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Hartig Realty III, LLC_Rehabilitation Loan-Mortgage_703 Main D~~~E ~<k~ MEMORANDUM September 5, 2006 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Development Agreement for the Former Hartig Drug Store at 703 Main Street Economic Development Director David Heiar is recommending approval of a Development Agreement for Hartig Realty to support their rehabilitation of the former Hartig Drug Store at 703 Main Street. The key items in the Development Agreement include: . Hartig will invest $735,000 to rejuvenate a cornerstone building that has been vacant for 6 years. . City will commit to a $300,000 Downtown Rehabilitation Loan and a $10,000 Design Grant in 2015 . The project retains 55 jobs and creates 10 new jobs in the downtown area. . The company will receive a 1 O-year TI F in the form of a 60% yearly tax rebate on the property taxes but not to exceed the tax increment revenues paid by the Developer. Failure to maintain the 55 jobs and create 10 jobs associated with this project will result in a pro-rated reduction of the TIF rebate. Hartig Realty is negotiating with a tenant that would mean the retention of 55 jobs in the downtown and the addition of 10 new jobs over the next five years. I concur with the recommendation and respectfully request Mayor and City Council approval. )\.cL1 c. VCUl 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 September 12, 2006 TO: Michael Van Milligen, City Manager FROM: David J. Heiar, Economic Development Director C\Jt SUBJECT: Development Agreement for the former Hartig Drug store at 703 Main Street INTRODUCTION This memorandum presents for City Council consideration a Resolution approving a Development Agreement for Hartig Realty III, LLC to support their rehabilitation of the former Hartig Drug store at 703 Main Street. BACKGROUND This two-story building housed the Hartig Drug Store for several decades. The first floor was the actual store until October of 2000 when it closed its doors. The basement and second floors continue to be home for Hartig Drug's corporate offices. Hartig Realty III LLC has obtained a tenant who would like to relocate their business to the first floor of the building. Many improvements are needed to make the facility useable for the new tenant. Interior and exterior improvements are planned which the Downtown Rehabilitation Loan Program will help fund. The project will retain 55 jobs within the downtown area and create 1 0 jobs over a 5-year span. The Development Agreement would include a Downtown Rehabilitation Loan/Grant to encourage private investment and rehabilitation efforts in the City's Greater Downtown Urban Renewal District. The loan/grant 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 is unique in that grants of up to $10,000 are available to offset necessary predevelopment costs. The program also 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. A 10-year 60% tax rebate has been offered to the company to assist in their downtown renovation project. The rebate is a form of tax increment financing without issuing a tax increment finance bond to loan monies to the company upfront. As the company pays its future tax obligation on the new improvements, the City will rebate 60% of the actual amount of property taxes paid by the developer, not to exceed the tax increment revenues paid by the Developer. DISCUSSION At this time, insufficient loan funds are available in the Downtown Rehabilitation Loan Program to fund the loan. The owners have agreed to wait until the funds become available in FY15. As of July 1, 2015, the loan funds will be available to the project and the company would like to proceed with the loan. Should the loan pool be recapitalized prior to FY15, this loan would move forward on the waiting list and would be funded earlier. Key items in the Development Agreement include; . Hartig will invest $735,000 to rejuvenate a cornerstone building that has been vacant for 6 years. . City will commit to a $300,000 Downtown Rehabilitation Loan and a $10,000 Design Grant in 2015 . The project retains 55 jobs and creates 10 new jobs in the downtown area. . The company will receive a 10-year TIF in the form of a 60% yearly tax rebate on the property taxes but not to exceed the tax increment revenues paid by the Developer. Failure to maintain the 55 jobs and create 10 jobs associated with this project will result in a pro-rated reduction of the TIF rebate. Additional terms and conditions are included within the attached Development Agreement. RECOMMENDATION Staff has reviewed the application and found it to be in keeping with the requirements of the Downtown Rehabilitation Loan/Grant Program. The project is anticipated to begin in October. I recommend that the City Council adopt the attached Resolution approving a Development Agreement for Hartig Realty III, LLC for the $300,000 Downtown Rehabilitation loan, a $10,000 design grant and a 60% rebate of property taxes for 10 years. ACTION STEP The action step for the City Council is to adopt the attached Resolution. F:\USERS\DHeiar\Hartig\DA memo.doc RESOLUTION NO. 455-06 A RESOLUTION APPROVING A DEVELOPMENT AGREEMENT FOR THE FORMER HARTIG DRUG STORE PROJECT. Whereas, the City of Dubuque, Iowa, has created a Downtown Rehabilitation Loan/Grant 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/grant program to finance code compliance activities and to spur job creation activities; and Whereas, the loan application from Hartig Realty III, LLC meets the requirements of this program; and Whereas, it is the determination of this Council that approval of the Development Agreement for the rehabilitation of the Property by Hartig Realty III, LLC according to the terms and conditions set out in the Development Agreement is in the public interest of the City of Dubuque. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Development Agreement with Hartig Realty III, LLC is hereby accepted and approved. Section 2. That the Mayor is hereby authorized to execute, on behalf of the City Council of the City of Dubuque, Iowa, the attached Development Agreement with Hartig Realty III, LLC. Section 3. That the City Manager is hereby authorized to execute, on behalf of the City Council of the City of Dubuque, Iowa, all necessary loan documents and is further authorized to disburse loan funds from the Downtown Rehabilitation Loan/Grant Program, in accordance with the terms and conditions of the executed agreement. Passed, approved and adopted this 18th day of September, 2006 Roy D. Buol, Mayor Attest: Jeanne F. Schneider, City Clerk F:IUSERSIDHeiarIHartigIDA res.doc (HMlTIG) ff)rtJ9- Corporate Office 703 Main Street. P.O. Box 709 . Dubuque, Iowa 52004-0709 563-588-B700 ;; Fd~; 563-.088-8750 August 30, 2006 Mr. David Heiar City of Dubuque Economic Development Department 50 West 13th Street Dubuque, LA 52001 Dear David: This is a formal letter of application for financial assistance for the Downtown Rehabilitation Loan Program which is offered by the City of Dubuque. Following is the information for each request in the application: . Applicant information 1. Hartig Realty III PO Box 709 Dubuque, IA 52004- 0709 (563) 588-8700 Phone (563) 588-8750 Fax FEIN # 42-1470631 2. Property address 703 Main Street, Dubuque, IA 52004 3. Description of project The main floor of the building located at 703 Main Street has been vacant since October, 2000 and is somewhat unattractive to passersby because of the empty store front on the main level. Through rehabilitation ofthe building and having a major business on the street level, the activity level will increase in the downtown area and benefit all merchants and businesses in the downtown area. This will fiJrther enhance and reflect the vitality and rejuvenation of the downtown area in the city of Dubuque. The rehabilitation of the building will also increase the tax base for the city of Dubuque. Downtown Rehabilitation Loan Application Hartig Drug Company 4. Employment Elements of project Through the revitalization ofthis building there will be 40 jobs retained in the city of Dubuque's downtown area and the potential of 10 additional full time positions over the next five years. 