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Dubuque Bank and Trust, CDC - Engine House #1 Settlement Copyrig hted November 16, 2020 City of Dubuque Action Items # 2. City Council Meeting ITEM TITLE: Dubuque Bankand Trust, CDC - Engine House #1 Settlement Agreement and Release SUM MARY: CityAttorney recommending approval of the Dubuque Bank& Trust Community Development Corporation Settlement Agreement and Release. SUGGESTED Suggested Disposition: Receive and File;Approve DISPOSITION: ATTACHMENTS: Description Type Staff Memo Staff Memo Settlement Agreement& Release Supporting Documentation Dubuque THE CITY OF � A�-Aseriea Ciry Du B E .�r:.��,��,..L� ;� � , II 2007•2012*2013 Masterpiece on the Mississippi �oi�*2019 CRENNA M . BRUMWELL , E Q,, CITY ATTORNEY TO: MAYOR ROY D. BUOL AND MEMBERS OF THE CITY COUNCIL DATE: NOVEMBER 6, 2020 RE: DUBUQUE BANK &TRUST COMMUNITY DEVELOPMENT CORPORATION SETTLEMENT AGREEMENT AND RELEASE Almost ten (10)years ago the City sought to have the historic Engine House at the Central Avenue curve rehabilitated. As the City was not eligible for tax credits, Dubuque Bank & Trust, Community Development Corporation (DB&T CDC) acquired and rehabilitated the building utilizing historic tax credits, a loan from the City of Dubuque, and its own funds. The original tenants were a division of the Crescent Community Health Center and Head Start. Crescent Community Health Center has now consolidated all its services under one roof and no longer occupies the Engine House. Head Start remains a tenant. The Development Agreement, Loan Agreement, Mortgage, and Promissory Note between DB&T CDC and the City would require repayment of the City loan by DB&T CDC I beginning next year following an accounting of a number of financials indicated in the Development Agreement. Due to significant changes in staffing at the DB&T CDC and the City of Dubuque most of the parties who negotiated the agreements have retired or left their respective organizations. One thing we are sure of, it always had been the desire of the City to reacquire this property when all of the federal and state tax credit obligations expired. This historic structure was originally a city fire station and serves as an anchor property for the redevelopment of the Central Avenue Corridor. The city greatly appreciates that the DB&T CDC took on the rehabilitation as the City would not have been able to access all of the same funding mechanisms and the rehabilitation would have cost the City much more if the DB&T CDC had not stepped in to help. Representatives of the City and Dubuque Bank & Trust have been meeting periodically ' over the last year to discuss a resolution of the situation that is mutually satisfactory. The parties have agreed to a compromise Settlement Agreement and Release which includes the following: OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA SUITE 330, HARBOR�/IEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001-6944 TE�EPHorvE (563)589-4381 /F,vc (563)583-1040/EMai� cbrumwel@cityofdubuque.org I 1) DB&T CDC deeds the Engine House to the City 2) DB&T CDC pays City $450,000 in cash 3) DB&T CDC assigns any leases in Engine House to City 4) DB&T CDC releases any and all claims it may allegedly have against City for the DB&T CDC out of pocket beyond the City loan and tax credits received for the project 5) City releases its mortgage and lien to DB&T CDC. 6) City returns the Promissor_y Note to DB&T CDC. 7) Both parties mutually release all claims against the other I recommend approval of the Settlement Agreement and Release by the City Council, providing the City Manager with the authority to sign any documents necessary to effectuate the terms of the Settlement Agreement and Release. 2 SETTLEMENT AGREEMENT AND RELEASE This Settlement Agreement and Release (this "Agreement") is entered into as of November 16, 2020, by and between the CITY OF DUBUQUE, IOWA (City) and DUBUQUE BANK AND TRUST, CDC (CDC) a/k/a DB&T Community Development Corp. ("the Parties"). BACKGROUND WHEREAS, City desired to redevelop an underutilized property known locally as ENGINE HOUSE # 1 and entered into a Development Agreement between City and Engine House 41, LLC. Dated June 6, 2011 (the "Development Agreement"); WHEREAS, Engine House 41, LLC was unable to perform its obligations under said Development Agreement; WHEREAS, City intending to improve the Washington Street neighborhood by developing the said property, solicited CDC to perform some of the obligations of Engine House #1, LLC; WHEREAS, said Development Agreement was assigned to CDC, which tools title as necessary to complete the project, which included meeting all designs and specifications to