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Proposed Downtown Rehabilitation Grant Award for 801 Rhomberg Copyrig hted December 7, 2020 City of Dubuque Consent Items # 16. City Council Meeting ITEM TITLE: Proposed Downtown Rehabilitation GrantAward for801 Rhomberg Avenue SUM MARY: City Manager recommending approval of a Downtown Rehabilitation GrantAward to Kevin Scharpf forthe Fa�ade Grant, Planning & Design Grant, and Financial Consultant Grant. RESOLUTION Approving a GrantAgreement between the City of Dubuque, lowa and Offal Food Group, LLC for the redevelopment of 801 Rhomberg Avenue SUGGESTED Suggested Disposition: Receive and File;Adopt Resolution(s) DISPOSITION: ATTACHMENTS: Description Type Grant Agreement for 801 Rhomberg Avenue-MVM City Manager Memo Memo Staff Memo Staff Memo Agreement Supporting Documentation Resolution Resolutions Dubuque THE CITY OF � ui-Aseria cih DuB E , . � . , � II � Maste iece on tj2e 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: Proposed Downtown Rehabilitation Grant Award for 801 Rhomberg Avenue DATE: December 1, 2020 Economic Development Director Jill Connors recommends City Council approval of a Downtown Rehabilitation Grant Award to Kevin Scharpf in the amount of$30,000 for the Fa�ade Grant, Planning & Design Grant, and Financial Consultant Grant. Mr. Scharpf is planning to rehabilitate the former gas station a 801 Rhomberg Avenue into a chicken shack restaurant. The project is anticipated to add 15-20 new jobs in the community. The Good Neighbor inquiry on this owner and property produced no issues. I concur with the recommendation and respectfully request Mayor and City Council approval. v � Mic ael C. Van Milligen MCVM:jh Attachment cc: Crenna Brumwell, City Attorney Cori Burbach, Assistant City Manager Jill M. Connors, Economic Development Director Dubuque Economic Development Department THE CITY OF � 1300 Main Street All•America Eity Dubuque,lowa 52001-4763 �� � "h�N",`��nz�'��:�:��� Office(563)589-4393 1 I ��� TTY(563)690-6678 http://www.cityofd u bu q ue.org zoo�=zoiz*zo�3 Masterpiece on the Mississippi �oi�*Zoi9 TO: Michael C. Van Milligen, City Manager FROM: Jill M. Connors, Economic Development Director SUBJECT: Proposed Downtown Rehabilitation Grant Award for 801 Rhomberg Avenue DATE: December 1, 2020 INTRODUCTION This memo presents for your concurrence a project selected for a rehabilitation grant award for FY2021. BACKGROUND The Downtown Rehabilitation Loan Program provides several incentives from the Economic Development Department for the rehabilitation of historic buildings in our greater downtown. This program has had a positive impact on the appearance and livability of our downtown, which leads to a more attractive business and residential environment. The Economic Development Department also finds these programs to be great tools for attracting and retaining a quality workforce for our businesses. DISCUSSION For this property, staff have perFormed a "Good Neighbor Inquiry" with Building Services, Engineering, Finance, Health, Housing, Legal, Planning, Police, Public Works, and Utility Billing for any concerns based on these or other properties owned by the applicant. The Good Neighbor Inquiry on this owner and property produced no issues. Application received October 12, 2020 for the Fa�ade Grant, Planning & Design Grant, and Financial Consultant Grant. The building owner, Kevin Scharpf, will rehabilitate the former gas station into a unique chicken shack restaurant aptly named "Birds." The property is located in the heart of the North End of Dubuque and would add a valuable food option in a current food desert. The project is anticipated to add 15-20 new jobs in the community. Funding these farade, Planning & Design, and Financial Consultant Grants would align with the City Council's goal of Vibrant Community: Healthy and Safe. Agreement will require compliance with an attached design letter, provided by the Planning Department. BUDGETIMPACT A Developer has repaid early on the balance of a $300,000 downtown rehabilitation loan. We have requested the Budget Office allocate those funds to CIP 2411942 to partially fund this grant agreement. CIP USE CURRENT RECOMMENDED REMAINING BALANCE PROJECTFUNDING BALANCE 2411942 FA�ADE, ETC. $34,847 $19,087 $15,760 3602436 FA�ADE, ETC. $10,913 $10,913 - 3602438 HOUSING $1,970 - $1,970 3602267 HOUSING - - - This takes into consideration all encumbrances and previous balances from all the consolidated CIP budgets. I recommend funding the grants at $19,087 maximum from CIP 2411942 and $10,913 maximum from CIP 3602436, for a total of$30,000. RECOMMENDATION/ ACTION STEP I recommend approval of the proposed grant award in the amount detailed above. 