Walter Development and TM Inc. Assignment of Development AgreementMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Assignment of Development Agreement by and Among the City of
Dubuque, Iowa, Walter Development, LLC, and TM, Inc.
DATE: June 15, 2011
Dubuque
Itittld
NI- America City
1 '
2007
At the May 16, 2011 City Council meeting, the City Council approved the Development
Agreement by and among the City of Dubuque, Iowa, Walter Development, LLC, and
TM, Inc., for the sale of 2.616 acres of property in the Dubuque Industrial Center West
for the construction of an office building. Walter Development reserved the right to
assignment of the Development Agreement and will, once the assignment is approved
by the City Council, assign its right to purchase the property to Epic Construction. Epic
Construction will construct the improvements and then re- convey the improved property
back to Walter Development.
City Attorney Barry Lindahl recommends City Council approval of the Assignment of
Right to Purchase Property Under Development Agreement.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Michael C. Van Milligen
THE CITY OF
DUTtJJE MEMORANDUM
Masterpiece on the Mississippi
BARRY LINDA
CITY ATTORNE
To: Michael C. Van Milligen
City Manager
DATE: June 15, 2011
RE: Assignment Of Development Agreement By and Among the City of
Dubuque, Iowa, Walter Development, LLC, and TM, Inc.
At the May 16, 2011 City Council meeting the City Council approved the Development
Agreement By and Among the City of Dubuque, Iowa, Walter Development, LLC, and
TM, Inc., for the sale of 2.616 acres of property in the Dubuque Industrial Center West
for the construction of an office building. In the Development Agreement, Walter
Development reserved the right to assign the purchase of the property to another entity
for purposes of a Section 1031 exchange under the Internal Revenue Code.
Internal revenue code section 1031 allows a property owner to defer capital gains taxes
on the exchange of properties for business or investment purposes. Instead of selling
the property and incurring capital gains taxes, the property owner exchanges it for
property of equal or greater value. To take advantage of section 1031, Walter
Development needs to first have the improvements required by the Development
Agreement constructed on the property it is purchasing from the City. Walter
Development reserved the right to assign the Development Agreement and will, once
the assignment is approved by the City Council, assign its right to purchase the property
to Epic Construction. Epic Construction will construct the improvements and then re-
convey the improved property back to Walter Development. Walter Development will
exchange other property it owns of equal or greater value to Epic Construction in return
for the improved property. Once is has made the exchange, Walter Development will
then assume all of the other obligations required by the Development Agreement.
I would request that the attached Assignment be submitted to the City Council for
consideration and approval.
OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001 -6944
TELEPHONE (563) 583 -4113 / FAx (563) 583 -1040 / EMAIL balesq @cityofdubuque.org
It is anticipated that the purchase of the property will close on July 1, 2011.
BAL:tls
Attachment
cc: Dave Heiar, Economic Development Director
William Maiers, Esq.
F: \USERS\tstecklelLindahl \Walter Development & TM Logistics\MVM_Assignment 061511.doc
It is anticipated that the purchase of the property will close on July 1, 2011.
BAL:tls
Attachment
cc: Dave Heiar, Economic Development Director
William Maiers, Esq.
F: \USERS \tsteckle \Lindahl \Walter Development & TM Logistics \MVM_Assignment_061511.doc
This Agreement, dated for reference purposes thel6thday of May
2011, by and among the City of Dubuque, Iowa, a municipality (City), established
pursuant to the Iowa Code and acting under authorization of Iowa Code Chapter
403, as amended (Urban Renewal Act), Walter Development, LLC, an Iowa limited
liability company with its principal place of business at Dubuque, Iowa (Developer),
and TM, Inc., d /b /a TM Logistics, Inc. an Iowa corporation with its principal place of
business in Dubuque, Iowa, (Employer).
WITNESSETH:
DEVELOPMENT AGREEMENT
BY AND AMONG
THE CITY OF DUBUQUE, IOWA,
WALTER DEVELOPMENT, LLC,
AND
TM, INC.
WHEREAS, in furtherance of the objectives of the Urban Renewal Act, City
has undertaken an Urban Renewal project (the Project) to advance the
community's ongoing economic development efforts; and
WHEREAS, the Project is located within the Dubuque Industrial Center
Economic Development District (the Project Area); and
WHEREAS, as of the date of this Agreement there has been prepared and
approved by City an Urban Renewal Plan for the Project Area consisting of the
Urban Renewal Plan for the Dubuque Industrial Center Economic Development
District, approved by the City Council of City on May 2, 1988, and as subsequently
amended through and including the date hereof (the Urban Renewal Plan); and
WHEREAS, a copy of the Urban Renewal Plan, as constituted on the date of
this Agreement, attached hereto as Exhibit A, has been recorded among the land
records in the office of the Recorder of Dubuque County, Iowa; and
WHEREAS, Employer has determined that it requires a new building to
maintain and expand its operations and employment in the Project Area; and
WHEREAS, Developer and Employer have entered into an agreement for
the construction of a new office building; and
WHEREAS, Developer has requested that City sell to Developer 2.616 acres
of which 2.616 acres are usable, legally described as Lot 2 -4 of Dubuque Industrial
Center West 4 Addition in the City of Dubuque, Dubuque County, Iowa, together
with all easements, tenements, hereditaments, and appurtenances belonging
thereto (the Property) so that Developer may develop the Property, located in the
Project Area for the construction of an office building and thereafter lease and sell
051311 032311balrev2
4.7 Preservation of Property. During the term of this Agreement, Developer shall
maintain, preserve and keep, or cause others to maintain, preserve and keep, the
Minimum Improvements in good repair and working order, ordinary wear and tear
excepted, and from time to time shall make all necessary repairs, replacements,
renewals and additions. Nothing in this Agreement, however, shall be deemed to
alter any agreements between Developer or any other party including, without
limitation, any agreements between the parties regarding the care and maintenance
of the Property.
