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Housing Enterprise Gronen App D~~~E ~<k~ MEMORANDUM () July 27,2004 c.) , , ) ,I TO: The Honorable Mayor and City Council Members u FROM: Michael C. Van Milligen, City Manager SUBJECT: Housing Enterprise Zone Program Agreement Number 04-HEZ-059 for Gronen Adaptive Reuse, LLLP On June 14, 2004, the City Enterprise Zone Commission approved an application to the Iowa Department of Economic Development (IDEO) on behalf of Gronen Adaptive Reuse, LLLP for Housing Enterprise Zone benefits related to the redevelopment of properties in the 1000 block of Main Street. IDEO approved the application on June 25, 2004. Economic Development Director Bill Baum recommends City Council approval of a Housing Enterprise Zone Program Agreement by and among IDEO, the City and Gronen Adaptive Reuse, LLLP. The agreement outlines the State benefits that will accrue to the LLLP based on their role as developer of a housing project that will provide 30 new upper floor housing units with an estimated capital investment of $4,831,000. There is no commitment within the agreement of any further City assistance. I concur with the recommendation and respectfully request Mayor and City Council approval. " œ /ì, ; C./ iJ / / ~ k~l "'I Y . 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 July 26, 2004 FROM: Michael Van Milligen, City Manager William Baum, Economic Development Directo~~ Housing Enterprise Zone Program Agreement Number 04-HEZ-O59 for Gronen Adaptive Reuse, LLLP TO: SUBJECT: INTRODUCTION This memorandum presents for City Council approval a Housing Enterprise Zone Program Agreement by and among the Iowa Department of Economic Development (IDED). the City and Gronen Adaptive Reuse, LLLP. The City Council is requested to adopt a resolution approving the agreement. BACKGROUND On June 14,2004, the City Enterprise Zone Commission approved an application to IDED on behalf of Gronen Adaptive Reuse, LLLP for Housing Enterprise Zone benefits related to the redevelopment of properties in 1000 block of Main Street. IDED approved the application on June 25, 2004. DISCUSSION Attached to this memorandum is a resolution that provides for the approval of the agreement for Housing Enterprise Zone benefits for Gronen Adaptive Reuse, LLLP. The resolution authorizes and directs the Mayor to execute the agreement on behalf of the City. The agreement outlines the State benefits that will accrue to the LLLP based on their role as developer of the housing project. The project will provide 30 new upper floor housing units. Gronen Adaptive Reuse, LLLP has estimated a capital investment of $4,831 ,000 within the Enterprise Zone. A copy of the agreement is attached to the resolution. RECOMMENDATION I recommend that the City Council approve the proposed Housing Enterprise Zone Program Agreement for Gronen Adaptive Reuse, LLLP by adopting the attached resolution. This agreement will provide State of Iowa financial benefits to a local housing developer making a substantial investment in our downtown. There is no commitment within the agreement of any further City assistance. ACTION STEP The action step for the Council is to adopt the attached resolution. attachments F: IUS E RS'Pmyh re IWPDOCSIEZIGro nen ICONTRACT M EM. doc ~ RESOLUTION NO. 300-04 RESOLUTION APPROVING A HOUSING ENTERPRISE ZONE PROGRAM AGREEMENT BY AND AMONG THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, THE CITY OF DUBUQUE AND GRONEN ADAPTIVE REUSE, LLLP. Whereas, the City of Dubuque has established two Enterprise Zones and an Enterprise Zone Commission; and Whereas, the Enterprise Zone Commission on June 14, 2004 approved the application of Gronen Adaptive Reuse, LLLP for Housing Enterprise Zone benefits; and Whereas, Gronen Adaptive Reuse, LLLP's application was approved by the Iowa Department of Economic Development on June 25, 2004; and Whereas, the Iowa Department of Economic Development has prepared and submitted for City Council approval an agreement relating to Housing Enterprise Zone benefits for Gronen Adaptive Reuse, LLLP a copy of which is attached hereto and by this reference made a part hereof; and Whereas, the City Council finds that the proposed agreement is acceptable and necessary to the growth and development of the city. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Iowa Department of Economic Development Housing Enterprise Zone Program Agreement, Number 04-HEZ-059, is hereby approved. Section 2. That the Mayor is hereby authorized and directed to execute the Agreement on behalf of the City of Dubuque and forward the executed copy to the Iowa Department of Economic Development for their approval. Passed, approved and adopted this 2nd day of August 2004. Terrance M. Duggan, Mayor Attest: Jeanne F. Schneider, City Clerk F :IUSERSIPmyh relWPDOCSIEZlGron en ICONTRACT. res .doc IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT HOUSING ENTERPRISE ZONE PROGRAM AGREEMENT EZ AGREEMENT NUMBER: APPLICATION APPROVAL DATE: 04-HEZ-059 June 25, 2004 AGREEMENT EFFECTIVE DATE: June 25, 2004 ENTERPRISE ZONE NAME: ZONE CERTIFICATION DATE: ZONE EXPIRATION DATE: City of Dubuque, Dubuque EZ-1 November 20,1997 November 19, 2007 THIS ENTERPRISE ZONE AGREEMENT is made by and among the IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, 200 East Grand Avenue, Des Moines, Iowa 50309 ("Department" or "IDED"), CITY OF DUBUQUE, City Hall, 50 W 13th St., Dubuque, IA 52001 ("Community") and GRONEN ADAPTIVE REUSE, LLLP, 1086 Main St., Dubuque, IA 52001 ("Housing Business"). WHEREAS, the purpose of the Enterprise Zone Program is to promote new economic development in economically distressed areas; and WHEREAS, the Community has designated and the Department has certified the Enterprise Zone identified above; and WHEREAS, eligible housing businesses with projects located in a certified Enterprise Zone are authorized under this program to receive certain tax incentives and assistance; and WHEREAS, the Enterprise Zone Commission responsible for the above-identified Zone has recommended approval and the Department has found the Housing Business' application to be consistent with the Act's eligibility requirements; and NOW THEREFORE, in consideration of the mutual promises contained in this Agreement and other good and valuable consideration, it is agreed as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall apply: 1.1 "Act' means 2003 Iowa Code sections 15E.191 through 15E.196 as amended by 2003 Iowa Acts, Senate File 441 and House File 576. 1.2 "Administrative Rules" means 261 Iowa Administrative Code, chapter 59. 1.3 "AGreement Effective Date" means the date this Agreement becomes effective and the Housing Business is authorized to receive program benefits. 