Facade and Design Grant_German Bank Building RenovationTHE CTTY OF Dubuque
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Masterpiece an the Mississippi
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Downtown Rehabilitation Loan, Facade Grant, and Design Grant to
German Bank Building, LLLP for the German Bank Building Renovation
DATE: August 26, 2008
On May 21, 2007, the City Council approved a Development Agreement with German
Bank Building, LLLP outlining an incentive package for the rehabilitation of the German
Bank Building located at 342 Main Street. German Bank Building, LLLP has invested
$1,500,000 to renovate the building into a restaurant on the first floor and two
apartments on the above floors.
The Development Agreement includes a commitment for a Downtown Rehabilitation
Loan/Grant to encourage private investment and rehabilitation efforts in the City's
Greater Downtown Urban Renewal District. The loan/grant program, capitalized with
funds available through the City's Tax Increment Financing District, 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. A
facade grant is also available of up to $10,000. 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 opportunities
in the district.
Economic Development Director Dave Heiar is recommending approval of the loan
agreement for the $300,000 Downtown Rehabilitation Loan, $10,000 Facade Grant and
$10,000 Design Grant.
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 J. Heiar, Economic Development Director
THE CITY OF Dubuque
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Masterpiece on the Mississippi
2007
DATE: August 21, 2008
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director
SUBJECT: Downtown Rehabilitation Loan, Facade Grant, and Design Grant to
German Bank Building, LLLP for the German Bank Building
renovation.
INTRODUCTION
This memorandum presents for City Council consideration a Resolution approving a
loan agreement for a Downtown Rehabilitation Loan of $300,000, a $10,000 Facade
Grant, and a $10,000 Design Grant for German Bank Building, LLLP to support the
rehabilitation of the building located at 342 Main Street.
BACKGROUND
On May 21, 2007, the City Council approved a Development Agreement with German
Bank Building, LLLP outlining an incentive package for the rehabilitation of the German
Bank Building located at 342 Main Street. German Bank Building, LLLP has invested
$1,500,000 to renovate the building into a restaurant on the first floor and two
apartments on the above floors.
The Development Agreement includes a commitment for a Downtown Rehabilitation
Loan/Grant to encourage private investment and rehabilitation efforts in the City's
Greater Downtown Urban Renewal District. The loan/grant program, capitalized with
funds available through the City's tax increment financing district, 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. A
facade grant is also available of up to $10,000. 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 opportunities
in the district.
DISCUSSION
The Downtown Rehabilitation Loan and grants were a critical part of the financing
needed for this project. The loan assisted German Bank Building, LLLP with their plans
to create a new restaurant and two apartments in the building.
Funds were not available in this program at the time the rehabilitation of this building
occurred.
There are sufficient funds in the Downtown Rehab Loan Program to finance this project
as it is at the top of the list of projects to receive this funding.
RECOMMENDATION
Staff has reviewed the loan agreement and found it to be in keeping with the
requirements of the Downtown Rehabilitation Loan/Grant Program.
I recommend that the City Council adopt the attached Resolution approving the
attached loan agreement with German Bank Building, LLLP for the $300,000 Downtown
Rehabilitation loan,$10,000 Facade Grant, and $10,000 Design Grant.
ACTION STEP
The action step for the City Council is to adopt the attached Resolution.
Y:\USERSWdejong\Downtown Rehab Loan\German Bank Building\20080821 DRLP Memo.doc
RESOLUTION NO. 287-08
A RESOLUTION AUTHORIZING EXECUTION OF A DOWNTOWN
REHABILITATION LOAN, FACADE GRANT, AND DESIGN GRANT TO
GERMAN BANK BUILDING (342 MAIN STREET) RENOVATION.
Whereas, the City of Dubuque, Iowa, has created a Downtown Rehabilitation
Loan/Grant Program for the purpose of stimulating reinvestment in the Greater
Downtown Urban Renewal District; and
Whereas, the City of Dubuque, Iowa is encouraging the use of this loan/grant
program to finance code compliance activities and to spur job creation activities; and
Whereas, the Development Agreement with German Bank Building, LLLP
approved by resolution 298-07 committed to a $300,000 Downtown Rehabiltation Loan,
$10,000 Fagade Grant, and $10,000 Design Grant for the renovation of the German
Bank Building located at 342 Main Street.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the City Council approves the attached Loan Agreement with
German Bank Building, LLLP.
