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Flexsteel Industries, Inc._State of Iowa Application for Business Financial Assistance Copyrighted May 15, 2017 City of Dubuque Action Items # 2. ITEM TITLE: State of Iowa Application for Business Financial Assistance - Flexsteel Industries, Inc. SUMMARY: City Manager recommending authorization to submit an Iowa Economic Development Assistance Application by Flexsteel Industries, Inc. to the Iowa Economic Development Authority. RESOLUTION Authorizing the filing of an application for State Business Financial Assistance on behalf of Flexsteel Industries, Inc. SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt Resolution(s) ATTACHMENTS: Description Type State of Iowa Application for Business Financial City Manager Memo Assistance for Flexsteel-MVM Memo Staff Memo Staff Memo Application to State Supporting Documentation Resolution Resolutions THE CM OF Dubuque AAA-A m c DUB E 11 1r Masterpiece on the Mississippi -2012I rP PP �oo� .zo13 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: State of Iowa Business Financial Assistance Application for Flexsteel Industries, Inc. DATE: May 10, 2017 Economic Development Director Maurice Jones recommends City Council authorization to submit an Iowa Economic Development Assistance Application by Flexsteel Industries, Inc. to the Iowa Economic Development Authority. Flexsteel is proposing to construct a 250,000 square foot $25 million new manufacturing facility in Dubuque Industrial Center South. Assistance from the State of Iowa, in the amount of$1 million, is being sought for the demolition and remediation of Flexsteel's 100-year-old manufacturing facility located on Jackson Street. The application also includes an estimated $293,200 Investment Tax Credit and an estimated $750,000 Sales, Services & Use Tax Refund on the new building construction in Dubuque Industrial Center South. I concur with the recommendation and respectfully request Mayor and City Council approval. Mic ael C. Van Milligen MCVM:jh Attachment cc: Tim Hall, Flexsteel SVP Finance, CFO & Secretary Hilary Stubben, Flexsteel In-House Corporate Counsel Jay Wickham, Chair, Dubuque County Board of Supervisors Ralph Potter, Dubuque County Attorney Doug Horstmann, Chair, Dubuque Initiatives Board of Directors Flint Drake, Attorney, Drake Law Firm — Representing Dubuque Initiatives Rick Dickinson, Greater Dubuque Development Corp. President & CEO Dan McDonald, Greater Dubuque Development Corp. Vice President of Existing Business David Lyons, LDDC, Sustainable Innovation Consultant Crenna Brumwell, City Attorney Barry Lindahl, Senior Counsel Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Maurice Jones, Economic Development Director Jill Connors, Economic Development Project Coordinator 2 Dubuque Economic Development Department THE CITY OF 50 West 13th Street All-America City Dubuque,Iowa 52001-4864 D U B3 E1 ' 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: State of Iowa Business Financial Assistance Application for Flexsteel Industries, Inc. DATE: May 9, 2017 INTRODUCTION This memorandum presents for City Council review and approval a resolution authorizing the submission of an Iowa Economic Development Assistance Application by Flexsteel Industries, Inc. to the Iowa Economic Development Authority (IEDA). BACKGROUND Founded in 1893, Flexsteel Industries, Inc. (Flexsteel) trades publicly on NASDAQ. Headquartered in Dubuque, Iowa, Flexsteel has North American manufacturing and distribution facilities in Dubuque, IA; Dublin, GA; Lancaster, PA; Riverside, CA; Starkville, MS; Huntingburg, IN; Edgerton, KS; Harrison, AR; and Juarez, Mexico. Flexsteel employs 1,400 associates worldwide and is governed by a Board of Directors. Flexsteel's core competencies are the design and production of furniture for residential and commercial applications. Flexsteel is known for its Blue Steel Spring as well as numerous other design and manufacturing innovations. The Blue Steel Spring is manufactured in Dubuque. Flexsteel sells to 50 countries around the globe and is carried by more than 1,200 retailers. Permanent showrooms are in High Point, NC and Las Vegas, NV. Flexsteel operates and maintains a fleet of hundreds of company-owned trucks/trailers in addition to using nationally dedicated carriers for unparalleled logistical precision. DISCUSSION The company is proposing to construct a new manufacturing facility in Dubuque. Assistance from the State of Iowa, in the amount of $1 million, is being sought for the demolition and remediation of the company's 100-year-old manufacturing facility located on Jackson Street in Dubuque. All of the company's manufacturing jobs in Dubuque will be lost if this project does not proceed in Dubuque. The company has facilities in other parts of the United