Hotel Julien Development AgreementTHE CITY of (~~' Dubuque
a
DUB E
i
Masterpiece on the Mississippi
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Development Agreement for the Hotel Julien Building
DATE: April 15, 2008
Economic Development Director Dave Heiar recommends City Council approval of a
Development Agreement with HJD Landlord, LLC and HJD Manager, LLC for a
$600,000 Downtown Rehabilitation loan, a $10,000 design grant, a $10,000 facade
grant, and a 100% rebate of incremental property taxes for 15 years. This will support
the rehabilitation of the Hotel Julien at 200 Main Street.
The proposed renovation is estimated to cost $20 million and includes a swimming pool,
spa, restaurant, retail boutiques, arestaurant/bar, updated conference and ball rooms
and 130 upscale rooms/suites. This renovation would also restore major portions of the
exterior of the building to look like the original building facade.
The key items in the Development Agreement include:
• HJD Landlord, LLC and HJD Manager, LLC will invest $20,000,000 to rejuvenate
a cornerstone building in Downtown Dubuque.
• City will commit to a $600,000 Downtown Rehabilitation Loan, a $10,000 Design
Grant, and a $10,000 Facade Grant. The project retains jobs and creates new
jobs in the downtown area.
• The company will receive a 15-year TIF in the form of a 100% yearly tax rebate
on increased property taxes but not to exceed the tax increment revenues paid
by the Developer. Failure to maintain the jobs and create jobs associated with
this project will result in a pro-rated reduction of the TIF rebate.
Upon completion of the renovation project (July 1, 2009), the City will provide
100% of the incremental increase in its share of Hotel/Motel tax revenue for three
full years, to assist in marketing the renovated hotel. The funds will be transferred
to the Convention and Visitors Bureau to exclusively market the hotel.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
G~
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
DuB E
Masterpiece on the Mississippi
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director ( j
SUBJECT: Development Agreement for the Hotel Julien Building
Dubuque
~ r
2007
April 15, 2008
INTRODUCTION
This memorandum presents for City Council consideration a Resolution approving a
Development Agreement for HJD Landlord, LLC and HJD Manager, LLC to support
their rehabilitation of the Hotel Julien at 200 Main Street.
BACKGROUND
In August 2006, the City Council approved a Memorandum of Understanding with The
Fischer Companies outlining an incentive package for the rehabilitation of the Julien
Hotel located at 200 Main Street. HJD Landlord, LLC and HJD Manager, LLC have
committed to retaining 12 (FTE) jobs and creating new 57 (FTE) jobs in the building.
The proposed renovation is estimated to cost $20 million and includes a swimming pool,
spa, restaurant, retail boutiques, arestaurant/bar, updated conference and ball rooms
and 130 upscale rooms/suites. This renovation would also restore major portions of the
exterior of the building to look like the original building facade.
The Development Agreement would include a Downtown Rehabilitation Loan/Grant to
encourage private investment and rehabilitation efforts in the City's Greater Downtown
Urban Renewal District. The loan/grant program, capitalized with funds available
through the City's tax increment financing district, provides for a maximum of $600,000
in attractive low-interest loan monies. The program is unique in that grants of up to
$10,000 are available to offset necessary predevelopment costs. A facade grant is also
available of up to $10,000. The program also includes a forgivable loan element
whereby qualifying applicants may have up to the full amount of the loan forgiven as an
incentive for the creation of new employment and housing opportunities in the district.
A 15-year 100% tax rebate has been offered to the company to assist in their downtown
renovation project. 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% of tax
increment over the existing base valuation of $1,555,800.00, not to exceed the tax
increment revenues paid by the Developer.
DISCUSSION
Key items in the Development Agreement include;
• HJD Landlord, LLC and HJD Manager, LLC will invest $20,000,000 to
rejuvenate a cornerstone building in Downtown Dubuque.
• City will commit to a $600,000 Downtown Rehabilitation Loan, a $10,000
Design Grant, and a $10,000 Facade Grant. The project retains 12 (FTE)
jobs and creates 57 (FTE) new jobs in the downtown area.
• The company will receive a 15-year TIF in the form of a 100% yearly tax
rebate on increased property taxes but not to exceed the tax increment
revenues paid by the Developer. Failure to maintain the jobs and create
jobs associated with this project will result in a pro-rated reduction of the
TIF rebate.
Upon completion of the renovation project (July 1, 2009), the City will
provide 100% of the incremental increase in its share of Hotel/Motel tax
revenue for three full years, to assist in marketing the renovated hotel. The
funds will be transferred to the Convention and Visitors Bureau to
exclusively market the hotel.
Additional terms and conditions are included within the attached Development
Agreement.
RECOMMENDATION
Staff has reviewed the application and found it to be in keeping with the requirements of
the Downtown Rehabilitation Loan/Grant Program and the Memorandum of
Understanding. The project has begun and is expected to be completed by June 2009.
I recommend that the City Council adopt the attached Resolution approving a
Development Agreement for HJD Landlord, LLC and HJD Manager, LLC for the
$600,000 Downtown Rehabilitation loan, a $10,000 design grant, a $10,000 facade
grant, and a 100% rebate of incremental property taxes for 15 years.
ACTION STEP
The action step for the City Council is to adopt the attached Resolution.