1.4 "Ac¡reement Expiration Date" means the date this Agreement ceases to be in force and effect. This Agreement shall remain in effect until IDED receives written verification that all thirty (30) units have been certified for occupancy. 1.5 "Application Approval Date" means the date, as identified above, on which the Director or Director's designee of the IDED approved the Housing Business' Enterprise Zone application. 1.6 "Boare!' means the IDED Board. HEZ Format revised 7/2002 EZ Agreement # 04-HEZ-059 Page 2 1.7 "Commission" or "Enterprise Zone Commission" means the Enterprise Zone commission established by the Community responsible for the certified Enterprise Zone. 1.8 "DRF" means the Iowa Department of Revenue and Finance. 1.9 "Enterprise Zone" means the site within the Community certified by the Board for the purpose of attracting private investment. 1.10 "Project" means the activity, or set of activities, described in this Agreement and the Enterprise Zone application approved by IDED. 1,11 "Project Completion" means the date of completion of construction or if this Project involves rehabilitation, the date all improvements included in the Project are completed. ARTICLE II ENTERPRISE ZONE BENEFITS 2.1 Benefits. The following Enterprise Zone benefits authorized by the Act and IDED administrative rules are available to the Housing Business under this Agreement: (a) Investment Tax Credit. The Housing Business may claim an investment tax credit up to a maximum of 10 percent of the new investment which is directly related to the building or rehabilitating of the units stated in Article IV, Section 4.1 of this Agreement. New investment which is directly related to the building or rehabilitating units includes the following costs: land, surveying, architectural services, building permits, inspections, interest on the construction loan, building materials, roofing, plumbing materials, electrical materials, amounts paid to subcontractors for labor and materials provided, concrete, labor, landscaping, appliances normally provided with a new home, heating and cooling equipment, millwork, drywall and drywall materials, nails, bolts, screws, and floor coverings. New investment does not include the machinery, equipment, hand or power tools necessary to build or rehabilitate homes. The new investment that may be used to compute the tax credit shall not exceed the new investment used for the first one hundred forty thousand dollars of value for each unit. In determining the tax credit, new investment financed through federal, state, and local government tax credits, grants, and forgivable loans shall not be included. The tax credit may be used to reduce tax liabilities imposed under Iowa Code chapter 422, Division II, Division III or Division V or under Iowa Code chapter 432. Any credit in excess of the tax liability for the tax year may be credited to the tax liability for the following seven years or until depleted, whichever occurs earlier. If the business is a partnership, subchapter S corporation, limited liability company, or estate or trust electing to have the income taxed directly to the individual, an individual may claim the tax credit allowed. The amount claimed by the individual shall be based upon the pro-rata share of the individual's earnings of the partnership, subchapter S corporation, limited liability company, or estate or trust. (b) Refund Of Sales, Service And Use Taxes Paid To Contractors Or Subcontractors. The Housing Business is eligible for a refund of sales, service and use taxes paid by an eligible business, including an eligible business acting as a contractor or subcontractor as authorized in Iowa Code section 15.331A. (i) The Housing Business may apply for a refund of the sales and use taxes paid under Iowa Code chapters 422 and 423 for gas, electricity, water or sewer utility services, goods, wares, or merchandise, or on services rendered, furnished, or performed to or for a contractor or subcontractor and used in the fulfillment of a written contract relating to the construction or rehabilitation of the units within the Enterprise Zone. Taxes attributable to intangible property and furniture and furnishings shall not be refunded. (ii) Format cevi"d 7/2002 EZ Agreement # 04-HEZ-059 Page 3 To receive a refund of the sales, service and use taxes paid to contractors or subcontractors, the Housing Business must, within one year after Project Completion, make an application to the DRF. 2.2 Duration Of Benefits. The Enterprise Zone designation shall remain in effect for ten years following the date of certification. Any state incentives or assistance that may be conferred must be conferred before the designation expires. However, the benefits of the incentive or assistance may continue beyond the expiration of the Enterprise Zone designation. ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUSINESS To induce the Department and the Community to authorize Enterprise Zone benefits referred to in this Agreement, the Housing Business represents, covenants and warrants that: 3.1 Authoritv. The Housing Business is a corporation duly organized and validly existing under the laws of its state of incorporation and is in good standing, and has complied with all applicable laws of the State of Iowa. The Housing Business is duly authorized and empowered to execute and deliver this Agreement. All action on the Housing Business' part (e.g. where required, appropriate resolution of its Board of Directors) for the execution and delivery of this Agreement, has been effectively taken. 3.2 Business Information. All written financial statements and related materials concerning the Housing Business and the Project provided to the Department and the Community are true and correct in all material respects and completely and accurately represent the subject matter thereof as of the effective date of the statements and related materials, and no material adverse change has occurred since that date. 3.3 Application. The contents of the application the Housing Business submitted to the Department for Enterprise Zone program benefits (Attachment A) is a complete and accurate representation of the Housing Business and the Project as of the date of submission and there has been no material adverse change in the organization, operation, business prospects, fixed properties or key personnel of the Housing Business since the date the Housing Business submitted its application to the Department. 3.4 Claims And Proceedinqs. There are no actions, lawsuits or proceedings pending or, to the knowledge of the Housing Business, threatened against the Housing Business affecting in any manner whatsoever its rights to execute this Agreement or to otherwise comply with the obligations of the Housing Business contained under this Agreement. There are no actions, lawsuits or proceedings at law or in equity, or before any governmental or administrative authority pending or, to the knowledge of the Housing Business, threatened against the Housing Business or affecting the Housing Business' ability to proceed with the Project. 