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IBM_Bond Hearing_Development AgreementTHE CITY OF DUBUQUE Masterpiece on the Mississippi Dubuque All-American CIty 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT': IBM ®ATE: January 15, 2009 Over the last four months the Greater Dubuque Development Corporation, Dubuque Initiatives and the City of Dubuque has had numerous visits from representatives of the IBM Corporation and hours of meetings. These meeting were held at McGraw Hill, the University of Dubuque, the Mississippi River Museum and Aquarium, the Community Foundation of Greater Dubuque, and the Grand River Center. Participants in the meetings included representatives of the following: ® Greater Dubuque Development Corporation ® City of Dubuque ® University of Dubuque ® Loras College ® Clarke College ® Northeast Iowa Community College ® University of Wisconsin o Platteville ® Southwest Wisconsin Technical College ® Kirkwood Community College ® Iowa Workforce Development ® Dubuque Initiatives ® Iowa Department of Economic Development ® Mc Graw Hill ® Gronen Properties • Community Foundation of Greater Dubuque ® Governor Chet Culver was also able to participate in some of the meetings. IBM was looking for a location for a new Technology Service Delivery Center that would employ 1,300 people. Dubuque was in competition with cities in five other states for this project To implement the project Dubuque Initiatives needed to purchase the 255,000 sq ft. Roshek Building at 700 Locust Street to provide 130,000 sq ft of leasable space to IBM to accommodate their 1,300 employees that they intended to hire by December 31, 2010. The anticipated cost of the base renovation of the building is over $24 Million, with another $14 Million in tenant improvements ($6.5 million for the IBM space). The $14 Million in tenant improvements will be financed by Dubuque Initiatives with the repayment of the cost built into tenant leases or they will be financed by the individual tenant. However, Dubuque Initiatives met with a consortium of the banks and credit unions in Dubuque to discuss a 20 years interest only loan for $25 Million to support the bare building renovation. I offered to recommend to the City Council the City would guarantee the repayment of the loan so that Dubuque Initiatives could borrow the money. The City has very little exposure related to the debt because most of it will be repaid through Federal Historic Tax Credits, Federal New Market Tax Credits, Federal Energy Tax Credits, State Historic Tax Credits, Tax Increment Financing revenues from the portion of the Roshek Building not leased by IBM, and building tenant lease revenues Based on current financial analysis the entire debt will be retired without any City contributions by the year 2020 well in advance of the 20 years balloon payment which would have been due in the year 2029. However, to give the banks and credit unions comfort that if need be the City had the capacity to repay the debt, I respectfully recommend Mayor and City Council approval at a January 26, 2009 Public Hearing for the authority to issue taxable General Obligation Bonds. It is anticipated that these bonds will never need to be issued If petitions are filed prior to the Public Hearing and are equivalent to 10% of the voters in the City's last regular election, the City Council must choose to either hold a special election to issue the bonds or issue a resolution to declare that the proposal to issue the bonds has been abandoned. The City then has the choice to guarantee the loan without the ability to issue debt, so any required payment would need to come from another revenue source, or to abandon the project. As this guarantee is a condition of the loan, the City would lose the IBM project and the associated 1,300 jobs. IBM Corporation plans to hire 1,300 employees over the next ten years at an average salary of over $43,000 per year investing over $800 Million in Dubuque over that ten years. These are high quality information technology jobs. Should IBM experience great success in Dubuque with this Technology Service Delivery Center there is the possibility of even more jobs in the future, It is also believed services and supplies needed by IBM will allow existing local companies to grow or attract new business to Dubuque. The corporate annual payroll of over $55 Million will help existing retail and commercial businesses in Dubuque. The addition of 1,300 people to the Dubuque job market will energize the local real estate market for home sales and apartment rentals. This project will also accelerate the development of the Millworking Warehouse District. I believe that IBM is the John Deer of the 21St Century. This project will make Dubuque a destination for people educated in Information Technology helping all companies in Dubuque. Dubuque benefitted from some major points in the process: ® The 18,000 college students and the colleges that exist locally, and more within 100 miles like UW Madison, UNI and University of Iowa that will provide a steady stream of potential employees. ® The awards the City has won like All American City from the National Civic League, One of 100 Best Places for Young People from America's Promise Alliance and most Livable City from the U.S. Conference of Mayors ® The City's Sustainability Initiative including: Environmental/Ecological Integrity, Economic Prosperity and Social and Cultural Vibrancy. ® The upcoming redevelopment of the Warehouse Millworking District to provide places for IBM workers to live and play. ® A reason cited by IBM was the extraordinary Public/Private cooperation and partnership that exists in Dubuque AS GDDC President Mike Blouin has said, the IBM project will be transformational for the Dubuque Economy. At the Public Hearing the City Council will also be asked to approve a development agreement with Dubuque Initiatives and an Incentive Agreement with IBM. I respectfully request Mayor and City Council approval to hold a public hearing on Monday, January 26, 2009 at 6:30 p.m. in the Council Chambers at the Historic Federal Building. U~ ~~ Micha I C. Van Milligen .. MCVM:Iw Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager THE CITY OF DUBUQUE Masterpiece on the Mississippi Dubuque All-American City 2007 TO: Michael C. Van Milligen, City Manger FROM: David J. Heiar, Economic Development Director RE: Loan Guarantee for Dubuque Initiatives to Rehabilitate Rosheck Building (Dubuque Building) to assist in bringing IBM to Downtown Dubuque BACKGROUND The State of Iowa, the City of Dubuque, Greater Dubuque Development Corporation, Iowa Workforce Development, the area colleges, and Dubuque Initiatives, are currently working with IBM Corporation, a world leader in the information technology industry, to create 1,300 IT positions in the Dubuque Building. IBM has approximately 380,000 employees worldwide and is a globally integrated enterprise that targets the intersection of technology and effective business. The company seeks to be a partner in its clients' success by enabling their own capacity for distinctive innovation. To help clients achieve growth, effectiveness, efficiency and the realization of greater value through innovation, IBM draws upon the world's leading systems, software and services capabilities. The company's business model is built to support. two principal goals: helping clients succeed in delivering business value by becoming more innovative, efficient and competitive through the use of business insight and information technology (IT) solutions; and, providing long-term value to shareholders. The company's strategy is to focus on the high-growth, high-value segments of the IT industry. The company's global capabilities include services, software, hardware, fundamental research and financing. The broad mix of businesses and capabilities are combined to provide business insight and solutions for the company's clients. The company has exited commodity businesses like personal computers and hard disk drives, and strengthened its position through strategic investments and acquisitions in emerging higher value segments like service oriented architecture (SOA) and Information on Demand. In addition, the company has transformed itself into a globally integrated enterprise which has improved overall productivity and is driving investment and participation in the world's fastest growing markets. The company's major operations comprise a Global Technology Services segment; a Global Business Services segment; a Systems and Technology segment; a Software segment; and a Global Financing segment. Global Services is a critical component of the company's strategy of providing IT infrastructure and business insight and solutions to clients. While solutions often include industry-leading IBM software and hardware, other suppliers' products are also used if a client solution requires it. Contracts for IBM services can range from less than one year to over 10 years. Within Global Services there are two reportable segments: Global Technology Services and Global Business Services. Global Technology Services (GTS) segment primarily reflects IT infrastructure services and business process services, delivering value through the company's global scale, standardization and automation. This is the business segment that will establish a new site in Dubuque. The Dubuque Building, located at 700 Locust Street, was originally built in 1928 as the Roshek's Department Store, has 9 full floors, basement, and sub-basement totaling 255,000 square feet. The