F:\USERS\DHeiarUulien InnUulien DA Memo.doc
Prepared/Return to: David Heiar, Economic Development, 50 W 13`h Street, Dubuque, IA 52001 (563) 589-4393
RESOLUTION NO. 122-08
A RESOLUTION APPROVING A DEVELOPMENT AGREEMENT FOR THE
HOTEL JULIEN PROJECT
Whereas, the City of Dubuque, Iowa, has a Memorandum of Understanding with
The Fischer Companies outlining an incentive package for the rehabilitation of the Hotel
Julien; and
Whereas, the City of Dubuque, Iowa, has created a Downtown Rehabilitation
Loan/Grant Program for the purpose of stimulating reinvestment in the Greater
Downtown Urban Renewal District; and
Whereas, the City of Dubuque, Iowa is encouraging the use of this loan/grant
program to finance code compliance activities and to spur job creation activities; and
Whereas, the loan application from HJD Landlord, LLC and HJD Manager, LLC
meets the requirements of this program; and
Whereas, it is the determination of this Council that approval of the Development
Agreement for the rehabilitation of the Property by HJD Landlord, LLC and HJD
Manager, LLC according to the terms and conditions set out in the Development
Agreement is in the public interest of the City of Dubuque.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the Development Agreement with HJD Landlord, LLC and
HJD Manager, LLC is hereby accepted and approved.
Section 2. That the Mayor is hereby authorized to execute, on behalf of the
City Council of the City of Dubuque, Iowa, the attached Development Agreement with
HJD Landlord, LLC and HJD Manager, LLC.
Section 3. That the City Manager is hereby authorized to execute, on behalf of
the City Council of the City of Dubuque, Iowa, all necessary loan documents and is
further authorized to disburse loan funds from the Downtown Rehabilitation Loan/Grant
Program, in accordance with the terms and conditions of the executed agreement.
Passed, approved and adopted this 21st day of April, 2008.
Roy D. Buol, Mayor
Attest
Jeanne F. Schneider, City Clerk
F:IUSERS1DHeiarlJulien Inn\Julien DA Res.doc
DEVELOPMENT AGREEMENT
BY AND AMONG
THE CITY OF DUBUQUE, IOWA,
HJD LANDLORD, LLC,
AND
HJD MANAGER, LLC
THIS DEVELOPMENT AGREEMENT, dated for reference purposes the 21Stdayof
April , 2008, is made and entered into by and among the City of Dubuque, Iowa
(City), HJD Landlord, LLC (Developer), and HJD Manager, LLG. (Employer).
WHEREAS, Developer is or will be, the owner of the following described real estate
(the Property):
TRACTI
Lots 5, 6, 7, 195, 196 and 196a, in the City of Dubuque, Iowa, according to the
United States Commissioners' Map of the Town of Dubuque, Iowa.
TRACT II
The Southerly 40 feet of Lot 194 in Town (now City) of Dubuque, Iowa, according
to the United States Commissioners' Map of the Survey of said Town of
Dubuque.
TRACT I I I
The Northerly 24 feet of Lot 194 in the City of Dubuque, Iowa, according to the
United States Commissioners' Map of the Survey of the Town of Dubuque, Iowa.
TRACT IV
Lot 193 in City of Dubuque, Iowa, according to the United States Commissioners
Map thereof.
TRACT V
Lots A, B, C and D of Julien Hotel Plaza in the City of Dubuque, Iowa, according
to the recorded Plat thereof.
TRACT VI
Lot 195A and Lot 197A in the City of Dubuque, Iowa, according to the United
States Commissioners Map thereof.
TRACT VII
A parcel of land located in the North 60 feet of Lot 745; the South 40 feet of the
North 100 feet of Lot 745 and the North 111 feet of the South 157 feet of Lot 745
in the City of Dubuque, Iowa, as described in Patent, Instrument No. 9801-91
and Patent, Instrument No. 7684-92, records of Dubuque County, Iowa.
TRACT VIII
South 22' of City Lot 8, Dubuque, Iowa.
All the above property generally located at 200 Main Street in the City of Dubuque; and
WHEREAS, the Property is located in the Greater Downtown Urban Renewal District
(the District) which has been so designated by City Council Resolution 26-07 as a slum and
041408adj
blight area (the Project Area) defined by Iowa Code Chapter 403 (the Urban Renewal
Law); and
WHEREAS, Developer has undertaken the redevelopment of an occupied building
(the Julien Hotel) located on the Property; and
WHEREAS, Employer will operate the Julien Hotel as the same during the term of
this Agreement; and
WHEREAS, Developer will make an additional capital investment in building
improvements, equipment, furniture and fixtures in the Property; and
WHEREAS, pursuant to Iowa Code Section 403.6(1), and in conformance with the
Urban Renewal Plan for the Project Area adopted on December 17, 2007, City has the
authority to enter into contracts and agreements to implement the Urban Renewal Plan;
and
WHEREAS, the City Council of City believe it is in the best interests of the City to
encourage Developer and Employer in the development of the Property by providing
certain incentives as set forth herein.
NOW, THEREFORE, the parties to this Development Agreement, in consideration
of the promises, covenants and agreements made by each other, do hereby agree as
follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES
1.1 Representations and Warranties of City. In orderto induce Developer and Employer
to enter into this Agreement, City hereby represents and warrants to Developer and
Employer that to the best of City's knowledge:
(1) City has duly obtained all necessary approvals and consents for its
execution, delivery and performance of this Agreement and that it has full power
and authority to execute, deliver and perform its obligations under this Agreement.
This Agreement, upon execution and delivery by the City (assuming due
authorization, execution and delivery by the Developer), is a valid and legally
binding instrument of City, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting creditors' rights generally.
(2) City shall exercise its best efforts to cooperate with Developer and Employer
in the development process.
(3) City shall exercise its best efforts to resolve any disputes arising during the
development process in a reasonable and prompt fashion.
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(4) The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, and the fulfillment of or compliance with the
terms and conditions of this Agreement are not prevented by, limited by, in conflict
with, or result in a violation or breach of, the terms, conditions or provisions of the
charter of City, any evidence of indebtedness, agreement or instrument of whatever
nature to which City is now a party or by which it or its property is bound, or
constitute a default under any of the foregoing:
(5) There are no actions, suits or proceedings pending or threatened against or
affecting City in any court or before any arbitrator or before or by any governmental
body in which there is a reasonable possibility of an adverse decision which could
materially adversely affect the financial position or operations of City or which
affects the validity of the Agreement or City's ability to perform its obligations under
this Agreement.
