Vessel Systems CEBA ApplicationMEMORANDUM
May 14, 2003
TO:The Honorable Mayor and City Council Members
FROM:Michael C. Van Milligen, City Manager
SUBJECT:Vessel Systems, Inc. Community Economic Betterment Account (CEBA)
Application
Economic Development Director Bill Baum recommends City Council authorization to
submit a Community Economic Betterment Account (CEBA) program application to the
Iowa Department of Economic Development on behalf of Vessel Systems, Inc., a
Dubuque manufacturer of large steel pressurized tanks.
To help fund this expansion, Vessel Systems, Inc. has requested a partially forgivable
CEBA loan of $125,000. The cost of the expansion is estimated to be $1,570,480. The
company currently employs 24 persons, and is proposing to increase employment by an
additional 25.
City assistance as public match for the CEBA application is required, and is proposed to
be $140,000 through tax increment financing and a write down of the land cost for their
new facility at Dubuque Industrial Center West.
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
May 12, 2003
TO:Michael Van Milligen, City Manager
FROM:Bill Baum, Economic Development Director
SUBJECT:Vessel Systems, Inc
Community Economic Betterment Account (CEBA) Application
INTRODUCTION
This memorandum presents for City Council review and approval a resolution authorizing
the submission of a Community Economic Betterment Account (CEBA) program application
to the Iowa Department of Economic Development on behalf of Vessel Systems, Inc., a
Dubuque manufacturer of large steel pressurized tanks.
BACKGROUND
Vessel Systems, Inc. has announced a proposal to expand in Dubuque at the Dubuque
Industrial Center West. The company is currently in leased facilities on 7th Street and is
proposing to construct a facility that better meets the needs of their manufacturing process.
The company currently employs 24 persons, and is proposing to increase employment by
an additional 25.
The expansion is conditioned on the approval of a State of Iowa CEBA application on
behalf of the company. As required by the CEBA program, application requires a
commitment of City funds to the project.
DISCUSSION
To help fund this expansion, the Company has requested a partially forgivable CEBA loan
of $125,000. The cost of the expansion is estimated to be $1,570,480.
City assistance as public match for the CEBA application is required, and is proposed to be
$140,000 through tax increment financing and a write down of the land cost.
The CEBA application is in the process of being completed. Attached are relevant pages
from the application.
RECOMMENDATION
I recommend that the City Council authorize the submission of a CEBA application for a
$125,000 partially forgivable loan on behalf of Vessel Systems, Inc. with a commitment of
the local match.
This project is consistent with the City's goals to expand local business, increase the
number of higher wage jobs and further diversify our economic base.
ACTION STEP
The action step for the City Council is to adopt the attached resolution.
attachment
F:\USERS\WBaum\Gen ED\MEMO ON CEBA APP vessel,doc
RESOLUTION NO. 182-03
A RESOLUTION AUTHORIZING THE FILING OF A COMMUNITY
ECONOMIC BETTERMENT ACCOUNT (CEBA) APPLICATION ON
BEHALF OF VESSEL SYSTEMS, INC.
Whereas, Vessel Systems, Inc. has proposed an industrial expansion in the
Dubuque Industrial Center West; and
Whereas, the City Council of Dubuque, Iowa has considered said proposal and
has determined that the proposed project will contribute to the local economy through
the creation of overt25 new jobs for area residents; and
Whereas, the Iowa Department of Economic Development's Community
Economic Betterment Account (CEBA) was designed to assist in the economic
development efforts of local jurisdictions; and
Whereas, the City of Dubuque, Iowa is eligible to apply for funding from the
Community Economic Betterment Account program.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. That the filing of an application for participation in the Iowa
CommunitY Economic Betterment Account program on behalf of Vessel Systems, Inc.
is approved.
Section 2. That the local match as identified in the application is hereby approved,
subject to the CEBA application approval.
Section 3. That the Mayor is hereby authorized to execute, and the City Manager is
hereby directed to submit said application to the State of Iowa Department of Economic
Development together with such documents as may be required.
Passed, approved, and adopted this 19th day of May, 2003.
