HomeMy WebLinkAboutMN-IURAED-2014-10-28Approved: 12/11/14
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 28, 2014
Common Council Chambers, 3rd Floor, City Hall, Ithaca, NY
Present: Doug Dylla, Chris Proulx, Leslie Ackerman, Heather Harrick, Heather Filiberto
Excused: Jennifer Tegan
Staff: Nels Bohn, Charles Pyott
Guests: None
I. Call to Order
Chair Dylla called the meeting to order at 3:32 P.M.
II. Agenda Additions/Deletions
Bohn noted he would like to add an agenda item to discuss a technical amendment to
the promissory note for The Lofts at Six Mile Creek project. There were no objections.
III. Public Comments (3‐minute maximum per person) ― None.
IV. Review of Meeting Minutes: August 12, 2014
Proulx moved, seconded by Harrick, to approve the August 12, 2014 minutes, with no
modifications. Carried Unanimously 4‐0.
V. Community Lending
A. Amend Economic Development Financing Policy Regarding Non‐Profit Borrowers
Bohn explained that the recent HUD monitoring report recommended revising IURA
policy to address the difference in the eligibility classification between for‐profit and
non‐profit applicants, to reflect Federal regulatory language.
Ackerman noted the resolution refers to “non‐profit;” however, the term “not‐for‐
profit” may be more accurate (e.g., not‐for‐profit organizations can in fact show
earnings). Bohn replied that EDC members are free to select either term.
Dylla agreed that Ackerman’s suggestion makes sense.
IURA EDC Minutes
October 28, 2014
Page 2 of 10
Moved by Ackerman, seconded by Filiberto:
Amend IURA Economic Development Financing Policy Regarding Not‐for‐Profit
Borrowers
WHEREAS, HUD‐Buffalo conducted a monitoring review of CDBG on July 22‐23, 2014
on the economic development activities resulting in no findings and one concern, and
WHEREAS, HUD‐Buffalo recommends revising the IURA Economic Development
Financing policy to address the difference in eligibility classification between a for‐
profit and non‐profit applicants, and
WHEREAS, at their October 28, 2014 meeting the Economic Development Committee
discussed this matter and recommended the following; now, therefore, be it,
RESOLVED, that the IURA hereby amends its IURA Economic Development Policy
Guidelines and Operating Plan, which governs IURA economic development financial
assistance programs, to read as follows at section 2.3:
2.3 Eligible Uses of IURA Funds. The use of IURA funds must be eligible
pursuant to the Federal regulations governing the CDBG program if CDBG
funds are to be utilized for any portion of the IURA financing. CDBG funds may
be used for the following activities:
(a) Private for‐profit entities: IURA funds may be used for any justifiable
business purpose including, but not limited to fixed assets, current assets
including inventory and accounts receivable, permanent working capital,
acquisition of land and/or buildings, and for costs related to micro‐
enterprise start‐ups.
(b) Not‐for‐profit entities: IURA funds may be used for commercial or
industrial improvements, including acquisition, construction,
rehabilitation, or installation of commercial or industrial buildings or
structures and other related real property equipment and improvements,
including railroad spurs or similar extensions.
Carried Unanimously 4‐0
IURA EDC Minutes
October 28, 2014
Page 3 of 10
B. Commons Construction Loan Guarantee Program
Bohn explained that the City has recently been trying to address the concerns of
Commons business owners regarding the construction delay for the Ithaca Commons
Repair and Upgrade Project, which has taken significantly longer than originally planned.
The City is exploring three different ways to address their concerns: (1) finding ways to
accelerate construction as much as possible; (2) promoting the Commons construction
loan program; and (3) instituting a parking plan to provide up to two hours of free
parking to customers of ground floor businesses on the Commons at any one of the
three downtown City garages.
Bohn noted that Tompkins Trust Company (TTC) has been offering line‐of‐credit loans of
up to $50,000 to downtown businesses (interest‐only during construction and very low
interest for remainder of loan term). Five downtown businesses have taken advantage
of the program so far, which is probably fewer than had been hoped for. No applicant
has been turned down. The IURA also committed to providing a loan guarantee for
applicants who meet the borrowing standards, but lack sufficient collateral (although no
request has yet been made to the IURA).
Bohn noted that since TTC has now committed to another year of the program, it would
make sense at this time for the IURA to consider its own role in the program and
whether it would like to provide additional assistance. Bohn recommended continuing
to support the program. The IURA may also like to consider other possible forms of
assistance. Bohn observed that it appears it is those Commons businesses that rely the
most on a stable, accessible pedestrian surface that have been struggling the most.