building lies in the heart of the downtown, right next to the Town Clock Plaza, the center of the downtown business community and is in need of significant rehabilitation to accommodate this major development project. Over the past several weeks, there have been many telephone conferences with McKesson and CB Richard Ellis to discuss the purchase of the Dubuque Building. It was agreed that Dubuque Initiatives would not only sign a Purchase and Sale Agreement, but that there would also be three separate leases with McKesson for the various operations that are currently located in the building. City staff, including City Attorney Barry Lindahl, has worked with Dubuque Initiatives to negotiate the terms of the Purchase Agreement and Leases. The purchase agreement was approved by Dubuque Initiatives on December 19, 2008. McKesson has given Dubuque Initiatives authority to meet with current tenants in the Dubuque Building to discuss relocation options to accommodate IBM's needs. Rick Dickinson has made these contacts, and many of the tenants have already made plans to quickly relocate. Early in this process, GDDC met with Durrant to review a previously assembled cost estimate for building renovations. The required renovations were estimated to cost $25 million including major needed improvements to the heating and cooling, roof, and ADA accessibility. Dubuque Initiatives is in the process of acquiring the building which will be finalized no later than January 16, and plans to lease 130,000 sq ft to the Company. Dubuque Initiatives has hired John Gronen, Jeff Morton, and Jim Urell to take a closer look at the building and the needed repairs. The most recent estimated cost for the building structural improvements is in the $38 million range. This does include approximately $6.5 million for the build out costs; which would be collateralized with an IBM lease. Dubuque Initiatives has $4.2 million in assets and intends to commit up to $2 million to this project. Renovations would begin early in February, with the company occupying the building in phases starting June 2009. They anticipate 350 employees in the building in June, an additional 350 employees sixty days later, and the remaining 600 employees early in 2010. IBM has requested a ten year lease proposal with two 5 year incremental renewal options. Dubuque Initiatives, with the assistance of GDDC, has met with representatives of the local banks to discuss the need for up to a $25 million construction loan to accommodate this rehabilitation project (see attached copy of Financing Term Sheet). The local banks and credit unions have agreed to work together in providing this financing, if the City guarantees up to $25 million of the loan. It should be noted that bonds will only be sold to guarantee the loan payments if needed. Bonds will not be sold to "finance" the loan. Obviously there is some risk; however, if we are successful in obtaining tax credits and grants, the City may never have to sell the bonds. If for some reason IBM does not lease longer than 10 years, Dubuque Initiatives will have prime rehabilitated office space to rent to other interested parties. Therefore, it is anticipated that some lease revenue will always be available to help repay the mortgage. IBM will not lease the entire building. Dubuque Initiatives anticipates that additional revenue will be generated by leasing this excess space. Honkamp & Krueger has run a cash flow analysis for this project, a copy of which is attached to this memo. The City would act as a guaranty for up to $25 million of Dubuque Initiatives' line of credit for this project. This guaranty would be secured by the full faith and credit of the City, and intended to be funded with Urban Renewal General Obligation bonds in the event that the City would be required to perform under this guaranty. According to Bill Noth, our bond counsel with Ahlers & Cooney P.C., the City would complete the preliminary proceedings to issue bonds in an amount sufficient to fund this guaranty so that the City Council and the lenders relying on this guaranty know that the City has lawful power to fund the guaranty should the need ever arise in the future. The City Council would set the date of public hearing on the bond proposal and the published notice of the hearing would inform citizens of their right to petition for an election on the bond proposal. If no petitions are received signed by at least 10% of the number of citizens who voted in the last regular City election, the City Council may take additional action for the issuance following the public hearing without the necessity of an election. At some future date, if the City were to perform on its guaranty, the City Council could proceed directly with the sale of the bonds when the balloon payment was due and would not be required to hold any additional hearings or take other actions before doing so. If petitions are filed and are equivalent to 10% of the voters in the City's last regular election, the City Council must choose to either hold a special election to issue the bonds or issue a resolution to declare that the proposal to issue the bonds has been abandoned. The City then has the choice to guarantee the loan without the ability to issue debt, so any required payment would need to come from another revenue source or to abandon the project. As this guarantee is a condition of the loan, the City would lose the IBM project and the associated 1,300 jobs. John Gronen and Paul Butler represented this project when they attended a National New Market Tax Credit conference in Boston (October 22-24). They returned with several Community Development Entities (CDE's) extremely interested in this project. A national representative of U.S. Bank also visited Dubuque in early November to tour the building. Gronen is working with Dubuque Initiatives to pursue Federal and State Historic Tax Credits. Federal Historic Tax Credits are always available if the rehabilitation complies with their guidelines. Due to the cap put on State Historic Tax Credits, we can not necessarily count on them at this time. John Gronen, Jill Conners, and Teri Goodmann have been making contacts with the Governor, local legislators and key State Legislators to raise the State Historic Tax Credit annual cap from $20 million to $50 million and to make sure State Historic Credits are available for this project. It is estimated that total tax credits for Federal Historic, State Historic and NMTC will total over $18 million. In the meantime, City staff has begun the process of investigating other grants and tax credits to help make this project cash flow. The Economic Development Administration (EDA) has invited the City to submit a grant application. They actually visited Dubuque in early November to gather more information. The regional EDA office in Denver, Colorado has expressed some concern about mixing EDA funds with Federal Historic Tax Credits. We have scheduled a conference call to discuss the details to make sure those funding sources are compatible. We have also discussed the potential use of EDA funds for parking ramps in the downtown to accommodate the additional employees. The City continues to advocate to the EDA providing more than $5 million and to securing that money for additional parking. The proposed Federal Stimulus package may also be utilized to meet the anticipated parking structure needs. Grants and tax credits are critical to making this phenomenal development project a reality. This project would have many beneficial impacts including the restoration of a major historic building in the downtown area, the creation of many tremendous IT positions, and the ability to attract and retain many young professionals in Dubuque and Iowa. This project would provide a rapid jump start to residential development in the Historic Millwork (Warehouse) District. With the creation of 1,300 new positions, this project would also create a ripple, or actually a wave effect on the entire downtown. It is difficult to truly measure the total impact of adding over $60 million to the annual payroll in Downtown Dubuque. This proposed project would provide significant help to the distressed census tract in which the Dubuque Building is located. Dubuque's Census Tract-1 has 24.9% of its population at or below the federal poverty line and the average income is 58.9% of the area average. The average salary for the 1,300 IT positions is expected to be over $46,000/yr which would create an annual payroll for the Dubuque operation of $60 million. The company also provides a tremendous benefit package. The magnitude of this proposed development is recognized by all who have had the opportunity to work on various aspects of this project. The State of Iowa Department of Economic Development and Governor Culver have assembled aggressive proposals to encourage IBM to locate in Iowa. A detailed incentive package outlining all the community partners is attached. The following quote from Mike Blouin, President of the Greater Dubuque Development Corporation helps further define this development project; "In many ways, IBM and Dubuque are very similar. We are tested. We are solid. t/l/e are reliable. Yet, at the same time, we are both aggressive innovators and always looking for new opportunities." It is certain that, IBM, along with many of our Dubuque partners, will need to be aggressive to create this growth opportunity. RECOMMENDATION/ACTION STEP The Council will need to approve the attached resolution, prepared by Bond Counsel Bill Noth, to set a