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Waiver of Special Assessments_400 East 22nd StreetMasterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Waiver of Special Assessments at 400 East 22nd Street DATE: May 3, 2012 Dubuque bierd All-America City 1 2007 The City of Dubuque received a letter from Michelle Mihalakis in February advising a feasibility study is being conducted for restoration of the historic storefront and residence at 400 East 22nd Street. With a grant received from the Community Foundation of Greater Dubuque, the Four Mounds Foundation is conducting a feasibility analysis for restoration and re -use of this building, including for use as a women's recovery center as part of the programs offered by the adjacent Salvia House. The current mortgage holder, Liberty Bank, is willing to deed the property for this use, at no cost. Housing and Community Development Department Director David Harris recommends City Council approval to delay application of the $4,150 in special assessments, due to work performed by the Housing Department to address exterior code violations at this abandoned property. This work included removal of a dilapidated garage and response to weed and garbage complaints. The City would determine later once there is a reuse and renovation plan if the assessment would be waived. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David Harris, Housing and Community Development Department Director THE CITY OF DUI5jJi Masterpiece on the Mississippi Dubuque kiterig AA- America City 11111 2007 TO: Michael Van Milligen, City Manager FROM: David Harris, Housing and Community Development Department SUBJECT: Waiver of Special Assessments at 400 East 22nd Street DATE: 3 May 2012 The attached letter from Michelle Mihalakis and Chris Olson advises a feasibility study is being conducted for restoration of the historic storefront and residence at 400 East 22nd Street With a grant received from the Community Foundation of Greater Dubuque, the Four Mounds Foundation is conducting a feasibility analysis for restoration and re -use of this building, including for use as a women's recovery center as part of the programs offered by the adjacent Salvia House As is typical of historic rehabilitation projects, this will cost more to restore than its completed value This will require considerable subsidy, including efforts to secure funding from grant sources and use of the HEART Program for much of the labor As I understand the planning, the current mortgage holder, Liberty Bank, is willing to deed the property for this use, at no cost Michelle Mihalakis /Operation Empower, doing business through a for - profit limited liability corporation, will become the owner The request is to waive $4150 in special assessments, due to work performed by the Housing Department to address exterior code violations at this abandoned property This work included removal of a dilapidated garage and response to weed and garbage complaints For all of the reasons stated in the letter, we support the intent of Michelle and Four Mounds to restore this property to use The City can be a supportive member of this partnership by waiving the assessments This does, however, raise a precedent, in that the Housing Department does perform maintenance on many vacant properties, City- wide It could be expected that new owners of those might also request similar forgiveness of assessments as part of proposals for rehabilitation, should this be established as a policy Until it is determined if the City agrees with the renovation and reuse plans for this reason, I recommend that the assessment not be waived at this time, but instead delayed att MAIM, if0142 /Dparwticn Zfnpvsaar Michei[e Mihatakts, Executive Director 2080 Elm Street #103 Dubuque, IA 52001 563 - 557 -4450 563- 557 -3009 (fax) February 3, 2012 Mike V an Milligen, City Manager City of Dubuque 50W 13thSt Dubuque, IA 52001 D ear Mike I wnte you on behalf of a partnership that is worhangto restore 400 E 22m Street and put it back into good use for the Washington Neighborhood This partnership is undertaking a feasibility study, led by Four Mounds and supported by the CommunityFoundation of Greater Dubuque, to detemune the best procedure for reuse of this blighted property Summary and Background 400 E 2r Street (the Property) is one of those character defining, neighborhood properties that pose a challenge what happens when we want to preserve our community's history and fabric, but multiple barriers make the goal seem impossible? This project bnngs relevant community partners together to work toward a solution to restore the property to positive, productive use for the neighb orhood, while benefiting multiple at-risk populations The building is a small (2400 square feet), bnck vernacular commercial /residential structure that was once typical in Dubuque - -the kind of building that filledthe corners ofpnmanly residential neighborhoods, giving neighbors access to groceries and other goods within walking distance o f their homes It sits at the axis of two intersecting street gnds between the Rhomberg,Northend and Washington neighb orhoods, with the small building actually fronted by three different streets It stands on its own island of sorts, with its only adjacent neighbor being Salvia House to the south The Hentage Trail and B ee B ranch Park (future) are to its east It sits approximately 2 blocks east o f the old App oloma's restaurant and three blocks west of Saa-ed Heart Catholic Church In spnng o f 2011, its elderly owner and resident died Approximately sixty cats were removed to the Humane Society, malang the building's reuse that much more challenging due to the significantly compromised interior. Since then, no heirs or entities with property rights have since come forward to claim the Property. Four Mounds was contacted, upon recommendation of the City, by Liberty Bank, who was anticipating that they may eventually hold title, due to a mortgage they hold. Four Mounds engaged a partnership to develop a feasibility study for the property's stabilization and reuse. As a result, we have unearthed a host of challenges for the Property's redevelopment, due to its physical condition and the complexity of the restrictions on the property and the potential funding sources involved. This project seeks to address multiple community problems and needs through partnership and planning. Issues and Project