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HomeMy WebLinkAboutCouncil Packet - 1/12/2015BUILDING & GROUNDS COMMITTEE January 12, 2015 4:20 p.m. Harold E. Getty Council Chambers Roll Call: Members: Chairperson David Jones Pat Morrissey Steve Schmitt Approval of Agenda, as proposed. NEW BUSINESS 1. Request by House of Hope and JSA Development for interest in 519 E. 3rd Street for future projects - Submitted by Noel Anderson, Community Planning & Development Director ADJOURNMENT Suzy Schares, CMC City Clerk/Human Resource Director Proposal to the City of Waterloo Regarding 519 East 3rd Street 1. Project House of Hope offers transitional housing and case management services to homeless single -mothers and their children. We have provided a professional presence in the Walnut Street neighborhood for 20 years, and given hundreds of families the opportunity to become productive members of our community. Our commitment to them and the community remains unwavering; we would like to continue to offer services at 306 Walnut and add a new building in the neighborhood House of Hope would like to build a 12-plex apartment building to replace the 222 Walnut location. These plans are contingent on our ability to sell 222 Walnut at a competitive price, as well as our ability to secure adequate land in the Walnut Court neighborhood within our budget. In order to build a 12-plex, we will need to secure both the land at 515 E 3`d Street and 519 E 3`d Street. We have entered into preliminary negotiations with Pat Hayes for his home at 515 E 3`d (plot 8913-24-312-007) and the area with a billboard off Franklin (plot 8913-24-312-009). We are requesting the city consider giving us the land at 519 E 3rd Street (plot 8913-24-006) for development. Also, we understand the city and Mr. Hayes own undivided interest in the land directly behind our 306 Walnut location (unknown plot number). That property is necessary for us to proceed as well. A new House of Hope 12-plex would include approx. 9 two -bedroom apartments, 2 three -bedroom apartments, and 1 one -bedroom apartment, as well as office, storage, meeting and reception space. Estimated construction costs would be approximately $1.2 million and include a basement for storage and office space, as well as two levels for apartment residences. (or three levels of apartment living with a first floor garage as noted in #6 of this proposal.) Our plans include continued use of our 306/308 Walnut location. We are exploring additional programming options at this site to further serve homeless women in the Cedar Valley. Details of which will be announced at a later date. 2. Timeline As a not for profit, funded exclusively by our local community, House of Hope values stewardship and are committed to responsibly managing our community's resources. Consequently, we have not commissioned architectural designs or definitive plans for construction. These will not be completed until we are assured that the project will move forward. We are, however, able to estimate a construction timeline based on the following assumptions. A. The City of Waterloo would proceed, as they indicated 18 months ago, to demolish the property at 519 E 3`d Street, with House of Hope taking possession of the property clear and ready to build. B. House of Hope would secure the property at 515 E 3rd Street along with the Franklin Street billboard area previously mentioned and the interior land directly behind 306 Walnut and assume responsibility for demolition C. The City of Waterloo or other private entity would purchase our property at 222 Walnut for commercial market value. 1. We estimate total time from acquisition to completion to be at least 12 months, up to 20 months. 2. The estimate includes: -an initial phase securing architectural designs, fundraising, demolition of 515 E 3rd Street, taking 6-8 months. -groundbreaking and construction, with an estimate for this phase of 8-12 months dependent weather and time of year. 3. Financing A. We anticipate the demolition of 515 E 3rd Street will cost approximately $15,000, with an additional $15,000 for asbestos removal if needed. B. Our building project is estimated at approximately $1.2 million, with some cost reduction possible if volunteers are used for unskilled work, and building materials are donated. C. We have discussed our intentions with our stakeholders, and they are very supportive of the project. D. We do not have specific commitments; as stated previously, we do not have architectural designs or specific costs determined. E. We will have the proceeds from the sale of 222 to use as seed money for the initial stages of the project. F. We are waiting to begin fundraising until a decision is made regarding these properties. G. House of Hope has operated for 20 years with the support of our local community exclusively. We believe our record of transparent, responsible, accountable services to the Cedar Valley stands on its own merit and is testament to the community's commitment to our project. 4. What other factors are involved? We have spoken to the owners of 515 East 3rd Street , Pat Hayes, and he has expressed a commitment to sell his property to our agency. However, the recent historic interest in the adjacent property has slowed our process. Me Hayes is aware that we would need to demolish the current structure in order to begin construction. We will ask for a 3rd party commercial appraisal of 222 Walnut by an appraiser of our choosing, and that all parties are mindful of that appraisal during negotiation. L 5. Does the City need any financial proof of moving ahead with the project at some early or middle point? As stated earlier, we estimate securing designs, demolition and fundraising will take up to 8 months. Construction could take as little as 8 months if ground -breaking takes place before late September, however will likely take an additional year. 6. Proposed Use We are open to working with the planning and zoning department to create a building exterior consistent with the city's vision for the area. We would need a parking variance for our construction. Because our program serves homeless families, few residents have a personal vehicle. 