Bee Branch Creek Restoration Project, Phase 9: Flood Migigation Maintenance Facility_411 E. 15th St._Blum Copyrighted
December 16, 2019
City of Dubuque Action Items # 1.
ITEM TITLE: Bee Branch Creek Restoration Project, Phase 9: Flood
Mitigation Maintenance Facility,Acquisition of 411 E. 15th
Street
SUMMARY: City Manager recommending approval to amend the
purchase agreementwith Blum Properties, Inc. and Alvin
Blum for the acquisition of 411 E. 15th Street.
RESOLUTION Amending the PurchaseAgreementfor
the acquisition of real estate owned by Blum Properties,
Inc. in the Cityof Dubuque
SUGGESTED DISPOSITION: Suggested Disposition: Receiveand File;Adopt
Resolution(s)
ATTACHMENTS:
Description Type
Bee Branch Flood Mitigation Maintenance Facility City Manager Memo
Acquisition at411 E 15th-MVM Memo
Staff Memo Staff Memo
Resolution Resolutions
SecondAmendmentto PurchaseAgreement Supporting Documentation
Dubuque
THE CITY OF �
uI�AaMca cih
DuB E � �
I � � I
Maste iece on the Mississi i Zoo�•zoiz•zois
YP pp zoi�*zoi9
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Bee Branch Creek Restoration Project, Phase 9: Flood Mitigation
Maintenance Facility, Acquisition of 411 E. 15th Street
(CIP #3402609)
DATE: December 11, 2019
City Engineer Gus Psihoyos recommends City Council approval to amend the purchase
agreement for the acquisition of 411 E. 15t" Street. Per the terms of the amendment,
the City will pay $500,000 for the purchase of the property. Upon receipt of the funds,
the owner, AI Blum, will at the same time donate $400,000 to the City of Dubuque to be
used by the City to redevelop the property.
In February of 2014, the City Council approved the execution of an agreement with the
lowa Flood Mitigation Board necessary for the City's receipt of $98,494,178.00 in State
of lowa sales tax increment funds for the Bee Branch Watershed Project. Per the
agreement, the City must construct the Flood Mitigation Maintenance Facility, which is
Phase 9 of the Bee Branch Watershed Flood Mitigation Project.
In June of 2014, the City Council approved the acquisition of 411 E. 15th Street for
$500,000.00. The City's interest in 411 E. 15th Street is related to the City's desire to
establish the Flood Mitigation Maintenance Facility.
In December of 2016, the City Council approved the first amendment to the Purchase
Agreement for 411 E. 15t" Street. The amendment established that:
1) The City would pay Mr. Blum $100,000 for the real estate at 411 East 15t" Street,
Dubuque, lowa, versus the previously agreed upon price of $500,000;
2) The City would apply for U.S. EPA Brownfields Cleanup Grants in 2016 and in
2017, in an attempt to secure federal funding assistance to perform the
environmental cleanup required for the City's use of the property. The City was
successful in securing $200,000 in U.S. EPA Brownfields Cleanup Grant funding
for 501 E. 15t" Street purchased from Mr. Blum in 2015 and the City was then
successful in securing $400,000 in U.S. EPA Brownfields Cleanup Grants for the
411 East 15t" Street property;
3) The City would hold $400,000, previously intended for Mr. Blum, in a designated
account. The funds would be drawn by the City to pay for up to 50% of the cost
of environmental cleanup activities required, but only after any and all state or
federal grant funds secured by the City specifically for environmental cleanup
activities are exhausted. If there was a balance remaining in the designated
account upon the issuance of a No Further Action Certificate from the lowa
Department of Natural Resources, the balance will be paid to Mr. Blum.
In January of 2017, the City purchased the property per the terms of the purchase
agreement, paying Mr. Blum $100,000 at closing.
