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Conlon Johnson_Sedgewick 1st AmendmentTHE CITY OF DUBUQUE Masterpiece on the Mississippi MEMORANDUM May 17, 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Amendment to the Conlon Johnson (Sedgwick) Development Agreement Economic Development Director Dave Heiar is recommending an amendment to the Conlon Johnson Development Agreement. A summary of the changes are as follows: 1. The building size increased from 22,000 square feet to 28,000 square feet. 2. The building value increased from $2,750,000 to $3,300,000. 3. The number of full time jobs increased from 75 to 110. 4. The TIF rebate increased from 82% to 88%. 5. The repayment of the acquisition grant in the case of a default changes from $2,014.00 to $1,373.42 for each job not created. I concur with the recommendation and respectfully request Mayor and City Council approval Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David J. Heiar, Economic Development Director THE CITY OF DUBUQUE Masterpiece on the Mississippi MEMORANDUM May 15, 2007 TO: Michael C. Van Milligen, City Manager FROM: David J. Heair, Economic Development Director SUBJECT: Amendment to the Conlon Johnson BACKGROUND Since the or:g;nal Conlon Johnson Development Agreemen lch has changed. Employment at Sedgwick, the major tenant in the building, continues to grow at a rapid pace. The origins! building provided 18,000 sq ft of leased space for Sedgwick. The remaining 4,000 sq ft is the home for Straka Johnson Architects, p.C. prior to this construction project being complete, Sedgwick asked the Developer far an additional 6,000 sq ft of space. In the original Development Agreement, Sedgwick pledged the creation of 75 jobs. The company now plans to have 110 full time employees. The projected building value has gone from $2,750,000 to $3,300,000. Based on the percentage of the building utilized by Sedgwick, the original development agreement provided for an 82% TIF rebate. With the building addition, 88% of the building will be leased by Sedgwick. A summary of the changes to the attached development agreement are as follows: 1. The building size increased from 22,000 sn ft to 28,000 sa ft. 2. The building value increased fror9~ $2,750,000 to $3,300,000. 3. The number of full time jobs increased from 75 to 110. 4. The TIF rebate increased from 82% to 88%. 5. The repayment of the acquisition grant in the case of a default changes from $2.014.00 to $1,373.42 for each job not created. R C M N®.41'IN That the City Council approve the first amendment to the Conlon Johnson Development Agreement. THE CITY OF DUB E Masterpiece on the Mississippi MEMORANDUM May 17, 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Amendment to the Conlon Johnson (Sedgwick) Development Agreement Economic Development Director Dave Heiar is recommending an amendment to the Conlon Johnson Development Agreement. A summary of the changes are as follows: 1. The building size increased from 22,000 square feet to 28,000 square feet. 2. The building value increased from $2,750,000 to $3,300,000. 3. The number of full time jobs increased from 75 to 110. 4. The TIF rebate increased from 82% to 88%. 5. The repayment of the acquisition grant in the case of a default changes from $2,014.00 to $1,373.42 for each job not created. I concur with the recommendation and respectfully request Mayor and City Council approval. ~. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David J. Heiar, Economic Development Director THE CITY OF DUB E MEMORANDUM Masterpiece on the Mississippi May 15, 2007 TO: Michael Van Milligen, City Manager FROM: David J. Heiar, Economic Development Director ~ SUBJECT: Amendment to the Conlon Johnson (Sedgwick) Development Agreement INTRODUCTION This memorandum presents for City Council adoption an amendment to the Conlon Johnson Development Agreement approved on August 21, 2006. BACKGROUND/DISCUSSION Since the original Conlon Johnson Development Agreement was approved, much has changed. Employment at Sedgwick, the major tenant in the building, continues to grow at a rapid pace. The original building provided 18,000 sq ft of leased space for Sedgwick. The remaining 4,000 sq ft is the home for Straka Johnson Architects, P.C. Prior to this construction project being complete, Sedgwick asked the Developer for an additional 6,000 sq ft of space. In the original Development Agreement, Sedgwick pledged the creation of 75 jobs. The company now plans to have 110 full time employees. The projected building value has gone from $2,750,000 to $3,300,000. Based on the percentage of the building utilized by Sedgwick, the original development agreement provided for an 82%TIF rebate. With the building addition, 88% of the building will be leased by Sedgwick. A summary of the changes to the attached development agreement are as follows: 1. The building size increased from 22,000 sq ft to 28,000 sq ft. 2. The building value increased from $2,750,000 to $3,300,000. 