HomeMy WebLinkAboutMN-IURAED-2012-06-19Approved 9/11/12
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, June 19, 2012
Common Council Chambers, 3rd Floor, City Hall, Ithaca, NY
Present: Doug Dylla, Leslie Ackerman, Martha Armstrong, Ayana Richardson
Absent: Jennifer Tegan
Staff: Nels Bohn, Phyllisa DeSarno, Charles Pyott
Guests: Gary Ferguson, Executive Director, Downtown Ithaca Alliance (DIA)
Heidi Brown & Olivia Ashline‐Royale, Owners‐Operators, The Art and Found
I. Call to Order
Chairperson Dylla called the meeting to order at 3:36 P.M.
II. Agenda Additions/Deletions – None
III. Public Comments (3‐minute maximum per person) ―None
IV. Review of Meeting Minutes: May 8, 2012
Richardson moved, seconded by Ackerman, to approve the May 8, 2012 meeting
minutes, with no modifications. Carried Unanimously 4‐0
V. Community Lending
A. Request from The Art and Found, Partnership To Be Formed Between Heidi
Brown & Olivia Ashline‐Royale, for Loan Assistance to Start Up & Operate The Art and
Found, a Retail Clothing Business, at 171 The Commons (CD‐RLF #33)
Brown and Ashline‐Royale presented a general overview of their loan application and
business plan.
Bohn indicated the applicants are the grand prize winners of the DIA’s “Race for the
Space” contest for attracting new businesses downtown. They will receive their first year’s
rent for free, as well as $10,000 in advertising, various professional services, and
technical assistance, among other benefits.
IURA EDC Minutes
June 19, 2012
Page 2 of 9
Bohn noted the primarily underwriting concern is the applicants’ lack of personal
financial resources, so there is little available cash/collateral. They also have
comparatively little bricks and mortar retail experience. Bohn noted, however, that the
“Race for the Space” package significantly mitigates the risk of the loan for the IURA. He
added that the applicants submitted a very strong, detailed business plan, which did not
rely on overly aggressive sales projections. They also did not lock themselves into
excessive up‐front inventory expenditures because a significant amount of inventory will
be provided on consignment. Bohn observed that the applicants’ target market
demographic is principally made up of college students and young women, which is
consistent with the DIA’s economic development objectives for the downtown area to
attract more college students.
With an IURA loan amount of $15,000, the endeavor is projected to create 2.5 full‐time
equivalent (FTE) positions. Bohn noted that the IURA loan should be structured to lend
to a yet to be established partnership or LLC so any personal credit issues of the owners
would not imperil the resources of the business.
Ackerman asked if it would be explicitly stipulated that it must be an LLC (limited liability
company), as opposed to a simple partnership. She observed there is no formal step is
necessarily required to form a simple partnership.
Bohn responded that the IURA’s consultant indicated that a partnership could be
acceptable pursuant to a written partnership agreement. The important issue is that
there is a legal framework in place to protect the business against personal liabilities of
the individual owners. Bohn will confirm with the IURA attorney as to what would be
required.
As a DIA Board member, DeSarno noted that she actively participated in the review of
all contest applications. (A total of 28 applicants was reviewed, with 14 interviewed.)
She remarked that the applicants’ presentation, business plan, and social media skills
were judged to be outstanding.
Ferguson noted that the DIA likes the use to which the applicants are putting the space;
it had actively been seeking an apparel store downtown. He stressed the DIA is fully
committed to the applicants’ success, which the technical assistance package will go a
long way towards ensuring.
Ashline‐Royale remarked the applicants have also been working actively with a small
group of advisors; and they have also benefited from strong sales of their products at
various large local public events (e.g., Ithaca Apple Harvest Festival, Ithaca Festival, etc.).
IURA EDC Minutes
June 19, 2012
Page 3 of 9
Dylla asked if the fund disbursement would be delayed until the partnership or LLC had
been formed. Bohn replied, yes, that is proposed to be a closing condition.
Ashline‐Royale indicated it is their plan to form the LLC within the first year of
operation.