States and Mexico, and will shift the manufacturing to one of those locations. The states of Wisconsin, Mississippi, Indiana, and North Carolina have made offers to the company. Most generous offers include free land, building, and tax incentives. Local government match is anticipated from the City of Dubuque, which is contemplated in a Development Agreement between the City and Flexsteel Industries, Inc. RECOMMENDATION I recommend that the City Council approve the Economic Development Assistance Application on behalf of Flexsteel Industries, Inc. for the proposed investment of approximately $35.6 million for the retention of its operations in Dubuque. The proposed project would retain 200 jobs and promote the City's goal of retaining and expanding business to add to the economic base. ACTION STEP The action step for the City Council is to adopt the attached resolution. Prepared bv: Jill Connors. Economic Development. 50 W. 13th Street. Dubuaue IA 52001. 563 589-4393 Return to: Jill Connors, Economic Development, 50 W. 13th Street, Dubuque IA 52001, 563 589-4393 RESOLUTION NO. 183-17 AUTHORIZING THE FILING OF AN APPLICATION FOR STATE BUSINESS FINANCIAL ASSISTANCE ON BEHALF OF FLEXSTEEL INDUSTRIES, INC. Whereas, Flexsteel Industries, Inc. has proposed making a Thirty -Five Million Five Hundred Sixty -Four Thousand Dollar($35,564,000.00) investment for the remediation of its current facility and construction of a new manufacturing facility in the City of Dubuque, Iowa; and Whereas, the City Council of the City of Dubuque, Iowa has considered the proposal and has determined that the proposed project will contribute to the local economy through the retention of two hundred (200) full-time jobs in the City, all of which qualify for the Iowa Economic Development Authority Business Financial Assistance Program; and Whereas, financial assistance from the Iowa Economic Development Authority is designed to assist in the economic development efforts of local jurisdictions; and Whereas, the Iowa Economic Development Authority has requested execution of an Economic Development Assistance Contract in order to finalize incentives and document associated terms for the remediation of the current facility on Jackson Street and the construction of Flexsteel Industries, Inc.'s proposed facility in the Dubuque Industrial Center in the City. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the filing of an Application for participation in the Iowa Economic Development Authority's Financial Assistance Program on behalf of Flexsteel Industries, Inc., a copy of which is attached hereto, is hereby approved. Section 2. That the Mayor is hereby authorized to execute and the City Manager is hereby directed to submit the Application to the Iowa Economic Development Authority together with such other documents as may be required. Passed, approved, and adopted this 15th day of May 2017. Roy D. Bp, I, Mayor Attest: Kev(i.6 S'. Firnstahl, City -Clerk econ 1( )WAO Debi V. Durham, Director Iowa Economic Development Authority Business Financial Assistance Application Business Finance - Business Development Division Iowa Economic Development Authority 200 East Grand Avenue Des Moines, Iowa 50309-1819 wwwiowaeconomicdevelopment.com Telephone. 5157253134 Email. businessfinance(dliowa box Application Instructions To Complete Electronic Form: Click on TEXT BOX to add text Double click on YES/NO boxes and select"Checked". 1. Al applicants must complete the Business Financial Assistance Application and attach only those additional sections for the components to which the applicant is applying. STATE of IOWA— Financial Assistance Proaram Hi h Quality Jobs Program (HQJP) Tax Credits ® Direct Financial Assistance 2. Before filling out this application form, please read all applicable sections of the Iowa Code and Iowa Administrative Code (rules). https://www.legis.iowa.qov/law/administrativeRuies 3. Only typed or computer-generated applications will be accepted and reviewed. Any material change to the format, questions, or wording of questions presented in this application will render the application invalid and it will not be accepted. 4. Complete the applicable sections ofthe application fully. If questions are left unanswered or required attachments are not submitted, an explanation must be included. 5. Use clear and concise language.Attachments should only be used when requested or as supporting documentation. 6. Any inaccurate information of a significant nature may disqualify the application from consideration. 