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CEBA Application - Prudential i5~~~E ~ck~ MEMORANDUM December 15, 2004 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Approval of CEBA Application for Prudential lL' Prudential Retirement Insurance & Annuity Company has proposed an expansion of employment in Dubuque. Over the next three years the Company is proposing to add 69 new positions at their downtown location. All of the positions have starting wages above $25,000 per year. Economic Development Director Bill Baum recommends City Council approval of an application for Community Economic Better Account (CEBA) funds to assist Prudential in an expansion project. The expansion is subject to the State of Iowa approval of CEBA assistance in the amount of $207,000. The required City local match is proposed to be $62,000. The source of funding for this cash match is proposed to be the Greater Downtown Urban Renewal District. Currently, by City policy, the City requests only 75% of the available increment in this Tax Increment Financing District. To fund the match, the City would need to request 75% plus $62,000 in next year's filing, or about 79% of the increment. I concur with the recommendation and respectfully request Mayor and City Council approval. "Llfl/ It'; ) , . Ii' j '1J) /,;l¡ ..,ilL-- Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager William Baum, Economic Development Director i5~ ~ck~ MEMORANDUM December 14, 2004 TO: FROM: Michael Van Milligen, City Manager William Baum, Economic Development Director ~ SUBJECT: Approval of a CEBA application for Prudential Introduction The purpose of this Memorandum is to request approval of an application for Community Economic Betterment Account (CEBA) funds to assist Prudential Retirement Insurance & Annuity Company in an expansion project. Background In 1999 the City entered into a Development Agreement and an Enterprise Zone Agreement with Trilog, Inc. (CIGNA) for the expansion of the Company at 5th and Main. The terms of the Development Agreement stipulated the City would provide a land grant for the expansion, and a rebate of property taxes paid on the incremental value created by the project. The Enterprise Zone agreement allowed the company to receive sales tax refunds on the materials used in construction, an increase in job training funding from the community college, and a tax credit on the capital investments made by the company. The Company agreed to employ 200 persons, in addition to the 1999 employment of 320, and to maintain these 520 positions for 10 years. In November 2002 CIGNA announced the company had signed an agreement to sell its retirement business to Prudential Retirement Insurance & Annuity Company. (Prudential) A Memorandum of Understanding and Assignment and Assumptions for the CIGNAlCITY/Prudential agreements were prepared and approved by the City Council and executed by all parties. I received documentation from CIGNA that employment at the end of December 2003 was 570. Today the Company employs 579 full time positions. Therefore, the Prudential continues to be in compliance with the terms of the City's Enterprise Zone and Development Agreements. Discussion In working with Rick Dickinson of the Greater Dubuque Development Corporation, we had envisioned the sale to Prudential would mean more good paying jobs to Dubuque. Now, a few months after the completion of the sale, Prudential has proposed an expansion of employment in Dubuque. Over the next three years the Company is proposing to add 69 new positions at their location downtown. All of the positions have starting wages above $25,000 per year. The expansion is subject to the State of Iowa approval of CEBA assistance in the amount of $207,000. A local match is required. A $62,000 loan is proposed to be provided to the company, borrowed against Tax Increment Financing (TIF) in the Greater Downtown Urban Renewal District. Currently in most of the district, the City requests 75% of the available TIF. In fiscal year 2007, the City would request 75% plus this $62,000, or approximately 79% of the available TIF. The exact percentage will be determined when actual valuations in the district are provided next year. An application for CEBA assistance has been prepared and approved by the company. Attached are pertinent pages of the application for your review. The complete application with all attachments will be sent to the Iowa Department of Economic Development after City Council approval. Recommendation New job creation by Prudential in Downtown Dubuque is very positive