Mortgage Assump 231 W. 2nd St
D~~~E
~ck~
MEMORANDUM
October 11, 2004
, .
TO:
The Honorable Mayor and City Council Members
¡
-1
",
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Assumption and Subordination of Mortgage Obligation and Promissory
Note for Property Located at 231 W. 2nd Street
In 1995 the City provided a Downtown Rehabilitation Loan to Fred Bakey for the
rehabilitation of commercial property at 231 West 2nd Street. In 2001 Dennis Gioletti
and Richard Hatton purchased the property from Bakey, and the City agreed to an
assumption and subordination of the mortgage at that time. Jeffrey Jackson wishes to
purchase this property and requires a similar assumption and subordination.
Economic Development Director Bill Baum recommends City Council approval of the
Assumption Agreement and the Mortgage Subordination Agreement that will allow
Denis Gioletti and Richard Hatton to transfer responsibility for a mortgage and
promissory note to Jeffrey Jackson, who wishes to purchase the commercial property at
231 W. 2nd Street.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
¡lJt LIv(A r, '/ 7¡jC
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
October 6, 2004
TO:
FROM:
Michael Van Milligen, City Manager
William Baum, Economic Development Director ¡/(;.øU#~
Assumption and Subordination of Mortgage Ob"ation and
Promissory Note for Property Located at 231 W. 2nd Street.
SUBJECT:
INTRODUCTION
This memorandum presents for City Council consideration a resolution consenting to an
Assumption Agreement and a Mortgage Subordination Agreement that would allow
Denis Gioletti and Richard Hatton to transfer responsibility for a mortgage and
promissory note to Jeffrey Jackson who wishes to purchase the commercial property at
231 W. 2nèl Street.
BACKGROUND
In 1995, the City provided a Downtown Rehabilitation Loan to Fred Bakey for the
rehabilitation of this property. In 2001, Gioletti and Hatton purchased the property from
Bakey, and the City agreed to an assumption and subordination of the mortgage at that
time. A further sale to Jeffrey Jackson requires a similar assumption and subordination.
The original loan amount of $100,000 was reduced to approximately $80,000 at the
time of the first assumption and now has an outstanding balance of approximately
$56,000. The City is currently in a second mortgage position.
DISCUSSION
The attached assumption agreement will facilitate the sale of the property to Jeffrey
Jackson. The agreement stipulates that he will assume responsibility for both the
mortgage and promissory note signed on November 20,1995 that secured the City's
original loan. Gioletti and Hatton will be released from liability.
Jackson will be borrowing up to $149,000 from Livingston State Bank, Livingston,
Wisconsin, to complete the purchase of the property. The attached mortgage
subordination agreement allows Livingston State Bank to have a first mortgage position
on this property. The City remains in a second position.
Staff has met with the buyer and has reviewed his financial statements and building
proforma. An appraisal of the property dated July 28, 2004 indicates a value of
$231,000. That exceeds the amount of outstanding principal by $26,000.
RECOMMENDATION
I recommend that the City Council approve both the assumption agreement and the
mortgage subordination agreement and authorize the Mayor and City Clerk to sign both
agreements on behalf of the City.
Jeffrey Jackson presently owns and operates a business in the building's storefront,
with 4 renovated residential rental units in the upper floors. He will be fully responsible
for satisfying the terms, obligations and conditions of the mortgage.
ACTION STEP
The action step for the City Council is to adopt the attached resolution.
attachments
F : IU S E R SIP myh reI WP 0 OC SILO AN 0 OC IBAK EYIS u ba ndassu m p2 me mo. doc
Prepared by: Pamela Myhre
50 W. 13th Street, Dubuque, IA 52001
(319) 589-4393
RESOLUTION 390-04
RESOLUTION AUTHORIZING AN ASSUMPTION AGREEMENT AND A MORTGAGE
SUBORDINATION AGREEMENT IN REGARD TO A MORTGAGE INTEREST IN THE
EASTERLY 40 FEET OF LOT 85 IN THE CITY OF DUBUQUE, DUBUQUE COUNTY,
IOWA.
Whereas, the City of Dubuque, Iowa holds a Mortgage on property legally
described as follows:
The Easterly 40 feet of Lot 85 in the City of Dubuque, Dubuque County, Iowa;
and
Whereas, the City provided a Downtown Rehabilitation Loan to Frederick R.
