HomeMy WebLinkAboutMN-IURAED-2015-07-21Approved: 12/2/15
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, Thursday, July 21, 2015
Common Council Chambers, City Hall, Ithaca, NY
Present: Doug Dylla, Heather Harrick, Chris Proulx, Heather McDaniel (formerly Heather
Filiberto)
Excused: Jennifer Tegan, Leslie Ackerman
Staff: Nels Bohn, Charles Pyott
Guests: Teresa Miller, Owner‐General Manager, Madeline’s Restaurant
Mike Cannon, Vice President of Commercial Banking, Tompkins Trust Company
Beth Morse, Regional/Campus Director, Finger Lakes School of Massage
I. Call to Order
Chair Dylla called the meeting to order at 3:33 P.M.
II. Agenda Additions/Deletions
None.
III. Public Comments (3‐minute maximum per person) ― None.
IV. Review of Meeting Minutes: May 21, 2015
Harrick moved, seconded by Dylla, to approve the May 21, 2015 minutes, with no
modifications. Carried Unanimously 4‐0.
V. New Business
A. Request from Delante, Inc. (DBA Madeline’s Restaurant) for Loan Assistance
Bohn explained that Madeline’s Restaurant is seeking $150,000 in IURA funding, as part
of total $475,000 loan refinancing and renovation funding package. Tompkins Trust
Company would provide matching funding for the project. The restaurant also recently
renewed it lease for 10 years (with an extension option for an additional 10 years).
Bohn noted that Madeline’s has seen a significant decline in revenue as a result of the
Commons renovation construction. The $150,000 IURA loan would span 7 years,
matched to the bank’s terms.
Ithaca
Urban
Renewal
Agency
IURA EDC Minutes
July 21, 2015
Page 2 of 20
Bohn noted the loan collateral would take the form of a second security lien on the
business assets, as well as second mortgage on the 106‐112 South Cayuga Street
property. Teresa A. Miller and Scott A. Miller would also provide their own personal
guarantees. Bohn indicated the loan appears well‐secured and collateralized. It would
strengthen the downtown area, at a key anchor location at the entrance to the
Commons, and create 3 new jobs.
Dylla asked the applicant to describe the proposed interior improvements. Miller
replied the restaurant has been operating since 1997, so its interior definitely needs to
be upgraded and modernized. The intent is to completely renovate and redesign the
interior, to complement the brand new appearance of the Commons. The restaurant
would also hire new staff to support added brunch and lunch service.
Bohn noted the new jobs would be filled by low‐ to moderate‐income employees,
although the jobs are not currently proposed as Living Wage jobs.
Miller noted that front‐of‐house staff are all tipped an average of 15%‐20% of customer
checks. Dylla asked what that percentage translates into in real terms. Miller replied
that the waiters do very well at $15‐$19/hour. The remainder of the staff receives a
higher hourly wage; but their tip income is a little harder to determine.
Harrick asked what the renovation timeline would be. Miller replied the restaurant
would need to close for some of the work (probably from Christmas until the second
week in January). The intent is to have most of the major renovation done over a 3
week period.
Harrick asked if the applicant is contemplating any other service‐oriented changes to the
restaurant, in addition to the dim sum brunch and lunches.
Miller replied she is considering adding a “social table” on the bar side of the restaurant,
featuring a slightly more casual type of service. The idea would be to have a single, very
long table, with no reservations required, for guests to socialize with one another.
McDaniel asked over what period of time the Common Area Maintenance (CAM) fee
arrears were accrued. Miller replied, from the end of 2013 to today ― for some reason
CAM fees were simply not being billed to the restaurant for that period of time.
McDaniel indicated that should be added to the projections as an expense. Miller
replied those maintenance costs are actually incorporated into the rental payments.
McDaniel asked if the CAM fees were built into the restaurant’s financial projections.
Miller replied, yes, at approximately $2,000/month.
IURA EDC Minutes
July 21, 2015
Page 3 of 20
McDaniel remarked it does not seem like the CAM fees match up with the financial
statements. Miller responded that most of building has been vacant in recent years, so
the restaurant’s CAM fees were proportionately higher in those years; however, CAM
payments have dropped significantly from about $2,600 to about $1,700, with the
arrival of new building tenants.
McDaniel noted she is trying to understand the nature and extent of the existing debt.