public hearing for January 26, 2009 for the potential sale of G.O. Bonds which would guarantee up to a $25 million loan to Dubuque Initiatives. F:\USERS\DHeiar\IBM\Loan guarantee to DI memo.doc Council Member Kevin Lynch then introduced the following Resolution entitled "RESOLUTION FIXING DATE OF HEARING ON A PROPOSED DEVELOPMENT AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND DUBUQUE INITIATIVES, AND A PROPOSED INCENTIVE AGREEMENT BETWEEN THE CITY AND INTERNATIONAL BUSINESS MACHINES CORPORATION", and moved that the same be adopted. Council Member Joyce Connors seconded the motion to adopt. The roll was called and the vote was: AYES: Braig, Buol, Connors, Jones, Lynch, Resnick Voetberg NAYS: None Whereupon, the Mayor declared the resolution duly adopted as follows: RESOLUTION NO. 16-09 RESOLUTION FIXING DATE OF HEARING ON A PROPOSED DEVELOPMENT AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND DUBUQUE INITIATIVES, AND A PROPOSED INCENTIVE AGREEMENT BETWEEN THE CITY AND INTERNATIONAL BUSINESS MACHINES CORPORATION WHEREAS, the City Council has approved and adopted an Amended and Restated Urban Renewal Plan (the "Urban Renewal Plan") for an area described therein as the Greater Downtown Urban Renewal District (the "Urban Renewal Area"); and WHEREAS, it is desirable that properties within the Urban Renewal Area be redeveloped as part of the overall redevelopment area covered by said Urban Renewal Plan; and WHEREAS, the City of Dubuque ("City") has received a proposal from Dubuque Initiatives (the "Developer") and International Business Machines Corporation (the "Employer"), in the form of a proposed Development Agreement (the "Development Agreement") between the City and the Developer and a proposed Incentive Agreement (the "Incentive Agreement", and together with the Development Agreement, referred to herein as the "Agreements") between the City and the Employer, pursuant to which, among other things, the Developer would acquire and renovate the Dubuque Building located at 700 Locust Street in the City, and lease portions of the same to the Employer; and -3- WHEREAS, the Employer reasonably expects to create approximately 1,300 new full-time employment positions at the Dubuque Building property prior to January 1, 2011, and reasonably expects to maintain those jobs during the term of the Agreements; and WHEREAS, in consideration of the obligations being assumed by the Developer and the Employer, the Agreements further propose that the City provide certain financial assistance to the Developer and the Employer, including a loan guaranty for the benefit of the Developer and the payment of certain economic development grants to the Developer and the Employer; and WHEREAS, the economic development grants to the Developer and the Employer shall be payable from, and only from, the tax increment revenues collected by the City in respect of the Dubuque Building property and the improvements constructed thereon, under the terms and following satisfaction of the conditions set forth in the Agreements; and WHEREAS, Iowa Code Chapters 15A and 403 (the "Urban Renewal Law") authorize cities to make grants for economic development purposes in furtherance of the objectives of an urban renewal plan and project and to appropriate such funds and make such expenditures as may be necessary to carry out the purposes of said Chapter, and to levy taxes and assessments for such purposes; and WHEREAS, the Council has determined that the Agreements are in the best interests of the City and the residents thereof and that the performance by the City of its obligations thereunder are public undertakings and purposes and in furtherance of the Urban Renewal Plan and the Urban Renewal Law and, further, that the Agreements and the City's performance thereunder are in furtherance of appropriate economic development activities and objectives of the City within the meaning of Chapters 403 and 15A of the Iowa Code, taking into account the factors set forth therein; and WHEREAS, the Urban Renewal Law sets forth the procedural action required to be taken before said tax increment payments can be made under the Agreements, and pursuant to Section 403.9 of the Code of Iowa, the Clerk shall publish notice of the proposal and of the time and place of the meeting at which the Council proposes to take action thereon and to receive oral and/or written objections from any resident or property owner of said City to such action. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the performance by the City of its obligations under the Agreements, including but not limited to the payment of the economic development grants to the Developer and the Employer under the terms set forth in the Agreements, be and are hereby declared to be public undertakings and purposes and in furtherance -4- of the Urban Renewal Plan and the Urban Renewal Law and, further, that the Agreements and the City's performance thereunder are in furtherance of appropriate economic development activities and objectives of the City within the meaning of Chapters 403 and 15A of the Iowa Code, taking into account the factors set forth therein. Section 2. That this Council meet in the Historic Federal Building, 350 West 6th Street, Dubuque, Iowa, at 6:30 o'clock P.M., on the 26t" day of January, 2009, for the purpose of taking action on the proposal to approve the Agreements and the payment of the economic development grants to the Developer and the Employer, under the terms set forth therein. Section 3. That the Clerk is hereby directed to cause at least one publication to be made of a notice of said meeting, in a legal newspaper, printed wholly in the English language, published at least once weekly, and having general circulation in said City, said publication to be not less than four clear days nor more than twenty days before the date of said public meeting. Section 4. The notice of the proposed action shall be in substantially the following form: -5- NOTICE OF MEETING OF THE COUNCIL OF THE CITY OF DUBUQUE, IOWA, ON THE MATTER OF THE PROPOSAL TO ENTER INTO A DEVELOPMENT AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND DUBUQUE INITIATIVES, AND AN INCENTIVE AGREEMENT BETWEEN THE CITY AND INTERNATIONAL BUSINESS MACHINES CORPORATION, AND THE PUBLIC HEARING THEREON PUBLIC. NOTICE is hereby given that the Council of the City of Dubuque, Iowa ("City"), will hold a public hearing on the 26t" day of January, 2009, at 6:30 o'clock P.M., in the Historic Federal Building, 350 West 6th Street, Dubuque, Iowa, at which meeting the Council proposes to take additional action on a proposal to enter into a Development Agreement (the "Development Agreement") between the City and Dubuque Initiatives (the "Developer"), and an Incentive Agreement (the "Incentive Agreement ,and together with the Development Agreement, referred to in this Notice as the "Agreements") between the City and International Business Machines Corporation (the "Employer"). The Agreements generally would obligate the Developer to acquire and renovate the Dubuque Building property located at 700 Locust Street in the City (the "Development Property"), and lease portions of the same to the Employer, under the terms and following satisfaction of the conditions set forth in the Agreements (the "Project"). The Employer reasonably expects to create approximately 1,300 new full- time employment positions at the Development Property and to maintairi those positions during the term of the Incentive Agreement. The Agreements would further obligate the City to assist the Project by providing certain financial assistance to the Developer and the Employer, including a loan guaranty for the benefit of the Developer and certain economic development grants to the Developer and Employer. The economic development grants will be payable from, and only from, the available tax increment revenues collected by the City in respect of the Development Property and the improvements constructed thereon, and such grants are subject to reduction or termination as provided in the Agreements. The aggregate amount of such grant payments to be made by the City during the term of the Agreements therefore cannot be determined conclusively, but such payments will not in any event exceed the amount of tax increment revenues collected by the City in respect of the Development Property during the term of the Agreements. Copies of the Agreements are on file for public inspection during regular business hours in the office of the City Clerk, City Hall, 50 West 13th Street, Dubuque, Iowa. -6- At the above meeting the Council shall receive oral or written objections from any resident or property owner of said City to the proposal to enter into the Agreements and make the economic development grant payments described in the Agreements. After all objections have been received and considered, the Council will at this meeting or at any adjournment thereof, take additional action on the proposal or will abandon the proposal to authorize the Agreements and said grant payments. This notice is given pursuant to Section 403.9 of the Code of Iowa, which Section shall govern the foregoing public hearing and all action taken thereat. Dated this 16t" day of January, 2009. /s/Jeanne F. Schneider, CMC City Clerk _7_ PASSED AND APPROVED this 15t" day of January, 2009. CIC®3 CERTIFICATE STATE OF IOWA ) SS COUNTY OF DUBUQUE ) I, the undersigned City Clerk of Dubuque, Iowa, do hereby certify that attached is a true and complete copy of the portion of the corporate records of the Municipality showing