In consideration of the premises and to induce Bank to accept the Mortgage on the described
premises from Denis Gioletti and Richard L. Hatton, the City hereby covenants and agrees that the
lien of the above-described Mortgage dated November 20, 1995, filed for record November 22, 1995
as Instrument No. 12265-1995 of the records of Dubuque County, Iowa, shall be subject and
subordinated to the Lien of the new First Mortgage by Denis Gioletti and Richard Hatton to
Dubuque Bank and Trust Company, said Mortgage not to exceed the sum of $77,000.00.
Dated this
day of September, 2001.
CITY OF DUBUQUE, IOWA
BY:
Terrance M. Duggan, Mayor
BY:
Jeanne F. Schneider, Clerk
STATE OF IOWA
DUBUQUE COUNTY
On this __ day of ,2001, before me, the undersigned, a Notary Public in
and for the State of Iowa, personally appeared TERRANCE M. DUGGAN and JEANNE F.
SCHNEIDER, to me personally known, who being by me duly sworn, did say that they are the
MAYOR and CLERK of the City of Dubuque, Iowa, that the seal affixed to the above instrument
is the corporate seal of the County of Dubuque, Iowa; and that said inStrument was signed and sealed
on behalf of the said City of Dubuque, Iowa by authority of the Board of Directors of said City; and
the said MAYOR and CLERK acknowledged the execution of said instrument to be the voluntary
act and deed of the said City of Dubuque, Iowa by it voluntarily executed.
Wimess our hands and notarial seal on the above stated date.
Notary Public in and for said State
STATE OF IOWA )
) SS.
DUBUQUE COUNTY )
On this day of ,2001, before me, the undersigned, a Notary Public in and
for the State of Iowa, personally appeared and
, to me personally known, who being by me duly sworn, did say that they
are the and , respectively, of
, the corporation executing the within and foregoing instrument, that no
seal has been procured by the corporation; that said instrument was signed on behalf of the
corporation by authority of its Board of Directors; and that and
, as officers acknowledged the execution of the foregoing instrument to
be the voluntary act and deed of the corporation, by it and by them voluntarily executed.
Notary Public in and for said State
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