HomeMy WebLinkAboutMN-IURAED-2015-12-02Approved: X/X/15
108 E. Green Street
Ithaca, New York 14850
(607) 274-6559
(607) 274-6558 (fax)
FINAL DRAFT MINUTES
ITHACA URBAN RENEWAL AGENCY
Economic Development Committee (EDC)
3:30 PM, Wednesday, December 2, 2015
Common Council Chambers, City Hall, Ithaca, NY
Present: Doug Dylla, Heather Harrick, Jennifer Tegan, Leslie Ackerman, Christine Lam
Excused: Chris Proulx
Staff: Nels Bohn
Guests: None
I. Call to Order
Chair Dylla called the meeting to order at 3:31 P.M.
II. Agenda Additions/Deletions
None.
III. Public Comments (3‐minute maximum per person) ― None.
IV. Review of Meeting Minutes: July 21, 2015
Ackerman moved, seconded by Tegan, to approve the July 21, 2015 minutes, with no
modifications. Carried Unanimously 5‐0.
V. New Business
A. Request from Carey Building Associates, LLC for Non‐Exclusive Utility Easement
Across 320‐324 E. State Street (Proposed Hilton Canopy Hotel Site)
Bohn announced the IURA received a request from Carey Building Associates, LLC for an
easement to bring utilities from Seneca Way into the Carey Building. Carey Building
Associates, LLC is coordinating its efforts with Lighthouse Hotels, which has consented
to the easement; and the easement has been laid out in a way that meets the needs of
both parties. It would prohibit construction above the underground easement area,
which will have a reasonably significant impact on future development potential and
land use for the property. The proposed easement would not obstruct or delay the
Hilton Canopy Hotel project in any way.
Ithaca
Urban
Renewal
Agency
IURA EDC Minutes
December 2, 2015
Page 2 of 10
Bohn noted the IURA currently has a purchase and sale agreement in place with the
Hilton Canopy Hotel (Lighthouse Hotels), so his only concern would be the impact the
easement would have if the IURA did not close on that agreement, with a large
easement cutting through both properties. Bohn asked Lighthouse Hotels for an update
on where the Hilton Canopy Hotel project currently stands with financing and
construction. He received verbal confirmation that financing at 80% of project cost is
now in place and the project has been thoroughly priced out. Construction costs ended
up being significantly higher than anticipated, so Lighthouse Hotels spent several
months of value‐engineering to reduce them. The project is expected to close in
January 2016.
Bohn noted there is some risk to the IURA, should the hotel project not move forward.
The easement is being granted to NYSEG and it would be possible to relocate it, if
necessary — but at the cost of relocation expenses. One of the easement’s benefits is
that it would remove overhead wires and place them underground, which would be a
definite enhancement for the downtown area. It would also include an electrical service
upgrade.
Bohn recommended approving the easement request, subject to certain conditions:
preservation of underground stormwater drainage facilities; commitment to removal of
overhead wires; termination of any other existing easements; assurance that the
Community School of Music and Arts (CSMA) will not be negatively impacted by the
easement; and written confirmation of Lighthouse Hotels’ expectation to close.
Dylla asked if the easement would allow other utilities to use the underground utility
space. Bohn replied that it would be open to NYSEG, Verizon, Time Warner Cable, and
the Finger Lakes Technologies Group.
Bohn added that he asked Carey Building Associates, LLC why two separate easements
crossing into the property are needed, and if they could be consolidated into a single
easement. That remains an outstanding question.
Moved by Harrick, seconded by Lam:
Approve a Utility Easement Across Property Located at
320‐324 E. State Street to Relocate Utilities Underground
WHEREAS, Carey Building Associates, LLC, owner of property located at 314‐320 E.