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider, City Clerk
F:\USERS\WBaum\Gen ED\Resolution approving CEBA app Vessel Systems.doc
SMART IDEA
Michael Blouin, Director
Iowa Department of Economic Development
Application For
CEBA
Financial Assistance
Division of Business Development
Iowa Department of Economic
Development
Community Economic Betterment Account (CEBA) Financial Assistance Program Page 2
August 2002
August2002
Community Economic Betterment Account (CEBA) Financial Assistance Program Page 3
CEBA Application Table of Contents ......................................................................................................... 2
introduction ................................................................................................................................... 3
General Instructions ..................................................................................................................... 3
Application Cover Sheet ............................................................................................................... 4
Application Secudty and Signatures .............................................................................. 5
Required Attachments and Submissions ................................................................................ 6 - 7
Rating and Evaluation for the CEBA Regular Program ............................................................... 8
Rating and Evaluation for the CEBA Venture Component ........................................................... 9
August 2002
Community Economic Betterment Account (CEBA) Financial Assistance Program Page 4
COMMUNITY ECONOMIC BETTERMENT ACCOUNT (CEBA)
FINANCIAL ASSISTANCE PROGRAM
Introduction
The purpose of the Community Economic Betterment Account (CEBA) program is to assist
communities of the State with their economic development efforts and to increase employment
opportunities for Iowans by increasing the level of economic activity within the state. The
program structure provides financial assistance to businesses and industries which require
assistance in order to create new job opportunities or retain existing jobs which are in jeopardy.
Also, the program may provide comprehensive management assistance to businesses involved
with the CEBA program. Assistance may be provided to encourage new business start-ups,
expansion of existing businesses, or the recruitment of out-of-state businesses into Iowa.
Although applications are submitted on behalf of businesses, only cities, counties, or
community colleges are eligible applicants. The individuals listed as the applicant contact
person should be prepared to complete paperwork and discuss funded projects for the full
duration of the project, usually three to five years.
A business receiving CEBA funds is required to make available at least 10 percent of the jobs
created to qualified Promise Jobs program participants. To meet the minimum requirements of
this provision, the business shall provide to the area Workforce Development Center, job
descriptions of the positions to be created and certify to the Department that qualified Promise
Job Participants shall receive hidng consideration. In addition, the business is encouraged to
undertake further affirmative action to hire Promise Job participants, such as publicly advertising
job openings. Promise Jobs is a program designed to assist individuals on government
assistance to garner the necessary skills and education for employment opportunities.
General Instructions for Submittin.q Applications
1)Before completing this form and applying for funds, make sure you have read the CEBA
administrative rules, application rating formulas, and the accompanying instructions.
2)Fill out the application cover sheet and any other required attachments completely. If any
questions are left unanswered or required attachments are not submitted, an explanation
must be included.
3)Only typed applications and business plans will be accepted and reviewed. Send the
odginal and one copy of the completed application form (pages 3-6) and attachments.
4)Use clear and concise language. Any inaccurate information of a significant nature may
disqualify the application from consideration and will certainly delay the review process.
5) Return the completed application form, business plan and any attachments to:
CEBA - Business Development
Iowa Department of Economic Development
200 East Grand Avenue, Des Moines, IA 50309
August 2002
Community Economic Betterment Account (CEBA) Financial Assistance Program Page 5
COMMUNITY ECONOMIC BETTERMENT ACCOUNT (CEBA)
FINANCIAL ASSISTANCE PROGRAM I
APPLICATION COVER sHEET
Return Completed Applications to:
CEBA - Division of Business Development
Iowa Department of Economic Development
200 East Grand Avenue, Des Moines, Iowa 50309
Date Submitted: May 6, 2003
(Please check program component for which you are applying):
x Small Business Gap financing __ New Business Opportunity
New Product DeveloPment __ Venture Component x Modernization
City or County Sponsoring Application City of Dubuque, Iowa
Mayor or Chairperson Terrance M. Dug.qan, Mayor
Address City Hall, 50 West 13th Street, Dubuque, Iowa Zip Code 52001
Contact Person Bill Baum Title Economic Development Director
Phone 563 569-4393 Fax 563 589-1733 Email wbaum(~,cityofdubuque.orq
Ownership Structure and History (Check Applicable Answers):
Corporation x Partnership Sole Proprietorship Limited Liability Co.
Cooperative
New Business Expansion of Existing Business x For Profit x
NotforProfit
Business Receiving Funding
Address 430 E 7th Street
Contact Person Ken Heitritter
Phone 563 557-8265 Fax 563 557-7443
Person Authorized to Obligate Business
Federal ID Number 42-1409707
Vessel Systems Inc.
