Lower Main Development_TIF Agreement
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MEMORANDUM
April 12,2004
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Development Agreement by and between the City and Lower Main
Development, LLC. to Provide Tax Increment Financing
On January 20, 2003, the City Council approved a Memorandum of Understanding that
agreed to provide a $150,000 Tax Increment Financing Forgivable Loan to Lower Main
Development, LLC. contingent on execution of a Minimum Assessment Agreement
and upon Shepherd, Inc. occupying the LLC:s development property. Shepherd, Inc.
has formally taken occupancy in the building, having relocated from East Dubuque. The
renovated building will also house several other businesses.
The Minimum Assessment Agreement establishes a base taxable value of $382,100 for
the property and requires a minimum $1,000,000 value in excess of the base value for
the purposes of funding the TIF bond.
Economic Development Director Bill Baum recommends City Council approval of a
Development Agreement by and between the City of Dubuque and Lower Main
Development, LLC., the developer of the former Weber Paper Company building at
137 Main Street and two adjacent parking lots.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
1f)1~jJ ~1 /l1Je
Michael C. Van Milligen ~
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Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
William Baum, Economic Development Director
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CITY OF DUBUQUE, IOWA
MEMORANDUM
April 12,2004
FROM:
Michael Van Milligen, City Manager
William Baum, Economic Development Director ~
TO:
SUBJECT: Development Agreement by and between the City and Lower Main
Development, L.L.C. to Provide Tax Increment Financing
INTRODUCTION
This memorandum presents for City Council consideration a Development Agreement
by and between the City of Dubuque and Lower Main Development, LLC., the
developer of the former Weber Paper Company building at 137 Main Street and two
adjacent parking lots. The attached Resolution approves the Development Agreement
that authorizes tax increment financing of $150,000.
BACKGROUND
On January 20, 2003, the City Council approved a Memorandum of Understanding that
agreed to provide a $150,000 Tax Increment Financing Forgivable Loan to the LLC.
contingent on execution of a Minimum Assessment Agreement and upon Shepherd, Inc.
occupying the LLC:s development property. The Assessment Agreement is attached
to this memorandum and Shepherd, Inc. has formally taken occupancy in the building,
having relocated from East Dubuque. The renovated building will also house several
other businesses.
DISCUSSION
The attached Development Agreement establishes the terms under which the City will
make the Economic Development Grant of $150,000 to the developer. The City intends
to provide proceeds from the sale of a TIF bond to the developer that will be repaid by
new tax increment generated from the redeveloped property over a 1 O-year period. At
this time, the minimum amount of new taxes are estimated to be $27,000 per year
which is sufficient to retire the debt on a loan amount of $182,000 which includes bond
counsel fees and advances for interest payments prior to new taxes coming available.
The Minimum Assessment Agreement establishes a base taxable value of $382,100 for
the property and requires a minimum $1,000,000 value in excess of the base value for
purposes offunding the TIF bond.
Additional documents will be presented at the May 3rd meeting to set a public hearing
on the actual issuance of the bond.
RECOMMENDATION
I recommend that the City Council approve the Development Agreement with Lower
Main Development, LLC. This action is consistent with the Memorandum of
Understanding the City Council adopted on January 20, 2003 to support the developer's
renovation of the former Weber Paper Company building and provide opportunities for
new job creation in the Old Main area.
ACTION STEP
The action step for the City Council is to adopt the attached Resolution.
attachments
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RESOLUTION NO, 173-04
AUTHORIZING THE EXECUTION OF A DEVELOPMENT AGREEMENT WITH LOWER
MAIN DEVELOPMENT, 1.1.C.
Whereas, the City Council of the City of Dubuque, Iowa, ( the "City") after public
hearing, duly adopted an Urban Renewal Plan (the Plan) for the Greater Downtown Urban
Renewal District (the District); and
Whereas, the Plan provides that the City may undertake special financing activities,
including loans or grants to private developers, to meet the objectives of the Plan and to
encourage the development of the District; and
Whereas, the City Council has determined, in accordance with Section 15A.1 of the
Iowa Code, that LOWER MAIN DEVELOPMENT, L.L.C. (the "Developer") is qualified to
receive such loan or grant assistance to assist with the renovation of property and new job
creation in the District; and
Whereas, a Development Agreement, attached hereto and by this reference made a
part hereof, sets forth the terms and conditions of an Economic Development Grant to the
Developer.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. That the form of Development Agreement by and between the City of Dubuque
and Lower Main Development, L.L.C., attached hereto, is hereby approved.
