HomeMy WebLinkAboutMN-IURAED-2012-02-14Approved 4/3/12
Ithaca
Urban
Renewal
Agency
108 E. Green Street
Ithaca, New York 14850
(607) 274-6559
(607) 274-6558 (fax)
MINUTES
ITHACA URBAN RENEWAL AGENCY
Economic Development Committee (EDC)
3:30 PM, Tuesday, February 14, 2012
Common Council Chambers, 3rd Floor, City Hall, Ithaca, NY
Present: Leslie Ackerman, Martha Armstrong, Ayana Richardson, Jennifer Tegan
Absent: Doug Dylla
Staff: Nels Bohn, Charles Pyott
Guests: None.
I. Call to Order
Vice Chairperson Richardson called the meeting to order at 3:35 P.M.
II. Agenda Additions/Deletions – None
III. Public Comments (3‐minute maximum per person) – None
IV. Review of Meeting Minutes
Armstrong moved, seconded by Ackerman, to approve the minutes of the December 13,
2011 meeting, with three minor modifications. Carried Unanimously 4‐0.
V. Community Lending
A. Request for Loan Modification from Diane’s Downtown Automotive, LLC (#9, 2004
CDBG)
Bohn recapitulated the salient details of the loan modification request.
Richardson observed that multiple opportunities appear to have been missed, for
putting the applicant back on track. It would be helpful to discuss how this kind of
situation might be avoided in the future.
IURA EDC Minutes
February 14, 2012
Page 2 of 7
Bohn indicated the situation had been exacerbated by a variety of confluent factors.
Diane’s Downtown Automotive experienced a particularly bad year in 2011, with the
loss of one of its mechanics. It took several months to fully comprehend the situation
and begin to resolve the accounting discrepancies. One of the principal problems
involved the applicant’s spending an inordinate amount time operating the business,
which precluded her from performing fiscal management and planning functions for the
business. Bohn remarked IURA consultant reviewed business financials and advised
that the proposed monthly loan repayment amount appears feasible if the business
continues to fully staff the auto repair business with two full‐time mechanics, though
the business’ track record of management is not strong given the long delinquency.
Ackerman noted the applicant appears to have too many administrative staff on the
payroll.
Tegan asked if IURA staff had determined why Diane’s accounts payable has been so
large, to which Bohn replied that the applicant believes that is largely associated with
the NAPA auto parts account.
Armstrong noted the applicant should hire an accountant with good rudimentary
accounting skills to keep her on track from month to month. Tegan suggested making
this a condition of the loan adjustment resolution. Richardson added that requiring
quarterly, or possibly monthly, reports may also be worth considering. Armstrong noted
that requiring additional monthly reporting may not assist a small business owner who
lacks time to follow up on accounts payment and accounts receivables.
Armstrong remarked the proposed new loan term seems too long to her; she suggested
including language indicating the IURA would re‐evaluate the loan terms in 2‐3 years.
Bohn replied that this is entirely feasible and it could even be tied to when the original
business acquisition loan is paid off.
Armstrong observed that another resolution could be drafted to address the financial
accounting, management, and reporting areas‐of‐improvement the EDC had identified.
Other members supported the concept of offering to share the cost of establishing a
useful fiscal management system in return for receipt of a semi‐annual financials.