7. The following must be submitted to Business Finance at IEDA in order to initiate the review process: • One original, signed application form and all required attachments • One electronic copy of the application form and all required attachments Facsimile copies will not be accepted. Applications must be submitted to IEDA Business Finance before 4:OOpm on the fourth Monday of the month. Applications will be reviewed by the IEDA Board on the third Friday of the following month. v31 17 Public Records Policies During the application process, the information submitted by you to IEDA is exempt from disclosure under the "industrial prospects" exemption found in Section 22.7(8). However, once you receive an award, the industrial prospects exemption no longer applies and all documents submitted and generated during the application and negotiation process become public records under Iowa's Open Records Law (Iowa Code. Chapter 22), unless 1) The information belongs to one of the classes of records automatically treated as confidential; or 2) You have applied for and received written notice that your information will be treated as confidential. Automatically Confidential Records IEDA automatically treats the following records as confidential and will withhold them from public inspection even without a request for confidential treatment: • Tax Records and Tax Liability Information • Quarterly Iowa Employer's Contribution and Payroll Report prepared for the Iowa Workforce Development Department • Payroll Registers • Business Financial Statements and Projections (unless those statements are already publicly available elsewhere, e.g., 10-K filings) • Personal Financial Statements Exemptions to the Open Records Law If you wish to have additional information treated as confidential, you must fill out the confidential treatment request form. This form is available by request. Under the Open Records Law, IEDA may lawfully treat certain information as confidential if that information falls within an exemption to the Open Records Law. The following exemptions represent records which may lawfully be treated as confidential under the Open Records law and which are most often applicable to the information submitted to IEDA: • Release of information would give an unfair advantage to competitors — Iowa Code Sec. 15.118 • Trade secrets —See Iowa Code section 22.7(3), see also Iowa Code Ch. 550 • Information on an industrial prospect with which the IEDA is currently negotiating —See Iowa Code section 22.7(8) • Communications not required by law, rule or regulation made to IEDA by persons outside the government to the extent that IEDA could reasonably believe that those persons would be discouraged from making them to IEDA if they were made available for general public examination — Iowa Code section 22.7(18) Non-Confidential Information Information that is submitted to IEDA as part of the application process or that is contained in a contract for program benefits is generally considered material to the eligibility requirements of the program or to the amount of incentives or assistance to be provided. Such information is generally not given confidential treatment. Such information includes but is not limited to, the number and type of jobs incented, the wage levels for the incented jobs, your company's employee benefit information, and your project budget. Additional Information Available. Copies of Iowa's Open Record law and IEDA's administrative rules relating to public records are available from the IEDA upon request. IEDA—Business Financial Assistance Application 2 v.3.1.17 SECTION A Applicant Information Date Application Submitted: 1. Name of Business: Flexsteel Industries, Inc 2. Entity Name (for contracting purposes): 3. Address: 385 Bell Street 4. City, State & Zip Code: Dubuque, Iowa 52001 5. Contact Person: Timothy E Hall Title: CFO 6. Phone: 563 556-7730 Fax: 563 556-8345 Email: thall@flexsteel.com 7. FEIN: 420442319 8. NAICS Code for primary business operations: 336360 9. US DOT Number: 45141 10. Does the Business file a consolidated tax return under a different tax ID number? ❑ Yes (If yes, please also provide that tax ID number) ® No a. Is the contact person listed above authorized to obligate the Business? ® Yes ❑No If no, please provide the name and title of a company officer authorized to obligate the Business: 11. If the application was prepared by someone other than the contact person listed above, please complete the following: Name of Business: Greater Dubuque Development Corporation Address: 900 Jackson Street Suite 109 City, State & Zip Code: Dubuque, Iowa 52001 Contact Person: Rick Dickinson Title: President and CEO Phone: 563 557-9049 Fax: Email: RickD@greaterdubuque.org Sponsor Information (A sponsor organization is a city or county) 12. Sponsor Organization: City of Dubuque 13. Official Contact (e.g. Mayor, Chairperson, etc.): Roy Buol Title: Mayor 14. Address: 50 West 13th Street 15. City, State & Zip Code: Dubuque, Iowa 52001 16. Phone: 563589-4110 Fax: Email: 17. If IEDA needs to contact