Maylay Holdings and Vanguard Countertops_First Amendment to Development AgreementMasterpiece on the Mississippi
Dubuque
AI- America City
11111!
m
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: First Amendment to Development Agreement with Malay Holdings, LLC.
and Vanguard Countertops, Inc.
DATE: February 2, 2011
The City entered into a development agreement with Vanguard on June 2, 2008, to sell
property in the Dubuque Industrial Center West (DICW) and construct a new facility.
The business committed to retain 11 positions and create an additional 10 positions
within three years. For this commitment, the company received an Acquisition Grant of
$50,000 per acre purchased and 8 years of Tax Increment Financing.
Economic Development Director Dave Heiar is recommending City Council approval of
the First Amendment to the Development Agreement between the City of Dubuque and
Malay Holdings, LLC and Vanguard Countertops, Inc. to provide for a three year
extension of the job creation period to January 1, 2014. The company has complied
with the other requirements of the Development Agreement, except for the job creation
element. Providing this extension will allow this small locally grown company the
opportunity to expand more readily as the national economy improves.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
Masterpiece on the Mississippi
TO: Michael Van Milligen, City Manager (�
FROM: David J. Heiar, Economic Development Director tr--)
Dubuque
pl-AmalcacIj
2007
SUBJECT: First Amendment to Development Agreement with Malay Holdings, LLC.
and Vanguard Countertops, Inc.
DATE: January 31, 2011
INTRODUCTION
This memorandum is to summarize the First Amendment to the Development
Agreement with Malay Holdings, LLC. and Vanguard Countertops, Inc.
BACKGROUND
Incorporated in 1961, Vanguard expanded from humble beginnings in a shop in the
alley behind Micro -Lite to its current location at 600 Cedar Cross Road in 1971. Plastic
laminate countertops became a sign of the times and the explosion of color was seen in
kitchens across the country. The building was expanded in 1979 to approximately
14,000 sq. ft.
Brian Gilligan purchased Vanguard from the founder in 1997 and further developed the
wholesale counter top business while eliminating the retail end of the business. Under
new ownership, the company ramped up the commercial cabinet business which was in
its embryonic stage. In 2000 Vanguard sold the first store fixture to Flexsteel Furniture
and broke into the Point of Purchase Display market.
Since that first sale the company has developed the display business to include more
than a dozen customers resulting in Vanguard -made displays in thousands of stores
across the country and internationally. The list of Vanguard display and store fixture
customers include Crescent Electric, Theisens Farm and Home, Vendors Unlimited, of
course Flexsteel, and many more. Vanguard products can be found in Wal -marts,
Kohls, JC Penneys, Theisens, furniture stores across the country and many others that
non - disclosure agreements preclude us from mentioning. Vanguard has made displays
for Flexsteel, Christopher Lowell, Wrangler, Ralph Lauren, Pronto Cafe, Twin Cities
Financial, and many others.
The City entered into a development agreement with Vanguard on June 2, 2008 to sell
property in the Dubuque Industrial Center West (DICW) and construct a new facility.
The business committed to retain 11 positions and create an additional 10 positions
within three years. For this commitment, the company received an Acquisition Grant of
$50,000 per acre purchased and 8 years of Tax Increment Financing.
DISCUSSION
On January 27, 2011, the Company submitted a letter to the City requesting an
extension of the time needed to create the new jobs for the company. Below is an
excerpt from the letter stating the reasoning behind the request for an extension of time;
"With respect to our Development Agreement, I expect the target to be out
of reach at the 3 -year mark on June 2, 2011. Given the current economic
climate 1 am frankly quite thrilled to have kept the employees I have and to
remain a viable business through this tumultuous time. As the nation and
the Midwest regain economic footing, I fully expect to be able to expand
and grow Vanguard in fulfillment of our agreement. At this time I see no
possibility of meeting my target and will respectfully ask for a three -year
extension to ramp up my business at a slower rate than previously agreed
to."
The business is seeking a three year extension of the job creation time frame to
January 1, 2014 (see attached letter).
The company has complied with the other requirements of the Development
Agreement, except for the job creation element.
Due to the fact that we are experiencing the worst recession since the Great
Depression, I would encourage the City Council to approve an amendment to this
Development Agreement, allowing this small locally grown company the opportunity to
expand more readily as the national economy improves.
