Novelty Iron Works_Collateral Assignment of Development AgreementMasterpiece on the Mississippi
Dubuque
band
AI- America City
1
2007 • 2012 • 2013
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Collateral Assignment of Development Agreement from Novelty Iron
Landlord LLC to the National Bank
DATE: October 17, 2013
Economic Development Director Maurice Jones recommends City Council approval of a
Collateral Assignment of Development Agreement from Novelty Iron Landlord LLC to
The National Bank out of Bettendorf, assigning the Development Agreement as security
for a $1,700,000 loan to finance construction costs for the Novelty Ironworks building
located at 333 E. 10th Street.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Maurice Jones, Economic Development Director
Masterpiece on the Mississippi
Dubuque
All- America City
Ilillr
2007 • 2012 • 2013
TO: Michael Van Milligen, City Manager
FROM: Maurice Jones, Economic Development Director
SUBJECT: Collateral Assignment of Development Agreement from Novelty Iron
Landlord LLC to The National Bank
DATE: October 11, 2013
Introduction
This memorandum transmits for City Council approval a Collateral Assignment of
Development Agreement from Novelty Iron Landlord LLC to The National Bank,
assigning the the Development Agreement with Novelty Iron Landlord LLC to The
National Bank as security for a loan to Novelty Iron Landlord LLC by The National Bank
Background
On June 17, 2013 the City Council approved a Development Agreement with
Warehouse Trust, LLC for the development of the Novelty Ironworks building at 333 E.
10th street. The Development Agreement required the development group, led by Bob
Johnson, make a capital investment of $27,000,000 for the creation of 76 apartments
and lower level retail space in the 260,000 square foot, five story structure. In
exchange, the City would provide a 15 year tax increment rebate, $760,000 in
downtown housing incentive and $35,000 in facade, financial consultant, and planning
and design grants.
Later in the summer, the Developer requested City approval of an Assignment of the
Development Agreement to a new company, Novelty Iron Landlord LLC, owned by
Warehouse Trust, LLC. The purpose of the Assignment was to accommodate new
lenders and investors associated with securing New Market Tax Credits on the project.
The Assignment was approved by the City Council on August 5, 2013 and fully
executed on August 21, 2013. Also at the meeting, the City Council amended the
Development Agreement to show that five units would be available for income qualified
tenants, a condition associated with the New Market Tax Credits.
The Developer has now requested that the City approve an assignment of the
Development Agreement to the National Bank out of Bettendorf, Iowa to secure a
$1,700,000 loan to finance construction costs for the building.
Discussion
The $1,700,000 loan secured by the Developer from the bank provides traditional up
front financing needed to redevelop the facility. The Assignment of Collateral provides
The National Bank the appropriate assurance needed to issue the loan. If there is a
default by the Developer, the bank can take over the project and claim the tax
increment rebates, the downtown housing incentive or other grants.
The Assignment of Collateral does not relieve Novelty Iron Landlord LLC of its
responsibilities outlined in the Development Agreement. The Assignment has been
reviewed and approved by the Legal Department and the City's bond counsel.
Recommendation
I recommend adoption of the attached resolution, providing City Council approval of the
Collateral Assignment of Development Agreement between Novelty Iron Landlord LLC and
The National Bank.
attachments
F: \USERS \Econ Dev \Novelty Iron Works \Development Agreement \20131010 Collateral Assignment of DA memo.docx
Preparer: Phil Wagner, Assistant Economic Development Director, 50. West 13th Street, Dubuque IA 52001 (563) 589 -4393
RESOLUTION NO. 301 -13
APPROVING THE COLLATERAL ASSIGNMENT OF DEVELOPMENT AGREEMENT
BETWEEN THE CITY OF DUBUQUE, IOWA, NOVELTY IRON LANDLORD LLC, AND
THE NATIONAL BANK.
Whereas, the City of Dubuque, Iowa entered into a Development Agreement with
Warehouse Trust, LLC dated June 17, 2013; and
Whereas, Warehouse Trust, LLC assigned its rights and responsibilities under the
Development Agreement to Novelty Iron Landlord LLC on August 5, 2013; and
Whereas, Novelty Iron Landlord LLC has requested a Collateral Assignment of
Development Agreement as security for a loan to Novelty Iron Landlord LLC from The
National Bank, 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 Assignment.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. The City of Dubuque hereby approves the Collateral Assignment of
Development Agreement, a copy of which is attached hereto.
Section 2. The Mayor is authorized and directed to sign the Collateral Assignment of
Development Agreement on behalf of the City of Dubuque.
Passed, approved and adopted this 21st day of October, 201
Attest:
Key' . FFirnstahl, City
Roy D. Buol, Mayor
October 16, 2013
Phil Wagner
Assistant Economic Development Director
City of Dubuque
50 W. 13th Street
Dubuque, Iowa 52001
RE: Assignment of Development Agreement
Dear Phil:
The proposed ASSIGNMENT OF DEVELOPMENT AGREEMENT between the CITY OF
DUBUQUE, NOVELTY IRON LANDLORD LLC, and THE NATIONAL BANK will allow
for the securitization of a loan for the rehabilitation of the Novelty Iron Works building.
