HomeMy WebLinkAboutMN-IURA-2010-09-23Approved 10/28/10 Ithaca
Urban
Renewal
Agency
108 East Green Street
Ithaca, New York 14850
(607) 274-6559 59
(607) 274-6558 (fax) (607) 274-6558 (fax)
MINUTES MINUTES
ITHACA URBAN RENEWAL AGENCY ITHACA URBAN RENEWAL AGENCY
8:30 AM, September 23, 2010 8:30 AM, September 23, 2010
Present: Susan Cummings, Doug Dylla, Tracy Farrell, Carolyn Peterson Present: Susan Cummings, Doug Dylla, Tracy Farrell, Carolyn Peterson
Others: J.R. Clairborne, Common Council Liaison (9:05 A.M.), Avi Smith Others: J.R. Clairborne, Common Council Liaison (9:05 A.M.), Avi Smith
Staff: Nels Bohn, JoAnn Cornish, Sue Kittel, Alice Vargo Staff: Nels Bohn, JoAnn Cornish, Sue Kittel, Alice Vargo
I. Call to Order I. Call to Order
The meeting was called to order by Chairperson Peterson at 8:35 a.m. The meeting was called to order by Chairperson Peterson at 8:35 a.m.
II. Additions to or deletions from the agenda II. Additions to or deletions from the agenda
Cummings requested that “drug seizure assets” be added at Old Business on the agenda. No
members objected.
Cummings requested that “drug seizure assets” be added at Old Business on the agenda. No
members objected.
III. Public comment – None III. Public comment – None
IV. Approval of meeting minutes of and July 22, 2010 IV. Approval of meeting minutes of and July 22, 2010
The July 22, 2010 minutes were not included in agenda packet. The July 22, 2010 minutes were not included in agenda packet.
VI. Economic Development Committee VI. Economic Development Committee
A. Request by Unity Inn LLC for loan assistance to start‐up and operate the Argos Inn, an 11‐
room Inn with bar/lounge at 408 E. State/MLK Street, CD‐RLF
A. Request by Unity Inn LLC for loan assistance to start‐up and operate the Argos Inn, an 11‐
room Inn with bar/lounge at 408 E. State/MLK Street, CD‐RLF
Bohn gave an update on negotiations that Avi Smith, owner of Unity Inn had with M&T Bank
for a Small Business Administration (SBA) 504 loan. Bohn stated that Smith’s understanding
was that M&T would approve a loan if a collateral reserve account in the amount of
$250,000 was established during construction, which he agreed to. According to Smith,
M&T increased its collateral reserve requirement to $500,000 with an indeterminate date
for releasing the reserve, and indicated that the new terms are unacceptable and he is now
working with another local lender.
Bohn gave an update on negotiations that Avi Smith, owner of Unity Inn had with M&T Bank
for a Small Business Administration (SBA) 504 loan. Bohn stated that Smith’s understanding
was that M&T would approve a loan if a collateral reserve account in the amount of
$250,000 was established during construction, which he agreed to. According to Smith,
M&T increased its collateral reserve requirement to $500,000 with an indeterminate date
for releasing the reserve, and indicated that the new terms are unacceptable and he is now
working with another local lender.
Bohn reviewed an analysis of collateral available to secure the loan. He indicated that IURA
legal counsel has informed him that the IURA would have difficulty in filing mortgages on
rental property located out‐of‐state and would have trouble collecting in the event of
default. Bohn suggested accessing the income generated from this rental property as
collateral through a personal financial guarantee from Mr. Smith and an assignment of rents
and leases.
Bohn reviewed an analysis of collateral available to secure the loan. He indicated that IURA
legal counsel has informed him that the IURA would have difficulty in filing mortgages on
rental property located out‐of‐state and would have trouble collecting in the event of
default. Bohn suggested accessing the income generated from this rental property as
collateral through a personal financial guarantee from Mr. Smith and an assignment of rents
and leases.
