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HomeMy WebLinkAboutCedar Valley Real Estate, LLC - Dev Agmnt - 1/22/19Prepared by Christopher S. Wendland, P.O. Box 596, Waterloo, IA 50703. 319-234-5701 DEVELOPMENT AGREEMENT This Development Agreement (the "Agreement") is entered into as of )'wit 2 , 2019, by and between Cedar Valley Real Estate, LLC (the "Company"), and the City of Waterloo, Iowa (the "City"). RECITALS A. City considers economic development within the City a benefit to the community and is willing for the overall good and welfare of the community to provide financial incentives so as to encourage that goal. B. Company is willing and able to finance and undertake acquisition and rehabilitation of an existing multi -unit residential property located in the Downtown Waterloo Urban Renewal and Redevelopment Plan Area. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the parties agree as follows: 1. Development Property. Company is the owner of a multi -story residential structure located on real property at 300 Commercial Street, Waterloo, described on Exhibit "A" attached hereto (the "Property") and consisting of tax parcel nos. 8913-26-208-001 and 8913-26-208-002. Company will undertake the Project (defined below) upon the Property. In connection with Improvements, Company will make diligent and commercially reasonable efforts to prepare and submit applications for brownfield and/or grayfield tax credits from the State of Iowa and for historic tax credits from applicable state and federal agencies (collectively, the "Tax Credits"). 2. Improvements by Company. Company shall upgrade and renovate the rooms, common areas, and other facilities (all of the foregoing renovations and improvements are collectively referred to as the "Improvements") at a minimum estimated investment cost of $2,100,000. The Improvements shall be constructed in accordance with all applicable City, state, and federal building codes and shall comply with all applicable City ordinances and other applicable law, including review and approval by the Waterloo Development Corporation's (WDC) Design Build Management Team (DBMT) process. The Property, the Improvements, and all development -related work to make the Property usable for Company's purposes as contemplated by this Agreement are collectively referred to as the "Project". Company shall commence Improvements within four (4) months after the date of this Agreement and shall substantially complete the Project within twelve (24) months thereafter. 3. City Activities in Aid of Project. A. Rebates. City shall provide property tax rebates as further set forth in Section 5 below. B. Economic development grant. City shall pay to Company a development grant of $300,000.00 (the "Grant"), payable within 30 days after City's chief financial officer examines Project financial statements, budget and projections and has had reasonable inquiries satisfied by Company. The purpose of the Grant is to provide local government matching funds for the Tax Credits. If the Project is not completed, Company shall repay the Grant to City in full within thirty (30) days after written demand from City, plus interest at the rate of six percent (6%) per annum, compounded monthly, from and after the date of initial disbursement until repaid in full. If the Grant and interest are not repaid, then Company hereby authorizes City to execute on Company's behalf and record a mortgage against the Property to secure repayment of the Grant plus interest. Appointment of Attorney in Fact: Company hereby authorizes City to execute and record, on Company's behalf and as its attorney- in-fact, the mortgage provided for in this paragraph, and for such limited purpose Company does hereby constitute and appoint City as its attorney-in-fact. 4. Minimum Assessment Agreement. Company acknowledges and agrees that it will pay when due all taxes and assessments, general or special, and all other lawful charges whatsoever levied upon or assessed or placed against the Property. Company further agrees that, prior to the date set forth in Section 2 of Exhibit "B", it will not seek or cause a reduction in the taxable valuation for the Property, which shall be fixed for assessment purposes, below the aggregate amount of $1,300,000.00 ("Minimum Actual Value"), through: (i) willful destruction of the Property, Improvements, or any part of either; (ii) a request to the assessor of Black Hawk County; or (iii) any proceedings, whether administrative, legal, or equitable, with any administrative body or court within the City, Black Hawk County, the State of Iowa, or the federal government. Company agrees to sign the agreement attached as Exhibit "B" at closing. 