This agreement satisfies a condition by THE NATIONAL BANK that the Tax Increment
Financing benefits agreed to by the CITY OF DUBUQUE in the June 17th, 2013 development
agreement be dedicated to servicing debt on the loan.
Th. ou,
/I)
ob Johns t- sident
Warehouse st, LLC
815-990-3646
bob@warehousetrust.com
ASSIGNMENT
OF DEVELOPMENT AGREEMENT
THIS ASSIGNMENT OF DEVELOPMENT AGREEMENT (this "Assignment ") is made and
entered into as of the�ay o, 2013, by and among THE CITY OF DUBUQUE,
IOWA, a municipal corporation (the "City "), NOVELTY IRON LANDLORD LLC, an Iowa
limited liability company ( "Borrower "), and THE NATIONAL BANK, a national banking
association ( "Lender ").
Recitals
WHEREAS, Borrower and Lender have entered into that certain Loan Agreement of even
date herewith (the "Loan Agreement "), pursuant to which Lender has agreed to make a
construction loan to Borrower in the amount of $1,700,000 (the "Loan") for the purpose of
fmancing the construction of a mixed use residential and retail building on property legally
described on Exhibit A attached hereto and hereby made a part hereof (the "Project "); and
WHEREAS, obligations of Borrower under the Loan is evidenced by that certain
Promissory Note of even date herewith (the "Note "), executed by Borrower and made payable to
Lender in the original principal amount of $1,700,000; and
WHEREAS, the Note is secured by that certain Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing of even date herewith (the "Mortgage ") executed
by Borrower in favor of Lender and encumbering the Project (the Loan Agreement, the Note, the
Mortgage and any other document executed in connection with the Loan are collectively referred
to herein as the "Loan Documents "); and
WHEREAS, the City and Warehouse Trust, LLC, an Iowa limited liability company
( "Developer "), have entered into that certain Development Agreement dated as of June 17, 2013,
as assigned to Borrower pursuant to that certain Assignment and Assumption of Contract Rights
and Obligations dated as of August 21, 2013, by and between Developer and Borrower, and as
amended by that certain First Amendment to Development Agreement dated as of August 21,
2013, by and between the City and Borrower (collectively, the "Development Agreement "),
pursuant to which the City has agreed to provide certain tax increment fmancing and other grants
to Borrower in connection with the Project; and
WHEREAS, Lender has required, as an express condition to entering into the Loan
Agreement, that Borrower assigns its rights under the Development Agreement to Lender.
NOW, THEREFORE, in consideration of the recitals set forth above and incorporated
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower hereby agrees as follows:
1. Capitalized terms used herein but not otherwise defined herein shall have the
meaning set forth in the Loan Agreement.
2. Borrower hereby assigns to Lender all of its right, title and interest in and to the
Development Agreement, together with all documents and agreements attached as exhibits
thereto, and all amendments, addenda and modifications thereof, whether made now or hereafter.
3. Borrower hereby represents and warrants that there have been no prior
assignments of its rights under the Development Agreement, that the Development Agreement is
a valid and enforceable agreement, that neither the City nor Borrower is in default thereunder
and that all covenants, conditions and agreements have been performed as required therein,
except those not to be performed until after the date hereof. Borrower agrees not to sell, assign,
pledge, mortgage or otherwise transfer or encumber its interest in the Development Agreement
as long as this Assignment is in effect. Borrower hereby irrevocably constitutes and appoints
Lender as its attorney -in -fact to demand, receive and enforce Borrower's rights under the
Development Agreement for and on behalf of and in the name of Borrower or, at the option of
Lender, in the name of Lender, with the same force effect as Borrower could do if this
Assignment had not been made.
4. This Assignment shall constitute a perfected, absolute and present assignment.
The City hereby agrees to make all payments due to the Borrower under the Development
Agreement to the Lender until such time as all obligations of the Borrower under the Note and
the Loan Documents have been paid in full.
5. Upon the occurrence of a Default, without affecting any of Lender's rights or
remedies against Borrower under any other instrument, Borrower shall be deemed to have
irrevocably appointed Lender as Borrower's attorney -in -fact to exercise any or all of Borrower's
rights in, to and under this Assignment and to give appropriate receipts, releases and satisfactions
on behalf of Borrower in connection with the performance by any party to the Development
Agreement and to do any or all other acts in Borrower's name or in Lender's own name that
Borrower could do under the Development Agreement with the same force and effect as if this
Assignment had not been made. In addition, Lender shall have the right to exercise and enforce
any and all rights and remedies available after a default to a secured party under the Uniform
Commercial Code as adopted in the State of Iowa. If notice to Borrower of any intended
disposition of collateral or of any intended action as required by law in any particular instance,
such notice shall be deemed commercially reasonable if given in writing at least ten (10) days
prior to the intended disposition or other action. Borrower hereby authorizes Lender to deliver a
copy of this Assignment to any other party to the Development Agreement to verify the rights
granted to Lender hereunder. All other parties under the Development Agreement are authorized
and directed by Borrower to tender performance of its obligations under the Development
Agreement to Lender upon presentation of a copy of this Assignment.