Section 2. 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/Grant
Program, in accordance with the terms and conditions of the executed agreement.
Passed, approved and adopted this 2nd day of September, 2008.
Roy D. Buol, Mayor
Attest:
Jeanne F. Schneider, City Clerk
Y:\USERS\Adejong\Downtown Rehab Loan\German Bank Buildings\20080902 DRLP Approval Resolution.doc
CITY OF DUBUQUE, IOWA
DOWNTOWN REHABILITATION LOAN PROGRAM
LOAN AGREEMENT
NUMBER: DRLP #1-08
This AGREEMENT, dated as of the day of , 2008, is entered into by and
between the CITY OF DUBUQUE, IOWA, a municipal corporation organized and existing under the laws
of the State of Iowa (hereinafter referred to as the "City") and German Bank Building, LLLP (hereinafter
referred to as the "Owner").
WITNESSETH:
Whereas, a Development Agreement with German Bank Building, LLLP was approved by the
Dubuque City Council on May 21, 2007 by Resolution No. 298-07 to provide a $300,000 Downtown
Rehabilitation Loan for the project.
Whereas, the Owner's property of 342 Main Street, Dubuque, Iowa, (hereinafter referred to as the
"Building") is located within the boundaries of the Greater Downtown Urban Renewal District most recently
established by Resolution No. 597-07 on December 17, 2007; and
Whereas, the goals and objectives of the Greater Downtown Urban Renewal Plan (the "Plan")
provide for the creation of the financial incentives needed to eliminate conditions of blight through a
program of voluntary or compulsory repair and rehabilitation of buildings and to retain or create
employment and/or housing opportunities within the District; and
Whereas, the City desires to assist the Owner in its efforts to bring said Building into compliance
with local codes and ordinances, to eliminate certain conditions of physical decay, and to retain or create
employment and/or housing opportunities within the District; and
Whereas, without the assistance of the Loan Program, the Owner would be unable to operate the
Building to its fullest capacity, thereby threatening local employment and/or housing opportunities.
NOW THEREFORE, in consideration of the premises and respective covenants, agreements and
representations hereinafter set forth, the parties agree as follows:
1. SOURCE OF FUNDS. City is prepared to provide financial assistance to qualified parties
through the use of tax increment financing under Chapter 403 of the Iowa Code, and has allocated funds
sufficient to carry out its obligations under this Agreement.
2. LOAN TERMS. City agrees to loan to Owner on the terms and conditions set forth herein
the amount of three hundred thousand dollars ($300,000) that shall consist of the Loan Program funds, if
and only if such funds are available. Payments shall be based on work completed and expenses
encumbered.
The term of the loan shall be twenty (20) years. Interest on the loan shall be three percent (3.0%)
per annum. Monthly interest payments shall become due and payable the first sixty (60) months of the
loan. Monthly interest and principal payments, amortized over a fifteen year period, shall become due and
payable beginning the sixty-first (61) month of the loan. The entire balance of the loan, including interest
and principal, shall become due and payable not later than the 240th month of the loan.
At the time of the initial disbursement of loan funds to Owner, Owner shall execute the Promissory
Note in the form attached hereto as Exhibit A payable to the order of the City in the principal amount of
three hundred thousand dollars ($300,000) and the Mortgage, attached as Exhibit B.
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3. DISBURSEMENT AND USE OF LOAN FUNDS. Loan funds shall be disbursed to Owner
by City for Qualifying Project Expenses, defined in Paragraph 27(c), for amounts not in excess of the total
sum of $300,000 nor more than ninety percent (90%) of the total project cost.
Owner shall furnish to City written requests for disbursement of loan funds. Such request shall be
accompanied by a statement of Owner's Qualifying Project Expenses and appropriate documentation of
such expenses. It is expressly understood that all funds advanced under this Agreement shall be used by
Owner only for the purpose of paying the Qualifying Project Expenses set forth in such written requests.