5. Proof of building ownership See following pages for building ownership from the Dubuque County Assessor's office. 6. Loan amount request $300,000.00 7. Proposed Security There is not a mortgage on this property and Dick Hartig personally guarantees this loan. Please refer to the following letter from Thomas Utzig, Executive Vice President and Chief Credit Officer of American Trust Bank for his comments on Dick's personal character. . Preliminary project budget Please refer to following indexed page. . Preliminary Construction Schedule September 15 - October 1,2006 - demolition of interior and site preparation October I - November 15, 2006 - Build out of interior . Financial Statements Please refer to following indexed pages. . Resolution authorizing the application Please refer to following indexed pages. If you have any questions after reviewing this application, please feel free to contact me. Regards, Richard J. ig Chief Executive Officer Page 2 Preliminary Project Budget MeGladrey Pullen Main Street Renovation Budget SeoDe of Work Budoet Amounts General Conditions 35,000.00 Selective Demolition 18,500.00 Cast-In-Place Concrete 2,100.00 Masonrv 3,200.00 Misc. Steel 1,500.00 ROUQh Caroentrv 15,000.00 Finish Camentrv 9,500.00 Casework and Counter Tops 33,200.00 EPDM Roof 50,000.00 Sheet Metal Flashino 1,500.00 Joint Sealants 1,500.00 Doors, Frames and Hardware 40,000.00 Glass and Glazino 14,000.00 Aluminum Windows 2,600.00 Wood Storefront 59,400.00 Gvosum Wall Board SyStems 115,000.00 Ceramic Wall and Floor Tile 8,500.00 Acoustical Ceilinos 23,900.00 Caroetino 40,000.00 Vinvl Comoosite Tile 1,200.00 PaintinQ 30,000.00 Soecialties 5,000.00 Plumbino 36,800.00 HVAC 46,000.00 Electrical 87,400.00 Subtotal 680,800.00 Proiect Continoencv 19,200.00 Contractor's Fee 35,000.00 Total Costs 735,000.00 Rehabilitation Loan -300,000.00 Fa,.ade Grant -10,000.00 Preliminary Budget - Net after grant money 425,000.00 Prepared by: Straka Johnson Architects PC CHA~IG) ff)rtJO- Corporate Office 703 Main Street. P.O. Box 709 . Dubuque, Iowa 52004-0709 563-588-8700 ~ Fax: 563-588-8750 August 30, 2006 Mr. David Heiar City of Dubuque Economic Development Department 50 West 13th Street Dubuque, LA 52001 Dear David: This is a formal letter of application for financial assistance for the Planning and Design Grant Program offered by the City of Dubuque. Following is the information for each request in the application: . Applicant information 1. Hartig Realty III PO Box 709 Dubuque, LA 52004- 0709 (563) 588-8700 Phone (563) 588-8750 Fax FEIN # 42-1470631 2. Property address 703 Main Street, Dubuque, LA 52004 3. Description of project The main floor of the building located at 703 Main Street has been vacant since October, 2000 and is somewhat unattractive to passersby because of the empty store front on the main level. Through rehabilitation of the building and having a major business on the street level, the activity level will increase and benefit all merchants and businesses in the downtown area. This will further enhance and reflect the vitality and rejuvenation of the downtown area in the city of Dubuque. The rehabilitation of the building will also increase the tax base for the city of Dubuque. FalYade Grant Application Hartig Drug Company 4. Employment Elements of project Through the revitalization of this building there will be 40 jobs retained in the city of Dubuque's downtown area and the potential of 10 additional full time positions over the next five years. S. Proof of building ownership See following pages for building ownership from the Dubuque County Assessor's office. 6. Grant amount requested $10,000.00 . Preliminary project budget Plea~e refer to following indexed pages for project budget and private match amount. · Preliminary Construction Schedule September 15 October 1,2006 - demolition of interior and site preparation October 1 - November 15, 2006 - Build out of interior If you have any questions after reviewing this application, please feel free to contact me. Regards, Page 2 DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF DUBUQUE, IOWA AND HART I G REALTY III, L.L.C. T IS DEVELOPMENTAGREEMENTdatedforreference ur osesthef da p p y ,; , 4 2g95 is made and entered into by and between the City of Dubuque, Iowa , and Hartig Realty 111, L.L.C. (Developer). WHEREAS, Developer is the owner of the following described real estate (the Property): Lot 60 and the southerly 31.5 feet of lot 59, in the City of Dubuque, lows, according to the United States Commissioners Map of the Town of Dubuque, Iowa; located at 703 Main Street in the City of Dubuque; and WHEREAS, the Property is located in the Greater Downtown Urban Renewal District (the District) which has been so designated by City Council Resolution 170 -04 as a slum and blight area (the Project Area) defined by Iowa Code Chapter 403 (the Urban Renewal Law); and WHEREAS, Developer has undertaken the redevelopment of a vacant building located on the Property and is operating the same during the term of this Agreement; and WHEREAS, Developer will make an additional capital investment in building improvements, equipment, furniture and fixtures in the Property and lease a part of the Property to McGladrey & Pullen, LLP; and WHEREAS, pursuant to Iowa Code Section 403.6(1), and in conformance with the Urban Renewal Plan for the Project Area adopted on April 19, 2004, City has the authority to enter into contracts and agreements to implement the Urban Renewal Plan; and WHEREAS, the City Council of City believe it is in the best interests of the City to encourage Developer in the development of the Property by providing certain incentives as set forth herein. NOW, THEREFORE, the parties to this Development Agreement, in consideration of the promises, covenants and agreements made by each other, do hereby agree as follows: SECTION 1. REPRESENTATIONS AND WARRANTIES 1.1 Representations and Warranties of City. In order to induce Developer to enter into this Agreement, City hereby represents and warrants to Developer that to the best of City's knowledge: (1) City has duly obtained all necessary approvals and consents for its execution, delivery and performance of this Agreement and that it has full power and authority to execute, deliver and perform its obligations under this Agreement. This Agreement, upon execution and delivery by the City (assuming due authorization, execution and delivery by the Developer), is a valid and legally binding instrument of City, enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting creditors' rights generally. (2) City shall exercise its best efforts to cooperate with Developer in the development process. (3) City shall exercise its best efforts to resolve any disputes arising during the development process in a reasonable and prompt fashion. (4) The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of or compliance with the terms and conditions of this Agreement are not prevented by, limited by, in conflict with, or result in a violation or breach of, the terms, conditions or provisions of the charter of City, any evidence of indebtedness, agreement or instrument of whatever nature to which City is now a party or by which it or its property is bound, or constitute a default under any of the foregoing. (5) There are no actions, suits or proceedings pending or threatened against or affecting City in any court or before any arbitrator or before or by any governmental body in which there is a reasonable possibility of an adverse decision which could materially adversely affect the financial position or operations of City or which affects the validity of the Agreement or City's ability to perform its obligations under this Agreement. 