Richardson moved, seconded by Ackerman:
CD‐RLF – Loan Assistance for The Art and Found
Retail Clothing Business (CD‐RLF #33)
Whereas, on May 24, 2012, The Art and Found, a Limited Liability Company (LLC) to be
formed by Heidi Brown and Olivia Ashline‐Royale applied for $15,000 of loan
assistance to start‐up and operate a retail clothing business at 171 The Commons,
Ithaca, NY, 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 Art and Found was a grand prize winner in the Downtown Ithaca
Alliance’s Race For the Space competition to attract new businesses downtown, and
will receive a package of non‐cash assistance valued at over $50,000, including free
rent for one year, and
Whereas, Art and Found’s target market is young women, particularly college
students, and inventory will consist of clothing and accessories produced by the
partners (20%), consignments from artisans who sell online through Etsy.com (50%)
and purchased inventory (30%), and
Whereas, the proposed uses of project funds are:
$20,500 inventory
$7,985 furnishings, fixtures & equipment
$1,790 supplies
$1,425 professional fees
$700 financing expenses
$8,650 start‐up and working capital
$41,050 Total, and
IURA EDC Minutes
June 19, 2012
Page 4 of 9
Whereas, the proposed sources of project funds are:
$5,000 Cash equity
$11,050 In‐kind equity
$10,000 IndieGoGo capital campaign
$15,000 IURA loan
$41,050 Total, and
Whereas, CD‐RLF financing policy establishes maximum loan amount of $50,000 for a
retail business project and requires compliance with the Community Development
Block Grant (CDBG) public benefit test to generate at least one FTE job for every
$35,000 of assistance, and
Whereas, the project is projected to create two and one‐half (2.5) full‐time equivalent
(FTE) employment positions of which at least 51% will be filled by low‐ and moderate‐
income persons , thereby satisfying the CDBG public benefit test, and
Whereas, The Art and Found is a women‐owned business, and the IURA encourages
development of minority‐ and women‐owned businesses, and
Whereas, the project implements IURA policy to create new employment
opportunities, facilitate expansion of business activity, expand the commercial tax
base, and fill vacant storefronts, and
Whereas, the proposed business will locate in an existing retail storefront and IURA
funding will not be used for any construction activities, therefore the project is a
categorically excluded activity pursuant to 24 CRF 58.35(b)(4) of the National
Environmental Protection Act (NEPA) and a Type II action under the City of Ithaca
Environmental Quality Review Ordinance, and is not subject to further environmental
review, and
Whereas, at their June 19, 2012 meeting, the IURA Economic Development Committee
reviewed the loan application, a credit analysis 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 approves a loan from the Community Development
Revolving Loan Fund in accordance with the loan application, and supplemental
submissions, subject to the following terms:
IURA EDC Minutes
June 19, 2012
Page 5 of 9
Borrower: The Art and Found, a partnership to be formed between Heidi
Brown and Olivia Ashline‐Royale
Loan Amount: Up to $15,000
Project: Start up and operation of a retail clothing business at 171 The
Commons, , Ithaca, NY
Total Project Cost: $41,050
Projected Use of IURA
Funds:
Non‐construction project costs, including Inventory, FF&E, &
financing fees
Term: 5 years and 3 months
Interest Rate: 4% annually, reset to 3% 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.
Repayment: Interest‐only payments for 3 months, then level monthly
principal and interest payments due to fully amortize the loan
over the remaining 5 year term (approximately $277/month).
Collateral: 1st lien on all business assets of The Art and Found to include
accounts, inventory, furniture, fixtures and equipment now
owned or hereinafter acquired.
Guarantor(s): Personal guarantees of Heidi Brown and Olivia Ashline‐Royale,
each individually.
Job Creation Requirement: Creation of at least two and one‐half (2.5) full‐time equivalent
employment positions of which at least 51% must be held by
low‐ and moderate‐income persons.
Conditions: Condition for loan closing:
1. Creation of an LLC including an operating agreement
identifying contributed equity.
2. Submission of lease that provides site control for a
minimum of five (5) years.
Condition for loan disbursement:
1. Documentation that at least $15,000 in match cash
funding has been secured.
Reporting: 1. Annual submission of profit & loss statement for Art and
Found verified by federal income tax returns of each
partner
2. Documentation of match funding
3. Job reporting
IURA EDC Minutes
June 19, 2012
Page 6 of 9
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
B. Loan Pipeline
Neighborhood Pride Grocery Store
Bohn announced that staff has been seeking more information from the owners, so it
can move forward with the loan application. IURA now has the loan documents for the
primary $1.5 million loan for the project from Square 1 bank. Bohn recommends that
the IURA would review any forthcoming loan application as though the store were at
the lower end of its sales projections ($3.5 million). The main question outstanding is
what factors have changed in the 1½ years since the store initiated its funding search
and how the income and expense projections and staffing plan are modified to reflect
an assumed lower sales level.
Bohn added that the store is also negotiating with the Cornell Cooperative Extension of
Tompkins County (CCE) for its use of 4,000 square feet in one portion of the building.
Potential “Race for the Space” Contestant Funding Application
Bohn announced a second “Race for the Space” contest winner may be applying to the
IURA for funding assistance of some kind. They will be moving into a refurbished
unused portion of The Ithaca Journal building. Since it is a job‐creating start‐up
enterprise, it would likely be eligible.
Potential African Food Market Funding Application
Bohn noted another potential funding applicant may approach the IURA for funding
assistance, for an African grocery and take‐out store. The potential applicant needs to
finalize the site choice and primary financing plan beforehand.