the sponsor organization with questions, should we contact the person listed above? ❑ Yes ® No, please contact the following person: Name: Maurice Jones Title: Economic Developmet Director Address: 50 West 13th Street City, State & Zip Code: Dubuque, Iowa 52001 Phone: 563 589-4393 Fax: 563 589-1733 Email: Mjones@cityofdubuque.org If necessary, please list information on additional sponsors in an attachment. IEDA—Business Financial Assistance Application 3 v.3.1.17 SECTION B Business Information 1. Provide a brief description and history of the Business. Include information about the Business' products or services and its markets and/or customers. Founded in 1893, Flexsteel Industries, Inc. trades publicly on NASDAQ under the ticker symbol FLXS. Headquartered in Dubuque, Iowa, Flexsteel has NorthAmerican manufacturing and distribution facilities in Dubuque, IA;Dublin, GA; Lancaster, PA; Riverside, CA; Starkville, MS; Huntingburg, IN;Edgerton, KS; Harrison, AR; and Juarez, Mexico. Flexsteel employs 1,400 associates worldwide and is governed by a Board of Directors. Flexsteel's core competencies are the design and production of furniture for residential and commercial applications. Flexsteel is known for its Blue Steel Spring as well as numerous other design and manufacturing innovations. The Blue Steel Spring is manufactured in Dubuque. Flexsteel sells to 50 countries around the globe and is carried by more than 1.200 retailers. Permanent showrooms are in High Point, NC and Las Vegas, NV. Flexsteel operates and maintains a fleet of over 100 of company-owned trucks/trailers in addition to using nationally dedicated carriers for unparalleled logistical precision. 2. Business Structure: ❑ Cooperative ® Corporation ❑ Limited Liability Company ❑ Partnership ❑ S-Corporation ❑ Sole Proprietorship 3. State of Incorporation: Minnesota 4. Identify the Business' owners and percent ownership: 5. Does a woman, minority, or person with a disability own the Business? ❑ Yes ® No 6. List the Business' Iowa locations and the most current number of employees at each location. Dubuge Iowa: Corporate Headquarters 145 and manufacturing 218 7. What is the Business' worldwide employment? (Please include employees of parent company, subsidiaries, and other affiliated entities in this figure.) 1400 Project Information 8. Project Street Address: Dubuque Industrial Center South Project City&Zip Code: Dubuque, Iowa 52002 Project County: Dubuque 9. Type of Business Project: ❑ Startup ® Expansion of Iowa Company ❑ New Location in Iowa 10. Does the project site qualify as a"Brownfield"or"Grayfield" site? ❑Yes ® No If yes, please explain and document as Attachment A6. 11. Describe the proposed project for which assistance is being sought. (Include project timeline with dates, facility size, infrastructure improvements, proposed products/services, any new markets, etc.) The company is proposing to construct a new manufacturing facitlity in Dubuque. Assistance from the State of Iowa is being sought for the demolition and remedation of the company's 100 year old manufacturing facility located on Jackson street in Dubuque. IEDA—Business Financial Assistance Application 4 v.3.1.17 12. Project Timeline (add additional rows as needed) Beginning Activity Date Activity Completion Date Ac uisiton of land for new manufacturing facility August 2017 August 2017 Construction of new manufacturing facilty August 2017 October 2018 13. Has any part of the project started*? ❑Yes ® No If yes, please explain. *For IEDA's purposes, starting the project includes:the start of construction or rehabilitation, the purchase of a building, the execution of a lease, or the installation of equipment to be used in the project. 14. Identify the Business' competitors. If any of these competitors have Iowa locations, please explain the nature of the competition (e.g. competitive business segment, estimated market share, etc.) and explain what impact the proposed project may have on the Iowa competitor. No Iowa publicly traded companies are competitors. Other companies like Ethan Allen, La-Z-Boy, Ashley, are competitors that sell retail furniture in Iowa. 15. Will any of the current Iowa employees lose their jobs if this project does not proceed? ® Yes ❑ No If yes, please explain why and identify those jobs as "retained jobs" in the Project Jobs Section E.AII of the company's manufacturing jobs in Dubuque will be lost if this project does not proceed in Dubuque. The company has facilites in other parts of the US and Mexico, and will shift the manufacturing to one of those locations. 16. Is the Business actively considering locations outside of Iowa? ® Yes ❑ No If yes, where and what assistance is being offered?The states of Wisconsin, Mississippi, Indiana, and North Carolina have made offers to the company. Most generous offers include free land, building, and tax incentives. 