Weber Paper Bldg. Rehab Loan
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MEMORANDUM
August 26, 2006
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Downtown Rehabilitation Loan for Lower Main Development, LLC
On January 20, 2003, the City Council approved a Memorandum of Understanding with
Lower Main Development, LLC to provide certain financial assistance for the
rehabilitation of the former Weber Paper Building located at 137 Main Street, including a
$300,000 Downtown Rehabilitation Loan.
At the time of the Memorandum of Understanding, insufficient loan funds were available
in the Downtown Rehabilitation Loan Program to fully fund the loan. Lower Main
Development, LLC agreed to wait until the funds were available in Fiscal Year 2007. As
of July 1, 2006, the loan funds are now available to the project and the company would
like to proceed with the loan.
Economic Development Director David Heiar recommends City Council approval of a
Downtown Rehabilitation Loan of $300,000 to Lower Main Development, LLC.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
YlJ~L
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
August 25, 2006
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director ~(JA
SUBJECT: Downtown Rehabilitation Loan for Lower Main Development, LLC
INTRODUCTION
This memorandum presents for City Council consideration a Resolution approving a
Downtown Rehabilitation Loan of $300,000 for Lower Main Development, LLC. to
support their rehabilitation of the former Weber Paper Building located at 137 Main
Street.
BACKGROUND
On January 20, 2003, the City Council approved a Memorandum of Understanding with
Lower Main Development, LLC to provide certain financial assistance to the
rehabilitation project, including the $300,000 Downtown Rehabilitation Loan. The
project has committed to purchase, lease, and make a capital investment in building
improvements at a cost of not less than $2,000,000.
The Downtown Rehabilitation Loan Program encourages private investment and
rehabilitation efforts in the City's Greater Downtown Urban Renewal District's Old Main,
Town Clock Plaza and Upper Main Subareas. The program, capitalized with funds
available through the City's tax increment financing district, provides for a maximum of
$300,000 in attractive low-interest loan monies. The program includes a forgivable loan
element whereby qualifying applicants may have up to the full amount of the loan
forgiven as an incentive for the creation of new employment and housing opportunities
in the district.
DISCUSSION
At the time of the Memorandum of Understanding, insufficient loan funds were available
in the Downtown Rehabilitation Loan Program to fully fund the loan. Lower Main
Development, LLC agreed to wait until the funds were available in FY '07. As of July 1,
2006, the loan funds are now available to the project and the company would like to
proceed with the loan.
The Downtown Rehabilitation Loan Program has a condition to forgive $2000 of the
loan for each job created in the project. Since funds were not available to execute the
loan at the time the project started, it disrupts the normal timing for the project to create
the jobs. For this project, jobs created between the project completion date and twenty-
four (24) months from the Closing Date of the Loan Agreement will count as jobs which
forgive $2000 of the loan. The jobs will need to be maintained until October 1, 2011.
Jobs created by the Shepherd Company will not count as forgivable jobs as stated in
the Memorandum of Understanding.
RECOMMENDATION
Staff has reviewed the loan agreement and found it to be in keeping with the
requirements of the Downtown Rehabilitation Loan Program. The project is
substantially complete and clearly meets the intent of the loan program.
I recommend that the City Council adopt the attached Resolution approving Lower Main
Development's request for the $300,000 loan. The Resolution directs the City Manager
to execute the loan agreement as per the terms and conditions of the Memorandum of
Understanding and to disburse loan funds.
ACTION STEP
The action step for the City Council is to adopt the attached Resolution.
attachments
F:\USERS\Adejong\Downtown Rehab Loan\Lower Main-Briggs Platinum\Cover memo.doc
RESOLUTION NO. 404-06
A RESOLUTION AUTHORIZING THE COMPLETION OF A DOWNTOWN
REHABILITATION LOAN TO LOWER MAIN DEVELOPMENT LLC.
Whereas, the City of Dubuque, Iowa, has created a Downtown Rehabilitation
Loan Program for the purpose of stimulating reinvestment in the Greater Downtown
Urban Renewal District; and
Whereas, the City of Dubuque, Iowa is encouraging the use of this loan program
to finance code compliance activities and to spur job creation activities; and
Whereas, a Memorandum of Understanding was approved by Resolution No.
30-03, agreeing for the City to provide a $300,000 Downtown Rehabilitation Loan to
Lower Main Development, LLC in fiscal year 2007; and
Whereas, the City will forgive $2000 of the loan for each job provided in the
building, but not including any jobs created by the Shepherd Company.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the City Manager is hereby authorized to execute, on behalf of
the City Council of the City of Dubuque, Iowa, the attached loan document and is
further authorized to disburse loan funds from the Downtown Rehabilitation Loan
Program, in accordance with the terms and conditions of the executed agreement.
Passed, approved and adopted this 5th day of September 2006.
Roy D. Buol, Mayor
Attest:
Jeanne F. Schneider, City Clerk
F:\USERS\Adejong\Downtown Rehab Loan\Lower Main.Sriggs Platinum\Loan Resolution.doc
EXHIBIT A
City of Dubuque, Iowa
PROMISSORY NOTE
Date: A "'J .
2')
, 2006
Loan Number:
Fund Source:
DRLP # 1 - 06
Downtown Rehabilitation Loan Program (TIF)
$300,000
FOR VALUE RECEIVED, the undersigned, Lower Main Development LLC, 137 Main Street, Dubuque, Iowa,
promises to pay to the order of the City of Dubuque, Iowa, 50 W. 13th Street, Dubuque, Iowa, 52001, or at
such place as it may direct, the sum ofTHREE HUNDRED THOUSAND DOLLARS ($300,000), together with
interest at the rate of 3 % per annum, upon the unpaid balance, in monthly interest only payments for the first
sixty (60) months of the loan and monthly principal and interest payments, amortized over an additional one
hundred-eighty (180) months, beginning in the sixty-first month of the loan, on the 1st day of each month
beginning after the final disbursement of the loan proceeds and continuing on the 1 st day of each month until
paid in full. The entire outstanding principal balance and interest, if not sooner paid, shall be paid in full on the
1 st day of the two hundred-fortieth (240) month after final disbursement of the loan proceeds.