IURA EDC Minutes
June 19, 2012
Page 7 of 9
VI. Other New/Old Business
A. Annual Election of Committee Vice‐Chairperson & Recommendation to IURA of
Chairperson
Ackerman moved, seconded by Richardson:
2012 Selection of Officers of IURA Economic Development Committee
Whereas, the IURA By‐laws provide that the committee membership shall elect its
own committee Vice‐Chairperson and nominate a candidate for committee
Chairperson for consideration by the Agency, and
Whereas, per the bylaws, an Agency member shall fill either the committee
Chairperson or committee Vice‐Chairperson position, and
Whereas, officers of each committee serve a one‐year term, but continue to hold
office until their successor is selected or appointed, and
Whereas the IURA Economic Development Committee is composed of the following
members:
• Leslie Ackerman
• Martha Armstrong
• Doug Dylla
• Ayana Richardson (Agency member)
• Jennifer Tegan, and
Whereas, at their June 19, 2012 meeting, the IURA Economic Development Committee
discussed this matter; now, therefore, be it
RESOLVED, that the IURA Economic Development Committee nominates Doug Dylla
to serve as the Economic Development Committee Chairperson, and be it further
RESOLVED, that the IURA Economic Development Committee elects Ayana Richardson
to serve as the Economic Development Committee Vice‐Chairperson.
Carried Unanimously 4‐0
IURA EDC Minutes
June 19, 2012
Page 8 of 9
B. Accept Conveyance from City of Ithaca of Approximately 6‐Acre Parcel Located At
Southerly End of Cherry Street
Bohn noted that Common Council approved the conveyance of a 6‐acre parcel of an
existing 8.25‐acre lot to the IURA, with guidelines that call for the issuance of an RFP to
sell the property for an economic development use of the property, for the resultant
use to be taxable, and for the sale price to be fair‐market value.
Dylla asked if the easement for the alignment of a future waterfront trail to connect to
the Black Diamond Trail lies outside the portion being conveyed to the IURA, to which
Bohn replied, yes. He added that the property line of the IURA property is 95’ from the
top of the bank at the flood control channel. Concerns have definitely been expressed
that the Black Diamond Trail be protected he noted.
Dylla asked if the IURA could require a potential developer to build a portion of the
Black Diamond Trail. Bohn replied, conceivably, although the purchase price would
probably be lowered, as a result. He added that particular segment of the Black
Diamond Trail would not get activated at a high level until a bridge is constructed across
the Flood Control Channel.
Bohn noted that staff will begin the process of drafting the RFP, which the EDC would
review at its next meeting. A scoring system for the responses would be generated. He
added that the IURA will most likely receive other City properties in similar fashion.
Dylla observed that the property is currently zoned industrial, but could possibly be
developed for mixed‐use. Bohn responded, yes, that was the Common Council’s intent.
If the IURA decides it would only like to see a residential use on the site, it should
communicate this to Council.
Bohn noted that Council’s approval of the sale was not unanimous, in large part because
both the Natural Areas Commission (NAC) and Conservation Advisory Council (CAC)
strongly advocated the property be preserved as open space; so there is some
sensitivity to that kind of issue, in this instance.
Dylla remarked he would be personally open to seeing a broader variety of uses on the
property.
IURA EDC Minutes
June 19, 2012
Page 9 of 9
Richardson moved, seconded by Ackerman:
The IURA Economic Development Committee votes to recommend acceptance of the
transfer of a 6‐acre portion of the 8.25 acre parcel located at the southerly end of
Cherry Street (Tax Parcel #100.‐2‐1.2) to the Ithaca Urban Renewal Agency for the
purpose of issuing an RFP for sale of the property to a purchaser committing to
undertake an economic development project.
Carried Unanimously 4‐0
C. Modification of 2013 HUD Entitlement Grant Review Process
Bohn remarked that the last funding assistance review cycle elicited several suggestions
for how to improve the process, including a suggestion to simplify the process by
bringing the decision‐makers together earlier in the cycle. It was ultimately decided to
recommend formation of a Committee of the Whole of the IURA along with
representation from the EDC and Neighborhood Investment Committee (NIC) to review
the funding applications.
Armstrong suggested that any applications that include an internship/job training
component be ranked using a single consistent scoring system and that the IURA seek to
leverage existing job training resources rather than create new programs.
D. Review of Loan & Lease Payment Reports
Bohn announced all loan recipients and lessees are current on their obligations,
including Diane’s Downtown Automotive, which had been experiencing difficulty earlier
in the year, but which now seems capable of paying a reduced monthly payment. Lot 10
reported strong sales in their early months of operation.
VIII. Adjournment (Next Meeting Date: 3:30 PM, Tuesday, June 12, 2012)
The meeting was adjourned by consensus at 4:40 P.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.