Amendment to B&G Consulting, LLC AgreementDubuque
THE CITY OF
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Masterpiece on the Mississippi
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Amendment to Agreement with B&G Development, LLC for New Market
Tax Credit Consulting Services
DATE: December 9, 2008
Economic Development Director Dave Heiar recommends City Council approval of an
amendment to the consulting agreement with B&G Development LLC for identifying and
marketing City parcels or facilities to New Market Tax Credit Community Development
Entities. This amendment will increase the monthly cap for services from $2,500 to
$4,000, unless an exception is approved by the City in advance, and will increase the
aggregate of total allowable expenses from $10,000 to $30,000.
concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahi, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
THE CITY OF
DuB E
Masterpiece on the Mississippi
Dubuque
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2007
TO: Michael Van Milligen, City Manager
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FROM: David J. Heiar, Economic Development Director ~, ~~
SUBJECT: Amendment to Agreement with B&G Development, LL for New Market
Tax Credit consulting services
DATE: December 8, 2008
INTRODUCTION
This memorandum presents for City Council approval of an amendment to the
consulting agreement with B&G Development LLC for identifying and marketing City
parcels or facilities to New Market Tax Credit (NMTC) Community Development Entities
(CDEs).
BACKGROUND
Part of the Community Renewal Tax Relief Act of 2000, the New Markets Tax Credit
Program encourages investments into privately managed investment institutions. In
turn, these privately managed investment institutions, or Community Development
Entities (CDEs), will make loans and capital investments in businesses in underserved
areas. By making an investment in a CDE, an individual or corporate investor can
receive a tax credit worth 39 percent (30 percent net present value) of the initial
investment, distributed over 7 years, along with any anticipated return on their
investment in the CDE.
One project in Dubuque has received an investment from a CDE. Iowa Business
Growth from Johnston, Iowa contributed to the Julien Hotel revitalization project. The
NMTC investment moved forward the otherwise stalled project. Other projects in
Dubuque would be eligible for NMTC investment.
Receiving a NMTC investment is a very competitive process. Dubuque is considered a
small-urban area according to the federal legislation. The NMTC funding dedicated to
this community size classification is highly competitive. Accessing this effective funding
source requires a proactive approach.
Paul Butler and John Gronen have begun a new consulting firm, B&G Development,
LLC which provides services in the areas of real estate development, historic
rehabilitation, and various financing options related to the development and
rehabilitation of real estate, including NMTCs. Their successful navigation of the NMTC
process with the Julien Hotel Project gave them valuable experience and contacts with
national CDEs which benefit Dubuque in accessing additional NMTC funds.
On September 2, 2008 the City Council approved a consulting agreement between the
City and B&G Development, LLC. to identify and market select City parcels or facilities
to NMTC CDEs. Below are the services being provided in the agreement;
• B&G Development shall identify and marked select City of Dubuque facilities to
NMTC CDEs with the goal of obtaining $6,000,000+ of NMTCs for specific City
facilities.
• Assist in developing marketing materials that outline the comprehensive plan and
impact of the City facilities.
• Contact potential CDEs to identify potential partners, interest level, receive
feedback, refine marketing and overall program.
• Focus on potential CDE partners that received funding from Round #6 of the
NMTC program.
• Assist in bringing a funding team together.
• Closing and funding of a NMTC transaction.
The contract with B&G Development, LLC provided for services at $65 per hour not to
exceed $2,500 per month unless approved by City in writing in advance of exceeding
such cap. Should the City receive NMTC funding from a CDE, B&G Development will
receive an incentive fee based upon the net NMTC funds received for a City project,
which will be as follows;
• 1.5% of the first $3,000,000 of net NMTCs.
• 1.0% of the next $3,000,000 of net NMTCs.
• 0.5% any funds received in excess of $6,000,000.
• Hourly fees paid for services will be deducted from any earned incentive.
Funding from this contracted service is funded from FY 2008 Economic Development
Operating Budget savings.
The City would also reimburse B&G Development for all direct expenses incurred in
providing the services outlined in the agreement. Any individual expense greater than
$1,000 and, in aggregate, over $10,000 must be approved by the City Manager in
writing before incurring such expense.
DISCUSSION
In the past couple of months B&G Development, LLC attended a national conference in
Boston to promote Dubuque projects that need NMTC. Several follow-up contacts
resulted from this conference. At least two of these CDE's have actually visited
Dubuque to get a better understanding of potential pending projects. Several have
expressed interest in committing part of their NMTC allocation toward various Dubuque
projects.