economic development news. The expansion will assist the City Council in meeting its goal of a "Diverse, Strong, Dubuque Economy" and in the implementation of the Downtown Master Plan. I recommend the attached resolution approving the submission of the CEBA application be approved F :IUSERSI WBaumlCI GNA IMemotoMikeonO4CE BAdoc RESOLUTION NO. A RESOLUTION AUTHORIZING THE FILING OF A COMMUNITY ECONOMIC BETTERMENT ACCOUNT (CEBA) APPLICATION ON BEHALF OF PRUDENTIAL RETIREMENT INSURANCE & ANNUITY COMPANY Whereas, PRUDENTIAL RETIREMENT INSURANCE & ANNUITY COMPANY has proposed the expansion of its existing operations; and Whereas, the City Council of Dubuque, Iowa has considered said proposal and has determined that the proposed project will contribute to the local economy through the creation of over 69 new jobs for area residents; and Whereas, the Iowa Department of Economic Development's Community Economic Betterment Account (CEBA) was designed to assist in the economic development efforts of local jurisdictions; and Whereas, the City of Dubuque, Iowa is eligible to apply for funding from the Community Economic Betterment Account program; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the filing of an application for participation in the Iowa Community Economic Betterment Account program on behalf of Prudential Retirement Insurance & Annuity Company is approved. Section 2. That a local match of $62,000 be provided by the City of Dubuque as a loan to the company, subject to the approval and execution of a formal loan agreement. Section 3. That the Mayor is hereby authorized to execute, and the City Manager is hereby directed to submit said application to the State of Iowa Economic Development Commission together with such documents as may be required. Passed, approved, and adopted this 20th day of December 2004. Terrance M. Duggan, Mayor Attest: Jeanne Schneider, City Clerk F:IUSERSIWBaumICIGNAIResolution approving CEBA app,doc t.) Towa SMART IDEA Division of Business Development Iowa Department of Economic Development 200 East Grand Avenue Des Moines, Iowa 50309 www.iowasmart.com Application for Financial Assistance June 29, 2004 Application for Financial Assistance Page 2 GENERAL INSTRUCTIONS 1. Please visit the IDEO website, www.iowasmart.com, or contact IDEO to see if this version of the application is still current. 2. Before filling out this application form, please read all applicable sections of the 2003 Iowa Code and Iowa Administrative Code (rules). 3. Only tvDed or comDuter-oenerated applications will be accepted and reviewed. Any material change to the format, questions, or wording of questions presented in this application, will render the application invalid and it will not be accepted. 4. Complete the applicable sections of the application fully; if questions are left unanswered or required attachments are not submitted, an explanation must be included. 5. Use clear and concise language. Attachments should only be used when requested or as supporting documentation. 6. Any inaccurate information of a significant nature may disqualify the application from consideration. 7. Send the original ~ one copy of the completed application form and all required attachments to: Business Finance Team Iowa Department of Economic Development 200 East Grand Avenue Des Moines, Iowa 50309 It is not necessary to bind the application and/or the required attachments. 3-ring binders, staples or binder clips may be utilized. Please provide photocopies of any document, which in its original form, IDEO would not be able to 2-hole punch for purposes of creating the applicant's file. IDEO December 5, 2003 Application for Financial Assistance Page 3 PUBLIC RECORDS POLICIES Information Submitted to IDED. The Iowa Department of Economic Development (IDEO) is subject to the Open Records law (Iowa Code, Chapter 22). Treatment of information submitted to IDEO in this application is governed by the provisions of the Open Records law. All public records are available for public inspection. Some public records are considered confidential and will not be disclosed to the public unless ordered by a court, the lawful custodian of the record, or by another person duly authorized to release the information. Confidential Records. IDEO automatically treats the following records as confidential and they are withheld from public disclosure: Tax Records Quarterly Iowa Employer's Contribution and Payroll Report prepared for the Iowa Workforce Development Department Payroll Registers Business Financial Statements and Projections Personal Financial