Sustainable Neighborhood Builders Proposed Memorandum of Understanding_1079 Elm StreetMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Proposed Memorandum of Understanding with Sustainable Neighborhood
Builders, Inc.
DATE: June 2, 2010
Economic Development Director Dave Heiar recommends City Council approval of a
Memorandum of Understanding between the City and Sustainable Neighborhood
Building, Inc. to redevelop property located at 1079 Elm Street in downtown Dubuque.
The major elements of the Memorandum of Understanding include the following:
1. Endorse the approved application for Enterprise Zone Benefits, between
the Iowa Department of Economic Development, the Company and the
City Council.
2. The preparation of a Development Agreement to implement Tax
Increment Financing (TIF) for a 15 year period.
3. Approval of an application for up to $10,000 of grant funding per
residential unit created through the Downtown Incentive Program for
market rate rental properties. Required compliance with all the program
guidelines and regulations.
4. Applications for State and Federal Historic Tax Credits.
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5. The preparation and approval of loan documents for the Downtown
Rehabilitation Loan and Grant program. This will include a $300,000
Downtown Rehabilitation Loan, $10,000 Facade Grant, and a $10,000
Design Grant.
It should be noted that all the available funds in the downtown loan pool
are currently committed to other projects until FY 2025. If the loan pool is
recapitalized beyond the recapitalization amounts stated in the FY2011
Budget, it is possible to close on this loan prior to FY 2025. If no new
funds are provided to recapitalize this loan pool, and if all current loan
payments are received on time, this loan would commit the loan pool
resources until FY 2027.
6. Developer proposes to redevelop the Property located at 1079 Elm Street
into a mixed -use facility. The redevelopment will consist of renovating
84,000 sq. ft. of space into 75 housing units and 22,000 sq. ft. of
commercial space at a minimum investment of $18,000,000.
7. Developer proposes that Phase I of the Property will be fully redeveloped
and completed by July 1, 2011.
8. The Developer agrees to convey ownership in 10 and Washington
streets to the City at no costs and to sign a voluntary assessment
agreement for street improvements. The assessment will be forgiven if
the project is completed on schedule.
9. The Developer also agrees to sell the Developer's interest in City Lot 2 of
Center City Place in Dubuque (the Alamo site) to City at Developer's cost
plus holding costs. Developer will remove the cement block building on
Lot 2 at City's expense prior to closing. City will use Lot 2 to provide
municipal parking and a future plaza area.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
THE CITY OF
DUB UE MEMORANDUM
Masterpiece on the Mississippi
TO: Michael C. Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Department
SUBJECT: Proposed Memorandum of Understanding with Sustainable Neighborhood
Builders, Inc.
DATE: May 26, 2010
INTRODUCTION
The attached resolution provides for the approval of a Memorandum of Understanding
between the City and Sustainable Neighborhood Builders, Inc. to redevelop property
located at 1079 Elm Street in downtown Dubuque.
DISCUSSION
Sustainable Neighborhood Builders, Inc. is represented by Bob Johnson who owns the
1079 Elm Street property. Sustainable Neighborhood Builders, Inc. hopes to redevelop
the property located at 1079 Elm Street into a mixed -use facility. The redevelopment
will consist of renovating 84,000 sq. ft. of space into 75 housing units and a 22,000 sq.
ft. of commercial space at a minimum investment of $18,000,000.
To help finance the redevelopment, Johnson plans to access several public funding
sources. Johnson would like to gain access to the City's Downtown Rehabilitation Loan
Program, Facade Grant Program, and Design Grant Program which are only available
to properties within the Greater Downtown Urban Renewal District.
A Memorandum of Understanding (MOU) is a preliminary step that is sometimes
requested prior to entering into a development agreement. The MOU provides a
general summary and understanding of what will be put into the ultimate contract
(Development Agreement). The MOU does not obligate the Developer or the City to
any part of the understanding until or unless all necessary definite agreements are
entered into by both parties. In this particular situation, the Certified Development
Entities (CDE) that are considering providing New Market Tax Credits into this project,
have requested some formal indication of the City's potential role in redeveloping this
Millwork District property.
1079 Elm Street is also currently located in one of the City's Enterprise Zones which
makes available a refund of sales and use tax charged for materials in the renovation of
the building and an Iowa state tax credit equal to 10% of his investment in the project.
