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Linseed Oil Building - 1st Amendment to Development AgreementCopyright 2014 City of Dubuque Public Hearings # 4. ITEM TITLE: Linseed Oil Building - Amendment to Development Agreement SUMMARY: Proof of publication on notice of public hearing to consider amending the Development Agreement with Wilmac Property Company for the property located at 151 East 9th Street and the City Manager recommending approval. RESOLUTION Approving the First Amendment to the Development Agreement between the City of Dubuque, Iowa, and Betty Building, LLC SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt Resolution(s) ATTACHMENTS: Description Type El City Building LLC First Amendment to Development Agreement -MVM City Manager Memo Memo ❑ Staff Memo Staff Memo ❑ Linseed Oil - DA 1st Amendment Supporting Documentation ❑ Resolution - Adopting lst Amendment Resolutions ❑ Proof of Publication Supporting Documentation THE CITY OF Dui Masterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager Dubuque band AI -America City r 2007 • 2012 • 2013 SUBJECT: First Amendment to Development Agreement between the City of Dubuque and Betty Building, LLC to Redevelop Property at 151 East 9th Street (Linseed Oil Paintworks Building) DATE: October 14, 2014 Economic Development Director Maurice Jones recommends City Council approval of the First Amendment to the Development Agreement with Betty Building, LLC for the redevelopment of property at 151 East 9t" Street (Linseed Oil Paintworks Building). The Amended Development Agreement would increase the Tax Increment Financing rebate period from 10 years to 15 years, which is consistent with the Caradco Building project and the Novelty Iron Works project in the Millwork District. In addition, the closing date is changed to November 1, 2014, and the substantial completion of the project is changed to June 30, 2015. I concur with the recommendation and respectfully request Mayor and City Council approval. briA44 (4., Mic ael 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 THE CITY OF DUB Masterpiece on the Mississippi Dubuque krikil All -America City 1111 I 2007 • 2012 •2013 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 Miliigen, City Manager FROM: Maurice Jones, Economic Development Director SUBJECT: First Amendment to Development Agreement between the City of Dubuque and Betty Building, LLC to redevelop property at 151 East 9th Street (Linseed Oil Paintworks Building) DATE: October 10, 2014 INTRODUCTION This memorandum is a request that the City Council approve the First Amendment to the Development Agreement between the City of Dubuque and Betty Building, LLC for the property located at 151 East 9th Street. BACKGROUND On February 18, 2013 the City Council approved submittal of an application to the State for New Production Round 5 of CDBG grant funding to assist in the adaptive reuse of property at 151 E. 9th Street, known as the Linseed Oil Paintworks Building, into residential apartments. On March 7, 2013 the City Council approved a Development Agreement with Wiimac Property Company for the rehabilitation of this building. The City Council approved the assignment of the Development Agreement by Wiimac Property Company to Betty Building, LLC on October 6, 2014. On June 19, 2013 the Iowa Economic Development Authority approved an amendment to CDBG contract #08-DRH-212 (for the Caradco Building), increasing the award amount by $2,248,820 for the purpose of rehabilitating the Linseed Oil Paintworks Building. This funding was considered essential to the City of Dubuque for two reasons. First, it will help address the critical shortage of workforce housing in our community and second, it will continue to help implement the redevelopment of older and under- utilized buildings in our community. The Linseed Oil Paintworks Building will include 16 new residential units. Due to the CDBG funding, nine (9) of the units will now be dedicated to residents whose income is at or below 80% area median income. The building will also have a handicapped accessible social area and garden on the roof. The Developer is also looking into a small solar system to supplement the electrical system. The Developer is estimating the total cost of the project to be $5,485,347. In addition to other funding sources, the project will be using State Historic Tax Credits which are being reserved. DISCUSSION The Development Agreement for the Linseed Oil Paintworks Building currently includes several City incentives, namely: • 10 years of Economic Development Grants funded by Tax Increment Financing • Downtown Housing Incentive program of $10,000 per housing unit created • Planning and Design Grant of up to $10,000 • Facade Grant of up to $10,000 • Financial Consultant Grant of up to $15,000 The Agreement also specified a closing date of no later than August 1, 2013, with a substantial completion of December 31, 2014. These dates were not achieved for the following reasons: 1. necessary before closing, did not The release of funds for the CDBG funds, come until January 8, 2014. 