CARADCO Landlord LLC_Assignment of Development AgreementMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
Dubuque
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AN- Ametica City
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2007
SUBJECT: Assignment of the Development Agreement, Downtown Rehabilitation
Loan and Grants, and Waiver Agreement to CARADCO Landlord, LLC
DATE: August 10, 2011
Economic Development Director Dave Heiar is recommending approval of an
assignment of the Development Agreement, Downtown Rehabilitation Loan and Grants,
and Waiver Agreement between the City of Dubuque and CARADCO Building, LLLP, as
subsidiary of Gronen Properties, to CARADCO Landlord, LLC, a different entity formed
by Gronen Properties to own the CARADCO redevelopment project.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
be assigned over to the new entity. The attached Assignment document allows for the
transfer of the agreements to CARADCO Landlord, LLC.
The attached resolution approves the Collateral Assignment of Development Agreement
to allow the Bank to take over the Development Agreement in the event default has
occurred and they need to take over the project.
The assignments and Collateral Assignment will not impact the terms and conditions
established in these agreements.
RECOMMENDATION
I recommend that the City Council approve the attached Assignment of the
Development Agreement from CARADCO Building, LLLP to CARADCO Landlord, LLC
to facilitate the redevelopment of the CARADCO Building located at 900 Jackson Street.
ACTION STEP
The action step for the City Council is to adopt the attached Assignment of
Development Agreement.
F: \USERS \Econ Dev \CARADCO\20110809 Memo CARADCO Assignment of City incentives.docx
Masterpiece on the Mississippi
Dubuque
killtd
AN-Amer9caCUy
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2007
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director le4-4-'‘
SUBJECT: Assignment of the Development Agreement, Downtown Rehabilitation
Loan and Grants, and Waiver Agreement to CARADCO Landlord, LLC
DATE: August 9, 2011
INTRODUCTION
This memorandum recommends approval of an assignment of the Development
Agreement, Downtown Rehabilitation Loan and Grants, and Waiver Agreement
between the City of Dubuque and CARADCO Building, LLLP, as subsidiary of Gronen
Properties, to CARADCO Landlord, LLC, a different entity formed by Gronen Properties
to own the CARADCO redevelopment project.
BACKGROUND
The project includes the creation of 72 apartments on the second and third floors of the
building. In addition to the residential units, the CARADCO Building will feature
approximately 35,000 square -feet of first -floor commercial space to attract and support
new downtown businesses. The developer is also exploring the use of 12,000 square -
feet of lower level space for community service projects. The project plans also include
an environmentally sensitive HVAC system and other measures to enhance the
building's energy efficiency. The renovation is expected to begin in spring 2011.
The Carr, Ryder & Adams Company (CARADCO) Main Plant Building, a former
millwork factory, occupying an entire city block, was built between 1880 and 1906. The
renovation of this building is expected to act as a catalyst for the revitalization of the
Historic Millwork District. With its foundation of historic, architecturally unique
warehouses, the district will become an urban mixed -use development containing
mixed - income housing, commercial space, and public gathering places, incorporating
sustainable and energy- efficient technologies.
At the January 18, 2011 meeting, the City Council approved a Community Development
Block Grant (CDBG) Housing Disaster Recovery Fund Contract between the Iowa
Department of Economic Development and the City of Dubuque on behalf of the
CARADCO Building project. The amount of the award was $8.9 million.
CARADCO Building, LLLP entered into a Development Agreement with the City of
Dubuque (the "Development Agreement "), on March 31, 2011. The main terms of the
agreement are as follows:
1) The City is committing to complete the street reconstruction project funded by the
TIGER Grant from the Federal Highway Administration.
2) The project will receive $720,000 in incentives through the Downtown Housing
Incentive Program ($10,000 per new housing unit).
3) CARACDO Building, LLLP will receive a 15 year TIF incentive on the value of the
assessable improvements. This can be taken as an up front TIF with a minimum
assessment agreement, or a 15 year TIF rebate.
4) Contingent upon sufficient collateral acceptable to the City, the project will
receive the proceeds from a $4,500,000 loan from the Iowa Finance Authority.
