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Home My WebLink AboutMN-IURAED-2011-02-15Approved May 10, 2011 Ithaca Urban Renewal Agency 108 East Green Street Ithaca, New York 14850 (607) 274-6559 (607) 274-6558 (fax) Continuation of February 10, 2011 meeting MINUTES IURA Economic Development Committee 3:00 PM, Thursday, February 15, 2011 Council Chambers, 3rd Floor, City Hall, Ithaca, NY Present: Leslie Ackerman, Martha Armstrong, Doug Dylla, Jennifer Tegan Staff: Nels Bohn, Alice Vargo I. Call to Order The meeting was reconvened at 3:10 p.m. by Chair Dylla. Dylla noted that this continuation will address agenda items from the February 10th meeting that were not completed. IV. Review of minutes for January 11, 2011 meeting Armstrong moved, seconded by Ackerman, to approve the minutes of January 11, 2011 as presented. Carried Unanimously 4 – 0 V. Community Lending B. Request for loan assistance from Mia Noodle Bar and Restaurant, Inc. to establish and operate a new restaurant at 130‐132 E. MLK Jr./State Street Bohn reviewed the credit analysis prepared by Robert Deemer Jr. of H. Sicherman & Co., Inc. on the loan application and its recommendation. He noted that Mr. Chutintaranond has a strong track record of starting and successfully operating four different restaurants in Ithaca, all of which are still in operation. Members reviewed collateral and proposed repayment terms. He reported that the restaurant is projected to create eighteen full‐time positions of which at least nine positions will be paid a living wage and several other will receive tips. Armstrong moved, seconded by Ackerman the following: CD‐RLF – Loan Assistance tor Mia Noodle Bar & Restaurant, Inc. Whereas, on January 10, 2011, Mia Noodle Bar and Restaurant, Inc. (Mia) applied for $100,000 of loan assistance to start up and operate a new restaurant in the Plantation Building located at 130‐132 E. MLK Jr./State Street, and IURA ED Minutes 2‐15‐11 Page 2 of 6 Whereas, Mia is owned 50%/50% by Sunit “Lex” Chutintanarond and his wife, Flaminia Cervesi, who are also the managing members of the ItalThai LLC, the owners of the Plantation Building, and Plantation Building LLC, who is undertaking the building renovation project with assistance though the Restore NY III grant program, 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, the need for the loan results from a funding shortfall in the Plantation Building redevelopment project due to problems securing an equity investor to fully utilize Federal and New York State historic rehabilitation tax credits (RTCs) generated by the project, and Whereas, the project structure assumed RTCs would generate a $680K equity investment, but after 2010 New York State legislative changes to the program no investor for the NYS RTCs can be secured, and the Federal RTC investment will only realize a $315K equity investment up front, resulting in a $365K funding gap, and, Whereas, Plantation Building LLC management proposes to fill the funding gap from the following sources: $135K equity from Plantation LLC member $130K increased bank loan $100K reallocation of equity pledged to Mia restaurant project $365K Whereas, filling the funding gap for the building rehabilitation project will create a $100K gap in the Mia restaurant project, thereby creating the need for IURA loan assistance, and Whereas, the proposed uses of project funds are: $250,000 machinery & equipment $ 50,000 furnishings $ 50,000 interior fit‐up construction $ 50,000 inventory & supplies $ 50,000 training and start‐up costs $ 50,000 working capital $500,000 Total, and Whereas, the proposed sources of project funds are: $ 300,000 Bank $ 50,000 Tompkins County Area Development $ 50,000 Landlord improvements $100,000 IURA $500,000 Total, and IURA ED Minutes 2‐15‐11 Page 3 of 6 Whereas, the project is projected to create eighteen (18) full‐time equivalent (FTE) employment positions of which at least 51% will be filled by low‐ and moderate‐income persons, and Whereas, nine (9) of the employment positions to be created are projected to earn wages of at least $13/hour, in excess of the $12.11/hour “living wage”, and Whereas, 2.5 FTE dishwasher positions will be created at $9/hour and the remaining employment positions receive tip income, and Whereas, CD‐RLF financing policy establishes maximum loan amount of $50,000 for a retail business and $100,000 for a non‐retail business except where the IURA determines that the project will result in an extraordinary degree of public benefit, and Whereas, CD‐RLF financing policy establishes an eligibility threshold for loans to restaurants, and Whereas, the project implements IURA policy to create new employment opportunities, facilitate expansion of business activity, expand the commercial tax