Johnson has received preliminary approval for assistance from the State to utilize this
program.
Johnson has submitted an application for up to $10,000 of grant funding per residential
unit created through the Downtown Incentive Program for market rate rental properties.
If approved, he will need to comply with all the program guidelines and regulations.
Johnson is also planning to use Tax Increment Financing (TIF) for a 15 year period to
fund this project as offered in the City's housing incentive program.
The Memorandum of Understanding spells out the condition that the City will assist in
accessing these funds if Johnson completes Phase I of the redevelopment of the
property by July 1, 2011.
The major elements of the Memorandum of Understanding include the following:
1. Endorse the approved application for Enterprise Zone Benefits, between
the Iowa Department of Economic Development, the Company, and the
City Council.
2. The preparation of a Development Agreement to implement Tax
Increment Financing (TIF) for a 15 year period.
3. Approval of an application for up to $10,000 of grant funding per
residential unit created through the Downtown Incentive Program for
market rate rental properties. Required compliance with all the program
guidelines and regulations.
4. Applications for State and Federal Historic Tax Credits.
5. The preparation and approval of loan documents for the Downtown
Rehabilitation Loan and Grant program. This will include a $300,000
Downtown Rehabilitation Loan, $10,000 Facade Grant, and a $10,000
Design Grant.
It should be noted that all the available funds in the downtown loan pool
are currently committed to other projects until FY 2025. If the loan pool is
recapitalized beyond the recapitalization amounts stated in the FY2011
Budget, it is possible to close on this loan prior to FY 2025. If no new
funds are provided to recapitalize this loan pool, and if all current loan
payments are received on time, this loan would commit the loan pool
resources until FY 2027.
6. Developer proposes to redevelop the Property located at 1079 Elm Street
into a mixed -use facility. The redevelopment will consist of renovating
84,000 sq. ft. of space into 75 housing units and 22,000 sq. ft. of
commercial space at a minimum investment of $18,000,000.
7 Developer proposes that Phase I of the Property will be fully redeveloped
and completed by July 1, 2011.
8. The Developer agrees to convey ownership in 10 and Washington
streets to the City at no costs and to sign a voluntary assessment
agreement for street improvements. The assessment will be forgiven if
the project is completed on schedule.
9. The Developer also agrees to sell the Developer's interest in City Lot 2 of
Center City Place in Dubuque (the Alamo site) to City at Developer's cost
plus holding costs. Developer will remove the cement block building on
Lot 2 at City's expense prior to closing. City will use Lot 2 to provide
municipal parking and a future plaza area.
RECOMMENDATION
I recommend the City Council review, discuss, and approve the Memorandum of
Understanding.
ACTION STEP
The requested action is for the City Council to adopt the attached resolution approving
the Memorandum of Understanding, and instructing the City Manager to prepare the
appropriate documents for City Council approval of the incentive package.
F: \USERS \Econ Dev \1079 Elm Street Novelty Iron\20100526 Council Memo for MOU.doc
Prepared by David J. Heiar City of Dubuque 50 West 13 Street Dubuque, IA 52001 (563) 589 -4393
RESOLUTION NO. 190 -10
A RESOLUTION APPROVING A MEMORANDUM OF UNDERSTANDING WITH
SUSTAINABLE NEIGHBORHOOD BUILDER'S INC. FOR THE REDEVELOPMENT
OF 1079 ELM STREET.
Whereas, Sustainable Neighborhood Builder's Inc. is proposing to redevelop
property located at 1079 Elm Street in the City of Dubuque, and
Whereas, the City is encouraging the Sustainable Neighborhood Builder's Inc. to
invest in the Dubuque Historic Millwork District, and
Whereas, a Memorandum of Understanding has been prepared for said
redevelopment,
NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF DUBUQUE,
IOWA, AS FOLLOWS:
Section 1. The attached Memorandum of Understanding is hereby approved.
Section 2. The City Manager is hereby directed to prepare documents necessary
to implement the Memorandum of Understanding
Passed, approved and adopted this 7 day of June, 2010.
