Loading...
Cooper Wagon Wrks Rehab LoanCITY OF DUBUQUE, IOWA MEMORANDUM March 13, 2001 TO: FROM: SUBJECT: The Honorable Mayor and City Council Members Michael C. Van Milligen, City Manager Downtown Rehabilitation Loan for Cooper Building 390 Main Street Acting Community and Economic Development Director Pam Myhre is recommending execution of a loan to The Cooper Development Company, LLC for funding from the City's Tax Increment Financing-Funded Downtown Rehabilitation Loan Program to renovate the former Cooper Wagon Works building located at 390 Main Street. The Developers, Scott Neuwoelmer and Greg Prehm, have proposed a $2.5 million project to transform this vacant property at 3rd and Main into a multi-use commercial destination with restaurant, pub, night club, banquet facility and office space utilizing all five floors of the building. The long-term low-interest loan ~vould be for $300,000. The Developers will also pursue historic tax credits, which means that the work will meet the Secretary of Interior's Standards for Rehabilitation. The project will begin in April 2001, and is scheduled for completion in this calendar year. I concur with the recommendation and respectfully request Mayor and City Council approval. Mi~hael'C. V!Milligen' MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Pamela Myhre, Acting Community and Economic Development Director VI '¢nbnqno CITY OF DUBUQUE, IOWA MEMORANDUM March 13, 2001 TO: FROM: SUBJECT: Michael Van Milligen, City Manager . __ Pamela Myhr~nd~nomic' Development Director Downtownqlehabilitafion Loan for Cooper Braiding 390 Main Street INTRODUCTION This memorandum presents for City Council consideration a resolution approving a request from The Cooper Development Company, LLC for funding from the City's TIF-fimded Downtown Rehabilitation Loan Program to renovate the former Cooper Wagon Works building located at 390 Main Street. The developers propose a project which will be an asset to the Old Main District in becoming an "entertainment district". BACKGROUND On November 3, 1997, the City Council established by Resolution #458-97 revisions to the existing Downtown Rehabilitation Loan Program to encourage and enhance private investment and rehabilitation efforts in the Downtown Dubuque Urban Renewal District. The program, capitalized with funds available through the City's tax increment financing district, now provides for a maximum of $300,000 in attractive low-interest loan monies. The program is unique in that grants of up to $10,000 are available to offset necessary predevelopment costs. The program also includes a forgivable loan element whereby qualifying applicants may have up to the full amount of the loan forgiven as an incentive for the creation of new employment and housing oppommities in the district. The principals of The Cooper Development Company, LLC, Scott Neuwoehner and Greg Prehm, have proposed a $2.5+ million project to transform this vacant property at 3~d and Main into a multi-use commercial destination with restaurant, pub, night club, banquet facility and office space utilizing all five floors of the building. DISCUSSION The developers propose to borrow $300,000 from the City's loan program to assist this historic renovation project. The Cooper Building is a key downtown landmark building that sits at the gateway to the 4th Street Peninsula and~lmerica's River project. The project will complete the restoration of the building's exterior and renovation of the interior five floors. The two upper floors will be completed once tenants are secured and build out of ofiice space is determined. Total project costs are estimated to be $2,547,665.00. The developers will complete the project as a historic tax credit project which means that the work will meet the Secretary of the Interior's Standards for Rehabilitation. The project will commence in April 2001 if approved and is scheduled for completion late 2001. A copy of summary portions of the application is attached. Staff has reviewed the application and found it to be in keeping with the general requirements of the Downtown Rehabilitation Loan Program. The project pro forma is f'mancially aggressive and very optimistic; however, it has not included future office rental revenue into the yearly projections which does leave room for increased net operating income. The financial risks involved with restaurant operations are great, but this project also includes a mix of other uses which can provide additional financial stability to the overall project. Additional information on the terms and conditions of the proposed Downtown Rehabilitation Loan is attached in the commitment letter. If the loan is approved by the City Council, this commitment letter would be executed by both the Mayor and by The Cooper Development Company, LLC. RECOMMENDATION This bullding's success is hugely important to the Old Main District and the 4~ Street Peninsula. Its location, its historic significance, its mass and scale provide a critical oppommity for