1.2 Representations and Warranties of Developer. The Developer makes the following representations and warranties: (1) Developer is a limited liability company duly organized and validly existing under the laws of the State of Iowa, and has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as presently proposed to be conducted, and to enter into and perform its obligations under the Agreement. (2) This Agreement has been duly authorized, executed and delivered by Developer and, assuming due authorization, execution and delivery by the City, is in 2 full force and effect and is a valid and legally binding instrument of Developer enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting creditors' rights generally. Developer's counsel shall issue a legal opinion to the City, at time of closing, confirming the representations contained herein, in form and substance reasonably satisfactory to City. (3) The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of or compliance with the terms and conditions of this Agreement are not prevented by, limited by, in conflict with, or result in a violation or breach of, the terms, conditions or provisions of the articles of organization or the operating agreement of Developer or any contractual restriction, evidence of indebtedness, agreement or instrument of whatever nature to which Developer is now a party or by which it or its property is bound, or constitute a default under any of the foregoing. (4) There are no actions, suits or proceedings pending or threatened against or affecting Developer in any court or before any arbitrator or before or by any governmental body in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, financial position or result of operations of Developer or which affects the validity of the Agreement or Developer's ability to perform its obligations under this Agreement. (5) Developer will perform its obligations under this Agreement in accordance with the material terms of this Agreement, the Urban Renewal Plan and all local, State and federal laws and regulations. (6) Developer will use its best efforts to obtain, or cause to be obtained, in a timely manner, all material requirements of all applicable local, state, and federal laws and regulations which must be obtained or met. (7) Developer has firm commitments for permanent financing for the Project in an amount sufficient, together with equity commitments, to successfully complete the requirements of this Agreement and shall provide evidence thereof to City prior to the Closing Date. 1.3 Closing. The closing shall take place on the Closing Date which shall be the day of , 2006, or such other date as the parties shall agree but in no event shall the Closing Date be later than the day of , 20 . Consummation of the closing shall be deemed an agreement of the parties to this Agreement that the conditions of closing shall have been satisfied or waived. 1.4 Conditions to Closing. The closing of the transaction contemplated by this Agreement and all the obligations of Developer under this Agreement are subject to fulfillment, on or before the Closing Date, of the following conditions: 3 (1) Developer and City shall be in material compliance with all the terms and provisions of this Agreement. (2) Developer shall have furnished City with evidence, in a form satisfactory to City (such as a letter of commitment from a bank or other lending institution), that Developer has firm financial commitments in an amount sufficient, together with equity commitments, to complete the Minimum Improvements (as defined herein) in conformance with the Construction Plans (as defined herein), or City shall have received such other evidence of such party's financial ability as in the reasonable judgment of City is required. (3) Developer's counsel shall issue a legal opinion to the City confirming the representations contained herein, in form and substance reasonably satisfactory to City. (4) Developer shall have provided City with an executed copy of a lease with McGladrey & Pullen, LLP. (5) Developer shall have the right to terminate this Agreement at any time prior to the consummation of the closing on the Closing Date if Developer determines in its sole discretion that conditions necessary for the successful completion of the Project contemplated herein have not been satisfied to the full satisfaction of such party in such party's sole and unfettered discretion. Upon the giving of notice of termination by such terminating party to the other parties to this Agreement, this Agreement shall be deemed null and void. 1.5 City's obligations at Closing. At or prior to the Closing Date, City shall: Deliver to Developer such other documents as may be required by this Agreement, all in a form satisfactory to Developer. SECTION 2. DEVELOPMENT ACTIVITIES 2.1 Required Minimum Improvements. Developer will make an additional capital investment of $735,000.00 in building improvements, equipment, furniture and fixtures in the Property. 2.2 Developer agrees to lease a part of the premises to McGladrey & Pullen, LLP for the purpose of retaining and creating new jobs in the District. 2.3 Plans for Construction of Minimum Improvements. Plans and specifications with respect to the development of Property and the construction of Minimum Improvements thereon (the Construction Plans) shall be in conformity with Urban Renewal Plan, this Agreement, and all applicable state and local laws and regulations, including but not limited to any covenants, conditions, restrictions, reservations, easements, liens and charges, recorded in the records of Dubuque County, Iowa. Developer shall submit to City, for approval by City, plans, drawings, specifications, and related documents with respect to the 4 improvements to be constructed by Developer on the Property. All work with respect to the Minimum Improvements shall be in substantial conformity with the Construction Plans approved by City. 2.4 Timing of Improvements. Developer hereby agrees that construction of Minimum Improvements on the Property shall be commenced within thirty (30) days after the Closing Date, and shall be substantially completed by December 31, 2006. The time frames for the performance of these obligations shall be suspended due to unavoidable delays meaning delays, outside the control of the party claiming its occurrence in good faith, which are the direct result of strikes, other labor troubles, unusual shortages of materials or labor, unusually severe or prolonged bad weather, acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action or by the exercise of reasonable discretion directly results in delays, or acts of any federal, state or local government which directly result in extraordinary delays. The time for performance of such obligations shall be extended only for the period of such delay. 