1.2 Representations and Warranties of Developer and Employer. Developer and
Employer make the following representations and warranties:
(1) Developer and Employer are Limited Liability Companies duly organized and
validly existing under the laws of the State of Iowa, and have all requisite power and
authority to own and operate their properties, to carry on their business as now
conducted and as presently proposed to be conducted, and to enter into and
perform their obligations under the Agreement.
(2) This Agreement has been duly authorized, executed and delivered by
Developer and Employer and, assuming due authorization, execution and delivery
by the City, is in full force and effect and is a valid and legally binding instrument of
Developer and Employer enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting creditors' rights generally. Developer's and Employer's
counsel shall issue a legal opinion to the City, at time of closing, confirming the
representations contained herein, inform and substance reasonably satisfactory to
City.
(3) The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, and the fulfillment of or compliance with the
terms and conditions of this Agreement are not prevented by, limited by, in conflict
with, or result in a violation or breach of, the terms, conditions or provisions of the
articles of organization or the operating agreement of Developer or Employer or any
contractual restriction, evidence of indebtedness, agreement or instrument of
whatever nature to which either Developer or Employer is now a party or by which it
or its properly is bound, or constitute a default under any of the foregoing.
(4) There are no actions, suits or proceedings pending or threatened against or
affecting Developer or Employer in any court or before any arbitrator or before or by
any governmental body in which there is a reasonable possibility of an adverse
3
decision which could materially adversely affect the business, financial position or
result of operations of Developer or Employer or which affects the validity of the
Agreement or Developer's or Employer's ability to perform its obligations under this
Agreement.
(5) Developer and Employer will perform their obligations under this Agreement
in accordance with the material terms of this Agreement, the Urban Renewal Plan
and all local, State and federal laws and regulations.
(6) Developer and Employer will use their best efforts to obtain, or cause to be
obtained, in a timely manner, all material requirements of all applicable local, state,
and federal laws and regulations which must be obtained or met.
(7) Developer has firm commitments for permanent financing for the Project in
an amount sufficient, together with equity commitments, to successfully complete
the requirements of this Agreement and shall provide evidence thereof to City prior
to the Closing Date.
1.3 Closing. The closing shall take place on the Closing Date which shall be the 14tH
day of May, 2008, or such other date as the parties shall agree but in no event shall the
Closing Date be later than the 31 St day of May, 2008. Consummation of the closing shall
be deemed an agreement of the parties to this Agreement that the conditions of closing
shall have been satisfied or waived.
1.4 Conditions to Closing: The closing of the transaction contemplated by this
Agreement and all the obligations of Developer and Employer under this Agreement are
subject to fulfillment, on or before the Closing Date, of the following conditions:
(1) Developer, Employer and City shall be in material compliance with all the
terms and provisions of this Agreement.
(2) Developer shall have furnished City with evidence, in a form satisfactory to
City (such as a letter from a corporate official that Developer has sufficient funds, or
a letter of commitment from a bank or other lending institution), that Developer has
firm financial commitments in an amount sufficient, together with equity
commitments, to complete the Minimum Improvements (as defined herein) in
conformance with the Construction Plans (as defined herein), or City shall have
received such other evidence of such party's financial ability as in the reasonable
judgment of City is required.
(3) Developer's and Employer's counsel shall issue a legal opinion to the City
confirming the representations contained herein, in form of Exhibit B, attached
hereto.
(4) Developer or Employer shall have the right to terminate this Agreement at
any time prior to the consummation of the closing on the Closing Date if Developer
4
or Employer determines in its sole discretion that conditions necessary for the
successful completion of the Project contemplated herein have not been satisfied to
the full satisfaction of such party in such party's sole and unfettered discretion.
Upon the giving of notice of termination by such terminating party to the other
parties to this Agreement, this Agreement shall be deemed null and void.
1.5 City's Obligations at Closing. At or prior to the Closing Date, City shall deliver to
Developer and Employer such other documents as maybe required by this Agreement, all
in a form satisfactory to Developer and Employer.
SECTION 2. DEVELOPMENT ACTIVITIES
2.1 Required Minimum Improvements. Developer shall make a total capital
investment of approximately $20,000,000.00 in building improvements, equipment,
furniture and fixtures in the Property (the Minimum Improvements). It is anticipated that
the Minimum Improvements are to include a swimming pool, spa, retail boutiques,
restaurant/bar, updated conference and ballrooms and approximately 130 upscale
rooms/suites. The renovation shall restore a large portion of the exterior of the building
to the original building facade.
2.2 [This section intentionally left blank]
2.3 Plans for Construction of Minimum Improvements. Plans and specifications with
respect to the development of the Property and the construction of the Minimum
Improvements thereon (the Construction Plans) shall be in conformitywith Urban Renewal
Plan, this Agreement, and all applicable state and local laws and regulations, including but
not limited to any covenants, conditions, restrictions, reservations, easements, liens and
charges, recorded in the records of Dubuque County, Iowa.
2.4 Timing of Improvements. Developer hereby agrees that construction of the
Minimum Improvements on the Property shall have been commenced by June 1, 2008,
and shall be substantially completed by June 30, 2009. The time frames for the
performance of these obligations shall 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 extraordinary
delays. The time for performance of such obligations shall be extended only for the period
of such delay.
2.5 Certificate of Completion. Promptly following the request of Developer upon
completion of the Minimum Improvements, City shall furnish Developerwith an appropriate
instrument so certifying. Such certification (the Certificate of Completion) shall be in
5
recordable form and shall be a conclusive determination of the satisfaction and termination
of the agreements and covenants in this Agreement.