urban revitalization that can have a real impact in an area that is now undergoing such positive change. Public support, to bridge financial gaps and take risks to make projects like this happen, is equally critical. The project's backers and local lender, along with the City's financial participation, will enable local entrepreneurs to bring renewed vitality to our downtown. I recommend that the City Council adopt the attached resolution approving The Cooper Development Company, LLC's request for $300,000 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 attached commitment letter. ACTION STEP The action step for the City Council is to adopt the attached resolution. attachments F:\USERS~Pmyhre\WPDOCS~LOANDOC~CooperWWk:ooperbldg.mem.wpd RESOLUTION NO. 104-01 A RESOLUTION AUTHORIZING A 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 partcipafion 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 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 loan 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 19th day of March, 2001. Terrance M. Duggan, Mayor AttestL Jeanne F. Schneider City Clerk 19 th day of March, 2001. / ' Te~-~anc edt~l~.~)uggan Mayor F:\USERS~'myhre\WPDOCS~LOANDOC~CooperWW~cooperbldg.res.wpd Community and Economic Development Department 50 West 13th Street Dubuque, Iowa 52001-4864 The Cooper Development Company, LLC 475 Valeria Street Dubuque, Iowa 52001 March 19, 2001 RE: Letter of Commitment/Downtown Rehabilitation Loan Program Cooper Building, 390 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: Source of Funds: Downtown Rehabilitation Loan Program Amount of Commitment: $300,000 Interest Rate: Three percent (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 or other security instrument that will satisfy the outstanding balance associated with this loan. Service People Integrity Responsibility Innovation Teamwork Commitment Letter Cooper Building Project Page 2 Purpose of the Loan: Historic renovation of the exterior facade and historically significant elements of the interior with remodeling of the remainder of the interior. Conditions of this Commitment: This commitment shall be subject to the deVelopers securing the financial commitment from Dubuque Bank and Trust Company as offered in a loan commitment letter dated March 1, 2001 and meeting all of the terms and conditions stated therein. CO) An "after rehab" appraisal must be submitted to the Community and Economic Development Department prior to the scheduled loan closing. The cost of said appraisal shall be incurred by the property owner. (c) A title opinion must be completed at the expense of the property owner. A copy of said document must be provided at the loan closing. (d) Ail exterior work must be reviewed and approved by the City's Historic Preservation Commission. (e) A loan agreement must be signed no later than June 30, 2001. The project must be completed in accordance with the regulations set forth for the City of Dubuque's Downtown Rehabilitation Loan Program. 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. Co) A rebate equal to two thousand dollars ($2,000) may 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. Commitment Letter Cooper Building Project Page 3 This commitment is valid for twenty-one (21) days from the date of this letter. If you wish to accept the offer, you must return the acknowledgment. Failure to return written acknowledgment will be cause for the commitment to lapse. This commitment offer shall lapse if construction on the proposed project does not start within ninety (90) days of the loan closing. Ir'the terms offered do not meet your approval, or if you have any questions regarding the conditions of this commitment, please contact Pamela Myhre, Community and 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 al/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 The Cooper Development Company, L.L.C. 475 Valeria Street Dubuque, Iowa 52001 December 1, 2000 Dear Pam, This Business plan should have all the necessary information for the application of the loan programs. We would like to apply for the following; Downtown Rehabilitation Program ($300,000) Faqade Grant Program ($10,000) Planning & Design Grants $(10,000) My partner and I will be applying for the funding. The following is our personal information; Scott A. Neuwoehner SS #- 475 Valeria St. Dubuque, IA 52001 556-4577 Greg A Prehm SS #- 5902 Clark Street Des Moines, IA 50311 515-235-5459 We will put personal guarantees as well as a second mortgage against the loan. We believe this project is important to the continued revitalization of the lower Main Street district. The "Cooper Building" is a historic structure in Downtown Dubuque, The renovation and revitalization of this structure is important not only for it's location (i.e. it's proximity to the new Chamber building and the entrance to the River Project.) but also to help further the lower main district revitalization effort. It is our belief that our proposed business located