Recently, Mr. Blum communicated to the City that he would be willing to donate to the
City the $400,000 in the designated account for the City's use for cleanup and
redevelopment of the Property. Moreover, Mr. Blum has agreed in principal to the terms
of the attached amendment to the purchase agreement. As outlined therein:
1 . The City agrees to pay $500,000 for the purchase of the Property;
2. Mr. Blum acknowledges receipt of$100,000 previously paid by the City; and
3. Mr. Blum agrees that upon receipt of the balance of the purchase price in the
amount of$400,000, he will at the same time donate $400,000 to the City to be
used to redevelop the Property as determined by City in its discretion.
Although not addressed in the proposed Amendment, in recognition of the donation, Mr.
AI Blum has expressed an interest in memorializing his father, Morris Blum, who started
the metal recycling facility that AI Blum has been operating on the property for the past
several decades. City staff has conveyed that Mr. Blum's donation and subsequent
recognition, will be considered within the guidelines set forth by the America's River III
fundraising campaign. Mr. Blum's donation would represent the largest donation to
date.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
1t�.�1C1��'�*'1 +' Ks�r ������i .
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Crenna Brumwell, City Attorney
Teri Goodmann, Assistant City Manager
Cori Burbach, Assistant City Manager
Gus Psihoyos, City Engineer
Gary Dolphin, America's River III Honorary Chair
Sue Hafkemeyer, America's River III Honorary Chair
Norma Denlinger, America's River III Honorary Chair
2
' Dubuque
THE CITY OF � �
Au-A�eriea Cih
DuB E � � �� ���
I� � I�
MaSteY iece on t1Ze MisSisSi i Zoo�•zotz.zois
P pp zoi�*Zoi9
TO: Michael C. Van Milligen, City Mana e �-� r� � �
� .��,
FROM: Gus Psihoyos, City Engineer ,,._.,.--;__w �''�
DATE: December 12, 2019
SUBJECT: Bee Branch Creek Restoration Project, Phase 9: Flood Mitigation
Maintenance Facility, Acquisition of 411 E. 15'h Street
(CIP#3402609)
INTRODUCTION
The purpose of this memorandum is to request approval to amend the purchase
agreement for the acquisition of 411 E. 15th Street. Per the terms of the amendment, the
City will pay $500,000 for the purchase of the property. And upon receipt of the balance
of the purchase price in the amount of$400,000 (City previously paid $100,000 for the
property), Blum will at the same time donate $400,000 to the City of Dubuque to be
used by the City to redevelop the Property as determined by City in its discretion.
BACKGROUND
In 2011, the City commissioned a Phase I Environmental Site Assessment (Phase I
ESA) at 411 East 15th Street in Dubuque. The ESA revealed evidence of"the presence
or likely presence of hazardous substances or petroleum products on the Property
under conditions that indic�te an existing release, a past release or a material threat of
a release of hazardous substances or petroleum products into structures on the subject
site or into the ground, groundwater or surface water of the Property." Based on the
Phase I ESA, a further investigation was necessary to quantify the actual extent and
concentration of any contamination on the Property. Of concern were the former tannery
area, the area with lead spoil, and a buried underground storage tank. Therefore, also in
2011, a Phase I I Environmental Site Assessment (Phase II ESA) was commissioned.
The Phase II ESA identified "fairly widespread contamination by oil and lead on the
property in excess of the statewide standards. This does not indicate a regulatory
exceedance, but it provides an indication' of the areas of concern. Depending on the
future use of the property, areas of concern might need to be remediated." The
composite sampling provided an indication as to the areas and extent of�contamination.
The Phase II ESA also indicated that "additional sampling at specific areas of concern
would provide a more definitive analysis of the types and extent of contamination."
In February of 2014, the City Council adopted Resolution 31-14, authorizing the
execution of an agreement with the lowa Flood Mitigation Board necessary for the City's
receipt of$98,494,178.00 in sales tax increment funds for the Bee Branch Watershed
Project. Per the agreement, the City must construct the Flood Mitigation Maintenance
Facility (Phase 9 of the Bee Branch Watershed Flood Mitigation Project).
In June of 2014, the City Council adopted Resolution 172-14, approving the acquisition
of 411 E. 15t" Street for $500,000.00. The City's interest in 411 E. 15t�' Street is related
to the City's desire to establish the Flood Mitigation Maintenance Facility.
