Spiegel Development Agreement_First AmendmentMasterpiece on the Mississippi
Dubuque
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TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: First Amendment to Development Agreement with Spiegel Family Realty
Company Iowa, LLC
DATE: May 31, 2011
Economic Development Director Dave Heiar recommends City Council approval of the
First Amendment to the Development Agreement with Spiegel Family Realty Company
Iowa, LLC to provide for a two year extension of the job creation period.
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
INTRODUCTION
This memorandum is to summarize the First Amendment to the Development
Agreement with Spiegel Family Realty Company Iowa, LLC.
Dubuque
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2007
TO: Michael Van Milligen, City Manager
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FROM: David J. Heiar, Economic Development Director
SUBJECT: First Amendment to Development Agreement with Spiegel Family Realty
Company Iowa, LLC
DATE: May 20, 2011
BACKGROUND
City staff worked with the Greater Dubuque Development Corporation and Spiegel
Family Realty of Iowa, LLC on a Spec Building at the Dubuque Industrial Center West.
Together GDDC and City Staff identified certain parameters they believed would be
highly desirable for outside companies looking to locate in Dubuque. GDDC has seen
an increase in requests for existing industrial buildings and it was anticipated that
having building ready space available would increase the City's chances to attract new
business.
The City entered into a development agreement with Spiegel Family Realty Iowa, LLC
on September 15, 2008 to sell property in the Dubuque Industrial Center West (DICW)
and construct a new manufacturing /warehouse /office facility. Spiegel Family Realty of
Iowa, LLC constructed a 200,000 sq. ft. spec building in the Dubuque Industrial Center
West.
The business committed to create not less than 10 full -time positions prior to December
31, 2010. For this commitment, the company received an Acquisition Grant of $50,000
per acre purchased and 9 years of Tax Increment Financing.
In the past couple of years, GDDC has used this building to entice prospective
businesses to visit our community. Unfortunately, the recession of the past few years
has made most businesses reluctant to relocate and /or expand.
DISCUSSION
On May 17, 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;
"As you are aware the last few years have been very tough for the
economy and especially difficult on the real estate market. Unfortunately,
we have not been able to find a tenant or a buyer for the property located
at 6000 Chavenelle Drive. We have seen bright spots in our other
businesses but the rental and warehousing businesses that we operate
have not returned to their pre- recession levels."
The business is seeking a two year extension of the job creation time frame to
December 31, 2012, and to adjust the tax increment financing period to begin
November 1, 2010 and end May 1, 2019 which would provide for the full 18 consecutive
semi - annual payments originally agreed to in the development agreement (see attached
letter).
The City Council has the ability to allow for an extension of time to create new jobs,
however, due to State limitations, the City Council can not extend TIF rebates. The tax
increment from this particular urban renewal district expires in May of 2018 by State
law.
The company is hopeful that with an improving economy that they will be able to lease
or sell the property within the next two years. 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 Spiegel Family Realty Company Iowa, LLC 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 Spiegel Family Realty Company Iowa,
LLC to provide for a two year extension of the job creation period.
F: \USERS\Econ Dev \Spiegel Family Realty Company\20110520 Spiegel Family Realty First Amend Memo.doc
Prepared /Return to: David Heiar, Economic Development, 50 W. 13 Street, Dubuque, IA 52001 (563) 589 -4393
RESOLUTION NO 176-11
RESOLUTION APPROVING THE FIRST AMENDMENT TO THE SPIEGEL FAMILY
REALTY COMPANY IOWA, LLC DEVELOPMENT AGREEMENT
Whereas, a Development Agreement (the Agreement), dated September 15,
2008, was entered into by and between the City of Dubuque, a municipal corporation of
the State of Iowa (City) and Spiegel Family Realty Company Iowa, LLC, an Iowa
business corporation with its principal place of business in Peosta, Iowa (Developer);
and
Whereas, City and Spiegel Family Realty Company Iowa, LLC now desire to
amend the Development Agreement as set forth in the 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 Spiegel Family Realty Company
Iowa, LLC 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 6 day of Jun9'2011.
Attest:
Roy D. Buol, Mayor
Kevin S. Firnsta ' Acting City Clerk
F: \USERS \Econ Dev \Spiegel Family Realty Company\20110520_Res approving first DA amendment Spiegel Family Realty.doc
FIRST AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE, IOWA,
AND
SPIEGEL FAMILY REALTY COMPANY IOWA, LLC.