2.5 Certificate of Completion. Promptly following the request of Developer upon completion of the Minimum Improvements, City shall furnish Developer with an appropriate instrument so certifying. Such certification (the Certificate of Completion) shall be in recordable form and shall be a conclusive determination of the satisfaction and termination of the agreements and covenants in this Agreement. SECTION 3. CITY PARTICIPATION 3.1 Downtown Rehab Loan/Grant. (1) City hereby commits to a $300,000 low interest loan, and a $1O,000 design grant through the Downtown Rehabilitation Loan /Grant Program. The project is to be completed in accordance with the regulations set forth for the City of Dubuque Downtown Rehabilitation Loan /Grant Program. The loan is for twenty years at 3% interest and is intended for Historic renovation of the exterior facade and historically significant elements of the interior with remodeling of the remainder of the interior for use as commercial /residential space. Monthly interest only payments shall be required for the first sixty (60) months of the loan. Monthly principal and interest payments, amortized over an additional fifteen (15) year period, shall begin the sixty -first month of the loan. Developer's counsel shall not less than thirty (3g ) days prior to closing on the loan provide City with an opinion of title showing merchantable title in Developer to the satisfaction of City. City shall have until the closing to render objections to title, including any easements or other encumbrances not satisfactory to City, in writing to Developer. Developer shall promptly exercise its best efforts to have such title objections removed or satisfied and shall advise City of intended action within ten (10) days of such action. If Developer shall fail to have such objections removed as of the closing, or any extension thereof consented to by City, City may, at its sole discretion, either (a) terminate its obligation under this Section 3.1 without liability on its part, or proceed to closing subject to such 5 objections. Developer agrees to use its best reasonable efforts to promptly satisfy any such objections. The loan shall be secured by a mortgage and personal guarantees in a form acceptable to City. Funding for this program is anticipated in FY 2015. A rebate equal to two thousand dollars ($2,000) may be forgiven for each new full - time job or full -time equivalent created within two years of the execution of the loan documents and maintained by the applicant or his /her tenant for a period of not less than three years. The amount of the loan to be forgiven shall be determined by the City on the fifth anniversary of the loan based on documented evidence of job creation. (2) A grant not to exceed ten thousand dollars ($10,000) will be available to offset documented predevelopment costs, architectural and engineering fees and other miscellaneous soft costs. A determination must be made by the City that the project is substantially complete and satisfies the conditions of the loan prior to the release of any grant monies. 3.2 Economic Development Grant to Developer. For and in consideration of Developer's obligations hereunder, and in furtherance of the goals and objectives of the urban renewal plan for the Project Area and the Urban Renewal Law, City agrees, subject to Developer being and remaining in compliance with the terms of this Agreement, to make twenty (20) consecutive semi- annual payments (such payments being referred to collectively as the Economic Development Grants) to the Developer: November 1 2009 November 1, 2010 November 1 2011 November 1 2012 November 1 2013 November 1, 2014 November 1 2015 November 1 2016 November 1, 2017 November 1. 2018 May 1 2010 May 1 2011 May 1 2012 May 1 2013 May 1 2014 May 1 2015 May 1 2016 May 1, 2017 May 1 2018 May 1 2019 pursuant to Iowa Code Section 403.9 of the Urban Renewal Law, in amounts equal to 60% of the actual amount of the property taxes paid by Developer but not to exceed the tax increment revenues paid by Developer and collected by City under Iowa Code Section 403.19 (without regard to any averaging that may otherwise be utilized under Iowa Code Section 403.19 and excluding any interest that may accrue thereon prior to payment to Developer) during the preceding six -month period in respect of the Minimum Improvements constructed by Developer (the Developer Tax Increments). Developer recognizes and agrees that the Economic Development Grants shall be paid solely and only from the incremental taxes collected by City in respect to the Minimum Improvements, which does not include property taxes 6 collected for the payment of bonds and interest of each taxing district, and taxes for the regular and voter - approved physical plant and equipment levy, the remaining actual amount of tax increment revenues paid by Developer to City and any other portion required to be excluded by Iowa law, and thus such incremental taxes will not include all amounts paid by Developer as regular property taxes. 3.3 To fund the Economic Development Grants, City shall certify to the County prior to December 1 of each year, commencing December 1, 2007, its request for the available Developer Tax Increments (60% of the actual amount of the property taxes paid by Developer but not to exceed the tax increment revenues paid by Developer to City) resulting from the assessments imposed by the County as of January 1 of the following year, to be collected by City as taxes are paid during the following fiscal year and which shall thereafter be disbursed to the Developer on November 1 and May 1 of that fiscal year. (Example: if City so certifies by December, 2007, the Economic Development Grants in respect thereof would be paid to the Developer on November 1, 2009, and May 1, 2010.) 3.4 The Economic Development Grants shall be payable from and secured solely and only by the Developer Tax Increments (60% of the actual amount of the property taxes paid by Developer but not to exceed the tax increment revenues paid by Developer to City) paid to City that, upon receipt, shall be deposited and held in a special account created for such purpose and designated as the Hartig Realty TIF Account of City. City hereby covenants and agrees to maintain its TIF ordinance in force during the term hereof and to apply the incremental taxes collected in respect of the Minimum Improvements and allocated to the Hartig Realty TIF Account to pay the Economic Development Grants, as and to the extent set forth in Section 3.2 hereof. The Economic Development Grants shall not be payable in any manner by other tax increments revenues, or by the remaining actual amount of tax increment revenues paid by Developer to City, or by general taxation or from any other City funds. City makes no representation with respect to the amounts that may be paid to Developer as the Economic Development Grants in any one year and under no circumstances shall City in any manner be liable to Developer so long as City timely applies the Developer Tax Increments actually collected and held in the Hartig Realty TIF Account (regardless of the amounts thereof) to the payment of the Economic Development Grants to Developer as and to the extent described in this Section. 