Community Housing Initiatives (CHI) Agreement Copyright 2014
City of Dubuque Consent Items # 10.
ITEM TITLE: Community Housing Initiatives (CHI)Agreement
SUMMARY: City Manager recommending approval of an Agreement
between Community Housing Initiatives-Washington
Neighborhood Housing Partnership and the City of
Dubuque's Housing & Community Development
Department.
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Approve
ATTACHMENTS:
Description Type
Community Housing Initiatives Agreement-MVM Memo City Manager Memo
CHI Agreement Memo Staff Memo
CHI Agreement Supporting Documentation
THE CITY OF Dubuque
DUB E i"
Masterpiece on the Mississippi 2007.2012.2013
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Agreement between Community Housing Initiatives and the City of
Dubuque's Housing & Community Development Department
DATE: August 5, 2016
On March 18, 2013, City Council approved recommending the partnership between
Community Housing Initiative (CHI), Dubuque Bank and Trust (DB&T) and the City
Housing Department to restore approximately 18 units in the Washington
Neighborhood. To-date CHI has purchased 23 properties. The assessed value of the
properties that have been rehabbed has increased by almost $400,000.
CHI has been actively working in the Washington Neighborhood by purchasing/
rehabbing and reselling properties. The City funds were used to assist in the
rehabilitation of these properties. As stated in the Agreement, the City will be
contributing up to $25,000 per property for the acquisition or rehabilitation portion of the
project.
The City has asked CHI to partner with them again for the next four years.
In order to fund the projects, each partner agrees to commit an amount of funds to
address the planned impact in the neighborhood. The breakdown of these funds are as
follows:
CHI agrees to provide a minimum of $1,548,000 of its resources and/or from a
construction loan line of credit.
City agrees to invest $600,000 for the purpose of the Project. As stated above, the City
will provide $25,000 per unit for acquisition or rehabilitation costs. No more than
$125,000 will be paid out to CHI in any fiscal year, with the exception of this fiscal year,
which the City will provide an additional $100,000 for this purpose. This will allow CHI
to purchase and/or rehabilitate an additional four properties in the Washington
Neighborhood.
CHI Obligations:
• CHI agrees to acquire, rehabilitate and resell a minimum of 24 total residential
units during the term of this Agreement. Homes purchased by CHI before the
effective date of the Agreement are considered part of the Project and therefore
are included toward the 24 residential unit requirement under the Agreement.
• There will be no income restrictions with respect to buyers purchasing residential
units rehabilitated through this Agreement.
City Obligations:
• Assist CHI with initial inspection of residential units to be purchased by CHI as
part of the Project.
• Develop minimum improvements documents for rehabilitation including scope of
work, drawings/specifications and bid packages for CHI to distribute to
contractors. City will also prepare contracts for all contractors and send once
signed to CHI.
• Assist CHI with making certain Contractors keep property cleaned up through
construction.
• Rehabilitation Inspector and Supervisor will perform final inspections with CHI to
assure satisfactory work completed by the Contractor(s).
• Buyers of the CHI properties will be eligible for the Washington Neighborhood
Homebuyer Program incentives.
Housing and Community Development Department Director Alvin Nash recommends
City Council approval of an Agreement between Community Housing Initiatives-
Washington Neighborhood Housing Partnership and the City of Dubuque's Housing &
Community Development Department.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Alvin Nash, Housing and Community Development Department Director
2
THE CITY OF Dubuque
DuB E AFAmenca My
I � � Im
Masterpiece on the Mississippi 2007.2032.2033
To: Mike Van Milligen, City Manager
From: Alvin Nash, Housing and Community Development Director
Subject: Agreement between Community Housing Initiatives (CHI), and the City of Dubuque's
Housing & Community Development Department
Date: August 9, 2016
Introduction
The purpose of this memorandum is to request City Council to authorize signature of the Agreement
between Community Housing Initiatives (CHI) and the City of Dubuque's Housing & Community
Development Department.
Background
On March 18, 2013, City Council approved recommending the partnership between Community
Housing Initiative (CHI), Dubuque Bank and Trust (DB&T) and the City Housing Department to
restore approximately 18 units in the Washington Neighborhood. To-date CHI has purchased 23
properties. The assessed value of the properties that have been rehabbed has increased by almost
$400,000.
CHI has been actively working in the Washington Neighborhood by purchasing/ rehabbing and
reselling properties. The City funds were used to assist in the rehabilitation of these properties. As
stated in the Agreement, the City will be contributing up to $25,000 per property for the acquisition or
rehabilitation portion of the project. This partnership is in line with the WNDC 2009 Neighborhood
Plan.
