HomeMy WebLinkAboutMN-IURAED-2012-11-13Approved: 12/18/12
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, November 13, 2012
Common Council Chambers, 3rd Floor, City Hall, Ithaca, NY
Present: Doug Dylla, Ayana Richardson, Leslie Ackerman, Martha Armstrong, Jennifer Tegan
Absent: None.
Staff: Nels Bohn, Phyllisa DeSarno, Charles Pyott
Guests: Olivia Ashline‐Royale, The Art and Found, LLC
John, Angelo, Irene, & Cindy Petito, Neighborhood Pride, LLC
John Fry, Retail Store Counselor, Associated Wholesalers, Inc. (AWI)
Anthony Borelli, New Business Development, Associated Wholesalers, Inc. (AWI)
I. Call to Order
Chairperson Dylla called the meeting to order at 3:32 P.M.
II. Agenda Additions/Deletions ― None
III. Public Comments (3‐minute maximum per person) ― None
IV. Review of Meeting Minutes: September 11, 2012
Richardson moved, seconded by Ackerman, to approve the September 11, 2012
minutes. Carried Unanimously 5‐0
IV. Community Lending
A. Request from The Art and Found, LLC to Modify Executed Loan Agreement to
Recognize Olivia Ashline‐Royale Becoming Sole Member & Releasing Heidi Brown’s
Financial Guarantee (CD‐RLF #33)
Bohn indicated the purpose of the resolution was to release Heidi Brown from the
personal guarantee associated with the loan agreement, to permit Olivia Ashline‐Royale
to take sole ownership of the business.
IURA EDC Minutes
November 13, 2012
Page 2 of 9
As part of buying out Heidi Brown’s half of the business, Bohn noted, Brown will receive
$3,000 up‐front, while Olivia Ashline‐Royale will pay the difference of $2,750, over 24
months.
Ashline‐Royale remarked it was a mutually agreed‐upon decision on the part of the
current owners, to give Heidi Brown the freedom to pursue other endeavors.
Ackerman moved, seconded by Richardson:
Modification #1 to IURA Loan to The Art & Found, LLC (CD‐RLF #33)
Whereas, on August 29, 2012, the IURA issued a $15,000 loan to The Art and Found, a
Limited Liability Company (LLC) formed by Heidi Brown and Olivia Ashline‐Royale to
start up and operate a retail clothing business at 171 The Commons, Ithaca, NY, and
Whereas, the loan is secured by a 1st security lien on all business assets including
inventory, and personal guarantees of Heidi Brown and Olivia Ashline‐Royale, and
Whereas, The Art and Found business has been operating since September 2012, and
Whereas, on November 6, 2012, The Art and Found submitted a request to the IURA
for a loan modification to facilitate a split between the two founding members with
Olivia Ashline‐Royale becoming the sole member of the LLC, and
Whereas, the proposed modification to the Operating Agreement for The Art and
Found, LLC calls for Ms. Ashline‐Royale to assume all liability for the IURA loan and a
release of Heidi Brown’s financial guarantee to repay the IURA loan, and
Whereas, The Art and Found, LLC indicates that the change in ownership will be
beneficial to the retail business, and
Whereas, at its November 13, 2012 meeting, the IURA Economic Development
Committee reviewed this matter and recommended the following; now, therefore, be
it
RESOLVED, that the IURA hereby approves the request from the Art and Found, LLC
for a modification to the loan to release the personal guarantee of Heidi Brown to
secure repayment of the IURA loan to The Art and Found, LLC, and be it further
IURA EDC Minutes
November 13, 2012
Page 3 of 9
RESOLVED, that the IURA Chairperson, upon the advice of IURA legal counsel, is
hereby authorized to execute all necessary and appropriate documents to implement
this resolution.
Carried Unanimously 4‐0
B. Request from Neighborhood Pride, LLC and First & Adams, Inc. for Loan Assistance to
Open & Operate Neighborhood Pride Grocery at 210 Hancock St. (CD‐RLF #32)
J. Petito and A. Petito recapitulated the salient details and history of the proposed
project.
(Martha Armstrong arrived at 3:42 p.m.)
J. Petito remarked the store’s management team has considerable combined experience
in retail and grocery store management. In addition, the Associated Wholesalers, Inc.
(AWI) support staff assisting the store have significant experience consulting for grocery
stores. J. Petito indicated his own experience qualifies him to manage the store and
oversee department heads. He added that store sales are expected to rise, garnering a
significant increase in profit after several years. The applicants will also be renting the
6,000 SF retail space on the other side of the building, most likely to the Cornell
Cooperative Extension of Tompkins County (CCE). Should that not work out, they have
an alternative tenant in mind.