Section 2. That the Mayor and City Clerk are hereby authorized and directed to execute,
on behalf of the City of Dubuque, Iowa, said Development Agreement.
Passed, approved and adopted this 19th day of April 2004.
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider
City Clerk
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DEVELOPMENT AGREEMENT
BY AND BETWEEN THE CITY OF DUBUQUE, IOWA
AND
LOWER MAIN DEVELOPMENT, L.L.C.
THIS DEVELOPMENT AGREEMENT dated this - day of , 2004 by
and between the City of Dubuque, Iowa (the "City"), and Lower Main Development,
LLC. (the "Developer").
WITNESSETH:
WHEREAS, the Developer and the City have entered into a Memorandum of
Understanding, approved by the City Council of Dubuque, Iowa on January 20, 2003,
which Memorandum of Understanding provides that the Developer will make a capital
investment of not less than $2 Million in building improvements, equipment, furniture
and fixtures in property located at 137 Main Street and adjacent parking lots in the City
of Dubuque, ("the Minimum Improvements") and lease Developer's property to
Shepherd, Inc., YOU Squared, Platinum Services and Epic Construction; and
WHEREAS, the Minimum Improvements are located on the real property, the legal
description of which is:
The South 20 feet 10 inches of the North 21 feet 6 inches of City Lot 2, the South 6
inches of City Lot 2 and the North 43 feet of City Lot 1 in the City of Dubuque, Iowa,
according to the United States Commissioners' Map of the Survey of the Town of
Dubuque, Iowa in accordance with the Plat of Survey filed as Instrument No. 12885-00
on November 6, 2000, records of Dubuque County, Iowa AND Lot 78a and the North 44
feet of Lot 79 in the City of Dubuque, Iowa, according to the United States
Commissioners' Map thereof AND the South 16.8 feet of the North % of the North 40
feet of City Lot 82 and the South % of the North 40 feet of City Lot 82 and the South 24
feet 9 inches of City Lot 82 in Dubuque, Iowa (the "Property"),
which is located in the Greater Downtown Urban Renewal District (the "District") which
has been so designated by City Council Resolution _-04 as a slum and blight area
(the "Project Area") defined by Chapter 403 of the Iowa Code (the "Urban Renewal
Law"); and
WHEREAS, the Developer has undertaken the redevelopment of a vacant building and
parking lots located on the Property and is operating the same during the term of this
Agreement; and
WHEREAS, pursuant to Section 403.6(1) of the Iowa Code, and in conformance with
the Urban Renewal Plan for the Project Area adopted on April 19, 2004, the City has
the authority to enter into contracts and agreements to implement the Urban Renewal
Plan.
2
NOW, THEREFORE, the parties to this Development Agreement, in consideration of
the promises, covenants and agreements made by each other, do hereby agree as
follows:
1. The substantial completion of the Minimum Improvements by the Developer will
occur on or before December 31, 2004.
2. The Developer agrees to operate the Minimum Improvements until at least the
termination of this Agreement.
3. The Developer agrees to lease a portion of the premises to Shepherd, Inc. for
the purpose of creating new jobs in the District.
4. For and in consideration of Developer's obligations as provided herein, City
agrees (subject to the conditions set forth in this Agreement) to make an Economic
Development Grant to Developer. The Economic Development Grant shall be in the
total amount not to exceed One Hundred Fifty Thousand Dollars ($150,000.00) and
shall be payable solely and only from the proceeds of the sale of urban renewal tax
increment revenue bonds or notes by City as described in Section 5 hereof, and not
from any other source.
5. The Developer acknowledges and agrees that City intends to finance all of its
costs associated with funding the Economic Development Grant to Developer through
the issuance of urban renewal tax increment revenue bonds or notes to be issued by
City under the provisions of Section 403.9 of the Iowa Code, the Urban Renewal Act
and this Section (such obligation being referred to herein as Notes). Developer further
acknowledges and agrees that it shall identify for City a purchaser for the Notes.