3.5 Permits. All necessary permits have been issued or will be applied for in a timely manner with reasonable expectation that they will be issued. ARTICLE IV CONDITIONS TO RECEIPT OF ENTERPRISE ZONE BENEFITS The Enterprise Zone Benefits authorized under Article II of this Agreement are available to the Housing Business provided the Housing Business, (and where applicable, the Community) satisfies each of the following conditions: 4.1 Build or Rehabilitate. The Housing Business must rehabilitate thirty (30) housing units in the City of Dubuque, Dubuque EZ-1 Enterprise Zone. 4.2 Modest Homes. The single-family homes and dwelling units which are rehabilitated or constructed by the Housing Business shall be modest homes or units, but shall include the necessary amenities. When completed and made available for occupancy, the single-family homes and dwelling units shall meet the United Sates Department of Housing and Urban Development's housing quality standards and local safety standards. Fmmat cevised 712002 EZ Agreement # 04-HEZ-OS9 Page 4 4,3 Completed within Two Years. The Housing Business shall complete its building or rehabilitation within two years from the time the Housing Business begins construction or rehabilitation of the units described in Section 4.1. 4.4 Records And Accounts. The Housing Business shall maintain information, books, records, documents and other evidence concerning the Project, in sufficient detail to permit the Department and the Community to assess compliance with the terms of this Agreement. The Housing Business shall retain the aforementioned records for a period of three (3) years from the Agreement Expiration Date. 4.5 Access To Records/lnspections. The Housing Business shall, upon prior reasonable notice and at any time (during normal business hours), permit the Community and its representatives and the Department, its representatives or the State Auditor to examine, audit andlor copy: (i) any plans and work details pertaining to the Project, (ii) all of the Housing Business' books, records and accounts relating to the Project, and (iii) all other documentation or materials related to this Agreement. The Housing Business shall provide proper facilities for making such examination andlor inspection. Records of the Housing Business furnished to the Department in connection with this Project are subject to the provisions of Iowa Code chapter 22 and administrative rules adopted by the Department concerning public records and requests for confidential treatment of records, 4.6 Notice Of ProceedinGs. The Housing Business shall promptly notify the Community and IDED of the initiation of any claims, lawsuits, bankruptcy proceedings or other proceedings brought against the Housing Business which would adversely impact the Project. 4.7 Reports; Communitv MonitorinG/Reportinc¡. (a) The Housing Business shall prepare, sign and submit the following reports: Report Due Date Annual Certification January 30 The Housing Business shall, for the length of its designation as an Enterprise Zone business, certify annually to the Community and the Department its compliance with the requirements of the Act. The Housing Business shall use the form provided by the Department for its annual certification. Documentation of compliance with the conditions detailed in Article IV shall be included with the annual certification. 4.8 Notice Of Business Chanc¡es. The Housing Business shall provide prompt advance notice to the Community and the Department of any proposed change in the Housing Business ownership, structure or control which would materially and directly affect the Project. ARTICLE V DEFAULT AND REPAYMENT 5.1 Events Of Default. Enterprise Zone benefits described in Article iI are only available to the Housing Business to the extent the Housing Business satisfies the conditions described in Article IV. Any of the following shall constitute an Event of Default under this Agreement: (a) Material Misrepresentation. If at any time any representation, warranty or statement made or furnished to the Department or the Community by, or on behalf of, the Housing Business in connection with this Agreement shall be determined by the Department to be incorrect, false, misleading or erroneous in any material respect when made or furnished. Fonnat revised 7/2002 EZ Agreement # 04-HEZ-059 Page 5 (b) Breach Of Ac¡reement. If there is a failure of the Housing Business to comply with any of the covenants, terms or conditions contained in this Agreement. (c) Relocation Or Abandonment. If there is an abandonment of the Project and the Housing Business fails to renew the Project within the Enterprise Zone within 30 days. If the relocation or abandonment is due to a natural disaster (e.g. flood, tornado), the Housing Business shall have 120 days to renew the Project within the Enterprise Zone. (d) Insolvencv Or Bankruptcv. If the Housing Business becomes insolvent or bankrupt, or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors, or the Housing Business applies for or consents to the appointment of a trustee or receiver for the Housing Business or for the major part of its property; or if a trustee or receiver is appointed for the Housing Business or for all or a substantial part of the assets of the Housing Business and the order of such appointment is not discharged, vacated or stayed within sixty (60) days after such appointment; or if bankruptcy, reorganization, arrangement, insolvency, or liquidation proceedings or other proceedings for relief under any bankruptcy or similar law or iaws for the relief of debtors, are instituted by or against the Housing Business and, if instituted against the Housing Business, is consented to, or, if contested by the Housing Business is not dismissed by the adverse parties or by an order, decree or judgment within sixty (60) days after such institution. 