HomeMy WebLinkAboutMN-IURA-2011-04-19Ithaca
Urban
Renewal
Agency
Approved 5/20/11
108 East Green Street
Ithaca, New York 14850
(607) 274-6559 59
(607) 274-6558 (fax) (607) 274-6558 (fax)
MINUTESMINUTES
ITHACA URBAN RENEWAL AGENCY
Council Chambers, City Hall
4:30 p.m., Tuesday, April 19, 2011
Members: Susan Cummings, Doug Dylla, Tracy Farrell, Carolyn Peterson
Others: J.R. Clairborne (4:45 p.m.), Common Council liaison to IURA
Staff: JoAnn Cornish, Sue Kittel, Alice Vargo
Guest: Gary Weissbrot, from Buffalo Street Books
Media: Seph Murtaugh, from The Ithaca Times, Liz Lawyer, from the Ithaca Journal
I. Call to Order
The meeting was called to order by Chairperson Peterson at 4:35 p.m.
II. Additions to or deletions from the agenda
There was a request to add Strategic Planning to item number VIII. New/Old Business
III. Public comment (3‐minute maximum per person)
None
IV. Economic Development Committee
A. Request to assign IURA loan from Gary Weissbrot d/b/a Buffalo Street Books (formerly known as
the ‘Bookery II’) to Buffalo Street Cooperative, Inc. to facilitate community buy‐out of the
bookstore (project #9, 2004 CDBG) ‐ Resolution
Dylla gave an update on the sale of the Buffalo Street Books store by Gary Weissbrot to a co‐op. A
condition of the sale is satisfaction of the outstanding IURA ED loan to Weissbrot. IURA underwriter
Bob Deemer has recommended that the IURA offer to allow Weissbrot to pay off most of the IURA loan
from the proceeds of his sale of the business to the coop by accepting $80K as full payment on the
approximately $90K principal remaining on the loan.
Weissbrot stated that he was disappointed that the IURA has denied his request for a loan but affirmed
his appreciation for the significant support the IURA has shown to his bookstore in the past. After
further discussion, the following was approved unanimously.
Motion by Dylla, seconded by Farrell
Request to Assign loan from Gary Weissbrot d/b/a Buffalo Street Books (formerly known as the
‘Bookery II’) to Buffalo Street Cooperative, Inc. to facilitate community buy‐out of the bookstore
(project #9, 2004 CDBG)
Whereas, on March 4, 2011 Gary Weissbrot d/b/a Buffalo Street Books submitted a request, pursuant
to proposal for a community buy‐out of the bookstore, to reassign the IURA loan to Buffalo Street
Cooperative, Inc., and discharge of a mortgage lien on property located at 825 Hector Street, Ithaca,
NY, and
IURA
April 19, 2011
Page 2 of 9
Whereas, on May 3, 2006 the IURA issued a loan of $110,000 to Gary Weissbrot for a $285,000 project
to acquire and reopen the Bookery II independent bookstore located at 215 N. Cayuga Street, and
create 7.5 FTE jobs at living wages, and
Whereas, on October 2, 2009 the IURA approved a loan modification to reduce monthly loan payments
down from approximately $1,190 to $400 until 2014 to allow full repayment of all non‐IURA business
debt, and
Whereas, beginning in January 2014 the loan is scheduled to revert back to principal and interest loan
repayments at 4% interest based on a 10‐year amortization schedule on the remaining outstanding
balance (projected to be $80,000, resulting in loan payments of approximately $810/month), and
Whereas, as of March 31, 2011 the loan is current with an outstanding principal balance of $88,900.99,
and
Whereas, the IURA loan is secured by the following:
1st security lien on all business assets of Buffalo Street Books, including inventory and furniture,
fixtures and equipment (FF&E)
2nd mortgage on residential property located at 825 Hector Street, Ithaca, NY
Assignment of $100,000 face value life insurance on Gary Weissbrot
Personal guarantees of Gary Weissbrot and Elizabeth Weissbrot, and
Whereas, in February 2011, Gary Weissbrot announced his intention to close the business, and
Whereas, a community appeal was issued by Assistant Manager Bob Proehl for a community buy‐out of
this last independent, full‐service bookstore in the community, and
Whereas, as of April 11, 2011, the community appeal resulted in pledges of over $300,000 of which
$223,604.42 in cash has been received, and
Whereas, pledges were received from over 600 individuals of which approximately 400 persons have
paid their pledge amount, and
Whereas, on March 24, 2011 the Buffalo Street Cooperative, Inc. (BSC) was incorporated at the New
York State Department of State as a domestic cooperative corporation, and
Whereas, the directors of BSC until the first annual meeting are:
Bob Proehl
Aaron Sacks
Nina Miller
George Sapio
Asha Sanaker, and
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April 19, 2011
Page 3 of 9
Whereas, Weissbrot has reached a conceptual agreement to sell Buffalo Street Books to BSC for
$170,000 (including inventory, FF&E and other business assets and with no liabilities except the IURA
loan), contingent upon assignment of the IURA loan to BSC and IURA discharge of the 2nd mortgage lien
on property located at 825 Hector Street, Ithaca, NY, and
