Roshek Building Project_First Amendment to Guarantee Agreement_Dubuque InitiativesMasterpiece on the Mississippi
MCVM:Iw
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David Heiar, Economic Development Director
Michael C. Van Mil ligen
Dubuque
AlWlmedcaCity
i r
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Roshek Building Guarantee Amendment to include a Construction Line of
Credit
DATE: January 13, 2011
Economic Development Director David Heiar is recommending a request by Dubuque
Initiatives (DI) to approve a First Amendment to the Guarantee Agreement between the
City of Dubuque and Dubuque Bank & Trust allowing for a Line of Credit to be included
under the $25 million guarantee for the Roshek Building project.
DI is finishing the buildouts of all current tenants within the building and is starting to
enter the post- construction portion of the project. Funds still remain to buildout floors 2,
3, 4, and Lobby but buildout cannot begin until new leases are signed. DI would like to
use the remaining funds to pay down additional debt, thus eliminating interest costs on
those funds.
To facilitate future tenant buildouts, DI needs funding available as a line of credit should
it need to finance the buildout. DB &T has offered to provide a Construction Line of
Credit which can be drawn down for future buildouts. DB &T has requested that the Line
of Credit be included in the Guarantee Agreement. Adding a $3 million Line of Credit to
the Guarantee keeps the total debt outstanding to below the $25 million commitment.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Masterpiece on the Mississippi
TO: Michael C. Van Milligen, City Manger
FROM: David J. Heiar, Economic Development Director L
RE: Roshek Building Guarantee Amendment to include a Construction Line of
Credit
DATE: January 11, 2011
Dubuque
City
II
2007
INTRODUCTION
This memorandum outlines a request by Dubuque Initiatives (DI) to approve an
amendment to the Guarantee Agreement between the City of Dubuque and Dubuque
Bank & Trust.
BACKGROUND
The Roshek Building, located at 700 Locust Street, was originally built in 1928 as the
Roshek's Department Store, has 9 full floors, basement, and sub - basement totaling
255,000 square feet. The building lies in the heart of the downtown, right next to the
Town Clock Plaza, the center of the downtown business community and was in need of
significant rehabilitation estimated at $38 million to accommodate this major
development project. Dubuque Initiatives purchased this building on January 16, 2009.
Renovations begin early in February 2009, with IBM occupying the building in phases
starting June 2009. IBM committed to hiring 1,300 employees and now occupies over
130,000 square feet within the building .
The City agreed to a Guarantee Agreement with Dubuque Bank & Trust, the lead bank
for the consortium of banks financing the project, in the amount of $25 million. Today,
approximately $22 million remains outstanding on the loans. Floors 2,3, 4 and Lobby
have space still available for additional tenants.
DISCUSSION
DI is finishing the buildouts of all current tenants within the building and is starting to
enter the post- construction portion of the project. Funds still remain to buildout floors 2,
3, 4, and Lobby but buildout cannot begin until new leases are signed. DI would like to
use the remaining funds to pay down additional debt, thus eliminating interest costs on
those funds.
To facilitate future tenant buildouts, DI needs funding available as a line of credit should
it need to finance the buildout. DB &T has offered to provide a Construction Line of
Credit which can be drawn down for future buildouts. DB &T has requested that the Line
of Credit be included in the Guarantee Agreement. Adding a $3 million Line of Credit to
the Guarantee keeps the total debt outstanding to below the $25 million commitment.
DI is expected to receive additional funds from the sale and rebate of State and Federal
Historic Tax Credits. This funding is expected to provide $12 million to the project in
April to pay down the outstanding loans.
Dubuque Initiatives plans to provide a full report to the City Council in February once the
audit of the project is complete. The verbal report provided by the auditor to Dubuque
Initiatives indicated that the project finances are on track or possibly somewhat better
than the original projections.
RECOMMEDATION /ACTION STEP
I am recommending City Council approval of a resolution approving a First Amendment
to the Guarantee Agreement allowing for a Line of Credit to be included under the $25
million guarantee for the Roshek Building project.
F: \USERS \Econ Dev \Roshek Building\20110111 Roshek Loan guarantee Amendmentl memo.doc
Prepared /Return to: David Heiar, Economic Development, 50 W. 13` Street, Dubuque, IA 52001 (563) 589 -4393
RESOLUTION NO. 24-11
RESOLUTION APPROVING GUARANTY AGREEMENT AND FIRST AMENDMENT TO THE
GUARANTY AGREEMENT, EACH BETWEEN THE CITY OF DUBUQUE AND DUBUQUE
BANK & TRUST COMPANY.
