Interstate Building, LLP & WS Live, LLC - 1st Amend. to Develp. Agree.THE CITY OF Dubuque
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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 Development Agreement with Interstate Building, LLLP
and WS Live, LLC
DATE: December 10, 2008
On November 3, 2008, the City Council approved a Development Agreement with
Interstate Building, LLLP and WS Live, LLC. A discrepancy was discovered in the
company's definition of FTE (35 hours per week) and the City's standard definition of
FTE (40 hours per week). An agreement was reached to use the City's definition.
On November 21, WS Live was notified by their second largest customer that they
would no longer need the services provided by WS Live. All of this client's work is
performed in Dubuque. Through ongoing discussions, WS Live has indicated that if the
City is willing to adjust the employment requirements in the original Development
Agreement, the company would implement a plan to close another operation and move
the business to Dubuque to replace some of the lost client work.
The new requirement would be 100 FTE's as compared to the former 122 FTE's. This
new number is based on a 40-hour work week for definition of the FTE's, which
accounts for a portion of the decrease in the number of FTE's.
Economic Development Director Dave Heiar recommends City Council approval of the
First Amendment to the Development Agreement with Interstate Building, LLLP and WS
Live, LLC to reflect changes in employment numbers and that WS Live must be
completely out of their current facility by January 15, 2009.
concur with the recommendation and respectfully request Mayor and City Council
approval.
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Michael C. Van Milligen
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Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
THE CITY OF Dubuque
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Masterpiece on the Mississippi
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TO: Michael C. Van Milligen, City Manger
FROM: David J. Heiar, Economic Development Director
RE: Amendment to Development Agreement with Interstate Building, LLLP
and WS Live, LLC
DATE: December 9, 2008
INTRODUCTION
This memorandum presents for City Council consideration a Resolution approving the
first amendment to the development agreement with Interstate Building, LLLP and WS
Live, LLC which was approved on November 3, 2008 and includes the lease of 15,000
sq ft of the former Interstate Building (131 West 10th Street) to assist with the retention
and creation of jobs by WS Live, LLC.
BACKGROUND
City staff has worked with Interstate Building, LLLP as they have completed a $2 million
renovation of the Interstate Building for speculative, first rate office space in the
downtown area. The Interstate Building consists of 20,000 sq ft of office space
throughout four levels as well as an additional 4000 sq ft in the lower level basement
space. It is very close in proximity to the recently rehabilitated 1000 block of Main Street
and the future rehabilitation project in the 900 block of Main Street.
City staff and Interstate Building LLLP have worked with WS Live in their search for a
new location in the City of Dubuque. WS Live is relocating from 301 Data Court Drive to
accommodate McKesson Corporation's relocation to the Technology Park. This forced
relocation caused the company to re-evaluate their presence in Dubuque. The
company currently has underutilized space at another facility in Superior, Wisconsin. On
November 3, 2008, the City Council approved a development agreement to keep WS
Live in Dubuque.
The key elements of the Development Agreement were as follows:
1) Developer will finalize the $2,000,000 rehabilitation of the Interstate Building by
December 15, 2008.
2) The Employer will sign a 7 year lease for 15,000 sq. ft. of the 20,000 sq. ft.
building.
3) The Employer will retain 122 FTE positions.
4) By January 2011, the Employer will create 14 additional FTE positions.
5) By January 2013, the Employer will create another 14 FTE positions.
6) City will provide developer with a 75%TIF rebate on the increased taxable value
of the building for 7 years.
7) City will provide employer with a $375,000 forgivable loan to fund one half of the
technology and build out needs of the Company.
8) Both the TIF rebate and the forgivable loan will be based on job retention and
creation.
DISCUSSION
Since the approval of the Development Agreement, staff has worked with WS Live on
the terms and conditions of a loan agreement. One of the discrepancies that was
discovered in these negotiations was the difference between the company's definition of
an FTE (35 hours per week) and the City's standard definition of an FTE (40 hours per
week). We have agreed to use the City's definition.
On November 21, WS Live was notified by their second largest customer that they
would no longer need the services provided by WS Live. All of this clients work is
performed in Dubuque. Through ongoing discussions, WS Live has indicated that if the
City is willing to adjust the employment requirements in the original Development
Agreement, the company would implement a plan to close another operation and move
the business to Dubuque to replace some of the lost client work. The specific
employment changes requested in the Development Agreement are summarized as
follows:
FTE's
Retained
Original DA 122
Proposed Amendment 100
Retained by January 1, 2011
Original DA 14
Proposed Amendment 7
Retained by January 1, 2013
Original DA 14
Proposed Amendment 7
The FTE's that will be retained are also now based on a 40 hour work week, which
accounts for a portion of the decrease in the above total numbers.