Cummings moved, seconded by Dylla, the following: Cummings moved, seconded by Dylla, the following:
IURA Minutes
September 23, 2010
Page 2 of 11
D‐RLF – Loan Assistance to Unity Inn LLC for Start‐up & Operation of Argos Inn
MLK Street to an 11‐room inn with a public bar/lounge to be known
s the Argos Inn, and
time as primary lender financing terms and collateral
equirements are solidified, and
m a lender to provide primary
nancing on the project in the amount of $960,000, and
hereas, Avi H. Smith (Smith) is the sole member of Unity Inn LLC, and
t
00% SBA guarantee) and the borrower provides
he remaining 20% of project cost, and
hereas, a funding gap of at least $100,000 in project financing is projected, and
am
in the City of
haca and expansion of the City’s commercial and industrial tax base, and
A determines that the
roject will result in an extraordinary degree of public benefit, and
ment
public benefit test to generate at least one FTE job for every
35,000 of assistance, and
at least $12.11/hour thereby
roviding local living wages to all full‐time employees, and
Wheas ed use :
leted
C
Whereas, on June 11, 2010, Unity Inn LLC applied for $100,000 of loan assistance for a
$1.645 million project to acquire and renovate the historic McCormick‐Cowdry house
located at 408 E. State/
a
Whereas, on July 22, 2010, the Ithaca Urban Renewal Agency (IURA) indicated strong
interest in a possible loan at such
r
Whereas, Unity Inn LLC has secured a verbal loan offer, fro
fi
W
Whereas, Unity Inn LLC is securing primary financing through the Small Business
Administration (SBA) 504 program whereby a private sector lender loans up to 50% of the
project cost secured by a senior lien, an SBA504 lender loans up to 30% of the project cos
secured by a junior lien (& backed by a 1
t
W
Whereas, the primary objectives of the Community Development Revolving Loan Progr
(CD‐RLF) is provision of direct financing for economic development activities to create
employment opportunities, facilitate the expansion of business activity with
It
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 IUR
p
Whereas, the project is projected to create eight (8) full‐time equivalent (FTE) employ
positions, of which at least 51% will be filled by low‐ and moderate‐income persons,
thereby meeting the CDBG
$
Whereas, all new full‐time positions are projected to receive
p
er, the propos s of project funds are
$350,000 property acquisition
$ 41,000 construction comp
$898,000 new construction
$ 89,000 construction contingency
IURA Minutes
September 23, 2010
Page 3 of 11
es & other soft costs
$131,000 furnishings, fixtures & equipment
$ 82,000 professional fe
$ 16,000 bar inventory
$ 62,000 working capital
$1,669,000 Total, and
Whe f project funds are:
lender #2
reas, the proposed sources o
$600,000 lender #1
$360,000 SBA 504
$609,000 equity
$100,000 IURA
$1,669,000 Total, and
wn,
, promote renovation of
istoric structures and create jobs paying living wages, and
y Guidelines
nd Operating Plan, and recommended the following; now, therefore, be it
olving Loan Fund in accordance with the loan application, and the
following terms:
Borrower: Inn LLC, a NYS limited liability company formed in
oan Amount: p to $100,000
Project:
ar/lounge located at 408 E. State/MLK Street, Ithaca, NY
otal Project Cost: 1,669,000
d Use of IURA
unds:
&E, inventory,
rofessional fees and/or working capital
Term: 0 years
Interest Rate: ry
borrower
ce with all other terms of the loan
greement.
Repayment:
Whereas, the project implements IURA policy to strengthen the vitality of the downto
encourage in‐fill development in lieu of sprawl development
h
Whereas, at their September 21, 2010 meeting, the IURA Economic Development
Committee reviewed the terms of SBA 504 loan offer and collateral available to secure an
IURA loan and applicable provisions of the IURA Economic Development Polic
a
RESOLVED, that the IURA hereby approves an IURA loan from the Community
Development Rev
Unity
2009
L U
Start up and operation of Argos Inn, an 11‐room inn and
b
T $
Projecte
Non‐construction project costs such as FF
F p
2
4% annually, reset to 3% upon submission of satisfacto
job reports documenting that job creation goals have
been achieved for two consecutive quarters and
is in complian
a
Interest‐only payments for 12 months, then level monthly
IURA Minutes
September 23, 2010
Page 4 of 11
e
19 year term (approximately
627/month @ 4%).
Collateral: y at
‐1‐14),
erty owned by Avi Smith on Boonville Road, Ukiah,
CA.
Guarantor(s): ually.
to appraisal of Brookton
total IURA collateral value of at least $100,000.
Conditions: nders in sufficient
be
oyees.
factory appraisal for 491
LC.
es of
education through access to Cornell resources
nd be it further
‐
ion in recognition of exceptional public benefits resulting from the
storic district;
of the downtown and reducing the need for visitors
Match fund leveraging exceeding 10:1, and be it further
principal and interest payments due to fully amortize th
loan over the remaining
$
1. 2nd collateral mortgage on Brookton Market propert
491 Brooktondale Rd., Caroline, NY (tax #11.
behind a first mortgage held by M&T Bank.
2. 1st security lien on 2006 Toyota Tacoma truck.