2 5. Property Tax Rebates. Provided that Company has completed the Improvements as set forth herein and has executed the Minimum Assessment Agreement as set forth in Section 4, the City agrees to rebate property taxes (with the exceptions noted below) as follows: 70% rebate for each of Years One through Fifteen, inclusive, for any taxable value over the January 1, 2018 value of $312,540.00. Rebates are payable in respect of a given year only to the extent that Company has actually paid general property taxes due and owing for such year. To receive rebates for a given year, Company must, within twelve (12) months after the tax payment due date, submit a completed rebate request to City on the form provided by or otherwise satisfactory to City, and if Company fails to do so within thirty (30) days following delivery of written notice from City, Company's right to a rebate for that year will be forfeited in the City's discretion. The taxable value of the Property as a result of the Improvements must be increased by a minimum of 10% and must increase the annual tax by a minimum of $500. This rebate program is not applicable to any special assessment levy, debt service levy, or any other levy that is exempted from treatment as tax increment financing under the provisions of applicable law. The first year in which a rebate may be given ("Year One") shall be the first full year for which the assessment is based upon the completed value of the Improvements and not a prior year for which the assessment is based solely upon the value of the land or upon the value of the land and a partial value of the Improvements, due to partial completion of the Improvements or a partial tax year. 6. Obligations Contingent and Cancellable. Each and every obligation of City under this Agreement is expressly made subject to and contingent upon City's completion of all procedures, hearings and approvals deemed necessary by City or its legal counsel for amendment of the urban renewal plan applicable to the Property and/or project area, all of which must be completed within 180 days from the date this Agreement is approved by the City council. Likewise, Company's obligations under this Agreement are subject to and contingent upon City's completion of all such procedures, hearings and approvals. 7. Representations and Warranties of City. City hereby represents and warrants as follows: A. City is not prohibited from consummating the transaction contemplated in this Agreement by any law, regulation, agreement, instrument, restriction, order or judgment. B. Each person who executes and delivers this Agreement and all documents to be delivered hereunder is and shall be authorized to do so on behalf of City. 3 8. Representations and Warranties of Company. Company hereby represents and warrants as follows: A. Company is not prohibited from consummating the transaction contemplated in this Agreement by any law, regulation, agreement, instrument, restriction, order or judgment. B. Company is duly organized, validly existing, and in good standing under the laws of the State of Iowa. C. Company has full right, title, and authority to execute and perform this Agreement and to consummate all of the transactions contemplated herein, and each person who executes and delivers this Agreement and all documents to be delivered to City hereunder is and shall be authorized to do so on behalf of Company. 9. Materiality of Company's Promises, Covenants, Representations, and Warranties. Each and every promise, covenant, representation, and warranty set forth in this Agreement on the part of Company to be performed is a material term of this Agreement, and each and every such promise, covenant, representation, and warranty constitutes a material inducement for City to enter this Agreement. Company acknowledges that without such promises, covenants, representations, and warranties, City would not have entered this Agreement and would not have offered the substantial Project incentives described herein. Upon breach of any promise or covenant, or in the event of the incorrectness or falsity of any representation or warranty, City shall deliver written notice of such breach to Company, and if Company fails to cure such breach within sixty (60) days thereafter, City may, at its sole option and in addition to any other right or remedy available to it, terminate this Agreement and declare it null and void. 10. Notices. Any notice under this Agreement shall be in writing and shall be delivered in person, by overnight air courier service, by United States registered or certified mail, postage prepaid, (with an additional copy delivered by one of the foregoing means), and addressed: (a) if to City, at 715 Mulberry Street, Waterloo, Iowa 50703, facsimile number 319-291-4571, Attention: Mayor, with copies to the City Attorney and the Community Planning and Development Director. (b) if to Company, at 1626 Picturesque Drive, Cedar Falls, Iowa 50613, facsimile number , Attn: Kade Hoppenworth. Delivery of notice shall be deemed to occur (i) on the date of delivery when delivered in person, (ii) one (1) business day following deposit for overnight delivery to an overnight air courier service which guarantees next day delivery, or (iii) three (3) business days following the date of deposit if mailed by United States registered or certified mail, postage prepaid. 