A. Petito remarked that he and his family have a tremendous of amount of experience
and familiarity with the community. He is absolutely certain that the store will be
successful.
L. Ackerman observed it will be critically important for the store to meet its profitability
‘break‐even point’, which may be a challenge given the extent of local competition (e.g.,
GreenStar, Wegmans, Aldi’s, etc.). She asked what the plan is for reaching the store’s
target market.
J. Petito responded they will be working with Rudy Paolangeli (RP Media) for the radio
ads and Cayuga Radio for the advertising plan. Over the first few weeks, a direct‐
marketing house‐to‐house campaign will be implemented. In addition, the store will be
promoting its web site, Facebook page, and other web resources.
IURA EDC Minutes
November 13, 2012
Page 4 of 9
Armstrong asked AWI how it would help if the applicant experiences difficulty achieving
its target sales. Borelli responded that AWI has a lot at stake in Neighborhood Pride as a
new cooperative member of AWI, so it wants to do everything it can to make it viable.
Fry added that AWI has considerable resources it can bring to bear. It has a whole
marketing department available to assist the store (e.g., data mining, outreach, etc.)
along with specialist in each department (e.g., meat, produce, deli, etc.).
Armstrong asked if AWI could ‘back‐stop’ the management at the store, if need be. Fry
replied, yes.
Dylla asked if AWI envisioned spending a defined number of hours per day on the store.
Borelli replied, it would be based on need. Dylla followed up by asking if AWI would be
monitoring financials, as well. Borelli replied, yes, the applicant permitting.
Dylla asked what training the applicant had already received. Fry replied that he
brought six people to the store to train the staff. Borelli added that J. Petito has also
been to five trade shows, seminars, and has been communicating with some of AWI’s
other customers.
Tegan asked what makes the applicant confident it can succeed, given the saturation of
the market. Borelli replied that the applicant team is clearly passionate about the
project ― and the location itself should help considerably to ensure its success. In light
of the ~$4M sales level the previous P&C store was able to maintain, Borelli replied, he
is confident the superior Neighborhood Pride store should be able to capture at least
that share of the market, especially with the enthusiastic support and anticipation the
local community has so consistently expressed.
Dylla asked if AWI could commit to defined minimum number of hours per month it
would be willing to put in, if the store experiences problems with its finances, sales, etc.
Fry replied that the plan is to provide a lot of support up to and after the opening,
probably representing an average of 2 days/week for the first 3‐4 months.
Dylla asked about the status of the CCE lease portion of the project. J. Petito replied
that CCE has most of the funding in place; it is just waiting for the final pieces to fall in
place and is currently designing a build‐out of the lease space.
Ackerman suggested the applicant gather advice from the community itself, as well.
The richer and more interactive a relationship it has with the community, the best
chances of success it will have. J. Petito replied that he has been meeting with
community members about a variety of issues and he will certainly continue to plan on
doing that.
IURA EDC Minutes
November 13, 2012
Page 5 of 9
Bohn concluded the discussion by noting that IURA consultant, Harry Sicherman, had
reviewed the business plan and suggested the store establish a line of credit with
itslocal lender, which the applicant is now working with M&T Bank to do.
Armstrong moved, seconded by Richardson:
CD‐RLF ― Loan Assistance for Neighborhood Pride Grocery Store (CD‐RLF #32)
Whereas, on March 30, 2011, Neighborhood Pride, LLC (NP) requested $100,000 in
loan assistance to re‐open and operate the former 25,000 SF P&C grocery store at 210
Hancock Street, Ithaca, NY, which parcel is owned by First & Adams, Inc. (F&A) and
Whereas, both NP and F&A are controlled by the Petito family, and
Whereas, the Petito family propose to re‐open a 19,000 SF family‐owned and family‐
operated grocery store and lease out the remaining 6,000 SF to Cornell Cooperative
Extension, 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 loan application was placed on hold by the committee until the
applicant secured primary financing for the project, and
Whereas, in January 2012, Square 1 Bank committed to loan $1.6 million for the
project, and
Whereas, the Square 1 Bank loan closed on May 22, 2012, and
Whereas, final requested supplemental loan information was provided to the IURA in
late August, and
Whereas, the proposed uses of project funds are:
$75,000 SBA fee & closing costs
$1,020,816 furnishings, fixtures & equipment
$671,000 building renovations
$300,000 inventory
$171,000 working capital
IURA EDC Minutes
November 13, 2012
Page 6 of 9
$35,000 interim interest – constr. phase
$5,000 construction monitoring
$2,277,816 Total, and
Whereas, the proposed sources of project funds are:
$1,631,000 Square 1 Bank
$546,816 equity
$100,000 IURA loan
$2,277,816 Total, and
Whereas, CD‐RLF financing policy establishes maximum loan amount of $50,000 for a
retail business project unless the project provides exceptional public benefits 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 nineteen (19) 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, all full‐time employment positions (except cashiers) are projected to receive
at least a living wage; and
Whereas, reopening the grocery store will provide extraordinary public benefit by
improving the physical, social and economic characteristics of the neighborhood, and
Whereas, the proposed business will locate in an existing retail building 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 the loan constitutes 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 November 13, 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 (CD‐RLF) in accordance with the loan application, and
supplemental submissions, subject to the following terms:
IURA EDC Minutes
November 13, 2012
Page 7 of 9
Borrowers: Neighborhood Pride LLC & First & Adams, Inc.
