Engine House #1 LLC_Assignment of Development AgreementMasterpiece on the Mississippi
Dubuque
AN-America City
1 1 1
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Assignment of the Engine House #1 Development Agreement to Dubuque
Bank & Trust CDC
DATE: August 10, 2011
Economic Development Director Dave Heiar is recommending approval of the
assignment of the Development Agreement between the City of Dubuque and Engine
House #1, LLC, a subsidiary of Dubuque Initiatives, to Dubuque Bank & Trust
Community Development Corporation to sell and rehabilitate the Engine House #1
building at 1805 Central Avenue which formerly housed the Housing Department
offices.
Leaving the building vacant is detrimental to this neighborhood. The proposed services
that will be provided by both the Community Health Center and the Head Start program
will greatly enhance the quality of life for this neighborhood. Substantial rehabilitation of
this building will provide many benefits to this neighborhood.
The City is ineligible for Historic Tax Credits and must turn Tong -term control over to a
separate entity. Dubuque Initiatives originally agreed to take on the redevelopment
project. However, Dubuque Bank & Trust CDC has offered to take on the project and is
better suited for the project than Dubuque Initiatives.
The project is pursuing Historic Tax Credits because there is a desire to rehabilitate the
building to its historic condition much like it appeared when it was a fire station. This
historic renovation will add some cost to the project which can be offset by receiving
Historic Tax Credits. It is anticipated that this rehabilitation project will also serve as a
potential stimulus to enhance the renovation of other buildings in this area.
The original Development Agreement was approved with Engine House #1, LLC on
June 6, 2011.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Milligen
illigen
ael C. Van
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
2
Masterpiece on the Mississippi
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director �.
Dubuque
AHmeiicaCity
2007
4'r `
SUBJECT: Assignment of the Engine House #1 Development Agreement to Dubuque
Bank & Trust CDC
DATE: July 27, 2011
INTRODUCTION
This memorandum recommends approval of a resolution to assign a development
agreement between the City of Dubuque and Engine House #1, LLC, as subsidiary of
Dubuque Initiatives, to Dubuque Bank & Trust CDC to sell and rehabilitate the Engine
House #1 building (18th Street) which formerly housed the Housing Department offices.
BACKGROUND
The Housing Department moved into their new offices at the Federal Building in 2008
and since that time their former offices on 18th Street have remained vacant. The
Housing Department released an RFP for ideas on re- utilization of the facility. The
Crescent Community Health Center and the Head Start program expressed an interest
in leasing portions of the building. The building will need to be renovated to
accommodate these tenants. The goal is to historically rehabilitate the building using
historic tax credits as one of the revenue sources. To facilitate additional funding from
the State and Federal Historic Tax Credit (HTC) programs, the building must be
controlled by an entity eligible to receive HTCs.
The original Development Agreement was approved with Engine House #1, LLC on
June 6, 2011.
DISCUSSION
Leaving the building vacant is detrimental to this neighborhood. The proposed services
that will be provided by both the Community Health Center and the Head Start program
will greatly enhance the quality of life for this neighborhood. Substantial rehabilitation of
this building will provide many benefits to this neighborhood.
The City is ineligible for HTCs and must turn long -term control over to a separate entity.
Dubuque Initiatives originally agreed to take on the redevelopment project. However,
Dubuque Bank & Trust CDC has offered to take on the project and is better suited for
the project than Dubuque Initiatives.
The project is pursuing HTCs because there is a desire to rehabilitate the building to its
historic condition much like it appeared when it was a fire station. This historic
renovation will add some cost to the project which can be offset by receiving HTCs. It is
anticipated that this rehabilitation project will also serve as a potential stimulus to
enhance the renovation of other buildings in this area.
Major elements of the proposed Development Agreement which is proposed to be
assigned to Dubuque Bank & Trust CDC are as follows:
• City will sell the building to Dubuque Bank & Trust CDC. for $1.
• City will provide a zero percent interest loan for the rehabilitation expenditures.
The initial loan will be for $1,550,000 and could be up to $1,700,000.
• Dubuque Bank & Trust CDC will receive 15 years of Tax Increment Financing.
• Dubuque Bank & Trust CDC is committing to using the loan proceeds to
rehabilitate the building according to the U.S. Department of the Interior
Secretary's Standards for Rehabilitation.
• The building will be leased to the Community Health Center and the Head Start
program.
• The City will have separate agreements for service with the Community Health
Center and the Head Start program (Operation New View) to help accommodate
the services they will provide to the neighborhood.
• Any net proceeds of tax credits, any developer fee, and net rent received for the
project will be used to pay down the City's loan to the project.
Additional terms and conditions of the sale of the property are included within the
attached development agreement.
Funding for the estimated $1,550,000 loan (potentially to $1,700,000) loan will be
provided by $874,000 in DRA distribution funds, $13,000 from a grant from the Office of
Energy Independence, $606,409 in short-term GO borrowing for a Federal and State
Historic Tax Credit bridge loan, and the remaining $207,000 will be paid for through
funds received from a recent land sale to Faley Properties, LLC in the Dubuque
Industrial Center West.
