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Downtown Housing Incentive Awards299 Main Street 73 CHS Forwards, LLC 21 $210,000 (Cooper Wagon Works Bldg.) Grant 426 -428 W. 5 St. 4 The Fischer Companies $110,000 951 -965 Main St. 7 Grant Masterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Initial Recommendation for Second Round of Downtown Housing Incentive Awards DATE: July 13, 2010 Dubuque hail Aft-Amerla City 11111! 2007 In November 2009, the City Council approved the creation of a $2.5 million incentive pool to encourage new residential units within the Greater Downtown Urban Renewal District. In the first round of applications, the City received fifteen applications for assistance. Of those, 5 projects were approved. After funding the first five projects, $2,184,000 is still available in the incentive program to encourage new housing units in the urban renewal district and a second round of applications was sought. Based on the guidelines of this new program, up to $10,000 of financial assistance would be available for each new unit of market rate residential housing created in the downtown area. In the second round of applications, the City received nine applications for assistance. Economic Development Director Dave Heiar recommends the following projects be approved to receive certain incentives to create new housing units within the Greater Downtown Urban Renewal District: Address Developer Housing Units Assistance Dave Heiar further recommends authorization to negotiate specific contracts for awards to the above projects and allow the City Manager to execute agreements with the property owners to commit to the market rate housing unit creations. 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 Masterpiece on the Mississippi TO: Michael Van Milligen, City Manager FROM: David J. Heiar, Economic Development Director SUBJECT: Initial Recommendation for Second Round of Downtown Housing Incentive Awards DATE: July 13, 2010 INTRODUCTION This memo is to provide a second round of funding to encourage new residential housing units in downtown Dubuque and to make changes to the Downtown Rehabilitation Loan and Grant program. Dubuque hfrd AI- Amalcacnr 1111 2007 BACKGROUND Dubuque has been successful in encouraging job creation in the community for several years. Several great projects have begun or continue this year including: • IBM is currently hiring new employees to reach 1,300 employees in Dubuque by the end of 2010. Many new hires are coming from outside the community. • Hormel Foods began operations this winter in their facility on Chavenelle Court. • Medline Industries has been growing steadily and has additional capacity in their new facility. Corporate management is committed to growing the operation in Dubuque. The City does not want to reduce the ability of our existing businesses in Dubuque from expanding or replacing employees because of the lack of housing. In seeing this influx of new positions coming to Dubuque and with the employee recruitment of other existing businesses, the Greater Dubuque Development Corporation (GDDC) has hired Shannon Gaherty as the Newcomer Relations Coordinator. Her job is to help new residents find housing, get information about the community, and get connected with services and organizations within the community. GDDC has expressed difficulties in finding quality housing, particularly in the downtown area. Many of Dubuque's new residents have a strong desire to live near work and entertainment. This desire needs to be met for Dubuque businesses to attract and retain a quality workforce. A pool of housing incentive funds was generated by delaying approved CIP projects and the funding was used to borrow approximately $2.5 million for this program. The following is a list of CIP projects reduced or delayed to facilitate the borrowing: 756 N. Main Street Hippocrene Enterprises, LLC (Walker Shoe Store) 4 $40,000 Grant 129 Main Street K & E Partnership LLP (Knippels Religious Gifts) 2 $12,000 Grant 163 Main Street D & J Realty 3 $30,000 Grant 392 -394 Bluff Street RMF Associates, LLC 2 $10,000 Grant 205 Bluff Street B &C Cathedral Development, LLC (St. Raphael School) 24 $224,000 Low - Interest Loan • Port of Dubuque Improvements • Millwork District Street Reconstruction • Millwork District Streetscape Improvements • Millwork District Fiber Optics • $100,000 not needed for demolition of a portion of the old Tri -State building being purchased from the Iowa DOT • Approximately $45,000 savings per year in the Greater Downtown Urban Renewal District from the refinancing of America's River bonds Based on the guidelines of this new program, up to $10,000 of financial assistance would be available for each new unit of market rate residential housing created in the