McGraw_Hill_Amendment to Development Agreement_Port of DubuqueTHE CITY OF DUBUQUE
Masterpiece on the Mississippi
Dubuque
All-American City
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Amendment to Development Agreement for McGraw-Hill Companies, Inc.
in Port of Dubuque
DATE: November 25, 2008
Economic Development Director Dave Heiar is recommending approval of a request
from McGraw-Hill Companies for a time extension for the creation of jobs committed to
in the June 2006 Development Agreement. This extension of the job creation date
would be until June 19, 2010. McGraw-Hill has met many of the terms of the
Development Agreement, including their commitment to an $18 million capital
investment in the Port of Dubuque, which actually ended up exceeding $27 million.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
THE CITY OF DUBUQUE
Masterpiece on the Mississippi
Dubuque
All-American City
2007
November 20, 2008
TO: Michael C. Van Milligen, City Manger
FROM: David J. Heiar, Economic Development Director
RE: Amendment to Development Agreement for McGraw-Hill Companies,
Inc. in Port of Dubuque
INTRODUCTION
This memorandum presents for City Council consideration a resolution approving a time
extension for the creation of jobs committed by McGraw-Hill in a Development
Agreement approved in June of 2006.
BACKGROUND
On June 19, 2006, the City Council approved a Development Agreement with McGraw-
Hill, Companies, Inc. to facilitate the construction of a 135,000 square foot office
complex in the Port of Dubuque.
The Development Agreement approved several incentives to encourage the expansion.
An Acquisition Grant reduced the asking price of the land from $435,600/acre to
$217,800/acre. A 10-year tax rebate has been offered to the company to assist in their
expansion and relocation. The rebate is a form of tax increment financing without
issuing a tax increment finance bond to loan monies to the company upfront. As the
company pays its future tax obligation on the new improvements, the City will rebate
100% (minus debt service and the School District Physical Plant and Equipment Levy)
of the new TIF increment for 10 years.
There incentives were predicated on job retention and job creation. McGraw-Hill
Companies, Inc. pledged to retain 276 existing full time positions and 113 part time
positions. The company also promised to create 24 full time positions and 5 part time
positions. All of these positions are to be retained for the term of the agreement (2018).
Many of the terms of the Development Agreement have already occurred. McGraw-Hill
committed to an $18 million capital investment, which in fact exceed $27 million.
However, the current weakening economy has created some issues for the company.
Attached is the letter from Edward Stanford, President of McGraw-Hill Higher Education
making the request for a time extension to create the new position. He states in his
letter, "McGraw-Hill is fully committed to meeting its investment, job retention, and job
creation requirements, as set forth in the Agreement. The weakening economy has had
an impact on our business and has slowed our growth plans in Dubuque. In an effort to
meet our commitment to the City of Dubuque, the executive committee has restructured
our organizational growth plan to ensure we will meet the job requirements of the
Agreement. However, an extension of the Job Creation Date to June 19, 2010, and the
retention of the incentives that were provided for the project, will be necessary to fully
implement this plan. We are confident we will be able to create 24 new full-time
positions and 5 new part-time positions in our Dubuque location by this revised Job
Creation Date."
The Iowa Department of Economic Development has authorized a time extension for
job creation associated with State incentives.
RECOMMENDATION
I recommend that the City Council approve the First Amendment to the McGraw-Hill
Companies, Inc. Development Agreement authorizing a one year extension for job
creation.
ACTION STEP
The action step is for the City Council to adopt the attached resolution.
F:\USERS\DHeiar\McGraw Hill 2\DA amendment memo.doc
RESOLUTION NO 418-08
RESOLUTION APPROVING THE FIRST AMENDMENT TO THE MCGRAW-HILL
COMPANIES, INC. DEVELOPMENT AGREEMENT
Whereas, a Development Agreement (the Agreement), dated June 19, 2006, was
entered into by and between the City of Dubuque, a municipal corporation of the State
of Iowa (City), and McGraw-Hill Companies, Inc., a New York corporation; and
Whereas, City and McGraw-Hill Companies, Inc. now desire to amend the
Development Agreement as set forth attached First Amendment.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the First Amendment of the McGraw-Hill Companies, Inc.
