40 Main, LLC_Fourth Amendment to Development AgreementMasterpiece on the Mississippi
Dubuque
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AN- Americacfy
1111 !
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Resolution Authorizing the Fourth Amendment to the Development
Agreement with 40 Main, LLC
DATE: October 31, 2011
Economic Development Director Dave Heiar recommends City Council approval of the
Fourth Amendment to the Development Agreement with 40 Main, LLC, authorizing a
one year extension on the balloon payment for the Economic Development loan of
$300,000 to the City's general construction fund to become due upon receipt of the
State Historic Tax Credits, but not later than December 31, 2012.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
M' hael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David Heiar, Economic Development Director
Masterpiece on the Mississippi
Dubuque
kdkil
Au- AmedcaCRy
2007
TO: Michael Van Milligen, City Manager
FROM: David Heiar, Economic Development Director
SUBJECT: Resolution authorizing the Fourth Amendment to the Development
Agreement with 40 Main, LLC
DATE: October 27, 2011
INTRODUCTION
This memorandum presents for City Council adoption a resolution approving an
amendment to the Development Agreement with 40 Main LLC, a mixed use
redevelopment of the building at 40 Main Street to allow for an extension on the date for
which the balloon payment is due on the Economic Development loan of $300,000.
BACKGROUND
On January 15, 2009, the City Council approved a Development Agreement with 40
Main, LLC. That Agreement set the terms for the redevelopment of property located at
40 Main Street. The Agreement stipulates the City will provide an Economic
Development Grant and loan to 40 Main, LLC in an amount estimated at $900,000.
On May 18, 2009, a first amendment to the Development Agreement was made to
convert the $300,000 Downtown Rehab Loan /Grant to a low interest loan funded from
interest earnings in the City's general construction fund. The loan is for a period of time
until the Developer received State Historic Tax Credits, but not later than December 31,
2011.
DISCUSSION
The 40 Main, LLC project is one of the redevelopment projects that has delivered 18
much needed rental units in the downtown area. All of these residential units are
leased. The Developer secured a tenant for the first floor of this building (Dubuque
Data Services) and the second phase of this project, 44 Main, created an additional 16
apartments. All of these residential units are leased.
This was the first market rate residential project in which the City partnered. As the
project evolved, it was necessary to make certain changes to the Development
Agreement. Recently the Developer requested an extension on the date for which the
balloon payment is due on the Economic Development loan of $300,000 to the City's
general construction fund.
The Developer anticipated receiving State Historic Tax Credits at the completion of the
40 Main project, but the State has decided that these credits would not be paid until the
entire building was completed which included the second phase of this project, 44 Main.
By combining these two projects into one, the Developer is now forced to file for the
Iowa state tax credits on the 2011 Iowa Tax return. This has caused a one year delay
in receiving tax credits and the Developer's plan was to use the receipt of these state
tax credits to repay the loan.
The Developer began making interest payments from the inception date of the loan and
was to make a balloon payment of $300,000 on December 31, 2011. The Developer is
requesting up to a one (1) year extension for the payment of $300,000 until the State
Historic Tax Credits are received but not later than December 31, 2012 (see attached
email). The Developer will continue making interest payments during this extension
period.
RECOMMENDATION /ACTION STEP
I recommend that the City Council approve a resolution authorizing the Fourth
Amendment to the Development Agreement with 40 Main, LLC to authorize up to
a one (1) year extension on the balloon payment for the Economic Development loan of
$300,000 to the City's general construction fund to become due upon receipt of the
State Historic Tax Credits but not later than December 31, 2012.
Attachment
cc: Jenny Larson, Budget Director
Cheryl Pregler, Finance Department
2
From: "Jay Freebery" <jreebery@chathambay.com>
To: -David Heiar "' <Dheiar @cityofdubuque.org >, "'Aaron DeJong "' <Adejong @ci...
CC: "'chris miller "' < chris @millerdevelopmentgroup.com >, "'Sherry Freebery"'...
Date: 10/26/2011 3:58 PM
Subject: 40 Main- 300K Loan
Dave,
Please accept this request to extend the timing for the balloon payment on
the 40 Main Loan of $300,000. As you know, we created the 40 Main project
first and subsequently acquired the 44 Main property, which allowed for the
creation of 16 additional residential units at 44 Main Street. The addition
of the second property, however, resulted in both projects being combined
for tax credit purposes into one project. No tax credit can be issued until
the completion of the two properties located 40 and 44 Main Street. This has
caused a year delay in our funding for the state tax credits. By combining
these projects, we are now forced to file for the Iowa state tax credits in
the 2011 Iowa Tax returns.
Our plan has always been to use the receipt of these state tax credits to
repay the loan. Consequently, we are respectfully requesting an extension of
up to 1 year to make our payment. Thank you for your consideration in this
matter.
Jay J. Freebery
Chief Operating Officer
Chatham Bay
1415 Foulk Road, Suite 104
Wilmngton, De 19803
(o) 302 -479 -9500 ext 102
(f) 302 - 479 -9200
www.chathambay.com
Real Estate Investors, Developers, and Managers
The information contained in this message and any attachments may be
confidential, privileged, proprietary or otherwise protected from disclosure
and is intended solely for the use of the individual or entity to whom it is
addressed. If you are not the intended recipient, you are hereby notified
that any dissemination, distribution, copying or use of this message and any
attachment is strictly prohibited and may be unlawful. You should not copy
or use this email or any attachment for any purpose, nor disclose all or any
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error, please notify us immediately by replying to this email and
permanently delete this message, any attachments and all copies thereof.