17. Please identify the company project management for the project location and experience.Timothy E Hall - CFO, Hilary Stubben -Corporate Counsel, and Steve Hall -VP Global Supply Chain. Timothy managed the Corporate office expansion in Dubuque and will play the lead role in this project. IEDA—Business Financial Assistance Application 5 v.3.1.17 SECTION C Applicant's Project Budget 1. Does the Business plan to lease the facility? ❑ Yes ® No If yes, please provide the Annual Base Rent Payment(lease payment minus property taxes, insurance, and operating/maintenance expenses) for three years in the budget below, and only major renovation costs your company expects to incur. Administrative rules require that the lease be in place for a minimum of five years. 2. Please complete the budget below. Include only costs the company plans to incur directly: Use of Funds Cost Source A Source B Source C Source D Source E Source F Base Rent 3 ears Tenant Improvements Land Acquisition 1320000 1320000 Site Preparation Building Acquisition Building Construction 25000000 25000000 Building Remodeling Mfg. Machinery & Equip. 3000000 3000000 Other Machinery& Equip. Racking, Shelving, etc.' Computer Hardware Computer Software Furniture & Fixtures Working Capital Research & Development Other: Cleanup of Jackson 6320000 1000000 2660000 2660000 Streetro er TOTAL $35640000 $1000000 $2660000 1 $29280000 1 Is $ Racking,shelving and conveyor equipment used in distribution center projects only 3. Please complete the chart below with proposed financing for the project (tax benefits should be reflected as indirect financing under#5 below): PROPOSED FINANCING Source of Funds Form of Funds Conditions/Additional Information Amount (Loan,Grant, In- Rate and Commitment Include when funds will be Add additional lines as needed Kind, Donation,etc.) Term Status disbursed; If loan,whether payments are a level term, balloon, etc Source A: IEDA (see#4 below) $1000000 Forgivable loan Pending Payments made as cleanup occurs Source B: Local Government $2660000 Grant Pending Development agreement must be approved Source C: Business $29280000 Cash Pending Development agreements must be approved Source D: $ Source E: Other Source $ Source F: Other Source $ TOTAL 1 $35640000 4. Direct financial assistance(loans/forgivable loans) must be secured with acceptable collateral. Please select the type of collateral your company will pledge to secure the IEDA financing, and document its value in Attachment A5.* Explain: No collateral, fundin disbursed at the end of the 5-year contrail ❑ Irrevocable letter of credit ❑ Dedicated certificate of deposit CD ❑ IEDA—Business Financial Assistance Application 6 v.3.1.17 *The IEDA Board has the final discretion on what collateral will be accepted. 5. Please complete the chart below with tax credits and other indirect financing expected for the project: TAX CREDITS AND INDIRECT FINANCING Source of Funds Amount Description Investment Tax Credit $293.200 1% of$29,320,000 Sales, Service& Use Tax Refund $750,000 $25,000,000 in building construction Research Activities Credit 3%/10% Local Property Tax Exemption Tax Increment Financing $4,100,000 10- ear annual rebate of$410,000 260E Job Training Funds In-kind Contribution Other $100000 NICC Workforce Training and Economic Development funding for training existing employees $2,000,000 Dubuque County contribution for land acquisition TOTAL $7,243,000 6. There are three justifiable reasons for providing assistance. Check the box next to the reason why assistance is needed to complete this project. ❑ Financing Gap- A gap exists between the financing required and the financing on-hand and the provision of tax incentives or assistance is necessary to fill the gap. ❑ Rate of Return Gap—The likely returns of the project are inadequate to motivate a company decision maker to proceed with the project even if sufficient debt or equity can be raised to finance the project, and the project's risks outweigh its rewards, making the provision of tax incentives or assistance necessary to reduce the project's risks. ® Location Disadvantage(Incentive)—The business is deciding between a site in Iowa ("Iowa site") and a site in another state ("out-of-state site") for its project and the cost of completing the project at the out-of-state site is demonstrably lower, making tax incentives or assistance necessary to equalize the cost differential between the two sites. Note: The authority will attempt to quantify the cost differential between the sites. The states of Wisconsin, Mississippi, Indiana, and North Carolina have made offers to the company. Most generous offers include free land, building, and tax incentives. 