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HomeMy WebLinkAboutMN-IURAED-2024-01-23 108 E. Green St. Ithaca, NY 14850 (607) 274-6565 MEETING MINUTES ITHACA URBAN RENEWAL AGENCY Economic Development Committee (EDC) 3:30 P.M., Tuesday, January 23, 2024 Common Council Chambers, 108 E. Green St., Ithaca, NY 14850 Present: Chris Proulx, Chair; Leslie Ackerman, Vice-Chair; Donna Fleming; Chuck Schwerin; Derek Adams Excused: None. Vacancies: 1 Staff: Nels Bohn; Charles Pyott (virtual) Guests: Cheryl Evola, Franco’s Pizzeria I. Call to Order Chair Proulx called the meeting to order at 3:32 P.M. II. Agenda Additions/Deletions Proulx noted the “Inlet Island Urban Renewal Project: Authorize Procurement of Due Diligence Services for Potential Land Acquisition” agenda item would be discussed last, since Ackerman indicated she needs to recuse herself from the discussion. III. Public Comments (3-minute max. per person) None. IV. Review of Meeting Minutes: December 12th, 2023 Ackerman moved, seconded by Adams, to approve the minutes, with one minor modification. Carried Unanimously: 5-0 V. New Business A. Community Lending: Request for Loan Assistance from S&J Ithaca, Inc. DBA Franco’s Pizzeria (CD-RLF #48) Bohn explained the resolution, the underwriter’s loan analysis, and the application which points to a $50,000 loan application to to assist the relocation and expansion of Franco’s from 508 West State Street to 527, which was formerly Cornell Laundry at one time; and on the back side of one of our other loan recipients, Liquid State, in the same building. The proposal essentially has some elements that are helpful to an underwriting process. The relocation has physically occurred already. The build-out is complete. It's about a $70,000 project that resulted in a drawdown in the reserves and their cash on hand, and they're looking for some working capital to keep themselves going strong. Franco's has a multi-year history in the community with a strong revenue record, and this project is designed to build on that and expand their Approved/Adopted: 4/9/24 EDC Meeting Minutes January 23, 2024 Page 2 of 13 revenue sales by increasing seating capacity, kitchen capacity, and some parking as well as other attributes. From an underwriting perspective, he agreed with the loan underwriter's analysis that this represents a relatively low risk because of their successful operating experience and the fact that there can't be any more cost overruns in the project like we see so often because it's completed. With these two major factors, he recommended there be an approval of a $50,000 loan. He noted that collateral is not strong in this case, so it's really based on the fact that the business will continue to be successful, but they've weathered some difficult pandemic times and have a strong record of performance. He recommended standard approval with a 5-year repayment, 6 months of interest only until they draw down the funds, and a starting interest rate of 75% of the prime interest rate. There should be two jobs created as a result of this loan. That will be tracked, and once they achieve that goal, we would reduce the interest rate another 100 basis points if they're successful and holding after two quarters. Bohn introduced Cheryl Evola. Evola explained Franco's has been successfully open since January and is going strong. She expressed their happiness with the change, the parking lot, and the handicapped accessibility. Their base clientele has come back, and they have seen a lot of new customers. They are in the process of implementing online ordering. She mentioned that 12% of customers order online and a 14% increase in dine-in customers and they increased their seating by 36 seats since relocating. She projects business will only get stronger, and they plan on staying in Ithaca long-term. Schwerin told Evola he was happy they were able to add two more full-time positions and asked if it was because of the expanded space and eat-in they needed more help. Evola explained that because of the expanded space, they hire an additional two, so they are up to four positions. Ackerman noted that Bohn mentioned six months' interest-free, and the document indicates four months. Bohn confirmed it should be corrected to four months because there is no construction project involved. Adams asked Evola about the challenge of launching online ordering. Evola responded that they did launch it but there were some issues with tickets printing correctly, and they were seeing a decrease of 11 minutes for pizza. An appointment is scheduled with tech support to resolve the issue. They have never offered online ordering, so this is a new encounter. Adams men�oned it being a matter of accessibility, which came up several times in the documents that we were sent, and that's an accessibility measure as well. Evola explained the amount of support they have. Fleming asked to clarify if, since the move had already taken place, they already had the expansion, and they already hired two people, they now needed funding because they