2. Meanwhile, the Iowa Department of Revenue began to indicate they would like to see legislative changes regarding qualified expenses for CDBG funding, which would have meant $500,000 that had been incorporated in the original project pro forma would now be "missing". 3. Finally, the project bids went out in July 2014 and came in with cost overruns compared to the pro forma (due to the elapsed timing). At this point, in order to meet other funding deadlines, Gronen Restoration began construction on the project, even though the financial closing had not yet taken place. Wilmac Property Company began negotiations with the Economic Development department, asking for additional years of Tax Increment Finance rebates in order to fill the gap created by the political and economic changes that had occurred in the time lapse. 2 The amended Development Agreement would increase the TIF rebate period from ten (10) years to fifteen (15) years. Fifteen years is consistent with the Caradco Building project and the Novelty Iron Works project in the Millwork District. The closing and substantial completion dates will also be revised. Closing will be set for no later than November 1, 2014, with substantial completion of the project by June 30, 2015. RECOMMENDATION/ ACTION STEP Based on the critical need for downtown housing and the City's goal to assist in redeveloping the Millwork District, I recommend the City Council adopt the attached resolution approving the First Amendment to the Development Agreement. 3 Prepared by/Return to: Jill Connors, 50 W. 13th Street, Dubuque IA 52001, 563 589-4393 RESOLUTION NO. 336-14 APPROVING THE FIRST AMENDMENT TO THE DEVELOPMENT AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND BETTY BUILDING, LLC Whereas, the City of Dubuque (City) and Wilmac Property Company (Wilmac) entered into a Development Agreement on March 7, 2013 for the rehabilitation of the Linseed Oil Paintworks Company Building located at 151 East 9th Street, Dubuque, Iowa (the Property); and Whereas, Wilmac has assigned its rights and responsibilities under the Development Agreement to Betty Building, LLC (Betty); and Whereas, Betty has requested certain amendments to the Development Agreement set forth in the First Amendment to Development Agreement attached hereto, including authorizing an increase in the Urban Renewal Tax Increment Revenue obligations, as provided by Chapter 403 of the Code of Iowa, for the purpose of carrying out the rehabilitation of property located at 151 East 9th Street; and Whereas, the City Council of the City of Dubuque finds that the City of Dubuque should consent to the First Amendment. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. The City Council of the City of Dubuque hereby approves the First Amendment to Development Agreement, a copy of which is attached hereto. Section 2. The Mayor is authorized and directed to sign the First Amendment to Development Agreement of behalf of the City of Dubuque. Passed, approved and adopted this 20th day of October, 2014. c9L-, Roy D. BSI, Mayor Attest: Kevin Firnstahl, C ty Clerk's FIRST AMENDMENT TO DEVELOPMENT AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND BETTY BUILDING, LLC The First Amendment to Development Agreement, dated for reference purposes the 20th day of October, 2014, is made and entered into by and between the City of Dubuque, Iowa (City) and Betty Building, LLC (Developer). Whereas City and Wilmac Property Company previously entered into a Development Agreement dated the 7th day of March, 2013 (the Development Agreement); and Whereas Wilmac Property Company, with the consent of City, assigned its rights in and under the Development Agreement to Developer, who simultaneously assumed the duties of Wilmac Property Company under the Development Agreement; and Whereas City and Developer desire to amend the Development Agreement as set forth herein. NOW, THEREFORE, IT IS AGREED BY AND BETWEEN THE PARTIES THAT THE DEVELOPMENT AGREEMENT IS AMENDED AS FOLLOWS: 1. Section 1.3 of the Development Agreement is hereby amended to read as follows: Closing. The closing shall take place on the Closing Date which shall be the 15th day of October, 2014, or such other date as the parties shall agree in writing but in no event shall the Closing Date be later than the 1st day of November, 2014. 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. 