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Durrant Group CEBA Application i5U~~E ~ck~ MEMORANDUM December 14, 2006 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Community Economic Betterment Account (CEBA) Application for Durrant Group, Inc. Economic Development Director Dave Heiar recommends City Council approval of the submission of a Community Economic Betterment Account (CEBA) program application to the Iowa Department of Economic Development on behalf of Durrant Group, Inc. To assist this project, Durrant Group, Inc. has requested a forgivable CEBA loan of $25,000 and a low-interest loan of $25,000. City assistance as public match for the CEBA application is required, and is proposed to be a 10 year TIF rebate estimated at $672,000. I concur with the recommendation and respectfully request Mayor and City Council approval. fV~j (11/JtJC I Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David Heiar, Economic Development Director CITY OF DUBUQUE, IOWA MEMORANDUM December 13, 2006 TO: FROM: Michael Van Milligen, City Manager David Heiar, Economic Development Director~ Community Economic Betterment Account (CEBA) Application for Durrant Group, Inc. 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 Durrant Group, Inc. an architectural firm specializing in the design of K-12 schools and prisons. The CEBA application is attached. BACKGROUND Durrant Group, Inc. has announced its intent to expand its operations in downtown Dubuque. The Company will retain 47 jobs and create 10 new positions as a part of this expansion process. The Durrant Group, Inc, is an Architecture and Engineering firm founded in 1933 in Boscobel, WI. The home office moved to Dubuque, Iowa, in 1948 and has resided here ever since. Durrant now employs 300 individuals across twelve offices in seven states including Hawaii. Much of Durrant's work is a balance of domestic and international including but not limited to the Pacific Rim and Asian countries. The Durrant Group, Inc. wishes to relocate its corporate office and Architect & Engineering practice in Dubuque, Iowa to a more viable location to allow for expansion of staff in their Architect & Engineering practice as well as expansion of the corporate office staff responsible for the overall leadership of the company. Durrant plans to begin expansion of staff in the 1st quarter of CY '07 and continue for the upcoming three years. The company plans to expand into the former Adams Company building in the Port of Dubuque. The building will be owned by Port of Dubuque Adams Development LLC (Wayne Briggs). In order to keep the Company's current employment downtown, and encourage additional employment, the City Council set a public hearing for January 16, 2007 to consider a TIF incentive package to the company. This financial package included the City's support of a CEBA application. The CEBA application will provide additional financial assistance to enable the company's expansion in Dubuque. The application requires a commitment of City funds to the project. The proposed TIF rebate would meet this local match requirement. An Enterprise Zone application is also pending. DISCUSSION Durrant Group, Inc. will commit to employ 10 new employees averaging over $64,000 per year plus benefits. The Company will be investing over $1 million in expansion and renovation expenses, including building renovation, computer equipment, furniture and fixtures and training costs. Port of Dubuque Adams Development, LLC will lease the property to Durrant and invest approximately $3 million to improve the property. To assist this project, Durrant Group, Inc. has requested a forgivable CEBA loan of $25,000 and a low-interest loan of $25,000. City assistance as public match for the CEBA application is required, and is proposed to be a 10 year TIF rebate estimated at $672,000. RECOMMENDATION I recommend that the City Council authorize the submission of a CEBA application for a $25,000 forgivable loan and a $25,000 low-interest loan on behalf of Durrant Group, Inc. with a commitment of local matching funds. This project is consistent with the City's goals to help local businesses expand in the community, increase the number of good paying jobs and further diversify our economic base. ACTION STEP The action step for the City Council is to adopt the attached resolution. attachments F:\USERS\Adejong\Enterprise Zone\Durrant Adams Co\Durrant CEBA APP memo.doc RESOLUTION NO. 598-06 A RESOLUTION AUTHORIZING THE FILING OF AN IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT APPLICATION FOR FINANCIAL ASSISTANCE ON BEHALF OF DURRANT GROUP, INC. Whereas, Durrant Group, Inc. has proposed expanding its operations in the Port of Dubuque 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 10 new full-time jobs for area residents; and Whereas, the Iowa Department of Economic Development's financial assistance programs are 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 state's financial assistance programs. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the filing of an Iowa Department of Economic Development Application for Financial Assistance on behalf of Durrant Group, Inc. is hereby approved. Section 2. That the local match identified in the application consisting of a 10-year TIF rebate is hereby approved, subject to the Iowa Department of Economic Development's approval of the application. 