If a default occurs under this Promissory Note or any of the other agreements between the undersigned and
the holder and is not cured within TEN (10) DAYS after written notice to the undersigned, then the holder may,
as its right and option, declare immediately due and payable the principal balance of this Promissory Note and
interest accrued hereon. The undersigned further agrees to pay all costs of collection, including reasonable
attorneys' fees. The City of Dubuque may at any time renew this Promissory Note or extend its maturity date
for any period and release any security for, or any party to this Promissory Note, all without notice to or
consent of and without releasing any maker, accommodation maker, endorser or guarantor from any liability
on the Promissory Note. Presentment or other demand for payment, notice of dishonor and protest are
hereby waived by the undersigned and each endorser and guarantor.
This Promissory Note is subject to the Loan Agreement of same date by and between the undersigned and
the City of Dubuque (including but not limited to a reduction in the principal amount of this Promissory Note as
authorized by paragraph 5 of said Loan Agreement) and any default under said Loan Agreement is a default
under this Promissory Note.
Signed,
Lower Main Development, LLC.
4!:iJ::tL1F
Title
CITY OF DUBUQUE, IOWA
DOWNTOWN REHABILITATION LOAN PROGRAM
LOAN AGREEMENT
NUMBER: DRLP # 1 - 06
This AGREEMENT, dated as of the day of , 2006, is entered into by and
between the CITY OF DUBUQUE, IOWA, a municipal corporation organized and existing under the laws
of the State of Iowa (hereinafter referred to as the "City") and Lower Main Development, LLC, (hereinafter
referred to as the "Owne~').
WITNESSETH:
Whereas, a Memorandum of Understanding with Lower Main Development, LLC was approved by
the Dubuque City on January 20, 2003 by Resolution No. 30-03 to provide a $300,000 Downtown
Rehabilitation Loan for the project.
Whereas, the Owner's property of 137 Main Street, Dubuque, Iowa, (hereinafter referred to as the
"Building") is located within the boundaries of the Downtown Dubuque Urban Renewal District established
by Resolution No. 187-02 on April 1, 2002, and the merged Greater Downtown Urban Renewal District
(the "District"), as established by Resolution No. 170-04 of the Dubuque City Council on April 19, 2004;
and
Whereas, the goals and objectives of the Greater Downtown Urban Renewal Plan (the "Plan")
provide for the creation of the financial incentives needed to eliminate conditions of blight through a
program of voluntary or compulsory repair and rehabilitation of buildings and to retain or create
employment and/or housing opportunities within the District; and
Whereas, the City desires to assist the Owner in its efforts to bring said Building into compliance
with local codes and ordinances, to eliminate certain conditions of physical decay, and to retain or create
employment and/or housing opportunities within the District; and
Whereas, without the assistance of the Loan Program, the Owner would be unable to operate the
Building to its fullest capacity, thereby threatening local employment and/or housing opportunities.
NOW THEREFORE, in consideration of the premises and respective covenants, agreements and
representations hereinafter set forth, the parties agree as follows:
1. SOURCE OF FUNDS. City is prepared to provide financial assistance to qualified parties
through the use of tax increment financing under Chapter 403 of the Iowa Code, and has allocated funds
sufficient to carry out its obligations under this Agreement.
2. LOAN TERMS. City agrees to loan to Owner on the terms and conditions set forth herein
the amount of three hundred thousand dollars ($300,000) that shall consist of the Loan Program funds, if
and only if such funds are available. Payments shall be based on work completed and expenses
encumbered.
The term of the loan shall be twenty (20) years. Interest on the loan shall be three percent (3.0%)
per annum. Monthly interest payments shall become due and payable the first sixty (60) months of the
loan. Monthly interest and principal payments, amortized over a fifteen year period, shall become due and
payable beginning the sixty-first (61) month of the loan. The entire balance of the loan, including interest
and principal, shall become due and payable not later than the 240th month of the loan.
At the time of the initial disbursement of loan funds to Owner, Owner shall execute the Promissory
Note in the form attached hereto as Exhibit A payable to the order of the City in the principal amount of
three hundred thousand dollars ($300,000) and the Mortgage, attached as Exhibit B.
3. DISBURSEMENT AND USE OF LOAN FUNDS. Loan funds shall be disbursed to Owner
by City for Qualifying Project Expenses, defined in Paragraph 27(c), for amounts not in excess of the total
sum of $300,000 nor more than ninety percent (90%) of the total project cost.
Owner shall furnish to City written requests for disbursement of loan funds. Such request shall be
accompanied by a statement of Owner's Qualifying Project Expenses and appropriate documentation of
such expenses. It is expressly understood that all funds advanced under this Agreement shall be used by
Owner only for the purpose of paying the Qualifying Project Expenses set forth in such written requests.
Owner shall substantially complete the Project, defined in Paragraph 27(b), in accordance with the
terms of this Agreement, on or before October 1, 2006. City shall not be obligated to pay any funds not
drawn by Owner as of said date and any undrawn funds as of such date shall be credited against the
balance due on the Promissory Note.
4. SECURITY. The loan shall be secured by at least a Second Mortgage on the building, a
copy of which is attached as Exhibit B. The value of which shall at no time be less than the amount of any
First Mortgage plus the amount of the loan funds disbursed for Qualifying Project Expenses.