RECOMMENDATION
The flurry of activity and potential projects in the Port, Warehouse, and Downtown
districts has required a greater amount of time and expense than originally anticipated
by B & G Development, LLC. Therefore, in an effort to keep all of these potential
projects on the radar, I am requesting that we increase our current contract limits with B
& G. I have attached a copy of the contract approval of September 2, 2008. The
sections of the contract that I recommend changes are as follows;
Section 3A
The monthly cap to increase from $2,500 to $4,000, unless an exception
is approved by the City in advance.
Section 3C
The aggregate of total allowable expenses is increased from $10,000 to
$30,000.
ACTION STEP
The action step would be to have the City Council approve an amendment to the
September 2, 2008 contract for these two changes.
Attachments
F:\USERS\DHeiar\NMTC\amend agrmnt B&G Development Memo.doc
FIRST AMENDMENT
TO
CONSULTING AGREEMENT
BETWEEN
THE CITY OF DUBUQUE, IOWA
AND
B & G DEVELOPMENT, LLC
Whereas, a Consulting Agreement ("Agreement"), dated September 6, 2008,
was entered into by and between the City of Dubuque, a municipal corporation of the
State of Iowa (City), and B & G Development, LLC, an Iowa limited liability company
("Consultant"); and
Whereas, City and B & G Development, LLC now desire to amend the
Consulting Agreement as set forth herein.
Now, therefore, the parties agree that the Consulting Agreement is amended
as follows:
1. Section 3A is amended to read as follows:
3. Consultant Fees and Expenses. In consideration of the services to
be provided to City by Consultant, City agrees to pay Consultant the following:
A. General Services Fee. City shall pay to Consultant a fee of $65
per hour for each hour of service provided by John Gronen or
Paul Butler in connection with the services to be provided
hereunder. Such fees shall not exceed $4,000.00 per month
unless approved by City in writing in advance of exceeding such
cap;
2. Section 3C is amended to read as follows:
C. Expenses. City shall reimburse Consultant for all direct expenses
incurred by Consultant in providing services hereunder.
Provided, however, that any individual expense item in excess of
$1,000.00 and any expenses in excess, in aggregate, of
$30,000.00 must be approved by the City Manager of City , in
writing, prior to incurring such expense or City shall not be
obligated to reimburse such expense. ~
CITY OF DU UQUE, IOWA B 8< EVELOP T, LLC
B
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Roy uol, Mayor -~ Jo n Grone
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eanne F. Schneider, City Clerk Maul Butler
Date: December 15, 2008
CONSULTING AGREEMENT
2nd September
This Consulting Agreement ("Agreement") is entered into this _ day of , 2008,
by and between B&G DEVELOPMENT, LLC, an Iowa limited liability company ("Consultant")
and the CITY OF DUBUQUE, IOWA ("City").
RECITALS
A. City owns or otherwise controls certain real estate (the "Real Estate") and desires to
obtain assistance in identifying and marketing select parcels or facilities of such Real Estate to New
Market Tax Credit ("NMTC") Community Development Entities ("CDEs")•
B. Consultant is in the business of, among other things, providing services in the area of real
estate development, historic rehabilitation and various financing options available related to
development and rehabilitation of real estate, including NMTCs; and,
C. City desires to retain Consultant to provide Consultant's services to City and Consultant
agrees to such retention, subject to the terms and conditions contained herein.
THEREFORE, in consideration of the mutual terms and covenants contained herein, the
parties agree as follows:
AGREEMENT
1. Services to be Provided by Consultant Consultant shall provide its services to City in
connection with the identification and marketing of City Real Estate to NMTC CDEs and shall
provide such services based in five (5) parts as identified on Exhibit "A" attached hereto and by this
reference made a part hereof.
2. Engagement. City hereby engages Consultant to provide the services set forth in
paragraph one (1) above in consideration of the fees to be paid by City to Consultant as set forth in
Paragraph 3 below and any other services upon which the parties may mutually agree.