The Development Agreement requires the Developer to repay the Loan with receipts
from the sale or rebate of Historic Tax Credits, Developer Fee, and net rent proceeds
from the tenants. The following is a chart describing the sources of repayment of the
loan to Dubuque Bank & Trust CDC:
Amount
Date Action Received Balance Outstanding
9/1/2011 Project Commencement $ 1,550,000
2/1/2012 Receipt of Federal HTCs $ 372,000 $ 1,178,000
3/1/2012 Receipt of Developer Fee $ 225,000 $ 953,000
5/1/2013 Est. Receipt of State HTCs $ 411,329 $ 541,671
* - the $541,671 will be paid through rents received from the tenants of the building
over the terms of the leases
P.
RECOMMENDATION
I recommend that the City Council approve the attached Assignment of the
Development Agreement for the Former Housing Department Building to Dubuque Bank
& Trust CDC for the purpose of rehabilitating the building for the Community Health
Center and a Head Start center.
ACTION STEP
The action step for the City Council is to adopt the attached Assignment of
Development Agreement.
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City of Dubuque
Engineering Division
50 West 13th Street
Dubuque, Iowa 52001
Phone: (563) 589 -4270
Fax: (563) 589 -4205
ASSIGNMENT OF DEVELOPMENT AGREEMENT
BETWEEN
ENGINE HOUSE #1, LLC
AND
DUBUQUE BANK & TRUST COMPANY CDC
This Assignment of Development Agreement is dated for reference purposes the
15trday of August , 2011, by and between Engine House #1, LLC (Assignor) and
Dubuque Bank & Trust CDC (Assignee).
WHEREAS, Assignor, as Developer, entered into a Development Agreement
with the City of Dubuque (the Development Agreement), dated the _ day of
, 2011; and
WHEREAS, pursuant to the Development Agreement, Assignor was to purchase
the real estate identified in the Development Agreement from the City of Dubuque on
the terms set forth in the Development Agreement; and
WHEREAS, Assignor and Assignee have agreed for Assignee to purchase the
real estate identified in the Development Agreement, subject to the terms of the
Development Agreement.
NOW, THEREFORE, the parties agree:
1. FOR VALUE RECEIVED, and subject to the approval of the City of
Dubuque, Assignor hereby assigns, transfers and sets over to Assignee all rights, title
and interest held by Assignor in the Development Agreement.
2. Assignee hereby assumes and agrees to perform all the remaining and
executory obligations of Assignor under the Development Agreement.
3. Assignor and Assignee hereby request the City of Dubuque to approve
this Assignment of the Development Agreement from Assignor to Assignee.
4. Assignee will reimburse Assignor for costs incurred associated with the
design and rehabilitation of the building.
IN WITNESS WHEREOF, the parties have executed this Agreement as their free
and voluntary act on the date referred to above.
ENGINE HOUSE #1, LLC,
ASSIGNOR ASSIGNEE
By �.
080111
DUBUQUE BANK & TRUST CDC
By:
APPROVAL OF ASSIGNMENT BY THE CITY OF DUBUQUE, IOWA
The City of Dubuque hereby approves the foregoing Assignment.
By:
Roy D. Buol, Mayor
Attest:
Ke in S. irns - hI, Acting ity Clerk
F: \USERS \Econ Dev \Engine House #1 \DA\20110801 EngineHouse #1AssignmentOfDA.docx
2
STATE OF IOWA )
COUNTY OF DUBUQUE ) ss:
On this 15 day of A00105 , 2011,, before me, a Notary Public in
and for the State of Iowa, persoally appeared itllta� -, ,. (,a..UaJr\an to me
personally known, who being by me duly sworn did say that I�J111tam 14. acala.hcLrm
is the Marna, 1ASMer\A--be-Cof Engine House # 1, LLC and that said instrument was
signed on behalf of said limited liability company by authority of its members and the
said Uutlkia.vn act acknowledged the execution of said instrument to be
the voluntary act and deed of said limited liability company, by it voluntarily executed.
Nota y Public in and for State of Iowa
lu MARIE P KOERPERICH
i ,A„, Commission Number 718845
M mrrission Expires
;o,,. CO 2.0 I I
STATE OF IOWA )
COUNTY OF DUBUQUE ) ss:
On this J S day of rt u 5 t , . 2011, before me, a Notary Public in
and for the State of Iowa, personal r appeared LDUr Ias T. *c,fstwrhLA to me
personally known, who being by me duly sworn did say th 00t.kc Las S• Nor s
is the prate i A t -t of said c.c,cpnA'c►o and tha said instrument was
signed on behalf of said Cii c,440 by authority of its members and the said
On,1 ►cam J . N.ai'4, — b.nc,�.,^ v. acknowledged the execution of said instrument to be the
volun 'fary act and deed of said Inc' potr, oh , by it voluntarily executed.
m . /o��r�i✓�
Notary Public in and for State of Iowa
3
DIANN M. GUNS
keliA COMMISSION N0
MY C WIRES ��"" as -A91