Whereas, a Guaranty Agreement dated June 22, 2009 was entered into by and between
the City of Dubuque, a municipal corporation of the State of Iowa (City), and Dubuque Bank &
Trust Company (DB &T); and
Whereas, the foregoing Guaranty Agreement facilitated Dubuque Initiatives (DI) to
borrow for the redevelopment of the Historic Roshek Building; and
Whereas, a construction build -out line of credit in the amount of not to exceed
$3,000,000 now is needed to make funds available for tenant area construction; and
Whereas, the line of credit will allow further paydown of loans already covered under the
foregoing Guaranty Agreement; and
Whereas, it is proposed that the City enter into a guaranty agreement with DB &T in
respect of DI's obligations under the line of credit, subject, however, to the limitation on the
amount of the City's guaranty obligation set forth in the foregoing Guaranty Agreement; and
Whereas, separate forms of Guaranty Agreement ( "Line of Credit Guaranty ") and First
Amendment to Guaranty Agreement ( "First Amendment "), each between the City and DB &T,
have been prepared to accomplish the foregoing, which have been determined to be in
acceptable form for the purposes intended.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. That the form and content of the. Line of Credit Guaranty and First
Amendment, the provisions of which are incorporated herein by reference, be and the same
hereby are in all respects authorized, approved and confirmed, and the Mayor and the City
Clerk be and they hereby are authorized, empowered and directed to execute, attest, seal and
deliver the Line of Credit Guaranty and First Amendment for and on behalf of the City in
substantially the form and content now before this meeting, but with such changes,
modifications, additions or deletions therein as shall be approved by such officers upon the
advice of the City Attorney, and that from and after the execution and delivery of the Line of
credit Guaranty and First Amendment, the Mayor and the City Clerk are hereby authorized,
empowered and directed to do all such acts and things and to execute all such documents as
may be necessary to carry out and comply with the provisions of the Line of Credit Guaranty
and First Amendment as executed.
Section 2. That the City Manager is authorized to take such actions as are
• necessary to implement the terms of the Line of Credit Guaranty and First Amendment as
herein approved.
Passed, approved and adopted this 18 day of January, ?y611.
;Liz ' I mo_
A -t:
eanne F. Schneider, City Clerk
D/ o
F: \USERS \Econ Dev \Roshek Building\20110118.2 Reso Approving 1st Amendment to Guarantee.doc
Roy D. Buol, Mayor
FIRST AMENDMENT TO GUARANTY AGREEMENT
This First Amendment to Guaranty Agreement is made and entered into as of the
day of , 2011, by and between the City of Dubuque,
Iowa, a municipal corporation organized and existing under the laws of the State of Iowa
(the "City ") and Dubuque Bank & Trust Company ( "DB &T "), as lead lender.
WHEREAS, the City and DB &T are parties to a Guaranty Agreement dated June
22, 2009 (the "Guaranty Agreement "), and now desire to amend the same to include a
separate line of credit agreement relating to the future build -out of the Roshek Building.
NOW, THEREFORE, the parties hereto agree with each other as follows:
1. Section 2.7 of the Guaranty Agreement is hereby amended to read as
follows:
2.7 Limitation on Guaranty. DB &T hereby acknowledges that, pursuant
to Section 3.3 of the Development Agreement, the Guarantor, in addition to
guaranteeing the Loans, previously has guaranteed a short -term construction loan
from DB &T to Borrower in the aggregate principal amount of $4,000,000 (the
"Construction Loan ") in connection with the Project. In addition, the Guarantor
also has guaranteed the Borrower's obligations under a line of credit agreement
between DB &T and the Borrower in the amount of not to exceed $3,000,000 (the
"Line of Credit ") in connection with the future build -out of the Project.
Notwithstanding anything contained herein or in the Agreements to the contrary,
the obligation of the Guarantor under this Guaranty and under the guaranty
agreements relating to the Construction Loan and the Line of Credit shall not
exceed, in the aggregate, the sum of Twenty Five Million and No /100 Dollars
($25,000,000.00); provided, however, that the foregoing shall not limit
Guarantor's obligation to DB &T under Section 2.6 hereof.
2. Ratification. All other provisions of the Guaranty Agreement are hereby
ratified, confirmed and approved.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed in their respective names and behalf by their duly authorized officers,
all on or as of the day first above written.