In June of 2016, utilizing funding through an EPA Brownfields Assessment Grant, a
Phase I ESA of the Property was conducted. In contrast to the 2011 ESAs which were
concentrated on recognized environmental conditions (RECs) associated with the soil
and groundwater, the 2016 ESAs identified RECs associated with the buildings and
contents therein such as "several 76-pound steel flask shipping containers of liquid
mercury in the first-floor office space of the main building . . . (that) were heavily
corroded . . . batteries, transformers, motors, and other automobile parts stored in
multiple locations on the subject property with associated staining on the ground, . . .
(and) hydraulic machinery that may contain PCBs (no "PCB-Free" labels were visible)
with associated staining on the subject property." In October of 2016, again utilizing
funding through an EPA Brownfields Assessment Grant, HR Green completed a Phase
II ESA of the Property. While the 2011 and 2016 ESA's both report on the presence of
petroleum/waste oil and metal related pollutants, the 2016 ESA indicated the presence
of Polychlorinated Biphenyl (PCBs). As a result, the 2016 Phase II ESA performed a
Cumulative Risk Evaluation determining that the cumulative cancer risk for a site
resident and a site worker and non-cancer risk for a site resident, site worker, and
construction worker are unacceptable. In other words, there is a cancer risk for the
employees of the scrap metal and industrial reclamation business currently operating at
the Property. And there are potential non-cancer related health risks to anyone who
would routinely enter onto the property.
Based on the discovery of additional environmental issues associated with the property
after entering into a purchase agreement for the property, the City negotiated an
amendment to the purchase agreement. In December of 2016, the City Council adopted
Resolution 416-16, approving the first amendment to the Purchase Agreement for 411
E. 15t" Street. The amendment established that:
1) The City would pay Mr. Blum $100,000 for the real estate at 411 East 15th Street,
Dubuque, IA versus the previously agreed upon price of$500,000;
2) The City would apply for U.S. EPA Brownfields Cleanup Grants in 2016 and in
2017 in an attempt to secure federal funding assistance to perform the
environmental cleanup required for the City's use of the property. The City was
successful in securing $200,000 in U.S. EPA Brownfields Cleanup Grant funding
for 501 E. 15th Street purchased from Mr. Blum in 2015 and was optimistic a
similar grant will be awarded for 411 E. 15t" Street. The City was successful in
securing $400,000 in U.S. EPA Brownfields Cleanup Grants for the 411 East 15tn
Street property;
3) The City would hold $400,000, previously intended for Mr. Blum, in a designated
account. The funds would be drawn by the City to pay for up to 50% of the cost
of environmental cleanup activities required, $300,000 unrelated to the buildings
and $100,000 related to the buildings, but only after any and all state or federal
2
�
grant funds s�cured by the City specifically for environmental cleanup activities
are exhausted. If there was a balance remaining in the designated account upon
the issuance of a No Further Action Certificate from the lowa Uepartment of
Natural Resources the balance will be paid to Mr. Blum. Regardless of the status
of cleanup activities, any remaining balance on October 1, 2020 will be paid to
Mr. Blum.
In January of 2017, the City purchased the property per the terms of the purchase
agreement, paying Mr. Blum $100,000 at closing.
The America's River III initiative was formed with local citizen volunteers and
businesses in 2010 to assist in raising funds for the now $232 million Bee Branch Creek
Watershed Mitigation project. At that time, few federal and state funding programs exist
to support local government in funding essential water infrastructure projects, especially
the size and scope of the Bee Branch Creek Restoration Project (Phase 4 & 7 of the
Bee Branch Watershed Flood Mitigation Project). It involved the resurrection of the
creek buried in a storm sewer and restoring its flood plain to mitigate flash flooding. In
doing so, the creek restoration project had the potential of creating a public amenity in
historic neighborhoods serving as a gateway to lowa and Dubuque from Wisconsin. The
significant scope of the project, its cost and proximity to the Mississippi River made it a
perfect candidate for state Vision lowa RECAT funding. Grant eligibility required a
public and private participation; Thus, the America's River III partnership was forged
between the City and the private sector. In September of 2018, the City Council
appr��oed �he �pdated America's River III fundraising campaign and associated naming
opportunities and giving levels.