The other change that is proposed in this amendment is that WS Live must be
completely out of their current facility by January 15, 2009 in order to qualify for the
forgivable loan. It is imperative for McKesson Corporation to be relocated within this
facility before June 30, 2009. In order for that to happen, WS Live must be out of the
building no later than January 15, 2009.
RECOMMENDATION/ACTION STEP
I recommend that the City Council approve the attached Resolution amending the
Development agreement with Interstate Building LLLP and WS Live, LLC to reflect the
changes in the employment numbers.
F:\USERS\DHeiar\WS Live\WS Live council memo for DA amendment.doc
FIRST AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE, IOWA
AND
INTERSTATE BUILDING, LLLP AND WS LIVE, LLC
Whereas, a Development Agreement (the Agreement), dated November
3, 2008, was entered into by and between the City of Dubuque, a municipal
corporation of the State of Iowa (City), Interstate Building, LLLP (Developer) and
WS Live, LLC (Employer); and
Whereas, City and Interstate Building, LLLP and WS Live, LLC 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 2.3 is amended to read as follows:
2.3 TIMING OF IMPROVEMENTS
Developer hereby agrees that construction of the Minimum Improvements on
the Property shall be substantially completed by December 30, 2008 and that
the employer shall be moved into this facility by January 15, 2009 and shall
be completely out of their current space at 301 Data Court by this same date.
For purposes of this section, "substantial completion" shall not contemplate
receipt of a certificate of occupancy. The time frames for the performance of
these obligations may be suspended due to unavoidable delays, meaning
delays, outside the control of the party claiming its occurrence in good faith,
which are the direct result of strikes, other labor troubles, unusual shortages
of materials or labor, unusually severe or prolonged bad weather, acts of
God, fire or other casualty to the Minimum Improvements, litigation
commenced by third parties which, by injunction or other similar judicial action
or by the exercise of reasonable discretion directly results in delays, or acts of
any federal, state or local government which directly result in delays. The
time for performance of such obligations shall be extended only for the period
of such delay.
2. Section 4.1 is amended to read as follows:
4.1 JOB RETENTION
(1) It is agreed by the parties that Employer has at least 100 full-time
equivalent positions in Dubuque, Iowa as of January 1, 2009.
Employer shall maintain 100 full-time equivalent positions during the
term of this Agreement.
(a) By January 1, 2011, Employer shall retain seven (7)
additional full-time equivalent positions so that the total
number of full-time positions is 107.
(b) By January 1, 2013, Employer shall retain seven (7)
additional full-time equivalent positions: so that the total
number of full time equivalent positions is 114.
(2) In the event that any certificate provided to City under Section 4.2
hereof discloses that Employer does not as of that date have at least
the number of full-time equivalent positions as provided hereinabove,
the semi-annual Economic Development Grants to be paid to the
Developer for such year under Section 3.1 shall be reduced by the
percentage that the number of such positions bears to the total number
of positions required to be retained by this Section 4.1 (For example, if
Employer on January 1, 2010, has 95 positions, the semi-annual
Economic Development Grants would be 95% (100 positions) of the
available Developer Tax Increment received by Gity).
(3) In addition, in the event that any certificate provided to City under
Section 4.2 hereof discloses that Employer does not as of that date
have at least the number of full-time equivalent positions as provided
hereinabove, the forgivable portion of the loan provided to Employer in
section 3.2 shall be reduced by the percentage that the employment
shortfall bears to the total number of positions required to be retained
by this Section 4.1. (For example; if Employer on December 31, 2011,
has 104 positions, the forgivable portion on that date would be 97.2%
(107 positions) of the available forgivable portion.
CITY OF
By:
QUE, IOWA
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Rvy D%Buol, Mayor
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By: ,~ ,
anne F. Schneider, City
WS LIVE, LLC
By: ~, ,
Jeff ntz r' ~ ,CFO
F:\USERS\DHeiar\WS Live\1 st Amendment to DA.doc
2
RESOLUTION NO 435-08
RESOLUTION APPROVING THE FIRST AMENDMENT TO THE INTERSTATE
BUILDING, LLLP AND WS LIVE, LLC DEVELOPMENT AGREEMENT
Whereas, a Development Agreement (the Agreement), dated November 3, 2008,
was entered into by and between the City of Dubuque, a municipal corporation of the
State of Iowa (City), and Interstate Building, LLLP and WS Live, LLC; and
Whereas, City and Interstate Building, LLLP and WS Live, LLC 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 Interstate Building, LLLP and WS
Live, LLC 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 15th day of December, 2008.
Roy D. Buol, Mayor
Attest:
Jeanne F. Schneider, City Clerk