Housing Tax Credit Gronen PropeTO:The Honorable Mayor and City Council Members
FROM:Michael C. Van Milligen, City Manager
SUBJECT:Affordable Housing Tax Credit Application from Gronen Properties
MEMORANDUM
October 29, 2002
Gronen Properties proposes to acquire and historically renovate six downtown
buildings, located at 1042, 1066, 1069, 1086 and 1091 Main Street and at 248 West
11th Street. The developer intends to restore and preserve the building facades, as well
as refurbish and re-occupy the street-level storefronts. The interior renovation will
preserve all historical and character-defining features. Application will be made to
nominate the properties for the National Register of Historic Places.
When completed the buildings will offer 30 apartments, all to be made affordable to
income-qualifying households as required by terms of the IFA tax credit program. A
total of 13 storefronts will also result from this renovation.
It is anticipated that Alliant/Heartland Properties will purchase the housing tax credits
and provide the major financing for this project, estimated at a total cost in excess of $5
million. The "local contributing effort" and subsidy requested of the City is tax
abatement, which will provide approximately $120,000 in financial benefit over a ten-
year period. The buildings proposed for renovation are all located within the Upper
Main Urban Revitalization District, meaning that the developer is eligible for
consideration for tax abatement for this project.
Housing and Community Development Director David Harris is recommending the City
Council indicate support of this project by approving the attached resolutions for local
support and local contributing effort.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
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, IOWA
MEMORANDUM
28 October 02
To: Mike Van Milligen, City Manager
From: David Harris, Housing and Community Development Department
Re: Affordable Housing Tax Credit Application from Gronen Properties
Introduction
The purpose of this memorandum is to review the request from Gronen
Properties for City support of an application to the Iowa Finance Authority for
housing tax credits; and to authorize the Mayor's signature on the attached
resolutions of support and local contributing effort.
Background
The Affordable Housing Tax Credit Program provides an equity financing
mechanism for housing projects which in turn must provide rental units for Iow-
and moderate-income tenants. It implements Section 42 of the Internal Revenue
Service Code, returning tax credits to investors who build or renovate Iow income
housing. In Iowa it is administered by the Iowa Finance Authority, which annually
distributes approximately $5 million in tax credits State-wide, on a competitive
application basis.
In Dubuque, projects previously financed through this program include Heartland
Housing Initiative's Loras Boulevard and Main Street apartments, the Applewood
complex on Pennsylvania Avenue, the Bishop's Block Apartments and Henry
Stout Place. The Raven Oaks/Arbor Glen Apartments project is now com-
mencing construction.
For the tax credit application, the Finance Authority utilizes a competitive scoring
system that ranks projects according to a variety of criteria. One of these is the
support of the project by the local government. Accordingly, a "resolution of
support" is submitted as part of all applications. Without this indication of local
acceptance, the proposal is competitively disadvantaged relative to other
developers requesting tax credit financing.
A threshold criteria is for "local contributing effort," in an amount of at least one-
percent of the value of the project. This is required of all applicants for the tax
credits. This contribution can be provided by a local government or by local or
regional agencies, public or private. It may take many forms, including direct
funding, donation of real estate, subsidized financing, or tax abatement or tax
increment financing proceeds. Without documentation of this financial support,
an application cannot be funded.
Discussion
Gronen Properties proposes to acquire and historically renovate six downtown
buildings, located at 1042, 1066, 1069, 1086 and 1091 Main Street and at 248
West 11th Street. The developer intends to restore and preserve the building
facades as well as refurbish and re-occupy the street-level storefronts. The
interior renovation will preserve all historical and character-defining features.
Application will be made to nominate the properties for the National Register of
Historic Places.
The buildings when completed will offer 30 apartments, all to be made affordable
to income-qualifying households as required by terms of the IFA tax credit
program. The 16 two-bedroom units will range in size from 900-1200 square
feet; one-bedrooms will be at 500-800 square feet. A total of 13 storefronts will
also result from this renovation. Amenities for residents will include individual
laundry, assigned off-street parking, a community reom and computer lab.
It is anticipated that Alliant/Heartland Properties will purchase the housing tax
credits and provide the major financing for this project, estimated at a total cost in
excess of $5 million. The "local contributing effort" and subsidy requested of the
City is tax abatement, which will provide approximately $120 000 in financial
benefit over a ten-year period. The buildings proposed for renovation are all
located within the Upper Main Urban Revitalization District, meaning that the
developer is eligible for consideration for tax abatement for this project.
