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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. 2 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. 2 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.] 4 [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.