proceedings of the Council, and the same is a true and complete copy of the action taken by the Council with respect to the matter at the meeting held on the date indicated in the attachment, which proceedings remain in full force and effect, and have not been amended or rescinded in any way; that meeting and all action thereat was duly and publicly held in accordance with a notice of meeting and tentative agenda, a copy of which was timely served on each member of the Council and posted on a bulletin board or other prominent place easily accessible to the public and clearly designated for that purpose at the principal office of the Council (a copy of the face sheet of the agenda being attached hereto) pursuant to the local rules of the Council and the provisions of Chapter 21, Code of Iowa, upon reasonable advance notice to the public and media at least twenty-four hours prior to the commencement of the meeting as required by law and with members of the public present in attendance; I further certify that the individuals named therein were on the date thereof duly and lawfully possessed of their respective city offices as indicated therein, that no Council vacancy existed except as may be stated in the proceedings, and that no controversy or litigation is pending, prayed or threatened involving the incorporation, organization, existence or boundaries of the City or the right of the individuals named therein as officers to their respective positions. WITNESS my hand and the seal of the Municipality hereto affixed this 16th day of January, 2009. <r ,~~'Jeanne F. Schneider, CMC City Clerk SEAL DCORNELL/ 595568.1 /MSWord\10422.084 -9- Council Member Kevin Lynch introduced the following Resolution entitled "RESOLUTION FIXING DATE FOR A MEETING ON THE PROPOSITION OF THE ISSUANCE OF NOT TO EXCEED $25,000,000 GENERAL OBLIGATION BONDS (FOR URBAN RENEWAL PURPOSES) OF DUBUQUE, IOWA, AND PROVIDING F:OR PUBLICATION OF NOTICE THEREOF", and moved that the same be adopted. Council Member Joyce Connros seconded the motion to adopt. The roll was called and the vote was: AYES: Braig, Buol, Connors, Jones, Lynch, Resnick, Voetberg NAYS: None Whereupon, the Mayor declared the resolution duly adopted as follows: RESOLUTION NO. 17-09 RESOLUTION FIXING DATE FOR A MEETING ON THE PROPOSITION OF THE ISSUANCE OF NOT TO EXCEED $25,000,000 GENERAL OBLIGATION BONDS (FOR URBAN RENEWAL PURPOSES) OF DUBUQUE, IOWA, AND PROVIDING FOR PUBLICATION OF NOTICE THEREOF WHEREAS, it is deemed necessary and advisable that the City of Dubuque, Iowa, should be authorized to issue General Obligation Bonds to the amount of not to exceed $25,000,000, as authorized by Sections 403.12 and 384.24(3)(q) of the Code of Iowa, for the purpose of providing funds to pay costs of carrying out the urban renewal project as hereinafter described; and WHEREAS, before said Bonds may be issued, it is necessary to comply with the provisions of said Code, and to publish a notice of the proposal to issue such Bonds and of the time and place of the meeting at which the Council proposes to take action for the issuance of the Bonds and to receive oral and/or written objections from any resident or property owner of said City to such action, and the right to petition for an election. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That this Council meet in the Historic Federal Building, 350 West 6th Street, Dubuque, Iowa, at 6:30 o'clock P.M., on the 26t" day of January, 2009, for the purpose of taking action on the matter of the issuance of not to exceed $25,000,000 -3- General Obligation Bonds for urban renewal purposes of said City, the proceeds of which bonds will be used to provide funds to pay costs of aiding in the planning, undertaking and carrying out of urban renewal project activities under the authority of Chapter 403- of the Code of Iowa and the Amended and Restated Urban Renewal Plan for the Greater Downtown Urban Renewal District, including those costs associated with the funding of any payments required under a Guaranty Agreement between the City and Dubuque Bank & Trust Company, entered into to secure a loan to Dubuque Initiatives for the purpose of acquiring, renovating, and improving the Dubuque Building located at 700 Locust Street, Dubuque, Iowa. Section 2. The Clerk is hereby directed to cause at least one publication to be made of a notice of said meeting, in a legal newspaper, printed wholly in the English language, published at least once weekly, and having general circulation in said City, said publication to be not less than ten clear days before the date of said public meeting on the issuance of said Bonds. Section 3. The notice of the proposed action to issue said Bonds shall be in substantially the following form: -4- NOTICE OF MEETING OF THE COUNCIL OF THE CITY OF DUBUQUE, IOWA ON THE MATTER OF THE PROPOSED ISSUANCE OF NOT TO EXCEED $25,000,000 GENERAL OBLIGATION BONDS (FOR URBAN RENEWAL PURPOSES) OF SAID CITY, AND THE HEARING ON THE ISSUANCE THEREOF PUBLIC NOTICE is hereby ~iven that the Council of the City of Dubuque, Iowa, will hold a public hearing on the 26t day of January, 2009, at 6:30 o'clock P.M., in the Historic Federal Building, 350 West 6th Street, Dubuque, Iowa, at which meeting the Council proposes to take additional action for the issuance of not to exceed $25,000,000 General Obligation Bonds for urban renewal purposes of said City, in order to provide funds to pay costs of aiding in the planning, undertaking and carrying out of urban renewal project activities under the authority of Chapter 403 of the Code of Iowa and the Amended and Restated Urban Renewal Plan for the Greater Downtown Urban Renewal District, including those costs associated with the funding of any payments required under a Guaranty Agreement between the City and Dubuque Bank & Trust Company, entered into to secure a loan to Dubuque Initiatives for the purpose of acquiring, renovating, and improving the Dubuque Building located at 700 Locust Street, Dubuque, Iowa. At any time before the date of the meeting, a petition, asking that the question of issuing such Bonds be submitted to the legal voters of the City, may be filed with the Clerk of the City in the manner provided by Section 362.4 of the Code of Iowa, pursuant to the provisions of Sections 384.24(3)(q) and 384.26 of the Code of Iowa. At the above meeting the Council shall receive oral or written objections from any resident or property owner of said City to the above action. After all objections have been received and considered, the Council will at this meeting or at any adjournment thereof, take additional action for the issuance of said bonds or will abandon the proposal to issue said bonds. This notice is given by order of the Council of Dubuque, Iowa, as provided by Sections 403.12 and 384.24(3)(q) of the Code of Iowa. Dated this 16t" day of January, 2009. /s/Jeanne F. Schneider, CMC City Clerk (End of Notice) _5_ PASSED AND APPROVED this 15t" day of January, 2009. Mayor ATTEST: ity Clerk CIC-3 CERTIFICATE STATE OF IOWA ) SS COUNTY OF DUBUQUE ) I, the undersigned City Clerk of Dubuque, Iowa, do hereby certify that attached is a true and complete copy of the portion of the corporate records of the Municipality showing proceedings of the Council, and the same is a true and complete copy of the action taken by the Council with respect to the matter at the meeting held on the date indicated in the attachment, which proceedings remain in full force and effect, and have not been amended or rescinded in any way; that meeting and all action thereat was duly and publicly held in accordance with a notice of meeting and tentative agenda, a copy of which was timely served on each member of the Council and posted on a bulletin board or other prominent place easily accessible to the public and clearly designated for that purpose at the principal office of the Council (a copy of the face sheet of the agenda being attached hereto) pursuant to the local rules of the Council and the provisions of Chapter 21, Code of Iowa, upon reasonable advance notice to the public and media at least twenty-four hours prior to the commencement of the meeting as required by law and with members of the public present in attendance; I further certify that the individuals named therein were on the date thereof duly and lawfully possessed of their respective city offices as indicated therein, that no Council vacancy existed except as may be stated in the proceedings, and that no controversy or litigation is pending, prayed or threatened involving the incorporation, organization, existence or boundaries of the City or the right of the individuals named therein as officers to their respective positions. WITNESS my hand and the seal of the Municipality hereto affixed this 16t" day of January, 2009. eanne F. Schneider, CMC City Clerk SEAL DCORNELL/ 595568.1 /MSWord\10422.084 _7_ $24,500,000 Dubuque Initiatives Incentives $5,594,447 City of Dubuque Incentives* $13,988,600 State of Iowa Incentives $8,500,000 Northeast Iowa Community College New Jobs Training Program $52,500 Additionallncentives $52,635,547 Total Incentives 'While not a part of the Development Agreement with IBM the City intends to pursue Federal funding to create a new parking ramp at the intersection of Stn Street and Bluff Street in downtown Dubuque to add an additional 900 parking spaces one block from the Roshek Building at an estimated cost of $20,133,000. ubugue Initiatives Incentives $23,827,986* Purchase and renovate the Roshek Building $ 600,000 Estimated New Market Tax Credit allocation