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 18th day of December 2006. Roy D. B ,Mayor Attest Jeanne F. Schneider City Clerk IOWA l!je I changing" Mary Lawyer, Director Iowa Department of Economic Development Project Review Form Business Development Division Iowa Department of Economic Development Completed forms with attachments should be sent to: E-mail: businessfinance@iowalifechanQinQ.com Mail: Iowa Department of Economic Development ATTN: Business Finance Team 200 East Grand Avenue Des Moines, Iowa 50309 Fax: (515) 242-4776 Questions? Need assistance? Contact the Business Finance Team at (800) 532-1215. 7/19/2005 Introduction The Iowa Department of Economic Development (IDEO) offers an array of financial assistance programs to aid businesses with start-ups and expansions. Funds are awarded from a variety of programs based on factors such a job creation, employee wage rates and benefits, value added to Iowa agricultural commodities, competition with other Iowa firms, and impact of the project on the Iowa economy. In an effort to better serve businesses and communities, IDEO is offering this Project Review form to help identify state assistance that may be available to interested businesses and communities considering new or expanded business operations in Iowa. Business: Name of Business: The Durrant Group, Inc. Address: 700 Locust Street, Suite 942 City: Dubuque State: IA Contact Person: Lori Thielen Zip: 52001 Title: Chief Financial Officer Phone: (563) 583.9131 Fax: (563) 557.9078 Email: Ithielen@durrant.com Federal 10 Number: 42-1081135 Does the Business file a consolidated tax return under a different tax 10 number? 0 Yes X No If yes, please also provide that tax 10 number: Sponsoring Community (if applicable): Section 1: Information about the Business: 1.1 Provide a brief description and history of the Business. Include information about the Business' products or services, markets served and primary competitors. Agricultural business should include information on commodity usage and producer ownership, if applicable. The Durrant Group, Inc., is an Architecture and Engineering firm founded in 1933 in Boscobel, WI. The home office moved to Dubuque, Iowa, in 1948 and has resided there ever since. Durrant now employs 300 individuals across twelve offices in seven states including Hawaii. Much of Durrant's work is a balance of domestic and intemational including but not limited to the Pacific Rim and Asian countries. The company is privately held and owned by approximately 100 shareholders and shareholders are required to be employees and associates of Durrant. Our competition is both domestic and intemational. We consider firms such as HOK, Perkins & Wills, and DLR to be our competition. Our competition typically has presence internationally and frequently has store fronts in the major US cities - Chicago, New York, Atlanta, and Los Angeles. All the corporate activities and operations are supported locally, including pension services, insurance coverage- health, and properly & casualty, and financial/bank services. Many of these relationships have been long standing and are appreciated. It is important to Durrant to be viewed as a good community citizen. 1.2 Business Structure: o Cooperative o Partnership X Corporation OS-Corporation o Limited Liability Company o Sole Proprietorship o Not for Profit 1.3 Does a woman, minority, or person with a disability own the Business? X Yes Women and minorities own about 13% of the outstanding stock and make up approximately 20% of the shareholders 0 No If yes, are you certified as Targeted Small Business? 0 Yes X No 1.4 Business Stage: 0 Startup X Expansion of Iowa Company 0 New Location in Iowa 2 D Relocation from another State 1.5 Annual Sales (Most Recent): $40,000,000 1.6 Projected Total Sales: Year 1: $46,000,000 Year 2: $ 52.500,000 Year 3: $ 60,300.000 1.7 List the Business' Iowa Locations and the Current Number of Employees at each Location: 700 Locust Street, Suite 942 Dubuque, IA 52001 47 Employees 510 East Locust Street, Suite 200 Des Moines, IA 50309 27 Employees 3 1.8 Employee Benefits: Please identify all employee benefits provided by and paid for (in full or in part) by the Business. Employee Benefits Provided by the Business Total Annual Cost (show on a per employee basis) Portion ofT otal Annual Cost Paid by the Business' Plan Provisions (Include deductibles, coinsurance 'Yo, office visit co-payments, annual out- of-pocket maximums, face amounts, com an match, etc. Famil Medical/Health Insurance $3,852.36 $13,483.20 62% 77% Dental Insurance Vision Insurance Life Insurance $25.20 None $50.40 . . Associate Level Em /0 ees None 100% 100% Short T emn Disability (STD) 100% Long Term Disability $56.04 (LTD) 100% See Attachment. A wellness program was implemented in January of 2006 through the outside expertise of American Healthways and healthlQ. Included in Medical/Health Insurance Included in Medical/Health Insurance Company pays for $10,000 policy for all FT employees. Company pays for $20,000 policy for Associates. Durrant has a self funded plan that pays employees based on years of service. For years 1 = 4, payment is 25% of nomnal salary. For years 5 and up, payment is 50% of nomnal sala . 