Cottingham & Butler Intercred AMEMORANDUM
May 23, 2003
TO:The Honorable Mayor and City Council Members
FROM:Michael C. Van Milligen, City Manager
SUBJECT:Intercreditor Agreement by and between City and the Iowa Department of
Economic Development
Economic Development Director Bill Baum recommends City Council approval of an
Intercreditor Agreement by and between the city and the Iowa Department of Economic
Development (IDED), providing for the shadng of security interests in mortgages related
to Cottingham & Butler's Town Clock Building at 835 Main Street.
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 22, 2003
TO:Michael Van Milligen, City Manager
FROM:William Baum, Economic Development Director
SUBJECT:Intercreditor Agreement by and between City and the Iowa
Department of Economic Development
INTRODUCTION
This memorandum presents for City Council consideration a Resolution
approving an Intemreditor Agreement by and between the City and the Iowa
Department of Economic Development (IDED) providing for the sharing of
security interests in mortgages related to Cottingham & Butler's Town Clock
Building at 835 Main Street.
DISCUSSION
Both the City and IDED have security interests in property owned by Cottingham
& Butler related to the City's $300,000 Downtown Rehabilitation Loan Agreement
and IDED's $120,000 CEBA Contract for the project involving the rehabilitation of
the Town Clock Building in 2001-2002. The attached Intemreditor Agreement
provides an equitable means to share the collateral securing the City and State
loans.
Prior to release of CEBA funds to the company, IDED requires the Intercreditor
Agreement. The state usually requires a first mortgage position on their loans,
but they have agreed to share that position with the City. The appraised value of
the property far exceeds the value of either the City's or the State's mortgages on
the property.
The City's legal staff has reviewed and approved the Agreement.
RECOMMENDATION
I recommend that the City Council approve the attached Intercreditor Agreement
thereby allowing the State to move ahead with the issuance of CEBA funds to
Cottingham & Butler.
ACTION STEP
The action step for the City Council is to adopt the attached Resolution.
attachment
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RESOLUTION NO. 183-03
A RESOLUTION APPROVING AN INTERCREDITOR AGREEMENT WITH THE IOWA
DEPARTMENT OF ECONOMIC DEVELOPMENT FOR PROPERTY OWNED BY
COTTINGHAM & BUTLER.
Whereas, the City of Dubuque, Iowa, ("City") and the Iowa Department of
Economic Development ("IDED") have provided certain loans to Cottingham & Butler for
the rehabilitation of property located at 835 Main Street; and
Whereas, certain mortgages have been filed as secudty for those loans; and
Whereas, the City and IDED wish to share their security interests in the
collateral; and
Whereas, the Intercreditor Agreement, hereto attached and by this reference
made a part hereof, sets forth the terms and conditions of the shared collateral.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the Intercreditor Agreement by and between the City and IDED is
hereby accepted and approved.
Section 2. That the Mayor is hereby authorized to execute, on behalf of the City
Council of the City of Dubuque, Iowa, the attached Intercreditor Agreement.
Passed, approved and adopted this 2nd day of June 2003.
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider
City Clerk
F:\US ERS\PInch re\WPDOCS\LOAN DOC\TOVVNCLOCKSint e rcreditor, res.d oc
INTERCREDITOR AGREEMENT
AGREEMENT made this 2nd day of June 2003 between the City of Dubuque ("CITY") and
the Iowa Department of Economic Development ("IDED").
WHEREAS, CITY and IDED each have loaned certain sums of money to Cottingham &
Butler, 300 Security Building, Dubuque, Iowa 52001 ("Corporation') and each have secured
their loans with a security agreement in certain assets owned by Corporation ("the Collateral");
and
WHEREAS, CITY and IDED desire to agree among themselves as to the relative priority
of their secudty interests in the Collateral and to set forth procedures to be taken upon the
occurrence of an event of default under any of the agreements.
NOW, THEREFORE, it is hereby agreed:
1.0 SECURITY; PRIORITY IN SECURITY
1.1 Security. CITY and IDED each have secured their loans through a secudty
agreement and perfected their security interest as reflected in the following mortgage:
Secured Party. Instrument Number Filed With Filing Date
City of Dubuque 9858-2001 Dubuque Co. Recorder June 28, 2001
CITY and IDED 9234-2002 Dubuque Co. Recorder May 21, 2002
Iowa Department of
Economic Development 6097-2003 Dubuque Co. Recorder March 13, 2003
1.2 Priority. CITY and IDED agree that they shall have equal pdodty in the Collateral.
This Agreement shall supersede any priority of the respective secudty interests of the parties to
this Agreement. The terms of this Agreement supercede the priorities created by the time or
order of attachment or perfection of secudty interests or the time or order of filing the mortgage
documents by CITY and IDED.
1.3 Priority Maintained. Nothing in this agreement shall be construed as reducing the
pdodty of the claims of either party. Whatever pdodty position or positions is held by the parties
shall be shared as set forth herein.
2.0 Default.
2.1 Default Notice. CITY and IDED each agree to provide the other written notice
promptly following their actual knowledge of an Event of Default under their agreements with
Corporation.
2.2 Recovery Sharing. The purpose of this Agreement is to divide the secured
Collateral among the parties to this Agreement in proportion to their respective outstanding
indebtedness. In the Event of Default, proceeds from the sale or other disposition of the Collateral
shall be applied as follows:
(a) First, to the payment of the costs and expenses incurred in the repossession and/or
collection.
(b) Second, the net proceeds of the sale shall be divided between the parties to this
Agreement in proportion to the respective amounts due on their loans to Corporation,
including all accrued interest, as of the date said net proceeds become available to be
distributed between the parties to this Agreement.
3.0 MISCELLANEOUS.
3.1 Notices. All notices, demands, and requests under this Agreement shall be in
writing and be effective when received.
3.2 Non-assignment CITY and IDED shall not sell, pledge, assign or otherwise
transfer their respective rights under this Agreement without advance written consent of both
parties to this Agreement, which consent shall not be unreasonably withheld.
3.3 Governing Law. This Agreement shall be governed by the laws of the State of
Iowa.
3.4 Binding Effect. This Agreement shall be binding upon CITY and IDED and their
respective successors and assigns.
3.5 Entire Agreement. This Agreement represents the entire understanding of the
parties and supersedes all other agreements (oral or wdtten) with respect to the subject matter of
this Agreement. Any amendment of this Agreement shall be in writing and shall require the
signature of both parties.
IN WITNESS THEREOF, the parties have executed this Intercreditor Agreement on the
day and year first stated.
CITY OFDUBUQUE
By:
Terrance M. Duggan, Mayor
IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT
By:
Kenneth H. Boyd, Business Finance Manager
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