Adams Co. G.O. Bonds IssueTO:
FROM:
SUBJECT:
MEMORANDUM
January 13, 2004
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
Authorization to Issue $500,000 General Obligation Loan Note for Adams
Company
On October 20, 2003, the City Council held a public hearing on the proposed issuance
of not to exceed $500,000 General Obligation Capital Loan Notes, in order to provide
funds to pay the costs of an urban renewal project in Dubuque Industrial Center West,
specifically funding an economic development grant to the Adams Company under the
Development Agreement dated May 19, 2003. With no objections from the public, the
Council adopted a resolution to institute proceedings and take additional action for the
authorization of a Loan Agreement and the issuance of notes not to exceed $500,000.
On December 15, 2003 the City Council approved an agreement with the Adams
Company to provide the Economic Development Grant on or before February 15, 2004.
The amount of the Grant will equal the difference between the purchase price paid by
the City for the Adams Company property, and the cost of the new manufacturing facility
located in the Dubuque Industrial Center West. Current estimate of this difference is
$500,000. When the cost of the new facility is complete, the final cost of the new facility
will be determined. The agreements also provide that the total payments to the Adams
Company for acquisition, relocation, and this economic development grant will not
exceed $3,500,000. At the closing of this economic development grant, the total
payments equal $2,907,500.
Economic Development Director Bill Baum recommends City Council approval to
purchase a $500,000 General Obligation Loan Note for the Adams Company from
American Trust and Savings Bank at a 4.07% fixed rate over 11 years.
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
January 13, 2004
TO:
FROM:
SUBJECT:
Michael Van Milligen, City Manager
Adams Company
INTRODUCTION
This memorandum presents for City Council approval a resolution accepting a proposal
to purchase a $500,000 General Obligation Loan Note for the Adams Company.
BACKGROUND
On October 20, 2003, the City Council held a public hearing on the proposed issuance
of not to exceed $500,000 General Obligation Capital Loan Notes, in order to provide
funds to pay the costs of an urban renewal project in Dubuque Industrial Center West,
specifically funding an economic development grant to the Adams Company under the
Development Agreement dated May 19, 2003. With no objections from the public, the
Council adopted a resolution to institute proceedings and take additional action for the
authorization of a Loan Agreement and the issuance of notes not to exceed $500,000.
On December 15, 2003 the City Council approved an agreement with the Adams
Company to provide the Economic Development Grant on or before February 15, 2004.
The amount of the Grant will equal the difference between the purchase price paid by
the City for the Adams Company property, and the cost of the new manufacturing
facility located in the Dubuque Industrial Center West. Current estimate of this
difference is $500,000. When the cost of the new facility is complete, the final cost of
the new facility will be determined. The agreements also provide that the total payments
to the Adams Company for acquisition, relocation, and this economic development
grant will not exceed $3,500,000. At the closing of this economic development grant,
the total payments equal $2,907,500.
DISCUSSION
Ken TeKippe, City Finance Director, and I have worked with the City's bond attomey,
Bill Noth to solicit quotes from local lenders to finance this note. Attached is a recap of
all proposals received. After reviewing the proposals with the City's investment advisor,
David Dirks with Public Financial Management and Mr. Noth, we are recommending the
City accept the proposal from American Trust and Savings Bank for a locked in rate of
4.07% for the term of the note. A letter is attached from the bank outlining their
proposal for the note. The note will be repaid over an eleven year period.
Mr. Noth has provided the City with the appropriate proceedings to approve the
proposal. The final loan agreement will be acted upon at the City Council meeting of
February 2, 2004.
RECOMMENDATION
I recommend that the City Council adopt the attached resolution accepting the proposal
of American Trust and Savings Bank.
ACTION STEP
The action step for the City Council is to adopt the attached resolution and authorize
and direct the negotiating of the loan agreement with American Trust and Savings
Bank.