2. Section 2.1 of the Development Agreement is hereby amended to read as follows: Required Minimum Improvements. Developer will make a capital investment of approximately Five Million Dollars ($5,000,000.00) to improve the Property (the Minimum Improvements). The Minimum Improvements include creating sixteen (16) apartments for market -rate and rental housing using Historic Tax Credits. Nine (9) of those apartments may be rent restricted, as defined in Internal Revenue Code Section 42(g)(2)(C), and occupied by individuals whose income as illustrated by HUD Handbook 4350.3 REV -1 (or subsequent versions), is less than or equal to 80 percent of the area 100214baI median family income (adjusted for household size) as determined and adjusted annually by HUD. The remaining apartment units shall be made available at market - rate rents. 3. Section 2.4 of the Development Agreement is hereby amended to read as follows: Timing of Improvements. Developer hereby agrees that construction of the Minimum Improvements on the Property shall be commenced within thirty (30) days after the Closing Date, and shall be substantially completed by June 30, 2015. The time 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. 4. Section 3.2 is amended to read as follows: Economic Development Grants 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 thirty (30) consecutive semi-annual payments (such payments being referred to collectively as the Economic Development Grants) to Developer: November 1, 2015 November 1, 2016 November 1, 2017 November 1, 2018 November 1, 2019 November 1, 2020 November 1, 2021 November 1, 2022 November 1, 2023 November 1, 2024 November 1, 2025 November 1, 2026 November 1, 2027 November 1, 2028 November 1, 2029 May 1, 2016 May 1, 2017 May 1, 2018 May 1, 2019 May 1, 2020 May 1, 2021 May 1, 2022 May 1, 2023 May 1, 2024 May 1, 2025 May 1, 2026 May 1, 2027 May 1, 2028 May 1, 2029 May 1, 2030 2 pursuant to Iowa Code Section 403.9 of the Urban Renewal Law, in amounts equal to a portion of the tax increment revenues 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). For purposes of calculating the amount of the Economic Development Grants provided in this Section, the Developer Tax Increments shall be only those tax increment revenues collected by City in respect of the increase in the assessed value of the Property above the assessment of January 1, 2012 ($79,970.00). The Developer Tax Increments shall not include (i) any property taxes collected for the payment of bonds and interest of each taxing district, (ii) any taxes for the regular and voter -approved physical plant and equipment levy, (iii) the remaining actual amount of tax increment revenues collected by City in respect of the valuations of the Property prior to January 1, 2012 and (iv) 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. 5. Section 6.3 is amended to read as follows: Termination Date. This Agreement and the rights and obligations of the parties hereunder shall terminate on June 1, 2030 (the Termination Date). 6. Except as expressly amended in this First Amendment to the Development Agreement, the terms of the Development Agreement will remain in full force and effect as set forth in the Development Agreement. CITY OF DUBUQUE, IOWA BETTY BUILDING, LLC By: Roy D. uol, Mayor Attest: By: ,777 Ke in S. Firnstahl, (Cy Clerk 3 By: Its: STATE OF IOWA {SS: DUBUQUE COUNTY CERTIFICATION OF PUBLICATION I, Suzanne Pike, a Billing Clerk for Woodward Communications, Inc., an Iowa corporation, publisher of the Telegraph Herald,a newspaper of general circulation published in the City of Dubuque, County of Dubuque and State of Iowa; hereby certify that the attached notice was published in said newspaper on the following dates: October 10, 2014, and for which the charge is $82.94. Sz, (24 Subscribed to before me, a otary Public in and for Dubuque County, Iowa, this /ea day of ( , 20 / . otary Public in and for Dubuque County, Iowa. Commission Number 15468; My Comm, Exp, FE3, 1. 2017 RESOLUTION, . N0.312-14 rt THE TE FOR FIXING PUBLIC.HEAI- DA ING OF - THE ..CITY COUNCIL OF . •THE CITY OF DUBUQUE, IOWA ON THE PRO- POSED ISSUANCE OF • URBAN INCREMENT TAX REVENUE DBLIGA- ,TIONS AND',THEEXE I CUTION. OF AN AMENDMENT TO THE DEVELOPMENT AGREEMENT BE- TWEEN THE CITY OF DUBUQUE;` IOWA. ANO BETTY BUILDING LLC, AND PROVIDING F.OR THE PUBLICA- TION °OF' NOTIOE THEREOF whereas,the C ty. of Dubuque (City) and Wilmac ProliertY Com- pany (Wilmac) entered a Development into Agreementon March 7, 2013 for th'e rehabilita-, tion of the LiTlseed 011 Paintwork$ Company Building located at 151 Eastr9th;Street Dubu-' quef IoWa,(the Proper tY); and , Whereas the Pevel opmept Agreement was assigned, by .