Cottingham & Butler CEBA Ap IDED
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MEMORANDUM
September 26, 2006
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Community Economic Betterment Account (CEBA) Application for
Cottingham & Butler, Inc.
Economic Development Director Dave Heiar is recommending approval to submit a
Community Economic Betterment Account (CEBA) program application to the Iowa
Department of Economic Development for a $360,000 partially forgivable loan on behalf
of Cottingham & Butler, Inc., with a commitment of local matching funds.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
flU ~ It"
Michael C. Van~illigen -
MCVM/ksf
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Dave Heiar, Economic Development Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
September 26, 2006
TO:
Michael Van Milligen, City Manager
David Heiar, Economic Development DirectorCt:'Mt.
Community Economic Betterment Account ~'d~) Application for
Cottingham & Butler, Inc.
FROM:
SUBJECT:
INTRODUCTION
This memorandum presents for City Council review and approval a resolution authorizing
the submission of a Community Economic Betterment Account (CEBA) program application
to the Iowa Department of Economic Development on behalf of Cottingham & Butler, Inc., a
national provider of employee benefit and risk management solutions. The CEBA
application is attached.
BACKGROUND
Cottingham & Butler, Inc. has announced its intent to expand its operations in downtown
Dubuque. The Company will retain 311 jobs and create 90 new positions as a part of this
expansion process.
Cottingham & Butler is an insurance advisor and service provider headquartered in
Dubuque. The Company has regional offices located throughout the United States and
has been in business since 1887. Cottingham & Butler is the 5ih largest insurance
broker in the United States and has over 2,000 clients. The Company does business in
over 40 states and has had a 15% average growth per year over the last 20 years.
In order to keep the Company's current employment downtown, and encourage
additional employment. The City Council approved a memorandum of understanding
offering an incentive package to the company to expand Downtown. This financial
package included the City's support of a CEBA application.
Cottingham & Butler plans to rehabilitate the 1st floor fa9ade of the Security Building to
restore it to it's grandeur of yesteryears. The Company also plans to restore the high
ceiling on the first floor and the open balcony that the Stampfer's Department Store had
for so many years, and renovate the full east side of the building. The initial cost
estimate for this renovation project is approximately $4.0 million.
In addition, Cottingham & Butler plans to renovate the House of China building located
Instructions
1, All applicants shall complete Section A of the Application for Financial Assistance and attach onlv those section(s) for the
program(s) to which the applicant is applying.
Proaram
Community Economic Betterrneant Account (CEBA)
Enterprise Zone Program (EZ)
High Quality Job Creation Program (HQJC)
Entrepreneurial Ventures Assistance Program (EVA)
Value Added Agricultural Products & Processes
Financial Assistance Program (VAAPFAP) Section F
Economic Development Set-Aside Program (EDSA) Section G
2. Please visit the IDEO Web site, htto:/lwww.iowalifechanQinQ.comlaoolicationslbus dev/index.hbnl or contact IDEO at (515)
242-4819 to see if this version of the application is still current.
3. Before filling out this application fonn, please read all applicable sections of the 2005 Iowa Code and Iowa Administrative
Code (rules). htto:11www4.1eQis.state,ia.usIIAChtmIl261.hbn
4. Only typed or comouter-()enerated applications will be accepted and reviewed. Any material change to the fonnat,
questions, or wording of questions presented in this application, will render the application invalid and it wiN not be
accepted.
5. Complete the applicable sections of the application fully; if questions are left unanswered or required attachments are not
submitted, an explanation must be included.
6. Use clear and concise language. Attachments should only be used when requested or as supporting documentation.
7. Any inaccurate infonnation of a significant nature may disqualify the application from consideration.
8. Upon completion of the application, please submit the following to the Business Finance Team at IDEO:
. The original, signed application fonn and all required attachments
. One copy of the application fonn and all required attachments from which additional copies can easilv be made.
If electronic copies of the application and required attachments are available, please e-mail these documents to
businessfinance@iowalifechanQino.com in addition to submitting the original plus one copy.