5 AVAILABLE INCENTIVES. Up to the full amount of the loan shall be forgiven by the City as
an incentive for the creation of new employment and/or housing opportunities. The amount of the loan to
be forgiven shall be determined sixty (60) months from the Closing Date of this Agreement and a new
amortization schedule shall be prepared. The base employment number to be used to calculate the
Employment Incentive has been determined to be zero (0) FTE employees for the Building excluding any
jobs associated with the Sheppard Company.
The amount of the loan forgiven shall be as follows:
(a) Two thousand dollars ($2,000) shall be forgiven for each new FTE position created and
maintained by the Owner or his/her tenant.
(b) To qualify, the Owner must document the following:
(1) The job represents a FTE position as defined herein Paragraph 27(d);
(2) The job was created between the project completion date and twenty-four (24)
months from the Closing Date of this Agreement.
(3) The job has been maintained by the Owner or his/her tenant for a period of not less
than thirty-six (36) months (until October 1, 2011);
(4) The job is a paid position; and
(5) The job has been created by the Owner or another entity located in the Building and is
for employment in a business located in the Building.
7. STATUS OF OWNER. Owner represents that it is a LLC duly organized and existing under
the laws of the State of Iowa; that it is authorized to borrow under this Agreement, to execute and deliver
the note and otherwise perform the obligations of this Agreement; that it has authority and power to own
its property and conduct its business as it is currently carried on; that the performance of its obligations
under this Agreement and the issuance of any note under it will not conflict with any provision of law, the
Articles of Incorporation or the Bylaws of LLC, or any agreement binding on it. Owner also represents,
except as disclosed in writing to City, that it is not a party to any pending or threatened litigation or to any
proceeding or action for the assessment or collection of additional taxes, and that it knows of no known
contingent liabilities not provided for or disclosed in the financial statement provided City which would
affect the ability of the Owner to repay this loan.
8. FINANCIAL CONDITION OF OWNER. Owner has delivered to City a statement of Owner's
financial condition as of the date of application for financial assistance which fairly represents the financial
condition of Owner as of the date stated, all in accordance with generally accepted accounting principles
Loan Agreement
page 3
consistently applied, and that the statements still correctly reflect the financial condition and status of its
operations as of the date of this Agreement.
9. TITLE OF OWNER. Subject to the liabilities reflected on Owner's financial statement as well
as those incurred in relation to this Project, Owner represents that it has good and marketable title, free of
any mortgage, pledge, lien, security interest, encumbrance, or charge to all those assets reflected on the
financial statement and to assets since acquired. Taxes not due or payable or otherwise delinquent are
excepted.
10. CONDITIONS OF BORROWING. On the date on which any sum is to be borrowed, Owner,
in addition to the Note, shall deliver to City such other papers and documents as may be required to
comply with the conditions of this Agreement, as counsel for City may reasonably request.
Owner shall be required at the Closing Date defined herein Paragraph 27(a) to comply, or establish
compliance, as follows:
(a) That the representations and warranties of Owner are correct on the Closing Date;
(b) That Owner has fully complied with the covenants and agreements to the extent required
before the Closing Date;
(c) That no default or event which might mature into a default has occurred or continues to the
Closing Date;
(d) That no litigation or proceeding is pending against Owner which would materially affect the
assets of Owner, taking into account the entire assets and overall business of Owner;
(e) That there has been no material adverse change in the financial condition of Owner from
that shown by the financial statement delivered to City under paragraph 8;
f) That no fire or casualty has occurred in any building or to any inventories or property of
Owner that might substantially, adversely affect the conduct of its business.
11. SPECIAL CONDITIONS. Owner agrees to comply with the following requirements
established by the City for the Loan Program:
(a) All exterior work must be approved by the City's Historic Preservation Commission prior to
the initiation of the Project.
12. COVENANTS OF OWNER. Owner covenants that it will:
(a) Correct code deficiencies in accordance with all applicable building and fire codes within the
scope of the project.
(b) Provide for the repair and rehabilitation of the Building in accordance with all applicable
building, zoning, fire and housing codes.
(c) Substantially complete the Project on or before October 1,2006.
(d) Maintain at all times insurance to the extent and against such hazards and liabilities as are in
keeping with the current insurance program of Owner, set forth in Exhibit C attached hereto
and entitled "Certificate of Insurance". Said certification shall be renewed on an annual
basis and provided to City within thirty (30) days of the anniversary date of this Agreement.
Loan Agreement
Page 4
(e) Pay when due all taxes, assessments and other liabilities, except those contested in good
faith where notice of such contest has been given to the City.
(f) Not create or permit to exist any other pledge, security interest, lien or other encumbrance
on the security for this Agreement provided in Paragraph 4 above and the Note provided
pursuant to this Loan Agreement without written consent of City.
(g) Give prompt notice in writing to City of any adverse development, financial or otherwise,
which would materially affect its business, properties or affairs, or the ability of Owner to
perform its obligations under this Agreement or the Note executed pursuant to the terms of
this Agreement.
(h) Use loan funds only for purposes authorized herein.
(i) Pay all recording and filing fees, mortgage taxes, documentary stamps, and any other taxes
payable in connection with this transaction.
