HomeMy WebLinkAboutMN-IURAED-2014-12-11Approved: X/X/13
108 E. Green Street
Ithaca, New York 14850
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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