to establish the IBM Fund for a Sustainable Dubuque at the Community Foundation of Greater Dubuque $24,427,986 TOTAL 'Repayment guaranteed by the City of Dubuque after applying all Federal and State Tax Credits to this 20 year interest only loan from a consortium of local banks and credit unions. The credits and grants include Federal and State Historic Tax Credits, Federal Energy Credits, Federal New Market Tax Credits and an Iowa Department of Economic Development Grant. City of Dubuque Incentives $ 3,584,447 20 year Property Tax Rebate: $1,828,068 to IBM $1,756,379 to Dubuque Initiatives $ 1,300,000 10 years of free shuttle bus service to parking in the Port of Dubuque $ 35,000 Facade Planning and Design Financing Consultant Grant to Dubuque Initiatives $ 375,000 Greater Dubuque Development Corporation staff person to support IBM employee recruitment efforts $ 300,000 Forgivable loan $ 5,594,447 Total State of Iowa Incentives $11,700,000 Direct Financial Assistance $ 1,848,600 Iowa New Jobs Tax Credit $ 50,000 Iowa Jobs Training Program (260F) TBD Refundable Research & Development Tax Credit $13,988,600* Total State of Iowa Incentives 'Absence of sales tax on Computers and Peripherals saves IBM another $500,000 Northeast Iowa Community College Incentive $8,500,000 New Jobs Training Program Additional Incentives $30,000 AccessDubuqueJobs.com five year access. $15,000 Alliant Energy: maximum reimbursement of $15,000 for Electrical Audit Custom rebates and "Performance Edge" incentives will be formulated based on audit results. $ 7,500 Black Hills Energy: up to $7,500 comprehensive Energy Audit for natural gas usage Will maximize custom and prescriptive rebates. $52,500 Total Additional Incentives The Roshek Building QALICB, LLC Forecasted Balance Sheets Years 1 - 20 Starting December 31, 2009 PRELIMINARY DRAFT ASSETS 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Current Assets Cash and Cash Equivalents $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 Cash Reserve for Repairs 17,792 36,661 62,186 87,575 110,267 132,469 154,116 175,763 197.410 219,057 Total Curren[Pssets 117,792 136,661 162,186 187,575 210,267 232,469 254,116 275,763 297,410 319,057 Property and Equipment, at Cost Land 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 Building 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 Building Improvements 19,991,338 37,993,998 37,993,998 37,993,998 37,993,998 37,993,998 37,993,998 37,993,998 37,993,998 37,993,998 Leasehold Improvements 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 Total Property and Equipment 26,941,338 44,943,998 44,943,998 44,943,998 44,943,998 44,943,998 44,943,998 44,943,998 44,943,998 44,943,998 Less: Accumulated Depreaa5on Property and Equipment, Net (232,098) 26,709,241 (1,142,046) 43,801,952 (2,291,892) 42,652,106 (3,441,738) 41,502,259 (4,591,584) 40,352,413 (5,741,430) 39,202,567 (6,891,277) 38,052,721 (8,041,123) 36,902,875 (9,190,969) 35,753,029 (10,340,815) 34,603,183 Total Assets $ 26,827,033 S 43,938,613 S 42,814,292 $ 41,689,835 $ 40,562,680 $ 39,435,036 $ 38,306,837 $ 37,178,638 S 36,050,439 $ 34,922,239 LIABILITIES AND MEMBERS' EQUITY Long-Tenn Liahilities Developer Account Payable $ 5,808,393 $ 5,808,393 $ 5,808,393 $ 5,808,393 S 5,808,393 S 5,808,393 S 5,808,393 $ 5,808,393 $ 5,808,393 $ 5,808,393 New Market Tax Credit Loan 8,303,391 8,303,391 6,303,391 8,303,391 8,303,391 8,303,391 8,303,391 - - - FederalHistoricTaxCreditLoan - 11,530,350 11,530,350 11,530,350 11,530,350 11,530,350 11,530,350 11,530,350 - - StateHistoricTaxCreditLoan - 11,066,875 11,086,875 11,086,875 11,086,875 11,086,875 11,086,875 11,086,875 - - DOnSiNCdOn Debt 13,285,842 8,373,995 7,726,284 7,051,461 6,423,245 5,771,607 5,097,988 4,819,645 3,448,032 1,993,270 Total Long-Term Liabilities S 27,397,626 $ 45,103,004 $ 44,455,293 5 43,780,470 $ 43,152,254 5 42,500,616 $ 41,826,997 $ 33,245,263 $ 9,256,425 5 7,801,663 MEMBERS' EQUITY Undesignated (588,386) (1,201,052) (1,703,187) (2,178,211) (2,699,841) (3,198,049) (3,674,275) 3,757,612 26,59fi,604 26,901,520 Designated Replacement Reserve 17,792 36,661 62,186 87,575 110,267 132,469 154,116 175,763 197,410 219,057 Total Members' Equity (570,594) (1,164,391) (1,641,001) (2,090,636) (2,589,574) (3,065,580) (3,520,160) 3,933,375 26,794,013 27,120,577 Total Liabilities and Members' Equity $ 26,827,033 $ 43,938,613 $ 42,814,292 $ 41,689,835 $ 40,562,680 S 39,435,036 S 38,306,837 $ 37,178,638 $ 36,050,439 $ 34,922,239 Printed 1/142009 10:06 AM Version 3.2 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 10O,OOD $ 100,000 $ 100,000 $ 100,000 240,703 262,350 283,997 305,644 327,291 348,938 370,585 392,232 413,879 435,526 340,703 362,350 383,997 405,644 427,291 448,938 470,585 492,232 513,879 535,526 100,000 100,000 1aD,ooD 1DD,DDO 100,000 100,000 100,000 100,000 100,000 100,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 37,993,998 37,993,996 37,993,998 37,993,998 37,993,998 37,993,998 37,993,996 37,993,998 37,993,998 37,993,998 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 44,943,998 44,943,998 44,943,998 44,943,998 44,943,998 44,943,998 44,943,996 44,943,998 44,943,998 44,943,998 (11,490,661) (12,640,507) (13,790,353) (14,940,199) (16,090,045) (17,239,891) (18,389,738) (19,539,584) (20,689,430) (21,839,276) 33,453,337 32,303,491 31,153,645 30,003,798 28,853,952 27,704,106 26,554,260 25,404,414 24,254,568 23,104,722 $ 33,794,040 $ 32,665,841 $ 31,537,642 $ 30,409,443 $ 29,281,244 $ 28,153,044 $ 27,024,845 $ 25,896,64fi $ 24,768,447 $ 23,640,248 S 5,808,393 $ 5,808,393 $ 5,248,924 $ 4,531,705 $ 3,813,282 $ 3,093,666 $ 2,372,820 S 1,650,708 $ 927,291 S 202,530 816,862 149,062 $ 6,625,255 $ 5,957,455 S 5,248,924 $ 4.531,705 $ 3,613,282 $ 3,093,666 $ 2,372,820 S 1,650,708 $ 927,291 $ 202,530 26,928,082 26,446,036 26,004,720 25,572,094 25,140,670 24,710,440 - 24,281,440 23,853,706 23,427,277 23,002,192 240,703 262,350 283,997 305,644 327,291 348,938 370,585 392,232 413,879 435,526 27,168,786 26,708,386 26,288,718 25,877,738 25,467,961 25,059,379 24,652,025 24,245,939 23,841,156 23,437,718 $ 33,794,040 $ 32,665,841 $ 31,537,642 $ 30,409,443 $ 29,281,244 $ 28,153,044 S 27,024,845 S 25,896,646 $ 24,768,447 $ 23,640,246 See Accompanying Notes and Accountant's Report 2 Printed 1/14!200910:08 AM Version 3.2 The Roshek Building QALICB, LLC Forecasted Income Statements For the Years Ending December 31, 2009- December 31, 2028 PRELIMINARY DRAFT 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Revenue: Base Rents IBM S 104,473 S 297,538 S 378,951 S 378,951 $ 378,951 S 378,951 5 378,951 S 378,951 5 378,951 S 378,951 O'Connor 82,968 82,968 82,968 82,968 - - - - - - McKesson 330,618 87,300 1,200 - - - - - - - Other 75,008 161,173 387,776 384,370 377,442 361,111 342,614 342,614 342,614 342,614 Total Base Rents 593,067 628,979 850,835 846,289 756,393 740,062 721,565 721,565 721,565 721,565 Common Area Renls IBM 158,216 463,472 608,508 626,727 644,946 664,986 685,027 705,068 726,930 748,793 Other 3,681 35,679 193,143 196,926 204,708 211,069 217,430 223,791 230,731 237,670 Total Common Area Rents 161,897 499,151 801,651 825,652 849,654 876,055 902,457 928,859 957,661 986,462 Tenant Specific Rents IBM 182,083 530,417 665,000 665,000 665,000 665,000 665,000 665,000 665,000 665,000 IBM Build Out Rent 365,656 946,400 946,400 946,400 946,400 946,400 946,400 946,400 946,400 946,400 Total Revenue 1,302,703 2,604,947 3,263,886 3,283,341 3,217,447 3,227,517 3,235,422 3,261,824 3,290,625 3,319,427 Opemting Expenses: General &Administrative Expenses 729,000 750,870 773,396 796,598 820,496 845,111 870,464 896,578 923,475 951,180 IBM Specific Expenses 182,063 530,417 665,000 665,000 665,000 665,000 665,000 665,000 fi65,000 665,000 Property Tax Property Tax Rents (32,254) (50,666) (59,970) (105,757) (105,757) (106,976) (108,231) (109,525) (110,857) (112,228) Property Tax Rebates (33,896) (30,417) (36,002) (63,490) (63,490) (64,222) (64,976) (65,752) (66,551) (67,375) Property Tax F~cpense 73,500 90,092 106,636 188,052 188,052 190,220 192,452 194,752 197,120 199,559 Total Property Tax 7,350 9,009 10,fifi4 18,805 18,805 19,022 19,245 19,475 19,712 19,956 Total Operating Expenses 918,433 1,290,296 1,449,060 1,480,403 1,504,301 1,529,133 1,554,709 1,581,053 1,608,187 1,636,136 Gross Profit 384,270 1,314,651 1,814,826 1,802,938 1,713,145 1,698,384 1,680,713 1,680,770 1,682,438 1,683,292 Other Income (Expenses) Tax Credit Income - - - - - 8,303,391 22,617,225 - Fed Historic TC Fxpense - (230,607) (230,607) (230,607) (230,607) (230,607) (230,607) (230,607) - - Tax Credit Put Option - - - - - - - (576,518) - - NMTC Expense (57,143) (57,143) (57,143) (57,143) (57,143) (57,143) (57,743) Replacement Reserve (17,792) (18,869) (25,525) (25,389) (22,692) (22,202) (21,647) (27,647) (21,647) (21,647) Interest Expense - (209,350) (502,440) (463,577) (423,088) (385,395) (346,296) (305,879) (289,179) (206,882) Oepreda[ion (232,098) (909,948) (1,149,846) (1,149,84fi) (1,149,846) (1,149,846) (1,149,846) (1,149,846) (1,149,846) (1,149,846) Tenant Relocation Expense (392,000) - - - - - - - - CDEManagementFee(1%OEI) (83,623) (311,400) (311,400) (311,400) (371,400) (311,400) (311,400) (227,777) - - CDE & Investment Administrative Cost (40,000) (40,000) (40,000) (40,000) (40,000) (40,000) (40,000) (40,000) - - Cansulting Fee (150,000) (150,000) - - - - - - - Total O[her Income (Expenses) (972,656) (1,927,317) (2,316,961) (2,277,962) (2,234,775) (2,196,593) (2,156,939) 5,751,117 21,156,553 (1,378,375) Net Income 5 (588,386) S (612,66fi) S (502,135) S (475,024) S (521,630) S (498,208) S (476,227) S 7,431,888 S 22,838,991 S 304,917 Panted 1/142009 10:08 AM Verson 3.2 zots zozo zozl zozz 2oz3 2o2a 2o2s zozs zoz7 zozfi $ 378,951 $ 378,951 $ 378,951 $ 378,951 8 378,951 6 378,951 $ 378,951 $ 378,951 8 378,951 $ 378,951 342,674 342,614 342,614 342,614 342,614 342,614 342,614 342,614 342,614 342,614 721,565 721,565 721,565 721,565 721,565 721,565 721,565 721,565 727,565 721,565 770,655 794,340 818,024 841,709 867,215 893,231 920,028 947,629 976,058 1,005,340 244,609 252,127 259,644 267,162 275,257 283,515 292,021 300,787 309,805 319,099 1,015,264 1,046,466 1,077,668 7,108,870 1,742,472 1,176,747 7,212,049 1,248,410 1,265,863 1,324,439 665,000 665,000 fi65,000 665,000 665,000 665,000 665,000 665,000 665,000 665,000 580,744 2,982,573 2,433,031 2,464,233 2,495,435 2,529,037 2,563,311 2,598,614 2,634,975 2,672,427 2,711,003 979,715 1,009,106 1,039,380 1,070,561 7,102,678 1,135,758 1,169,831 7,204,926 1,247,074 1,278,306 665,000 665,000 665,000 665,000 665,000 665,000 665,000 665,000 665,000 665,000 (113,641) (115,097) (116,596) (718,140) (119,730) (119,730) (119,730) (179,730) (119,730 (119,730) (68,223) (69,097) (69,997) (70,924) (71,879) (71,879) (71,879) (71,879) (71,679) (71,879) 202,072 204,660 207,325 210,071 212,899 212,899 212,899 272,899 212,899 272,899 20,207 20,466 20,733 21,007 21,290 27,290 21,290 21,290 21,290 21,290 1,664,922 1,694,572 1,725,112 7,756,568 1,788,968 1,822,048 1,856,121 1,897,216 1,927,364 1,964,596 1,317,657 738,459 739,121 738,867 740,069 741,263 742,493 743,759 745,064 746,408 (21,647) (21,647) (27,647) (27,647) (27,647) (21,647) (27,647) (21,647) (21,647) (21,647) (119,596) (49,012) (8,944) - - - _ _ _ (1,149,846) (1,149,846) (1,149,846) (1,149,846) (1,149,846) (1,149,846) (7,149,846) (7,149,846) (7,149,846) (1,149,846) (1,291,089) (1,220,505) (1,180,437) (1,171,493) (1,171,493) (7,771,493) (7,171,493) (1,171,493) (1,171,493) (1,177,493) $ 26,562 $ (482,046) $ (441,316) $ (432,fi26) $ (431,424) $ (430,230) $ (429,000) S (427,734) $ (426,429) $ (425,085) See Accompanying Notes and Accountant's Report 3 Printed 1/148009 10:98 AM Version 3.2 The Roshek Building QALICB, LLC Forecasted Statements of Cash Flows For the Years Ending December 31, 2009- December 31, 2028 PRELIMINARY DRAFT 2009 2070 2011 2012 2013 2014 2015 2016 2077 2018 Cash Flows From Operating Activities: Net lncrome $ (588,386) $ (612,666) S (502,135) $ (475,024) $ ($21,630) S (498,208) $ (476,227) $ 7,431,888 $ 22,838,991 $ 304,917 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 232,098 909,940 1,149,846 1.149,846 1,149,846 1,149,846 1,149,846 1,749,846 1,149,(746 1,149,846 Net Cash Provided by Operating ActivNes (356,288) 297,282 647,711 674,622 628,216 651,638 673,619 8,581,734 23,988,837 1,454,763 Cash Flows From Investing Activities: Acquisdion oFProperty and Equipment (21,132,945) (18,002,659) - _ _ _ _ _ _ _ Replacement Reserve 17,792 18,869 25,525 25,389 22,692 22,202 21,647 21,647 21,647 21,647 Payments on Developer AP Net Cash (Used)by lnvestlng Activities (21,115,153) (17,983,790) 25,525 25,389 22,692 22,202 21,647 21,647 21,647 21,647 Cash Flows From Financing Activities: Payments on Constucton Debt - (4,911,848) (647,711) (674,622) (628,216) (651,638) (673,679) (278,343) (1,371,612) (1,454,763) Proceeds from Construction Debt 13,285,842 _ _ _ _ _ _ - _ Payments on Tax Credit Debt _ _ _ _ _ (8,303,391) (22,617,225) - ProceedsfromTaxCred'RDebt 8,303,397 22,617,225 Net Cash (Used)by Financing Activities 21,589,233 17,705,377 (647,711) (674,822) (628,216) (651,638) (673,619) (8,581,734) (23,988,837) (1,454,763) Net Increase in Cash 117,792 18,869 25,525 25,389 22,692 22,202 21,647 27,647 21,647 27,647 Cash, t3eginning of Year - 117,792 136,661 162,186 187,575 210,267 232,469 254,116 275,763 297,410 Cash, End of Year S 717,792 5 13fi,661 S 162,186 S 187,575 S 210,267 $ 232,469 5 254,116 $ 275,763 $ 297,410 S 319,057 Supplemental Disclosures Cash Flows Information: Cash Paid during the Year for Interest $ - S 209,350 $ 502,440 S 463,577 S 423,080 $ 385,395 S 346,296 $ 305,879 S 289,179 $ 206,882 Pnntetl 1/74/2009 10:08 AM Version 3.2 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 5 26,562 $ (492,046) 5 (441,376) $ (432,626) $ (431,424) 5 (430,230) 5 (429,000) 5 (427,734) 5 (42'0,429) 5 (425,085) 1,749,846 7,749,846 1,149,846 1,749,846 1,149,846 1,149,846 1,749,846 1,749,846 1,749,846 1,149,846 1,176,408 667,800 708,530 717,220 718,422 719,616 720,846 722,112 723,417 724,761 21,647 21,647 21,647 21,647 27,647 21,647 21,647 21,647 21,647 21,647 - - (559,469) (717,220) (718,422) (719,616) (720,846) (722,N2) (723,417) (724,761) 21,647 21,647 (537,822) (695,573) (696,775) (697,969) (699,199) (700,465) (701,770) (703,114) (1,176,408) (667,800) (149,062) - - _ _ _ - _ (7,176,408) (667,800) (149,062) 21,647 21,647 21,647 21,647 27,647 21,647 21,647 21,647 21,647 21,647 319057 340,703 362,350 383,997 405,644 427,291 448,938 470,585 492,232 513,879 $ 340,703 $ 362,350 S 383,997 S 405,644 S 427,291 $ 448,938 $ 470,585 $ 492,232 $ 513,879 5 535,526 g 119,596 S 49,012 g 8,944 5 - 5 - g _ g _ g - g _ g Printed 1H 4/200910:08 AM Version 3.2 t~:~;, A ~ ~.LL ~ CONTACT: Greater Dubuque Development Corporation Milce Blouin, President JcrnuarY 15, 200 Mil<e6@greaterdubuque.org P: 5b3.557.9049 i ~ ~- ~, __ _ ~ ,~ DUBUQUE, IOWA -January 15, 2008 -IBM (NYSE: IBM) today announced it will open a new technology service delivery center in Dubuque, Iowa, creating up to 1,300 jobs and providing high- value information technology services to IBM customers. Working with Iowa Governor Chet Culver, the City of Dubuque and Dubuque Initiatives and the Greater Dubuque Development Corporation, IBM has signed a 10-year lease, with optional extension years, to occupy the historic Roshek Building in downtown Dubuque. The City of Dubuque, Dubuque Initiatives and IBM plan to upgrade the facility to make it a "green" building. The renovation of the building will utilize industry-leading energy-efficient technology. "We selected the City of Dubuque for our new delivery center based on several criteria, including the strong positive public-private partnership within the city, its competitive business model and the talent and skills that Iowa and the Midwest have to offer," said Mike Daniels, senior vice president, IBM Global Technology Services. "We continue to invest in IBM's future and recruit the skilled persons we need to grow our business. The Dubuque service center is a model for creating new opportunities and we look forward to working with the City and the State of Iowa to accomplish great things together." "Today's announcement is about three things -Jobs, Jobs, Jobs;' said Governor Culver. "I want to welcome IBM to Iowa, and thank them for bringing these 1,300 high quality, good paying jobs to our state. Today's announcement is one more sign that people around the country are discovering what we have known all along -that with our highly skilled workforce, inviting business climate, and quality of life, Iowa is a great place for business. As Governor, I will not rest when it comes to bringing jobs like these to Iowa:' Dubuque Mayor Roy Buol commented, "We are extremely proud that IBM chose Dubuque for this project and particularly thrilled about the role that Dubuque's sustainability initiative played in that decision. IBM's decision to locate in the Roshek Building, through adaptive reuse of a historic structure in the heart of our downtown, illustrates our shared commitment to sustainable development, historic preservation, and community - revitalization." - - --- - -_° - ~ January 15, 2U04 CONTACT: Greater Dubuque Development Corporation Mile Blouin, President Mike6@greaterdubuque.org P: 5b3.557.904y "This is truly a historic and transformational moment in the history of Dubuque and the tri-state area;' said Mike Blovin, President of the Greater Dubuque Development Corporation. "We look forward to participating in the creation of a stronger, sustainable 21st Century community." The technical service delivery center in Dubuque will primarily support IBM's U.S. strategic outsourcing clients, providing server systems operations, security services and end-user services, including maintenance and monitoring of computer hardware and software systems. The services utilize collaborative problem solving and defect prevention processes based on service management standards. Employees will manage IBM's world-class servers and storage systems that are critical for assuring optimal IT infrastructure performance. IBM intends to employ several hundred people in the new facility by the end of this year and up to 1,300 by the end of 2010. IBM will work with institutions of higher learning in the tri-state area of Iowa, Illinois and Wisconsin for recruitment and training of potential employees. In addition, IBM will look for opportunities to partner with these schools to enhance their curricula to better prepare students for opportunities in the IT industry, including the types of roles found at IBM.IBM's global delivery network incorporates more than SO strategic centers around the world and serves thousands of clients. IBM's global delivery capabilities are a key differentiator -the company delivers services seamlessly by harnessing its infrastructure, processes, tools and skilled resources. The global delivery centers are a key component of IBM's strategy to be a globally integrated enterprise, allowing clients to capitalize on a global talent pool to drive profitable growth. About IBM For more information, visit www.ibm.com~services. To learn