Developer further acknowledges and agrees that the Notes shall be sold on such terms
and conditions, bear such interest rates, mature at such times and in such amounts as
City, reasonably, shall determine to be acceptable to it and shall be payable from and
secured solely and only by a pledge of the tax increment revenues collected by City in
respect of the Property and the Minimum Improvements located thereon for a period
not to exceed ten (10) years or as City shall otherwise determine. City shall have no
obligation to fund any of its obligations hereunder from any source other than the
proceeds of the Notes. City's obligation to issue the Notes and undertake its
obligations hereunder shall be subject in all respects to unavoidable delays, the
provisions of this Section, and to the satisfaction of all conditions required (in the
judgment of bond counsel for City) by Chapter 403 of the Code of Iowa, as amended,
with respect to the issuance of the Notes.
6. Notwithstanding any other provisions of this Agreement, City shall have no
obligation to Developer under this Agreement to issue the Notes or to fund the
Economic Development Grant to Developer if any of the following conditions exist:
(a) City is unable to complete the sale of the Notes on such terms and
conditions as it shall deem reasonably acceptable to it in accordance with the
requirements of Section 5 above; or
(b) There has been, or there occurs, a material change in the financing
commitments secured by Developer for construction and operation .of Minimum
Improvements during the term hereof, which change(s) make it substantially
more likely, in the reasonable judgment of City, that Developer will be unable to
fulfill its covenants and obligations under this Agreement.
7. Developer recognizes that City intends to utilize the tax increment revenues
collected in respect of Minimum Improvements to pay debt service including without
limitations the principal and accrued interest on the Notes. After the payment of required
debt service, City shall be free to use all tax increment revenues collected in respect of
Minimum Improvements or other properties within Project Area for any purpose for which
the tax increment revenues may lawfully be used pursuant to the provisions of the Urban
Renewal Act, and City shall have no obligation to Developer with respect to use thereof.
8. Developer shall agree to, and with City shall execute an Assessment Agreement
subs,tantially in the form attached hereto as Exhibit A pursuant to the provisions of Section
403.6(19) of the Code of Iowa specifying the Assessor's Minimum Actual Value for
Property and Minimum Improvements for calculation of real property taxes. Specifically,
Developer shall agree to a minimum actual value for Property and Minimum Improvements
that will result in a minimum actual value as of January 1, 2005 of not less than One Million
Dollars ($1 ,000,000.00) in excess of the Base Taxable Value (such minimum actual value
at the time applicable is herein referred to as the Assessor's Minimum Actual Value).
Nothing in the Assessment Agreement shall limit the discretion of the Assessor to assign
an actual value to Property in excess of such Assessor's Minimum Actual Value nor
prohibit Developer from seeking through the exercise of legal or administrative remedies a
reduction in such actual value for property tax purposes; provided, however, that Developer
shall not seek a reduction of such actual value below Assessor's Minimum Actual Value in
any year so long as Assessment Agreement shall remain in effect. Assessment
Agreement shall remain in effect until July 1,2016 (the Termination Date). Assessment
Agreement shall be certified by the Assessor for City as provided in Iowa Code Section
403.6(19) and shall be filed for record in the office ofthe County Recorderof Dubuque
County, and such filing shall constitute notice to any subsequent encumbrancer or
purchaser of Property (or part thereof), whether voluntary or involuntary, and such
Assessment Agreement shall be binding and enforceable in its entirety against any such
subsequent purchaser or encumbrancer.
9. Neither the preambles nor provisions of this Agreement are intended to modify,
nor shall they be construed as modifying, the terms of any other contract between the
City and the Developer. .
10. This Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the parties.
4
CITY OF DUBUQUE, IOWA
By
Terrance M. Duggan
Mayor
Attest:
Jeanne F. Schneider
City Clerk
Lower Main Development, L.L.C.
By
Wayne C. Briggs
Managing Member
(City Seal)
STATE OF IOWA )
) ss:
COUNTY OF DUBUQUE)
On this - day of 2004, before me the undersigned, a Notary
Public in and for the said County and State, 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, -Iowa, a
municipal corporation executing the instrument to which this is attached; that the seal
affixed hereto is the seal of said municipal corporation; that said instrument was signed
and sealed on behalf of the City of Dubuque, Iowa, by authority of its City Council; and
that said Mayor and City Clerk acknowledged the execution of said im,trument to be the
voluntary act and deed of said City, by it and by them voluntarily executed.
j
Notary Public
STATE OF IOWA )
) ss:
COUNTY OF DUBUQUE)
Onthis ~ day of 2004, before me the undersigned, a Notary
Public in and for the State of Iowa, personally appeared Wayne C. Briggs, to me
personally known, who, being by me duly sworn, did say that he is the Managing
Member of Lower Main Development, LLC., the corporation executing the instrument
to which this is attached and that as said Managing Member of Lower Main
Development, LLC. acknowledges the execution of said instrument to be the voluntary
act and deed of said company, by it and by him, an individual, voluntarily executed.