4.8 Non - Discrimination. In carrying out the project, Developer shall not
discriminate against any employee or applicant for employment because of race,
religion, color, sex, sexual orientation, gender identity, national origin, age or
disability.
4.9 Conflict of Interest. Developer agrees that no member, officer or employee
of City, or its designees or agents, nor any consultant or member of the governing
body of City, and no other public official of City who exercises or has exercised any
functions or responsibilities with respect to the project during his or her tenure, or
who is in a position to participate in a decision - making process or gain insider
information with regard to the project, shall have any interest, direct or indirect, in
any contract or subcontract, or the proceeds thereof, for work to be performed in
connection with the project, or in any activity, or benefit therefrom, which is part of
this project at any time during or after such person's tenure. In connection with this
obligation, Developer shall have the right to rely upon the representations of any
party with whom it does business and shall not be obligated to perform any further
examination into such party's background.
4.10 Non - Transferability /Tax- Deferred Exchange. Until such time as the Minimum
Improvements are complete (as certified by City under Section 2.4), this Agreement
may not be assigned by Developer except to Employer nor may the Property be
transferred by Developer to another party except Employer without the prior written
consent of the City, which shall not be unreasonably withheld. Thereafter,
Developer or Employer shall have the right to assign this Agreement and upon
assumption of the Agreement by the assignee, Developer shall no longer be
responsible for its obligations under this Agreement. The Developer may elect to
acquire the property as part of a tax - deferred exchange as defined in Internal
Revenue Code §1031, in which case, with the consent of the City, which consent
shall not be unreasonably withheld, all right, title, and interest in this Agreement
may be assigned by the Developer to a qualified intermediary and /or
Accommodator as defined by Internal Revenue Service Code and Regulations for
the purpose of facilitating said tax - deferred exchange in accordance with Internal
Revenue Service Code and Regulations. All documentation necessary to effect any
such assignment shall be acceptable to the City, in its sole discretion. In doing so,
City shall bear no additional cost nor liability of any kind to Developer. Developer's
performance under this Agreement is not conditioned on the Developer's ability to
15
effect said exchange and any such assignment and exchange shall in no way
relieve the Developer or Employer of any commitments under this Agreement.
4.11 Restrictions on Use. Developer agrees for itself, and its successors and
assigns, and every successor in interest to the Property or any part thereof that
they, and their respective successors and assigns, shall:
(1) Devote the Property to, and only to and in accordance with, the uses
specified in the Urban Renewal Plan (and City represents and agrees that
use of the Property as an office building is in full compliance with the Urban
Renewal Plan) (however, Developer shall not have any liability to City to the
extent that a successor in interest shall breach this covenant and City shall
seek enforcement of this covenant directly against the party in breach of
same); and
(2) Not discriminate upon the basis of race, religion, color, sex, sexual
orientation, national origin, age or disability in the sale, lease, rental, use or
occupancy of the Property or any improvements erected or to be erected
thereon, or any part thereof (however, Developer shall not have any liability
to City to the extent that a successor in interest shall breach this covenant
and City shall seek enforcement of this covenant directly against the party in
breach of same).
4.12 Release and Indemnification Covenants.
(1) Developer releases City and the governing body members, officers,
agents, servants and employees thereof (hereinafter, for purposes of this
Section, the Indemnified Parties) from, covenants and agrees that the
Indemnified Parties shall not be liable for, and agree to indemnify, defend
and hold harmless the Indemnified Parties against, 'any loss or damage to
property or any injury to or death of any person occurring at or about or
resulting from any defect in the Minimum Improvements.