Owner shall substantially complete the Project, defined in Paragraph 27(b), in accordance with the
terms of this Agreement, on or before June 30, 2009. City shall not be obligated to pay any funds not
drawn by Owner as of said date and any undrawn funds as of such date shall be credited against the
balance due on the Promissory Note.
4. SECURITY. The loan shall be secured by at least a Second Mortgage on the building, a
copy of which is attached as Exhibit B. The value of which shall at no time be less than the amount of any
First Mortgage plus the amount of the loan funds disbursed for Qualifying Project Expenses.
5. AVAILABLE INCENTIVES. Up to the full amount of the loan shall be forgiven by the City as
an incentive for the creation of new employment and/or housing opportunities. The amount of the loan to
be forgiven shall be determined sixty (60) months from the Closing Date of this Agreement and a new
amortization schedule shall be prepared. The base employment number to be used to calculate the
Employment Incentive has been determined to be Zero (0) FTE employees for the Building.
The amount of the loan forgiven shall be as follows:
(a) Two thousand dollars ($2,000) shall be forgiven for each new FTE position created and
maintained by the Owner or his/her tenant.
(b) To qualify, the Owner must document the following:
(1) The job represents a FTE position as defined herein Paragraph 27(d);
(2) The job was created between the project completion date and twenty-four (24)
months from the Closing Date of this Agreement.
(3) The job has been maintained by the Owner or his/her tenant for a period of not less
than thirty-six (36) months (until October 1, 2011);
(4) The job is a paid position; and
(5) The job has been created by the Owner or another entity located in the Building and is
for employment in a business located in the Building.
(c) Two thousand dollars ($2,000) may be forgiven for each new housing unit created. Anew
housing unit shall be defined as one of the following:
(1) The creation of a housing unit where one did not previously exist; or
(2) An existing housing unit which has been unlicensed and unoccupied for a period of
not less than five years.
7. STATUS OF OWNER. Owner represents that it is a Limited Liability Limited Partnership
duly organized and existing under the laws of the State of Iowa; that it is authorized to borrow under this
Agreement, to execute and deliver the note and otherwise perform the obligations of this Agreement; that
it has authority and power to own its property and conduct its business as it is currently carried on; that the
performance of its obligations under this Agreement and the issuance of any note under it will not conflict
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with any provision of law, the Articles of Incorporation or the Bylaws of Corporation, or any agreement
binding on it. Owner also represents, except as disclosed in writing to City, that it is not a party to any
pending or threatened litigation or to any proceeding or action for the assessment or collection of
additional taxes, and that it knows of no known contingent liabilities not provided for or disclosed in the
financial statement provided City which would affect the ability of the Owner to repay this loan.
8. FINANCIAL CONDITION OF OWNER. Owner has delivered to City a statement of Owner's
financial condition as of the date of application for financial assistance which fairly represents the financial
condition of Owner as of the date stated, all in accordance with generally accepted accounting principles
consistently applied, and that the statements still correctly reflect the financial condition and status of its
operations as of the date of this Agreement.
9. TITLE OF OWNER. Subject to the liabilities reflected on Owner's financial statement as well
as those incurred in relation to this Project, Owner represents that it has good and marketable title, free of
any mortgage, pledge, lien, security interest, encumbrance, or charge to all those assets reflected on the
financial statement and to assets since acquired. Taxes not due or payable or otherwise delinquent are
excepted.
10. CONDITIONS OF BORROWING. On the date on which any sum is to be borrowed, Owner,
in addition to the Note, shall deliver to City such other papers and documents as may be required to
comply with the conditions of this Agreement, as counsel for City may reasonably request.
Owner shall be required at the Closing Date defined herein Paragraph 27(a) to comply, or establish
compliance, as follows:
(a) That the representations and warranties of Owner are correct on the Closing Date;
(b) That Owner has fully complied with the covenants and agreements to the extent required
before the Closing Date;
(c) That no default or event which might mature into a default has occurred or continues to the
Closing Date;
(d) That no litigation or proceeding is pending against Owner which would materially affect the
assets of Owner, taking into account the entire assets and overall business of Owner;
(e) That there has been no material adverse change in the financial condition of Owner from
that shown by the financial statement delivered to City under paragraph 8;
f) That no fire or casualty has occurred in any building or to any inventories or property of
Owner that might substantially, adversely affect the conduct of its business.
