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Multi-Family Rental Unit Production Round 5_2811-12 Jackson StreetMasterpiece 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: Multi - Family Rental Unit Production - Round 5 for 2811 -2812 Jackson Street DATE: February 12, 2013 Economic Development Director Dave Heiar is recommending approval of a $820,000 application for CDBG Multi - Family Rental Unit Production — Round 5 funding as part of a $1,565,000 project to create multi - family rental units at 2811 -2812 Jackson Street. In late November 2012, the State announced that the CDBG Multi Family Rental Unit Production Round -5 (NP5) program was accepting applications from developers and the applications are due no later than March 1, 2013. Projects can be new construction or adaptive reuse. Fifty -one percent of rental units must be leased to persons who are at or below 80% of the area median income, which is $37,000 for a family of one, for a period of 10 years. The funds will be a 10 year forgivable loan. ECIA and City Staff have reviewed 5 proposals from local developers who had expressed interest in the NP5 program. Three of these applications either did not meet the state criteria or were not shovel ready. However, the attached application submitted by Todd Queck (Queck Capital Management) for the NP5 program is a shovel ready project. The proposed project would include the deconstruction of an abandoned greenhouse /nursery and several outbuildings contained on a % acre property located at 2811 and 2812 Jackson Street. This area is an otherwise residential neighborhood. The property could be transformed into four 3 -unit townhouses. Each townhouse would include 2 bedrooms, 1 1/2 bathrooms, and a 1 -car garage, with roughly 1,000 square feet of living space. The construction cost would range between $105,000 - $110,000 per unit plus land and deconstruction. The Queck's sent a letter to all the property owners on this block in mid - January to make them aware of this proposal. There were no objections raised. Mrs. (Kristine) Queck also met with the North End Neighborhood Association to present the proposed redevelopment of this property. There were many questions but the proposal was well received. The 2009 IFA housing study indicated a need for 557 new rental units in our community with emphasis on downtown locations. The City has not yet met the rental housing need identified by the 2009 study. In the meantime, local businesses and industries continue to expand including Green Industrial Supply, IWI, Sedgwick, Heartland Financial and John Deere. Unfortunately, the tight rental housing market makes job growth challenging. 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: Multi - Family Rental Unit Production — Round 5 for 2811 -2812 Jackson St DATE: February 7, 2013 PURPOSE This memorandum is to seek City Council approval of an application for CDBG Multi - Family Rental Unit Production — Round 5 funding to create multi - family rental units at 2811 -2812 Jackson Street. BACKGROUND In late November 2012, the State announced that the CDBG Multi Family Rental Unit Production Round -5 (NP5) program was accepting applications from developers and the applications are due no later than March 1, 2013. Approximately $18 million is available for cities over 50,000 in population. The maximum allowable per project is $3 million and no more than 2 applications will be accepted per city. Projects need written acceptance from the local government and will be prioritized according to the following factors. a) Affordability b) Sustainability c) Need (market) d) Project's relationship to the disasters of 2008 e) Other factors if necessary. Awards will be given to projects that are most shovel ready. Projects can be new construction or adaptive reuse and should reflect a debt service coverage ratio between 1.15 and 1.35. All other project funding sources need to be secured prior to commitment of these CDBG funds and 51% of rental units must be leased to persons who are at or below 80% of the area median income which is $37,000 for a family of one for a period of 10 years (this restriction is 5 years if project has less than 12 units). Mixed use projects will be allowed but only the residential portion of the project will be funded from this program. Davis Bacon wages will apply to the project. The funds will be a 10 year forgivable loan, 5 years if less than 12 units (non- receding). Each project will need to submit a "Green Development Plan ". DISCUSSION ECIA and City Staff have reviewed 5 proposals from local developers who had expressed interest in the NP5 program. Three of these applications either did not meet the state criteria or were not shovel ready. However, the attached application submitted by Todd Queck (Queck Capital Management) for the NP5 program is a shovel ready project. The proposed project would include the deconstruction of an abandoned greenhouse /nursery and several outbuildings contained on a 3/4 acre of property located at 2811 and 2812 Jackson Street (see attached aerial photo). This area is an otherwise residential neighborhood. The property could be transformed into four 3 -unit townhouses, following the Old town Design Guidelines. Each townhouse would include 2 bedrooms, 1 % bathrooms, and a 1 -car garage, with roughly 1,000 square feet of living space. The construction cost would range between (105,000 - $110,000 per unit plus land and deconstruction. According to the City's Planning Department, the current zoning for this property is C -1 which would allow for the construction of four 3 unit town houses. The Queck's sent a letter to all the property owners on this block in mid - January to make them aware of this proposal (see attached letter). There were no objections raised. Mrs. (Kristine) Queck also met with the North End Neighborhood Association to present the proposed redevelopment of this property. There were many questions but the proposal was well