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Historic Millwork District Parking Site PurchaseMasterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Historic Millwork District Parking DATE: September 21, 2010 In early 2009, the City Council adopted the Master Plan for Historic Millwork District. One of the segments of the plan emphasized the need to develop parking to support redevelopment of the District. The plan recommended a supply of on- street parking, surface Tots, a small structure, and parking in and beneath buildings where possible. One of the specific recommendations of the plan suggested acquiring property commonly referred to as the Alamo site which is currently owned by John Gronen and Bob Johnson (Warehouse Redevelopment, LLC). Economic Development Director Dave Heiar recommends City Council approval of an Offer to Buy Real Estate and Acceptance for the Alamo property. The major provisions of the agreement are: 1.) The sellers would retain ownership of a small building known as the Alamo (former Rouse and Company Foundry Building located at the corner of 10 and Washington Street) which has historic significance. They would also retain 15 feet of land on the south and east sides of the building for access purposes. 2.) The City will purchase the property for costs paid by Warehouse Redevelopment, LLC for acquiring and holding the property. The City would purchase the property for $698,973.42, if the closing is on May 1, 2011. The purchase price will increase by $210 for each day after May 1, 2011 that the closing occurs and will correspondingly decrease for every day prior to May 1 that the closing occurs. 3.) The seller is responsible for deconstructing the existing block building and stabilizing the Alamo structure prior to closing. 4.) Fixtures in the Alamo building will remain with the sellers. Dubuque kifril All- AnedcaCity r 2007 5.) The City will reimburse the seller for costs of deconstruction and stabilization, provided that the City shall approve the bids prior to start of this work. 6.) The City will acknowledge on an appropriate Internal Revenue Service form that the City completed an appraisal in December 2009 by Kane Appraisal Services in which the property was valued at $800,000. 7.) Seller will terminate rights of current tenants. 8.) City will asphalt a surface parking lot on this site to coincide with the rehabilitation of the Caradco Building (900 Jackson). 9.) The Gronens' will commit to leasing 197 parking spaces phased in over 16 months after the rehabilitation of the Caradco Building at a rate established by the City Council. 10.) Johnson agrees to lease 120 parking spaces on sites controlled by the seller within 600 feet of the completion of the Iron Works Building (1079 Elm Street) phased in over 5 months, at a rate established by the City Council. The City is also working with the IDOT to lease an area next to 151/61. 11.) Should a ramp be constructed on the site, the City will provide alternate parking spaces during the construction of the parking facility. The City Council has previously approved a $2.7 million Capital Improvement Program budget item to create parking in the Historic Millwork District. This provides funding for this project and others. In the future, as other parking options become available, there will be an attempt to fulfill the master plan design and add public open space on this site. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Mil(igen 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 Directo7 SUBJECT: Historic Millwork District Parking DATE: September 21, 2010 Dubuque AFAmedcaCitt 111 r 2007 PURPOSE This memorandum will discuss the potential option to purchase property in the Historic Millwork District to meet future parking needs of the redeveloped District. BACKGROUND In early 2009, the City Council adopted the Master Plan for Historic Millwork District. One of the segments of the plan emphasized the need to develop parking to support redevelopment of the District. The plan recommended a supply of on- street parking, surface lots, a small structure, and parking in and beneath buildings where possible. One of the specific recommendations of the plan suggested acquiring property commonly referred to as the Alamo site which is currently owned by John Gronen and Bob Johnson (Warehouse Redevelopment, LLC). Attached is an aerial photo which depicts the recommended parking site. DISCUSSION Over the past twelve months City staff has met with the major property owners to discuss their projected parking needs as each of their buildings is redeveloped. During the same time, City staff has had ongoing negotiations with the owners of the proposed Alamo parking site, to discuss acquisition and demolition of the former Eagle office building which is located on the site. Attached is a proposed Offer to Buy Real Estate. Major provisions of the agreement are as follows: 1.) The sellers would retain ownership of a small building known as the Alamo (former Rouse and Company Foundry Building located at the corner of 10 and Washington Street) which has historic significance. They would also retain 15 feet of land on the south and east sides of the building for access purposes. 