Novelty Iron Works - 5th Amendment to Development Agreement Copyrighted
June 19, 2017
City of Dubuque Consent Items # 9.
ITEM TITLE: Novelty Iron Works -5th Amendment to Development
Agreement
SUMMARY: City Manager recommending approval of the 5th
Amendment to Development Agreement with Novelty Iron
Landlord, LLC which allows for payment of grants based
upon valuation of the entire property and which also reflects
the change of name for Triumph Community Bank.
RESOLUTION Approving the Fifth Amendment to the
Development Agreement between the City of Dubuque,
Iowa and Novelty Iron Landlord, LLC
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt
Resolution(s)
ATTACHMENTS:
Description Type
Novelty Iron Landlord LLC 5th Amendment to City Manager Memo
Development Agreement-MVM Memo
Staff Memo Staff Memo
5th Amendment to DA Supporting Documentation
Effect of 5th Amendment Supporting Documentation
Resolution of Approval Resolutions
THE CITY OF Dubuque
fta B E I 11p y
Masterpiece 012 the Mississippi 2007.2012«2013
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Novelty Iron Landlord LLC — 5t" Amendment to Development Agreement
DATE: June 13, 2017
On June 17, 2013, the City of Dubuque, Iowa entered into a Development Agreement
with Warehouse Trust, LLC, with an assignment to Novelty Iron Landlord LLC for the
renovation of the Novelty Iron Building and a collateral assignment to The National
Bank. The Development Agreement established semi-annual economic development
grants to be paid based upon assessed values of the property.
Since the time of the original Development Agreement, changes in how the property is
assessed have caused a need for clarification in order to provide grant payments on the
entire building, as was the intent.
Economic Development Director Maurice Jones recommends City Council approval of
the 5th Amendment to Development Agreement with Novelty Iron Landlord LLC, which
allows for payment of grants based upon valuation of the entire property instead of just
60% of the property. Additionally, The National Bank has undergone a name change to
Triumph Community Bank a division of TBK Bank, SSB, and this name change is
reflected in the 5th Amendment to Development Agreement.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Crenna Brumwell, City Attorney
Teri Goodmann, Assistant City Manager
Maurice Jones, Economic Development Director
Dubuque Economic Development Department
THE CITY OF 50 West 131h Street
All-AmericaCitY Dubuque,Iowa 52001-4864
DUB3 E1 I Office(563)589-4393
TTY(563)690-6678
® http://www.cityofdubuque.org
Masterpiece on the Mississippi 200.2012.2013
TO: Michael Van Milligen, City Manager
FROM: Maurice Jones, Economic Development Director
SUBJECT: Novelty Iron Landlord LLC — 5th Amendment to Development
Agreement
DATE: June 13, 2017
INTRODUCTION
The purpose of this memorandum is to request City Council approval of a 5th
Amendment to the Novelty Iron Landlord LLC Development Agreement in order to
modify Section 2.1 to include the entire property and Section 3.3 to reflect this change in
the amounts paid for the semi-annual economic development grants, as well as to
reflect a name change of The National Bank to Triumph Community Bank a division of
TBK Bank, SSB, which holds the collateral assignment of the Development Agreement.
BACKGROUND
On June 17, 2013, the City of Dubuque, Iowa entered into a Development Agreement
with Warehouse Trust, LLC, with an assignment to Novelty Iron Landlord LLC for the
renovation of the Novelty Iron Building and a collateral assignment to The National
Bank. The Development Agreement established semi-annual economic development
grants to be paid based upon assessed values of the property.
DISCUSSION
Since the time of the original Development Agreement, changes in how the property is
assessed have caused a need for clarification in order to provide grants payments on
the entire building, as was the intent. The 5th Amendment to Development Agreement
allows for payment of grants based upon valuation of the entire property instead of just
60% of the property.
Additionally, The National Bank has undergone a name change to Triumph Community
Bank a division of TBK Bank, SSB. This will be reflected in the 5th amendment to
Development Agreement, as well.
RECOMMENDATION/ ACTION STEP
I recommend the Council approves the attached resolution, authorizing the Mayor to
sign the 5th Amendment.