Whereas, funds raised by BSC are insufficient to buy the business, fund a $50,000 permanent working
capital fund account, and pay off the IURA loan, and
Whereas, Weissbrot plans to use sale proceeds to retire all non‐secured business debt of $67,000 and
accounts payable, and
Whereas, Weissbrot has been tentatively hired by BSC as General Manager of the cooperative
bookstore, and
Whereas, acting as General Manager, Weissbrot has developed a 12‐month profit and loss projection
that increases both revenues and expenses by approximately 19%, retains all current employment
positions and adds an additional ½ FTE position, resulting in a breakeven budget before debt service,
and
Whereas, projected increased revenues include the following:
$54,000 – increase sales of books by 10% to $597K (customer loyalty and growth of “1st class”
program)
$25,000 – annual fundraising by For Books’ Sale, Inc., a New York State not‐for‐profit corporation
created in 2010
$12,000 – annual new coop members @ $250 each
$7,000 – new café
$2,400 – room rental to art gallery, and
Whereas, projected increased expenses include the following:
$75,000 – new GM position & ½ FTE cashier, salary increase to Asst. GM, and $0.40‐$0.65/hour wage
increases to all other employees
WHEREAS, the Borrower fulfilled all original job creation goals and continue to pay living wages to all
employees, and
WHEREAS, the IURA underwriter, H. Sicherman & Co., Inc. has identified a number of concerns with a
loan assignment that reduces loan security to a 1st lien on inventory and FF&E, and
WHEREAS, contemplated recommendations to address underwriting concerns for the requested loan
assignment include:
professional appraisal of inventory
documentation of collateral value of inventory
approval of salary and wage levels until business performance goals accomplished
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April 19, 2011
Page 4 of 9
semi‐annual submission of independently audited financial statements to verify inventory value
and financial health of the business
review and approval of projected pro forma and the business decision‐making process for the
cooperative
placement of net proceeds from the business sale into an escrow account requiring IURA
authorization for withdrawal until full repayment of the IURA loan or retention of the 2nd mortgage
lien and personal guarantees from the original loan, and
Whereas, an alternative approach to facilitate the community buy‐out of the bookstore is to deny the
requested assignment, but approve a discounted payoff of the loan from the proceeds of the sale of the
business, thereby allowing Gary Weissbrot to become the lender to the BSC, and
Whereas, a discount is appropriate to induce Gary Weissbrot to make a substantial pay off of the
$88,900.99 outstanding principal balance on the IURA loan, avoid other IURA expenses of a
complicated loan assignment, and facilitate the on‐going operation of the bookstore under a
cooperative ownership, and
Whereas, continued operation of the bookstore will retain 8 FTE jobs, generate over $7,000/year in
sales tax revenue to the City, prevent the loss of a downtown anchor retail business and avert a
prominent vacant storefront, and
Whereas, IURA staff in consultation with the IURA independent underwriter estimate that fulfilling due
diligence obligations to structure and monitor a loan assignment will require the IURA to incur initial
expenses that exceed $10,000 for IURA staff time, IURA legal counsel, IURA underwriter consultant
services, not counting out‐year monitoring, and
Whereas, the Economic Development Committee reviewed this matter at their April 12, 2011 meeting
and recommended the following; now, therefore, be it
RESOLVED, that the IURA hereby denies the request from Gary Weissbrot d/b/a Buffalo Street Books to
reassign the IURA loan to Buffalo Street Cooperative and discharge the 2nd mortgage lien on 825 Hector
Street, Ithaca, NY due to the reduction in the quality of loan collateral, and be it further
RESOLVED, that the IURA hereby finds that facilitating transfer of ownership and continued operation
of the last remaining locally‐owned independent full‐service bookstore in the community will improve
the social, physical and economic characteristics of the City of Ithaca, and be it further
RESOLVED, that to facilitate continued operation of the bookstore and repayment of 90% of the IURA
loan, the IURA hereby recognizes receipt of $80,000 by June 1, 2011 as fully satisfying all IURA loan
obligations of Gary Weissbrot and agrees upon receipt of same to discharge the 2nd mortgage lien on
property located at 825 Hector Street and release the UCC‐1 security lien on business assets, and be it
further
RESOLVED, that the IURA recognizes a loan loss of up to $8,900.99, and be it further
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April 19, 2011
Page 5 of 9
RESOLVED, that the IURA Chairperson is authorized, subject to advice of IURA legal counsel, to execute
any and all agreements to implement this resolution.
