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HomeMy WebLinkAboutMN-IURAED-2024-05-13 108 E. Green St. Ithaca, NY 14850 (607) 274-6565 MEETING MINUTES ITHACA URBAN RENEWAL AGENCY Economic Development Committee (EDC) 3:30 P.M., Monday, May 13, 2024 Common Council Chambers, 108 E. Green St., Ithaca, NY 14850 Present: Chris Proulx, Chair; Leslie Ackerman, Vice-Chair; Chuck Schwerin Excused: Donna Fleming; Derek Adams Vacancies: 1 Staff: Nels Bohn; Charles Pyott (virtual) Guests: Kate Donohue, Cinemapolis John Guttridge, Urban Encore, LLC Travis Brooks, Greater Ithaca Activities Center (GIAC) (virtual) I. Call to Order Chair Proulx called the meeting to order at 3:35 P.M. II. Agenda Additions/Deletions None. III. Public Comments (3-minute max. per person) None. IV. Review of Meeting Minutes: April 9th, 2024 Ackerman moved, seconded by Schwerin, to approve the minutes, with no modifications. Carried Unanimously: 3-0 V. New Business A. Request to Consent to Assign Lease at 120 E. Green St. from Cayuga Green, LLC to Seventh Art Corporation of Ithaca Donohue explained that occupancy costs have been a substantial challenge for Cinemapolis, for which they have received relief from the Ithaca Urban Renewal Agency (IURA) over the last year and a half. Cinemapolis, as a sub-tenant of the leasehold between Cayuga Green, LLC and IURA, is taking an important step towards a long-term solution by buying out Cayuga Green, LLC's leasehold, making Cinemapolis a direct tenant of IURA. This will reduce their occupancy costs going forward. Under the current triple-net lease agreement with Cayuga Green, Cinemapolis has already been responsible for the vast majority of maintenance and, while there are new responsibilities to be taken on in the new arrangement, is confident that the amount of savings going forward will be worth the additional responsibilities. Approved/Adopted: 7/9/24 EDC Meeting Minutes May 13, 2024 Page 2 of 6 The purchase will be funded through a combination of money and sources: (1) $100,000 from the Tompkins County Tourism program to cover the down payment; (2) a low-interest loan from the Park Foundation; and (3) a mortgage from Tompkins Community Bank secured by the leasehold. The proposal is very manageable, and it will be beneficial to the IURA to establish a long-term tenant relationship with Cinemapolis. Cinemapolis is looking for IURA to release Cayuga Green, LLC from its obligations under the existing lease to enable Cinepolis to make the purchase. Bohn explained the request for an assignment of lease and a release of Cayuga Green, LLC from any future obligations. He indicated the City attorney reviewed the documents and did not raise any issues. He noted the additional request to extend the lease an additional ten years. The original lease was for 15 years with two 10-year renewals, which would expire in 2044. This request would bring it forward through the same period when the parking garage bonds will be paid off and the City has an option to reacquire the entire facility. He indicated research needs to be done to confirm IURA has the authority to extend the lease and consent could be given subject to legal review and approval. Schwerin moved, seconded by Ackerman: Consent to Assignment of Cinema Lease from Cayuga Green, LLC to Cinemapolis WHEREAS, on May 6, 2024, Seventh Art Corporation of Ithaca (Cinemapolis) submitted a request for the IURA to (1) consent to the assignment of the lease of the cinema lease premises located on the ground floor of the Green Street parking garage from Cayuga Green, LLC to Cinemapolis, (2) release Cayuga Green, LLC from any further obligations under the lease following the assignment, and (3) extend the term of the lease to June 28, 2054, and WHEREAS, on July 24, 2007, the IURA entered into an agreement to lease 10,947 square feet of the Green Street Garage to Cayuga Green, LLC (Premises) for a cinema use, and WHEREAS, Cayuga Green, LLC subleases the Premises to Cinemapolis, and WHEREAS, the effective commencement date of the IURA lease to Cayuga Green, LLC was April 29, 2009, and provides for a 15-year lease with two 10-year renewals at the option of the lessee, which if exercised will extend the lease term through April 28, 2044; and WHEREAS, Cinemapolis entered into a purchase and sale agreement dated April 30, 2024 (Purchase Agreement) with Cayuga Green, LLC for assignment of the lease between the IURA as lessor and Cayuga Green, LLC as lessee for ground floor cinema lease space at 120 E. Green Street, and WHEREAS, the Purchase Agreement contains a seller contingency for closing that Cinemapolis obtain the IURA’s consent to the assignment of the IURA lease to Cinemapolis and IURA provide a written release of Cayuga Green, LLC from all prospective Lessee obligations under the IURA lease, and WHEREAS, the Purchase Agreement is anticipated to enhance the long-term financial sustainability