Novelty Iron Works Assignment of Development AgreementMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Novelty Iron Works
DATE: August 2, 2013
Dubuque
band
AIl- America City
1
2007 • 2012 • 2013
City Attorney Barry Lindahl is recommending approval of an assignment of the
Warehouse Trust LLC development agreement to a new limited liability company,
Novelty Iron Landlord LLC, which will be managed and partially owned by Warehouse
Trust LLC. The assignment is to accommodate lenders and investors associated with
the financing structure of the Project. It is contemplated that the Project property will be
transferred to and improved by Novelty Iron Landlord LLC.
City Attorney Barry Lindahl is further recommending two amendments to the
Development Agreements. The first change is to Section 2.1 (1) of the Development
Agreement which requires the project developer to create no less than seventy -six (76)
market rate apartment units. One of the Project's lenders is obtaining a portion of its
loan proceeds through the use of New Market Tax Credits which will require that some
of the units be affordable to low- income persons. Warehouse Trust, LLC is requesting
that the Development Agreement be amended to make five (5) out of the seventy -six
(76) apartment units to individuals whose income as illustrated by HUD Handbook
4350.3 REV -1 (or subsequent versions), is less than or equal to 80 percent of the area
median family income (adjusted for household size) as determined and adjusted
annually by HUD. The remaining apartment units shall be made available at market -
rate rents. The second change is to Section 4.12 (1) which requires that the Developer
devote the Property to the uses specified in the Urban Renewal Plan and Developer will
have no liability to the City for this covenant in the event of breach by a successor.
Upon breach by a successor, the City must seek enforcement of this covenant directly
against the successor.
I concur with the recommendation and respectfully request Mayor and City Council
approval
l7"' c'k-0,943A,
Michael C. Van Milligen
MCVM:ds
Attachment
cc: Barry Lindahl, City Attorney
Crenna Brumwell, Assistant City Attorney
Maureen Quann, Assistant City Manager
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Phil Wagner, Acting Economic Development Director
THE CITY OF
DUB E MEMORANDUM
Masterpiece on the Mississippi
BARRY LINDAHL
CITY ATTORNEY
To: Michael C. Van Milligen
City Manager
DATE: August 1, 2013
RE: Novelty Iron Works
The City of Dubuque entered into a Development Agreement with Warehouse Trust,
LLC dated June 17, 2013 for the development of the Novelty Iron Works Building in the
Millwork District.
Warehouse Trust, LLC has requested City approval of an Assignment of the
Development Agreement to a new limited liability company, Novelty Iron Landlord LLC,
which will be managed and partially owned by Warehouse Trust, LLC. The purpose of
the Assignment is to accommodate lenders and investors associated with the financing
structure of the Project. It is contemplated that the Project property will be transferred to
and improved by Novelty Iron Landlord LLC.
Warehouse Trust, LLC is also requesting an amendment to the Development
Agreement. The first change is to Section 2.1(1) of the Development Agreement which
requires the project developer to create no less than seventy -six (76) market rate
apartment units. One of the Project's lenders is obtaining a portion of its loan proceeds
through the use of New Market Tax Credits which will require that some of the units be
affordable to low- income persons. Warehouse Trust, LLC is requesting that the
Development Agreement be amended to make five (5) out of the seventy -six (76)
apartment units to individuals whose income as illustrated by HUD Handbook 4350.3
REV -1 (or subsequent versions), is less than or equal to 80 percent of the area median
family income (adjusted for household size) as determined and adjusted annually by
HUD. The remaining apartment units shall be made available at market -rate rents. The
second change is to Section 4.12(1) which requires that the Developer devote the
Property to the uses specified in the Urban Renewal Plan and any successor in interest
will have no liability to the City for this covenant.
Two resolutions are attached with the proposed First Amendment to Development
Agreement and the Assignment and Assumption of Development Agreement. I
recommend that the resolutions be submitted to the City Council for consideration and
approval.
OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001 -6944
TELEPHONE (563) 583 -4113 / FAX (563) 583 -1040 / EMAIL balesq @cityofdubuque.org
BAL:tls
Attachments
cc: Phil Wagner, Acting Economic Development Director
PVUSERSRsteckeA Linda hl W ovelty Iron World- Warehouse Trust LLGMidAmenca Holdings (Bob Johnson)WIVM_ Amendment &AssignmentTODAResolutions _080113. doc
OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001 -6944
TELEPHONE (563) 583 -4113 / FAx (563) 583 -1040 / EMAIL balesq @cityofdubuque.org
Preparer: Barry A. Lindahl, Esq. Suite 330, Harbor View Place, 300 Main Street, Dubuque, IA 52001 (563) 583 -4113
RESOLUTION NO. 246 -13 A
CONSENTING TO THE ASSIGNMENT OF THE DEVELOPMENT AGREEMENT
BETWEEN THE CITY OF DUBUQUE, IOWA AND WAREHOUSE TRUST, LLC TO
NOVELTY IRON LANDLORD, LLC
Whereas, the City of Dubuque entered into a Development Agreement with
Warehouse Trust, LLC dated June 17, 2013; and
Whereas, Warehouse Trust, LLC now desires to assign its rights and
responsibilities under the Development Agreement to Novelty Iron Landlord LLC, which
will be managed and partially owned by Warehouse Trust, LLC; and
Whereas, the Development Agreement requires the consent of the City to any
such assignment; and
Whereas, the City Council of the City of Dubuque finds that the City of Dubuque
should consent to the assignment, a copy of which Assignment Agreement is attached
hereto.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. The City of Dubuque hereby consents to the Assignment Agreement,
a copy of which is attached hereto.
Passed, approved and adopted this 5th day of August, 2013.
Roy D,l /Suol, Mayor
Attest:
Trish L. Gleason, Assistant City Clerk
Preparer: Barry A. Lindahl, Esq. Suite 330, Harbor View Place, 300 Main Street, Dubuque, IA 52001 (563) 583 -4113
RESOLUTION NO. 246 -13 B
APPROVING THE FIRST AMENDMENT TO THE DEVELOPMENT AGREEMENT
BETWEEN THE CITY OF DUBUQUE, IOWA AND NOVELTY IRON LANDLORD, LLC
Whereas, the City of Dubuque entered into a Development Agreement with
Warehouse Trust, LLC dated June 17, 2013; and
Whereas, Warehouse Trust, LLC has assigned its rights and responsibilities
under the Development Agreement to Novelty Iron Landlord LLC; and
Whereas, Novelty Iron Landlord LLC has requested an amendment to the
Development Agreement in the form attached hereto; and
Whereas, the City Council of the City of Dubuque finds that the City of Dubuque
should consent to the Amendment.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. The City of Dubuque hereby approves the Amendment to
Development Agreement, a copy of which is attached hereto.
Section 2. The Mayor is authorized and directed to sign the Amendment to
Development Agreement on behalf of the City of Dubuque.
Attest:
Passed, approved and adopted this 5th day of August, 2013.
Trish L. Gleason, Assistant City Clerk
Roy D.,uol, Mayor
ASSIGNMENT AND ASSUMPTION OF CONTRACT RIGHT AND OBLIGATIONS
This Assignment and Assumption of Contract Rights and Obligations (the "Assignment
and Assumption Agreement") is made and entered into as of fi f / 2013, by and between
Warehouse Trust, LLC ("Assignor"), and Novelty Iron Landlord LLC, an Iowa limited liability
company ("Assignee").
WHEREAS, Assignor is a party to that certain Development Agreement dated June 17,
2013 (the "Contract"), pursuant to which the City of Dubuque, Iowa, (the "City") has agreed to
provide certain benefits to Assignor and Assignor has agreed to develop real property within the
City in accordance with the Contract;
WHEREAS, Assignor desires to assign its rights under the Contract to Assignee, and
Assignee has agreed to assume the obligations of Assignor under the Contract;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the receipt, adequacy
and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:
1. Assignment and Assumption. Effective as of ? , 2013 and subject
to the consent of the City (the "Effective Date"):
(a) Assignor hereby assigns, sells, transfers and sets over to Assignee all of
Assignor's right, title, benefit, privileges and interest in arising under or in connection with the
Contract (collectively, the "Assignment"); and
(b) Assignee hereby accepts the Assignment and assumes and agrees to observe and
perform all of the duties, obligations, terms, provisions and covenants, and to pay and discharge
all of the liabilities of Assignor to be observed, performed, paid or discharged under or in
connection with the Contract on or after the Effective Date.
(c) This Assignment is subject to Assignor remaining both the manager and a
member of Assignee during the Term of the Contract.
(d) Assignor shall remain fully responsible for all of its obligations under . the
Contract, notwithstanding any transfer of the property to Assignee and the assumption of any of
the Assignor's obligations thereunder.