Attachments
F;~U,%ERS~VR~rn\EDA APPIJCAT[ON FOR ADAMS CO MPANY~TIFBO ND MEMO.doc
City of Dubuque
$500,000 Adams Company GO Capital Loan Note
Recap of Proposals
Fixed Interest Variable Total Interest
=inancial Institution Rate interest Rate (over life of loan Origination Fee Principal
~.merican Trust & Savings Bank 4.07% 128,148.47 1,000.00 45,454.54 each year
1.25% over one 79,345.02 1,000.00 45,454.54 each year
· ~ear Treasury (assumes no
Bill weekly rate increase in
currently 2.52% current rate)
American Trust & Savings Bank
4.22-5.10% 149,614.88 500.00 laddered annual
~ncreasing payments 41,412.17 -
throughout the 50,682.74
life of the loan
Dubuque Bank & Trust
Dupaco Community Credit Union Declined to bid per phone call from Bob Hoefer
DuTrac Community Credit Union 5.75% not provided not provided
prime rate minus 110,250.02 45,454.54 each year
.50% - current (assumes no
rate 3.5% increase in
East Dubuque Savings Bank current rate)
prime rate minus not provided not provided
.75% - current
rate 3.25%
Liberty Bank FSB
3.75% five year fixed adjusting at 133,669.43 semi-annual P&I
the end of the initial five year assumes payments will be
period to a rate equal to the five change to adjusted at the end of
year fixed advance rate for the 5.50% after lhe initial five year period
Federal Home Loan Bank of Des 5 years
Liberty Bank FSB Moines
4.125%1 136,850.00 45,000 each year w/
Premier Bank I~inal payment 50,000
U.S. Bank No response
State Central Bank 4.25%1 I 133,697.88 I I 45,454.54 each year
Fidelity Bank & Trust No response
Janua~ 12,2004
' American Trust
Simply belier banking:
895 Main Street
P.O. Box 938
Dubuque, Iowa 52004-0938
563.589.0827
Fax 589.0860
trichter@amedca ntrust.com
vcww. americantrust, com
Victoria J. (Tod) Richter
Vice President
Commercial Banking
January 5, 2004
Mr. Kenneth TeKippe, Finance Director
City of Dubuque
Finance Department, City Hall
50 West 13th Street
Dubuque, tA 52001-4864
Dear Ken:
American Trust & Savings Bank is pleased to offer the following loan proposal regarding
the $500,000 General Obligation Capital Loan Note as outlined in your request for loan
agreement proposal dated December 15, 2003.
Bo~ower:
City of Dubuque.
Lender:
Amedcen Trust & Savings Bank.
Amount:
Five hundred thousand dollars ($500,000).
Purpose:
Costs associated with the Dubuque Industrial Center West Urban
Renewal Area as a result of the Adams Company expansion.
Interest Rate:
Amedcan Trust is offering twa interest rate options. The first ,
option is a weekly vadable interest rate equal to 125 basis points
over the 1-year Treasury Bill Weekly Rate. Based on this week's
rate, if funding today, the initial interest rate would be 2.52
percent.
A~nedc~n Trust will also offer a fixed-rate option equal to 4.07
percent. Interest, in both cases, will be computed on a 30/360-
day basis. We understand that interest on the Note and loan
agreement will be excluded from gross income for federal income
tax purposes, and be designated by the City as a "qualified tax-
exempt obligation" (i.e.: "bank qualified").
Funding: The loan will be fully funded on or about February 13, 2004.
American Trust & Savings Bank
Mr. Kenneth Te~ppe
January 5,2004
Page 2
Repayment:
Interest will first be payable on June 1, 2004, and payable
semiannually thereafter on the first day of June and December of
each subsequent year. Principal will be due in equal annual
installments of approximately $45,454.54 commencing June 1,
2005, through June 1, 2015. There will be no prepayment penalty
on the note.
Origination fee:
An origination fee equal to $1000 shall be paid to Lender at the
time of closing.
