Loading...
Dodds River Terminals_Art Gilloon Request to Address CouncilGILLOON, WRIGHT & HAMEL, P.C. Attorneys Arthur F. Gilloon* E. David Wright* Dirk J. Hamel** *Also Licensed in Wisconsin **Also Licensed in Illinois July 30, 2008 Mayor Roy Buol and Dubuque City Council Members David Resnick, Dirk Voetberg, Joyce Connors, Karla Braig, Kevin Lynch and Ric Jones City Hall 50 West 13`h Street Dubuque, IA 52001 Please Reply To: 770 Main Street Dubuque, IA 52001-6820 Phone: 563) 556-6433 Fax: (563) 556-7706 Writer's e-mail: agilloon(ddbglaw.com L— CC _O U RE: OUR CLIENT: DODDS RIVER TERMINAL, INC.; AND (1) DUBUQUE MUNICIPAL RIVER -RAIL TERMINAL LEASE 4/10/79; (2) SHOREFRONT LEASE AND EASEMENT 5/31/58 (AS AMENDED 10/4/68) Dear Honorable Mayor Buol and Council Members: Our office represents Dodds River Terminal, Inc., an Iowa corporation located at 20 Terminal Street, Dubuque, IA 52001. Its President is Dennis P. Dodds. Dodds River Terminal, Inc. and its family predecessors have leased or owned property at the Dubuque riverfront since May, 1958. This all began in the Fall of 1957 when Dodds River Terminal, Inc.'s predecessor in business, J.A. Dodds & Sons, began making plans for shipment to Dubuque on the Mississippi River of twine and other agricultural products. J.A. Dodds was a family partnership formed November 1, 1947. As stated in the attached letter of February 22, 1958 from J.A. Dodds (Dennis Dodds' grandfather) to the Dock Commissioners of the City of Dubuque, the Dodds family approached the City to lease riverfront property so that "...river transportation to and from Dubuque will be increased and improved and that thereby the best interests of the City will be promoted." See Exhibit A attached. That February 22, 1958 letter is the beginning of a 50-year relationship between the Dodds family and the City of Dubuque, during which time the Dodds family has been a very good corporate citizen. Mayor Roy Buol and Dubuque City Council Page 2 July 30, 2008 Unfortunately, this past relationship is now being tested by conflicts of interpretation concerning Dodds' two leases at the south port of Dubuque. The first lease was signed May 31, 1958 (Lease #1) and was a five-year lease from 1958 to 1963, with nine 5-year options. This lease is for 200 feet of shorefront property on the Mississippi in return for which the Dodds family pays the City rent and wharfage fees. It contains a 20-foot easement to get to the property. This lease was amended on October 4, 1968, because the Spring, 1965 flood washed away a railroad trestle located on the leased portion of the riverbank. As amended, Lease #1 provides that the Dodds family pay annual rent of $250.00 plus wharfage fees of at least $400.00 per year. In addition, rent includes wharfage fees for any barges unloaded along the leased riverfront. The Dodds family has continuously exercised its option to renew this lease in five- year increments. I have attached as Exhibit B the last three option exercises signed by Dennis P. Dodds dated December 23, 1997, May 22, 2003 and February 25, 2008. I have attached as Exhibit C photographs of the area encompassing Lease #1, and the Municipal River -Rail Terminal building (Lease #1) described below. Lease #2 concerns the lease of the ground on which sits the Municipal River -Rail Terminal building, which was built in 1928. From 1961 to 1979, J.A. Dodds & Sons leased a portion of the building, and in 1979, the family purchased the Municipal River -Rail Terminal building from the City of Dubuque for $66,500.00. Contemporaneously with that purchase, the Dodds family entered into a 30-year lease for the ground under the building with the City dated April 10, 1979 which contained a consumer price index rent escalation clause. This lease expired March 31, 2008. However, Dodds River Terminal, Inc. has a right of first refusal on the underlying ground per paragraph 9 of Lease #2, should the City desire to lease these premises to a third party. This right of first refusal has no expiration date. Our purpose in writing is to advise the Council of certain disputes that have arisen between Dodds River Terminal, Inc. and the City Manager concerning both of these leases, and to seek your guidance and approval for a path to resolving these disputes. Following Dennis