7. Please provide a brief explanation of the need for assistance. The company and city need this assistance for demolition and environmental remediation of the existing manufacturing campus, resulting in the redevelpment and reuse of the property. But for this assistance, the project would not move forward in Dubuque. IEDA—Business Financial Assistance Application 7 v.3.1.17 SECTION D Employee Benefits There are three options to meeting the sufficient benefit requirement. These options are detailed in the chart below. Please complete questions 1-3. If your company meets Option 1 or 2, no additional information is required. If you would like to utilize Option 3, piease also complete questions 4-6. Option 1 Option 2 Option 3 80% single Coverage 50% Family coverage Monetary Equivalent Total Number of Pay 80% of premium costs Pay 50% of premium costs for Provide medical and pay the Employees in for a standard medical plan, a standard medical plan, monetary equivalent of Option US single coverage. family coverage. 1 or Option 2 in supplemental 250+ $1250maximum deductible $2500 maximum deductible employee benefits. 50-249 $2250 maximum deductible $4500 maximum deductible Benefits Counted Toward 0-50 $2000 maximum deductible $4000 Maximum deductible Monetary Equivalent: Medical coverage, Dental coverage, Vision insurance, Life insurance, Pension, 401(k) (company's Average contribution, Short-/long-term disability insurance, Child care services, Other nonwage compensation 1. How many full-time, permanent employees does your company currently employ within the U.S.? 1355 2. What is the total premium cost for a standard medical plan for single employee coverage? $530-$1450 a. What portion of this cost is paid by the business? 80-100% b. What is the deductible associated with this plan? $250-$450 3. What is the total premium cost for a standard medical plan for family coverage? $1140-$1450 a. What portion of this cost is paid by the business?78-100% b. What is the deductible associated with this plan? $500-$900 No additional information required, in this section, if your company meets the requirement for Option 1 or Option 2 4. Does your company provide additional benefits to full time employees? ®Yes [-]No If yes, please provide the annual amount offered by the business, per employee in the chart below: Benefit Annual amount paid by the business (Der employee): Dental Insurance—Sin Ie plan $ Dental Insurance—Family Ian $ Pension Use 3-year average calculated below $ Retirement Plan - i.e. 401 k Use 3-year average calculated below) $ Profit Sharing Plan (Use 3-year average calculated below) $ Childcare Services $ Life Insurance coverage $ Disability Insurance coverage $ Health Savings Account HSA contribution $ TOTAL $ 5. Does the Business offer a pension plan, 401(k) plan, and/or retirement-plan? ❑ Yes ❑ No If yes, please indicate the amount contributed on a per employee basis by the Business to the plan for the last three years. For 401(k) plans, please provide information on the company match and indicate the average annual match per employee. Year Ending Average Actual Match per Employee $ IEDA—Business Financial Assistance Application 8 v.3.1.17 Three-year Average: 1 $ 6. Does the Business offer a profit-sharing plan?❑ Yes ❑ No If yes, please indicate total amount paid out each year for the past three years and then, determine the average annual bonus or contribution per employee for that three year period. Year Ending Average Actual Share per Employee $ Three-year Average: $ Notes: 1. A qualified plan must be offered to all full-time permanent employees. 2. If you have multiple health insurance plans, please provide information on each plan. IEDA—Business Financial Assistance Application 9 v.3.1.17 SECTION E Project Jobs 1. List the jobs that will be created and/or retained as the result of this project. (A retained job is an existing job that would be eliminated or moved to another state if the project does not proceed in Iowa.) For jobs to be created, include the starting and final hourly wage rate. For retained jobs, include the current hourly wage rate. Full-Time CREATED Jobs Add addltlonal rows as needed Job Title Number of Starting Wage at 36 months CREATED Jobs Hourly Wa e followinq the award Total Full-Time CREATED Jobs Flexsteel Industries, Inc. Full-Time RETAINED Jobs Number of Job Title Jobs Hourly Wage Office/Management 35 $12.39 - $81.44 Plant Supervision 15 $16.46 - $37.05 General Labor janitor, Inventory, Mail) 5 $12.00 - $14.00 Production Level 1 51 $13.30 - $15.30 Production Level 2 48 $14.20 - $16.20 Production Level 3 15 $14.65 - $16.65 Production Level 4 13 $16.00 - $18.00 Production Level 5 3 $20.50 - $22.50 D&E Level 1 4 $16.00 - $18.00 D&E Level 2 5 $16.50 - $18.50 D&E Level 3 11 $18.00 - $20.00 Facility Maintenance 3 $18.40 Truck Drivers, Loaders & Mechanics 10 $20.50 - $20.77 Total Full-Time RETAINED Jobs 218 *Hourly Wage Reflects New Contract Hourly Wages (Does not include Gainsharing) The new manufacturing facility and modernization, along with attrition, may result in a reduction of employment at the facility in Dubuque. However, the company is committed to the retention of 200 jobs at the new manufacturing facility. 