This will be a 20 year loan at 3% interest.
5) A Downtown Rehabilitation Loan Program loan of $300,000 for the Main Street
buildings. The expected year of funding this is FY2026, and was approved by
the City Council on December 6, 2010.
6) Facade, Planning and Design, and Financial Consultant grants will also be made
to the Main Street buildings. The expected year of funding these grants is
FY2013, which was approved by the City Council on December 6, 2010.
7) Contingent upon a subrecipient agreement and loan documents, an $8.9 million
CDBG award from the State of Iowa to assist in the creation of workforce housing
in the building.
8) Developer will spend approximately $28 million to create 72 residential units at
900 Jackson Street. This renovation will also include approximately 35,000
square feet of commercial space on the main floor.
CARADCO Building, LLLP was awarded a Downtown Rehabilitation Loan and Grant
Program incentives by Resolution 453 -10 on December 6, 2010 (the "Downtown Loan
and Grants). These incentives include a $300,000 low interest loan, a $10,000 Facade
Grant, $10,000 Design Grant, and a $15,000 Financial Consultant Grant.
CARADCO Building, LLLP entered into a Petition and Waiver Agreement with the City
of Dubuque dated the 7th day of September, 2010 and recorded September 15, 2010 as
Instrument No. 2010 -13755 in the records of Dubuque County, Iowa (the "Waiver
Agreement "). This agreement specified that CARADCO Building would be responsible
to reimburse the City for costs of reconstructing the streets near the building should the
project not be done.
The Bank financing the CARADCO project has requested the City allow for the
Development Agreement be assigned to them should they need to take over the project
in the event as additional collateral.
DISCUSSION
Gronen Properties has determined that it is necessary to create a new LLC to own the
CARADCO building project. The project will involve investors relating to the historic tax
credits being produced by the project. Therefore, the agreements specified above must
be assigned over to the new entity. The attached Assignment document allows for the
transfer of the agreements to CARADCO Landlord, LLC.
The attached resolution approves the Collateral Assignment of Development Agreement
to allow the Bank to take over the Development Agreement in the event default has
occurred and they need to take over the project.
The assignments and Collateral Assignment will not impact the terms and conditions
established in these agreements.
RECOMMENDATION
I recommend that the City Council approve the attached Assignment of the
Development Agreement from CARADCO Building, LLLP to CARADCO Landlord, LLC
to facilitate the redevelopment of the CARADCO Building located at 900 Jackson Street.
ACTION STEP
The action step for the City Council is to adopt the attached Assignment of
Development Agreement.
F: \USERS \Econ Dev \CARADCO\20110809 Memo CARADCO Assignment of City incentives.docx
ASSIGNMENT OF DEVELOPMENT AGREEMENT, DOWNTOWN REHABILITATION
LOAN AND GRANTS, AND PETITION AND WAIVER AGREEMENT
AND COLLATERAL_ ASSIGNMENT OF DEVELOPMENT AGREEMENT
CARADCO BUILDING, LLLP
AND
CARADCO LANDLORD, LLC / GRONEN RESTORATION, INC.
This Assignment is dated for reference purposes the q day of August, 2011, by
and between CARADCO BUILDING, LLLP (Assignor) and CARADCO LANDLORD,
LLC /GRONEN RESTORATION, INC. (Assignee).
WHEREAS, Assignor, as Developer, entered into a Development Agreement
with the City of Dubuque (the "Development Agreement "), dated the 21 day of March,
2011; and
WHEREAS, Assignor was awarded a Downtown Rehabilitation Loan and Grant
Program incentives by Resolution 453 -10 on December 6, 2010 (the "Downtown Loan
and Grants); and
WHEREAS, Assignor, as Owner, entered into a Petition and Waiver Agreement
with the City of Dubuque dated the 7 day of September, 2010 and recorded
September 15, 2010 as Instrument No. 2010 -13755 in the records of Dubuque County,
Iowa (the "Waiver Agreement ");
WHEREAS, Assignor's lender has required a Collateral Assignment of the
Development Agreement dated the 21 day of March, 2011; and
WHEREAS, Assignor and Assignee have agreed that Assignee shall acquire the
real estate identified in the Development Agreement, Downtown Loan and Grants, and
Waiver Agreement, subject to the terms of both such agreements.