6. The City hereby consents and agrees to the terms and conditions of this
Assignment. The City further represents and warrants to Lender that the Development
Agreement is a valid agreement enforceable in accordance with its terms, that neither the City
nor Borrower is in default hereunder and that all covenants, conditions and agreements have
been performed as required therein, except those not to be performed until after the date thereof.
7. The City agrees to provide Lender with copies of any notice of default given
under the Development Agreement, and that Lender shall have the right, but not the obligation,
to cure such default within the time period set forth in the Development Agreement.
8. The parties agree that no material change or amendment shall be made to terms of
the Development Agreement without the prior written consent of Lender, which consent shall not
be unreasonably withheld or delayed.
9. This Assignment can be waived, modified, amended, terminated or discharged
only explicitly in a writing signed by Lender. A waiver by Lender shall be effective only in the
specific instance and for the specific purpose given. Mere delay or failure to act shall not
preclude the exercise or enforcement of any of Lender's rights or remedies hereunder. All rights
and remedies of Lender shall be cumulative and shall be exercised singularly or concurrently, at
Lender's option, and any exercise or enforcement of any one such right or remedy shall neither
be a condition to nor bar the exercise or enforcement of any other.
10. Except as set forth herein, no provision of this Assignment shall be deemed or
construed to alter, amend or modify, in any way, the rights and obligations of the City or the
Borrower contained in the Development Agreement.
11. Any notice, request, demand or other communication hereunder shall be deemed
duly given if delivered or postage prepaid, certified or registered, addressed to the party as set
forth below:
If to the City:
The City of Dubuque, Iowa
Attention: Michael C. Van Milligen, City Manager
50 West 13th Street
Dubuque, Iowa 52001
With a copy to:
Barry A. Lindahl, City Attorney
300 Main Street, Suite 300
Dubuque, Iowa 52001
If to Borrower:
-3
Novelty Iron Landlord LLC
1079 Elm Street
Dubuque, Iowa 52001
If to Lender:
The National Bank
852 Middle Road
Bettendorf, Iowa 52722
Attention: Tasha Keegan
12. This Agreement shall be governed by and construed in accordance with the laws
of the State of Iowa. Venue for any action arising form or related to this Agreement is the Iowa
District Court for Dubuque County.
10086.13
8293803v3
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK.]
[SIGNATURE PAGE TO ASSIGNMENT OF DEVELOPMENT AGREEMENT —
DIRECT LOAN]
IN WITNESS WHEREOF, Borrower has caused this Assignment to be duly executed as
of OAT /7 , 2013.
NOVELTY IRON LANDLORD LLC, an Iowa
limited liability company
ame: / Rba 1- L TbHhj, or1
Its: }v( Fl A 4 erg\
t
STATE OF IOWA )
) ss
COUNTY OFD 0,0 au )
The foregoing instrument was acknowledged before me this ) 7 day of Od' 6e r,
2013, by ROC /4 L• J144 .so el the Net .e.r of Novelty Iron Landlord LLC, an Iowa
limited liability company, for and on behalf of said limited liability company.
eut JOHN D. FREUND
1Commission Number 728859
c MY to 7ft 6RES
/OWN
[SIGNATURE PAGE TO ASSIGNMENT OF DEVELOPMENT AGREEMENT]
THE CITY OF DUBUQUE, IOWA, a municipal
corporation
By:
Name:
Its:
D
Roy D. Buol
Mayor
STATE OF IOWA
) ss
COUNTY OF DUBUQUE )
The foregoing instrument was acknowledged before me this 22nd day of October ,
2013, by Roy D. Buol , the Mayor of the City of Dubuque, Iowa, a municipal
corporation, for and on behalf of said municipal corporation.
/ /
•
Notary Publi
L oP KEVIN S. FIRNSTAHL
COMMISSION NO.745295
• MY COMMISSI N/ EXPIRES
�Ow" ,,7 j4,
[SIGNATURE PAGE TO ASSIGNMENT OF DEVELOPMENT AGREEMENT]
STATE OF IOWA
COUNTY OF
) ss
THE NATIONAL BANK, a national banking
association
By:
Tasha D. Keegan
Its Vice President
giri
The foregoing instrument was acknowledged before me this day of
2013, by Tasha D. Keegan, a Vice President of The National Bank, a national banking association,
for and on behalf of said national banking associ ion.
(cu.) Scf
Notary Public