HomeMy WebLinkAboutMN-IURAED-2011-08-09Ithaca
Urban
Renewal
Agency
Approved October 11, 2011
108 E. Green Street
Ithaca, New York 14850
(607) 274-6559
(607) 274-6558 (fax)
Draft Minutes
IURA Economic Development Committee (EDC)
3:30 PM, Tuesday, August 9, 2011
Common Council Chambers, 3rd Floor, City Hall, Ithaca, NY
Present: Doug Dylla, Leslie Ackerman, Martha Armstrong, Jennifer Tegan, Ayana Richardson
Staff: Nels Bohn, Phyllisa DeSarno, Charles Pyott
I. Call to Order
Chairperson Dylla called the meeting to order at 3:35 P.M. New Committee member,
Ayana Richardson, was introduced and welcomed to the meeting.
II. Agenda Additions/Deletions – None
III. Public Comments (3‐minute maximum per person) – None
IV. Review of Meeting Minutes:
Armstrong moved, seconded by Richardson, to approve the minutes of the April 12,
2011 and May 10, 2011 meetings. Carried Unanimously.
V. Community Lending
A. Priority Business Loan Fund – Request from McGuire & Riis, Inc. for Loan
Assistance to Open and Operate the Blind Elk Restaurant/Bar/Performing Arts
Venue at 139 W. State Street
Bohn recapitulated the salient details of the loan application and stressed the
desirability of returning the underutilized ground floor space to active use. The loan
application meets basic eligibility criteria for IURA loan assistance and features many
positive attributes, including the fact the space is virtually ready to go and is in a
great infill location. Nonetheless, some serious underwriting concerns remain.
IURA EDC Minutes
August 9, 2011
Page 2 of 9
Bohn noted that IURA underwriter, Bob Deemer of H. Sicherman & Co., Inc., believes
the project is under‐capitalized and many of the projections seem generous for the
space. Moreover, there is limited collateral and no guarantor. As a result, Deemer
recommends bringing in more capital, preferably from someone with an operating
role. Bohn indicated he shares Deemer’s views. Were the business to experience
any financial uncertainty, there would be little means for it to reduce its expenses
(e.g., like the Bandwagon Brew Pub demonstrated it was able to do). The
application is now in the early stages of seeking additional conventional lender
financing.
Bohn noted there are essentially three options for the Committee, at this time:
1. recommend denial of the loan application;
2. wait for results of pending loan applications with other lenders, then resume
underwriting; or
3. signal IURA interest in a possible second‐lien, gap financing loan ($30K‐$40K
range), subject to a loan commitment for primary financing and addressing
underwriting concerns.
Bohn recommended the third option.
Ackerman indicated she has worked with applicants Justin McGuire and Matt Riis,
while they developed their business plan. She agrees with Deemer’s concerns that
the costs are likely to be higher and the revenues lower than anticipated. In
addition, she indicated the applicants may be underestimating the difficulty of
consistently filling the space.
Armstrong remarked the salaries the applicants allocate for themselves seem
excessive, especially for the first year. Tegan agreed the financials do not make a
great deal of sense for a start‐up. Armstrong added the application would be
stronger if the applicants obtained more up‐front financing (e.g., from friends,
investors, and family).
Dylla indicated it sounds from the discussion that the Committee may be leaning
towards the third option. He added that all the recommendations for enhancing the
loan application listed on Bohn’s 8/9/11 memorandum to the Committee seem
pertinent.
Ackerman suggested the applicant could look at some kind of alternative,
community‐based financing sources. For example, instituting some kind of
membership loyalty program, such as the one Wide Awake Bakery devised to fund
its ovens. (She could put the applicants in touch with them.)
IURA EDC Minutes
August 9, 2011
Page 3 of 9
Richardson noted the applicants would benefit from funding from someone with a
direct operational role in the business, such as a chef. It seems likely they could find
a chef seeking ownership in a business and they would benefit from someone with
that kind of experience.
Tegan remarked that the competitive assessment the applicants submitted could be
improved, to include detailed revenue comparisons with other comparable local
businesses (much like Avi Smith created for the Argos Inn application).