2.) The City will purchase the property for costs paid by Warehouse Redevelopment, LLC for acquiring and holding the property. The City would purchase the property for $698,973.42, if the closing is on May 1, 2011. The purchase price RESOLUTION NO. 394 -10 APPROVING AN AGREEMENT FOR THE PURCHASE OF REAL ESTATE IN THE HISTORIC MILLWORK DISTRICT, CITY OF DUBUQUE, IOWA COMMONLY REFERRED TO AS THE ALAMO SITE FROM WAREHOUSE REDEVELOMENT, LLC. Whereas, Warehouse Redevelopment, LLC is the owner of City Lot 2 of Center City Place in the City of Dubuque, Iowa, according to the United States Commissioners' Map of the Town of Dubuque, Iowa (the Property); and Whereas, the City Council finds that it is in the best interests of the City of Dubuque to purchase the Property for future parking and plaza needs in the Historic Millwork District; and Whereas, the City Council has obtained the necessary financing to purchase the Property. Whereas, the Offer to Buy and Acceptance, attached hereto and by this reference made a part hereof, sets forth the terms and conditions of the purchase of property from Warehouse Redevelopment, LLC. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Offer to Buy and Acceptance attached hereto, is hereby approved. Section 2. That the City Manager is hereby authorized and directed to execute, on behalf of the City of Dubuque, Iowa, said Purchase Agreement. Attest: Passed, approved and adopted this 4 day of October, 2010. eanne F. Schneider, CMC City Clerk yi_arAlua aria A. Braig, Mayor P -Tem F: \USERS \Econ Dev \Warehouse District\Alamo Block\20100922 Resolution approving purchase Alamo site.doc OFFER TO BUY REAL ESTATE AND ACCEPTANCE TO: Warehouse Redevelopment, LLC, Seller: SECTION 1. REAL ESTATE DESCRIPTION. The Buyer offers to buy real estate in Dubuque County, Iowa, described as follows: City Lot 2 of Center City Place in Dubuque, Iowa [except Seller retains the building locally known as the "Alamo Building" (the "Building ") and the real estate under and around such building as identified on Exhibit "A" consisting of 15 feet of property on the East side of the Alamo Building and 15 feet on the South side of the Alamo Building ] . The Building and the retained real estate shall in aggregate be referred to as the "Retained Real Estate ". That portion of City Lot 2 of Center City Place, excluding the Retained Real Estate, shall be referred to as the "Real Estate ". In addition, Seller shall also retain an easement for walkways and an access easement (the "Easement Areas ") to provide direct access to the Alamo Building from the public sidewalks or roadways as mutually agreed prior to closing consistent with the accesses shown on Exhibit A. Seller shall obtain a survey /plat, at Buyer's cost, separating the Retained Real Estate from the Real Estate and further identifying the Easement Areas. The survey /plat shall be obtained and recorded prior to closing, with any easements and appurtenant servient estates, but subject to the following: a. any zoning and other ordinances; b. any covenants of record; c. any easements of record for public utilities, roads and highways designated the Real Estate; provided Buyer, on possession, are permitted to make the following use of the Real Estate: public parking lot/ramp and public plaza. SECTION 2. PRICE. The purchase price shall be $698,973.42 less $210.00 per day for each day that the Closing occurs prior to May 1, 2011 (for example if closing occurs 30 days before May 1, 2011, the purchase price would be reduced by $6,300.00 (30 x $210)) and the purchase price shall increase $210.00 per day for each day that the closing occurs after May 1, 2011, payable at City Hall, Dubuque, Iowa, as follows: $100.00 with this Offer to Buy Real Estate, receipt of which is hereby acknowledged, and the balance of the purchase price in cash at closing. In the event this agreement fails to close by the closing date, Seller shall promptly return all earnest money to Buyer. The parties acknowledge that the purchase and sale contemplated herein does not include the Building as such Building is, due to the required rehabilitation, a liability as it relates to the proposed use of the Real Estate and is unlikely to be an income generating structure. In addition, the Seller has obtained commitments from funding sources to assist in such rehabilitation and certain of such sources are not available to Buyer. SECTION 3. REAL ESTATE