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ARC Urban Revit Plan Kennedy CrMEMORANDUM October 29, 2002 TO:The Honorable Mayor and City Council Members FROM:Michael C. Van Milligen, City Manager SUBJECT:ARC Urban Revitalization Plan Area Residential Care has advised the City that they intend to build a 16-unit apartment building on Kennedy Circle. As this will be for Iow and moderate income disabled individuals, they plan to apply to the Iowa Finance Authority for housing tax credits. They are requesting that the City provide urban revitalization status for the project in order to create $33,000 in City assistance to meet the 1% local assistance threshold of $20,000 required by the IFA and a perceived funding gap of $13,000. The Council has granted site-specific urban revitalization designation to a number of housing projects over the years, including Windsor Park (Xavier Hospital), Cathedral Gardens (St. Raphaels Convent), Martha's Haus (Sacred Heart Convent) and Henry Stout Place (the Iowa Inn). All these projects developed housing through extensive rehabilitation of an existing structure. All but Windsor Park provided this as housing affordable to lower-income households. In addition, in the past two years the Council has approved urban revitalization for two new construction projects on Garfield Avenue. Both were developed as single reom occupancy (SRO) facilities for Iow-moderate income men, the first being the Davis Place, completed last year. The second is currently under construction. Although the City's policy has been to grant urban revitalization only for projects including rehabilitation of an existing structure, an exception was made for the Davis Place project last year. In this case, the Housing Department had secured a $200,000 grant from the Iowa Department of Economic Development to assist Jn the conversion of the dilapidated building on the site into single rooming units. However, subsequent to this award, the developer determined that it was economically infeasible to adaptively reuse the building, resulting in a decision to demolish. We then were able to obtain approval from IDED for use of the $200,000 grant for construction of a new facility. We had applied to IDED for the $200,000 grant as part of our commitment to provide additional SRO-type housing as a result of the closing of the Iowa Inn. We had ordered the vacation of the Iowa Inn the previous year, resulting in the displacement of a number of lower-income men. Construction of the Davis Place was part of a plan to replace the lost rooming units. The Council accordingly approved a site-specific urban revitalization district for the property, for new construction, to provide needed financial assistance due to the Iow ($250 per month) rents required as a result of the State grant. The second SRO project was approved for urban revitalization designation this year. I respectfully recommend rejection of this request to create a new Urban Revitalization District. ARC should build this worthwhile project meeting one or both of the following criteria to get City financial support: 1. This should be done in an area of the City that has already been designated by the City Council as an area in need of assistance, as you have done by creating Urban Revitalization and Urban Renewal Districts downtown or elsewhere; AND/OR 2. This should be done as a remodeling project and not new construction, to be more consistent with past practice of the City Council. There are many buildings in need of work. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager David Harris, Housing and Community Development Department CITY OF DUBUQUE, IOWA MEMORANDUM October 24, 2002 TO: Michael C. Van Milligen, City Manager FROM: David Harris, Housing and Community Development Department SUBJECT: ARC Urban Revitalization Plan Introduction The purpose of this memorandum is to request the City Council to adopt the attached ordinance establishing the ARC Urban Revitalization Area; and to approve the attached agreement stating the terms of the tax abatement schedule. Background On October 21, the City Council adopted a resolution setting a public hearing for November 4 2002 on the ARC Urban Revitalization Plan. The plan provides for the establishment of the Urban Revitalization Program for property located west of Kennedy Circle and east of Keyway Drive. The project under consideration at this time will include construction of a 16-unit apartment building, for residents from the Area Residential Care program. The project will provide assisted housing to 24 individuals with mental illness and mental retardation. ARC will provide 24-hour on-site supportive services to the residents. Jobs for seven staff will be created as a result of this project. Rents are projected at $309 for one-bedroom units and $392 for two-bedrooms. (This compares with our current Section 8 Program HUD "fair market rents" of $418 and $537, respectively). Discussion The primary financing source for this project, estimated to cost $2 million, will be federal Iow-income housing tax credits, administered through the Iowa Finance Authority (IFA). In order to qualify for this funding, the project will provide that all units will be income- restricted and all households have incomes less than 60% of area median. Additionally, at least 40% of the units will be reserved for households eaming less than 50% of area median income. In order to qualify for the competitively awarded housing tax credits, projects must score points according to a ranking system used by the Finance Authority. One criterion - that the project is located within either an urban renewal or an urban revitalization district - rates ten points, a significant amount toward the total score. For the ARC project, the developer is requesting the City to grant urban revitalization designation, in order to