Dubuque, Iowa
Title
Zip Code 52001
President
Email kehvsi~,,m cleod usa. net
Ken Heitdtter
Website www.vesselsystemsinc.com
,~ Fundin.q Information
Total Project Budget $ 1,F0,480 Amount Requested from CEBA $125,000
Loan Amount $ 62,500 Forgivable Loan Amount $ 62,500
Specify loan and forgivable ~an amounts. See Chapter 53, Section 261 in the Administrative Rules for maximum funding amounts.
o
The Program is not designed to provide 100% funding for any project and limits assistance based on the type of project submitted,
August 2002
Community Economic Betterment Account (CEBA) Financia~ Assistance Program Page 6
Security
It is expected that 100% of the award be secured. Acceptable secudty includes Personal Guarantee,
Corporate Guaranty, UCC Financing Statement, Mortgage on Real Estate or Irrevocable Letter of Credit.
Please list below the security to be pledged, the value and position of that security, and the amount owed
(if applicable). If for some reason, this standard is not possible, an explanation must be provided.
Collateral description
2nd Mortqaqe on Real Estate
Note: All awards secured by Personal Guarantees will require a current financial statement from each of
the personal guarantors, which must be attached to the application as an exhibit.
Violations of Law
Has the business been cited or convicted for violations of any laws or regulations (including
environmental or safety regulations? If yes, please explain.
RELEASE OF INFORMATION AND CERTIFICATION
I hereby give permission to the Iowa Department of Economic Development (IDED) to research the
company's history, make credit checks, contact the company's financial institutions, and peri'orm
other related activities necessary for reasonable evaluation of this proposal. I understand that all
information submitted to IDED relating to this application is subject to the Open Records Law
(2001 Iowa Code, Chapter 22) and that confidentiality may not be guaranteed. Copies of Iowa's
Open Records law and IDED's administrative rules relating to public records are available from
the Deportment upon request. I hereby certify that all representations, warranties, or statements
made or furnished to the IDED in connection with this application are true and correct in all
material respect. I understand that it is a criminal violation under Iowa law to engage in deception
and knowingly make, or cause to be made, directly or indirectly, a false statement in writing for
the purpose of procuring economic development assistance from a state agency or subdivision.
Signature of Company Officer Authorized to Obligate Business
Ken Heitritter, President
Signature Type Name and 'rifle
Signature of Mayor or Chairperson Authorized to Obligate City or County
Signature
Terrance M. Duqqan, Mayor
Type Name and Title
NOTE: IDED will not provide assistance in situations where it is determined that any representation, warranty, or
statement made in connection with this application is incorrect, false, misleading or erroneous in any material respect.
If assistance has already been provided by IDED pdor to discovery of the incorrect, false, or misleading
representation, IDED may initiate legal action to recover CEBA funds.
The Deparbment reserves the dght to negotiate the amount, term, interest rate, secudty and other conditions of any
CEBA loan or forgivable loan pdor to the award.
August2002
Community Economic Betterment Account (CEBA) Financial Assistance Program Page 7
REQUIRED ATTACHMENTS AND SUBMISSIONS t
(CheCk off eaCh item submitted, If not submitted~ explain why) ~
EXHIBIT I
x A. Provide a brief description and history of the Business and describe the proposed project.
x B. The business plan which shall include at a minimum; marketing study, feasibility study,
projected profit and loss statements for three years into the future, project budget,
production operations, management structure, personnel needs, description of product
or process, status of productJprocess development and patent status (if applicable).
C. Supplemental information not included in a business plan as outlined above.
x D. For existing businesses, the business plan shall also include: profit and loss
statements and balance sheet for past three years, schedules of aged accounts
receivable, aged accounts payable, and a schedule of other debts.
_ __ E. Personal financial statements of principal owners and/or those who may be
guaranteeing the debt if other than principal owners.
x F. Community resolution authorizing submission of the application and map indicating
location of project.
x G. List of FTE jobs pledged during project pedod with name of position and the starting
wage for jobs to be created and the current wage for existing jobs to be retained.
__ H. Does business operate any other facilities in Iowa? Yes __ No x If yes, attach
location and number of FTE employees at each.
__ I. Will any current FTE employees lose their jobs if the project does not proceed? Yes
__ No x If yes, attach explanation regarding the number, location and why.
x J. Copies of the company's Quarterly Iowa Employer's Contribution and Payroll Report for
the past year and a copy of the most recent payroll report for one-pay pedod.
x K. Description of fringe benefits provided by company to employees.
x L. Complete project budget on page 6 showing sources and uses for all project funding.