5.2 Notice Of Default. (a) From Department. If, through the annual certification report or other means, the Department has reason to believe the Housing Business is in default of the terms of this Agreement, the Department will issue a written notice of default to the Housing Business, setting forth the nature of the default in reasonable specificity, and providing therein a reasonable period of time, which shall not be less than 30 days from the date of the notice of default, in which the Housing Business shall have an opportunity to cure, provided that cure is possible and feasible. A copy of any Notice of Default will also be provided to the Community and DRF. (b) From Communitv. If, through monitoring, auditing or other means, the Community has reason to believe the Housing Business is in default of the terms of this Agreement, the Community wiii issue a written notice of default to the Housing Business, setting forth the nature of the default in reasonable specificity, and providing therein a reasonable period of time,~which shall not be less than 30 days from the date of the notice of detault, in which the Housing Business shall have an opportunity to cure, provided that cure is possibie and feasible. A copy of any Notice of Default will also be provided to the Department and DRF. 5.3 Repavment: Loss of Benefits. (a) Failure to meet/maintain rec¡uirements. If the Housing Business fails in any year to meet or maintain anyone of the requirements of the Act, the Housing Business shall repay the value of the incentives received for each year during which it was not in compliance. (b) DRF recoverv. Once it has been established, through the Housing Business' annual certification, monitoring, audit or otherwise, that the Housing Business is required to repay all or a portion of the incentives received, the DRF shall collect the amount owed. DRF has the authority, pursuant to the Act, to recover the value of state taxes or incentives provided under the Act. The value of state incentives provided under the Act includes applicable interest and penalties. ARTICLE VI GENERAL TERMS AND PROVISIONS 6.1 Compliance With Laws And ReGulations. The Housing Business shall comply with all applicable State and federal laws, rules (including the administrative rules adopted by the Department for the Enterprise Zone Program - 261 Iowa Administrative Code, chapter 59), ordinances, regulations and orders. FOITnat ,evi"d 7/2002 EZ Agreement # 04-HEZ-059 Page 6 6.2 Termination. This Agreement may be terminated by the Department or the Community: (a) in the event of an unremedied material Event of Default by the Housing Business under Article V of this Agreement; or (b) by mutual agreement of all parties. 6,3 Survival Of Aqreement. If any portion of this Agreement is held to be invalid or unenforceable, the remainder shall be valid and enforceable. 6.4 Governinc¡ Law. This Agreement shall be interpreted in accordance with the law of the State of Iowa, and any action relating to this Agreement shall only be commenced in the Iowa District Court for Polk County or the United States District Court for the Southern District of Iowa. 6.5 Modification. This Agreement may only be modified by a written document signed by all Parties. 6.6 Notices. Whenever this Agreement requires or permits any notice or written request by one party to another, it shall be in writing, enclosed in an envelope, addressed to the party to be notified at the address heretofore stated (or at such other address as may have been designated by written notice), properly stamped, sealed and deposited in the United States Mail. Any such notice given hereunder shall be deemed delivered upon the earlier of actual receipt or three (3) business days after posting. The Department may rely on the addresses of the Housing Business and Community set forth heretofore, as modified from time to time, as being the addresses of the Community and Housing Business. 6,7 Waivers. No waiver by a party of any Event of Default hereunder shali operate as a waiver of any other Event of Default or of the same Event of Default on any future occasion. No delay on the part of a party in exercising any right or remedy hereunder shall operate as a waiver thereof, No single or partial exercise of any right or remedy by a party shall preclude future exercise thereof or the exercise of any other right or remedy. 6.8 Headinc¡s. The headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction and interpretation of this Agreement. 6.9 Intec¡ration. This Agreement contains the entire understanding between the Community, Housing Business and the Department and any representations that may have been made before or after the signing of this Agreement, which are not contained herein, are nonbinding, void and of no effect. None of the parties have relied on any such prior representation in entering into this Agreement. 6.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. 6.11 reference: Documents Incorporated Bv Reference. The following documents are hereby incorporated by (a) (b) Attachment A, "Housing Business' Enterprise Zone Application." Attachment B, "Enterprise Zone Commission Resolution Approving the Housing Business' Enterprise Zone Application." 6.12 Order Of Prioritv. In the event of a conflict between documents of this Agreement, the following order of priority shall govern: (a) (b) (c) Articles 1 through 6 herein. Attachment A, "Housing Business' Enterprise Zone Application." Attachment B, "Enterprise Zone Commission Resolution Approving the Housing Business' Enterprise Zone Application." IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date first stated: Focmatrevised 7/2002 EZ Agreement # 04-HEZ-OS9 Page 7 FOR THE COMMUNITY: CITY OF DUBUQUE FOR IDED: Michael Miller, Investment Management Signature Type or Print Name, Title FOR THE HOUSING BUSINESS: GRONEN ADAPTIVE REUSE, LLLP Signature Type or Print Name, Title Fonnat "vised 7/2002 ATTACHMENT A Housing Business' Enterprise Zone Application HEZ Format revised 7/2002 09 ~ /// ,-- .:0" 'j IOWA DEP AR TMENT OF ECONOMIC DEVELOPMENT APPLICATION for ENTERPRISE ZONE BENEFITS Housing Development IOWA DEPT. OF ECONOMIC DEVELOPMEI,ï 'JUN 18 2004 DIVIS¡ON OF COMMUNITY DEVELOPMENT Iowa Department of Economic Development Division of Business Development 200 East Grand Avenue Des Moines, Iowa 50309 APRIL 2002 INTENT: The Enterprise Zone Program was established by the Iowa Legislature with the intent of promoting new economic development in economically distressed areas ofIowa by encouraging communities to target resources in ways that attract productive private investment. PROJECT INITIATION: Projects that have already been initiated before receiving formal application approval by the Iowa Department of Economic Development shall not be eligible for tax incentives and assistance under this program. "Project initiation" means anyone of the following: the start of construction of new or expanded buildings; the start of rehabilitation of existing buildings; the purchase or leasing of existing buildings; or the installation of new machinery and equipment or new computers to be used in the operation of the business' project. The purchase of land or signing an option to purchase land or earth moving or other site development activities not involving actual building construction, expansion or rehabilitation shall not constitute project initiation. GENERAL INSTRUCTIONS 1. If more than six months has elapsed since the date on the front of this application, please contact IDED to see ifthis version of the application is still current. 