assist with the application scodng, and resulting tax abatement in an amount up to $33 000. The total package of financing for the project, including IFA tax credits, investor equity to be provided through Alliant/Heartland Properties, private mortgage and City tax abatement, will enable the project to provide housing at below- market rents for 24 mentally disadvantaged individuals. The Council's policy in approving project-specific urban revitalization districts has been to grant 10-year tax abatement, which also is required by state code for the ARC district. However, in this case, the developer has requested tax abatement only in the amount of $33 000. This will require approximately only a five-year tax abatement from date of completion of construction. This is based on an approximate $6500 annual tax contribution on the completed project, based on a recent revision to the Section 42 Code (federal housing tax credit program) that now assesses a tax credit property only on its income potential. To compensate the City for the tax abatement over $33 000, the attached security agreement should be adopted at this time to guarantee reimbursement. While the ARC Foundation is a non-profit and pays no real estate taxes, the proposed project will be financed in part through the equity contribution of the limited partner (Heartland/Alliant), through purchase of the tax credits. This will be transacted at completion of construction. At that time, the ownership will become a for-profit entity and will pay property tax. Recommendation I recommend that the City Council approve the ordinance authorizing adoption of the ARC Urban Revitalization Plan and approve the security agreement for tax abatement reimbursement. Action Requested The Action Step is for the City Council to adopt the attached ordinance and secudty agreement. Prepared by: Aggie Kramer, Community Development Specialist F:'~Users~AKRAMER\Urban Revite\PlanningUR~list Dist UR ord mem.doc ORDINANCE NO. -2002 AN ORDINANCE ESTABLISHING THE ARC URBAN REVITALIZATION AREA AS AN URBAN REVITALIZATION AREA PURSUANT TO CHAPTER 404 OF THE CODE OF IOWA. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the ARC Urban Revitalization Area as hereinafter described shall hereafter be designated an urban revitalization area pursuant to Chapter 404 of the Code of Iowa 2001, to wit: The northerly 140 feet of Lot One (1) of Lot Five (5) of Herrig's JFK Addition in the City of Dubuque, Iowa, according to the recorded plat thereof. Section 2. That the ARC Urban Revitalization Plan as hereto attached is hereby adopted and approved and the property within said described area shall be subject to the provisions of said Plan. Section 3. That said ARC Urban Revitalization Area shall hereafter be on file in the City Clerk's Office, City Hall, Dubuque, Iowa. Passed, approved and adopted this day of November 2002. Attest: Termnce M. Duggan, Mayor Jeanne F. Schneider, City Clerk F:'tUsers~AKRAMER~rban Revite~RC UR~ARC UR Ord.doc ARC Urban Revitalization Plan October 2002 1.0 Introduction The following plan describes certain provisions of the Iowa Urban Revitalization Act and proposes the creation and designation of an ARC Urban Revitalization District. The State of Iowa, under Iowa Code Chapter 404, allows cities to designate areas as urban revitalization districts. Under this Act, improvements to qualified areas may receive a total or partial exemption from property taxes for a specified number of years. The exemptions are intended to stimulate private investment by the reduction of tax increases related to property improvements. Once an area is deemed to meet the requirements established in Chapter 404, a plan must be established that identifies the district boundaries, property owners, existing conditions, proposed plans and the basic abatement provisions for the revitalization area. Iowa Code Chapter 404.1 lists five reasons for which a city or county may establish urban revitalization plans. These include: the existence of numerous buildings that are dilapidated or deteriorated; the need for preservation and restoration of buildings due to their histodc significance; the area is appropriated as an economic development region as defined in Iowa Code 403.17; the need for public improvements related to housing; and the encouragement of housing and residential development. The law also states that at least 75% of a participating property's square footage must be used for residential purposes in order to qualify for the program. The ARC Urban Revitalization Plan will be based upon the need for the encouragement of housing and residential development in the area. 2.0 The District 2.1 Location Map 1 identifies the location of the Revitalization District. As indicated on the map, this area is located east of the intersection of Keyway and Keymeer Drive, with access to the site from Kennedy Circle. The boundaries of the District are: The northerly 140 feet of Lot One (1) of Lot Five (5) of Herrig's JFK Addition in the City of Dubuque, Iowa. 2.2 Existing and Proposed Zoning Map 2 shows the existing zoning district. Within the ARC Urban Revitalization District all the property is located in an R-4 Multifamily Residential District. ARC Urban Revitalization Plan October 2002 Page 2 A conditional use permit will be requested of the Zoning Board of Adjustment to accommodate a 16-unit project. The current zoning permits 12 units in one building. 2.3 Existing and Proposed Land Use All the property is currently vacant. The proposed use is for a 16 unit, two-story apartment building. The proposed project wilt provide affordable housing with services to 24 Iow-income individuals with disabilities. The total acreage of the ARC Urban Revitalization Distdct is 30,472 square feet 2.4 Assessed Valuations and Owners of Records The property is assessed as commercial. The existing assessed valuation of the real estate in this Revitalization District is a land value of $66,021. No buildings are located on the site. The current owners of record of the real estate within the District is Area Residential Care Foundation. 