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HomeMy WebLinkAboutMN-IURAED-2014-12-11Approved: X/X/13 108 E. Green Street Ithaca, New York 14850 (607) 274-6559 (607) 274-6558 (fax) DRAFT MINUTES ITHACA URBAN RENEWAL AGENCY Economic Development Committee (EDC) 3:30 PM, Thursday, December 11, 2014 Second Floor Conference Room, City Hall, Ithaca, NY Present: Doug Dylla, Chris Proulx, Leslie Ackerman, Jennifer Tegan Excused: Heather Harrick, Heather Filiberto Staff: Nels Bohn, Charles Pyott Guests: Gary Ferguson, Downtown Ithaca Alliance (DIA) I. Call to Order Chair Dylla called the meeting to order at 3:33 P.M. II. Agenda Additions/Deletions Bohn indicated that Gary Ferguson asked to be placed on the agenda to discuss strategies for supporting Commons retail businesses. No objections were raised. III. Public Comments (3-minute maximum per person) ― None. IV. Review of Meeting Minutes: October 28, 2014 Proulx moved, seconded by Ackerman, to approve the October 28, 2014 minutes, with no modifications. Carried Unanimously 4-0. V. Discussion of Support for Commons/Downtown Retail Businesses Ferguson reported that he met several times with Commons merchants over the past month to discuss strategies for bolstering their business. Several ideas were generated based on those discussions and he is seeking the Committee’s advice on how praticable they might be. Bohn observed it primarily seems to be those Commons businesses that are not tourist- dependent that have struggled the most. Ithaca Urban Renewal Agency IURA EDC Minutes December 11, 2014 Page 2 of 8 Online Downtown Marketplace Ferguson indicated the first idea was to create an online virtual downtown marketplace ― a complex endeavor that would require further research. The DIA already met with several people to evaluate the pros and cons of the proposal, which would most likely require a feasibility study to identify a business model, establish possible partnerships, and define an overall strategy. It seems as though it would definitely increase volume and profitability for downtown businesses, but it would probably require part-time staffing to maintain the web site, manage inventory, etc. Proulx observed it would involve many issues, not just technology- and inventory- related ones. The idea does seem promising. In his view, one of the primary challenges for downtown retailers is that downtown Ithaca is a ‘black box’ for many people who live outside the city. An integrated downtown web site would open that black box and let people know exactly what is available. Ackerman suggested a large portion of the potential market would probably be ex- Ithacans, with connections to Ithaca, which the site would be a great means of reaching. Proulx observed that the web site would unfortunately not address the more acute financial problems downtown merchants have been experiencing. Technical Assistance for Online & Social Media Marketing Ferguson announced that the second proposal would involve assisting merchants who need help in web site and social media capacity-building (many of whom have none at all, although some are very proficient). The thought was to design a program to provide direct technical assistance to downtown merchants to improve their online and social media standing, while recognizing each business has different needs. Under the program, the DIA would assemble a stable of professionals willing to support the program at a discounted basis. It would like to put together a funding pool to implement the program. Ackerman suggested she may have some useful contacts the DIA could use. Proulx asked if the tech-savvy merchants are also the most profitable. Ferguson replied that tech-savvy merchants actually exhibit a range of profitability. Bohn noted that beginning with those businesses/products that cater the most to a college-aged clientèle may make the most sense. He added that CDBG funding is limited to helping individual businesses (benefitting low- to moderate-income groups), under the micro-enterprise category. IURA EDC Minutes December 11, 2014 Page 3 of 8 Tegan remarked there definitely seems to be potential in the idea; and it could be implemented relatively quickly. Proulx noted that, while the IURA could not fund the initiative through a general fund, if the program were established under the aegis of the DIA, the IURA could help businesses tap into it and offer them the necessary technical assistance. Bohn added that the IURA would need to identify the project’s costs on a pro rata basis. Proulx suggested it may be possible to enlist a third-party information technology company to provide all the infrastructure, for a portion of the proceeds. Ackerman asked if the DIA already has funding available to launch the program on a limited basis. Ferguson replied, he believes so. He requested funding from the Commons Repair & Renovation Project staff, who indicated it is something they would be willing to do. Dylla observed that the IURA already approved funding for technical assistance to some downtown businesses, which could be used if those