Dubuque Initiatives_Roshek Building_Second Amendment to Development AgreementMasterpiece on the Mississippi
Economic Development Director Dave Heiar is recommending approval of an
amendment to the Development Agreement between the City of Dubuque and the
Dubuque Initiatives for redevelopment of the Roshek Building.
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Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Dave Heiar, Economic Development Director
Michael C. Van Milligen
Dubuque
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1111-America City
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2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Second Amendment to the Development Agreement between the City of
Dubuque and Dubuque Initiatives
DATE: May 4, 2011
Currently, Dubuque Initiatives is obligated by the Development Agreement with the City
to use all historic tax credit funding to pay down debt covered by the City's Guaranty.
An amendment is needed to allow Dubuque Initiatives to use tax credit funds to fund the
reserve account as required by US bank to receive additional funding to the project.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Masterpiece on the Mississippi
Dubuque
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AI- NneiicaCity
2007
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director
SUBJECT: Second Amendment to the Development Agreement etween the City of
Dubuque and Dubuque Initiatives
DATE: May 4, 2011
INTRODUCTION
This memo is to seek City Council approval of a resolution approving an amendment to
the Development Agreement between the City of Dubuque and Dubuque Initiatives for
the redevelopment of the Roshek Building. A change to the allocation of tax credit
funding is needed to facilitate additional funding to the project.
BACKGROUND
A Development Agreement between the City and Dubuque Initiatives was approved on
February 17, 2009 and amended on April 29, 2009 to provide incentives and a
guarantee for the redevelopment of the Roshek Building. The rehabilitation was done to
encourage IBM to create 1,300 IT jobs in Dubuque.
The $25 million Guaranty signed by the City required that receipts from the sale of tax
credits or a Developer Fee be required to pay down debt, thus limiting the exposure to a
default by Dubuque Initiatives. Currently, the debt remaining covered by the Guaranty
is $21,197,776.32. Dubuque Initiatives will be receiving the State Historic Tax Credit
funds in May which will bring the debt remaining covered by the Guaranty down to
$11,197,776.32.
DISCUSSION
Dubuque Initiatives has an opportunity to receive additional funding from Federal
Historic Tax Credits from the tax credit investor, US Bank. The credits earned from the
project were higher than anticipated when the original financing was put in place. US
Bank has offered to pay an additional $215,500 to Dubuque Initiatives if the funds are
placed in a reserve account amounting $991,291.07 to fund future priority return and put
payments associated with the Federal Historic Tax Credits. Priority return payments are
payments made to the Federal Historic Tax Credit purchasing partner throughout the
compliance period of the project. The put payment is the final payment made to the
Federal Historic Tax Credit partner to buy its interest in the project. The net present
value of these payments was factored into the original purchase price of the Federal
Historic Tax Credits.
Currently, Dubuque Initiatives is obligated by the Development Agreement with the City
to use all historic tax credit funding to pay down debt covered by the City's Guaranty.
An amendment is needed to allow Dubuque Initiatives to use tax credit funds to fund the
reserve account as required by US Bank to receive additional funding to the project.
Attached is the proposed Second Amendment to the Development Agreement with
Dubuque Initiatives allowing funding received from the Federal Historic Tax Credits to
be placed in a reserve account for priority return and put payments.
RECOMMENDATION
I am recommending approval of the attached resolution approving the Second
Amendment to the Development Agreement to allow funding a reserve account for
priority return and put payments with tax credit funding received from the project.
ACTION STEP
The action step is to approve the attached resolution.
F: \USERS \Econ Dev \IBM \CIty DI Agreements\20110504 DI DA 2nd Amendment memo_1.docx
Prepared /Return to: David Heiar, Economic Development, 50 W. l3'" Street, Dubuque, IA 52001 (563) 589 -4393
RESOLUTION NO 171-11
RESOLUTION APPROVING THE SECOND AMENDMENT TO THE ROSHEK BUILDING
DEVELOPMENT AGREEMENT
Whereas, a Development Agreement (the Agreement), dated February 17, 2009,
was entered into by and between the City of Dubuque, a municipal corporation of the State
of Iowa (City), and Dubuque Initiatives (Developer); and
Whereas, this Development Agreement was amended (First Amendment) on April
27, 2009; and
Whereas, City and Dubuque Initiatives now desire to amend the Development
Agreement as set forth attached Second Amendment, and
Whereas, Dubuque Initiatives desires to fund a reserve account for priority return
and put payments with tax credit funding.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. That the Second Amendment of the Dubuque Initiatives Development
Agreement is hereby approved.
Section 2. That the Mayor is hereby authorized and directed to execute said
Second 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 Second Amendment as heyein approved.
Passed, approved and adopted this 16 day of May 201
Attest:
Kevi Firns ahl, A ting City lerk
F: \USERS \Econ Dev \IBM \CIty DI Agreements\20110516 DI DA 2rd amendment reso.doc
Roy D. Buol, Mayor
SECOND AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE
AND DUBUQUE INITIATIVES
This Second Amendment to Development Agreement, dated for reference
purposes the 16th day of May, 2011, is made and entered into by and between the City of
Dubuque, Iowa (City) and Dubuque Initiatives (Developer).
Whereas City and Developer previously entered into a Development Agreement
dated the 17th of February, 2009 (the Development Agreement); and
Whereas the Development Agreement was amended by the First Amendment
dated the 27th of April, 2009; and
Whereas City and Developer have agreed to further amend the Development
Agreement as set forth herein to allow for a portion of tax credit equity received in the
project be allowed to be placed in reserve for payment of priority return and put
payments due to the tax credit investor.
NOW, THEREFORE IT IS AGREED BY AND BETWEEN THE PARTIES AS
FOLLOWS:
1. Section 3.3(1) of the Development Agreement, as amended, is amended to be
read as follows:
(1) City shall provide guarantees, in the forms attached hereto as Exhibit D
(collectively, the Guaranty), on behalf of certain entities, including but not limited to
Developer, for the purpose of securing equity investments and loans in order to finance
the rehabilitation, construction and improvement of the Property (collectively, the
Minimum Improvements Loan), in the aggregate maximum principal amount not to
exceed $25,000,000. In consideration for the Guaranty, Developer agrees that any
grants and tax credits received by Developer or which accrue to the benefit of Developer
or the Property shall be applied by Developer in the following order, to (a) funding a
reserve account in the amount of $991,291.07 for future payments of priority return or
put payments due to US Bank , (b) pre- Minimum Improvements Loan development
costs, or (c) the balance of the principal of the Minimum Improvements Loan, the tax
credit investor.
CITY OF DUBUQUE, IOWA
By: Ro�
y D. uol, Mayor
By:
Ke in S. Firnstahl, Acting ity C erk
DUBUQUE INITIATIVES
By:
William H. Callahan, President
F: \USERS \Econ Dev \IBM \CIty DI Agreements\20110504 2nd Amendment to DI DA_1.doc