Loan Amount: Up to $100,000
Project: Start‐up and operation of a retail grocery store at 210
Hancock Street, Ithaca, NY
Total Project Cost: $2,277,000
Projected Use of IURA
Funds:
Pre‐opening & working capital, financing fees &
procurement of technical assistance. Funds may not be
used for construction expenses.
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.
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).
Collateral: 1st mortgage lien on property located at 423 First Street,
Ithaca, NY, owned by First & Adams, Inc.
Guarantor(s): Personal guarantees of Angelo Petito, Irene Petito and
John Petito, each individually.
Job Creation
Requirement:
Creation of at least 19 FTE employment positions of
which at least 51% must be held by low‐ and moderate‐
income persons.
IURA EDC Minutes
November 13, 2012
Page 8 of 9
Conditions: Condition for loan closing:
1. Written confirmation of management’s commitment
to take advantage of intensive technical assistance
services offered by Associated Wholesalers Inc. to its
cooperative members, including on‐site grocery
management support services for an average of 2
days/week for approximately 3 months.
Reporting: 1. Annual submission of accountant‐prepared profit &
loss statement and balance sheet verified by federal
income tax returns
2. IURA Job reporting, including reporting on living
wages
3. Documentation of project match funding
And be it further
RESOLVED, that the IURA hereby recognizes that this project to reopen the former
P&C grocery store will likely result in an extraordinary degree of public benefit and
thereby waives the normal $50,000 loan limit for retail business loans through the CD‐
RLF, 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, and be it further
RESOLVED, that the IURA Chairperson, upon the advise of IURA legal counsel, is
hereby authorized to execute all necessary and appropriate documents to implement
this resolution.
Carried Unanimously 5‐0
Bohn remarked that the only outstanding condition for closing is “3. Submission of
revised schedule of employment positions at $3.5 million sales level.” J. Petito
responded he would submit the formal document.
Armstrong asked if the collateral property had been examined. Bohn replied, yes, and it
was deemed to be in reasonably good condition.
IURA EDC Minutes
November 13, 2012
Page 9 of 9
C. Other
None.
VI. Other Business
A. Industrial Park Activities
Bohn reported that the draft sales agreement with the City has been drafted, which
includes a condition for the elimination of any squatters on the property, which IURA
legal counsel indicated should be the City’s responsibility. IURA staff is scheduled to
meet with the City Attorney and the Mayor about how best to proceed.
Bohn announced that a local business has expressed an interest in a project at 241
Cherry Street. The Piggery is investigating the possibility of leasing an approximately
5,000 SF custom‐designed meat processing facility, including slaughtering, which is
projected to employ 8‐15 FTE personnel. IURA staff is in the process of querying City
personnel regarding the appropriateness and legality of this proposed use. No specific
ordinance(s) prohibit it.
B. Review of October 2012 Lease & Loan Payment Report
Deferred until the next meeting.
C. Common Council Actions of Interest to EDC
Deferred until the next meeting.
D. Discuss Proposed Sale of Real Property When Publicity Would Substantially Affect
Value Thereof ― Possible Executive Session Regarding Industrial Park Activities
― EXECUTIVE SESSION ―
Tegan moved, seconded by Ackerman, to open the Executive Session at 4:45 P.M.
Carried Unanimously 5‐0
No action was taken during the Executive Session.
VII. Adjournment (Next Meeting Date: 3:30 PM, Tuesday, December 18, 2012)
The Executive Session and meeting was adjourned by consensus at 5:00 P.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.