1170 Roosevelt Street Ext. Dubuque, Iowa. Although the current owner is a non-profit organization and does not pay property tax, the property will be transferred to a limited partnership for purposes of constructing the housing development. The general partner of the limited partnership will be Area Residential Care Foundation. The limited partnership entity will pay property tax. 2.5 City Plans and Services There are no current plans to expand or improve City services to this area. Currently the area enjoys the same level of City services as the surrounding area. 3.0 Relocation No persons, families or businesses wilt be displaced or relocated as a result of the improvements in the district. The site is currently vacant. 4.0 Qualification of Area 4.1 Proposed Improvements The proposed improvements will include a new two-story apartment building to meet the special housing and service needs of persons with disabilities. The building will have eight one-bedroom apartments and eight two-bedroom apartments. All of the apartments will be income restricted and affordable to households with incomes less than 60% of the area median income. Additionally, at least 40 % of the units will be reserved for households with incomes less than 50% of the area median income. Supportive services provided by Area Residential Care, Inc. will be available 24 hours a day seven days a week on-site. ARC Urban Revitalization Plan October 2002 Page 3 4.2 Proposed Impact The proposed project will leverage over $2 million in federal and state funding and will include both a pdvate mortgage and capital contributions by an investor. The tax abatement generated by the project will enable the project to rent one-bedroom apartments for $309 per month and two bedroom apartments for $392 per month. The project will provide an affordable housing alternative for persons with mental illness and mental retardation. The proposed project will provide 24 hour 7 day a week on-site supportive services to assist Iow income tenants with their successful and productive integration into the community. 5.0 Revitalization Program 5.1 Tax Exemption a) All residential property, assessed either as residential or commercial, in the Revitalization District shall be eligible for tax abatement. b)"Qualified real estate" means land upon which no structure existed at the start of new construction, which is located in a designated Revitalization Distdct and upon which new construction has been added during the time the area was so designated. c) Property tax exemption shall be available only for new construction on the vacant land in the Revitalization District. d) "Actual value added by improvements" means the actual value added as of the first year for which the exemption was received. e)Any improvements that were assessed before the Revitalization District was officially designated will not be eligible for exemption. Improvements begun one year prior to the area becoming designated will not be eligible for exemption. f)The actual value of the improvements must result in an increase in assessed value by at least fifteen pement or ten percent in the case of real property assessed as residential property before a tax exemption may be applied Each year that an application is made for tax exemption, the assessed value must have increased in that year by at least fifteen percent or ten percent in the case of real property assessed as residential property. i)The tax abatement schedule shall offer the same exemption opportunity as is available in other Urban Revitalization Districts so designated in the City of Dubuque. Therefore, a ten-year 100% exemption on the actual value added by the improvements as provided in Iowa Code Section 404.3 (4) shall be established as part of this Plan. j) The designation of the ARC Urban Revitalization Area will remain in effect only ARC Urban Revitalization Plan October 2002 Page 4 until the area is fully redeveloped or for three years, whichever occurs first. Upon repeal or expiration of the ordinance establishing the revitalization area, all existing exemptions would continue until their previously established expiration date. k)The percent increase in value shall also reflect the standard used in other Urban Revitalization districts in the city. The actual value of the improvements must increase the assessed value by at least fifteen percent (15%) before abatement is applied. Each year that an application is made for tax abatement, the assessed value must have increased in that year by at least fifteen percent (15%). I) The proposed area shall remain as a revitalization area commencing upon the adoption of the ordinance approving this Revitalization District by the City Council. 5.2 Eligibility For qualified improvements to be eligible for tax exemption, a building permit must be obtained in accordance with the City of Dubuque's Code of Ordinances. Also for property accessed as commercial, 75% or greater of the total square footage must be used for residential purposes in order to qualify for the program. 5.3 Availability of funding There are at present many active programs, which may provide a source of funding for residential improvements to the Revitalization District. These include: Federal Low Income Housing Tax Credits, HOME Loan from the Iowa Department of Economic Development, Federal Home Loan Bank Funds, private mortgage, private construction loan and private equity. The amount of funding from each source is pending. The project applied for Federal Home Loan Bank funding on September 6, 2002 and the anticipated award date is mid to late November 2002. The project will apply for Low Income Housing Tax Credits November 25, 2002. Once an award is made for the tax credits the amount of funds to be committed by the other sources will be determined. 