Business Finance Team
Iowa Department of Economic Development
200 East Grand Avenue
Des Moines IA 50309
Download and Comolete
Section B
Section C
Section 0
Section E
APollcation Due Dates
IDEO Board Meetin
ril 20, 2006 March 27, 2006
Ma 18, 2006 A ri124. 2006
June 15, 2006 Ma 22, 2006
Jul 20, 2006 June 26, 2006
Au ust17, 2006 Jul 24,2006
Sa tember 21. 2006 Au ust 28. 2006
October 19. 2006 Sa tember 25,2006
November 16,2006 October 23,2006
December 21,2006 November 27,2006
. EVA applications will be acted upon every other month starting in March.
A Ifcation Due Oat.
Section A - Applicant & Project Information
2
Public Records Policies
Information Submitted to IDEO. The Iowa Department of Economic Development (IDEO) is subject to the Open Records iaw
(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
. Quarterty Iowa Emp/oyer's Contribution and Payroll Report prepared for the Iowa Workforce Development Department
. Payroll Registem
. Business Financial Statements and Projections
. Pemonal 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 922.7(3)]
. Reports to governmental agencies which, if released, would give advantage to competitom and serve no public purpose.
[Iowa Code 922.7(6)1
. Information on an industrial prospect with which the IDEO is currently negotiating. [Iowa Code 922.7(8)]
. Communications not required by law, rule or regulation made to IDEO by pemons 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 922.7(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
htto://www.iowalifechanqinq.com/downloads/chao1690oenrecords.doc.
Section A - Applicant & Projectlntormation
3
RESOLUTION NO. 468-06
A RESOLUTION AUTHORIZING THE FILING OF A COMMUNITY
ECONOMIC BETTERMENT ACCOUNT (CEBA) APPLICATION ON
BEHALF OF COTTINGHAM & BUTLER, INC.
Whereas, Cottingham & Butler, Inc. has proposed the expansion of its
operations in Dubuque, Iowa; 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 90 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 CEBA
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 Community
Economic Betterment Account program on behalf of Cottingham & Butler, Inc. is hereby
approved.
Section 2. That the local match of identified in the application as $600,000 of
loans, a $20,000 grant and a 10 year TIF rebate for increased building valuation estimated
at one million to the company is hereby approved, subject to the CEBA application
approval.
Section 3. That the Mayor is hereby authorized to execute and the City Manager is
hereby directed to submit said application to the Iowa Department of Economic
Development together with such documents as may be required.
Passed, approved, and adopted this 2nd day of October 2006.
Roy D. Buol, Mayor
Attest:
Jeanne Schneider, City Clerk
F:\USERSIDHeiarlCottingham & BullerlResolulion approving CEBA app.doc
Applicanllnformatlon
1. Name of Business: Cottingham & Butler, Inc.
Address: 300 Security Building
City, State & Zip Code: Dubuque, IA 52001
Contact Person: Brenda Hoefler Title: Chief Financial Officer
Phone: (563) 587-5301 Fax: (563) 587-5881 Email: Brenda.Hoefler@cb-sisco.com
2. SIC or NAICS Code: 524210,524291,524292
3. Federal 10 Number: 42-1490886
Does the Business file a consolidated tax return under a different tax 10 number? [ZI Ves
If yes, please also provide that tax 10 number: 42-0935948
o No
4.
Is the contact person listed above authorized to obligate the Business? 0 Ves
If no, please provide the name and title of a company officer authorized to obligate the Business:
Co-Authorization by Chief Executive Officer and Chief Financial Officer required.
[ZINo
5. If the application was prepared by someone other than the contact person listed above, please complete the following:
Name: Title:
Organization:
Address:
City, State, & ZIP Code:
Phone: Fax: Email:
Sponsor Information
Please review the following table to determine who needs to sponsor this application. Depending on the programs being
applied for, more than one sponsor may be necessary.
