CDBG Loan Heartland FinancialMEMORANDUM
February 25, 2003
TO:The Honorable Mayor and City Council Members
FROM:Michael C. Van Milligen, City Manager
SUBJECT:CDBG Economic Development Loan
Heartland Financial USA, Inc.
The City entered into a Memorandum of Understanding (MOU) with Heartland Financial
on January 7, 2002 to support the renovation of the former Walsh Store building and
create new jobs in the downtown. The project, located in the 1300 block of Central
Avenue, is underway with completion anticipated by December, 2003. The MOU
identified several financial incentives to the company to encourage the histodc
renovation and reuse of the former Walsh Store building. Keeping the company in the
downtown, creating 47 new jobs and improving City Hall's immediate neighborhood
were presented as reasons to support the overall project and financial assistance
package.
Economic Development Director Bill Baum recommends City Council approval of a
$500,000 Community Development Block Grant (CDBG) Economic Development
forgivable loan to assist Heartland Financial USA, Inc. to expand in the former Walsh
Store building.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
William Baum, Economic Development Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
February 24, 2003
TO:Michael Van Milligen, City Manager
FROM:William Baum, Economic Development Director
SUBJECT:CDBG Economic Development Loan
Heartland Financial USA, Inc.
INTRODUCTION
This memorandum presents for City Council consideration a resolution approving a loan
request from Heartland Financial USA, Inc. for funding through the City's Community
Development Block Grant (CDBG) Economic Development Loan Program to assist in
the company's expansion in the former Walsh Store building.
BACKGROUND
The CDBG Economic Development Loan Program provides Iow interest loan monies to
b.usinesses creating new job opportunities that will be made available to Iow and
moderate income persons. This program was first authorized in FY 1995 and currently
has a budget of $600,000 in CDBG funds.
DISCUSSION
The City entered into a Memorandum of Understanding (MOU) with Heartland Financial
on January 7, 2002 to support the renovation of the former Walsh Store building and
create new jobs in the downtown. The project, located in the 1300 block of Central
Avenue, is underway with completion anticipated by December, 2003. The MOU
identified several financial incentives to the company to encourage the historic
renovation and reuse of the former Walsh Store building. Keeping the company in the
downtown, creating 47 new jobs and improving City Hall's immediate neighborhood
were presented as reasons to support the overall project and financial assistance
package.
The $500,000 CDBG loan will be fully forgiven if job creation goals are met and the
requirement to make at least 51% of the jobs available to Iow and moderate income
persons is fulfilled. Should the company not create 47 new jobs within five years, an
amount equal to 1/47 of the loan plus interest ($12,333) will be due and payable for
each job not created. The full loan plus interest is due and payable if the 51% Iow/mod
income requirement is not met.
If the loan is approved by the City Council, a commitment letter will be executed by the
Mayor and the owners. The commitment letter is attached with details of the financing
terms.
RECOMMENDATION
Staff has reviewed the loan request and finds it to be in keeping with the requirements
of the Economic Development Loan Program. It is my recommendation that the City
Council adopt the attached resolution approving the loan request of $500,000 and
authorizing the preparation and execution of all necessary loan documents by the City
Manager.
ACTION STEP
The action step for the City Council is to adopt the attached resolution.
attachments
Prepared by: Pamela Myhre
Economic Development Planner
F:\USERS\Pm~h re\WPDOCS~LOANDOC\COOPER\cornindioan.mern.doc
RESOLUTION 76-03
A RESOLUTION AUTHORIZING A COMMITMENT LETTER AND THE
EXECUTION OF A COMMUNITY DEVELOPMENT BLOCK GRANT LOAN OF
FIVE HUNDRED THOUSAND DOLLARS ($500,000) TO HEARTLAND
FINANCIAL USA, INC.
Whereas, under provisions of Title I of the Housing and Community
Development Act of 1974, as amended, the City of Dubuque has received Community
Development Block Grant Funds for the purpose of stimulating economic development
activities within the community; and
Whereas, the City of Dubuque, Iowa desires to assist the further expansion of
Heartland Financial USA, Inc. and to create new permanent employment opportunities
for Iow and moderate income citizens; and
Whereas, a Commitment Letter, hereto attached and by this reference made a
part hereof, sets forth the terms and conditions of Heartland Financial USA, Inc.'s
participation in the City's CDBG Economic Development Loan Program.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the Mayor is hereby authorized to execute, on behalf of the
City Council of the City of Dubuque, Iowa, the attached Commitment Letter and to
forward said letter to Heartland Financial USA, Inc.
Section 2. That the City Manager be and he is hereby directed to prepare,
upon receipt and acknowledgment of the attached Commitment Letter by the Company,
the necessary loan documents in accordance with the terms and conditions set forth in
said Commitment Letter.
Section 3. That the City Manager is hereby authorized to execute, on behalf of
the City Council of the City of Dubuque, Iowa, all necessary loan documents and is
further authorized to disburse loan funds from the CDBG Economic Development Loan
Program, in accordance with the terms and conditions of the executed agreement.
Passed, approved and adopted this 3rd day of March, 2003.
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider City Clerk
F:\USERS\Pm~hre\WPDOCS\LOANDOC~HearUandFinanciaNoan.res.doc
Economic Development Department
City Hall - Second Floor
50 West 13th Street
Dubuque, Iowa 52001-4864
(563) 589-4393 office
(563) 589-1733 fax
Lynn B. Fuller
Heartland Financial USA, Inc.
1398 Central Avenue
Dubuque, Iowa 52001
March 3, 2003
RE: Letter of Commitment
Dear Mr. Fuller:
I am pleased to inform you that your application for financial assistance has been
accepted and approved by the Dubuque City Council.
The following offer is made:
Source of Funds: Amount of Commitment:
Interest Rate: Term of Loan:
Payment Schedule:
CDBG Economic Development Loan Program
Five Hundred Thousand Dollars ($500,000)
Three percent (3%) per annum
Ten (10) years
Fully forgiven after 5 years if job creation goals are met
($12, 333 must be repaid for each job not created); if 51%
Iow/mod income requirements have not been fulfilled, loan is
due and payable in full at the end of the 5 years.
Form of Security: First Mortgage position on Heartland Financial Operations
Center (former Walsh Store)
Purpose of the Loan: To pumhase machinery and equipment to support the
expanded operations in the former Walsh Store Building.
Special Conditions of this Commitment:
(a) Forty-seven (47) new positions must be created within a five (5) year period and
with at least 51% of those jobs made available to persons of Iow and moderate
income.
Service People lntegr/ty Responsibility lrmovation Teamwork
This commitment is valid for twenty-one (21) days from the date of this letter. If you
wish to accept the offer, you must return the acknowledgment below. Failure to return
written acknowledgment will be cause for the commitment to lapse.
If the terms offered do not meet your approval, or if you have any questions regarding
the conditions of this commitment, please contact Pamela Myhre, Economic
Development Department, at 563/589-4393.
Sincerely,
Terrance M. Duggan
Mayor
ACKNOWLEDGMENT
We have reviewed the above offer and accept the CDBG Economic Development Loan
of $500,000 and all of the terms of this commitment letter.
Heartland Financial USA, Inc.
Lynn B. Fuller, Chairman of the Board
Date
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