3. The number of full time jobs increased from 75 to 110. 4. The TIF rebate increased from 82% to 88%. 5. The repayment of the acquisition grant in the case of a default changes from $2,014.00 to $1,373.42 for each job not created. RECOMMENDATION That the City Council approve the first amendment to the Conlon Johnson Development Agreement. F:\USERS\DHeiarlConlon Johnson ArchitectsWmendment to the Conlon Johnson DA memo.doc This Amendment to Development Agreement is entered into this day of 2007, by and between 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), and Conlon Johnson .Development, LLC, with its principal place of business at Dubuque, Iowa (Developer). RECITALS A. City and Developer previously entered into a Development Agreement dated on or about the 21 St day of August, 2006 ("The Development Agreement"); B. Pursuant to the terms of The Development. Agreement, Developer acquired from the City property legally described as: dot 4 of Block 1 of Dubuque Technology Park, in the City of Dubuque, Iowa, according to the plat thereof, and Lot 1 of Dubuque Technology Park Rlo. 2 in the City of Dubuque, Iowa, together with all easements, tenements, hereditaments and appurtenances belonging thereto (the "Property"); C. The Development Agreement contemplated that the Developer would construct a home office space for the occupancy of Straka-Johnson Architects, P.C. to maintain and expand its multi-state business operations and further construct and lease a regional office building to Sedgwick Claims Management Services, Inc. ("Sedgwick"), amulti-state claims management firm; D. Subsequent to Developer's purchase of the Property as .provided in the Development Agreement, Sedgwick and Developer reached an agreement to expand Sedgwick's portion of the project; E. The parties desire to amend the Development Agreement to accommodate the expansion-plans-of-Sedgwick-and-desire to set forth-such-amendment -in - --- writing, THEREFORE, in consideration of the mutual terms and covenants contained herein, the parties agree as ioiiows: 1 1. Amendments. The Development Agreement is hereby amended in the following particulars: (a) .The last paragraph of Section 2.1 is hereby stricken from the agreement and the following shall be inserted into the Development Agreement in lieu thereof: "The Developer hereby agrees to construct on the North part of the Property an office facility- of not less than 28,000 square feet of floor space along with the necessary site work as contemplated in the Development Agreement at a cost of approximately $3,300,000.00." (b) Paragraph 3.2 of the Development Agreement is hereby amended by striking each reference to 82% and replacing such references with 88% and striking each reference to 18% and replacing. such references with 12%; (c) Paragraph 4.1 shall be revised by striking such provision and the following shall be inserted into the Development Agreement in lieu thereof: "Developer shall ensure that Sedgwick or a different occupant of the north portion of the property employs one hundred ten (110} tali-time positions (2080 hours per- year) in Dubuque, Iowa at all. times during the Term of this Agreement. In the event that any certificate provided to City under Section 4.2 hereof .discloses that Developer does not as of that date have at least one hundred ten (110) positions as provided hereinabove, Developer shall pay to City, promptly upon written demand therefore, an amount equal to $1,373.42 ($151,076.00 divided by 110 positions) for each position less than one hundred ten (110) positions reflected on the certificate. In addition, for the positions that Developer fails to provide for any year during -the Term of this Agreement, the semi-annual Economic Development Grants for such year under Section 3.2 shall be reduced by the percentage that the number of such positions bears to the total number of positions required by this Section 4.1." 2 2. Affect on Balance of Development Agreement. Except as modified herein, the Development Agreement shall contin!~e to govern the. rights and obligations of City and. Developer with respect to the Development Agreement and the project contemplated thereby.