3. Consultant Fees and Ex enses In consideration of the services to be provided to City
by Consultant, City agrees to pay Consultant the following
A. General Services Fee. City shall pay to Consultant a fee of $65 per
hour for each hour of service provided by John Gronen or Paul Butler
in connection with the services to be provided hereunder. Such fees
shall not exceed $2,500.00 per month unless approved by City in
writing in advance of exceeding such cap;
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B. New Market Tax Credits Incentive Fee. City shall pay to Consultant
a success or incentive fee based upon the net NMTC funds received
for City Real Estate ,which fee shall be as follows:
a. 1.5% of the first $3,000,000.00 of net
NMTCs received by City during the
term hereof or as a result of the
services provided by Consultant
hereunder, even if such funds are
received after termination hereof;
b. 1% of the next $3,000,000.00 under
the same terms as provided in
subparagraph (a) above;
c. .5% of any funds received in excess of
$6,000,000.00 under the same terms
as provided in subparagraph (a) above.
For purposes of this agreement, "net NMTCs received" shall equal the funds actually
received by the city for NMTCs related to the Real Estate before deductions related to legal,
accounting and similar such expenses.
Any General Service Fee paid shall be credited against any incentive fee due under the terms
of this Agreement.
C. Expenses. City shall reimburse Consultant for all direct expenses
incurred by Consultant in providing services hereunder. Provided,
however, that any individual expense item in excess of $1,000.00 and
any expenses in excess, in aggregate, of $10,000.00 must be approved
by the City Manager of City , in writing, prior to incurring such
expense or City shall not be obligated to reimburse such expense.
4. Method and Time of Payment. General Services Fees shall be billed by Consultant
on a monthly basis and shall be paid within thirty (30) days of the date of the invoice provided by
Consultant to City. Any incentive fee shall be paid to Consultant within thirty (30) days of receipt
by City of the value for the NMTCs obtained hereunder.
5. Limitation of Services Provided. Consultant shall provide only the services identified
above. Consultant cannot and will not provide legal, accounting or other advice under this
agreement and each party shall be responsible for obtaining its own counsel in connection with such
matters.
Page 2 of 4
6. Relationship of Parties. Consultant shall act as an independent contractor of City
hereunder. This agreement is not intended to create any relationship between the parties except as
independent parties contracting.
7. Indemnification. City hereby agrees to indemnify and hold harmless Consultant and its
principals, employees or agents from and against any and all claims, causes of action or other
demands of any nature related to the Real Estate or this Agreement, including the cost of reasonable
attorney's fees and Court costs arising out of the negligence of City, its officers and employees.
Consultant hereby agrees to defend, indemnify and hold harmless City, its officers and
employees from and against any claim against City arising out of this or related to this agreement
resulting from the negligence of Consultant, its principals, employees and agents.
8. Representations and Warranties. City acknowledges that Consultant has made no
representation or warranty that Consultant will be able to obtain NMTCs related to the Real Estate
above and Consultant simply agrees to use its best efforts to obtain such funding sources. City
warrants and represents to Consultant that City will provide all available information requested by
Consultant with respect to the Real Estate; all such information provided to Consultant shall be
accurate and that City shall update all such information to ensure Consultant has accurate and
complete information at all times while acting pursuant to this Agreement.
9. Default. In the event City defaults on City's obligation to make payments to Consultant
as provided herein, and Consultant is required to take any action to collect such sums due, City
agrees that City will pay to Consultant all collection costs incurred by Consultant, including
reasonable attorney's fees and Court costs. Any funds not paid when due Consultant shall accrue
interest at the rate of 12% per annum from the due date.
10. Term. This agreement shall extend for a term of one (1) year from and after the date
hereof provided that termination shall not affect City's obligation to pay fees on any funds received
by City after termination of the agreement if receipt of such funds triggers a fee due to Consultant
hereunder. Notwithstanding the foregoing, either City or Consultant may terminate this Agreement
upon thirty (30) days written notice to the other party for any reason, with or without cause.
11. Confidentiality. City agrees that City shall not, without the prior written consent of
Consultant, disclose to any individual or entity (except as required by law and except for
professionals such as attorneys and accountants who are also bound by confidentiality, or otherwise,
to retain such information as confidential) the method or means of Consultant providing services
hereunder or any terms of this Agreement. This Confidentiality provision shall survive termination
of this Agreement.
Page 3 of4
12. Miscellaneous. This Agreement shall be governed by and construed under the laws of
the State of Iowa and may not be assigned by either party without the prior written consent of the
other party. In the event any action is brought to enforce any term of this agreement or in any way
related to this agreement, the parties agree that such action shall be brought in the District Court for
Dubuque County, Iowa.
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