The balance sheet shows $42,000 of long‐term debt, as well as a credit line of $49,000.
She asked what the $42,000 loan terms are. Miller replied that is an M&T Bank debt,
which was a business loan. It would be completely paid off, assuming the restaurant
receives its refinancing.
McDaniel asked if it was determined that the personal debt was an actual business‐
related debt. Miller explained she used introductory 0%‐interest credit card offers to
purchase equipment and similar items. She has records of all the transactions.
McDaniel noted it appears to her that the business is losing more money than it needs
to. She observed that it also has paid shareholders. Miller explained that the
shareholder payments were also covered through the credit card debt.
McDaniel noted that the retained earnings are negative. She suspects the income
projections may be too optimistic. The assumption that revenue would return to pre‐
Commons construction levels appears to be based solely on the presence of new
building tenants. The two major hotel projects will not be open until 2016 and 2017.
Miller responded that the income projections she calculated were only supposed to
reflect a return to pre‐Commons construction levels. She does not believe they are too
optimistic.
McDaniel observed that Miller plans to return to pre‐Commons construction revenue
levels of $1.1M/year; however, it does not make sense to her to add new staff just to
return to those pre‐Commons construction levels if they are not going to significantly
increase revenue above that. She suggested it may be a better to wait to undertake the
renovations, when the restaurant finds itself in a better cash‐flow position.
Miller responded that adding lunch service has considerable potential for aggressively
adding to revenue growth; and that should be something the restaurant taps into as
soon as possible. It would not add significantly to the restaurant’s expenses, other than
adding a few new employees.
IURA EDC Minutes
July 21, 2015
Page 4 of 20
McDaniel expressed concern it is a lot of debt for a business that has been experience a
negative net operating revenue. She would be more comfortable waiting 4‐6 months to
determine if the lost revenue was genuinely the result of Commons construction.
Miller replied that the business actually carried much more debt when it was originally
acquired in 2006; and that debt was aggressively repaid. She added that the new long‐
term lease should also help provide financial stability.
Proulx noted the applicant’s implication is that revenues were higher before 2012, when
Commons construction began; however, revenue appears to have been declining prior
to the Commons construction. It seems reasonable to assume that increased
competition may also have contributed to the revenue decline.
Miller conceded that pre‐2012 revenue was a little higher; but it was the period from
2013 to the present which brought the restaurant the furthest into debt. She believes
part of the solution for reversing the revenue decline will require reinvigorating the
restaurant’s appearance and upgrading its service offerings.
Proulx remarked that Simeon’s on the Commons has been eliminated as a competitor
for over a year, which theoretically opened up potential revenue for the other nearby
restaurants. He asked if the applicant has any sense if that was the case.
Miller replied that she knows all the restaurants experienced at least some revenue
decline due to the Commons construction. Additionally, Madeline’s entrance has been
visually obscured by active construction work for several months this year. She
imagines most of the beneficiaries from the absence of Simeon’s have been the places
that serve lunch; and the Aurora Street restaurants probably benefited the most.
Proulx asked if there is anything in the applicant’s plans that would enhance the
restaurant’s visibility on the new Commons. Miller replied, yes. She has hired an
architectural consultant and another consultant, who will develop a new lighting
concept to attract customers, since the restaurant has suffered from its location under
an extensive overhang and a lack of lighting. New outdoor furnishings would also be
added and the popular lounge‐like area expanded.
Moved by Proulx, seconded by Harrick:
Loan Assistance to Delante Inc. dba Madeline’s Restaurant (PB‐LF #7)
WHEREAS, on May 27, 2015, Delante Inc. (Madeline’s) applied for a $150,000 IURA
loan for a $470,000 project to refinance existing debt and acquire new fixtures and
equipment and renovate the Madeline’s restaurant located at 215 E. State/MLK Jr.
