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Assistance Pool to Encourage Residential Housing in Downtown2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Assistance Pool to Encourage Residential Housing in Downtown DATE: November 12, 2009 Economic Development Director Dave Heiar is recommending that a pool of funds in the amount of $2.5 million be created to encourage new residential housing units in downtown Dubuque and that a Request for Proposals be solicited from developers who are interested in renovating existing structures in the downtown. Between existing employers and some new employers arriving in Dubuque, there is going to be a need for about 600 - 1,000 new rental units in the community. Much of that need will be in downtown, with IBM hiring 1,300 people that will be housed in the Roshek Building. There are already thousands of jobs in our downtown. Creating downtown housing supports downtown retail and restaurant development and allows people to walk to work. This supports the Downtown Master Plan and the Historic Millwork Master Plan. I respectfully recommend Mayor and City Council approval of the issuance of the Request for Proposal. Michael C. Van Milligen MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David J. Heiar, Economic Development Director 2007 TO: Michael Van Milligen, City Manager FROM: David J. Heiar, Economic Development Director ~~~~ SUBJECT: Assistance Pool to Encourage Residential Housing invDowntown DATE: November 12, 2009 INTRODUCTION This memo is to create a pool of funds in the amount of $2.5 million to encourage new residential housing units in downtown Dubuque. BACKGROUND Dubuque has been successful in encouraging job creation in the community for several years. Several great projects have begun or continue this year including: • IBM is currently hiring new employees to reach 1,300 employees in Dubuque by the end of 2010. Many new hires are coming from outside the community. • Hormel Foods will begin operations this winter in their facility on Chavenelle Court. • Medline Industries has been growing steadily and has additional capacity in their new facility. Corporate management is committed to growing the operation in Dubuque. The City does not want to reduce the ability of our existing businesses in Dubuque from expanding or replacing employees because of the lack of housing. In seeing this influx of new positions coming to Dubuque and with the employee recruitment of other existing businesses, the Greater Dubuque Development Corporation (GDDC) has hired Shannon Gaherty as the Newcomer Relations Coordinator. Her job is to help new residents find housing, get information about the community, and get connected with services and organizations within the community. GDDC has expressed difficulties in finding quality housing, particularly in the downtown area. Many of Dubuque's new residents have a strong desire to live near work and entertainment. This desire needs to be met for Dubuque businesses to attract and retain a quality workforce. DISCUSSION The Economic Development department is aware of several downtown housing projects in varying levels of development. These projects are located in the Historic Millwork District, as well as projects located in various areas of the downtown. Most of these projects have financial gaps in proformas which are delaying the start of construction. An opportunity exists to create a pool of funds to be made available to complete financing packages for the immediate creation of market-rate housing units within the Greater Downtown Urban Renewal District (See Attached Map for boundaries). Market- rate housing is described as rental housing which is not income restricted, which would be made available and can be afforded by residents earning at or below 80% of the area median income level as determined by the Department of Housing and Urban Development (HUD), and owner occupied housing units in the downtown. The pool of funds will be generated by delaying approved CIP projects and use the funding to borrow approximately $2.5 million for this program. The following is a list of CIP projects reduced or delayed to facilitate the borrowing: • Port of Dubuque Improvements • Millwork District Street Reconstruction • Millwork District Streetscape Improvements • Millwork District Fiber Optics • $100,000 not needed for demolition of a portion of the old Tri-State building being purchased from the Iowa DOT • Approximately $45,000 savings per year in the Greater Downtown Urban Renewal District from the refinancing of America's River bonds Some of the proposed funding for this incentive program has been committed as local match for grant applications. If any of these federal grants are approved, the pool of funds available for this incentive program will be reduced accordingly. Projects eligible to receive assistance from this newly established pool of funds must meet the following requirements: • The project must assist in the creation of new market-rate workforce residential units within the Greater Downtown Urban Renewal District. • The project must be a rehabilitation of an existing structure. • The project must assist in the creation of more than ten (10) new housing units. • The project must be under construction by March 1, 2010, with 25% of the project completed by July 1, 2010. • The units created must be completed and ready for occupancy by December 31, 2010. • No more than $10,000 per residential unit