13. DEFAULT. Owner shall be in default upon the occurrence of any of the following events:
(a) Owner fails to pay any installment of principal or interest on any note (whether to City or any
other public or private lender) when due or within thirty (30) days thereafter;
(b) Owner becomes insolvent or admits in writing its inability to pay its debts as they mature; or
applies for, consents to or acquiesces in the appointment of a trustee or receiver for any of
its property; or in the absence of an application for consent or acquiescence, a trustee or
receiver is appointed for it or a substantial part of its property and is not discharged within
ten (10) days; or it otherwise commits an act of bankruptcy; or any bankruptcy,
reorganization, debt arrangement or other proceeding under any bankruptcy or insolvency
law, or any dissolution or liquidation proceeding is instituted by or against it and if instituted is
consented to or acquiesced in by it or remains for ten days undismissed;
(c) Owner fails in the performance of any of the terms and conditions of this Agreement and
such non-performance continues for ten (10) days after written notice thereof from City or
from the holder of a note;
(d) Any warranty made by Owner is untrue in any material respect, or any schedule, statement,
report, notice or writing furnished by Owner to City is untrue in any material respect on the
date as of which the facts set forth are stated or certified, provided any such error is not the
result of unintentional errors which are capable of correction without prejudice to the City;
(e) Any government board, agency, department, commission or public or private lender takes
possession or control of any substantial part of any property of Owner.
14. ACCELERATION AT OPTION OF CITY. If any event of default occurs, City may, after ten
days written notice of default to Owner, declare Note immediately due and payable, at which time all
unpaid principal and interest shall immediately become due and payable. City shall promptly advise
Owner in writing of any acceleration under this paragraph, but the failure to do so shall not impair the
effect of such declaration.
15. MAINTENANCE OF RECORDS AND RIGHT TO INSPECT. Owner shall keep and
maintain books, records and other documents relating directly to the receipt and disbursement of loan
funds; and any duly authorized independent accounting representative of City shall at all reasonable times
have access to and the right to inspect, copy, audit and examine all such books and other documents of
Owner pertaining to the project until the completion of all close out procedures respecting City's loan and
the final settlement and conclusion of all issues arising out of said loan.
Loan Agreement
page 5
16. ADDRESS. Owner's principal business address is:
Lower Main Development, LLC
137 Main Street
Dubuque, Iowa 52001
Owner shall promptly give City written notice of any further change in its principal office address.
City's address is:
City Manager
City Hall
50 West 13th Street
Dubuque, Iowa 52001
17. LIMITATION OF CITY'S LIABILITY FOR PROJECT ACTIVITIES. City shall not be liable to
Owner, or to any party, for the completion of, or the failure to complete, any activities which are part of the
Project, except as may be specifically provided in this Agreement or other written agreements between
City and Owner or any of Owner's affiliates or subsidiaries. Owner agrees to indemnify, hold harmless
and defend City from any such claims.
18. CONFLICT OF INTEREST. Owner certifies that to its knowledge no member, officer or
employee of City, or its designees or agents, nor any consultant or member of the governing body of City,
and no other public official of City who exercises or has exercised any functions or responsibilities with
respect to the Project during his or her tenure, or who is in a position to participate in a decision making
process or gain inside information with regard to the Project, has nor shall have any interest, direct or
indirect, in any contract or subcontract, or in any activity, or benefit therefrom, which is part of this Project
at any time during or for one year after such person's tenure.
19. NONDISCRIMINATION. In carrying out the Project, Owner shall not discriminate against
any employee or applicant for employment or tenancy because of race, reiigion, color, sex, national origin,
age or disabiiity. Owner shall post in a conspicuous place, available to employees and applicants for
employment, notices to be provided by City setting forth the provisions of this nondiscrimination clause.
Owner shall state that all qualified appiicants will receive consideration for employment without regard to
race, religion, color, sex, national origin, age or disability.
20. DISCLAIMER OF RELATIONSHIPS. Nothing contained in this Agreement between the
parties, nor any act of City or Owner shall be deemed or construed by any of the parties, or by any third
persons, to create any relationship of third party beneficiary, principal or agent, limited or general
partnership, or joint venture.
21. NOTICE. Any notice, if mailed by United States certified mail, shall be deemed given when
mailed, postage prepaid, addressed to the other party at its address shown above, or at any other address
subsequently designated by either party to the other.
22. SUCCESSORS AND ASSIGNS. All covenants, representations, warranties and
agreements herein set forth shall be binding upon Owner, and its legal representatives, successors and
assigns. This Agreement may not be assigned by City or Owner, without the express written consent of
the other party.
23. LEGALITY. If any provision of this Agreement shall, for any reason, be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, but this
Agreement shall be construed as if such invalid or unenforceable provision had never been contained
herein.
Loan Agreement
page 6
24. GOVERNING LAW. This Agreement and all rights and duties hereunder, including but not
limited to all matters of construction, validity and performance shall be governed by the laws of the State
of Iowa.
25. SURVIVAL OF REPRESENTATIONS. All representations or warranties of Owner shall
survive the execution and delivery of this Agreement and any note executed and delivered under it, and no
investigation by City nor any closing shall affect the representations or warranties or the right of City to rely
on and enforce them.
26. DELAY. No delay on the part of City or the holder of any note in the exercise of any right
shall operate as a waiver, nor shall any single or partial exercise of any right preclude other or additional
exercise of any right.
27. DEFINITIONS.
(a) "Closing Date" shall mean the date on which this Agreement is executed by the parties.
(b) "Project" shall mean the rehabilitation project of Owner's property at 137 Main Street,
Dubuque, Iowa, identified in Owner's application for financial assistance. Said application is
on file in the office of the Economic Development Department, 50 West 13th Street,
Dubuque, Iowa 52001.
(c) "Qualifying Project Expenses" shall mean those expenditures or expenses incurred by
Owner during and for the Project and identified in the Owner's application for financial
assistance, whether paid to third parties or incurred as wage expense, fringe benefit
expense or other costs of Owner's employees, agents and contractors.