depleted reserves and they want to use the loan for operating expenses. Evola responded that they do have open invoices. They had to buy some equipment. One item is $12,340 which is included in the packet provided. They did increase payroll by an average of $3,000. They are paid but it does not make the ability to make a cushion and go on and keep on. Fleming also asked Evola about the independent consultant who indicated the financial systems were a little bit rough and how concerned should we be about that and has the applicant taken measures to make the financial, make your financial accounting systems. Evola explained that their account passed away during COVID, and the changeover was rough. She indicated an H&R Block accountant has been secured, which she started doing in 2023. EDC Meeting Minutes January 23, 2024 Page 3 of 13 Ackerman asked about an item brought up by the underwriter's analysis, which was a projection that in the first year was going to be $70,000 additional towards the payroll line over the year. It was noted that that would be adequate for two full-time employees, and she thought it sounded low. She did a little math and didn't know where the assumption was on how much was going to be covering payroll expenses, but if it was somewhere between 25% and 30%, we're looking at wages that would break down to under $14 an hour. Evola responded that she was not sure how that figure came up. They do have part-time employees. They don't pay anybody under $15 an hour. They appreciate their employees and take care of them. They also get good tips on top of that. She mentioned roughly $30,000 per part-time job. Ackerman responded that sounds more an appropriate level, because if you have two full-time equivalents and benefits, even not adding optional benefits, but just the required federal benefits, and if you're paying them approaching a living wage, it's not going to be $70,000. Evola indicated she didn't know where that figured. Ackerman said she didn't compare to see if that was accurate in the projections; it was in the narrative that it said 70,000. It was in our underwriter's analysis that it said it would be adequate to cover two full-time equivalents. Schwerin asked Bohn if it's okay if they're part-time. Bohn responded that we need to show the equivalent of two FTEs, so two part-times at 50% make one job. He mentioned that in the projections that the underwriter prepared, the salary line was increased from 2022, which had the last full year of reporting, by almost a hundred $100,000 in the salary line. So, there's an increase there, and that's excluding compensation of the officers. So, there's an acknowledgment that there's a significant increase in the salary line, a little higher than the $70,000 that's referenced there. Proulx noted that it's 22-24. Bohn confirmed. Evola added that they have hired four to date and may go higher. Bohn mentioned that the interest rate won't be reduced until two full-time equivalents are accomplished. There's an incentive there to do that, but we don't want somebody to hire people just to meet the loan requirements. It should be for business purposes. It looks like they are on track to do that. We allow up to two years for that to occur, so it doesn't have to happen immediately. Bohn noted that they are conservative in projected revenues. They're pretty modest for an increase for the new space, and that was intentional because some of the numbers are not quite as pinned down, so you want to take a conservative approach to that. And there's still a debt coverage ratio that's pretty strong even though so conservative, so he believes there is room I think for increased payroll. Proulx asked Evola what is the thing that is the biggest risk? Evola responded that the biggest risk she could think of is technology. Business has come back; she is very pleased with the employees' performance. The way that it operates is efficient. She is proud and happy. Technology, online, is really keeping her up at night. She has a platform and how she runs her tickets is different now. She likes their business to look professional and it is not. Their customers will see it. She thinks they'll have a good turnout for the online once it's all settled and it's up and running. Proulx commented that it sounds like what they need is working capital. Another option would have been a line of credit through a commercial bank as opposed to the 5-year loan from the IURA. He asked how they see the pros and cons of those options and why they ended up at the IURA. Evola responded that, in hindsight, she would have set herself up before. She is working with Michael West at M&T Bank. He has been helping her, making the business credible, as far as banking or the financial industry. She was new to EDC Meeting Minutes January 23, 2024 Page 4 of 13 Ithaca. She didn't want to have a loan, so she didn't go that route. Fortunately, she has been very successful. Prior to the remodel, she didn't have any open invoices. She prepaid the sales tax. She didn't see the importance until she