2, Before filling out this application form, please read Iowa Code Sections 15E,I91 through 15E.196, as amended and the Enterprise Zone administrative rules, 3. Only typed or computer-generated applications will be accepted and reviewed. (Contact the IDED to have an electronic copy of this application e-mailed to you.) Any material change to the format. Questions or wording of Questions presented in this application, will render the application invalid and will not be accepted, 4. Complete the application fully; if any questions are left unanswered or required attachments are not submitted, an explanation must be included. 5, Use clear and concise language. Attachments should only be used when requested or as supporting documentation. 6. Any inaccurate information of a significant nature may disqualify the application from consideration. 7. Send the original ~ two copies of the completed application form and all required attachments to: Kent Powell Housing Fund Compliance Specialist Iowa Department of Economic Development 200 East Grand Avenue Des Moines, Iowa 50309 Phone: (515)242-4786 Fax: (515) 242-4809 E-mail: kent.oowelliljUded,state.ia.us It is not necessary to bind the application and/or the required attachments. Staples and/or binder clips may be utilized. Please provide photocopies of any documents, which in their original form, IDED would not be able to 2-hole punch for purposes of creating the applicant's file, April 2002 PUBLIC RECORDS POLICIES The Iowa Department of Economic Development (IDED) is subject to the Open Records law (2001 Iowa Code, Chapter 22). Treatment of information submitted to IDED in an Enterprise Zone application is governed by the provisions ofthe Open Records law, All public records are available for public inspection, Some public records are considered confidential and will not be disclosed to the public unless ordered by a court, the lawful custodian of the record, or by another person duly authorized to release the information. Copies of Iowa's Open Records law and IDED's administrative rules relating to public records are available from the Department upon request. APPLICANT INFORMATION Name of Housing Business: Gronen Adaptive Reuse, LLLP Contact Name & Title: John Gronen, General Partner Address: 1086 Main Street City, State & Zip Code: Dubuque, Iowa 52001 Telephone: Fax: 563.557.7010 563.690,1610 E-mail Address: gro n enres@mcleodusa.net Local Enterprise Zone Commission Enterprise Zone Commission Name: City of Dubuque Enterprise Zone Commission Contact Name & Title: William Baum, Economic Development Director Address: City of Dubuque City Hall, 50 W, 13th Street Organization: City, State & Zip Code: Dubuque, Iowa 52001 Telephone: Fax: 563,589.4393 563.589,1733 E-mail Address: wbau m@cityofdubuque,org 2 April 2002 CERTIFICATION & RELEASE OF INFORMATION I, the undersigned, on behalf of the Housing Business identified above, hereby submit the following application under Iowa Code Sections I5E.191 through 15E. I 96. I certify that the Housing Business is in good standing, and has complied or will upon receipt of approval by the Department, with all applicable laws ofthe State ofIowa to conduct business within the State. I certify that all information, representations, or statements provided to the Iowa Department of Economic Development (IDED), in connection with this application, are true and correct in all material respects, I certify and understand that in order to receive benefits under the Enterprise Zone Program that the project described in this application has not been initiated and that the project will not be initiated until the business receives final approval of this application from the IDED. I hereby give permission to IDED to make credit checks, contact the company's financial institution(s), and perform other related activities necessary for reasonable evaluation of this application. I understand this application is subject to final approval by the Department and am aware that Enterprise Zone benefits are not available until final Department approval is secured and an agreement is executed with the Housing Business, IDED and the Community, within a reasonable time period following approval. This application will be used as the basis for the Enterprise Zone agreement, Business: Ge.M((1j'~ 5,1-1. ot Date For the Enterprise Zone Commission: 4~Á~ ~~ ' Signature, Title / Æ?d?arJ <C;k~ Print name and title tj;'¡/ð<l Date ¿~ [1þ¡(1I~ April 2002 APPLICA nON INFORMA nON 1. Please provide a brief description of the proposed housing development project. Six historic buildings in the loth block of Main Street, Dubuque, Iowa. Upper floors will be gut-rehabbed with the units finished as quality, affordable housing. Will be completed historically correct utilizing historic tax credits. 2, In which Enterprise Zone will this project occur (include the zone's name, number, size in acres, and date certified)? Dubuque Enterprise Zone I 3. Does the project involve new construction or rehabilitation? Rehabilitation 4. How many single-family homes or multi-family units are proposed? 30 total units: 16 2-bed units, ]4 I-bed units 5, What will be the per unit value ofthe housing? Hard construction costs of approx. $100,000 per unit, with appraised value at less than that. 6, The single family homes or multi-family units being constructed or rehabilitated must be modest homes or units and include the necessary amenities. Please explain how the proposed project will satisfY this requirement? The project is working closely with the City of Dubuque Housing and Fire Departments to meet necessary requirements. Units will meet 100% low-income housing. 7. Will the project meet U,S. Department of Housing and Urban Development Housing Standards and applicable local codes? Yes 8. What is the current status ofthe project? When is construction scheduled to begin? What is the anticipated project completion date? Current status: Under-going environmental reviews, lead and asbestos assessments and architectural plans. Begin construction: Summer 2004 Complete: Late fall 2005 to early winter 2006 4 April 2002 9. 1O. II. 12. 