Purchase of 1126 White Street from DCSDTHE CTTY OF
DUB ~ E
Masterpiece on the Mississippi
MEMORANDUM
May 29, 2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Purchase of Building at 1126 White Street
Housing and Community Development Department Director David Harris recommends
City Council approval to purchase the building at 1126 White Street from the Dubuque
Community School District, for $50,000. This building will be converted to townhouse
units to promote increased owner-occupancy in the neighborhood.
The School District originally purchased this historic, vacant, nine-unit apartment
building with the intent of demolishing it for parking for the new Prescott School, in
2005. After further consideration and discussion with City staff, it was agreed that other
parking alternatives would be pursued.
Subsequently, the City developed a re-use scenario for the building, to complement the
Washington Neighborhood revitalization effort now under way. This concept would
convert the building to townhouse units, to promote increased owner-occupancy in the
neighborhood. These would be priced at market rates and marketed to `young
professionals' working downtown. In particular, we would seek to interest Prescott staff
in purchasing these townhouses. Personnel at DB&T and the Crescent Community
Health Center would also be recruited, among others. The objective is additional
owner-occupants and mixed-income households in an area that is currently
predominantly lower-income and renter families.
The City hired AI Lundh to develop schematic drawings, showing a converted building
with either three or five townhouse units, ranging in size from 1000 to almost 2000
square feet, each with two bedrooms and two baths. Cost estimates were obtained,
indicating prices for completed homes in a range from $85,000 to $145,000, depending
on number of units.
The Council additionally authorized purchase and demolition of a derelict building
located adjacent at 141 East 11th Street, offering the possibility of additional off-street
parking for this project.
A request-for-proposals was authorized by the Council, released in April, seeking bids
from developer/contractors willing to purchase the building and accomplish the
conversion to townhouses. Proposals are due June 8.
To assist with costs of construction financing, an application was submitted to the Iowa
Finance Authority's OurHome Rehabilitation Program. The City would receive a
$500,000 loan, at 3%, to in turn be loaned to the developer to subsidize costs during
construction and marketing of the units.
Additional City financial participation would include a contribution of $100,000 toward
development costs, from the Targeted Homeownership Grants CIP. The recently-
approved lending guidelines for the Washington: Revitalize! initiative also include a
package of forgivable, due-on-sale and low-interest, 20-year loans -totaling
$30,000 per unit -that will be made available to the developer and then passed through
to the purchasers of the individual units. As these are all General Funds, no income
limits will apply to buyers.
The building is also within the Washington Neighborhood Urban Revitalization Area,
recently expanded to include the boundaries of the neighborhood association. The City
Assessor has informed the City that the assessment of the building will be based on the
sale price, resulting in a 10-year abatement of taxes on the improvements and a base
value of only $50,000. These combined financing and real estate tax incentives will
substantially impact the `affordability' of the town homes, by reducing monthly payments
and cost to the buyers. In fact, although no buyer income limits will be required, the
smaller units are projected to be within affordability guidelines for households earning
80% of area median income.
The conversion of this building to town homes will accomplish a number of objectives to
complement our Washington Neighborhood revitalization efforts. It will promote owner
occupancy and a mix of household incomes. If successful, it will demonstrate the
market for sensitive re-use of historic but under-utilized and/or functionally obsolete
rental housing. It may achieve a `green' objective of promoting `walk-to-work'
residences in the downtown. And it will enhance the area adjacent to the new Prescott
School.
Additionally, the project promotes a partnership with the School District, by incorporating
use of the HEART Program as a training opportunity for students. HEART student
workers will perform carpentry labor at the site, under professional supervision, while
earning academic credit.
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
David Harris, Housing and Community Development Department Director
THE CITY OF
DuB E
Masterpiece on the Mississippi
25 May 07
MEMORANDUM
To: Michael Tan Milligen, City Manager
j l
From: David Hams, Housing and Community Development Department
Re: Purchase of building at 1126 White Stree#
Introduction
The purpose of this memorandum is to request the City Council to approve the
attached offer to purchase 1126 White Street from the Dubuque Community
School District.
Background
The School District originally purchased this historic, vacant, nine-unit apartment
building with the intent of demolishing it for parking for the new Prescott School,
in 2005. After further consideration and discussion with City staff, it was agreed
that other parking alternatives would be pursued.
Subsequently, we have developed a re-use scenario for the building, to
complement the Washington Neighborhood revitalization effort now under way.
This concept would convert the building to townhouse units, to promote
increased owner-occupancy in the neighbofiood. These would be priced at
market rates and marketed to `young professionals' working downtown. In
particular, we would seek to interest Prescott staff in purchasing these
townhouses. Personnel at DB&T and the Crescent Community Health Center
would also be recruited, among others. The objective is additional owner-
occupants and mixed-income households in an area that is currently
predominantly lower-income and renter families.