Partnership The property lies in many districts that provides both carrots and sticks to help and challenge redevelopment: it is the key historic property in a new national register historic district and the area is under Section 106 scrutiny due to the use of federal funding /permits in the Bee Branch area it's on the Heritage Trail: it fronts the Bee Branch, is in Urban Renewal. Enterprise and Urban Revitalization zones: and it is in the Washington Neighborhood. The property is currently a nuisance but has the potential to be a real asset as a highly visible, corner property on the Bee Branch and the Heritage Trail. But challenges like this make redevelopment perplexing: we will likely have to wait until late 2014 to redevelop the property, when the flood plain is removed and the requirement to elevate the building physically above the flood plain goes away, an action that would have an Adverse Effect (under Section 106 federal code) on this historic property and likely pose a financial hardship for reasonable redevelopment. Reuse & Planning Partners Four Mounds Foundation (501c3) is willing to make this a project for the HEART program, a program that focuses its youth training program in the Washington Neighborhood. However, it has become clear that a funding plan, ownership stricture, end -use goal, hazardous material abatement and redevelopment strategy need to be in place prior to engaging the students in work. Four Mounds is leading the feasibility study process. Manasseh House /Operation Empower Manasseh House /Operation Empower (501c3) is launching a recovery center called Life Transformation Center located at the old Appolonia's restaurant. The plan is to launch it in March of this year. The property located at 400 E. 22nd lends itself very well to a women's recovery house because of its close proximity to the permanent supportive housing projects (for single women at 2080 and 2160 Elm Street) and women's shelter (380 E. 21st Street), also operated by Manasseh House /Operation Empower. Dubuque has no in- patient treatment facility for its residents. Citizens who have engaged in treatment had to attend a treatment program in other cities. Upon completion of the programs, there is little relapse prevention in place for these people to succeed. Treatment programs are too short and the need is so great for continued help that relapse prevention programs are an answer to saving lives from the devastating effects of addiction. Manasseh House will be able to house approximately 8 women in recovery at any given time. They can also be involved in the recovery center agenda/Manasseh LifeMakeover classes and for therapeutic purposes can utilize the Heritage Trail, and the Dr. Viner Community Gardens located on Lincoln Avenue, a partnership between Manasseh House and Crescent Community Health Center. A commercial endeavor could possibly be included to enhance the trail and neighborhood. Dubuque would be blessed to have a program of this scope to help this special needs population. The 2014 flood plain removal date will likely be okay for development, as the property is in probate and funding will need to be assembled after ownership is obtained. Liberty Bank holds a mortgage on the property and has a right to petition the courts for ownership prior to March 20, 2013. Steven Thorns, VP /Senior Commercial Lender (Dubuque) is at the table as long as there is a reasonable, viable role for them to help obtain ownership. Tax Issues Unpaid property taxes, taxes paid by a 3`d part y (a bank out of Colorado) after the death of the last owner /resident, and special assessment taxes must be satisfied in order for Liberty to claim ownership and pass the property along for redevelopment. The City of Dubuque continues to be both invited and involved as planning moves forward. Other planning partners for the project include: • CFGD: as feasibility study and property stabilization hinder • Washington Neighborhood Development Corporation • Relevant departments /staff of the City of Dubuque, including Planning (zoning, historic preservation /section 106, housing, economic development, health, building, etc) • Community expertise, currently committed from: John Gronen, Gronen Restoration (in -kind services for construction, restoration, reuse and financial planning) Jeff Morton, Jeffrey Morton Architects (discounted and in -kind services). and engineering services as necessary for evident structural issues Request At this point, we request that the City consider forgiveness of two special assessment taxes that were incurred on this property during a lack of ownership or stewardship, after the property's owner passed away and during a time when the property has been in probate. We are working with Liberty Bank to move the property out of probate and into good ownership, where it will no longer be a burden to the City. The taxes, which are scheduled to be turned over to the county 2 -5 -12, are as follows: Issued by Housing: took down Special assessment tax $ 3,030.00 unpaid garage Special assessment tax $ 1,120.00 unpaid Issued by Housing: garbage, weeds We have engaged in a feasibility study to ensure that we can physically and financially return this building to good, productive use for the City and community. At this point, we do not have cost estimates for redevelopment, but understand that it will not be an inexpensive project to undertake. The building has some structural issues and the entire interior will need to be gutted, including ADA, kitchen, baths. & mechanicals. We'll be looking at multiple sources for development costs. Having the special assessments waived will help us move forward in these initial stages. In order to minimize any other city funding being spent toward this property. I personally offer to take over snow, debris and weed removal and any basic grooming and mowing needs from here on out. Other background information I have attached other documents to give you more information about this property, our partnership and plans for its redevelopment, including: • Context photographs and mapping • Summary of tools and restrictions (carrots and sticks) We ask that you grant this request to help us move forward with this work to revitalize this important property so it can be restored and put back into good use for the Washington Neighborhood and those we plan to serve. Sincerely. Michelle Mihalakis Founder /Executive Director Manasseh House