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HomeMy WebLinkAboutMN-IURA-2016-10-27Approved:12/15/16 108 East Green Street Ithaca, New York 14850 (607) 274-6565 (607) 274-6558 (fax) MINUTES ITHACA URBAN RENEWAL AGENCY Common Council Chambers,City Hall 8:30 A.M.,Thursday,October 27,2016 Members:Mayor Svante Myrick,Eric Rosario,Karl Graham,Tracy Farrell Excused:Chris Proulx Stephen Smith (Common Council Liaison) Staff:Nels Bohn,JoAnn Cornish,Charles Pyott Guests:Benjamin Brotman,Liquid State Brewing Company,Inc. I.Call to Order Chair Myrick called the meeting to order at 8:38 A.M. II.Agenda Additions/Deletions No changes were made to the agenda. III.Public Comment None. IV.Review of Draft Meeting Minutes:August 25,2016 Farrell moved,seconded by Rosario,to approve the August 25,2016 meeting minutes,with no modifications. Carried Unanimously 4 0 V.Economic Development Committee (EDC) A.Request from Liquid State Brewing Company,Inc.for Loan Assistance for Start Up Craft Microbrewery with Taproom at 527 W.State Street (PB LF #9) Bohn reported the IURA received a funding application for a brewery/taproom start up,to be located in the former Cornell Laundry building.It would be an eligible activity for the Priority Business Loan Fund,which does permit businesses with alcohol sales.A considerable amount of equity is associated with the project and bank funding has already been secured. Ithaca Urban Renewal Agency IURA Minutes October 27,2016 Page 2 of 16 Bohn explained the IURA is being asked to provide $70,000.The project would create at least 2.5 full time equivalent (FTE)jobs (not counting the two co owners),so it would meet IURA job creation requirements.The underwriting report concludes the project meets underwriting standards.While neither of the two owners has direct retail experience,they have hired a retail manager with considerable retail experience.The major underwriting issue is the standard risk associated with any start up venture.There is also a limited amount of collateral available to secure a loan.The project has a robust business plan,with good debt coverage ratios and the owners have strong brewing expertise. The applicants developed a budget with sufficient working capital and a detailed list of costs.The Committee recommends approval of the loan application. Bohn added that there has been ongoing discussion associated with the City’s zoning and regulatory framework for brewpubs vs.micro breweries.The City Planning and Economic Development Committee will be considering a zoning amendment to clarify where brewpubs and micro breweries are permitted in the City. Brotman explained that,strictly speaking,brewpubs can produce up to 5,000 barrels a year,but the business would certainly not produce remotely that much in its initial stages.He also noted eventually he would like to establish a restaurant on the State Street side of the building. Graham asked when the neighbors and general public would be given the opportunity to provide comments on the project.Bohn replied that would take place as part of the Public Hearing process for the proposed zoning amendment. Cornish added the project is currently slated for staff level Limited Site Plan Review.If Planning Division staff believes it would have a significant neighborhood impact and/or if there is any public controversy associated with it,then the project would be submitted to the Planning and Development Board for full Site Plan Review,which would include another Public Hearing process. Farrell observed the local community recently experienced a serious drought.Since beer production uses a considerable amount of water,she wonders what impact the project would have.Brotman responded the former Cornell Laundry operation had been using one million gallons of water a month. The proposed brewpub would only use a small fraction of that. Moved by Rosario,seconded by Graham: Loan Assistance to Liquid State Brewing Company,Inc.(PB LF #9) WHEREAS,on August 19,2016 the Liquid State Brewing Company,Inc.(LS Brewing)applied for a $70,000 IURA loan for a start up micro brewery with taproom at 527 W.Green Street;and WHEREAS,the primary objective of the Ithaca Density District Priority Business Loan Fund (PB LF)is to induce the creation,start up and expansion of specific priority business enterprises in the greater downtown that have been defined by the community as highly desirable or IURA Minutes October 27,2016 Page 3 of 16 substantially increases foot traffic thereby strengthening downtown vitality,including a brewpub;and WHEREAS,the proposed business is substantially similar to a brewpub and therefore eligible for loan assistance through the PB LF;and WHEREAS,the proposed uses of project funds are: $16,000 Lease deposit $98,000 Leasehold improvements $335,000 Equipment $35,000 Furniture &fixtures $35,200 Fees/Soft costs $125,800 Working capital $645,000 Total,and WHEREAS,the proposed sources of project funds