(d) "Full-Time Job Equivalent" shall equal a total of forty hours of labor per workweek. Such
hours may be accrued by single individuals or divided among two or more individuals.
(e) "New housing unit" shall mean either a housing unit created where one did not previously
exist, or an existing housing unit which has been unlicensed and unoccupied for a period of
not less than five years.
Dated this
day of
,2006.
CITY OF DUBUQUE, IOWA
Michael C. Van Milligen, City Manager
Wayne
Lower
Loan Agreement
page 7
F:\USERS\Adejong\Downtown Rehab Loan\Lower Main-Briggs Platinum\Downtown Rehab Loan Agreement.doc
Prepared by: Aaron M. DeJona City Hall. 50 W 13th Street. Dubuaue. Iowa 52001 Phone: 563-583-
4213
Return to: same
MORTGAGE
THIS MORTGAGE is made between Lower Main Development, LLC ("Mortgagors") and City of Dubuque, Iowa ("Mortgagee").
[ ] If this box is checked, this Mortgage is a Purchase Money Mortgage as defined in the Iowa Code.
1. Grant of Mortgage and Security Interest. Mortgagors hereby sell, convey and mortgage unto Mortgagee, and grant a
security interest to Mortgagee in the following described property:
a. Land and Buildings. All of Mortgagors' right, title and interest in and to the following described real estate situated in
Dubuque County, Iowa (the "Land"); City Lot 78A and the North 44' of City Lot 79 (also known as 137-153 Main Street),
and all buildings, structures and improvements now standing or at any time hereafter constructed or placed upon the Land
(the "Buildings"), including all hereditaments, easements, appurtenances, riparian rights, mineral rights, water rights, rights
in and to the lands lying in streets, alleys and roads adjoining the land, estates and other rights and interests now or
hereafter belonging to or in any way pertaining to the Land.
b. Personal Property. All fixtures and other personal property integrally belonging to, or hereafter becoming an integral
part of the Land or Buildings. whether attached or detached, including but not limited to, light fixtures, shades, rods, blinds,
Venetian blinds, awnings, storm windows, screens, linoleum, water softeners, automatic heating and air-conditioning
equipment and all proceeds, products, increase, issue, accessions, attachments, accessories, parts, additions, repairs.
replacements and substitutes of, to, and for the foregoing (the "Personal Property").
c. Revenues and Income. All rents, issues, profits, leases, condemnation awards and insurance proceeds now or
hereafter arising from the ownership, occupancy or use of the Land, Buildings and Personal Property, or any part thereof
(the "Revenues and Income").
TO HAVE AND TO HOLD the Land, Buildings, Personal Property and Revenues and Income (collectively called the
"Mortgaged Property"), together with all privileges, hereditaments thereunto now or hereafter belonging, or in any way
appertaining and the products and proceeds thereof, unto Mortgagee, its successors and assigns.
2. Obligations. This Mortgage secures the following (hereinafter collectively referred to as the "Obligations"):
a. The p<!yment of the loan made by Mortgagee to Lower Main Development, LLC evidenced by a promissory note dated
A ~. 2.-' , 2006 in the principal amount of $300,000.00, any renewals, extensions, modifications or refinancing
the of and any promissory notes issued in substitution therefor; and
b. All other obligations of Mortgagors to Mortgagee, now existing or hereafter arising, whether direct or indirect, contingent
or absolute and whether as maker or surety, including, but not limited to, future advances and amounts advanced and
expenses incurred by Mortgagee pursuant to this Mortgage.
3. Representations and Warranties of Mortgagors. Mortgagors represent, warrant and covenant to Mortgagee that (i)
Mortgagors hold clear title to the Mortgaged Property and title in fee simple in the Land; (ii) Mortgagors have the right, power and
authority to execute this Mortgage and to mortgage, and grant a security interest in the Mortgaged Property; (iii) the Mortgaged
Property is free and clear of all liens and encumbrances, except for real estate taxes not yet delinquent and except as otherwise
stated in subparagraph 1 a. herein; (iv) Mortgagors will warrant and defend title to the Mortgaged Property and the lien and priority of
this Mortgage against all claims and demands of all persons, whether now existing or hereafter arising; and (v) all buildings and
improvements now or hereafter located on the Land are, or will be, located entirely within the boundaries of the Land.
4. Payment and Performance of the Obligations. Mortgagors will pay all amounts payable under the Obligations in
accordance with the terms of the Obligations when and as due and will timely perform all other obligations of Mortgagors under the
Obligations. The provisions of the Obligations are hereby incorporated by reference into this Mortgage as if fully set forth herein.
5. Taxes. Mortgagors shall pay each installment of all taxes and special assessments of every kind, now or hereafter levied
against the Mortgaged Property before the same become dellnquent, without notice or demand, and shall deliver to Mortgagee proof
of such payment within fifteen (15) days after the date in which such tax or assessment becomes delinquent.
6. Liens. Mortgagors shall not create, incur or suffer to exist any lien, encumbrance, security interest or charge on the
Mortgaged Property or any part thereof which might or could be held to be equal or prior to the lien of this Mortgage, other than the
lien of current real estate taxes and installments of special assessments with respect to which no penalty is yet payable. Mortgagors
shall pay, when due, the claims of all persons supplying labor or materials to or in connection with the Mortgaged Property.
7. Compliance with Laws. Mortgagors shall comply with all present and future statutes, laws, rules, orders, regulations and
ordinances affecting the Mortgaged Property, any part thereof or the use thereof.