of Cinemapolis and was one component of the Downtown Ithaca Alliance’s 2023 Cinemapolis Assistance Plan that was endorsed by the IURA; and EDC Meeting Minutes May 13, 2024 Page 3 of 6 WHEREAS, the IURA Economic Development Committee reviewed this matter at their May 13, 2024, and recommends the following action; now, therefore, be it RESOLVED, that the IURA hereby approves the requests from Cinemapolis and authorizes the IURA Chair, subject to IURA legal counsel review, to execute an Assignment and Assumption of Lease and Landlord’s Consent agreement by and between Cayuga Green, LLC and Seventh Art Corporation of Ithaca, d/b/a Cinemapolis and the IURA, and be it further RESOLVED, that the IURA Chair is hereby authorized, subject to IURA legal counsel review, to execute a release of Cayuga Green, LLC from all prospective Lessee obligations under the IURA lease of the Premises; and be it further RESOLVED, that following the closing of the Purchase Agreement, the IURA hereby authorizes the IURA Chair to execute an amendment to the lease agreement between the IURA and Seventh Art Corporation of Ithaca to allow for an additional renewal period to extend the term through June 27, 2054. Carried Unanimously: 3-0 B. Community Development Lending 1. Preliminary Request from Urban Encore, LLC for Housing Development Action Grants (HODAG) Loan Assistance to Support 115-123 S. Cayuga St. Rehabilitation Project to Create 18 Residential Rental Housing Units — Discussion Bohn explained this is an opportunity for the Committee to consider potential HODAG loan applications. He noted limited resources are available and there are some restrictions on eligibility. The funds must be used for residential rental property operations or construction and must primarily benefit low- and moderate-income persons defined as 80% of area-meeting income or lower, though market rate influences may affect eligibility. Approximately $500,000 is available for the Committee to consider how to invest. There is no longer a HODAG program, and no additional funds will be added other than those generated by loans made with the available funds. Urban Encore, LLC's project, which is also the City's Restore New York project that was awarded last year. The request was partially met by the award, creating a gap between funding awarded and funding requesting and resulting in a challenge to get this project to the end. Guttridge explained the project was not conceptualized initially as a big affordable housing project. Because of the gap created by the partial Restore New York funding, they had to re-analyze the project and came across a small building loan program that is a combination of a mortgage paired with a non- payment loan from New York State's Small Building Participation Loan Program (SBPLP). As a result, this project will be a regulated affordable housing project. The Community Preservation Corporation (CPC) will offer financing to bridge to the grant sources at the rate of 10%. Urban Encore cannot sustain the carrying costs at that rate during construction and has secured a private bridge loan of $1 Million loan at a low rate. If IURA can authorize a short-term loan, that will close the carrying gap during the construction period. Full repayment would occur upon receipt of the Restore New York grant funds from New York State. EDC Meeting Minutes May 13, 2024 Page 4 of 6 Bohn explained that the proposed interest rate is 3%, subject to negotiation and underwriting. He understands there is a willingness for personal guarantees from two principals as well as a subordinate lien on the property. Guttridge commented that he is confident of turning the project around in three years, but they may seek loan modification at some point depending on the timing of Restore New York's grant funding. Bohn commented the application will go through standard underwriting. 2. Preliminary Request from GIAC, Inc. for HODAG Loan Assistance to Support 2-Unit Residential Rental Housing Project — Discussion Bohn explained his understanding was that GIAC was working on acquisition of property adjacent to the new GIAC recreation center, or team center building, which is approaching completion and to be ready for opening by July if not late June. The goal is to acquire the property which consists of a two-unit apartment with two individual side-by-side units for residential rental purposes, one for employee housing and the other for young women. Brooks remarked GIAC is still in the process of purchasing the two units. He stated that legal review is in process, financing was approved by Tompkins Community Bank, and inspection results from the City are pending. The plan is to leave the property as two rentals over the next year and then work on raising funds to do the work to bring the two units to where they would like them to be. The goal is for one unit to be workforce housing and for the other, bigger