101 123 Main Agree CDBG LoanMEMORANDUM
TO:
FROM:
SUBJECT:
September 29, 2003
The Honorable Mayor and City Council Members
Millig City M
Michael C. Van en, anager
Public Hearing on Subordination Agreement
Premier Bank for Anthony Kemp and William Barrick
CDBG Loan #2-96 for 101-123 Main Street
Economic Development Director Bill Baum recommends City Council approval of a
Subordination Agreement with Premier Bank related to the City's mortgage interest in
property located at 101-123 Main Street associated with Anthony Kemp and William
Bardck's $100,000 Community Development Block Grant Loan that was used to
rehabilitate the property.
In 1996 the City provided a $100,000 loan (15 year term at 3% interest) to Sidney and
Colleen Wallace to renovate property they owned at 1st and Main Street. The City had a
first mortgage position with that loan. On March 6, 2000, the City approved an
assumption agreement that allowed Kemp and Barrick to assume the City loan when
they purchased the commercial building from the Wallaces. Kemp and Bardck's
outstanding debt to the City is approximately $76,000.
Premier Bank is requesting the City subordinate its existing mortgage interest to allow
the bank to refinance the property with Kemp and Barrick. The current owners intend to
buy out a third-party investor, pay off another outstanding loan on the property and
invest $92,000 in building renovations. An August 28, 2003 appraisal commissioned by
the bank indicates the existing value of the building to be $410,000, which is great 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
September 17, 2003
TO:
FROM:
SUBJECT:
Michael Van Milligen, City Manager
William Baum, Economic Development Director /~~-
Public Hearing on Subordination Agreement
Premier Bank for Anthony Kemp and William Barrick
CDBG Loan #2-96 for 101-123 Main Street
INTRODUCTION
This memorandum requests City Council approval of a resolution authorizing a
subordination agreement with Premier Bank related to the City's $100,000 Community
Development Block Grant Loan used to rehabilitate the property at 101-123 Main Street.
DISCUSSION
To enable Anthony Kemp and William Barrick to continue with the rehabilitation and reuse
of the building at 101-123 Main Street, the City has been asked to subordinate its existing
first mortgage interest to allow Premier Bank to refinance the property. The bank would
move to a first mortgage position with the City in second position. A recent appraisal of the
property shows sufficient value to cover both the bank's mortgage and the City's
outstanding loan with Kemp and Barrick which is approximately $76,000.
The Council has previously set a public hearing on the matter for October 6, 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.
RECOMMENDATION
I recommend the authorization of a subordination agreement. The City's security interest in
its loan should not be in jeopardy due to Premier Bank's refinancing of the property. The
property value should increase with 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:\USERS~Pm~h re\WPDOCS%OANDOC\kemp&barrick~sub2.rnern.doc
RESOLUTION NO. 377-03
RESOLUTION AUTHORIZING A SUBORDINATION AGREEMENT IN REGARD TO A
MORTGAGE INTEREST IN CITY LOT 80 AND THE SOUTH I AND 5/12 FEET OF
LOT 79 IN THE CITY OF DUBUQUE, DUBUQUE COUNTY, IOWA
Whereas, pursuant to Resolution No. 328-03 and published notice of time and
place of hearing, the City Council of the City of Dubuque, Iowa, met on October 6,
2003, to consider the proposal to dispose of interest in certain real estate by executing
a Subordination Agreement for a Real Estate Mortgage filed October 4, 1996, as
Instrument No. 11847-96, as to the following described real estate:
City Lot 80 and the South 1 and 5/12 Feet of Lot 79 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, attached hereto and made a part hereof, on
behalf of the City of Dubuque, Iowa.
Passed, approved and adopted this 6th day of October 2003.
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider, City Clerk
F:\USERS\Pm~hre\WPDOCS\LOANDOC\kemp&barrick~sub.res.doc
Prepared by: Cindy Olberding, Premier Bank, 1975 JF Kennedy Road, Dubuque, IA 52002 (563) 588-1000
SUBORDINATION AGREEMENT
On the day of ,2003, it is agreed by the City of Dubuque,
Iowa, that its mortgage dated the 26t" day of September, 1996, and filed October 4, 1996,
executed by SIDNEY R. WALLACE AND WILLIAM N. HOS to the City of Dubuque, Iowa, as
Instrument No. 11847-96 in the records of Dubuque County, Iowa, will be subordinated to that
mortgage to PREMIER BANK dated the day of ,2003, and
filed on the day of ,2003, as Instrument No.
of the records of Dubuque County, Iowa. The City of Dubuque, Iowa,
acknowledges the execution of said document.