8. Permitted Contests. Mortgagors shall not be required to (i) pay any tax, assessment or other charge referred to in
paragraph 5 hereof, (ii) discharge or remove any lien, encumbrance or charge referred to in paragraph 6 hereof, or (iii) comply with
any statute, law, rule, regulation or ordinance referred to in paragraph 7 hereof, so long as mortgagors shall contest, in good faith, the
existence, amount or the validity thereof, the amount of damages caused thereby or the extent of Mortgagors' liability therefor, by
appropriate proceedings which shall operate during the pendency thereof to prevent (A) the collection of, or other realization upon the
tax, assessment, charge or lien, encumbrances or charge so contested, (B) the sale, forfeiture or loss of the Mortgaged Property or
any part thereof, and (C) any interference with the use or occupancy of the Mortgaged Property or any part thereof. Mortgagors shall
give prompt written notice to Mortgagee of the commencement of any contest referred to in this paragraph 8.
9. Care of Property. Mortgagors shall take good care of the Mortgaged Property; shall keep the Buildings and Personal
Property now or later placed upon the Mortgaged Property in good and reasonable repair and shall not injure, destroy or remove
either the Buildings or Personal Property during the term of this Mortgage. Mortgagors shall not make any material alteration to the
Mortgaged Property without the prior written consent of Mortgagee.
10. Insurance.
a. Risks to be Insured. Mortgagors, at their sole cost and expense, shall maintain insurance on the Buildings and other
improvements now existing or hereafter erected on the Land and on the Personal Property included in the Mortgaged
Property against loss by fire, extended coverage perils and such other hazards as Mortgagee may from time to time
require, such insurance to have a "Replacement Cost" endorsement attached thereto, with the amount of the insurance at
least equal to the balance of the Obligations. At Mortgagors' option, such policy may have a coinsurance clause of not less
than 90% of replacement cost provided the policy contains an appropriate form of cost escalation endorsement.
Mortgagors will at their sole cost and expense, from time to time, and at any time at the request of Mortgagee, provide
Mortgagee with evidence satisfactory to Mortgagee of the replacement cost of Mortgaged Property. Mortgagors will
maintain such other insurance as Mortgagee may reasonably require.
b. Policy Provisions. All insurance policies and renewals thereof maintained by Mortgagors pursuant to this Mortgage
shall be written by an insurance carrier satisfactory to Mortgagee, contain a mortgagee clause in favor of and in form
acceptable to Mortgagee, contain an agreement of the insurer that it will not amend, modify or cancel the policy except
after thirty (30) days prior written notice to Mortgagee, and be reasonably satisfactory to Mortgagee in all other respects.
c. Delivery of Policy or Certificate. If requested by Mortgagee, Mortgagors will deliver to Mortgagee original policies
satisfactory to Mortgagee evidencing the insurance which is required under this Mortgage, and Mortgagors shall promptly
furnish to Mortgagee all renewal notices and, upon request of Mortgagee, evidence of payment thereof. At least ten (10)
days prior to the expiration date of a required policy, Mortgagors shall deliver to Mortgagee a renewal policy in form
satisfactory to Mortgagee.
d. Assignment of Policy. If the Mortgaged Property is sold at a foreclosure sale or if Mortgagee shall acquire title to the
Mortgaged Property, Mortgagee shall have all of the right, title and interest of Mortgagors in and to any insurance policies
required hereunder, and the unearned premiums thereon, and in and to the proceeds thereof resulting from any damage to
the Mortgaged Property prior to such sale or acquisition.
e. Notice of Damage or Destruction; Adjusting Loss. If the Mortgaged Property or any part thereof shall be damaged
or destroyed by fire or other casualty, Mortgagors will, within five (5) calendar days after the occurrence of such damage or
destruction, give written notice thereof to the insurance carrier and to Mortgagee and will not adjust any damage or loss
which is estimated by Mortgagors in good faith to exceed $25,000 unless Mortgagee shall have joined in or concurred with
such adjustment; but if there has been no adjustment of any such damage or loss within four (4) months from the date of
occurrence thereof and if an Event of Default shall exist at the end of such four (4) month period or at any time thereafter,
Mortgagee may alone make proof of loss, adjust and compromise any claim under the policies, and appear in and
prosecute any action arising from such policies. In connection therewith, Mortgagors do hereby irrevocably authorize,
empower and appoint Mortgagee as attorney.in-fact for Mortgagor (which appointment is coupled with an interest) to do
any and all of the foregoing in the name and on behalf of Mortgagors.
f. Application of Insurance Proceeds. All sums paid under any insurance policy required by this Mortgage shall be paid
to Mortgagee, which shall, at its option, apply the same (after first deducting therefrom Mortgagee's expenses incurred in
collecting the same including but not limited to reasonable attorney's fees) to the reduction of the Obligations or to the
payment of the restoration, repair, replacement or rebuilding of Mortgaged Property that is damaged or destroyed in such
manner as Mortgagee shall determine and secondly to the reduction of the Obligations. Any application of insurance
proceeds to principal of the Obligations shall not extend or postpone the due date of the installments payable under the
Obligations or change the amount of such installments.
g. Reimbursement of Mortgagee's Expenses. Mortgagors shall promptly reimburse Mortgagee upon demand for all of
Mortgagee's expenses incurred in connection with the collection of the insurance proceeds, including but not limited to
reasonable attorneys fees, and alt such expenses shall be additional amounts secured by this Mortgage.
11. Inspection. Mortgagee, and its agents, shall have the right at all reasonable times, to enter upon the Mortgaged Property
for the purpose of inspecting the Mortgaged Property or any part thereof. Mortgagee shall, however, have no duty to make such
inspection. Any inspection of the Mortgaged Property by Mortgagee shall be entirely for its benefit and Mortgagors shall in no way rely
or claim reliance thereon.