ATTEST:
;a-7W/ -
eanne F. Schneider, City Clerk
F:\USERS\Econ Dev \1079 Elm Street Novelty Iron\20100602 Resolution MOU.doc
Roy D. Buol, Mayor
MEMORANDUM OF UNDERSTANDING
6/03/10
Whereas, Sustainable Neighborhood Builders, Inc., a local developer wishes to
redevelop property owned by it and located at 1079 Elm Street (the Property) into a
Mixed -Use facility; and
Whereas, the Property is currently located within the Greater Downtown Urban
Renewal District making the Property eligible for various financial incentives; and
Whereas, the City of Dubuque (City) believes this project will be beneficial to the
community; and
Whereas, City and Sustainable Neighborhood Builders, Inc. (Developer) desire to
enter into further discussions concerning the Property's eligibility for various financial
incentives, the parties propose the following:
1. Developer proposes to redevelop the Property located at 1079 EIm Street into a
mixed -use facility. The redevelopment will consist of renovating 84,000 sq. ft. of
space into 75 housing units and 22,000 sq. ft. of commercial space at a.minimum
investment of $18,000,000.
2. Developer proposes that Phase One of Property will be fully completed by July 1,
2011.
3. In consideration for Developer's intentions as described in Paragraphs 1 and 2,
City proposes to make the following incentive package available to Developer:
The Downtown Rehabilitation Loan Program, Facade Grant Program, and
Design Grant Program. The amount of funding from each of these
programs the Property would be eligible for are as follows:
$300,000 Downtown Rehabilitation Loan;
$10,000 Facade Grant; and
$10,000 Design Grant
The first 5 years of the Downtown Rehabilitation loan will be interest only
payments. Interest rate will be 3 %. Principal and interest payments begin
in year 6 and the principal will be amortized over 15 years. A $2,000 credit
will be given for every job or housing unit created within two years of the
execution of the binding development agreement and maintained for a
three year period. Anticipated funding of the Downtown Rehabilitation
Loan is FY2025.
• Enterprise Zone Benefits: These benefits include a refund of sales and
use tax charged for materials in the renovation of the building and an Iowa
state tax credit equal to 10% of Developer's investment in the project,
subject to approval of the State of Iowa and the City of Dubuque
Enterprise Zone Commission.
• Tax Increment Financing (TIF) for a 15 -year period.
• Up to $10,000 of grant funding per residential unit created through the
Downtown Incentive Program for market rate rental properties. The
Developer will need to comply with all the program guidelines and
regulations.
4. Developer agrees to convey ownership in 10 and Washington Streets to the
City at no costs and to sign a Voluntary Assessment Agreement for street
improvements. The assessment will be forgiven if the project is completed on
schedule.
5. Developer will sell City Lot 2 of Center City Place in Dubuque (the Alamo site) to
City at Developer's cost plus holding costs. Developer will remove the cement
block building on Lot 2 at City's expense prior to closing.
City will use Lot 2 to provide municipal parking and a future plaza area.
6. Developer acknowledges that in order for City to secure such incentives, certain
requirements are imposed upon Developer as specified in the respective
program regulations. Developer agrees to cooperate with City, the State of Iowa,
and the United States Department of Housing and Urban Development, by
providing the information and documents necessary for the approval of loans and
applications for financial assistance described herein. Developer will certify that
all property in the City of Dubuque owned by Developer or in which Developer
has any interest, other than the Property, complies with all applicable City of
Dubuque ordinances and regulations, including, but not limited to, housing,
building, zoning, fire health, and vacant and abandoned building regulations.
2
7. Notwithstanding any other provision of this Memorandum of Understanding, City
shall have no obligation whatsoever to Developer nor shall Developer have any
obligation whatsoever to City under this Memorandum of Understanding in part
or in whole until and unless all necessary definitive agreements are entered into
between Developer and City and approved by the City Council and the
Developer's appropriate officers and the Developer has proven to the City that all
financing needed for this project is secured. Neither the City Council nor the
Developer's officers are under any legal obligation to approve such agreements.
Approved this 7 day of June, 2010 by and between Sustainable Neighborhood
Builders, Inc., and the City of Dubuque, Iowa.
SUSTAINABLE NEIGHBORHOOD
BUILDER'S, INC.
Robert L. Jo son, President
J U/ //
Robert L Joh - n, Secretary
3
CITY OF DUBUQUE, IOWA
dZ Etc=,/
Roy D. Viol, Mayor
-anne F. Schneider, City Clerk
F: \USERS \Econ Dev \1079 Elm Street Novelty Iron\20100603 MOU Sustainable Neighborhood Builders_060310.doc