Closing Costs:
All direct dosing costs associated with the transaction will be the
responsibility of Borrower. Lender will be reimbursed by the
Borrower for all out-of-pocket costs and expenses incurred by the
Lender in connection with the General Obligation Capital Loan
Note.
Documents:
Prior to closing, the Lender shall receive copies of such
organizational documents of the Borrower as the Lender may
request. The Lender will receive a copy of the resolutions of the
Borrower authorizing the execution, delivery, and performance of
any and all documents related to the proposed loan transaction.
Lender will receive the approving opinion of Ahlers & Cooney,
P.C., Des Moines, Iowa, at no cost to the lender.
Security:
The loan will be secured by a pledge of general taxes to be levied
under the Debt Service Fund of the City.
Covenants:
Borrower will supply Lender annual audited financial statement
prepared in accordance with general accepted accounting
practices within 120 days of fiscal year end.
This letter shall not be deemed as evidence of a binding agreement on the part of either
the Lender of the Borrower. Important terms may remain to be negotiated. Even if
agreement in principal should be reached on the terms of financing at a subsequent
date, neither party to the financing shall be legally bond until definite loan documents are
signed by Lender and Borrower. This loan is subject to final approval of the Lender's
Credit Committee. Such approval will be obtained upon acceptance of the proposal.
The rates and terms stated in this letter are subject to change if the foregoing terms and
conditions are not accepted in wdting by January 31, 2004. The rates and terms may
also change if the loan is not funded pdor to February 28, 2004.
American Trust & Savings Bank
Mr. Kenneth TeKippe
January 5, 2004
Page 3
We, at Amedcan Trust & Savings Bank, appreciate the opportunity ~3 bid on this loan
proposal. We look forward to hearing from you soon regarding the financing of the
$500,000 General Obligation Capital Loan Note.
Sincerely,
'~ictoda J. Ric~l/ter
Vice President
The foregoing terms and conditions are hereby accepted and agreed upon this
day of ,2004. The undersigned acknowledges receipt of a copy
of this instrument.
City of Dubuque
By:.
Kenneth TeKippe, Finance Director
(This Notice to be posted)
NOTICE AND CALL OF PUBLIC MEETING
Governmental Body: The City Council of Dubuque, Iowa.
Date of Meeting:
January 19, 2004.
Time of Meeting:
Three o'clock P.M.
Place of Meeting:
Five Flags Civic Center, 405 Main, Dubuque, Iowa.
PUBLIC NOTICE IS HEREBY GIVEN that the above mentioned governmental
body will meet at the date, time and place above set out. The tentative agenda for said
meeting is as follows:
Resolution directing the acceptance of a proposal to purchase $500,000
General Obligation Capital Loan Notes
Such additional matters as are set forth on the additional page(s) attached hereto.
(number)
This notice is given at the direction of the Mayor pursuant to Chapter 21, Code of
Iowa, and the local rules of said governmental body.