Dodds' notice to the City exercising the next five-year term (2008- 2013) on the Shorefront lease (Lease #1) as set out in his letter of February 25, 2008 (see third page of Exhibit B attached), Dennis received on June 17, 2008 a letter from the City Manager dated June 4, 2008 (Exhibit D). The City Manager advised that the City believed the next 5-year option did not exist because wharfage fees in the prior five years had not equaled at least $450.00 per year. That assertion by the City Manager is disputed. Within a week of Mr. Dodds' receipt of the City Manager's letter, the undersigned responded with the attached letter of June 24, 2008 (Exhibit E). It is noteworthy that while the City Manager's letter of June 4, 2008 contained an invitation to meet to discuss Lease #2 (the Municipal River -Rail Terminal building), and my Mayor Roy Buol and Dubuque City Council Page 3 July 30, 2008 response of June 24, 2008 accepted such invitation to meet. The City Manager is apparently unwilling to meet. Also, my calls and messages to the City Attorney of June 26 at 3:40 P.M. and July 2 at 2:10 P.M. have gone unreturned. As indicated in my letter of June 24, 2008 (Exhibit E), our client is putting rent payments toward Lease #1 in escrow, pending resolution of the dispute. Now, instead of honoring its invitation to meet, the City has responded to my letter of June 24, 2008 by rejecting our assertion of a continuing lease of the shorefront (Lease #1), and demanding Mr. Dodds turn in his keys to the Municipal River -Rail Terminal building (Lease #2) to Steve Sampson Brown, referred to as the "Project Manager." See attached Exhibit F - July 8, 2008 letter from Michael C. Van Milligen to Arthur F. Gilloon. This is apparently because the City believes that Lease #1 has expired in spite of Mr. Dodds' renewal notice, and that he has no rights to occupy the Municipal River -Rail Terminal building under Lease #2, although it is undoubtedly owned by Dodds River Terminal, Inc. with a right of first refusal on a future lease of the underlying ground. The record should also reflect our objection to the apparent lack of good faith and fair dealing that has occurred in regard to Lease #1. The third page of Exhibit B reflects that Dennis Dodds gave notice on behalf of Dodds River Terminal, Inc. of the exercise of its Lease #1 option by letter dated February 25, 2008. Following the City's receipt of that certified letter, City representatives discussed with Dennis Dodds various options for both the shorefront lease and the ground lease under the Municipal River -Rail Terminal building, never raising the wharfage fee issue or giving any indication that other conditions needed to be fulfilled before the City would consider consenting to the lease extension on Lease #1. In other words, the City strung Mr. Dodds along through March, April and May, 2008 in various conversations with him, and then waited until the City Manager's letter of June 4 (not received by Dennis Dodds until June 17, 2008) to raise any issue about the prior five years' average wharfage fee. Under Iowa law, every contract has an implied covenant of good faith and fair dealing. That covenant appears to have been broken in this case. However, the relationship is not beyond repair, assuming the Council will direct the City Administration to honor the following requests on behalf of Dodds River Terminal, Inc.: 1. As to Lease #1, the City Council should direct its Manager to do the following: A. Reevaluate his position that the shorefront lease has expired, and meet with Dodds River Terminal, Inc. to find a resolution that will avoid litigation; B. Accept Dodds River Terminal, Inc. escrowed rent payments on a month - to -month basis while the re-evaluation and negotiations are occurring without any waiver of the City's ultimate position; C. Take no further action which threatens eviction. Mayor Roy Buol and Dubuque City Council Page 4 July 30, 2008 2. As to Lease #2 (the ground lease under the Municipal River -Rail Terminal building), we request the Council to direct the City Manager as follows: A. Refrain from pursuing eviction; B. Communicate with Dodds River Terminal, Inc. as to future plans for the south port of Dubuque, allowing Dodds River Terminal, Inc. an opportunity to secure a buyer for