Street, and
IURA EDC Minutes
July 21, 2015
Page 5 of 20
WHEREAS, the project will allow the landmark restaurant to upgrade outdoor and
indoor dining areas, expand hours of operation to include daily lunch and weekend
brunch, which will result in the creation of 3 full‐time equivalent employment
positions, and
WHEREAS, the primary objective of the Ithaca Density District Priority Business Loan
Fund (PB‐LF) is to induce the creation, start‐up and expansion of specific priority
business enterprises in the greater downtown that have been defined by the
community as highly desirable or substantially increases foot traffic thereby
strengthening downtown vitality, and
WHEREAS, Madeline’s is located on The Commons at the corner of S. Aurora Street
and E. State/MLK Jr. street directly across from Simeon’s restaurant where in 2014 a
runaway truck heavily damaged the landmark Simeon’s building, requiring partial
demolition of the still boarded‐up building, and
WHEREAS, the upgrading of the restaurant, including new outdoor furnishings , and
expansion of business hours to serve lunch and weekend brunch, will generate
significant customer traffic at an important section of The Commons throughout the
day and evening, thereby strengthening downtown vitality, and
WHEREAS, Teresa Miller is the 100% owner of Delante Inc., a woman‐owned
business, and
WHEREAS, the proposed uses of project funds are:
$72,700 interior renovations
$14,300 exterior renovations
$163,000 debt refinancing
$80,000 restaurant furnishings, fixtures and equipment (FF&E)
$90,000 common area maintenance (CAM) arrearage
$50,000 working capital
$470,000 Total, and
WHEREAS, the proposed sources of project funds are:
$320,000 Bank loan
$150,000 IURA
$470,000 Total, and
WHEREAS, Tompkins Trust Company has issued a commitment for a $320,000 loan
subject to IURA loan approval, and
IURA EDC Minutes
July 21, 2015
Page 6 of 20
WHEREAS, the project is projected to create at least three (3) full‐time equivalent
(FTE) employment positions, of which at least 51% will be filled by low‐ and
moderate‐income persons, resulting in $50,000 of loan assistance per job created,
and
WHEREAS, the project will additionally retain 15 FTE existing employment positions,
and
WHEREAS, the IURA Economic Development Policy Financing Guidelines and
Operating Plan for the Priority Business Loan Fund normally requires at least one FTE
job for every $35,000 of loan assistance, and
WHEREAS, the IURA guidelines authorize increasing the limit of IURA financing per
job to $50,000/job in individual instances where the IURA determines that the
expanded business activity will effect an extraordinary degree of public benefit and
the total portfolio of all HUD‐assisted loans still results in an overall employment/cost
ratio not exceeding $35,000 per job, and
WHEREAS, the IURA portfolio‐wide ratio of loan assistance per job is $16,347
($7.3MM/447jobs), and
WHEREAS, the IURA particularly seeks to assist projects that assist minority and/or
women‐owned businesses, such as Delante Inc., and
WHEREAS, the proposed IURA loan proceeds will be used for debt refinancing and
purchase of restaurant furniture and equipment and the site is located outside of any
flood hazard areas, therefore the project is a categorically excluded activity pursuant
to 24 CRF 58.35(b)(4) of the National Environmental Protection Act (NEPA); the action
constitutes a Type II action under the City of Ithaca Environmental Quality Review
Ordinance; and therefore is not subject to further environmental review, and
WHEREAS, at their July 21, 2015 meeting, the IURA Economic Development
Committee reviewed the loan application, a credit analysis prepared by H. Sicherman
& Co., Inc. and applicable provisions of the IURA Economic Development Policy
Guidelines and Operating Plan, and recommend the following; now, therefore, be it
RESOLVED, that the IURA hereby finds that the project is eligible for assistance
through the Priority Business Loan fund because it will generate substantial foot
traffic thereby strengthening downtown vitality, and be it further
IURA EDC Minutes
July 21, 2015
Page 7 of 20
RESOLVED, that the IURA authorizes up to $50,000 of loan assistance per job created
for this project due to the extraordinary degree of public benefit of this project at the
critical eastern entrance to The Commons, and be it further
RESOLVED, that the IURA hereby approves a loan from the Ithaca Density District
Priority Business Loan Fund (PB‐LF) in accordance with the loan application, and
supplemental submissions, subject to the following terms:
Borrowers: Delante Inc. DBA Madeline’s Restaurant, a New York State S
corporation
Loan Amount: Up to $150,000
Project: Debt refinancing and upgrading of furnishing and equipment
of Madeline’s restaurant located at 215 E. State/MLK Jr. Street,
Ithaca, NY.
Total Project Cost: $470,000
Projected Use of IURA
Funds:
Debt refinancing and purchase of restaurant furniture and
equipment. IURA funds may not be used for construction
activities.