2 GRANT AGREEMENT FOR THE DOWNTOWN REHABILITATION GRANT PROGRAM BETWEEN THE CITY OF DUBUQUE, IOWA AND OFFAL FOOD GROUP, LLC THIS GRANT AGREEMENT (the "Agreement"), dated for reference purposes the 7th day of December, 2020, by and between the City of Dubuque, Iowa a municipality established pursuant to the Code of Iowa ("City") and acting under the authorization of Chapter 403 of the Code of Iowa (the "Urban Renewal Act") and Offal Food Group, LLC ("Grant Recipient"). WHEREAS, in furtherance of the objectives of the Urban Renewal Act, City has undertaken a program for the development and redevelopment of an area in the city known as the Greater Downtown Urban Renewal District (the "District"), an urban renewal area established pursuant to the Urban Renewal Act, and in connection therewith has established the Downtown Rehabilitation Grant Program (the "Program"); and WHEREAS, Grant Recipient intends to complete the renovation and rehabilitation of a building located on property within the District locally known as 801 Rhomberg Avenue, Dubuque, Iowa (the "Development Property"), legally described as: Lot 1 of the Subdivision of Lot 42 in Cook's Addition to the City of Dubuque, Iowa, according to the recorded Plat thereof; Lot 2 of the Subdivision of Lot 42 in Cook's Addition to the City of Dubuque, Iowa, according to the recorded Plat thereof; The Southeasterly 95.53 feet of Lot 17 and the Southeasterly 95.53 feet of Lot 3 of the Subdivision of Lot 18, both in "Dreibelbis Addition, Dubuque" in the City of Dubuque, Iowa, according to the recorded Plat thereof; Lot 5 of the Subdivision of Lots 1 and 11, and Lot 1 of the Subdivision of Lot 1-A, in Lorimier's Subdivision of Out Lots 654 and 688 in the City of Dubuque, Iowa, according to the recorded Plat thereof; which will include various improvements to the building, as more specifically detailed in Grant Recipient's application to the Program (the "Project"); and WHEREAS, Grant Recipient has applied for a Fagade Grant, Planning & Design Grant, and a Financial Consultant Grant for the Project from City under the Program in amounts collectively up to Thirty Thousand Dollars ($30,000) (the "Grant"), the terms of which are set forth in this Agreement; and 120120bal WHEREAS, the City Council believes that the development of the Development Property pursuant to this Agreement and the fulfillment generally of this Agreement, are in the vital and best interests of City and in accord with the public purposes and provisions of the applicable state and local laws and requirements under which the Project has been undertaken and is being assisted. NOW THEREFORE, in consideration of the promises and obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: SECTION 1. MINIMUM IMPROVEMENTS. 1.1. Required Minimum Improvements. Grant Recipient shall improve the Development Property as follows: Exterior masonry walls will be repointed and reconstructed as needed, especially where steel lintels are falling over the former service bay doors and large storefront openings. Stucco on non-primary facades will be removed and underlying brick masonry will be repaired and repointed as necessary. New aluminum storefront entrances and windows will be installed to replace existing. Wood and siding infill at former service bay openings will be removed and replaced with large aluminum and glass overhead doors will be installed. The decorative mansard roofs will be cleaned and repainted. (the "Minimum Improvements"). The Minimum Improvements shall be completed in substantial conformity with the scope and scale described in Grant Recipient's Application to the Program attached hereto as Exhibit B. 1.2. Timinq of Minimum Improvements. Grant Recipient shall begin construction of the Minimum Improvements by December 1, 2020 and complete construction of the Minimum Improvements by April 15, 2021. City shall determine in its sole discretion, following an inspection by City's Building Services Department and/or Planning Department, when the Minimum Improvements have been completed. In order to be considered completed, the Minimum Improvements must be constructed in accordance with the terms of this Agreement, in compliance with the regulations of the Program, and in substantial conformity with Grant Recipient's Application Design Letter attached hereto as Exhibit A. 1.3 Certificate of Completion. Promptly following the request of Grant Recipient and upon determination by the City Manager that the Minimum Improvements have been completed as required by this Agreement, the City Manager shall furnish Grant Recipient with a Certificate of Completion in recordable form which shall be a conclusive determination of the satisfaction and termination of the agreements and covenants in this Agreement. 