its building and/or negotiate a new temporary lease with the City for the ground under the building; C. Incorporate into its decision -making process the opinions of local experts regarding the architectural/historical significance of the Municipal River -Rail Terminal building, and incorporate Dubuque's "Sustainability" vision. Architect Jeff Morton and developer John Gronen of Gronen Properties and Gronen Adaptive Reuse viewed the property at issue and specifically the Municipal River -Rail Terminal building on July 19, 2008. Their joint opinion is that the Municipal River -Rail Terminal building is an interesting building architecturally and historically, and all possibilities for incorporating it into the master plan for Southport should be explored. That exploration cannot occur unless the Council directs the City Manager to discuss the master plan, if any, for the Southport of Dubuque with Dodds River Terminal, Inc. Finally, we are troubled by the fact that the City Manager's office seems content not to pursue some sort of peaceful resolution of the lease disputes described above and in the attachments, when the City of Dubuque could continue to receive rent payments pending a resolution, without waiving any rights. We realize the City may have a long-term goal of reclaiming riverfront property, but it should not do it in a way that ignores the good faith arguments put forth bylong-standing, good corporate citizens like Dodds, and while ignoring the opportunity to generate revenue on these properties while a dispute is pending. We look forward to your review of this letter and the enclosed materials, and an opportunity to make an oral presentation to you at your City Council meeting on August 4, 2008. Please consider this letter our request to be placed on the formal agenda for your Council meeting on Monday, August 4, 2008, and for the undersigned to speak on behalf of Dodds River Terminal, Inc. AFG/jdh Enclosures Sincerely, Arthur F. Gilloon cc: Michael Van Milligen, City Manager Barry Lindahl, City Attorney • February 22,, 1958 Board of Dock Co.issioners of the City of Dubuque Dubuque, Iowa Attentions :sir. Carl E. Kiesele, Manager Gentlemen: For the past three years we have been engaged in developing . the agricultural twine business in connection with and as a part Of odr •otfter emits pur5uitsi whieh we have carried on as A part- nership ' si:nc a November 1, 1947, During these three years we have purchased such twine from importers who have shipped it into our Dubuque warehouse at No. 35 Terminal. Street by rail and truck, and have distributed it in the midwest to retail dealers; In tna, fall of 1957 we started making pions for shipment to us by barge up the Mississippi River of such twine and other agri- cultural products, and consulted with City Solicitor Thomas H. elNso and Mr. A. 7 . McDonald, Jr.. with .the view of erecting a loading and- unloading device east of the Terminal Building and of acquiring access from the river front to the Terminal Building, • and suggested that & section of the Terminal Building be kept available by the -Dock .Board for, use by ri.yer shippers:,: and at -that time . undsrstoad that such faciljtivs would: be made available fors us. Wehave recently been advised by the Dock Board.. mat such fa.ei.lities in this location will not be available to us. We have contracted for, shipment to usv:4.4 tour . barges ,o f twine, of 500 tone- • ch, to arrive in Dubuque. durpn , t4e_. the ,�. karoh, Apri4 and r4ay .of. 1958, axe, expect toto-recetw4wmimpcbargea,of twine ire September and Cot©ber: of 1.9 8, alpn bargee .of other agricultural . products durin the. s eex ween ' teer May and September, and we are making every effort ncrease river barge shipments to us during 1958 and subsequent years. We.intend to make use of the existing wharf unloading facil ities as long as they are adequate to serve. our purposes, but fore- see the possibility that such'facilities.may socn.become inadequatD with increasing use of the riverfror such business. • If and when, in our judgment, these existing unloading facil- ities become inadequate - for the purposes of our business,, we are willing to' erect and.construct at our own expense our own private loading and unloading facilities on water front property