10 parking stalls (4 for program residents and 6 for staff and visitors) would be sufficient. We are willing to consider 6 stalls in a first floor garage if the city recommends. However, such a design would require that we have three levels above to allow for 12 apartments. Water retention plans will be included in drawings we will submit at a later date. We would anticipate an egress to our property by the billboard -section of the lot off Franklin. Also, we plan a fenced play area and commons in the back of our construction, on the lot that currently is owned in undivided shares. 7. Quality of Proposed Development As indicated previously, after we have acquired the properties at 515 and 519 East 3rd, we will develop it with new construction, following all pertinent city codes. We will work in cooperation with the City of Waterloo to create an architectural style and building exterior consistent with the area and vision for the future. The value this project brings to the community is evident in the nature and scope of our service. House of Hope is the only agency in the Cedar Valley offering personalized case management and transitional housing services to homeless women and their children. The need for our service to the community is well documented. According to the US Census, 16.9% of Blackhawk County residents are living under the poverty level, significantly higher than the Iowa average of 11.6%. The House of Hope program allows women the opportunity to attend school, pay fines, complete community service, or any other steps necessary for their unique situation to ultimately secure stable employment and maintain permanent housing. Ultimately, we support the end of generational poverty and the development of productive community members. 8. Traffic Flow We do not anticipate curb cuts will be needed as there is access currently on the property (plot 8913-24-312-009). Our plans include an asphalt parking lot and driveway that can be one directional with signage and pavement paint to ensure safe traffic flow off Franklin. 9. Economic Impact Considerations House of Hope's economic impact is an investment in the most fragile of our citizens and the future of our community. While we are tax exempt, it is our hope that the City recognizes supporting families and investing in a community has value beyond immediate tax revenue. Our program provides benefits to the community that sustains generations, reduces poverty, and improves quality of life. 10. Price As a not for profit, community organization, House of Hope asks that the city give us the property at 519 E 3rd Street, in accordance with the City of Waterloo Plan for Acquisition and Relocation. Also, House of Hope will sell 222 Walnut following a fair market appraisal of both residential and commercial value. Proposed Use- cost expenditures Demolition $25,000 New construction of 12 plex, $1.2 Million Asphalt drive (on billboard area off Franklin) $20,000 including 1 handicapped stall Playground (in interior lot behind 306 Walnut) - $10,000 Financial Capacity - House of Hope has provided services in the Walnut neighborhood for 20 years, funded exclusively by our community. As stated previously, we remain ever mindful of our responsibility to be good stewards of the resources the community entrusts to our care. Consequently, we have not as of yet requested architectural plans to be drawn for this project; to incur this cost in the midst of uncertainly would be irresponsible. Also, we will not begin the fundraising process until our project is defined and we are certain the land is available. We have, however, discussed our plans with the Community Foundation of Northeast Iowa and the Guernsey Foundation, as well many individual donors, and all are supportive of our plans to move forward. We are able to meet our monthly operating costs through grants, donations and private support, have over $100,000 in reserve funds, and will use the proceeds from the sale of 222 Walnut as seed money. Proposal to the City of Waterloo by JSA Development for the Acquisition and Rehabilitation of the property located at 519 East 3rd Street IuRk ..rum. .uunao. ,41111nwne.0 11 MEL AI MI j • IBM. ....,.. ®)®� I,.......1 .,...... s�oua� .ueounemmtmumumaNnommommanamosuisammomoak ivniiiaiirl.uuvuini�ueuo ik January 8, 2015 JSA Development, LLC 607 Sycamore Street Suite 800 Waterloo, IA 50703 319-234-3147 1 This proposal is not about a single house. JSA Development proposes to demonstrate an alternative approach to neighborhood revitalization. To date the City of Waterloo's approach to neighborhood revitalization has been two pronged. 1) Demolition. Demolition of houses and buildings which are actually or perceived to be beyond rehabilitation. 2) New construction and occasional rehabilitation. This approach constructs or occasionally rehabilitates houses in targeted neighborhoods. The construction and rehabilitation is typically accomplished with Federal block grant, HOME funds, federal/state 2008 flood recovery funds and/or federal neighborhood stabilization funds. These funds, while useful, are almost always restricted to incomes at or below 80% of the area median income. Both of these approaches can be valuable and useful; however the resources that support these are limited and often only serve to reinforce the neighborhoods' perception as a marginal neighborhood by the community as a whole. Waterloo needs an additional tool to revitalize our neighborhoods. JSA Development is proposing that we demonstrate that there is an alternative that can and will work. It has long been known that historic rehabilitation is an important tool to revitalize older areas of our cities. The national Main Street program was founded in 1976 and is based largely on historic preservation. One only has to look to our own Downtown or 90 miles to the east, in Dubuque, to see the potential