got in this position. In the meantime, she has taken steps with Michael West, doing her processing. Proulx commented we can all attest, don't beat yourself up, that it is just the natural journey of being a small business owner -- what you could do one day just out of the resources you have, and then you do an expansion and you need different kinds of resources. Ackerman asked Bohn if given that it's likely if their business continues to thrive as it's doing that they won't need five years on this, and they'll soon hopefully have a line of credit through M&T, can it be paid down early, which would save them a lot of interest if that turns out to be possible for them. Bohn responded that prepayments are permitted without any penalty and encouraged when they can make work. Fleming moved, seconded by Schwerin: Loan Assistance to S&F Ithaca, Inc. (d/b/a Franco’s Pizzeria) — (CD-RLF Project #48) WHEREAS, on December 4, 2023, S&F Ithaca, Inc. (“Borrower”) applied for $50,000 in loan assistance from the IURA to relocate and expand Franco’s Pizzeria to 527 W. State Street, Ithaca, NY, and WHEREAS, the primary objective of the Community Development Revolving Loan Fund (CD-RLF) is provision of direct financing for economic development activities that create employment opportunities, facilitate the expansion of business activity with the City of Ithaca and expand the commercial and industrial tax base, and WHEREAS, a food and beverage business is only eligible for CD-RLF loan assistance if the business derives 35% or less of revenues from sale of alcoholic beverages and scores at least 100 points on the IURA restaurant eligibility worksheet that evaluates risk and community benefit characteristics, and WHEREAS, the restaurant business is projected to derive less than 35% of revenues from sale of alcoholic beverages and received a staff score of over 100 points on the IURA restaurant eligibility worksheet, and WHEREAS, the proposed uses of project funds are: $80,000 Construction/Buildout $20,000 Furniture, Fixtures and Equipment $20,000 Inventory/Supplies $50,000 Working Capital (payroll, utilities, rent, marketing, misc.) $170,000 Total, and WHEREAS, the proposed sources of project funds are: $120,000 Equity $50,000 IURA $170,000 Total, and EDC Meeting Minutes January 23, 2024 Page 5 of 13 WHEREAS, the IURA Economic Development Policy Financing Guidelines and Operating Plan for the Priority Business Loan Fund requires creation at least one full-time equivalent (FTE) job for every $35,000 of loan assistance and sets a maximum loan amount of $100,000 for retail businesses, and WHEREAS, the project is anticipated to create at least 2.0 FTE employment positions, resulting in $25,000 of loan assistance per job created/retained, and WHEREAS, an environmental review record has been created documenting that the interior renovation project complies with the National Environmental Protection Act (NEPA), and WHEREAS, positive risk factors include: 1. Ownership has operated the business at a similar location for seven years with a history of positive financial performance and growing revenue. 2. Buildout of the new location is complete, and the business has re-opened to the public. 3. The project will create opportunities for increased revenues with additional seating, ADA access, an expanded kitchen and storage facilities, and ability to accept on-line orders, with a relatively modest increase in rent and other costs. 4. The Borrower funded the buildout and FF&E purchases with their own equity, and the IURA loan will represent only 29% of total project costs. 5. Management has relevant experience with both owners having operated restaurants in the past. WHEREAS, negative risk factors include: 1. The business utilizes rudimentary financial systems to track past, current, and projected revenues and expenses. 2. Collateral is modest; 3. Financial guarantees of owners offer minimal support for loan repayment; 4. There is robust competition in the market from other pizzerias; and WHEREAS, the IURA’s independent loan analyst categorized the loan to represent a minimal credit risk to the IURA, and WHEREAS, at its January 23, 2024 meeting, the IURA Economic Development Committee reviewed the loan application and the credit analysis prepared by Michael Thomas, Vice President, Harrison Studio, and recommend the following action; now, therefore, be it RESOLVED, that the IURA hereby approves a loan from the CD-RLF in accordance with the loan application and supplemental submissions, subject to the following terms: Borrower: S&F Ithaca, Inc. a New York State domestic corporation established in 2016 Loan Amount: Up to $50,000 Project: Relocation and Expansion of Franco’s Pizzeria at 527 W. MLK Jr./State Street, Ithaca, NY. EDC Meeting Minutes January 23, 2024 Page 6 of 13 Total Project Cost: $170,000 Projected Use of IURA Funds: Working capital incurred after December 31, 2023, including but not limited to payroll, rent, utilities, and other operating expenses. Funds cannot be used towards any expenses, such as construction, covered