Franklin Investments_Amendment to Development Agreement for 39 Bluff St.THE CITY OF
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Dubuque
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TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: First Amendment to Development Agreement with Franklin Investments,
LLC
DATE: April 30, 2013
Economic Development Director Dave Heiar recommends City Council approval of the
First Amendment to the Development Agreement with Franklin Investments, LLC for
redevelopment of the property located at 39 Bluff Street. This amendment includes
$20,000 of additional downtown housing incentives and an additional $10,000 for
financial consultant assistance.
When the Development Agreement was originally approved, the City did not provide
incentives for apartments that were less than 650 sq. ft. Therefore, two of the
residential units were not included in the incentive package. This project helped to
demonstrate the need to modify that guideline. Based on the demand for smaller
market rate units in the downtown area, these apartments were among the first to be
occupied.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
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Michael C. Van Milligen
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Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
David J. Heiar, Economic Development Director
Masterpiece on the Mississippi
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director
SUBJECT: First Amendment to Development Agreement with Franklin
Investments, LLC
DATE: April 30, 2013
Dubuque
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All-America City
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INTRODUCTION
On April 4th, 2011 the City Council approved a Development Agreement with Franklin
Investments, LLC. This memorandum presents for City Council consideration a
Resolution approving the 1st amendment to the Development Agreement on the
property located at 39 Bluff Street in downtown Dubuque.
BACKGROUND
City staff had worked with Franklin Investments, LLC to formulate a funding package to
redevelop the property located at 39 Bluff Street.
Franklin Investments, LLC has invested over $1,750,000 in redeveloping 39 Bluff Street to
include creating 21 apartments for market -rate rental.
The approved Development Agreement provided for incentives to encourage
redevelopment of the property.
The key elements of the Development Agreement included the following:
1) Up to $190,000 in incentives through the Downtown Housing Incentive Program.
2) A 15 year TIF rebate in the form of a yearly tax rebates on the value of the
assessable improvements (increased valuation).
3) Developer will spend at least $1,750,000 to create 21 market -rate residential
units on Bluff Street and shall be substantially completed by December 31, 2011.
The Council also approved a letter of commitment with the following incentives:
4) Downtown Rehabilitation Loan of $300,000
5) Design Grant for $10,000
6) Facade Grant of $10,000
7) Financial Consultant Grant of $5,000
DISCUSSION
When the Development Agreement was originally approved, the City did not provide
incentives for apartments that were less than 650 sq. ft. Based on the original floor
plans, two of these units were less than 650 sq. ft. Therefore, these 2 units were not
included in the incentive package. The project is now complete and the developers
have requested an additional $20,000 for those units that were not previously included.
The as -built floor plans indicate that one of the units now meets the minimum
requirements with 659 sq. ft. The remaining unit is only 606 sq. ft., however, this project
helped to demonstrate the need to modify that guideline. Based on the demand for
smaller market rate units in the downtown area, these apartments were among the first
to be occupied in the Franklin Project.
The Council has since approved a change to this guideline which now states:
Units smaller than 650 square feet will not be eligible for this project, unless the
project meets the guidelines for Federal or State Historic Tax Credits and is a
self- contained unit with a private bathroom and kitchen facility.
The smallest unit in the Franklin Investments, LLC project meets this criteria. Based on
the quality of this finished project and based on the change to the City's guidelines, it
seems appropriate to amend our development agreement to aid the developer on this
project to narrow the financing gap.
When the City Council approved a letter of commitment for additional incentives, the
developer requested $5,000 for a financial consultant grant, even though the allowable
upper limit for this grant is $15,000. Since this was the developer's first project involving
historic tax credits, the developer was not aware of the complexity and amount of
paperwork required in this process, and has asked the City to allow for the additional
funding that had not been previously requested. The financial consultant grant does
require a dollar for dollar match from the developer.
RECOMMENDATION
I recommend that the City Council approve the 1st amendment to the Development
Agreement which includes $20,000 of additional downtown housing incentives and an
additional $10,000 for financial consultant assistance.
ACTION STEP
The action step for the City Council is to adopt the attached Resolution.
F: \USERS \Econ Dev \Franklin School \20130430 MEMO 1st Amend Franklin Investments DA.doc
Prepared /Return to: David Heiar, Economic Development, 50 W. 13th Street, Dubuque, IA 52001 (563) 589 -4393
RESOLUTION NO. 148 -13
RESOLUTION APPROVING THE FIRST AMENDMENT TO THE FRANKLIN
INVESTMENTS, LLC DEVELOPMENT AGREEMENT
Whereas, a Development Agreement (the Agreement), dated April 4, 2011, was
entered into by and between the City of Dubuque, a municipal corporation of the State
of Iowa (City), and Franklin Investments, LLC (Developer); and
Whereas, City and Franklin Investments, LLC now desire to amend the
Development Agreement as set forth attached First Amendment.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the First Amendment of the Franklin Investments, LLC
Development Agreement is hereby approved.
Section 2. That the Mayor is hereby authorized and directed to execute said
First 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 First Amendment as herein approved.
Passed, approved and adopted this 6th day of May, 2013.
Attest:
Kevin ' irnstahl, City Cler
Roy D. Buol, Mayor
F: \USERS \Econ Dev \Franklin School \Development Agreement \1 st Amendment\20130430 Resolution 1st Amendment Franklin
Investments.doc
FIRST AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE
AND FRANKLIN INVESTMENTS, LLC
The First Amendment to Development Agreement, dated for reference purposes
the 6th day of May, 2013, is made and entered into by and between the City of
Dubuque, Iowa (City) and Franklin Investments, LLC (Developer).
Whereas City and Developer previously entered into a Development Agreement
dated the 4th of April, 2011 (the Development Agreement); and
Whereas the Development Agreement provides in Section 2.1 for Minimum
Improvements less than one million seven hundred fifty thousand dollars ($1,750,000)
to improve the Property creating twenty one (21) apartments for market -rate rental; and
Whereas City and Developer have agreed to amend the Development
Agreement to revise the downtown housing grant and the financial consultant grant; 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 3.6 (1) of the Development Agreement is hereby amended to read as
follows:
3.1 Downtown Housing Incentive
(1) City agrees to provide to Developer, on the terms and conditions set
forth herein, a grant in the amount of Two Hundred Ten Thousand
Dollars ($210,000.00) (the Grant) which shall be funded solely and
only from available Downtown Incentive Program funds.
2. The following section will be added to the Development Agreement
3.7 Financial Consultant Grant. City agrees to provide a grant not to
exceed fifteen thousand dollars ($15,000) to reimburse Developer for
documented costs related to hiring a financial consultant to evaluate
the Project's feasibility. Such funds will be disbursed only on
completion of the Minimum Improvements, documents of costs and
an inspection of the completed Project at a rate of $.50 for each
$1.00 of costs incurred.
CITY OF DUBUQUE, IOWA Franklin Investments, LLC
By:
By:
Q°Yjej
Roy D. diol, Mayor
By:'
arn.r, Managing Member
F:\USERS\Econ Dev\Franklin School\Development Agreement\1st Amendment\20130430 - 1st Amendment Franklin
Investment DA.doc