with in the building will be an asset to the lower Main Street area and Dubuque as a whole. As much as 30 new full and part-time jobs will be created as a result of our businesses. We believe that the Lower Main Street area can and will become the "Entertainment District" of Dubuque, offering residents as well as tourists numerous dinning, shopping, lodging, and entertainment choices. Our project will be the for -runner in accomplishing this goal. Please feel free to contact me anytime with any questions you may have. I look forward to hearing from you. Sincerely, Scott A. Neuwoehner Telephone (319) 556-4577 Fax (319) 556-4767 Executive Summary Business Description Scott A. Neuwoehner & Greg A. Prehm are entrepreneurs that have developed a business proposal that shows their v/sion for building an entertainment complex in the lower main district of Dubuque. They will be leaving successful occupations to purse this endeavor for the next five years. Together their vision, drive and skills will help Scott and Greg create a successful new business employing over 30 full time people, and bring a revitalized new business concept to the Historic old Main street area, helping pave the way for future progress in the area. Their company the Cooper Development Corporation (to be formed) w/il own a building located at 390 Main Street, formally know as the Cooper Wagon Works Building, operating 4 individual business and leasable office space. The roof is less than 5 years old and all renovation estimates are included w/th this plan for rev/ew. The hub of the business "Main Street Brew Pub & Restaurant", is a full service restaurants speciatizing in quality food, atmosphere _and micro brewed beers. This is a 250+ seat restaurant featuring an average ticket price of $6.00 lunches and $12 dollar dinners. The restaurant level itself is a 7200 sqn~re foot area. Featuring exposed brick walls and ceilings, Panoramic views, 20-foot ceilings, and large exposed columns. A second supporting business is the" Old Main Reception & Banquet Hall" a 6500+ sq. foot area located on the second floor. Featuring panoramic views of downtown, a prim location and a unique atmosphere. The Restaurant wilt cater the food and beverage. Located in the lower level the "Boiler Room Night Club", the third proposed business, is a 200+ capacity night club featuring daily specials, dancing, live music and a truly unique atmosphere. The fourth business also located in the lower level is the "Cypress Lounge" a piano bar lounge that features plush interior and a atmosphere to attract an upper scale businessmen and women clientele. The Cooper Development Corporation's build/ng will also house 2 floors of leasable business space, each floor encompassing 5000 square at an conservative est/mate of 8.50 a square foot. The industry The Cooper Development Corporation will be a part of the 376.2 billion- dollar food service industry. (Estimated for 2000, see industry analysis) The industry has been in one of its greatest growth periods since the early 90's. According to the National Restaurant Association, the industry should continue to expand at a solid growth rate for it's n/nth consecutive year, increasing an estimated 5% fi:om 1999. In the nineties the industry has passed some notable milestones including surpassing the $300 billion sales threshold. Sales at Full service restaurants are projected to top 128 billion an almost 6% increase fi:om the previous year. Market The Cooper Development Corporation business located at the comer of third and Main Street will have over 300 feet of fi:ontage on what is sure to be one of the busiest streets entering the Ice harbor and River project area_ Local agencies (see supporting documents) have est/mated 1.3 mil/ion visitors to the River Project annually. Meaning 1.3 million tourists will pass by our business front door each year. There are three hotels (one proposed), the Five Flags Convention Center, and over 6700 people employed w/th in "lunch" distance of our location. We est/mate that there are currently only a few' business in Dubuque who will be targeting our customers based on a full serv/ce menu, convenience, location, atmosphere, pricing, enterm/nment, and our micro-brewed beers. Out of those business our pr/cing competes with or beats our competition. Business Description Business Name & Location The legal name of the company is the '"'Cooper Development Corporation" owning and operating a building in the lower main d/strict homing five separate business entities all geared toward separate demographics of customers. The building is located on the comer of? and Main and is currently known as the "Cooper Wagon Works Building". This building MI1 house the following entity's spelled out in detail in a later section: Main Street Brew Pub and Restaurant (main level) "Main Street" will be the hub of the businesses. Geared toward the ever- increasing need for a unique quality restaurant in the downtown Dubuque area. It will be a brew pub restaurant