by The Davis- Bacon Act that would trigger prevailing wage requirements. Term: Interest-only payments for four (4) months followed by a five-year term. Amortization: 60-months amortization (after interest-only period) Interest Rate: 6.375% per annum (75% of current Prime rate). Rate is reduced by 50 basis points to 5.875% annually when borrower establishes and continues an automatic loan payment through a financial institution to make timely level monthly payments on the loan beginning with initiation of level monthly loan repayments. The interest rate shall be reduced by 100 basis points upon: (1) submission of satisfactory job reports documenting that the job-creation goal has been achieved for two consecutive quarters; and (2) compliance with all other terms of the loan agreement. Repayment: Interest-only payments for four (4) months, then level monthly payments of principal and interest to fully amortize the loan over 60 months (approximately $975/month based upon the 6.375% interest rate stated above, and subject to a revised P&I amount upon any rate reset. Loan Collateral: General UCC 1st security interest filing on all business assets, including equipment, inventory, furnishings, and fixtures now owned or hereafter acquired located at 527 West MLK Jr./State Street, Ithaca, NY. Personal Guarantor(s): 1. Cheryl Evola 2. Francesco Evola EDC Meeting Minutes January 23, 2024 Page 7 of 13 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: 5-0 VI. Old/Other Business A. IURA Financials Review: December 2023 Bohn reported that everyone is current on lease payments at this time. One least payer always pays five days past the deadline and is shown as delinquent, but then pays. Everybody is current on the loan report as well. Incentivizing people to set up automatic payment plans has worked well. Referencing the grant summary, Bohn noted we're working on getting 2019 closed out. The GIAC Youth Programming is the big project waiting to spend down. There has been some progress and we had a partial drawdown on that, so there is one year's worth of expenses expended over that $75,000 and GIAC is providing additional information for year two staffing on that, so looks like it's in the pipeline to get invoices and a voucher sent to us so we can pay that out. Likewise, the other bigger project under the 2021 CDBG, is the GIAC Gymnasium. If you go by, you can see it's physically advanced quite far. They are doing the interior finishing up the interiors now and he believes the floor is going in this week. That is a multi-million-dollar project, and we have a $100,000 grant in that, which was committed to professional services. He touched base with the Director of Engineering, who is going to provide us with information on spend-down on that money as well. We want to get to our CDBG spend-down limit at the end of May of no more than 150% of our most recent award being available to us but not spent. We're about $350,000 away from it. If we can pull down these two projects will be in pretty good stead. Ackerman asked Bohn about the CDBG Admin that hasn't been spent down from 2019. Bohn responded that is the CDBG CV Admin. It is down to about $7,000 and that is going to spend down. He explained an issue with late entry in the time-billing system. People were incurring costs in the program but were billing Job Creation: Creation of at least 2.0 (two) full-time equivalent (FTE) jobs of which at least 51% shall be filled by low- and moderate-income persons. Loan Conditions: 1. Borrower to provide proof of equity contributed to the project prior to disbursement of any loan funds. Compliance to be determined by the Director of Community Development. Reporting: 1. Annual company Federal tax returns. EDC Meeting Minutes January 23, 2024 Page 8 of 13 it to the general admin when it should be to that special funding source of the community of the Community Development Block Grant. He indicated it should be close to zero by the end of January. Adams noted GIAC appears in several years of grants that have been unexpended and it seems like more than the renovations mentioned. He questioned if it is related to communication, and why they appear on the report more often. Bohn noted the hospitality training program appearing two different years. He explained there have been staff changes which impacted their ability to have someone with experience with the vouchering system and follow through on that. The other issue is that the staff gets paid by the City and then we reimburse the City for the cost. There's not the how am I going to make payroll question that an independent not-for-profit, so they have the luxury of that but, on on the other hand, we have to wait for the documentation to be complete as well, so there's a little bit of a time lag there. There's one contract that was just executed. We sequence the funding agreements to wherever the need is first for funding. Because they tend to be slow in vouchers, we put them not at the top of the list. They are currently at the top of list now for one of those