Colts Drum and Bugle Corps-Proposed Sale of 1112-1114 Central by Michael Visintin-Documents added to packet 3-2-2023BITTER LAW OFFICES
Joseph J. Bitter*
Thomas A. Bitter
*Also licensed in Illinois
Client parking in rear
485 LOCUST STREET
DUBUQUE, IOWA 52001-6940
Office: 563-588-4608
Fax: 563-588-0103
May 5, 2003
The Honorable Terrance M. Duggan, Mayor of Dubuque,
and
Members of the Dubuque City Council
City Hall
50 W. 13th St.
Dubuque, IA 52001-4864
RE: Michael J. Visintin - Proposed Sale to Colts 45 Drum and Bugle Corps
Residence
Joe: 563-582-1768
Tom: 563-582-7545
We represent Michael Visintin. He has two mortgages on his property. He hasn't paid a nickel
on his second mortgage. He is unable to do so. Michael wants to sell this property to the Colts
for $63,000.00. He won't make a nickel on the sale. The Colts are the only prospect for this
property. Michael is selling because he is tired of pouring his own money into this building.
Michael is about ready to walk away from this building and let the City condemn it. He will sell
it to anyone who will take it off his hands.
The pertinent City Ordinance states that a demolition permit has to go through two steps:
a) It must first be determined if the building is significant such as historically. It has
been determined that the double peak of the roof line gives this building some architectural
significance.
b) If the building is found to have significance, then the owner must demonstrate that
the building cannot be economically successful. Michael has demonstrated this.
Previously, the Historic Preservation Commission asked the City staff to do an analysis to
determine whether the building could be economically viable. The staff prepared a report which
you have seen or will see. We believe their report is flawed in several respects.
First of all, the staff report shows a vacancy rate of 6%. As an officer in the Dubuque Landlord
Association, I can tell you that figure is way too low. A 20% vacancy rate for downtown
Dubuque is more appropriate. Secondly, the City of Dubuque wants Michael to go to a bank and
borrow $139,000.00 to fix up this building. I am very doubtful that any bank would loan this
kind of money on this building. Michael is unwilling to incur a $139,000.00 debt and place his
credit rating on the line for this building. Why should he have to do this? Thirdly, the City
wants Michael to borrow $99,998.00 from a special governmental fund. This will be a no
interest loan and no payments for 20 years. This sounds great, but we don't know whether this
loan will ever be granted and the City of Dubuque study completely leaves out the fact that in 20
years Michael would have to repay $100,000.00. The City study makes no provision to amortize
this $100,000.00 which, without interest, would still be $5,000.00 a year. Fourth, the City of
Dubuque study tells us that Michael can qualify for federal tax credits for fixing up this building.
I am experienced in the federal tax credit arena. They are only beneficial to rich taxpayers who
have high income. Michael is certainly not one of them. The City study does not tell you that
you cannot sell these tax credits. The City leads you to believe that you can, in fact, sell the tax
credits. However, in order to qualify for the tax credits, you must own the building. Michael
would therefore have to sell the building, so that the buyer would get the tax credits. Under the
most favorable circumstances, entities (mostly successful corporations) who purchase properties
in order to get the tax credits are paying about 75 cents on the dollar.
It is very doubtful that anyone or any entity will buy this building, especially a high taxed entity,
merely for the tax credits. In order to tempt a buyer, Michael might well have to allow the tax
credits to go for 50 cents on the dollar. The City proposal arrives at a modest profit showing
100% of the tax credits. This will never happen.
In order to qualify for tax credits, many special construction rules must be followed. This would
undoubtedly run up the cost of construction far in excess of the estimate obtained by the City of
Dubuque.
As you know, Historic Preservation denied the demolition request on a vote of 3 to 2. In voting
against the demolition, one of the commissioners stated on the record that he voted no because
he knew the buyer wanted to tear the building down. This is contrary to the requirement of the
City Ordinance, which, as indicated above, mandates the demolition permit if the building is not
economically viable.
This building is not economically viable. If you agree, your Ordinance requires you to issue the
demolition permit. We urge you to do this. Thank you.
JJB/km(6)
Actual Real Dollar Profit/Loss Statement
1112-1114 Central for 2000, 2001, 2002
Submitted to Dubuque City Council
May 5, 2003
Michael J. Visintin, Owner
Background Information
Acquired January 31, 2000 for 50,00.00
Second Mortgage dated July 31, 2001 for 16,000.00
Actual Dollar Profit/Loss through December 31, 2002:
Year: Gross Income: Real Dollars Payed Out: Net Real Dollar Profit/Loss
2000 18769.00
2001 21052.00
2002 19108.00
18881.70
22330.00
24168.00
-112.70
- 1278.00
- 5060.00
In addition, please note that the building never generated enough income to make even
one payment on the second mortgage.
ULL/7,s'
Michael J. Visintin
1
Actual Real Dollar Profit/Loss Statement
1112-1114 Central for 2000, 2001, 2002
Submitted to Dubuque City Council
May 5, 2003
Michael J. Visintin, Owner
Line Numbers are from Schedule E of tax returns submitted for those years. These forms
have been previously submitted as evidence and are part of the packets that you already
received.
Special note for 2000. I have stated that No payments have ever been made on the
second mortgage. That statement is part of your record in a testimony from Floyd
Kunkel. However, that mortgage was issued July 31, 2001. From 2/14/00 through
02/01/01, I made payments of principle and interest to him of 244.67 per month.
Evidence of this fact is given in the interest paid to this account on line 13 of the 2000
Schedule E. If the council wishes, I will also produce the checking account statements
for those dates.
2000:
Schedule E Line Number
3) Gross Income
19) Total Expenses
16) Taxes
9) Insurance
12) Bank Interest
13) Other Interest -Second Loan
Total Adjusted Real Expense:
Goss Income:
Total Adjusted Real Expense:
Total Payments to Bank:
Payments on Second Loan:
Total Real Dollar Income:
U
Amount
18769.00
16936.00
- 1658.00
- 530.00
-3576.00
- 1597.00
9575.00
18769.00
- 9575.00
-6610.00
- 2696.70
-112.70
2
2001:
Schedule E Line Number Amount
3) Gross Income 21052.00
19) Total Expenses 20842.00
16) Taxes -1721.00
9) Insurance - 529.00
12) Bank Interest -4139.00
Total Adjusted Real Expense: 14453.00
Goss Income: 21052.00
Total Adjusted Real Expense: -14453.00
Total Payments to Bank: -7877.00
Total Real Dollar Income: -1278.00
2002:
Special Note for 2002: 6,474.00 was paid out to remodel three apartments in this year.
This money does not show up as an expense deduction, but as an investment, which must
be deducted over a number of years. It will lessen tax bills in the years ahead, but will
never result in income.
Schedule E Line Number Amount
3) Gross Income 19108.00
19) Total Expenses
16) Taxes
9) Insurance
12) Bank Interest
Total Adjusted Real Expense:
Goss Income:
Total Adjusted Real Expense:
Total Payments to Bank:
Remodeling (Form 4797, line 7)
Total Real Dollar Income:
15595.00
- 1887.00
- 529.00
-4045.00
9134.00
19108.00
- 9134.00
-8560.00
-6474.00 (To be deducted over a period of years)
-5060.00
Final Note: Since no payment has ever been made on the second mortgage, the interest
on it is being recapitalized. Hence, even the equity gained by making payments on the
first mortgage is roughly equal to the recapitalized interest on the second mortgage.
Michael J. Visintin
JAALz,
3