HomeMy WebLinkAboutMN-IURAED-2010-06-08Ithaca
Urban
Renewal
Agency
Approved 7-13-10
108 East Green Street
Ithaca, New York 14850
(607) 274-6559
(607) 274-6558 (fax)
MINUTES
Economic Development Committee
3:30 PM, Tuesday, June 8, 2010
Present: Doug Dylla, Martha Armstrong, Jennifer Tegan, Leslie Ackerman
Staff: Nels Bohn, Alice Vargo, JoAnn Cornish, Phyllisa Desarno
Guest: Dan Smalls, Executive Producer and Doug Levine, Executive Director from the State Theatre,
Kelly and David Moreland, Owners of Mama Goose
I. Call to order
The meeting was called to order at 3:33 P.M. by chairperson Dylla.
Dylla introduced and welcomed Leslie Ackerman as a newest member of the ED Committee.
II. Additions to or deletions from the agenda - None
III. Public comment - None
IV. Review of Minutes for April 13, 2010 and May 11, 2010
Motion by Armstrong, seconded by Tegan, to approve the April 13, 2010 and May 11, 2010 minutes
as presented.
Carried Unanimously 4-0
V. State Theatre of Ithaca, Inc. (Priority Business Loan #2, 2009) – Update
Bohn reviewed that the IURA $458,000 loan to acquire and continue operation of the State Theatre required
reporting back to the IURA on first year operations. Dan Smalls, Executive Producer, and Doug Levine,
Executive Director distributed a listing of performances with attendance figures, YTD budget vs. actual
expenses, YTD profit & loss statement, balance sheet, and aging of payables. They summarized that
financials results for the first year of operations are on target with the budget despite ticket sales off 15%
from projections due to the overall poor economy. Total income to date is $485,000 of which $326,000 is
earned income, according to Smalls. Unearned income exceeded budgeted amounts and operating
expenses have been reduced. Smalls reported the following outcomes:
1. # performances by category – 64 shows
2. # ticket sales/attendance – 44,000 tickets sold
3. # job creation – 13 FTE jobs created
4. Income & expense as compared to 2009-10 budget – on-budget
5. fund raising compared to 2009-10 budget (unearned income) - $109,000 exceeds $65,000
budgeted amount
6. Board membership – 10 member board
7. allocation of the "historic preservation" budget line - $2,000 budget line
8. improvements to/future needs of facility – stage lighting, replacement of atmospheric ceiling light
bulbs, restoration and repainting of ticket booth and ground level exterior entrance area.
IURA EDC Minutes
June 8, 2010
Page 2 of 6
Smalls reported that STI hired Doug Levine as Executive Director early in the year in recognition of the
importance of establishing a fund raising program. Levine stated that they are focusing on marketing and
sending out large volumes of mailings for fundraising, and they are well over their fundraising budget. They
have received an estimated $109,000 in funds from about 1,000 donors. He also reported that they are
conducting three full days of building assessment with a variety of professionals, including Cornell building
and maintenance staff, to develop a strategic plan for the facility. Dylla encouraged continued development
of a master plan for the facility and increased on-line exposure for the State Theatre. Armstrong asked
about the Ticket Center. Smalls indicated they are negotiating in good faith to allow customers to purchase
tickets through the Ticket Center as well as their own ticket office. Dylla asked about the status of an
account payable to Cayuga Sign Inc. Smalls indicated they inherited this billing from Historic Ithaca and
there were some issues with performance of the sign. They have paid down a portion of the billing and are
working with the vendor to pay off the remaining amount as their budget allows, and continue to contract
with the vendor for additional work.
VI. Community Development Revolving Loan Fund – Request by Mama Goose LLC for loan assistance
to start-up the Mimi’s Attic retail store at 430 W. State/MLK Street
Kelly Moreland stated that they purchased the whole building on W. State/MLK Street and Mama Goose is
looking to expand their business in response to the vacancy created by Bishops Home Center. They seek
permanent financing to add Mimi’s Attic, a division of Mama Goose that will sell gently used house wares
and furniture. The new store has now been open for 11 days, and employs 2 full-time and 1 part-time staff.
There has been a lot of traffic in the store, averaging sales around $800/day.
Armstrong moved, seconded by Ackerman the following:
CD-RLF – Loan Assistance to Mama Goose LLC for Start-up of
Mimi’s Attic Retail Business
Whereas, on April 14, 2010, Mama Goose LLC (MG) applied for $40,000 of loan assistance for a $52.000
project to expand the MG to open Mimi’s Attic, a retail store selling second-hand furniture, house wares and
home décor in a 4,000 SF portion of the space previously occupied by Bishop’s Home Center at 430 W.