CITY OF DUBUQUE, IOWA DUBUQUE BANK & TRUST COMPANY
By:
ATTEST:
By:
Roy Buol, Mayor
Its:
^
eanne F. Schneider, CMC
City Clerk
680520.1 \10422.087
By:
Oaf
DUBUQUE
INITIATIVES
MEMORANDUM
TO: Dave Heiar, Economic Development Director
FROM: Dubuque Initiatives Board of Directors
SUBJECT: Line of Credit Collateral for New Tenants at Roshek Building
DATE: January 7, 2010
DI is finishing the buildouts of all current tenants within the building and is starting to
enter the post- construction portion of the project. Funds still remain to buildout floors 2,
3, 4, and Lobby but buildout cannot begin until new leases are signed. DI would like to
use the remaining funds to pay down additional debt, thus reducing interest costs on
those funds.
To facilitate future tenant buildouts, DI needs funding available as a line of credit should
it need to finance the buildout. DB &T has offered to provide a Construction Line of
Credit which can be drawn down for future buildouts. DB &T has requested that the Line
of Credit be included in the Guarantee Agreement. Adding a $3 million Line of Credit to
the Guarantee keeps the total debt outstanding to below the $25 million commitment.
As of today, the current loans outstanding covered by the City's guarantee amount to
$22,038,037.49. DI is expected to receive additional funds from the sale and rebate of
State and Federal Historic Tax Credits. This funding is expected to provide $12 million
to the project in April to pay down the outstanding loans.
Dubuque Initiatives plans to provide a full report to the City Council in February once the
audit of the project is complete. The verbal report provided by the auditor to Dubuque
Initiatives indicated that the project finances are on track or possibly somewhat better
than the original projections.
The DI board respectfully requests City Council consideration to including a $3 million
construction Line of Credit to the Guarantee to make funding available for future
buildouts and save on interest costs in the interim.
WITNESSETH:
GUARANTY AGREEMENT
BETWEEN
THE CITY OF DUBUQUE, IOWA,
AS GUARANTOR,
AND
DUBUQUE BANK & TRUST COMPANY
(LINE OF CREDIT)
THIS GUARANTY AGREEMENT is made and entered into as of
, 2011 ( "the Guaranty "), by and between the City of Dubuque,
Iowa, a municipal corporation duly organized and existing under the laws of the
State of Iowa and acting pursuant to Chapters 15A and 403 of the Code of Iowa, as
amended ( "Guarantor"), and Dubuque Bank & Trust Company ( "DB &T ").
WHEREAS, DB &T intends to make a drawdown construction line of credit
available to Dubuque Initiatives ( "Borrower") in the principal amount of not to exceed
$3,000,000 ( "the Loan "), pursuant to a [Promissory Note and related Agreement]
dated as of , 2011 between DB &T and Borrower (the "Agreement ");
and
WHEREAS, the proceeds derived from the Loan shall be used to pay costs
associated with the build -out of certain office /retail space in the Roshek Building
located generally at 700 Locust Street, Dubuque, Iowa (the "Project "), in fulfillment of
the Borrower's obligations under that certain Development Agreement dated
February 17, 2009 between and between Guarantor and Borrower, as amended (the
"Development Agreement "); and
WHEREAS, Guarantor desires that DB &T make the Loan and is willing to
enter into this Guaranty in order to secure the payment of the Loan and as an
inducement to DB &T to enter into the Agreement.
NOW, THEREFORE, in consideration of DB &T entering into the Agreement
and as an inducement to DB &T to make the Loan, Guarantor does hereby, subject
to the terms hereof, covenant and agree with DB &T as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF GUARANTOR.
Guarantor hereby represents and warrants:
1.1. It is a municipal corporation under the laws of the State of Iowa with the
power to enter into this Guaranty and has duly authorized the execution and delivery
of this Guaranty, and neither this Guaranty nor the agreements herein contained or
the transactions contemplated hereby contravene or constitute a default under any
agreement, instrument or indenture or any other agreement or requirement of law by
which Guarantor is bound.
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1.2. This Agreement, upon execution and delivery by Guarantor (assuming due
authorization, execution and delivery by DB &T, is a valid and legally binding
instrument of Guarantor, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting creditors' rights generally.
1.3 The undertaking of the Project by Borrower pursuant to the Development
Agreement is in the vital and best interests of Guarantor and in accord with the
public purposes and provisions of the applicable federal, state and local laws and the
requirements under which the Project has been undertaken and is being assisted,
and the Development Agreement and this Guaranty are necessary to promote and
further the economic development of the City of Dubuque, and will result in the
creation and maintenance of jobs within the City, as authorized and defined in
Section 15A.1 of the Code of Iowa, as amended.
SECTION 2. COVENANTS AND AGREEMENTS.
