Ruscilla McGraw-Hill Sub. AgreeBarry A. LindahL Esq.
Corporation Cotmsel
Suite 330, Harbor View Place
300 Main Street
Dubuque, Iowa 52001-6944
batesq~mwci.net
December 13, 2001
Mayor Terrance Duggan and
Members of the City Council
City Hall - City Clerk's Office
50 West 13th Street
Dubuque, IA 52001
RE: Ruscilli/McGraw-Hill
Dear Mayor and Council Members:
The Development Agreement with Ruscilli Development Co. Ltd. and the McGraw-Hill
Companies, Inc. provides, in part, that in the event of a default by the developer that is
not cured within the time provided for, the City has the right to re-enter and take
possession of the property, subject to the rights of the holder of any first mortgage.
Enclosed is a Subordination Agreement submitted to me by National City Bank (Bank),
holder of a first mortgage on the real estate. Under the Agreement, the City
acknowledges that National City Bank is the holder of a first mortgage, the City agrees
to notify the Bank in the event of a default and the City acknowledges that its rights
under the Development Agreement are subject to and subordinate to the rights of the
Bank as set forth in the Development Agreement.
The Bank also agrees that in the event that it exercises its rights to judicial foreclosure
and acquires title to the property, the Bank will be bound by the terms of the
Development Agreement.
The Subordination Agreement is authorized by the Development Agreement. I have
reviewed the Agreement as has our Financial Counsel, Bill Noth, and we find the
Agreement to be an acceptable form.
I would therefore request that the City Council authorize the Mayor to execute the
Agreement on behalf of the City.
Barry Lindahl
Coporation Counsel
Service People Integrity Responsibility Innovation Teamwork
BAL/im
Attachment
Ccz
Michael Van Milligen, City Manager
Bill Baum, Economic Development Director
Robert Kiger, Esq.
2
614,-227-2144
41 Soath High Su-e~
Columbu.% Ohio 43215~5194
Facmmd¢: 61~-227-2100
Toll Fr~a:: 800-53~.279~
December 12, 2001
VIA. FACSIMILE {31_9- _~t-! 040)
Barry A. Lindahl, Esq.
300 Main Stl~et, SI*. 330
DublJ. que, Iowa 52001
Re: Ruscilli/McGraw Hill
Aramhed is a copy of the revised form of Subordination Agreement which I will have
executed by the Bank at our closing which should occur within the next couple of daYs. I will
then forward the same along to you.
Please acaept this letter as a request to you from National City Bank that the matter of the
execution of the Subordination Agreement be placed on the City Council agenda.
Robert C. Kiger
RCK:mrg
Enclosure
cc: Mr. James }L Partridge (w/encL via facsimile)
Cinc/m~i * Cleveland * Colml~l~ * Dayton * Naples, FL · ~hingmn DC
SUBORDINATION AGREEMENT
This Agreement is made as of this, , day of ,2001, by and between the City
of Dubuque, Iowa, a municipality (flue "City") established pursuant m the code of Iowa~ of the
sra~e of Iowa and National City Bank, a national banking association, having a place of business
at 155 E- Broad Street, Columbus, Ohio 43215 (',Bank").
WHEREAS, under date of October 19, 2001 the City, Ruscilli Development Co, Ltd.
CRu$cilti") and The McGraw-Hill Companies, Inc. ("McGraw-Hill") entered into a certain
development agreement (the "Development Agreement") covering, inter alia the purchase by
RAV Dubuque, LLC, as successor to Ruscilli, of a 20.3 acre parcel described on Exhibit A
attached hereto (the "Real Estate") and for the development thereon of an industrial warehouse
and disrribmion center to be leased to McGraw-Hill; and
WHEREAS, National City Bank has made a construction loan trhe "Loan") to R/W
Dubuque, LLC in an amount not to exceed $9, 689,411.00, secured by a fimt priority mortgage
lien on the Real Estate (the "Mortgage"), the purpose of which is to provide construction funds
for the construction of the office warehouse facility; and
WHEREAS, Section 6 of the Development Agreement provides, among other things, that
upon an Event of Default as defined therein which is not cared within the time provided for
therein, the City would have the right to reenter and rake possession of the property and to
terminate and revest in the City the estate conveyed by the City m R/W Dubuque, LLC subject,
however, to the superior rights of the holder of any "First Mortgage" as del'reed therein; and
WHERI~AS, Bank is unwilling m go forward with the disbursement olios Loan proceeds
unles~ the priorities as set forth in the Development Agreement are clarified.
NOW THEREFORE, the City and Bank hereby agree as follows:
City acknowledges and agrees thru National City Bank is the holder ora "First
Mortgage" on the Real Estate and is therefore entitled to all of the protections ora
holder ora First Mortgage under the Development Agreement.
Pursuant m Section 6.2 of the Development Agreement the City agrees m notify Bank
of any Even* of Default as defined in the Development Agreement and shall accept a
cure thereof by Bank within the 60 day period provided for in the Development
Agreement.
City acknowledges that its rights under the Development Agreement, including,
without limitation, its rights to reenter and take possession of file property and to sell
the same at private sale, are subject and subordinate m the ri,bm of Bank m bring a
judicial foreclosure in the event of a default under its Mortgage.
4. In ~he event Bank exercises its right to judicial foreclosure and acquires title to the
teal estate au the foreclosure sale, Break agrees to be bound by the terms of the
Development AgreemenL to the same exuent as the Developer therein_
IN WITNESS THE~OF, the parties have executed this Agreemem effective as of~e
__ day of__ ,2001.
Signed and acknowledged in
the presence of:
City of Dubuque, Iowa
By: .
Priltt Name:
National City Bank
By:
STATE OF OHIO
COUNTY OF FRANKLIN
On this ... day of ,200_, before me, the undersigned~ a Notary
Public in and for *he State of Ohio, personally appeared , ro me
personally known, who being by me duly sworn, did say that he is the
of National City Bank, and ltmt the insmunent was signed on behalf of the national
banking a~sociation by authority of the association; and he acknowledged the execution
of the in~roznent to be the voluntary act and deed of said association and by it voluntarily
executed.
Notary Public
STATE OF IOWA
COUNTY OF
On this day of : ~ 200_o before me, a Noxary Public in and for
the State of Iowa, personally appeared and
, m me personally known, and, who, being by me duly sworn,
did say that they are the Mayor and City Clerk, respectively, of the City of Dubuque~
Iowa; that the seal affixed to the foregoing instmmem is thc corporate seal of the
corpomfion~ and that the insuumem was signed and sealed on behalf of the corporation,
by authority of its City Council, as contained in Ordinance No. passed (the
Resolution adopted) by the City Council, under Roll Call No. of the City
Council on the. .. day of ~ 200_, and that and
acknowledged the execution of the insmanent to be their
voluntary act and deed and file voluntary act and deed of the corlmmfian, by it voluntarily
executed
Notary Public