SECTION 3. CITY PARTICIPATION
3.1 Downtown Rehab Loan/Grant for Property at 200 Main Street.
(1) City hereby commits to a $600,000 low interest loan, $10,000 fagade grant,
and a $10,000 design grant through the Downtown Rehabilitation Loan/Grant
Program for the Property at 800 Main Street. The project is to be completed in
accordance with the regulations set forth for the City of Dubuque Downtown
Rehabilitation Loan/Grant Program. The loan is for twenty years at 3% interest and
is intended for Historic renovation of the exterior facade and historically significant
elements of the interior with remodeling of the remainder of the interior for use as a
full service hotel. Monthly interest only payments shall be required for the first sixty
(60) months of the loan. Monthly principal and interest payments, amortized over an
additional fifteen (15) year period, shall begin the sixty-first month of the loan.
Developer's counsel shall not less than thirty (30) days prior to closing on the loan
provide City with an opinion of title showing merchantable title in Developer to the
satisfaction of City. City shall have until the closing to render objections to title,
including any easements or other encumbrances not satisfactory to City, in writing to
Developer. Developer shall promptly exercise its best efforts to have such title
objections removed or satisfied and shall advise City of intended action within ten
(10) days of such action. If Developer shall fail to have such objections removed as
of the closing, or any extension thereof consented to by City, City may, at its sole
discretion, either (a) terminate its obligation under this Section 3.1 without liability on
its part, or (b) proceed to closing subject to such objections. Developer agrees to
use its best reasonable efforts to promptly satisfy any such objections. The loan
shall be secured by a mortgage (which mortgage shall be subordinate to any other
financing of Developer in connection with the Property) and corporate guarantees in
a form acceptable to City. Funding for this program is anticipated in FY 2021.
A rebate of the loan equal to two thousand dollars ($2,000) may be forgiven for
each new full-time job or full-time equivalent created by Employer after March 30,
2008 and prior to March 30, 2011 and maintained by Employer for a period of not
less than three years after March 30, 2011. The amount of the loan to be forgiven
shall be determined by City on March 30, 2014 based on documented evidence of
job creation and retention.
(2) A grant not to exceed ten thousand dollars ($10,000) will be available to
offset documented predevelopment costs, architectural and engineering fees and
other miscellaneous soft costs. A determination must be made by City that the
project is substantially complete and satisfies the conditions of the loan prior to the
release of any grant monies.
(3) A grant not to exceed ten thousand dollars ($10,000) will be available to
6
offset documented front or rear facade renovations to eliminate inappropriate
additions or alterations and restore the facade to its historic appearance, or to
rehabilitate the facade to include new windows, paint, signage, awnings, etc. to
improve overall appearance. Landscaping or screening with fencing or retaining
walls may also be allowed, especially as it may improve property adjacent to the
public right-of-way.
3.2 Economic Development Grant to Developer. For and in consideration of
Developer's obligations hereunder, and in furtherance of the goals and objectives of the
urban renewal plan for the Project Area and the Urban Renewal Law, City agrees, subject
to Developer being and remaining incompliance with the terms of this Agreement, to make
thirty (30) consecutive semi-annual payments (such payments being referred to collectively
as the Economic Development Grants) to Developer:
November 1, 2011 May 1, 2012
November 1, 2012 May 1, 2013
November 1, 2013 May 1, 2014
November 1, 2014 May 1, 2015
November 1, 2015 May 1, 2016
November 1, 2016 May 1, 2017
November 1, 2017 May 1, 2018
November 1, 2018 May 1, 2019
November 1, 2019 May 1, 2020
November 1, 2020 May 1, 2021
November 1, 2021 May 1, 2022
November 1, 2022 May 1, 2023
November 1, 2023 May 1, 2024
November 1, 2024 May 1, 2025
November 1, 2025 May 1, 2026
pursuant to Iowa Code Section 403.9 of the Urban Renewal Law, in amounts equal to a
portion of the tax increment revenues collected by City under Iowa Code Section 403.19
(without regard to any averaging that may otherwise be utilized under Iowa Code Section
403.19 and excluding any interest that may accrue thereon prior to payment to Developer)
during the preceding six-month period in respect of the Minimum Improvements
constructed by Developer (the Developer Tax Increments). For purposes of calculating the
amount of the Economic Development Grants provided in this Section, the Developer Tax
Increments shall be only those tax increment revenues collected by City in respect of the
increase in the assessed value of the Property above the assessment of January 1, 2007
($1,555,800). The Developer Tax Increments shall not include (i) any property taxes
collected for the payment of bonds and interest of each taxing district, (ii) any taxes for the
regular and voter-approved physical plant and equipment levy, (iii) the remaining actual
amount of tax increment revenues collected by City in respect of the valuations of the
Property prior to January 1, 2010 and (iv) any other portion required to be excluded by
Iowa law, and thus such incremental taxes will not include all amounts paid by Developer
7
as regular property taxes.
3.3 To fund the Economic Development Grants, City shall certify to the County prior to
December 1, 2009, its request for the available Developer Tax Increments resulting from
the assessments imposed by the County as of January 1 of that year and each year
thereafter until and including January 1, 2025, to be collected by City as taxes are paid
during the following fiscal year and which shall thereafter be disbursed to the Developer on
November 1 and May 1 of that fiscal year. (Example: if City so certifies in December, 2010,
the Economic Development Grants in respect thereof would be paid to the Developer on
November 1, 2011, and May 1, 2012.)
