Friends of St. Mary's / Steeple Square - Collateral Assignment of DA Copyright 2014
City of Dubuque Consent Items # 12.
ITEM TITLE: Friends of St. Mary's /Steeple Square - Collateral
Assignment of Development Agreement
SUMMARY: City Manager recommending approval of a Collateral
Assignment of the Development Agreement for the 1501
Jackson Street project to Dubuque Bank& Trust.
RESOLUTION Approving Collateral Assignment of
Development Agreement related to rehabilitation of 1501
Jackson Street
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt
Resolution(s)
ATTACHMENTS:
Description Type
1501 Jackson Street Collateral Assignment of City Manager Memo
Development Agreement-MVM Memo
Staff Memo Staff Memo
Collateral Assignment of DA Supporting Documentation
Resolution of Approval Resolutions
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: Collateral Assignment of Development Agreement for 1501 Jackson
Street
DATE: September 27, 2016
Economic Development Director Maurice Jones recommends City Council approval of a
Collateral Assignment of the Development Agreement for the 1501 Jackson Street
project to Dubuque Bank & Trust.
Friends of St. Mary's d/b/a Steeple Square is working with Dubuque Bank & Trust Co.
(DB&T) to obtain loan funds to assist in the rehabilitation. As a part of the required loan
document package, DB&T has requested that Jackson Street School, LLC and Friends
of St. Mary's d/b/a Steeple Square sign a Collateral Assignment of the Development
Agreement to the bank. This Assignment requires that the City join in the Assignment.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
6a-A-%,
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Crenna Brumwell, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Maurice Jones, Economic Development Director
Dubuque Economic Development Department
THE CITY OF 50 West 13th Street
All-AmericaCitY Dubuque,Iowa 52001-4864
DUB3 AkE1 ' Office(563)589-4393
TTY(563)690-6678
® http://www.cityofdubuque.org
Masterpiece on the Mississippi 200.2012.2013
TO: Michael Van Milligen, City Manager
FROM: Maurice Jones, Economic Development Director
SUBJECT: Collateral Assignment of Development Agreement for 1501 Jackson
Street
DATE: September 21, 2016
INTRODUCTION
The purpose of this memorandum is to request City Council approval of a collateral
Assignment of the Development Agreement for the 1501 Jackson Street project to
Dubuque Bank & Trust.
BACKGROUND
Attached to this Memorandum is a collateral assignment document related to the
rehabilitation of 1051 Jackson Street in Dubuque and a resolution approving the
assignment. This building is owned by Friends of St. Mary's d/b/a Steeple Square.
DISCUSSION
Friends of St. Mary's d/b/a Steeple Square has created a special purpose entity
(Jackson Street School, LLC) to facilitate the use of federal and state historic tax credits
and other development programs in the rehabilitation project. The City Council recently
approved an assignment of the Development Agreement from Friends of St. Mary's
d/b/a Steeple Square to Jackson Street School, LLC.
Friends of St. Mary's d/b/a Steeple Square is working with Dubuque Bank & Trust Co.
(DB&T) to obtain loan funds to assist in the rehabilitation. As a part of the required loan
document package, DB&T has requested that Jackson Street School, LLC and Friends
of St. Mary's d/b/a Steeple Square sign a collateral Assignment of the Development
Agreement to the bank. This Assignment requires that the City join in the Assignment.
The purpose of the collateral Assignment is to allow the bank to step into the shoes of
the Friends of St. Mary's d/b/a Steeple Square entities in the event of a default under
the loan documents. In short, if such a default occurred, DB&T could then acquire the
property through enforcement of its rights under the loan documents and then would
have the same rights as the Friends of St. Mary's d/b/a Steeple Square entities under
the Development Agreement.
In this fashion, the bank would be in position to either complete the project or transfer
the real estate and the rights under the agreements (with City approval) to a buyer that
would finish the project. Therefore, approval of the proposed Assignment not only
facilitates the Developer's efforts to complete the project but helps ensure the project
would be completed by a third party in the unlikely event of a default under the loan
documents.