downtown area. The City Council, on November 19, 2009, approved an assistance pool of funds to encourage creation of new market -rate housing within the Greater Downtown Urban Renewal District. The City received 15 applications for assistance. Of those, 5 projects were approved for assistance. They are: Address Developer Housing Units Assistance After funding the first 5 projects, $2,184,000 is still available in the incentive program to encourage new housing units in the urban renewal district. DISCUSSION The deadline for submitting applications for the second round was May 24, 2010 and 9 applications were received requesting over $3.2 million in incentives. A selection committee has reviewed the applications. The committee included: • Dave Heiar, Economic Development Director • Rick Dickinson, Greater Dubuque Development • Barry Lindahl, City Attorney • Guy Hemenway, Assistant Planner • Steve Brown, Engineering Project Manager • Aaron DeJong, Asst. Economic Development Director 299 Main Street 73 CHS Forwards, LLC 21 $210,000 (Cooper Wagon Works Bldg.) Grant 426 -428 W. 5 St. 4 The Fischer Companies $110,000 951 -965 Main St. 7 Grant Proposals were evaluated on several criteria. The criteria included: • Timeliness /Readiness • Cost/Benefit • Impact • Additional benefits of proposed project (i.e. exterior rehab, historic preservation, LEED, Commercial Development) • Magnitude of other City financial assistance being requested The committee had concerns with the quality of some of the applications. Several of the larger projects had many financial contingencies which would be detrimental to meeting the timeframe specified in the RFP (July 2011). However, several of the projects have shown the capacity to complete the units by the deadline and have financing committed to the project. The committee is still doing due diligence and negotiating with some of the developers to determine if they can meet the timeframes and merit a commitment of city assistance. The committee is recommending the following projects be approved to receive certain incentives to create new housing units within the Greater Downtown Urban Renewal District: Address Developer Housing Uni ts Assistance RECOMMENDATION The recommendation is to approve the attached resolution authorizing staff to negotiate specific contracts for awards to the above projects and allow the City Manager to execute agreements with the property owners to commit to the market rate housing unit creations. A sample of the proposed agreement format is attached. F:\USERS\Econ Dev \Downtown Housing \RFP 2nd Round Memos\2010713 Housing RFP #2 Recommendation 1.doc Prepared by: David Heiar, Economic Dev Director, 50 West 13 Street, Dubuque IA 52001 563 589 -4393 Return to: Jeanne Schneider, City Clerk, 50 West 13 Street, Dubuque IA 52001 563 589 -4121 RESOLUTION NO. 277 -10 APPROVING CERTAIN AWARDS FROM THE DOWNTOWN HOUSING INCENTIVE POOL TO CREATE NEW MARKET -RATE HOUSING UNITS WITHIN THE GREATER DOWNTOWN URBAN RENEWAL DISTRICT Whereas, the City of Dubuque has been successful in encouraging job creation and retention in the community for several years; and Whereas, many of the City of Dubuque's new residents have a strong desire to live near work and entertainment; and Whereas, a significant shortage of quality market -rate rental and owner - occupied residential units exists and efforts are needed to encourage new development of such units; and Whereas, several downtown residential development projects need financial assistance to secure funding for such project; and Whereas, the City received several applications for assistance from a Request for Proposals due May 24, 2010; and Whereas, such proposals have been reviewed by a recommendation committee. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. The City Council approves the following projects to receive financial assistance for the creation of market -rate housing units within the Greater Downtown Urban Renewal District: 299 Main Street 73 CHS Forwards, LLC (Cooper Wagon Works Bldg.) 21 $210,000 Grant 426 -428 W. 5 St. 4 The Fischer Companies $110,000 951 -965 Main St. 7 Grant Section 2. That the City Manager is hereby authorized and directed to execute Incentive Agreements for the approved projects. Atte Address Passed, approved and adopted this 19 day of July, 2010. c eanne F. Schneider, City Clerk Developer Housing Units F: \USERS \Econ Dev \Downtown Housing \RFP Resolutions\20100719 Resolution Housing Award Rnd 2 #1.doc Assistance 2 Roy D. Buol, Mayor r DOWNTOWN HOUSING PROGRAM INCENTIVE AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND This Agreement, dated for reference purposes the day of , 20_, is made and entered into by and between the City of Dubuque, Iowa (City), a municipal corporation organized and existing