HomeMy WebLinkAboutMN-IURA-2010-04-29Approved 6/24/10 Ithaca
Urban
Renewal
Agency
108 East Green Street
Ithaca, New York 14850
(607) 274-6559
(607) 274-6558 (fax) ax)
MINTUES MINTUES
ITHACA URBAN RENEWAL AGENCY ITHACA URBAN RENEWAL AGENCY
Council Chambers, City Hall Council Chambers, City Hall
8:30 AM - April 29, 2010 8:30 AM - April 29, 2010
Present: Carolyn Peterson, Susan Cummings, Doug Dylla, Tracy Farrell Present: Carolyn Peterson, Susan Cummings, Doug Dylla, Tracy Farrell
Others: J.R. Clairborne, Common Council Liaison (9:00 AM) Others: J.R. Clairborne, Common Council Liaison (9:00 AM)
Staff: Nels Bohn, JoAnn Cornish, Alice Vargo Staff: Nels Bohn, JoAnn Cornish, Alice Vargo
Guest: Tom Schryver, Chief Financial Officer of e2e materials, Inc. Guest: Tom Schryver, Chief Financial Officer of e2e materials, Inc.
I. Call to Order I. Call to Order
The meeting was called to order by Chairperson Peterson at 8:40 AM. The meeting was called to order by Chairperson Peterson at 8:40 AM.
II. Additions to or deletions from the agenda II. Additions to or deletions from the agenda
Farrell requested an update on the P&C building. Farrell requested an update on the P&C building.
III. Public comment - None III. Public comment - None
IV. Approval of meeting minutes: IV. Approval of meeting minutes:
April 23, 2009, September 24, 2009, March 25, 2010. April 23, 2009, September 24, 2009, March 25, 2010.
Review of minutes was postponed until the May meeting. Review of minutes was postponed until the May meeting.
V. Economic Development Committee V. Economic Development Committee
A. e2e Materials, Inc. request for loan assistance through the CD-RLF program A. e2e Materials, Inc. request for loan assistance through the CD-RLF program
Tom Schryver, Chief Financial Officer of e2e Materials, Inc. (e2e) was asked to speak about the company
and it history and material. e2e holds the patents and an exclusive licensing agreement for a non-toxic
biocomposite material that is a substitute for traditional wood composites that is moldable, high-strength,
naturally fire-retardant and green, according to Schryver. He distributed samples of the product and
answered questions. Schryver explained that the material is made up of 100% recyclable materials, such as
soy meal, jute, flax, kenef, hemp and sugar cane fiber. He noted that all widely-available wood composites
still include formaldehyde, a known carcinogen, so the industry has a problem that e2e can help solve.
Tom Schryver, Chief Financial Officer of e2e Materials, Inc. (e2e) was asked to speak about the company
and it history and material. e2e holds the patents and an exclusive licensing agreement for a non-toxic
biocomposite material that is a substitute for traditional wood composites that is moldable, high-strength,
naturally fire-retardant and green, according to Schryver. He distributed samples of the product and
answered questions. Schryver explained that the material is made up of 100% recyclable materials, such as
soy meal, jute, flax, kenef, hemp and sugar cane fiber. He noted that all widely-available wood composites
still include formaldehyde, a known carcinogen, so the industry has a problem that e2e can help solve.
Cummings asked if input materials were purchased locally, and voiced her concern about competing uses for
food crops, citing food price increases and food shortages attributed to increased ethanol production.
Schryver stated that they have developed a regionally integrated manufacturing model whereby all materials
and sourcing comes within a 500 mile radius, wherever manufacturing may occur in North America. He
noted that the soy powder used is a byproduct of the production of soy oil, so it does not necessarily
compete against food uses. The fibers used can be sourced from several different plants. He added that
even if e2e materials fully replaced wood composites, such as particle board, it would still use less than 2%
of the world’s supply of soy meal.
Cummings asked if input materials were purchased locally, and voiced her concern about competing uses for
food crops, citing food price increases and food shortages attributed to increased ethanol production.
Schryver stated that they have developed a regionally integrated manufacturing model whereby all materials
and sourcing comes within a 500 mile radius, wherever manufacturing may occur in North America. He
noted that the soy powder used is a byproduct of the production of soy oil, so it does not necessarily
compete against food uses. The fibers used can be sourced from several different plants. He added that
even if e2e materials fully replaced wood composites, such as particle board, it would still use less than 2%
of the world’s supply of soy meal.