NOW, THEREFORE, the parties agree as follows:
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, Downtown Loan and
Grants, and Waiver Agreement.
2. Assignee hereby assumes and agrees to perform all the remaining and
executory obligations of Assignor under the Development Agreement, Downtown Loan
and Grants, and Waiver Agreement.
3. Assignor and Assignee hereby request that the City of Dubuque approve
this Assignment of Development Agreement, Downtown Loan and Grants, and Waiver
Agreement from Assignor to Assignee.
4. City approves the Collateral Assignment of Development Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as their free
and voluntary act on the date referred to above.
CARADCO BUILDING, LLLP, ASSIGNOR
By: Gronen Restor•tion, Inc.,
General Partner
By: • 7L
Jahn N. Gr• .g en, President
CA ADCO LANDLORD, LLC, ASSIGNEE
By: GRONEN RE TORATION, INC.,
Managing Mem
By: & /"
nN.
GROWN RESTORAT •N, INC.
By: c i
Joh' N. Gronln, President
By:
Attest:
v�—
nen, President
APPROVAL OF ASSIGNMENT BY THE CITY OF DUBUQUE, IOWA
The City of Dubuque hereby approves the foregoing Assignment.
2
STATE OF IOWA
COUNTY OF DUBUQUE ) ss:
On this cob day of a , 2011, before me, a Notary Public in
and for the State of Iowa, person appeared JOHN N. GRONEN, to me personally
known, who being by me duly sworn did say that he is the President of GRONEN
RESTORATION, INC. and that said instrument was signed on behalf of said GRONEN
RESTORATION, INC. as the General Partner of CARADCO BUILDING, LLLP by
authority of its Board of Directors and the said JOHN N. GRONEN acknowledged the
execution of said instrument to be the voluntary act and deed of CARADCO BUILDING,
LLLP by him voluntarily executed.
LAURIE STELPFLUG
Notarial Seal • Iowa
Commission # 74 02
My Commission Expires
Notary Public in and for Stat of Iowa
STATE OF IOWA )
COUNTY OF DUBUQUE ) ss:
On this CO day of A t, , 2011, before me, a Notary Public in
and for the State of Iowa, personall appeared JOHN N. GRONEN, to me personally
known, who being by me duly sworn did say that he is the President of GRONEN
RESTORATION, INC. and that said instrument was signed on behalf of said GRONEN
RESTORATION, INC., as the Managing Member of CARADCO LANDLORD, LLC, by
authority of its members and the said JOHN N. GRONEN acknowledged the execution
of said instrument to be the voluntary act and deed of said CARADCO LANDLORD,
LLC by him voluntarily executed.
0 p-FC
Notary Public in and for S . of Iowa
3
LAURIE STELPFLUG
Notarial Seal - Iowa
Commission # 747902
My Commission Expires 1—Ir'1 2012
�- +ter_- •TMssn +-vs
STATE OF IOWA )
COUNTY OF DUBUQUE ) ss:
On this day of , 2011, before me, the undersigned, a
Notary Public in and for the State . Iowa, personally appeared John N. Gronen to me
personally known, who being by me duly sworn, did say that he is the President of said
corporation executing the within and foregoing instrument; that the instrument was
signed on behalf of said corporation by authority of its Board of Directors; and the said
John N. Gronen acknowledged the execution of said instrument to be the voluntary act
and deed of said corporation, by it and by him voluntarily executed.
LAURIE STELPFLUG
Notarial Seal - Iowa
Commission # 747902 2
My Commission Expires '21 1:2 J
4
f • (1 l .t Q (\ -XL1.