1.4. Construction of Minimum Improvements. Grant Recipient shall complete all work with respect to construction of the Minimum Improvements in conformance with all 2 requirements of the Program, this Agreement, and all federal, state, and local laws, ordinances, and regulations. 1.5. Insurance. (1) Grant Recipient shall provide and maintain or cause to be maintained at all times during the process of constructing the Minimum Improvements and at its sole cost and expense builder's risk insurance, written on a Completed Value Form in an amount equal to one hundred percent (100%) of the building (including Minimum Improvements) replacement value when construction is completed. Coverage shall include the "special perils" form and Grant Recipient shall furnish City with proof of insurance in the form of a certificate of insurance. (2) Upon completion of construction of the Minimum Improvements and up to the Termination Date, Developer shall maintain, or cause to be maintained, at its cost and expense property insurance against loss and/or damage to the building (including the Minimum Improvements) under an insurance policy written with the "special perils" form and in an amount not less than the full insurable replacement value of the building (including the Minimum Improvements), naming City as loss payee. Developer shall furnish to City proof of insurance in the form of a certificate of insurance. (3) The term "replacement value" shall mean the actual replacement cost of the building with Minimum Improvements (excluding foundation and excavation costs and costs of underground flues, pipes, drains and other uninsurable items) and equipment, and shall be reasonably determined from time to time at the request of City, but not more frequently than once every three (3) years. (4) Grant Recipient shall notify City immediately in the case of damage exceeding $50,000.00 in amount to, or destruction of, the Development Property or any portion thereof resulting from fire or other casualty. Net proceeds of any such insurance (Net Proceeds), shall be paid directly to Grant Recipient as its interests may appear, and Grant Recipient shall forthwith repair, reconstruct and restore the Development Property to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration, Grant Recipient shall apply the Net Proceeds of any insurance relating to such damage received by Grant Recipient to the payment or reimbursement of the costs thereof, subject, however, to the terms of any mortgage encumbering title to the Property, as its interests may appear. Grant Recipient shall complete the repair, reconstruction and restoration of the Development Property whether or not the Net Proceeds of insurance received by Grant Recipient for such purposes are sufficient. SECTION 2. FURTHER COVENANTS OF GRANT RECIPIENT. 3 2.1. Operation of Development Property; Housinq Vouchers. For and in consideration of the Grant offered under this Agreement, during the operation of the Development Property as a rental residential property, Grant Recipient shall accept, or cause to be accepted, applications from prospective tenants with housing vouchers issued under the U.S. HUD's Section 8 voucher program or a similar program who are otherwise qualified prospective tenants. Grant Recipient shall not deny any tenant a lease based on a public assistance source of income. A public assistance source of income means income and support derived from any tax supported federal, state or local funds, including, but not limited to, social security, supplemental security income, temporary assistance for needy families, family investment program, general relief, food stamps, and unemployment compensation, housing choice voucher subsidies and similar rent subsidy programs. This Section 4.2 shall survive the termination of this Agreement. If Grant Recipient, or Grant Recipient's successors or assigns violates the requirements of this Section 2.1 as determined by the City Manager in the City Manager's sole discretion after the termination of this Agreement, Grant Recipient or Grant Recipient's successors or assigns shall not be eligible for any City financial assistance programs. 2.2. Real Propertv Taxes. Grant Recipient shall pay or cause to be paid, when due, all real property taxes and assessments payable with respect to all and any parts of the Development Property. 2.3. No Other Exemptions. Until the Termination Date, Grant Recipient agrees not to apply for any state or local property tax exemptions, except for an application for urban revitalization tax abatement under lowa Code Chapter 404 and 427, which are available with respect to the Development Property or the Minimum Improvements located thereon that may now be, or hereafter become, available under state law or city ordinance during the term of this Agreement. 