Pro ram
CEBA
EZ
HQJC
EVA
VAAPFAP
EDSA
Acce table S onsor
Cit or Coun or Communi Coile e in which the Pro'ect Site is Located
Locai Enle rise Zone Commission
Cit or Count in which the Pro'ect Sile is Located
City or County in which the Project Site is Located: Local Development Entity; John Pappajohn Entrepreneurial
Center; a Small Business Develo ment Center; Business Acceierator; or similar enti
Ci or Coun in which the Pro'ect Site is Located or Local Develo ment Enti
Ci or Coon in which the Pro'ect Site is Located
1. Sponsor Organization: City of Dubuque
Official Contact (e.g. Mayor, Chairperson, etc.):Roy Bual Title: Mayor
Address: 50 West 13'" Street
City, Slate & ZIP Code: Dubuque, IA 52001
Phone: 563-589-4110 Fax: E-mail: rdbuol@cityafdubuque.org
Section A - Applicant & Project Information
4
2. If IDEO needs to contact the sponsor organization with questions, should we contact the person listed above?
DYes [g] No, please contact the following person:
Dave Heiar, Economic Development Director
50 West 131h Street
Dubuque, IA 52001
Phone (563)589-4393 Fax (563)589-1733
dheiar@cityofdubuque.org
Certification & Release of Information
I hereby give permission to the Iowa Department of Economic Development (IDEO) 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 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 the Project may not be initiated until final approval is
secured. (High Quality Job Creation Program applications may be submitted up to 12 months following the completion ofthe
project.)
I understand that IDEO reserves the right to negotiate the financial assistance. Furthermore, I am aware that financial
assistance is not available until an agreement is executed within a reasonable time period following approval.
I hereby cartify that all representations, warranties, or statements made or fumished to IDEO in connection with this application
are We 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 state agency or subdivision.
For~si~ess:
~ ~ 7ftJ'O J-...J
Signature '
John E. Butler, Chairman & CEO
rb~t:.
Date!
Name and Title (typed or printed)
For the Sponsor(s):
Signature
Date
Name and Title (typed or printed)
Please use the following if more than one sponsor is required. (For example, use this if a signature from the local Enterprise
Zone Commission is required in addition to the signature from the Mayor of the sponsoring city.)
Section A - Applicant & Project Information
5
Signature
Date
Name and Title (typed or printed)
IDEO 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 may initiate legal action to recover
incentives and assistance awarded to the Business.
Section A - Applicant & Project Information
6
Prolect Information
1. Provide a brief description and history of the Business. Include information about the Business' products or services
and its markets and/or customers.
Cottingham & Butler was established in 1887. It is located in Dubuque, Iowa with approximately 325 employees
nationwide. The company is privately owned and operated. Cottingham & Butler is a national provider of employee
benefit and risk management solutions. It is the 57" largest insurance broker in the United States, with over 2,000
clients. We place over $250 million in commercial insurance premium, and administer $250 million in benefits claims.
2.
Business Structure:
D Cooperative
D Partnership
D COlflOration
t8J S-Corporation
D Limited Liabilily Company
D Sole Proprietorship
D Not for Profit
State of Incorporation: Iowa
2. Identify the Business' owners.
John E. Butler
David O. Becker
Christopher D. Patrick
Dean F. Fair
John J. Oltavi
Lanry J. Nedder
Does a woman, minority, or person with a disability own the Business?
if yes, is the business certified as a Targeted Small Business?
DYes
DYes
t8J No
D No
4. List the Business' Iowa Locations and the Current Number of Employees at each Location.
We currently have one Iowa location in Dubuque, Iowa with approximately 311 employees.
5. What is the Business' worldwide employment? (Please include employees of parent company, subsidiaries, and other
affiliated entities in this figure.)
The total employment is approximately 325 employees.
6. Briefly describe the proposed project for which assistance is being sought. (Include project timeline with dates, facility
size, infrastructure improvements, proposed products/services, any new markets, etc.)
We are looking for assistance to continue to grow our business. Our plans are to add 90 positions over the next three
years. We need to expand and improve our current facilities to be able to accommodate this growth. There are two
buildings that would be rehabilitated as part of this process, those being the Security Building. and one commonly
known as the "House of China" building.