3. Assignment of leases and rents on residential rental
prop
1. Personal guarantees of Avi H. Smith, individ
2. Additional limited financial guarantors of
3. Satisfactory individuals subject
Market property, to achieve a
1. Loan commitment from primary le
amount to complete the project
2. Creation of at least eight (8) full‐time equivalent
employment positions of which at least 51% must
held by low‐ and moderate‐income persons.
3. Payment of living wages to all full‐time empl
4. Submission of satis
Brooktondale Rd.
5. Site plan and ILPC project approval.
6. Annual submission of balance sheet and profit and loss
statements and federal income taxes for Unity Inn L
7. Submission of a copy of correspondence to Cornell
University seeking in‐kind donation of services to provide
opportunities for low/moderate‐ income employe
an IURA‐assisted project to upgrade their skills/
A
RESOLVED, that the IURA hereby waives the maximum $75,000 loan amount from the CD
RLF for this applicat
project, including:
Renovation of a historic building in the local East Hill hi
Returning a tax‐exempt property back on the tax rolls
Establishment of business that will pay a living wage to all full‐time employees;
Strengthening the vitality
to travel by automobile;
IURA Minutes
September 23, 2010
Page 5 of 11
RESOLVED, that the Director of Community Development for the IURA is authorized to issue
a loan commitment letter in accordance with this resolution.
Following discussion, Dylla moved, seconded by Cummings, the following amendments:
1. Add an additional bullet point on the second “Resolved” statement:
“• Returning a tax‐exempt property back on the tax rolls”
2. Add an additional condition for loan approval in the first “Resolved” statement:
“7. Submission of a copy of correspondence to Cornell
University seeking in‐kind donation of services to provide
opportunities for low/moderate‐ income employees of an IURA‐
assisted project to upgrade their skills/education through access
to Cornell resources ”
Amendment Carried Unanimously
Amended Motion Carried Unanimously
B. Request by Cayuga Green II LLC for an extension of the purchase and sale contract for
parcel ‘D’ (tax map #81.‐2‐4)
Bohn reported that Cayuga Green II LLC has been working to secure financing through the
HUD 221(d)4 program, which has been successful for them in Ohio. The approval process
through the 221(d)4 program is 9‐12 months and the developer is awaiting an invitation to
submit the firm commitment application. Members reviewed the plans, the purchase and
sale contract, and discussion of Cayuga Green II LLC’s financing strategy.
Cummings moved, seconded by Farrell, the following:
Cayuga Green Project Phase IIB, Parcel “D” – 2nd Extension of Purchase and Sale Contract
Whereas, Cayuga Green II LLC requests an extension of the purchase and sale contract for
parcel ‘D’ (tax parcel #81.‐2‐4) for construction of rental housing located adjacent to the
Cayuga Garage to provide time to secure project financing through the HUD 221(d)4 Insured
Mortgage Financing program, and
Whereas, the IURA and City previously amended the original sales contract in 2009 to allow
construction of rental housing units in addition to for‐sale units and to extend the term by
12 months to July 2010 in response to the developers inability to secure project financing
for residential condominiums, and
Whereas, the commercial credit market has been extremely tight for loans to construct new
high‐rise housing for several years and remains extremely limited, and
Whereas, the principals of Cayuga Green II LLC have recently utilized the HUD 221(d)4
mortgage insurance program to secure financing from a HUD‐approved private lender for a
multi‐family rental housing project in Ohio, and
IURA Minutes
September 23, 2010
Page 6 of 11
Whereas, through the HUD 221(d)4 program, the Federal Home Administration provides
mortgage insurance to HUD‐approved lenders to for‐profit or non‐profit borrowers
developing multi‐family rental housing, and
Whereas, the HUD 221(d) 4 program requires federal prevailing wages to be paid for new
construction, and
Whereas, a HUD 221(d)4 review and approval process requires submissions of detailed
construction plans and specifications, cost detail, market study and marketing plan, and
takes 9‐12 months if all information is in order, and
Whereas, a HUD 221(d) 4 mortgage insurance application process requires documentation
of fee simple ownership of the project site, and
Whereas, Cayuga Green II LLC has been pursuing HUD 221(d) 4 approval for several months
and is awaiting an invitation to submit a “firm commitment” application, and
Whereas, initial construction plans to build adjoining the Cayuga Garage have been modified
to provide a 10‐foot horizontal separation distance to avoid the need for retrofits to the
Cayuga Garage to meet New York State Building Code requirements regarding wall openings
and fire egress routes at the Garage, and
Whereas, the Cayuga Green II LLC has submitted revised preliminary plans for construction
of a 7‐story, 39‐unit rental housing project at Parcel ‘D’ that are consistent with the original
designs for the Cayuga Green project, and
Whereas, Cayuga Green II LLC seeks no property tax abatements for the project, and
Whereas, the IURA wishes to facilitate the construction of additional housing units in
downtown Ithaca that will expand the range of housing opportunities and increase the
property tax base; now, therefore, be it
Resolved, the IURA hereby approves an extension of the existing Purchase and Sale
Contract on Cayuga Green Project Phase IIB ‐ Parcel D, until December 31, 2011, and be it
further
Resolved, that the legal description of the parcel to be sold pursuant to the sales contract
be revised and reduced in size in accordance with a lot adjustment plan dated January 22,
2010, prepared by T.G. Miller PC, to avoid the need for retrofits to the Cayuga Garage, and
be it further
Resolved, that payment on the balance of the $280,000 purchase price of the property will
be based on a 10‐year term loan at an interest rate of 5.5%, and be it further
Resolved, the above approvals are subject to Common Council approval of the property
disposition, and be it further
IURA Minutes
September 23, 2010
Page 7 of 11
Resolved, the IURA Chairperson, upon the advice of IURA legal counsel, is hereby authorized
to execute all necessary and appropriate documents to implement this resolution, including
but not limited to executing an amended purchase and sale contract.