grant years because they've told us they're getting ready to voucher. He thinks we are going to see some progress there and we will be asking them to voucher. here have been a couple of staff changes, which means there have been some time periods when they have not had salary expenses in the program as well. B. Staff Report Bohn reported the project next door is getting ready to open. The housing project and the conference center are both looking at a May-June opening and are in the active marketing stage. If anyone is looking to improve their housing cost scenario in the community, this is an opportunity to get into the lottery for the project. There are 180 units being offered at various price points for various income levels. Someone making $60,000 a year could be eligible for a one bedroom, for example. It is not only for people who are extremely low-income. It's a spectrum all the way up to 90% of area median income for the project. Their hope is to get a pool of applicants that matches up with a diversity of incomes applying for the project. They had a similar spectrum of incomes expected but almost all the applicants came in with Section 8 vouchers and it created a community of higher-need services than what they had anticipated and fewer 60-80% area median income residents. He indicated the marketing deadline for applicants is February 19. Their target is the end of May for beginning occupancy on that project. Proulx asked about area large employers promoting the development. Bohn mentioned they are working with the Downtown Ithaca Alliance and their in-house property management staff to get the word out and are strongly encouraging them to use all the marketing tools. He noted that, even with affordability, it may take a while to fill 180 units. Schwerin asked if the number of parking places increased. Bohn responded that some were torn down and some were built, so they kept the total parking number equal to where it was. He indicated there are still about 250 spaces available at the Cayuga garage even if they fill up Green Street and he believes there is ample parking. Proulx asked if the net was new because of the parking that was added for the Ithacan. Bohn responded that there was a modest net increase of about 40 parking spaces. He noted the Seneca Garage keeps taking spaces offline because of structural issues, so it is a balance issue, but we do have current capacity. We want to have enough capacity for the housing as well as for the conference center. EDC Meeting Minutes January 23, 2024 Page 9 of 13 Adams asked about where to direct interested applicants for the residential units. Bohn mentioned the website and noted the application process to get into the pool is simple. He mentioned that he is trying to get the marketing out there because the intention is to meet some of the workforce housing needs. He added that there are 40 units set aside for homeless households that will have special services on site from Tompkins Community Action. They are suggesting they will have seven staff dedicated to those services, which is a strong ratio. Bohn mentioned HUD has a proposed new rule out, talking about enhancing economic development activities using CDBG funds. It is a very dense set of regulations and rulemaking that they are proposing. One thing that is relevant is that they are talking about increasing the public benefit test. Where we now say you need one job for every $35,000 of assistance to $100,000 per job, and really increasing that. Even if they just used the inflation rate from when they set that back in 2001, it would be up to over $60,000. But they are looking at increasing the public benefit test standard to give more flexibility to communities. They are also looking at a broader way of looking at economic impact and benefit, rather than just as a job, maybe looking at some other attributes. It is the beginning of the rule making process and it can take a long time to go through that. He believes they have a March 20 deadline for comments, then it goes into them responding and working through that process to try to issue a final rule change. He plans to probably make some draft comments to encourage some of the things IURA has run into. He believes increasing that flexibility would be beneficial to us to go above $35,000. Ackerman asked what other measures they are looking at. Bohn indicated it is kind of vague. They are posing it now as asking questions such as would this or that be beneficial. They have not really defined it. They talk about presuming certain groups are benefiting neighborhoods or people who live in a high poverty neighborhood is automatically providing the benefit without having to ask their income level--presumptions that will reduce the kind of paperwork kind of aspects of going out and getting income surveys and things like that. That might be beneficial. They always want to push the 108 loan program, which is this tool they have where you can take five times your grant award and make a loan with it. You're basically using your awards in future