more and apply for opportunities visit any of the following: www.ibm.com~careers~us, www.accessdubuquejobs.com, or www.iowajobs.org. ### Media Contacts: Jenna Gable IBM Media Relations (917) 472-3512 gable]@us.ibm.com Jen Knecht IBM Media Relations (917) 472-3607 knechtj@us.ibm.com Matt Paul Link Strategies, LLC 515.243.0445 matt@linkstrategies.com 00,00 ubuque Initiatives Incentives $5,594,447 City of ®ubuque Incentives* $13,988,600 ~ tate of Iowa Incentives $8,500,000 Northeast Iowa Community College New Jobs Training Program $52,500 Additionllncentives I nt~ *vilhile not a part of the ®evelopment Agreement with IBM the City intends to pursue Federal funding to create a new parking ramp at the intersection of Stn Street and Bluff Street in downtown ®ubuque to add an additional 900 parking spaces one block from the Roshek Building at an estimated cost of $20,133,000° u u u Inii ti Inc ntiv s $23,827,986* Purchase and renovate the Roshek Building $ 600,000 Estimated New Market Tax Credit allocation to establish the IBM Fund for a Sustainable Dubuque at the Community Foundation of Greater Dubuque $24,427,986 TOTAL *Repayment guaranteed by the City of Dubuque after applying all Federal and State Tax Credits to this 20 year interest only loan from a consortium of local banks and credit unions. The credits and grants include Federal and State Historic Tax Credits, Federal Energy Credits, Federal New Market Tax Credits and an Iowa Department of Economic Development Grant. iy u u u Incentive $ 3,584,447 20 year Property Tax Rebate: $1,828,068 to IBM $1,756,379 to Dubuque Initiatives $ 1,300,000 10 years of free shuttle bus service to parking in the Port of Dubuque $ 35,000 Facade Planning and Design Financing Consultant Grant to Dubuque Initiatives $ 375,000 Greater Dubuque Development Corporation staff person to support IBM employee recruitment efforts $ 300,000 Forgivable loan $ 5,594,447 Total $11,700,000 Direct Financial Assistance $ 1,848,600 Iowa New Jobs Tax Credit $ 50,000 Iowa Jobs Training Program (260F) TBD Refundable Research & Development Tax Credit $13,988,600* 1°otal Mate of Iowa Incentives *Absence of sales tax on Computers and Peripherals saves IBM another $500,000 Northeast Iowa Community College Incentive $8,500,000 New Jobs Training Program $30,000 AccessDubuqueJobs.com five year access. $15,000 Alliant Energy: maximum reimbursement of $15,000 for Electrical Audit Custom rebates and "Performance Edge" incentives will be formulated based on audit results. $ 7,500 Black Hills Energy: up to $7,500 comprehensive Energy Audit for natural gas usage Will maximize custom and prescriptive rebates. $52,500 Total Additional Incentives BORROWER: Dubuque Initiatives, Inc. (DI), a private Not-for-Profit Organization organized under a 501 c-3 status. PURPOSE: Provide construction build-out funds and end financing for the redevelopment of the Dubuque Building (the "Property"), for leasing to IBM (the "tenant") and other tenants. LOAN TYPE: Commercial Real Estate Construction and Term Loan LENDERS: A consortium of Dubuque-area Lenders, lead by Dubuque Bank & Trust and including the following: American Trust & Savings Dupaco Community Credit Union DuTrac Commnunity Credit Union Premier Bank U.S. Bank Fidelity Bank East Dubuque Savings Bank State Central Bank Liberty Bank PROJECT COST: The project cost is estimated at $38 million for the deconstruction, modernization and code-compliant requirements of the 260,000 s.f. property. Reconstruction will also include complete renovations to the lobby and mezzanine levels of the property and expanded office space for existing tenants. In addition, DI and the tenant will require construction and term loan funds to build-out to tenant specifications that are currently estimated at $6.5 million. LOANAMOUNT: Up to $25 million using adraw-down Construction Financing structure that will then convert to Term Financing and a $6.5 1 million Tenn Credit Facility for the tenant build-out based on the lease term. EQUITYCONTIBUTION: Dubuque Initiatives is a private, non-profit economic development organization dedicated to downtown re- development. Although organized as a 501 c-3, it has more than $4MM in net assets including significant amounts of cash or readily-convertible to cash assets. DI stands ready to invest up to $2 million toward the project, to be used in the unlikely event that the property does not cash flow from the rents received. The organization will also be seeking equity contributions from a variety of other sources such as New Markets Tax Credits ($7.275 million); Federal and State Historic Tax Credits ($16.75 million) as well as other State or Local funds that would help reduce the overall lease rate being charged to the tenant. LOAN TO PROJECT COST. Yet to be determined, but end debt financing is expected to be in the range of 33.33%. ESTIMATED LOAN CLOSING: February 2009 ESTIMATED PROJECT COMPLETION: Phase I needs to be completed for the tenant by June 2009 LOAN RATE: Construction: Fixed at 5.85% Term Loan: Fixed at 5.85% LOAN TERM.• Construction: up to 12-months Term Loan: up to120-months on initial tenant-related loan and up to 240-months on other structured financing with re-pricing options every 60- months on the Term Facility. AMORTIZATION: Construction: Monthly interest-only payments Term Loan: Monthly interest-only payments. 2 DI will be required to use all excess cash flows related to any tax credits, grants or those derived from rental of the property directly toward debt reduction after all interest cost. GUARANTORS: SECURITY: Repayment shall be guaranteed by the City of Dubuque in an amount not to exceed $25 million. Promissory notes will be secured with an Assignment of the $2 million deposit account. The tenant build-out debt will include an Assignment of Rents on the subject property. PREPAYMENT PENALTIES: The Borrower may prepay the Loan Amount in whole or in part at any time without prepayment penalty. CLOSING COSTS: Borrower will be responsible for paying all closing costs incidental to the Loan Amount. PRE-CLOSING DOCUMENTS: Prior to closing, the Borrower shall have delivered to Lender and Lender has reviewed and is satisfied with the following: (1) Attorney's title opinion as required under Iowa law showing good and merchantable title on the Property. (2) Builders' risk hazard insurance policy on the Property against direct loss or damage for the replacement cost of the improvements in amounts not less than the maximum Loan Amount or the full replacement value of the improvements, whichever is greater. (3) All agreements, contracts and other related agreements including but not limited to the Lease Agreements. (4) Consents, permits and approvals from all governmental authorities required in comlection with the construction of the improvements to the Property. (5) Borrower's organizational documents. (6) Borrower's projected opening balance sheet and annual income and expenses relating to the Property. 3 OTHER LOAN CONTINGENCIES: (1) Borrower agrees to maintain the following Minimum Debt Service Coverage Ratio: Year l: No requirement during the construction period Year 2: 1.OOx Year 3: 1.15x Year 4: 1.15x Year 5: 1.15x For purposes of this covenant, the Debt Service Coverage Ratio shall be defined as Borrower's Earnings before Interest Expense, Taxes and Depreciation divided by Principal and Interest Payments. (2) Borrower agrees to maintain a minimum net worth of not less than $2 million. (3) Construction to comply with all local, state and federal standards. (4) Commitment subject to the terms and conditions of a Commercial Construction Loan Agreement (5) Borrower to provide quarterly financial statements, annual financial statements and tax returns on a timely basis going forward. (6) Guarantors to provide annual financial statements on a timely basis going forward. (7) Final Commitment is subject to approval from the consortium of Lenders. 4 WHERE HISTORY MEETS HIGH-TECH... January 15, 2009 IBM's Web site boldly proclaims: "The world is smaller. Flatter. Faster. We think it can be smarter too. Never has this been more true than today. For some, at first glance Dubuque, Iowa, may have looked like nothing more than a blip on the map. But officials from IBM, a company known for innovation and foresight, looked beyond the surface. They saw more than a location in Dubuque and realizing that the world is flatter -they saw a land of opportunity. IBM's decision to relocate a portion of its operations to Dubuque is a testament to the strength of our community and surrounding communities. It is a decision that speaks to our work ethic, our educational system and our quality of life. It speaks to what Dubuque is at its core - a smaller city with big opportunities. Dubuque is a city that is driven and on the move. It is important to note that today's announcement did not just happen. It is the result of tireless work by the Greater Dubuque Development Corporation in cooperation with the City of Dubuque, Dubuque Initiatives and a variety of area businesses, organizations and leaders. It was a partnership in the truest sense of the word. Today is a proud day for Dubuque. From an educational perspective, we look forward to the new internship opportunities and exposure to the most cutting-edge technologies that our students will surely benefit from. In return, we have much to share with IBM. Mary Kenneth Keller, BVM, co-developer of the BASIC computer language, was a pioneer in the computing field when she founded the computer science department at Clarke -one of the oldest