specializ/ng in brewing quality micro brew beers along with serving high quality food. Main Street will focus mainly on micro brewed beers, burgers, steaks and other culinary delights. The "Main Street Brew Pub" will be the only restaurant in the area cooking on a hickory fired AZTEC grill giving the restaurant an immediate/mpact, not only for it's micro brewed beers, but also for the foods unique hickory flavor. '" Cypress Lounge (lower level) Another unique aspect to down town Dubuque! A cozy piano bar catering to the 30+ age group, which will seat up to 75 patrons and will be separated from the other business located in the lower level. With solid, exposed 1/me stone walls, piano bar ambiance, built in tropical fish tanks, and direct access to the elevator the "Cyprus" Lounge is sure to be a big hit. Boiler Room Night Club (lower Level) The "Boiler Room" is a nightclub geared toward attracting Dubuque's 20+ age group. This over 200 capacity club will feature a unique, classy atmosphere not typical of other local nightclubs. The "Boiler Room Night Club" will feature a separate entrance so not to interfere with the day to day operations of the other occupants in the building. Old Main Reception Hall (second floor) The second floor will feature a 300+ person reception hall that will be used during the weekdays as a banquet area for local business and club luncheons, dinner parties, holiday events, etc. As a reception hall it wilt offer prospective customers a classier atmosphere and more convenient location than other typical halls and hotels. Food and beverage service will be catered fi:om the "Main S~'eet Brew Pub" restaurant. Office space (Third and Fourth floor) By year two of business we will have two floors of 4500+ sq. feet each available for rent as office space. Legal Form of Business The legal form of the business will be Limited Liability Corporation (LLC) to be reg/stered in the state of Iowa. Company Owners/Title The company's owners are Scott A. Neuwoetmer and Crreg Prehm> General partners. Current situation Mr. Neuwoehnwr and Mr. Prehm bring to the table experience of running their own successful independent businesses- Mr. Prehm a Stock Broker, and Mr. Neuwoehner a Real Estate Broker. They also have worked fi:om t/me to t/me in the restaurant and bar business. To enhance their management skills they plan to retain the services of an experienced consultant during the first year of business. The consultant, Richard Walls has successfully managed the initial start-ups of more than five, "million dollar" producing restaurants in the state of Missouri. Richard will play a key role/n the first months o£business and, additionally, will be retained as a consultant for the remainder of the year. In addition, three separate, experienced assistants will be retained in the first year to assist with management responsibilities. 2 The market has been defined; the competition has been evaluated and the location has been carefully selected and tested for the necessary demographics and traffic needed to meet the goals necessary to ach/eve profitability. The location has been chosen based in part due to the over 5000 employees and 400+ business located within close proximity, and in part to the over 1 million estimated v/sitors who will come to Dubuque annually to visit the "America's River Project". Additionally, the location of the five flags center, two hotels, and the new hotel/indoor Water Park proposed for the area, make the "Cooper Wagon Works" location an excellent choice. Also, the city's drive to revitalize down town Dubuque makes the value of the location almost immeasurable. Mr. Neuwoehner currently has the "Cooper Wagon Works" building under contract. The restaurant will be located on street level facing North toward 3~d street and East toward Main street. The restaurant w/ii be approximately 4500 square feet and will seat 265 patrons. The atmosphere w/Il feature large windows exposing the entire North and East Sides to the open street, with exposed brick walls on the South side, and large exposed columns in the middle. The motif will be that of an old brewery with exposed antique brewing equipment and local historic brewing decorations. We believe that the moderately priced menu,, good selection of food and beers, inviting atmosphere and location, and a good advertising campaign will make th/s restaurant the most popular restaurant, not only in the local area but in the surrounding region as well. The fact that it will be the only place in town to enjoy a local micro brewed beer in and of it self will give Main Street instant credibility among the pubhc. The lounge will be called the "Cypress Lounge" and will feature among other things a piano player, on different nights of the week. This lounge will cater to upper middle class businessmen and women, and the yuppie crowd. Evidence that this type of bar is. in demand is the enormous success of the Busted Lift Bar located at 180 Main Street. The "Cypress Lounge" not only will cater