TAXES. Seller shall pay any unpaid real estate taxes payable for fiscal year 2009 -2010 and prior years for the Real Estate and the Retained Real Estate. Seller shall also pay real estate taxes for fiscal year 2010 -2011 prorated to 1 the date of closing for the Real Estate and the Retained Real Estate. Buyer shall pay all subsequent real estate taxes for the Real Estate. Any proration of real estate taxes on the Real Estate shall be based upon such taxes for the year currently payable unless the parties state otherwise. SECTION 4. SPECIAL ASSESSMENTS. Seller shall pay all special assessments which are a lien as of the date of closing. Buyer agrees that the Retained Real Estate shall not be assessed for any of Buyer's street and infrastructure improvements now planned and which are completed within three (3) years after the Closing Date. SECTION 5. RISK OF LOSS AND INSURANCE. Sellers shall bear the risk of loss or damage to the Real Estate prior to closing or possession, whichever first occurs. Sellers agree to maintain existing insurance and Buyers may purchase additional insurance. SECTION 6. CARE AND MAINTENANCE. Subject to Par. 18, the Real Estate shall be preserved in its present condition and delivered intact at the time possession is delivered to Buyer. SECTION 7. POSSESSION. If Buyer timely performs all obligations, possession of the Real Estate shall be delivered to Buyer within twenty (20) days of completion of the deconstruction and stabilization identified in Paragraph 18.3 and no later than the 1 day of May, 2011 (the "Closing Date ") or such later date as the parties may agree in writing with any adjustments of rent, insurance, and interest to be made as of the date of transfer of possession. SECTION 8. FIXTURES. All property that integrally belongs to or is part of the Alamo Building (former Rouse and Company Foundry Building located on the corner of 10 and Washington Streets) on the Real Estate, whether attached or detached, such as Tight fixtures, shades, rods, blinds, awnings, windows, storm doors, screens, plumbing fixtures, water heaters, water softeners, automatic heating equipment, air conditioning equipment, wall to wall carpeting, built -in items and electrical service cable, outside television towers and antenna, fencing, gates and landscaping shall be considered a part of the Building and excluded from the sale. SECTION 9. USE OF PURCHASE PRICE. At time of settlement, funds of the purchase price may be used to pay taxes and other liens and to acquire outstanding interests, if any, of others. SECTION 10. ABSTRACT AND TITLE. Seller, at its expense, shall promptly obtain an abstract of title to the Real Estate continued through the date of acceptance of this offer, and deliver it to Buyer for examination. It shall show merchantable title in Seller in conformity with this agreement, Iowa law and Title Standards of the Iowa State Bar Association. The abstract shall become the property of the Buyer when the purchase price is paid in full. Seller shall pay the costs of any additional abstracting and title work due to any act or omission of Seller, including transfers by or the death of Seller or its 2 assignees. SECTION 11. DEED. Upon payment of the purchase price, Seller shall convey the Real Estate to Buyer, by Warranty Deed, free and clear of all liens, restrictions, and encumbrances except as provided in 1 a. through 1 .d. Any general warranties of title shall extend only to the time of acceptance of this offer, with special warranties as to acts of Seller continuing up to time of delivery of the deed. SECTION 12. TIME IS OF THE ESSENCE. Time is of the essence in this contract. SECTION 13. REMEDIES OF THE PARTIES 13.1 If Buyer fails to timely perform this contract, Seller may forfeit it as provided in the Iowa Code, and all payments made shall be forfeited or, at Seller's option, upon thirty days written notice of intention to accelerate the payment of the entire balance because of such failure (during which thirty days such failure is not corrected) Seller may declare the entire balance immediately due and payable. Thereafter this contract may be foreclosed in equity and the Court may appoint a receiver. 13.2 If Seller fails to timely perform this contract, Buyer has the right to have all payments made returned to it and Seller shall reimburse Buyer for any expenses incurred by Buyer for the design of the parking lot contemplated by this agreement. 