years as collateral, so if it doesn't get paid back or it's ineligible, then they just take money away from your allocation. It can allow a community to undertake a larger project than we would. We could do a $3 million project, in theory, as a repayable loan, and we would get paid back and be neutral at the end of the day. They are trying to make that an easier program to work with. We did use it once with the Boatyard Grill project on Inlet Island. It was a bit of a bear to work with, if they can make it an easier tool, it might have some advantages. But you don't want to take a high risk on 108 loan. You want it to be really secure and collateralized, because you don't want to have them siphoning off money from your future revenues. They have a number of measures are trying to incorporate in that rule. They notice that communities are using CDBG for economic development in a decreasing amount. If they look back 10 years, there was a higher level of economic development activity than there is now. Proulx questioned if they do realize why that happens. If, if the amount of your word of year is held steady and the costs are not held steady, most communities, including ours, have had to prioritize putting it towards housing, which is a rapidly increasing cost. Bohn agreed and noted that they also recognize, from a once-a-year check on our expenditure rate might have some counter-beneficial impacts, that communities are finding ways to spend the money down in a way that might be undermining the strategic long-term interest. If you want to undertake a more complicated project, it may take longer to do, and you may not meet that spend down, so communities are spending it on simple to do things when in fact EDC Meeting Minutes January 23, 2024 Page 10 of 13 they might not be the best use of the funds from a community-impact perspective. He commented that is helpful that they are thinking through that process. They pointed to a couple examples of communities that said, well, we weren't going to hit our spend down, so we allocated it to X because we knew we could spend it on a sidewalk project or pave a road in a neighborhood or something when really we wanted to do a more mixed-use project. He thinks they are picking up on some of the issues, so we will see where it goes, and he will keep the committee in the loop. Proulx and Fleming asked about the Section 108 loan. Bohn explained Section 108 loan is based on issuing bonds. He used an example of making a loan to a business that was expanding the business and needed $3 million, IURA could apply to HUD for that, and they would issue a loan to IURA based on issuing bonds and IURA would then make the loan. IURA makes the private party responsible for repaying the loan to us, which we've been repaid by HUD, so it allows us to access a bigger pool of funds than we would normally have. But HUD is expecting it to be repaid. It's not a grant and you don't want to use it for grant funds particularly. The trick with it is you still have to meet a HUD CDBG test. If it's $3 million and you need to have $35,000 for each job, you have to have a lot of jobs to make that eligible. That is one of the limits and how I am using it. Bohn it could also be used internally. For example, we cannot currently do multi-year funding with CDBG, because we don't know what next year's award is going to be. If we did a 108 loan for ourselves, we could essentially do a 5-year project and earmark funding each year to undertake a project that would otherwise be too large. It opens up some options, but the tricky thing as in the past is that HUD goes to the market to issue bonds only once a year. So, you are taking a loan out thinking the interest rate is going to be 4, but by the time it goes market, it could be 6, and you're stuck with that. On the other hand, it is a fixed rate. It introduces some complications in the financial. Proulx mentioned he had Bohn research financing policies and asked him to put a review of financing policies on a future agenda. B. Inlet Island Urban Renewal Project: Authorize Procurement of Due Diligence Services for Potential Land Acquisition Ackerman recused herself from discussion of the project, due to her employment with Ithaca Neighborhood Housing Services, Inc. (INHS). (Ackerman departed at 4:19 p.m.) Bohn explained the IURA has approved the conceptual plan for the Inlet Island redevelopment project and the next step is to sign a disposition and development agreement where we say the developer has to sign it, thereby committing themselves to the terms and the project that we've defined. But we cannot counter-sign it, which is kind of a purchase and sale agreement, until they've gone through an environmental review process and Common Council has approved the sale. So, we have an agreement signed by one party, the other party is waiting until certain things happen. However, in this situation, although we have conceptual approval on the project, which includes affordable housing, a hotel, and some improvements to facilitate ongoing marina activities