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Assistance Pool to Encourage Residential Housing in DowntownMasterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Assistance Pool to Encourage Residential Housing in Downtown DATE: October 26, 2010 Dubuque killtil Al4medcaTity 2007 In November 2009, Economic Development Director Dave Heiar recommended that a pool of funds in the amount of $2.5 million be created to encourage new residential housing units in downtown Dubuque and that a Request for Proposals be solicited from developers who are interested in renovating existing structures in the downtown. Through the first and second rounds of the incentive program, 11 properties have been awarded assistance to create 102 new residential units. After funding the first 11 projects, $1,529,000 is still available in the incentive program to encourage new housing units in the urban renewal district. Based on the initial experience, the requirements and incentives have been amended from previous rounds of the incentive program. The unchanged requirements are as follows: • The project must assist in the creation of new market -rate downtown rental and owner - occupied residential units within the Greater Downtown Urban Renewal District. • The project must be the rehabilitation of an existing structure. • No more than $10,000 per residential unit in assistance will be considered. • No more than $750,000 will be provided to a single project. • No developer fee will be permitted until all City assistance is paid or satisfied in full. • The City will disperse awarded funds for the benefit of the project once the project is completed and a Certificate of Occupancy has been given for the housing units. • Each approved project will also be eligible to receive site - specific Tax Increment Financing (TIF) for a 15 -year period, depending on the project scope. The modified or new requirements are as follows: • The project must be under construction by April 1, 2011, with at least 25% of the project completed by July 1, 2011. • The units created must be completed and ready for occupancy by December 31, 2011 if less than 30 units. The deadline can be negotiated for projects greater than 30 units. • A minimum of two new housing units must be created in the project. • Units smaller than 650 square feet will not be eligible for this project. • No more than 65% of the units of any project can have a restriction of 80% of the median income. • No units can have a restriction of less than 80% of the median income. Economic Development Director Dave Heiar recommends the City Council authorize the issuance of an RFP for the third round of Downtown Housing Incentive Program. I concur with the recommendation and respectfully request Mayor and City Council approval. Mic ael 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: Assistance Pool to Encourage Residential Housing in Downtown DATE: October 21, 2010 Dubuque kittel AN4me IcaCfY 11111 2007 INTRODUCTION This memo is to provide a third round of funding to encourage new residential housing units in downtown Dubuque. 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. • Sedgwick CMS has committed to create an additional 106 jobs at its facility in the Technology Park. 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. Several housing studies have been conducted in recent years that indicate a need for additional housing in the downtown area. The most recent study by the Iowa Finance Authority in November 2009 indicated a need for an additional 556 units in the community, with the most desirable units being in the downtown area. About a year ago, 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: • 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 Through the first and second rounds of the incentive program, 11 properties have been awarded assistance to create 102 new residential units. They are: Company Name Project Address # Units Amount Awarded Hippocrene Enterprises, LLC 756 N. Main Street 4 units $40,000 Grant (Walker Shoe Store) K & E Partnership LLP 129 Main Street 2 units $12,000 Grant (Knippel Religious Gifts) D & J Realty 163 Main Street 3 units $30,000 Grant RMF Associates, LLC 392 -394 Bluff Street 2 units $10,000 Grant B & C Cathedral Development, LLC 205 Bluff Street 24 units $226,000 low interest loan Term: 10 Years Rate: 2% Payment Frequency: Monthly 73 CHS Forwards, LLC 299 Main Street 21 units $210,000 Grant The Fischer Companies 426 -428 W. 5th 4 units $40,000 Grant Street The Fischer Companies 951 -965 Main Street 7 units $70,000 Grant HHH Enterprises, LLC Bonson Block, LLC 44 Main, LLC 164 -180 Main Street 3 units $15,000 Grant 356 Main Street 8 units $80,000 Grant 44 Main Street 24 units $240,000 Grant DISCUSSION After funding the first 11 projects, $1,529,000 is still available in the incentive program to encourage new housing units in the urban renewal district. Attached is an RFP for a third round of applications. Based on our initial experience the requirements and incentives have been amended from previous rounds of the incentive program. The unchanged requirements are as follows: • The project must assist in the creation of new market -rate downtown rental