Cummings asked about intellectual property issues, especially international. Schryver indicated that the
technology is based on a Cornell patent for which e2e has an exclusive license that they retain control of
Cummings asked about intellectual property issues, especially international. Schryver indicated that the
technology is based on a Cornell patent for which e2e has an exclusive license that they retain control of
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subject to satisfaction of certain milestones. Additional research and development has resulted in additional
patents based on the original concept. Cornell and e2e each hold approximately 50% of these patents, said
Schryver. In response to a question, he noted that they also hold international patents on the technology, but
that defending the patents in an international setting can pose challenges so they are being careful about
international applications. He added that approximately $500,000 has been invested to date to establish and
defend the e2e patents.
Shryver explained that loan funds will be used to acquire machinery and equipment for creation of a
prototyping and R&D facility at 239 Cherry Street that will allow e2e to work with various customers to shape
components and produce prototypes for customers considering use of e2e technology. Shryver indicated
that e2e project to create five (5) full-time jobs. He also mentioned that they are advertising for two positions.
Shryver noted that one model for adoption of their product is to have a large company substitute use of e2e
materials for wood composites, in the furniture, cabinetry, transportation, building or casket industries and
earn a licensing fee. They have engaged several different customers for proof of concept and prototyping
agreements that require e2e to demonstrate the advantages of their product, which will be accomplished in
the prototype facility.
Dylla moved, seconded by Peterson, the following:
CD-RLF – Loan Assistance to e2e Materials, Inc.
Whereas, on March 24, 2010, e2e Materials, Inc. (e2e) applied for $100,000 of loan assistance for a
$444,202 project to develop a pilot production facility at 239 Cherry Street, Ithaca, NY, and
Whereas, e2e is a venture-backed corporation based in Ithaca, NY commercializing biocomposite technology
developed at Cornell University as a substitute for traditional wood composites (e.g., particle board) and for
other applications in markets including furniture, cabinetry, green building and transportation, and
Whereas, e2e holds patents and an exclusive licensing agreement for production of moldable, high-strength,
naturally fire-retardant, non-toxic biocomposites, 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 five (5) full-time equivalent (FTE) employment positions (projected
to earn at least $12 per hour), of which at least 51% are projected to be filled by low- and moderate-income
persons, and
Whereas, the proposed uses of project funds are:
$360,552 machinery & equipment
$34,400 renovation and installation
$49,250 labor & transportation
$444,202 Total, and
Whereas, the proposed sources of project funds are:
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$125,000 Tompkins County Area Development (TCAD)
$219,202 equity
$100,000 IURA
$444,202 Total
Whereas, e2e had an initial close on Series A equity round on January 12, 2010 that has raised $1,100,000
to date with an additional $250,000 that may be raised prior to the closing date in May,
and
Whereas, e2e identifies five stages of development for commercializing their technology are:
1. Proof of concept
2. Prototyping
3. Product development
4. Pilot production
5. Full volume production, and
Whereas, e2e is in the proof of concept stage/prototype stage where they are demonstrating their ability to
net shape components for special markets and produce small runs, and
Whereas, the project will build prototype capacity in the form of two compression presses which can produce
molded product and flat sheets as large as 4’ x 8’ in size, and
Whereas, e2e has engaged three customers on proof of concept/prototype projects for potential use of e2e’s
products, and
Whereas, TCAD has approved a loan to e2e as follows:
Amount: $125,000
Loan term: 5 years at 9% interest, interest-only payments for 2 years; amortized over
following 3 years
Disbursement: Lump sum at loan closing
Collateral: Shared 1st security interest with IURA in equipment to be purchased
Warrants: Warrant coverage equal to 5% of loan amount to purchase preferred stock at the
current Series A share price ($3.14); exercisable over a period of 10 years
Job Creation: Creation of 5 jobs, of which at least 50% will be made available to LMI persons
Lease: Submission of a signed, minimum one-year lease at 239 Cherry Street,
and
Whereas, the project machinery and equipment purchased is estimated by IURA staff to have a net collateral
value of $90,000 – $150,000 in event of a loan default, and
Whereas, the proposed CD-RLF loan will leverage $219,202 in private sector investment, and
Whereas, the balance of available funds for new economic development loans is $560,587 as of March 31,
2010, and
Whereas, at their April 13, 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
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considered applicable provisions of the IURA Economic Development Policy Guidelines and Operating Plan,
and recommended the following action by a 2-0 vote (one abstention); now, therefore, be it
RESOLVED, that the IURA hereby waives the maximum CD-RLF loan amount for this application in
recognition of the exceptional public benefits resulting from project, including:
Creation of skilled production employment positions, with the potential for significant additional
growth of skilled employment positions;
Support the growth of a Cornell University based technology spin-off firm to diversify the economic
base of the community and expand the manufacturing sector;
Development of a home-grown “green” company making products that are safe, sustainable
products to replace materials that currently use toxins (formaldehyde) and petroleum, and be it
further
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: E2e Materials, Inc., a Delaware C-Corporation.
