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Iowa Finance Authority Request for Proposal_Millwork District HousingTHE COF Dubuque hAd DtUB E All-America My Masterpiece on the Mississippi 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Application for Workforce Housing Funding DATE: June 30, 2010 Economic Development Director Dave Heiar is recommending approval for issuance of a Request for Proposal for the $4,477,500 low interest loan pool provided to the City by the Iowa Finance Authority for the creation of Workforce Housing units in the Historic Millwork District. The loan would require that at least 50% of the units in the development be for people at the 120% of the Area Median Income and below. This income level is currently: Dubuque County FY 2010 -120% Income Limit Category 1 Person 2 Person 3 Person 4 Person 5 Person 6 Person 7 Person 8 Person $ 52,875 $ 60,375 $ 67,950 $ 75,450 $ 81,525 $ 87,525 $ 93,600 $ 99,600 Other requirements in the RFP are: • The project must be the rehabilitation of an existing structure. • The units created must be completed and ready for occupancy by December 31, 2011. • A minimum of 20 new housing units must be created in a project. • Units smaller than 500 square feet will not be eligible. • Agreed upon collateral must be committed for the loan. • Personal guarantees will be required of the developer /owner of the development. Personal financial statements must be provided to the City to determine financial capacity to complete the project. • A confirmation must be provided by financial institutions which have agreements with the developer /owner that he /she has not been more than 29 days delinquent on any obligations. • The developer /owner must not have any outstanding code enforcement issues or delinquent financial obligations to the City of Dubuque on any property the developer /owner owns or has an interest in within the City of Dubuque, unless a correction plan has been approved by the City. • Minimum loan terms are as follows: • Rate: 3% • Amortization: 30 years • Term: 20 years concur with the recommendation and respectfully request Mayor and City Council approval. Mic ael C. Van Milligan MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David J. Heiar, Economic Development Director THE COF Dubuque DtUB E All-America CRY Masterpiece on the Mississippi 1 2007 TO: Michael Van Milligen, City Manager FROM: David J. Heiar, Economic Development Director SUBJECT: Application for Workforce Housing Funding DATE: June 28, 2010 INTRODUCTION This memo outlines the need for City Council to approve the attached Request For Proposal (RFP) seeking proposals for a $4,477,500 low interest loan pool from the Iowa Finance Authority (IFA). 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. IFA created a pool of funds to establish a low- interest loan program to assist in the creation of workforce housing. The city submitted an application and was approved $4,500,000 out of the loan program. At the June 21, 2010 Council meeting, a loan agreement was approved for the funding. The loan from IFA is guaranteed by the full faith and credit of the City of Dubuque. DISCUSSION To seek proposals from developers interested in utilizing these funds, an RFP has been prepared. Several requirements must be met for use of these funds and they are as follows: • At least 50% of all. created units must be rented to tenants earning at or less than 120% of AMI. The developer /owner must provide to the City information confirming this requirement is met to the satisfaction of the IFA annually. • The project must be the rehabilitation of an existing structure. • The units created must be completed and ready for occupancy by December 31, 2011. • A minimum of 20 new housing units must be created in a project. • Units smaller than 500'square feet will not be eligible. • Agreed upon collateral must be committed for the loan. • Personal guarantees will be required of the developer /owner of the development: Personal financial statements must be provided to the City to determine financial capacity to complete the project. • A confirmation must be provided by financial institutions which have agreements with the developer /owner that he /she has not been more than 29 days delinquent on any obligations. • The developer /owner must not have any outstanding code enforcement issues or delinquent financial obligations to the City of Dubuque on any property the developer /owner owns or has an interest in within the City of Dubuque, unless a correction plan has been approved by the City. • Minimum loan terms are as follows: • Rate: 3% • Amortization: 30 years o Term: 20 years The following items will be required to be in the proposal to the City: • Project Description. • Reason(s) for the requested assistance. • A ten -year detailed financial proforma which must include project revenues and expenses by category and a listing of all planned sources of financing to complete the project. • A listing of proposed collateral for the loan. • A listing of all committed equity from the developer and /or owners. • If commercial uses are proposed within the project, a listing of committed leases for commercial space. • A floor plan for all proposed units. • A letter from a financial institution committing to the conventional financing associated with the project. RECOMMENDATION /ACTION STEP To request that the City Council approve the attached resolution authorizing the release of the attached RFP to seek proposals for $4,477,500 in the Workforce Housing Revolving Loan Fund. FAUSERS\Econ Dev \IFA Workforce Housing\20100630 IFA loan to developers RFP Memo.doc CITY OF DUBUQUE, IOWA July 6, 2010 REQUEST FOR PROPOSALS — REVOLVING LOAN FUND Low - Interest Loans available to Encourage Workforce Housing Units within the Historic Millwork District - $4,477,500 available. INTRODUCTION The City of Dubuque, Iowa is soliciting