HomeMy WebLinkAboutMN-IURAED-2013-10-08Approved: 11/12/13
108 E. Green Street
Ithaca
Urban
Renewal
Agency
Ithaca, New York 14850
(607) 274-6559
(607) 274-6558 (fax)
MINUTES
ITHACA URBAN RENEWAL AGENCY
Economic Development Committee (EDC)
3:30 PM, Tuesday, October 8, 2013
Common Council Chambers, 3rd Floor, City Hall, Ithaca, NY
Present: Doug Dylla, Chris Proulx, Heather Filiberto, Heather Harrick, Leslie Ackerman,
Jennifer Tegan
Excused: None.
Staff: Nels Bohn, Charles Pyott
Guests: Jonathan (Jay) E. Gould, Perfect Screen Printers (PSP) Unlimited
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: July 15, 2013 & August 27, 2013
Ackerman moved, seconded by Harrick, to approve the July 15, 2013 minutes, with
three modifications. Carried Unanimously 5‐0.
Harrick moved, seconded by Proulx, to approve the August 27, 2013 minutes, with no
modifications. Carried Unanimously 5‐0.
V. Property Disposition
A. Cherry Street Industrial Park — Modify Lease with Jonathan Gould to Authorize
Early Exercise of Option to Acquire Tax Parcel #96.‐2‐1.21 at 245 Cherry Street
Bohn noted indicated he recently received an inquiry from Jay Gould’s attorney about
the subject property, which has been vacant ever since Gould moved his business to
Lansing, NY. Gould intends to move Perfect Screen Printers back to the 245 Cherry
Street location and acquire the building. He requests approval to purchase the property
early, under the existing 23‐year lease/purchase agreement.
IURA EDC Minutes
October 8, 2013
Page 2 of 5
In the past, Bohn noted, the IURA has generally agreed to these kinds of requests on a
discretionary basis. Gould is offering $12,000 (the pre‐set buyout amount) for the
parcel and asks that the IURA waive any pre‐payment penalties and future rent. Bohn
drew Committee members’ attention to the present‐value analysis that was generated.
The principal challenge associated with the proposal would be how to calculate the
appropriate discount rate, since the IURA’s opportunity costs differ from the applicant’s.
Bohn noted he very much supports selling the property, since the IURA gains little by
serving as the landlord after the building after the initial five years to ensure that a
building gets constructed.
Gould indicated he plans to expand the existing building and return his 14 staff to
Ithaca, since Perfect Screen Printers performed very well at the 245 Cherry Street
location prior to his move to the Village of Lansing. He stressed he would prefer to
receive a discount on the sale price ― when he originally bought it in the mid‐1990s, it
was totally undocumented, which cost several thousand dollars to remedy (e.g.,
mapping, etc.) in order to qualify for a Small Business Administration (SBA) loan. He can
provide documentation of the additional costs he incurred through his attorney.
Dylla asked how many staff Perfect Screen Printers employs. Gould replied, 14 staff.
Ideally, he would employ a few more at the new location.
Dylla asked Bohn what the title pay‐off amount would be. Bohn replied, approximately
$16,500. Bohn added that he did, in fact, hear from a former IURA Board member that
there had originally been a complication with the sale of the property and some
additional costs were incurred (circa 1995); however, the property file does not contain
much information. Bohn noted the IURA Board would need to approve the action (but
not Common Council). Dylla asked if IURA is bound to the calculated pay‐off amount.
Bohn replied, no, the IURA has some discretion.
Dylla asked if any stipulations would be made regarding the applicant’s employment level.
Bohn replied there are no stipulations in the current lease and no stipulations have been
proposed. Gould added that his staff earns a minimum of $10/hour, while most of them
earn $15‐16/hour, including health insurance benefits. He remarked he has been in
business for 45 years. Most of his staff have been with the company for 8‐15 years.
Ackerman asked if the original agreement’s terms provide any guidance into how to
handle the current request. Bohn replied that the original agreement assumes a pay‐
out at the end of the lease in 2018, but there is no pre‐established pre‐payment penalty;
and the land purchase value was linked to the land value at the time‐of‐sale. Bohn
observed that most of the Cherry Street properties have now been bought out (some
early, some not). It would definitely be helpful to have documentation that validates
the applicant’s claims. The IURA generally tries to find a middle ground, between the
historic rate and what the owner would find a use for.
IURA EDC Minutes
October 8, 2013
Page 3 of 5
Bohn noted that, should the buyout price not be acceptable, the proposed resolution
authorizes a mortgage be placed on the leased property to allow the building expansion
and business relocation to move forward.
Dylla asked if IURA administrative costs would be covered under the present‐value
analysis. Bohn replied he did not calculate that figure, since the sale would in all
likelihood save the IURA money on administrative costs in future years.