and owner - occupied residential units within the Greater Downtown Urban Renewal District. • The project must be the rehabilitation of an existing structure. • No more than $10,000 per residential unit in assistance will be considered. • No more than $750,000 will be provided to a single project. • No developer fee will be permitted until all city assistance is paid or satisfied in full. • The City will disperse awarded funds for the benefit of the project once the project is completed and a Certificate of Occupancy has been given for the housing units. • Each approved project will also be eligible to receive site - specific Tax Increment Financing (TIF) for a 15 year period, depending on the project scope. The modified or new requirements are as follows: • The project must be under construction by April 1, 2011, with at least 25% of the project completed by July 1, 2011. • The units created must be completed and ready for occupancy by December 31, 2011 if less than 30 units. The deadline can be negotiated for projects greater than 30 units. • A minimum of 2 new housing units must be created in the project. • Units smaller than 650 square feet will not be eligible for this project. • No more than 65% of the units of any project can have a restriction of 80% of the median income. • No units can have a restriction of less than 80% of the median income. The assistance available through the fund may take several different forms, including but not limited to: • Low - Interest Loans • Grants City staff selected by the City Manager will be charged with evaluating the proposals with the ultimate task to select projects which create new market -rate rental and owner - occupied residential units in the Greater Downtown Urban Renewal District at the lowest per unit cost to the fund. Per unit cost to the fund will be calculated based upon the structure of the assistance required for the project. One of the City's goals is to leverage the most private investment with the least public assistance. The City Manager will make a recommendation to the City Council and the City Council will make the final awards. The terms of the award and the City's obligation to provide financial assistance to a project will be set forth in a development or loan agreement between the City and successful applicant. Some of the proposed funding for this incentive program has been committed as local match for grant applications. If any of these federal grants are approved, the pool of funds available for this incentive program will be reduced accordingly. Eligible projects to use this new financing pool need not be directly used for housing unit creation. The identified project must be a required component related to housing unit creation (i.e. parking). An RFP requesting proposals from developers or property owners will need to be immediately available. In order to expedite the creation of housing units, proposals should be delivered to the Economic Development Department no later than Noon on November 29, 2010. Staff will review the proposals and discuss them with the City Manager. The City reserves the right to reject any and all proposals and to negotiate changes with any applicant. The City Manager will then provide a recommendation to the City Council. RECOMMENDATION I recommend that the City Council approve the attached resolution approving the RFP for a third round of applications to the Downtown Housing Incentive Program. ACTION STEP The action step is to approve the attached resolution authorizing the City Manager to issue and RFP for the third round of the Downtown Housing Incentive Program. F: \USERS \Econ Dev \Downtown Housing \RFP 3rd Round\20101021 Housing RFP #3 Memo.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. 436-10 APPROVING AUTHORIZING THE CITY MANAGER TO SOLICIT PROPOSALS FOR PROJECTS TO ENCOURAGE MARKET -RATE DOWNTOWN RENTAL AND OWNER - OCCUPIED RESIDENTIAL UNITS IN 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. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. The City Council approves the Request For Proposal for projects that are in need of assistance to encourage new market -rate downtown rental and owner - occupied residential housing units in the Greater Downtown Urban Renewal District. Section 2. That the City Manager is hereby authorized and directed to distribute the Request for Proposal to interested parties. At .st: Passed, approved and adopted this 1 day of November, 2010 Jeanne F. Schneider, City Clerk F: \USERS \Econ Dev \Downtown Housing \RFP Resolutions\20101020 Resolution Downtown Housing RFP3.doc Roy D. Buol, Mayor 1 CITY OF DUBUQUE, IOWA November 1, 2010 THIRD REQUEST FOR PROPOSALS Assistance to Encourage Market -Rate Downtown Rental and Owner - Occupied Residential Units - $1,529,000 estimated to be available. INTRODUCTION The City of Dubuque, Iowa is soliciting proposals from developers and property owners to expand the availability of market -rate downtown rental and owner - occupied residential units. HISTORY /BACKGROUND Recent job creation projects within the City of Dubuque have caused a significant demand for downtown living options from new residents preferring to live near work and entertainment