6.0 Conclusion The ARC Urban Revitalization District will assist the development efforts of vacant properties by providing needed housing units for the citizens of Dubuque and the surrounding area. After the ten-year abatement period lapses on these projects, the full assessed value of the rehabilitation property will go on the tax rolls to the benefit of the entire community. F:\Users~AKRAMER~Urban Revite~ARC UR~ARC Revitalization Plan.doc ARC Urban Revitalization Plan: Land Use 2002 ARC Urban Revitalization Plan: Zoning 2002 MEMORANDUM October 14, 2002 TO:The Honorable Mayor and City Council Members FROM:Michael C. Van Milligen, City Manager SUBJECT:Request for Urban Revitalization Status for New Residential Construction Area Residential Care has advised the City that they intend to build a 16-unit apartment building on Kennedy Circle. As this will be for Iow and moderate income disabled individuals, they plan to apply to the Iowa Finance Authority for housing tax credits. They are requesting that the City provide urban revitalization status for the project in order to create $33,000 in City assistance to meet the 1% local assistance threshold of $20,000 required by the IFA and a perceived funding gap of $13,000. The Council has granted site-specific urban revitalization designation to a number of housing projects over the years, including Windsor Park (Xavier Hospital), Cathedral Gardens (St. Raphaels Convent), Martha's Haus (Sacred Heart Convent) and Henry Stout Place (the Iowa Inn). All these projects developed housing through extensive rehabilitation of an existing structure. All but Windsor Park provided this as housing affordable to lower-income households. In addition, in the past two years the Council has approved urban revitalization for two new construction projects on Garfield Avenue. Both were developed as single room occupancy (SRO) facilities for Iow-moderate income men, the first being the Davis Place, completed last year. The second is currently under construction. Although the City's policy has been to grant urban revitalization only for projects including rehabilitation of an existing structure, an exception was made for the Davis Place project last year. In this case, the Housing Department had secured a $200,000 grant from the Iowa Department of Economic Development to assist in the conversion of the dilapidated building on the site into single rooming units. However, subsequent to this award, the developer determined that it was economically infeasible to adaptively reuse the building, resulting in a decision to demolish. We then were able to obtain approval from IDED for use of the $200,000 grant for construction of a new facility. We had applied to IDED for the $200,000 grant as part of our commitment to provide additional SRO-type housing as a result of the closing of the Iowa Inn. We had ordered the vacation of the Iowa Inn the previous year, resulting in the displacement of a number of lower-income men. Construction of the Davis Place was part of a plan to replace the lost rooming units. The Council accordingly approved a site-specific urban revitalization district for the property, for new construction, to provide needed financial assistance due to the Iow ($250 per month) rents required as a result of the State grant. The second SRO project was approved for urban revitalization designation this year. I respectfully recommend rejection of this request to create a new Urban Revitalization District. ARC should build this worthwhile project meeting one or both of the following criteria to get City financial support: This should be done in an area of the City that has already been designated by the City Council as an area in heed of assistance, as you have done by creating Urban Revitalization and Urban Renewal Districts downtown or elsewhere; AND/OR This should be done as a remodeling project and not new construction, to be more consistent with past practice of the City Council. There are many buildings in need of work. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager David Harris, Housing and Community Development Director City of Dubuque Urban Revitalization Areas Prepared by: Barry A. Lindah1300 Main Street Suite 330 Dubuque IA 52001 563 583-4'113 AGREEMENT BY AND BETWEEN THE CITY OF DUBUQUE, IOWA AND KENNEDY POINT LIMITED PARTNERSHIP This Agreement is made and entered into this __ day of , 2002, by and between the City of Dubuque, Iowa (City) and Kennedy Point Limited Partnership (Kennedy), an Iowa limited partnership. WHEREAS, Iowa Code Chapter 404 authorizes City by ordinance to designate an area of the city as a revitalization area if the area is appropriate for construction of housing and residential development, including multifamily housing; and WHEREAS the City Council has designated such an area as the ARC Urban Revitalization Area (the Area); and WHEREAS, Kennedy desires to construct the following housing and residential development, including multifamily housing in the Area: 16 unit two- story apartment building to provide affordable housing with services for up to 24 Iow-income individuals with disabilities (the Improvements) on the following described property (the Property): The north 140 feet of Lot One (1) of Lot Five (5) of Herdg's JFK Addition in the City of Dubuque, Iowa, according to the recorded plats thereof, subject to easements of record, together with an access easement 30 feet in width across and along the south property line of Lot Two (2) of Lot Five (5) in Herrig's JFK Addition. And WHEREAS, under Iowa Code Chapter 404, the Improvements on the Property may be eligible to receive an exemption from taxation based on the actual value