RESOLUTION NO. 212-17
APPROVING THE FIFTH AMENDMENT TO THE DEVELOPMENT AGREEMENT
BETWEEN THE CITY OF DUBUQUE, IOWA AND NOVELTY IRON LANDLORD, LLC
Whereas the City of Dubuque, Iowa (City) and Warehouse Trust, LLC (Developer)
entered into a Development Agreement dated for reference purposes the 17th day of
June, 2013 which Development Agreement was assigned to Novelty Iron Landlord LLC
the 5th day of August, 2013; and
Whereas, Developer, with the consent of City, assigned its rights in and under the
Development Agreement to The National Bank (Bank), which has changed its name to
Triumph Community Bank a division of TBK Bank, SSB; and
Whereas the agreement has been amended on four occasions as follows: the First
Amendment to Development Agreement, dated the 21St day of August, 2013, the Second
Amendment to Development Agreement, dated the 6th day of January, 2014, the Third
Amendment to Development Agreement, dated the 16th day of March, 2015, and the
Fourth Amendment to Development Agreement, dated the 21st day of December, 2015;
and
Whereas City and Developer now desire to amend the Development Agreement as set
forth in the Fifth Amendment to Development Agreement attached hereto.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. The City Council hereby approves the Fifth Amendment to Development
Agreement.
Section 2. The Mayor is authorized and directed to sign the Fifth Amendment to
Development Agreement on behalf of the City of Dubuque.
Passed, approved and adopted this 19th day of June /2017.
Roy D. Buol,/Mayor
Attest:
Kevin/ Firnstahl, City Clerk
FIFTH AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE, IOWA
AND
NOVELTY IRON LANDLORD LLC
This Fifth Ame dment to Development Agreement, dated for reference purposes
the day of , 2017, is made and entered into by and between the
City of Dubuque, Iowa (City) and Novelty Iron Landlord LLC (Developer).
Whereas, City and Warehouse Trust, LLC previously entered into a Development
Agreement dated the 17th of June 2013 (the Development Agreement); and
Whereas, Warehouse Trust, LLC, with the consent of City, assigned the
Development Agreement to Developer, who assumed the duties of Warehouse Trust,
LLC under the Development Agreement; and
Whereas, Developer, with the consent of City, assigned its rights in and under the
Development Agreement to The National Bank (Bank) now known as Triumph
Community Bank a division of TBK Bank, SSB; and
Whereas, there have been four prior amendments to the Development Agreement,
dated the 21st day of August 2013, the 6th day of January 2014, the 16th day of March
2015, and the 21st day of December, 2015; and
Whereas, City and Developer have agreed to this Fifth Amendment to the
Development Agreement to clarify the Economic Development Grants due to Developer.
THEREFORE, in consideration of the mutual terms and covenants contained
herein, the parties agree as follows:
1. Section 2.1 of the Development Agreement is hereby amended to read as
follows:
2.1 Required Minimum Improvements.
The required Minimum Improvements encompass the entirety of improvements
of every kind to the Property and include, but are not limited to:
(1) Residential Units. Developer shall improve the Property by creating not less
than seventy-six (76) apartments for market -rate rental, as shown on attached
Exhibit L, which apartments may not be financed with low income tax credits —
LITC.; and
080513cm b
(2) Retail Space. Developer shall create not Tess than thirty-four thousand
(34,000) square feet of retail space.
(3) The Residential Units and the Retail Space is referred to collectively herein
as the Minimum Improvements and shall be a capital investment of
approximately Twenty -Seven Million Dollars ($27,000,000.00).
2. Section 3.3 of the Development Agreement is amended to read as follows as follows:
3.3. Semi-annual Economic Development Grants. For, and in consideration of
Developer's obligations hereunder, and in furtherance of the goals and objectives
of the urban renewal plan for the Project Area and the Urban Renewal Law, City
agrees, subject to Developer being and remaining in compliance with the terms of
this Agreement, to make thirty (30) consecutive semi-annual payments on the
following dates (such payments being referred to collectively as the Economic
Development Grants) to Developer:
November 1., 2016
November 1, 2017
November 1, 2018
November 1, 2019
November 1, 2020
November 1, 2021
November 1, 2022
November 1, 2023
November 1, 2024
November 1, 2025
November 1, 2026
November 1, 2027
November 1, 2028
November 1, 2029
November 1, 2030
May 1,2017
May 1, 2018
May 1,2019
May 1, 2020
May 1, 2021
May 1, 2022
May 1, 2023
May 1, 2024
May 1, 2025
May 1, 2026
May 1, 2027
May 1, 2028
May 1, 2029
May 1, 2030
May 1, 2031
pursuant to Iowa Code Section 403.9 of the Urban Renewal Law, in
amounts equal to a portion of the tax increment revenues collected by City
under Iowa Code Section 403.19 (without regard to any averaging that may
otherwise be utilized under Iowa Code Section 403.19 and excluding any
interest that may accrue thereon prior to payment to Developer) during the
preceding six-month period in respect of the Minimum Improvements
constructed by Developer (the Developer Tax Increments). For purposes of
calculating the amount of the Economic Development Grants provided in
this Section, the Developer Tax Increments shall be only those tax
increment revenues collected by City in respect of the increase in the
assessed value of the Property above the assessment of January 1, 2012
($715,500) for the entire building. The Developer Tax Increments shall not
2
include (i) any property taxes collected for the payment of bonds and
interest of each taxing district, (ii) any taxes for the regular and voter -
approved physical plant and equipment levy and instructional support levy,
(iii) the remaining actual amount of tax increment revenues collected by City
in respect of the valuations of the Property prior to January 1, 2012 and (iv)
any other portion required to be excluded by Iowa law, and thus such
incremental taxes will not include all amounts paid by Developer as regular
property taxes.