Discussion
We hired AI Lundh to develop schematic drawings, showing a converted building
with either three or five townhouse units, ranging in size from 1000 to almost
2000 square feet, each with two bedrooms and two baths. Cost estimates were
obtained, indicating prices for completed homes in a range from $85 000 to
$145 000, depending on number of units.
The Council additionally authorized purchase and demolition of a derelict building
located adjacent at 141 East 11th Street, offering the possibility of additional off-
street parking for this project.
A request-for-proposals was authorized by the Council, released in April, seeking
bids from developer/contractors willing to purchase the building and accomplish
the conversion to townhouses. We have shown the property to a number of
firms; proposals are due 8 June.
To assist with costs of construction financing, an application was submitted to the
Iowa Finance Authority's OurHome Rehabilitation Program. The City would
receive a $500 000 loan, at 3%, to in turn be loaned to the developer to subsidize
costs during construction and marketing of the units. As the units would be sold,
funds would be repaid to the City and then to IFA. The Finance Authority is
expected to approve this loan at its June meeting. City Council authorization will
be required to approve this obligation.
Additional City financial participation would include a contribution of $100 000
toward development costs, from the Targeted Homeownership Grants CIP
(no.101-1595); this program is capitalized by City General Funds. The recently-
approved lending guidelines for the Washington: Revitalize! initiative also include
a package of forgivable, due-on-sale and low-interest, 20-year loans -totaling
$30 000 per unit -that will be made available to the developer and then passed
through to the purchasers of the individual units. As these are all General Funds,
no income limits will apply to buyers.
The building is also within the Washington Neighborhood Urban Revitalization
Area, recently expanded to include the boundaries of the neighborhood
association. The City Assessor has informed us that the assessment of the
building will be based on the sale price, resulting in a 10-year abatement of taxes
on the improvements and a base value of only $50 000. These combined
financing and real estate tax incentives will substantially impact the `affordability'
of the townhomes, by reducing monthly payments and cost to the buyers. In fact,
although no buyer income limits will be required, the smaller units are projected
to be within affordability guidelines for households earning 80% of area median
income.
We have met with the School District's Support Services Committee on two
occasions and have reached an agreement on the sale price of $50 000. This
will be recommended for approval by action of the School Board at its 11 June
meeting.
Recommendation
The conversion of this building to town homes will accomplish a number of
objectives to complement our Washington Neighborhood revitalization efforts. It
will promote owner occupancy and a mix of household incomes. If successful, it
will demonstrate the market for sensitive re-use of historic but under-utilized
and/or functionally obsolete rental housing. It may achieve a `green' objective of
promoting `walk-to-work' residences in the downtown. And it will enhance the
area adjacent to the new Prescott School.
Additionally, the project promotes a partnership with the School District, by
incorporating use of the HEART Program as a training opportunity for students.
HEART student workers will perform carpentry labor at the site, under
professional supervision, while earning academic credit.
Action Step
The action requested of the City Council is to approve the attached offer to
purchase the building at 112fi White Street, from the Dubuque Community
School District, for $50 000.
cc:
Barry Lindahl, City Attorney
Law Offices Of
FUERSTE, CAREW, COYLE, JUERGENS &SUDMEIER, P.C.
200 SECURITY BUILDING
151 WEST 8TH STREET
DuBUQoE, IOWA 52001-6832
ALLAN J. CAREW
MICHAEL J. COYLE
STEPHEN J.JUERGENS
ROBERT L. SUDMEIER*
DOUGLAS M. HENRY
MARK J. WILLGING
MICHAEL J.SHUBATTt
A. THEODORE HUINKER
DANITA L. GRANT
JOHN F. HODGES*t
WILLIAM N. TOOMEY
June 13, 2007
ALL ATTORNEYS LICENSED IN IOWA
•AG,SO LICENSED [N WISCONSIN
tALSO LICENSED M ILLINOIS
Mr. Barry A. Lindahl
300 Main Street
Harbor View Place Ste. 330
Dubuque, IA 52001
Dear Barry:
Accepted Offer enclosed.
AJC/jar
Enclosure
Very truly yours,
FUERSTE, ~
JUERGENS
BY:
P.C.
WILLIAM C.FUERSTE
(RETIRED)
TELEPHONE:
(563) 556-4011
TELECOPIER:
(563)556-7134
E-MAII.:
MAII~FCCJS.COM
WRrIER'$ DII2ECT
E-MAn. ADDRESS
ACAREW [t.FCCJS.COM
OFFER TO BUY REAL ESTATE AND ACCEPTANCE
TO: Dubuque Community School District (Seller)
1. REAL ESTATE DESCRIPTION. The City of Dubuque, Iowa (Buyer) offers to
buy real estate in Dubuque County, Iowa, described as follows (1126 White Street,
Dubuque, Iowa):
The South Middle 1!5 of Out Lot 480 in the City of Dubuque, Iowa,
according to the United States Commissioners' Map thereof
with any easements and appurtenant servient estates, but subject to the following: a. any
zoning and other ordinances; b. any covenants of record; c. any easements of record for
public utilities, roads and highways designated the Real Estate.