are: $200,000 Equity $350,000 M&T Term Loan $25,000 M&T Line of Credit $70,000 IURA $645,000 Total,and WHEREAS,the primary owners of LS Brewing are Jamey Tielens and Benjamin Brotman,and WHEREAS,the project is projected to create at least 2.5 full time equivalent (FTE)employment positions,of which at least 51%will be filled by low and moderate income persons,resulting in $28,000 of loan assistance per job created,and WHEREAS,the IURA Economic Development Policy Financing Guidelines and Operating Plan for the Priority Business Loan Fund normally requires at least one FTE job for every $35,000 of loan assistance,and WHEREAS,as IURA loan proceeds may be used for interior improvements of existing commercial space,the loan is listed at 58.35(a)(3)(iii)as categorical excluded but subject to federal laws listed at 58.5 for the National Environmental Protection Act (NEPA),and WHEREAS,the project does not require further consultation with respect the federal laws listed at 58.5,such as flood hazard regulations,and therefore converts to an Exempt activity for NEPA, and WHEREAS,the interior renovation of existing commercial space constitutes a Type II action under the City of Ithaca Environmental Quality Review Ordinance and therefore is not subject to further environmental review,and IURA Minutes October 27,2016 Page 4 of 16 WHEREAS,at their October 11,2016meeting,the IURA Economic Development Committee reviewed the loan application,a credit analysis prepared by Richard Rickli of H.Sicherman &Co., Inc.and applicable provisions of the IURA Economic Development Policy Guidelines and Operating Plan,and recommend the following;now,therefore,be it RESOLVED,that the IURA hereby approves a loan from the Ithaca Density District Priority Business Loan Fund (PB LF)in accordance with the loan application,and supplemental submissions,subject to the following terms: Borrowers:Liquid State Brewing Company,a New a New York State Corporation Loan Amount:Up to $70,000 Project:Establishment of a start up micro brewery with taproom at 527 W. State Street,Ithaca,NY. Total Project Cost:$645,000 Projected Use of IURA Funds:Purchase of beer brewing production equipment,furnishings and fixtures Term:90 months (7 years and six months) Interest Rate:3.5%annually,reset to 2.5%upon submission of satisfactory job reports documenting that the job creation goal has been achieved for two consecutive quarters and borrower is in compliance with all other terms of the loan agreement. Repayment:Interest only payments for six (6)months,then level monthly payments of principal and interest to fully amortize the loan over 84 months (approximately $941/month)and subject to a revised P&I amount upon rate reset. Loan Collateral:1. General security interest on all business assets including accounts,inventory,furniture,fixtures and equipment now owned or hereafter acquired,subordinated to the lien of M&T Bank. Personal Guarantor(s):Benjamin J.Brotman and Jamey T.Tielens,joint and several.. Job Creation Requirement:Creation of at least two and one half (2.5)FTE employment positions of which at least 51%must be held by low and moderate income persons. Loan Disbursement:In full,upon receipt of invoices for production equipment and or furnishings and fixtures in an amount equal to or greater than the loan amount. IURA Minutes October 27,2016 Page 5 of 16 Conditions:1. All related party debt shall be fully subordinated to IURA debt in both lien and payment. 2. Completion of NEPA environmental review by staff. Reporting:1. Annual submission of accountant prepared federal and New York State tax returns. 2. Quarterly IURA job reporting of jobs created. 3. Documentation of project match funding. And be it further, RESOLVED,that the Director of Community Development for the IURA is authorized to issue a loan commitment letter in accordance with this resolution,and be it further RESOLVED,that the IURA Chairperson,upon the advice of IURA legal counsel,is hereby authorized to execute all necessary and appropriate documents to implement this resolution. Carried Unanimously 4 0 B.Restore New York Initiative (Round 4)—Grant Application Report Bohn reported the Restore New York Initiative (Round 4)grant application was submitted.He has also spoken with some of the other applicants who were not selected,to determine ways those projects could move forward.Common Council voted unanimously in support of the application. He expects to find out the results of the application sometime in December 2016. C.Committee Vice Chairperson Report Bohn announced that Jennifer Tegan resigned from the Committee,due to too many time commitments.Charles Hamilton has replaced her. VI.Governance Committee (GC) A.Second Amendment to Legal Services Contract:Richard Ruswick Rosario explained the IURA amended the contract earlier this year to account for additional work Mr. Ruswick performed for the 210 Hancock Street housing project.Since that time,Mr.Ruswick