opportunities. Recent economic study of housing in the City of Dubuque has shown unmet demand for this housing type. The City of Dubuque previously established a pool of funds to be made available to complete financing packages for the immediate creation of market -rate downtown rental and owner - occupied residential units within the Greater Downtown Urban Renewal District. (See attached map for boundaries) Market -rate residential units include rental units which are not income restricted or rental units that are restricted to 80% of median income and less for no more than five years (units must not be restricted to 60% of median income or less, or any other restriction under 80 %) and owner occupied units. Eighty percent of median income level as determined by the Department of Housing and Urban Development (HUD), is currently at $35,000 for a single person, $40,000 for two and $45,000 for three. Through the second round of the program, the City committed $971,000 in grants and loans to assist 11 projects. These projects will create 102 downtown market rate residential units. PROJECT REQUIREMENTS Projects eligible to receive assistance from this newly established pool of funds must meet the following requirements: • The project must assist in the creation of new market -rate downtown rental and owner - occupied residential units within the Greater Downtown Urban Renewal District. • The project must be the rehabilitation of an existing structure. • The project must be under construction by April 1, 2011, with at least 25% of the project completed by July 1, 2011. • The units created must be completed and ready for occupancy by December 31, 2011 if less than 30 units. Deadline can be negotiated for projects greater than 30 units. Third Round - Public Assistance to Encourage Downtown Rental Housing Page 2 • No more than $10,000 per residential unit in assistance will be considered. • No more than $750,000 will be provided to a single project. • No more than 65% of the project units may have the 80% of median income or below restriction. • A minimum of 2 new housing units must be created in the project. • Assisted project units may not have a restriction of 60% of median income and below. • The City will disperse awarded funds for the benefit of the project once the project is completed and a Certificate of Occupancy has been given for the housing units. • No developer fee will be permitted until all city assistance is paid or satisfied in full. • Units smaller than 650 square feet will not be eligible for this project. The assistance requested need not be directly used for housing unit creation. However, the project must be a required component related to housing unit creation (i.e. parking). STRUCTURE OF ASSISTANCE The assistance available through the fund may take several different forms, including but not limited to: • Low - Interest Loans • Grants Each approved project will also be eligible to receive site - specific Tax Increment Financing (TIF) for a 15 year period, depending on the project scope. SELECTION CRITERIA City staff selected by the City Manager will be charged with evaluating the proposals with the ultimate task to select projects which create new market -rate rental and owner - occupied residential units in the Greater Downtown Urban Renewal District at the lowest per unit cost to the fund. Per unit cost to the fund will be calculated based upon the structure of the assistance required for the project. One of the City's goals is to leverage the most private investment with the least public assistance. The City Manager will make a recommendation to the City Council and the City Council will make the final awards. The terms of the award and the City's obligation to provide financial assistance to a project will be set forth in a development or loan agreement between the City and successful applicant. PROPOSAL REQUIREMENTS Applicants must complete the attached application. A ten -year detailed financial proforma is required to accompany the application. The proforma should include project revenues and expenses by category and a listing of all planned sources of financing to complete the project. A floor plan for all proposed units must be included with the application. SUBMISSION REQUIREMENTS Third Round - Public Assistance to Encourage Downtown Rental Housing Page 3 A fully completed application 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, November 29, 2010. Proposals should be addressed to David Heiar, Economic Development Director, at the above address. Questions can be directed to David Heiar or Aaron DeJong by telephone at (563) 589 -4393, by fax at (563) 589 -1733, or by email at dheiar(acityofdubuque.orq or adejonqa,cityofdubuque.orq. 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. Some of the proposed funding for this incentive program has been committed as local match for federal grant applications. If any of these federal grants are approved, the pool of funds available for this incentive program will be reduced accordingly. 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 project in greater detail. F: \USERS \Econ Dev \Downtown Housing \RFP\20101019_Downtown Housing RFP3.doc