State Street, requests the IURA to grant an underground utility easement to New
York State Electric and Gas (NYSEG), Verizon, Time Warner Cable, and Finger Lakes
Technologies Group across property located at 320‐324 E. State Street to provide
electric and communication utilities to serve the Carey Building, the proposed Hilton
Canopy hotel project, and any other property adjoining the easement, and
IURA EDC Minutes
December 2, 2015
Page 3 of 10
WHEREAS, the route of the proposed underground easement will follow the
approximate route of existing overhead electric lines, and
WHEREAS, on July 2, 2015, the IURA executed an agreement to convey title to
property located at 320‐324 E. State Street to Lighthouse Hotels, LLC to undertake an
approved urban renewal project to construct a seven story Hilton Canopy hotel, and
WHEREAS, conveyance of the parcel from the IURA to Lighthouse Hotels, LLC is
subject to satisfaction of the following conditions:
1. Acquisition of adjacent property (tax parcel #69.‐1‐8);
2. Proof of project financing;
3. Issuance of a building permit, and
WHEREAS, the utility easement will prohibit structures to be built within the limits of
the easement, which could impair the value of the property if Lighthouse Hotels, LLC
does not acquire the property, and
WHEREAS, Lighthouse Hotels, LLC has provided a verbal project status report that
construction cost has been finalized, a project financing commitment has been
secured, and acquisition of the adjacent property and issuance of a building permit is
scheduled to occur in the 1st quarter of 2016, and
WHEREAS, Lighthouse Hotels, LLC has provided written consent for the proposed
easements; and
WHEREAS, relocation of utilities underground improves the physical characteristics of
the urban renewal area; and
WHEREAS, at their December 2, 2015 meeting, the Economic Development
Committee considered this matter and recommended the following; now, therefore,
be it
RESOLVED, that the IURA Chairperson is hereby authorized, subject to review by
IURA legal counsel, to execute an easement agreement to grant a nonexclusive
easement to NYSEG, Verizon, Time Warner Cable, and Finger Lakes Technologies
Group for underground utilities across property located at 320‐324 E. Green Street
(tax parcels #69.‐1‐1.3 and #69.‐1‐6.2) subject to satisfaction of the following
conditions:
1. Provision for continued rights to maintain any existing municipal water and sewer
facilities which cross the easement area;
2. Commitment that existing utilities and telecommunication overhead wires at 320‐
324 E. State will be relocated underground;
IURA EDC Minutes
December 2, 2015
Page 4 of 10
3. Terminate any portion of any existing NYSEG easement at 320‐324 E. State Street
for overhead utilities and removal of the existing utility pole;
4. Confirmation from Carey Building Associates, LLC that the Community School of
Music and Arts (CSMA), as an adjoining property owner to the easement who
currently receives utility service from the overhead wires to be removed, will
have rights to access underground electric and communication utilities in the
easement at no cost to CSMA, and provided that any reasonable cost of such
relocation be paid by Carey Building Associates, LLC;
5. Submission from Lighthouse Hotels, LLC of a Canopy hotel project status report
confirming satisfactory progress toward satisfying the conditions contained in the
sale agreement to acquire property located at 320‐324 E. State Street from the
IURA, and be it further
RESOLVED, that IURA legal costs associated with this request shall be paid by Carey
Building Associates, LLC.
Carried Unanimously 5‐0
B. Request from Cayuga Green, LLC for Various Approvals to Facilitate Refinancing of
Cayuga Green Place, Located at 131‐135 E. Green St. (Cayuga Green — Phase II)
Bohn noted the IURA approved a similar resolution in July 2015; however, the initial
lender did not ultimately close on that agreement. Cayuga Green, LLC subsequently
identified a new lender, First Niagara Bank, which is asking for first lien on the property
(Urban Outfitters) the IURA sold to Cayuga Green, LLC. It is also asking the IURA to allow
Cayuga Green, LLC to grant leasehold mortgages to First Niagara Bank for the lease
interest in the ground floor of Cayuga Street Garage (Coltivare, Merrill Lynch) and
Cinemapolis. Bohn indicated he does not believe there is a risk for the IURA to grant the
leases as collateral. The transaction would also enable the IURA’s Urban Outfitters loan
to be paid off. Cayuga Green, LLC has satisfied the goals of the project and met all its
obligations. It has also remained current on all its IURA debt throughout the life of the
loan.