performed another $203 worth of work to review documents subordinating the mortgage to the permanent lender.Since his original legal services contract included a maximum $5,000 expenditure cap,a resolution is needed to approve the additional expenditure.The project owner has already paid the legal costs,so the amendment will not adversely impact IURA finances. IURA Minutes October 27,2016 Page 6 of 16 Moved by Rosario,seconded by Farrell: Procurement of Independent Legal Services,Ruswick —2nd Amendment to 2016 Contract WHEREAS,the IURA authorized a 1st amendment to the 2016 independent contract for legal services with Richard P.Ruswick at Levene Gouldin &Thompson,LLP to cover extraordinary expenses associated with the 210 Hancock Street Low Income Housing Tax Credit (LIHTC)project, which cost was fully reimbursed by the project sponsor,and WHEREAS,in recent years,Ruswick has provided specialized legal services on LIHTC projects,and, WHEREAS,as no additional legal expenses were anticipated to be incurred in 2016 on LIHTC projects,the contract amount was fully expended,and WHEREAS,in response to a request from INHS,Leven Gouldin &Thompson were requested to provide legal services for legal review of documents to subordinate IURA mortgages to the permanent lender for the Stone Quarry Apartments LIHTC project and has submitted a bill for $203.50,which will be reimbursed by the project sponsor,and WHEREAS,the funding cap has been reached on the independent contract,and WHEREAS,the IURA Governance Committee considered this matter at their October 21,2016 meeting and recommended the following action;now,therefore,be it RESOLVED,that the IURA Chairperson is hereby authorized,upon review of legal counsel,to execute a second contract amendment for independent contractor legal services with Richard P. Ruswick at Levene Gouldin &Thompson,LLP not to exceed an additional $500,and be it further RESOLVED,that the source of such funds for legal services shall be derived from revenues received from counter parties. Carried Unanimously 4 0 B.Response to Contract Monitor Staff Vacancy Rosario reported that Contracts Monitor René Funke recently resigned.The IURA needs to determine how to proceed with filling the vacancy,including providing funds for Ms.Funke to provide technical assistance as an independent contractor to train a new Contracts Monitor. —EXECUTIVE SESSION — Moved by Rosario,seconded by Farrell,to enter an Executive Session at 9:05 a.m. Carried Unanimously 4 0 IURA Minutes October 27,2016 Page 7 of 16 No action was taken during the Executive Session. Moved by Rosario,seconded by Farrell,to adjourn the Executive Session at 9:15 a.m. Carried Unanimously 4 0 Moved by Rosario,seconded by Graham the following resolutions: Hire Contracts Monitor WHEREAS,on October 20,2016,the incumbent Contacts Monitor announced her upcoming resignation to take another job beginning November 8,2016,and WHEREAS,the Contracts Monitor performs critical work functions for the IURA to achieve its mission and meet its obligations to administer the HUD Entitlement Grant program,and WHEREAS,IURA management recommends filling the upcoming vacancy on a part time or full time basis depending upon the pool of applicants and work duties assigned,and WHEREAS,the IURA desires to retain internal personnel capacity to perform critical work functions, and WHEREAS,the IURA Governance Committee discussed this matter at their October 21,2016 meeting and recommended a job search be commenced by staff to fill the upcoming vacancy,and WHEREAS,IURA Director of Community Development has identified a highly qualified candidate for the job position,and WHEREAS,following consultation with the Executive Director,a conditional job offer was made to the preferred candidate subject to IURA approval,and WHEREAS,the preferred candidate has accepted a conditional job offer to fill the Contracts Monitor position subject to IURA approval;now,therefore,be it RESOLVED,that the IURA hereby authorizes the hiring of Charles Pyott as IURA Contracts Monitor subject to the following terms: Title:Contracts Monitor Salary:$48,105.69/year Work Hours:35 hours per week Employment Status:Regular,full time “at will”employee Start Date:As soon as possible,subject to mutual agreement with candidate and candidate’s current employer,the City of Ithaca Duties:Job responsibilities per the Contracts Monitor job description,including minute taking IURA Minutes October 27,2016 Page 8 of 16 Health Insurance:80%employer payment toward enrollment in the IURA’s policy for coverage or payment of your out of pocket costs to continue an existing policy in an amount up to 75%of the cost the IURA would have paid for coverage. Retirement:11%of gross salary contribution by employer Vacation:2.7 hours/biweekly period (2 weeks/year increased to 3 weeks/year after four years of service) Other Terms:Governed by the IURA Human Resource Policies,including paid sick