60% of monthly earnings up to a maximum of $2,000 per month. . 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 annual contribution per employee for that three year period. Does the Business offer a pension plan, 401(k) plan, and/or retirement plan? X Yes D 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 infomnation on the company match and indicate the average annual match per employee (show average as a percentage of salary). Durrant matches 50% up to 7% of an employee's annual compensation into the 401 (k) plan. On average this is 3.5% of their annual salary. Does the Business offer a profit-sharing plan? I D Yes X No Does the Business offer child care services? D Yes X No Child care services include child care services on-site at the facility in which the project will occur or off-site child care subsidized by the business at the rate of 50% or more of the costs incurred by an employee. 4 Section 2: Information about the Project: 2.1 Describe the proposed project for which state assistance is being sought. Include a project timeline with dates: The Durrant Group, Inc. wishes to relocate its corporate office and Architect & Engineering practice in Dubuque, Iowa to a more viable solution to allow for expansion of staff in our Architect & Engineering practice as well as expansion of the corporate office staff responsible for the overall leadership of the company. Durrant plans to begin expansion of staff in the 1 'I quarter of CY '07 and continue for the upcoming three years. Durrant plans to be in a new facility that brands their company and showcases the corporate headquarters by end of CY '07. This is imperative to the success of Durrant worldwide and to the local office efforts that we upgrade and project the correct image within our organization and to our worldwide clientele. Durrant will decide on the corporate headquarters by 1 'I quarter CY '07. With most of the intemational activity occurring through the Minneapolis office, there is consideration of non Iowan corporate headquarters. The three non Iowan headquarters under consideration for the corporate headquarters are Minneapolis, Phoenix, and Madison. Those three options each have a unique purpose and value for corporate headquarter functions and all three offer more expansive travel options. 2.2 Project address: Adams Company Building Westerly portion of Lot 1 Adams Company 2nd addition Port of Dubuque Dubuque, IA 52001 2.3 Is the project address in an Enterprise Zone? X Yes D No 2.4 Is the Business actively considering locations outside of Iowa? X Yes for corporate headquarters D No If yes, where and what assistance is being offered? We have hired a national firm to assist in finding options within the states and cities where a majority of the business is concentrated. 2.5 List the jobs that will be retained and/or 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 startinq wage rate. Job Tille Skills, Education, or Experience Number of Retained (R) or Starting or Current Required Jobs Created ICI Wage Rate Year 1 of the Proiect CEO, President Registered 1 R ArchitectlEngineerlFinancial major $230.000 with 10 years in the business or related industrv CFO CPA, Accounting, or Finance with a 1 R $140,000 Master's Degree and 5 years in the business or related industrv Controller CPA, Accounting. or Finance major 1 R $63,000 with 3 - 4 years expenence Assistant Controller Accounting or Finance major with 3 - 1 R $50,000 4 years experience Payroll Supervisor HR major with 3 years expenence in 1 R $49,000 HR functions and pavroll Accounting Clerks 2 year degree or related work 5 R $135,000 experience in functions of accounting such as invoicing, Accounts Receivable, and Accounts Pavable MIS Director MIS degree with 7 years of 1 C $120,000 exoerience MiS Specialist MIS or related degree with 2 - 3 1 C $45,000 years expenence MIS Specialist MIS or related degree with 5+ years 1 C $65,000 of exoerience 5 Marketing Principal Registered 1 C $95,000 ArchitecVEngineer/Financial major with 7 years in the business or related industrv Electrical Engineer Registered Prolessional with 3 - 4 1 C $80,000 years exoerience Year 1 Subtotal 16 , Year 2 of the Prolect Architect Graduate Professionai 1 C $40,000 Structurai Enoineer Graduate Professional 1 C $55,000 Field Manager Construction Manager with 4 - 5 1 C $55,000 vears exoerience Year 2 Subtotal 3 Year 3 of the Prolect Mechanical Enoineer Graduate Professional 1 C $55,000 Interiors Consultant Graduate Professional 1 C $30,000 Year 3 Subtotal 2 Total Number of Retained Jobs: 10 Total Number of Created Jobs: 10 6 .0 <n 0 u c. 0 Qj > Q) "0 Q) "0 " 13 .5 ;;: 0 Qj .c <n Q) <n c: Q) c. >< w -S 0 :!2 C w '5 .... .c w "0 Cl c: c '" => Q) m <n .... 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" o U) EA-EA-EA-f;R-EA-EA-EA-EA-EA-EA-EA-EA-EA-lfl-....EA- c .. U ~ :::J o U) __EA-EA-f;R-EA-~~~~~~~~~..~ o .. l:! :::J o U) m .. l:! :::J o U) <( .. U ~ o U) c o = '" '" e "C <.