4 11. No Joint Venture. Nothing in this Agreement shall, or shall be deemed or construed to, create or constitute any joint venture, partnership, agency, employment, or any other relationship between the City and Company nor to create any liability for one party with respect to the liabilities or obligations of the other party or any other person. 12. Amendment, Modification, and Waiver. No amendment, modification, or waiver of any condition, provision, or term of this Agreement shall be valid or of any effect unless made in writing, signed by the party or parties to be bound or by the duly authorized representative of same, and specifying with particularity the extent and nature of the amendment, modification, or waiver. Any waiver by any party of any default by another party shall not affect or impair any rights arising from any subsequent default. 13. Severability; Reformation. Each provision, section, sentence, clause, phrase, and word of this Agreement is intended to be severable. If any portion of this Agreement shall be deemed invalid or unenforceable, whether in whole or in part, the offending provision or part thereof shall be deemed severed from this Agreement and the remaining provisions of this Agreement shall not be affected thereby and shall continue in full force and effect. If, for any reason, a court finds that any portion of this Agreement is invalid or unenforceable as written, but that by limiting such provision or portion thereof it would become valid and enforceable, then such provision or portion thereof shall be deemed to be written, and shall be construed and enforced, as so limited. 14. Captions. All captions, headings, or titles in the paragraphs or sections of this Agreement are inserted only as a matter of convenience and/or reference, and they shall in no way be construed as limiting, extending, or describing either the scope or intent of this Agreement or of any provisions hereof. 15. Binding Effect. This Agreement shall be binding and shall inure to the benefit of the parties and their respective successors, assigns, and legal representatives. 16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. 17. Entire Agreement. This Agreement, together with the Minimum Assessment Agreement attached hereto as Exhibit "B", constitutes the entire agreement of the parties and supersedes all prior or contemporaneous negotiations, discussions, understandings, or agreements, whether oral or written, with respect to the subject matter hereof. 18. Time of Essence. Time is of the essence of this Agreement. 5 IN WITNESS WHEREOF, the parties have executed this Development Agreement by their duly authorized representatives as of the date first set forth above. CITY OF WATERLOO, IOWA CEDAR VALLEY REAL ESTATE, LLC By: Quentin M. Hart, Mayor Attest: 4.141C elley Felch21M)City Clerk By:a‘C:: Kade Hoppenworth Managing Member PERSONAL GUARANTY. The undersigned members and/or managers of Company hereby agree for themselves and their heirs, personal representatives, and assigns, to unconditionally guarantee to City, its successors and assigns, the full and prompt performance by Company, its successors and assigns, of all promises and covenants on the part of Company to be performed pursuant to the foregoing Agreement, including but not limited to the duties of indemnity set forth therein, if any. Liability of guarantors hereunder is joint and several. Kade Hoppenworth 6 EXHIBIT "A" Legal Description of Property Lots Nos. 4 and 5 in Block No. 5, Original Plat on the West Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa. EXHIBIT "B" MINIMUM ASSESSMENT AGREEMENT This Minimum Assessment Agreement (the "Agreement") is entered into as of , 2019, by and among the CITY OF WATERLOO, IOWA ("City"), CEDAR VALLEY REAL ESTATE, LLC ("Company"), and the COUNTY ASSESSOR of the City of Waterloo, Iowa ("Assessor"). WITNESSETH: WHEREAS, on or before the date hereof the City and Company have entered into a development agreement (the "Development Agreement") regarding certain real property, described in Exhibit "A" thereto, located in the City; and WHEREAS, it is contemplated that pursuant to the Development Agreement, the Company will undertake the development of an area ("Project") within the City and within the Downtown Waterloo Urban Renewal and Redevelopment Plan Area; and WHEREAS, pursuant to Iowa Code § 403.6, as amended, the City and the Company desire to establish a minimum actual value for the land and the building(s) pursuant to this Agreement and applicable only to the Project, which shall be effective upon substantial completion of the Project and from then until this Agreement is terminated pursuant to the terms herein and which is intended to reflect the minimum actual value of the land and buildings as to the Project only; and WHEREAS, the City and the Assessor have reviewed the preliminary plans and specifications for the improvements (the "Improvements") which the parties contemplate will be erected as a part of the Project. NOW, THEREFORE, the parties hereto, in consideration of the promises, covenants, and agreements made by each other, do hereby agree as follows: 1. Upon substantial completion of construction of the Improvements by the Developer, the minimum actual taxable value which shall be fixed for assessment purposes for the land and Improvements to be constructed thereon by the Company as a part of the Project shall not be Tess than $1,300,000.00 ("Minimum Actual Value") until termination of this Agreement. The parties agree for purposes of this Agreement that construction of the Improvements will be substantially completed on or before December 31, 2020. 2. The Minimum Actual Value herein established shall be of no further force and effect, and this Minimum Assessment Agreement shall terminate, on December 31, 2046. Nothing herein shall be deemed to waive the Company's rights under Iowa Code § 403.6, as amended, to contest that portion of any actual value assignment made by the Assessor in excess of the Minimum Actual Value established herein. In no event, however, shall the Company seek or cause the reduction of the actual value assigned below the Minimum Actual Value established herein during the term of this Agreement. 3. This Agreement shall be promptly recorded by the City with the Recorder of Black Hawk County, Iowa. The City shall pay all costs of recording. 4. Neither the preambles nor provisions of this Agreement are intended to, or shall be construed as, modifying the terms of the Development Agreement. 5. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. CITY OF WATERLOO, IOWA CEDAR VALLEY REAL ESTATE, LLC By: / Quentin M. Hart, Mayor Attest: Kelley Felc 1-, City Clerk STATE OF IOWA ) ss. COUNTY OF BLACK HAWK On this day of , 2019, before me, a Notary Public in and for the State of Iowa, perso - Ily appe- ed Quentin M. Hart and Kelley Felchle, to me personally known, who being duly sworn, did say that they are the Mayor and City Clerk, respectively, of the City of Waterloo, Iowa, a municipal corporation, created and existing under the laws of the State of Iowa, and that the seal affixed to the foregoing instrument is the seal of said municipal corporation, and that said instrument was signed and sealed on behalf of said municipal corporation by authority and resolution of its City Council, and said Mayor and City Clerk acknowledged said instrument to be the free act and deed of said municipal corporation by it and by them voluntarily executed. By: Kade Hoppenworth Managing Member NANCY 1-i1GBY COMMISSION1\10.738229 MY COMMISSION IEXPIRES 2 l r Notary Public STATE OF IOWA ) ss. COUNTY OF BLACK HAWK ) Acknowledged before me on \\ , 2019 by Kade Hoppenworth, as Managing Member of Cedar Valley Real Estate, LLC. If0 ADRIENNE MILLER COMMISSION NO. 809109 * MY COMMISSION EXPIRES '" FEBRUARY 23, 2021 3 otary Public CERTIFICATION OF ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the improvements are to be constructed for the development, and being of the opinion that the minimum market value contained in the foregoing Minimum Assessment Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the property subject to the development, upon completion of improvements to be made on it and in accordance with the Minimum Assessment Agreement, certifies that the actual value assigned to such land and building upon completion of the development shall not be less than One Million Three Hundred Thousand Dollars ($1,300,000.00). Assessor for Black Hawk County, Iowa Date STATE OF IOWA ) ) ss. COUNTY OF BLACK HAWK ) Subscribed and sworn to before me on , 2019, by T.J. Koenigsfeld, Assessor for Black Hawk County, Iowa. Notary Public