leased to us by the Dock Board. We have :wade inquiry as to and have ascert- ained the approximate cost of making such improvements, including the purchase of a crane, and assure you that the partnership has the necessary capital to defray such expenses. At this time we are willing and hereby offer to enter into a written Lease with the Dock Board whereby we will lease from it a tract of land extending from Terminal Street in the City of Du- buque to the Mississippi River, which we understand to be a distance of approximately 100 feet, and having a width of 30 feet along the crater front, for a term of 5 years commencing on March 1, 195$, with an option to be granted us of extending the term for 9 addit- ional successive periods of 5 years each;. such Lease to provide, among othlr thing s as follows; 1. At any time during the first 3 years of the term we shall be given the right to construct a wharf and loading and unloading facilities, together with the necessary pile clusters, upon the water front adjoining the leased premises, the dimensions of such wharf to be approximately 15 feet by 15 feet in area. 2. In the event that we fail to make such improvements with- in said 3 year period, the Lease is to terminate. 3. The rental shall be an annual rental, payable in advance each year in an amount equivalent to T# per square foot of the real estate so leased, together with the customary wharfage fees, except that the wharfage fee per ton of 2,000 pounds on all pack- aged goods transported to or from the demised premises by water shall be 50.per ton; ant upon completion of the wharf,the annual rental„ commencing with the. year after such completion, shall be increased by an amount equivalent to 10 per square foot of the top surface area of said wharf. 4. Such improvements shall be made in accordance with plans and specifications approved by the Dock Board and the work shall be done by a .competent contractor who sha11" fur fish pr6per security and insurance, and such wort shall be done under the supervision of the Dock Board Engineer; and as soon as erected,' such improvements shall become a part of the real estate and the property of the Lessor. 5. lie shall be granted the exclusive use of the water front abutting the demised premises during the term of the Lease and any renewals thereof, and the Lessor will agree to keep certain water front adjoining the leased premises open and available for use by the Lessee and the public in common. o: We shall not have the right, without the written consent of the Lessor, to exercise the options of renewal for successive terms unless the average annual tonnage on all goods transported by water to or from the leased premises during the 5 years immediately preceding each renewal is at least 5,000.tons. -3- 7. 'We shall be given the right to load on barges and to un- load from barges products owned by others as well as products owned by us.. 8. We will agree to unload a maximum per year of 6 barges, such barges to be designated to us in writing by the Dock Board, but not to exceed 3,000 tons at 2,000 pounds per ton, upon the conditions that our unloading facilities are adequate to handle their products and that we will make the customary charges for such services comparable to similar charges at other upper Mississippi River ports, 9. 4, 'a=er- to be given en witlei3+ rr► teptit x tt, t* ' Nir y; . erty covered by this Lease so much 'rater front adjoining the leased premises as may be necessary to service one barge, the leasing of such water frontto commence as soon as our wharf and loading and unloading facilities have been erected, and we will agree to pay as rental therefor are amount equivalent to $2,00 per running foot of water front so leased, with a provision that all wharfage paid by us under the Lease each year shall annually be applied towards the payment of and credited upon such water front rental. lie are convinced that if the Door Board enters into such a Lease that river transportation to and from Dubuque will be increased arad improved and that thereby the best interests of the City will be promoted, We request that this proposal be given i=ediate attention by the Dock Board, that we be permitted to attend the meeting at which it will be considered and that we be given due notice