2. PRICE. The purchase price shall be $ 50,000.00, payable at City Hall,
Dubuque, Iowa, as follows: $50,000 at closing.
3. REAL ESTATE TAXES. Seller shall pay any unpaid real estate taxes payable
in prior years and taxes for the current fiscal year prorated to the date of possession.
Buyer shall pay all subsequent real estate taxes.
4. SPECIAL ASSESSMENTS. Seller shall pay all special assessments that are a
lien as of the date of possession.
5. RISK OF LOSS AND INSURANCE. Seller shall maintain $ 50,000 of fire,
windstorm and extended coverage insurance on the Real Estate until possession is given
to Buyer and shall promptly secure endorsements to the appropriate insurance policies
naming Buyer as an additional insured. Risk of loss from such insured hazards shall be
on Buyer after Seller has performed under this paragraph and notified Buyer of such
performance.
6. CARE AND MAINTENANCE. The Real Estate shall be preserved in its present
condition and delivered intact at the time possession is delivered to Buyer. However, if
there is loss or destruction of all or any part of the Real Estate from causes covered by
the insurance maintained by Seller, Buyer agrees to accept such damaged or destroyed
Real Estate together with such insurance proceeds in lieu of the Real Estate in its present
condition and Seller shall not be required to repair or replace same.
7. POSSESSION. If Buyer timely performs all obligations, possession of the Real
Estate shall be delivered to Buyer on June 29, 2007, with any adjustments of rent,
insurance, and interest to be made as of the date of transfer of possession.
8. FIXTURES. All property that integrally belongs to or is part of the Real Estate,
whether attached or detached, such as light fixtures, shades, rods, blinds, awnings,
windows, storm doors, screens, plumbing fixtures, water heaters, water softeners,
automatic heating equipment, air conditioning equipment, wall to wall carpeting, built-in
items and electrical service cable, outside television towers and antenna, fencing, gates
and landscaping shall be considered a part of Real Estate and included in the sale
except:
9. USE OF PURCHASE PRICE. At time of settlement, funds of the purchase
price may be used to pay taxes and other liens and to acquire outstanding interests, if
any, of others.
10. 'ABSTRACT AND TITLE. Seller, at its expense, shall promptly obtain an
abstract of title to the Real Estate continued through the date of acceptance of this offer,
and deliver it to Buyer for examination. It shall show merchantable title in Seller in
conformity with this agreement, Iowa law and Title Standards of the Iowa State Bar
Association. The abstract shall become the property of the Buyer when the purchase
price is paid in full. Seller shall pay the costs of any additional abstracting and title work
due to any .act or omission of Seller, including transfers by or the death of Seller or
Seller's assignees.
11. DEED. Upon payment of the purchase price, Seller shall convey the Real
Estate to Buyer by Special Warranty Deed, free and clear of all liens, restrictions, and
encumbrances except as provided in 1 a. through 1 .d. Any general warranties of title
shall extend only to the time of acceptance of this offer, with special warranties as to acts
of Seller continuing up to time of delivery of the deed.
12. TIME IS OF THE ESSENCE. Time is of the essence in this contract.
13. REMEDIES OF THE PARTIES
a. If Buyer fails to timely perform this contract, Seller may forfeit it as provided in
the Iowa Code, and all payments made shall be forfeited or, at Seller's option, upon thirty
days written notice of intention to accelerate the payment of the entire balance because
of such failure (during which thirty days such failure is not corrected) Seller may declare
the entire balance immediately due and payable. Thereafter this contract may be
foreclosed in equity and the Court may appoint a receiver.
b. If Seller fails to timely perform this contract, Buyer has the right to have all
payments made returned to it.
c. Buyer and Seller also are entitled to utilize any and all other remedies or actions
at law or in equity available to them and shall be entitled to obtain judgment for costs and
attorney fees as permitted by law.
14. CONTRACT BINDING ON SUCCESSORS IN INTEREST. This contract shall
apply to and bind the successors in interest of the parties.
15. CONSTRUCTION. Words and phrases shall be construed as in the singular
or plural number, and as masculine, feminine or neuter gender, according to the context.
16. TIME FOR ACCEPTANCE. If this offer is not accepted by Seller on or before
June 12, 2007, it shall become void and all payments shall be repaid to the Buyer.
17. AS IS CONDITION. Buyer is purchasing the Real Estate in its as is condition.
Dated: ~ UJ ~
CITY OF DUBUQUE, IOWA
By
Michael C. Van Milligen, City Manager
THIS OFFER IS ACCEPTED
Dated: ~~1! , ~ ~a oZ (~~
DUBUQUE COMMUNITY SCHOOL DISTRICT
By
Doug as H t nhPresident of the Board
Joni ucas, Secretary of the Board