Loan Amount: $100,000
Project: Prototype facility at 239 Cherry Street, Ithaca, NY
Projected Use of
Funds:
Machinery & equipment
Term: 5 years (60 months)
Interest Rate: 9%
Repayment: Monthly interest-only payments ($750/month) for 2 years, then
level monthly principal and interest payments (approximately
$3,178/ month) to fully amortize the loan over 3 years.
Warrants:
Warrant coverage equal to 5% of the loan amount ($5,000) to
purchase the company’s existing preferred stock; number of
shares
covered by warrant to be calculated by dividing $5,000 by the
current Series A share price ($3.14 as of March 2010); the
strike price per share to be the current Series A share price;
exercisable for a period of 10 years (with provisions that provide
for termination, if not exercised, upon a change of control of the
company).
Collateral: 1st security interest shared on a pro rata basis (44.4%) with
Tompkins County Area Development on machinery and
equipment purchased.
Guarantor(s): None
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Conditions: Creation of at least five (5) full-time equivalent employment
positions of which at least 51% must be held by low- and
moderate-income persons.
Loan shall become due and payable in event the prototype
facility or jobs created as a result of this loan are relocated
outside of the City of Ithaca.
Quarterly job reporting to document job creation.
Annual submission of independent accountant-prepared
balance sheet & profit & loss statement
Submission of a minimum one-year term lease at 239 Cherry
Street, or other location within the City of Ithaca.
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, and be it further
RESOLVED, that the Economic Development Committee is hereby directed to develop a recommended
framework and underwriting guidelines for use of CDBG loan funds to assist pre-revenue, high-tech, venture-
backed businesses.
Passed Unanimously 4-0
Schryver left the meeting at 9:43 A.M.
B. CD-RLF, request to clarify debt of Trends of Ithaca, LLC, to IURA
Dylla moved, seconded by Farrell, the following:
CD-RLF – Recognize Trends of Ithaca, LLC loan as paid in full
Whereas, the IURA approved a $50,000 loan to Trends of Ithaca, LLC (Trends) in 2003 as part of a
$165,000 project to establish the Trends retail business at 119 E. State Street that sold home furnishing,
cards and gifts, and
Whereas the loan was amortized over 60 months with level monthly loan payments of $943.57, after an initial
3-month interest-only period; and
Whereas, the loan was secured by a subordinate lien on business assets, a personal guarantee and an
assignment of life insurance, and
Whereas, circa 2005, the Trends store went out of business due to insufficient sales, but the owner Joe
Delaney continued to make monthly loan payments to the IURA, and
Whereas, Trends of Ithaca, LLC has continued to make all regular monthly loan payments of $943.57
through July 2009, when according to M & T Bank, the IURA’s loan servicing agent, a loan balance of $116
remained, and
Whereas, Mr. Delaney questioned the remaining bill as his understanding was that the loan was paid off as
of his July payment of $943.57, and
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Whereas, Mr. Delaney verbally requested that the IURA consider the loan paid in full, and
Whereas, M&T Bank records indicate a $116 loan balance exists due to disbursement of the loan over time,
although M&T has revised their loan management software system three times since 2003 and
were not able to exactly document the reason for the remaining loan balance in the IURA staff’s opinion, and
Whereas, Trends has been a model IURA borrower and has never required extensive staff effort to collect
loan payments, and
Whereas, IURA staff recommends that the IURA recognize the Trends loan as paid in full, and
Whereas, at their April 13, 2010 meeting, the Economic Development Committee recommended the
following; now, therefore, be it
Resolved, that the IURA hereby recognized the debt of Trends of Ithaca LLC to be paid in full.
Unanimously Approved 4-0
Members agreed that a letter informing the borrower of the resolution should also thank Trends of Ithaca,
LLC for its integrity in repaying the loan after closing the business.