of its time and place. Respectfully submitted, J. A. DODDS & SON$, By By r. Partner Its J ttor ne DODDS RIVER TERMINALS, INC. 20 TERMINAL ST, • P.O. BOX 3414 • DUBUQUE, IOWA 52004-3414 PHONE 319-583-9703 • FAX 319-583-9702 December 23, 1997 City of Dubuque Office of Public Works City Hall Dubuque, IA 52001 TO THE CITY OF DUBUQUE, IOWA A MUNICIPAL CORPORATION, OF IOWA, THROUGH ITS OFFICE OF PUBLIC WORKS, OWNER: You are hereby notified that we wish to extend our lease for an additional five (5) years, commencing on June 1, 1998 and terminating on May 31, 2003 under same terms and conditions set forth In our lease and agreement. DATED at Dubuque, Iowa this 23rd day of December, 1997. DODDS RIVER TERMINAL, INC. By w ad °"6/ President LESSEE COMPLETE TRANSFER SERVICE BARGE - RAIL - TRUCK • WAREHOUSING & OUTSIDE STORAGE DODDS kiVER TERMINALS,' INC. 20 TERMINAL ST. • P.O. BOX 3414 • DUBUQUE, IOWA 52004-3414 PHONE 319-583-9703 • FAX 319-583-9702 May 22, 2003 Certified Mail — Return Receipt Requested Mr. Michael A. Koch Public Works Director City Hall 50 West 13th Street Dubuque, IA 52001 Dear Mr. Koch: This letter will formally advise that Dodds River Terminal, Inc., as successor to J. A. Dodds & Sons, a Partnership, and Dubuque Twine Company, hereby gives notice of the exercise of its option to extend the Lease and Agreement dated the 31 St day of May, 1958, which was the subject of the "Reconstruction of Lease and Agreement dated the 31St day of May, 1958, as Amended by October 4, 1968 Amendment" for the last five (5) year term under such Lease. Dodds River Terminal, Inc. also gives formal notice of exercise of its option to extend for the remaining term, the Lease covering the mooring site which is described in Amendment to Lease and Agreement, dated the 4th day of October, 1968. Respectfully submitted, DODDS RIVER TERMINAL, INC. U By Dennis Dodds, President dpdds option notice.doc/sh COMPLETE TRANSFER SERVICE BARGE - RAIL- TRUCK • WAREHOUSING & OUTSIDE STORAGE DODDS iIVER TERMINAL5, INC. 20 TERMINAL ST. • P.O. BOX 3414 • DUBUQUE, IOWA 52004-3414 PHONE 319-583-9703 • FAX 319-583-9702 February 25, 2008 Certified Mail - Return Receipt Requested Mr. Gus Psihoyos City Engineer City Hall 50 West 13 th Street Dubuque, IA 52001 Dear Mr. Psihoyos: This letter will formally advise that Dodds River Terminal, Inc. gives notice of exercise of its option to extend for the next remaining five (5) year term, the Lease covering the mooring site which is described in Amendment to Lease and Agreement, dated the 4th day of October, 1968. Respectfully submitted, DODDS RIVER TERMINAL, INC. By 44/14/1,60 Dennis P. Dodds, President COMPLETE TRANSFER SERVICE BARGE - RAIL - TRUCK • WAREHOUSING & OUTSIDE STORAGE 1 a EXHIBIT (0 ins APC THE CITY OF DUB E City Manager's Office City Hall 50 West 13th Street Dubuque, Iowa 52001-4864 (563) 589-4110 office (563) 589-4149 fax (563) 690-6678 TDD ctymgr@cityofdubuque.org June 4, 2008 Mr. Dennis P. Dodds President Dodds River Terminals, Inc. 20 Terminal Street PO Box 3414 Dubuque, IA 52004-3414 RE: Dodds River Terminals — Lease 1 Dear Mr. Dodds: On February 25, 2008, Dodds River Terminals, Inc. requested a five-year lease extension for the Lease and Agreement covering the mooring site located at Terminal Street. Paragraph 2 of the Lease and Agreement states that. "...the renewal options herein granted may not be exercised by Lessee without the prior written consent of Owner if the average annual wharfage in the five (5) years immediately preceding such renewal shall be Tess than Four Hundred Fifty Dollars ($450.00)." According to the City's records, the average annual wharfage payment for the past five years has been $400 versus the annual lease stipulation amount of $450. The City has determined that it is not in its best interest to renew or extend this lease. This letter serves as formal notice that all rights of occupancy by Dodds River Terminals, Inc. under the Lease and Agreement terminates as of May 31, 2008. All business operations involved with Lease 1 must cease immediately and all trade fixtures must be removed from the property by July 1, 2008. Service People Integrity Responsibility Innovation Teamwork Page 2 June 4, 2008 Based on this formal lease termination notice, your check (No. 5593) in the amount of $650 is returned with this letter. (Note enclosure.) Additionally, in a telephone conversation with the City's Project Manager Steve Sampson Brown on May 1, 2008, the City agreed to give Dodds River Terminals Inc. until July 1, 2008 to provide the City with a plan for reuse of the Terminal Building. The City also agreed to allow Dodds to delay proceeding with the removal of the Terminal Building until July 1, 2008 while a business plan for operating riverboat dinner cruises is developed. Please contact me at your earliest convenience so we can set a meeting date to discuss this matter with you. If you have any questions, please contact me at (563) 589-4110. Sincerely, Michael C. Van Milligen City Manager Sent via Certified Mail, Return Receipt Encs. GILLOON, WRIGHT & HAMEL, P.C. Attorneys Arthur F. Gilloon* E. David Wright* Dirk J. Hamel** *Also Licensed In Wisconsin **Also Licensed in Illinois June 24, 2008 Michael C. Van Milligen City Manager 50 West 13th Street Dubuque, IA 52001 RE: Dodds River Terminal, Inc. Your letter of June 4, 2008 Please Reply To: 770 Main Street Dubuque, IA 52001-6820 Phone: 563) 556-6433 Fax: (563) 556-7706 Writer's e-mail: asilloonedbaIaw.com Dear Mike: Our office represents Dodds River Terminal, Inc. Your letter of June 4, 2008, to Dennis P. Dodds has been referred to us for reply. This letter is for settlement purposes and not admissible at trial. First, I must tell you that Dennis did not receive your letter of June 4 until June 17. A postal service employee put the envelope in the wrong P.O. Box. A letter from postal service supervisor Robert W. Winegar is attached regarding same. Now, as to the merits of your letter, be advised we do not accept your letter as formal notice of the termination of the May 31, 1958 Lease (as amended), otherwise known as Lease #1 or the "shorefront" lease. This is for several reasons, including but not limited to the following: 1. Dennis Dodds sent a check to the City for $650.00 on May 30, 2008. Receipt of this check by the City raises the wharfage average to greater than $450.00 per year. In fact, only $250.00 of the $650.00 need be applied to the wharfage in order for the average annual wharfage in the preceding five years to be at least $450.00. (This assumes that the "City's records" referenced in paragraph 3 of your letter are accurate); 2. Dodds River Terminal, Inc. and its predecessors in business have a 50+ year good faith bargaining relationship with the City, and formerly with the Board of Dock Commissioners. In fact, there have been times when my client has notified the City of unbilled amounts so that the City could properly collect revenues due under various Leases. In addition, there were many years in which the annual wharfage was less than $450.00 in the five years preceding a lease extension request. This reflects the historical fact that the 1958 Lease was signed at a time when the area leased was a municipal wharf for many and varied barges to Toad and unload. That situation has chan•ed over time to where virtually no Michael C. Van Milligen Page 2 June 24, 2008 barges have unloaded in the last number of years. Over the long course of dealing between the parties regarding the shorefront lease, five-year average annual wharfage fees were never relied upon to deny a renewal option exercise by the tenant. There is a serious question as to whether the average annual wharfage is even relevant or material to the contract anymore, and we believe the City's attempt to terminate the Lease based on the wharfage clause will not be favored in a court of equity; 3. Lastly, your letter of June 4 is a notice of default. However, paragraph 16 of the May, 1958 lease requires that the City give our client 30 days notice to cure any default before the Lease terminates. Your attempt to unilaterally terminate the Lease without notice is not allowed under the lease and is rejected by Dodds River Terminal, Inc. In a separate matter involving the terminal building, your letter references a telephone conversation between the City's Project Manager, Steve Sampson Brown, and Dennis Dodds. They did talk on May 1 regarding the separately expiring lease for the ground under the Terminal Building. However, Dennis did not promise to have a "riverboat dinner cruise plan" developed