- Wilmac to BettY Build- ipgt LLC, (Betty) to, fa cihtate ,tiler rehabihta . tion c off the' Property; and r Whereas petty 'has requested; certain amendments,to the De= velopment Agreement settforth in, the First Amepdmepit io -Deyel- oprrient =Agreementat- tached hereto rnclud=,, ing in=r. crease in:the°Urban;eRe, . n*al Tax Increment Revenue'; obligations, as provided byChapter 403•ofthe Code of 10- wa for,the purpose,of carrY,lfD,pkt thegre bilitation', of,•pr0pertyba- located at 151 ,East 9th Streetn:as ;hereinafter deser,ibed,and, Whereas, before said I, obligations may be'4p- proved; Chapter 403 of the,, Code of Iowa re- quires that the''City' . Clerk publish a notice of the proposal and of theairne and place, of i the meeting at Which the .Oity Council `pro- poses;-- to take.;action thereon, and, at which meeting, the City-Coun-, cil shall receive oral and/or written :objec- tionfrom any resident or property owner -of said City to such pro;• posed ;action NOW THEREFORE, BE , IT RESOLVED BY THE ;CITY COUNCIL OF4HE CITY OF DU- BUQUE,40WA: Section 1. The City Clerk. is hereby author; ized..,and directed,;to cause, xthis ,Resolution and notice to be pub - aa. prescribed' by Iowa, Code Section 403.9of a public; hear- pn the City's Antent authorize Urban Re- newal : ;Tax Increment Revenue obligations, to be held on the 20th day of Qctober, t 2014, --at 6:30' o'clock p.rn: `in the CityCouncil:Chambers atthe Historic;Federal Building, 350 yif. 6th St. Dubuque, Iowa Section 2. The City Coui ciI will' meet �t said tine and place for the purpose of takings action on :approving. the: First_ Amendment to.;Devel"Q`pment Agree- ment. and sauthorizing ani the,,Ur ban itenevfa1 Tax Incre ' ment Reueriue obliga tions relating thereto the proceeds of which oblgations will be used to=carry out certam_of the +special financing activities described;in the Greater. Dowptawn Urban Renewal Disirict consisting of the fund- ing of economic devel opments grants to.Bet ty, Building, LLC . pyr suant to ,the Develop Ment • Agreement; as amended, under the terms and conditions of said and,. llth Street Urban Revitaji zation District Plan. It iso expected that, the aggregate aount -of m the Tax Increment Rey I enue obligations is,ap pGo-���atelX$��QAQ, ii • eetion 3 ;The Clerkeis hereby d:.lrecte'd . to cause at least one,pvb-' lipattoo'to be made,cifa notice of said meeting,, in, at,nawspaper,;.print,' ed wholly, in the Eng-, lishlanguage publish- ed at least once week- lyand having general .I circulationlin said City, I said, .publication to be I not, less than fourdays nor more; than twenty dayslbefore the dateof, saiOr eeting on the is suance ofsaid obliga, tions Sectiop 4. Thatthe no tice of tthe proposed action to issue said•ob I gations .-shall be - in-; substantially theifform attached'hereto., ,Passed; approved and adopted this 6th day Of/ October ;2014 Roy b; Buol Mayor Attest Kevin Firnstahl City Clerk° ciry (3F DUBUQUE OFFICIAL NOTICE NOTICE'OF A PUBLIC - HEARING , '0F 0TH$ C TY COUNCIL: 'OF THE nCIt%,0F DUB07 QUE, 10WA, ,0�1 CHE MATTER OFTHE• PRO POSED =AUTHORIZA, T ON OF URBAN •.RE ' NEWAL TAX, INCRE MENT REVENUE'OBLI-. GATIONS AND THE EXECUTION OF A`DE- VELOPMENT,.. AGREE MENT • ',RELATING THERETO; WITH, BET- TY;B,UILD,,ING,LLC. , PUBLIC NOTICE:.is• hereby given that:.the City:Council of the City, of Dubuque loWa,'iwill. hdld.,a public hearing:: ori -the 20th, day,of._Oc tuber., "at p.m in': the City:Council Chain- bers at the Historic,- Federal ;Building :.350 W 6th St., Dubuque, to-; wa at Which time -City; Couricll: will meet for, the purpose of ,taking action on' approving the First Amendment, to ;Development Agree-' ment and authorizing., an mpre'ase ih.the` Ur= ban„Renewai,iax mcre - ment Revenue obliga tions relating; theret9p the prodeeds‘of whioh°' obligations will be used;' to .carry out certain of j the special ; mancing activities'deserlbed in the 'Gres ei' Downtown i, Urbon Renewal Disrict rl corisisting.0,f the fund oprl`ent ing bf eco s gnomrantsipytBbevel :. Bet ty,� Bijildlrrg LLC su�J;iutito� hea1Devd#bp � menu Ag�eement a`s arner��edF",under" the: terms and conditions, S feta t ,bane evltali za"tbn District Qlan , It is' �Xpected ,that they aggregate arr oltntr ofA. the;�"�axfilncret�eh� R�V e�}iloe,obhgatro$1240,ns iV 0ap . phKim1�ately 0;;; At9tfe meeting the City Council will re ' ceiye gyral and written v objetti ins ,f'omk f' resident or' property owner' of ),said pity, to” 1 th`e above action Aftei all` obecti0 shave bee�OV eceiVed and con- sideced the :City Coun cil;may, at tills meeting °. ora anY idiee. anent thereof approve the Development Agree.- rne_nt „and, _ authorize such , `Tax` ncrenient Revenue grant Obliga- tions or will abandon"' the,proposal By order' of the City Council said hearing and appeals there from; shall, Abe help m. :accordance. with and governed;by the, provisions, of Sect tion 403 9 of the Code ofaowa Any visual orhearing impairetl, persons needing special assi tadce or persons with special, accessibility needs shouldcontact the City'Cler'k'Sx Office at',.."(563)''',,,5894.100. .lor TTY,r(563) 556-9948urs.prior toat least 48 ho the meeting k , ; . ;This natice`is given by orderkof the.City.Coun ciJ'of theCity of Dubin que lows, as provided byChapte,r'403 of the Code of Iowa Dated this; -6th day of Ogtober 20'14 Kevin S. Firnstahl City Clerk of Dubuque, I Iowa 1t10/10.