Security Building - Pending financial assistance, we would like to begin work early in 2007 for completion in the spring
of 2008. The scope of the project includes a historic rehabilitation of the building on the ground level exterior of the
south and west elevations. a full east side exterior rehabilitation, and conversion of the 17,000 square ft. mixed-use
third party tenant space into usable office space to accommodate our growth.
"House of China" building - Pending financial assistance, we would like to begin work early in 2007 for completion in
the fall of 2007. The scope includes a complete interior and exterior renovation of the building. The construction will
tum this otherwise vacant building into approx. 6,000 sq. ft. of additional office space for Cottingham & Butler and/or
possibly a public restaurant.
Section A - Applicant & Project Information
7
7. Project Address (Street Address, City, and County):
800 Main Street, Dubuque, IA Dubuque County
803 Main Street, Dubuque, IA Dubuque County
8. Type of Business Project:
o Startup [8J Expansion of Iowa Company 0 New Location in Iowa
o Relocation from another State
9. Please identify the management at the project location and hislherltheir experience.
John E. Butler, Chairman & CEO - 40+ years with Cottingham & Butler
David O. Becker, President & COO - 2 years with Cottingham & Butler, previously partner with McKinsey Consulting.
10.
Has any part of the project started?
If yes, please explain.
We are currently developing conceptual drawings to help understand the scope and cost of the project. No
construction can begin until we have secured appropriate financing.
[8J Yes
ONo
Section A - Applicant & Project Information
8
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12.
In Networ1<
MedicaUHealth 3,480 6,960 2,088 4,176 Coinsurance 80%/20%
Insurance Single Deductible $250
Family Deductible $750
Out of Pocket Maximum Single $1,650
Out of Pocket Maximum Family $3,300
Coinsurance 80%120%
Dental Insurance 288 864 144 432 Deductible 0
Vision Insurance NA NA NA NA
Life Insurance 54 0 54 0
Company pays 100% of STD Premiums.
Short Term Disability 100% 100% Calculations are based on salary, not
(STD) employee or family status.
Benefit = 70% Sala
Employees pay 100%, so in the event they
Long Term Disability 0% 0% are disabled, the benefits are tax free for
(LTD) them. The calculations are based on
salary, not employee or family status.
Benefit = 60% Sala not taxable
* If the business's plan is self-insured, please use the amount paid by the business for costs associated with employee and family coverage
during the past three years and then, determine the business' average annuai contribution per employee for that three year period.
Does the Business offer a pension plan, 401(k) plan, and/or retirement-plan? I:8J Ves 0 No
If yes, please indicate the amount contributed on a per employee basis by the Business to the plan. For 401(k) plans, please
provide information on the company match and indicate the average annual match per employee (show average as a
percentage of salary).
Cottingham & Butler offers two plans to all employees, a 401 K plan, and a defined contribution plan.
Cottingham & Butlers 401K plan matches 50% on the dollar, up to 4% of the employee's salary.
Cottingham & Butler offers a defined contribution retirement plan. The company contributes 4% of the employees' salary to the
plan up to the social security base. The company contributes 8% of the employee's salary above the social security base.
Does the Business offer a profit-sharing plan? 0 Ves I:8J No
If yes, please indicate total amount paid out each year for the past three years and then, determine the average annual bonus or
contribution per employee for that three year period.
Section A - Applicant & Project Information
11
Does the Business offer child care services? 0 Yes [8J No
Child care services include child care services on-site at the facility in which the project will occur or off-sHe child care
subsidized by the business at the rate of 50% or more of the costs incurred by an employee.
13. Identify the Business' competitors. If any of these competitors have Iowa locations, please explain the nature ofthe
competition (e.g. competitive business segment, estimated market share, etc.) and explain what impact the proposed
project may have on the Iowa competitor.