2. Representations and Warranties of Assignor. Assignor hereby represents and
warrants to Assignee:
(a) The Contract is in full force and effect and is valid and enforceable in accordance
with its terms;
(b) Assignor is and has been in compliance with the terms of the Contract since the
effective date of the Contract;
080113maq
(c) To Assignor's knowledge, the City is and has been in compliance with the terms
of the Contract since the effective date of the Contract; and
(d) Assignor has not received notice of any alleged or potential breach of the
Contract.
3. Further Actions. Each of the parties hereto covenants and agrees, at its own
expense, to execute and deliver, at the request of the other party hereto, such further instruments
of transfer and assignment and to take such other action as such other party may reasonably
request to more effectively consummate the assignments and assumptions contemplated by this
Assignment and Assumption Agreement.
4. Governing Law. This Assignment and Assumption Agreement shall be
governed by and construed in accordance with the laws of the State of Iowa without giving effect
to the principles of conflicts of laws thereof.
5. Counterparts. This Agreement and any amendments hereto, may be executed in
one or more counterparts, each of which constitutes an original, and all of which, collectively,
constitute one agreement. The signatures of all parties need not appear on the same counterpart
and any counterpart signature pages, to the extent signed and delivered by means of a facsimile
machine or other electronic means, including transmission of .pdf copies by electronic mail, shall
be treated in all manner and respects as an original agreement or instrument and shall be
considered to have the same binding legal effect as if it were the original signed version thereof
delivered in person.
[END OF AGREEMENT - SIGNATURE PAGE FOLLOWS]
2
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
ASSIGNOR:
Warehouse Trust, LLC
an Iowa limited liability company
By: 4 1) //
Its:
F:\USERS\tsteckle\Lindahl\Novelty Iron Works -Warehouse Trust LLC -
ASSIGNEE:
Novelty Iron landlord LLC,
an Iowa Limited liability company
By:
Its:
dAmerica Holdings (Bob Johnson)\AssienmentAndAssumptionAgreement_o8o113maq.doc
3
J
CONSENT
The undersigned, on behalf of the City of Dubuque, Iowa (the "City"), does hereby
consent to the assignment and assumption of the Development Agreement by and between the
City and Warehouse Trust, LLC dated June 17, 2013 (the "Contract") in accordance with the
terms of the foregoing Assignment and Assumption of Contract Rights and Obligations .
CITY:
CITY OF DUBUQUE, IOWA
By: Roy,D. Buol
Its: Mayor
Date: August 5 , 2013
4
FIRST AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE, IOWA
AND WAREHOUSE TRUST, LLC
(as assigned to Novelty Iron Landlord LLC)
The First Amendment to Development Agreement, dated for reference purposes
the 24 day of "4,06,0S1— , 2013, is made and entered into by and between the
City of Dubuque, Iowa (City) and Novelty Iron Landlord LLC (Developer).
Whereas City and Warehouse Trust, LLC previously entered into a Development
Agreement dated the 17th of June, 2013 (the Development Agreement);
Whereas Warehouse Trust, LLC, with the consent of the City, assigned its rights
in and under the Development Agreement to Developer, who simultaneously assumed
the duties of Warehouse Trust, LLC under the Development Agreement;
Whereas Section 2.1(1) of the Development Agreement requires the developer to
create not less than seventy-six (76) apartments for market -rate rental and Section
4.12(1) of the Development Agreement contains a representation that such use is in
compliance with the relevant Urban Renewal Plan;
Whereas one of Developer's lenders has required Developer to offer five (5) of its
76 apartment units to persons whose income as illustrated by HUD Handbook 4350.3
REV -1 (or subsequent versions), is less than or equal to 80 percent of the area median
family income (adjusted for household size) as determined and adjusted annually by
HUD; and
Whereas City and Developer have agreed to amend the Development
Agreement to allow Developer to comply with the foregoing obligations to Developer's
lender; 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 2.1(1) of the Development Agreement is hereby amended to read as
follows:
(1) Residential Units. Developer shall improve the Property by creating not less
than seventy-six (76) apartments, as shown on attached Exhibit L. Five (5) of
080113maq
those apartments may be rent restricted, as defined in Internal Revenue Code
Section 42(g)(2)(C), and occupied by individuals whose income as illustrated by
HUD Handbook 4350.3 REV -1 (or subsequent versions), is less than or equal to
80 percent of the area median family income (adjusted for household size) as
determined and adjusted annually by HUD. The remaining apartment units shall
be made available at market -rate rents.
