Hotel Julien_First Amendment to Development AgreementTHE CITY OF Dubuque
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DUB E A°~~'~~~~
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Masterpiece on the Mississippi
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: First Amendment to Development Agreement for the Hotel Julien Building
DATE: September 2, 2009
Economic Development Director Dave Heiar recommends City Council approval of a
resolution approving the First Amendment to Development Agreement for HJD
Landlord, LLC and HJD Manager, LLC to support their rehabilitation of the Hotel Julien
at 200 Main Street.
The developer is asking to amend the Development Agreement as follows:
1. Extend the completion date from June 30, 2009 to September 30, 2009.
2. Revise the collection of Hotel/Motel tax revenues to begin in the 4th quarter of
2009 (October, November, December) rather than the 3rd quarter.
3. Provide a $30,000 cash advance on the Hotel/Motel tax now to allow for joint
marketing with the Convention and Visitors Bureau of the completed project.
This advance will be repaid from projected Hotel/Motel taxes collected prior to
the end of this fiscal year (June 2010).
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
THE CITY OF
DUB E
Masterpiece on the Mississippi
Dubuque
1 1
Zoos
August 31, 2009
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director
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SUBJECT: First Amendment to Development Agreement for the Hotel Julien Building
INTRODUCTION
This memorandum presents for City Council consideration a Resolution approving the First
Amendment to Development Agreement for HJD Landlord, LLC and HJD Manager, LLC to
support their rehabilitation of the Hotel Julien at 200 Main Street.
BACKGROUND
In April 2008, the City Council approved a Development Agreement with The Fischer
Companies outlining an incentive package for the rehabilitation of the Julien Hotel located at
200 Main Street. HJD Landlord, LLC and HJD Manager, LLC have committed to retaining 12
(FTE) jobs and creating new 57 (FTE) jobs in the building. The proposed renovation is
estimated to cost $20 million and includes a swimming pool, spa, restaurant, retail boutiques, a
restaurant/bar, updated conference and ball rooms and 130 upscale rooms/suites. This
renovation would also restore major portions of the exterior of the building to look like the
original building facade.
The Development Agreement included a Downtown Rehabilitation Loan/Grant to encourage
private investment and rehabilitation efforts in the City's Greater Downtown Urban Renewal
District. The loan/grant program, capitalized with funds available through the City's tax
increment financing district, provides for a maximum of $600,000 in attractive low-interest loan
monies. The program is unique in that grants of up to $10,000 are available to offset necessary
predevelopment costs. A facade grant is also available of up to $10,000. The program also
includes a forgivable loan element whereby qualifying applicants may have up to the full amount
of the loan forgiven as an incentive for the creation of new employment and housing
opportunities in the district.
A 15-year 100% tax rebate was also offered to the company to assist in their downtown
renovation project. The rebate is a form of tax increment financing without issuing a tax
increment finance bond to loan monies to the company upfront. As the company pays its future
tax obligation on the new improvements, the City will rebate 100% of tax increment over the
existing base valuation of $1,555,800.00, not to exceed the tax increment revenues paid by the
Developer.
Key items in the Development Agreement included:
• HJD Landlord, LLC and HJD Manager, LLC will invest $20,000,000 to rejuvenate a
cornerstone building in Downtown Dubuque.
• City will commit to a $600,000 Downtown Rehabilitation Loan, a $10,000 Design Grant,
and a $10,000 Facade Grant. The project retains 12 (FTE) jobs and creates 57 (FTE)
new jobs in the downtown area.
• The company will receive a 15-year TIF in the form of a 100% yearly tax rebate on
increased property taxes but not to exceed the tax increment revenues paid by the
Developer. Failure to maintain the jobs and create jobs associated with this project will
result in a pro-rated reduction of the TIF rebate.
• Upon completion of the renovation project (July 1, 2009), the City will provide 100% of
the incremental increase in its share of Hotel/Motel tax revenue for three full years, to
assist in marketing the renovated hotel. The funds will be transferred to the Convention
and Visitors Bureau to exclusively market the hotel.
DISCUSSION
When the Development Agreement was signed, the Developer anticipated that the total project
would be completed by June 30, 2009. Although major parts of the project are completed,
(ballroom and rooms), some elements of the project (i.e. restaurant and pool) are still being
completed. The project cost has also increased substantially from the initial commitment of
$20, 000, 000.