Carried Unanimously, 4‐0
B. Committee Chairperson report
None
V. Neighborhood Investment Committee
A. Request from Community Housing of Ithaca, Inc. to modify loan terms for the Red Cross Shelter
Conversion project (2006 CDBG #6) – resolution
Farrell introduced the resolution by explaining that the IURA funded the Red Cross Shelter
project in 2006 and reported the creation of 16 emergency shelter beds to HUD. The contract
with Community Housing of Ithaca, the building’s owner, required a 10 year affordability
period, which began in 2008. Recent changes in local need has led to a request to allow 10 of
these emergency beds to be converted to SRO units.
Motion by Farrell, seconded by Dylla to accept the Resolution
Modify Loan Terms for 2006 CDBG #6 “Red Cross Shelter Conversion”
Whereas, as part of the 2006 Action Plan, Community Housing of Ithaca, Inc. (CHI) was awarded
$350,000 of Community Development Block Grant (CDBG) funds, in the form of a deferred loan, to
renovate a partially vacant building and create 16 emergency shelter beds as well as space for the drop‐
in Friendship Center at 618 West State Street, and
Whereas, the shelter was created and has operated as under the terms of a 2009 deferred loan
agreement that requires provision of at least 16 emergency shelter beds, and
Whereas, the need for emergency shelter beds has fallen and the need for single room occupancy
(SRO) units is growing in Ithaca, and
Whereas, the shelter was constructed so that its use could be flexible and still meet the requirements
of the relevant HUD regulations, and
Whereas, on April 7, 2011 CHI formally requested conversion of seven of the emergency shelter beds to
SRO units to be used for income‐eligible tenants, and
Whereas, this conversion can be administered to ensure that the project continues to meet CDBG
eligibility guidelines for affordable housing, and
Whereas, the Neighborhood Investment Committee of the Ithaca Urban Renewal Agency reviewed this
matter at their April 8, 2011 meeting and recommends the following, now, therefore be it
Resolved, that the Ithaca Urban Renewal Agency hereby approves CHI’s request to convert seven (7)
IURA
April 19, 2011
Page 6 of 9
emergency shelter beds to SRO units for income‐eligible tenants at affordable rents at the ‘Red Cross
Conversion’ project located at 618 W. State Street (2006 CDBG #6), and be it further
Resolved, the IURA approves a modification to the IURA loan agreement with CHI to implement the
approved change of use, and be it further
Resolved, the IURA Chairperson is authorized, subject to advice from IURA legal counsel, to execute all
instruments necessary to implement this resolution.
Carried Unanimously, 4‐0
B. Request from the Child Development Council to modify grant conditions for Child Care
Scholarships project (2010 CDBG #12) ‐ resolution
The Child Development Council sent a letter to the IURA requesting a change to the
emergency scholarship eligibility guidelines in their 2010 contract. They would like to broaden
the scholarship eligibility to include not only city residents, but also childcare programs
operating within the City. They stated that it is challenging to find city families who are
eligible and need emergency daycare scholarships.
Motion by Farrell, seconded by Dylla to accept the Resolution
Modify Grant Conditions for Child Care Scholarships (2010 CDBG #12)
Whereas, as part of the 2010 Action Plan, the Child Development Council was awarded
Community Development Block Grant (CDBG) funds in the amount of $13,000 to provide emergency
scholarships to families who were facing a short‐term crisis that put their access to daycare in jeopardy
due to a sudden inability to pay, and
Whereas, the Ithaca Urban Renewal Agency approved this project subject to a restriction that
beneficiaries be residents of the City of Ithaca, and
Whereas, the Child Development Council had other funds committed to the project to fund non‐City
residents, and
Whereas, after significant marketing efforts, the Child Development Council has been unable to
implement the program as established on schedule due to an apparent limited demand for these
scholarships by City residents, and
Whereas, on March 17, 2011, the Child Development Council formally requested an amendment to the
use of the CDBG funds to allow for City‐based daycare providers to access the scholarship monies for
their clients regardless of the residence of the child, and
Whereas, the Neighborhood Investment Committee reviewed the issue at their meeting on April 8,
2011 and recommends the following, now therefore be it
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April 19, 2011
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Resolved, that the contract for the 2010 CDBG project # 12 “Childcare Scholarships” be amended to
allow scholarship funds to benefit either City residents regardless of the location of the childcare
provider or City of Ithaca providers regardless of the residence of the child, and be it further
Resolved, that the chairperson of the Ithaca Urban Renewal Agency is hereby authorized to execute
such contract amendment upon advice from the IURA attorney.