2. Section 4.12(1) of the Development Agreement is hereby amended to read as
follows:
(1) Devote the Property to, and only to and in accordance with, the uses
specified in the Urban Renewal Plan (and City represents and agrees that use of
the Property as commercial, retail and residential (as specified herein) is in full
compliance with the Urban Renewal Plan) (however, Developer shall not have
any liability to City to the extent that a successor in interest shall breach this
covenant and City shall seek enforcement of this covenant directly against the
party in breach of same); and
3. Except as expressly amended in this First Amendment to the Development
Agreement, the terms of the Development Agreement will remain in full force and effect
as set forth in the Development Agreement.
[END OF AMENDMENT — SIGNATURE PAGE FOLLOWS]
2
CITY OF DUBUQUE, IOWA
By:
Bv:
Roy D. Buol, Mayor
K in S. Firnstahl, City C erk
3
NOVELTY IRON LANDLORD LLC
DA'1sBRoW y
LAW FIRM
REPLY TO DES MOINES OFFICE
July 26, 2013
City of Dubuque, Iowa
50 West 13th Street
Attn: Phil Wagner
Re: Novelty Iron Works the "Project ")
Dear Phil:
As you are aware, the City of Dubuque, Iowa entered into a Development Agreement
with Warehouse Trust, LLC dated June 17, 2013 (the "Development Agreement "). Upon
review of the Development Agreement, we have identified two components that need to be
revised in order to accommodate the Project's financing structure.
The Project's financing structure involves New Market Tax Credits, Federal Historic Tax
Credits and Iowa Historic Tax Credits (the "Credits "). To accommodate lenders and investors
associated with the Credits and for other reasons, the Project is being restructured. Warehouse
Trust, LLC will no longer serve as the developer and owner of the Project. Instead, Warehouse
Trust, LLC has formed a new limited liability company, whose legal name is Novelty Iron
Landlord LLC (the "Master Landlord "). It is contemplated that the Master Landlord will be
managed and partially owned by Warehouse Trust LLC. It is also contemplated that the real
property associated with the Project will be transferred to and improved by the Master Landlord,
with the assistance of Sustainable Neighborhood Builders, Inc., who would serve as the
contracted development agent for the Project.
Because the Project is expected to be owned and developed by the Master Landlord and
its agents, we believe that it is more appropriate for it to be the counter -party on the
Development Agreement. Therefore, we ask that you consent to the assignment of the
Development Agreement from Warehouse Trust, LLC to the Master Landlord in accordance
with Sections 4.10 and 2.5 of the Development Agreement.
In addition to assigning the Development Agreement to the Master Landlord, we ask that
you amend Section 2.1(1) of the Development Agreement. Section 2.1(1) of the Development
Agreement requires the Project developer to create no less than seventy -six (76) market rate
apartment units. One of the Project's lenders (a subsidiary of Iowa Community Development,
L.C.) (the "NMTC Lender ") is obtaining a portion of its loan proceeds through the use of New
Market Tax Credits and is obligated, as a result, to require any person borrowing money from it
to make a portion of their apartment units affordable to low- income persons as defined by the
New Market Tax Credit program, which treats those with incomes equal to or less than 80% of
DAVIS BROWN KOEHN SHORE & ROBERTS P.C.
PHONE 51 5.208.2500 FIRM FAX 51 5.243.0554
WEB WWW. DAVISBROWNLAW. COM
THE DAVIS BROWN TOWER
21 5 1 0'" STREET, STE. 1 300
DES MOINES, IA 50309
THE HIGHLAND BUILDING
4201 WESTCWN PKWY, STE. 300
WEST DES MOINES, IA 50255
THE AMES OFFICE
2605 NORTHRIDGE PKWY, STE. 1 01
AMES, IA 5001 0
City of Dubuque
July 26, 2013
Page 2
the area median family income (determined and annual adjusted by HUD) as low- income
persons.
In this particular case, the NMTC Lender is requiring the Project developer to make 5 of
its 76 apartment units affordable to low- income persons. Therefore, we ask that you amend
Section 2.1(1) and make conforming changes to Section 4.12(1) of the Development Agreement
and to take such further actions as are necessary to allow the Project developer to make 5 of its 76
apartment units affordable to low- income persons. If you would like us to propose language for
such amendment, please let us know. We would be happy to do so.
Very truly yours,
DAVIS, BROWN, KOEHN, SHORS & ROBERTS, P.C.
Jason M. Stone