Due to this construction delay, the developer is requesting that the Hotel/Motel Marking funds
also be delayed to correspond to the completion of the project. The agreement initially
anticipated that the Convention and Visitors Bureau would receive this extra revenue to promote
the Julien after the State remitted the tax to the City. In an effort to jump start the marketing, the
developer is asking the City to advance $30,000 of .the new revenue at this time. It is
anticipated that this cash advance would be repaid to the City from Hotel/Motel taxes collected
by the Julien prior to the end of the fiscal year (June 30, 2010).
The developer is asking to amend the Development Agreement as follows:
1) Extend the completion date from June 30, 2009 to September 30, 2009.
2) Revise the collection of Hotel/Motel tax revenues to begin in the 4th quarter of 2009
(October, November, December) rather than the 3rd quarter.
3) Provide a $30,000 cash advance on the Hotel/Motel tax now to allow for joint marketing
with the Convention and Visitors Bureau of the completed project. This advance will be
repaid from projected Hotel/Motel taxes collected prior to the end of this fiscal year
(June, 2010).
RECOMMENDATION
I recommend that the City Council adopt the attached Resolution approving the First
Amendment to the Development Agreement for HJD Landlord, LLC and HJD Manager, LLC.
ACTION STEP
The action step for the City Council is to adopt the attached Resolution.
20090831 Hotel Julien First DA Amend Memo
Prepared/Return to: David Heiar, Economic Development, 50 W. 13t" Street, Dubuque, IA 52001 (563) 589-4393
RESOLUTION NO. 313-09
RESOLUTION APPROVING THE FIRST AMENDMENT TO THE HJD LANDLORD,
LLC and HJD MANAGER, LLC DEVELOPMENT AGREEMENT
Whereas, a Development Agreement (the Agreement), dated April 21, 2008, was
entered into by and between the City of Dubuque, a municipal corporation of the State
of Iowa (City), and HJD Landlord, LLC and HJD Manager, LLC (Developer); and
Whereas, City and HJD Landlord, LLC and HJD Manager, LLC now desire to
amend the Development Agreement as set forth attached First Amendment.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the First Amendment of the HJD Landlord, LLC and HJD
Manager, LLC Development Agreement is hereby approved.
Section 2. That the Mayor is hereby authorized and directed to execute said
First Amendment on behalf of the City of Dubuque and the City Clerk is authorized and
directed to attest to his signature.
Section 3. That the City Manager is authorized to take such actions as are
necessary to implement the terms of the First Amendment as herein approved.
Passed, approved and adopted this 8th day of September, 2009.
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Roy D. Buol, Mayor
Att "t:
eanne F. Schneider, City Clerk
20090831_Hotel Julien Res approving FIRST DA amendment
Whereas City and Developer previously entered into,a Development Agreement
dated the 21St of April, 2008 (the Development Agreement); and
Whereas the Development Agreement (Section 2.1) provides for minimum
investment of approximately $20,000,000.00 in building improvements, equipment,
furniture and fixtures in the Property to include a swimming pool, spa, retail boutiques,
restaurant/bar, updated conference and ballrooms and approximately 130 upscale
rooms/suites.
Whereas City and Developer have agreed to amend the Development
Agreement to revise the completion date and timing on marketing funds; and
Whereas the parties desire to amend the Development Agreement to set forth
such amendment in writing.
THEREFORE, in consideration of the mutual terms and covenants contained
herein, the parties agree as follows:
1. Section 2.4. Section 2.4 is hereby amended by changing to substantially
completed date to September 30, 2009.
2. Section 3.6. Section 3.6 is hereby amended by striking such provision and in
lieu thereof placing the following:
3.6 Hotel/Motel Tax Marketing Funds. Upon completion of the
renovation project which Developer represents will be on or before
September 30, 2009, City will provide 100% of the incremental
increase from calendar year 2007 in its share of Hotel/Motel tax
revenue for the Julien Hotel for three full years after the date of
completion to assist Developer in marketing the Julien Hotel. The
funds will be transferred to the Convention and Visitors Bureau to
exclusively market the Julien Hotel. In fiscal year 2009-10, the City will
advance $30,000 to the Convention and Visitor's Bureau to initiate this
marketing campaign. This cash advance will be reimbursed to the City
prior to remitting other tax revenues as described to the Convention
and Visitors Bureau.
3. Except as modified herein, the Development Agreement shall remain in full
force and effect.
CITY OF DUBUQUE, IOWA
By: Roy D. Buol, Mayor
Jeanne F. Schneider, City Clerk
HJD LANDLORD, LLC
By: L. Anthony Pfohl
Managing Member
HJD MANAGER, LLC
By: L. Anthony Pfohl
Member