2. Is the hourly wage rate based on a 40 hour work week, 52 weeks per year? ® Yes ❑ No If no please explain: IEDA—Business Financial Assistance Application 10 v.3.1.17 Business Financial Assistance Application — Flexsteel Industries, Inc. Page 11 , Section F — original redacted from City Council copy, as it contained confidential information IEDA—Business Financial Assistance Application 11 v.3.1.17 SECTION G Attachments Please attach the following documents: Al Project Plan Please provide an executive summary for your project. This information should include, at a minimum, expanded information about the company's products and services and any other project related information that has not already been described in the application for financial assistance. Please note, a traditional business plan, including an executive summary, market analysis, organization and management structure, marketing and sales management, service and product line narrative, financial projections, feasibility study and patent status, as well as any other relevant information, may be requested by the Iowa Economic Development Authority to evaluate the feasibility of this project. Flexsteel Industries, Inc., headquartered in Dubuque, Iowa, manufactures high quality furniture for residential and commercial markets, including the recreational vehicle industry. One of the company's manufacturing facilities is in Dubuque, Iowa. This facility currently employs over 200 FTEs. The company is proposing to construct a new$25M manufacturing facility in Dubuque to replace the existing facility, which is over 100 years old. This investment is a major upgrade to facility layout for improved product flow through the manufacturing process and modernization of equipment. The modernization, along with attrition, may reduce employment at the facility in Dubuque. The total project contains two phases: The investment of$25 million in a new facility, and the remediation of the approximately 40-acre existing manufacturing facility. Keeping this new facility in Dubuque is a joint effort between the company, the unions representing some of the employees, the City of Dubuque, Dubuque County, and Dubuque Initiatives, the private non-profit corporation that had a major role in the IBM expansion project in Dubuque. All three union contracts have been approved by the unions and the company. This first step was accomplished in December 2016 and January 2017. The City of Dubuque is agreeing to provide Tax Increment Financing rebates for a ten-year period on the new manufacturing facility. The City is also agreeing to participate in the demolition of the buildings, including environmental cleanup of the existing facility on Jackson Street. Dubuque County is agreeing to purchase the land from the City of Dubuque and resell the property to the company at a discount. The cost to the county is $2M. Dubuque Initiatives is agreeing to accept the donation of the Jackson Street facility, and contract for the demolition of the buildings and remediation of the existing site. Dubuque Initiatives will then market and resell the property for light industrial use. None of this will be possible without the financial participation of the State of Iowa for$1 M to assist in the demolition and mitigation of the Jackson Street properties. The total budget for all activities is $34,640,000. Most of the cost will be the company's. The city's and county's cash contribution will be $2,660,000. Refer to budget page for details. A2 Payroll Information (Confidential) IEDA—Business Financial Assistance Application 12 v.3.1.17 • Copies of the Business' Quarterly Iowa Employer's Contribution and Payroll Report for the past year. This report should include the monthly employment totals. • A copy of the most recent payroll report for one pay period. The copy of the most recent payroll report for one pay period must be in Excel format and include the following information: o Company name, date of payroll and source of payroll information o Employee name and/or employee identification number o Current hourly wage - do not include bonuses or other benefit values o Indicate if the employee is full time (40 hours per week, 52 weeks per year) or part time. o A sample Excel spreadsheet can be provided by IEDA staff A3 Affidavit that states the Business has not, within the last five years, violated state or federal statutes, rules, and regulations, including