13. Attach a legal description of the business site on which the project will occur. See Attachment I Attach a detailed map (no larger than 8" x 14") showing the housing development site in relation to the boundaries of the certified Enterprise Zone. See Attachment 2 Is any part ofthe project located in a 10O-year flood plain? No Please indicate the total capital investment that will be made as the result of this project? Description of Capital Expenditure Amount Construction $3,470,000 Architectural $ 100,000 Construction Loan Costs $ 260,000 Operating Reserves $ 135,000 Other $ 866,000 Total $4,831,000 Please identify the sources of project financing that will be utilized and the amount of the financing. (The total amount of the financing should equal the total expenditures in Question #12.) Source of Project Financing Amount Deferred Development Fee $ 310,000 EZ Proceeds $ 14,000 American Trust and Savings Bank $ 211,000 City of Dubuque $ 420,000 LIHTC & Historic Credit Equity $3,876,000 Total $4,831,000 14. For purposes of determining the amount of investment tax credits the housing business may receive, the Iowa Department of Economic Development cannot include capital expenditures financed through federal, state, and local government tax credits, grants and forgivable loans. Based on this information, what portion of your total capital investment (identified in Question #12) will be eligible for the investment tax credit? $300,000 (estimated) IS. Please attach a long-term plan for the proposed housing development project including labor and infrastructure needs. See Attachment 3 16. What economic benefits will the project bring to the area? Investment in the downtown and the adaptive use of upper floor space for housing will greatly enliven the downtown district. The project is fully in accord with the City's recent Downtown Master Plan, New housing, new jobs, and new residents will combine to benefit this Upper Main Street neighborhood. A new downtown school is being planned just blocks away and other educational, recreational and cultural April 2002 17. amenities are located within blocks of the development. New residents will utilize and support these amenities, Explain why the proposed project would be considered a good housing development project. The concept ofre-using existing buildings downtown is part of the City's overall redevelopment strategy. Two of the six buildings' residential space have been vacant since 1962. There is a great need and desire for quality downtown housing. 18. Please attach an affidavit that states the Housing Business has not, within the last five years, violated state or federal environmental and worker safety statutes, rules, and regulations or, if such violations have occurred, that there were mitigating circumstances or such violations did not seriously affect public health or safety or the environment. ' See Attachment 4 19, Explain why Enterprise Zone Benefits are needed in order for the project to proceed. Benefits are needed to decrease the amount ofthe project's conventional bank loan in order to maintain adequate debt service coverage. 20. Please indicate the amount of Enterprise Zone tax benefits being requested for this project. State Sales, Service, and Use Tax Refund: _$57,OOO_est. Investment Tax Credit: _$30,000_est. 21. Please list any additional requirements adopted by the local Enterprise Zone Commission and explain how the Housing Business will meet each requirement. N/A 6 April 2002 ATTACHMENTS Please make sure the folIowing items are included with this application: Housing Business: J Legal description ofthe business site on which the project will occur. , Detailed map (no larger than 8" x 14") showing the business site in relation to the boundaries of the certified Enterprise Zone. j Long tenn strategic plan, which includes labor and infrastructure needs. .¡ Affidavit that states the Business has not, within the last 5 years, violated state or federal environmental and worker safety statutes, rules, and regulations, Enterprise Zone Commission: ¿ Resolution by the Enterprise Zone Commission approving this application. ~Proofthat the meeting, in which this application was approved, was open to the public (i.e. public notice which was published and/or posted), pi Meeting minutes from the meeting, in which this application was approved. 7 Apcil2002 ,ArrÆ-~ T I' Legal Description and Street address of each building South Cooley 0 1042 Main St. 0 Lot 39 in the City of Dubuque, Iowa, according to the United States Commissioner's Map thereof, North Cooley 0 1066 Main St 0 Lot 40 in the City of Dubuque, Iowa, according to the United States Commissioners' Map thereof, Rolling Bootery 0 1086 Main St. 0 City Lot 40A in the City of Dubuque, Dubuque County, Iowa, according to the United States Commissioner's Map of the Town (now City) of Dubuque, Iowa, Twin Sister/Curtis Apts. 0 1069 Main St. 0 Lots 42, 42a and the south 8 feet oflot 41, in the City of Dubuque, Iowa, according to the United States Commissioners' Map of the Town of Dubuque, Iowa; and Burden Building 0 1091 Main St. 248 W. lltb St. 0 248W.l1tbSt. 0 The North 43.2 feet of Lot 41 in the City of Dubuque, Iowa, according to the United States Commissioners Map thereof , -1 ß'1' Ii- cH /tI Pt T ?- mile .Ma. ~ ,;oY ,f dobo,o., ¡,.. ~ -¥~r . /i'ffA-UlMØ\í ~ ll. EXECUTIVE SUMMARY A. DEVELOPMENT RECOMMENDATIONS . Based on the income qualification standards of the Iowa Housing Finance Agency's Low-Income Tax Credit Program; economic and demographic statistics; area perception and growth; an analysis of supply and demand characteristics; absorption trends of residential construction; and a survey of the rental apartment market in the City of Dubuque, (Dubuque County) Iowa, this study has established that a market does exists for a 30-unit family rental housing development to be renovated, Upper Main Revitalization Project. . After a review of the subject site and market analysis data, it is our opinion, based on the IFA guidelines, the development receives a positive recommendation. . With the proposed plans to develop all 30-units (100.0%) available to households with incomes at or below 60.0% of the area median income, the subject site in the City of Dubuque, Iowa, is proposed as follows: BEDROOMS NUMBER OF UNITS 60% BATHROOMS SQUARE FEET GROSS RENT (60%) UTILITY ALLOW ANCE* NET RENT (60%) UNIT BY TYPE AND BEDROOM ONE TWO 14 1.0 600 $426. $51. $375. 