for downtown revitalization based on historic preservation. JSA Development and others have demonstrated the value of historic rehabilitation projects in Waterloo over the last ten years. We are seeking to use the same tools and skills in our near downtown neighborhoods. Since 2006, JSA has utilized historic preservation as a revitalization method in the following buildings in Downtown Waterloo: 1) 326-330 E 4th Street (Bank Iowa, Charlie's Angels photography studio and seven high end apartments) 2) 510-512 Mulberry St (future home of Select Structural and the Girl Scouts of Eastern Iowa and Western Illinois) 2 3) 228 E 4th Street (Screaming Eagle, Silos and Smokestacks headquarters and three high end apartments) 4) 220-224 E 4t Street (six upper end apartments) 5) 206/208 East 4th Street (Boardwalk Deli and three high -end apartments) 6) 128 East 4th Street (Newton's Cafe and two high -end apartments) 7) 616 to 624 Sycamore Street (Brown Derby Ballroom, My Thai restaurant and four upper -end apartments) 8) 112-118 E 4th Street (HQAA headquarters, Benjamin F. Edwards area office, the House of Eden clothing and salon and Sub City) 9) 217-219 W 4th Street (Cedar Valley Bike Collective and three high -end apartments) 10) 500 Jefferson Street (Waterloo Convention and Visitors Bureau) 11) 612-616 Jefferson Street (six upper -end apartments) We also currently have under construction the following projects: 1) 223-229 E 4th Street (4 U Clothing, and future home to six high -end apartments and three new first class retail spaces) 2) 611-615 Sycamore Street (future home to eight high -end apartments and one new high -end retail space) 3) 320-322 E 4th Street (Cu and the Cellar, and future home to five high -end and two luxury apartments) We are asking for the opportunity to apply the skill set we have developed to one of our downtown neighborhoods. In order for our approach to work, we must have an historic building with which to start. In this situation 519 East 3rd Street is that historic building. We have engaged Louis Berger and Associate to compete the historic documentation process for the East 3rd Street property. Additionally, we have attached their preliminary opinion that the subject property will, in fact, qualify as an historic property and be eligible for the National Register of Historic Places. This firm is the same firm that was hired by the City of Waterloo and successfully achieved National Register of Historic Places listing for both the West Waterloo Commercial Historic District and the Overland Waterloo Building (the KWWL building). We believe that the Walnut Neighborhood is the next natural extension of downtown revitalization. Since at least 1992, and perhaps earlier, consultants hired by the City of Waterloo have recommended that the Walnut Neighborhood be listed on the National Register of Historic Places. To date no action has been taken by the City to implement those recommendations. 3 1. The Proposal JSA Development proposes to complete a historic rehabilitation of 519 E 3rd Street. The rehabilitation will create two upper -end, market rate apartments. The existing floor plans, as well as, the proposed floor plans are attached to this document. The historic rehabilitation will allow JSA to spend approximately $290,000 on the rehabilitation and recover approximately 45% of the cost of the project from State and Federal historic tax credits. These are non -property tax, non -income restricted dollars to support our revitalization efforts. A detail of the $290,000 is available for a confidential review by request. Our goal is to create an economically viable property and to create downtown area housing that supports our existing and future downtown businesses. As noted earlier, we also see this as a demonstration project to show that historic rehabilitation can be successfully used as a neighborhood revitalization tool. 2. Access We have provided a basic site plan in the attached architectural drawings. Should we be allowed the opportunity to proceed, we will resolve any issues related to parking. We believe that their may be an opportunity for a drive to be used for parking along the north/east elevation but will confirm that with a survey and appropriate design if our proposal is successful. It should also be noted that there is ample unused on street parking in that block and in the surrounding neighborhood. Additionally, it may be possible to secure leased spaces in the parking area at the rear of the strip mall across the street. 3. Site Development JSA has invested in a preliminary set of schematic drawings by ARTS Architects. These drawings are attached to this document. These drawings are the result of on -site visits and measurements taken by ARTS. An example of a nearly completed kitchen in a current JSA project is below. It should be noted that this space had previously been vacant and infested with pigeons for several decades. 4 We are confident that two, high -quality, upper -end apartments can be created in this house. Each apartment would have access via common stairways at both the front and the rear of the house. The first floor apartment will be a large two bedroom apartment, while the second floor will be an even larger two bedroom plus a den apartment. We have also visited the property with one of our regular contractors, Orchard Improvements, who has expressed a great deal of confidence in the suitability of this house for rehabilitation. 4. Financial Capacity JSA has a ten year track record of completing historic rehabilitations in Downtown Waterloo. To date the firm has invested approximately $29 million dollars in projects. This project is relatively small for the firm. Regarding project specific financing, attached is loan proposal for the project from BankIowa. Additional funds would come for equity investments as well as federal and state historic rehabilitation tax credits. 5 We are asking that the City of Waterloo provide funds equivalent to the cost to abate any hazardous material and demolition costs. These are funds the City would expend under the demolition alternative. 