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Genuine Genius Solutions, LLC UDAG Loan AmendmentTHE CITY OF Dubuque '' ~T TR ~ M-AmericaCitY v .a.~ Masterpiece on the Mississippi 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: UDAG Loan Amendment for Genuine Genius Solutions, LLC DATE: May 26, 2009 Economic Development Director Dave Heiar recommends City Council approval to amend the $40,000 Urban Development Action Grant (UDAG) Loan Agreement with Genuine Genius Solutions, LLC to allow a one year extension of the repayment of the loan. concur with the recommendation and respectfully request Mayor and City Council approval. Mi ael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David Heiar, Economic Development Director THE CITY OF DUB E Masterpiece on the Mississippi TO: Michael Van Milligen, City Manager FROM: David Heiar, Economic Development Director Dubuque AlaanPriicacii~ i 2007 ~~~ SUBJECT: UDAG Loan Amendment for Genuine Genius Solutions, LLC` DATE: May 21, 2009 INTRODUCTION This memorandum presents for City Council a request to amend an Urban Development Action Grant (UDAG) loan agreement of $40,000 with Genuine Genius Solutions, LLC. BACKGROUND In April 2007, Genuine Genius Solutions, LLC announced its intent to relocate its operations in downtown Dubuque. The Company, which originated in Minneapolis, planned to create 13 new positions in Dubuque as a part of this relocation and expansion process. Genuine Genius Solutions, LLC is an idea architecture firm that targets specific industries. The Company identifies, protects and designs reusable tools into marketable solutions delivered via a channel marketing strategy in conjunction with Circle Partners, who are established companies with specific expertise that have shared risk and aligned financial goals. As part of the incentive package to encourage Genuine Genius to locate in Dubuque, the city provided a $40,000 UDAG loan. Repayments were to begin in March 2009. DISCUSSION While many positive things have occurred since the Company located in Dubuque (see attached letter), they suffered a significant hit to their business as they were directly impacted by the stock market declines. Most of their customers are large publicly traded companies and many of them imposed spending freezes on projects. These actions severely impacted the Company's revenue for the last quarter of 2008 and the first quarter of 2009. As a result, Genuine Genius was forced to cut costs including temporary pay reductions. In the past couple of months, customer budgets that were frozen are now being discussed or acted upon which results in new business for Genuine Genius over the next several quarters. The Company is confident that business is now slowly emerging from this unusual global event; however they are not unshackled from the burden caused by over six months of financial pain. Genuine Genius is requesting that the City of Dubuque defer payments of the current loan for a period of one year to assist in efforts to rebound from this financial situation. Payments would resume in March of 2010 as previously agreed. RECOMMENDATION/ACTION STEP recommend that the City Council approve the request to amend the $40,000 UDAG Loan Agreement with Genuine Genius Solutions, LLC., to allow a one year extension of the repayment of the loan. This project is consistent with the City's goals to help businesses locate and expand in the community, increase the number of good paying jobs and further diversify our economic base. attachment F:\USERS\DHeiar\Genuine Genius Solutions\20090521 GGS loan extention memo.doc Genuine Genius May 20th, 2009 To: City of Dubuque Re: Deferment of Loan Payment To Whom It May Concern, Late in 2007 Genuine Genius Technologies (GG) opened an office in Dubuque, IA to contribute to the vision of creating an innovative business hub. Over the past 18 months Genuine Genius has contributed to the community in several ways: Visibility as a technology friendly city. Most of GG's customers are large technology companies and government agencies. Many of our customers visit Dubuque and are able to create an entirely new perception of our community. Our business model is also complimentary to the addition of companies like IBM as they often require our services. Attracting new talent to the area. Since moving to Dubuque Genuine Genius has hired several employees with technology skills. Three of our new hires moved from Davenport, Chicago and Madison respectively and have salaries in excess of $SOk per year. We will continue to draw new talent to the area as our business grows. Foster local talent. Rob Daniels the owner of Genuine Genius actively volunteers for advisory roles at NICC and participated in multiple college panels to help the local colleges develop marketable skills while letting students know there are technology opportunities in Dubuque. Showcase in the Warehouse Revitalization Project. Genuine Genius honored their commitment to Dubuque and located in the warehouse district. Working with a local developer Genuine Genius designed and decorated an exciting office space that serves as a showcase for prospective businesses and various government agencies. Additionally Genuine Genius volunteers to participate in community development groups as they continue evolving the downtown area. Active Business Partner in the Community. While most Genuine Genius customers exist outside of Dubuque we have actively partner with several organizations in the community. Woodward Communications have become financial, management and customer partners with Genuine Genius. Our organizations share ideas, provide services to each other and ultimately leverage our complementary strengths (GG as a young nimble company and Woodward as a larger established company). Additionally we 120 E. 9t" St. Dubuque, IA 52001 Genuine Genius actively work with Greater Dubuque to drive innovation. Currently we are brainstorming how we can work together to provide knowledge transfer to local small business regarding government contracting. We feel there are untapped opportunities for small businesses in Dubuque. These are just some of the things Genuine Genius brings to the community. I feel that it is important that you as city officials are aware of all the positive things that have occurred since Genuine Genius chose Dubuque over other communities in the five state area. We see our company as a model for small businesses that may consider Dubuque. We also strongly believe that to develop a dynamic and durable business environment each IBM announcement should parallel several new small business announcements. While many positive things have occurred since our move we suffered a significant hit to our business as we were directly impacted by the stock market declines. Most of our customers are large publicly traded companies and all of them imposed spending freezes on projects. These actions severely impacted our revenue for Q4 2008 - Q1 2009. As a result we were forced to cut costs including temporary pay reductions. Even with these adjustments we find our business in a difficult position. On a positive note customer budgets that were frozen are now being discussed or acted upon which results in new business for Genuine Genius over the next several quarters. We feel confident that our business is now slowly emerging from this unusual global event; however we are not unshackled from the burden caused by over six months of financial pain. I am requesting that the city of Dubuque defer payments of our current loan for a period of one year to assist us in our efforts to rebound from this financial situation. Payments would resume in March of 2010 as previously agreed. We look forward to a long prosperous presence in the city of Dubuque and look forward to your response. Warmest Regards, c..~ _ I Rob Daniels CEO Genuine Genius Technologies, LLC 120 E. 9th St. Dubuque, IA 52001