funds are still available. Bohn replied the IURA already re-allocated those funds to other projects; however, the IURA does have the Rotating Loan Fund (RLF) it could use to assist some of the businesses. One way or the other, resources could certainly be identified, if the IURA decides the project is a priority. Tegan remarked it would certainly be worthwhile for the IURA to do something help support the merchants through the difficult times they have been experiencing. VI. Community Lending A. Request for Loan Modification: e2e Materials, Inc. Bohn explained that the last time e2e appeared before the IURA it requested that its payment term be extended, which the IURA granted for a six-month extension of the interest-only period. The IURA loan is now at a point where it will revert to Principal and Interest payments. e2e has asked if it could make a $1,500 payment every month. Bohn noted that this seems like a reasonable approach and he would recommend granting the request. Moved by Ackerman, seconded by Proulx: 3rd Modification to e2e Materials, Inc. Loan (CD-RLF #27) WHEREAS, on November 5, 2014, e2e Materials, Inc. requested a 3rd loan modification to revise the repayment terms on the IURA loan, and IURA EDC Minutes December 11, 2014 Page 4 of 8 WHEREAS, on November 22, 2011 the IURA issued a $100,000 loan to e2e Materials, Inc. (e2e) for machinery and equipment to establish a prototyping facility for production of molded biocomposites located at 239 Cherry Street, Ithaca, NY, and WHEREAS, the 5-year loan bears a 9% interest rate and provided an 2-year interest- only period and monthly payments due to amortize the loan balance over the remaining 3-year period, and WHEREAS, on March 21, 2013 the IURA approved loan modification to extend the interestonly payment period for an additional 12 months ending on March 30, 2014, and WHEREAS, on March 27, 2014 the IURA approved a second loan modification to extend the interest-only payment period for an additional 6 months at $937/month, and WHEREAS, on November 1, 2014 the loan reverted back to principal and interest payments of $3,180/month, and WHEREAS, e2e is a pre-revenue company working to monetize its proprietary technology, And WHEREAS, e2e requests a revised flat monthly loan payment of $1,500/month to pay interest and pay down approximately $600/month in principal, and WHEREAS, the IURA loan is secured by a 1st security interest in machinery and equipment that is shared with Tompkins County Area Development(TCAD), which provided e2e with $125,000 of loan financing, and WHEREAS, TCAD authorized an extended interest-only period through March 2015, and WHEREAS, e2e has satisfied IURA job creation requirements is current on the IURA loan that had an outstanding principal balance of $90,170.22 as of October 31, 2014, and WHEREAS, at their December 11, 2014 meeting, the IURA Economic Development Committee considered this matter and recommended the following, now, therefore be it IURA EDC Minutes December 11, 2014 Page 5 of 8 RESOLVED, that the IURA hereby approves a 3rd modification of the loan to e2e Materials, Inc. (CD-RLF #27) to revise the required loan repayment to $1,500/month through October 31, 2015, which payment will fully cover interest expenses and approximately $600 of principal repayment, and be it further RESOLVED, the above temporary loan modification is contingent upon continued submission of shareholder reports to the IURA no less than quarterly, and be it further RESOLVED, that the IURA Chair, upon the advice of IURA legal counsel, is authorized to execute all necessary and appropriate documents to implement this resolution. Carried Unanimously 3-0 Tegan abstaining B. Request for Loan Modification: Unity Inn, LLC Bohn reported that the Committee doe not have the documents it should have received; he recommended deferring the review of the request. He explained that the reason for the request is that the owner wants to sell Brookton’s Market to acquire working capital to fund the inn, which would require that the IURA release him from the mortgage. He noted that, although the owner is now current on his IURA obligations, it may make sense to require him to agree to automated monthly payments as a condition of approval. C. Maximum Loan Amount for CD-RLF Loans Bohn indicated this agenda item resulted from discussions with different borrowers, who lost interest in IURA funding once they understood the funding limitations. The maximum loan amounts have not increased significantly over the years. The IURA has always maintained them at a low level due to concerns it would run out of cash. The proposed increase in maximum loan amounts would not interfere with the public benefit test and it would enable the IURA to fund slightly larger projects. Bohn noted that, should the proposal be adopted, the IURA would need to ensure it is judicious in examining applicants’ real funding needs. Moved by Tegan, seconded by Proulx: CD-RLF ― Revise Maximum Loan Amounts WHEREAS, the Community Development Revolving Loan Fund (CD-RLF) is the IURA’s primary program to