Statements Other information supplied to IDEO as part of this application may be treated as confidential under Iowa Code section 22.7. Following are the classifications of records which are recognized as confidential under Iowa law and which are most frequently applicable to business information submitted to IDEO: Trade secrets [Iowa Code §22.7(3)] Reports to governmental agencies which, if released, would give advantage to competitors and serve no public purpose. [Iowa Code §22.7(6)] Information on an industrial prospect with which the IDEO is currently negotiating. [Iowa Code §22.7(8)] Communications not required by law, rule or regulation made to IDEO by persons outside the government to the extent that IDEO could reasonably believe that those persons would be discouraged from making them to the Department if they were made available for general public examination. [Iowa Code §22.7(18)] Information supplied to IDEO as part of this application that is material to the application and/or the state program to which the applicant is applying including, but not limited to the number and type of jobs to be created, wages for those jobs, employee benefit information, and project budget, are considered open records and will not be treated as confidential. Additional Information Available. Copies of Iowa's Open Record law and IDEO's administrative rules relating to public records are available from the Department upon request or at httD:I Iwww.iowasmartidea.com/docs/chaD1690Denrecords.doc. IDEO December 5, 2003 Page 4 Application for Financial Assistance APPLICAIIJIII: ¡N FOMMftON Name of Business: Address: City, State 8r. ZIP Code: Contact Name 8r. Title: Telephone: E-mail Address: Website: Federal ID Number: Prudential Retirement Insurance & Annuity Company 500 Main Street Dubuque Lori Theilen 563-585-6643 Fax: Lori .Th ielen/PI/Prudentia I (i'ì)Prudentia 1 www.prudential.com 06-1050034 SIC or NAICs Code: 563-585-6579 Is the contact person listed above authorized to obligate the Business? 0 Yes I:8JNo If no, please provide the name and title of a company officer authorized to obligate the Business. Douglas Russell, VP Operations Business Structure: I:8J Corporation 0 Limited Liability Co. 0 Not for Profit If Corporation, attach a copy of Corporate Resolution authorizing company officials to execute application, contract, and/or necessary loan documents, if approved. Type of Business Project: 0 New Location in Iowa 0 Retention of Iowa Facility 0 Partnership 0 Cooperative 0 Sole Proprietorship 0 S-Corporation I:8J Expansion of Iowa Company 0 Start-up 0 Relocation This application was prepared by: Name 8r. Title: Organization: Address: City, State 8r. Zip Code: Telephone: E-mail Address: William Baum, Economic Development Director City of Dubuque 50 W. 13th Street Dubuque, IA 52001 563-589-4393 Fax: wbau m@cityofdubuque.org 563-589-1733 IDEO December 5, 2003 Application for Financial Assistance Page 5 Please complete the sponsoring community information if the Business is applying for one of the following programs: CEBA Enterprise Zone Program New Capital Investment Program New Jobs and Income Program Economic Development Set-Aside Program City, County, or Enterprise Zone Commission Sponsoring Application: City / County: Mayor / Chairperson: Address: City, State 8r. ZIP Code: Dubuque, IA Richard Stein 50 W. 13th Street Dubuque, IA 52001 IDEO's Contact at the City/County/EZ Commission: Name 8r. Title: Same as above Telephone: E-mail Address: Fax: APPLICATION SUBMISSION DEADLINES "".'..~rK+.Lj ,'."'. ",'. .< ' L, .," ., ',', ,j , CEBA 4 weeks prior to the next IDEO Board Meeting. Enterprise Zone Program Any time; allow 3-4 weeks from date IDEO receives application for processing. New Capital Investment Program Any time; allow 3-4 weeks from date IDED receives (NCIP) application for processing. New Jobs and Income Program 4 weeks prior to the next IDED Board Meeting. (NJIP) Iowa Values Fund 4 weeks prior to the next Iowa Values Board Meeting Entrepreneurial Ventures Any time; allow 3-4 weeks from date IDEO receives Assistance (EVA) application for processing VAAPFAP 151 of the month in order for request to be considered at that month's review meeting. Economic Development Set Aside Any time; allow 3-4 weeks from date IDEO receives (EDSA) application for processing. IDED December 5, 2003 Application for Financial Assistance Page 6 CERTIFICATION 8r. RELEASE OF INFORMATION: I hereby give permission to the Iowa Department of Economic Development (IDED) or the Iowa Values Board to research the Business' history, make credit