Lake Ridge Economic Development District_Resolution of NecessityMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Resolution of Necessity for Creating the Lake Ridge Economic
Development District
DATE: June 15, 2011
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
Dubuque
bitil
AN- America City
2007
Economic Development Director Dave Heiar recommends City Council approval of a
Resolution of Necessity finding that the creation of a new Lake Ridge Economic
Development District is both necessary and appropriate, and setting a public hearing for
August 1, 2011.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Masterpiece on the Mississippi
TO:
FROM:
SUBJECT:
DATE:
Michael C. Van Milligen, City Manager
David J. Heiar, Economic Development Director
Resolution of Necessity for creating the Lake Ridge Economic
Development District
June 14, 2011
Dubuque
AllAirla Clly
I
2007
Introduction
This memorandum presents for City Council consideration a Resolution of Necessity
finding that the creation of a new Lake Ridge Economic Development District is both
necessary and appropriate and also sets a public hearing for August 1, 2011. This
district would include property adjacent to Lake Ridge Drive near Cedar Cross Road. A
map is attached to show the boundaries.
Background
Rose Development, controlled by Greg McClenahan, is proposing to build a $9.3 million
70 -unit `affordable assisted living facility' on Lake Ridge Drive. This would be the sixth
Rose development built in Iowa since 2005. The others are located in Ames, Des
Moines, East Des Moines, Waterloo and Council Bluffs. The Police Department
checked and these facilities do not create any policing problems.
The Rose developments have all been assisted by the Iowa Finance Authority through
the Low - Income Housing Tax Credit Program. Award of tax credits reduces the need
for conventional mortgage financing and lowers development costs, allowing lower
rents. McClenahan has additionally used a variety of other assisted financing at his
developments, including urban revitalization tax abatement, enterprise zone credits and
HOME Program grants.
Residents in these projects must all qualify by income, at 60% or less of area median
income. Many qualify for Section 8 housing vouchers and Medicaid services. Rents
are capped at no more than 30% of tenant income. The services the resident receives
are provided by a contracted licensed health care provider, such as the VNA. The costs
for those services are paid by Medicaid HCBS waiver programs. With this package of
subsidies, the low- income resident can afford the full spectrum of housing and
supported services that would otherwise approach $3000 per month.
Greg McClenahan provided the Housing Department with documentation outlining the
need for such a facility in Dubuque. He responded that he had reviewed the IFA
market studies performed for the Applewood III (2009) and Dubuque Senior Apartments
(2010) complexes. While these are not assisted facilities, they did document the need
and absorption rates for new affordable senior housing units in Dubuque. Both of these
projects were awarded tax credits by IFA.
McClenahan provided some additional analysis. He stated the existing market rate
Dubuque facilities are beyond the economic means of his target market (under 60%
AMI.) Further, he stated that these facilities do not accept persons using the Medicaid
Waiver — which pays the cost of the supportive services needed by the frail elderly.
Finally, he mentioned that he had conferred with Linda McDonald, Executive Director of
Scenic Valley Agency on Aging, which administers the Medicaid Waiver program
locally. He characterized her position as very supportive of an affordable assisted
facility in Dubuque.
There is no other similar facility in Dubuque. The only assisted senior housing is
offered at market rates. In March, the City Council approved an application by The
Rose for IFA financing. The City also committed local match if IFA tax credits were
secured. Recently, IFA has announced an award of tax credits toward this project.
With a total development (less land) cost of $9.3 million, McClenahan requested a
yearly commitment of $19,355 for 10 years. This can be done through Tax Increment
Financing. This commitment would allow the project to borrow $185,000 out of IFA's
Senior Living Loan program, a 1% interest loan program to assist project like the Rose
of Dubuque. This amount equals 2% of development costs, resulting in 10 points on
the application.
This level of financial assistance in turn allows McClenahan to project 100% of rents
within HUD Fair Market Rent (FMR) guidelines, at $449 /month. This will make 100% of
the units available to our Section 8 seniors, without even needing the higher `exception
rents' we could provide at this location.
And, as mentioned, all units in this facility would then rent at levels affordable to our
Section 8 seniors. That could be a strong inducement for their enrollment in the
Program, increasing their level of participation and further enrolling more Section 8
households at a west side location.
Following the establishment of an Urban Renewal District, the City will negotiate a
development agreement with The Rose to maintain the rent for the units for a 10 year
period at an amount not to exceed the HUD Fair Market Rent with the City providing a
10 year property tax rebate through tax increment financing not to exceed the amount
of taxes allowed to be distributed through TIF based on the assessed valuation or
$19,355 per year, whichever is less.