The City has asked CHI to partner with them again for the next four years.
Discussion
In order to fund the projects, each partner agrees to commit an amount of funds to address the
impact we want to make in the neighborhood. The breakdown of these funds are as follows:
CHI agrees to provide a minimum of$1 ,548,000 of its resources and/or from a construction loan line
of credit.
City agrees to invest $600,000 for the purpose of the Project. As stated above, the City will provide
$25,000 per unit for acquisition or rehabilitation costs. No more than $125,000 will be paid out to CHI
in any fiscal year with the exception of this fiscal year which the City will provide an additional
$100,000 for this purpose. This will allow CHI to purchase and/or rehabilitate an additional 4
properties in the Washington Neighborhood.
Proposed funding source from the City for this partnership is Downtown TIF funds (3602573) as
follows:
Fiscal Year Amount of Fund Account
FY16-17 $225,000 2602573
FY17-18 $125,000 2602573
FY18-19 $125,000 2602573
FY19-20 $125,000 2602573
Also available to buyers of the CHI properties will be the Washington Neighborhood Homebuyer
Program with the following incentives:
Maximum Income
Household Size Very Low Income Lower Income Moderate Income
(less than 30% of (less than 50% of (51-80% of area
area median) area median) median
1 20,520 34,200 54,720
2 20,520 34,200 54,720
3 23,598 39,330 62,928
4 23,598 39,330 62,928
5 23,598 39,330 62,928
6 23,812 39,687 63,500
7 25,443 42,406 67,850
8 27,096 45,156 72,250
Loan Terms (Median Income based from State Housing Trust Fund Income Guidelines)
• Household income <30% Median Income (MI): $25,000, 0% interest; $60/month; 35-year term
• Household income <50% Median Income (MI): $20,000, 0% interest; $60/month; 28-year term
• Household income <80% Median Income (MI): $15,000, 0% interest; $60/month; 21-year term
• Household income >80% Median Income (MI): $10,000, 0% interest; $60/month; 14-year term
Action Step
The action requested is for City Council to approve the attached Agreement between Community
Housing Initiatives and the City of Dubuque's Housing & Community Development Department.
Attach.
cc: Jenny Larson, Budget Director
Kris Neyen, Rehabilitation Programs Supervisor
Erica Haugen, Community Development Specialist
Jean Nachtman, Finance Director
AGREEMENT BETWEEN
THE CITY OF DUBUQUE
AND
COMMUNITY HOUSING INITIATIVES, INC. -
WASHINGTON NEIGHBORHOOD HOUSING PARTNERSHIP
Effective Date: July 1, 2016
This Agreement is made by and between the City of Dubuque, Iowa ("City") and Community
Housing Initiatives, Inc. ("CHI") and shall be effective beginning on the above effective date and
remain in effect until June 30, 2020, or for a period of four (4) full years from the effective date
above, whichever is later.
This Agreement outlines the terms and conditions under which the City shall invest funding with
CHI to assist with the acquisition, rehabilitation and resale of residential units located in the
Washington Neighborhood (hereinafter the "Project").
For purposes of this Agreement the Washington Neighborhood is defined to include:
Central Avenue starting at East 22nd Street South down to East 11th Street, then East 11th Street
East to Elm Street, Elm Street North until East 20th Street & Rhomberg Avenue, Rhomberg
Avenue East to Kniest Street, Kniest Street North to East 22nd Street and back to Central Avenue.
In consideration of the mutual representations and obligations hereunder, the City and CHI agree
as follows:
Section 1. Funding
CHI agrees to provide a minimum of $2,472,000 of its resources and/or from a construction loan
line of credit.
The City agrees to invest with CHI $600,000 for the purpose of the Project in Dubuque's
Washington Neighborhood as part of a comprehensive neighborhood revitalization initiative. The
City funding shall be in the form of payments toward the acquisition and/or rehabilitation costs of
each unit up to, but not more than $25,000, and in no event to exceed the total rehabilitation cost
per unit. The City funding will be provided to CHI over four years, in an annual amount not to
exceed $225,000 in year one and $125,000 plus unused funds from year one in years two
through four and is subject to inclusion in the adopted City budget over the term of the
Agreement.
CHI may begin accessing City funding upon completion of at least 25% of the work per unit as
outlined in Section 2. The remaining funds may be requested upon 50% completion, 75%
completion and upon final completion of each unit. Funding requests to the City shall be in
writing and include supporting documentation of work completed.