Carried Unanimously
III. Restore NY3, request from Justin Hjortshoj and Domenica Brockman, DBA Petrune, to modify
their project to rehabilitate upper levels of the Petrune Building located at 126‐128 E.
State/MLK Street from residential use to commercial/production use
Bohn reported on Petrune’s proposed modification to their project to renovate the 3rd and 4th
floor to production and commercial uses. He stated that Petrune was unable to secure bank
financing for the residential project, in part due to a concern that property taxes would
increase by $14,000 due to the project, thereby consuming significant income generated by the
project. He reported that the Economic Development Committee will review the project in
greater detail to develop a recommendation to the Agency.
IV. Governance Committee
A. City financial audit
Cummings reported that IURA staff has been informed that the perennially delinquent City
financial audit is a serious problem that could result in withholding of HUD funds. Bohn
reported that the city audits are due for completion no later than nine months after the end
of the fiscal year. The City is completing its 2008 audit, but has not begun its 2009 audit yet,
so it will remain at least one year delinquent. While the 2008 City audit was submitted to
the Federal clearinghouse, the management letter is being withheld by the auditor for
receipt of a letter from the City Attorney identifying contingent legal liabilities that may
materially impact the financial statement, said Bohn. The City Attorney letter is expected to
be completed in the near future.
Members agreed that an initiative to allow the City Controller to catch up on delinquent
audits is critically important. Bohn reported that a strategy has been developed jointly with
the City Controller to increase audit preparation capacity through the contracted use of the
IURA Bookkeeper.
Cummings moved, seconded by Farrell, the following:
City of Ithaca Financial Audit
Whereas, the U.S. Department of Housing & Urban Development (HUD) requires each city
receiving CDBG and HOME funds to submit financial audits within 9 months of completion of
each fiscal year, and
Whereas, due to staff limitations, the City of Ithaca has been unable to satisfy this
requirement since at least 2004, at which time the City also became a HUD Entitlement
community receiving annual formula grants through the CDBG and HOME programs, and
IURA Minutes
September 23, 2010
Page 8 of 11
Whereas, HUD monitoring of the CDBG and HOME program has identified that the City is
not in compliance with HUD requirements for timely submission of the Financial Audits, and
Whereas, continued failure to submit Financial Audits in a timely fashion will imperil future
HUD funding, and
Whereas, the IURA seeks to assist the City to bring its Financial Audit schedule into
compliance with HUD requirements in order to resolve a monitoring finding due to
consistently late municipal audits and to preserve HUD Entitlement funding, and
Whereas, the IURA administers the Financial Assistance Agreement with the City for the
Cayuga Green Garage project whereby the annual net deficiency amount to meet Cayuga
Green bond expenses are submitted to the City as a net annual appropriation request,
which the City has duly paid, and
Whereas, the prevailing interest rates on the Cayuga Green bonds in 2010 were lower than
projected resulting in a one‐year surplus of funds, and
Whereas, this surplus can be carried over to 2011 to reduce the 2011 net annual
appropriation request to the City pursuant to the Financial Assistance Agreement, thereby
freeing up $30,000 to be used by the City Controller in the 2011 City Budget for additional
accounting services to bring the City Financial Audit schedule into compliance with HUD
requirements, and
Whereas, the IURA’s part‐time Bookkeeper is a Certified Public Accountant who is interested
in providing services to the City and the City Controller is interested in hiring the IURA’s
Accountant with funds expected to be contained in the 2011 City Budget, and
Whereas, at their September 17, 2010 meeting the IURA Governance Committee reviewed
this matter and recommended that the IURA assist the City to catch up on delinquent
audits; now, therefore, be it
RESOLVED, that the IURA hereby authorizes the IURA Bookkeeper to provide up to $30,000
of professional services to the City to prepare for City Financial Audits on condition such
IURA expenses will be reimbursed by the City, and be it further
RESOLVED, that provision of such professional services in an amount not to exceed $10,000
may commence in 2010 at no risk to the City, provided that the Mayor’s proposed 2011 City
Budget contains sufficient funding for professional services to bring the City’s Financial
Audits current.