DISCUSSION
Per the terms of the purchase agreement with the former owner of 411 E. 15h Street
(the Property), Mr. AI Blum, the City was holding $400,000, previously intended for Mr.
Blum, in a designated account. These funds were to be used by the City to help offset
the environmental cleanup activities, but only after any and all state or federal grant
funds secured by the City specifically for environmental cleanup activities were
exhausted. The balance remaining in the designated account following completion of
the cleanup activities was to be paid to Mr. Blum. Regardless of the status of cleanup
activities, any remaining balance on October 1, 2020 is to be paid to Mr. Blum.
Mr. Blum communicated to the City that he would be willing to donate to the City all of
the funds in the designated account for the City's use for cleanup and redevelopment of
the Property. Moreover, Mr. Blum has agreed in principal to the terms of the attached
amendment to the purchase agreement. As outlined therein:
1. The City agrees to pay $500,000 for the purchase of the Property;
2. Mr. Blum acknowledges receipt of $100,000 previously paid by the City; and
3. Mr. Blum agrees that upon receipt of the balance of the purchase price in the
amount of$400,000, he will at the same time donate $400,000 to the City to be
used to redevelop the Property as determined by City in its discretion.
3
The City is still working through the process of developing a final cleanup plan for the
Property, which requires working closely with the EPA. As such, the final cleanup plan is
not yet in place and anticipated cleanup costs are not established. Therefore, projecting
how much of the $400,000 the City would be required to pay Mr. Blum in October of
2020 is unclear. The proposed amendment to the agreement would eliminate any future
payments to Mr. Blum.
Although not currently addressed in the proposed Amendment, in recognition of the
donation, Mr. AI Blum has expressed an interest in memorializing his father, Morris
Blum, who started the metal recycling facility that AI Blum has been operating on the
property for the past several decades. City staff has conveyed that Mr. Blum's donation
and subsequent recognition, will be considered within the guidelines set forth by the
America's River III fundraising campaign. Mr. Blum's donation would represent the
largest donation to date.
RECOMMENDATION
I recommend that the City amend the Purchase Agreement for the acquisition of 411 E.
15t" Street such that the City will make a payment of$400,000 to Mr. Blum and at the
same time Mr. Blum will donate $400,000 to the City to be used to redevelop the
Property as determined by City in its discretion.
BUDGET IMPACT
The proposed amendment will not impact the budget as the additional $400,000 paid to
Mr. Blum to purchase the property will be offset by a donation in the same amount to
the City. In fact, the proposed amendment would eliminate the City's current obligation
to pay Mr. Blum up to $400,000 that remain unspent following cleanup activities or
unspent as of October of 2020.
REQUESTED ACTION
I respectfully request adoption of the attached resolution authorizing the Second
Amendment to the Purchase Agreement for 411 E. 15th Street and authorizing the City
Manager to negotiate the final terms of the amendment such that the City will make a
payment of$40Q,00� to Mr„ Blum and at thP same time Mr. Blum will donate $400,000
to the City to be used to redevelop the Property as determined by City in its discretion.
Attach.