(1) To fund the Economic Development Grants, City shall certify to the
County prior to December 1, 2015, its request for the available Developer
Tax Increments resulting from the assessments imposed by the County as
of January 1 of that year and each year thereafter until and including June
1, 2026, to be collected by City as taxes are paid during the following fiscal
year and which shall thereafter be disbursed to the Developer on November
1 and May 1 of that fiscal year. (Example: if City so certifies in December
2015, the Economic Development Grants in respect thereof would be paid
to the Developer on November 1, 2016, and May 1, 2017.)
(2) The Economic Development Grants shall be payable from and
secured solely and only by the Developer Tax Increments paid to City that,
upon receipt, shall be deposited and held in a special account created for
such purpose and designated as the Novelty Iron Works TIF Account of
City. City hereby covenants and agrees to maintain its TIF ordinance in
force during the term hereof and to apply the incremental taxes collected in
respect of the Minimum Improvements and allocated to the Novelty Iron
Works TIF Account to pay the Economic Development Grants, as and to
the extent set forth in Section 3.3(2) hereof. The Economic Development
Grants shall not be payable in any manner by other tax increments
revenues, or by general taxation or from any other City funds. City makes
no representation with respect to the amounts that may be paid to
Developer as the Economic Development Grants in any one year and under
no circumstances shall City in any manner be liable to Developer so long
as City timely applies the Developer Tax Increments actually collected and
held in the Novelty Iron Works TIF Account (regardless of the amounts
thereof) to the payment of the Economic Development Grants to Developer
as and to the extent described in this Section.
(3) City shall be free to use any and all tax increment revenues collected
in respect of other properties within the Project Area and the remaining
actual amount of the property taxes paid by Developer to City, or any
available Developer Tax Increments resulting from the termination of the
annual Economic Development Grants under Section 3.3(2) hereof, for any
purpose for which such tax increment revenues may lawfully be used
pursuant to the provisions of the Urban Renewal Law, and City shall have
no obligations to Developer with respect to the use thereof.
(4) Non-appropriation/Limited Source of Funding. Notwithstanding
anything in this Agreement to the contrary, the obligation of City to pay any
installment of the Economic Development Grant shall be an obligation
limited to currently budgeted funds, and not a general obligation or other
indebtedness of City or a pledge of its full faith and credit under the meaning
of any constitutional or statutory debt limitation, and shall be subject in all
respects to the right of non -appropriation by the City Council as provided in
this Section 3.3(4). City may exercise its right of non -appropriation as to the
amount of the installments to be paid during any fiscal year during the term
of this Agreement without causing a termination of this Agreement. The
right of non -appropriation shall be exercised only by resolution affirmatively
declaring City's election to non -appropriate funds otherwise required to be
paid to Developer in the next fiscal year under this Agreement.
(a) In the event the City Council elects to not appropriate
sufficient funds in the budget for any future fiscal year for the
payment in full of the installments on the Economic Development
Grant due and payable in that fiscal year, then: i) City shall have no
further obligation to Developer for the payment of all installments due
in the next fiscal year which cannot be paid with the funds then
appropriated for that purpose; and, ii) Developer shall be released
from all further obligations under this Agreement during that same
fiscal year.
(b) Each installment of the Economic Development Grant shall be
paid by City solely from funds appropriated for that purpose by the
City Council from taxes levied on the Property that are allocated to
the special fund pursuant to Iowa Code (2013) §403.19(2).