added by Improvements on the Property and such exemption is for a period of ten years (the Exemption Period); and WHEREAS, the Improvements on the Property may be eligible for an exemption from taxation and Kennedy has requested an exemption from taxation for the total amount of $33,000.00 of abated taxes on the Property during the Exemption Period. NOW, THEREFORE, IT IS AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS: 1. Kennedy shall comply with the requirements of Iowa Code Chapter 404 and the City Ordinance establishing the ARC Urban Revitalization Area. 2. Upon compliance with Iowa Code Chapter 404 and the City Ordinance establishing the ARC Urban Revitalization Area and subject to the City Assessor's determination that the Improvements qualify under Iowa Code Chapter 404 for exemption from taxation, and in consideration for City's designation of the Area, Kennedy agrees that it shall be entitled to an exemption from taxation during the Exemption Period but only until the total amount of $33,000.00 in taxes on the Improvements to the Property have been abated. Kennedy shall pay to City an amount equal to any further abatement on the Improvements to the Property during the Exemption Period in excess of $33,000.00 in abated taxes within thirty days after the effective date of any such additional tax abatement and upon receipt of such payments, City shall pay such amounts to the Dubuque County Treasurer to be apportioned among the respective taxing bodies in the same manner as if Kennedy had paid such amount to the Dubuque County Treasurer as a property tax payment on the Improvements on the Property. The effective date of such tax abatements shall be the date when the abated taxes on the Improvements on the Property would have been due and payable to the Dubuque County Treasurer. 3. Kennedy shall not later than September 1 of each year during the Exemption Period obtain from the Dubuque City Assessor and provide to City's Housing and Community Development Department a calculation of the amount of taxes Kennedy would have paid on the Improvements on the Property had such taxes not been abated. CITY OF DUBUQUE, IOWA By Terrance M. Duggan, Mayor Attest: Jeanne F. Schneider, City Clerk KENNEDY POINT LIMITED PARTNERSHIP By. Mary Hickey President, Area Residential Care Foundation, A General Partner STATE OF IOWA ) ) SS: COUNTY OF DUBUQUE ) On this day of ,20 __, before me, a Notary Public in and for said county and state, personally appeared Mary Hickey, to me known to be the identical person who subscribed the name of Mary Hickey to the foregoing instrument as President, Area Residential Care Foundation, a general partner of Kennedy Point Limited Partnership, and acknowledged the execution thereof to be her voluntary act and deed and the voluntary act and deed of said partnership. Witness my hand and notarial seal the day and year last above written. NOTARY PUBLIC STATE OF IOWA ) ) SS: COUNTYOF DUBUQUE ) On this __ day of ,20 , before me, the undersigned, a Notary Public in and for the State of Iowa, personally appeared Terrance M. Duggan and Jeanne F. Schneider, to me personally known, who, being by me duly sworn, did say that they are the Mayor and City Clerk, respectively, of the City of Dubuque, Iowa; a municipal corporation; that the seal affixed to the foregoing instrument is the corporate seal of the corporation, and that the instrUment was signed and sealed on behalf of the corporation, by authority of its City Council, as contained in Resolution No. passed by the City Council on the ; and Terrance M. Duggan and Jeanne F. Schneider acknowledged the execution of the instrument to be their voluntary act and deed and the voluntary act and deed of the corporation, by it voluntarily executed. NOTARY PUBLIC URBAN RENEWAL DISTRICTS Dubuque Industrial Center Economic Development District East 7th Street Economic Development District Ice Harbor Urban Renewal District Dubuque Industrial Center/South Economic Development District Kerper Boulevard Industrial Park Economic Develpment District Downtown Urban Renewal District Swiss Valley Urban Renewal District Quebecor Economic Development District N CITY OF DUBUQUE, IOWA MEMORANDUM October 8 2002 TO: Michael C. Van Milligen, City Manager FROM: David Harris, Housing and Community Development Department SUBJECT: ARC Urban Revitalization Plan Introduction This memorandum recommends that the City Council set a public hearing to consider designating the ARC Urban Revitalization District. Background Chapter 404 of the Iowa Code (Urban Revitalization Act) authorizes cities to designate areas as urban revitalization areas. Improvements to qualified real estate within these designated areas may receive a total or partial exemption from property taxes for a specified number of years. The exemptions are intended to stimulate private investment by abating tax increases that usually accompany property improvements. This additional private investment provides a long-term increase or stabilization in the area's tax base, enhances the viability of revitalization areas and/or supports important city objectives such as historic preservation, economic development and affordable housing development In order to implement the provisions of Chapter 404, the City must prepare a revitalization plan for each designated area and hold at least one public hearing after proper notice. The law mandates specific criteria and procedures that must be followed. The City's Urban Revitalization Program offers a ten-year property tax abatement for eligible improvements to residential properties in designated revitalization districts. Discussion The project under consideration at this time will include construction of a 16-unit apartment building, for residents from the Area Residential Care program. The ARC Foundation has purchased a site west of Kennedy Circle