(2) Except for any gross negligence, willful misrepresentation or any
willful or wanton misconduct or any unlawful act of the Indemnified Parties,
Developer agrees to protect and defend the Indemnified Parties, now or
forever, and further agrees to hold the Indemnified Parties harmless, from
any claim, demand, suit, action or other proceedings whatsoever by any
person or entity whatsoever arising or purportedly arising from (1) any
violation of any agreement or condition of this Agreement (except with
respect to any suit, action, demand or other proceeding brought by
Developer against City based on an alleged breach of any representation,
warranty or covenant of City under this Agreement and /or to enforce its
rights under this Agreement); or (2) the acquisition, construction, installation,
ownership, and operation of the Minimum Improvements; or (3) the condition
of the Property and any hazardous substance or environmental
16
WILLIAM J. MAIERS
CHADWYN D. COX
MARK J. SULLIVAN
JOHN T.NEMMERS
TODD N.KLAPATAUSKAS"
KIM C. RODDCK
NATALIA H. BLASKOVICH
COLISTA K. SCHMITT"
GINA L. KRAMER
Mr. Barry A. Lindahl
Attorney at Law
Suite 330 Harbor View Place
300 Main Street
Dubuque, IA 52001
Dear Barry:
Per your request, please let me take this opportunity to advise in writing why Walter
needs to assign the Development Agreement to Epic Construction. First of all, let us clarify that
Epic Construction is the general contractor for the construction of the building. They are located
at 862 White Street, Dubuque, IA 52001. To take advantage of a Section 1031 Exchange, Walter
cannot construct the building after obtaining title. Rather, the completed building must be on the
real estate before Walter takes title. If Walter took title and then constructed the building, the cost
of construction would not be eligible for the like -kind exchange. Epic Construction has agreed to
serve as accommodator. Epic will transfer legal title to the building to Walter after the building is
constructed. If you or the Council have additional questions, please feel free to contact me.
WJM /dms
cc: Walter Development, L.L.C.
Attention: Timothy W. Hodge
S: \WP \DONNA \Corporations \Walter Development, L.L.0 \Corr\061311- LINDAHL.wpd
all REYNOLDS & KENLINE
LAW FIRM SINCE 1890
RE: Walter Development/City of Dubuque
Development Agreement
Sincerely,
William J. aiers
June 13, 2011
110 EAST 9TH STREET
P.O. BOX 239
DUBUQUE, to 52004 -0239
1N (563)556-8000
rnx (563)556-8009
OFFICE@RKENLINE.COM
':Eu WWW.RKENLINE.COM
ASSIGNMENT OF RIGHT TO PURCHASE PROPERTY UNDER
DEVELOPMENT AGREEMENT
THIS AGREEMENT is entered into by and between EPIC CONSTRUCTION
(hereinafter called Assignee) and WALTER DEVELOPMENT, L.L.C. (hereinafter called
Assignor).
WITNESSETH:
WHEREAS, Assignor, as Buyer, entered into that certain Development Agreement
with the City of Dubuque ( "the City "), a copy of which is attached hereto as Exhibit A and
is incorporated herein by this reference (hereinafter called "Development Agreement "); and
WHEREAS, Assignor expressly reserved the right to assign its rights, but not its
obligations, in the Development Agreement for a like kind exchange and qualifying use
within the meaning of Section 1031 of the Internal Revenue Code on or before the Closing
Date, subject to the approval of the City of Dubuque; and
WHEREAS, Assignor and Assignee have executed an Agreement in which
Assignee has agreed to purchase the Property identified in the Development Agreement.
NOW, THEREFORE, the parties agree:
(1) Assignor hereby assigns to Assignee Assignor's rights to purchase the
Property described in the Development Agreement attached as Exhibit A.
(2) Assignee hereby assumes Assignor's rights to purchase the Property
described in the Development Agreement from the City as stated in the
Development Agreement, subject in all respects to the Development
Agreement.
(3) Assignor hereby requests and directs the City of Dubuque to issue the Deed
described in the Development Agreement directly to Assignee, subject in all
respects to the Development Agreement.
(4) The City shall be considered a third -party beneficiary under this Agreement.
During the period in which title to the Property is held by the Assignee, the
City's right of reverter under Sections 5.3 and 5.4 of the Development
Agreement shall be enforceable by the City directly against the Assignee in
the same manner and to the same extent as such provisions would
otherwise be enforceable against the Assignor.
IN WITNESS WHEREOF, the parties have executed this agreement as their free
and voluntary act and deed.
Dated this 20th day of June, 2011.
WALTER DEVELOPMENT, L.L.C.,
Assignor
By:
EPIC CONSTRUCTION,
I I
By I�,II
Assignee
APPROVAL OF ASSIGNMENT BY
CITY OF DUBUQUE, IOWA
By:
And:
6: ")744 �
othy W. Hoy e, Y anager
k 7e.
(pro -tem) Mayor
acting) City Clerk
S: \WP \DONNA \Corporations \Walter Development, L.L.0 \Plead\ASSIGNMENT OF RIGHT TO PURCHASE PROPERTY UNDER DEVELOPMENT AGREEMENT- EPIC.wpd
E
is
June 15, 2011
City of Dubuque
50 W 13 St.
Dubuque, IA 52001
Brad Bierman
President
nstruction
Attn: Mr. Dave Heiar
Dear Mr. Heiar,
This letter is to notify you that a July 1, 2011 closing date is acceptable for the TM, Inc. project
between Epic Construction and Walter Development to be constructed on Lot 2 -4 of DICW.
Sincerely,
Epic Construction
f--
862 White Street 1 Dubuque, Iowa 52001 1 p.563.583.2169 1 f.563.583.2412 1 www.epicgc.com