2.1. Unconditional Guaranty. Guarantor hereby unconditionally and irrevocably
guarantees to DB &T that (a) the full and prompt payment of the principal on the Loan
when and as the same shall become due, whether at the stated maturity thereof, by
acceleration, or otherwise, and (b) the full and prompt payment of all interest on the
Loan when and as the same shall become due. All payments by Guarantor shall be
paid in lawful money of the United States of America. Each and every default in
payment of the principal of or interest on the Loan shall give rise to a separate cause
of action hereunder, and separate suits may be brought hereunder as each cause of
action arises.
2.2. Notice to Guarantor to Perform Under Guaranty. If Borrower should at any
time fail to make any of the payments required under the Agreement as and when
said payments become due and payable, Guarantor hereby unconditionally
covenants that it shall make said payments within thirty (30) days after receipt by
Guarantor of written notice of such failure to pay from DB &T.
2.3. Guaranty to Remain in Force Until Full Payment. The obligations of
Guarantor under this Guaranty shall be absolute, unconditional and irrevocable and
shall remain in full force and effect until the aggregate principal amount of the Loan
outstanding and all interest due thereon shall have been paid in full and such
obligations shall not be affected, modified or impaired upon the happening from time
to time of any event, including without limitation any of the following, whether or not
with notice to, or the consent of, Guarantor.
(1) the compromise, settlement, release or termination of any or all of the
obligations, covenants or agreements of Borrower under the Agreement;
(2) the failure to give notice to Guarantor of the occurrence of an event of
default under the terms and provisions of this Guaranty or the Agreement;
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(3) the assignment, transfer or mortgaging or the purported assignment,
transfer or mortgaging of all or any part of the interest of Borrower in the
Project or any failure of title with respect to Borrower's interest in the Project;
(4) the waiver of the payment, performance or observance by Borrower or
Guarantor of any of the obligations, covenants or agreements of them
contained in the Agreement or this Guaranty;
(5) the extension of the time for payment of any principal of or interest on
the Loan or under this Guaranty or of the time for performance of any other
obligations, covenants or agreements under or arising out of the Agreement
or this Guaranty or the extension or the renewal of either thereof;
(6) the modification or amendment (whether material or otherwise) of any
obligation, covenant or agreement set forth in the Agreement;
(7) the taking or the omission of any of the actions referred to in the
Agreement and any actions under this Guaranty;
(8) any failure, omission, delay or lack on the part of DB &T to enforce,
assert or exercise any right, power or remedy conferred on DB &T in this
Guaranty or the Agreement, or any other act or acts on the part of DB &T;
(9) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all the assets, marshalling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with creditors or
readjustment of, or other similar proceedings affecting Guarantor or Borrower
or any of the assets of them, or any allegation or contest of the validity of this
Guaranty in any such proceeding;
(10) to the extent permitted by law, the release or discharge of Guarantor
from the performance or observance of any obligation, covenant or
agreement contained in this Guaranty by operation of law;
(11) the default or failure of Guarantor fully to perform any of its obligations
set forth in this Guaranty, provided that the specific enumeration of the
above - mentioned acts, failures or omissions shall not be deemed to exclude
any other acts, failures or omissions, though not specifically mentioned
above, it being the purpose and intent of this paragraph that the obligation of
Guarantor shall be absolute, unconditional and irrevocable to the extent
herein specified and shall not be discharged, impaired or varied except by the
payment of the principal of and interest on the Loan in accordance with the
terms of the Agreement. Without limiting any of the other terms or provisions
hereof, it is understood hereunder, there shall be no obligation on the part of
3
DB &T to resort in any manner or form for payment to Borrower or to any other
person, firm or corporation, their properties or estates.
2.4. Liability Not Affected by Bankruptcy. Without limiting the foregoing, it is
specifically understood that any modification, limitation, or discharge of the liability of
Guarantor hereunder arising out of or by virtue of any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under Federal or State law
hereafter initiated by or against Guarantor shall not affect, modify, limit, or discharge
the liability of Guarantor hereunder in any manner whatsoever and this Guaranty
shall remain and continue in full force and effect and shall be enforceable against the
Guarantor to the same extent and with the same force and effect as if any such
proceedings had not been instituted; and it is the intent and purpose of this
Guaranty and the Guarantor shall and does hereby waive all rights and benefits
which might accrue to it by reason of any such proceeding and the Guarantor agrees
that it shall be liable for an amount equal to the full amount of payments payable
under the terms of the Agreement, irrespective and without regard to any
modification, limitation, or discharge of the liability of the Guarantor that may result
from any such proceeding.