16 1.0 1,430 $538. $ 63. $475. * estimated by developer and/or local housing agency . The development will be undergoing a significant number of improvements and rehabilitations. Exterior items include: new roof, repair hard surface parking areas, improved signage and landscaping, new entry doors and new windows. Interior items include: new appliances, cabinets, plumping and light fixtures in the kitchen; new cabinets, sinks, toilets and tub/shower units in the bathroom and new entry doors and air- conditioning units. + The square footage, specifically the two-bedroom units, will be an advantage for the market area. 6 + Each unit in the proposed development will contain a electric range, refrigerator, dishwasher, air conditioner, exhaust fan, ceiling fans, window coverings, washer dryer/hook-ups, one full bathroom, garbage disposal, and carpeting. The unit amenities are sufficient for the market area and will create a good absorption pattern. + Rents will include electric, water/sewer services and trash removal. All utilities will be included within the development. However, for comparison purposes, a utility allowance of $51. per month for a one-bedroom unit and $63. per month for a two-bedroom unit is estimated. + Project amenities associated with a smaller family-orientated development are important to the success of the proposed facility, including community building/room, on-site rental management office, playground, laundry room, security and adjacent parking for the building. Additional the development will have a computer center for tenants. + The existing subject site buildings, Upper Main Revitalization Project, have a good location within the City of Dubuque market area. Additionally, ingress and egress to the subject parcel is good. From a marketing point of view, it would be beneficial if the proposed site would be able to create an environment within this development, especially the associated with smaller family progranuning. + The subject property is adequately located within one mile of all essential resident services, including but not limited to: governmental services, educational, shopping, employment and medical. There is public transportation available near the site. + The step-up opportunity ($50. or less than the proposed rent) for tenants in the Dubuque area rental market, based on the proposed 50 % LIHTC net rents is good to excellent for both one-bedroom and two-bedroom units. + More importantlv in the Dubuque market area. is the fact that there is an excellent base of units at net rents higher than the oroposed rent of one-bedroom and two-bedroom units. thereby creatinl! a potential product value in the rental market. + The proposed rents combined with the current rental market absorption pattern should result in an overall vacancy rate of less than 3.5 % for the proposed development. The overall LIHTC market should result in a vacancy rate of less than 5.0%. + It is our opinion that the proposed net rents are positioned properly in the market area, especially with the proposed mix of units for the development. The proposed rents are a value when reviewed with the existing market rents, a positive indicator for positioning and absorption. The immediate rental competition is limited from the existing developments, because of the lack of quality market-rate units at the proposed rents in the Dubuque market area. 7 . Because of the good base of existing units and the active base of employment, office and commercial facilities within the immediate area, the development will be able to benefit from the synergism created by the current market in the proposed site area. The proposed site does have good accessibility to major roadways and can benefit positively from a strong marketing program. . The absorption potential for tenants in the area rental market, based on the proposed net rent for one-bedroom and two-bedroom units is excellent. It is anticipated, because of the criteria set forth by the income and household size, the depth of the market demand and the proposed product mix, absorption will be at an average of 3 to 5 units per month, resulting in a 6.0 to 10.0 month absorption period for the proposed development. The absorption rate may be higher in the initial months of rent-up. c;/ þrlt-C-ffnLÐz;( ~ May 20, 2004 AFFADAVIT We hereby certify that Gronen Adaptive Reuse, LLLP has not violated the state or federal environmental and worker safety statutes, rules and regulations. Date: 5,'Z/) .Oi $.~O.{)¡ PO ~OX 1862 DU~UQUr' IOWfi. 52004.1862 PfiGnr 563.557'7010 rft! 557'690.1610 ATTACHMENT B Enterprise Zone Commission Resolution Approving the Housing Business' Enterprise Zone Application HEZ Format revised 7/2002 CITY OF DUBUQUE, IOWA ENTERPRISE ZONE COMMISSION RESOLUTION 2-04 A RESOLUTION APPROVING THE FILING OF AN APPLICATION WITH THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT REQUESTING ENTERPRISE ZONE BENEFITS ON BEHALF OF GRONEN ADAPTIVE REUSE, LLLP. Whereas, the State ofIowa Department of Economic Development (IDED) is accepting applications from eligible businesses pursuant to the authority of House File 724, Enterprise Zone Legislation; and Whereas, the City of Dubuque, Iowa has two certified Enterprise Zones; and Whereas, the City's Enterprise Zone Commission has been created by City Ordinance to review applications for tax incentives and assistance based on criteria specified by law and to transmit its recommendation to the IDED; and Whereas, the City's Enterprise Zone Commission has reviewed an application trom Gronen Adaptive Reuse, LLLP and has found the housing developer eligible to apply for Enterprise Zone benefits. NOW, THEREFORE, BE IT RESOLVED BY THE ENTERPRISE ZONE COMMISSION OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Gronen Adaptive Reuse, LLLP application for Enterprise Zone benefits is approved. Section 2. That Gronen Adaptive Reuse, LLLP will create thirty (30) new housing units in the city's downtown. Section 3. That Gronen Adaptive Reuse, LLLP will invest approximately $4,831,000 in Enterprise Zone I as part of the historic renovation project. Section 3. That the Chairperson is hereby authorized and directed to execute, on behalf of the Enterprise Zone Commission, the joint application for Enterprise Zone benefits. Passed, approved and adopted this 14th day of June, 2004. W~~~, Richard Stein Chair F: IUS ERSlPm yh eel WP DOCS IEZlGron en \ad op cresol u ti on. d oc City of Dubuque PUBLIC NOTICE OF MEETING ENTERPRISE ZONE COMMISSION DATE: TIME: PLACE: Monday, June 14, 2004 4:00 p.m. Conference Room B, City Hall 50 W. 13th Street Dubuque, Iowa 52001 Notice is hereby given that the above identified governmental body will meet at the time, date and place as set forth above. The tentative agenda for the meeting is as follows: CALL TO ORDER AFFIDAVIT OF COMPLIANCE MINUTES February 2, 2004 APPLICATIONS Gronen Adaptive Reuse, LLLP ITEMS FROM PUBLIC ITEMS FROM COMMISSION ITEMS FROM STAFF ADJOURNMENT This notice is given pursuant to Chapter 21, Code of Iowa and applicable local regulations of the City of Dubuque andlor the governmental body holding the meeting. /~ NOTICE Visually or hearing impaired persons needing assistance or persons with special accessibility needs who wish to attend the meeting should contact the ED Department at (563)589-4393 or the Human Rights Department at (563)589-4193 (TOO Number) at least forty-eight (48) hours prior to the meeting. P, 1 * * * COMMUNICATION RESULT REPORT ( JUN, 11. 