Moved by Tegan, seconded by Harrick:
Cayuga Green Phase II — Request from Cayuga Green, LLC for Various IURA
Approvals to Facilitate Project Refinancing (Parcels ‘E’)
WHEREAS, Cayuga Green, LLC, seeks to refinance project debt on the Cayuga Green
Place project located at 131‐135 E. Green Street (Property), also known as Parcel E of
the Cayuga Green project, and seeks IURA approval to subordinate an IURA loan to
new financing, and
IURA EDC Minutes
December 2, 2015
Page 5 of 10
WHEREAS, proposed project refinancing in July through Rialto Mortgage Financing,
LLC did not proceed to closing, and
WHEREAS Cayuga Green, LLC has now secured a loan commitment from First Niagara
Bank to refinance project debt, 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 resulting in
Urban Outfitters executing a lease to occupy ground floor space at the Property, and
WHEREAS, First Niagara Bank requires that the IURA subordinate its promissory note
and mortgage to its first mortgage as a condition of financing, and
WHEREAS, First Niagara Bank further requires IURA consent to assign and/or
mortgage leasehold interest in the following leases between the IURA and Cayuga
Green LLC to First Niagara Bank as collateral to secure the proposed loan:
Cayuga Green Lease Agreement, Parcel “A” Ground Floor of Cayuga Garage, July
1, 2006 (tenants: Merrill Lynch & TC3 Foundation’s Coltivare),
Cayuga Green Lease Agreement, Portion of Ground Floor of Green Garage, July
24, 2007 (tenant: Cinemapolis), 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 First Niagara Bank in
the principal amount of $12,500,000, and
WHEREAS, the IURA’s existing 5th lien mortgage is subordinated to mortgage liens
totaling over $12,500,000, so the IURA collateral position will not be impaired, and
WHEREAS, Cayuga Green, LLC also proposes paying off the IURA Urban Outfitters
loan at the time of refinancing, which carried a principal balance of $54,207.55 as of
October 31, 2015, and
WHEREAS, this matter was discussed at the December meeting of the IURA Economic
Development Committee, which recommends the following action: now, therefore
be it
IURA EDC Minutes
December 2, 2015
Page 6 of 10
RESOLVED, the IURA hereby approves an agreement to subordinate its mortgage on
real property located at 131‐135 E. Green Street to First Niagara Bank, conditioned
upon pay off of the IURA’s Urban Outfitter loan to Cayuga Green, LLC, and be it
further
RESOLVED, that the IURA further grants consent to Cayuga Green LLC to assign
and/or mortgage their interest in the following leases to First Niagara Bank to secure
the proposed loan:
Cayuga Green Lease Agreement, Parcel “A” Ground Floor of Cayuga Garage, July
1, 2006,
Cayuga Green Lease Agreement, Portion of Ground Floor of Green Garage, July
24, 2007, 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, including but not
limited to subordination agreements, non‐disturbance agreements and estoppel
certificates, to implement this resolution, and be it further
RESOLVED, that IURA legal fees associated with this request shall be paid by Cayuga
Green LLC.
Carried Unanimously 5‐0
C. Review of Proposed Reforms to City of Ithaca Community Investment Incentive
Tax Abatement Program (CIITAP)
Bohn noted the Committee now has the opportunity to provide feedback on the
recently proposed CIITAP revisions. Since launching in 2000, the program has gone
through several iterations, from simple to more complex, but with the same underlying
goal of providing financial incentives for multi‐story development in the downtown
core. The first iteration of the program was simple, with only a few eligibility criteria. It
was subsequently modified to include 48 different community benefits, with projects
providing 23 community benefits receiving the full incentive. This second iteration of
the program, however, was widely perceived as too complex and confusing. The
program was then modified once again to a far simpler program. The current program
does not include many eligibility requirements. Bohn stressed that the tax abatement
only applies to taxes on the increased value of a given project, so there is no reduction
in the existing tax on a property. If the applicant can demonstrate financial need, they
can also receive an additional 1‐3 years of tax abatement, for a total of up to 10 years.
(Every project that has received approval has demonstrated that need.)
IURA EDC Minutes
December 2, 2015
Page 7 of 10
Bohn explained that CIITAP does not currently provide any financial incentives or
requirements for providing extra community benefits, beyond the “Basic Eligibility
Criteria.” In acknowledgment of this, the Mayor appointed a working group to examine
the best approach for reforming the program and including incentives for enhanced
benefits. The proposed revisions include seven “Basic Eligibility Criteria” for a 7‐year
abatement: Project Size Requirement; Project Density Requirement; Project Location
Requirement; Municipal Compliance; Sustainability and Energy Requirement; Diversity
and Inclusion; and Local Construction Labor. Three new “Enhanced Eligibility Criteria”
have been proposed for a 12‐year abatement: Local Labor; Energy Standards and
Sustainability; and Living Wages. The goal was to keep the standard program the same,
but provide a further abatement benefit period, if the developer meets the
requirements. The working group’s proposal was reviewed at a recent Planning &
Economic Development Committee meeting, which produced considerable discussion
and criticism.