restore said property and make it fully functional for tenants identified to lease the space by the City. WHEREAS, the Parties have disputed the terms of the Development Agreement as well as a certain Loan Agreement dated March 5, 2012 (the "Loan Agreement"); and made demands on each other that have not been met and claims disputed, which include the CDC contribution of $457,737.00 cash in order to complete the project and open the doors which was not mentioned in the Development Agreement or the Loan Agreement, and the proper use of depreciation expense to calculate net revenue (collectively the "Dispute"); all of which can only be resolved by lawsuit which will be costly to the Parties and delay City's efforts at neighborhood improvement described herein. WHEREAS, City wishes to have title returned to City for Engine House 91 described as: Lot 1 of Engine House No 1 Subdivision in the City of Dubuque, Iowa ("the Property") in order to control it and thereby continue its original intent that this be an anchor for continued, future development and improvement of the Washington Street neighborhood. City refuses to acknowledge CDC's claim of $457,737.00, allowance of depreciation and various terms of the Loan Agreement. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and intending to be legally bound hereby,the Parties hereby agree as follows: AGREED TERMS 1. Consideration. a. CDC will pay$450,000 in cash("Cash Settlement")paid by deposit into City's account; and b. CDC will release its disputed claim for cash to complete the project in the amount of$457,737; and c. CDC will deliver of a quit claim deed conveying title to City; and d. Assigning the eXisting lease to City. e. City shall release its mortgage lien and return the Promissory Note to CDC promptly upon City Council approval of this Settlement Agreement and Release. f. The Parties agree that the Consideration and the Release of City provided below shall fully compensate City and satisfy any claimed obligation under the Development Agreement, its assignment, the Promissory Note, Mortgage and Loan Agreement. 2. Fees. The Parties acknowledge and agree that they are solely responsible for paying any attorneys' fees and costs they incurred and that no Party nor its attorney(s) will seek any award of attorneys' fees or costs from the other Parties. 3. Mutual Release. The Parties, on behalf of themselves, their predecessors, successors, direct and indirect parent companies, direct and indirect subsidiary companies, companies under common control with any of the foregoing, participants, affiliates and assigns, and its and their past, present, and future officers, council members, directors, shareholders, interest holders, members, partners, attorneys, agents, insurers, indemnitors, contractors, employees, managers, representatives, assigns, and successors in interest, and all persons acting by, through, under, or in concert with them, and each of them (each a "Releasing Party"), hereby release and forever discharge all other Parties, together with their predecessors, successors, direct and indirect parent companies, direct and indirect subsidiary companies, companies under common control with any of the foregoing, participants, affiliates and assigns and its and their past, present, and future officers, directors, shareholders, interest holders, members, partners, attorneys, agents, insurers, indemnitors, contractors, employees, managers, representatives, assigns and successors in interest, and all persons acting by,through,under or in concert with them,and each of them (each a "Released Party"), from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which such Releasing Party has had, now has or has made claim to have against any such Released Party for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Agreement arising out of the Development Agreement, its 2 assignment, the Loan Agreement or connected in any way to the Dispute and the Property, whether such claims, demands and causes of action are matured or unmatured or known or unknown. The Releasing Parties hereby absolutely, unconditionally and irrevocably, covenant and agree with and in favor of each Released Party above that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Released Party on the basis of any claim released, remised and discharged by such Releasing Party pursuant to the above release. This Agreement resolves any claim for relief that could have been alleged, no matter how characterized, including, without limitation, compensatory damages, damages for breach of contract, bad faith damages, reliance damages, liquidated damages, punitive damages, costs and attorneys' fees related to or arising from the Dispute and the Property. 