in the nation. In that same spirit of innovation, and combined with our forward-thinking adult and graduate degree programs, Clarke College is dedicated to preparing graduates ready to meet the demands of an ever-changing workplace. With another international business leader in Dubuque, it also serves to show students that Dubuque is a tremendous place to begin a career and a family. Today is an exciting day and, in difficult economic times like these, it is a sign of hope and progress. To officials at IBM, we are excited you have chosen Dubuque and we stand ready to support you as you begin transitioning to our thriving city. Welcome to the land of opportunity. Note: Media requesting interviews or additional informntion should contact Mike Cyze, executive director of communication at Clarke College, at (563)588-6318 or by e-mail at rnike.cyze@clarke.edu. e-mail gddc greaterdubuque.org phone 563.557.9049 S00 Main Street, Suite 120, Dubuque, Iowa 52001 fr>: 563.557.1059 ww~r~.greaYerdubuque.crg LORAS COLLEGEStatement from Loral College President Jim Collins January 15, 2009 On behalf of the Loras College community, I am thrilled to welcome a new and very prominent business partner to the City of Dubuque. The reputation and the quality of IBM are well known to the Loras community. For a over a decade, Loras College has been a lap top campus and one of only 200 among all of this country's colleges and universities. Throughout this time, we have been and will continue to operate as an exclusively IBM/Lenovo technological platform. We have created a predominantly wireless, technology-rich campus culture which helps to prepare our students for internationally renowned companies like IBM. Majoring in high-quality programs such as computer information technology, media studies and electromechanical engineering, Loral graduates are aready-made workforce for this newest addition to our community. Loral' ability to forge mutually beneficial community partnerships, as with Loras for Literacy, combined with these excellent programs, demonstrates that we will continue to meet workforce needs well into the future. Dubuque has been home to Loral College for 170 years. Within this All America city, we have found an abundant supply of natural resources, individuals with a strong work ethic and adeeply-rooted sense of values and hospitality that we believe cannot be equaled anywhere else. We are proud that our history and the city's are intertwined. We look forward to greatly expanding the power of Dubuque to include our newest neighbors and friends -the staff of IBM. **Loras for Literacy is a program that provides technological sophistication to area teachers, reading specialists and elementary grade school children. It is funded completely through the generosity of the Verizon Foundation and Federal Government. Note: Media requesting interviews or additional information should contact Sue Czeshinski, Director of Contrttunicatiwis, at Loral College, at (563)588-7769 or by e-mail at sue.czeshinski@loras.edu. e-mail gddc greaterdubuque.org (ihone 563.557.9049 300 Main Street, Suite 120, Dubuque, Iowa 52001 tax 563.557.1059 t^rwvv,greaterdubuque.arg Statement from Northeast Iowa Community College President Penny Wills January 15, 2009 "On behalf of everyone at Northeast Iowa Community College (NICC), I would like to welcome IBM to the Dubuque business community. I am confident that IBM will benefit from the highly-skilled, dedicated workforce that our region offers," said NICC President Penny Wills. "Northeast Iowa Community College is excited to contribute to the success of IBM in Dubuque by continuing to provide the workforce for the future." Note: Media requesting interviews or additional information should contact the Office of the President at Northeast Iowa Community College at (800)728-2256. UNIVERSITY of DuBUQuE Statement from University of Dubuque President Jeffrey F. Bullock January 15,2009 "We are excited to partner with IBM and other employers in the Greater Dubuque region to continue providing gifted, ethical, and motivated graduates. We commit to doing our part to facilitate an environment of continued growth and innovation. We believe that this announcement is just one more example that the best is yet to be for our educational institutions, and for the Greater Dubuque region." Note: Media requesting interviews or additional information shoccld contact tl2e Office of the President at the University of Dubuque at (563)589-3224. e-mail g<Ide greaterdubuque.Urg phone 583.557.9049 300 Ytain Street, Suite 120, Dubuque, Iowa 52001 ?=x 563.557.1059 Greate rdub uque.org Statement from the University of Wisconsin-Platteville and Chancellor David J. Markee January 15, 2009 University of Wisconsin-Platteville Welcomes IBM to the Region The University of Wisconsin-Platteville and Chancellor David J. Markee joined regional leaders today in welcoming IBM to Dubuque and the tri-state community. In commenting Markee noted, "UW-Platteville joined the regional higher education community, Dubuque, and the Greater Dubuque Development Corporation in working with IBM to explore and address workforce needs. We are proud of the people who live, work, teach and learn in this region and we know that our people enjoy a high quality of life. We also know that many of the students who attend our university are eager to pursue employment in the region. Further, UW-Platteville's strengths in science, technology, engineering, and mathematics are a good match to the needs of IBM." The University of Wisconsin-Platteville serves some 7400 students from the campus in Platteville, Wisconsin. The university has seen significant growth in students of nearly 40% over the past decade. Additionally, there has been an investment of over $130 million in facilities during the decade. In December of 2008 the university opened a 100,000 square foot facility, dedicated to engineering education. This space is in addition to Ottensman and Ullrich Halls, which house programs in the sciences and engineering. "Regional partnerships are the key to a dynamic and robust future in this tri-state region," said Markee. "UW-Platteville has worked diligently through the years to develop and nurture partnerships with business, industry, agencies, and municipalities. We applaud Dubuque and tri-state community in working together to bring good things to the region. We look forward to a strong and productive relationship with IBM." Note: Media requesting interviews or additional information should contact Ms. Barbara Daus, Special Assistant to the Chancellor at University of Wisconsin-Platteville at (608)342-1234 or by email at daus@uwplatt.edu. o-mail gddc greaterdubuque,org pnore 563.557.9049 300 Main Street, Suite 120, Dubuque, Iowa 52001 iax 563.557.1059 ~rn~.n^r.greaterdubuq ue.org Statement from Southwest Tech January 15, 2009 Southwest Tech Welcomes IBM Corporation to the Tri-State Region Southwest Wisconsin Technical College faculty and staff welcome IBM Corporation to the tri-state region. As the largest provider of technical education in southwest Wisconsin, Southwest Tech will partner with higher education providers throughout the region to meet the development and training needs of IBM. "We at Southwest Tech are dedicated to meeting the needs of our students and employers. We also have a history of accomplishing this through partnerships with educators and businesses. As IBM makes this commitment to the tri-state region, we at Southwest Tech commit to working with all of the partners to help to make this IBM initiative one of their most successful," stated Dr. Joan Senn, College Vice President of Learning Services. Recognized as the leading provider of technical education and career skills training in southwest Wisconsin, Southwest Tech has begun its fifth decade serving the region. The College currently offers three associate degree programs in the information technology field, providing highly skilled employees for area firms. For more information about the College, including more than 40 degree and diploma programs, specific courses, and student life, visit www.swtc.edu. Note: Media requesting interviews or additional information should contact Derek Dachelet, Interim Director of Marketing & Public Relations at Southwest Wisconsin Technical College at (608)822-2417 or by email at ddachelet@swtc.edu. Statement from Kirkwood Community College President Mick Starcevich January 15, 2009 "The faculty and staff of Kirkwood Community College welcome IBM to Dubuque, Iowa. As an educational provider with global vision and innovative curriculum, Kirkwood Community College partners with businesses throughout the region to meet their workforce needs," said Mick Starcevich, President of Kirkwood Community College. "We look forward to providing IBM with the workforce that we are so well-known for shaping: highly-skilled, critical thinkers who will ensure success in the workplace. Kirkwood has enjoyed a longstanding relationship with IBM in developing and delivering educational programs for their iSeries computer platform. We look forward to strengthening that valued relationship through our support of IBM's exciting new initiative in Dubuque." Note: Media requesting interviews or additional information should contact Steve Ovel, Executive Director, Governmental Relations at Kirkwood Community College at (319)398-5466 or by entail at sovel@kirkwood.edcc. e-nu3il gddc greaterdubuque.org phone 563.557.9049 300 Main Street, Suite 12G, Dubuque, Iowa 52001 rax 563.5521059 www.greatertlubuque.oeg ~,