to the upper middle class but will also be, with it's easy access from the restaurant, a place where patrons waiting for their dinner table can visit and enjoy a cocktail. The cypress will serve a varity of drinks including the brewed beers from the restaurant. The atmosphere will be a cross between a plush cigar bar and the before mentioned Busted Lift. Like the Busted Lift the walls will be solid exposed limestone, with an exposed ceiling. However the Cypress will also have plush carpeting and a solid oak bar. The wails bekind the bar will have built in tropical fish tanks and low level mode lighting. It is our belief that the "Cypress Lounge" will be regarded as a one of a kind place to go for a relaxing one of a kind atmosphere. "The Boiler Room" nightclub, adjacent to the "Cypress Lounge" w/Il be a club that introduces Dubuque to a new way of nightlife. If you could roll the best qualities of local Dubuque bars and the Coliseum in East Dubuque into one you would have the Boiler room. With similar decor as the "Cypress Lounge"- exposed lime stone walls and fish tamks behind the bar- the club will have it's own unique style and atmosphere not typical ora club or local bar. Essentially an under ground bar, the '~Boiler Room" will feature dancing (club style), on Thursdays and Saturdays, & live music on Friday nights. Pool tables and other bar games will also be available to patrons. The boiler room will feature specials every night of the week. Thursdays, Fridays, & Saturdays a cover charge will be collected at the door. What the "Boiler Room" will have that other clubs around the Wi state area do not is a special atmosphere, not just a dance club atmosphere, or a live music atmosphere, but a quasi-mix. One aspect of the "Boiler Room" that will be unique to the area will be the live web cast that will be slated for Saturday nights. In an effort to jump on the bandwagon of the Intemet we will set up a live web cast from the bar via an appropriate web site on Saturday ni~ts. ~ will be a promotional campaign to lure curious viewers to check out the action. Future ~oals. Our vision is to build on the revitalization of downtown, to draw people form all demographics into the downtown lower main area, and specifically to our facilities. Our goal is to contribute to making the old main area the new "Entertainment District" for Dubuque. With the restaurant we will provide a unique dining experience unlike any other in the Dubuqueland area. The nightclub will appeal to a younger crowd, while the lounge will draw an older more sophisticated crowd. The objective of the reception area is twofold. A classy reception area that will offer an escape from hotel lobbies and hallways, and a banquet area downtown that offers great food and service not to mention atmosphere for businesses to entrain clients and have employee parties. The Cooper Development Company LL.C. 475 Valeria Street Dubuque, Iowa 52001 Breakdown of Proiected Project Costs and Funding Sources proiect Cost Estimates: Item Dollar Amount Building Cost Construction Bid Equipment Cost Contingency Working Capital (390 main) (Prism, Material & Labor) SunStar, SYSCO, Other) Construction, finish grid capital overruns) $ 510,000.00 1,24~665.00 390,000.00 200,000.00 200,000.00 Total Projected Costs 2,547,665.00 Source Dollar Amount Investors Bank Loan* Tax Credits** City Funding* Facade Grant* Design Grant* Cover Purchase of Building) Construction, Equipment, Capital, Contingency) Equipment, Construction) ( Equipment, Construction) (Windows) ( Design work) $ 510,000.00 1,500,000.00 200,000.00 300,000.00 10,000.00 10,000.00 Total Sources of Funding $ 2,530~000.00 * Each source of funding will be used for numerous phases of the project unless certain guidelines related to that funding prohibit a particular use or allocation. ** Tax credits are estimated at $200,000 and could be as high as $220,000. T~,l~nhnn~ (R1 A/5.RR-4577 [:n',' (R1A~ .q.q~-47gi7 The Cooper Development Company L.L.C. 475 Valeria Street Dubuque, Iowa 52001 March 6, 2001 Dear Pam, Enclosed is the Loan Commitment from DB&T. Please note the terms and Conditions required prior to closing. These terms and conditions have been addressed and we are now waiting for the SBA and City Approval as the final pieces of the puzzle. It is vital to this project that we receive all $300,000 of the Downtown rehabilitation loan funding and any other grant monies that are available. We appreciate your prior and continuing work in helping us to secure thes~ funds and would appreciate any personal or professional opinions you may have on proceeding. The Bank is expecting the SBA approval with in the next couple of weeks. We would like to get the city portion taken care of within that time frame as well, so we may start construction ASAP. Thanks again for you continued work. I look forward to hearing from you soon. With Regards, Scott A. Neuwoenner Managhag Partner Cooper Development Company L.L.C. T~l~nhnn~ t'Rl A~ F-,.~R--~.R77 Fray t'Ri A~ FLRR~.7R7