3.4 The Economic Development Grants shall be payable from and secured solely and
only by the Developer Tax Increments paid to City that, upon receipt, shall be deposited
and held in a special account created for such purpose and designated as the Julien Hotel
TIF Account of City. City hereby covenants and agrees to maintain its TIF ordinance in
force during the term hereof and to apply the incremental taxes collected in respect of the
Minimum Improvements and allocated to the Julien Hotel TIF Account to pay the Economic
Development Grants, as and to the extent set forth in Section 3.2 hereof. The Economic
Development Grants shall not be payable in any manner by other tax increments revenues,
or by general taxation or from any other City funds. City makes no representation with
respect to the amounts that may be paid to Developer as the Economic Development
Grants in any one year and under no circumstances shall City in any manner be liable to
Developer so long as City timely applies the Developer Tax Increments actually collected
and held in the Julien Hotel TIF Account (regardless of the amounts thereof) to the
payment of the Economic Development Grants to Developer as and to the extent
described in this Section.
3.5 City shall be free to use any and all tax increment revenues collected in respect of
other properties within the Project Area and the remaining actual.amount of the property
taxes paid by Developer to City, or any available Developer Tax Increments resulting from
the termination of the annual Economic Development Grants under Section 3.2 hereof, for
any purpose for which such tax increment revenues may lawfully be used pursuant to the
provisions of the Urban Renewal Law, and City shall have no obligations to Developer with
respect to the use thereof.
3.6 Hotel/Motel Tax Marketing Funds. Upon completion of the renovation project which
Developer represents will be on or before July 1, 2009, City will provide 100% of the
incremental increase from calendar year 2007 in its share of Hotel/Motel tax revenue for
the Julien Hotel for three full years after the date of completion to assist Developer in
marketing the Julien Hotel. The funds will be transferred to the Convention and Visitors
Bureau to exclusively market the Julien Hotel.
SECTION 4. COVENANTS OF DEVELOPER OR EMPLOYER
4.1 Job Creation.
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(1) Employer shall create fifty-seven (57) full-time equivalent (FTE) positions
(2080 hours per year) employees in Dubuque, Iowa after March 2008 and within
three years of the date of the Development Agreement, and shall maintain those
jobs during the Term of this Agreement. City acknowledges that Employer has
existing employees and all persons now or hereafter employed by Employer shall
count against the sixty-nine (69) full-time employee requirement described herein. It
is agreed by the parties that Employer has 12 FTE employees in Dubuque, Iowa, as
of March 2008.
(2) In the event that the certificate provided to City under Paragraph 9 hereof on
January 1, 2011, discloses that Employer does not as of that date have at least
sixty-nine (69) full-time equivalent employees as provided hereinabove, City shall
reduce the semi-annual Economic Development Grants. For the positions that
Employer fails to create and maintain for any year during the Term of this
Agreement, the semi-annual Economic Development Grants for such year under
Section 3.2 shall be reduced by the percentage that the number of such positions
bears to the total number of 69 positions required to be created and maintained by
this Paragraph.
(3) For purposes of this Agreement, the jobs created by Employer shall include
any jobs created or persons employed at the Property by (i) HJD Landlord, LLC, (ii)
HJD Manager, LLC, (iii) tenant's located within the Property or (iv) affiliates,
subsidiaries, contractors or subcontractors of such subcontractors of HJD Landlord,
LLC, HJD Manager, LLC or any tenant of the Property as long as such jobs are
associated withat business operated at the Property. Job creation and job retention
requirements of this Section 4.1 may be satisfied by any or all of such entities.
4.2 Certification. To assist City in monitoring the performance of Employer hereunder,
three (3) years from the date of this Agreement, and again each year thereafter during the
term of this Agreement, a duly authorized officer of Employer shall certify to City (a) the
number of full time equivalent jobs employed at Property, and (b) 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 preceding twelve (12) months, Employer is not orwas 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 such period, 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 January 1, 2011, and on
January 1 of each year thereafter during the term of this Agreement.
4.3 Books and Records. During the term of this Agreement, Developer and Employer
shall keep at all times and make available to City upon reasonable request proper books of
record and account in which full, true and correct entries will be made of all dealings and
transactions of or in relation to the business and affairs of Developer and Employer in
9
accordance with generally accepted accounting principles consistently applied throughout
the period involved, and Developer and Employer shall provide reasonable protection
against loss or damage to such books of record and account.
4.4 Real Property Taxes. Developer shall pay or cause to be paid, when due, all real
property taxes and assessments payable with respect to all and any parts of the Property
unless Developer's obligations have been assumed by another person pursuant to the
provisions of this Agreement.
4.5 No Other Exemptions. During the term of this Agreement, Developer and Employer
agrees not to apply for any state or local property tax exemptions which are available with
respect to the Property or the Minimum Improvements located thereon that may now be, or
hereafter become, available under state law or city ordinance during the term of this
Agreement, including those that arise under Iowa Code Chapters 404 and 427, as
amended.
4.6 Insurance Requirements.
(1) Developer shall provide and maintain or cause to be maintained at all
times during the process of constructing the Minimum Improvements and at its
sole cost and expense a property policy written on a replacement cost basis.
Coverage shall include the "special perils" form.
(2) Upon completion of construction of the Minimum Improvements and up to the
Termination Date, Developer shall maintain, or cause to be maintained, at its sole
cost and expense property insurance against loss and/or damage to the building
(including the Minimum Improvements) under an insurance policy written with the
"special perils" form and in an amount not less than the full insurable replacement
value of the building (including the Minimum Improvements). .
The term "replacement value" shall mean the actual replacement cost of the
building with Minimum Improvements (excluding foundation and excavation costs
and costs of underground flues, pipes, drains and other uninsurable items) and
equipment, and shall be reasonably determined from time to time at the request of
City, but not more frequently than once every three (3) years.
(3) City shall be named as mortgagee under such property policies and
Developer shall provide City with the mortgagee's copy of such coverage.