Notary Publi
in and for State of Iowa
COLLATERAL ASSIGNMENT OF DEVELOPMENT AGREEMENT
THIS COLLATERAL ASSIGNMENT OF DEVELOPMENT AGREEMENT (this
"Agreement "), is made and entered into as of the day of , 2011, by and
among CARADCO LANDLORD, LLC, an Iowa limited liability company (the "Borrower "),
AMERICAN TRUST & SAVINGS BANK, an Iowa state banking corporation (the "Lender "),
and the CITY OF DUBUQUE, IOWA, a municipal corporation organized and existing under the
laws of the State of Iowa (the "City ").
WITNESSETH:
WHEREAS, the City, Caradco Building, L.L.L.P., an Iowa limited liability limited partnership
( "Caradco Building "), and Gronen Restoration, Inc., an Iowa corporation ( "Gronen ") entered
into that certain Development Agreement dated as of March 21, 2011, as assigned by Caradco
Building and Gronen to and assumed by the Borrower pursuant to that certain Assignment of
Development Agreement dated as of , by and among the Borrower, Caradco
Building, Gronen and the City (collectively, the "Development Agreement "), providing for the
development of certain property legally described on Exhibit A attached hereto and incorporated
herein by this reference (the "Property "); and
WHEREAS, the Borrower is renovating an existing building into 72 residential units and multi -
tenant commercial space (the "Improvements ") on the Property (the Improvements and the
Property are hereinafter at times collectively referred to as the "Project "); and
WHEREAS, the Borrower and the Lender have entered into that certain Construction Loan
Agreement of even date herewith (the "Loan Agreement "), pursuant to which the Lender has
agreed, among other things, to make a construction loan to the Borrower in the original principal
amount of up to $12,342,474 (the "Loan"); and
WHEREAS, the obligation of the Borrower to repay the Loan is evidenced by that certain
Promissory Note of even date herewith (the "Note "), executed by the Borrower payable to the
order of the Lender, in the original principal amount of $12,342,474 (the "Note "); and
WHEREAS, the Note is secured, among other things, by a certain Mortgage, Security
Agreement, Fixture Financing Statement and Assignment of Leases and Rents of even date
herewith (the "Mortgage ") executed by the Borrower in favor of the Lender and encumbering the
Project; and
WHEREAS, the Lender has required, as an express condition of entering into the Loan
Agreement, the Borrower to assign all of its rights under the Development Agreement to the
Lender to secure the obligations of the Borrower under the Note, the Loan Agreement, the
Mortgage and the documents related thereto (collectively, the "Loan Documents "), as set forth
herein.
NOW THEREFORE, in consideration of the foregoing recitals and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. The Borrower hereby assigns to the Lender all of the Borrower's right, title and interest
under and pursuant to the Development Agreement to secure the Borrower's obligations
under the Loan Documents.
2. The Borrower hereby represents and warrants that there have been no prior assignments
of the Development Agreement, that the Development Agreement is a valid and
enforceable agreement and that neither the City nor the Borrower is in default thereunder
and that all covenants, conditions and agreements have been performed as required
therein, except those not to be performed until after the date hereof.
3. The Borrower hereby agrees not to sell, assign, pledge, mortgage or otherwise transfer or
encumber its interest in the Development Agreement as long as this Agreement is in
effect. The Borrower hereby irrevocably constitutes and appoints the Lender as its
attorney -in -fact to demand, receive and enforce the Borrower's rights with respect to the
Development Agreement for and on behalf of and in the name of the Borrower or, at the
option of the Lender, in the name of the Lender, with the same force and effect as the
Borrower could do if this Agreement had not been made.
4. This Agreement shall constitute a perfected, absolute and present assignment, provided
that the Lender shall have no right under this Agreement to enforce any of the provisions
of the Development Agreement or exercise any rights or remedies under this Agreement
until an Event of Default (as that term is defined in any of the Loan Documents) shall
occur and be continuing.
5. Upon the occurrence of an Event of Default, the Lender may, without affecting any of its
rights or remedies against the Borrower under any other instrument, document or
agreement, exercise its rights under this Agreement as the Borrower's attorney -in -fact in
any manner permitted by law and, in addition, the Lender shall have the right to exercise
and enforce any and all rights and remedies available after a default to a secured party
under the Uniform Commercial Code as adopted in the State of Iowa. If notice to the
Borrower of any intended disposition of collateral or of any intended action is required by
law in any particular instance, such notice shall be deemed commercially reasonable if
given at least ten (10) calendar days prior to the intended disposition or other action.