Armstrong noted the entrance to the property is not prominent, which will make it
that much harder to promote the business and enhance its visibility. DeSarno
responded that she thought they were planning on creating a new, iconic entrance,
which would also serve as their logo or signature feature, to which Bohn responded
they have allocated $3,000 for exterior finishes in their business plan, so
improvements may be largely limited to bold visual signage painted on the entrance
door.
Richardson noted that the applicants also do not have the benefit of using an
already established restaurant space, such as the Bandwagon Brew Pub benefited
from.
Dylla indicated that discussion of this application could be tabled and informal
discussions between the applicant and IURA staff could take place, to pursue option
three, as well as other recommendations for enhancing the loan application.
Members agreed. Bohn indicated he will contact the applicants to follow up.
B. Community Development Revolving Loan Fund (CD‐RLF)
1. Request from Mia Noodle Bar & Restaurant, Inc. to Substitute Loan Collateral
(CD‐RLF #31)
Bohn noted that owner Lex Chutintaranond finally received the $900,000 in
Restore NY funding he had been awaiting from the Empire State Development
Corporation. Bohn indicated, however, that Chutintaranond had run into
problems with the Federal historic rehabilitation tax credits (RTCs) he had been
anticipating receiving by this point and which will now be delayed another 4‐6
weeks.
At this juncture, Chutintaranond is requesting to shift the IURA loan collateral to
the ZaZa’s Cucina property, in lieu of the mortgage on his home, allowing him to
take out a home equity loan for $100,000. Bohn remarked that based on a
recent appraisal there is sufficient equity in the restaurant property to secure
the IURA and the IURA will continue to hold personal loan guarantees from Lex
and his wife.
IURA EDC Minutes
August 9, 2011
Page 4 of 9
Armstrong moved, seconded by Dylla:
Loan Modification #1 to Mia Noodle Bar & Restaurant, Inc. Loan (CD‐RLF #31)
Whereas, on April 19, 2011 the IURA issued a $100,000 loan to Mia Noodle Bar
and Restaurant, Inc. (Mia) to start‐up and operate a new restaurant in the
Plantation Building at 130‐132 E. MLK/State Street, which loan is secured by the
following collateral:
• 2nd mortgage lien on property located at 20 Rosina Drive, Ithaca, NY
• 3rd security lien on all restaurant equipment, behind M&T Bank and TCAD
• Personal guarantees of Sunit Chutintaranond and Flaminia Cervesa,
principals of Mia, and
Whereas, on August 1, 2011, Mia Noodle Bar & Restaurant, Inc. requested a
modification to the IURA loan to substitute a 2nd mortgage lien on property
located at 622 Cascadilla Street, Ithaca, NY in place of the 3rd mortgage lien on
property located at 20 Rosina Drive to allow refinancing of the property to
support business expenses associated with the Plantation Building project , and
Whereas, the IURA Gateway loan of $490,000 to ItalThai, LLC was secured in part
by a 2nd mortgage on 622 Cascadilla Street, and
Whereas, recently received Restore NY grant funds allowed ItalThai LLC to repay
all but $78,735 of the $490,000 Gateway loan, which loan will be fully repaid
upon receipt of historic tax credit equity, and
Whereas, the 622 Cascadilla Street property recently appraised out at a fair
market value of $905,000, and
Whereas, M&T Bank holds a 1st mortgage lien on 622 Cascadilla Street property
to secure a loan with an outstanding principal balance of approximately
$544,000, and
Whereas, equity available in the 622 Cascadilla Street property is approximately
$280,000, as follows:
$905,000 appraised fair market value
‐ $544,000 1st mortgage – M&T
‐ $79,000 2nd mortgage – IURA
$282,000 equity value, and
IURA EDC Minutes
August 9, 2011
Page 5 of 9
Whereas, the equity value available through a 3rd mortgage on 622 Cascadilla
Street is sufficient to secure the $100,000 IURA loan, and
Whereas, at their August 9, 2011 meeting, the IURA Economic Development
Committee considered this matter and recommended the following; now,
therefore, be it
RESOLVED, that the IURA hereby approves the request from Mia Noodle Bar &
Restaurant, Inc. for a modification to collateral securing CD‐RLF loan #31 by
substituting a mortgage lien on 622 Cascadilla Street property to replace the
mortgage lien on 20 Rosina Drive property, subject to all costs of the loan
modification to be borne by the borrower, and be it further
RESOLVED, that the IURA Chairperson, subject to review by IURA legal counsel, is
authorized to execute documents to implement this resolution.