Bakey and Patricia E. Bakey on November 20, 1995 for the renovation of said property
located at 231 W. 2nd Street and further agreed on September 17, 2001 to an
assumption agreement and a mortgage subordination agreement to facilitate the sale of
said property to Denis Gioletti and Richard L. Hatton; and
Whereas, Denis Gioletti and Richard L. Hatton are now proposing to sell said
property to Jeffrey L. Jackson; and
Whereas, Denis Gioletti and Richard L. Hatton have asked the City to transfer
their liability for the mortgage and promissory note associated with said property to
Jeffrey L. Jackson; and
Whereas, the Assumption Agreement, hereto attached and by this reference
made a part hereof, sets forth the terms and conditions of the agreement; and
Whereas, Livingston State Bank requests the City subordinate its interest in said
property by executing a Mortgage Subordination Agreement for a Real Estate Mortgage
filed November 22, 1995, as Instrument No. 12265-1995 of the records of Dubuque
County, Iowa, and;
Whereas, the Mortgage Subordination Agreement, hereto attached and by this
reference made a part hereof, sets forth the terms and conditions of the agreement.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the Assumption Agreement attached hereto is hereby approved
and the Mayor and City Clerk are hereby authorized and directed to execute said
Assumption Agreement on behalf of the City of Dubuque, Iowa.
Section 2. That the Mortgage Subordination Agreement attached hereto is
hereby approved and the Mayor and City Clerk are hereby authorized and directed to
execute said Mortgage Subordination Agreement on behalf of the City of Dubuque,
Iowa.
Passed, approved and adopted this 18th day of October, 2004.
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider, City Clerk
F: IU S E R S 'Pmyh ro I W P DOCSIL DAN D OC \BAK EYIs u bo rd . res 2 . doc
Prepared by Denis Gioletti, 1420 Renaissance Dr., Suite 406, Park Ridge IL 60068
ASSUMPTION AGREEMENT
THIS Agreement is made on the 30t-i-day of September, 2004 between DENIS
GIOLETTI AND RICHARD HATTON, Sellers, and JEFFREY L. JACKSON, Buyer,
and the CITY OF DUBUOUE. IOWA (City).
WHEREAS, Buyer wishes to buy and Sellers wish to sell certain real estate
legally described as follows, to wit:
The Easterly 40 Feet of Lot 85 in the City of Dubuque, Iowa, according to the United
States Commissioner's Map of the City of Dubuque, Iowa; and,
WHEREAS, this property is currently subject to a Mortgage held by the City of
Dubuque, Iowa;
NOW THEREFORE, in consideration of the mutual promises set forth herein, the
parties agree as follows:
I. Buyer assumes and agrees to pay as part of the purchase price for the above-
described real property, the balance owing on a certain Promissory Note to the
City dated the November 20, 1995 secured by a Mortgage made to the City
dated November 20, 1995 which Mortgage was filed on November 22, 1995,
as Instrument #12265-95 of the records of Dubuque County, Iowa, which
Buyer hereby assumes.
2. Buyer agrees to pay said Note according to its face and terms and comply with
the terms, obligation and conditions of the Mortgage.
3. Sellers agree to transtèr the above-described real property to Buyer on the
terms and condition previously agreed.
. 4. . City rel~ses Selt;er from any further liability on said Note and Mortgage.
¡J¿ r " ( 6L'
~ ,/=/Â-r A CITY OF DUBUQUE, lOW A
Denis Gioletti, Seller
,:iÁc! I4I1IL --
Richard Hatton, Seller
By:
Mayor
By:
City Clerk
STATE OF IOWA
)
) ss.
)
DUBUQUECOUNY
On this - day of September, 2004, before me, the undersigned, a Notary
Public in and for the State ofIowa, personally appeared
and
personally known, who being by me duly sworn, did say that the said
is MAYOR and the said
is CITY CLERK of the City of Dubuque, Iowa, that
the seal affixed to the above instrument is the corporate seal of the City of Dubuque,
Iowa; and that said instrument was signed and sealed on behalf of the said City of
Dubuque, Iowa by authority of the City Council of said City; and the said
and acknowledged
the execution of said instrument to be the voluntary act and deed of the said City of
Dubuque, Iowa, by it voluntarily executed.
