Dbq Museum of Art Defer Loan
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MEMORANDUM
April 26, 2004
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TO:
The Honorable Mayor and City Council Members
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FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Request from the Dubuque Museum of Art to Defer Loan Repayment
Economic Development Director Bill Baum recommends City Council approval of a
request by the Dubuque Museum of Art (DuMA) to defer payments on their $300,000
Downtown Rehabilitation Loan until July 1, 2006, and accept the Personal Guaranty
from Charles E. Stoltz as collateral for the deferred payments.
In April 2003 DuMA requested a one-year deferral on interest payments being made on
a $300,000 Downtown Rehabilitation Loan provided to the museum in 1999. The terms
of that 3% loan provide for 5 years of interest-only payments with principal plus interest
payments commencing years 6-20. The City holds a second mortgage as security on
that loan. The Council agreed to the deferment with interest payments due May 1 and
June 1, 2004, and principal plus interest payments to commence July 1, 2004.
DuMA's recent request would extend the deferment until July 1, 2006, with balloon
payment of $52,713.60 due at that time to "catch up" the deferred payments. Chuck
Stoltz, a Museum Trustee, has offered to guarantee the payments during the deferment
period. City Attorney Tim O'Brien has worked with Mr. Stoltz's attorney on an
appropriate personal Guaranty acceptable to the City.
The Museum has provided recent audited financials for staff review and continues its
5-year capital campaign to raise $3 million.
I serve on the Fundraising Campaign Committee of the Dubuque Museum of Art
because I support their mission and their investment in downtown. Discussions on this
deferment began before I served on this group. I do not believe a conflict exists.
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I concur with the recommendation and respectfully request Mayor and City Council
approval.
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Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Bill Baum, Economic Development Director
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CITY OF DUBUQUE, IOWA
MEMORANDUM
April 23, 2004
TO:
FROM:
Michael Van Milligen, City Manager
William Baum, Economic Development Director ~
SUBJECT: Request from the Dubuque Museum of Art to Defer Loan Repayment
INTRODUCTION
This memorandum requests City Council approval of a request from the Dubuque
Museum of Art (DuMA) to defer payments on their $300,000 Downtown Rehabilitation
Loan. A March 17,2004 letter of request is attached hereto.
BACKGROUND
In April, 2003, DuMA requested a one-year deferral on interest payments being made
on a $300,000 Downtown Rehabilitation Loan provided to the museum in 1999. The
terms of that 3% loan provide for 5 years of interest-only payments with principal plus
interest payments commencing years 6-20. The City holds a second mortgage as
security on that loan. The Council agreed to the deferment with interest payments due
May 1 and June 1, 2004 and principal plus interest payments to commence July 1,
2004.
DISCUSSION
DuMA's recent request would extend the deferment until July 1, 2006, with a balloon
payment of $52,713.60 due at that time to "catch up" the deferred payments. Chuck
Stoltz, a Museum Trustee, has offered to guarantee the payments during the deferment
period. City Attorney Tim O'Brien has worked with Mr. Stoltz's attorney on an
appropriate Personal Guaranty acceptable to the City.
The Museum has provided recent audited financials for staff review and continues it's
5-year capital campaign to raise $3 million.
RECOMMENDATION
I would recommend approval of the request to defer payments until 2006 subject to the
signed Personal Guaranty by Mr. Stoltz. DuMA has made a significant investment in
the downtown and its facility is a cultural amenity. Additional support for the museum
during this critical growth and capital campaign time period is understandable and
should not significantly affect the Downtown Rehabilitation Loan program's cashflow.
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ACTION STEP
The action step for the City Council is to approve the request by the Dubuque Museum
of Art to defer payments on their Downtown Rehabilitation Loan until July 1, 2006 and
accept the Personal Guaranty from Charles E. Stoltz as collateral for the deferred
payments.
attachment
F: IUS ERSIPm-,hreIWPDOCSILOANDOCIDUMA lreq uest2.mem. doc
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March17,2004
Mike Van Milligen
City Manager
City Hall
50 W. 13'"
Dubuque, IA 52001
Dear Mike,
This serves as a follow-up to Chuck Stoltz' letter to you dated October 8, 2003
requesting suspension of loan payments by the Dubuque Museum of Art for its
$300,000 Downtown Rehabilitation Loan from June 1, 2004 to June 1, 2007. I
have enclosed a copy of the letter for your reference.
On November 18, 2003 Geri Shafer and Diane Sass from the Museum's staff
attended a meeting with Bill Baum and Pam Myhre to discuss the terms of the Joan.
At its April 21, 2003 City Council meeting, the Council approved the deferral of
interest payments on the Museum's $300,000 Downtown Rehabilitation Loan for a
twelve month period. Currently the Museum is scheduled to resume interest
payments in May and June of 2004 and begin principal and interest payments in
July of 2004.
The Museum is requesting approval for a suspension of the May and June 2004
interest payments and principal and interest payments from June 1, 2004 to June 1,
2006. It is our understanding that the 2007 date originally requested by Chuck
Stoltz is not available since the City has other cOmmitments due in 2006. We
further understand that a balloon payment of $52,713.60 would be due from the
Museum on July 1, 2006.
Chuck Stoltz, a member of the Museum's Board of Trustees, has provided written
documentation to you dated October 8, 2003, that he will personally guarantee the
payments in the event the Dubuque Museum of Art declares bankruptcy.
At the November 18 meeting Bill and Pam requested the Museum provide its 2003
audited fmancials. The preliminary financials have been completed and are
enclosed with this letter. Additionally, from February 1, 2001 through February 1,
2004 the Museum has continuously employed 3 full-time and 3 half-time
employees. We understand there is an employment credit available per job.
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The Dubuque Museum of Art appreciates the City's consideration of its request. If
you require any additional information, please contact Geri Shafer, Director of the
Museum at 557-1851.
Thank you.
Sincerely, ~ ?w~
John Chapman, M.D.
President
Board of Trustees
cc: Chuck Stoltz
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