Carried Unanimously 5‐0
2. Neighborhood Pride, LLC Loan Application – Status Report
Bohn reported the applicant had received a preliminary commitment letter from
Square 1 Bank. The most significant obstacle facing the applicant involves
Square 1 Bank’s request for a life insurance policy to secure the full value of the
loan, taken out on Tony and Irene Petito (both in their eighties). Square 1 does
seem very interested in the project, however. It seems serious about the loan,
and it also appears as though it may be flexible regarding the life insurance
requirement.
This is the first time the Petitos have had a lender agree to consider in writing to
finance the project; although the Square 1 loan amount is a little higher the
Petitos originally intended, since it now includes the cost of stocking the store.
In 1‐2 months, Bohn noted more information should be available on the loan
commitment. He also noted that the designated break‐even point has been
reduced to $3.5 million — probably a more realistic assessment, given that is
closer to the total annual sales of the former P&C in its final years of operation.
Bohn noted that appraisals on the property should be completed in 3‐5 weeks
and the planned tenant for the subsidiary space on the property, Cornell
Cooperative Extension, has hired an architect.
Armstrong noted the age of the owners certainly appears to be an issue. She
asked if there were some kind of trust in place, to which DeSarno replied that it
is a corporation, which the children all have some involvement in.
IURA EDC Minutes
August 9, 2011
Page 6 of 9
Bohn noted the estate would be divided between the five children equally, but
that arrangements have been made to allow the business to continue under the
direction of John Petito, according to John Petito. Nonetheless, Armstrong
noted, a better delineated succession plan of some kind would probably
strengthen the application.
Bohn indicated this item will be on a future agenda when an executed loan
commitment letter from the primary lender has been issued.
VI. Old Business
A. Economic Development Performance Goals – Resolution
Bohn indicated some discussion took place at the 5/20/11 IURA Board meeting
about economic development performance goal #4. At that meeting, Susan
Cummings raised a concern about the use of the term “traditional neighborhood
business district” and whether this would apply, for example, to filling the vacant
former Eckerd drug store building on Route 13. As a result of the ensuing discussion,
the original wording (“Fill 3 vacant commercial storefronts in traditional
neighborhood business districts and the downtown of the City of Ithaca.”) was
changed to: “Fill 3 vacant commercial storefronts in pedestrian‐oriented commercial
districts.”
Armstrong agreed it can be difficult to determine the dividing line between
pedestrian‐accessible and pedestrian‐inaccessible.
Moved by Richardson, seconded by Armstrong:
Economic Development Performance Goals
WHEREAS, the New York State Public Authorities Law requires each public benefit
corporation to adopt a mission statement and develop performance measurements
to carry out the mission, and
Whereas, on March 25, 2011 the IURA adopted the following mission statement:
“The Ithaca Urban Renewal Agency secures and manages resources to improve the
social, physical and economic characteristics of the City of Ithaca by expanding
access to quality affordable housing, strengthening neighborhoods and the local
economy, and supporting other community development activities.”