in assistance will be considered. • No more than $750,000 will be provided to a single project. • No more than 66.7% of the project units may have the 80% of median income or below restriction. • Project units may not have a restriction of 60% of median income and below. • The City will disperse no funds to the benefit of the project prior to all financing being committed and at least 25% of the construction has progressed. • A developer may not take any developer fee until all city assistance is paid off or satisfied. Eligible projects to use this new financing pool need not be directly used for housing unit creation. The identified project must be a required component related to housing unit creation (i.e. parking). An RFP will request proposals from developers or property owners will need to be immediately available. In order to expedite the creation of housing units, proposals should be delivered to the Economic Development Department no later than Noon on December 21, 2009. Staff will review the proposals and discuss them with the City Manager. The City reserves the right to reject any and all proposals and to negotiate changes with any applicant. The City Manager will then provide a recommendation to the City Council. RECOMMENDATION/ACTION STEP I recommend that the City Council approve the creation of a pool of funds to encourage developers and property owners to create new residential units in the Greater Downtown Urban Renewal District and to authorize an RFP for proposals to create residential development in the District. F:\USERS\Econ Dev\Downtown Housing\20091112 Housing RFP memo(2.5).docx CITY OF DUBUQUE, IOWA November 16, 2009 REQUEST FOR PROPOSALS Assistance to Encourage Market-Rate Downtown Rental and Owner-Occupied Residential Units - $2.5 million estimated to be available. INTRODUCTION The City of Dubuque, Iowa is soliciting proposals from developers and property owners to expand the availability of market-rate downtown rental and owner-occupied residential units. HISTORY/BACKGROUND Recent job creation projects within the City of Dubuque have caused a significant demand for downtown living options from new residents preferring to live near work and entertainment opportunities. Recent economic study of housing in the City of Dubuque has shown unmet demand for this housing type. The City of Dubuque has established a pool of funds to be made available to complete financing packages for the immediate creation of market-rate downtown rental and owner- occupied residential units within the Greater Downtown Urban Renewal District. (See attached map for boundaries) Market-rate residential units include rental units which are not income restricted or rental units that are restricted to 80% of median income and less for no more than five years (units must not be restricted to 60% of median income or less, or any other restriction under 80%) and owner occupied units. Eighty percent of median income level as determined by the Department of Housing and Urban Development (HUD), is currently at $35,000 for a single person, $40,000 for two and $45,000 for three. PROJECT REQUIREMENTS Projects eligible to receive assistance from this newly established pool of funds must meet the following requirements: The project must assist in the creation of new market-rate downtown rental and owner- occupied residential units within the Greater Downtown Urban Renewal District. • The project must be the rehabilitation of an existing structure. • The project must assist in the creation of more than ten (10) new residential units. • The project must be under construction by March 1, 2010, with 25% of the project completed by July 1, 2010. • The units created must be completed and ready for occupancy by December 31, 2010. • No more than $10,000 per residential unit in assistance will be considered. • No more than $750,000 will be provided to a single project. • No more than 66.7% of the project units may have the 80% of median income or below restriction. Public Assistance to Encourage Downtown Rental Housing Page 2 Project units may not have a restriction of 60% of median income and below. The City will disperse no funds for the benefit of the project prior to all financing being committed and at least 25% of the construction being completed. No developer fee will be permitted until all city assistance is paid or satisfied in full. The assistance requested need not be directly used for housing unit creation. However, the project must be a required component related to housing unit creation (i.e. parking). STRUCTURE OF ASSISTANCE The assistance available through the fund may take several different forms, including but not limited to: • Low-Interest Loans • Forgivable Loans • Grants • Loan Guarantees • Equity contribution The proposal may also include a description of the need for any other assistance or cooperation from the City, such as the use of tax increment financing. SELECTION CRITERIA City staff selected by the City Manager will be charged with evaluating the proposals with the ultimate task to select projects which create new market-rate rental and owner- occupied residential units in the Greater Downtown Urban Renewal District at the lowest per unit cost to the fund. Per unit cost to the fund will be calculated based upon the structure of the assistance required for the project. One of the City's goals is to leverage the most private investment with the least public assistance. The City Manager