> co ~"O o~ EE ~ o "E- "- '" t5 c. '" .9 C :::J o E <( '" "0 C :::J "- - o .. l:! :::J o U) Section 3: Request for State Assistance 3.1 What amount of state assistance is needed for this project to occur in the State of Iowa? Over $500,000. 3.2 As IDED programs are need-based, please explain why state assistance is needed and how the above amount was determined: The assistance is needed to combat the cost of residing in Iowa long term. The corporate headquarters costs of operating inclusive of travel and branding would be better satisfied in a more metropolitan sized city and state. Analysis is underway to assess incentives for expansion in other current satellite offices. 3.3 Please indicate your interest in the following forms of assistance. (Rank in order of importance with 1 = greatest interest.) 1 Direct Financial Assistance (loan or forgivable loans) ~ Tax Incentives (income tax credits and sales tax refunds) _ Equity Financing (Venture Network of Iowa, Angel Investors, etc.) _ Infrastructure and Utility Improvements. Please identify improvements: Section 4: Additional Information 4.1 Does the company have a completed business plan for this project? X Yes o No 4.2 Have you contacted anyone at the IDED about your project? If yes, please indicate whom: DYes X No 4.3 Are you working with the City I County or a local development organization? X Yes If yes, please indicate whom: Greater Dubuque Development Corporation, Director Rick Dickinson o No Section 5: Release of Information: I hereby give permission to the Iowa Department of Economic Development to research the Business' history, make credit checks, contact the Business' financial institutions, insurance carriers, and perform other related activities necessary to reasonably evaluate and respond to the Business' inquiry regarding state assistance. I also hereby authorize the Iowa Department of Revenue to provide the IDED state tax information pertinent to the Business' state income tax, sales and use tax, and state tax credits claimed. Signature Date _Lori Thielen, Chief Financial Officer Name and Title (typed or printed) The Business Finance team reviews completed Project Review forms on a weekly basis. The IDED will contact the contact person listed for additional information, if needed, and after the review has been completed. The Iowa Department of Economic Development thanks you for your interest in doing business in the State of Iowa. 8 IOWA l!ie I changing" Section B - CEBA 1. Which program component is the Business applying for? D Small Business Gap Financing 1:8:1 New Business Opportunity D New Product Development D Modernization Component 2. Funding Information: Total Amount Requested: Loan Amount: Forgivable Loan Amount: $ 50,000 $ 25,000 $ 25,000 See Chapter 53, Section 261 in the CEBA Administrative 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: D D D D Personal Guarantee D Other: All awards secured by Personal Guarantees will require a current financial statement from each of the personal guarantors, which must be attached to the application. D 1:8:1 D Corporate Guaranty UCC Financing Statement Irrevocable Letter of Credit Surety Bonds Mortgage on Real Estate Escrow Account 4. Does the business certify that at least 10% of the positions to be created will be made available to qualified Promise Job Participants? 1:8:1 Yes D 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 inflammable, corrosive, reactive or explosive liquid or gas located on the project site? DYes 1:8:1 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 1:8:1 No If yes, please specify: Will the Business be treating, transporting or disposing of any liquid, gas, or solid (described above) either 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 1:8:1 No If yes, please specify the substance and what the Business will be doing with it. Section B - CEBA 2/4/2005 6. Does the Business generate solid or hazardous waste? 0 Yes ~ No If yes, please describe and provide a copy of the Business' solid and hazardous waste reduction plans. Attachments Please attach the following documents: B3 Community resolution authorizing the submission of the application Section B - CEBA 2/4/2005 2 IOWA IUe I changing'" Section C - Enterprise Zone Program 1. In which Enterprise Zone will this project occur (include the zone's name, number, size in acres, and date certified)? Zone EZ-1, 1012 Acres, certified (amended) July 17, 2000 2. Please list any additional requirements adopted by the local Enterprise Zone Commission and how the Business will meet each requirement. Attachments Please attach the following documents: C1 Legal description of the business site on which the project will occur Lot 1 Adam's Company 2nd Addition in the city of Dubuque, Iowa. C2 Detailed map (no larger than 8"x14") showing the business site in relation to the boundaries of the certified Enterprise Zone The local Enterprise Zone Commission should submit the following: C4 Proof that the local Enterprise Zone Commission meeting, during which this application was approved, was open to the public (Le. public notice which was published and/or posted) C5 Meeting minutes from the local Enterprise Zone Commission meeting, during which this application was approved C6 Resolution by the local Enterprise Zone Commission approving this application Section C - EZ 2/4/2005