5. Project Team Firm Name Role JSA Development James E. Walsh, Jr 315 E 5th Street Waterloo, IA 50703 319.234.3147 Developer David Deeds 607 Sycamore Street Waterloo, IA 50703 773.255.2258 Project Manager AHTS Architects Mardy Hoist Architectural Banklowa Ryan Sheridan Lender Louis Berger and Associates Camilla Deiber Architectural Historian Steinmetz Architecture Doug Steinmetz Consulting Historic Architect Orchard Improvements Kent Orchard General Contractor As noted above, the following are projects by JSA Development which have been completed or are in process. Completed 1) 326-330 E 4th Street (Bank Iowa, Charlie's Angels photography studio and seven high end apartments) 2) 510-512 Mulberry St (future home of Select Structural and the Girl Scouts of Eastern Iowa and Western Illinois) 3) 228 E 4th Street (Screaming Eagle, Silos and Smokestacks headquarters and three high end apartments) 4) 220-224 E 4th Street (six upper end apartments) 5) 206/208 East 4th Street (Boardwalk Deli and three high -end apartments) 6) 128 East 4th Street (Newton's Cafe and two high -end apartments) 7) 616 to 624 Sycamore Street (Brown Derby Ballroom, My Thai restaurant and four upper -end apartments) 8) 112-118 E 4th Street (HQAA headquarters, Benjamin F. Edwards area office, the House of Eden clothing and salon and Sub City) 9) 217-219 W 4th Street (Cedar Valley Bike Collective and three high - end apartments) 10) 500 Jefferson Street (Waterloo Convention and Visitors Bureau) 11) 612-616 Jefferson Street (six upper -end apartments) Under Construction 1) 223-229 E 4th Street (4 U Clothing, and future home to six high - end apartments and three new first class retail spaces) 2) 611-615 Sycamore Street (future home to eight high -end apartments and one new high -end retail space) 3) 320-322 E 4th Street (Cu and the Cellar, and future home to five high -end and two luxury apartments) 6. Timetable As specified in the attached draft development agreement, the City of Waterloo will transfer title to the property by no later than February 28, 2015. Construction will commence within 90 days of title transfer with completion of the project within twelve months of construction commencement. 7. Bid price Under the attached development agreement, JSA Development will pay the City of Waterloo $1 and execute a development agreement acceptable to both parties. It would appear that under the City's Sale of Property policy, this purchase price would be acceptable under number three of the residential buildable lot exception. Which reads as follows: "3. If located within an area which has not seen recent new housing construction, City Council may sell for $1.00 plus costs, in accordance with a development agreement requiring the buyer to construct new housing." The Walnut Neighborhood has not experienced new housing construction in several decades. 7 City of Waterloo: Offer to Buy Form Property to be bid upon: 519 East 3`d Street Name in which property would be transferred: JSA Development, LLC Name of bidder: JSA Development, LLC Address of bidder: 607 Sycamore St, Suite 800, Waterloo, IA 50703 Phone number of bidder: 319-234-3147 Fax number/email of bidder: ddeeds@Isadevelopment.com My offer for 519 East 3`d Street: $1.00 Other notes, conditions: See the attached draft development agreement Furthermore, I understand the zoning, building, and fire code provisions for the project and believe my project will work as described. /s/ David Deeds, Controller for JSA Development, LLC Signature of applicant/bidder. 8 January 7, 2015 David Deeds JSA Development 315 E. 5th Street, 2nd Floor Waterloo, IA 50703 RE: Opinion of Eligibility for 519 E 3rd Street, Waterloo, Linn County, Iowa Dear Mr. Deeds: The Louis Berger Group, Inc. (Louis Berger) understands that you would to obtain a preliminary opinion on the eligibility of the residence at 519 E. 3'd Street for listing in the National Register of Historic Places. The opinion given below is based on exterior examination of the structure and review of registration requirements in the multiple property documentation form, Historical and Architectural Resources of Waterloo, Iowa. Built circa 1895, this two -bay, two -and -one -half -story Queen Anne style dwelling is a distinctive example of its type and thus meets registration requirements for Industrial Era House Types constructed between 1890 and 1930 under National Register of Historic Places Criterion C in the area of architecture. The house has all the significant character defining features of the Queen Anne style dwelling including a dominant front -facing gable, asymmetrical facades, wood novelty cladding, original one -over -one wood sash windows, full -width porch, and double door primary entry. Set on a raised stone block foundation, this cross -gable dwelling has an asphalt shingle roof with overhanging eaves, coursed saw tooth and fish scale shingle siding in the gables, modillions, and bay windows on both stories that give the appearance of a tower. The dwelling maintains a significant degree of integrity of design, workmanship, materials, feeling, and association. Sincerely, aickt, Camilla Deiber Senior Architectural Historian edb cc: Eric Barr 3222 Kimball Ave. Suite A Waterloo, Iowa 50702 January 7, 2015 Mr. David Deeds Mr. James Walsh JSA Development, LLC. 315 E. 5th St. Waterloo, IA 50703 Re: 519 E. 3rd Street Project Dear Dave & Jim: On behalf of Banklowa, I am pleased to provide you with the following proposal. This proposal is subject to the following terms and conditions: Borrower: Purpose: Guarantor(s): Loan Amount: JSA Development, LLC. The rehabilitation and permanent financing of 519 E. 3rd Street, Waterloo, IA. The financing will be separated into two loans as outlined below. James Walsh, Unlimited & Unsecured Loan #1: $130,000 construction loan, to be converted to an amortizing loan upon construction completion. Loan will be a draw -down line of credit. Loan amount not to exceed 80% loan -to -value (LTV), based on a new appraisal to be ordered by the Bank, based on the as -proposed project. Loan #2: $65,000 tax credit loan. Loan will be a draw -down line of credit. Loan amount not to exceed 50% of the total projected tax credit for the project. Note: Funding for each draw request will come from the following sources: 75% will be advanced from the two loans proportionately and 25% will be injected by the Borrower. Interest Rate: Loan #1: _ fixed for (5) five years. Term: Loan #2: IIIM6 fixed until maturity (see below). Loan #1: Five (5) year term. Payments will be based on an amortization period of fifteen (15) years. During initial nine (9) month construction period, the loan will be interest - only due monthly. After the initial nine (9) months, the loan will convert to monthly principal and interest payments based on a fifteen (15) year amortization. (319) 236-2140 • 1-866.231-7460 Fax (319) 235-7424 • www.banIdoivii.aalh" Cedar Rapids • Cedar Falls • Independence • Jesup • Lamont • Norway • Waterloo Loan #2: Loan will have a maturity date of 12/31/16. During the term of the loan, the Borrower will make monthly interest payments on the subject loan. The principal and any unpaid accrued interest will be due at maturity. Collateral: Loangl: 1st Real Estate Mortgage and Assignment of Rents on the subject property (519 E. 3rd St., Waterloo, IA). Fees: Loan Fee: Loan#2: Security Agreement taking an interest/assignment in the tax credits to be received for the subject property and a 2"d Real Estate Mortgage on the subject property. Borrower is responsible for paying all costs associated with the loan. This will include: appraisal, abstracting, title opinion, attorney closing fee, flood certification and recording fees. There may be other fees not listed. These costs can be rolled into the loan subject to the LTV being 80% or less. Environmental: Borrower to complete an Environmental Questionnaire on the subject property. Should the Questionnaire not indicate any elevated risk or concerns, no additional environmental due diligence will be required. Appraisal: The Bank will engage an appraisal on the subject property. Loan Covenants & Conditions: 1. Borrower to provide Bank with corporate tax return within 120 days of year end. 2. Guarantor(s) to provide Bank with a current personal financial statement and tax return within 120 days of year end. 3. Minimum Debt Service Coverage Ratio (DSCR) of not less than 1.25:1.00 on the subject property. Proposed initial testing date would be for the year ending 12/31/16. Ratio would be defined as: (Net Income + Depreciation + Interest) / Annual Loan Debt Service 4. Borrower to maintain all operating deposit accounts at Banklowa, for the subject property. 5. During construction/renovation phase of the project, monthly construction draws must be submitted along with signed lien waivers for all past payments. The Bank will conduct monthly on -site inspections with each draw request. 6. Borrower to carry Builder's Risk/Property insurance on the subject property, naming the Bank as Mortgagee/Loss Payee. 7. Other terms and conditions, if applicable, to be determined during underwriting. Due to the confidential nature and preferential terms outlined in this proposal they are not to be discussed or shared with any other financial institution. If the terms and conditions of this proposal meet with your approval, please indicate your acceptance by signing and returning the enclosed copy of this letter to the undersigned on or before January 31, 2015, or in that event the proposal will expire. 2)Page 11 Borrower acknowledges that this is a proposal only, and is not a commitment to provide financing. Any commitment will be subject to Bank review and approval of the Borrower, Guarantor(s) and subject property. Please feel free to contact me if you have any questions or would like to discuss the terms and conditions outlined in this letter. I appreciate the opportunity to provide you with this proposal! Ryan p. Sheridan Vice President I hereby agree to the terms and conditions of this proposal. Dated this day of , 2015. JSA Development, LLC. By: James Walsh, Manager/Member 12 3jPage RESOLUTION NO. RESOLUTION APPROVING AND AUTHORIZING EXECUTION OF A DEVELOPMENT AGREEMENT BETWEEN JSA DEVELOPMENT, LLC, AND THE CITY OF WATERLOO, IOWA. WHEREAS, JSA Development, LLC and its affiliates have and will redevelop property in the [Logan Avenue Urban Renewal and Redevelopment Plan Area], and this redevelopment presents a plan to redevelop portions of the Walnut Historic Neighborhood, and WHEREAS, JSA Development, LLC and its affiliates have contributed significantly to the economic vitality and viability of Downtown and this vitality is necessary to fully leverage the City's investment in public infrastructure, and WHEREAS, JSA Development, LLC and its affiliates and the City of Waterloo, Iowa, feel it is in the best interest of both parties to execute a Development Agreement between the parties regarding the development and use of said real estate as well as other matters, and WHEREAS, the City of Waterloo declares that this project qualifies for incentives as authorized under Chapter 15A and Chapter 403 in the Code of Iowa and the [Logan Avenue Urban Renewal and Redevelopment Plan], and WHEREAS, the City Council of the City of Waterloo, Iowa, has considered the Development Agreement, a copy of which is hereto attached, finds that the disbursement of public funds for the purposes described in said agreement will reasonably accomplish a public purpose, and deems it in the best interest of the City of Waterloo, Iowa, to enter into said Agreement. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Waterloo, Iowa, that the Development Agreement between JSA Development, LLC and the City of Waterloo, Iowa, a copy of which is hereto attached, is hereby approved and the Mayor and City Clerk are hereby authorized to execute said Agreement on behalf of the City of Waterloo, Iowa. ADOPTED this day of January, 2015. Suzy Schares, City Clerk Ernest G. Clark, Mayor 13 WALNUT NEIGHBORHOOD RESIDENTIAL HISTORICAL PROPERTY DEVELOPMENT AGREEMENT This Development Agreement (the "Agreement") is made and entered into this day of January, 2015, by and between JSA Development, LLC (the "Company"), and the City of Waterloo, Iowa ("City"). WHEREAS, City considers economic development within the City a benefit to the community and is willing for the total good and welfare of the community to provide financial incentives so as to encourage that goal, and WHEREAS, JSA Development, LLC or its affiliated companies have and will redevelop property in the [Logan Urban Renewal and Redevelopment Plan Area], and this redevelopment presents a plan to redevelop a portion of the Walnut Historic Neighborhood, and WHEREAS, JSA Development, LLC and its affiliates have contributed significantly to the economic vitality and viability of Downtown and this vitality is necessary to fully leverage the City's investment in public infrastructure, and WHEREAS, Company will invest up to $350,000 to rehabilitate the property located at 519 East Third Street bringing it up to modern standards in the [Logan Avenue Urban Renewal and Redevelopment Plan], as listed by the commonly known address and/or tax parcel number and legally described on attached Exhibit "A" (each a "Property"). WHEREAS, the Walnut Historic Neighborhood is defined as area bounded by [East 4th Street, Franklin Street, U.S. Highway 63 and the Illinois Central Railroad] tracks. NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, Company and City agree as follows: 1. CURA Tax Exemptions. Provided that the Company has prepared and submitted required documents upon completion of work in accordance with the terms of the City's Consolidated Urban Renewal Area ("CURA") property tax exemption program, the City will grant and affirmatively support Company's receipt of property tax exemptions of 100% for any taxable value over the January 1, 2014 value as shown on Exhibit "A" for the first three years following completion of rehabilitation projects. Completion of the rehabilitation projects shall be determined by notice of completion delivered to City by the Company. 2. Property Tax Rebates. Provided that Company has executed the Minimum Assessment Agreement as set forth in paragraph 2, City agrees to rebate property taxes (with the exceptions noted below) for each improved Property in the years following any CURA exemptions as follows: 14 a. Year Four - 100% Rebate b. Year Five - 100% Rebate c. Year Six 100% Rebate d. Year Seven 100% Rebate e. Year Eight 100% Rebate f. Year Nine 100% Rebate g. Year Ten 100% Rebate for any taxable value over the January 1, 2014 value as shown on Exhibit "A". 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. The taxable value of a Property as a result of the improvements, to the Properties described herein, must be increased by a minimum of 10% and must increase the annual tax by a minimum of $100.00. This rebate program is not applicable to any special assessment levy, debt service levy, or any other levy (such as the Self - Supported Municipal Improvement District) that is exempted from treatment as tax increment financing under the provisions of applicable law. For improved Properties, 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. 2.1 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 each Property. Company further agrees that, prior to January 1, 2023, it will not seek or cause a reduction in the taxable valuation for a Property, which shall be fixed for assessment purposes, below the aggregate amount shown on Exhibit "A" ("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" concurrently with execution of this Agreement. The parties agree to cooperate with any reasonable request by the other party or by the Black Hawk County Assessor to modify such agreement and this Agreement in order to divide the Minimum Actual Value among 2 15 condominium units that may be established upon one or more of the Properties following completion of Improvements. 3. Abatement or Rebatement Funded by Others. The City and the Company acknowledge that a property tax exemption, abatement, rebatement or similar program may be implemented and funded by the State of Iowa or other governmental entities during the term of this Agreement. In the event such a program is established, the benefits thereof, if any, shall flow to the Company or its successor(s) or assignee(s), and City agrees to cooperate in good faith with the Company to support Company's applications for such benefits and to otherwise aid the Company in securing such benefits. 4. Conversion to Condominiums. The City and the Company acknowledge that subdivision and condominium conversion of one or more of the Properties may occur during the term of this Agreement. The City commits to amend this Agreement or otherwise work in good faith to ensure that benefits and obligations under this agreement are protected. 5. Documentation and Establishment of a National Register of Historic District. The City will appropriate all funds necessary to fund the hiring of an appropriately qualified historical consultant to prepare, compete, submit and oversee through approval, all documentation necessary to establish a Walnut Historic Neighborhood National Register of Historic Places District. The selected consultant will be engaged by no later than April 1, 2015. The National Park Service approval process will be completed by no later than November, 2015. In support of this effort, the City agrees to implement a building demolition moratorium and design review overlay in the proposed district. 6. Conveyance of City Owned Property. The City will convey the property commonly know as 519 East 5m Street to the Company for one dollar ($1). This property will be conveyed with clear title by no later than February 28, 2015. 7. Environmental Remediation. The City will reimburse the Company for costs incurred to remediate environmental issues including but not limited to asbestos and lead paint. 