There are 39,000 insurance brokers in the United States, with hundreds in Iowa. Cottingham & Butier is the 57th
largest in the United States and the 2nd largest in Iowa (behind Holmes, Murphy in Des Moines). Most insurance
brokers conduct business in a very tight and limited geography. Cottingham & Butler has a unique business model for
our industry, wilh more than 80% of our revenue coming from businesses located outside of Iowa. Our expansion
plans will continue to build on that model, employing workers in Iowa to serve disproportionately businesses outside of
Iowa. Because of the geographic diversity of our business, we don't have a set of "regular' competitors within Iowa or
outside of Iowa that we would call our main competitors. Our market share of the insurance brokerage business
nationwide is probably less than 0.1 %. In one of our specialties - insUling trucking companies -- we probably have
around 2% of the national market.
As far as larger brokers in Iowa go, we would often be compared with Holmes, Murphy in Des Moines and True North
in Cedar Rapids. Our best guess would be that we compete with those two larger brokers on less than 2-3% of our
business. As such, despite an 25-30% expansion of our business, we expect the impact on the large Iowa competitors
to be marginal. Moreover, we are not heavily focused on smaller accounts and thus our expansion would not likely
increase competition at all for the many small insurance brokerages that focus on serving smaller businesses
throughout Iowa.
14. Will any of the current Iowa employees lose their jobs if this project does not proceed in Iowa?
DYes [8J No
If yes, please explain why and identify those jobs as "retained jobs' in the following question.
Section A - Applicant & Project Information
12
15 List the jobs that will retained andlor created as the result of this project. (A retained job is an existing job
that would be eliminated or moved to another state if the project does not proceed in Iowa.) For retained jobs, include
the current wage rate. For jobs to be created, including the startina wage rate.
YEAR 1
Job TIUe
IT Programmer
Sales Executive
Sales PersonlEOP
Department Manager
Account Administrator
Beneift Manager
Underwriter
Account Executive
Benefit Claims Examiner
CaselOisease Manager
Claims Examiner
Total Year 1
YEAR 2
Job Title
IT Programmer
Accountant
Recruiter
Administrative Support
Sales ExecutIve
Sales PersonlEDP
Account Administrator
Beneift Manager
Safety Consullant
Benefrt Claims Examiner
CaselOisease Manager
Claims Examiner
Total Year 2
YEAR 3
Skills, Education, Experience Required
es, Computer Science; 5 Yrs Experience
5 Years Sales Experience
College Degree
College Degree, 5 Years Experience
College Degree
College Degree
College Degree, 5 Years Experience
10 Years Experience
Entry Level
5 Years Experience in Healtheare
College Degree, 1-2 Years Experience
Skills. Education, Experience Required
8S, Computer Science; 5 Yrs Experience
College Degree, 1.2 Yrs Experience
College Degree, 1-2 Yrs Experience
3~5 Years Experience
5 Years Sales Experience
College Degree
College Degree
College Degree
3.5 Years Experience; College Degree
Entry Level
5 Years Experience in Healthcare
College Degree, 1-2 Years Experience
Job Title Skills, Education, Experience Required
IT Programmer 8S, Computer Science; 5 Yrs Experience
Accountanl College Degree, 1-2 Yrs Experience
Sales Executive 5 Years Sales Experience
Sales PersonlEDP College Degree
Underwriter/Captive Manager 3.5 Years Experience
Account Administrator College Degree
Beneift Manager College Degree
Safety Consultant 3~5 Years Experience; College Degree
Benefit Claims Examiner Entry Level
CasefOisease Manager 5 Years Experience in Healtheare
Claims Examiner College Degree, 1-2 Years Experience
Total Year 3
Total Number of Created Jobs
Number of Jobs
1
4
8
1
5
1
1
1
2
3
3
30
Retained or
Created Wage rate
Created 55,000
Created 90,000
Created 40,000
Created 100,000
Created 30,000
Created 35,000
Created 75,000
Created 125,000
Created 20,000
Created 40,000
Created 32,000
Retained or
Number of Jobs Cr&ated Wage rate
1 Created 50.000
1 Created 35,000
1 Created 45,000
1 Created 25,000
2 Created 90,000
9 Created 40,000
6 Created 30,000
1 Created 35,000
1 Created 45,000
2 Created 20,000
2 Created 40,000
3 Created 32,000
30
Number of Jobs
1
1
3
8
2
6
1
1
2
1
4
30
90
13
Retained or
Created Wage rate
Created 50,000
Created 35,000
Created 90,000
Created 40,000
Created 80,000
Created 30,000
Created 35,000
Created 45,000
Created 20,000
Created 40,000
Created 32,000
Total Wag
55,000
360,000
320,000
100,000
150,000
35,000
75,000
125,000
40,000
120,000
96,000
Total Wag
50,000
35,000
45,000
25,000
180,000
360,000
180,000
35,000
45,000
40,000
80,000
98,000
Total Wage
50,000
35,000
270,000
320,000
160,000
180,000
35,000
45,000
40,000
40,000
128,000
16. Discuss each of the following items with respect to the proposed project:
a) the current employment conditions in the community, include any business closures, unemployment rates, etc.