C. ED Committee Chairperson’s Report
Dylla asked for an update on the recently closed P&C grocery store on Hancock Street. Bohn stated that he
understands that the owners of the 25,000 square foot building have decided not to sell the building and are
looking at possible tenants, with a preference for a grocery store use. Dylla noted that it is important to the
neighborhood to have access to groceries. Bohn noted that Deputy Director of Economic Development, Phyllisa
DeSarno, has been working with the property owner and a variety of business enterprises, including grocery
stores, to re-tenant the plaza.
VI. Neighborhood Investment Committee
A. Southside Community Center, Inc. request to revise the project scope and extend the schedule for the RIBs
building renovation project (#10, 2007 CDBG)
Farrell moved, seconded by Dylla the following:
HUD Entitlement Grant – Request by SSCC to Revise Project Scope and Extend Schedule for the
RIBs Building Renovation Project (project #10, 2007 CDBG)
Whereas, on February 10, 2010, the Southside Community Center (SSCC) submitted a request to revise the
project scope for the RIBs Building Renovation project at 530 W. Buffalo Street (project #10, 2007 CDBG)
and extend the deadline to expend CDBG funds, and
Whereas, on June 26, 2008 an IURA funding agreement was executed with SSCC to undertake a project to
renovate the vacant former pump station building at 530 W. Buffalo Street for use by Recycle Ithaca Bicycles
(RIBs), a program of the SSCC, and
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Whereas, based on cost estimates procured by SSCC, CDBG funds were earmarked for the following uses:
$5,800 Masonry repair
$3,900 Roof repair
$2,000 Gas heater
$10,000 Storage shed
$5,000 Deck & stairs
$26,700 Total, and
Whereas, subsequent investigation and cost quotes revealed that (1) additional building renovations are
necessary to comply with the NY State Building Code, (2) roof repair needs are more extensive than
originally projected, and (3) the exterior fence and gate needs is in need of upgrading to ensure long-term
durability, and
Whereas, a gas heater has been installed at a cost of $135, and
Whereas, there is a balance of $26,565 in unexpended CDBG funds for this project, and
Whereas, SSCC’s desired building renovation project includes the following scope based on price quotes at
Davis-Bacon wage rates:
$17,057 New roof installation (including roof insulation)
$ 9,470 Interior insulation and drywall
$ 5,800 Perimeter fencing & gate
$ 2,869 Hand railings at two stairways
$ 2,836 Interior painting
$ 2,418 Insulation of storage/work area
$ 2,207 Parapet & coping repairs
$ 415 Building permit
$43,072 Total, and
Whereas, SSCC recognizes the IURA has limited CDBG funding available for the project and has agreed to
assume responsibility for completing the following repairs/renovations:
$2,869 Hand railings at two stairways, by 3/15/2010
$2,836 Interior painting, by 11/1/10 or as soon as drywall is installed
$2,418 Insulation of storage/work area, by 10/1/10
$8,123 Total, and
Whereas, SSCC requests CDBG funds be reallocated for the following repairs/renovations:
$17,057 New roof installation (including roof insulation)
$ 2,207 Parapet and coping repair
$ 5,800 Perimeter fencing & gate
$ 415 Building permit
$ 1,086 Contingency & other repairs/renovations
$26,565 Total, and
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Whereas, SSCC requests IURA assistance to secure additional funding to complete installation of interior
wall insulation and drywall for the main room, budgeted at $9,470, which will improve comfort and energy
efficiency and reduce operating expenses, and
Whereas, RIBs indicates their plan is to resume full programming activities at 530 W. Buffalo St. in Spring
2010 following completion of hand railings to remedy building code deficiencies, and
Whereas, the Neighborhoods Investment Committee discussed this project at their February 12, 2010
meeting and raised concerns regarding management capacity, program sustainability and the level of future
programming benefiting low- and moderate-income persons, and
Whereas, Olan Mack, Executive Director of the Southside Community Center, offered to install hand railings
at their own cost to bring the building into compliance with the NYS Building Code, resume RIBs
programming at 530 W. Buffalo St. this Spring, and defer their request for CDBG funding until June/July
when SSCC would report on programming and project beneficiaries, and
Whereas, the Neighborhoods Investment Committee voted 3-1 to recommend the following, now, therefore,
be it
RESOLVED, that the IURA hereby defers action on the Southside Community Center’s (SSCC) request to
revise the funding agreement for the RIBS Building Renovation project (CDBG 2007 #10) until receipt from
SSCC of programming activity and beneficiary data achieved at 530 W. Buffalo Street from April – June,
2010, for consideration in deciding to approve:
1. Extension of the schedule to expend CDBG funds to December 31, 2010; and