2.4. Non-Discrimination. In carrying out the Project, Grant Recipient shall not discriminate against any employee or applicant for employment or tenant because of race, religion, color, sex, sexual orientation, gender identity, national origin, age, or disability. SECTION 3. DOWNTOWN REHABILITATION GRANT PROGRAM. 3.1. Facade Grant. City agrees to provide a matching (1:1) grant not to exceed Ten Thousand Dollars ($10,000) to reimburse Grant Recipient for documented costs that improve the overall appearance of the Development Property, provided the Project as completed meets the criteria of the Farade Grant Program. 3.2 Planninq and Desiqn Grant. City agrees to provide a matching (1:1) grant not to exceed Nine Thousand Dollars ($10,000) to reimburse Grant Recipient for documented predevelopment costs, architectural and engineering fees and other authorized soft costs associated with the rehabilitation of the Property on the terms and conditions set forth in the attached Design Letter. 4 3.3 Financial Consultant Grant. City agrees to provide a matching (1:1) grant not to exceed Ten Thousand Dollars ($10,000) to reimburse Grant Recipient for documented costs related to hiring a financial consultant to evaluate the Project's feasibility on the terms and conditions set forth in the Financial Consultant Grant Program. 3.4. Pavment of the Grant. The Grant shall be payable as follows: (1) Any and all portions of the Grant shall be funded solely and only from available Program funds; (2) Prior to the release of any grant funds, (i) Grant Recipient shall have submitted documentation of its eligible expenses under the corresponding grant program, and (ii) City shall have issued a Certificate of Completion; and (3) The Grant funds shall be disbursed directly to Grant Recipient. SECTION 4. EVENTS OF DEFAULT; REMEDIES. 4.1. Events of Default Defined. Failure by Grant Recipient to substantially observe or perform any covenant, condition, obligation, or agreement on its part to be observed or perFormed under this Agreement shall be an "Event of Default." 4.2. Remedies on Default by Grant Recipient. Whenever any Event of Default occurs and is continuing, City, as specified below, may take any one or more of the following actions after the giving of written notice by City to Grant Recipient of the Event of Default, but only if the Event of Default has not been cured within thirty (30) days following such notice, or if the Event of Default cannot be cured within thirty (30) days and Grant Recipient does not provide assurances to City that the Event of Default will be cured as soon as reasonably possible thereafter: (1) City may suspend its perFormance under this Agreement, including suspension of the payment of any installment of the Grant to Grant Recipient, until it receives assurances from Grant Recipient deemed adequate by City, that Grant Recipient will cure its default and continue its performance under this Agreement; (2) City may terminate this Agreement; or (3) City may take any action, including legal, equitable, or administrative action, which may appear necessary or desirable to enforce perFormance and observance of any obligation, agreement, or covenant under this Agreement. 4.3. No Remed,v Exclusive. No remedy herein conferred upon or reserved to City is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair 5 any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. 4.4. No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by any other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. SECTION 5. MISCELLANEOUS. 5.1. Conflict of Interest. Grant Recipient represents and warrants that, to its best knowledge and belief after due inquiry, no officer or employee of City, or its designees or agents, nor any consultant or member of the governing body of City, and no other public official of City who exercises or has exercised any functions or responsibilities with respect to the Project during his or her tenure, or who is in a position to participate in a decision-making process or gain insider information with regard to the Project, has had or shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work or services to be performed in connection with the Project, or in any activity, or benefit therefrom, which is part of the Project at any time during or after such person's tenure. 