,tome
Witness our hands and notarial seal on the above stated date.
Notary Public in and for said State
COUNTY OF DUBUQUE
)
) ss.
)
STATE OF IOWA
On this X day of September, 2004, before me, the undersigned, a Notary
Public in and for said State, personally appeared DENIS GIOLETTI and RICHARD
HATTON, to me known to be the same persons who executed the foregoing instrument,
and acknowledged that they executed the same as their voluntary act and deed.
~"""
"OFFICIAL SEAL"
DAVID E. ALMS
NOTARY ~UBLIC. STATE Of ILLIN :at
MY COMMISSION EXPIRES 4/2/2 ~
(ð Vðv----
Public
)
) ss.
COUNTY OF DUBUQUE)
6 ~ i'£~
On this ~ day of &ptëñil5ër; 2004, before me, the undersigned, a Notary
Public in and for said State, personally appeared JEFFREY L. JACKSON, to me known
to be the same person who executed the foregoing instrument. and acknowledged that he
executed the same as his voluntary act and deed.
7J! !::!4 fF6 ~
STATE OF IOWA
"',1: ". MElINDA AETTENBERGER
¡ '-": Commluion Number 125
", Com million Elplrt
09/24/2004 09: 48 FAX 608 723 4487
LAW OFFICE OF CRAIG DAY
I4i 002
MORTGAGE SUBORDINATION AGREEMENT
On the - day of October, 2004, it is agreed between the City of Dubuque, Iowa
(hereinafter referred to as "City") and Livingston State Bank (hereinafter referred to as
"Bank"), that,
WHEREAS, the City holds a Mortgage on property legally described as follows:
The Easterly 40 feet of lot 85 in the City of Dubuque, Iowa, according to the United States
Commissioner's Map of the City of Dubuque, Iowa.
Said Mortgage being dated on November 20, 1995, filed for record November 22, 1995,
as Instrument No. 12265-1995 of the records of Dubuque County, Iowa.
WHEREAS, the City has been advised that Jeff and Connie Jackson are purchasing
the property from Denis Gioletti and Richard L. Hatton.
WHEREAS, the Bank is desirous of having a Purchase Money Mortgage on said
property in the amount of$149,000.00. The Bank will not accept said Mortgage unless the
prior Mortgage held by the City is subordinated to the New Mortgage.
THEREFORE, IT IS AGREED THAT:
In consideration of the premises and to induce Bank to accept the Mortgage on the
described premises from Jeff and Connie Jackson, the City hereby covenants and agrees
that the lien of the above-described Mortgage dated November 20, 1995, filed for record
November 22, 1995 as Instrument No. 12265-1995 of the records of Dubuque County,
Iowa, shall be subject and subordinated to the Lien of the new First Mortgage by Jeff and
Connie Jackson to Livingston State Bank, said Mortgage not to exceed the sum of
$149,000.
Dated this - day of October, 2004.
CITY OF DUBUQUE, IOWA
LIVINGSTON STATE BANK
By:
By:
By:
By:
\\N"""'I""""."""",",,2\O."" A'."C',"""" .,.,. ..,klmortg.g. .,bo""'.IIo" .",..,
09/24/2004 09: 48 FAX 608 723 4487
LAW OFFICE OF CRAIG DAY
I4J 003
STATE OF IOWA)
COUNTY OF DUBUQUE )§
On this - day of October, 2004, before me, the undersigned, a Notary Public
in and for the State of Iowa, personally appeared and , to me
personally known, who being by me duly sworn, did say that they are the Mayor and Clerk
of the City of Dubuque, Iowa, that the seal affixed to the above instrument is the corporate
seal of the County of Dubuque, Iowa; and that said instrument was signed and sealed on
behalf of the said City of Dubuque, Iowa by authority of the Board of Directors of said City;
and the said Mayor and Clerk acknowledged the execution of said instrument to be the
voluntary act and deed of the said City of Dubuque, Iowa by it voluntarily executed.
Witness our hands and notarial seal on the above stated date.
Notary Public in and for said State
\tNI"'oIoINloholo\W,'o~,2\.o"k ,"..ILI';",..o" 51010 """"mort..,. '"_'notion '0',",,'