11. SPECIAL CONDITIONS. Owner agrees to comply with the following requirements
established by the City for the Loan Program:
(a) All exterior work must coincide with the historic character of the building.
12. COVENANTS OF OWNER. Owner covenants that it will:
(a) Correct code deficiencies in accordance with all applicable building and fire codes within the
scope of the project.
(b) Provide for the repair and rehabilitation of the Building in accordance with all applicable
building, zoning, fire and housing codes.
(c) Substantially complete the Project on or before June 30, 2009.
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(d) Maintain at all times insurance to the extent and against such hazards and liabilities as are in
keeping with the current insurance program of Owner, set forth in Exhibit C attached hereto
and entitled "Certificate of Insurance". Said certification shall be renewed on an annual
basis and provided to City within thirty (30) days of the anniversary date of this Agreement.
(e) Pay when due all taxes, assessments and other liabilities, except those contested in good
faith where notice of such contest has been given to the City.
(f) Not create or permit to exist any other pledge, security interest, lien or other encumbrance
on the security for this Agreement provided in Paragraph 4 above and the Note provided
pursuant to this Loan Agreement without written consent of City.
(g) Give prompt notice in writing to City of any adverse development, financial or otherwise,
which would materially affect its business, properties or affairs, or the ability of Owner to
perform its obligations under this Agreement or the Note executed pursuant to the terms of
this Agreement.
(h) Use loan funds only for purposes authorized herein.
(i) Pay all recording and filing fees, mortgage taxes, documentary stamps, and any other taxes
payable in connection with this transaction.
13. DEFAULT. Owner shall be in default upon the occurrence of any of the following events:
(a) Owner fails to pay any installment of principal or interest on any note (whether to City or any
other public or private lender) when due or within thirty (30) days thereafter;
(b) Owner becomes insolvent or admits in writing its inability to pay its debts as they mature; or
applies for, consents to or acquiesces in the appointment of a trustee or receiver for any of
its property; or in the absence of an application for consent or acquiescence, a trustee or
receiver is appointed for it or a substantial part of its property and is not discharged within
ten (10) days; or it otherwise commits an act of bankruptcy; or any bankruptcy,
reorganization, debt arrangement or other proceeding under any bankruptcy or insolvency
law, or any dissolution or liquidation proceeding is instituted by or against it and if instituted is
consented to or acquiesced in by it or remains for ten days undismissed;
(c) Owner fails in the performance of any of the terms and conditions of this Agreement and
such non-performance continues for ten (10) days after written notice thereof from City or
from the holder of a note;
(d) Any warranty made by Owner is untrue in any material respect, or any schedule, statement,
report, notice or writing furnished by Owner to City is untrue in any material respect on the
date as of which the facts set forth are stated or certified, provided any such error is not the
result of unintentional errors which are capable of correction without prejudice to the City;
(e) Any government board, agency, department, commission or public or private lender takes
possession or control of any substantial part of any property of Owner.
14. ACCELERATION AT OPTION OF CITY. If any event of default occurs, City may, after ten
days written notice of default to Owner, declare Note immediately due and payable, at which time all
unpaid principal and interest shall immediately become due and payable. City shall promptly advise
Owner in writing of any acceleration under this paragraph, but the failure to do so shall not impair the
effect of such declaration.
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15. MAINTENANCE OF RECORDS AND RIGHT TO INSPECT. Owner shall keep and
maintain books, records and other documents relating directly to the receipt and disbursement of loan
funds; and any duly authorized independent accounting representative of City shall at all reasonable times
have access to and the right to inspect, copy, audit and examine all such books and other documents of
Owner pertaining to the project until the completion of all close out procedures respecting City's loan and
the final settlement and conclusion of all issues arising out of said loan.
16. ADDRESS. Owner's principal business address is:
German Bank Building, LLLP
Attn: Michael D. Steele
788 Main Street
Dubuque, IA 52001
Owner shall promptly give City written notice of any further change in its principal office address.