(c) The right of non -appropriation reserved to City in this Section
3.3(4) is intended by the parties, and shall be construed at all times,
so as to ensure that City's obligation to pay future installments on the
Economic Development Grants shall not constitute a legal
indebtedness of City within the meaning of any applicable
constitutional or statutory debt limitation prior to the adoption of a
budget which appropriates funds for the payment of that installment
or amount. In the event that any of the provisions of this Agreement
are determined by a court of competent jurisdiction to create, or
result in the creation of, such a legal indebtedness of City, the
enforcement of the said provision shall be suspended, and the
Agreement shall at all times be construed and applied in such a
manner as will preserve the foregoing intent of the parties, and no
event of default shall be deemed to have occurred as a result thereof.
If any provision of this Agreement or the application thereof to any
circumstance is so suspended, the suspension shall not affect other
provisions of this Agreement which can be given effect without the
suspended provision. To this end the provisions of this Agreement
are severable.
[END OF AMENDMENT — SIGNATURE PAGE FOLLOWS]
CITY OF DUBUQUE, IOWA
By:
By:
Roy D. Buo,J Mayor
!0
Khvin S. Firntdll, City`Clerk
NOVELTY IRON LANDLORD LLC
The National Bank, now known as Triumph Community Bank a division of TBK Bank,
SSB, hereby consents to the Fifth Amendment to the Development Agreement.
TRIUMP COMMUNITY BANK A DIVISION OF TBK BANK, SSB
B
6
EFFECT OF AMENDMENT
2.1 Required Minimum Improvements. The required Minimum Improvements
encompass the entirety of improvements of every kind to the Property and include, but
are not limited to:
(1) Residential Units. Developer shall improve the Property by creating not less
than seventy-six (76) apartments for market-rate rental, as shown on attached
Exhibit L, which apartments may not be financed with low income tax credits -
LITC.; and
(2) Retail Space. Developer shall create not less than thirty-four thousand
(34,000) square feet of retail space.
(3) The Residential Units and the Retail Space is referred to collectively herein
as the Minimum Improvements and shall be a capital investment of approximately
Twenty Seven Million Dollars ($27,000,000.00).
3.3 Semi-annual Economic Development Grants. For, and in consideration of
Developer's obligations hereunder, and in furtherance of the goals and objectives of the
urban renewal plan for the Project Area and the Urban Renewal Law, City agrees, subject
to Developer being and remaining in compliance with the terms of this Agreement, to
make thirty (30) consecutive semi-annual payments on the following dates (such
payments being referred to collectively as the Economic Development Grants) to
Developer:
November 1 , 2016 May 1 , 2017
November 1 , 2017 May 1 , 2018
November 1 , 2018 May 1 , 2019
November 1 , 2019 May 1 , 2020
November 1 , 2020 May 1 , 2021
November 1 , 2021 May 1 , 2022
November 1 , 2022 May 1 , 2023
November 1 , 2023 May 1 , 2024
November 1 , 2024 May 1 , 2025
November 1 , 2025 May 1 , 2026
November 1 , 2026 May 1 , 2027
November 1 , 2027 May 1 , 2028
November 1 , 2028 May 1 , 2029
November 1 , 2029 May 1 , 2030
November 1 , 2030 May 1 , 2031
pursuant to Iowa Code Section 403.9 of the Urban Renewal Law, in amounts equal
to a portion of the tax increment revenues collected by City under Iowa Code
Section 403.19 (without regard to any averaging that may otherwise be utilized
under Iowa Code Section 403.19 and excluding any interest that may accrue
6
thereon prior to payment to Developer) during the preceding six-month period in
respect of the Minimum Improvements constructed by Developer (the Developer
Tax Increments). For purposes of calculating the amount of the Economic
Development Grants provided in this Section, the Developer Tax Increments shall
be only those tax increment revenues collected by City in respect of the increase
in the assessed value of the Property above the assessment of January 1 , 2012
($715,500) for the entire building. The ^,OROR;61R; referred to OR +hic
agFeeMe„+ FepFeGeRtG aheli+ 60 of the °„tire h 4od xj The Developer Tax
Increments shall not include (i) any property taxes collected for the payment of
bonds and interest of each taxing district, (ii) any taxes for the regular and voter-
approved physical plant and equipment levy and instructional support levy, (iii) the
remaining actual amount of tax increment revenues collected by City in respect of
the valuations of the Property prior to January 1 , 2012 and (iv) any other portion
required to be excluded by Iowa law, and thus such incremental taxes will not
include all amounts paid by Developer as regular property taxes.