This First Amendment to Development Agreement, dated for reference
purposes the 6 day of June, 2011, is made and entered into by and between the
City of Dubuque, Iowa (City) and Spiegel Family Realty Company Iowa, LLC, an
Iowa business corporation with its principal place of business in Peosta, Iowa
(Developer).
Whereas City and Developer previously entered into a Development
Agreement dated the 15 of September 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
December 31, 2010; 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
December 31, 2010 and such certification shall be provided not later than February
28, 2011; and
Whereas, due to the severe economic recession, City and Developer have
agreed to amend the Development Agreement to extend the date for the creation of
ten (10) full -time equivalent employees to December 31, 2012; and
Whereas, City and Developer have agreed to amend the Development
Agreement to change the certification date for the creation of ten (10) full -time
equivalent employees to December 31, 2012 with such certificate provided not later
than February 28, 2013; and
Whereas the parties desire to amend the Development Agreement to set
forth such amendment in writing.
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:
4.1 Job Creation.
1
(1) Developer shall make best efforts to create not less than ten (10) fulltime
jobs in Dubuque, Iowa prior to December 31, 2012, and shall maintain those
jobs during the Term of this Agreement.
(2) In the event that any certificate provided to City under Section 4.2 hereof
discloses that Developer does not as of that date have at least 10
employees as provided hereinabove, then Developer shall pay to City,
promptly upon written demand therefor, an amount equal to $ 2,038.44 per
job not created or maintained ($563,200.00 divided by 10 jobs =
$56,320.00). The payments provided for herein shall be the City's sole
remedy for the failure of Developer to meet the job creation requirements of
subsection 4.1(1).
(3) In addition, for the positions that Developer fails to maintain for any year
during the Term of this Agreement, the semi - annual Economic Development
Grants for such year under Section 3.1(2) shall be reduced by the
percentage that the number of such positions bears to the total number of
positions required to be maintained (10 jobs) by this Section 4.1. (For
example, if Developer has 9 jobs, the semi - annual Economic Development
Grants would be 90.0% (9/10 employees) of the Tax Increment Revenues
received by City). The reduction of the semi - annual Economic Development
Grants shall be the City's sole remedy for the failure of Developer to meet
the job creation requirements of subsection 4.1 (1).
2. Section 4.2 of the Development Agreement is hereby amended to
read as follows:
4.2 Certification. To assist City in monitoring the performance of Developer
hereunder, not later than January 10, 2013 and not later than January 10 of
each year thereafter during the Term of this Agreement, a duly authorized
officer of Developer 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, Developer 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, 2013 and by
February 28 of each year thereafter during the Term of this Agreement.
3. Except as modified herein, the Development Agreement shall remain
in full force and effect.
2
CITY OF DUBUQUE, IOWA SPIEGEL FAMILY RELTY
COMPANY IOWA, LLC
By:
By:
Roy D(,BuoI, Mayor
Acting City Clerk
F: \USERS \Econ Dev \Spiegel Family Realty Company\20110520 - 1st Amendment to Spiegel Family Realty DA.doc
3
By:
A. J. Spiegel
May 17, 2011
Mr. David J. Heiar, Economic Development Director
Economic Development Department
50 West 13 Street
Dubuque, IA 52001 -4805
Dear Mr. Heiar:
We are submitting this request for a two year extension of the Development Agreement
between Spiegel Family Realty Company of Iowa, LLC and the City of Dubuque. As
you are aware the last few years have been very tough for the economy and especially
difficult on the real estate market. Unfortunately, we have not been able to find a tenant
or a buyer for the property located at 6000 Chavenelle Drive. We have seen bright spots
in our other businesses but the rental and warehousing businesses that we operate have
not returned to their pre- recession levels.
Specifically we are requesting that the job fulfillment requirement in section 4.1 of the
agreement be extended for a two year period. We also request that the property tax
rebate agreement be extended for a two year period as well.
We are hopeful that with an improving economy and the help of the City of Dubuque we
will be able to lease or sell the property within the next two years.
A, piegd1, Member
Spiegel Family Realty Company Iowa, LLC