12. Protection of Mortgagee's Security. Subject to the rights of Mortgagors under paragraph 8 hereof, if Mortgagors fail to
perform any of the covenants and agreements contained in this Mortgage or if any action or proceeding is commenced which affects
the Mortgaged Property or the interest of the Mortgagee therein, or the title thereto, then Mortgagee, at Mortgagee's option, may
perform such covenants and agreements, defend against or investigate such action or proceeding, and take such other action as
Mortgagee deems necessary to protect Mortgagee's interest. Any amounts or expenses disbursed or incurred by Mortgagee in good
faith pursuant to this paragraph 12 with interest thereon at the rate of 10% per annum, shall become an Obligation of Mortgagors
secured by this Mortgage. Such amounts advanced or disbursed by Mortgagee hereunder shall be immediately due and payable by
Mortgagors unless Mortgagors and Mortgagee agree in writing to other terms of repayment. Mortgagee shall, at its option, be
subrogated to the lien of any mortgage or other lien discharged in whole or in part by the Obligations or by Mortgagee under the
provisions hereof, and any such subrogation rights shall be additional and cumulative security for this Mortgage. Nothing contained in
this paragraph shall require Mortgagee to incur any expense or do any act hereunder, and Mortgagee shall not be liable to
Mortgagors for any damage or claims arising out of action taken by Mortgagee pursuant to this paragraph.
13. Condemnation. Mortgagors shall give Mortgagee prompt notice of any action, actual or threatened, in condemnation or
eminent domain and hereby assign, transfer and set over to Mortgagee the entire proceeds of any award or claim for damages for all
or any part of the Mortgaged Property taken or damaged under the power of eminent domain or condemnation. Mortgagee is hereby
authorized to intervene in any such action in the names of Mortgagors, to compromise and settle any such action or claim, and to
collect and receive from the condemning authorities and give proper receipts and acquittances for such proceeds. Any expenses
incurred by Mortgagee in intervening in such action or compromising and settling such action or claim, or collecting such proceeds
shall be reimbursed to Mortgagee first out of the proceeds. The remaining proceeds or any part thereof shall be applied to reduction
of that portion of the Obligations then most remotely to be paid, whether due or not, or to the restoration or repair of the Mortgaged
Property, the choice of application to be solely at the discretion of Mortgagee.
14. Fixture Filing. From the date of its recording, this Mortgage shall be effective as a financing statement filed as a fixture
filing with respect to the Personal Property and for this purpose the name and address of the debtor is the name and address of
Mortgagors as set forth in paragraph 20 herein and the name and address of the secured party is the name and address of the
Mortgagee as set forth in paragraph 20 herein.
15. Events of Default. Each of the following occurrences shall constitute an event of default hereunder ("Event of Default"):
a. Mortgagors shall default in the due observance or performance of or breach its agreement contained in paragraph 4
hereof or shall default in the due observance or performance of or breach any other covenant, condition or agreement on
its part to be observed or performed pursuant to the terms of this Mortgage.
b. Mortgagors shall make an assignment for the benefits of its creditors, or a petition shall be filed by or against
Mortgagors under the United States Bankruptcy Code or Mortgagors shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of a material part of its properties or of the Mortgaged Property or shall
not, within thirty (30) days after the appointment of a trustee, receiver or liquidator of any material part of its properties or of
the Mortgaged Property, have such appointment vacated.
c. A judgment, writ or warrant of attachment or execution, or similar process shall be entered and become a lien on or be
issued or levied against the Mortgaged Property or any part thereof which is not released, vacated or fully bonded within
thirty (30) days after its entry, issue or levy.
d. An event of default, however defined, shall occur under any other mortgage, assignment or other security document
constituting a lien on the Mortgaged Property or any part thereof.
16. Acceleration; Foreclosure. Upon the occurrence of any Event of Default and at any time thereafter while such Event of
Default exists, Mortgagee may, at its option, after such notice as may be required by law, exercise one or more of the following rights
and remedies (and any other rights and remedies available to it):
a. Mortgagee may declare immediately due and payable all Obligations secured by this Mortgage, and the same shall
thereupon be immediately due and payable, without further notice or demand.
b. Mortgagee shall have and may exercise with respect to the Personal Property, all the rights and remedies accorded
upon default to a secured party under the Iowa Uniform Commercial Code. If notice to Mortgagors of intended disposition
of such property is required by law in a particular instance, such notice shall be deemed commercially reasonable if given
to Mortgagors at least ten (10) days prior to the date of intended disposition.
c. Mortgagee may (and is hereby authorized and empowered to) foreclose this Mortgage in accordance with the law of the
State of Iowa, and at any time after the commencement of an action in foreclosure, or during the period of redemption, the
court having jurisdiction of the case shall at the request of Mortgagee appoint a receiver to take immediate possession of
the Mortgaged Property and of the Revenues and Income accruing there from, and to rent or cultivate the same as he may
deem best for the interest of all parties concerned, and such receiver shall be liable to account to Mortgagors only for the
net profits, after application of rents, issues and profits upon the costs and expenses of the receivership and foreclosure
and upon the Obligations.
