Workforce Housing Funding Application_Historic Millwork DistrictMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Application for Workforce Housing Funding
DATE: May 12, 2010
Dubuque
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All- Amdlca
2007
Over the past several months, City staff and many partners have met with
representatives of the Iowa Finance Authority (IFA) and the Iowa Department of
Economic Development (IDED) to stress the City's critical need for rental workforce
housing. On a couple of occasions, IFA and IDED staff have traveled to Dubuque to
see, first hand, the housing needs and potential opportunities, particularly in the Historic
Millwork District, to address this workforce housing need.
Earlier this week, IFA created a pool of funds to establish a low- interest loan program to
assist in the creation of workforce housing, defined as 120% of area median income
($52,560) and below. City staff proposes that Dubuque submit an application for
consideration by the IFA Board. The major elements of the application would be:
• Request $4.5 million to establish a local revolving loan fund to assist
redevelopment of the Historic Millwork District.
• Loan terms: 20 year loan — 10 years interest only at 3 %; 10 years principal and
interest at 3% - 20 year amortization.
• Dubuque loan pool would be loaned to Millwork developers on terms negotiated
by the City. Loan repayments can be used by the City to make additional loans
during the 20 year term.
• At least 50% of the completed units developed with loan proceeds will be rented
to families whose annual income is no more than 120% of the area median
income (today that equates to $52,560).
• The IFA loan would be secured by the full faith and credit of the City's general
obligation bonding authority.
• The loan can be repaid at any time without penalty.
Economic Development Director Dave Heiar recommends City Council approval of the
submission of an application to IFA for $4.5 million to establish a local revolving loan
fund to create workforce and market rate housing in the Historic Millwork District.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
MicI ael 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
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director
SUBJECT: Application for Workforce Housing Funding
DATE: May 14, 2010
Dubuque
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7
2007
INTRODUCTION
The City has been working with the Iowa Finance Authority (IFA) to create a state pool of
funding to address the shortage of workforce housing. On May 12 the IFA Board established
this funding program.
BACKGROUND
Over the past several months, City staff and many of our partners have met with representatives
of the IFA and the Iowa Department of Economic Development (IDED) to stress the City's
critical need for rental workforce housing. On a couple of occasions, IFA and IDED staff have
traveled to Dubuque to see, first hand, our housing needs and potential opportunities,
particularly in the Historic Millwork District, to address this workforce housing need.
Housing has become a significant issue in Dubuque since IBM has decided to locate their 1,300
employee Global Service Delivery Center. A lack of rental housing has caused trouble for new
residents to find a place to live. In March 2010, the Greater Dubuque Development Corporation
(GDDC) discovered a 1% vacancy rate within Dubuque.
A study was conducted for IFA in November 2009 to determine the additional need for housing
within Dubuque. The study showed an additional 556 housing units are needed in the area,
noting the most desirable units being in the downtown core area. The Millwork District would be
a large scale project able to fulfill much of the needed demand for rental housing.
Even prior to the IBM announcement, the City had studies that indicated a need for additional
downtown housing. The consultants who prepared the Master Plans for the Port of Dubuque,
the Downtown and the Historic Millwork District emphasized the need for downtown housing.
A solution is needed soon for this housing shortage because other companies in Dubuque are
also starting to increase their employment numbers. Companies have started to see challenges
in recruiting a qualified workforce because housing is unavailable in the area. The Millwork
District property owners are positioned to act quickly on their projects, if financing can be
secured to fill current proforma gaps. This loan program from IFA would provide additional
funding for these projects.
DISCUSSION
Earlier this week, IFA created a pool of funds to establish a low- interest loan program to assist
in the creation of workforce housing. City staff proposes that Dubuque submit an application for
consideration by the IFA Board. The major elements of our application would be as follows:
• Request $4.5 million to establish a local revolving loan fund to assist redevelopment of
the Historic Millwork District.
• Loan terms: 20 year loan — 10 years interest only at 3 %; 10 years principal and interest
at 3% - 20 year amortization.
• Dubuque loan pool would be loaned to Millwork developers on terms negotiated by the
City. Loan repayments can be used by the City to make additional loans during the 20
year term.
• At least 50% of the completed units developed with loan proceeds will be rented to
families whose annual income is no more than 120% of the area median income (today
that equates to $52,560).
• The IFA loan would be secured by the full faith and credit of the City's general obligation
bonding authority.
• The loan can be repaid at any time without penalty.
It should be noted that there is always some risk to the City when providing a loan guarantee.
The City has previously accepted grants and /or loans to assist local projects, but not on this
scale. The City previously agreed to a $500,000 loan from the IFA to assist the White Street
condominium project. This was also a loan to the City, which in turn was loaned to the
developer. The City also assisted the Dubuque County Historical Society with the National
Mississippi River Museum expansion project. The federal government committed $5 million of
National Scenic Bylaws /SAFETEA -LU funding toward this expansion. The City was required to
provide this funding upfront and was reimbursed by the federal government. In the event of a
default, the City was obligated to repay the grant.
If approved, it is the intent to have the City loan these funds to Millwork District projects that
have all other necessary financing in place to complete the projects. Conventional financing
commitments from financial institutions, commitments for tax credits, and other financial
commitments will need to be realized before closing a deal with any local developer from our
revolving loan pool. While the City will negotiate for some collateral on the loan, it is known that
this will not be a 100% first mortgage.
It should also be noted that if the IFA Board approves the City's application for a loan, the City
Council would still be required to hold a public hearing prior to authorizing the contract (loan
agreement) with the State of Iowa.
RECOMMENDATION /ACTION STEP
To request that the City Council approve the attached resolution authorizing submission of an
application to the IFA for $4.5 million dollars to establish a local revolving loan fund to create
workforce housing in the Historic Millwork District.
F: \USERS\Econ Dev \IFA Workforce Housing\20100514 App IFA Workforce Housing Memo to Council.doc
RESOLUTION NO 164 -10
A RESOLUTION AUTHORIZING THE FILING OF AN APPLICATION WITH THE IOWA
FINANCE AUTHORITY (IFA) ON BEHALF OF THE CITY OF DUBUQUE TO ESTABLISH
A LOCAL REVOLVING LOAN FUND FOR WORKFORCE AND MARKET RATE
HOUSING IN THE HISTORIC MILLWORK DISTRICT.
Whereas, the City has been working with the Iowa Finance Authority to create a
state pool of funding to address the shortage of workforce housing; and
Whereas, the Iowa Finance Authority has established a pool of funds to
establish a low interest loan program to assist in the creation of workforce housing; and
Whereas, the low interest loan program would provide funds to assist Millwork
District projects in creating workforce (120% of area median income and below) and
market rate housing; and
Whereas, the City of Dubuque, Iowa is eligible to apply for funding from the Iowa
Finance Authority.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. That the filing of an application to establish a local revolving loan fund
for workforce housing is hereby approved.
Section 2. That the City Manager is hereby directed to submit said application to the
Iowa Finance Authority together with such documents as may be required.
Passed, approved, and adopted this 17 day of Mi, 2010.
Attest:
eanne Schneider, City Clerk
F: \USERS \Econ Dev \IFA Workforce Housing\20100514 Resolution Submit App IFA Funding.doc
Roy D. Buol, Mayor