The annual cycle for application for Urban Revitalization is the end of January,
with Council review and approval in February. To be eligible, a property must be
located within an existing district, be used primarily for residential occupancy and
realize an increase of at least 15% in assessed value as a result of the building
improvements. For this reason, it is anticipated that the Gronen project
properties will all qualify for Urban Revitalization Program participation.
Recommendation
It is recommended that the Council indicate support of this project by approving
the attached resolutions for local support and local contributing effort. The
project achieves our goal for reoccupancy of long-vacant upper story housing in
the downtown, as well as historic building renovation and provision of affordable
housing for Iow- and moderate-income households.
Action Step
The action requested of the City Council is to approve the attached resolutions of
support and local contributing effort for this project.
RESOLUTION NO. 600-02
A RESOLUTION OF SUPPORT FOR THE DEVELOPMENT OF
AFFORDABLE HOUSING ON MAIN AND WEST 11TH STREETS
WHEREAS, the City of Dubuque; Iowa has been informed by Gronen Properties
that a Iow income housing tax credit application will be filed with the Iowa
Finance Authority for the development of affordable rental housing to be located
in Dubuque, Iowa with a legal description as follows:
Lot 39 in the City of Dubuque, Iowa, according to the United States
Commissioner's Map thereof; and
Lot 40 in the City of Dubuque, Iowa, according to the United States
Commissioner's Map thereof; and
City Lot 40A in the City of Dubuque, Dubuque County, Iowa, according to
the United States Commissioner's Map of the Town (now City) of
Dubuque, Iowa; and
Lots 42, 42A and the south 8 feet of Lot 41, in the City of Dubuque, Iowa,
according to the United States Commissioner's Map of the Town of
Dubuque, Iowa; and
The North 43.2 feet of Lot 41 in the City of Dubuque, Iowa, according to
the United States Commissioners Map thereof.
WHEREAS, this housing project will contain 30 units;
WHEREAS, the units will be targeted to family mixed income;
WHEREAS, the project will be acquisition and rehabilitation;
WHEREAS, the project will have the following amenities:
Green space;
Community room
Computer room
WHEREAS, The Sponsor has requested local assistance through a tax
abatement;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. The City supports the application of Gronen Properties for
Affordable Housing Tax Credits, subject to necessary public hearings and
building permits.
Section 2. This resolution shall remain effective until 1 July 2003. In the
event that any of the above-listed characteristics should materially change prior
to the issuance of a building permit, this resolution shall be null and void.
Passed, approved and adopted this day of November, 2002,
Terrance M. Duggan, Mayor
Attest:
Karen M. Chesterman, Deputy City Clerk
RESOLUTION NO.601-02
A RESOLUTION OF LOCAL CONTRIBUTING EFFORT FOR THE
DEVELOPMENT OF AFFORDABLE HOUSING ON MAIN AND WEST
11TH STREETS
WHEREAS, the City of Dubuque, Iowa has been informed by Gronen Properties
that a Iow income housing tax credit application will be filed with the Iowa
Finance Authority for the development of affordable rental housing to be located
in Dubuque, Iowa, at 1042, 1086, 1086 and 1091 Main Street and at 248 West
11th Street; and
WHEREAS, a local contributing effort is required by the Qualified Allocation Plan
and Iowa Code Section 16.4, to be provided by a local governmental unit or by
local or regional agencies public or private; and
WHEREAS, the Iowa Finance Authority may consider any type of proposed local
contributing effort; and the agency making the local contributing effort must
indicate the value of its contribution; and
WHEREAS, the proposed affordable housing project is located in the Upper Main
Urban Revitalization District and is therefore eligible for consideration for a tax
abatement; and
WHEREAS, the Sponsor intends to apply for tax abatement benefits provided
through the Urban Revitalization Program; and
WHEREAS, said tax abatement benefits would constitute the required local
contributing effort, and have an estimated value of $120 000.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. The City is supportive of the application of Gronen Properties
for a tax abatement for the proposed affordable housing project provided through
the Urban Revitalization Program, subject to the application cycle and subse-
quent City Council review and approval.
Passed, approved and adopted this 4th day of November, 2002.
Terrance M. Duggan, Mayor
Attest:
Karen M. Chesterman, Deputy City Clerk