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Downtown Rehabilitation Loan and Facade Grant (Helicon Management)Masterpiece on the Mississippi Dubuque bietd AFAmedcaemr 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Downtown Rehabilitation Loan and Facade Grant for Property Located at 756 Main Street DATE: March 8, 2010 Economic Development Director Dave Heiar recommends City Council approval of a letter of commitment for a Downtown Rehabilitation Loan for $300,000, a Facade Grant of $10,000, Design Grant of $10,000, and a Financial Consultant Grant of $15,000 for Helicon Management, LLC to support their rehabilitation of property located at 756 Main Street. The building was formerly Walker's Shoe Store. This project includes renovation of an existing and vacant building located at 756 North Main Street to include a casual dining restaurant on the ground floor and four loft style, market rate apartment units on the second and third floors. At this time, insufficient loan funds are available in the Downtown Rehabilitation Loan Program to fund the loan. The owners have agreed to wait until the funds are available in FY2020. I concur with the recommendation and respectfully request Mayor and City Council approval. —` Mic el C. Van Milligen MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David J. Heiar, Economic Development Director Masterpiece on the Mississippi DATE: March 1, 2010 TO: Michael Van Milligen, City Manager FROM: David J. Heiar, Economic Development Director SUBJECT: Downtown Rehabilitation Loan and Fagade Grant for Property Located at 756 Main Street Dubuque kiltd ANAmedcaeny 11111! 2007 INTRODUCTION This memorandum presents for City Council consideration a Resolution approving a letter of commitment for a Downtown Rehabilitation Loan of $300,000, a Facade Grant of $10,000, Design Grant for $10,000, and a Financial Consultant Grant of $15,000 for Helicon Management, LLC. to support their rehabilitation of property located at 756 Main Street. BACKGROUND 756 Main Street is in the heart of downtown Dubuque and in the middle of several revitalization projects which have been undertaken, most notably Cottingham & Butler's Security Building, Steele Capital Management, and the Historic Roshek Building. The building was formerly the Walker's Shoe Store. The Downtown Rehabilitation Loan /Grant Program encourages private investment and rehabilitation efforts in the City's Greater Downtown Urban Renewal District. The program, capitalized with funds available through the City's tax increment financing district, provides for a maximum of $300,000 in attractive low- interest loan monies. The program is unique in that grants of up to $10,000 are available to offset costs for Facade improvements, $10,000 for design expenditures, and $15,000 for financial consultant expenditures, all dollar for dollar matching grants. The program also includes a forgivable loan element whereby qualifying applicants may have up to the full amount of the loan forgiven as an incentive for the creation of new employment and housing opportunities in the district. DISCUSSION The project includes renovation of existing and vacant building located at 756 North Main Street to include casual dining restaurant on ground floor and a total of four (4) loft style, market rate apartment units on second and third floors above. According to the developers in their application, the project will create temporary construction jobs and the restaurant will create 20 -25 permanent jobs for Dubuque. At this time, insufficient loan funds are available in the Downtown Rehabilitation Loan Program to fund the loan. The owners have agreed to wait until the funds are available in FY2020. As of July 1, 2019, the loan funds should be available to the project and the company would like to proceed with the loan. Recapitalizations for this program have been included into the City's Capital Improvements Program. Should the recapitalization schedule be altered, the timing for the availability of loan funds may change. Additional information on the terms and conditions of the proposed Downtown Rehabilitation Loan /Grant is attached in the commitment letter. If the loan is approved by the City Council, this commitment letter would be executed by the Mayor and by the owners. RECOMMENDATION Staff has reviewed the application and found it to be in keeping with the requirements of the Downtown Rehabilitation Loan /Grant Program. The project will begin when other funding sources have been secured. I recommend that the City Council adopt the attached Resolution approving a letter of commitment for property located at 756 Main Street for the $300,000 Downtown Rehabilitation loan, a $10,000 facade grant, a $10,000 Design Grant, and a $15,000 Financial Consultant Grant. ACTION STEP The action step for the City Council is to adopt the attached Resolution. F: \USERS\Econ Dev \Helicon Management LLC \DRLP\20100301 Helicon DRLP Memo.doc RESOLUTION NO. 86 -10 A RESOLUTION AUTHORIZING A LETTER OF COMMITMENT AND ADDITIONAL ACTIONS CONCERNING A DOWNTOWN REHABILITATION LOAN AND FACADE GRANT FOR PROPERTY LOCATED AT 756 MAIN STREET. Whereas, the City of Dubuque, Iowa, has created a Downtown Rehabilitation Loan /Grant Program for the purpose of stimulating reinvestment in the Greater Downtown Urban Renewal District; and Whereas, the City of Dubuque, Iowa is encouraging the use of this loan /grant program to finance code compliance activities and to spur job creation activities; and Whereas, the loan application from Helicon Management, LLC meets the requirements of this program; and Whereas, a Commitment Letter, hereto attached and by this reference made a part hereof, sets forth the terms and conditions of Helicon Management, LLC participation in the Downtown Rehabilitation Loan Program. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the application of Helicon Management, LLC for participation in the Downtown Rehabilitation Loan and Grant Program is hereby accepted and approved. Section 2. That the Mayor is hereby authorized to execute, on behalf of the City Council of the City of Dubuque, Iowa, the attached Commitment Letter and to forward said letter to Helicon Management, LLC for review and approval. Section 3. That the City Manager be and he is hereby directed to prepare, upon execution and receipt of the attached Commitment Letter by the applicant, the necessary loan documents in accordance with the terms and conditions set forth in said Commitment Letter. Section 4. That the City Manager is hereby authorized to execute, on behalf of the City Council of the City of Dubuque, Iowa, all necessary loan documents and is further authorized to disburse loan funds from the Downtown Rehabilitation Loan /Grant Program, in accordance with the terms and conditions of the executed agreement. Attest: Passed, approved and adopted this 15 day of March, 2010. eanne F. Schneider, City Clerk F: \USERS \Econ Dev \Helicon Management LLC \DRLP\20100315 Helicon DRLP Resolution.doc Roy D. Buol, Mayor March 16, 2010 Helicon Management, LLC Attn: Mark Hope 800 Spring Street, Suite 101 Galena, IL 61036 RE: Letter of Commitment/Downtown Rehabilitation Loan Program For 756 Main Street Dear Mr. Hope: I am pleased to inform you that your application for financial assistance for the renovation of property located at 756 Main Street has been accepted and approved by the Dubuque City Council. The following offer is made: Source of Funds: Downtown Rehabilitation Loan Program Amount of Commitment: $300,000 Interest Rate: Three percent (3 %) per annum Term of Loan: Twenty (20) years Payment Schedule: Monthly interest only payments shall be required for the first sixty (60) months of the loan. Monthly principal and interest payments, amortized over an additional fifteen (15) year period, shall begin the sixty-first month of the loan. At this time, insufficient loan funds are available in the Downtown Rehabilitation Loan Program to fund the loan. As of July 1, 2019, the loan funds should be available to the project and the company would like to proceed with the loan. Recapitalizations for this program have been included into the City's Capital Improvements Program. Should the recapitalization schedule be altered, the timing for the availability of loan funds may change. You may prepay this loan in whole or in part at any time without penalty. Form of Security: The loan shall be secured by a second mortgage on the property. Purpose of the Loan: Renovation of the exterior facade and interior for use as mixed use space. Conditions of this Commitment: (a) An "after rehab" appraisal must be submitted to the Economic Development Department prior to the scheduled loan closing. The cost of said appraisal shall be incurred by the property owner. (b) A title opinion must be completed at the expense of the property owner. A copy of said document must be provided at the loan closing. (c) A loan agreement must be signed no later than June 30, 2023. (d) The project is to be completed in accordance with the regulations set forth for the City of Dubuque's Downtown Rehabilitation Loan Program. Additional Commitments: (a) A rebate equal to two thousand dollars ($2,000) may be forgiven for each new full -time job or full -time equivalent created within two years of the authorization of the loan by the Dubuque City Council and maintained by the applicant or his /her tenant for a period of not less than three years. The amount of the loan to be forgiven shall be determined by the City on the fifth anniversary of the loan based on documented evidence of job creation. Any jobs relocated from another location within the downtown area will not count as a new job. (b) A grant not to exceed ten thousand dollars ($10,000) will be available to offset documented construction costs for facade improvements. Fagade Grant Funds will be dispensed on completion of work, documentation of costs and an inspection of the completed project at a rate of $.50 for each $1.00 of costs incurred. Partial payments may be made for completed work. Written requests for payment must be submitted to the Economic Development Department. (c) A grant not to exceed ten thousand dollars ($10,000) will be available to offset costs related to planning and design for the rehabilitation project. Planning and Design Grant Funds will be dispensed on completion of work, documentation of costs and an inspection of the completed project at a rate of $.50 for each $1.00 of costs incurred. Partial payments may be made for completed work. Written requests for payment must be submitted to the Economic Development Department. (d) A grant not to exceed fifteen thousand dollars ($15,000) will be available to offset cost related to hiring a financial consultant to evaluate the project's feasibility. Financial Consultant Grant Funds will be dispensed on completion of work, documentation of costs and an inspection of completed project at a rate of $.50 Sincerely, Roy D. Buol Mayor for each $1.00 of costs incurred. Financial Consultant Grant Funds will be dispensed after the project has been completed. Written requests for payment must be submitted to the Economic Development Department. (e) A rebate equal to two thousand dollars ($2,000) may be forgiven for each new full -time job or full -time equivalent created within two years of the authorization of the loan by the Dubuque City Council and maintained by the applicant or his /her tenant for a period of not less than three years. The amount of the loan to be forgiven shall be determined by the City on the fifth anniversary of the loan based on documented evidence of job creation. Any jobs relocated from another location within the downtown area will not count as a new job. This commitment is valid for twenty -one (21) days from the date of this letter. If you wish to accept the offer, you must return the acknowledgment. Failure to return written acknowledgment will be cause for the commitment to lapse. This commitment offer shall lapse if construction