4. No Outstanding or Known Future Claims/Causes of Action. Each Party affirms that it has not filed with any governmental agency or court any type of action or report against any of the other Parties, and currently knows of no existing act or omission by the other Parties that may constitute a claim or liability excluded from the release in paragraph 3 above. 5. Acknowledgment of Settlement. The Parties acknowledge that(i)the Consideration set forth in this Agreement, which includes, but is not limited to, the Settlement Payment, is in full settlement of all claims or losses of whatsoever kind or character that they have, or may ever have had, against the other Parties, as broadly described in paragraph 1 above, including by reason of the Dispute and the Property and(ii)by signing this Agreement, and accepting the Consideration provided herein and the benefits of it, they are giving up forever any right to seek further monetary or other relief from the other Parties,for any acts or omissions up to and including the date on which this Agreement is executed by all Parties, including, without limitation, the Dispute and the Property. 6. No Admission of Liabilitv. The Parties agree that neither admits any liability to the other by entering into this Agreement, delivering any documents or by the Settlement Payment. 7. ApprovaL The Parties agree this Agreement cannot be final until it is approved by the City of Dubuque City Council. 8. Entire A�reement. The recitals set forth at the beginning of this Agreement are incorporated by reference and made a part of this Agreement. This Agreement constitutes the entire agreement and understanding of the Parties and supersedes all prior negotiations and/or agreements, proposed or otherwise, written or oral, concerning the subject matter hereo£ Furthermore, no modification of this Agreement shall be binding unless in writing and signed by each of the parties hereto. 9. New or Different Facts: No Effect. Except as provided herein,this Agreement shall be, and remain, in effect despite any alleged breach of this Agreement or the discovery or existence of any new or additional fact, or any fact different from that which either Party 3 now knows or believes to be true. Notwithstanding the foregoing, nothing in this Agreement shall be construed as, or constitute, a release of any Party's rights to enforce the terms of this Agreement. 10. Interpretation. Should any provision of this Agreement be declared or be determined by any court to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part,term or provision shall be deemed not to be a part of this Agreement. The headings within this Agreement are purely for convenience and are not to be used as an aid in interpretation. Moreover,this Agreement shall not be construed against either Party as the author or drafter of the Agreement. 11. Governin� Law and Choice of Forum. This Agreement is made and entered into within and shall be governed by, construed, interpreted and enforced in accordance with the laws of the State of Iowa, without regard to the principles of conflicts of laws. Any action to enforce this Agreement shall be brought only in state court in Dubuque County, Iowa. 12. Reliance on Own Counsel. In entering into this Agreement, the Parties acknowledge that they have relied upon the legal advice of their respective attorneys, who are the attorneys of their own choosing,that such terms are fully understood and voluntarily accepted by them, and that, other than the Consideration set forth herein, no promises or representations of any kind have been made to them by the other Party. The Parties represent and acknowledge that in executing this Agreement they did not rely, and have not relied,upon any representation or statement,whether oral or written,made by the other Party or by that other Party's agents,representatives or attorneys with regard to the subject matter, basis or effect of this Agreement or otherwise. 13. Counterparts. This Agreement may be executed in several counterparts as deemed necessary or convenient, each of which, when so executed, shall be deemed an original, provided that all such counterparts shall be regarded as one and the same document, and any party to this Agreement may execute this Agreement by executing a counterpart hereof. The delivery of a facsimile, pdf or other digital copy of an executed counterpart of this Agreement shall be deemed to be valid execution and delivery of this Agreement, but the party delivering a facsimile, pdf or other digital copy shall deliver an original copy of this Agreement as soon as possible after delivering the facsimile or other digital copy. 14. Authority to