Council approves loan to convert Annie Whitmire campus to affordable housing; amendment adds Heritage Fund protections

The Davenport City Council on Wednesday approved a resolution authorizing city loan financing for the redevelopment of the Annie Whitmire campus into a family housing project, with an amendment added to require Heritage Fund loans to include the same protections as federal HOME funding if HOME funding cannot be used.

The council vote followed roughly 50 minutes of staff presentations, public comment and detailed questioning by alderpersons. The amended resolution passed unanimously on the final roll call after the council first approved an amendment by an 8-2 vote.

Bruce Berger, community and economic development director, told the council the city and a developer team have pursued multiple funding sources for the project, including Low-Income Housing Tax Credits (LIHTC), HOME funds (a HUD program) and state historic tax credits. Berger said some funding delays have come into conflict with the project's timetable and the city is asking for flexibility from two different funding sources to allow closing to proceed.

Berger described procedural protections that would limit the city's exposure if the project fails to proceed. He said the Iowa Title Guarantee process, required for LIHTC projects, places multiple sources of project financing into a state-controlled escrow and releases funds as monthly draws are approved so that the city’s loan would be paid out gradually rather than in a single disbursement. He also said performance and payment bonds required by HOME funds—and to be mirrored by Heritage Fund loans if used—would help ensure vendors and subcontractors are paid or that the work is finished by bondholders if the developer cannot complete construction. “The Iowa Title Guarantee process with the state has all of the funding sources go into that escrow,” Berger said. “So most of our money, it's only at the very end of the project that really all of our money gets in.”

Developer representative Chris Ailes described the team’s recent awards and timeline. He said the Iowa Finance Authority scored multiple applications and awarded the LIHTC allocation to the family project, while the senior housing phase did not score highly enough this round. Ailes said National Park Service consultation tied to state historic tax-credit rules also affects sequencing: under that consultation the developer cannot start the senior portion until one year after completing the family phase. “Our plan would be to complete the family project by December,” Ailes said, and then pursue a later application for the remaining campus buildings.

Public commenters urged caution. David Ezra Sidra of the Third Ward said city staff had not done adequate due diligence on the developers and cited prior housing code citations and a tax lien associated with an individual previously identified with the project. “City staff should have told city council about this before the vote,” Sidra said. Multiple other residents asked whether the city would retain any portion of the campus if the senior phase failed to receive funding and whether conveyance terms and buy-back options remained in place.

Council discussion focused on three themes: (1) safeguarding the city’s financial exposure, (2) confirming who will own and manage the property after conveyance, and (3) sequencing the two proposed phases (family housing first, senior housing later). Alderman Rick Dunn said he would seek parity between the city’s Heritage Fund loan terms and the protections required by HOME funds; Dunn moved an amendment that added a whereas clause directing Heritage Fund loan documents to “mirror the HOME loan documents to the extent possible and include protections such as, but not limited to, requiring the developer to take out a performance bond and payment bonds.” That amendment passed 8-2 in roll call vote.

After additional questions about property-tax treatment and timing for the lease and conveyance, the council voted 10-0 to approve the resolution as amended. Council staff said the lease document between the city and the developer was still under negotiation and that transfer of the property would likely be at least a month out to allow completion of the draft lease and final legal review.

The city will continue to monitor the developer’s progress on required draws and bond procurement under the escrow process and the project remains contingent on environmental review, federal and state funding approvals, and building permits. Berger said that, once conveyed, the campus will return to the tax rolls, subject to any approved tax-exemption periods for affordable housing; exact future tax revenue was not specified during the meeting.

Votes at a glance

- Amendment (require Heritage Fund loan documents to mirror HOME protections including performance and payment bonds): Passed 8-2 on roll call (Yes: Lynch; Jobgen; Arden; Newton; McGuinness; Gripp; Reinartz; Burkholder. No: T. Dunne; Kelly). Mover: Alderman Rick Dunn. Second: Alderman McGinnis.

- Resolution (approve loan financing for Annie Whitmire family housing project, subject to environmental review, federal regulations, funding availability, city ordinances, and building permit process; authorize city administrator to execute documents): Passed 10-0 on roll call (Yes: McGinnis; Arden; Burkholder; Tidon; Jobgen; Lynch; Kelly; Grip; Newton; Anne Rayner). Outcome: approved; staff noted lease draft still pending and transfer likely at least a month away.

Why it matters

The vote advances a large, multi-source-financed redevelopment of the Annie Whitmire campus into primarily income-restricted housing, moving the property from a city-owned, tax-exempt status toward private ownership that will generate property tax revenue in the future. Council members and residents pressed staff for greater transparency about developer identities and prior compliance history; the amendment and staff explanations aim to reduce the city’s financial risk if federal HOME funding is not available.

What’s next

Council staff said they will return with a final draft lease and any additional documentation required before conveyance. If the developer completes construction and satisfies LIHTC and historic-credit requirements, the developer anticipates pursuing a second-phase application to the Iowa Finance Authority for the remainder of the campus at a later date; that second phase is subject to separate award cycles and cannot proceed until after completion of the first phase and applicable waiting periods.