Notary Public
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Prepared by: Pamela Myhre, 50 W. 13th Street, Dubuque, IA 52001
Phone: 563-589-4393
ASSESSMENT AGREEMENT
THIS ASSESSMENT AGREEMENT, dated as of this - day of
2004, by and among the CITY OF DUBUQUE, IOWA, (the "City"), LOWER MAIN
DEVELOPMENT, LLC., its successors and assigns, (the "Developer"), and the CITY
ASSESSOR for the City of Dubuque, Iowa (the "Assessor").
WITNESSETH:
WHEREAS, on or before the date hereofthe City and Developer have entered into a
DevelopmentAgreement as of , 2004 (the "Agreement")
regarding certain real property located in the City legally described as follows:
The South 20 feet 10 inches ofthe North 21 feet 6 inches of City Lot 2, the
South 6 inches of City Lot 2 and the North 43 feet of City Lot 1 in the City of
Dubuque, Iowa, according to the United States Commissioners' Map of the
Survey of the Town of Dubuque, Iowa in accordance with the Plat of Survey filed
as Instrument No. 12885-00 on November 6,2000, records of Dubuque County,
Iowa AND Lot 78a and the North 44 feet of Lot 79 in the City of Dubuque, Iowa,
according to the United States Commissioners' Map thereof AND the South 16.8
feet of the North % of the North 40 feet of City Lot 82 and the South % of the
North 40 feet of City Lot 82 and the South 24 feet 9 inches of City Lot 82 in
Dubuque, Iowa (the "Development Property"); and
WHEREAS, it is contemplated that pursuant to said Agreement, the Developer will
undertake the development of the Development Property, which is within the Greater
Downtown Urban Renewal District established under an Urban Renewal Plan adopted by
Resolution No. on April 19, 2004; and
WHEREAS, pursuant to Section 403.6 of the Code of Iowa, as amended, the City
and the Developer desire to establish a minimum actual value for Development Property to
be constructed by the Developer pursuant to the Agreement (defined therein as the
"Minimum Improvements"); and
WHEREAS, the City and the Assessor have reviewed the preliminary plans and
specifications for the Minimum Improvements which it is contemplated will be erected.
NOW, THEREFORE, the parties to this Assessment Agreement, in consideration of
the promises, covenants and agreements made by each other, do hereby agree as follows:
1. The taxable value on the Property as of January 1, 2004 was $382,100 (the
"Base Taxable Value").
2. Upon substantial completion of construction of the above-referenced
Minimum Improvements by the Developer, but no later than January 1, 2005, the minimum
actual taxable value which shall be fixed for assessment purposes for the Development
Property and Minimum Improvements to be constructed thereon by the Developer shall be
not less than One Million Dollars ($1,000,000.00) in excess of the Base Taxable Value,
(hereafter referred to as the "Minimum Actual Value") until termination of this Assessment
Agreement. The parties hereto expect that the construction of the above-referenced
Minimum Improvements will be completed on or before December 31, 2004.
. Nothing herein shall be deemed to waive the Developer's rights under Iowa Code
Section 403.6(19) to contest that portion of any actual value assignment made by the
Assessor in excess ofthe Minimum Actual Value established herein. In no event, however,
shall the Developer seek to reduce the actual value assigned below the Minimum Actual
Value established herein during the term of this Agreement.
3. The Minimum Actual Value herein established shall be of no further force and
effect and this Assessment Agreement shall terminate on July 1,2016.
4. This Assessment Agreement shall be promptly recorded by the Developer
with the Recorder of Dubuque County, Iowa. The Developer shall pay all costs of
recording.
5. Neither the preambles nor provisions of this Assessment Agreement are
intended to, or shall be construed as, modifying the terms of the Agreement between the
City and the Developer.
