First Amendment to Development Agreement - 40 Main LLCPrepared/Return to: David Heiar, Economic Development, 50 W. 13th Street, Dubuque, IA 52001 (563) 589-4393
RESOLUTION NO
RESOLUTION APPROVING THE FIRST AMENDMENT TO THE 40 MAIN LLC
DEVELOPMENT AGREEMENT
Whereas, a Development Agreement (the Agreement), dated January 15, 2009,
was entered into by and between the City of Dubuque, a municipal corporation of the
State of Iowa (City), and 40 Main LLC (Developer); and
Whereas, City and 40 Main LLC now desire to amend the Development
Agreement as set forth attached First Amendment.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the First Amendment of the 40 Main LLC Development
Agreement is hereby approved.
Section 2. That the Mayor is hereby authorized and directed to execute said
First Amendment on behalf of the City of Dubuque and the City Clerk is authorized and
directed to attest to his signature.
Section 3. That the City Manager is authorized to take such actions as are
necessary to implement the terms of the First Amendment as herein approved.
Passed, approved and adopted this 18t" day of May, 2009.
Roy D. Buol, Mayor
Atte
eanne F. Schneider, City Clerk
F:\USERS\DHeiar\40-42 South Main\Resolution approving frst DA amendment.doc
The First Amendment to Development Agreement, dated for reference purposes
the 18t" day of May, 2009, is made and entered into by and between the City of
Dubuque, Iowa (City) and ~0 Main, LLC (Developer).
Whereas City and Developer previously entered into a Development Agreement
dated the 15t" of January, 2009 (the Development Agreement}; and
Whereas the Development Agreement provides in Section 2.1 for Minimum
lmpravements less than four million dollars ($4,000,000) to improve the Property
creating eighteen (18) apartments for market-rate rental and seven thousand eight
hundred (7,800) square feet ofretail space.
Whereas City and Developer have agreed to .amend the Development
Agreement to revise the loan. agreement aril extend the completion deadline; and
Whereas the parties .desire to amend the Developmeht Agreement to set forth
such amendment in writing..
THEREFORE, in consideration of the mutual terms and covenants contained
herein, the parties agree as follows:
1. Section 2.4, Timing of Improvements shall be modified to extend the project
completion date from March 1, 2010 to August 1, 2010.
2. Section 3.1 of the Development ,Agreement is hereby amended to read as follows:
3.1 Downtown Rehab Loan/Grant.
(1) Subject to the conditions set forth in this section, City hereby commits
to a .$300,000 low interest loan funded from interest earnings in the
City's General Construction Fund. The Project is to be completed in
accordance with the regulations set forth by the City of Dubuque.
The loan is for a period of time until the Developer receives State
Historic Tax Credits ors this project, but not later than Docember 31,
2011 at 3% interest and is intended for historic renovation of the
.exterior fagade and historically significant elements of the interior with
remodeling of the remainder of the interior for use as
commercial/residential space. Monthly interest only payments shall
be required during the term of this loan. The entire principal is due
when the developer receives State Historic Tax Credits an this
project, but not later than December 3~, 2011. Developer's counsel
shall not less than thirty (30) days prior to closing on the loan provide
City with an opinion of title. showing merchantable title in Developer to
the satisfaction of City. City shall have until the closing to render
objections to title, including any easements or other encumbrances
not satisfactory to City, in writing to Developer. Developer shall
promptly exercise its best efforts to have such title objections
removed or satisfied and shall advise City of its intended action within
ten (10) days of receipt of City's objections to title. If Developer shall
fail to have such objections removed as of the closing, or any
extension thereof consented to by City, Gity may, at its sole
discretion, either (a) terminate its obligation under this Section 3.1
without liability on its part, or proceed to closing subject to such
objections. ..Developer agrees to use its best reasonable efforts to
promptly satisfy any such objections. The loan shall be secured by a
lien on the State Historic Tax Credits, a mortgage and personal
guarantees.in a form acceptable to City.
3. Except as modified herein, the Development Agreement shall remain in full
force and effect.
CITY OF DUBUQUE; IOWA 40 MAIN, LLC
~~~
By: By:
Roy d. Buol, Mayor hri5 Miller, Partner
By:
Jeanne F. Schneider, City Clerk
F:\USERS1DHeiar\40112 South Main\FIRST AMENDMENT:daa
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: First Amendment to 40 Main LLC Development Agreement
DATE: May 13, 2009
On, January 15, 2009, the City Council approved a development agreement with 40
Main LLC for the rehabilitation of a mixed use building at 40 Main Street. The building
will provide commercial space on the first floor and 18 market rate residential units on
the upper floors.