RECOMMENDATION /ACTION STEP
I am recommending City council approval of the attached resolution approving the First
Amendment to the Development Agreement with Malay Holdings, LLC and Vanguard
Countertops, Inc. to provide for a three year extension of the job creation period.
F: \USERS \Econ Dev \Vanguard Tops\20110131 Vanguard First Amend Memo.doc
Vanguard
capable • accurate • committed
www.vanguardtops.com
January 27, 2011
David Heiar
Economic Development Director
50 West 13th St.
Dubuque, IA 52001 -4805
Dear David:
Respectfully,
Brian P. Gilligan
Countertops
Commercial Cabinets
Solid Surface Products
Point of Purchase Displays
Custom Laminated Products
With respect to our Development Agreement, I expect the target to be out of reach at the 3 -year mark on June
2, 2011. Given the current economic climate I am frankly quite thrilled to have kept the employees I have and
to remain a viable business through this tumultuous time. As the nation and the Midwest regain economic
footing, I fully expect to be able to expand and grow Vanguard in fulfillment of our agreement. At this time I see
no possibility of meeting my target and will respectfully ask for a three -year extension to ramp up my business
at a slower rate than previously agreed to.
As city staff and Council review my extension request know that I take seriously the commitment to our
development agreement. That said, complying to it at this point in time would require me to pay a portion of
the monies received over the course of the commitment and pay the full cost of all future property taxes. This
would further hinder Vanguard's ability to expand the business as monies that would have been used to fund
expansion are redirected to cover these commitments.
It is and has always been my plan, albeit modified with a current economic detour, to be able to fully comply
with the agreement and would ask for this additional time to do just that. It is my contention that given an
extension, Vanguard would be able to grow and expand as the economy emerges from this current state and
both Vanguard and the City will reap the benefits. Denial of this extension will have a double negative effect as
it will require me to borrow money to pay back these past payments, which will further postpone my ability to
fund growth.
We have weathered the storm of the past few years and are beginning to see the benefits of our expansion.
2009 was a year in which the goal was survival but 2010 showed improvement. I am encouraged and excited
about the future, but need to be patient to let the national economy get traction and allow both Vanguard and
the City meet the goal of increased employment. Thank you for your consideration of my request.
1300 Synergy Court • Dubuque, IA 52002
563- 556 -7600 • fax: 563-556-0832 • bgilligan @vanguardtops.com
Prepared /Return to: David Heiar, Economic Development, 50 W. 13 Street, Dubuque, IA 52001 (563) 589 -4393
'RESOLUTION NO 47 -11
RESOLUTION APPROVING THE FIRST AMENDMENT TO THE MALAY HOLDINGS,
LLC AND VANGUARD COUNTERTOPS, INC. DEVELOPMENT AGREEMENT
Whereas, a Development Agreement (the Agreement), dated June 2, 2008, was
entered into by and between the City of Dubuque, a municipal corporation of the State
of Iowa (City), Malay Holdings, LLC, an Iowa limited liability company with its principal
place of business at Dubuque, Iowa (Developer) and Vanguard Countertops, Inc., an
Iowa corporation with its principal place of business in Dubuque, Iowa (Employer); and
Whereas, City, Malay Holdings, LLC and Vanguard Countertops, Inc. now desire
to amend the Development Agreement as set forth attached First Amendment.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the First Amendment of the Malay Holdings, LLC and
Vanguard Countertops, Inc. Development Agreement is hereby approved.
Section 2. That the Mayor is hereby authorized and directed to execute said
First Amendment on behalf of the City of Dubuque and the City Clerk is authorized and
directed to attest to his signature.
Section 3. That the City Manager is authorized to take such actions as are
necessary to implement the terms of the First Amendment as herein approved.
Passed, approved and adopted this 7 day of Februpry, 2011.
Attest:
anne F. Schneider, City Clerk
F: \USERS \Econ Dev \Vanguard Tops\20110131_Res approving first DA amendment Vanguard.doc
Roy D. Buol, Mayor
FIRST AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE, IOWA,
MALAY HOLDINGS, LLC,
AND
VANGUARD COUNTERTOPS, INC.