6. This Assessment Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the parties, and all holders of mortgages upon or security
interests in the Development Property or Minimum Improvements granted prior to the date
hereof, to secure any loans with respect to the Development Property or Minimum
Improvements, that execute the consent attached hereto.
CITY OF DUBUQUE, IOWA
LOWER MAIN DEVELOPMENT, L.L.C.
By:
Terrance M. Duggan
Mayor
By:
Wayne C. Briggs
Managing Member
By:
(seal)
Jeanne F. Schneider
City Clerk
ACKNOWLEDGMENT
STATE OF IOWA
)
) 88.
)
COUNTY OF DUBUQUE
On this day of 2004, before me, the undersigned, a
Notary Public in and for the State of Iowa, personally appeared Terrance M. Duggan and
Jeanne F. Schneider to me personally known, who being duly sworn, did say that they are
the Mayor and City Clerk, respectively, of the City of Dubuque, Iowa, a Municipal
Corporation, created and existing under the laws of the State of Iowa, and that the seal
affixed to the foregoing 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 and by them voluntarily
executed.
Notary Public in and for the State of Iowa
My Commission Expires:
STATE OF IOWA
COUNTY OF DUBUQUE
)
) 88.
)
On this day of 2004, before me, the undersigned, a
Notary Public in and for the. State of Iowa, personally appeared Wayne C. Briggs to me
known, who being by me duly sworn, did say that he is the Managing Member of Lower
Main Development, LLC., the corporation executing the instrument to which this is
attached and that as said Managing Member of Lower Main Development, L.LC.
acknowledges the execution of said instrument to be the voluntary act and deed of said
company, by it and by him, an individual, voluntarily executed.
Notary Public in and for the State of Iowa
My Commission Expires:
CERTIFICATION OF ASSESSOR
The undersigned, having reviewed the plans and specifications for the Minimum
Improvements to be constructed and the market value assigned to the land upon which the
Minimum Improvements are to be constructed, and being of the opinion that the minimum
market value contained in the foregoing Assessment Agreement appears reasonable,
hereby certifies as follows: The undersigned Assessor, being legally responsible for the
assessment of the property described in the foregoing Assessment Agreement, upon
completion of Minimum Improvements to be made on it and in accordance with the
Assessment Agreement, certifies that the actual value assigned to such land, building and
equipment upon completion shall not be less than One Million Dollars ($1,000,000.00) in
excess of the Base Taxable Value until termination of this Assessment Agreement
pursuant to the terms hereof.
Dubuque City Assessor for the City of Dubuque, Iowa
Date:
STATE OF IOWA
)
) SS
)
COUNTY OF DUBUQUE
Subscribed and sworn to before me by
City Assessor for the City of Dubuque, Iowa.
Notary Public in and for the State of Iowa
My Commission expires:
Date:
CONSENT
The undersigned holder of a mortgage or other encumbrance on the above described
real property dated the - day of , 20_, filed on the - day of
, 20 , Instrument No. , records of Dubuque County,
Iowa, hereby acknowledges and consents to the foregoing Minimum Assessment
Agreement and in the event of a foreclosure of such mortgage or other encumbrance,
agrees to be bound by the terms and conditions hereof to the same extent as if it were
the Developer and had executed this Minimum Assessment Agreement prior to such
mortgage or other encumbrance.
Signature & Acknowledgement
The undersigned holder of a mortgage or other encumbrance on the above described
real property dated the - day of ,20_, filed on the ~ day of
, 20_, Instrument No. , records of Dubuque County,
Iowa, hereby acknowledges and consents to the foregoing Minimum Assessment
Agreement and in the event of a foreclosure of such mortgage or other encumbrance,
agrees to be bound by the terms and conditions hereof to the same extent as if it were
the Developer and had executed this Minimum Assessment Agreement prior to such
mortgage or other encumbrance.
Signature & Acknowledgement
The undersigned holder of a mortgage or other encumbrance on the above described
real property dated the - day of , 20_, filed on the ----'- day of
, 20_, Instrument No. , records of Dubuque County,
Iowa, hereby acknowledges and consents to the foregoing Minimum Assessment
Agreement and in the event of a foreclosure of such mortgage or other encumbrance,
agrees to be bound by the terms and conditions hereof to the same extent as if it were
the Developer and had executed this Minimum Assessment Agreement prior to such
mortgage or other encumbrance.
Signature & Acknowledgement
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