leave,11 holidays,3 personal days and vacation. RESOLVED,that the IURA Executive Director,or her designee,is hereby authorized to implement this resolution. Authorize Independent Contract with Incumbent Contracts Monitor WHEREAS,on October 20,2016,the Contacts Monitor announced her upcoming resignation to take another job that begins November 8,2016,and WHEREAS,the IURA has authorized a job search to fill the position,and WHEREAS,there is a strong possibility that there will not be an overlap in time between the new Contracts Monitor and the incumbent for training,and WHEREAS,the incumbent is open to the possibility of providing technical assistance services as an independent contractor to help train the new Contracts Monitor;and WHEREAS,the IURA Governance Committee discussed this matter at their October 21,2016 meeting and recommend the following;now,therefore,be it RESOLVED,that the Chairperson,subject to review by legal counsel,is authorized to execute an independent contractor agreement with the incumbent Contracts Monitor for technical assistance services in an amount not to exceed $2,500,following her separation from the IURA. Carried Unanimously 4 0 C.FY 2017 IURA Administrative Budget Rosario reported that the proposed budget is affected by two principal factors driving most of the increase compared to 2016:(1)an increase in health insurance premiums;and (2)the possibility the future Contracts Monitor may require family health insurance coverage,which is considerably more expensive.The proposed IURA employee retirement benefit contribution (11%)and 1.75% increase in employee salaries are both consistent with the City of Ithaca’s 2017 budget.Under the current scenario,there could potentially be a $11,000 shortfall in 2017.To mitigate for the potential shortfall,IURA staff explored other sources of funding (e.g.,loan repayments,use of non restricted funds). IURA Minutes October 27,2016 Page 9 of 16 Rosario noted one positive development in the budget outlook is that the sale of the Canopy Hotel property will provide $33,000/year in loan repayments.There should also be some salary savings from the vacant Community Development Planner position,which could make up for the shortfall; however,to maintain a conservative budget outlook,that was not factored into the budget. Bohn added the IURA expects a number of loan repayments in 2017 (including early pay offs),which will increase its assets,although that will diminish the IURA’s future revenue.The Liquid State Brewing Company,Inc.loan approved earlier in the meeting is not included in the proposed budget.It will be incumbent on IURA staff to identify more revenue sources from loans (especially housing loans,since they involve lower risk and are consistent with the IURA’s mission). Moved by Rosario,seconded by Farrell: FY 2017 IURA Administrative Budget WHEREAS,the IURA desires to annually adopt an administrative budget to guide expenditures and manage financial resources of the IURA,and WHEREAS,New York State law governing public authorities requires submission of the adopted budget 60 days prior to the start of the next fiscal year,and WHEREAS,the IURA budget is due to be submitted to the New York State Authorities Budget Office by November 1st of each year,and WHEREAS,at their October 21,2016 meeting the IURA Governance Committee reviewed this matter and recommended the following action;now,therefore,be it RESOLVED,that the IURA hereby adopts the FY 2017 IURA Administrative Budget,dated 10/14/16 as herein attached,and be it further RESOLVED,that effective with the first payroll check date following January 1,2017,any modifications to IURA employee salaries,benefits,and contributions shall be adjusted as contained in the adopted 2017 IURA budget. Carried Unanimously 4 0 IURA Minutes October 27,2016 Page 10 of 16 IURA Minutes October 27,2016 Page 11 of 16 IURA Minutes October 27,2016 Page 12 of 16 IURA Minutes October 27,2016 Page 13 of 16 IURA Minutes October 27,2016 Page 14 of 16 D.IURA Financials Report:September 2016 Rosario indicated the IURA grants summary is generally in good shape,including the spend down ratio.2016 projects have now been added the list.The Spencer Road Sidewalks project remains listed at $100,000 of unexpended funds,since it is still in its design and public review phase.There are also unexpended funds associated with the Learning Web’s 2014 Housing Scholarship Program, resulting from some delays the organization encountered from a reduction in its Federal funding. Farrell asked about the Downtown Ithaca Alliance (DIA)Business Boost program.Bohn replied that the IURA received proposals from the DIA for projects that met the IURA’s funding requirements (e.g.,participants need to demonstrate they used online marketing tools as a function of their core business),which the Pack and Ship Store,Sew Green,and Alphabet Soup were able to do.They also had to prove the business owners are