Carried 3‐1 (Cummings Opposed)
C. Committee Chairperson report
None
VII. Governance Committee
A. Possible executive session to discuss a matter involving the medical, financial, credit, or
employment history of a particular person or corporation, or matters leading to the appointment,
employment, promotion, demotion, discipline, suspension, dismissal, or removal of a particular
person – possible resolution(s)
On a motion by Cummings and second by Farrell, the IURA entered executive session at 5:23 p.m. to
discuss the employment history of particular persons. The IURA returned from executive session at 5:37
p.m. with no action taken.
Cummings moved and Farrell seconded the following resolution:
Jill Sage Merit‐Based Salary Increase
WHEREAS, Ms. Jill Sage was hired as Bookkeeper for the IURA with an initial date of employment of
June 22, 2009 and is currently working 21 hours per week at a salary level of $27,529 ($25.21/hour),
and
WHEREAS, the IURA senior staff has recently completed a performance review for Ms. Sage, and
WHEREAS, Ms. Sage has very successfully accomplished the work of learning all of the IURA’s financial
systems and enhancing the IURA’s fiscal management and record keeping, and
WHEREAS, the management staff recommend a salary increase be approved for Ms. Sage in recognition
of her high quality job performance and to reflect the responsibilities and level of independent
judgment required by the position, and
WHEREAS, the adopted 2011 IURA budget included $5,000 of unallocated funding for merit‐based
salary increases, and
WHEREAS, at their April 15, 2011 meeting, the Governance Committee reviewed Ms. Sage’s 2011
performance evaluation and recommended the following, now therefore be it
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April 19, 2011
Page 8 of 9
RESOLVED, that the IURA hereby approves the recommended salary increase for Ms. Sage in the
amount of $1,375, and be it further
RESOLVED, that such salary increase shall become effective the first full pay period following adoption
by the Ithaca Urban Renewal Agency, and be it further
RESOLVED, that the IURA Executive Director is hereby authorized to execute any and all documents
necessary to implement this resolution.
Approved unanimously.
Cummings moved and Dylla seconded the following:
René Funke Salary Increase
WHEREAS, Ms. René Funke was hired as a temporary employee on January 19, 2010 and transitioned to
a full time permanent employee of the Ithaca Urban Renewal Agency on June 1, 2010 as Contracts
Monitor I, and
WHEREAS, Ms. Funke was hired as part of the transition plan for the Contracts Monitor retiring from
the IURA, and
WHEREAS, the IURA recognized the Contracts Monitor as a highly specialized position requiring an
unusual skill set and background in HUD regulations and understood that a trainee position would be
required to ensure a smooth transition, and
WHEREAS ,the transition is complete and Ms. Funke has assumed all of the duties of the Contracts
Monitor, and
WHEREAS, Ms. René Funke is currently working 35 hours per week at a salary level of $40,073
($22.02/hour), and
WHEREAS, the IURA senior staff has recently completed a performance review for Ms. Funke, and
WHEREAS, Ms. Funke has very successfully accomplished the work of learning all of the IURA’s
contracting and reporting requirements, and
WHEREAS, the management staff recommend a salary increase be approved for Ms. Funke in
recognition of her high quality job performance and to reflect the responsibilities and level of
independent judgment required by the position, and
WHEREAS, the adopted 2011 IURA budget included $5,000 of unallocated funding for merit‐based
salary increases, and
WHEREAS, at their April 15, 2011 meeting, the Governance Committee reviewed Ms. Funke’s 2011
performance evaluation and recommended the following, now therefore be it
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April 19, 2011
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RESOLVED, that the IURA hereby approves the recommended salary increase for Ms. Funke in the
amount of $2,000, and be it further
RESOLVED, that such salary increase shall become effective the first full pay period following adoption
by the Ithaca Urban Renewal Agency, and be it further
RESOLVED, that the IURA Executive Director is hereby authorized to execute any and all documents
necessary to implement this resolution.
Approved unanimously.
The Agency congratulated the two employees and expressed their appreciation for the dedication and
hard work of these two employees.
B. Review of March 2011 IURA financials
The Agency reviewed and accepted the March 2011 financials.
C. Committee Chairperson report
None
VIII. New/Old Business
A. IURA Chairperson Report
None
B. Other New/Old Business
Cummings raised the topic of the Downtown Ithaca Alliance (DIA) Strategic Plan which had recently
been accepted by the Common Council. She noted the significant amount of housing being
proposed and her interest in knowing how the decision‐making process regarding the plan were
arrived at. She was particularly interested in public input, noting that INHS and the IURA had
apparently not been consulted. The matter was discussed briefly and referred to the Neighborhood
Investment Committee.
C. Next Meeting: May 26, 2011
IX. Motion to Adjourn
At 6:07 p.m. Cummings moved and Dylla seconded a motion to adjourn. All approved.
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