Whereas, at their May 10, 2011 meeting the Economic Development Committee
(EDC) developed economic development performance measures to implement the
mission statement, and
IURA EDC Minutes
August 9, 2011
Page 7 of 9
Whereas, at their May 20, 2011 meeting the IURA discussed the EDC‐recommended
performance measures and referred the issue back to the EDC Committee to
respond to concerns expressed, and
Whereas, at their August 9, 2011 meeting the EDC reviewed IURA concerns and
revised their recommendation; now, therefore be it
RESOLVED, the IURA hereby adopts the following performance goals to carry out the
IURA mission statement:
Economic Development (rolling 3‐year period):
1. Create 36 new full‐time equivalent jobs, including 27 positions that will be paid
at least a “living wage”
2. Invest $400,000 in loans to assist 8 new or existing businesses in the City of
Ithaca
3. Leverage $2,000,000 in private investment
4. Fill 3 vacant commercial storefronts in pedestrian‐oriented commercial districts
5. Invest in job training/job placement projects resulting in permanent employment
for 15 persons
Carried Unanimously 5‐0
VII. Other New/Old Business
A. Staff Report
1. Southwest Area
Bohn summarized the findings of the recently completed McCormack Baron
Salazar (MBS) report that was presented to Common Council on 7/6/11. In
short, given the constraints associated with the area, MBS does not believe the
City’s goals for a 600‐unit mixed‐use/mixed‐income residential development on
the site can be achieved. According to the MBS report, the most significant
obstacle is the determination by the U.S. Army Corps of Engineers that major
portions of the area are wetlands and subject to the Clean Water Act. Other
complications include subsoil surface conditions, some modest environmental
concerns, and the fact that one of the major access roads to the site, Fairgrounds
Memorial Parkway, is privately owned.
Bohn indicated there has also been significant ongoing discussion about where
dredging remnants from the inlet and the creeks should be moved to. In the
end, the only site that could be agreed on was the Southwest Area, even though
it is not considered ideal. The dredge spoils site will be at least 20 acres in size.
IURA EDC Minutes
August 9, 2011
Page 8 of 9
The disposition of the Southwest Area now has to be re‐considered from the
beginning. The DEC should be responsible for paying for the dredging, but has
steered clear of making financial commitments for dredging. Without the
dredging, the City will lose valuable navigable waterways and increase the risk of
flooding.
In short, the site will not be available for new development in the short‐term.
One suggestion was to move the Newman Municipal Golf Course to the
Southwest Area and redevelop the waterfront golf course site, however the golf
course site is subject to flooding.
MBS did mention in its report that 200 units of housing may be possible for the
Southwest Area, but it would be very difficult to attract people, without any
direct connections to surrounding neighborhoods.
In response to a question about the IURA’s role in the project, Bohn responded
that it was envisioned that the IURA would take ownership of the areas targeted
for development to negotiate property sales to preferred for‐profit or non‐profit
developers for specified end uses to implement the City’s vision for the site.
2. NYS Regional Economic Development Councils
No report was presented.
3. Emerson
Bohn reported that tours of the Emerson Power Transmission site have been
conducted for prospective developers, although Emerson concluded the initial
round of prospective developers was not suitable. The most recent developer to
visit the site possesses considerable available financing capital and has been
involved with a similar redevelopment project in the Capital region. Bohn noted
that Emerson’s approved clean up plan only seeks to clean up the site for
industrial use; however, most prospective developers have identified
commercial and residential use of the site.
4. Ithaca Falls Overlook
Bohn indicated that the City has retained Barton & Loguidice to conduct an
environmental investigation and develop a remediation plan for the City’s one‐
acre Ithaca Falls Overlook parcel that adjoins the privately‐owned Ithaca Gun
parcel. Developer Frost Travis is committed to developing the private site for a
45‐unit residential project subject to clean up of the City site.
B. Other
1. CAPER
IURA EDC Minutes
August 9, 2011
Page 9 of 9
Bohn remarked that the City is required by the U.S. Department of Housing and
Urban Development (HUD) to report annually on its progress in implementing its
Consolidated Plan. The report, known as the Consolidated Annual Performance
and Evaluation Report (CAPER), will be submitted to HUD on September 23,
2011. The report is available for public comment from September 3‐22, 2011 at
the IURA’s offices and any Committee members who would like to review it are
welcome to.
2. e2e Materials, Inc.
Tegan reported that e2e Materials, Inc. is doing very well, producing products
and making shipments in conjunction with two partners, and it is committed to
looking for a larger production space (as much as 100,000 square feet).
VIII. Next Meeting Date: September 13, 2011
IX. Adjournment
The meeting was adjourned by consensus at 4:50 P.M.
END
Minutes prepared by C. Pyott, edited by N. Bohn.
j:\community development\admin files\minutes\edc\2011\8august\edc minutes 08-09-11 - draft nb.doc