Term: 84 months (7 years)
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 six (6) months, then level monthly
payments of principal and interest to fully amortize the loan
over the remaining 78 months (approximately $2,153/month)
and subject to a revised P&I amount upon rate reset.
Loan Collateral: 1. Second security lien on all business assets including
accounts, inventory, furniture, fixtures and equipment
now owned or hereafter acquired behind only a security
lien held by Tompkins Trust Company.
2. Second mortgage on 106‐112 South Cayuga Street, Ithaca,
a commercial property owned by Teresa and Scott Miller,
behind only a mortgage lien held by Tompkins Trust
Company.
Personal Guarantor(s): Teresa A. Miller and Scott A. Miller, joint and several.
IURA EDC Minutes
July 21, 2015
Page 8 of 20
Job Creation Requirement: Creation of at least three (3) FTE employment positions of
which at least 51% must be held by low‐ and moderate‐income
persons.
Reporting: 1. Annual submission of accountant‐prepared federal and
New York State tax returns.
2. Quarterly IURA job reporting of jobs created.
3. Documentation of project match funding.
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 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 Finger Lakes Massage Group, Inc. for Loan Assistance
Beth Morse explained she has worked at the Finger Lakes School of Massage since 1999
in various administrative and teaching positions. The current owners bought the school
in 2003. They have been in business 21 years. The school has been searching for a new
location for 8 years. Morse noted that the school was granted national accreditation 6
years ago, thus making its students eligible for Federal student loans. She is excited
about the prospect of being in a more modern building, and benefiting from additional
foot traffic and exposure.
Bohn indicated it is a $150,000 request, as part of a $230,000 project, the vast majority
of which would be devoted to interior renovations to the new space. (There is also a
lease option for a street‐level clinic/retail space, but that is not part of the current
project scope.) Bohn stressed that the school would attract a lot more activity
downtown than many other potential tenants. The project would provide considerable
mutual benefits to both the school and the city, including the creation of 3 FTE jobs,
filled by low‐ to moderate‐income people. The school appears to have sufficient cash‐
flow to repay debt; however, the IURA underwriter believes it is critical the owners
provide personal guarantees. Bohn indicated it is a reasonably well‐secured loan for a
project that would have a highly positive impact on the city and downtown area, as a
long‐term investment in the community.
IURA EDC Minutes
July 21, 2015
Page 9 of 20
Harrick asked how the relocation would affect the school’s enrollment. Morse replied
she expects it to increase. It has been a challenge for the school to find enough teaching
space in its current building and the school’s teaching capacity would increase in the
new location.
Proulx observed that the school has significantly increased its marketing budget, but
that does not appear to have not affected enrollment. Morse replied that the school
focused primarily on identifying leads, as part of a basic marketing plan, to expand it
local and regional outreach.
McDaniel noted the relocation would be great for the Commons. She believes it is
precisely what downtown Ithaca needs. From the school’s balance sheet, and its profits
and losses, it appears the school could afford the new space. Proulx agreed.
Dylla inquired into the school’s student loan debt. Morse replied that the school is
required to fall below a certain default rate on Federal student loans, so its financial aid
department is very active. The school also has its own student debt owed to it. Student
loan funds are managed and drawn down as a function of students earning credit hours,
so the school has an extremely strict attendance policy. Morse noted the projected
increased enrollment from the relocation should help decrease the amount of money it
is owed from student loans, since the school could draw funds down in what have
historically been slow times of the year.
Dylla observed the “Business Management” line item varies wildly from year to year.
Morse responded that is one budget line item she knows practically nothing about, only
that it represents the owners taking fees from the company.
Bohn remarked that IURA staff discussed that particular line item at length. Much of it
is simply a distribution of funds to the owners, which only takes place after core
operating costs have been accounted for.
McDaniel asked if the applicant approached any banks for a loan. Morse replied that
originally the new landlord was going to do that on the school’s behalf, but then the
school learned of the IURA, which seemed like a better option.
Dylla asked if the IURA should seek an agreement restricting how much money the
owners can withdraw from the school. Bohn replied that an agreement like that was
initially proposed to subordinate that line item to the IURA loan, but the owners were
resistant to that proposal; and it was thought the personal guarantees would
accomplish the same goal.