received. The project will offer an affordable and unique opportunity to live in new construction in this established neighborhood. The project would have a positive impact on the environmental, social and economic sustainability of Dubuque's north end. The property's current buildings are in hazardous disrepair. Removing these structures and constructing new townhomes surrounded with fully developed green space would enhance the safety and appearance of the neighborhood environment. This project would provide several lower income families a unique opportunity to live in an affordable new townhome. In addition, by replacing an ill- placed commercial greenhouse in an otherwise well -kept residential neighborhood with a series of nicely developed townhouses, the developer will enhance neighborhood home values and give the area between White and Jackson Street a revitalized and bold new look. Portzen Construction is ready to begin the project as soon as all funding sources have been secured. The Dubuque housing market continues to show a need for affordable rental units. This project offers to fill a void many families seek. There have been several multi - family apartment conversions in the past 18 months, but very few townhouse style units, which offer a more private and stable setting. The project is shovel -ready upon acceptance. The Developer has also secured financing for this development. The CDBG Multi - Family Rental Unit Production — Round 5 application requests a grant of $820,000 to fund the gaps associated with construction of 12 townhouse rental units. The total project cost is estimated at $1,565,000. The 2009 IFA housing study indicated a need for 557 new rental units in our community with emphasis on downtown locations. The City has not yet met the rental housing need identified by the 2009 study. In the meantime, local businesses and industries continue to expand including Green Industrial Supply, IWI, Sedgwick, Heartland Financial and John Deere. Unfortunately, the tight rental housing market makes job growth challenging. The demand for quality rental housing continues to outpace the available rental units. RECOMMENDATION Based on the critical need for rental housing, I recommend that the City Council approve the attached Resolution to authorize an application for $820,000 of CDBG Multi - Family Rental Unit Production — Round 5 on behalf of the 2811 -2812 Jackson Street project proposed by Queck Capital Management. F: \USERS \Econ Dev \NP5\20130207_NP5 Funding Council Memo- Queck.doc 2 Prepared by: David Heiar, Economic Dev Director, 50 West 13th Street, Dubuque IA 52001 563 589 -4393 Return to: Kevin S. Firnstahl, City Clerk, 50 West 13th Street, Dubuque IA 52001 563 589 -4121 RESOLUTION NO. 59 -13 RESOLUTION OF SUPPORT TO THE IOWA ECONOMIC DEVELOPMENT AUTHORITY, ON BEHALF OF QUECK PROPERTY MANAGEMENT GROUP FOR SUBMITTAL OF AN APPLICATION FOR A CDBG DISASTER MULTI - FAMILY UNIT PRODUCTION ROUND 5 APPLICATION. Whereas, Dubuque County was impacted by the floods of 2008 and the area has a critical need for additional workforce housing; and Whereas, in 2009 the Real Property Research Group financed by the IFA along with other studies concluded that there is a need for additional downtown housing; and Whereas, the City Council has prioritized the redevelopment of infill space rather than encouraging urban sprawl; and Whereas, the project is located at 2811 -2812 Jackson Street and will provide much needed residential development to the downtown and North end areas; and Whereas, the City Council finds that the proposed application is acceptable and necessary to the growth and development of the city. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Attest: Section 1.. Section 2. The City of Dubuque agrees to support the CDBG Disaster Multi- Family Unit Production Round 5 Application on behalf of Queck Property Management Group for the property at 2811 -2812 Jackson Street That the Mayor is hereby authorized and directed to execute this Resolution on behalf of the City of Dubuque and forward the executed copy to the Iowa Economic Development Authority. Passed, approved and adopted this 18th day of February, 2013. Kevin . Firnstahl, City Cler F: \USERS \Eton Dev \NP5\20130207.. Resolution of Support NP5.doc Roy D. Buol, Mayor January 15, 2012 Hello, I recently purchased the River Valley Nursery at 2811 Jackson Street. I am writing because you own property near this abandoned nursery, and I am considering various options for the reuse of this property. I have been approached by various commercial contractors who would like to use the area for storage units, a proposed brick -yard, and several other uses I feel do not benefit this otherwise well -kept area between Jackson and White Street. It is my belief that a large commercial facility is out of place in this neighborhood. Instead, my vision is to demolish the nursery, all outbuildings, and the dilapidated concrete tower currently located on the site. After the land is cleared, I would like to build a small townhouse complex that would consist of three buildings containing four units each, for a total of 12 townhouses. Each townhouse will have 2 bedrooms, a 1 -car garage and cost between $105,000 - $110,000 to build. The project would be very bold in that new development is foreign to this part of the downtown. My hope is that the revitalized look and new construction will increase the value of all the surrounding property in this area. I am working with the City of Dubuque's Economic Development Department to turn this plan into a reality. We are at the stage of the project where we need to know if any adjacent property owners object to this plan. If you have any questions or concerns regarding the proposed townhouse project, please address them to me or to the City of Dubuque Economic Development Department before Friday, February 1, 2013. Contact information is provided below. 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