2.5. Right to Proceed Against Guarantor. In the event of a default in the payment
of principal of the Loan when and as the same shall become due, whether at the
stated maturity thereof, by acceleration, or otherwise, or in the event of a default in
the payment of any interest on the Loan when and as the same shall become due,
DB &T may, in its sole discretion, have the right to proceed first and directly against
Guarantor under this Guaranty without proceeding against or exhausting any other
remedies which it may have and without resorting to any other security held by
DB &T.
2.6. Waiver of Notice and Reliance on Guaranty. Guarantor expressly waives
notice from DB &T of its acceptance and reliance on this Guaranty. Guarantor
agrees to pay all costs, expenses and fees, including all reasonable attorneys' fees,
which may be incurred in enforcing or attempting to enforce this Guaranty following
any default on the part of Guarantor hereunder, whether the same shall be enforced
by suit or otherwise.
2.7 Limitation on Guaranty. DB &T hereby acknowledges that, pursuant to
Section 3.3 of the Development Agreement, the Guarantor, in addition to
guaranteeing the Loan, also has guaranteed certain other loans made by DB &T to
Borrower and /or other entities pursuant to (i) the Guaranty Agreement (Loans A
through D) dated June 22, 2009 and (ii) the Guaranty Agreement (Construction
Loan) dated , 2009, each between DB &T and the Guarantor
(collectively, the "Project Loans "), and all such additional financing shall be used in
connection with the rehabilitation, construction and improvement of the Project.
Notwithstanding anything contained herein or in the Agreement to the contrary,
DB &T acknowledges and agrees that the total maximum principal amount of the
obligation of the Guarantor under this Guaranty and under the guaranty agreements
executed by Guarantor in connection with the Project Loans shall not exceed
4
$25,000,000; provided, however, that the foregoing shall not limit Guarantor's
obligation to DB &T under Section 2.6 hereof.
SECTION 3. MISCELLANEOUS.
3.1. Obligations Absolute and Unconditional. The obligations of Guarantor
hereunder shall arise absolutely, unconditionally and irrevocably, when the Loan
shall have been made to Borrower by DB &T.
3.2. Nonexclusive Remedy; Notice; Waiver; Amendment. No remedy herein
conferred upon or reserved to DB &T is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Guaranty or now or
hereafter existing at law or in equity. No delay or omission to exercise any right or
power accruing upon any default, omission or failure of performance hereunder shall
impair any such right or power or shall be construed to be a waiver thereof; but any
such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle DB &T to exercise any remedy reserved to it in
this Guaranty, it shall not be necessary to give any notice, other than such notice as
may be herein expressly required. In the event any provision contained in this
Guaranty should be breached by Guarantor and thereafter duly waived by DB &T,
such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder. No waiver, amendment, release or
modification of this Guaranty shall be established by conduct, custom or course of
dealing, but solely by an instrument in writing duly executed by DB &T.
3.3. Annual Audit and Financial Statements. Guarantor shall keep proper books
of record and account in accordance with generally accepted principles of
accounting as the same apply to governmental entities and will furnish to DB &T as
soon as available and in any event within 180 days after the close of each fiscal year
of Guarantor, a copy of the annual financial statements of Guarantor for such fiscal
year all as prepared and certified by a firm of independent certified public
accountants.
3.4. Entire Agreement. This Guaranty constitutes the entire agreement and
supersedes all prior agreements between the parties with respect to the subject
matter hereof and may be executed simultaneously in several counterparts, each of
which shall be deemed an original, and all of which together shall constitute one and
the same instrument.
3.5. Severability. The invalidity or unenforceability of any one or more phrases,
sentences, clauses or sections in this Guaranty shall not affect the validity or
enforceability of the remaining portions of this Guaranty, or any part thereof.
3.6. Release. Upon full payment of the principal of and interest on the Loan in
accordance with the Agreement, this Guaranty shall by its terms terminate and, upon
5
request by Guarantor, DB &T shall release Guarantor from the provisions of this
Guaranty in writing.
3.7. Applicable Law. This Guaranty shall be governed by and construed in
accordance with the laws of the State of Iowa.
IN WITNESS WHEREOF, Guarantor and DB &T have caused this Guaranty
to be executed as of the date first above written.
CITY OF DUBUQUE, IOWA DUBUQUE BANK & TRUST COMPANY
By: By:
Roy D. Buol, Mayor
ATTEST:
By:
Jeanne F. Schneider, CMC
City Clerk
680634.1 \10422.087
Its:
6