Shepherd, Inc. - Iowa Economic Development Authority (IEDA)IOWA ECONOMIC rEVELORME'°'T AUTHORITY
200 East Grand Avenue 1 Des Moines, Iowa 50309 USA 1 Phone: 515.725.3000
Iowaeconomicdevelopment.com
October 23, 2014
Ms. Julie Kinsella
Shepherd, Inc.
4135 Pennsylvania Avenue
Dubuque, IA 52002
RE: Cancellation of Security Documents
Funding Agreement #04-CEBA-05
Dear Ms. Kinsella:
F ECE V ED
A4-
2con cmkk daveioprs me i
14 OCT 27 PM 12: 17
City Clerk's Office
Dubuque, IA
We are in receipt of the repayment amount on the above referenced Agreement per the executed
Settlement Agreement. Because the loan and forgivable loan have been repaid in full, the original
promissory note and Personal Guarantees have been canceled and are enclosed, along with a copy of
the UCC -1 termination. We have also canceled the promissory note provided by the City of Dubuque
and have returned the original to them.
Should you have questions or need additional assistance, please feel free to contact me at
515-725-3041 or Kristi.steil@iowa.gov.
Sincerely,
Kristi Steil
Project Assistant
Compliance Team
/ks
Enclosures
cc: Mayor Roy D. Buol, City of Dubuque
IEDA Compliance file
IEDA Accounting
Governor Terry E. Branstad Lt. Governor Kim Reynolds 1 Director Debi V. Durham
04-CEBA-05
PAGE 16
$100,000
CANCELED
DATE iU - 22 - I1A 14S
ATTACHMENT B2
PROMISSORY NOTE -
COMMUNITY
IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT
CEBA PROGRAM
PROMISSORY NOTE
Loan Number 04-CEBA-05
Des Moines, Iowa
(City and State)
October 16, 2003
(Date)
FOR VALUE RECEIVED, the undersigned (hereafter called the "Maker") promises to pay to the order of the State
of Iowa, Department of Economic Development (hereafter called the "Payee"), at its office at 200 East Grand Avenue, Des
Moines, Iowa 50309, or upon notice to the Maker, at such other place as may be designated from time to time by the
holder, the principal sum of $100,000, to be paid as follows:
A $75,000 loan at (2%) interest to be paid as follows:
72 equal monthly payments of $1,126.92 beginning on the first day of the thirteenth month from the date CEBA
funds are disbursed. Final payment may vary depending upon dates payments are received. Such payments shall be
applied first on interest then due and the remainder on principal.
And, a $25,000 forgivable loan at six (6%) percent interest to be paid as follows:
A ten-year $25,000 forgivable loan. There will be no principal or interest payments or accruals for years one
through ten. At the ten-year date, if the Business has fulfilled at least 50% of its job creation/retention (if applicable) and
wage obligation, $641 will be forgiven for each new FTE job created/retained (if applicable) and maintained for at least
ninety days past the project completion date. Any balance (shortfall) will be amortized over a two year period (beginning at
the project completion date) at six (6%) percent interest per annum with equal monthly payments, and, interest will be
charged at six (6%) percent per annum from the date of the first CEBA disbursement on the shortfall amount with that
amount accrued as, of the project completion date being due and payable immediately. If the Business has a current loan
balance, the shortfall balance and existing balance will be combined to reflect a single monthly payment.
1. Payments. All payments under the -Note shall be -applied in this order: (1) to interest, and (2) to principal.
2. Loan Agreement; Acceleration Upon Default. This Note is issued by Maker to evidence an obligation to repay
a loan according to the terms of Loan Agreement #04-CEBA-05 of October 16, 2003 between the Payee and Maker and,
at the election of the holder without notice to the Maker, shall become immediately due and payable in the event any
payment is not made when due or upon the occurrence of any event of default under the terms of the Loan Agreement.
3. Limitation. Maker's liability for the repayment of this Note is limited to those amounts Maker collects through its
good faith enforcement of security interest which Maker represents that it has obtained or will obtain as required by the
above -referenced Loan Agreement. Upon exhaustion of its rights in the collateral granted by such security interest, the
Maker will have no liability for any deficiency owing Payee under this Note. Nothing in this paragraph shall limit the
recovery of principal and interest by Payee in the event of Maker's fraud, negligence, or gross mismanagement in the
application for, or use of, sums loaned under the above -referenced Loan Agreement.