3.5 City shall be free to use any and all tax increment revenues collected in respect of other properties within the Project Area and the remaining actual amount of tax increment revenues paid by Developer to City, or any available Developer Tax Increments resulting from the termination of the annual Economic Development Grants under Section 3.2 hereof, for any purpose for which such tax increment revenues may lawfully be used pursuant to the provisions of the Urban Renewal Law, and City shall have no obligations to Developer with respect to the use thereof. SECTION 4. COVENANTS OF DEVELOPER 4.1 Job Creation. Developer shall ensure that McGladrey & Pullen, LLP or a different 7 occupant of the Property creates (10) full -time (2080 hours per year) employees in Dubuque, Iowa within three (3) years from the date of this Agreement, and shall ensure that McGladrey & Pullen, LLP or a different occupant of the Property maintain those jobs during the Term of this Agreement. City acknowledges that Developer and McGladrey & Pullen, LLP have existing employees and all persons now or hereafter employed by Developer or McGladrey & Pullen, LLP shall count against the ten (10) full -time employee requirement described herein. It is agreed by the parties that Developer and McGladrey & Pullen, LLP have 55 employees in Dubuque, Iowa, as of September, 2006. In the event that the certificate provided to City under Paragraph 9 hereof on January 1, 2010, discloses that Developer and McGladrey & Pullen, LLP do not as of that date have at least sixty five ( full -time employees as provided hereinabove, the City shall reduce the semi - annual Economic Development Grants. For the positions that Developer and McGladrey & Pullen, LLP fail to create and maintain for any year during the Term of this Agreement, the semi- annual Economic Development Grants for such year under Section 3.2 shall be reduced by the percentage that the number of such positions bears to the total number of 65 positions required to be created and maintained by this Paragraph. 4.2 Certification. To assist City in monitoring the performance of Developer and McGladrey & Pullen, LLP hereunder, three (3) years from the date of this Agreement, and again each year thereafter during the term of this Agreement, a duly authorized officer of Developer shall certify to City (a) the number of full time equivalent jobs employed at Property, and (b) to the effect that such officer has re- examined the terms and provisions of this Agreement and that at the date of such certificate, and during the preceding twelve (12) months, Developer is not or was not in default in the fulfillment of any of the terms and conditions of this Agreement and that no Event of Default (or event which, with the lapse of time or the giving of notice, or both, would become an Event of Default) is occurring or has occurred as of the date of such certificate or during such period, or if the signer is aware of any such default, event or Event of Default, said officer shall disclose in such statement the nature thereof, its period of existence and what action, if any, has been taken or is proposed to be taken with respect thereto. Such certificate shall be provided not later than January 1, 2010, and on January 1 of each year thereafter during the term of this Agreement. 4.3 Books and Records. During the term of this Agreement, Developer shall keep at all times proper books of record and account in which full, true and correct entries will be made of all dealings and transactions of or in relation to the business and affairs of Developer in accordance with generally accepted accounting principles consistently applied throughout the period involved, and Developer shall provide reasonable protection against loss or damage to such books of record and account. 4.4 Real Property Taxes. Developer shall pay or cause to be paid, when due, all real property taxes and assessments payable with respect to all and any parts of the Property unless Developer's obligations have been assumed by another person pursuant to the provisions of this Agreement. 8 4.5 No Other Exemptions. During the term of this Agreement, Developer agrees not to apply for any other state or local property tax exemptions which are available with respect to the Development Property or the Minimum Improvements located thereon that may now be, or hereafter become, available under state law or city ordinance during the term of this Agreement, including those that arise under Iowa Code Chapters 404 and 427, as amended. 4.6 Insurance Requirements. (1) Developer shall provide and maintain or cause to be maintained at all times during the process of constructing the Minimum Improvements and at its sole cost and expense builder's risk insurance, written on a Completed Value Form in an amount equal to one hundred percent (100 %) of the building (including Minimum Improvements) replacement value when construction is completed. Coverage shall include the "special perils" form and developer shall furnish City with proof of insurance in the form of a certificate of insurance. (2) Upon completion of construction of the Minimum Improvements and up to the Termination Date, Developer shall maintain, or cause to be maintained, at its cost and expense property insurance against loss and/or damage to the building (including the Minimum Improvements) under an insurance policy written with the "special perils" form and in an amount not less than the full insurable replacement value of the building (including the Minimum Improvements). Developer shall at all times furnish proof of insurance in the form of a certificate of insurance. The term "replacement value" shall mean the actual replacement cost of the building with Minimum Improvements (excluding foundation and excavation costs and costs of underground flues, pipes, drains and other uninsurable items) and equipment, and shall be reasonably determined from time to time at the request of City, but not more frequently than once every three (3) years. 4.7 Preservation of Property. During the term of this Agreement, Developer shall maintain, preserve and keep, or cause others to maintain, preserve and keep, the Minimum Improvements in good repair and working order, ordinary wear and tear accepted, and from time to time shall make all necessary repairs, replacements, renewals and additions. 4.8 Non - Discrimination. In carrying out the project, Developer shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, sexual orientation, national origin, age or disability. 4.9 Conflict of Interest. Developer agrees that 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 insider information with regard to the 9 project, shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be performed in connection with the project, or in any activity, or benefit therefrom, which is part of this project at any time during or after such person's tenure. In connection with this obligation, Developer shall have the right to rely upon the representations of any party with whom it does business and shall not be obligated to perform any further examination into such party's background. 4.10 Non - Transferability. Until such time as the Minimum Improvements are complete (as certified by City under Section 2.4), this Agreement may not be assigned by Developer nor may the Property be transferred by Developer to another party without the prior written consent of City, which shall not be unreasonably withheld. Thereafter, Developer shall have the right to assign this Agreement and upon assumption of the Agreement by the assignee, Developer shall no longer be responsible for its obligations under this Agreement. 