and if applicable, the community's need for assistance in attracting the Business.
Since January of 2002, the Dubuque metro area has experienced an increase of over 5,100 jobs. In addition,
during this same period, new commerciaVindustrial construction spending has exceeded $200 million. However,
despite this progress, the most recent numbers show that Dubuque lost 900 jobs between June & July 2006 and
the unemployment rate stands at 3.2 percent.
From a broader perspective, Dubuque County has experienced declining manufacturing employment, going from
37% of the total jobs in 1978 to the current level of about 17 percent. Unfortunately, some of the manufacturing
jobs have been replaced with varying types of lower-paying service jobs. However, thanks to a growing interest in
this region's financial serviceslinsurance industry talent, Dubuque's economy has been resilient. The proposed
project from Cottingham & Butler could provide an additional boost for Dubuque, while hitting a targeted
cluster/industry for the State of Iowa.
b) impact of the proposed project on the community and the state, include projections that reflect the impact on local
and state tax revenue and any additional costs the community will incur as the result of the proposed project:
Cottingham & Butler's proposed project, based on 90 jobs and $3,950,000 in new direct payroll, would be a
positive impact for Dubuque and the entire State of Iowa. This project would also increase the property tax basis
by $3,000,000 and increased property taxes by $90,000 per annum.
cj impact the proposed project will have on current employees, including the potential for increased skills and wages;
and
The 9rowth of the business will allow current Cottingham & Butler employees to further enhance their skills as the
growth creates additional opportunities that will be available to them.
d) impact the investment will have on the ability of the business to expand, upgrade, or modernize its capabilities.
This investment will allow Cottingham & Butler to expand its Dubuque headquarters and allow them to recrutt and
hire the talent necessary to continue growing the business.
17.
Is the Business actively considering locations outside of Iowa?
If yes, where and what assistance is being offered?
[gJ Yes
o No
Cottingham & Butler is rapidly expanding and is considering alternative locations outside of Iowa. In the past year we
have opened a branch in Naperville, IL and Chattanooga, TN.
18. There are three general justifiable reasons for assistance. Check the box next to the reason why assistance is needed
to complete this project
o Financing Gap - The Business can only raise a portion of the debt and equity necessary to complete the
project. A gap between sources and uses exists and state and/or federal funds are needed to fill the gap.
[gJ Rate of Return Gap - The Business can raise sufficient debt and equity to complete the project, but the
returns are inadequate to motivate an "economic person" to proceed with the projecl. Project risks outweigh the
rewards.
[gJ Locational Disadvantage (Incentive) - The Business is deciding between a site in Iowa (site A) and a site in
another state (site Bj for its project. The Business argues that the project will cost less at site B and will require a
subsidy to equalize costs in order to locate at stte A. The objective here is to quantify the cost differential between site
A and site B.
Section A - ApplicaIlt & Project tnformation
14
What measures were analyzed to determine the amount and form of assistance needed?