Proulx asked what the City’s tax revenue on the property would be. Gould replied,
approximately $4,000/year. Bohn observed that probably represents a combined City,
County, and Ithaca City School District assessment.
Bohn indicated that without additional documentation it is difficult to make a definitive
determination of the absolute fairest price; however, he could envision moving towards a
higher discount rate and thereby a lower buy‐out price given the re‐investment that would
be made in the property.
(Jennifer Tegan arrived at 3:56 p.m.)
Dylla asked if Gould would accept a figure of $14,225 for the sale price. Gould replied, yes.
Moved by Proulx, seconded by Harrick:
Cherry Street Industrial Park ― Modify Lease with Jonathan Gould to Authorize
Early Exercise of His Option to Acquire Tax Parcel #96.‐2‐1.21 (245 Cherry Street)
WHEREAS, the Ithaca Urban Renewal Agency (IURA) leases an approximately ½ acre
parcel in the Cherry Street Industrial Park located at 245 Cherry Street (tax parcel #96.‐
2‐1.21) to Jonathan Gould (Gould), and
WHEREAS, the 23‐year lease extends from November 8, 1995 until November 8, 2018
at an annual rent of $1,140 with an option for the lessee to acquire the property at the
end of the lease for $12,014.65, and
WHEREAS, on September 3, 2013, Gould requested authorization for early exercise of
the option to purchase the premises for a lump sum payment of $12,000 to implement
a plan to expand the building by $1,375 square feet, relocated PSP Unlimited, and its
14 employees, back to 245 Cherry Street, and
WHEREAS, on October 7, 2013, Gould requested that the IURA consent to grant a
mortgage to Tompkins Trust Company on Gould’s leasehold interest in the premises to
secure a loan in the amount of $220,000 in the event the buy‐out price is not financially
feasible, and
IURA EDC Minutes
October 8, 2013
Page 4 of 5
WHEREAS, the 3,692 square foot building on the premises has remained vacant since
PSP Unlimited moved to Craft Road in the Village of Lansing, and
WHEREAS, the IURA seeks to maximize investment and employment activity in the
Cherry Street Industrial Park, and
WHEREAS, past IURA actions to allow early exercise of the purchase option have
calculated the pay off amount based on the net present value of the future lease
payments to be foregone and the future lump sum payment, and
WHEREAS, considering the $12,014.65 option price and the net present value of future
rent due, the Economic Development Committee recommends setting the final
purchase price at $14,225, and
WHEREAS, on September 11, 2012, the Economic Development Committee reviewed
this matter and recommended the following; now, therefore be it
RESOLVED, that the IURA hereby approves the request from Jonathan Gould to modify
the lease agreement for tax parcel #96.‐2‐1.21 (245 Cherry Street) to allow early
exercise of the purchase option at a final price of $14,225, and be it further
RESOLVED, that should Jonathan Gould elect not to exercise early purchase of the
property at the above payoff price, the IURA hereby consents to Jonathan Gould
granting a mortgage to Tompkins Trust Company in an amount up to $220,000 on his
leasehold interest in the 245 Cherry Street lease premises, and be it further
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, and be it further
RESOLVED, Lessee shall be responsible to pay actual IURA legal fees associated with
the lease modification or consent to grant a mortgage on IURA premises.
Carried 4‐0
(Dylla & Tegan abstaining.)
B. Cherry Street Industrial Park Expansion— Response to Request for Expressions of
Interest (RFEI)
Bohn announced that the RFEI was issued, advertized all summer, and local property
owners, businesses, and real estate brokers were contacted, but not a single response
was received.
IURA EDC Minutes
October 8, 2013
Page 5 of 5
As a result, Bohn now recommends hiring a real estate broker to actively market the
property, with the same conditions. Committee members agreed. Bohn indicated he
would solicit proposals from commercial real estate brokers for review by the
committee.
VI. Community Lending
A. Review of September 2013 Lease & Loan Repayments Report
State Theater
Bohn noted the theater is a month late in its payments, which is not ununsual since this
is the time of year it has the most difficulty covering all its costs before the heavy fall
season begins. He expects it to become current soon.
B. Update on Various IURA‐Assisted Community Lending Projects
― EXECUTIVE SESSION ―
Harrick moved, seconded by Ackerman, to open the Executive Session at 4:01 p.m.
Carried Unanimously 6‐0
No action was taken during the Executive Session.
― Executive Session concluded at 4:17 p.m. ―
C. Loan Pipeline Report
None.
VII. Staff Report
None.
VIII. Other Business
None.
IX. Adjournment (Next Meeting Date: 3:30 PM, Tuesday, November 12, 2013)
The meeting was adjourned by consensus at 4:18 P.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.