Upon the sale of all residential units completed for the Project under this Agreement, the
aggregate sales proceeds received will be distributed in the following order:
1) Dubuque Bank & Trust Loan
2) CHI Developer Fee and expenditures as outlined in Section 2
3) Any remaining funds (profit) must be used for the purchase, rehabilitation, and resale of
additional residential units, or such other use that is approved by the City in writing.
Section 2. Scope of Work
CHI Obligations:
CHI agrees to acquire, rehabilitate and resell a minimum of twenty-four (24) total
residential units during the term of this Agreement (hereinafter the "Minimum
Improvements"). A residential unit can be a single-family structure or multi -unit structure
as long as the intent is for the resale of the housing unit(s). Each unit within a multi -unit
structure, such as a duplex, shall constitute a residential unit. Homes purchased by CHI
before the effective date of the Agreement are considered part of the Project and therefore
are included toward the 24 residential unit requirement under the Agreement.
• Acquisition of at least twenty-four (24) total residential units shall be completed by the end
date of this Agreement. The Minimum Improvements will be completed in accordance with
all federal, state, and local laws and be finished within six (6) months after the expiration of
this Agreement.
• Exhibit A outlines the estimated budget for completion of the Minimum Improvements
through a detailed Scope of Work.
• CHI agrees to maintain the properties during the course of the Project including, but not
limited to lawn care, snow removal, maintenance and making sure property remains clean
during construction.
CHI will maintain insurance in accordance with the provisions of this Agreement and as
outlined in Section 5.
• CHI agrees to maintain accurate records that include detailed costs associated with the
Project and Minimum Improvements as well as proceeds received from the sale of each
residential unit. In addition, all cost and sales records will accompany ail requests to draw
from City funds.
CHI will determine the selling price of residential units. Factors determining the selling
price may include costs incurred and the appraised value of the rehabilitated residential
units.
There will be no income restrictions with respect to buyers purchasing residential units
rehabilitated through this Agreement.
City Obligations:
• Assist CHI with initial inspection of residential units to be purchased by CHI as part of the
Project.
• Develop minimum improvements documents for rehabilitation including scope of work,
drawings/specifications and bid packages for CHI to distribute to contractors. City will also
prepare contracts for all contractors and send once signed to CHI.
• Assist CHI with making certain Contractors keep property cleaned up through construction.
• Rehabilitation Inspector and Supervisor will perform final inspections with CHI to assure
satisfactory work completed by the Contractor(s).
Section 3. Project Budget
Exhibit A hereto represents a Scope of Work budget estimate for the Minimum Improvements
required for completion of the Project.
Section 4. Indemnification
CHI shall indemnify, defend and hold harmless the City, its governing body, departments,
officials, employees and agents from and against all liability, claims, actions, damages, losses
and expenses arising out of the City's work in performing its obligations under this Agreement.
Section 5. Insurance
1. Property Insurance.
a. CHI must provide and maintain or cause to be maintained at all times during
the Project 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 buildings replacement values, including improvements, when
construction is completed. Coverage shall include the "special perils" form
and CHI shall furnish City with proof of insurance in the form of a certificate
of insurance.
b. Upon completion of the Project and up to the Termination Date, CHI shall
maintain, or cause to be maintained, at its cost and expense property
insurance against Toss and/or damage to the buildings (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 buildings (including the Minimum Improvements). CHI shall
furnish to City proof of insurance in the form of a certificate of insurance.
c. 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.
d. CHI shall notify City immediately in the case of damage exceeding $50,000
in amount to, or destruction of, the Minimum Improvements or any portion
thereof resulting from fire or other casualty. Net proceeds of any such
insurance (Net Proceeds), shall be paid directly to CHI as its interests may
appear, and CHI shall forthwith repair, reconstruct and restore the Minimum
Improvements to substantially the same or an improved condition or value as
they existed prior to the event causing such damage and, to the extent
necessary to accomplish such repair, reconstruction and restoration, CHI
shall apply the Net Proceeds of any insurance relating to such damage
received by CHI to the payment or reimbursement of the costs thereof,
subject, however, to the terms of any mortgage encumbering title to the
Property (as its interests may appear). CHI shall complete the repair,
reconstruction and restoration of Minimum Improvements whether or not the
Net Proceeds of insurance received by CHI for such purposes are sufficient.