and east of Keyway Drive for this purpose and had it rezoned for residential use. The project will provide assisted housing to 24 individuals with mental illness and mental retardation. ARC will provide 24-hour on-site supportive services to the residents. Jobs for seven staff will be created as a result of this project. Rents are projected at $309 for one-bedroom units and $392 for two-bedrooms. (This compares with our current Section 8 Program HUD "fair market rents' of $418 and $537, respectively). The primary financing source for this project, estimated to cost $2 million, will be federal Iow-income housing tax credits, administered through the Iowa Finance Authority (IFA). In order to qualify for this funding, the project will provide that all units will be income- restricted and all households have incomes less than 60% of area median. Additionally, at least 40% of the units will be reserved for households earning less than 50% of area median income. In order to qualify for the competitively awarded housing tax credits, projects must score points according to a ranking system used by the Finance Authority. One criterion - that the project is located within either an urban renewal or an urban revitalization district - rates ten points, a significant amount toward the total score. For the ARC project, the developer is requesting the City to grant urban revitalization designation, in order to assist with the application scoring, and resulting tax abatement in an amount up to $33 000. The total package of financing for the project, including IFA tax credits, investor equity to be provided through AlliantJHeartland Properties, private mortgage and City tax abatement, will enable the project to provide housing at below- market rents for 24 mentally disadvantaged individuals. The Council's policy in approving project-specific urban revitalization districts has been to grant 10-year tax abatement, which also is required by state code for the ARC district. However, in this case, the developer has requested tax abatement only in the amount of $33 000. This will require approximately only a five-year tax abatement from date of completion of construction. This is based on an approximate $6500 annual tax contribution on the completed project, based on a recent revision to the Section 42 (federal housing tax credit program) Code that now assesses a tax credit property only on its income potential. To compensate the City for the tax abatement over $33 000, the attached security agreement should be adopted at the public hearing to guarantee reimbursement. While the ARC Foundation is a non-profit and pays no real estate taxes, the proposed project will be financed in part through the equity contribution of the limited partner (Heartland/AIliant), through purchase of the tax credits. This will be transacted at completion of construction. At that time, the ownership will become a for-profit entity and will pay property tax. Chapter 404 provides for a 30-day public comment period prior to the adoption of an urban revitalization plan. However this requirement can be waived for good cause. Since Area Residential Care Foundation is the only property owner, the Council is requested to waive the 30-day notification. Additionally the City's Code of ordinances requires comment by the Long Range Planning Commission on any urban revitalization plan, which will occur on October 16, 2002. In summary, the Council will be requested to consider approval of an urban revitalization district for the ARC project at its 21 October meeting. At that time, it will be reaquested to set a public hearing for designation of the district, to be held on 4 November. At the November meeting, the Council will be additionally requested to approve the security agreement for tax abatement reimbursement and approve the required IFA resolutions of support and local contributing effort. The requested local financial assistance will be tax abatement in the amount of $33 000. Recommendation I recommend that the City Council approve the attached resolution setting the public hearing for November 4, 2002 to consider designating the ARC Urban Revitalization district. At the public hearing the Council can adopt the proposed plan by ordinance. Action Requested The Action Step is for the City Council to adopt the attached resolution. Prepared by: Aggie Kramer, Community Development Specialist F:\Users',AKRAMER\Urban Revite~ARC UR~ARC UR memo 02.doc RESOLUTION NO. -02 RESOLUTION FINDING THAT THE DESIGNATION OF THE ARC URBAN REVITALIZATION PLAN IS NECESSARY IN THE INTEREST OF THE PUBLIC HEALTH, SAFETY AND WELFARE OF THE RESIDENTS OF THE CITY OF DUBUQUE, IOWA AND PROVIDING FOR A PUBLIC HEARING THEREON. Whereas, the City Council of the City of Dubuque finds that property in the ARC Urban Revitalization district is appropriate for construction of housing and residential development; and Whereas, the City's Long Range Planning Advisory Commission has reviewed the proposed plan and found the plan provides incentives for utilizing vacant parcels for affordable housing; and Whereas, Chapter 404 of the Code of Iowa provides for the establishment of an urban revitalization area for such properties following a public hearing. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the development of the areas described in the attached ARC Urban Revitalization Plan is found t(~ be necessary in the interest of the public health, safety and welfare of the residents of the City, to wit: Section 2. That the ARC Urban Revitalization Plan as proposed meets the eligibility criteda of Chapter 404.1 of the Code of Iowa, 2001. Section 3. That the City Council has found good cause to waive the 30-day notification period. Section 4. That the City Clerk is directed to publish notice of a public hearing on the aforementioned Urban Revitalization Area Plans to be held on November 4, 2002 at 6:30 p.m. in the Carnegie Stout Library Auditorium, 360 West 11th Street, DubUque, Iowa 52001; and Section 5. That the ARC Urban Revitalization Plan shall be a matter of record and shall be available for pubic inspection in the office of the City Clerk at City Hall, 50 West 13~ Street, Dubuque, Iowa Passed, approved and adopted this day of October 2002. Attest: Terrance M. Duggan; Mayor Jeanne F. Schneider, City Clerk F:\Users~AKRAMER\Urban Revite~ARC UR~ARC UR Res.doc ARC Urban Revitalization Plan October 2002 1.0 Introduction The following plan describes certain provisions of the Iowa Urban Revitalization Act and proposes the creation and designation of an ARC Urban Revitalization District. The State of Iowa, under Iowa Code Chapter 404, allows cities to designate areas as urban revitalization districts. Under this Act, improvements to qualified areas may receive a total or partial exemption from property taxes for a specified number of years. The exemptions are intended to stimulate pdvate investment by the reduction of tax increases related to property improvements. Once an area is deemed to meet the requirements established in Chapter 404, a plan must be established that identifies the distdct boundaries, property owners, existing conditions, proposed plans and the basic abatement provisions for the revitalization area. Iowa Code Chapter 404.1 listsfive reasons for which a city or county may establish urban revitalization plans. These include: the existence of numerous buildings that are dilapidated or deteriorated; the need for preservation and restoration of buildings due to their histodc significance; the area is appropriated as an economic development region as defined in Iowa Code 403.17; the need for public improvements related to housing; and the encouragement of housing and residential development. The law also states that at least 75% of a participating property's square footage must be used for residential purposes in order to qualify for the program. The ARC Urban Revitalization Plan will be based upon the need for the encouragement of housing and residential development in the area. 2.0 The District 2.1 Location Map 1 identifies the location of the Revitalization District. As indicated on the map, this area is located east of the intersection of Keyway and Keymeer Drive, with access to the site from Kennedy Circle. The boundaries of the District are: The northerly 140 feet of Lot One (1) of Lot Five (5) of Herrig's JFK Addition in the City of Dubuque, Iowa. 2,2 Existing and Proposed Zoning Map 2 shows the existing zoning district. Within the ARC Urban Revitalization District all the property is located in an R-4 Multifamily Residential District. ARC Urban Revitalization Plan October 2002 Page 2 A conditional use permit will be requested of the Zoning Board of Adjustment to accommodate a 16-unit project. The current zoning permits 12 units in one building. 2.3 Existing and Proposed Land Use All the property is currently vacant. The proposed use is for a 16 unit, two-story apartment building. The proposed project will provide affordable housing with services to 24 Iow-income individuals with disabilities. The total acreage of the ARC Urban Revitalization District is 30,472 square feet 2.4 Assessed Valuations and Owners of Records The property is assessed as commercial. The existing assessed valuation of the real estate in this Revitalization District is a land value of $66,021. No buildings are located on the site. The current owners of record of the real estate within the District is Area Residential Care Foundation, 1170 Roosevelt Street Ext. Dubuque, Iowa. Although the current owner is a non-profit organization and does not pay property tax, the property will be transferred to a limited partnership for purposes of constructing the housing development. The general partner of the limited partnership will be Area Residential Care Foundation. The limited partnership entity will pay property tax. 2.5 City Plans and Services There are no current plans to expand or improve City services to this area. Currently the area enjoys the same level of City services as the surrounding area. 3.0 Relocation No persons, families or businesses will be displaced or relocated as a result of the improvements in the district. The site is currently vacant. 4.0 Qualification of Area 4.1 Proposed Improvements The proposed improvements will include a new two-story apartment building to meet the special housing and service needs of persons with disabilities. The building will have eight one-bedroom apartments and eight two-bedroom apartments. All of the apartments will be income restricted and affordable to households with incomes less than 60% of the area median income. Additionally, at least 40 % of the units will be reserved for households with incomes less than 50% of the area median income. Supportive services provided by Area Residential Care, Inc. will be available 24 hours a day seven days a week on-site. ARC Urban Revitalization Plan October 2002 Page 3 4.2 Proposed Impact The proposed project will leverage over $2 million in federal and state funding and will include both a private mortgage and capital contributions by an investor. The tax abatement generated by the project will enable the project to rent one-bedroom apartments for $309 per month and two bedroom apartments for $392 per month. The project will provide an affordable housing alternative for persons with mental illness and mental retardation. The proposed project will provide 24 hour 7 day a week on-site supportive services to assist Iow income tenants with their successful and productive integration into the community. 