Dubuque Initiatives_Roshek Building 4th Amendment to Development Agreement Copyright 2014
City of Dubuque Action Items # 2.
ITEM TITLE: Dubuque Initiatives -4th Amendment to Development
Agreement for Roshek Building
SUMMARY: City Manager recommending approval of an amendment to
the Development Agreement between the City of Dubuque
and Dubuque Initiatives for the redevelopment of the
Historic Roshek Building.
RESOLUTION Approving the Fourth Amendment to the
Development Agreement Between the city of Dubuque,
Iowa and Dubuque Initiatives
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt
Resolution(s)
ATTACHMENTS:
Description Type
4th Amendment to De\elopment Agreement with Staff Memo
Dubuque Initiatives-MVM Memo
Staff Memo Staff Memo
4th Amendment to DA Supporting Documentation
Resolution of Approval Resolutions
THE CITY OF Dubuque
DUB E i"
Masterpiece on the Mississippi 2007.2012.2013
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Fourth Amendment to Development Agreement with Dubuque Initiatives
DATE: February 2, 2017
Economic Development Director Maurice Jones is recommending approval of an
amendment to the Development Agreement between the City of Dubuque and Dubuque
Initiatives for the redevelopment of the Historic Roshek Building. The amendment
would insert a non-appropriation clause into the agreement, with the result being the
reduction of the amount of the statutory debt limit used by the City.
A Development Agreement between the City and Dubuque Initiatives was approved on
February 17, 2009 to provide incentives and a guaranty for the redevelopment of the
Roshek Building.
The New Markets Tax Credit (NMTC) structure for financing the Roshek Building
redevelopment required a seven-year compliance period, during which the debt could
not be refinanced. That compliance period ended in June 2016, and staff have worked
with the Dubuque Initiatives board to unwind that NMTC structure in order to allow for
the refinancing of the debt.
This seemed like the appropriate time to also approach the Dubuque Initiatives board
with a request to include a non-appropriation clause in the Development Agreement
with the City for the Roshek redevelopment. The City now includes this clause in all
new development agreements.
By including the non-appropriation clause in the Agreement, the City will see a
significant reduction in the use of its constitutional debt limit, as only one year of tax
increment (TIF) rebates (approx. $273,600) will count against the debt limit at any given
time instead of the full amount covered by the Agreement (approx. $3,556,800). This is
still considered a contractual obligation of the City and failure to make one or more
payments due to non-appropriation might trigger a downgrade of the bond rating for all
City debt, make it difficult to sell future offerings, and damage the City's relationship with
current and future development partners.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mic ael C. Van Milligen'
MCVM:jh
Attachment
cc: Crenna Brumwell, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Maurice Jones, Economic Development Director
2
Dubuque Economic Development Department
THE CITY OF 50 West 13th Street
All-AmericaCitY Dubuque,Iowa 52001-4864
DUB36kE1 ' Office(563)589-4393
TTY(563)690-6678
® http://www.cityofdubuque.org
Masterpiece on the Mississippi 200.2012.2013
TO: Michael Van Milligen, City Manager
FROM: Maurice Jones, Economic Development Director
SUBJECT: Fourth Amendment to Development Agreement with Dubuque Initiatives
DATE: January 31, 2017
INTRODUCTION
The purpose of this memorandum is to seek City Council approval of a resolution
amending the Development Agreement between the City of Dubuque and Dubuque
Initiatives for the redevelopment of the Historic Roshek Building. The amendment
would insert a non-appropriation clause into the agreement, with the result being the
reduction of the City's debt limit usage.
BACKGROUND
A Development Agreement between the City and Dubuque Initiatives was approved on
February 17, 2009 and amended on April 29, 2009 and May 16, 2011 to provide
incentives and a guaranty for the redevelopment of the Roshek Building, as well as on
September 6, 2011 to assign proceeds from Historic Tax Credits to the building's
indebtedness covered by the Guaranty.
DISCUSSION
The New Markets Tax Credit (NMTC) structure for financing the Roshek Building
redevelopment required a seven-year compliance period, during which the debt could
not be refinanced. That compliance period ended in June 2016, and staff have worked
with the Dubuque Initiatives board, its legal counsel, Roshek Building property
management staff, Honkamp Krueger, and others to unwind that NMTC structure in
order to allow for the refinancing of the debt.
This seemed like the appropriate time to also approach the Dubuque Initiatives board
with a request to include a non-appropriation clause in the Development Agreement
with the City for the Roshek redevelopment. The board has agreed to the clause, which
is presented in the attached agreement.
By including the non-appropriation clause in the Agreement, the City will see a
significant reduction in the use of its constitutional debt limit, as only one year of tax
increment (TIF) rebates (approx. $273,600) will count against the debt limit at any given
time instead of the full amount covered by the Agreement (approx. $3,556,800). This is
still considered a contractual obligation of the City and failure to make one or more
payments due to non-appropriation might trigger a downgrade of the bond rating for all
City debt, make it difficult to sell future offerings, and damage the City's relationship with
current and future development partners.