13.3 Buyer and Seller also are entitled to utilize any and all other remedies or actions at law or in equity available to them and shall be entitled to obtain judgment for costs and attorney fees as permitted by law. SECTION 14. APPROVAL OF COURT. If the sale of the Real Estate is subject to Court approval, the fiduciary shall promptly submit this contract for such approval. If this contract is not so approved, it shall be void. SECTION 15. CONTRACT BINDING ON SUCCESSORS IN INTEREST. This contract shall apply to and bind the successors in interest of the parties. SECTION 16. CONSTRUCTION. Words and phrases shall be construed as in the singular or plural number, and as masculine, feminine or neuter gender, according to the context. SECTION 17. TIME FOR ACCEPTANCE. If this offer is not accepted by Seller on or before 5:00 pm on the 31st day of October, 2010, it shall become void and all payments shall be repaid to the Buyer. SECTION 18. OTHER PROVISIONS. 18.1 The Offer is subject to final approval of the City Council of the City of Dubuque, Iowa in its sole discretion. 3 18.2 Buyer, its counsel, accountants, agents and other representatives, shall have full and continuing access to the Real Estate and all parts thereof, upon reasonable notice to Seller for the purpose of inspecting, surveying, engineering, test boring, performance of environmental tests and such other work as Buyer shall consider appropriate, provided that Buyer shall hold Seller harmless and fully indemnify Seller against any damage, claim, liability or cause of action arising from or caused by the actions of Buyer, its agents, or representatives upon the Real Estate (except for any damage, claim, liability or cause of action arising from conditions existing prior to any such entry upon the Real Estate), and shall have the further right to make such inquiries of governmental agencies and utility companies, etc. and to make such feasibility studies and analyses as Buyer considers appropriate. 18.3 Seller shall at its expense deconstruct the former Eagle Offices located at 955 Elm Street and the auto body building, located at 375 East 9t Street (the "Deconstruction Buildings "). Provided, however, Seller shall not be responsible for the cost of unforeseen conditions or elements related to the Deconstruction Buildings to be deconstructed or the Real Estate, including environmental issues. Such deconstruction shall be to the satisfaction of Buyer prior to closing. Buyer will be deemed satisfied with the deconstruction if the Deconstruction Buildings and foundations have been removed from the premises and the property graded to a level lot. Seller shall also, at its expense, stabilize the Alamo building. Such stabilization shall include structural stabilization, including roof, masonry work and repairs to the holes in the building caused by deconstruction. Buyer shall at Closing reimburse Seller for its actual costs of such deconstruction and stabilization. Provided, Seller shall obtain bids for all proposed deconstruction of the Deconstruction Buildings and stabilization of the Alamo and shall submit such bids to Buyer for approval at least thirty (30) days prior to the Closing. If Buyer approves such bids this transaction shall proceed as provided herein and Seller shall be reimbursed for the above costs at Closing. If Buyer does not approve such bids in writing prior to Closing then this agreement shall be null and void and neither party shall have any further obligation to the other hereunder. 18.4 Buyer will acknowledge on the appropriate Internal Revenue Service form prepared by Seller that Buyer is in receipt of an appraisal of the Real Estate that shows the fair market value of the Real Estate to be $800,000.00 and that Sellers are donating to the City the difference between this fair market value appraisal and the purchase price. 18.5 Seller warrants that the rights of all tenants shall be terminated by Seller prior to Closing and that there will be no tenants whose rights in the Real Estate survive the Closing. This covenant shall survive the Closing. 18.6 Additional Contingencies. Seller's obligation to proceed hereunder is expressly subject to and contingent upon (but may be waived by Seller) the following: Completion, execution and final City approval of Development Agreements providing as follows: 4 (a) That Buyer shall develop an asphalt surface parking lot on the Real Estate consisting of approximately 197 standard parking spaces (the "Parking Spaces "). Buyer shall not be required to complete construction of the Parking Spaces before substantial completion of the rehabilitation of the Caradco Building. (b) That an entity controlled by John Gronen and Mary Gronen, or their assignees, shall lease the Parking Spaces at an annual rental established by the City Council (which rate shall be consistent with Buyer's standard and typical lease rates for such spaces) as long as at least 72 residential units are available in that Building locally known as the Caradco Building (900 Jackson). The Parking Spaces shall be leased by the Gronen entity or Gronens' assignee as follows: i. At least 30spaces within thirty (30) days after the substantial completion of rehabilitation of