Cottingham & Butler has evaluated the project from a variety of angles. The company would like to continue growing in the
Dubuque area, but embarking on the current project in our current Dubuque, IA location does not generate the retum available
from investing elsewhere.
First, the company's renovations to its current historic location ('Security Building") and the local vacant building ("House of
China") would require an investment of money that would be significantly larger than the expected appreciation of the properties
post-renovation. Our analysis and consuilant with outside experts suggest that our "basis" in the buildings would be $1-2 million
greater than the true market values of the buildings.
Second, market-based rent levels would fall extremely far short of justifying the renovations from a cash-flow basis. Our
analysis suggests that expected rents would be less than ha~ of what would be required for a prudent investor to make the
historic renovations that we are planning.
State assistance including historic tax credits, investment tax credits, training reimbursement, and forgivable loans would
provide appropriate assistance to make the project financially viable.
In addition, the expansion of our business in Dubuque and the hiring of 90 additional employees will require a very significant
oullay of training dollars for our company. In Dubuque and the surrounding areas, there are very few qualified insurance and
claims professionals that would have the skills required for the jobs we are looking to add. Our current projections suggest that
the jobs we add will pay on average 30-35% more than the current average in Dubuque. However, given the lack of a natural
pool of workers with experience, Cottingham & Buller will need to train the vast majority of these individuals in the ins and outs
of insurance as well as the Cottingham & Buller processes. Training a new person on insurance typically takes 6-9 months and
costs the company $5,000-$10,000 in hard dollars associated with materials, education, and certification. For every new person
we hire, the company's total investment (hard dollars + time) is probably more than $30,000. In contrast, 11 we were to continue
our expansion in Chicago, there is an abundant pool of talent that is already trained in insurance. Given our experience in
Naperville, the cost of hiring experienced talent in Chicago for most of our positions would not be significantly different than what
we pay in Dubuque, even given the cost of living differences. Simply put, it Is a buyer's market for experienced insurance
professionals in the larger cities in the Midwest.
The job training reimbursement will allow us to economically grow in Dubuque and invest the time and money in developing the
skills of the employees we hire. Over lime, the investment should payoff for the company and for the State of Iowa, as we grow
the base of experienced professionals in our company.
What amount of state assistance is requested based on the above-identified need?
$360,000 -IDED/CEBA Forgivable & 0% Interest Loan
$450,000 - Jobs Training Reimbursement
$465,000 - Investment Tax Credit
$1,000,000 -Iowa Historic Tax Credit
What typelform of assistance is preferred (e.g. loans, forgivable loans, tax incentives, etc.)?
We are interested in low interest loans, forgivable loans, tax incentives, and training reimbursements.
20. Please indicate what program(s) the Business is applying to and download and submit those applicable sections:
~
~
o
o
CEBA
EZ
HQJC
EVA
(Complete Section B)
(Complete Section C)
(Complete Section D)
(Complete Section E)
Section A - Applicant & Project Information
15
o
o
VAAPFAP
EDSA
(Complete Section F)
(Complete Section G)
The Department reserves the right to review this application and detemline, based on the proposed project and available
program funds, which /inancial assistance program(s) is best suited for the Business' project. The actual program(s) utilized
may val}' from the programs indicated above.
Section A - Applicant & Projectlnformalion
16
21. Return on Investment Information - Business Taxes
IDED is required to calculate the return on slate and local government investments in this project. Data from other parts of the
application will be combined with the estimates requested below to calculate the required return on investment informalion.
instructions for Question 21
IDEO is asking for a best estimate on the increase in taxes associated with this project.
Estimates should only include the expected increase in tax liability resulting from this project.
At minimum, IDEO needs estimates for the first three years of the project.
Show data as if no tax abatements or tax credits awarded for this proiect were taken.
For partnership forms of ownership (e.g. limited partnerships, s-corporations, LLC, etc.), please estimate the
partners' increase in Iowa tax liability due to this project.
Sales and use taxes refer to the taxes paid on materials, etc. that the Business purchases, not taxes you
collect from sales to your customers.