RECOMMENDATION/ ACTION STEP
I recommend approving the attached resolution allowing the Mayor to sign the 4h
Amendment to Development Agreement, which includes a non-appropriation clause.
RESOLUTION NO. 49-17
APPROVING THE FOURTH AMENDMENT TO THE DEVELOPMENT AGREEMENT
BETWEEN THE CITY OF DUBUQUE, IOWA AND DUBUQUE INITIATIVES
WHEREAS, the City of Dubuque, Iowa (City) and Dubuque Initiatives
(Developer) are parties to a Development Agreement dated February 17, 2009 (the
Agreement), as amended on April 27, 2009, May 16, 2011, and September 6, 2011,
relating to the redevelopment of the Roshek Building located generally at 700 Locust
Street in the City (defined in the Original Agreement as the Property); and
WHEREAS, Section 3.1 of the Agreement obligates the City to provide
Developer with an Economic Development Grant; and
WHEREAS, City and Developer desire to amend the Agreement to include a
non -appropriation clause with respect to the Economic Development Grant as set forth
in the Fourth Amendment, attached hereto.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA, AS FOLLOWS:
Section 1. The Fourth Amendment to Development Agreement attached
hereto is hereby approved and the Mayor is authorized and directed to sign the Fourth
Amendment on behalf of the City of Dubuque.
Section 2. All other provisions of the Agreement shall remain in full force and
effect.
Passed, approved and adopted this 6th day of February, 2017.
Attest:
Trish L. Gleason, CMC, Assistant City Clerk
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Roy D. Buol, Mayor
FOURTH AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE, IOWA
AND
DUBUQUE INITIATIVES
This Fourth Amendment to Development Agreement (the Amendment) dated, for
reference purposes the (� day of r"brLec,c- U, is
made and entered into by and between the City of Dubuque, Iowa, a municipality (City)
established pursuant to the Iowa Code and acting under the authorization of Iowa Code
Chapter 403, as amended, and Dubuque Initiatives, an Iowa -not-for-profit corporation
(Developer).
WHEREAS, City and Developer are parties to a Development Agreement dated
February 17, 2009 (the Agreement), as amended on April 27, 2009, May 16, 2011, and
September 6, 2011, relating to the redevelopment of the Roshek Building located
generally at 700 Locust Street in the City; and
WHEREAS, Section 3.1 of the Agreement obligates the City to provide
Developer with an Economic Development Grant; and
WHEREAS, City and Developer desire to amend the Agreement to include a
non -appropriation clause with respect to the Economic Development Grant as set forth
herein.
NOW, THEREFORE, it is agreed by the parties as follows:
1. Section 3.1 of the Agreement is amended by adding the following new
subsection 5:
(5) Non -Appropriation. Notwithstanding anything in this Agreement to the contrary,
the obligation of City to pay any installment of the Economic Development Grant from
the pledged tax increment revenues shall be an obligation limited to currently budgeted
funds, and not a general obligation or other indebtedness of City or a pledge of its full
faith and credit within the meaning of any constitutional or statutory debt limitation, and
shall be subject in all respects to the right of non -appropriation by the City Council of
City as provided in this Section. City may exercise its right of non -appropriation as to
the amount of the installments to be paid during any fiscal Year during the term of this
Agreement without causing a termination of this Agreement. The right of non -
appropriation shall be exercised only by resolution affirmatively declaring City's election
to non -appropriate funds otherwise required to be paid in the next fiscal year under this
Agreement.
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In the event the City Council of City elects to not appropriate sufficient funds in the
budget for any future fiscal year for the payment in full of the installments on the
Economic Development Grant due and payable in that future fiscal year, then City shall
have no further obligation to Developer for the payment of any installments due in that
future fiscal year which cannot be paid with the funds then appropriated for that
purpose.
The right of non -appropriation reserved to City in this Section is intended by the parties,
and shall be construed at all times, so as to ensure that City's obligation to pay future
installments on the Economic Development Grant shall not constitute a legal
indebtedness of City within the meaning of any applicable constitutional or statutory
debt limitation prior to the adoption of a budget which appropriates funds for the
payment of that installment or amount. In the event that any of the provisions of this
Agreement are determined by a court of competent jurisdiction to create, or result in the
creation of, such a legal indebtedness of City, the enforcement of the said provision
shall be suspended, and the Agreement shall at all times be construed and applied in
such a manner as will preserve the foregoing intent of the parties, and no event of
default shall be deemed to have occurred as a result thereof. If any provision of this
Agreement or the application thereof to any circumstance is so suspended, the
suspension shall not affect other provisions of this Agreement which can be given effect
without the suspended provision, and to this end the provisions of this Agreement are
severable.
2. All other terms and conditions of the Development Agreement shall remain in
full force and effect.
CITY OF DUBUQUE, IOWA DUBUQU TIATIVES
By:
By:
Kevin S Firnstahl, City Clerk
Trish L. Gleason, Assistant City Clerk
Roy D.B`,Mayor
By:
is M. Aviles, President
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