The initial planning stages and project design have taken somewhat longer than initially
anticipated due to a funding gap created by the delay of State Historic Tax Credits and
the City's waiting list for Downtown Rehabilitation Loans.
In the original agreement, the City had committed to $600,000 of TIF (half grant, half
loan) and a $300,000 low interest Downtown Rehabilitation Loan. Unfortunately due to
the popularity of this program, these loan funds are not expected to be available until
FY2013. Initially, the developer anticipated that the local financial institutions would
allow State Historic Tax Credits at a discounted rate as part of the financing package.
Due to the uncertainties with the timing of State Historic Tax Credits, the bank would not
allow the developer to count any value for State Historic Tax Credits. This created a
$600,000 funding gap for the project. The developer is providing another $300,000 of
personal equity to the project but needs an immediate $300,000 loan from the City that
is available this year. City of Dubuque Budget Director Jennifer Larson, has indicated
that the City could use $300,000 of UDAG funds to provide a short term loan to the
developer. To free up this UDAG money an inter fund transfer will be required to cover
the City's operational expense where these funds had been budgeted. General
Construction Funds are available to accomplish this. The 3% loan will be repaid as soon
as the Historic Tax Credits are received, but no later than December 31, 2011. This
loan would replace the Downtown Rehabilitation Loan/Grant previously authorized by
the Council.
It is highly unusual for the City to use this source of funding on a private project, but the
certainty of receiving the State Historic Tax Credits and the high visibility of this
important downtown project that could easily became a blighting influence makes this
action justified. This will not become common practice.
Due to the delays in starting the project, the developer is also requesting that the
completion date be moved from March 1, 2010 to August 1, 2010.
All other provisions of the January 15, 2009 Development Agreement would remain the
same.
I concur with the recommendation and respectfully request Mayor and City Council
approval
Michael C. Van Milligen
MCVM:Iw
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Dave Heiar, Economic Development Director
i~~.~l~,~c;i~e
.'~
~~~
May 6, 2009
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director
s~
SUBJECT: First Amendment to 40 Main LLC Development Agreement
INTRODUCTION
Some of the provisions in the original development agreement with 40 Main LLC require
a modification to reflect the current schedule and to accommodate financing gaps.
BACKGROUND
On January 15, 2009, the City Council approved a development agreement with 40
Main LLC for the rehabilitation of a mixed use building at 40 Main Street. The building
will provide commercial space on the first floor and 18 market rate residential units on
the upper floors.
DISCUSSION
The initial planning stages and project design have taken somewhat longer than initially
anticipated due to a funding gap created by the delay of State Historic Tax Credits and
the City's waiting list for Downtown Rehabilitation Loans.
In the original agreement, the City had committed to $600,000 of TIF (half grant, half
loan) and a $300,000 low interest Downtown Rehabilitation Loan. Unfortunately due to
the popularity of this program, these loan funds are not expected to be available until FY
2013. Initially, the developer anticipated that the local financial institutions would allow
State Historic Tax Credits at a discounted rate as part of the financing package. Due to
the uncertainties with the timing of State Historic Tax Credits, the bank would not allow
the developer to count any value for State Historic Tax Credits. This created a $600,000
funding gap for the project. The developer is providing another $300,000 of personal
equity to the project but needs an immediate $300,000 loan from the City that is
available this year., City of Dubuque Budget Director Jennifer Larson, has indicated that
the City could use $300,000 of UDAG funds to provide a short term loan to the
developer. To free up this UDAG money an inter-fund transfer will be required to cover
F:\USERS\DHeiar\40-42 South Main\1 st Amendment to DA memo.doc
the City's operational expense where these funds had been budgeted. General
Construction Funds are available to accomplish this. The 3% loan will be repaid as soon
as the State Historic Tax Credits are received, but no later than December 31, 2011.
This loan would replace the Downtown Rehabilitation Loan/Grants previously authorized
by the Council.
It is highly unusual for the City to use this source of funding on a private project, but the
certainty of receiving the State Historic Tax Credits and the high visibility of this
important downtown project that could easily became a blighting influence makes this
action justified. This will not become common practice
Due to the delays in starting the project, the developer is also requesting that the
completion date be moved from March 1, 2010 to August 1, 2010.
All other provisions of the January 15, 2009 Development Agreement would remain the
same.
REC®IVIIVIEN®~-TIOfd
I recommend that the City Council approve the attached resolution approving the 1St
amendment to the January 15, 2009 Development Agreement with 40 Main, LLC.
F:\USERS\DHeiar\40-42 South Main\1st Amendment to DA memo.doc