2. Liability Insurance. CHI must maintain a commercial general liability insurance
policy with coverage and limits not less than the following:
General Aggregate Limit
Products -Completed Operations Aggregate Limit
Personal and Advertising Injury Limit
Each Occurrence
Fire Damage Limit (any one occurrence)
Medical Payments
Section 6. Amendments
$2,000,000
$1,000,000
$1,000,000
$1,000,000
$50,000
$5,000
This Agreement may be modified or amended only in writing by a duly authorized representative
and executed by both CHI and City. It may not be amended or modified by oral agreement or
understanding between the parties unless the same shall be in writing, duly approved, and
executed by both parties.
Section 7. Parties Bound
The covenants and conditions herein contained shall apply to and bind the legal representatives,
successors, and assigns of all of the parties hereto, and all of the parties hereto shall be jointly
and severally liable hereunder.
Section 8. Notices
All notices or demands to be given, made, or sent, or which may be given, made, or sent by one
party to the other pursuant to this Agreement shall be deemed to have been given, made, or sent
when made in writing, and deposited in the U.S. mail, certified and postage prepaid, addressed
as follows:
a. To City: City of Dubuque
Housing & Community Development
Attn: Alvin Nash, Housing Director
350 West 6th Street, Suite 312
Dubuque, IA 52003
b. To CHI: CHI
Doug LaBounty
300 East Court Avenue
Des Moines, IA 50309
The address to which any notice, demand, or other writing may be given, made, or sent by any
party as above provided may be changed by written notice given by such party as above
provided.
Section 9. Termination
Either party may terminate the Agreement for any reason by providing sixty (60) days written
notice. However, termination does not preclude CHI's obligation to repay the City for its
investment up to the date of termination for homes not completed under the Agreement, nor the
City's obligation to reimburse CHI for work completed through the date of termination by the City.
Additionally, termination does not preclude the parties from meeting any other obligations under
the Agreement for work started prior to the date of termination which must be completed.
Section 10. Governing Law
This Agreement will be governed by and construed in accordance with the laws of the State of
Iowa.
Section 11. Severability
If any term, covenant, or condition of this Agreement is held by a court of competent jurisdiction to
be invalid, or unenforceable, the rest of the Agreement will remain in full force and effect and will
in no way be affected, impaired, or invalidated, unless such enforcement will frustrate the purpose
of this Agreement.
Section 12. Force Majeure
In the event that either party hereto will be delayed or hindered in •or prevented from the
performance of any act required hereunder by reason of strikes, lockouts, labor troubles,
unavailability or excessive price of fuel, power failure, riots, insurrection, war, terrorist activities,
chemical explosions, hazardous conditions, fire, weather or acts of God, or by reason of any
other cause beyond the exclusive and reasonable control of the party delayed in performing work
or doing acts required under the terms of this Agreement, then performance of such act will be
excused for the period of the delay and the period for the performance of any such act will be
extended for a period equivalent to the period of such delay.
Section 13. Paragraph Headings
The titles to the paragraphs of this Agreement are solely for the convenience of the parties and
will not be used to explain, modify, simplify, or aid in the interpretation of the provisions of this
Agreement.
Section 14. Entire Agreement
This Agreement constitutes the entire agreement between the parties, and any prior
understanding or representation of any kind preceding the date of this Agreement shall not be
binding on either party except to the extent incorporated in this Agreement.
IN WITNESS WHEREOF, the parties have executed these presents the day and year first above
written.
City of Dubuque a
By:
Name:
Roy 1D. Buol
Mayor
Title:
8/15/16
Title: President
Exhibit A
Agreement Between City of Dubuque and Community Housing Initiatives, Inc. -
Washington Neighborhood Housing Partnership
Estimated Budget for Completion of Scope of Work
Number of Homes:24
Sources of Funding:Aggregate
Community Housing Initiatives $2,472,000
City of Dubuque $600,000
Total Sources of Funding $3,072,000
Average 24
Estimated Development Costs:Per Home Aggregate
Acquisition of homes $45,000 $1,080,000
Rehabilitation $65,000 $1,560,000
Marketing/realtor $6,000 $144,000
Taxes, insurance, miscellaneous $5,000 $120,000
Developer fee $7,000 $168,000
Total Development Costs $128,000 $3,072,000
Estimated Home Sale Proceeds $103,000 $2,472,000
Proceeds
Allocation of Aggregate Home Sale Proceeds:Amount Balance
$2,472,000
Community Housing Initiatives $2,472,000 $0
City of Dubuque $0 $0