RECOMMENDATION/ ACTION STEP
Based on the critical need for downtown housing and the City's goal to assist in
redeveloping the Washington Neighborhood area, I recommend the City Council adopt
the attached resolution approving the Assignment of the Development Agreement to
Dubuque Bank & Trust.
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RESOLUTION NO. 342-16
APPROVING COLLATERAL ASSIGNMENT OF DEVELOPMENT AGREEMENT
RELATED TO REHABILITATION OF 1501 JACKSON STREET
Whereas, the property at 1501 Jackson Street in Dubuque, Iowa (the Building) is
owned by Friends of St. Mary's d/b/a Steeple Square (Owner); and
Whereas, Owner and the City of Dubuque (City) have entered into a Development
Agreement for the rehabilitation of the Building; and
Whereas, Owner has created a special purpose entity to facilitate the use of federal
and state historic tax credits and other development programs in the rehabilitation project,
to wit, Jackson Street School, LLC, which is owned by Friends of St. Mary's d/b/a Steeple
Square; and
Whereas, the City Council has approved an assignment of the Development
Agreement from Friends of St. Mary's d/b/a Steeple Square to Betty Building, LLC and
the Subrecipient Agreement from Wilmac to Jackson Street School, LLC; and
Whereas, Owner and Jackson Street School, LLC will enter into a loan agreement
with Dubuque Bank & Trust Co. (DB&T) for additional funding for the Building and DB&T
has requested that Jackson Street School, LLC sign a collateral Assignment of the
Development Agreement to DB&T (the Assignment), which Assignment require that City
join in the Assignment; and
Whereas, the City Council finds that the Assignment should be approved.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF DUBUQUE,
IOWA AS FOLLOWS:
Section 1. The Assignment of the Development Agreement attached hereto is
hereby approved.
Section 2. The Mayor is authorized and directed to sign the Assignment of the
Subrecipient Agreement and Assignment of the Development Agreement on behalf of the
City of Dubuque.
Attest:
Passed, approved and adopted this 3rd day of Octobe , 2016.
iy,J
te-: f
Kevin Sp Firnstah Clerk
Roy O. Bu� Mayor
COLLATERAL ASSIGNMENT OF DEVELOPMENT AGREEMENT
THIS COLLATERAL ASSIGNMENT OF DEVELOPMENT AGREEMENT (this
"Assignment") is made and entered into as of the'day of October, 2016, by and among
JACKSON STREET SCHOOL, LLC, an Iowa limited liability company ("Borrower"),
FRIENDS OF ST. MARY'S, an Iowa non-profit corporation d/b/a Steeple Square ("Developer"
and together with Borrower, "Assignors"), THE CITY OF DUBUQUE, IOWA, a municipal
corporation existing under the laws of the State of. Iowa (the "City"), and DUBUQUE BANK
AND TRUST COMPANY, an Iowa state banking corporation ("Lender").
Recitals
WHEREAS, Borrower and Lender have entered into that certain Construction Loan
Agreement of even date herewith (the "Loan Agreement"), pursuant to which Lender has agreed
to make certain loans to Borrower in the aggregate amount of $2,981,000 (the "Loans") for the
purpose of providing financing for the acquisition and rehabilitation of a building known as the
St. Mary's Jackson Street School 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 (i) that certain
Promissory Note in the original principal amount of $2,170,000 of even date herewith
("Note A") executed by Mortgagor and payable to Lender, (ii) that certain Promissory Note in
the original principal amount of $471,000 of even date herewith ("Note B") executed by
Mortgagor and payable to Lender, and (iii) that certain Promissory Note in the original principal
amount of $340,000 of even date herewith ("Note C" and together with Note A and Note B, the
"Notes"); and
WHEREAS, the City and Developer have entered into that certain Development
Agreement dated as of May 2, 2016, as amended by the First Amendment thereto dated June 6,
2016, as further amended by the Second Amendment thereto dated July 18, 2016, and as further
amended by the Third Amendment thereto dated September 19, 2016 (as amended, the
"Development Agreement"), pursuant to which the City has agreed to provide certain financing
incentives in connection with the development and rehabilitation of the Project, including
without limitation (i) a Downtown Housing Incentive Grant in the amount of $120,000; (ii) a
Planning and Design Grant in the amount of $10,000; (iii) a Facade Grant in the amount of
$10,000; and (iv) a Financial Consulting Grant in the amount of $15,000 (collectively, the
"Grants"); and
WHEREAS, Lender has required, as an express condition to making the Loans, that
Borrower assign its rights under the Development Agreement to Lender to secure the obligations
of Borrower under the Notes and the Loan Agreement.