4.11 Restrictions on Use. Developer agrees for itself, and its successors and assigns, and every successor in interest to the Property or any part thereof that they, and their respective successors and assigns, shall: (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 an office, 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 (2) Not discriminate upon the basis of race, religion, color, sex, sexual orientation, national origin, age or disability in the sale, lease, rental, use or occupancy of the Property or any improvements erected or to be erected thereon, or any part thereof (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). 4.12 Compliance with Laws. Developer shall comply with all laws, rules and regulations relating to its businesses, other than laws, rules and regulations the failure to comply with or the sanctions and penalties resulting therefrom, would not have a material adverse effect on the business, property, operations, financial or otherwise, of Developer. SECTION 5. EVENTS OF DEFAULT AND REMEDIES 5.1 Events of Default Defined. The following shall be Events of Default under this Agreement and the term Event of Default shall mean, whenever it is used in this Agreement, any one or more of the following events: 10 (1) Failure by Developer to pay or cause to be paid, before delinquency, all real property taxes assessed with respect to the Minimum Improvements and the Property. (2) Failure by Developer to cause the construction of the Minimum Improvements to be commenced and completed pursuant to the terms, conditions and limitations of this Agreement. (3) Transfer of any interest by Developer of the Minimum Improvements in violation of the provisions of this Agreement prior to the issuance of the final Certificate of Completion. (4) Failure by Developer or City to substantially observe or perform any other material covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. 5.2. Remedies on Default by Developer. Whenever any Event of Default referred to in Section 5.1 of this Agreement occurs and is continuing, City, as specified below, may take any one or more of the following actions after the giving of written notice by City to Developer (and the holder of any mortgage encumbering any interest in the Property of which City has been notified of in writing) of the Event of Default, but only if the Event of Default has not been cured within sixty (60) days following such notice, or if the Event of Default cannot be cured within sixty (60) days and Developer does not provide assurances to City that the Event of Default will be cured as soon as reasonably possible thereafter: (1) City may suspend its performance under this Agreement until it receives assurances from the defaulting party deemed adequate by City, that the defaulting party will cure its default and continue its performance under this Agreement; (2) Until the Closing Date, City may cancel and rescind this Agreement; (3) City shall be entitled to recover from Developer the sum of all amounts expended by City in connection with the funding of the Downtown Rehab Loan /Grant to Developer, and City may take any action, including any legal action it deems necessary, to recover such amounts from the defaulting party; (4) City may withhold the Certificate of Completion; or (5) City may take any action, including legal, equitable or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement or to enforce performance and observance of any obligation, agreement, or covenant under this Agreement. 5.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to City is intended to be exclusive of any other available remedy or remedies, but each and every 11 such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. 5.4 No implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by any other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. 5.5 Agreement to Pay Attorneys' Fees and Expenses. if any action at law or in equity, including an action for declaratory relief or arbitration, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs of litigation from the other party. Such fees and costs of litigation may be set by the court in the trial of such action or by the arbitrator, as the case may be, or may be enforced in a separate action brought for that purpose. Such fees and costs of litigation shall be in addition to any other relief that may be awarded. 5.6 Remedies on Default by City. If City defaults in the performance of this Agreement, Developer may take any action, including legal, equitable or administrative action that may appear necessary or desirable to collect any payments due under this Agreement, to recover expenses of Developer, or to enforce performance and observance of any obligation, agreement, or covenant of City under this Agreement. Developer may suspend their performance under this Agreement until they receive assurances from City, deemed adequate by Developer, that City will cure its default and continue its performance under this Agreement. SECTION 6. GENERAL TERMS AND PROVISIONS 5.1 Notices and Demands. Whenever this Agreement requires or permits any notice or written request by one party to another, it shall be deemed to have been properly given if and when delivered in person or three (3) business days after having been deposited in any U.S. Postal Service and sent by registered or certified mail, postage prepaid, addressed as follows: If to Developer: If to City: Richard J. Hartig Hartig Realty 111, LLC 703 Main Street Dubuque, IA 52001 City Manager 50 W. 13th Street Dubuque, Iowa 52001 Phone: (563) 589 -4110 Fax: (563) 589 -4149 12 With copy to: City Attorney City Hall 50 W. 13 Street Dubuque IA 52001 Or at such other address with respect to either party as that party may, from time to time designate in writing and forward to the other as provided in this Section. 6.2 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of City and Developer and their respective successors and assigns. 6.3 Termination Date. This Agreement and the rights and obligations of the parties hereunder shall terminate on May 1, 2019 (the Termination Date). 6.4. Execution By Facsimile. The parties agree that this Agreement may be transmitted between them by facsimile machine. The parties intend that the faxed signatures constitute original signatures and that a faxed Agreement containing the signatures (original or faxed) of all the parties is binding on the parties. 