under the laws of the State of Iowa and (Owner). Whereas, the Owner's property at (the Building) is located within the boundaries of the Greater Downtown Urban Renewal District (the District); and Whereas, the goals and objectives of the Greater Downtown Urban Renewal Plan (the Plan) provide for the creation of the financial incentives creating housing opportunities within the District; and Whereas, City desires to assist Owner in its efforts to create housing opportunities within the District through the Downtown Housing Incentive Program (the Incentive Program). NOW THEREFORE, in consideration of the premises and respective covenants, agreements and representations hereinafter set forth, the parties agree as follows: SECTION 1. HOUSING UNIT CREATION. The Owner commits to creating new market - rate rental units as described in Section 25(2) (the Project) within the Building. SECTION 2. SOURCE OF FUNDS. City has allocated funds sufficient to carry out its obligations under this Agreement. SECTION 3. HOUSING GRANT. 3.1 City agrees to provide to Owner on the terms and conditions set forth herein a grant the amount of ($ ) (the Grant) that shall consist of Incentive Program funds. 3.2 Grant funds shall be disbursed to Owner by City for Qualifying Project Expenses, defined in Section 25(3), for amounts not in excess of the total sum in Section 3.1. It is expressly understood that all funds advanced under this Agreement shall be used by Owner only for the purpose of paying the Qualifying Project Expenses set forth in such written requests. 3.3 Grant funds will be disbursed to the Owner after City issuance of a Certificate of Occupancy for the Project. Prior to the disbursement of any funds, Owner shall provide F: \USERS \Econ Dev\Downtown Housing\20100209Downtown Housing IncentiveAgreement_Grants.doc evidence satisfactory to City that the improvements have been completed in accordance with the plans and other documentation submitted to City with the application. SECTION 4. FINANCIAL CONDITION OF OWNER. Owner has delivered to City evidence of Owner's ability to complete the Project as of the date of application for financial assistance which fairly represents the financial condition of Owner as of the date stated, all in accordance with generally accepted accounting principles consistently applied, and that the statements still correctly reflect the financial condition and status of its operations as of the date of this Agreement. SECTION 5. TITLE OF OWNER. Subject to the liabilities reflected on Owner's financial statement as well as those incurred in relation to this Project, Owner represents that it has good and marketable title, free and clear of any mortgage, pledge, lien, security interest, encumbrance, or charge to all those assets reflected on the financial statement and to assets since acquired. Taxes not due or payable or otherwise delinquent are excepted. SECTION 6. HISTORIC CHARACTER. All exterior work shall coincide with the historic character of the building. SECTION 7. DEFAULT. Owner shall be in default upon the occurrence of any of the following events: (1) Owner becomes insolvent or admits in writing its inability to pay its debts as they mature; or applies for, consents to or acquiesces in the appointment of a trustee or receiver for any of its property; or in the absence of an application for consent or acquiescence, a trustee or receiver is appointed for it or a substantial part of its property and is not discharged within ten (10) days; or it otherwise commits an act of bankruptcy; or any bankruptcy, reorganization, debt arrangement or other proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding is instituted by or against it and if instituted is consented to or acquiesced in by it or remains for ten days undismissed; (2) Owner fails in the performance of any of the terms and conditions of this Agreement and such non - performance continues for ten (10) days after written notice thereof from City or from the holder of a note; (3) Any warranty made by Owner is untrue in any material respect, or any schedule, statement, report, notice or writing furnished by Owner to City is untrue in any material respect on the date as of which the facts set forth are stated or certified, provided any such error is not the result of unintentional errors which are capable of correction without prejudice to the City; (4) Any government board, agency, department, commission or public or private lender takes possession or control of any substantial part of any property of Owner. 