4. Reduced Amount. In the event the Maker fails to requisition and spend the full face amount of the Note as set
out above, then the amount of each installment payment shall be reduced accordingly in equal amounts.
5. Security. Payment of this Note is secured by Personal Guarantees and Blanket UCC -1 and the holder is
04-CEBA-05
PAGE 17
entitled to the benefits of the security therein described.
In case of a decline in the market value of the collateral, or any part thereof, the Payee may demand that
additional collateral of quality and value satisfactory to holder be delivered, pledged and transferred to holder.
6. Waiver. No delay or omission on the part of the holder in exercising any right under this Note shall operate as a
waiver of that right or of any other right under this Note. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right and/or remedy on any future occasion.
7. Waiver of Protest. Each maker, surety, endorser and guarantor of this Note, expressly waives presentment,
protest, demand, notice of dishonor or default, and notice of any kind with respect to this Note.
8. Costs of Collection. The Maker will pay on demand all costs of collection, maintenance of collateral, legal
expenses, and attorneys' fees incurred or paid by the holder in collecting and/or enforcing this Note on default.
9. Meaning of Terms. As used it this Note, "holder" shall mean the -Payee or other endorsee of this Note, who is
in possession of it, or the bearer hereof, if this Note is at the time payable to the bearer. The word "Maker" shall mean
each of the undersigned. If this Note is signed by more than one person, it shall be the joint and several liabilities of such
persons.
10. Miscellaneous. The captions of paragraphs in this Promissory Note are for the convenience of reference only,
shall not define or limit the provisions hereof and shall not have any legal or other significance whatsoever.
ADDRESS: City of Dubuque:
City Hall, 50 West 13th Street
Dubuque, Iowa 52001-4864
BY:
T rrance Duggan, Mayor
ATTESrt:
(Signature, Title)
Copyright 2014
City of Dubuque ITEM# 18.
ITEM TITLE: Shepherd, Inc. - Iowa Economic Development Authority (IEDA)
Settlement
SUMMARY: City Manager recommending approval of the execution of a Settlement
Agreement between the Iowa Economic Development Authority,
Shepherd, Inc. and the City of Dubuque.
RESOLUTION Authorizing the execution of a Settlement Agreement for
CEBA Loan Agreement 04-CEBA-05 by and between the Iowa Economic
Development Authority, Shepherd, Inc., and the City of Dubuque
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Approve
ATTACHMENTS:
Description
❑ Shepherd Inc CEBA Loan Settlement -MVM Memo City Manager Memo
❑ Staff Memo Staff Menlo
❑ CEBA Settlement Agreement Supporting Document
❑ Resolution - CEBA Settlement Agreement Resoufons
Type
Masterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Shepherd Inc. CEBA Loan Settlement
DATE: October 1, 2014
Dubuque
2007 • 2012 • 2013
On August 18, 2003, the City Council approved an application to the State for
Community Economic Betterment Account (CEBA) funding for Shepherd, Inc., a
company in the copyediting and book production industry.
The State awarded Shepherd, Inc. a $75,000 low-interest loan and a $25,000 forgivable
loan with the agreement for the creation of 39 FTE positions in addition to the
company's existing 5 FTE positions, over a 10 -year compliance period.
Shepherd, Inc. moved their company to Dubuque, and brought 43 jobs. They did well
despite the huge changes in the publishing industry. However, because of technology
changes that brought wide -sweeping changes in the entire industry, they did not have
the full number of FTE positions in place at the end of the compliance period. As such,
the State deemed the project in default of the terms of its loan agreement and
requested repayment of the $25,000 forgivable loan.
It is important to note that the CEBA program had a longer compliance period than
current programs (10 years instead of 5 years).
Because the company was being held to a standard no longer recognized by the State,
Dan McDonald of Greater Dubuque Development Corporation addressed the IEDA
board in August 2014, to make the case of a reasonable settlement. The State agreed
to require a repayment of half of the original amount, $12,500.
The State has requested signature from both the City and from Shepherd, Inc. on the
settlement agreement.