Ackerman asked if any businesses considered applying for the program, but decided not
to since they were already struggling and did not believe they could take on more debt.
Bohn replied he feels reasonably confident that is the case.
Ackerman asked if there are any businesses which would originally have been approved
for the program, but which would no longer be considered good candidates. If so, the
IURA could probably help them on an individual basis. Bohn replied the EDC could
certainly consider recommending that approach to the IURA Board. The businesses are
always free to approach the IURA directly or the IURA could coordinate its efforts with
TTC.
Proulx asked if there is any other mechanism the IURA could use to provide assistance.
Bohn replied that since Commons businesses do not fit particularly well under the CDBG
lending model, the Revolving Loan Fund (RLF) would probably be the best option. The
current RLF balance is $684,000, so providing $100,000 in assistance to Commons
business would not be a problem.
IURA EDC Minutes
October 28, 2014
Page 4 of 10
Bohn noted the Downtown Ithaca Alliance (DIA) may be able to identify the most‐
impacted businesses.
Dylla remarked he would prefer if TTC continued to provide the underwriting.
Moved by Filiberto, seconded by Proulx, to recommend continuation of the IURA
Downtown Construction Loan Guarantee Program.
Carried Unanimously 4‐0
C. Maximum Loan Amount for Downtown Catalyst Projects
Bohn remarked there has been recent discussion about the possibility of the IURA
increasing its maximum loan amount from $150,000 to $250,000, as part of a
coordinated effort to move the Hotel Ithaca downtown conference center project
forward. The IURA would provide a $250,000 loan (with the same underwriting
standards it always employs) as part of a private‐public sector package to fill the
project’s funding gap. The project is anticipated to create 16‐24 jobs. Bohn asked if the
EDC would consider such an action. At this stage in the process, the developer just
wants to know what its options are.
Filiberto indicated she will abstain from any discussion and action on the project due to
her involvement at TCAD evaluating potential IDA incentives for the hotel/conference
center project.
Ackerman asked if increasing the maximum loan amount would only be for a one‐time
special case. Bohn replied, yes. That was the original intent.
Bohn noted that the EDC can open an Executive Session to discuss the proposal in more
detail if it chooses. Proulx responded he would definitely have a few questions about
the potential role of the investor.
Dylla asked why the IURA would not consider simply increasing the maximum loan for
all its loans. Bohn replied that would be a policy decision on the part of the IURA. The
IURA specifically established the maximum loan amount due to concerns there would be
too much demand on its resources without it.
Proulx suggested the IURA should also be examining the ratio of IURA assistance to the
overall cost of a given project. Bohn replied the IURA already does that, in some cases,
although that was not done for the Priority Business Loan Fund (PBLF). PBLF standards
dictate that IURA loan financing cannot exceed 60% of the total project cost.
IURA EDC Minutes
October 28, 2014
Page 5 of 10
― EXECUTIVE SESSION ―
Proulx moved, seconded by Ackerman, to open the Executive Session at 4:06 p.m. to
discuss the financial, credit, or employment history of a particular person or
corporation.
Carried Unanimously 4‐0
The Executive Session was closed at 4:17 p.m.
No action was taken in the Executive Session.
Moved by Ackerman, seconded by Harrick, to recommended increasing the maximum
loan amount for the Priority Business Loan Fund (PB‐LF) program from $150,000 to
$250,000.
Carried 3‐0, Filiberto Abstaining
D. Review of Selected Loan Portfolio Projects
Bohn noted the meeting packet includes a detailed update on the financial status of e2e
Materials, Inc., which periodically reports to the IURA regarding its shareholder reports,
operations, and future prospects. e2e Materials, Inc. continues to receive the financial
support of its shareholders.
E. Review of September 2014 IURA Loan Repayment Report
Bohn reported that all loan repayments are current, with the exception of: the Argos
Inn, which made a payment last month; the State Theatre, which is two months late;
and the Bandwagon Brew Pub, which is also two months late.
Bohn explained that the Bandwagon Brew Pub is in an unusual situation: it has a
$40,000 loan from the IURA and has paid all but $11,000 of it. Current IURA records
indicate the Bandwagon Brew Pub is two months late, while M&T Bank records state it
is current. Some prior payments that were received after the first of the month were
apparently applied to the interest due, rather than the principal, so M&T Bank considers
the loan current. M&T Bank is correct in stating that the Bandwagon Brew Pub is
current on its interest, but has confirmed that they are behind on its principal payments.