on the island and public service access and amenities along the trail, the project requires the transfer of property from the Department of Environmental Conservation to the City and then that will be transferred to the developer. That is the Coast Guard Auxiliary license prop building at the end. We've gone a long way with negotiations with DEC and a term sheet that has 24 different things in it about how to work out this land transfer with DEC EDC Meeting Minutes January 23, 2024 Page 11 of 13 because they want to also use the island as a base for drench activities when that gets going. Basically, the idea here is a swap in some respect that the city gets the Coast Guard Auxiliary property and DEC gets a permanent easement right at the base of the Route 89 bridge, where we currently have a surface parking lot, to use as their long-term permanent easement where they can set up dredge equipment and maintenance equipment as necessary to maintain the permanent easement and keep the flood control channel operating under its intended use. Schwerin asked if that is where dewatering will take place. Bohn responded they will take the water from there and pump it over to behind Lowe's, which is where the 10-acre dewatering facility is located. It is a matter of these pumps and hoses going from Inlet Island over to that location, probably down the flood control channel. They would want to have access to the flood control channel and on the old barge canal side to run those hoses and pumps. Bohn explained the newest wrinkle is that DEC would like to not just convey the Coast Guard Auxiliary property but also a parcel adjacent to it which goes out into the water. They are doing that, in part, because they want to get out of the ownership of property on Inlet Island and they just want permanent easements. They have indicated it is a condition of the swap for the agency and the City to take this additional parcel. The challenge here is that, historically, that additional parcel, although most of it is underwater, did have bulk fuel storage on it in the 1940s and 50s. This resolution is proposing, before we go down considering acquisition of that property, we want to have an environmental analysis of the property. Phase I will say you better do some testing, so we might just jump right to the soil testing and say let's see what's underneath there. If it's clean and not an issue, that gives us one set of information. If there is contamination, that would drive us to say we don't want any part of it, unless it has been cleaned up or something like that. There has been no testing of that site. We know there's been testing south of the site. The developer is aware of that and will take responsibility to clean it up and have the cost offset against their purchase price. That is on City property. The developer has agreed in concept to acquire the Coast Guard Auxiliary property and be responsible for the cleanup on that parcel. The City would be responsible for this additional parcel that goes out into the flood control channel. The only upland portion is the 25-foot-wide permanent easement where the stonedust trail goes from a bulkhead to the end. Bohn explained the resolution is granting authorization for Proulx to sign an agreement to hire the appropriate kind of environmental investigation to be done on that parcel because we are not going to consider committing to acquire that property until we know what the environmental conditions are. Schwerin questioned who would pay for the testing. Bohn replied that it would be paid by the IURA, but it would be subject to reimbursement from the sale of properties. We have joint city and IURA properties and that would be a project cost that would have to be a shared expense between those two properties when we calculate net proceeds. Schwerin questioned what happens if that transaction never occurs. Bohn responded then the IURA would be out that cost. Proulx asked about the anticipated cost. Bohn responded that the initial kind of analysis would be well under $5,000, and if further investigation is needed, we would bring it back. He thinks at that point we would just probably indicate to DEC that we're not interested in anything that is going to require a cleanup because that's state land. Schwerin asked if they are interested in sharing the cost of testing. Bohn responded they are not. He indicated that in the negotiations they wanted to include it and IURA would not commit to acquiring it. Proulx, referencing the developer's map, questioned what part IURA thought the DEC would maintain. Bohn explained that the yellow triangle shows the parcel expected to be acquired from the DEC. He pointed out, at EDC Meeting Minutes January 23, 2024 Page 12 of 13 the water's edge, a 25-foot strip which is a portion of the parcel which is upland. He referenced the DEC parcel numbers 270 and 271 shown on the schematic. Proulx asked if the developer is planning to build anything on the two parcels. Bohn responded that the developer plans to build on the portion that has the Coast