Dubuque Racing Association Request to Refinance Existing DRA Loan Copyright 2014
City of Dubuque Consent Items # 16.
ITEM TITLE: Dubuque Racing Association Request to Refinance
Existing DRA Loan
SUMMARY: City Manager recommending approval of a request from
Dubuque Racing Association President and CEO Jesus
Avil6s to refinance the loan obligations coming due
December 1, 2016.
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Approve
ATTACHMENTS:
Description Type
Dubuque Racing Association Request to Refinance City Manager Memo
Existing DRA Loan-MVM Memo
DRA Letter Supporting Documentation
THE CITY OF Dubuque
DUB E i"
Masterpiece on the Mississippi 2007.2012.2013
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Dubuque Racing Association Request to Refinance Existing DRA Loan
DATE: September 28, 2016
Dubuque Racing Association President and CEO Jesus Aviles is requesting approval to
refinance the loan obligations coming due December 1, 2016.
1 concur with the recommendation and respectfully request Mayor and City Council
approval.
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Jesus Aviles, Dubuque Racing Association President and CEO
Crenna Brumwell, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
WSTIOQUE
DRA -= CAS IM1 O
DIAMOND JO
DUBUQUE RACINO ASSOCIATION C A s i N o
Date: September 27, 2016
To: The Honorable Mayor and City Council Members
CC: Michael C. Van Milligen,City Manager
From: Jesus M. Avil6s, President and CEO%Dubuque Racing Association .
Issue: Refinancing of Existing DRA Loan
As stated in the Third Amendment of the Lease Agreement between the City of Dubuque and the
Dubuque Racing Association(DRA), I am formally requesting City approval to refinance the loan
obligations coming due December 1, 2016 with American Trust & Savings Bank (DRA's lead
bank) and Dubuque Bank& Trust.
The current note 44893 has an interest rate of 4.5% and a balance of$,6534,567.20. We can lock
the proposed rate for an addition 5 years at Prime +.25% fixed for the remaining term of the loan. i
If rates remain steady the interest rate would be 3.75%.
A second variable balance term loan (Note 44894) is also up for renewal. The current variable
balance term loan is $3,608,216.22. This loan will renew at the same rate as the other loan, the
available balance on this variable balance tern loan will be reduced on a monthly basis until the
remaining commitment is$1,000,000 plus the amount outstanding on the Letter of Credit required
by the Iowa Racing and Gaming Commission. The Iowa Racing and Gaming Commission require
that we have a Letter of Credit in their favor. The current commitment is in the amount of
$527,302. The current rate of this loan varies between (4% - 6%) based on Prime. This is a line
of credit that hasn't been used since May 2015.
I have included the proposed terms information from American Trust & Savings Bank; the DRA
Board of Directors accepted the terms, subject to City Council consent, on September 27, 2016.
If you require additional information or further clarification, please contact me. Thank you for
your consideration in this matter.
1855 GREYHOUND PARK RD.DUBUQUE, IA,52001 800.373.3647 1 WWW.DRADUB000E.COM
� S
American 7�rust DuBuQpE BANK
Simply better banking' •,. °, °°°": AND r>rvsT
Victoria J. Richter,Senior Vice President David K.Gaylor, Executive Vice President
895 Main Street 1398 Central Ave.
P.O. Box 938 P.O. Box 778
Dubuque, Iowa 52004-0938 Dubuque, IA 52004-0778
563.589.0827 563-589-2023
trichter(Ma► eriG-entrust.com dgaylor@dubuquebank,com
September 13, 2016
Mr. Jesus Aviles,President&CEO
Mr. Bill Eichhorn, CFO
Dubuque Racing Association
P.O. Box 3190
Dubuque, IA 52004-3190
Dear Jesus and Bill:
American Trust& Savings Bank and Dubuque Bank&Trust are pleased to let you know
we have collectively approved the renewal of your obligations that are coming due
December 1, 2016.
The current balance on the term note 44893 is$6,534,567.20. We propose to renew the
outstanding balance for an additional 5 years at Prime+ .25%fixed for the remaining
term of the loan. The loan rate will not be lower than 3.50%. Today's Prime rate of
interest is 3.5%per annum,which would result in a renewal rate of 3.75%if rates remain
steady. This is subject to change daily. We can lock the rate 30 days prior to the
renewal,if you so desire. This renewal will fully amortize the remaining balance of the
loan. If Prime remains the same as today's rate,the required monthly payment reduces
by$4,104.07 to $119,762.93. Like previously, we will allow you the option of prepaying
the entire year's principal in January and just pay interest monthly, OR you may pay
monthly principal and interest payments.
The variable balance term loan(note 44894) is also coming due for renewal. The total
existing commitment on the variable balance term loan is$3,608,216.22. That
commitment continues to decrease on a monthly basis in accordance with the
amortization schedule that is attached to that note. The line of credit portion of the
commitment has not been used since May 2015. We have a Letter of Credit issued in
favor of the Iowa Racing and Gaming Commission as part of that commitment. The
Letter of Credit is currently in the amount of$527,302.
it
September 13, 2016
Mr. Jesus Aviles
Mr. Bill Eichhorn
Page 2 of 2
We propose renewing the variable balance term loan at the same rate as the other loan,
and we will continue to reduce the available balance on a monthly basis until the
remaining commitment is$1,000,000 plus the annount outstanding on the Letter of
Credit. Then you will have available a line of credit to handle any unusual cash needs
and we will have some additional room for any increases needed on the Letter of Credit,
if needed.
Both loans will mature December 1,2021.
There will be nominal documentation fees for the renewals of these loans but no other
fees. Current documentation will remain intact except for the renewal notes,
corresponding amortization schedules,and documents directly related to the note
agreements.
Purpose of Letter:
This letter shall not be deemed as evidence of a binding agreement on the part of either
the Banks or the Borrower. Important terms may remain to be negotiated, and even if an
agreement in principal should be reached on the terms of the financing at a subsequent
date,neither party to the financing shall be legally bound until definitive loan documents
have been signed by the respective parties.
Thank you so much for your continued partnership with our banks. We truly appreciate
working with you.
Sincerely,
r
Victoria J. Richte David K. Gaylor
Senior Vice President,AT&SB Executive Vice President, DB&T
The terms of this letter are accepted this day of , 2016.
Dubuque Racing Association