8. Right of First Refusal. The City will grant the Company a right of first refusal to acquire City owned property within the Walnut Historic Neighborhood. This right will be to acquire City owned property for one dollar ($1) if the transfer is under a mutually agreed upon development agreement. Otherwise this right shall be at the lesser of Assessed Value or appraised market value. 9. Grant to Support Rehabilitation. The City will grant the company the estimated cost of demolition of the property. For the purposes of this agreement this amount will be set at $15,000 plus any cost of environmental remediation. 3 16 10. Franklin Street Road Diet. The City will develop and implement a plan to complete a Franklin Street Road Diet by no later than December 31, 2015. 11. Company Performance. The Company will commence construction on the project with 90 days of title transfer. Project completion will be no later than twelve months following construction commencement. 12. 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. 13. 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 its organization and is duly qualified 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. D. Company has full authority to execute this Agreement on behalf of each separate company affiliated with the Company, and to bind each such affiliated company to the terms hereof. 14. 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. 4 17 15. Severability. 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. 16. 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. 17. Binding Effect. This Agreement shall be binding and shall inure to the benefit of the parties and their respective successors, assigns, legal representatives, and future owners of the Property. 18. 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. 19. 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. 20. Time of Essence. Time is of the essence of this Agreement. IN WITNESS WHEREOF, the parties have executed this Development Agreement by their duly authorized representatives as of the date first written above. CITY OF WATERLOO, IOWA JSA DEVELOPMENT, LLC By: By: Ernest G. Clark, Mayor James E. Walsh, Jr., Manager, Attest: Suzy Schares, City Clerk 5 18 EXHIBIT "A" Legal Description of Improved Property: COOLEY ADDITION SW 30 FT LOT 4 BLK 63 SW 5 FT NE 30 FT SE 97.3 FT OF LOT 4 BLK 63 NE 15 FT LOT 5 BLK 63. 19 EXHIBIT "B" MINIMUM ASSESSMENT AGREEMENT This Minimum Assessment Agreement (the "Agreement") is entered into as of January , 2015, by and among the CITY OF WATERLOO, IOWA, ("City"), JSA Development, 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 located in the City; and WHEREAS, it is contemplated that pursuant to the Development Agreement, the Company will undertake the development of an area (the "Project") within the City and within the ["Logan Avenue Urban Renewal and Redevelopment Plan"] area WHEREAS, pursuant to Iowa Code section 403.6, as amended, the City and the Company desire to establish a minimum actual value for the land and building thereon pursuant to the Development Agreement and applicable only to the development, which shall be effective upon substantial completion of the development 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 building as to the development only; and WHEREAS, the City and the Assessor have reviewed the plans and specifications for the improvements (the "Improvements") and the work completed as a part of the development; NOW, THEREFORE, the parties to this Agreement, 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 Company or its affiliated companies on the property described in Exhibit "A" attached hereto, the minimum actual taxable value which shall be fixed for assessment purposes for the land and Improvements constructed thereon as a part of the Project shall not be less than those shown on Exhibit "A" ("Minimum Actual Value") until termination of this Agreement. The parties also acknowledge that the Company may submit one or more of the properties to a condominium regime after completion of the Improvements and that future owners of any such property as so divided are intended to be the beneficiaries of this Agreement and a related Development Agreement. 20 2. The Minimum Actual Value herein established shall be of no further force and effect and this Agreement shall terminate on December 31, 2023. 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. The City shall not unreasonably withhold its consent to permit the Company to contest its taxable valuations in full, commencing with the assessment of January 1, 2024. 3. This Agreement shall be promptly recorded by the City with the Recorder of Black Hawk County, Iowa, the City paying 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 between the City and the Company. 5. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. The City agrees to cooperate with any reasonable request by the Company to execute a written assignment of this Agreement to future owners of condominium units that may be created on any of the properties and to execute one or more amendments to this Agreement to divide the Minimum Actual Value for the property among such units and to ensure that such future owners receive the benefits contemplated by this Agreement and a related Development Agreement between the parties. CITY OF WATERLOO, IOWA JSA DEVELOPMENT, LLC By: By: Ernest G. Clark, Mayor James E. Walsh, Jr., Manager Attest: Suzy Shares, City Clerk 2 21 STATE OF IOWA ) ss. COUNTY OF BLACK HAWK On this day of January 2015, before me, a Notary Public in and for the State of Iowa, personally appeared Ernest G. Clark and Suzy Schares, 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. STATE OF IOWA ) ss. COUNTY OF BLACK HAWK Notary Public Subscribed and sworn to before me on , 2015 by James E. Walsh, Jr., as Manager of JSA Development, LLC. Notary Public 3 22 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, building and equipment upon completion of the development shall not be less, in the aggregate, than those shown on Exhibit "A" hereto, until termination of this Minimum Assessment Agreement pursuant to the terms hereof. Assessor for Black Hawk County, Iowa Date STATE OF IOWA ) ) ss. 