6. The City hereby consents and agrees to the terms and conditions of this Agreement. The
City further represents to the Lender that the Development Agreement is a valid and
enforceable agreement and that neither the City nor the Borrower is in default thereunder
-2
and that all covenants, conditions and agreements have been performed as required
therein, except those not to be performed until after the date hereof.
7. The City hereby agrees to provide the Lender with a copy of any notice of default under
the Development Agreement at the same time and in the same manner as the same is
provided to the Borrower, and that the Lender shall have the right, but not the obligation,
to cure any such default on behalf of the Borrower within the periods of time set forth in
the Development Agreement.
8. The parties hereto agree that no material change or amendment shall be made to the terms
of the Development Agreement without the prior written consent of the Lender, which
consent should not be unreasonably withheld or delayed. The parties hereto agree that
this Agreement does not release the Borrower from its obligations under the
Development Agreement.
9. This Agreement can be waived, modified, amended, terminated or discharged only
explicitly in a writing signed by the Lender. A waiver by the Lender shall be effective
only in a specific instance and for the specific purpose given. Mere delay or failure to act
shall not preclude the exercise or enforcement of any of the Lender's rights or remedies
hereunder. All rights and remedies of the Lender shall be cumulative and may be
exercised singularly or concurrently, at the Lender's option, and any exercise or
enforcement of any one such right or remedy shall neither be a condition to nor bar the
exercise or enforcement of any other.
10. Any notice, request, demand or other communication hereunder shall be deemed fully
given if delivered or postage prepaid, certified or registered, addressed to the party as set
forth below:
If to the City:
The City of Dubuque, Iowa
5 West 13th Street
Dubuque, Iowa 52001
If to the Borrower:
Caradco Landlord, LLC
1056 Main Street
Dubuque, Iowa 52001
If to the Lender:
American Trust & Savings Bank
895 Main Street
Dubuque, Iowa 52004
Attn: Tori Richter
11. This Agreement shall be governed by and construed in accordance with the laws of the
State of Iowa.
12. This Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have made and entered into this Agreement as of
the day and year first above written.
6212252v1
14755.2
[SIGNATURE PAGES FOLLOW]
BORROWER:
CARADCO LANDLORD, LLC, an Iowa
limited liability company
By:
Its:
STATE OF IOWA )
) ss
COUNTY OF )
The foregoing instrument was acknowledged before me this day of , 2011, by
, the , of Caradco Landlord, LLC, an Iowa
limited liability company, for and on behalf of said limited liability company.
Notary Public
LENDER:
AMERICAN TRUST & SAVINGS BANK
By:
Victoria J. Richter
Its 2nd Senior Vice President
STATE OF IOWA )
) ss
COUNTY OF )
The foregoing instrument was acknowledged before me this day of , 2011, by
Victoria J. Richter, the 2nd Senior Vice President of American Trust & Savings Bank, an Iowa
state banking corporation, for and on behalf of said state banking corporation.
Notary Public
CITY:
CITY OF DUB QUE, IOWA
By:
U
Roy D. B o
Its Mayor
By:
Kevin S. Fi tahl
Its Acting City Clerk
STATE OF IOWA )
) ss
COUNTY OF Dubuque )
The foregoing instrument was acknowledged before me this /. day of L,, , , ;it , 2011, by
Roy D. Buol and Kevin S. Firnstahl, the Mayor and Acting City Clerk, respec vely, of the City
of Dubuque, Iowa, a municipal corporation organized and existing under the laws of the State of
Iowa, for and on behalf of said municipal corporation.
0 wh
'4
Notary Public
SUSAN M, WINTER
COMMISSION N0,103274
MY COMMISSION EXPIRES
THIS INSTRUMENT WAS DRAFTED BY:
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Suite 3500
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