2. Revision of the project scope and source of funds as follows:
Item Funding Source
SSCC CDBG
Hand railings at two stairways $2,869
New Roof installation $17,057
Parapet and coping repair $2,207
Perimeter fencing and gate $5,800
Building permit $415
Insulating of storage/work
area
$2,418
Contingency &
repair/renovation
$1,086
Total $5,287 $26,565
Cummings spoke against the motion. She indicated that the IURA is not doing the Southside
Community Center (SSCC) a favor by offering this building at this location for use by RIBs, as the
building needs extensive repairs and the parcel lacks adequate bicycle storage. Additionally, SSCC
lacks capacity to oversee a construction project. Cummings encouraged using CDBG funds directly for
RIBs programming, rather than building repairs. Cummings argued that since the building belongs to
the City, the City should be chiefly responsible for building repairs. Bohn noted that the SSCC
approached the City requesting to lease the former pump station for RIBs programming and submitted
a CDBG funding request knowing the building needed repairs, although the full scope of the building
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repairs has expanded from the original estimate. Members discussed whether the City or the tenant
should fund and manage building repairs at this City-owned building. Peterson indicated support for
the City Department of Public Works to play a larger role in funding repairs to this property under the
jurisdiction of the Water & Sewer Division. Members agreed that participation by the City is desirable.
Farrell noted that RIBs can legally operate in the building now since out-of-code items have been
remedied.
After further discussion, Farrell moved, seconded by Dylla, to table the resolution until more
information is known about City funding participation.
Unanimously approved 4-0
B. Ithaca Free Clinic
The Free Clinic will be renting lease space at 530 W. State Street in the portion of the building fronting
along W. Seneca Street that is currently occupied by GIAC. GIAC will be moving back to their own
building by July.
C. INHS, 100 W. Seneca Street housing project (2010 HOME)
Farrell updated members on the following modifications to the project that were reported to the NI
Committee by Paul Mazzarella:
The proposed ground level large public community room intended to be leased out for events
and meetings was deleted in the final plan due to tax credit regulations limiting income producing
uses
Addition of two ground-level apartments, for a total of 52 housing units
Finalized building façade with all-brick masonry and extensive ground floor windows along W.
Seneca Street
Tenancy will be targeted to households earning 50%-60% of AMI. One-half of the units will be
leased to households earning 50%-60% of AMI and the remainder will be leased to tenants
earning less than 50% of AMI.
Cummings commented that the IURA should encourage future new construction projects downtown to
incorporate active tenant space on roof tops or renewable energy installations. She recommended that
the IURA communicate in writing to the Planning Board on building design/layout issues on IURA-
assisted projects.
D. Cass park public dock (#12, 2007 CDBG)
Bohn explained that the docks are completed and the Common Council is now determining how to
manage usage of the docks. She reported that at least one Board of Public Works member opposes
Dragon Boat use of a portion of the docks.
VII. Governance Committee
A. Report from Chairperson
Cummings updated members on items before the Governance Committee.
B. Review of IURA financials for March, 2010
Bohn reported that all borrowers are current, except Diane’s State Street Auto and State Theatre of
Ithaca, Inc. who are one-month late.
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VIII. New/Old Business
A. Chairperson Report
Peterson reported she has been meeting with a group of young men of color seeking to expand
economic opportunities for unemployed and underemployed young men of color and summer youth
employment. She reported that there is currently no New York State or Federal funding available
for summer youth employment this year. Last year over 400 youth in Tompkins County received
summer employment assistance, in part through Stimulus Funding. Historically, State funding has
supported approximately 200 youth gain summer employment. She expressed concerns about the
lack of summer youth employment funding given the recession that created very high
unemployment, especially for young men of color.
Peterson left the meeting at 11:05 A.M.
B. Staff Report
Brief update reports were provided on P&C grocery store redevelopment, Mutual Housing of Ithaca
and the Emerson facility.
C. Other
D. Next meeting date: May 27, 2010
IX. Motion to Adjourn
The meeting was adjourned by consensus at 11:20 A.M.
End
Minutes prepared by A. Vargo, edited by N. Bohn
J:\Community Development\Admin Files\MINUTES\IURA\2010\4April - Approved\4-29-10 IURA Approved Min.doc