In return for committing to the annual payment, the City will receive a commitment that
the units in the project are compliant with the HUD Fair Market Rent for the 10 years.
Discussion
The attached Resolution directs staff to prepare an Urban Renewal Plan and to forward
the Urban Renewal Plan to the Long Range Planning Commission for their review and
comment. This is required by Chapter 403 along with a consultation process that
involves all affected taxing entities. Those taxing entities, the County, School Board
and community college, have an opportunity to comment on the proposed Urban
Renewal Plan prior to the required public hearing on the Urban Renewal Plan, but they
cannot block adoption of the plan.
City Council public hearing on the Urban Renewal Plan will be scheduled for August 1,
2011. The public notice will be published no more than twenty days and no less than
four days prior to the public hearing to allow for the appropriate publication
requirements. This will allow time for preparation of the plan, review and comment
period by the Long Range Planning Commission and the consultation process with the
taxing entities.
Recommendation
I recommend the City Council adopt the attached Resolution of Necessity that begins
the process of creating the Urban Renewal Plan for the Lake Ridge Economic
Development District and sets a public hearing for August 1, 2011.
The Plan will provide the tools to encourage development activities within the District.
Action Step
The action step for the City Council is to adopt the Resolution of Necessity attached to
this memorandum.
F: \USERS \Econ Dev \Urban Renewal\Lake Ridge\20110614 Lake Ridge UR Neces Memo.doc
RESOLUTION NO. 200 -11
A RESOLUTION OF NECESSITY FINDING THAT CERTAIN PROPERTY
ALONG LAKE RIDGE DRIVE IS AN ECONOMIC DEVELOPMENT AREA AND
THAT THE DEVELOPMENT OF SAID AREA IS NECESSARY IN THE
INTEREST OF THE RESIDENTS OF THE CITY OF DUBUQUE, IOWA.
Whereas, the City Council has determined that the active development of vacant
property for low- income assisted senior living is a beneficial use that will enhance the
City's ongoing economic development efforts; and
Whereas, the City Council has determined that the area described in Section 1
below meets the definitions of an economic development area as defined in Chapter
403 "Urban Renewal" of the Iowa Code; and
Whereas, a significant need for low- income assisted senior housing units exists
in the community and local resources are needed to advance the development; and
Whereas, Chapter 403 of the Iowa Code requires that before urban renewal
authority may be exercised, a City Council must adopt a resolution of necessity finding
that the area in question is a slum, blighted or ec�nomic development area, and that so
designating such area is necessary in the interest of the public health, safety or welfare
of the residents of the municipality.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the following described area is an economic development area
as defined by Chapter 403 of the Iowa Code and is appropriate for an urban renewal
project, to wit:
Lot 2 of Lot 2 of Cedar Lake Plaza 3rd Addition in the City of Dubuque, Dubuque
County, Iowa (hereinafter called the Lake Ridge Economic Development District).
Section 2. That the development of the Lake Ridge Economic Development
District is necessary and appropriate to facilitate the proper growth and development of
the community in accordance with sound planning and local community objectives.
Section 3. That the development of this area will provide new opportunities for
quality housing and job creation in the community.
Section 4. That the City Manager is authorized and directed to prepare an
Urban Renewal Plan for the Lake Ridge Economic Development District, to forward
said Plan to the City's Long Range Planning Commission for review and comment and
to begin the consultation process required by law with affected taxing entities.
Section 5. That the City Clerk is directed to publish notice of a public hearing on
the adoption of an Urban Renewal Plan for the Lake Ridge Economic Development
District to be held on the 1 day of August, 2011, at 6:30 p.m. in the Historic Federal
Building in Dubuque, Iowa, 350 W. 6 Street, Dubuque, Iowa and that said notice shall
generally identify the area covered by the Plan and the general scope of the Urban
Renewal Plan activities planned for such area.
Section 6. That the City Clerk is further directed to send by ordinary mail a copy
of said Plan and notice of public hearing to the Dubuque Community School District, the
County Board of Supervisors and the Northeast Iowa Community College, as the
affected taxing entities.
PASSED, APPROVED and ADOPTED this 20 day of June, 2011.
ATT T:
j ,
K- in Fir tahl, Acting Cit Jerk
F: \USERS\Econ Dev \Urban Renewal \Lake Ridge\2o3.1.o62o Lake Ridge Reso of Necessity.doc
Lynn V. Sutton, Mayor Pro -Tem
CEDAR poss RD