This First Amendment to Development Agreement, dated for reference
purposes the 7 day of February, 2011, is made and entered into by and between
the City of Dubuque, Iowa (City), Malay Holdings, LLC, an Iowa limited liability
company with its principal place of business at Dubuque, Iowa (Developer) and
Vanguard Countertops, Inc., an Iowa corporation with its principal place of business
in Dubuque, Iowa (Employer).
Whereas City, Developer and Employer previously entered into a
Development Agreement dated the 2nd of June 2008 (the Development
Agreement); and
Whereas the Development Agreement provides in Section 4.1 that the
Employer shall create ten (10) full -time equivalent employees (FTE) prior to
January 1, 2011; and
Whereas, the Development Agreement provides in Section 4.2 that
Employer shall certify to the City the number of full -time equivalent employees by
January 1, 2011 and such certification shall be provided not later than February 28,
2011; and
Whereas due to the severe economic recession, City, Developer and
Employer have agreed to amend the Development Agreement to extend the date
for the creation of ten (10) full -time equivalent employees to January 1, 2014; and
Whereas City, Developer and Employer have agreed to amend the
Development Agreement to change the certification date for the creation of ten (10)
full -time equivalent employees to January 1, 2014 with such certificate provided not
later than February 28, 2014; and
Whereas the parties desire to amend the Development Agreement to set
forth such amendment in writing.
1
THEREFORE, in consideration of the mutual terms and covenants contained
herein, the parties agree as follows:
1. Section 4.1 of the Development Agreement is hereby amended to
read as follows:
(1) Job Creation. Employer shall create ten (10) full -time equivalent
employees (FTE) in Dubuque, Iowa prior to January 1, 2014, and shall maintain
those jobs during the Term of this Agreement. It is agreed by the parties that
Employer has Eleven (11) FTE in Dubuque, Iowa, as of September 26, 2007. FTE
shall be calculated by adding full -time and part-time employees together using 2080
hours per year as a FTE employee. In the event that the certificate provided to City
under Section 4.2 hereof on January 1, 2018 discloses that Employer does not as
of that date have at least 21 FTE employees as provided hereinabove, Employer if
Employer owns or leases the Property and /or Improvements on that date (and City
may rely upon a statement from Employer or Developer with respect to Employer's
ownership or lease status for such purposes without any obligation to verify such
status), otherwise Developer shall pay to City, promptly upon written demand
therefor, an amount equal to $ 8,465.00 per job not created or maintained
($177,750 divided by 21 FTE = $ 8,465.00). (In the event that Employer is required
to pay City under the second paragraph of Section 2.3, the amount per job not
created of $ 8,456.00 shall be reduced by the amount of such payment). The
payments provided for herein shall be the City's sole remedy for the failure of
Employer to meet the job creation requirements of this subsection 4.1(1).
2. Section 4.2 of the Development Agreement is hereby amended to
read as follows:
Certification. To assist City in monitoring the performance of Employer
hereunder, not later than January 1, 2014, and again not later than January 1 of
each year thereafter during the term of this Agreement, a duly authorized officer of
Employer shall certify to City in a form acceptable to City (a) the number of full time
jobs employed in Dubuque, Iowa, and (b) to the effect that such officer has
re- examined the terms and provisions of this Agreement and that at the date of
such certificate, and during the preceding twelve (12) months, Employer is not or
was not in default in the fulfillment of any of the terms and conditions of this
Agreement and that no Event of Default (or event which, with the lapse of time or
the giving of notice, or both, would become an Event of Default) is occurring or has
occurred as of the date of such certificate or during such period, or if the signer is
aware of any such default, event or Event of Default, said officer shall disclose in
such statement the nature thereof, its period of existence and what action, if any,
has been taken or is proposed to be taken with respect thereto. Such certificate
shall be provided not later than February 28, 2014, and by February 28 of each
year thereafter during the term of this Agreement
2
3. Except as modified herein, the Development Agreement shall remain
in full force and effect.
CITY OF DUBUQUE, IOWA MALAY HOLDINGS, LLC
By:
Roy
Buol, Mayor
eanne F. Schneider, City Clerk
F: \USERS \Econ Dev \Vanguard Tops\20110131 - 1st Amendment to Vanguard DA.doc
3
By:
Brian Gilligan, President
VANGUARD COUNTERTOPS, INC.
By:
Brian Gilligan, President