By:
Terrance M. Duggan, Mayor
By: Jeanne F. Schneider, City Clerk
STATE OF IOWA
: ss:
DUBUQUE COUNTY
Onthis ~Z'~, dayof (/'~"TZ'~'~'/~,2003, beforeme, a Notary Public in and for the
State of Iowa, in and for said county, personally appeared Terrance M. Duggan and Jeanne F.
Schneider, to me personally known, who being by me duly sworn did say that they are the
Mayor and City Clerk, respectively of the City of Dubuque, a Municipal Corporation, created
and existing under the laws of the State of Iowa, and that the seal affixed to said instrument is
the seal of said Municipal Corporation and that said instrument was signed and sealed on behalf
of said Municipal corporation by authority and resolution of its City Council and said Mayor and
City Clerk acknowledged said instrument to be the free act and deed of said Municipal
Corporation by it voluntarily executed.
Karen M. Chesterman,
Notary Public, State ofIowa
~o ~.~. ~COMMISSION NO, 108258
'~' ! MY COHMiSE~ON EXPIRES
F:\USERS\Pmyhre\WPDOCS%OANDOC~kemp&bardck\SubordAgreement.doc
MEMORANDUM
September 9, 2003
TO:
The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT:
Subordination Agreement
Premier Bank for Anthony Kemp and William Bardck
CDBG Loan #2-96 for 101-123 Main Street
Economic Development Director Bill Baum recommends City Council approval of a
Subordination Agreement with Premier Bank related to the City's mortgage interest in
property located at 101-123 Main Street associated with Anthony Kemp and William
Barrick's $100,000 Community Development Block Grant Loan that was used to
rehabilitate the property, and that a public hearing be set for October 6, 2003.
In 1996 the City provided a $100,000 loan (15 year term at 3% interest) to Sidney and
Colleen Wallace to renovate property they owned at 1st and Main Street. The City had a
first mortgage position with that loan. On March 6, 2000, the City approved an
assumption agreement that allowed Kemp and Barrick to assume the City loan when
they purchased the commercial building from the Wallaces. Kemp and Barrick's
outstanding debt to the City is approximately $76,000.
Premier Bank is requesting the City subordinate its existing mortgage interest to allow
the bank to refinance the property with Kemp and Barrick. The current owners intend to
buy out a third-party investor, pay off another outstanding loan on the property and
invest $92,000 in building renovations. An August 28, 2003 appraisal commissioned by
the bank indicates the existing value of the building to be $410,000, which is great than
the outstanding combined bank and City debt.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
MCVM/jh
Attachment
CC:
Micha6~l C~Va !~e?~----~
Barry Lindahi, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
William Baum, Economic Development Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
September 8, 2003
TO:
FROM:
SUBJECT:
Michael Van Milligen, City Manager
William Baum, Economic Development Director ,~~
Subordination Agreement
Premier Bank for Anthony Kemp and William Barrick
CDBG Loan #2-96 for 10'1-123 Main Street
INTRODUCTION
This memorandum requests that the City Council set a public hearing on a subordination
agreement with Premier Bank. The subordination agreement relates to the City's mortgage
interest in property associated with Anthony Kemp and William Barrick's $100,000
Community Development Block Grant Loan #2-96 that was used to rehabilitate property
located at 101-123 Main Street. A resolution setting the public hearing for October 6, 2003
is attached.
BACKGROUND
In 1996, the City provided a $100,000 loan (15 year term at 3% interest) to Sidney and
Colleen Wallace to renovate property they owned at 1st and Main Street. The City had a
first mortgage position with that loan. On March 6, 2000, the City approved an assumption
agreement that allowed Kemp and Barrick to assume the City loan when they purchased
the commercial building from the Wallace's. Kemp and Barrick's outstanding debt to the
City is approximately $76,000.