finance economic development activities that create employment opportunities and expand business activity within the City of Ithaca, and IURA EDC Minutes December 11, 2014 Page 6 of 8 WHEREAS, the CD-RLF is intended as a gap financing product, to close the financial “gap” between the total project cost and the amount of equity and conventional financing raised by the business, and WHEREAS, CD-RLF policies currently establish the following maximum loan amounts: • Retail businesses: $50,000; • Non-retail businesses: $100,000, and WHEREAS, capital needs of businesses frequently exceed the current maximum loan amounts, limiting the effectiveness of the CD-RLF, and WHEREAS, the Economic Development Committee recently recommended increasing the maximum loan amount for the Priority Business Loan fund (PB-LF) program from $150,000 to $250,000, and WHEREAS, the CD-RLF and PB-LF jointly have available over $750,000 in funds to be loaned, and WHEREAS, IURA staff recommend increasing the CD-RLF maximum loan amounts by $50,000, and WHEREAS, all CD-RLF loans must satisfy the CDBG public benefit test which generally requires at least one employment opportunity generated per $35,000 of loan assistance, and WHEREAS, at their December 11, 2014 meetings 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, to establish the following maximum loan amounts for the Community Development Revolving Loan Fund: • Retail businesses: $100,000 • Non-retail businesses: $150,000 Carried Unanimously 4-0 D. Loan Pipeline Review Bohn reported that the IURA received a loan application from Melissa Matthews to fund a non-traditional business that markets goods and services for charitable causes (focusing on people who have overcome extreme challenges in their lives). IURA EDC Minutes December 11, 2014 Page 7 of 8 Bohn remarked that Ms. Matthews appears quite sophisticated in how she has employed media and she has been very convincing. She has performed online testing and received very positive responses. The proposal would include a virtual store, with headquarters in Ithaca. Tegan noted she is familiar with the applicant. She seems to have evolved her approach and projections, which are now much more realistic. She also appears to be making the right connections. Bohn reported that an out-of-town retail store, Heels & Hobos, has been looking at a couple of prospective Ithaca locations for another store. They were prepared to sign a lease, but then examined the IURA loan program more carefully and were disappointed at the maximum loan amount, and reconsidered. They believed they would need $180,000 to launch the Ithaca store. Bohn repored that efforts to reinvigorate the downtown convention center project at Hotel Ithaca (formerly the Holiday Inn) continue to move forward. The IURA communicated to the developers the revised potential IURA loan funding amount and also connected them to state funding options. The project current suffers from a $4 million funding shortfall. The IURA/City believes it could find $1M to dedicate to the project. E. November 2014 IURA Loan & Lease Repayment Report Bohn reported all loan and lease payments are now current. VI. New Business A. Review of IURA-Assisted Job Training Programs Bohn explained IURA staff wanted to provide a summary of the issues that arose from the recent roundtable meetings, as a result of Lynn Truame’s efforts to determine how to make the job training programs more effective. There were two separate roundtable meetings, whose purpose was to get the organizations to coordinate and collaborate, identify best practices, etc. It has recently become apparent that program beneficiaries encounter many barriers to employment ― not simply a lack of a specific skill or experience set. What seems to be required would be more of a case management, confidence-building approach, and more investment in time and resources than had initially been assumed. There seemed to be considerable benefit from having the various organizations participate in this process. It may even be possible to have some program beneficiaries graduate from one program to enter another. Workforce NY is very interested in that. IURA EDC Minutes December 11, 2014 Page 8 of 8 Bohn indicated the Neighborhood Investment Committee (NIC) recommended continued support of The Learning Web program, which was experiencing difficulty on several levels (e.g., recruiting people for the program, beneficiaries dropping out of the program, etc.). VII. Staff Report A. Project Updates Bohn announced that New York State’s 2014 Regional Economic Development Council grants have been awarded, with the Southern Tier receiving a sizeable share of the total (e.g., Finger Lakes Re-Use, Cornell Veterinary School, Paleontological Research Institution/Earth Musem, the Chain Works Project, etc.). VIII. Adjournment (Next Meeting Date: 3:30 PM, Tuesday, January 13, 2015) The meeting was adjourned by consensus at 4:43 P.M. — END — Minutes prepared by C. Pyott, edited by N. Bohn. j:\community development\admin files\minutes\edc\2014\edc minutes 12-11-14 - draft.doc