State/MLK Street, Ithaca, NY, and
Whereas, MG is a retailer of primarily second-hand children’s clothing and accessories which expanded and
relocated to an approximately 4,300 SF storefront at 430 W. State/MLK Street in 2008 and currently
employs four full-time and eight part-time employees, and
Whereas, Kelly Moreland is the sole member of Mama Goose LLC, which qualifies as a women-owned
business enterprise, and
Whereas, the primary objectives of the Community Development Revolving Loan Program (CD-RLF) is
provision of direct financing for economic development activities to create employment opportunities,
facilitate the expansion of business activity within the City of Ithaca and expansion of the City’s commercial
and industrial tax base, and
Whereas, CD-RLF financing policy establishes maximum loan amount of $40,000 for a retail business and
$75,000 for a non-retail business except where the IURA determines that the project will result in an
extraordinary degree of public benefit, and
Whereas, the project is projected to create three (3) full-time equivalent (FTE) employment positions, of
which at least 51% are projected to be filled by low- and moderate-income persons, thereby meeting the
CDBG public benefit test to generate at least one FTE job for every $35,000 of assistance, an
IURA EDC Minutes
June 8, 2010
Page 3 of 6
Whereas, new full-time positions are projected to pay $9-$11 per hour with 100% employer-paid health
insurance provided to full-time employees and 50% employer-paid health insurance for part-time employees
working at least 20 hours per week, and
Whereas, the proposed uses of project funds are:
$11,360 furnishings, fixtures and equipment
$4,000 inventory
$36,640 start up costs & working capital, including professional fees
$52,000 Total, and
Whereas, the proposed sources of project funds are:
$12,000 equity
$40,000 IURA
$52,000 Total, and
Whereas, the Kelly and David Moreland have taken out a short-term, private bridge loan of $30,000 that is
due in October 2010 to fund initial start-up costs for Mimi’s Attic, and
Whereas, MG seeks term debt to repay this loan and cover additional start-up costs, and
Whereas, MG is a women-owned business, and the IURA encourages development of minority- and
women-owned businesses, and
Whereas, MG is current on their $70,000 IURA loan issued in 2008, and has satisfied its job creation goals,
and
Whereas, MG operations has strengthened the W. State/MLK Street business corridor, an IURA target area
for revitalization, and
Whereas, at their June 8, 2010 meeting, the IURA Economic Development Committee reviewed credit
analysis report on the loan application prepared by Robert Deemer, Jr. of H. Sicherman & Co., and
considered applicable provisions of the IURA Economic Development Policy Guidelines and Operating Plan,
and recommended the following; now, therefore, be it
RESOLVED, that the IURA hereby approves an IURA loan from the Community Development Revolving
Loan Fund in accordance with the loan application, and the following terms:
Borrower: Mama Goose LLC, a NYS limited liability company formed in 2008
Loan Amount: $40,000
Project: Start up of Mimi’s Attic retail operation at 430 W. State/MLK Street,
Ithaca, NY
Projected Use of Funds: FF&E, inventory, start-up costs and working capital (construction activity
is not an eligible use of IURA funds for this loan)
Term: 5 years (60 months)
IURA EDC Minutes
June 8, 2010
Page 4 of 6
Interest Rate: 4% annually, reset to 3% upon submission of satisfactory job reports
documenting that job creation goals have been achieved for two
consecutive quarters and borrower is in compliance with all other terms
of the loan agreement.
Repayment: Interest-only payments for 90 days or until full loan disbursement,
whichever is sooner, then level monthly principal and interest payments
due to fully amortize the loan over the 60 month term (approximately
$737/ month), due the first day of each month.
Collateral: 1st lien on all business assets of Mama Goose LLC (Mimi’s Attic is a
division of MG), to include accounts, inventory, furniture, fixtures and
equipment now owned or hereinafter acquired.
Guarantor(s): 1. Personal guarantees of Kelly J. Moreland and David Moreland, each
individually.
2. Corporate guarantee of 430 W. State Street LLC.
Conditions: 1. Creation of at least three (3) full-time equivalent employment
positions of which at least 51% must be held by low- and moderate-
income persons.
2. Subordination of AFCU’s collateral position on business assets of
Mama Goose LLC
3. Annual submission of profit and loss statements broken out for
Mimi’s Attic and Mama Goose divisions
4. Annual submission of balance sheet and profit and loss statements
for Mama Goose LLC.
RESOLVED, that the Director of Community Development for the IURA is authorized to issue a loan
commitment in accordance with this resolution, and be it further
RESOLVED, that IURA Chair, upon the advice of the Executive Director and IURA Attorney, is hereby
authorized to execute all necessary and appropriate documents to implement this resolution, including, but
not limited to, executing loan agreement documents.