Nothing contained in this message and /or any attachments constitutes a
solicitation or an offer to buy or sell any securities.
Prepared /Return to: David Heiar, Economic Development, 50 W. 13th Street, Dubuque, IA 52001 (563) 589 -4393
RESOLUTION NO 364 -11
RESOLUTION APPROVING THE FOURTH AMENDMENT TO THE 40 MAIN LLC
DEVELOPMENT AGREEMENT
Whereas, a Development Agreement (the Agreement), dated January 15, 2009,
was entered into by and between the City of Dubuque, a municipal corporation of the
State of Iowa (City), and 40 Main LLC (Developer); and
Whereas, the Agreement was amended (First Amendment) on May 18, 2009;
and
Whereas, the Agreement was further amended (Second Amendment) on August
3, 2009; and
Whereas, the Agreement was further amended (Third Amendment) on October
13, 2010; and
Whereas, the Agreement provides for an Economic Development Loan with a
balloon payment for one (1) year from December 31, 2011; and
Whereas, Developer desires to extend the Economic Development Loan balloon
payment for one (1) year from December 31, 2011 to December 31, 2012 as set forth in
the proposed Fourth Amendment attached hereto; and
Whereas, the City Council has agreed to extend the Economic
Development Loan balloon payment due date on the terms and conditions set forth in
the Fourth Amendment.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the Fourth Amendment of the 40 Main LLC Development
Agreement is hereby approved.
Section 2. That the Mayor is hereby authorized and directed to execute said
Fourth Amendment on behalf of the City of Dubuque and the City Clerk is authorized
and directed to attest to his signature.
Section 3. That the City Manager is authorized to take such actions as are
• necessary to implement the terms of the Fourth Amendment as herein approved.
Passed, approved and adopted this 7th day of November 2011.
Roy D. Buol, Mayor
F: \USERS \Econ Dev \40 Main \Development Agreement\20101027 40 Main 4th amendment reso_1.doc
FOURTH AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE
AND 40 MAIN, LLC
This Fourth Amendment to the Development Agreement, dated for reference
purposes the 7th day of November, 2011, is made and entered into by and between the
City of Dubuque, Iowa (City) and 40 Main, LLC (Developer).
Whereas, City and Developer previously entered into a Development Agreement
dated the 15th of January, 2009 (the Development Agreement) for the property at 40
Main Street (the Property), as amended May 18, 2009, August 3, 2009 and October 13,
2010; and
Whereas, the Development Agreement provides in Section 3.1 for Minimum
Improvements of not less than Four Million Dollars ($4,000,000) to improve the Property
by creating eighteen (18) apartments for market -rate rental and seven thousand eight
hundred (7,800) square feet of retail space; and
Whereas, the Development Agreement provides for a $300,000 low interest loan
by City to Developer with a balloon payment of December 21, 2011; and
Whereas, Developer has requested an extension of the balloon payment due
date to December 31, 2012; and
Whereas, City and Developer have agreed to amend the Development
Agreement to revise the balloon payment due date; and
Whereas the parties desire to amend the Development Agreement to set forth
such amendment in writing.
THEREFORE, in consideration of the mutual terms and covenants contained
herein, the parties agree as follows:
1. Section 3.1. Section 3.1 is hereby amended to read as follows:
3.1 Downtown Rehab Loan /Grant.
(1) Subject to the conditions set forth in this section, City hereby commits
to a $300,000 low interest loan funded from interest earnings in the
City's General Construction Fund. The Project is to be completed in
accordance with the regulations set forth by the City of Dubuque.
The loan is for a period of time until the Developer receives State
Historic Tax Credits on this project, but not later than December 31,
2012 at 3% interest and is intended for historic renovation of the
exterior facade and historically significant elements of the interior with
remodeling of the remainder of the interior for use as
commercial /residential space. Monthly interest only payments shall
be required during the term of this loan. The entire principal is due
when the developer receives State Historic Tax Credits on this
project, but not later than December 31, 2012. Developer's counsel
shall not Tess than thirty (30) days prior to closing on the loan provide
City with an opinion of title showing merchantable title in Developer to
the satisfaction of City. City shall have until the closing to render
objections to title, including any easements or other encumbrances
not satisfactory to City, in writing to Developer. Developer shall
promptly exercise its best efforts to have such title objections
removed or satisfied and shall advise City of its intended action within
ten (10) days of receipt of City's objections to title. If Developer shall
fail to have such objections removed as of the closing, or any
extension thereof consented to by City, City may, at its sole
discretion, either (a) terminate its obligation under this Section 3.1
without liability on its part, or proceed to closing subject to such
objections. Developer agrees to use its best reasonable efforts to
promptly satisfy any such objections. The loan shall be secured by a
lien on the State Historic Tax Credits, a mortgage and personal
guarantees in a form acceptable to City.
2. Except as modified herein, the Development Agreement shall remain in full
force and effect.
CITY OF D UQU , IOW 40 MAIN, LLC
By:
By:
Roy
ol, Mayor
Kevin
Firnstahl, City
lerk
By: 40 main MM, LLC
Its managing iember
By.
Christopher A. Miller
Its managing member
F: \USERS \Econ Dev \40 Main \Development Agreement\201110278 40 Main 4th Amendment to DA_16.doc