Development Agreement is hereby approved.
Section 2. That the Mayor is hereby authorized and directed to execute said
First Amendment on behalf of the City of Dubuque and the City Clerk is authorized and
directed to attest to his signature.
Section 3. That the City Manager is authorized to take such actions as are
necessary to implement the terms of the First Amendment as herein approved.
Passed, approved and adopted this 1st day of December, 2008.
Roy D. Buol, Mayor
Attest:
Jeanne F. Schneider, City Clerk
FIRST AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE, IOWA
AN D
THE McGRAW-HILL COMPANIES, INC.
Whereas, a Development Agreement (the Agreement), dated June 19,
2006, was entered into by and between the City of Dubuque, a municipal
corporation of the State of Iowa (City), and The McGraw-Hill Companies, Inc., a
New York corporation (McGraw-Hill); and
Whereas, City and McGraw-Hill now desire to .amend the Development
Agreement as set forth herein.
Now, therefore, the parties agree that the Development Agreement is
amended as follows:
1. Section 14.1 is amended to read as follows:
14.1 Job Creation. McGraw-Hill shall create twenty-four (24) full-time
(1820 hours per year) positions and five (5)part-time (1300 hours per year)
positions in the Port of Dubuque, within four (4) years from the date of this
Agreement, and shall maintain those jobs during the Term of this
Agreement. It is agreed by the parties that McGraw-Hill will have two
hundred seventy-six (276) full-time positions and one hundred thirteen
(113) part-time positions in the Port of Dubuque, as of July 1, 2006. In the
event that the certificate provided to City under Section 14.2 hereof on
July 1, 2016, discloses that McGraw-Hill does not as of that date have at
least three hundred (300) full-time and one hundred eighteen (118) part-
time positions as provided hereinabove, McGraw-Hill shall pay to City,
promptly upon written demand therefore, an amount equal to $1037.00
per job not created ($217,800 per acre x 1.99 acres/418 positions to be
created and maintained in the Port of Dubuque). In addition, for the
positions that McGraw-Hill fails to create and maintain in the Port of
Dubuque for any year occurring after the fourth year during the Term of
this Agreement, the semi-annual Economic Development Grants for such
year under Section 14.2 shall be reduced by the percentage that the
number of such positions bears to the total number of positions (418)
required to be created and maintained by this Section 14.1.
2. Section 14.2 is amended to read as follows:
14.2. Certification. To assist City in monitoring the performance of
McGraw-Hill hereunder, four (4) years from the date of this Agreement,
and every year thereafter during the term of this Agreement, a duly
authorized officer of McGraw-Hill shall certify to City (1) the number of full-
time equivalent positions and part-time positions maintained in the Port of
Dubuque, and the number of full-time equivalent positions and part-time
created in the Port of Dubuque-, and (2) to the effect that such officer has
re-examined the terms and provisions of this Agreement and that at the
date of such certificate, and during the term of this Agreement, McGraw-
Hill is not or was not in default in the fulfillment of any of the terms and
conditions of this Agreement and that no Event of Default (or event which,
with the lapse of time or the giving of notice, or both, would become an
Event of Default) is occurring or has occurred as of the date of such
certificate or during the term of this Agreement, or if the signer is aware of
any such default, event or Event of Default, said officer shall disclose in
such statement the nature thereof, its period of existence and what action,
if any, has been taken or is proposed to be taken with respect thereto.
Such certificate shall be provided not later than July 1, 2010, and on July
1, 2011, through July 1, 2018.
CITY OF DUBUQUE, IOWA
By: Roy D. Buol, Mayor
By: Jeanne F. Schneider, City Clerk
THE MCGRAW-HILL COMPANIES,
INC.
By:
John Morris, Controller, Real Estate