Applicants will not be held to these numbers with respect to any award from or contract with IDEO.
This page of the application will automatically be treated as confidential.
Increase In Tax Collections Associated with this Project
State Business Taxes Year 1 Year 2 Year 3 Year 4 Year 5
State Corporate Income Tax' $30,000 $30,000 $30,000 $30,000 $30,000
State Business Sales and Use Tax $58,000 $ $ $ $
. Insurance Companies: Provide State Insurance Premium Tax
Local Business Taxes Year 1 Year 2 Year 3 Year 4 Year 5
Local Real Estate Property Tax $90,000 $90,000 $90,000 $90,000 $90,000
Local Option Sales Tax $ $ $ $ $
Section A - Applicant & Projecllnformation
17
Attachments
Please attach the following documents:
A 1 Business Plan
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 producUprocess development. and
. patent status (if applicable).
(Any infonnation outlined above not included in the business plan should be submitted as supplemental infonnation via
a separate attachment)
A2 Copies of the Business' Quarteriy Iowa Employer's Contribution and Payroll Report Summary Page (Page 1) for the
past year and a copy of the most recent payroll report for one pay period.
A3 Affidavil that states the Business has not. wilhin the last five years. violated state or federal statutes, rules, and
regulations, including environmental and worker safety reguiations, or, if such violations have occurred, that there were
mitigating circumstances or such violations did not seriously affect public health or safety or the environment.
A4 Financiallnfonnation (Existing Businesses Only)
. Profit and loss statements and balance sheets for past three year-ends;
. Current YTD profit and loss statement and balance sheet;
. Schedule of aged accounts receivable;
. Schedule of aged accounts payable; and
. Schedule of other debts.
Application Checklist
Section A - Applicant & Projecllnformation
18
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Section B - CEBA
1. Which program component is the Business applying for?
(8J Small Business Gap Financing
(8J New Business Opportunity
o New Product Development
o Modernization Component
2. Funding Information:
Total Amount Requested:
Loan Amount:
Forgivable Loan Amount:
$ 360,000
$ 90,000
$ 270,000
See Chapter 53, Section 261 in the CEBA Adminisfrative Rules for maximum funding amounts. The CEBA program is
not designed to provide 100% funding for any project and limits assistance based on the type of project submitted.
3. Security:
o
o
o
o Personal Guarantee 0 Other:
All awards secured by Personal Guarantees will require a current financial statement from each of tha personal
guarantors, which must be attached to the application.
Corporate Guaranty
UCC Financing Statement
Irrevocable Letter of Credit
o
(8J
o
Surety Bonds
Mortgage on Real Estate
Escrow Account
4. Does the business certify that at least 10% of the posttions to be created will be made available to qualified Promise
Job Participants? (8J Yes 0 No
5. Are underground tanks (whether or not in current use) for the storage of petroleum products, agricultural or other
chemicals, waste oil or other liquid waste or any other infiammable, corrosive, reactive or explosive liquid or gas
located on the project site?
DYes
(8J No
If yes, please explain:
Will the Business be storing above-ground, on or about the project site, in tanks or otherwise, any liquid or gas (as
described above) or any inflammable, corrosive, reactive or explosive solid, for any length of time or any purpose?
DYes
(8J No
If yes, please specify.
Will the Business be treating, transporting or disposing of any liquid, gas, or solid (described above) etther on or about
the project site or at a landfill or other treatment facility or upon any public street or highway, or on any waterway or
body of water, or in any aircraft?
DYes
(8J No
If yes, please specify the substance and what the Business will be doing with it.
Seelion B - CEBA
2/412005
6. Does the Business generate solid or hazardous waste? t81 Yes 0 No
If yes, please describe and provide a copy of the Business' solid and hazardous waste reduction plans.
Cottingham & Butler generates traditional office waste. We have a strong recycling program that has been in place for
several years, whereby we recycle all of our paper and cardboard.
Attachments
Please attach the following documents:
83 Community resolution authorizing the submission of the application
Section B - CEBA
21412005
2