will make a recommendation to the City Council and the City Council will make the final awards. The terms of the award and the City's obligation to provide financial assistance to a project will be set forth in a development or loan agreement between the City and successful applicant. PROPOSAL REQUIREMENTS Applicants must complete the attached application. A ten-year detailed financial proforma is required to accompany the application. The proforma should include project revenues and expenses by category and a listing of all planned sources of financing to complete the project. SUBMISSION REQUIREMENTS A fully completed application with attachments and exhibits must be received in the office of the City of Dubuque Economic Development Department, 50 W. 13th Street, Dubuque, Iowa 52001 by 12:00 p.m. CDT Monday, December 21, 2009. Public Assistance to Encourage Downtown Rental Housing Page 3 Proposals should be addressed to David Heiar, Economic Development Director, at the above address. Questions can be directed to David Heiar orAaron DeJong by telephone at (563) 589-4393, by fax at (563) 589-1733, or by email at dheiarCa)_cityofdubugue.org or adeiong(a~cityofdubugue.org. Each applicant assumes full responsibility for delivery and deposit of the completed proposal package on or before the deadline. The City of Dubuque is not responsible for any loss or delay with respect to delivery of the proposals. Some of the proposed funding for this incentive program has been committed as local match for federal grant applications. If any of these federal grants are approved, the pool of funds available for this incentive program will be reduced accordingly. The City of Dubuque reserves the right to reject any and all proposals and to negotiate changes with any applicant. The City of Dubuque is not liable for any cost incurred by any applicant prior to the execution of an agreement or contract. Nor shall the City of Dubuque be liable for any costs incurred by the applicant that are not specified in any contract. The City of Dubuque is an Equal Employment Opportunity Employer. Applicants may be invited to an interview to discuss their project in greater detail. F:\USERS\Econ Dev\Downtown Housing\20091116 Downtown Housing RFP_750,000.docx Prepared by: David Heiar, Economic Dev Director, 50 West 13'" Street, Dubuque IA 52001 563 589-4393 Return to: Jeanne Schneider, City Clerk, 50 West 13`" Street, Dubuque IA 52001 563 589-4121 RESOLUTION NO. 444-09 APPROVING THE CREATION OF AN ASSISTANCE POOL TO ENCOURAGE MARKET- RATE DOWNTOWN RENTAL AND OWNER-OCCUPIED RESIDENTIAL UNITS IN THE GREATER DOWNTOWN URBAN RENEWAL DISTRICT AND AUTHORIZING THE CITY MANAGER TO SOLICIT PROPOSALS FOR PROJECTS TO CREATE SUCH UNITS Whereas, the City of Dubuque has been successful in encouraging job creation and retention in the community for several years; and Whereas, many of the City of Dubuque's new residents have a strong desire to live near work and entertainment; and Whereas, a significant shortage of quality market-rate rental and owner-occupied residential units exists and efforts are needed to encourage new development of such units; and Whereas, several downtown residential development projects need financial assistance to secure funding for such project. NOW THEREFORE, BE IT RESOLVED BYTHE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. The City Council approves the creation of a pool of funds to encourage new market-rate downtown rental and owner-occupied residential housing units in the Greater Downtown Urban Renewal District. Section 2. The City Council approves the Request For Proposal for projects that are in need of assistance to encourage new market-rate downtown rental and owner- occupied residential housing units in the Greater Downtown Urban Renewal District. Section 3. That the City Manager is hereby authorized and directed to distribute the Request for Proposal to interested parties. Passed, approved and adopted this 16t" day of November, 2009 Roy D. Buol, Mayor Attest: Jeanne F. Schneider, City Clerk F:IUSERS\Econ Dev\Downtown Housing\20091116 Resolution Downtown Housing RFP.docx DOWNTOWN HOUSING APPLICATION FOR PUBLIC ASSISTANCE Name of Project: Address of Project: CONTACT INFORMATION Name: Address: Company: Telephone: Fax: E-mail: Number of housing units created: Amount of assistance needed: $ Structure of assistance: ^ Loan ^ Forgiveable Loan ^ Grant ^ Loan Guarantee ^ Equity Contribution ^ Other Are there additional benefits to the city greater than the creation of new housing given the structure of assistance? Project Description: (Please attach description as Attachment A) Page 1 of 2 Estimated Start Date: Estimated 25% Completion Date: Estimated Completion Date: Is the project located within the Greater Downtown Urban Yes ^ No ^ Renewal District? Is the project rehabilitation of an existing structure? Yes ^ No ^ Is a 10 year pro forma attached (as Attachment B)? Yes ^ No ^ Does the pro forma show a developer's fee? Yes ^ No ^ If yes, over what period of time will this fee be paid? Does the project have bank financing? If yes, what financial institution? Yes ^ No ^ Signature Date A fully completed application with attachments and exhibits must be received in the office of the City of Dubuque's Economic Development Department, 50 W. 13th Street, Dubuque, Iowa 52001 by 12:00 p.m. CDT on Monday, December 21, 2009. Page 2 of 2 F:\USERS1Econ Dev\Downtown Housing120091019_Downtown Housing Application.doc