Motions carries 3 – 0, with one abstention (Peterson).
Peterson indicated she abstained from the vote as it is her policy to abstain on actions of the
IURA that involve a recommendation to the Mayor.
IURA Minutes
September 23, 2010
Page 9 of 11
B. FY 2011 IURA Budget
Cummings reviewed the proposed budget that includes an increased employee contribution
to health insurance, a 1% salary increase and a 2% retirement benefit increase.
Cummings moved, seconded by Farrell, the following:
WHEREAS, the IURA desires to annually adopt an administrative budget to guide
expenditures and manage financial resources of the IURA, and
WHEREAS, at their September 17, 2010 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 2011 IURA Administrative Budget, dated
9/17/10, as herein attached, and be it further
RESOLVED, that effective January 1, 2011, IURA employee salaries and employee
contributions to health care insurance shall be adjusted as contained in the 2011 budget,
and be it further
RESOLVED, that the IURA Human Resource Policies be amended to reflect changes to the
employee retirement benefit contained in the 2011 budget, effective January 1, 2011.
Carried Unanimously 4‐0
C. Review of August 2010 IURA financials
Bohn reported that all loans are current except for Diane State Street Auto, who remains 2
months late. Bohn will contact her about setting up a meeting to discuss her finances.
D. Committee Chairperson report
Cummings reported on the Tompkins County Industrial Development Agency’s (IDA’s)
dispute with Cayuga Green LLC regarding compliance with the section of the PILOT
agreement regarding the maximum average net rent at the Cayuga Apartments. She
reviewed draft correspondence from her to the County Legislator and IDA member, Jim
Dennis, providing background on the project, recognizing the project’s success at expanding
the range of housing options available downtown and strengthening the downtown
economy and encouraging resolution of the dispute. By consensus, the Agency authorized
the letter to be sent by the Vice‐Chairperson on IURA letterhead.
VI. Neighborhood Investment Committee
A. 2011 HUD Entitlement Grant, organizational meeting
Kittel reported on the proposed schedule for developing the 2011 Action Plan. The
first public hearing on the Action Plan is scheduled for January 27, 2011. Follow‐up
dates are being compiled. The call for proposals will go out late October with a
deadline for receipt set for December 17, 2010.
B. Committee Chairperson report
IURA Minutes
September 23, 2010
Page 10 of 11
Farrell reported that the Rt. 13 Pedestrian Crossing projects to enhance pedestrian
safety to cross Rt. 13 at the Dey/Willow St. and Third St. intersections will not be
undertaken this year as securing the right to make improvements in the railroad
right‐of‐way are being worked out.
VII. New/Old Business
A. IURA Chairperson Report ‐ none
B. Staff Report – Bohn reported that the Finger Lakes Wine Center is scheduled to
open at 237 S. Cayuga Street in November. Stockpiled contaminated construction
debris has now been removed from the Ithaca Gun site, but field testing show low‐
level lead contamination remains where stockpiles existed. The property owner is
working with NYSDEC on a plan to further investigate and remediate the site.
C. Other New/Old Business ‐ Drug Seizure Assets
Cummings urged the IURA to recommend that Common Council investigate the use
of drug seizure assets provided to the City to meet community development needs,
perhaps for a “weed and seed” program to prevent illegal drug activity and provide
employment opportunities to unemployed young adults. Peterson reported that
investigation into this issue has confirmed that the authorized uses for drug seizure
assets is very narrow and focused on law enforcement activities.
D. Next meeting date: October 28, 2010
VIII. Motion to Adjourn
The meeting was adjourned at 10:55 a.m. by consensus.
END
Minutes prepared by A. Vargo, edited by N. Bohn
IURA Minutes
September 23, 2010
Page 11 of 11
j:\community development\admin files\minutes\iura\2010\9september\9‐23‐10 iura minutes nb edit.doc