City's address is:
City Manager
City Hall
50 West 13th Street
Dubuque, Iowa 52001
17. LIMITATION OF CITY'S LIABILITY FOR PROJECT ACTIVITIES. City shall not be liable to
Owner, or to any party, for the completion of, or the failure to complete, any activities which are part of the
Project, except as may be specifically provided in this Agreement or other written agreements between
City and Owner or any of Owner's affiliates or subsidiaries. Owner agrees to indemnify, hold harmless
and defend City from any such claims.
18. CONFLICT OF INTEREST. Owner certifies that to its knowledge no member, officer or
employee of City, or its designees or agents, nor any consultant or member of the governing body of City,
and no other public official of City who exercises or has exercised any functions or responsibilities with
respect to the Project during his or her tenure, or who is in a position to participate in a decision making
process or gain inside information with regard to the Project, has nor shall have any interest, direct or
indirect, in any contract or subcontract, or in any activity, or benefit therefrom, which is part of this Project
at any time during or for one year after such person's tenure.
19. NONDISCRIMINATION. In carrying out the Project, Owner shall not discriminate against
any employee or applicant for employment or tenancy because of race, religion, color, sex, national origin,
age or disability. Owner shall post in a conspicuous place, available to employees and applicants for
employment, notices to be provided by City setting forth the provisions of this nondiscrimination clause.
Owner shall state that all qualified applicants will receive consideration for employment without regard to
race, religion, color, sex, national origin, age or disability.
20. DISCLAIMER OF RELATIONSHIPS. Nothing contained in this Agreement between the
parties, nor any act of City or Owner shall be deemed or construed by any of the parties, or by any third
persons, to create any relationship of third party beneficiary, principal or agent, limited or general
partnership, orjointventure.
21. NOTICE. Any notice, if mailed by United States certified mail, shall be deemed given when
mailed, postage prepaid, addressed to the other party at its address shown above, or at any other address
subsequently designated by either party to the other.
22. SUCCESSORS AND ASSIGNS. All covenants,. representations, warranties and
agreements herein set forth shall be binding upon Owner, and its legal representatives, successors and
assigns. This Agreement may not be assigned by City or Owner, without the express written consent of
the other party.
23. LEGALITY. If any provision of this Agreement shall, for any reason, be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, but this
Agreement shall be construed as if such invalid or unenforceable provision had never been contained
herein.
24. GOVERNING LAW. This Agreement and all rights and duties hereunder, including but not
limited to all matters of construction, validity and performance shall be governed by the laws of the State
of Iowa.
25. SURVIVAL OF REPRESENTATIONS. All representations or warranties of Owner shall
survive the execution and delivery of this Agreement and any note executed and delivered under it, and no
investigation by City nor any closing shall affect the representations or warranties or the right of City to rely
on and enforce them.
26. DELAY. No delay on the part of City or the holder of any note in the exercise of any right
shall operate as a waiver, nor shall any single or partial exercise of any right preclude other or additional
exercise of any right.
27. DEFINITIONS.
(a) "Closing Date" shall mean the date on which this Agreement is executed by the parties.
(b) "Project" shall mean the rehabilitation project of Owner's property at 342 Main Street,
Dubuque, Iowa, identified in Owner's application for financial assistance. Said application is
on file in the office of the Economic Development Department, 50 West 13th Street,
Dubuque, Iowa 52001.
(c) "Qualifying Project Expenses" shall mean those expenditures or expenses incurred by
Owner during and for the Project and identified in the Owner's application for financial
assistance, whether paid to third parties or incurred as wage expense, fringe benefit
expense or other costs of Owner's employees, agents and contractors.
(d) "Full-Time Job Equivalent" shall equal a total of forty hours of labor per workweek. Such
hours may be accrued by single individuals or divided among two or more individuals.
(e) "New housing unit" shall mean either a housing unit created where one did not previously
exist, or an existing housing unit which has been unlicensed and unoccupied for a period of
not less than five years.
Dated this _ day of ~ f ~ , 2008.
CITY OF DUBUQUE, IOWA
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Michael C. Van Milligen, City Manager
Michael D. Steele
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German Bank Building, LLLP
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