Attach cost estimates and other documentation regarding project financing as needed.
x M. If Corporation, copy of Corporate Resolution authorizing company officials to execute
application and necessary loan documents, if approved.
x N. Business' Federal Identification Number 42-1409707
__ O. Has any part of project started? Yes __ No x If yes, attached explanation.
x P. Explain the need for the specific type of assistance requested and why state assistance
is needed and can not be obtained elsewhere.
X
August 2002
Community Economic Betterment Account (CEBA) Financial Assistance Program Page 8
SUMMARY OF PROJECT COSTS AND PROPOSED
FINANCING SOURCES
USE OF FUNDS SOURCES
(Summarize All Sources from Questions 27)
ACTIVITY COST SOURCE A SOURCE B SOURCE C SOURCE D SOURCE E
1. Land $191,490 $191,490
Acquisition $382,980
2. Site
Preparation $
3. Building
Acquisition $
4. Building $125,000 $140,000 $672,500
Construction $ 937,500
5. Building
Remodeling $
6. Machinery & $76,500 $73,500
Equipment $150,000
7. Furniture &
Fixtures I $
8. PermanentI~ $100,000
Working Capital I $100,000
(Detail:)
Job Training
9. Other: $
Recruitment
10. Other: $
$1,570,480
TOTAL: $125,000 $331,490 $76,500 $100,000 $937,490
August2002
Community Economic Betterment Account (CEBA) Financial Assistance Program Page 9
I ~ 26)AMOUNT T~RATE~TERM:
Source A: STATE ASSISTANCE (CEBA) $125,000 50/50 0% 5year
Source B: CITY OF DUBUQUE $331,490 Land/TIF Grant
Source C: VESSEL SYSTEMS INC $ 76,500 Equity
Source D: NORTHEAST IOWA COMMUNITY COLL. $100,000 Job Trn ,
Source E: PREMIER BANK $937,490 Loan 6.25% 25 years
Source F: $
I TOTAL: $1570480
(1) For example: Forgivable Loan, Direct Loan, Grant, Equity, etc.
F:\USERS\WBaum\Gen ED\CEBA application - Vessel Systems.doc
August200?
Vessel Systems, Inc.
Manufacturers of A.S.M.E. Code & Non-Code Vessels
Existing JobsAve Start Current max Ave. Benefits
Per hour Per hour Cost
Welders $12.50 $14.47 $8,700
Finishers $11.10 $13.27 $6,500
Maintenance $14.25 $14.90 $6,500
Leaders $13.75 $16.16 $10,000
Technical Engr. $32,000 $53,000 $11,000
Office support $25,000 $31,000 $8,700
At Vessel Systems most benefits have a shared cost. The above reflects just the
company's average cost of the benefit for the average incumbent in this position. The
current average wage and benefit is $13.85/hr and $8,050.00 in benefits. This yields an
average wage and benefits per hour of $17.95 or $35,200 average per year.
Propose Job additions
Office Support 1
Technical Engr. 1
Maintenance 1
Finishers 5
Welders 17
The proposed compensation will be in the range of existing
jobs. Our existing wage and benefit structure given to our
employees has increased over the last three years a
minimum of 3.5% per year. The decision to continue with
annual increases will be based on current/future economic
trends and the improved productivity of the work force.
Vessel Systems, Inc.
Manufacturers of A.S.M.E. Code & Non-Code Vessels
page1 of 2
Major Medical Insurance/Health
(BC/BS)
Total Monthly Company Pays Associate Pays Company Pays
Premium (Monthly) (Monthly) % of Total Premium
Single $208.93 $161.37 $47.56 77%
Family $522.33 $360.50 $161.83 690/o
Dental Insumnca (Guardian)
Total Monthly Company Pays Associate Pays Company Pays
Premium (Monthly) (Monthly) % of Total Premium
Single $29.61 $25.28 $4.33 85%
Family $72.37 $42.04 $30.33 580/0
Pay Adder. Employees with proof of equal to or better coverage get reimbursement of difference between
annual single premium and employee contribution when actually working. Currently $74.68 biweekly
Other benefits eligible for:. Funeral leave for Death of employee's spouse, child, parent, brother or sister,
mother & father in law, up to 3 working days with pay for attendance at funeral and related functions.
One paid day for employee's attendance at grandparent's funeral.