the Caradco Building (900 Jackson),; and, ii. At least11 additional spaces for each month after the Section 18.6 (b)i date until all of the approximately 197 Parking Spaces are leased by the Gronen entity or its' assignee; and, The Gronen entity or the Gronens' assignee may sublease the Parking Spaces to third parties upon terms agreeable to the Gronen entity or the Gronens' assignee in its or their sole discretion, provided that the sub - lessee is a tenant or owner residing within the Historic Millwork District PUD boundaries. (c) That an entity controlled or operated by Robert Johnson, or Johnson's assignee shall lease at least 120 Parking Spaces on property controlled by Buyer within 600 feet of that building locally known as the Iron Works Building at an annual rental established by the City Council (which rate shall be consistent with Buyer's standard and typical lease rates for such spaces) as long as at least 75 Residential Units are available in that Building (the "Iron Works Parking Spaces "). The Iron Works Parking Spaces shall be leased by the Tenant entity as follows: i. At least 40 spaces within thirty (30) days after the substantial completion of rehabilitation of the Iron Works Building, but no later than January 1, 2012 ; and, ii. At least 40 additional spaces within 60 days after the Section 18.6 (c)i date; and, iii. At least 20 additional spaces within 90 days after the Section 18.6 (c)i date; and, iv. The balance of the Parking Spaces within 150 days after the Section 18.6 (c)i date. The Johnson entity or Johnson's assignee may sublease the Iron Works Parking 5 Spaces to third parties upon terms agreeable to the Johnson entity or Johnson's assignee in its or his sole discretion, provided that the sub - lessee is a tenant or owner residing within the Historic Millwork District PUD boundary. (d)That in the event a parking ramp is developed on the Real Estate, the Gronen entity or the Gronen assignee Building under Paragraph 18.6(b) above and the Johnson entity or Johnson's assignee under Paragraph 18.6(c) above shall be entitled to the same lease rights within the parking ramp (the same number of Parking Spaces and the same number of Iron Works Parking Spaces, respectively) as provided above. During the construction of said ramp, some or all of the then existing parking spaces may not be available to the Gronen entity and /or the Johnson entity or their assignees. During this period Buyer will provide temporary substitute parking /shuttle options for these displaced parking patrons. Dated: S �-e ... - 04, CITY OF DUBUQUE, IOWA By: THIS OFFER IS ACCEPTED Dated: /J /(() WAREN, O - REDEVE 1 PMENT, LLC By: v / 7- By: Michael C. Van Milligen City Manager John a Konen By: ,ge,A Bob Joh son mber 6 MINIM Ell.LI,LLI L1.1 1,V A REA FUTURE SURFACE PARKING LOT UP LANDSCKEOMO 1,1111.01.40,..1. NOLLANIA 111. N•1111. MP. VOCAL I t I m +! I 1 ! I t W F I N i1 v _ I LAKOSGAPE AREA IN h1 !k ' NI J 1 ' II 1.1 IN ,,,- IE1 1 110', III i : !I U 1I 1 I mil It Ns ►�__, II Ilp lim 1.1.1111.1.11•0 �II. -- 111 1.1.1111.1.11•0 i i �' viii ■I WASHUY1iU(DY STREET (SHOWN RECONSTRUCTED) X9+00 208 +00 amitalli qr.! mi���i�i�ir� _ - � an ■ - I IUIUI■I.IUIIIII.IU'U1U11 -: ; 1111U1U11U1 .1.1.1.1 ■1■1■i■1U11•11M1 ■I• ��1 , .L r ir; � ! tia∎nn.11■11i hi I STEEI MOM AN Iti a _ ' AT C ARAI CO MAIN PLANT B ILDING • l i • �a i — ! 0 m NEW MEC 11.414 Cr CABT 1 4 O PLAN NORTH CONCEPTUAL SITE PLAN NOTTOSCAL NOT FOR CONSTRUCTION P AYOONB IMMO w.so.ai ..IOIWlJiRI_10 : = PROJECT NO.10370 DATE 17 SEPT.21110 DRAWN BY..1EM REVISIONS SIIEET NO. A100 Alamo site with parking ramp structure taken from the Master Plan 1 inch = 300 feet Legend Road Centerline Alamo Purchase Area C I Historic Millwork District Boundary Created by ADJ Base data provided by Dubuque County GIS Millwork District / /4ri,o S;f� Warehouse Redevelopment LLC Exhibit 1 Capital Expenditures Land 60,000.00 Building 432,213.07 Office Improvements 16,517.07 Improvements 4,329.84 Organizational Costs 600.00 Total Capital Expenses 513,659.98 Net Income (Loss) Before Depreciation & Amortization January 2006 through December 2006 January 2007 through December 2007 January 2008 through December 2008 January 2009 through December 2009 January 2010 through August 31, 2010 September 2010 through May 1, 2011 Estimated Holding Cost Total Holding Expenses Accounts Receivable Not Collected included in Income 18,700.01 Carrying Cost of Capital Contributions (6% Interest Rate) through May 1, 2011 56,051.76 NO Total Investment & Holding Costs in Warehouse Redevelopment LLC From January 2006 through May 1, 2011 Note: If the closing date is extended the holding cost each day is: $50 Interest and $160 operating cost (11,853.08) (12,347.19) (32,715.40) (24,984.21) (34,713.55) (50,000.00) 166,613.43 755,025.18 - 5� 0 s1,7� 4 �qFl 73. �f.Z 210.00