5.2. Grants, Notices, and Demands. A grant payment, notice, demand, or other communication under this Agreement by any party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and (1) In the case of Grant Recipient, is addressed and delivered personally to Offal Food Group, LLC, 955 Washington, Suite 101, Dubuque, IA 52001; Attn: Kevin Scharpf; and (2) In the case of City, is addressed and delivered personally to the City of Dubuque at City Hall, 50 W. 13th Street, Dubuque, IA 52001; Attn: City Manager and City Attorney. or to such other designated individual or officer or to such other address as any party shall have furnished to the other in writing in accordance herewith. 5.3. Titles of Sections. Any titles of the several parts and Sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 5.4. Definitions. All capitalized terms used herein shall have the meaning defined herein, unless a different meaning clearly appears from the context. 5.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. 6 5.6. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Iowa. 5.7. Amendment. This Agreement may not be amended except by a subsequent writing signed by the parties hereto. 5.8. Successors and Assigns. This Agreement is intended to and shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. 5.9. Termination Date. This Agreement shall terminate and be of no further force or effect May 1, 2026, unless the Agreement is terminated earlier by the other terms of this Agreement. 5.10. No Third -Party Beneficiaries. No rights or privileges of either party hereto shall inure to the benefit of any landowner, tenant, contractor, subcontractor, material supplier, or any other person or entity, and no such landowner, tenant, contractor, subcontractor, material supplier, or any other person or entity shall be deemed to be a third -party beneficiary of any of the provisions contained in this Agreement. 5.11. Indemnification. Grant Recipient hereby agrees to defend, indemnify, and hold harmless City, its officer and employees, against any and all claims of any kind made by Grant Recipient or any third party relating to or arising out of this Agreement, including costs, expenses, or attorneys' fees. 5.12. No Assignment; Non -Transferability. Following the execution of this Agreement and until the Termination Date: (1) Grant Recipient represents and agrees that it will not transfer, convey or make any assignment of any of its rights or interests in the Development Property, Minimum Improvements, or this Agreement to any other party unless: (i) the transferee partnership, corporation, or individual assumes in writing all of the obligations of Grant Recipient under this Agreement, and (ii) City consents thereto in writing in advance thereof; and (2) Grant Recipient represents and agrees that it will not assign its rights or interests in this Agreement, including the Grant, to any other party unless City consents thereto in writing in advance thereof. CITY OF DUBUQUE, IOWA By: 'o.k'z Roy D. pfuiol, Mayor OFFAL FOOD GROUP, LLC Kevin Scharpf, Owner 7 ATTEST: /�, 1,6�4,94 Adrienne N. Breitfelder, City Clerk Prepared by: Jill Connors, Economic Development, 1300 Main Street, Dubuque IA 52001, 563 589-4393 Return to: Jill Connors, Economic Development, 1300 Main Street, Dubuque IA 52001, 563 589-4393 RESOLUTION NO. 352-20 APPROVING A GRANT AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND OFFAL FOOD GROUP, LLC FOR THE REDEVELOPMENT OF 801 RHOMBERG AVENUE Whereas, Offal Food Group, LLC is the owner of the building at 801 Rhomberg Avenue in the City of Dubuque, Iowa (the "Development Property"); and Whereas, Offal -Food Group,, LLC---has- applied --to the -City- of- Dubuque --Economic Development Department (the "City") for a Fagade Grant, Planning & Design Grant, and a Financial Consultant Grant (the "Grants") for the rehabilitation of the Development Property (the "Project"); and Whereas, the Project is eligible for the Grants; and Whereas, City and Offal Food Group, LLC have tentatively entered into a Grant Agreement for the Development Property (the "Grant Agreement"), a copy of which is attached hereto; and Whereas, it is the determination of the City Council that approval of the Grant Agreement for redevelopment of the Development Property by Offal Food Group, LLC, according to the terms and conditions set out in the Grant Agreement, is in the public interest of the City of Dubuque. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Grant Agreement between the City of Dubuque and Offal Food Group, LLC is hereby approved. Section 2. That the Mayor is hereby authorized and directed to execute the Grant Agreement on behalf of the City of Dubuque and the City Clerk is authorized and directed to attest to his signature. Section 3. That the City Manager is authorized to take such actions as are necessary to comply with the terms of the Grant Agreement as herein approved. Passed, approved, and adopted this 71" day of December 2020. "4- � 4-1 Roy D. ptuol, Mayor Attest: a" ✓/r &*ue'? Adrienne N. Breitfelder, City Clerk