unit to be short-term, shelter-type housing for houseless women aged 16-25. For ages under 18, they must deal with the Office of Children and Family Services (OCFS); over 18, they do not. Over the next year, the goal is to figure out which route is better and allows for more funding. Proulx asked where the HODAG loan would fit into the financing plan. Brooks replied that he believes the purpose of the loan is to serve better interest while long-term grants are worked out to complete the construction and pay off the loan for the property. Schwerin asked how much is being requested for the loan. Brooks commented that he was uncertain. Bohn remarked he does not have a clear answer and that GIAC should keep in mind whether the request is for a short-term or long-term loan and to understand the total budget and financial feasibility given the mortgage and the price being paid versus the rent and income expected, as well as operating costs associated with homeless housing being possibly staff-intensive. Brooks remarked that the plan is for current staff to operate the program next door for housing and the staff that would live in the other unit would provide support in the evenings, so a great deal of staffing cost is not anticipated. Additionally, GIAC has been doing this type of work for approximately 10 years, working with other agencies. GIAC anticipates the cost of work to be between $75,000-$100,000, depending on how much responsibility the current owner will have following City inspection results. Proulx remarked the greatest need for the HODAG loan appears to be for construction to convert the property to be suitable for the new long-term use. Brooks agreed. EDC Meeting Minutes May 13, 2024 Page 5 of 6 Schwerin asked about GIAC's timeframe. Brooks indicated closing should happen within the next month pending completion of the City inspections. Schwerin asked what percentage of financing TCB is providing. Brooks replied that TCB is providing 80% of its financing. Bohn remarked that more information is needed about the full budget for the GIAC project and the length of time for the loan. Proulx requested that GIAC provide a three to four-page summary of the project, including budget and timeline. C. Annual Election of Committee Officers Proulx was nominated to continue as Committee Chair, to be approved by the Board, and Ackerman was nominated to be Committee Vice-Chair. Proulx moved, seconded by Ackerman: 2024 IURA Economic Development Committee (EDC) Election of Vice-Chairperson & Nomination of Chairperson WHEREAS, the IURA By-laws provide that the committee membership shall elect its own committee Vice-Chairperson and nominate to the IURA Board a member to serve as Chairperson of the Committee, and WHEREAS, IURA By-laws further require at least one officer must be an IURA member, and WHEREAS, officers of each committee serve a one-year term, but continue to hold office until their successor is selected or appointed, and WHEREAS, the current committee officers are: Chairperson: Chris Proulx Vice-Chairperson: Leslie Ackerman, and WHEREAS, at their May 13, 2024, meeting the Chair called for nominations for Vice-Chair and Chair of the IURA Economic Development Committee; now, therefore be it RESOLVED, that the IURA Economic Development Committee hereby nominates Chris Proulx as Committee Chairperson, and be it further RESOLVED, that the IURA Economic Development Committee hereby elects Leslie Ackerman as Committee Vice-Chairperson. Carried Unanimously: 3-0 EDC Meeting Minutes May 13, 2024 Page 6 of 6 VI. Old/Other Business A. 2024 Action Plan — Update Bohn reported the HUD allocation for the Action Plan was received. Compared to the anticipated funds, there was an increase of $30,000 in CDBG funds and a decrease of $30,000 in HOME funds. Common Council is recommending that the 2024 Action Plan presented by the IURA be approved for the consent agenda at the June 5, 2024 meeting for submission to HUD. They are also reviewing the five-year consolidated plan and the update to the assessment of fair housing to be included in the June 5, 2024 consent agenda. B. IURA Financials Review: March 2024 Bohn reported that all the lease and loan payments are current. Spend down on CDBG spend down is being tracked. The goal was behind $100,000 in March, but most recent numbers suggest the goal will be met. He also mentioned the included balance sheet which ties together different reports. C. Staff Report Bohn reported on the application for another Restore New York grant for the Flatiron Building project, on the triangle block in the West State Street, Seneca Street, and Taughannock Boulevard area. The proposal is to demolish those two buildings and create a 24-unit affordable housing project with ground-level parking. VII. Adjournment The meeting was adjourned by consensus at 4:33 P.M. — END — Minutes prepared by S. Dean, edited by C. Pyott/N. Bohn.