Cooper Devel Loan Subord AgreeMEMORANDUM
July 14, 2003
TO:
FROM:
SUBJECT:
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
Public Headng on Subordination Agreement
Dubuque Bank & Trust for Cooper Development Company's
Downtown Rehabilitation Loan
Economic Development Director Bill Baum recommends City Council approval of a
Subordination Agreement with Dubuque Bank & Trust Company related to the city's
mortgage interests associated with Cooper Development Company's $300,000
Downtown Rehabilitation Loan.
Cooper Development plans to complete renovation of the 3rd and 4th floors, which
necessitates increasing its bank loan with Dubuque Bank & Trust. A recent appraisal
commissioned by the bank indicates the after-rehab value of the building and
improvements will be more than the outstanding combined bank and city debt.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen ~
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
William Baum, Economic Development Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
July 14, 2003
TO:
FROM:
SUBJECT:
Michael Van Milligen, City Manager
William Baum, Economic Development Director ~'~
I '
Public Hearing on Subordination Agreement
Dubuque Bank & Trust for Cooper Development Company's
Downtown Rehabilitation Loan
INTRODUCTION
This memorandum requests City Council approval of a resolution authorizing a
subordination agreement with Dubuque Bank & Trust related to the City's $300,000
Downtown Rehabilitation Loan with Cooper Development Company.
DISCUSSION
To enable Cooper Development to continue with the rehabilitation and reuse of the former
Cooper Wagon Works building at 299 Main Street, the City has been asked to subordinate
its existing mortgage interest to allow Dubuque Bank & Trust to increase its primary loan to
the company. The bank is currently in a first mortgage position with the City in second
position. An appraisal of the affer-rehab value of the property is sufficient to cover both the
bank's increased mortgage and the City's loan with Cooper.
The Council has previously set a public hearing on the matter for July 21,2003. Because a
mortgage constitutes an interest in a particular piece of real estate, approval of a
subordination of that mortgage is treated as a disposition of public property. State law
requires that before a city may dispose of public property it must hold a public hearing.
Upon approval by the City Council, a subordination agreement will be prepared by the bank
and reviewed by the City's legal staff before recording. That will ensure the City's second
position security interest remains as represented by Dubuque Bank & Trust's letter dated
June 19, 2003 which was attached to the documents setting this request for public hearing.
RECOMMENDATION
I recommend the authorization of a subordination agreement. The City's security interest in
its loan should not be in jeopardy due to the additional Dubuque Bank & Trust loan. The
property value should increase with the further restoration and full use of the building, which
is in the downtown's overall best interest.
ACTION STEP
I recommend that the City Council adopt the attached resolution.
attachments
F:\USERSWmyhre\WPDOCS~LOANDOC\COOPER\sub2 mem.doe
RESOLUTION NO. 252-03
RESOLUTION AUTHORIZING A SUBORDINATION AGREEMENT IN REGARD TO A
MORTGAGE INTEREST IN CITY LOT 73 (EXCEPT THE SOUTHERLY 3 INCHES
THEREOF) IN THE CITY OF DUBUQUE, DUBUQUE COUNTY, IOWA
Whereas, pursuant to Resolution and published notice of time and place of
hearing, [he City Council of the City of Dubuque, Iowa, met on July 21. 2003, to
consider the proposal to dispose of interest in certain real estate by executing a
Subordination Agreement for a Real Estate Mortgage filed August 3, 2001, as
Instrument No. 12323-01, as to the following described real estate:
City Lot 73 (except the southerly 3 inches thereof) in the City of Dubuque.
Dubuque County, Iowa; and
Whereas, the City Council overruled any and all objections, oral or written, to
dispose of interests of the City of Dubuque, Iowa, in the above-described real estate.
NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE. IOWA:
Section 1 That the Mayor and City Clerk are hereby authorized and directed to
execute said Subordination Agreement on behalf of the City of Dubuque. Iowa.
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider, City Clerk
Passed, approved and adopted this 21sT day of July 2003.
F:\USERS~Pmyh re\WPDOCS\LOANDOC\COOPER~sub.res.doc
MEMORANDUM
July 1,2003
TO:
FROM:
SUBJECT:
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
Subordination Agreement
Dubuque Bank & Trust for Cooper Development Company's
Downtown Rehabilitation Loan
Economic Development Director Bill Baum recommends City Council approval of a
Subordination Agreement with Dubuque Bank & Trust Company related to the city's
mortgage interests associated with Cooper Development Company's $300,000
Downtown Rehabilitation Loan, and that a public hearing be set for July 21, 2003.
Cooper Development plans to complete renovation of the 3rd and 4th floors, which
necessitates increasing its bank loan with Dubuque Bank & Trust. A recent appraisal
commissioned by the bank indicates the affer-rehab value of the building and
improvements will be more than the outstanding combined bank and city debt.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
.Cindy Steinhauser, Assistant City Manager
William Baum, Economic Development Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
June 27, 2003
TO:
FROM:
SUBJECT:
Michael Van Milligen, City Manager /~.~~
William Baum, Economic Development Director
Subordination Agreement
Dubuque Bank & Trust for Cooper Development Company's
Downtown Rehabilitation Loan
INTRODUCTION
This memorandum requests that the City Council set a public hearing on a subordination
agreement with Dubuque Bank & Trust. The subordination agreement relates to the City's
Mortgage interests associated with Cooper Development Company's $300,000 Downtown
Rehabilitation Loan. A resolution setting the public hearing for July 21, 2003 is attached.