EXecute Agreement. By signing below, each Party warrants and represents that the person signing this Agreement on its behalf has authority to bind that Party and that the Party's eXecution of this Agreement is not in violation of any By-law, Covenants and/or other restrictions placed upon them by their respective entities. [SIGNATURE PAGE FOLLOWS] 4 IN WITNESS WHEREOF, and intending to be legally bound, each of the Parties hereto has caused this Agreement to be executed as of the date(s) set forth below. THE CITY O DUBUQUE By: D Typed Name: Roy D. Buol Title: Mayor, City of Dubuque Dated: November 16, 2020 DUBUQUE BANK & TRUST CDC a/k/a DB&T Community Development Corp. By. Typed Name: Michael J. Coyle Title: Heartland EVP, Senior General Counsel Dated: October 27, 2020 Doc ID: 010637410001 Type: GEN Kind: QUIT CLAIM DEED Recorded: 12/10/2020 at 04:19:35 PM Fee Amt: $12.00 Page 1 of 1 Revenue Tax: $0.00 Dubuque County Iowa John Murphy Recorder File2020-00019743 QUIT CLAIM DEED Taxpayer: Adrienne N. Breitfelder, City of Dubuque, 50 W. 13th Street, Dubuque, IA 52001 Preparer: Edward F. Henry, 890 Main Street, Suite 200, Dubuque, Iowa 52001, Phone: (563) 556-4011 For the consideration of One Dollar(s) and other valuable consideration, DB&T Community Development Corp, an Iowa corporation does hereby Quit Claim to the City of Dubuque, Iowa, a municipal corporation of the State of Iowa, all its right, title, interest, estate, claim and demand in the following described real estate in Dubuque County, Iowa: This deed is exempt according to Iowa Code 428A.2(6). Lot 1 of Engine House No. 1 Subdivision in the City of Dubuque, Iowa, according to the recorded plat thereof, Each of the undersigned hereby relinquishes all rights of dower, homestead and distributive share in and to the real estate. Words and phrases herein, including acknowledgment hereof, shall be construed as in the singular or plural number, and as masculine or feminine gender, according to the context. Dated: December 9, 2012. r Michael J. Coyle, as Heartlan' VP, S for General Counsel, for Dubuque Bank & Trust CDC a/k/a DB&T Community Development Corp, Grantor STATE OF IOWA, COUNTY OF DUBUQUE This record was acknowledged before me on Nf,Lc L 1.'. , A6At7 , by Michael J. Coyle, as Heartland EVP, Senior General Counsel, of Dubuque Bank & Trust CDC a/k/a DB&T Community Development Corp. fiRACE_Y L. STECKLEN Commission Number 716016 owe ;-My Comm. Exp. 4?'))-2—S ©The Iowa State Bar Association 2019 IowaDocs® Signature of No ry Public �d Form No. 106, Quit Claim Deed Revised February 2019 1� CX NR City Clerk Doc ID: 010637420002 Type: GEN Kind: RELEASE OF MORTGAGE Recorded: 12/10/2020 at 04:19:57 PM Fee Amt: $12.00 Paqe 1 of 2 Dubuque County Iowa John Murphy Recorder Fi1e2020_00019744 Arl RELEASE OF REAL ESTATE MORTGAGE THE IOWA STATE BAR ASSOCIATION Official Fonn No. 129 Recorder's Cover Sheet fT Preparer Information: (Name, address and phone number) Crenna M. Brumwell, City of Dubuque City Attorney 300 Main Street, Suite 330 Dubuque,1A 52001 (563)589-4381 Taxpayer Information: (Name and complete address) DB&T Community Development Corp. 1398 Central Avenue Dubuque, IA 52001 Return Document To: (Name and complete address) DB&T Community Development Corp. 1398 Central Avenue Dubuque, IA 52001 Grantors - City of Dubuque, Iowa Grantees: DB&T Community Development Corp. Legal description: Document or instrument number of previously recorded documents: 2012-00003711 0 The Iowa State Bar Association 2020 IOWADOCS® 1200 DBQ Ch Clerk LEASE OF REAL ESTATE MORTGAGE The undersigned, the present owner(s) of the mortgage hereinafter- described, do hereby acknowledge that a certain mortgage bearing date of March 5, 2012 made and executed by DB&T Community Development Corp. to City of Dubuque, Iowa _ and Recorded in the records of the office of the Recorder of the County of Dubuque State of Iowa, recorded as document reference number 2012-00003 i 11 on March 7 2012 is redeemed, paid off, satisfied and discharged in fill. Words and phrases herein, including acknowledgment hereof, shall be construed as in the singular or plural number, and as masculine, feminine or neuter gender, according to the context. Dated December 9.2020 NOTE: For partial release of real estate mortgage, see Form No.130 Michael C. Van Milliben City of Dubuque City Manager STATE OF IOWA , COUNTY OF —DUBUQUE This record • - • •efore me on Walljby �� `•P TRACEY L. STECKLEIN s- Commission Numbrr 16016 oar My Comm Exp. ��(( STATE OF , COUNTY OF This record was acknowledged before me on LI Signature of Notary Public (c0 The Iowa State Bar Association 2020 Form No. 129, Release of Real Estate Mortgage IowaDoes® Revised January 2016