Caradco Building CDBG Contract Amendment No. 3_IEDADubuque Economic Development Department
THE CITY OF h��,,,,..�� City Hall — Second Floor
Ate 50 West 13th Street
DUB E 1 ' Dubuque, Iowa 52001 -4864
I 'e Office (563) 589 -4393
Fax (563) 589 -1733
TTY (563) 690 -6678
econdev @cityofdubuque.org
www.cityofdubuque.org
Masterpiece on the Mississippi 2012
January 29, 2013
Iowa Department of Economic Development
Attn: Ms Julie Lunn
200 East Grand Ave
Des Moines, IA 50309
RE: CDBG Contract #08 -DRH -212
Dear Julie:
The City of Dubuque hereby requests Amendment #3 to its above referenced CDBG grant
contract providing funds to the Gronen Restoration for the adaptive reuse and conversion
of the former Caradco Warehouse Building into residential apartments. The City requests
that the CDGB budget be increased as per accompanying page. Per numerous
conversations between the City, Gronen, ECIA and IEDA staff, the increased funding is
necessary for additional CDBG program compliance above the original contract scope of
the project.
Thank you for your prompt attention and consideration of the amendment. Please feel free
to contact Mark Schneider at ECIA if you should have any questions regarding this matter.
Sincerely.
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0
Roy D Buol
Mayor
cc: John Gronen, Gronen Restoration
Mark Schneider, ECIA
Service People Integrity Responsibility Innovation Teamwork
City of Dubuque: 08 -DRH -212 CDBG Grant Project
Gronen Restoration — Caradco Building Project
Amendment Number 3
Line Item Original Budget Revised Budget
Construction $8,900,000 10,100,000
Legal $0.00 $16,500
Administration $0.00 $32,500
Contingency $0.00 $50,000
$8,900,000 $10,199,000
Masterpiece on the Mississippi
Dubuque
kital
All- America City
II h/
2012
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Contract Amendment Number 3 for CDBG Contract #08 -DRH -2012
(Caradco Building Project)
DATE: January 30, 2013
The Iowa Economic Development Authority awarded the City of Dubuque Community
Development Block Grant (CDBG) Supplemental Funds of $8.9 million to help fund the
construction of 72 residential units in the Carr, Ryder & Adams Company Main Plant
Building (the Caradco Building) at 900 Jackson Street in Dubuque's Historic Millwork
District.
Prior to the developer starting the Caradco Building Project, City staff requested a
clarification from the IEDA on what part of the project would require Davis Bacon
prevailing wages. The directive from the State was that if the Developer was able to
separate the residential portion of the construction project from the commercial portion
of the construction, that Davis Bacon would only apply to the residential rehabilitation
work since the CDBG funds were provided for housing. In order to comply with this
directive, the Developer delayed the start of the project for nearly two months to rewrite
the bid documents. As the residential portion of the Caradco Building Project was being
completed, there were numerous conversations among staff for IEDA, the City, ECIA,
the Department of Labor, the Department of Housing and Urban Development (HUD)
and the developer about the necessity of additional CDBG program compliance
requirements beyond the original contract scope of the project.
Based on those discussions, it was determined that the Department of Labor and HUD
did not agree with the information provided to City Staff by IEDA and that Davis Bacon
prevailing wages would also apply to the core and shell rehabilitation work. During
these discussions, it was also agreed that the IEDA would provide additional funding for
the extra costs associated with these compliance requirements. Therefore, the City is
submitting an amendment to the CDBG Supplement Funds award in the amount of
$1,299,000 to cover the additional costs. The amendment would also allow some of the
CDBG funds to cover legal and administrative costs as well as a potential contingency
to cover unanticipated costs associated with these changes.
Economic Development Director Dave Heiar recommends that the City Council approve
a Resolution authorizing the submittal and execution of an amendment to the
Community Development Block Grant Housing Disaster Recovery Fund Contract
Agreement between the Iowa Economic Development Authority and the City of
Dubuque on behalf of the Caradco Building Project.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
David J. Heiar, Economic Development Director
2
Masterpiece on the Mississippi
Dubuque
knetril
All- America City
1
2007
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director
SUBJECT: Contract Amendment Number 3 for CDBG Contract #08 -DRH -212 (Caradco
Building Project)
DATE: January 29, 2013
PURPOSE
This memorandum presents for City Council a resolution authorizing an amendment to the
Community Development Block Grant (CDBG) Housing Disaster Recovery Fund Contract
between the Iowa Economic Development Authority (IEDA) and the City of Dubuque on behalf
of the Caradco Building Project.
BACKGROUND
The Iowa Economic Development Authority awarded the City of Dubuque CDBG Supplemental
Funds of $8.9 million to help fund the construction of 72 residential units in the Carr, Ryder &
Adams Company Main Plant Building (the Caradco Building) at 900 Jackson Street in
Dubuque's Historic Millwork District.
Caradco 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.