BACKGROUND
The City provided a $300,000 loan to the Cooper Development Company on August 1,
2003 to assist with the rehabilitation of the former Cooper Wagon Works building at 299
Main Street. As part of the loan agreement, the City accepted a second mortgage interest
position on its loan. Dubuque Bank & Trust holds the first mortgage as the primary lender
in the project.
DISCUSSION
A letter dated June 19, 2003 from Dubuque Bank & Trust is attached hereto requesting the
City subordinate its existing mortgage interest to allow the bank to increase the amount of
its original loan to the company. Cooper Development plans to complete renovation of the
3rd and 4th floors of its building and has requested an increase in its bank loan to
$2,050,000. A recent appraisal commissioned by the bank indicates the affer-rehab value
of the building and improvements will be more than the outstanding combined bank and
City debt.
Attached to this memorandum is a resolution that initiates the process for approving the
subordination agreement. Because a mortgage constitutes an interest in a particular piece
of real estate, approval of a subordination of that mortgage is treated as a disposition of
public property. State law requires that before a city may dispose of public property it must
hold a public hearing. The resolution, therefore, declares the City's intent to subordinate its
mortgage interest and sets a date for public hearing on the matter.
RECOMMENDATION
I recommend that the City Council adopt the attached resolution setting a public hearing for
July 21, 2003 on the proposed subordination agreement. At that time, the City Council will
be presented with a second resolution authorizing the Mayor to sign the subordination
agreement with Dubuque Bank & Trust.
attachments
F:\USERS\Pm~re\WPDOCS~LOANDOC\COOPER~subl .rnem.doc
DUBUQUE BANK& TRUST
MEMBER HEARTLAND FINANCIAL USA, INC,
June 19, 2003
1398 CENTRAL AVENUE · P.O, 80X 778 · DUBUQUF, IA 52004-0778
PHONE(SE3)589-2000 · TOLLFREE(800)397-2000 · FAX (563)559-2011
Mr. William Baum
Director
Economic Development Department
City of Dubuque
50 West 13th Street
Dubuque, IA 52001
RE: Cooper Development Company Loan Subordination Request
Dear Bill:
Dubuque Bank & Trust is currently reviewing a request from Cooper Development
Company, LLC for additional funds to complete improvements to the 3~a and 4th floors of
the old "Cooper Wagon Works" building. The 3rd floor is recently completed and the 4th
floor will be renovated into an upscale restaurant.
Their request is for the Bank to increase its loan to $2,050,000. Our approval would be
subject to the City of Dubuque agreeing to subordinate its currant loan in the amount of
$300,000 to our new loan amount. A recently completed appraisal indicates a value of
$3,040,000 once all improvements are finished. This represents a loan to value of 67%
for the Bank and 77% when our two loans are combined.
Please advise if the City of Dubuque will require any additional information before
considering our request to subordinate your existing loan to our new loan. To date the
project has done well and has been well received by the community. We look forward to
working with you on this project and on many more projects in the future.
Sincerely,
Duane T. Frick
Vice President
Commercial Lending
Prepared by: Pamela M~hre
CityHall, 50 W. 13th Street, Dubuque, IA 52001
(563)589-4393
RESOLUTION NO.
RESOLUTION DECLARING THE INTENT OF THE CITY OF DUBUQUE,
IOWA, TO SUBORDINATE A MORTGAGE INTEREST IN CERTAIN REAL
ESTATE
Whereas, Cooper Development Company, LLC executed and delivered a Real
Estate Mortgage to the City of Dubuque, Iowa ("City"), filed August 3, 2001, as Instrument
No. 12323-01, in connection with Downtown Rehabilitation Loan Program #3-01 from City;
and
Whereas, City Lot 73 (except the southerly 3 inches thereof) in the City of Dubuque,
Dubuque County, Iowa, is the real estate parcel described in said Mortgage; and
Whereas, City and Dubuque Bank & Trust both have Mortgage interests in the
above-described real estate; and
Whereas, Dubuque Bank & Trust requires that the City subordinate its Mortgage
interest in the above-described real estate to Dubuque Bank & Trust's interest to allow
Cooper Development to increase its rehabilitation loan with the bank; and
Whereas, the City Council has determined that the execution of a subordination
agreement with Dubuque Bank & Trust regarding the above-described real estate
mortgage is in the public interest.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. That it is the intent of the City Council to execute a subordination
agreement with Dubuque Bank & Trust with regard to the above-described Mortgage on
the following described real estate located in the City of Dubuque, Iowa:
City Lot 73 (except the southerly 3 inches thereof) in the City of Dubuque, Dubuque
County, Iowa.
Section 2. That the City Clerk is hereby directed to give notice in the manner
required by law of a public hearing to be held on July 21, 2003 at 6:30 P.M. in the
Auditorium of the Carnegie-Stout Public Library, at which time and place all interested
parties will be given opportunity to be heard for or against the proposal to dispose of the
real estate interests herein described.
Passed, adopted and approved this 7th day of July 2003.
Terrance M. Duggan, Mayor
ATTEST:
Jeanne F. Schneider, City Clerk
F:\USERS\Pmyhre\WPDOCS\LOANDOC\COOPER~subsetph.res,doc