proposals from developers within the Historic Millwork District to encourage the development of Workforce Housing. HISTORY /BACKGROUND Recent job creation projects within the City of Dubuque have caused a significant demand for downtown living options from people preferring to live near work and entertainment opportunities. Recent economic studies of housing in the City of Dubuque have shown an unmet demand for such housing. The City of Dubuque has recently gained access to $4,477,500 in low- interest loan funds from the Iowa Finance Authority (IFA) which will be loaned to projects that have the ability to create workforce housing units in a timely manner. Workforce housing is defined for this program as units being affordable to a person earning 120% of the Area Median Income (AMI). The chart below specifies the 120% AMI levels for the number of people in the household for FY 2010: Dubuque County FY 2010 -120% Income Limit Category 1 Person 2 Person 3 Person 4 Person 5 Person 6 Person 7 Person 8 Person $ 52,875 $ 60,375 $ 67,950 $ 75,450 $ 81,525 $ 87,525 $ 93,600 $ 99,600 The loans would be guaranteed to IFA by the full faith and credit of the City of Dubuque. PROJECT REQUIREMENTS Projects eligible to receive assistance from this newly established pool of funds must meet the following requirements: • At least 50% of all created units must be rented to tenants earning at or less than 120% of AMI. The developer /owner must provide information to the City confirming this requirement is met to the satisfaction of the IFA annually. • The project must be the rehabilitation of an existing structure. • The units created must be completed and ready for occupancy by December 31, 2011. • A minimum of 20 new housing units must be created in a project. Page 2 • Units smaller than 500 square feet will not be eligible. • Agreed upon collateral must be committed for the loan. • Personal guarantees will be required of the developer /owner of the development. Personal financial statements must be provided to the City to determine financial capacity to complete the project. • A confirmation must be provided by financial institutions which have agreements with the developer /owner that he /she has not been more than 29 days delinquent on any obligations. • The developer /owner must not have any outstanding code enforcement issues or delinquent financial obligations to the City of Dubuque on any property the developer /owner owns or has an interest in within the City of Dubuque, unless a correction plan has been approved by the City. • Minimum loan terms are as follows: • Rate: 3% • Amortization: 30 years • Term: 20 years SELECTION CRITERIA City staff selected by the City Manager will be charged with evaluating the proposals with the ultimate task to select a project which creates new workforce housing rental units in the Historic Millwork District. Eligible projects will be evaluated based upon the perceived risk of the loan and the leveraging of public assistance to create workforce housing. PROPOSAL REQUIREMENTS Applicants must submit a written proposal for this funding. The proposal must describe the project and must include the following information: • Project Description. • Reason(s) for the requested assistance. • A ten -year detailed financial proforma which must include project revenues and expenses by category and a listing of all planned sources of financing to complete the project. • A listing of proposed collateral for the loan. • A listing of all committed equity from the developer and /or owners. • If commercial uses are proposed within the project, a listing of committed leases for commercial space. • A floor plan for all proposed units. • A letter from a financial institution committing to the conventional financing associated with the project. SUBMISSION REQUIREMENTS A fully completed proposal with attachments and exhibits must be received in the office of the City of Dubuque Economic Development Department, 50 W. 13 Street, Dubuque, Iowa 52001 by 12:00 p.m. CDT Monday, July 26, 2010. Page 3 Proposals should be addressed to David Heiar, Economic Development Director, at the above address. Questions can be directed to David Heiar or Aaron DeJong bytelephone at (563) 589 -4393, by fax at (563) 589 -1733, or by email at dheiar `yofdubugue.org or adeiong(a).cityofdubugue.org Each applicant assumes full responsibility for delivery and deposit of the completed proposal package on or before the deadline. The City of Dubuque is not responsible for any loss or delay with respect to delivery of the proposals. The City of Dubuque reserves the right to reject any and all proposals and to negotiate changes with any applicant. The City of Dubuque is not liable for any cost incurred by any applicant prior to the execution of an agreement or contract. Nor shall the City of Dubuque be liable for any costs incurred by the applicant that are not specified in any contract. The City of Dubuque is an Equal Employment Opportunity Employer. Applicants may be invited to an interview to discuss their projects in greater detail. RESOLUTION NO 252-10 A RESOLUTION APPROVING A REQUEST FOR PROPOSALS FOR THE LOCAL REVOLVING LOAN FUND FOR WORKFORCE AND MARKET RATE HOUSING IN THE HISTORIC MILLWORK DISTRICT. Whereas, the City has approved a loan agreement 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 seeking proposals from developers to use the funding to encourage workforce and market -rate housing in the Historic Millwork District. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the attached RFP is hereby approved. Section 2. That the City Manager is hereby authorized to release the attached RFP to seek proposals from interested developers. • Attest: Passed, approved, and adopted this 6 day of July, eanne Schneider, City Clerk F: \USERS \Econ Dev \IFA Workforce Housing\20100706 Resolution RFP for IFA funding Reso.doc %LL Roy D. Buol, Mayor