Prepared by Deron Muehring
Cc: Crenna Brumwell, City Attorney
Barry Lindahl, Senior Counsel
Steve Sampson Brown, Project Manager
Deron Muehring, Civil Engineer II
4
RESOLUTION NO. 441-19
A RESOLUTION AMENDING THE PURCHASE AGREEMENT FOR THE
ACQUISITION OF REAL ESTATE OWNED BY BLUM PROPERTIES, INC. IN THE
CITY OF DUBUQUE
Whereas, the City of Dubuque required certain properties located in the area of
the Bee Branch Creek Restoration Project for stormwater mitigation activities as
recommended in the "Drainage Basin Master Plan;" and
Whereas, it was determined that property owned by Blum Properties, Inc. (Blum)
at 411 E. 15th Street (the Property) would provide the needed space to construct the
Bee Branch Watershed Flood Mitigation Maintenance Facility; and
Whereas, the City Council passed Resolution 172-14 approving the acquisition of
the Property for the Bee Branch Creek Restoration Project; and
Whereas, a purchase agreement was finalized with the Blum Properties ,
Inc., owner of the Property described as Lots 182, 182A, 183, 184, 185, 186, West
65' of Lots 217, 218, 219, 220, & 221, and East 35' of Lots 217, 218, 219, 220, & 221
all in East Dubuque Addition, in the City of Dubuque, Dubuque County, Iowa; and
Whereas, an environmental assessment was performed at the Property finding
contamination by oil and lead on the Property that provided an indication of the areas
of concern that, due to the City's proposed use of the property, would require
environmental cleanup; and
Whereas, Blum Properties, Inc. agreed to amending the terms of the Total
Acquisition Agreement (Purchase Agreement) reducing the purchase price to
$100,000 with $400,000 to be held by the City in a designated account to be drawn
by the City to pay for 50% of the environmental cleanup costs after any and all state
or federal grant funds secured by the City specifically for environmental cleanup
activities are exhausted with the funding that remains in the designated account to be
paid to Blum Properties, Inc. following cleanup activities but no later than October of
2020; and
Whereas, the City purchased the property in December of 2016, for $100,000; and
Whereas, -Blum Properties, Inc. has agreed to amending the terms of the Purchase
Agreement such that the City will make a payment of $400,000 to Mr. Blum and at
the same time Mr. Blum will donate $400,000 to the City to be used to redevelop the
Property as determined by City in its discretion; and
Whereas, it is in the best interest of the City to purchase the property per the terms
of the Second Amendment to the Purchase Agreement.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA THAT:
Section 1. The Second Amendment to the Purchase Agreement for 411 E. 15th Street
(Amendment) is hereby approved.
Section 2. The City Manager is authorized to negotiate the final terms, and execute the
Amendment such that the City will make a payment of $400,000 to Mr. Blum and at the
same time Mr. Blum will donate $400,000 to the City to be used to redevelop the Property
as determined by City in its discretion.
Passed, approved and adopted this 16th day of December 2019
0 .4 1'
Roy D. Buol, Mayor
Attest:
ee Affir
Kevi' S. irnstha(, CMC, City Clerk
SECOND AMENDMENT
TO
PURCHASE AGREEMENT
BETWEEN THE CITY OF DUBUQUE, IOWA
AND
BLUM PROPERTIES, INC. AND ALVIN BLUM
This Second Amendment to Purchase Agreement (the Purchase Agreement)
dated for reference purposes the day of , 2019, is made and entered
into by and between the City of Dubuque, lowa (Buyer), Blum Properties, Inc. and Alvin
Blum (Seller).
Whereas, Buyer and Seller entered into a Purchase Agreement fully executed
June 18, 2014, for Lots 182, 182A, 183, 184, 185, 186, 217, 218, 219, 220, 221 , all in
East Dubuque Addition, Dubuque, lowa (the Property), as amended by the First
Amendment to Purchase Agreement dated December 20, 2016; and
Whereas, the parties now agree to further amend the Purchase Agreement, as set
forth herein.
NOW, THEREFORE, IT IS AGREED BY AND BWTEEN THE PARTIES AS
FOLLOWS:
Section 1 . Paragraph 3 of the Purchase Agreement, as amended, is further
amended to read as follows:
3. Buyeragreesto pay Seller$500,000 forthe purchase ofthe Property. Seller
acknowledges receipt of $100,000 previously paid by Buyer. Blum agrees that
upon Seller's receipt of the balance of the purchase price in the amount of
$400,000, Blum will at the same time donate $400,000 to the City of Dubuque to
be used by the City to redevelop the Property as determined by City in its
discretion.
Section 2. All other terms and conditions of the Purchase Agreement, as
amended, shall remain in full force and effect.
BUYER: SELLER:
CITY OF DUBUQUE, IOWA BLUM PROPERTIES, INC.
By: By:
Gus Psihoyos, City Engineer Alvin Blum, President
By:
Alvin Blum