Economic Development Director Maurice Jones recommends City Council approval of
the execution of a Settlement Agreement between the Iowa Economic Development
Authority, Shepherd, Inc. and the City of Dubuque.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mic ael C. Van
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Maurice Jones, Economic Development Director
2
'I igen
Masterpiece on the Mzssissippz
Dubuque
2007 • 2012 • 2013
Economic Development Department
50 West 13th Street
Dubuque, Iowa 52001-4864
Office (563) 589-4393
TTY (563) 690-6678
http://www.cityofdubuque.org
TO: Michael Van Milligen, City Manager
FROM: Maurice Jones, Economic Development Director
SUBJECT: Shepherd Inc. CEBA Loan Settlement
DATE: September 30, 2014
INTRODUCTION
The purpose of this memorandum is to provide information regarding the history of the
CEBA loan funding for Shepherd, Inc. and to request City concurrence on the
settlement agreement now proposed by the Iowa Economic Development Authority.
BACKGROUND
On August 18, 2003 the City Council approved an application to the State for CEBA
funding from Shepherd, Inc., a company in the copyediting and book production
industry.
The State awarded Shepherd, Inc. a $75,000 low-interest loan and a $25,000 forgivable
loan pursuant to the terms of the CEBA Loan Agreement 04-CEBA-05, dated October
16, 2003. This agreement stipulated the creation of 39 FTE positions in addition to the
company's existing 5 FTE positions, over a 10 -year compliance period.
The required City match for the project was achieved through the issuance of a
$2,000,000 bond, of which $150,000 in proceeds was awarded to Lower Main
Development, LLC as a Tax Increment Economic Development Grant for the
redevelopment of the Weber Paper Building (now Platinum Building) at 137 Main Street,
subject to the occupancy of Shepherd, Inc. in 12,000 sq. ft. on two floors of the
rehabilitated building.
DISCUSSION
Shepherd, Inc. moved their company to Dubuque, and brought 43 jobs. They did well
despite the huge changes in the publishing industry. However, because of technology
changes that brought wide -sweeping changes in the entire industry, they did not have
the full number of FTE positions in place at the end of the compliance period. As such,
the State deemed the project in default of the terms of its loan agreement and
requested repayment of the $25,000 forgivable loan.
It is important to note that the CEBA program had a longer compliance period than
current programs (10 years instead of 5 years).
Because the company was being held to a standard no longer recognized by the State,
Dan McDonald of Greater Dubuque Development Corporation addressed the IEDA
board in August 2014, to make the case of a reasonable settlement. The State agreed
to require a repayment of half of the original amount, $12,500.
The State has requested signature from both the City and from Shepherd, Inc. on the
settlement agreement. I have confirmed with Julie Kinsella, the COO of Shepherd, Inc.,
and the company has already paid the settlement.
RECOMMENDATION/ ACTION STEP
I recommend the City Council adopt the attached resolution authorizing the execution of
the Settlement Agreement.
RESOLUTION NO 307-14
AUTHORIZING THE EXECUTION OF A SETTLEMENT AGREEMENT FOR CEBA
LOAN AGREEMENT 04-CEBA-05 BY AND BETWEEN THE IOWA ECONOMIC
DEVELOPMENT AUTHORITY, SHEPHERD, INC., AND THE CITY OF DUBUQUE
Whereas, in 2003 the City Council of the City of Dubuque approved an
application to the Iowa Economic Development Authority (IEDA) for CEBA funding from
Shepherd, Inc. (Shepherd), a company in the copy-editing and book production
industry; and
Whereas, the IEDA awarded Shepherd a $75,000 low-interest loan and a
$25,000 forgivable loan pursuant to the terms of CEBA Loan Agreement 04-CEBA-05,
dated October 16, 2003 (the Agreement), to which the City of Dubuque (City) was also
a party. The Agreement stipulated the creation of 39 FTE positions in addition to
Shepherd's existing 5 FTE positions, over a 10 -year compliance period; and
Whereas, because of technology that brought wide -sweeping changes in the
entire industry, Shepherd did not have the full number of FTE positions in place at the
end of the compliance period, and IEDA deemed the project in default of the terms of
the Agreement and requested repayment of the $25,000 forgivable loan; and
Whereas, Shepherd and IEDA have agreed to a repayment of half of the original
amount, $12,500, as set forth in the attached Settlement Agreement; and
Whereas, Shepherd has paid the $12,500 repayment to IEDA; and
Whereas, IEDA has requested that City approve the Settlement Agreement, with
no additional cost to City.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA, AS FOLLOWS:
1. The Settlement Agreement is hereby approved.
2. The City Manager is authorized and directed to sign the Settlement Agreement
on behalf of the City of Dubuque.