base, and occupy formerly vacant upper floor space on the Commons, and Whereas, at their February 10, 2011 meeting, the IURA Economic Development Committee reviewed the loan application, the credit analysis prepared Robert Deemer Jr. of H. Sicherman & Co., Inc. and applicable provisions of the IURA Economic Development Policy Guidelines and Operating Plan, and recommended the following; now, therefore, be it RESOLVED, that the IURA hereby determines that the project satisfies CD‐RLF eligibility requirements for loan assistance to a restaurant because of the project’s public benefits and the capacity/experience of the borrower, and 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: Mia Noodle Bar & Restaurant, Inc., a NYS corporation created in 2008 Loan Amount: Up to $100,000 Project: Start up and operation of restaurant at 130‐132 E. MLK Jr./ State Street, Ithaca, NY Total Project Cost: $500,000 Projected Use of IURA Funds: Furnishings, fixtures and equipment Term: 7 years and 3 months Interest Rate: 3.5% annually, reset to 2.5% upon submission of satisfactory job reports documenting that the job creation goal has been achieved for two consecutive quarters and borrower is in compliance with all other terms of the loan agreement. IURA ED Minutes 2‐15‐11 Page 4 of 6 Repayment: Interest‐only payments for 3 months, then level monthly principal and interest payments due to fully amortize the loan over the remaining 7 year term (approximately $1,344/month @ 3.5%). Collateral: 1. 2nd mortgage lien on property located at 20 Rosina Drive, Ithaca, NY 2. 3rd security lien on all restaurant equipment, behind only M&T Bank and Tompkins County Area Development Corp. Guarantor(s): Personal guarantees of Sunit Chutintaranond and Flaminia Cervesi, each individually. Conditions: 1. Creation of at least eighteen (18) full‐time equivalent employment positions of which at least 51% must be held by low‐ and moderate‐income persons. 2. Payment of living wages ($12.11/hour) to at least 9 FTE employment positions not dependent on tip income. 3. Annual submission of federal income taxes and profit & loss statement for Mia Noodle Bar & Restaurant, Inc. And be it further RESOLVED, that the IURA hereby waives the maximum $50,000 loan amount from the CD‐RLF for this application in recognition of exceptional public benefits resulting from the project, including:  Establishment of an anchor business for a $3.2 million rehabilitation project converting a partially vacant downtown building into a mixed‐use building containing retail, office and housing uses;  Rehabilitating of a 4‐story, historic downtown Commons building in accordance with the Secretary of the Interior’s standards for historic rehabilitation;  Generation of more than $25,000 annually in sales tax revenue to the City;  Establishment of a minority‐ and woman‐owned business; 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. Carried Unanimously 4‐0 VI. 2011 HUD Entitlement Action Plan B. Continued review of funding applications for economic development projects/programs – recommendation to IURA The Committee continued review of the following funding applications:  KTC “Next Steps” Training Program ($80,000) – (KTC)  ED Loan Fund ($133,000) – (CD LOAN FUND)  JobsBuild Training Program ($48,000) – (JB)  eLab ($122,192) – (ELAB) IURA ED Minutes 2‐15‐11 Page 5 of 6  Rebuilding The Wall Work Readiness ($107,000, but receptive to a $30,000 pilot) – (RTW)  Work Preserve Job Training ($38,220) – (WP) Members reviewed supplemental information submitted for several projects and discussed funding constraints, feasibility, program design, cost effectiveness and program outcomes. After further discussion, the Committee developed evaluation criteria and jointly scored each project from 0 (low) to 3 (high) for each criterion, resulting in the following scoring: Page intentionally left blank IURA ED Minutes 2‐15‐11 Page 6 of 6 RTW KTC W.P. JB ELAB CD LOAN FUND Criteria Capacity/Feasibility 1 3 3 3 0 3 Community Benefit/ Impact 3 1 1 3 1 2 Value Cost/Job/Individual Cost Benefit 2 1 2 3 0 3+ Use of Resources/Effective/Partners 0 1 3 3 1 2 Financial Sustainability 0 2 1 1+ 0 3 Concept/Creativity 2 2 2 2 3 2 Gut Reaction 1 1 2 2 0 2 TOTAL 9 11 14 17 5 17 Members discussed the scoring outcome and unanimously recommended the following funding allocation for ED funding applications in the 2011 Action Plan: $36,000 JobsBuild Training Program (public service) $32,000 Work Preserve Job Training (public service) $183,000 ED Loan Fund $251,000 VII. Next meeting date: April 12, 2011 (the March 8 meeting is canceled) Meeting adjourned by consensus at 4:45 p.m. END Minutes prepared by A. Vargo, edited by N. Bohn j:\community development\admin files\minutes\edc\2011\2feb\edc minutes 2‐15‐11nb.doc