(4) Developer shall notify City immediately in the case of damage exceeding
$500,000.00 in amount to, or destruction of, the Minimum Improvements or any
portion thereof resulting from fire or other casualty. Net proceeds of any such
insurance (Net Proceeds), shall be paid directly to Developer as its interests may
appear, and Developer shall forthwith repair, reconstruct and restore the Minimum
Improvements to substantially the same or an improved condition or value as they
existed prior to the event causing such damage and, to the extent necessary to
10
accomplish such repair, reconstruction and restoration, Developer shall apply the
Net Proceeds of any insurance relating to such damage received by Developer to
the payment or reimbursement of the costs thereof, subject, however, to the terms
of any mortgage encumbering title to the Property (as its interests may appear).
Developer shall complete the repair, reconstruction and restoration of Minimum
Improvements whether or not the Net Proceeds of insurance received by Developer
for such purposes are sufficient.
4.7 Preservation of Property. During the term of this Agreement, Developer shall
maintain, preserve and keep, or cause others to maintain, preserve and keep, the
Minimum Improvements in good repair and working order, ordinary wear and tear
accepted, and from time to time shall make all necessary repairs, replacements, renewals
and additions.
4.8 Non-Discrimination. In carrying out the project, Developer or Employer shall not
discriminate against any employee or applicant for employment because of race, religion,
color, sex, sexual orientation, national origin, age or disability.
4.9 Conflict of Interest. Developer and Employer agree that no member, officer or
employee of City, or its designees or agents, nor any consultant or member of the
governing body of City, and no other public official of City who exercises or has exercised
any functions or responsibilities with respect to the project during his or her tenure, or who
is in a position to participate in adecision-making process or gain insider information with
regard to the project, shall have any interest, direct or indirect, in any contract or
subcontract, or the proceeds thereof, for work to be performed in connection with the
project, or in any activity, or benefit therefrom, which is part of this project at any time
during or after such person's tenure. In connection with this obligation, Developer and
Employer shall have the right to rely upon the representations of any party with whom it
does business and shall not be obligated to perform any further examination into such
party's background.
4.10 Non-Transferability. Until such time as the Minimum Improvements are complete
(as certified by City under Section 2.4), this Agreement may not be assigned by Developer
nor may the Property be transferred by Developer to another party without the prior written
consent of City, which shall not be unreasonably withheld. Thereafter, Developer shall
have the right to assign this Agreement and upon assumption of the Agreement by the
assignee, Developer shall no longer be responsible for its obligations under this
Agreement.
4.11 Restrictions on Use. Developer agrees for itself, and its successors and assigns,
and every successor in interest to the Property or any part thereof that they, and their
respective successors and assigns, shall:
(1) Devote the Property to, and only to and in accordance with, the uses
specified in the Urban Renewal Plan (and City represents and agrees that use of
the Property as a hotel, is in full compliance with the Urban Renewal Plan)
11
(however, Developer shall not have any liability to Gity to the extent that a successor
in interest shall breach this covenant and City shall seek enforcement of this
covenant directly against the party in breach of same); and
(2) Not discriminate upon the basis of race, religion, color, sex, sexual
orientation, national origin, age or disability in the sale, lease, rental, use or
occupancy of the Property or any improvements erected or to be erected thereon, or
any part thereof (however, Developer shall not have any liability to City to the extent
that a successor in interest shall breach this covenant and City shall seek
enforcement of this covenant directly against the party in breach of same).
4.12 Compliance with Laws. Developer and Employer shall comply with all laws, rules
and regulations relating to its businesses, other than laws, rules and regulations the failure
to comply with or the sanctions and penalties resulting therefrom would not have a material
adverse effect on the business, property, operations, financial or otherwise, of Developer
and Employer.
SECTION 5. EVENTS OF DEFAULT AND REMEDIES
5.1 Events of Default Defined. The following shall be Events of Default under this
Agreement and the term Event of Default shall mean, whenever it is used in this
Agreement, any one or more of the following events:
(1) Failure by Developer to pay or cause to be paid, before delinquency, all real
property taxes assessed with respect to the Minimum Improvements and the
Property.
(2) Failure by Developer to cause the construction of the Minimum
Improvements to be commenced and completed pursuant to the terms, conditions
and limitations of this Agreement.
(3) Transfer of any interest by Developer of the Minimum Improvements in
violation of the provisions of this Agreement prior to the issuance of the final
Certificate of Completion.
(4) Failure by Developer, Employer or City to substantially observe or perform
any other material covenant, condition, obligation or agreement on its part to be
observed or performed under this Agreement.
5.2. Remedies on Default by Developer or Employer. Whenever any Event of Default
referred to in Section 5.1 of this Agreement occurs and is continuing, City, as specified
below, may take any one or more of the following actions after the giving of written notice
by City to Developer (and the holder of any mortgage encumbering any interest in the
Property of which City has been notified of in writing) and Employer of the Event of Default,
but only if the Event of Default has not been cured within sixty (60) days following such
notice, or if the Event of Default cannot be cured within sixty (60) days and Developer or
12
Employer does not provide assurances to City that the Event of Default will be cured as
soon as reasonably possible thereafter:
(1) City may suspend its performance under this Agreement until it receives
assurances from the defaulting party deemed adequate by City, that the defaulting
party will cure its default and continue its performance under this Agreement;
(2) Until the Closing Date, City may cancel and rescind this Agreement;
(3) City shall be entitled to recover from Developer the sum of all amounts
expended by City in connection with the funding of the Downtown Rehab
Loan/Grant to Developer, and City may take any action, including any legal action it
deems necessary, to recover such amounts from the defaulting party;
(4) City may withhold the Certificate of Completion; or
(5) City may take any action, including legal, equitable or administrative action,
which may appear necessary or desirable to collect any payments due under this
Agreement or to enforce performance and observance of any obligation,
agreement, or covenant under this Agreement.
5.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to City is
intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement or now or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default shall impair any
such right or power or shall be construed to be a waiver thereof, but any such right and
power may be exercised from time to time and as often as may be deemed expedient.