It was IDED's goal to utilize the CDBG Supplemental Funds in a manner that results in green -
built, sustainable multi - family structures. This project coincides with a full reconstruction of the
district's streets, funded through a $5.6 million TIGER (Transportation Investment Generating
Economic Recovery) grant from the United States Department of Transportation. The
reconstruction features a "complete streets "' design, which facilitates a broad range of users,
with connections to the downtown and Port of Dubuque.
The City worked with the developer, Caradco Building, LLLP, in submitting two grant
applications totaling $8.9 million in Supplemental Funds. IDED prepared one contract to cover
both awards. The grant assisted with the development of 72 workforce housing units: 44 two -
bedroom units and 28 one - bedroom units. Income guidelines will apply for a portion of the
workforce housing units (46/72). Projects constructed with this funding result in mixed - income
projects, in that only a percentage of the total number of units are required to meet the activity
income and rent requirements (i.e., the "assisted" units). The total estimated cost for the
rehabilitation of the Caradco Building is $30 million. Other major funding sources include a $4.5
million loan secured earlier this year from the Iowa Finance Authority.
The CDBG Supplemental Funds is a 10 -year forgivable loan (non- receding), forgiven in full at
the end of the 10 -year compliance period. If the assisted rental project is sold or transferred, or
converted to an alternate (non - residential) use, during the 10 -year period following completion
and acceptance, the entire amount of the CDBG loan must be repaid.
Upon mutual agreement and consent between IDED and the originally assisted rental property
owner, the assisted rental project may be sold or transferred, but only if the new purchaser
agrees to continue with the terms of the forgivable loan agreement, including the covenants and
restrictions in the agreement, to complete the remainder of the 10 -year affordability period with
tenant income and rent limitations. The CDBG Supplemental Funds subsidy amount provided is
secured by a mortgage on the assisted multi - family property. The City, as a CDBG Disaster
Recovery Housing Recipient, must provide a 20% match to the CDBG Supplemental Funds, as
a source of funds for the project. Those funds were committed by City Council resolution and
included City of Dubuque Downtown Housing Incentives and a TIF rebate.
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 18,000 square -feet of lower level space for
community betterment projects. The project also includes an environmentally sensitive HVAC
system and other measures to enhance the building's energy efficiency.
DISCUSSION
Prior to the developer starting the Caradco Building Project, City Staff requested a clarification
from the IEDA on what part of the project would require Davis Bacon prevailing wages. The
directive from the State was that if the Developer was able to separate the residential portion of
the construction project from the Commercial portion of the construction that Davis Bacon would
only apply to the residential rehabilitation work since the CDBG funds were provided for
housing. In order to comply with this directive, the Developer delayed the start of the project for
nearly two months to rewrite the bid documents. As the residential portion of the Caradco
Building Project was being completed, there were numerous conversations among staff for
IEDA, the City, ECIA, the Department of Labor, the Department of Housing and Urban
Development (HUD) and the developer about the necessity of additional CDBG program
compliance requirements beyond the original contract scope of the project.
Based on those discussions, it was determined that the DOL and HUD did not agree with the
information provided to City Staff by IEDA and that Davis Bacon prevailing wages would also
apply to the core and shell rehabilitation work. During these discussions, it was also agreed that
the IEDA would provide additional funding for the extra costs associated with these compliance
requirements. Therefore, the City is submitting an amendment to the CDBG Supplement Funds
award in the amount of $1,299,000 to cover the additional costs. The amendment would also
allow some of the CDBG funds to cover legal and administrative costs as well as a potential
contingency to cover unanticipated costs associated with these changes. The additional costs
requested in this amendment are summarized as follows:
Line Item Original Budget Revised Budget
Construction $8,900,000 $10,100,000
Legal $0 $16,500
Administration $0 $32,500
Contingency $0 $50,000
$8,900,000 $10,199,000
RECOMMENDATION
I recommend that the City Council approve the attached Resolution authorizing the submittal
and execution of an amendment to the Community Development Block Grant Housing Disaster
Recovery Fund Contract Agreement between the Iowa Economic Development Authority and
the City of Dubuque on behalf of the Caradco Building Project.
F: \USERS \Econ Dev \CARADCO \RIO -CDBG Round 3\20130129 RIO -CDBG Caradco Contract Amendment #3 Memo.doc
Prepared by: David J. Heiar, ED Director, 50 West 13th Street, Dubuque IA 52001 563 589 -4393
Return to: David Heiar, ED Director, 50 West 13th Street, Dubuque IA 52001 563 589 -4121
RESOLUTION NO, 31 -13
APPROVING AMENDMENT NUMBER 3 TO THE COMMUNITY DEVELOPMENT BLOCK
GRANT (CDBG) HOUSING DISASTER RECOVERY FUND CONTRACT BETWEEN THE
IOWA ECONOMIC DEVELOPMENT AUTHORITY AND THE CITY OF DUBUQUE ON
BEHALF OF THE CARADCO BUILDING PROJECT
Whereas, the City of Dubuque worked with Caradco Building, LLLP and Caradco
Landlord, LLC to prepare CDBG Housing Disaster Recovery Fund grant applications to assist
in the funding of residential rehabilitation for the Caradco Building Project; and
Whereas, the Iowa Economic Development Authority approved CDBG Contract #08-
DRH -212 dated January 21, 2011 between the City of Dubuque and the Iowa Economic
Development Authority authorizing $8,900,000 of CDBG Housing Disaster Recovery Funds for
the Caradco Building Project; and
Whereas, additional CDBG program compliance requirements beyond the original
contract scope of the Caradco Building Project are being required by the Iowa Economic
Development Authority; and
Whereas, upon the request of the City of Dubuque, the Iowa Economic Development
Authority has agreed to amend CDBG Contract #08 -DRH -212 to include such additional costs.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1.