(1) To fund the Economic Development Grants, City shall certify to the
County prior to December 1 , 2015, its request for the available Developer
Tax Increments resulting from the assessments imposed by the County as
of January 1 of that year and each year thereafter until and including June
1 , 2026, to be collected by City as taxes are paid during the following fiscal
year and which shall thereafter be disbursed to the Developer on November
1 and May 1 of that fiscal year. (Example: if City so certifies in December,
2015, the Economic Development Grants in respect thereof would be paid
to the Developer on November 1 , 2016, and May 1 , 2017.)
(2) The Economic Development Grants shall be payable from and
secured solely and only by the Developer Tax Increments paid to City that,
upon receipt, shall be deposited and held in a special account created for
such purpose and designated as the Novelty Iron Works TIF Account of
City. City hereby covenants and agrees to maintain its TIF ordinance in
force during the term hereof and to apply the incremental taxes collected in
respect of the Minimum Improvements and allocated to the Novelty Iron
Works TIF Account to pay the Economic Development Grants, as and to
the extent set forth in Section 3.3(2) hereof. The Economic Development
Grants shall not be payable in any manner by other tax increments
revenues, or by general taxation or from any other City funds. City makes
no representation with respect to the amounts that may be paid to
Developer as the Economic Development Grants in any one year and under
no circumstances shall City in any manner be liable to Developer so long
as City timely applies the Developer Tax Increments actually collected and
held in the Novelty Iron Works TIF Account (regardless of the amounts
thereof) to the payment of the Economic Development Grants to Developer
as and to the extent described in this Section.
7
(3) City shall be free to use any and all tax increment revenues collected
in respect of other properties within the Project Area and the remaining
actual amount of the property taxes paid by Developer to City, or any
available Developer Tax Increments resulting from the termination of the
annual Economic Development Grants under Section 3.3(2) hereof, for any
purpose for which such tax increment revenues may lawfully be used
pursuant to the provisions of the Urban Renewal Law, and City shall have
no obligations to Developer with respect to the use thereof.
(4) Non-appropriation/Limited Source of Funding. Notwithstanding
anything in this Agreement to the contrary, the obligation of City to pay any
installment of the Economic Development Grant shall be an obligation
limited to currently budgeted funds, and not a general obligation or other
indebtedness of City or a pledge of its full faith and credit under the meaning
of any constitutional or statutory debt limitation, and shall be subject in all
respects to the right of non-appropriation by the City Council as provided in
this Section 3.3(4). City may exercise its right of non-appropriation as to the
amount of the installments to be paid during any fiscal year during the term
of this Agreement without causing a termination of this Agreement. The
right of non-appropriation shall be exercised only by resolution affirmatively
declaring City's election to non-appropriate funds otherwise required to be
paid to Developer in the next fiscal year under this Agreement.
(a) In the event the City Council elects to not appropriate
sufficient funds in the budget for any future fiscal year for the
payment in full of the installments on the Economic Development
Grant due and payable in that fiscal year, then: i) City shall have no
further obligation to Developer for the payment of all installments due
in the next fiscal year which cannot be paid with the funds then
appropriated for that purpose; and, ii) Developer shall be released
from all further obligations under this Agreement during that same
fiscal year.
(b) Each installment of the Economic Development Grant shall be
paid by City solely from funds appropriated for that purpose by the
City Council from taxes levied on the Property that are allocated to
the special fund pursuant to Iowa Code (2013) §403.19(2).
(c) The right of non-appropriation reserved to City in this Section
3.3(4) is intended by the parties, and shall be construed at all times,
so as to ensure that City's obligation to pay future installments on the
Economic Development Grants shall not constitute a legal
indebtedness of City within the meaning of any applicable
constitutional or statutory debt limitation prior to the adoption of a
budget which appropriates funds for the payment of that installment
or amount. In the event that any of the provisions of this Agreement
8
are determined by a court of competent jurisdiction to create, or
result in the creation of, such a legal indebtedness of City, the
enforcement of the said provision shall be suspended, and the
Agreement shall at all times be construed and applied in such a
manner as will preserve the foregoing intent of the parties, and no
event of default shall be deemed to have occurred as a result thereof.
If any provision of this Agreement or the application thereof to any
circumstance is so suspended, the suspension shall not affect other
provisions of this Agreement which can be given effect without the
suspended provision. To this end the provisions of this Agreement
are severable.
9