Passed, approved and adopted this 6th day of Oct g ber, 2014.
Roy D. BoI, Mayor
F:\USERS\tsteckle\Lindahl\Resolutions\ShepherdSettlementAgreementToCEBALoanAgreement_100114.docx
SETTLEMENT AGREEMENT
THIS AGREEMENT, effective as of the latest date signed below, between the Iowa Economic
Development Authority f/k/a Iowa Department of Economic Development ("IEDA"), Shepherd, Inc.
("Business"), and the City of Dubuque ("Community");
WHEREAS, TF,DA awarded to Business a Twenty -Five Thousand Dollar ($25,000) Forgivable
Loan and released Twenty -Five Thousand Dollars ($25,000) pursuant to the terms of the CEBA Loan
Agreement (04-CEBA-05) dated October 16, 2003, (referred to as the "Contract");
WHEREAS, Business failed to meet the Job Creation Obligations as specified in the Contract;
WHEREAS, as a result of this failure Business is in default under the terms of the Contract and
acknowledges its obligation to repay the funds to IEDA;
WHEREAS, IFDA and Business desire to fully settle, release and discharge any and all claims
against each other related to this Contract;
WHEREAS, the Business and IEDA have agreed to a Negotiated Settlement on the terms and
conditions described herein;
NOW, THEREFORE, the Parties agree as follows:
1. Acknowledgement of default. Business acknowledges its default under the terms of the
Contract. The default consists of failure to create 39 FTE jobs above a base employment of 4,
for a total of 43 FTE jobs by the "Project Completion Date" as specified in the Contract. The
43 jobs must be maintained for an additional thirteen weeks through the Maintenance Period.
The Business had 16 FTE jobs at the Project Completion Date and 15 FTE jobs at the End of
Maintenance Period.
2. Total amount owed. Given the Business did not meet the job creation obligation, one-half of
the forgivable loan in the amount of $12,500 shall be repaid. The remainder of the forgivable
loan, and all interest and penalties are hereby waived.
3. Repayment. Business shall submit $12,500 to the Authority by September 22, 2014. Payment
can be made by check and should be mailed to Iowa Economic Development Authority,
Attn: Kristi Steil, 200 East Grand Avenue, Des Moines, Iowa 50309.
4. Collateral. The collateral originally securing the Contract is a Blanket UCC -1 on all business
assets and six (6) Personal Guarantees. This collateral shall remain in effect until the full
amount of $12,500 is received. Business shall execute any documents as requested by IEDA to
ensure that the specified collateral is in effect and binding on Business.
5. Full amount due if breach of settlement agreement. Any breach of this Settlement
Agreement shall result in immediate repayment by the Business of the outstanding balance due
under this Settlement Agreement, plus 6% interest charged from the date of breach.
1
6. Expenses. Business agrees to pay to IEDA all expenses incurred or paid by IEDA including
attorney's fees and court costs in connection with enforcement of this Settlement Agreement.
7. Successors and assigns. This Settlement Agreement shall be binding upon and inure to the
benefit of Business and IEDA, and each of their respective legal representatives, successors and
assigns.
8. Severability. If any provision of this Settlement Agreement is held invalid by any court, the
remainder shall not be invalid, but shall be enforced as written consistent with the purposes of
this Settlement Agreement.
9. Integration. This Settlement Agreement represents the full agreement between the parties
concerning settlement of amounts owed due to default under the Contract and no promise or
expectation of any further consideration has been made by any party.
10. This Settlement Agreement does not replace the Contract and the Contract is incorporated as
part of this Settlement Agreement and all provisions not affected by this settlement survive the
Settlement Agreement.
11. Business freely and voluntarily enters into this Settlement Agreement.
IN WITNESS, WHEREOF, the Undersigned approve and execute this Settlement Agreement
effective as of the latest date signed below.
FOR BUSINESS: FOR IEDA:
Signature Deborah V. Durham, Director
Print Name & Title Date
Date
FOR CMMUNI Y:
1
Signa
Roy D. Buol, Mayor
Print Name & Title
October 6, 2014
Date
2