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M }aaJTS PJ£ 3 6 L2 • Q i esnoH opoJ.siH teellS laiC 3 6 L9 - vSf 1 g H.� 43 4d940CL-4 1....15 WC'384 sa aM1900-1.1ot we. ee.ewei Wed +snWdd SMOV wed Si i 0311H321NI ST 1� staziotWoo EOLO9 VI 'oopeloM leeJTS PJE 3 6l9 esnoH ouo1siH }eons PIC 3 6 LS - vsr udt '1'1I n111M1111111111111 I =tea c$ lL 4D C 0 -- WC m 0 N W N WCut(O1-11r05PC 3e1.5PSCO WWO PWMUIOOIMWIO/t00PIIOZ iP LSWl Wed 15A0WN.Apy,$)noJ ReWNWJ SUZY SCHARES From: Carolyn Cole <Carolyn.Cole@vgm.com> Sent: Thursday, January 08, 2015 11:52 AM To: SUZY SCHARES Subject: FW: 515/519 E. 3rd Street For the record. From: Jeff Kurtz [mailto:ikurtz@mainstreetwaterloo.org] Sent: Thursday, January 08, 2015 11:46 AM To: Carolyn Cole Subject: 515/519 E. 3rd Street Dear Ms. Cole It has been brought to our attention that there is an effort underway to preserve historic residential structures at 515 and 519 E. 3rd Street. This is a possible change of direction from the City's original plan to demolish these properties. As Main Street Waterloo is a program designed to encourage economic development within the context of historic preservation, we applaud this possible new direction for these structures. Allowing the restoration of these structures will: *Provide historical and aesthetic benefits to the neighborhood *Bring new investment and focus to a potential historic district *Provide needed market rate housing to the area surrounding downtown Waterloo *Showcase the potential of these old homes. So much has been lost in Waterloo, much of in a misguided "it can't be saved" mindset. Showing how this CAN be done will help to change minds. The work being done by House of Hope is invaluable to our community! However, there would appear to be many alternative options available for new construction that would not require the demolition of more historic real estate in Waterloo. Thanks, Jeff Kurtz Main Street Waterloo This email has been scanned for email related threats and delivered safely by Mimecast. For more information please visit http://www.mimecast.com 1 Category House of Hope JSA Development Project New construction of a 12-plex. Estimated at $1.2 million. Rehabilitation into a two -unit development/. Estimated at $290,000. Timeline 12-20 months to complete project. 12 months to complete project. Financing Will raise funds through fundraising drive. Confident in partners and ability to fundraise. Have $100,000 in reserve. Would use sale of 222 Walnut as seed funds. Will use bank funds, historic tax credits, and proposed tax rebates and abatement for project. Other factors Have been in neighborhood for 20 years. Would need to buy two more parcels from Mr. Hayes, abutting property owner, to make project work. Have been in discussion with Mr. Hayes. Have actively renovated several downtown building utilizing method proposed, historic tax credits, with over $29 million in investment. Financial Proof Have not yet started fundraising until certain project will move ahead. Have a letter from Banklowa for financing. Proposed Use 12-plex would serve as transitional housing and case management services to homeless single mothers and their children. The existing homes would be renovated in historic standards for a 2-units apartment or condominium housing unit. Quality of Development Would want to work with staff on design that would be aesthetically pleasing to neighborhood. Have previously renovated 306/308 Walnut in a compatible manner. Even note potential for first level parking. Have included drawings from AHTS Architects showing the existing proposed floor plans and layouts of the project. Traffic Flow Would use existing curb cut from Franklin Street for rear parking lot to be developed on billboard site. They are uncertain as to exact layout of parking. Note there is existing on -street parking in area, as well as potential to rent back parking lot spaces from commercial development across East 3rd Street. Economic Considerations No property taxes paid as a not for profit. But note other positive impacts upon community. Proposed Development Agreement would essentially have no property taxes paid on property for 10 years (3 years of CURA and 7 years of tax rebates at 100%). Note larger historic positive impact on Walnut Street Neighborhood. Price $1.00. $1.00 Other (City factors) They would be looking for City to buy 222 Walnut Street. Estimated at $190,000. They would request City demolish building for them prior to conveyance ($15,000). With asbestos ($30,000 total). City would use with combination of CVS site to try and draw additional commercial development to corridor. The proposed Development Agreement would have City: Provide equivalent of demolition costs ($30,000 total). Provide costs for historic survey of Walnut Street Neighborhood area (estimated at $20,000). Provide equivalent of lead paint removal costs to developer (estimated at $25,000). Right of First Refusal for all Walnut Street Neighborhood properties. Moratorium on demolition in Walnut Street Neighborhood. Franklin Street Road Diet Estimated City costs: $30,000 in demolition $190,000 in acquisitions Total of $220,000 + demolition costs of 222 Walnut in future — so "total total" of $260,000. But would open up further commercial land for redevelopment. $75,000 in cash to developer and/or costs to historic consultants (no guarantee for entire neighborhood district creation). Note sure how to calculate costs for a Franklin Street Road Diet. A road diet is defined as "A road diet, also called a lane reduction or road re- channelization, is a technique in transportation planning whereby the number of travel lanes and/or effective width of the road is reduced in order to achieve systemic improvements." If the proposal is to reduce lanes to Franklin Street, that is a very large expense ($millions).