IURA EDC Minutes
February 14, 2012
Page 3 of 7
Armstrong moved, seconded by Ackerman:
Loan Modification to Diane’s Downtown Automotive, LLC (Project #9, 2004 CDBG)
Whereas, on May 18, 2006, the IURA issued an $80,000 loan to Diane’s Downtown
Automotive, LLC as part of a $475,000 project to acquire Eddie’s Super Station located
at 435 W. State and operate “Diane’s State Street Automotive,” a woman‐owned
service station with gasoline sales, mechanical repairs, and automotive rental, and
Whereas, a monthly loan payment of $851.39 was established to repay the 10‐year,
5% interest loan, and
Whereas, the loan remained current through mid‐2010, but went into default after
the business suffered losses, and
Whereas, management has recently grown the auto‐repair segment of the operation
and returned the business to modest profitability, and
Whereas, as of January 31, 2012, the loan is in default with an outstanding principle
balance of $54,001.46 and accrued interest outstanding of $4,050.18, for a total of
total amount owed of $58,051.64, and
Whereas, the borrower has reviewed profit/loss statements and balance sheets for
the business with their accountant and concluded that the business can afford to
resume monthly loan payments of $450, and
Whereas, the borrower requests a loan modification to reduce the loan payment to
$450 and extend out the term of the loan to amortize the loan, and
Whereas, the borrower made a full loan payment in January 2012, and
Whereas, the business generates annual sales tax to the City in excess of $20,000, and
Whereas, at their February 14, 2012, meeting, the IURA Economic Development
Committee reviewed this matter and recommended the following; now, therefore, be
it
IURA EDC Minutes
February 14, 2012
Page 4 of 7
RESOLVED, that the IURA hereby authorizes the IURA Chairperson, subject to review
by IURA legal counsel, to execute a modification to the loan agreement and
promissory note with Diane’s Downtown Automotive, LLC to restructure monthly loan
payments due to $450/month to amortize the sum of outstanding principal balance of
($54,001.46), plus accrued unpaid interest ($4,050.18) and extend the payment
schedule to fully amortize the loan (15.5 years), and be it further
RESOLVED, that all late penalties through December 2011 be forgiven, and be it
further
RESOLVED, that the IURA reserves the right in the future to accelerate repayment of
the loan after primary business debt is retired and subject to financial feasibility, and
RESOLVED, that the Director of Community Development is authorized to issue a
commitment letter consistent with this resolution.
Carried Unanimously 4‐0
Ackerman moved, seconded by Tegan:
Technical Assistance to Diane’s Downtown Automotive, LLC (Project #9, 2004 CDBG)
Whereas, enhanced financial management and reporting can assist Diane’s State
Street Automotive, LLC (Diane’s) manage the business and identify issues and
opportunities for improving profitability of the business, and
Whereas, Diane’s has indicated a frustration with the current bookkeeping and
accounting practices, but lacks resources to invest in an upgraded financial
management system, and
Whereas, the IURA has approved a request from Diane’s to restructure the loan to
reduce monthly loan payments and extend the term of the loan, and
Whereas, enhanced financial management of the business will significantly increase
the likelihood of successful repayment of the IURA loan in full, and
Whereas, at their February 14, 2012, meeting, the IURA Economic Development
Committee reviewed this matter and recommended the following; now, therefore, be
it
IURA EDC Minutes
February 14, 2012
Page 5 of 7
RESOLVED, that the IURA hereby offers to provide 50% match funding, not to exceed
$2,500, to Diane’s State Street Automotive, LLC to hire a satisfactory
accounting/bookkeeping firm to set up and begin implementation of a financial
management system for the business that would generate BS, P&L, aging of payables
and aging of receivables reports with submission of semi‐annual June 2012 and June
2013 reports due to the IURA.
Carried Unanimously 4‐0
B. Updates on Restore NY Projects & Loan Pipeline
Petrune
Bohn noted that the Petrune clothing store is part way through the renovations of its
upper floors. A problem arose recently when the contractor, who had originally agreed
to wait for payment until receipt of Restore NY funds, purchased the House of Shalimar
building. This contractor no longer can no longer self‐finance the cost of impovements
so Petrune is seeking a bridge loan until Restore NY grant funds become available. They
have inquired to the IURA about such financing if bank financing is not available. Bohn
requested that they keep him apprised of their efforts to secure bank financing.
Ithaca Gun
Bohn reported that progress towards the remediation and redevelopment of the site is
accelerating. The privately‐owned former factory site has completed most of the
Focused Site Investigation Work Plan, which is the final phase of the cleanup. Low‐level
lead‐contaminated dust remains on the site as a result of the crushing and stockpiling
operation, which will need to be resolved. The City has completed a draft Site
Investigation Work Plan for the adjoining Ithaca Falls Overlook Site and expects to begin
site investigation this spring after DEC approves the work plan. He noted that the
Environmental Restoration Program grant funds awarded to the City for the
investigation allow investigation off‐site to assess whether any lead has migrated off‐
site or into the gorge.