IURA EDC Minutes
July 21, 2015
Page 10 of 20
Proulx remarked he would hate to see a situation in which the owners could extract
money from one school to support another school in the same holding company. Bohn
replied he believes the owners are protective of ensuring the security of all their
investments. He believes the IURA should be well‐protected with the personal
guarantees from each individual owner.
Moved by McDaniel, seconded by Harrick:
Loan Assistance to Finger Lakes Massage Group, Inc.
DBA Finger Lakes School of Massage (PB‐LF #8)
WHEREAS, on June 22, 2015, Finger Lakes Massage Group, Inc. (FLMG) applied for a
$150,000 IURA loan for a $230,000project to relocate and expand the Finger Lakes
School of Massage into existing vacant office space on the second level of the
Rothschild Building located at 215 E. State/MLK Jr. Street on The Commons, and
WHEREAS, the project will allow the school to increase enrollment and revenues at
the massage therapy program, retail store and new Alumni clinic, which in total will
result in the creation of 3 full‐time equivalent employment positions, and
WHEREAS, the primary objective of the Ithaca Density District Priority Business Loan
Fund (PB‐LF) is to induce the creation, start‐up and expansion of specific priority
business enterprises in the greater downtown that have been defined by the
community as highly desirable or substantially increases foot traffic thereby
strengthening downtown vitality, and
WHEREAS, the project will bring 25 staff and 75 students daily to the campus,
including a retail store with Alumni spa at a first floor location, thereby generating
significant foot traffic and increased vitality on The Commons, and
WHEREAS, the proposed uses of project funds are:
$72,700 A/E fees, constr. Manag. Fees, permits
$14,300 interior renovations
$11,500 signage and window shades
$80,000 marketing, moving expense and FF&E
$230,000 Total, and
WHEREAS, the proposed sources of project funds are:
$80,000 Equity
$150,000 IURA
$230,000 Total, and
IURA EDC Minutes
July 21, 2015
Page 11 of 20
WHEREAS, FLMG is owned by David Merwin and John Robinson, and
WHEREAS, FLMG’s current lease at 1251Trumansburg Road expires on 12/31/15, and
WHEREAS, the owner of the Rothschild Building has executed a 10‐year lease with
FLMG, with an option for one additional 10‐year term, and
WHEREAS, the project is projected to create at least three (3) full‐time equivalent
(FTE) employment positions, of which at least 51% will be filled by low‐ and
moderate‐income persons, resulting in $50,000 of loan assistance per job created,
and
WHEREAS, the IURA Economic Development Policy Financing Guidelines and
Operating Plan for the Priority Business Loan Fund normally requires at least one FTE
job for every $35,000 of loan assistance, and
WHEREAS, the IURA guidelines authorize increasing the limit of IURA financing per
job to $50,000/job in individual instances where the IURA determines that the
expanded business activity will effect an extraordinary degree of public benefit and
the total portfolio of all HUD‐assisted loans still results in an overall employment/cost
ratio not exceeding $35,000 per job, and
WHEREAS, the IURA portfolio‐wide ratio of loan assistance per job is $16,347
($7.3MM/447 jobs), and
WHEREAS, as IURA loan proceeds may be used for interior improvements of existing
commercial space, the loan is listed at 58.35(a)(3)(iii) as categorical excluded but
subject to federal laws listed at 58.5 for the National Environmental Protection Act
(NEPA, and
WHEREAS, the interior renovation of existing commercial space constitutes a Type II
action under the City of Ithaca Environmental Quality Review Ordinance and
therefore is not subject to further environmental review, and
WHEREAS, at their July 21, 2015 meeting, the IURA Economic Development
Committee reviewed the loan application, a credit analysis prepared by N. Bohn and
reviewed by H. Sicherman & Co., Inc. and applicable provisions of the IURA Economic
Development Policy Guidelines and Operating Plan, and recommend the following;
now, therefore, be it
IURA EDC Minutes
July 21, 2015
Page 12 of 20
RESOLVED, that the IURA hereby finds that the project is eligible for assistance
through the Priority Business Loan fund because it will generate substantial foot
traffic thereby strengthening downtown vitality, and be it further
RESOLVED, that the IURA authorizes up to $50,000 of loan assistance per job created
for this project due to the extraordinary degree of public benefit of this to increase
vitality on The Commons, and be it further
RESOLVED, that the IURA hereby approves a loan from the Ithaca Density District
Priority Business Loan Fund (PB‐LF) in accordance with the loan application, and
supplemental submissions, subject to the following terms:
Borrowers: Finger Lakes Massage Group, Inc., a New York State S
corporation
Loan Amount: Up to $150,000
Project: Relocation and expansion of Finger Lakes School of Massage
from 1251 Trumansburg Road, Town of Ithaca, NY to 215 E.