by July 1. What he promised to have ready by July 1 was an update for Steve concerning possible purchasers or tenants for the building. Your offer to set a meeting date to discuss the future of the terminal building is appropriate. We would like to have such a meeting where both the terminal building and disputed issues raised by your letter of June 4, 2008 concerning the shorefront lease can be discussed and hopefully resolved. Please be advised per your return of Dodds River Terminal, Inc. Check #5593 dated May 30, 2008 in the amount of $650.00 payable to the City of Dubuque, an equivalent amount is being deposited in an interest -bearing escrow account during the pendency of the shorefront lease dispute. We consider Lease #1 to still be in effect and renewed until 2013, when Dodds River Terminal, Inc. will have another 5 year option to consider exercising. We consider the $650.00 to be a timely sent amount sufficient to cure any default occasioned by your June 4th claim of annual wharfage below an average of $450.00 per year. Either Dennis Dodds or I will contact you to set up a meeting per the above. If you wish to discuss this matter in the meantime, please contact the undersigned. Sincerely, Arthur F. Gilloon AFGrdh cc: Dennis P. Dodds, President Dodds River Terminal, Inc. City Attorney Barry A. Lindahl UNITED STATES POSTAL SERVICE DATE: 06/17/2008 Today, Dennis Dodds approached me regarding a certified mail piece postmarked June 6th, 2008. He questioned whether there was a notice left on 6/8/08 as was written on the piece. When Dennis approached me today, I discovered that a USPS employee mistakenly put the notice in the wrong PO Box causing Dennis to never have received the notice until 6/17/08. I apologize for the inconvenience this may have caused. Thank you, _ 1 Robert W. Winegar Supervisor, Customer Services USPS Dubuque, IA 52001-9998 (563) 582-3674 350 W 6" ST. DUBUQUE IA 50201-9998 319-582-3674 Fox: 319-582-2528 SOARING TO THE TOP Sicha. Hawkeye PC City Manager's Office City Hall 50 West 13th Street Dubuque, Iowa 52001-4864 (563) 589-4110 phone (563) 589-4149 fax (563) 690-6678 TDD ctyrngr@cityofdubuque.org Mr. Arthur F. Gilloon Gilloon, Wright & Hamel, P.C. 770 Main Street Dubuque, IA 52001 THE CITY OF DUB July 8, 2008 RE: Dodds River Terminals, Inc. — Leases 1 & 2 Dear Art: This is in response to your June 24, 2008 letter to me. It was our understanding that Dennis would be providing the City with a riverboat dinner cruise proposal by July 1, and not possible purchasers or tenants for the building. We are sorry for the misunderstanding, but the City is not interested in selling or leasing the building. With respect to the May 31, 1958 lease, if Dennis intended to exercise the option to renew, as a condition of exercising the option he would have had to have paid the average annual wharfage in the preceding five years of at least $450.00. The $650.00 payment Dennis tendered included $250.00 rent which would have been required to be paid on June 1 if the option had been exercised and the balance of the $650.00 was $400.00 wharfage. This payment of rent and wharfage has been the practice for a number of years. However, the average annual wharfage for the preceding five years did not meet the $450.00 minimum required for the option to renew. Contrary to your claim, the failure to meet the minimum wharfage required for the option to renew was not an act of default. Dennis was not required by the lease to pay the minimum wharfage. Thus, failure to pay the mimimum wharfage was not a violation of any covenant of the lease, and thus no default. We have given Dennis more than a reasonable opportunity since his lease expired March 31, 2008 to salvage the building or to propose an alternate use. This letter serves as formal notice that all rights of occupancy by Dodds River Te rmir a!s,Inc. are hereby terminated. ,e building keys are to be immediately given to Project Manager Steve Sampson Brown. If Dennis needs access to the building, he should make those arrangements through Steve. All trade fixtures and personal belongings are to be removed by August 1. Michael C. Van Milligen City Manager cc: Barry Lindahl, City Attorney Steve Sampson Brown, Project Manager Service People Integrity Responsibility Innovation Teamwork