checks, contact the Business' financial institutions, insurance carriers, and perform other related activities necessary for reasonable evaluation of this application. I also hereby authorize the Iowa Department of Revenue to provide to IDEO state tax information pertinent to the Business' state income tax, sales and use tax, and state tax credits claimed. I understand that all information submitted to IDEO or the Iowa Values Board related to this application is subject to Iowa's Open Record Law (Iowa Code, Chapter 22). I understand this application is subject to final approval by IDEO and/or the Iowa Values Board and the Project may not be initiated until final approval is secured. I understand that IDEO or the Iowa Values Board reserves the right to negotiate the benefits. Furthermore, I am aware that benefits are not available until an agreement is executed within a reasonable time period following approval. I hereby certify that all representations, warranties, or statements made or furnished to IDEO or the Iowa Values Board in connection with this application are true and correct in all material respect. I understand that it is a criminal violation under Iowa law to engage in deception and knowingly make, or cause to be made, directly or indirectly, a false statement in writing for the purpose of procuring economic development assistance from a ¿~~( 10/1 /~i - Signature r Date / I 1:h-gps: k.KuSSRil Sßh: fý tJìC-e- pr~s ÎolLver Name d Title (typed or printed) For the Community (refer to the top of page 6 for programs requiring Community signature): Signature Date _Terrance Duggan, Mayor Name and Title (typed or printed) IDEO or the Iowa Values Board will not provide assistance in situations where it is determined that any representation, warranty, or statement made in connection with this application is incorrect, false, misleading or erroneous in any material respect. If assistance has already been provided prior to discovery of the incorrect, false, or misleading representation, IDEO or the Iowa Values Board may initiate legal action to recover incentives and assistance awarded to the Business. IDED December 5, 2003 Application for Financial Assistance Page 7 All applicants shall complete Section A of this application and onlv the section(s} for the program(s} to which the applicant is applying. Prooram CEBA Enterprise Zone Program New Capital Investment Program New Jobs and Income Program Iowa Values Fund Entrepreneurial Ventures Assistance Value Added Agricultural Products & Processes Financial Assistance Program Economic Development Set-Aside Program Section B Section C Section 0 Section E Section F Section G Section H Section I IDED December 5, 2003 5. Application for Financial Assistance Page 8 SEcnON A: PROJECT INFORMATION I 1. Provide a brief description and history of the Business including current products/services and markets served. On April 1, 2004, Prudential Financial, Inc. (NYSE: PRU) announced that it has completed the acquisition of the retirement business of CIGNA Corp. (NYSE: CI) for a cash consideration of $2.1 billion. Effective immediately, all of CIGNA's full-service retirement operations, its staff, and retirement programs and services are part of Prudential Retirement, a business of Prudential Financial. The new Prudential Retirement, combining two leading retirement services providers, now offers clients even greater retirement expertise across the full spectrum of retirement plan management. The transaction increases Prudential Retirement's assets to $120 billion and doubles its defined contribution record keeping assets to $59 billion, based on account values as of December 31, 2003. The acquisition also creates a Top 10 provider in the defined contribution market (PlanSponsor, June 2003), as well as establishing the nation's top manager of stable-value and funding agreement assets (LIMRA International, 2002). In addition, the transaction strengthens Prudential Financials position among the Top 10 leading global institutional asset managers, based on assets under management. The company employees at the Dubuque location as of 9/1: 579 employees. 2. Describe the proposed project for which assistance is being sought including any proposed products/services, any new markets, and the project address (if different than the address listed on page 5). Company is proposing to expand employment in Dubuque. New products and services - moving employment, or existing services have increased 3. Has any part of the project started? DYes I:8J No If yes, please explain. 