State/MLK Jr. Street, Ithaca, NY.
Total Project Cost: $230,000
Projected Use of IURA
Funds:
Professional fees, interior renovations, marketing, furnishings,
fixtures and equipment and working capital as may be
approved by the IURA Chairperson.
Term: 84 months (7 years)
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 six (6) months, then level monthly
payments of principal and interest to fully amortize the loan
over the remaining 78 months (approximately $2,153/month)
and subject to a revised P&I amount upon rate reset.
Loan Collateral: 3. First security lien on all business assets including accounts,
inventory, furniture, fixtures and equipment now owned
or hereafter acquired.
Personal Guarantor(s): David Merwin and John Robinson, joint and several.
IURA EDC Minutes
July 21, 2015
Page 13 of 20
Job Creation Requirement: Creation of at least three (3) FTE employment positions of
which at least 51% must be held by low‐ and moderate‐income
persons.
Conditions: 1. Subordinate $250,000 debt due to Finger Lakes Holding
Company, Inc. to the IURA loan.
2. Payment of federal prevailing wages if IURA funds are used
for applicable construction activities
3. Completion of NEPA environmental review by staff.
Reporting: 4. Annual submission of accountant‐prepared federal and
New York State tax returns.
5. Quarterly IURA job reporting of jobs created.
6. Documentation of project match funding.
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 advice of IURA legal counsel, is
hereby authorized to execute all necessary and appropriate documents to implement
this resolution.
Carried Unanimously 4‐0
C. Request from Cayuga Green, LLC for Various Approvals to Facilitate Refinancing of
Cayuga Green Place
Bohn explained that the applicant has reached the point in the project’s lifecycle where
it is unwinding its New Markets Tax Credit (NMTC) funding and refinancing the project.
The applicant’s refinancing agent agreed in concept to the refinancing commitment, but
required that the property be conveyed to a separate entity. Bohn indicated that the
project has met all the IURA’s goals (e.g., a mixed‐use/residential active use) and is in
good standing on loan repayments. The applicant has also offered to repay the Urban
Outfitters loan. The proposal would facilitate the applicant’s operations and the IURA
would benefit financially from the transaction.
Moved by Proulx, seconded by McDaniel:
Cayuga Green Phase II ― Request from Cayuga Green, LLC for Various IURA
Approvals to Facilitate Project Refinancing (Parcels ‘E’)
IURA EDC Minutes
July 21, 2015
Page 14 of 20
WHEREAS, Cayuga Green, LLC, seeks to refinance project debt on the Cayuga Green
Place project located at 131 E. Green Street (Property), also known as Parcel E of the
Cayuga Green project, and seeks IURA approval to assign an IURA loan to a new
entity and subordinate an IURA loan to new financing, and
WHEREAS, the IURA sold the Property to Cayuga Green, LLC in 2007 and issued a
$760,000 loan for a portion of the purchase price, which loan is secured by a 5th lien
mortgage on the Property, and
WHEREAS, Cayuga Green, LLC successfully completed an urban renewal project at the
Property by constructing and occupying a 90,000 square foot, mixed‐use residential
project with ground floor commercial use, including Urban Outfitters, and
WHEREAS, in 2009 the IURA issued a $100,000 loan to Cayuga Green, LLC to pay for
project expenses for Urban Outfitters to sign a lease to occupy ground floor space at
the Property, and
WHEREAS, Cayuga Green, LLC has applied to refinance its existing debt on the project
with Rialto Mortgage Finance, LLC (Rialto), and
WHEREAS, Rialto is requiring ownership of real property located at 131 E. Green
Street be transferred from Cayuga Green, LLC to a newly formed single purpose
entity as a condition of financing, and
WHEREAS, Rialto is further requiring that the IURA subordinate its promissory note
and mortgage to its first mortgage as a condition of financing, and
WHEREAS, “131 East Green Street, LLC” has been formed as a new ownership entity,
which has identical ownership as Cayuga Green, LLC with Bloomfield/Schon +
Partners, LLC as the sole member and Steven F. Bloomfield and Kenneth E. Schon as
managing members, and
WHEREAS, the new entity will assume the IURA loan obligations of Cayuga Green LLC,
and
WHEREAS, the Rialto loan will be secured by a 1st lien mortgage on the Property, and
WHEREAS, under proposed refinancing, the IURA mortgage will move up from 5th lien
