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Date
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January 25,
2010
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Agenda
Item No. 49 Roll
Call No. 10-
Communication No. 10-036 Submitted by: Matthew Anderson, Economic
Development Administrator |
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AGENDA
HEADING:
Resolution
approving an Urban Renewal Development Agreement and Conceptual Development
Plan with Metro Lofts LLC for the construction of a $20 million apartment
project immediately north of Vine Street between 2nd and 3rd Streets.
SYNOPSIS:
Recommend
approval of the Urban Renewal Development Agreement with Metro Lofts LLC for
the project to be located north of Vine Street between 2nd and 3rd
Streets. The original 2005 development
agreement with Metro Lofts, LLC (George Sherman, President and Owner, Sherman
Associates, 223 Park Avenue South, Suite 201, Minneapolis, MN) has been replaced
with a new agreement to reflect the change from construction of 70-80
condominiums to 111 apartment units and provide for a revised disbursement
schedule for the remaining $1 million from the originally approved Economic
Development Assistance Grant of $1.5 million.
FISCAL
IMPACT:
Amount:
$1,000,000
Funding
Sources: FY10 Operating Budget, SP370, FIN909105, page
115.
ADDITIONAL
INFORMATION:
Sherman Associates committed to constructing housing on the site at 2nd and Vine in 2005. The original 70-80 unit condominium project became economically infeasible due to escalating construction costs, but the developer worked to analyze alternatives to make the project succeed. The most reasonable alternative was to pursue a mixed income apartment project as the way to contribute needed housing to the downtown market and utilize a key infill development site. The revised concept was presented to Council in 2006, where approval was given to proceed with amending the original development agreement. Subsequently, in late 2006 Council approval was also provided for application to the Iowa Finance Authority for Low Income Housing Tax Credit (LIHTC) funds to create the 60% affordable 40% market rate mix of housing for the Metro Lofts project. The project was not awarded credits in 2007 or 2008, but reapplied, again with City Council support, in 2009 and has received approval. The Urban Design Review Board reviewed the revised design plan for the Metro Lofts project in March 2009, and voted to approve the design as submitted.
The
revised Urban Renewal Development Agreement formally provides for the revision
from 70-80 condominiums to 111 apartment units, and structures a revision to
the disbursement schedule for the remaining $1 million of the $1.5 million in
economic development assistance originally awarded to the project. The first
disbursement of $500,000 was used to purchase the site at 2nd and
Vine from the Neighborhood Improvement Corporation in 2005. The second and
third disbursements were to be disbursed at 80% project completion and 100%
completion, respectively. With the revised agreement, the second disbursement
of $500,000 will be advanced at the time of closing on the financing for the
project. The funds will be deposited with a trustee, designated by Sherman
Associates and HUD, who will hold the proceeds of the HUD Guaranteed Loan for
the project. The trustee will be
authorized to draw upon the second disbursement in the same proportion as the
amounts drawn from the proceeds of the HUD guaranteed loan designated for
payment of construction costs for the Metro Lofts project. The third
disbursement in the amount of $500,000 shall be advanced after receipt of
certification from the developer's architect or project engineer that the improvements
are at least 50% completed, and shall be managed in the same manner as the
second disbursement.
The
City of Des Moines has held a $500,000 interim mortgage on the site at 2nd
and Vine since 2005. In conjunction with the amendment to the disbursement
schedule for the financial assistance, it has been requested that the interim
mortgage amount be amended to $1.5 million. The interim mortgage will serve as
security in the event that the project is not diligently pursued to completion,
and the developer is required to return all advance payments made on the
Economic Development Assistance Grant.
The
proposed resolution authorizes the Mayor and City Clerk to execute the
Development Agreement on behalf of the City, and also all associated financing
documents approved by the Office of Economic Development and Legal Department.
Location
Map
PREVIOUS
COUNCIL ACTION(S):
Date: November 23, 2009
Roll
Call Number: 09-2140
Action: Memorandum of Agreement with State Historic
Preservation Officer (SHPO) and SA Metro Lofts Limited Partnership for
archaeological survey of site for Metro Lofts Project at 255 Vine Street. (Council Communication No.
09-832) Moved by Hensley to adopt. Motion Carried 7-0.
Date: October 27, 2008
Roll Call Number: 08-1904
Action: SA Metro Lofts, Limited Partnership
for new construction of mixed income housing at 255 Vine Street and a
commitment of TIF funds for an application to the Iowa Finance Authority
requesting Low Income Housing Tax Credits.
Moved by Kiernan to adopt. Motion
Carried 7-0
Date: May 8, 2006
Roll Call Number: 06-910
Action: From Sherman & Associates
requesting City consideration of an amendment to the Metro Lofts project (100 2nd
Avenue) to change development from approximately 70-80 condominiums with
underground parking, to an estimated 105 unit apartment with underground
parking similar to the Vine Street Lofts at 101 2nd Avenue. (Council
Communication No. 06-270)
Moved by Hensley to receive and
file, and to authorize the City Manager to negotiate with Sherman &
Associates for an amendment to the Urban Renewal Development Agreement for
Metro Lofts consistent with the Council Communication, for further
consideration by the City Council. Motion Carried 6-1.
Date: February 7, 2005
Roll Call Number: 05-1157 to 05-1161
Action: Urban Renewal Development
Agreement with Lander-Sherman Urban Development LLC for redevelopment of
property, north of Vine Street between 2nd and 3rd
Streets. (Council
Communication No. 05-060) Moved by Hensley to adopt. Motion
Carried 6-1. Absent: Vlassis.
BOARD/COMMISSION
ACTION(S):
Date:
March 17, 2009
Roll
Call Number: N/A
Action: Urban Design Review Board approved the design and level of financial assistance as
presented for the Metro Lofts project.
ANTICIPATED
ACTIONS AND FUTURE COMMITMENTS: NONE
For more information on this and other agenda items,
please call the City Clerk’s Office at 515-283-4209 or visit the Clerk’s Office
on the second floor of City Hall,