5.4 No Implied Waiver. In the event any agreement contained in this Agreement should
be breached by any party and thereafter waived by any other party, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any other
concurrent, previous or subsequent breach hereunder.
5.5 Agreement to Pay Attorneys' Fees and Expenses. If any action at law or in equity,
including an action for declaratory relief or arbitration, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs of litigation from the other party. Such fees and costs of litigation
may be set by the court in the trial of such action or by the arbitrator, as the case may be,
or may be enforced in a separate action brought for that purpose. Such fees and costs of
litigation shall be in addition to any other relief that may be awarded.
5.6 Remedies on Default by City. If City defaults in the performance of this Agreement,
Developer or Employer may take any action, including legal, equitable or administrative
action that may appear necessary or desirable to collect any payments due under this
Agreement, to recover expenses of Developer or Employer, or to enforce performance and
13
observance of any obligation, agreement, or covenant of City under this Agreement.
Developer or Employer may suspend their performance under this Agreement until they
receive assurances from City, deemed adequate by Developer or Employer, that City will
cure its default and continue its performance under this Agreement.
SECTION 6. GENERAL TERMS AND PROVISIONS
6.1 Notices and Demands. Whenever this Agreement requires or permits any notice or
written request by one party to another, it shall be deemed to have been properly given if
and when delivered in person or three (3) business days after having been deposited in
any U.S. Postal Service and sent by registered or certified mail, postage prepaid,
addressed as follows:
If to Developer: HJD Landlord, LLC
Tony Pfohl
290 Main Street
P.O. Box 267
Dubuque, IA 52004-0267
Phone: (563)583-3526
Fax: (563)583-3537
With copy to: Drake & Freund, P.C.
D. Flint Drake
2477 John F. Kennedy Road, Ste. 203
Dubuque, IA 52002
Phone: (563)582-2000
Fax: (563)583-5225
If to Employer: HJD Manager, LLC
Tony Pfohl
290 Main Street
P.O. Box 267
Dubuque, IA 52004-0267
Phone: (563)583-3526
Fax: (563)583-3537
With copy to: Drake & Freund, P.C.
D. Flint Drake
2477 John F. Kennedy Road, Ste. 203
Dubuque, IA 52002
Phone: (563)582-2000
Fax: (563)583-5225
If to City: City Manager
50 W. 13th Street
Dubuque, Iowa 52001
14
Phone: (563) 589-4110
Fax: (563) 589-4149
With copy to: City Attorney
City Hall
50 W. 13t" Street
Dubuque IA 52001
Or at such other address with respect to either party as that party may, from time to time
designate in writing and forward to the other as provided in this Section.
6.2 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit
of City, Developer and Employer and their respective successors and assigns.
6.3 Termination Date. This Agreement and the rights and obligations of the parties
hereunder shall terminate on May 1, 2026 (the Termination Date).
6.4. Execution By Facsimile. The parties agree that this Agreement may be transmitted
between them by facsimile machine. The parties intend that the faxed signatures
constitute original signatures and that a faxed Agreement containing the signatures
(original or faxed) of all the parties is binding on the parties.
6.5.1 Memorandum of Development Agreement. Developer shall promptly record a
Memorandum of DevelopmentAgreement in the form attached hereto as ExhibitA
in the office of the Recorder of Dubuque County, Iowa. Developer shall pay the
costs for so recording.
6.6 Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes any prior understandings or oral or written agreements
between the parties respecting the within subject matter. In entering into this
Agreement, neither party has relied on any representations by the other party
outside of this Agreement.
15
IN WITNESS WHEREOF, City has caused this Agreement to be duly executed in its
name and behalf by its Mayor and attested to by its City Clerk and Developer and
Employer has caused this Agreement to be duly executed on or as of the first above
written.
CITY OF DUU~QUE, IOWA
UC
By
Roy D. of
Mayor
Attest:
~^ ~s~
anne F. Schneider
City Clerk
(City Seal)
HJD LANDLORD, LLC
`~~
By
L. Anthony Pfohl
Managing Member
HJD MANAGER, LLC
B
Y
L. Anthony Pfohl
Member
STATE OF IOWA
COUNTY OF DUBUQUE
SS
On this 21st day of April 2008, before me the undersigned, a Notary
Public in and for the said County and State, personally appeared Roy D. Buol and Jeanne
F. Schneider, to me personally known, who, being by me duly sworn, did say that they are
the Mayor and City Clerk, respectively, of the City of Dubuque, Iowa, a municipal
corporation executing the instrument to which this is attached; that the seal affixed hereto
is the seal of said municipal corporation; that said instrument was signed and sealed on
behalf of the City of Dubuque, Iowa, by authority of its City Council; and that said Mayor
and City Clerk acknowledged the execution of said instrument to be the voluntary act and
deed of said City, by it and by them voluntarily executed.
No ry Public
~*P~ ~ $ KEVIN S, FIRNS7AHL
~ COMMISSION N0.745295
r MY COMMISSION EXPIRES
,o,,,-: 2~12~10
STATE OF IOWA
COUNTY OF DUBUQUE
~ (b saal X3 uo3ss11uwoa w wu~a
O6 i~£L 'oN 40Jsf11N1110,
SS VMO1 - 1117$ 1v1L2gON ~~v°
sauo a au1~y
On this ~_ day of ,ti ~~~-~ 2008, before me the undersigned, a Notary
16
Public in and for the State of Iowa, personally appeared L. Anthony Pfohl, to me personally
known, who, being by me duly sworn, did say that he is the Managing Member of HJD
Landlord, LLC and the Manager or HJD Manager, LLC the corporations executing the
instrument to which this is attached and that as said Managing Member of HJD Landlord,
LLC and the Manager or HJD Manager, LLC acknowledged the execution of said
instrument to be the voluntary act and deed of said company, by it and by him, an
individual, voluntarily executed.