position to 2nd lien position behind only a mortgage lien held by Rialto in the
principal amount of $13,200,000, and
IURA EDC Minutes
July 21, 2015
Page 15 of 20
WHEREAS, the IURA’s existing 5th lien mortgage is subordinate to mortgage liens
totaling over $14,900,000, and
WHEREAS, Cayuga Green, LLC also proposes paying off the IURA Urban Outfitters
loan at the time of refinancing, which carries a principal balance of $56,183.69 as of
June 30, 2015, and
WHEREAS, this matter was discussed at the July meeting of the IURA Economic
Development Committee, which recommends the following action: now, therefore
be it
RESOLVED, the IURA hereby approves the requested assignment of the IURA loan,
note and mortgage from Cayuga Green LLC, dated July 23, 2007, to 131 E. Green
Street, LLC, conditioned upon pay off of the IURA’s urban outfitter loan to Cayuga
Green, LLC, and be it further
RESOLVED, that the IURA hereby approves a subordination agreement to
subordinate its mortgage on real property located at 131 E. Green Street to Rialto
Mortgage Financing, LLC, and be it further
RESOLVED, that the IURA Chairperson, upon advise of the IURA Attorney, is hereby
authorized to execute all necessary and appropriate documents to implement this
resolution.
Carried Unanimously 4‐0
VI. Old Business
A. Loan Delinquency Protocol
Bohn explained that creating a loan delinquency protocol was the subject of earlier
discussions. The IURA loan policy guidelines do not contain very much detail regarding
delinquencies, so the intent was to develop a consistent approach for when people are
delinquent in their payments.
McDaniel suggested adding some language about requesting interim financial
statements/reports. Bohn replied that the IURA already requires annual financial
reports. McDaniel responded that having access to interim financial statements/reports
would help the IURA better understand a given delinquency situation. Bohn indicated
he would clarify that in the table.
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July 21, 2015
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Moved by Harrick, seconded by Proulx:
Protocol on Past Due Loans
WHEREAS, the IURA Economic Development Policy Guidelines and Operating Plan
lacks detailed guidelines for responding to past due loans, and
WHEREAS, the IURA seeks to develop a consistent, but flexible, approach to guide
staff and the IURA on processes to follow to conduct due diligence on past due loans,
and
WHEREAS, the Economic Development Committee and Governance Committees have
reviewed drafts of a policy to clarify the appropriate responsibilities of staff and the
IURA when loan repayments are past due, and
WHEREAS, at their July 21, 2015 meetings the Economic Development Committee
reviewed the latest revisions to the policy and recommended the following; now,
therefore, be it,
RESOLVED, the IURA hereby adopts the attached IURA Protocol on Past Due Loans,
dated 5/19/15.
Carried Unanimously 4‐0.
(see following page)
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July 21, 2015
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IURA EDC Minutes
July 21, 2015
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July 21, 2015
Page 19 of 20
B. New York State Upstate Revitalization Initiative Update
Bohn explained that there is a $500M available pool of state funding, which Empire
State Development is organizing/facilitating. The framework for funding applications is
based on four major themes and Empire State Development is currently soliciting for
input on them: the Greater Binghamton Innovation Ecosystem Initiative; the Southern
Tier Food and Agriculture Initiative; the Advanced Industries ―Transportation Products,
Components, and System Controls Initiative; and the Promoting the Southern Tier's
Innovative Culture Initiative.
IURA EDC Minutes
July 21, 2015
Page 20 of 20
VII. Reports
A. IURA Loan & Lease Repayment Report
Bohn reported that the Art and Found loan repayment is now only one month past due.
He has communicated to the owner and awaits her response. In terms of the lease
payments, Allpro Parking made a payment and Southside Community Center is also now
current.
B. Staff Report
Bohn indicated that a loan for the reconstruction of Simeon’s restaurant remains in the
loan pipeline. IURA staff still needs more information from the applicant.
VIII. Adjournment
The meeting was adjourned by consensus at 5:00 P.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.