4. Attachment A1: A business Dlan which shall, at a minimum, include: marketing study, feasibility study, projected profit and loss statements for three years into the future, project budget, production operations, management structure, personnel needs, descriptions of product or process, status of product/process development and patent status (if applicable). (Any information outlined above not included in the business plan should be submitted as supplemental information via a separate attachment.) See attachment Identify the Business' competitors and explain what impact the proposed project will have on any Iowa competitors. National competitors that reside regionally: Principal and Aegon. Local competitors: Hartland Financial and local banks. IDED December 5, 2003 1. Attachment A2: Copies of the Business' Quarterly Iowa Employer's Contribution and Payroll Report for the past year and a copy of the most recent payroll report for one pay period. Current employment as of 9/1: 579. See cover letter for more details. 2. Will any of the current employees lose their jobs if the project does not proceed? DYes I:8J No If yes, attach an explanation regarding the total number of employees that could be affected, their location(s), and why. 3. List the jobs that will be created and/or retained as the result of this project. For retained jobs, include the current wage rate. For jobs to be created, include the startinG wage rate. Job Title Skills, Education, or Number Retained (R) Starting or Experience Required of Jobs or Created (C) Current Wage Rate Distribution Education College Education 25 C $32,000.00 Center Specialist Participant Service High School Education 28 C $25,000.00 Center Representative Participant Service College Education 3 C $30,000.00 Center Operations Client Service College Education 7 C $33,000.00 Consultant Risk Management College Education 1 C $30 000.00 Sales Operations College Education 3 C $30 000.00 Managers College Education 2 C $70 000.00 Total Number of Retained Jobs: N/A Total Number of Created Jobs: 69 4. 5. Indicate the total number of jobs to be created during each year of the project and the estimated increase in annual payroll each year. Year 1: 54 jobs $ 1,685,000 Year 4: - jobs $ Year 2: 15 jobs $ 396,000 Year 5: - jobs $ Year 3: - jobs $ Does the Business operate any other facilities in Iowa? No If yes, complete the following: DYes I:8J Location # of Emplovees Application for Financial Assistance Page 10 11. Attachment A3: Description of the employee benefits provided by the company. With respect to medical and dental insurance plans, please include: a) the total cost of each benefit, PRUDENTIAL EMPLOYEE BENEFITS CHARGEBACK, 2005 Part Time - Marketing Benefit Full Time Part Time Assistants Total Welfare Plan 9,012 7,727 0 Total Pension 6.81% 6.13% 6.13% Total PESP 3.28% 3.17% 3.17% .PESP - 401(k) Plan b) the amount and percentage of the cost paid by the employee, and c) a benefit summary (deductibles, co-payments, eligibility requirements, etc.) 12. During the last five years, has the Business been cited or convicted for violations of any laws or regulations, including environmental or safety regulations? DYes I:8J No If yes, please attach a record of any legal action taken, fines, and an explanation of any mitigating circumstances. The Prudential acquisition of CIGNA was completed on 4/1/04. From 4/1/04 to current date, the business has not been cited or convicted for violations of any laws or regulations, including environmental or safety regulations. IDED December 5, 2003 Application for Financial Assistance Page 11 13. Project Budget: The budget should attempt to identify all sources of funding being considered including owner equity/investment, your primary lender as well as all public funds (local loan funds, federal programs, city assistance, etc.) Please be as detailed as possible. TOTAL AMOUNT BUDGETED Cost Source A Source B Source C Source D Source E Source F I Source G I Source H $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1$ $ $ $ $ $ $ $ $ $ $50000 $ $ $50,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $79000 $ $ $79 000 $ $ $ $ P T$ T$ T$ T$ $2,081.000 $207,000 $62,000 $1.812,000 2210.000 1941.200 $ 207.000 62,000 TERMS OF PROPOSED FINANCING Source of Funds Amount Type Rate Term Conditions Source A: IDEO $207 000 Foroive. Loan N/A 3 vears Creation of Jobs and Investment Source B: City $62,000 Loan 3% 3 vears N/A Source C: Prudential $1 941 200 N/A N/A N/A Onqoinq Operatinq Costs Source D: $ Source E: $ Source F: $ Source G: $ Source H: $ TOTAL $2,210 000 IDEO December 5, 2003