M&T Bank has indicated it is willing to reverse the way it has applied the payments; or
the IURA can consider extending the loan schedule an extra two months (Bohn’s
recommendation). Bohn added the proposed action would only be a technical
amendment, since it would only be extending the payment schedule two months, and
not changing the fundamental terms of the loan.
IURA EDC Minutes
October 28, 2014
Page 6 of 10
Moved by Dylla, seconded by Proulx:
Technical Amendment to Repayment Schedule for
Bandwagon Brewery, Inc. (PBLF #3)
WHEREAS, on April 29, 2010 the IURA issued a , 5‐year, $40,000 loan to Bandwagon
Brewery LLC (Bandwagon) as part of a projected $177,000 project to establish a
brewpub restaurant at 114 N. Cayuga Street and create at least six FTE jobs, and
WHEREAS, Bandwagon has created at least six FTE jobs, of which at least 51% are held
by low‐ and moderate‐income persons, and
WHEREAS, as of September 30, 2014 the loan balance is $11,336.63, and
WHEREAS, according to IURA financial records, Bandwagon is two months delinquent
on loan repayments according to the amortization schedule established at issuance of
the loan, and
WHEREAS, according to IURA loan servicing agent, M&T Bank, the loan is current, and
WHEREAS, after conducting significant investigation by the IURA Accountant, M&T
Bank agrees that Bandwagon is two months delinquent on principal payments though
they are current on interest payments, and
WHEREAS, it appears that M&T Bank applied late payments received in 2013 towards
accrued interest and less towards principal payments resulting in the discrepancy, and
WHEREAS, both the IURA and M&T agree that Bandwagon has made 38 principal
payments as of September 30, 2014, whereas the original amortization schedule
requires 40 principal payments to have been made as of September 30, 2014, and
WHEREAS, based on payments statements delivered to the borrower by M&T Bank,
Bandwagon believes they are current on the IURA loan, and
WHEREAS, the repayment discrepancy may be corrected by either (1) reapplying loan
payments received by M&T Bank to show the borrower is two months late, which will
result in late fees due if the borrower does not make a triple payment at the next
monthly due date, or (2) the IURA could extend the term of the loan by two months to
ensure full payment of the outstanding principal, and
WHEREAS, at their October 28, 2014 meeting the Economic Development Committee
discussed this matter and recommended the following; now, therefore, be it,
IURA EDC Minutes
October 28, 2014
Page 7 of 10
RESOLVED, that the IURA hereby authorizes extension of the amortization period by
two months on the IURA loan issued to Bandwagon Brewery LLC allowing the
borrower to retire the debt in full upon making 60 principal payments.
Carried Unanimously 4‐0
Bohn remarked that the IURA has been trying to determine why the State Theater has
been showing as late on loan payments, especially since it is enrolled in an automated
debit with M&T Bank. The statements show the State Theater as having applied
$10,000 to its account, rather than $1,000. It is a simple arithmetic error. The State
Theater plans on being completely current on its loan by 11/15/14; so there is no need
for further action.
Ackerman asked if the lost interest will be absorbed by M&T Bank. Bohn replied he
believes so, but he would need to check with the IURA accountant.
Bohn reported that the Argos Inn is one month late on its payments and a default letter
will be mailed to it.
Bohn reported that another technical loan repayment issue emerged with The Lofts at
Six Mile Creek and its promissory note. The promissory note indicates the first full
payment is due to the IURA on the day the loan closed. (In fact, IURA staff questioned
that requirement at the loan closing, but the attorney insisted it was correct.) As a
result, if the borrower does not make payment by the first of month, it will be
considered late. Bohn recommended modifying the promissory note.