6.5 Memorandum of Development Agreement. Developer shall promptly record a Memorandum of Development Agreement in the form attached hereto as Exhibit in the office of the Recorder of Dubuque County, Iowa. Developer shall pay the costs for so recording. IN WITNESS WHEREOF, City has caused this Agreement to be duly executed in its name and behalf by its Mayor and attested to by its City Clerk and Developer has caused this Agreement to be duly executed on or as of the first above written. CITY OF DUBI4QUE, IOWA HARTIG REALTY 111, L.L.C. By Roy D. Buol Mayor (City Seal) STATE OF IOWA kf anne F. Schneider ity Clerk 13 By Richard J. - - ig Chief Executive Officer COUNTY OF DUBUQUE On this day of — r /, 2006, before me the undersigned, a Notary y rt � � . � g ry Public in and for the said ounty and State, personally appeared Roy D. Buol and Jeanne F. Schneider, to me personally known, who, being by me duly sworn, did say that they are the Mayor and City Clerk, respectively, of the City of Dubuque, Iowa, a municipal corporation executing the instrument to which this is attached; that the seal affixed hereto is the seal of said municipal corporation; that said instrument was signed and sealed on behalf of the City of Dubuque, Iowa, by authority of its City Council; and that said Mayor and City Clerk acknowledged the execution of said instrument to be the voluntary act and deed of said City, by it and by the voluntarily executed. i 41 c Ndtary Public SS o COMMISSION N '�� 2/14 106` STATE OF IOWA } ) SS COUNTY OF DUBUQUE } On this day of 2006, before me the undersigned, a Notary � g � ry Public in and for the State of Iowa, personally appeared Richard J. Hartig, to me personally known, who, being by me duly sworn, did say that he is the Chief Executive Officer of Hartig Realty 111, L.L.C., the corporation executing the instrument to which this is attached and that as said Chief Executive Officer of Hartig Realty 111, L.L.C. acknowledges the execution of said instrument to be the voluntary act and deed of said company, by it and by him, an individual, voluntarily executed. V(04 F:IUSERSItstecklelLindahl \Hartig Realty III, LLCIHartigDevelopmentAgreement090706ba l.doc Last saved by Tracey Stecklein; 9/7/2006 1:08 PM 14 M�!al►'n idl C Tmission res 7••• Prepared by: Barry A. Lindahl 300 Main Street Suite 330 Dubuque IA 52001 563 583-4113 Return to: Barry A. Lindahl 300 Main Street Suite 330 Dubuque IA 52001 563 583-4113 MEMORANDUM OF DEVELOPMENT AGREEMENT A Development Agreement by and among the City of Dubuque, Iowa, an Iowa municipal corporation, of Dubuque, Iowa, and Hartig Realty III, L.L.C. was made regarding the following described premises: Lot 60 and the southerly 31.5 feet of lot 59, in the City of Dubuque, Iowa, according to the United States Commissioners Map of the Town of Dubuque, Iowa. The Development Agreement is dated for reference purposes the _ day of , 20_, and contains covenants, conditions, and restrictions concerning the sale and use of said premises. This Memorandum of Development Agreement is recorded for the purpose of constructive notice. In the event of any conflict between the provisions of this Memorandum and the Development Agreement itself, executed by the parties, the terms and provisions of the Development Agreement shall prevail. A complete counterpart of the Development Agreement, together with any amendments thereto, is in the possession of the City of Dubuque and may be examined at its offices as above provided. Dated this _ day of ,20_ CITY OF DUBUQUE, IOWA By: Roy D. Buol, Mayor By: Jeanne F. Schneider, City Clerk 15 COUNTY OF DUBUQUE ) ) ) SS STATE OF IOWA On this _day of ,20_, before me, a Notary Public in and for the State of Iowa, in and for said county, personally appeared Roy D. Buol and Jeanne F. Schneider, to me personally known, who being by me duly sworn did say that they are the Mayor and City Clerk, respectively of the City of Dubuque, a Municipal Corporation, created and existing under the laws of the State of Iowa, and that the seal affixed to said instrument is the seal of said Municipal Corporation and that said instrument was signed and sealed on behalf of said Municipal corporation by authority and resolution of its City Council and said Mayor and City Clerk acknowledged said instrument to be the free act and deed of said Municipal Corporation by it voluntarily executed. Notary Public, State of Iowa STATE OF IOWA ) ) ) SS COUNTY OF DUBUQUE On this _ day of ,20_, before me, a Notary Public in and for the State of Iowa, in and for said county, personally appeared Richard J. Hartig to me personally known, who being by me duly sworn did say that he is the Chief Executive Officer of Hartig Realty III, L.L.C. and that said instrument was signed on behalf of said company by authority of its members and that he acknowledged the execution of this instrument to be the voluntary act and deed of said company by it voluntarily executed. Notary Public, State of Iowa 16 THE CITY OF Iterd DUBJ E All America City 11111! Masterpiece on the Mississippi 2007.2012.2013 Dubuque Ccs.;, l .c.. Economic Development Department 50 West 13th Street Dubuque, Iowa 52001-4864 Office (563) 589-4393 TTY (563) 690-6678 http://www.cityofdubuque.org TO: Michael Van Milligen, City Manager FROM: Maurice Jones, Economic Development Director SUBJECT: Release of Mortgage for 703 Main Street — Downtown Rehabilitation Loan DRLP #1-09 DATE: April 28, 2017 INTRODUCTION The purpose of this memorandum is to inform you of a final loan payment and request your signature on a release of mortgage. BACKGROUND Hartig Realty III, L.C. entered into an agreement in 2009 for a $300,000 loan for the redevelopment of 703 Main Street. At the time, a mortgage on the property was held as security on the loan. DISCUSSION Regular payments have been made on this loan, and a payment of $240,888.87 has been made to the Finance Department as of April 27, 2017. This amount closes out the balance due on the loan. RECOMMENDATION/ ACTION STEP I recommend signing the release of mortgage attached to this memo, which will subsequently be recorded with the County. Prepared by and return to: Jill Connors, Economic Development Department, 50 W. 13th Street, Dubuque, IA 52001, (563) 589-4393 RE: All of Mortgagors' right, title and interest in and to the following described real estate situated in Dubuque County, Iowa (the "Land"); Lot 60 and the southerly 31.5 feet of lot 59, in the City of Dubuque, Iowa, according to the United States Commissioners Map of the Town of Dubuque, Iowa (also known as 703 Main Street) RELEASE OF REAL ESTATE MORTGAGE The City of Dubuque, Iowa, Economic Development Department, the present owner of the Real Estate Mortgage hereinafter described and encumbering the above-described real estate, hereby acknowledges that said Real Estate Mortgage, bearing date of the September 3, 2009 made and executed by Hartig Realty III, L.C., mortgagor, to the City of Dubuque Economic Development Department, mortgagee, and recorded in the records of the office of the Recorder of the County of Dubuque, State of Iowa, as Instrument No. 2009-00017503 on the 11th day of September, 2009 is redeemed, paid off, satisfied and discharged in full. Dated this 28th day of April, 2017. State of Iowa ss: Dubuque County City of Dubuque, low By: Michael C. Van Milligen City Manager City of Dubuque ( On this ( ' day of✓ , before me, a Notary Public, in and for the state of Iowa, personally appeared Micha6I C. Van Milligen, to me personally known, and, who being by me duly sworn, did say that she is the City Manager of the City of Dubuque, Iowa; and that the instrument was signed on behalf of the said City of Dubuque, Iowa, by Michael C. Van Milligen, City Manager and that said Michael C. Van Milligen, acknowledged the execution of the instrument to be her voluntary act and deed and the voluntary act and deed of the City of Dubuque, Iowa, by it voluntarily executed. JUAPITA HILKtN Commlaslon Humb r 708 !iy Commission Expires_-' 'C/-301 Notary Public in and for said County and State I ( Commission Expires: -+ //6 / JCo Masterpiece on the Mississippi April 27, 2017 Hartig Realty IV LLC Attn: Richard Hartig 703 Main St Dubuque, IA 52001 RE: Loan Repayment Dear Mr. Hartig: Dubuque txtrd All•America City 11 111! 