5.0 Revitalization Program 5.1 Tax Exemption a) All residential property, assessed either as residential or commercial, in the Revitalization District shall be eligible for tax abatement. b) "Qualified real estate" means land upon which no structure existed at the start of new construction, which is located in a designated Revitalization District and upon which new construction has been added during the time the area was so designated. c) Property tax exemption shall be available only for new construction on the vacant land in the Revitalization District. d) "Actual value added by improvements" means the actual value added as of the first year for which the exemption was received. e) Any improvements that were assessed before the Revitalization District was officially designated will not be eligible for exemption. Improvements begun one year prior to the area becoming designated will not be eligible for exemption, The actual value of the improvements must result in an increase in assessed value by at least fifteen percent or ten percent in the case of real property assessed as residential property before a tax exemption may be applied. Each year that an application is made for tax exemption, the assessed value must have increased in that year by at least fifteen percent or ten percent in the case of real property assessed as residential property. i) The tax abatement schedule shall offer the same exemption opportunity as is available in other Urban Revitalization Districts so designated in the City of Dubuque. Therefore, a ten-year 100% exemption on the actual value added by the improvements as provided in Iowa Code Section 404.3 (4) shail be established as part of this Plan. j) The designation of the ARC Urban Revitalization Area will remain in effect only ARC Urban Revitalization Plan October 2002 Page 4 until the area is fully redeveloped or for three years, whichever occurs first. Upon repeal or expiration of the ordinance establishing the revitalization area, all existing exemptions would continue until their previously established expiration date. k) The pement increase in value shall also reflect the standard used in other Urban Revitalization districts in the city. The actual value of the improvements must increase the assessed value by at least fifteen percent (15%) before abatement is applied. Each year that an application is made for tax abatement, the assessed value must have increased in that year by at least fifteen percent (15%). The proposed area shall remain as a revitalization area commencing upon the adoption of the ordinance approving this Revitalization District by the City Council. 5.2 Eligibility For qualified improvements to be eligible for tax exemption, a building permit must be obtained in accordance with the City of Dubuque's Code of Ordinances. Also for property accessed as commercial, 75% or greater of the total square footage must be used for residential purposes in order to qualify for the program. 5.3 Availability of funding There are at present many active programs, which may provide a source of funding for residential improvements to the Revitalization District. These include: Federal Low Income Housing Tax Credits, HOME Loan from the Iowa Department of Economic Development, Federal Home Loan Bank Funds, pdvate mortgage, pdvate construction loan and private equity. The amount of funding from each source is pending. The project applied for Federal Home Loan Bank funding on September 6, 2002 and the anticipated award date is mid to late November 2002. The project will apply for Low Income Housing Tax Credits November 25, 2002. Once an award is made for the tax credits the amount of funds to be committed by the other sources will be determined. 6.0 Conclusion The ARC Urban Revitalization District will assist the development efforts of vacant properties by providing needed housing units for the citizens of Dubuque and the surrounding area. After the ten-year abatement period lapses on these projects, the full assessed value of the rehabilitation property will go on the tax rolls to the benefit of the entire community. F:\Users~KRAMER~UFban Revita~ARG UR\ARC Revitalization PIan.doc ARC Urban Revitalization Plan: Land Use 2002 ARC Urban Revitalization Plan: Zoning 2002 CITY OF DUBUQUE, IOWA OFFICIAL NOTICE NOTICE is hereby given that the City Council of Dubuque, Iowa, will conduct a public hearing at a meeting to com- mence at 6:30 p.m. on Mon- day, November 4, 2002, in the Public Library Auditorium to consider designating the Area J Residential Care (ARC) Urban Revitalization Area pursuant to Chapter 404 of the Code of Iowa. (Copy of supporting documents are on file in the City Clerk's Office and may be viewed during working hours.) Written comments regarding above may be submitted to the City Clerk's Office on or_ before said time of public hearing. At said time and place of public hearing all interested citizens and parties will be given an opportunity to be heard for or against said amendment. Any visual or hearing im- paired persons needing spe- cial assistance or persons" with special accessibility needs should contact the City Clerk's Office at (563) 589- 4120 or TDD (563) 690-6678 at least 48 hours prior to the meeting. Published by order of the City Council given on the 21st day of October, 2002. Jeanne F. Schneider City Clerk 1 t 10/25 3 01Z-1)4 STATE OF IOWA {SS: DUBUQUE COUNTY CERTIFICATION OF PUBLICATION I, Tammy M Feldmann, a Billing Clerk for Woodward Communications, Inc., an Iowa corporation, publisher of the Telegraph Herald,a newspaper of general circulation published in the City of Dubuque, County of Dubuque and State of Iowa; hereby certify that the attached notice was published in said newspaper on the following dates: October 25, 2002, and for which the charge is $11.43. Subscribed to before me, a Notary Public in and for Dubuque County, Iowa, this ,i8.{,f day of 4 -z 7 , 20 0, . Notary Public in and for Dubuque County, Iowa. NARY K. WESTERMEYER Commission Number 154885 Icy Comm. Exp. FEB. 1, 2005