Moved by Filiberto, seconded by Ackerman:
Technical Amendment to Promissory Note with The Lofts at Six Mile Creek, LLC
(Cayuga Green Project, Phase IIB ― Parcel D)
WHEREAS, on April 23, 2014 the IURA conveyed sale of parcel D of the Cayuga Green
project (tax parcel # 81.‐2‐4, 217 S. Cayuga Street) to The Lofts at Six Mile Creek, LLC
to construct a 45‐unit apartment building, and
WHEREAS, a $260,000 promissory note was executed between the IURA and The
Lofts at Six Mile Creek, LLC, and
WHEREAS, the terms of the promissory note require full monthly payments to
amortize the debt over 15 years beginning May 1, 2014, whereby the borrower is
required to make payments at the beginning of the term, one month in advance of
interest coming due, and
IURA EDC Minutes
October 28, 2014
Page 8 of 10
WHEREAS, IURA legal counsel confirms that the promissory note terms are
unconventional and repayment terms in promissory notes on all other IURA loans
require principal and interest payments due monthly beginning after the first month
of issuance of the loan, and
WHEREAS, the IURA servicing agent indicates that according to the promissory note
language, failure by the borrower to make payment by the first of each month will
result in the payment being late and incurring penalties, and
WHEREAS, at their October 28, 2014 meeting the Economic Development Committee
discussed this matter and recommended the following; now, therefore, be it,
RESOLVED, that the IURA hereby authorizes amending the promissory note with The
Lofts at Six Mile Creek, LLC to revise the loan repayment schedule to require the first
full monthly payment due on June 1, 2014 rather than May 1, 2014, and be it further
RESOLVED, that the Director of Community Development is authorized to implement
this resolution.
Carried Unanimously 4‐0
Bohn reported that all lease payments are now current.
VI. Other/New Business
A. Review of Draft Economic Development Chapter of Tompkins County
Comprehensive Plan Revision
Bohn explained that the County has asked various organizations/agencies to review the
draft Economic Development Chapter of its Comprehensive Plan. If EDC members have
any comments, now would be a good time to submit them in order for them to be
considered.
Dylla remarked it would be helpful if the bar chart on p. 47 (“2009 NHTS: Average Daily
Person Trips per Person by Mode and Trip Purpose”), in the Transportation sub‐section,
identified a trend/projection as well.
Filiberto noted she sees an incongruity between the County’s energy‐reduction goals
and several of its other goals, like housing, education, etc. She questioned if the County
can actually achieve its energy‐reduction goals, given its goals to increase housing and
economic development.
IURA EDC Minutes
October 28, 2014
Page 9 of 10
Filiberto also questioned the extent to which the County’s living wage goal is attainable.
The County funds and actively promotes the tourism/hospitality industry; however,
those jobs tend to be dominated by low‐paying, seasonal jobs.
Dylla asked if Filiberto would be able to report to the EDC on Tompkins County Area
Development’s (TCAD) Economic Development Strategy, at some point. Filiberto
replied, yes.
VII. Staff Report
A. Project Updates
None.
B. Review of IURA Economic Development Performance Indicators
Dylla noted the goals appear low in comparison to past years. Bohn remarked that
there are some potential projects in the pipeline, which may change the figures. He
noted that IURA staff should be able to focus more of its attention on economic
development‐related goals over the next few months. Bohn noted the IURA has not
been able to achieve the Living Wage Jobs goal of 75% of total jobs created. IURA staff
discussed this issue with the IURA Board. It was suggested that given the IURA’s
portfolio of numerous retail/hospitality‐related borrowers, it may not be a realistic goal.
One possibility is to measure the Living Wage Jobs goal by individual economic sector.
Ackerman observed only 2012 was a complete failure in terms of the Living Wage Jobs
goal. Most other years were better.
Dylla asked if organizing a workshop could lead to better outcomes for the Job
Placement Leading to Job Training goal. Bohn replied, yes. He added that the IURA has
not asked many of its program sponsors to track their participants after they complete
the program, so it is an inherently difficult goal to accurately measure.
Ackerman observed that the IURA has little additional information on what is behind the
figures for the Job Placement Leading to Job Training goal (e.g., duration of job search,
what kinds of of jobs, etc.).
Proulx noted the report is slightly underwhelming in terms of the total impact it
portrays.
IURA EDC Minutes
October 28, 2014
Page 10 of 10
Bohn remarked that Ithaca is fortunate to be a community in which lenders are willing
to lend to small businesses. In that respect, Ithaca does not suffer many of the same
challenges as other communities with barriers to businesses accessing capital. Ithaca
also benefits from a stronger economic base than most other upstate communities, so
there is not as much need for subsidized/low‐interest public sector lending.
Ackerman noted she still supports retaining the Living Wage Jobs goal, even if can be
difficult to achieve, as an aspirational goal.
Dylla asked if Bohn could provide some data on how the IURA/Ithaca compares to other
HUD‐funded communities. Bohn replied, yes.
VIII. Adjournment (Next Meeting Date: 3:30 PM, Tuesday, December 9, 2014)
The meeting was adjourned by consensus at 5:04 P.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.