2007.2012.2013 Finance Department 50 West 13th Street Dubuque, Iowa 52001-4805 Office (563) 589-4133 Fax (563) 690-6689 TTY (563) 690-6678 finance@cityofdubuque.org www.cityofdubuque.org Enclosed is the original promissory note for your Community and Economic Development loan. The City received your final payment of $240,888.87 on April 27, 2017 and considers this loan paid in full. Please retain the enclosed "paid" promissory note for your records. The security on the loan has been released. If you have any additional questions, please contact me at 589-4141. Thank you for your attention to this matter. Sincerely, G7//C Jean M Nachtman Finance Director Enclosure cc: Maurice Jones, Economic Development Director Service People Integrity Responsibility Innovation Teamwork !,.a APR 2 7 2017 rrrTREASURER DUBUQUE i111iIiIIIIIIIIIIIIIII11II1II3111111iIiIINIINIiIHINNINI Doc ID: 006562760003 Type: GEN GE Recorded: 09/11/2009 at 03;30:31 PM Fee Amt: $19,00 Page 1 of 3 KathyuFlynnue ntyyThurlooa tr Reoorder F11e2009-00017503 prepared bv: Aaron M. DeJona City Hall, 50 W. 13th Street. Dubuque. Iowa 52001 Phone: 563-5$3-4393, Return to: same MORTGAGE THIS MORTGAGE Is made between Hartig Really III, L.C. ("Mortgagor) 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. Mortgagor 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"); Lot 60 and the southerly 31.5 feet of lot 59, in the City of Dubuque, Iowa, according to the United States Commissioners Map of the Town of Dubuque, Iowa (also known as 703 Main Street), and at 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 fights, 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 fbdures, 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, pads, 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 Properly 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 payment of the loan made by Mortgagee to Hartig Realty III, L.C. evidenced by a promissory note dated rtri., tai". 3 , 2009 in the principal amount of 0300,000.00, any renewals, extensions, modifications or refinancing thereof 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; (0) Mortgagors have the right, power and authority to execute this Mortgage and to mortgage, and grant a security interest in the Mortgaged Property; (110 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 la. 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 delinquent, 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 Ilen, 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 penally 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 (Ill) 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, et 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 lime, 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 vAll deliver to Mortgagee original potldes 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 expirationdate-of a. required policy, -Mortgagors_aba l de)tWer 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 file., Mortgaged Property, Mortgagee shall have all of the right, title and interest of Mortgagors in and to any insurance policies required hereunder, and the uneamed 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 al 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 Obilgatlons 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 all 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 purposa 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 fall to perform any of the covenants and agreements contained in this Mortgage or Warty action or proceeding Is commenced which affects the Mortgaged Property or the interest of the Mortgagee !herein, 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. My 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, al 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 thls 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 dale 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 hereln 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 Properly 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 ane or more of the following rights and remedies (end any other rights and remedies available to i1): 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 particubar Instance, such notice shall be deemed commercially reasonable if given to Mortgagors at least len (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 al 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 Properly and of the Revenues and Income accruing !here from. and to rentor 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 Stale of Iowa shalt 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 620.5, 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 ii all of the three following contingencies develop: (1) The real estale 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 (hose 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. If to Mortgagors, to: Hartig Really III, L.C., Attn: Richard J. Harlig, 703 Main Street, Dubuque, Iowa 52001 b. If to Mortgagee, to; Economic Development Department; City Hall; 50 West 13th S1., Dubuque, Iowa 52001 or (o 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. Severabitlty, 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 es 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 Slate 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 Provtsions. Dated: , 2009 Hartig Realty III, L.C., Mortgagor %r I UNDERSTAND THAYFiOMESTEAD PROPERTY IS IN MANY CASES PROTECTED FROM THE CLAIMS OF CREDITORS AND EXEMPT FROM JUDICIAL SALE; AND THAT BY SIGNING THIS MORTGAGE, 1 VOLUNTARILY GIVE UP MY RIGHT TO THIS PROTECTION FOR THIS MORTGAGED PROPERTY WITH RESPECT TO CLAIMS BASED UPON THIS MORTGAGE. Dated: 2"4 3 9 STATE OF IOWA ss; COUNTY OF DUBUQUE On this 3� clay of.7% NaT1, 2009, before me, the undersigned, a Notary Public. personally appeared Richard J. Hartig, 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. �r `�. ELLA SOPPE F ICommisalon Numb r7 85 ,„ Aly Comm, Exp. V( .7:0 ..t'\�-fly Notary Public Name Hartig Realty IV LLC SS#/Fed ID# 42-1484678 Contact Richard Hartig Address 703 Main City State Zip Dubuque, IA 52001-6814 Mortgage orig date 9/3/2009 Loan # Loan Location 703 Main St Activity/Account 24160241 Interest Rate 3% Payment Amount $1,933.63 Beginning Balance 12/31/2015 $261,168.21 Payment Payment FY Payment Principal Interest Ending NBR Due Date Date Due Date (43405) (43105) Balance 76 01/01/2016 01/07/2016 1,280.71 652.92 259,887.50 77 02/01/2016 02/01/2016 1,283.91 649.72 258,603.59 78 03/01/2016 03/01/2016 1,287.12 646.51 257,316.47 79 04/01/2016 04/01/2016 1,290.34 643.29 256,026.13 80 05/01/2016 05/02/2016 1,293.56 640.07 254,732.57 81 06/01/2016 06/01/2016 1,296.80 636.83 253,435.77 82 07/01/2016 07/11/2016 2017 1,300.04 633.59 252,135.73 83 08/01/2016 08/04/2016 2017 1,303.29 630.34 250,832.44 84 09/01/2016 09/02/2016 2017 1,306.55 627.08 249,525.89 85 10/01/2016 10/10/2016 2017 1,309.81 623.82 248,216.08 86 11/01/2016 11/28/2016 2017 1,313.09 620.54 246,902.99 87 12/01/2016 12/01/2016 2017 1,316.37 617.26 245,586.62 88 01/01/2017 01/04/2017 2017 1,319.66 613.97 244,266.96 89 02/01/2017 02/01/2017 2017 1,322.96 610.67 242,944.00 90 03/01/2017 03/03/2017 2017 1,326.27 607.36 241,617.73 91 04/01/2017 04/05/2017 2017 1,329.58 604.05 240,288.15 92 05/01/2017 2017 1,332.91 600.72 240,288.15 93 06/01/2017 2017 1,336.24 597.39 240,288.15 94 07/01/2017 1,339.58 594.05 240,288.15 95 08/01/2017 1,342.93 590.70 240,288.15 96 09/01/2017 1,346.29 587.34 240,288.15 97 10/01/2017 1,349.65 583.98 240,288.15 98 11/01/2017 1,353.03 580.60 240,288.15 99 12/01/2017 1,356.41 577.22 240,288.15 100 01/01/2018 1,359.80 573.83 240,288.15 101 02/01/2018 1,363.20 570.43 240,288.15 102 03/01/2018 1,366.61 567.02 240,288.15 103 04/01/2018 1,370.02 563.61 240,288.15 104 05/01/2018 1,373.45 560.18 240,288.15 105 06/01/2018 1,376.88 556.75 240,288.15