Section 2.
That the City requests that the Iowa Economic Development Authority
amend CDBG contract #08 -DRH -212 to include the additional costs of
the CDBG program compliance requirements beyond the scope of the
original contract
That the City Manager is hereby authorized and directed to execute an
amendment to CDBG Contract #08 -DRH -212 on behalf of the City of
Dubuque and to forward the executed copy to the Iowa Economic
Development Authority for its approval, and to take such other action as
may be necessary with respect to the amended contract.
Passed, approved and adopted this 4th day of February, 2013.
Attest:
Kevin ' i stahl, City ' lerk
F: \USERS \Econ Dev \CARADCO \RIO -CDBG Round 3\20130129 Caradco Resolution IDED_ CDBG Amendment #3.doc
y D. Buol, Mayor
IOWA ECONOMIC DEVELOPMENT AUTHORITY
200 East Grand Avenue 1 Des Moines, Iowa 50309 USA 1 Phone: 515.725.3000
iowaeconomicdevelopment.com
March 21, 2013
The Honorable Roy D. Buol, Mayor
City of Dubuque
City Hall - 50 W. 13th Street
Dubuque, IA 52001
SUBJECT: Contract Number 08 -DRH -212, Amendment # 3
Dear Mayor Buol:
RECEIVED
)WA
economic dee /eloprrenP
13MAR27 AM8 :S3
City Clerk's Office
DL buque, IA
The Iowa Economic Development Authority recently amended the CDBG Contract for Dubuque, in response to
your request. Enclosed is your copy of the executed amendment. Changes made by this amendment are now
in effect.
Please file your copy of this amendment with your original contract document so that you will have current
information on the status of your contract. If your amendment includes a budget change be sure that is
reflected on your next "Request for Payment /Activity Status Form." If you have any questions please feel free
to contact your Project Manager, Julie Lunn, at (515) 725 -3082 or e -mail at Julie.Lunn @iowa.gov.
Sincerely,
Tim Metz
Contract and Compliance Manager
Enclosure
cc: Janet Walker, City of Dubuque
Julie Lunn, IEDA
Governor Terry E. Branstad 1 Lt. Governor Kim Reynolds 1 Director Debi V. Durham
Iowa Economic Development Authority
. .Community Development Block Grant (CDBG) Program .
Contract Amendment
Recipient: Dubuque
Contract Number: 08 -DRH -212
Contract Amendment Number: Three (3)
Amendment Effective Date: February 19, 2013
The Iowa Economic Development Authority (IEDA) hereby amends the above referenced Community
Development Block Grant (CDBG) Program contract by increase the amount of grant award.
The contract by and between the Iowa Economic Development Authority ( "Department or IEDA ") and Dubuque
( "Recipient ") is amended as of the date shown above as follows:
AMEND each Article in the Contract that refers to "Attachment A, Program Description and Budget" to
"Attachment A, Program Description and Budget, as amended,"
AMEND AWARD AMOUNT from $8,900,000 to $10,199,000.
Except as otherwise revised above, the terms, provisions, and conditions of the Contract remain unchanged and
are in full force and effect.
RECIPIENT: D . uque
BY:
1,1
ayo Dubuque
IOWA ECO
BY:
ENT AUTHORITY
Frit othy R. 'addell, Division Administrator
IOWA CDBG DISASTER RECOVERY HOUSING FUND PROGRAM DESCRIPTION & BUDGET
ATTACHMENT A
DATE: February 19, 2013
Name of Recipient: Dubuque
Contract Number: 08 -DRH -212
To be filled in by IDED
Original
Amendment # Three (3)
Proj Mgr Sign jml
ACTIVITY DESCRIPTION
PERFORMANCE
TARGETS /MEASURE
NATIONAL
OBJECTIVE
BUDGET
Activity 4: 876 Unit Production
72 Total Units
46 LMI
LMI
$10,199,000
GENERAL ADMINISTRATION 181
TOTAL BUDGET:
$10,199,000
G: \BCF\ Recipients \Disaster \08DRH \Dubuque - 212 \Dubuque 08- DRH- 212AttachAAmend3.xlsx