Unpaid Medical Leave: Company will pay Employer's share of medical premium for up to 3 months and
life insurance for up to one year.
Shift Differential: Majority of hours between 3:30 p.m. and 12:00 a.m. get plus $.30 per hour.
Majority of hours between 12:00 a.m. and 7:00 a.m. get plus $.35 per hour.
Temporarily go from first shift to alternate shift get plus $1.00 per hour.
Holidays: Total of 11 (nine fixed; and 2 floating which can be scheduled with a min. 3 day notice.)
Part-Time get on a pro-rata basis.
Paid Time Off:,
After 1 st anniversary of senior'~y date
After 2nd anniversary of seniority date
After 3rd anniversay of seniority date
After 4th anniversary of seniority date
After 5th anniversary of seniority date
After b-th anniversary of seniority date
56 hours
72 hours
96 hours
104 hours
120 hours
144 hours
Vessel Systems, Inc.
Manufacturers of A.S.M.E. Code & Non-Code Vessels
page 2 of 2
Short-Term Disability: 60% of weakly earning up to a maximum of $305Meek (current amount).
Self-Funded by Company; consequently no premiums or cost to employees.
Benefit starts first day of accident or hospitalizatlen or eighth day of illness.
26 weeks maximum weeks of benefit.
401 K: When employea contributes a minimum of 1% of pay, then Company contributes the
following: After 3 years of seniority $250.00; After 4 years of seniority $350.00;
after 5 years of seniority and each year therafter $500.00.
Automatic Pay Increase Unil maximum of pay grade reached
Welders and Group Leaders $.40/hour after successful completion of probationary peded and
$,30 each additlena1120 calendar days when not on layoff or leave of absence.
Others: $.25/hour after successful completion of pmbetionary pednd and then $.25/hour
each additional 120 calendar days when not on layoff or leave of absence.
Perfect Attendance Bonus: $.20/hour if scheduled hours worked each month
Safety Equipment: See tool issued sheat/cost information from Pumhasing?
Work Boots and/or prescription OSHA (ANSI approved lenses and frames) with a receipt-
for a total of $100.00 not to exceed once per year.
Life Insurance: $26,000 benefit. Premium $9.88/month-100% paid for by Company.
Vessel Systems, Inc.
Manufacturers of A.S.M.E. Code & Non-Code Vessels
In the 1940's this facility produced trucks that hauled and distributed fuel oil and
gas. This type of operation continued on into the 1960's when air receivers for
Train engines and presses were being made as well as (UL) fuel storage tanks.
The company was then known as Morrison Tank. In the early 70's, two
gentleman bought the assets and the organization was renamed Tank Tek. In the
late 70's another addition was added to this site (Now known as the big shop
about 50' X 1909 in 1979. When this addition was added the current owners
closed down a business in the Chicago land area and moved the work to
Dubuque. On or around this time the company was renamed Watubo-tek. Which
stood for Water tube & boiler and, Tank Tek, hence the name Watubo-tek. In or
about 1990, the business was sold to the then operations manager and operated
essentially the same until late 1992 when the company was closed
In 1993 the now Vessel Systems, was first chartered. ~4t the time we knew
little of tank fabrication but a lot about manufacturing & marketing. With new
plan in hand the business flourished beyond expectations. The company provides
products to almost every market segtnent Water & waste treatment Air, fuel &
chemical storage. Food & Beverage processing. Environmental products such as
flash vessels, airpurification & degasifiers. Commercial, Industrial heating and
cooling units. Vessel Systems now has products in every major continent of the
world and about 98% of its current business is sold outside the state of Iowa. The
market for these products is vast, over 20 billion dollars in vessels were created in
2OO2.
The existing facility was never created for this type of product with such
diversity. 30% of the products we buiM today, must have an outside contractor
move the units from one area to another up to three different times. 25% of the
probable market is eliminated because we don't have the capacity to lift these
items.
The new facility design is a straight through 65' wide 450' long factory
with a common crane rail running the entire length and 4 - 10 metric ton cranes
operating on this rail system~ Raw material in one end and finished out the
opposite end. There will be two vera~al tanks, wht~h wtll hold 25,000 gallons of
water for recycling for our test system. A totally enclosed paint & blast booth will
be built inside this building so the cranes can easily lift and position any of the
products into them for further processing. Everything will be created in such a
way so as to eliminate disruptions which cause lost sales. This will be 2~d to none
in the Midwest from a tank production point of view.
Please see attached layout