2004 10:23AM) * * * TTl DUBUQUE CITY MANAGER - - - - - - - - - - -- - - - - _u- - -- - - - -- - - - - - - - n- - nn-- - - - - - - - --- - _un- - - - - - - - - - - - -- - - - - - - - - - - - - --- -_u_u- -- FILE MOD E OPTION ADDRESS (GROUP) RESUL T PAGE 7706 MEMORY TX (G02) CH 8 (G02) CITY CLERK iG021 CR GAZETTE (G02) DM REGiSTER (G02) DYERSViLLE COMM (G02) KCRG-DUBUQUE iGO2) JUliEn JOURNAL (GO2ì KAT KGRR KDTH iGO2) KCRG TV (GO2) KGAN & KFXB TV (GO21 KWWL TV (GO21 KWWL TV (GO2) MEDiA COM (G02ì TELEGRAPH HERALD (G02)WDBQ/KLYV OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK 1/1 1/1 1/1 1/1 1/1 1/1 1/1 1/1 1/1 1/1 1/1 1/1 1/1 1/1 1/1 - - - - - - - - - - -- - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --- --- _u - --- - - _n - - - -- - - _u-n ---- - -- - - - - - _____--n-- L I NC FA I' E--2) BUSY E-4) NO FACSIMILE CONNECTION City of Dubuque PUBLIC NOTICE OF MEETING ENTERPRISE ZONE COMMISSION Monday, June 14, 2004 4:00 p.m. Conferençe Room B, City Hall 50 W. 13th Street Dubuque, Iowa 52001 DATE: TIME: PLACE: Notice is hereby given that the above identified governmental body will meet at the time, date and place as set forth above. The tentative agenda for the meeting is as follows: CALL TO ORDER AFFIDAVIT OF COMPLIANCE MINUTES February 2, 2004 APPLICATIONS r..rnnf'.n Adaotive Reuse. LLLP ENTERPRISE ZONE COMMISSION City of Dubuque, Iowa MINUTES DATE: June 14, 2004 TIME: 4:04 P.M. PLACE: Conference Room B, City Hall 50 West 13th Street, Dubuque, Iowa 52001 COMMISSION: Present: Doug Buswell, Doug Stillings, Dan LoBianco, Andrea Muntz, Rick Stein, Mike Van Milligen, Dave Baker, Dan White Absent: Kelly Deutmeyer STAFF: Bill Baum, Pam Myhre CALL TO ORDER Staff reported that neither the Chair nor Vice-Chair was expected to attend the meeting. Motion by Van Milligen, second by Stillings, to appoint Dan White as the Acting Chair. Motion passed unanimously. The meeting was called to order at 4:04 p.m. Staff certified that the meeting was being held in compliance with the Iowa Open Meetings Law. MINUTES Stillings moved and Van Milligen seconded a motion to approve the minutes of February 2, 2004. Motion passed unanimously. [Stein arrived at meeting and resumed Chair responsibilities.] APPLICATIONS Gronen Adaptive Reuse. LLLP Baum presented the 30-unit upper-story downtown housing project located in the 1000 Block of Main Street and related that EZ benefits are also available to housing developments. He introduced the developers, John and Mary Gronen, who explained the project to the Commission and shared a photo display and floor plans of the multi- building project. John Gronen indicated that the rehabilitation work would be done to historic standards. Stein asked about parking. Gronen stated that 34-37 off-street spaces would be created behind the buildings. Van Milligen asked about the community room. It will be on the 1 st floor and will be access-controlled for tenants only. Stein asked about handicap accessibility. Gronen noted that while the upper floor units are not accessible - because there is not an elevator required - one of the 30 units must still be handicap accessible. He said the historic building code allows some leeway with the interior stairs. The project will be available partially in Summer 2005 and the remainder in Spring 2006. Van Milligen asked how many people would be employed in the rehab work. Gronen estimated 20 people over the construction period. Stein asked if the units were subsidized. People with less than 60% of the area median income are eligible tenants and the rents are predetermined as affordable. Buswell asked about the appraised value and amount of equity in the project. The rules and regulations of the program were discussed. Van Milligen indicated his support for the project and that it really cleans up that part of Main Street, utilizes tax credits in Dubuque rather than seeing them used by another community and explained that the project was being partially funded with TIF money through the Downtown Rehab Loan Program. LoBianco clarified that Dubuque Main Street Ltd. will be a tenant in one of the storefronts. He shared that a recent study showed the need for 2-bedroom housing units in the downtown and that the project would be a worthy renovation project for Upper Main. Stein asked about environmental issues. Gronen explained that an above ground oil tank had been on the property, and since an old photography studio and dry cleaners were also former building tenants, additional testing for chemicals will be completed. Some asbestos has been noted but nothing substantial. Motion by Van Milligen, second by Buswell, to authorize the resolution approving the application. The following vote was taken: Nay: Abstain: Baker, Buswell, LoBianco, Muntz, Stein, Stillings, Van Milligen and White None Aye: ADJOURNMENT Meeting adjourned at 4:35 p.m. Approved Chairperson F :IUSE RS'Pmyh relWPDOCSIEZlMinutes 1M I N6-14-04. doc Iowa Tax Credit Certificate Housing Enterprise Zone Investment Tax Credit This certificate must be attached to the income tax return for the tax vears beqinninq on or after Januarv 1. 2003 by a taxpayer claiminq enterprise zone housinq investment tax credits. Name ot Eligible Housing Business Name of Transferee (if applicable)" Gronen Adaptive Reuse, LLLP Address of Eligibie Housing Business Address of Transferee 1086 Main St., City State Zip Code City State Zip Code Dubuque, IA 52001 Taxpayer Identification No" Taxpayer Identification No. Amount of Credit being claimed in this tax year" Amount of Credit being transferred to this Transferee Date ot Project Completion (Attach certificate of occupancy)" "To be completed by taxpayer at time of riling. "" Replacement tax credIt cert/flcates wIll only be issued to projects utilizing Federal Section 42 credits. Signature required below if transferring credit to transferee (if applicable) We request transfer of the tax benefits to the above "transferee" in the amount indicated. Name Title Investment Tax Credit Amount of approved Tax Credit $32,000.00 HEZ Application Number 04-HEZ-059 "Tax Certificate Instructions" This tax credit certificate must be attached to any income tax return for tax years beginning on or after January 1, 2003. The credit can be taken in the year the units are ready for occupancy. Any credit in excess of the tax liability for the tax year may be credited to the tax liability for the following seven (7) years or until depleted whichever is earlier. If the business claiming the credit is a partnership, S Corporation, limited liability company, or estate or trust electing to have the income taxed directly to the individual, please attach a schedule listing each individual and the amount of the credit available to each. A copy of this form and a copy of the certificate of occupancy (or equivalent documentation) must be attached to any Iowa tax return for a project claiming the housing enterprise zone investment tax credit. Iowa Form 3468 must also be attached to the tax return claiming housing enterprise zone tax credits. For Economic Development: Michael Miller Investment Management Team leader Date: HEZ Format revised 7/2002