low to moderate income.The program has been closed out. IURA Minutes October 27,2016 Page 15 of 16 Regarding loan repayments,Bohn reported the State Theatre remains one month past due.He invited the theatre’s Executive Director to a future meeting of the Economic Development Committee to provide an update on its operations and budget outlook.The theatre did lose one of its tenants (New Roots Charter School),which reduced its income.The theatre also has a balloon payment due next year,so it will be important to know how it plans on paying it off. Rosario reported that lease payments are all in good standing,except the Southside Community Center’s (SCC)Recycle Ithaca's Bicycles (RIBS)program,which is likely the result of SCC’s organizational transition,staff and board turn over,and its work on a revised strategic plan. E.Committee Chairperson Report None. VII.Neighborhood Investment Committee (NIC) A.Ithaca Neighborhood Housing Services (INHS)Scattered Site Housing Preservation Project Graham referred Board members to the October 6,2016 letter from Director of Real Estate Development Joseph L.Bowes,outlining what INHS is proposing.INHS is asking the City to accept on its behalf funding from the financial settlement between New York State and Morgan Stanley for the renovation and preservation of INHS’98 unit rental housing portfolio.INHS would institute three new corporate entities for the project —one to hold the land,one to own the properties,and one to manage them —allowing INHS to keep the properties permanently affordable,as well as increase their energy efficiency. Graham noted the Committee believed it would be a great project,but it had concerns with INHS increasing its scope of services,as well as questions about the project’s net benefit to the city (e.g., impact on housing assessments and taxes). Farrell added that INHS has historically paid taxes on its rental properties,but this project proposes exempting them through the State’s “581 a”real property tax exemption program (using a “capitalization of income”method).INHS would commit to maintaining the properties as affordable for 50 years.The Committee also discussed whether INHS might consider selling some of the smaller units to home owners. Bohn noted the INHS properties in question had been managed without enough resources available to meet capital needs due to low rent levels,so this would be a great opportunity to remedy that.The proposal does not require IURA approval at this point. B.202 Hancock Street Townhouses —Underwriting &Subsidy Layering Analysis Graham reported that as part of the funding for the project the seven townhouses were required to undergo an analysis of project feasibility,funding status,and other issues (e.g.,that the buyers of the units would meet HOME guidelines). IURA Minutes October 27,2016 Page 16 of 16 C.State Legislation Authorizing Property Tax Exemption for Certain Resale Restricted Affordable Housing Graham announced the Governor recently signed the legislation;and the final step will be for the individual taxing authorities to approve and implement it in their own jurisdictions.Both the City and County are supportive of the legislation,although it remains unclear how the Ithaca City School District (ICSD)will respond. Bohn added the IURA will first collaborate with the City and County to implement the legislation, and then ask ICSD to do the same.55 properties in the County are currently eligible for the exemption. D.Committee Chairperson Report Graham reported that the IURA owns a parcel at 402 S.Cayuga Street,which has historically been an awkward site to develop (e.g.,steep slopes).The Committee is expecting a proposal from Habitat for Humanity to develop the site,ideally as a for sale,owner occupied project. Graham announced that the IURA’s Housing for School Success program has enrolled two families in the program so far.The families would eventually be expected to receive Section 8 housing vouchers from the Ithaca Housing Authority (IHA). VIII.Other/New/Old Business A.IURA Chairperson Report None. B.Common Council Liaison Report Myrick reported that Common Council approved the City’s 2017 budget,which includes a 1.98%tax levy increase,with a 6.7%reduction in property taxes,the lowest in 16 years. Myrick also announced that the Planning and Economic Development Committee unanimously voted against the proposed Maguire/Carpenter Business Park Temporary Mandatory Planned Unit Development (TMPUD)project for the development of an automobile dealership on that site. C.Staff Report Bohn reported that Cornell University’s undergraduate housing plan has been moving forward.Cornell is seeking to address some deferred maintenance needs,while also meeting current and future student housing needs,with the construction of a new 500 bed on campus dormitory. IX.Adjournment The meeting was adjourned by consensus at 10:03 A.M. —END — Minutes prepared by C.Pyott,edited by N.Bohn.