environmental, worker safety regulations and antitrust laws, or, if such violations have occurred, that there were mitigating circumstances or such violations did not seriously affect public health or safety or the environment. A sample affidavit can be provided by IEDA staff. A4 Financial Information (Confidential, unless already publicly available) (Existing Businesses Only) • Profit and loss statements and balance sheets for past three year-ends, • Current YTD profit and loss statement and balance sheet, • Schedule of aged accounts receivable, • Schedule of aged accounts payable, and • Schedule of other debts. AS Collateral documentation (If requesting direct financial assistance only) A6 Brownfield or Grayfield site documentation (if applicable) IEDA—Business Financial Assistance Application 13 v.3.1.17 SECTION H Certification & Release of Information 1. Are there any judgments or court actions completed or pending against the applicant entity, or any current or prospective officer, principal, director, or owner? ❑ Yes ® No 2. Has any current or prospective officer, principal, director, or owner been accused or convicted of any wrongdoing or crime, other than a simple misdemeanor? ❑ Yes ® No 3. Have there been any current or past bankruptcies on the part of the applicant entity (or predecessor entities), or on the part of any current (or prospective) officer, principal, owner or in any business dealings of current (or prospective) officers, principals, or owners of the applicant entity? ❑ Yes ® No 4. In the last five years have there been, or are there currently any investigations of potential violations of public health, safety (including workplace safety) or environmental laws by the applicant entity, or any current or prospective officer, principal, director, or owner? ® Yes ❑ No 5. In the last five years have there been, or are there currently any violations of antitrust laws by the applicant entity, or any current or prospective officer, principal, director, or owner? ❑ Yes ® No 6. If yes to any of the above, please provide additional explanation: See Attached I hereby give permission to the Iowa Economic Development Authority (IEDA) to research the Business' history, make credit checks, contact the Business' financial institutions, insurance carriers, and perform other related activities necessary for reasonable evaluation of this application. I also hereby authorize the Iowa Department of Revenue to provide to IEDA state tax information pertinent to the Business° state income tax, sales and use tax, and state tax credits claimed. I understand that all information submitted to IEDA related to this application is subject to Iowa's Open Record Law (Iowa Code, Chapter 22), unless specifically marked as confidential section. I understand that IEDA reserves the right to negotiate the financial assistance. I understand this application is subject to final approval by IEDA and the Project may not be initiated until final approval is secured. Furthermore, I am aware that funds will not be disbursed until a contract has been executed and the appropriate terms have been met. 1 understand that upon execution of the contract and prior to the issuance of a tax credit number or the disbursement of Award Funds, a recipient shall pay IEDA a one-time compliance cost fee in the amount of $500. In addition, if tax benefits are greater than $100,000, the Recipient shall remit to IEDA a compliance cost fee 0.5% of the value of the Tax Incentives claimed pursuant to the contract. The fee will be due and payable upon filing the Recipient's annual tax return for each tax year in which tax credits are claimed under the contract. I hereby certify that all representations, warranties, or statements made or furnished to IEDA in connection with this application are true and correct in all material respect. I understand that it is a criminal violation under Iowa law to engage in deception and knowingly make, or cause to be made, directly or indirectly, a false statement in writing for the purpose of procuring economic development assistance from a state agency or subdivision. For the Business: For the Saonsor(s): Signature Date Signature Timothy E. Hall, Chief Financial Officer Roy Buol, Mayor Name and Title (typed or printed) Name and Title (typed or printed) Date IEDA will not provide assistance in situations where it is determined that any representation, warranty, or statement made in connection with this application is incorrect, false, misleading or erroneous in any material respect. If assistance has already been provided prior to discovery of the incorrect, false, or misleading representation, IEDA may initiate legal action to recover incentives and assistance awarded to the Business. IEDA — Business Financial Assistance Application 14 v.3.1.17