1
-~ ~ ~ ~
Notary Public
4~~"a . Anne c ones
Notarial Sca -IOWA
L
Commission No. 7348 ~
1ON1A M Commission EX Tres
F:\USERS\DHeiar\Julien Inn\Julien DevelopmentAgreement.doc
17
Prepared by: Barry A. Lindahl 300 Main Street Suite 330 Dubuque IA 52001 563 583-4113
Return to: Barry A. Lindahl 300 Main Street Suite 330 Dubuque IA 52001 563 583-4113
EXHIBIT A
MEMORANDUM OF DEVELOPMENT AGREEMENT
A Development Agreement by and among the City of Dubuque, Iowa, an Iowa municipal
corporation, of Dubuque, Iowa, HJD Landlord, LLC, and HJD Manager, LLC was made
regarding the following described premises:
TRACTI
Lots 5, 6, 7, 195, 196 and 196a, in the City of Dubuque, Iowa, according to the
United States Commissioners' Map of the Town of Dubuque, Iowa.
TRACT II
The Southerly 40 feet of Lot 194 in Town (now City) of Dubuque, Iowa, according
to the United States Commissioners' Map of the Survey of said Town of
Dubuque.
TRACT I I I
The Northerly 24 feet of Lot 194 in the City of Dubuque, Iowa, according to the
United States Commissioners' Map of the Survey of the Town of Dubuque, Iowa.
TRACT IV
Lot 193 in City of Dubuque, Iowa, according to the United States Commissioners
Map thereof.
TRACT V
Lots A, B, C and D of Julien Hotel Plaza in the City of Dubuque, Iowa, according
to the recorded Plat thereof.
TRACT VI
Lot 195A and Lot 197A in the City of Dubuque, Iowa, according to the United
States Commissioners Map thereof.
TRACT VII
A parcel of land located in the North 60 feet of Lot 745; the South 40 feet of the
North 100 feet of Lot 745 and the North 111 feet of the South 157 feet of Lot 745
in the City of Dubuque, Iowa, as described in Patent, Instrument No. 9801-91
and Patent, Instrument No. 7684-92, records of Dubuque County, Iowa.
TRACT VIII
South 22' of City Lot 8, Dubuque, Iowa.
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The Development Agreement is dated for reference purposes the day of
20_, and contains covenants, conditions, and restrictions concerning the sale
and use of said premises.
This Memorandum of Development Agreement is recorded for the purpose of
constructive notice. In the event of any conflict between the provisions of this Memorandum
and the Development Agreement itself, executed by the parties, the terms and provisions
of the Development Agreement shall prevail. A complete counterpart of the Development
Agreement, together with any amendments thereto, is in the possession of the City of
Dubuque and may be examined at its offices as above provided.
Dated this day of , 20_
CITY OF DUBUQUE, IOWA
By:
Roy D. Buol, Mayor
By:
Jeanne F. Schneider, City Clerk
19
STATE OF IOWA
COUNTY OF DUBUQUE
SS
On this day of , 20_, before me, a Notary Public in and for the State of
Iowa, in and for said county, personally appeared Roy D. Buol and Jeanne F. Schneider, to
me personally known, who being by me duly sworn did say that they are the Mayor and
City Clerk, respectively of the City of Dubuque, a Municipal Corporation, created and
existing under the laws of the State of Iowa, and that the seal affixed to said instrument is
the seal of said Municipal Corporation and that said instrument was signed and sealed on
behalf of said Municipal corporation by authority and resolution of its City Council and said
Mayor and City Clerk acknowledged said instrument to be the free act and deed of said
Municipal Corporation by it voluntarily executed.
Notary Public, State of Iowa
20
EXHIBIT B
OPINION OF DEVELOPER'S COUNSEL
21
Mayor and City Councilmembers
Cit~ Hall
13t and Central Avenue
Dubuque IA 52001
Re: Development Agreement Among the City of Dubuque, Iowa HJD Landlord, LLC, and
HJD Manager, LLC
Dear Mayor and City Councilmembers:
We have acted as counsel for HJD Landlord, LLC, (Developer) and HJD Manager,
LLC (Employer) in connection with the execution and delivery of a certain Development
Agreement (Development Agreement) between Developer and the City of Dubuque, Iowa
("City") dated for reference purposes the day of , 20_.
We have examined the original certified copy, or copies otherwise identified to our
satisfaction as being true copies, of the Development Agreement and such other
documents and records as we have deemed relevant and necessary as a basis for the
opinions set forth herein.
Based on the pertinent law, the foregoing examination and such other inquiries as
we have deemed appropriate, we are of the opinion that:
1. Developer and Employer are a limited liability companies organized and
existing under the laws of the State of Iowa and has full power and authority to execute,
deliver and perform in full Development Agreement. The Development Agreement has
been duly and validly authorized, executed and delivered by Developer and Employer and,
assuming due authorization, execution and delivery by City, is in full force and effect and is
valid and legally binding instrument of Developer and Employer enforceable in accordance
with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization
or other laws relating to or affecting creditors' rights generally.
2. The execution, delivery and performance by Developer or Employer of the
Development Agreement and the carrying out of the terms thereof, will not result in
violation of any provision of, or in default under, the articles of incorporation and bylaws of
Developer, any indenture, mortgage, deed of trust, indebtedness, agreement, judgment,
decree, order, statute, rule, regulation or restriction to which Developer or Employer is a
party or by which Developer's property is bound or subject.
3. There are no actions, suits or proceedings pending or threatened against or
affecting Developer or Employer in any court or before any arbitrator or before or by any
governmental body in which there is a reasonable possibility of an adverse decision which
could materially adversely affect the business (present or prospective), financial position or
results of operations of Developer or Employer or which in any manner raises any
questions affecting the validity of the Agreement or the Developer's or Employer's ability to
22
perform Developer's or Employer's obligations thereunder.
Very truly yours,
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