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Financing POD Parking RampTHE CTT'Y OF DUB E ~-~~ MEMORANDUM March 27, 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Financing for Port of Dubuque Public Parking Ramp Economic Development Director David Heiar is recommending approval of a Financing Term Sheet with Robert W. Baird & Co. Incorporated for financing of the public parking ramp in the Port of Dubuque. I concur with the recommendation and respectfully request Mayor and City Council approval. ~, l Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David J. Heiar, Economic Development Director Txe crrv or MEMORANDUM ~;-~-~ March 27, 2007 TO: Michael Van Milligen, City Manager FROM: David J. Heiar, Economic Development Director SUBJECT: Financing for Port of Dubuque Public Parking Ramp INTRODUCTION Financing for the Port of Dubuque Public Parking Ramp will come from two revenue sources. The first source of revenue will be the escrow account established by the Diamond Jo prior to a bid award on this construction project. The final amount of this escrow will be determined by the Diamond Jo, but will not be less than the balance of $6.3 million as established in the Development Agreement. The other revenue source that will fund this project is the sale of TIF bonds. A minimum assessment agreement on the proposed Diamond Jo Casino will fund the repayment of these bonds. BACKGROUND When an upfront bond sale is used to finance a development project, the City requires the developer to bring a bond buyer to the table. Generally, these are smaller bond sales and the developer utilizes a local financial institution to purchase the bonds. In this project the bond sale is expected to be somewhere between $11-20 million. The Diamond Jo is proposing to utilize Baird, a national firm to buy and/or sell these bonds. It is anticipated that these bonds will be somewhat more difficult to place in the market, unlike Dubuque G.O. bonds. These bonds will not be rated and will not have the full faith and credit of the City standing behind them. The bonds are however backed by a corporate guarantee of the Diamond Jo. Baird has asked for approval by both the City and the Diamond Jo to the terms specified in the attached Financing Term Sheet. City Attorney Barry Lindahl and Finance Director Ken TeKippe have reviewed the Financing Term Sheet. RECOMMENDATION/ACTION ITEM That the City Council authorize the City Manager to sign the attached Financing Term Sheet with Baird for financing of the Public Parking Ramp in the Port of Dubuque. F:\USERS\DHeiar\Diamond Jo\Financing for Port of Dubuque Public Parking Ramp.doc BAIRD Thomas J. Gavin Managing Director Public Finance March 28, 2007 Mr. Brent Stevens Mr. David Heiar Chief Executive- Officer Director of Economic Development Diamond Jo Casino LLC City of Dubuque 400 East Third Street Second floor of City Hall, 50 W. 13th Street Dubuque, Iowa 52001 Dubuque, IA 52001 RE: Dubuque Ice Harbor Parking Facl7ity -Financing Term Sheet Dear Gentlemen: Robert W. Baird & Co. ("Baird' is pleased to have the opportunity to provide underwriting services for the proposed Dubuque Ice Harbor Parking Facility bond offering. The attached term sheet represents our preliminary understanding of the project to be financed and our proposed compensation for this financing. This letter and term sheet do not represent a guarantee by Baird that the transaction .contemplated hereby will be consummated nor that the terms will not change. All costs of issuance, including legal fees for bond counsel, issuer's counsel, Diamond Jo counsel, and printing expenses are the responsibility of Diamond Jo Casino. All fees assessed or required by the City are the responsibility of Diamond Jo Casino. We look forward to working with you on this transaction. Please feel free to contact me if you have any questions, or if you require additional infomlation. Sincerely, Accepted on behalf of Diamond Jo Casino LLC Thomas J. Gavin Managing Director Robert W. Baird & Co. Enclosure Mcmber New York Stock Exchange and SIPC Mr. Brent Stevens Accepted on behalf of the City of Dubuque, IA Michael Van Milligen Authorized Official Robert W. Baird & Co. Incorporated 300 East Fifth Avenue, Suite 200 Naperville, IL 60563-3181 Main (630) 778-9100 Toll-free (800) 686-4346 Fax (630) 778-7179 tgavm(p~nvbaicd.com Amount: Dubuque Ice Harbor Parking Facility Preliminary Financing Term Sheet* Up to $20,000,000 Borrower: City of Dubuque (the "City'. Nature of Financing: Tax Increment Revenue Bonds (the "Bonds'. Use of Proceeds: Bond proceeds, together with other available funds, will be used to construct a public multi-level parking facility to be owned and operated by the City on real estate located adjacent to a new casino to be developed by Diamond Jo Casino LLC ("Diamond Jo"), pay costs of issuance on the Bonds and fund any required reserves and capitalized interest. Source of Payment on the Incremental property taxes to be collected on Diamond Jo real Bonds: estate. Minimum Assessment Minimum assessment agreement to be executed between the City Agreement: and Diamond Jo providing for the collection of sufficient property tax increments from Diamond Jo to satisfy the principal of and interest on the Bonds. Guarantee: Obligations of Diamond Jo, pursuant to the Minimum Assessment Agreement, are to be guaranteed by Peninsula Gaming LLC. Debt Service Reserve: Up to one year principal and interest requirement to be determined. Tax Status of Bonds: Taxable. Interest Rates: Fixed rates to be determined on the day of pricing. Amortization Period: Thirty years from the date of issuance. Payment Dates: Semi-annual interest and annual principal on dates to be determined. Rating: Not rated. Underwriter's Discount: 2.25% of the offering price of the Bonds. Cost of Issuance: All costs of issuance including bond counsel, issuer's counsel Diamond Jo counsel, printing and other costs are to be paid from bond proceeds. Estimated Closing: August 2007. *Preliminary, subject to change.