DISCUSSION
A letter dated September 8, 2003 from Premier Bank is attached hereto requesting the City
subordinate its existing mortgage interest to allow the bank to refinance the property with
Kemp and Barrick. The current owners intend to buyout a third party investor, pay off
another outstanding loan on the property and invest $92,000 in building renovations. An
August 28, 2003 appraisal commissioned by the bank indicates the existing value of the
building to be $410,000 which is greater 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 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
October 6, 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 Premier Bank.
ACTION STEP
The action step for the City Council is to adopt the attached resolution.
attachments
F:\USERS~Pm~hre\WPDOCS~LOANDOC\kernp&bardck\subl .mere.doc
PREMIER BANK
Expect the Best.
September 8, 2003
Pam Myhre
Economic Development Planner
The City of Dubuque
50 West 13th Street
Dubuque, IA 52001
Re: Bill Barrick and Tony Kemp Refinance
PalTI:
As you are aware from our various phone conversations, Bill Barrick and Tony Kemp are
in the process of refinancing their commercial property located at the comer of 1s~ and
Main Street, Dubuque, with Premier Bank. As such, Premier Bank is requesting The City
of Dubuque to subordinate their mortgage to Premier Bank on the subject property.
Shown below is the approximate sources and uses of funds relating to the refinancing and
the loan-to-appraised value of the property based on the new appraisal.
Sources and Uses of Funds
Sources:
Premier Bank Real Estate Loan
Total Sources
$307,500
$307,500
Uses:
Buyout Third Party Investor
Cash for Building Renovations
PayoffFifth Third Bank 1s~ REM
Total Sources
$175,000
92,000
40,500
$307,500
Loan-to-Appraised Value
Loans:
Premier Bank
City of Dubuque
Total Loans
$307,500
76,000
$383,500
Appraised Value:
Tom Kane Appraisal
Appraised value
$410,000
$410,000
WEST SIDE OFFICE · 1975 IrK Road - P.O. Box 420 · Dubuque, Iowa 52004-0420 · Telephone 563-588-1000 · Fax 563-588-3352
DOWNTOWN OFFICE · 9th & Iowa Streets - P.O. Box 420 · Dubuque~ Iowa 52004-0420 ·TeIephone 563-690-1000 · Fax 563-690-0070
www.ptemierbanking.com
Member FDIC
Page 2
Barrick and Kemp
Premier Bank LTV
City of Dubuque LTV
75.00%
93.54%
Enclosed for your records is a recent copy of the appraisal for the subject property
completed by Tom Kane. Please feel flee to call me at 588-1000 with any questions.
Sincerely,
Darin P. Fischer
Senior Vice President
Premier Bank
RESOLUTION NO.
RESOLUTION DECLARING THE INTENT OF THE CITY OF DUBUQUE, IOWA, TO
SUBORDINATE A MORTGAGE INTEREST IN CERTAIN REAL ESTATE
Whereas, Anthony Kemp and William Barrick assumed a Real Estate Mortgage made to the
City of Dubuque, Iowa ("City"), filed October 4, 1996, as Instrument No. 11847-96, in connection with
Community Development Block Grant Loan #2-96 from City;, and
Whereas, Lot 80 and the South 1 and 5/12 feet of Lot 79 in the City of Dubuque, Dubuque
County, Iowa, is the real estate parcel described in said IVbrtgage; and
Whereas, City and Premier Bank both have Mortgage interests in the above-described real
estate; and
Whereas, Premier Bank requests that the City subordinate its Mortgage interest in the
above-described real estate to Premier Bank's interest to allow Anthony Kemp and William Bardck
to refinance their property with the bank; and
Whereas, the City Council has determined that the execution of a subordination agreement
with Premier Bank 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
Premier Bank with regard to the above-described Mortgage on the following described real estate
located in the City of Dubuque, Iowa:
Lot 80 and the South 1 and 5/12 feet of Lot 79 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 October 6, 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 ofthe real estate interests herein described.
Passed, adopted and approved this 15th day of September 2003.
ATTEST:
Jeanne F. Schneider, City Clerk
Terrance M. Duggan, Mayor
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