Museum Art Defer loan int paymeMEMORANDUM
April 14, 2003
TO:The Honorable Mayor and City Council Members
FROM:Michael C. Van Milligen, City Manager
SUBJECT:Request from the Dubuque Museum of Art to Defer Loan Interest
Payments for One Year
The Dubuque Museum of Art (DUMA) was the recipient of a Downtown Rehabilitation
Loan in an amount of $300,000 in 1999. The terms of that 3% loan involve 5 years of
interest-only payments, with principal plus interest payments commencing in years 6
through 20.
A written request has been received from DuMA identifying current financial difficulties
and requesting to defer their interest-only payments for a one-year period. Interest due
over the course of the year ($9,000) would be added to the principal loan amount and
future repayment of principal plus interest would be $2,133.90 per month on a $309,000
balance.
DuMA has a major fundraising campaign anticipated in the near future and the financial
condition of the museum should be stabilized by the time the higher principal plus
interest payments are due in mid 2004.
Economic Development Director Bill Baum is recommending approval of the DuMA
request to defer interest payments on their Downtown Rehabilitation loan for one year.
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
TO:Michael Van Milligen, City Manager
FROM:William Baum, Economic Development Director
SUBJECT:Request from the Dubuque Museum of Art to Defer Loan Interest
Payments for One Year
April 14, 2003
INTRODUCTION
This memorandum requests City Council approval of a request from the Dubuque
Museum of Art (DUMA) to defer interest payments on their $300,000 Downtown
Rehabilitation Loan. A letter of request is attached hereto.
BACKGROUND
DuMA was the recipient of a Downtown Rehabilitation Loan in an amount of $300,000
in 1999. The terms of that 3% loan involve 5 years of interest-only payments with
principal plus interest payments commencing years 6-20. There is no job creation
requirement attached to this loan. In fact, for each new full-time equivalent job created
within the first 2 years of the loan and maintained for an additional 3 years, $2000 in
loan principal is forgiven.
DISCUSSION
Currently, DuMA is within the first 5 years of the loan and making $750/month interest-
only payments. The account is current with the $300,000 balance outstanding. The
interest-only payments are scheduled to continue until July 1, 2004 when monthly
principal plus interest payments of $2,071.74 will be due. A written request, attached
hereto identifying current financial difficulties, asks that the City allow DuMA to defer
payments for a one-year period. Interest due over the course of the year ($9,000)
would be added to the principal loan amount and the future repayment of principal plus
interest would be slightly increased to $2,133.90 on a $309,000 balance.
A major fundraising campaign is anticipated in the near future, and the financial
condition of the museum should be stabilized by the time the higher principal plus
interest payments are due in mid-2004.
RECOMMENDATION
I would recommend approval of the request. While the revolving loan program counts
on repayments of all loans in the loan pool to fund future loan obligations, the interest-
only payments at this time should not substantially affect the City's ability to fund future
loan obligations made to Heartland Financial, Gronen Properties and the Weber
Building. If, however, the scheduled repayment of principal plus interest isfurther
delayed, the availability of loan funds for future projects could be negatively impacted.
ACTION STEP
The action step for the City Council is to approve the request by the Dubuque Museum
of Art to defer interest payments on their Downtown Rehabilitation Loan for one year
and authorize staff to prepare a new amortization schedule for the loan.
attachment
F:\USERS\Pm~hre\WPDOCS\LOANDOC~UMA\req uest. mem.doc
April 10, 2003
Para Myhre
City Hall
50 West 13th Street
Dubuque, IA 52001
Dear Pam,
As you requested, we submit the following:
As a result of experiencing a shortfall in our cash flow, we respectfully request a
deferral of interest payments on our downtown rehabilitation loan to the city for
a period of 12 months.
Respectfully submitted,
Geri Shafer
Director
Bob Woodward
President, Board of Trustees
cc: Mike Van Milligen, City Manager
John Schmidt, Treasurer