17. Redemption. It is agreed that if this Mortgage covers less than ten (10) acres of land, and in the event of the foreclosure of
this Mortgage and sale of the property by sheriffs sale in such foreclosure proceedings, the time of one year for redemption from said
sale provided by the statues of the State of Iowa shall be reduced to six (6) months provided the Mortgagee, in such action files an
election to waive any deficiency judgment against Mortgagors which may arise out of the foreclosure proceedings; all to be consistent
with the provisions of Chapter 628 of the Iowa Code. If the redemption period is so reduced, for the first three (3) months after sale
such right of redemption shall be exclusive to the Mortgagor, and the time periods in Sections 628.5, 628.15 and 628.16 of the Iowa
Code shall be reduced to four (4) months. It is further agreed that the period of redemption after a foreclosure of this Mortgage shall
be reduced to sixty (60) days if all of the three following contingencies develop: (1) The real estate is less than ten (10) acres in size;
(2) the Court finds affirmatively that the said real estate has been abandoned by the owners and those persons personally liable
under this Mortgage at the time of such foreclosure; and (3) Mortgagee in such action files an election to waive any deficiency
judgment against Mortgagors or their successors in interest in such action. If the redemption period is so reduced, Mortgagors or
their successors in interest or the owner shall have the exclusive right to redeem for the first thirty (30) days after such sale, and the
time provided for redemption by creditors as provided in Sections 628.5, 628.15 and 628.16 of the Iowa Code shall be reduced to
forty (40) days. Entry of appearance by pleading or docket entry by or on behalf of Mortgagors shall be a presumption that the
property is not abandoned. Any such redemption period shall be consistent with all of the provisions of Chapter 628 of the Iowa
Code. This paragraph shall not be construed to limit or otherwise affect any other redemption provisions contained in Chapter 628 of
the Iowa Code.
18. Attorneys' Fees. Mortgagors shall pay on demand all costs and expenses incurred by Mortgagee in enforcing or protecting
its rights and remedies hereunder, including, but not limited to, reasonable attorneys' fees and legal expenses.
19. Forbearance not a Waiver, Rights and Remedies Cumulative. No delay by Mortgagee in exercising any right or remedy
provided herein or otherwise afforded by law or equity shall be deemed a waiver of or preclude the exercise of such right or remedy,
and no waiver by Mortgagee of any particular provisions of this Mortgage shall be deemed effective unless in writing signed by
Mortgagee. All such rights and remedies provided for herein or which Mortgagee or the holder of the Obligations may have
otherwise, at law or in equity, shall be distinct, separate and cumulative and may be exercised concurrently, independently or
successively in any order whatsoever, and as often as the occasion therefor arises.
20. Notices. All notices required to be given hereunder shall be in writing and deemed given when personally delivered or
deposited in the United States mail, postage prepaid, sent certified or registered, addressed as follows:
a.lfto Mortgagors, to: Lower Main Development, LLC, 137 Main Street, Dubuque, Iowa 52001
b. If to Mortgagee, to: Economic Development Department; City Hall; 50 West 13th St., Dubuque, Iowa 52001
or to such other address or person as hereafter designated in writing by the applicable party in the manner provided in this paragraph
for the giving of notices.
21. Severability. In the event any portion of this Mortgage shall, for any reason, be held to be invalid, illegal or unenforceable in
whole or in part, the remaining provisions shall not be affected thereby and shall continue to be valid and enforceable and if, for any
reason, a court finds that any provision of this Mortgage is invalid, illegal, or unenforceable as written, but that by limiting such
provision it would become valid, legal and enforceable then such provision shall be deemed to be written, construed and enforced as
so limited.
22. Further Assurances. At any time and from time to time until payment in full of the Obligations, Mortgagors will, at the request of
Mortgagee, promptly execute and deliver to Mortgagee such additional instruments as may be reasonably required to further
evidence the lien of this Mortgage and to further protect the security interest of Mortgagee with respect to the Mortgaged Property,
including, but not limited to, additional security agreements, financing statements and continuation statements. Any expenses
incurred by Mortgagee in connection with the recordation of any such instruments shall become additional Obligations of Mortgagors
secured by this Mortgage. Such amounts shall be immediately due and payable by Mortgagors to Mortgagee.
23. Successors and Assigns bound; Number; Gender; Agents; Captions. The rights, covenants and agreements contained
herein shall be binding upon and inure to the benefit of the respective legal representatives, successors and assigns of the parties.
Words and phrases contained herein, including acknowledgment hereof, shall be construed as in the singular or plural number, and
as masculine, feminine or neuter gender according to the contexts. The captions and headings of the paragraphs of this Mortgage
are for convenience only and are not to be used to interpret or define the provisions hereof.
24. Governing Law. This Mortgage shall be governed by and construed in accordance with the laws of the State of Iowa.
25. Release of Rights of Dower, Homestead and Distributive Share. Each of the undersigned hereby relinquishes all rights of
dower, homestead and distributive share in and to the Mortgaged Property and waives all rights of exemption as to any of the
Mortgaged Property.
26. Acknowledgment of Receipt of Copies of Debt Instrument. Mortgagors hereby acknowledge the receipt of a copy of this
Mortgage together with a copy of each promissory note secured hereby.
27. Additional Provisions.
Dated: II '^~J ?.- 5 , 2006
Lower Main Development, LLC
Mortg gor
Wayne Brl g, fr"s ,;,;,....,,:/..
Title
I UNDERSTAND THAT HOMESTEAD PRO TY IS IN MANY CASES PROTECTED FROM THE CLAIMS OF CREDITORS AND
EXEMPT FROM JUDICIAL SALE; AND THAT BY SIGNING THIS MORTGAGE, I VOLUNTARILY GIVE UP MY RIGHT TO THIS
PROTECTION FOR TH(.MORTGAGED PROPERTY WITH RESPECT TO CLAIMS BASED UPON THIS MORTGAGE.
g (-z....S 64-
Dated:
STATE OF IOWA
ss:
COUNTY OF DUBUQUE
On this. '2--5~ay of A iJv..s t ,2006, before me, the undersigned, a Notary Public, personally appeared Wayne Briggs,
Managmg Member of Low Main Development, LLC, to me known to be the identical person named in and who executed the
foregoing instrument, and acknowledged that they executed the same as their voluntary act and deed.
!.l~
If"
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1 ). )'
, Notary Public