City Clerk, Dubuque, Iowa
January 19, 2004
The City Council of the City of Dubuque, in the County of Dubuque, State of
Iowa, met in regular session, in the Five Flags Civic Center, 405 Main, Dubuque, Iowa,
at Three o'clock P.M., on the above date. There were present Mayor Duggan, in the
chair, and the following named Council Members:
Absent:
-1-
Council Member Markham introduced the following
Resolution hereinafter set out entitled "RESOLUTION DIRECTING THE
ACCEPTANCE OF A PROPOSAL TO PURCHASE $500,000 GENERAL
OBLIGATION CAPITAL LOAN NOTES", and moved its adoption. Council Member
Connors seconded the motion to adopt. The roll was called and the vote
was~
AYES: Buol, Cline, Connors, Markham,
Duggan, Michalski, Nicholson
NAYS: None
Whereupon, the Mayor of the Council declared the Resolution duly adopted as
follows:
RESOLUTION 33-04
RESOLUTION DIRECTING THE ACCEPTANCE OF A
PROPOSAL TO PURCHASE $500,000 GENERAL
OBLIGATION CAPITAL LOAN NOTES
WHEREAS, the City of Dubuque, in the County of Dubuque, State of Iowa,
sometimes hereinafter referred to as the City, is a municipal corporation duly
incorporated, organized and existing under and by virtue of the Constitution and laws of
the State of Iowa; and
WHEREAS, it is deemed necessary that the City should enter into a Loan
Agreement and borrow the mount of $500,000 as authorized by Sections 384.24A and
384.25, Code of Iowa, as amended, for the purposes of paying costs of aiding in the
planning, undertaking and carrying out of urban renewal project activities under the
authority of Chapter 403 of the Iowa Code and the Amended and Restated Urban
Renewal Plan for the Dubuque Industrial Center Economic Development District,
including those costs associated with the funding of an economic development grant to
the Adams Company under the Development Agreement dated May 19, 2003 between the
City and said developer; and
WHEREAS, proposals have been requested and received from fmancial
institutions offering to enter into such Loan Agreement; and
WHEREAS, after a review of all the proposals received, it has been determined
that the best and most favorable proposal is that of American Trust & ;and
Savings Bank
WHEREAS, it is the intention of this Council to enter into a Loan Agreement in
accordance with said proposal.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF DUBUQUE, IOWA:
Section 1. That this Council does hereby accept the attached proposal of
Ameri can Trus~: & Sari ngs Bani<of Dubuque, Iowa, and takes additional action to permit
the entenng into of a Loan Agreement.
Section 2. The Mayor and City Clerk are authorized and directed to proceed on
behalf of the City to acknowledge the acceptance of said proposal, to negotiate the final
terms of a Loan Agreement, to take all action necessary to permit the entering into of a
Loan Agreement on a basis favorable to the City and acceptable to the Council, and to
proceed to meet the conditions of this accepted proposal.
PASSED AND APPROVED this 19th day of January, 2004.
19th dayof January ,2004.
Terrance M. Duggan, Mayor
ATTEST:
Jeanne F. Schneider, City Clerk
~,/~ity Clerk
-3-
CIG-3
9/91
CERT~ICATE
STATE OF IOWA
COUNTY OF DUBUQUE
)
) ss
)
I, the undersigned City Clerk of Dubuque, Iowa, do hereby certify that attached is
a true and complete copy of the portion of the corporate records of said Municipality
showing proceedings of the Council, and the same is a tree and complete copy of the
action taken by said Council with respect to said matter at the meeting held on the date
indicated in the attachment, which proceedings remain in full force and effect, and have
not been amended or rescinded in any way; that meeting and all action thereat was duly
and publicly held in accordance with a notice of meeting and tentative agenda, a copy of
which was timely served on each member of the Council and posted on a bulletin board
or other prominent place easily accessible to the public and clearly designated for that
purpose at the principal office of the Council (a copy of the face sheet of said agenda
being attached hereto) pursuant to the local rules of the Council and the provisions of
Chapter 21, Code of Iowa, upon reasonable advance notice to the public and media at
least twenty-four hours prior to the commencement of the meeting as required by said
law and with members of the public present in attendance; I further certify that the
individuals named therein were on the date thereof duly and lawfully possessed of their
respective city offices as indicated therein, that no Council vacancy existed except as may
be stated in said proceedings, and that no controversy or litigation is pending, prayed or
threatened involving the incorporation, organization, existence or boundaries of the City
or the right of the individuals named therein as officers to their respective positions.
WITNESS my hand and the seal of said Municipality hereto affixed this
day of ., 2004.
City Clerk, Dubuque, Iowa
SEAL
DCOKNELLk397573\l\10422065
F:\USERS\WBaumkEDA APPLICATION FOR ADAMS COMPANY~esolution accepting proposal.doc