Neighborhood Pride
Bohn remarked he is still awaiting a response from applicant John Petito regarding the
status of the Neighborhood Pride grocery store project. The applicant is working to fulfill a
closing checklist received from Square 1 bank, but did not receive a commitment letter or
equivalent written document. Petito reports that the Small Business Administration has
authorized the loan to advance for 7A financing.
IURA EDC Minutes
February 14, 2012
Page 6 of 7
Bohn added that he has informed Mr. Petito that as soon as they have a written loan
commitment the IURA can resume its underwriting of the $100,000 IURA loan application.
VI. Economic Development Planning
A. DIA “Race for the Space” Competition
Bohn announced that the Downtown Ithaca Alliance (DIA) is soliciting business
proposals to fill a retail (no kitchen) space in the downtown area. The best business
proposal would receive free rent for one year in a prime retail or office space, a one‐
year advertising package, design services for storefront layout and, graphic design
services, business planning and marketing assistance, quarterly monitoring visits by a
team of business operations experts, and Ithaca College intern assistance. Bohn noted
that the broader underlying goal is to identify a variety of promising leads, in addition to
finding a promising new business to fill a retail space. Bohn indicated he had spoken
with DIA Executive Director Gary Ferguson and ― if the program is successful ― it may
be possible for the IURA to provide a financing package of some kind. Bohn concluded
that the hope is that more landlords would participate in the future.
B. Identifying Technical Assistance Needs for Operating Businesses
Bohn indicated that the subject of Diane’s Downtown Automotive was discussed at the
last IURA meeting; and the Agency wanted to see what recommendations the EDC
might have for the kinds of technical assistance services should be locally available for
businesses, like Diane’s, when they experience difficulty.
Ackerman noted she had a long conversation with Eldred Harris, who is trying to put
together a master list of subject matter experts, coaches, consultants, etc., for local
businesses. Ackerman noted she has seen models of these kinds of programs in other
communities, although it is worth noting most of those kinds of programs engage their
consultants at significantly lower rates than they would ordinarily earn in their own
private practices.
Richardson noted that even just establishing some kind of modest incentive program,
involving partial reimbursement for these kinds of services, would probably make a
significant difference.
Armstrong noted that it would be most productive to identify in advance one or two
target areas of assistance that local businesses have the most trouble with and would
benefit the most from. Furthermore, limiting the program to those businesses that are
most likely going to benefit from it may be the best approach (i.e., businesses that are in
otherwise good shape, but which are struggling with only one or two aspects of their
business operations, and would be most likely to succeed).
IURA EDC Minutes
February 14, 2012
Page 7 of 7
Armstrong offered to share the master list of business experts, coaches, and consultants
they are compiling at AFCU, when it is completed.
C. 2012 NYS Regional Economic Development Council Funding Round
Bohn indicated that another round of NYS Regional Economic Development Council
funding is being launched, to be announced in late Spring. Although it certainly
represents an opportunity for the IURA, it should be noted that this round will focus on
funding shovel‐ready, capital projects that result in job creation. It is his understanding
that only bricks and mortar projects will be eligible for funding.
VII. Other New/Old Business
A. Staff Report
Bohn announced the Mayor has been nominated and elected as Chair of the IURA.
Bohn also noted the Mayor’s recent “State of the City” address to Common Council
contained numerous items which may be of interest to the Agency, which was included
in the meeting packet. The Mayor has also been appointed to serve on the Tompkins
County Industrial Development Agency (IDA) and Tompkins County Area Development
(TCAD) boards and has taken a strong interest in invigorating small business in the city.
B. Review of Loan & Lease Payment Reports
Bohn noted that the e2e Materials line item indicates a late payment, but it is in fact
now current. The State Theatre made 2 payments and believes it is now current, which
is being researched. The Bandwagon Brewery also believes it is current. The Finger
Lakes Wine Center is still restructuring itself, with an all new staff. Evaporated Metals
Film is past due on its lease payments, as is Perfect Screen Printers.
VIII. Next Meeting Date: 3:30 PM, Tuesday, March 6, 2012 (Note: No meeting on March 13th)
IX. Adjournment
The meeting was adjourned by consensus at 4:51 P.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.