2 SECTION 8. ADDRESS. Owner's principal business address is: Name Company Address City, State ZIP Owner shall promptly give City written notice of any further change in its principal office address. City's address is: City Manager City Hall 50 West 13th Street Dubuque, Iowa 52001 SECTION 9. LIMITATION OF CITY'S LIABILITY FOR PROJECT ACTIVITIES. City shall not be liable to Owner, or to any party, for the completion of, or the failure to complete, any activities which are part of the Project, except as may be specifically provided in this Agreement or other written agreements between City and Owner or any of Owner's affiliates or subsidiaries. Owner agrees to indemnify, hold harmless and defend City from any such claims. SECTION 10. CONFLICT OF INTEREST. Owner certifies that to its knowledge no member, 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 inside information with regard to the Project, has nor shall have any interest, direct or indirect, in any contract or subcontract, or in any activity, or benefit therefrom, which is part of this Project at any time during or for one year after such person's tenure. SECTION 11. NONDISCRIMINATION. In carrying out the Project, Owner shall not discriminate against any employee or applicant for employment or tenancy because of race, religion, color, sex, sexual orientation, national origin, age or disability. Owner shall post in a conspicuous place, available to employees and applicants for employment, notices to be provided by City setting forth the provisions of this nondiscrimination clause. Owner shall state that all qualified applicants will receive consideration for employment without regard to race, religion, color, sex, sexual orientation, national origin, age or disability. SECTION 12. DISCLAIMER OF RELATIONSHIPS. Nothing contained in this Agreement between the parties, nor any act of City or Owner, shall be deemed or construed by any of the parties, or by any third persons, to create any relationship of third party beneficiary, principal or agent, limited or general partnership, or joint venture. 3 SECTION 13. NOTICE. Any notice, if mailed by United States certified mail, shall be deemed given when mailed, postage prepaid, addressed to the other party at its address shown above, or at any other address subsequently designated by either party to the other. SECTION 14. SUCCESSORS AND ASSIGNS. All covenants, representations, warranties and agreements herein set forth shall be binding upon Owner, and its legal representatives, successors and assigns. This Agreement may not be assigned by City or Owner, without the express written consent of the other party. SECTION 15. LEGALITY. If any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, but this Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein. SECTION 16. GOVERNING LAW. This Agreement and all rights and duties hereunder, including but not limited to all matters of construction, validity and performance shall be governed by the laws of the State of Iowa. SECTION 17. SURVIVAL OF REPRESENTATIONS. All representations or warranties of Owner shall survive the execution and delivery of this Agreement and any note executed and delivered under it, and no investigation by City, nor any closing shall affect the representations or warranties or the right of City to rely on and enforce them. SECTION 18. DELAY. No delay on the part of City or the holder of any note in the exercise of any right shall operate as a waiver, nor shall any single or partial exercise of any right preclude other or additional exercise of any right. SECTION 19. DEFINITIONS. (1) "Closing Date" shall mean the date on which this Agreement is executed by the parties. (2) "Project" shall mean the rehabilitation project of Owner's property at , identified in Owner's application for financial assistance. Said application is on file in the office of the Economic Development Department, 50 West 13th Street, Dubuque, Iowa 52001. The Project shall include the creation of new market rate residential housing units at a cost of not less than $ (3) "Qualifying Project Expenses" shall mean those expenditures or expenses incurred by Owner during and for the Project and identified in the Owner's application for financial assistance, whether paid to third parties or incurred as wage expense, fringe benefit expense or other costs of Owner's employees, agents and contractors. (4) "New rental housing unit" shall mean either a rental housing unit created where one did not previously exist, or an existing rental housing unit which has been 4 unlicensed and unoccupied for a period of not less than five years prior to the date of this Agreement. SECTION 20. CERTIFICATION OF COMPLIANCE WITH CITY CODES. By signing this Agreement, Owner certifies that all property in the City of Dubuque owned by Owner or in which Owner has any interest, other that the Project 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. CITY OF DUBUQUE, IOWA OWNER Michael C. Van Milligen, City Manager (Signature) 5 (Printed Name) Its