Guard Auxiliary. The developer does not want to own parcel 271. On the Coast Guard Auxiliary parcel, it is more of a patio kind of operation there, but they're very clear in their site plan review analysis with the Planning Board that they are still trying to figure out exactly where that building starts and ends. That could change if they feel they need to incorporate the Coast Guard Auxiliary property into their project. Proulx questioned if we are going to test what is underwater. Bohn responded no, but if contamination is found, boundaries of contamination need to be identified. Fleming asked if the bottom line is the DEC wants to unload a bit of property that's currently underground. Bohn responded they don't want ownership, but they just want an easement along the property that serves as the flood control channel. The reason why they want that is because it has a history of bulk fuel storage and they're worried that when the development project proceeds, it's going to stir up soil and it is conceivable that it will show some contamination that extends towards their property, and they don't want to be dragged into a cleanup cost when the sleeping dog is not causing any problems. Fleming asks if the bottom of this parcel is not the bottom of the channel. Bohn explained the parcel does go out into the channel and does include that and that if you look at historical maps, that's where the bulk field storage was located on that part of the parcel that's currently underneath the flood control channel. Reasonably, there would have to have been some excavation to make that a waterway and there's a good reason to think that if there was any contamination, it probably was addressed when they developed the flood control channel, but we don't have anything to document that. Proulx noted part of the parcel is on land and that has to be tested for sure. Bohn confirmed and stated that is where testing would occur first. Schwerin moved, seconded by Adams: Procurement of Due Diligence Services, Inlet Island Urban Renewal Project WHEREAS, on June 24, 2021, the IURA selected Finger Lakes Development, LLC (“FLD”) as a qualified and eligible sponsor (“Preferred Developer”) to undertake an Inlet Island urban renewal project subject to the City of Ithaca Common Council (“Common Council”) authorization to transfer City-owned lands to the IURA via a contingent option agreement, and WHEREAS, on August 4, 2021, the Common Council authorized transfer of certain City-owned lands on Inlet Island to the IURA to prepare a proposed urban renewal project, and WHEREAS, on August 28, 2021, the IURA authorized execution of an ENA with FLD, and WHEREAS, an Exclusive Negotiation Agreement (“ENA”) structures negotiations and responsibilities between the IURA and Preferred Developer to develop a proposed Disposition and Development Agreement (“DDA”) to convey real property to the Preferred Developer to undertake a specified development project, and EDC Meeting Minutes January 23, 2024 Page 13 of 13 WHEREAS, on October 27, 2022 the IURA conditionally approved FLD’s development program and authorized submission of an IURA Disposition and Development Agreement (DDA) for execution by FLD, and WHEREAS, the DDA acts as an agreement binding the Preferred Sponsor to undertake the approved urban renewal project according to an agreed-upon time schedule and for the IURA to convey IURA lands upon Common Council approval, following public hearing, and WHEREAS, the approved development program requires a lands transaction to occur between the IURA/City and the NYS Department of Environmental Conservation to acquire property located at 508 Taughannock Blvd, and WHEREAS, agreement from DEC that it conceptually consents to convey 508 Taughannock Blvd. to facilitate the urban renewal project is required prior to the Preferred Developer’s endorsement of the DDA, and WHEREAS, negotiations with DEC have resulted in a draft term sheet for lands transactions that involve potential acquisition of lands from DEC, and WHEREAS, it is prudent to undertake due diligence activities, including subsurface investigation, prior to committing to acquire lands controlled by DEC, and WHEREAS, expenses incurred to conduct due diligence may be reimbursed from sale of lands for the urban renewal project, and WHEREAS, the IURA Economic Development Committee reviewed this matter at their January 23, 2024 meeting and recommended the following action: now, therefore, be it RESOLVED, that the IURA Chair is hereby authorized, upon review of IURA legal counsel, to execute an agreement(s) to conduct due diligence activities, including but not limited to subsurface investigation, of land potentially to be acquired from NYSDEC for the Inlet Island urban renewal project, and be it further RESOLVED, that funding for appraisal services shall derive from the non-CDBG funding account for reimbursement upon sale of property. Carried Unanimously: 4-0 VII. Adjournment The meeting was adjourned by consensus at 4:35 P.M. — END — Minutes prepared by S. Dean, edited by C. Pyott/N. Bohn.