Carried Unanimously 4-0
VII. High-Tech Business Loan Guidelines, amendment to IURA Economic Development Financing
Policy Guidelines and Operating Plan
Dylla reviewed the proposed high-tech business loan fund guidelines and asked for input. Ackerman asked
about the rationale for the guidelines. Dylla explained that current loan guidelines were determined by the
IURA to provide insufficient guidance on applications from high-tech start up businesses, which have yet to
generate revenues and have very unique products or services. He indicated that during review of the e2e
Materials, Inc. loan the Committee recognized that Ithaca has a competitive advantage for technology spin-
offs from Cornell which have strong potential to significantly benefit the local economy with export oriented
products and services and create career path jobs. Tegan suggested that “convertible debt” should be
permitted as match funding in addition to “equity.” Members agreed. Following further discussion,
Tegan moved, seconded by Ackerman to recommend establishment of high-tech business loan fund
guidelines as follows:
IURA EDC Minutes
June 8, 2010
Page 5 of 6
RESOLVED, that the IURA hereby amends its IURA Economic Development Policy Guidelines and
Operating Plan, which governs IURA economic development financial assistance programs, to establish a
new loan fund as follows:
Title:
High-Tech Business Loan Fund
Objective:
To assist with the job expansion of local start-up high-tech businesses in the City of Ithaca
Eligible Borrowers:
For profit and non-profit businesses
Eligible Projects:
Start-up or expansion of a high-tech business located in the City of Ithaca
Eligible Uses:
Any justifiable business purpose related to job expansion
Target Area:
Citywide
Maximum Amount of Financing:
$100,000
Term:
Not to exceed 5 years
Interest Rate:
Transaction specific depending on risk, may range up to 10%, plus warrants
Match Funding:
A minimum 3:1 match of equity investments or convertible debt from other qualified, professional investors
in the business
Security/Collateral:
Transaction specific, no minimum loan-to-value standard is required. Personal guarantees may be sought
when appropriate.
CDBG national objective test:
Low/mod jobs benefit whereby 51% of all jobs created must be held by, or made available to, LMI persons.
Job Creation:
At least one FTE job for every $35,000 of loan assistance
Living Wage:
Required for all full-time jobs created
Carried Unanimously 4-0
IURA EDC Minutes
June 8, 2010
Page 6 of 6
VIII. Draft IURA Economic Development Goals for 2010 – 2012
Dylla provided a brief overview and discussed possible performance measures. Armstrong questioned
whether long-term job creation and retention can be tracked on ED loans. Bohn indicated that an effective
incentive for borrowers to complete initial job reporting data has been the promise to release the borrower
from further job reporting which can be onerous if there is significant turnover. Armstrong suggested staff
follow up on job creation/retention after the mandatory job reporting period with minimal documentation,
such as requesting submission of a sample payroll or based on verbal reporting.
IX. Staff Report
A. May 2010 loan repayment report
Bohn reviewed the May financials and reported all borrowers are current though the Taitem loan is
shown as in arrears for the first time, but we believe this may be a mix up by the loan servicing bank.
Bohn noted that PB Associates and Marina Realty of Ithaca, LLC (MRI) have paid off their CD-RLF
loans. MRI is also in the process of refinancing their $800,000 Section 108 loan through the IURA as
well.
B. Loan application pipeline
Bohn stated that the Orange Blossom Pancake House would like to expand to serve dinners and that
they have inquired about financing for a walk-in cooler. Bohn indicated that he provided them with a
loan application.
C. Project updates, P&C, Commons Upper Story Housing, FLWC
Bohn reported that the property owners of the P&C Plaza are planning to open and operate a 15,000
SF neighborhood grocery store in the 25, 000 SF former P&C grocery store. The two Commons Upper
Story Housing projects – Plantations & Petrune buildings - have now each secured bank financing and
are ready for submission to Empire State Development to gain a Grant Disbursement Agreement to
access Restore NY funding. Bohn reported that he met with the Executive Director of the Finger Lakes
Wine Center and they have now satisfied their loan condition to secure written commitments for at least
$70,000 in donations and commitments from at least 15 wineries to provide inventory to the FLWC.
FLWC has encountered delays with accessing grant funding awarded through Assemblywoman Lifton’s
office. He also noted that the liquor license has been approved.
Armstrong left the meeting at 5:00 p.m.
Cornish left the meeting at 5:03 p.m.
X. Old and Other Business
Next meeting date: July 13, 2010
XI. Adjournment
The meeting was adjourned at 5:07 p.m.
END
Minutes prepared by A. Vargo, edited by N. Bohn.
j:\community development\admin files\minutes\edc\2010\6june 2010\edc minutes 6-8-10 nb.doc