on the proposed project does not start within ninety (90) days of the loan closing. If the terms offered do not meet your approval, or if you have any questions regarding the conditions of this commitment, please contact David Heiar, Economic Development Department, at 589 -4393. ACKNOWLEDGMENT We have reviewed the above offer and accept the $300,000 Downtown Rehabilitation Loan, and the $10,000 facade grant and all of the terms of this commitment letter. Mark Hope Date F: \USERS\Econ Dev \Helicon Management LLC \DRLP\20100316 Helicon DRLP approval letter.doc 1 Applications for funding through the City of Dubuque's Downtown Rehabilitation Loan Program, Planning and Design Grant Program, Facade Grant Program, and Financial Consultant Grant Program will be accepted by the Economic Development Department, 50 West 13th Street, Dubuque, Iowa (563) 589 -4393. Applications will be reviewed by the Department on a case by case basis with qualifying projects being submitted to the City Council for final review and approval. Date of Application: 02.26.2010 APPLICANT INFORMATION Owner Name: Helicon Management, LLC Applicant Name : Toben Murdock Address of Project: 756 N. Main Street Mailing Address: 800 Spring Street, Suite 101 Galena, IL 61036 SS# or Federal Tax ID #: 27- 1664172 Telephone: 815.776.9347 Fax: 815.776.7101 City of Dubuque, Iowa Downtown Rehabilitation Loan Program, Planning and Design Grant Program, Facade Grant Program, and Financial Consultant Grant Program APPLICATION E -mail: toben.murdock @epochinsights.com Which assistance programs is this project seeking? ® Downtown Rehab Loan Program ® Planning and Design Grant Program ® Facade Grant Program ® Financial Consultant Grant Program Description of Project: (If additional space is needed, please attach description as Attachment A) Please see Attachment A Page 1 of 3 How will the project further the revitalization of downtown? (If additional space is needed, please attach as Attachment B) Please see Attachment B Number of current housing units on property? Number of new housing units created from project? Number of jobs currently in building? Number of jobs created after project completed? Is proof of building ownership attached? Yes ❑ No El If no, reason for not providing proof of building ownership? If the owner is a for - profit or non - profit organization, is a Resolution adopted by the Board of Directors which authorizes both the project and the application attached with the Minutes of the Meeting when it was adopted? Page 2 of 3 0 4 0 20 -25 Under contract F:\USERS\Econ Dev \Helicon Management LLC \DRLP\20100226 Helicon MGMT DRLP Application.doc Yes ❑ No 1 Downtown Rehab Loan Program Amount of financing requested: 875,670.00 $'2)cre Total cost of project seeking assistance: 1,025,670.00 Proposed security or collateral for the financing: Personal Guarantee What is the construction schedule for the project: Appendix C Is a Historical Income Statement for the property (for 2 years) attached? Is a cash flow projection indicating the ability to repay the loan attached? *Loan Funds will be dispensed on a requisition basis as project costs are incurred for completed work. Written requests for payment must be submitted to the Economic Development Department. Planning and Design Grant What are the estimated costs for planning and design? 35,000. How much assistance is the project requesting? 15,000. Will invoices be made available to confirm expenditures? Yes ® No ❑ *Planning and Design Grant Funds will be dispensed on completion of work, documentation of costs and an inspection of the completed project at a rate of $.50 for each $1.00 of costs incurred. Partial payments may be made for completed work. Written requests for payment must be submitted to the Economic Development Department. Facade Grant What are the estimated costs for facade improvements? 125,000. How much assistance is the project requesting? 10,000. What is the construction schedule for facade improvements? Appendix C Will invoices be made available to confirm expenditures? Yes ® No ❑ *Facade Grant Funds will be dispensed on completion of work, documentation of costs and an inspection of the completed project at a rate of $.50 for each $1.00 of costs incurred. Partial payments may be made for completed work. Written requests for payment must be submitted to the Economic Development Department. Financial Consultant Grant What are the estimated costs for financial consultant services? 30,000. How much assistance is the project requesting? 15,000. Yes ❑ No Page 3 of 3 Yes ® No ❑ *Financial Consultant Grant Funds will be dispensed on completion of work, documentation of costs and an inspection of completed project at a rate of $.50 for each $1.00 of costs incurred. Financial Consultant Grant Funds will be dispensed after the project has been completed. Written requests for payment must be submitted to the Economic Development Department. Appendix A Renovation of existing and vacant building located at 756 North Main Street in Dubuque, IA to include casual dining restaurant on ground floor and a total of four (4) loft style, market rate apartment units on second and third floors above. Appendix B Development of new restaurant and four (4) unique, loft style apartments in the heart of Dubuque's emerging downtown business district in what is presently a vacant and unappealing building. Project will create temporary construction jobs and restaurant will create 20 -25 permanent jobs for Dubuque. Positive tax revenue generated by way of improved structure, creation of residential units, construction jobs and restaurant employment, and restaurant sales. Appendix C The construction is scheduled to begin April 1, 2010 with an estimated completion date of November 15, 2010. The facade construction will be completed within this time frame but our ability to begin will be dependent upon the direction we receive to remain compliant with Tax Credit guidelines. Phase one for this project has been submitted the State.