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. Capitalized terms used herein but not otherwise defined
herein shall have the meaning set forth in the Loan Agreement.
2. Assignment. Assignors hereby assign to Lender all of their 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, to secure the obligations of Borrower under the Notes and the Loan Agreement.
3. Borrower Representations and Warranties. Assignors hereby represent 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 any Assignor 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. Assignor 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.
Assignor hereby irrevocably constitutes and appoints Lender as its attorney-in-fact to demand,
receive and enforce Assignor's rights under the Development Agreement for and on behalf of
and in the name of such Assignor or, at the option of Lender, in the name of Lender, with the
same force effect as Assignor could do if this Assignment had not been made.
4. Attorney -in -Fact. Upon the occurrence of a default or event of default under the
Notes or the Loan Agreement (a "Default"), without affecting any of Lender's rights or remedies
against Borrower under any other instrument, Assignors shall be deemed to have irrevocably
appointed Lender as Assignors' attorney-in-fact to exercise any or all of Assignors' rights in, to
and under the Development Agreement and to give appropriate receipts, releases and
satisfactions on behalf of Assignors in connection with the performance by any party to the
Development Agreement and to do any or all other acts in Assignors' names or in Lender's own
name that Assignors 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 Assignors 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. Assignors hereby authorize 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 Assignors to tender performance of its obligations under the
Development Agreement to Lender upon presentation of a copy of this Assignment.
5. City Consent. 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 Willis, that neither the City
nor either Assignor 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.
6. City Notice. 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 obligatipn, to cure such default within the time period set forth in the Development
Agreement.
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7. No Amendment. The parties hereto 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.
8. No Waiver. 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.
9. Continuing Obligations. 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 contained
in the Development Agreement.
10. Notice. 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
Attention: City Manager
50 W. 13th Street
Dubuque, Iowa 52001
With copy to:
City Attorney
City Hall
50 W 13`h1 Street
Dubuque, Iowa 52001
If to Borrower:
Jackson Street School, LLC
Attention:
900 Jackson Street, Suite LL2
Dubuque, Iowa 52001
If to Developer:
Friends of St. Mary's d/b/a Steeple Square
Attention: Jack McCullough, President
PO Box 3188
Dubuque, Iowa 52004-3188
If to Lender:
Dubuque Bank and Trust Company
Attention: Mark D. Wagner
1398 Central Avenue
Dubuque, IA 52001
11. This Agreement shall be governed by and construed in accordance with the laws
of the State of Iowa.
17712.10
12450612v1
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK.]
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[SIGNATURE PAGE TO COLLATERAL ASSIGNMENT OF
DEVELOPMENT AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be duly
executed as of the date set forth above.
JACKSON STREET SCHOOL, LLC, an
Iowa limited liability company
By:
Name:
Its:
[SIGNATURE PAGE TO COLLATERAL ASSIGNMENT OF
DEVELOPMENT AGREEMENT]
FRIENDS OF ST. MARY'S, an Iowa non-
profit corporation d/b/a Steeple Square
By:
Name: Jack McCullough
Title: President
[SIGNATURE PAGE TO COLLATERAL ASSIGNMENT OF
DEVELOPMENT AGREEMENT]
THE CITY OF DTJ1BUQUE, IOWA
By:
7
Name: Roy(6. Buol
Its: Mayor
[SIGNATURE PAGE TO COLLATERAL ASSIGNMENT OF
DEVELOPMENT AGREEMENT]
DUBUQUE BANK AND TRUST COMPANY
By:
Mark D. Wagner
Commercial Banking Officer
EXHIBIT A
LEGAL DESCRIPTION
Lot 1 City Lot 493, in the City of Dubuque, Iowa, according to Plat recorded as Document
#2011-18253 and filed December 1, 2011 in Dubuque County, Iowa recorder's office.