Harrick asked if the goal of achieving density in the downtown core could now be said to
have been met. Bohn replied that some people believe it has been. When the program
was originally conceived, there had been no major new investment in the downtown
core for nearly 20 years. The argument could certainly be made that the downtown
economy is now vital and competitive enough that a tax abatement program is no
longer warranted.
Ackerman observed there definitely appears to be considerable interest by developers
in the downtown core in recent years. If the City continues to offer this kind of valuable
incentive program, then it should be asking developers to provide additional community
benefits.
Harrick suggested the program could be used to target specific kinds of projects (e.g.,
conference center) that have been determined to have a particular strategic value to
the city, rather than simply continuing to incentivize many of the same kinds of projects
the city has seen in recent years.
Dylla agreed with the underlying objective of the program, as well as the impetus to
simplify the overall approach; however, he would prefer to see the enhancements
structured as requirements, rather than options. Affordable housing should definitely
be one of them.
Ackerman agreed some of the proposed enhancements should be basic requirements.
Lam noted there is insufficient available data from past and existing projects to be able
to gauge a given project’s measurable use of local labor or payment of living wages. She
is skeptical there is enough accurate and readily available information on hand to justify
some of the proposed new requirements.
IURA EDC Minutes
December 2, 2015
Page 8 of 10
Bohn replied that was part of the motive for beginning to ask developers to track things
like their use of local labor. Once more accurate data has been collected, the City could
better determine what a particular baseline standard should be and what threshold
above that basic standard needs to be met for the enhanced 12‐year abatement. Bohn
noted that providing developers a set of options from which to choose ensures they do
not risk pursuing a goal they may not ultimately be able to achieve. He added that one
of the reasons the proposed list is fairly short is due to past projects being encumbered
by multiple people/interests, all asking for different benefits, which ended up becoming
too onerous and complex. The working group, therefore, proceeded on the assumption
that having a relatively short list would be more effective. Certainly, other benefits, like
affordable housing or a conference center project, could still be widely considered to be
community benefits.
Ackerman observed the “Diversity & Inclusion” basic eligibility criterion is peculiar, since
it does not seem to demand anything substantive. Bohn replied that the working group
put considerable thought into that criterion, but it is difficult to quantify and implement.
A more robust requirement was discussed, like a commitment to hire and retain hard‐
to‐employ people, but it was determined it would be too difficult for the IDA to
implement.
Tegan noted the City may not be realistic enough in terms of identifying what is
plausible/possible. More effort needs to be made to generate better‐defined and
measurable requirements. The requirements that are ultimately selected should be the
most measurable and feasible ones.
Bohn responded that the feasibility of a given requirement is not so much of a problem,
if it is among several different options provided to developers.
Ackerman reiterated it would be best to push developers to provide something
meaningful in exchange for the City’s continuing to provide such significant tax
abatements.
D. HUD Entitlement Grant — Draft FY 2016 Economic Development Funding
Application Process
Bohn announced the IURA will be soliciting funding applications beginning in January 2016.
This year, IURA staff are trying to customize the different applications to each specific use
(housing, public facility, public service, economic development). He noted many of the
applications in the Economic Development funding category are for programs (e.g.,
downtown business loan pool), rather than specific projects, since it is difficult for most
projects to wait the 8 months between being approved and actually receiving the funding.
In recent years, Economic Development programs have primarily been job
training/placement programs.
IURA EDC Minutes
December 2, 2015
Page 9 of 10
Dylla inquired into the IURA’s lessons learned from its job training/placement programs.
Bohn replied that IURA staff learned considerably more over the past year. For example,
the Learning Web’s Supported Employment program was not as successful as originally
anticipated, largely because the organization misunderstood the nature of the clients it
would be working with. Clients ended up needing a year of positive/stable work history,
before even being considered for placement at the Cayuga Medical Center. As a result,
most of the program funding was spent on those kinds of efforts and not placing clients on
the entry‐level career path the program was intended for. Other job training/placement
programs, like Historic Ithaca’s Work Preserve program, GIAC’s Hospitality Employment
Training Program (HETP), and the Finger Lakes ReUse ReSET program, on the other hand,
were not as ambitious as the Learning Web, but achieved some good outcomes. All of
these organizations are aware that job placement has become an increasingly important
focus for the IURA.
VI. Old Business
A. NY Upstate Revitalization Initiative: Southern Tier Plan — Update
Bohn noted that 12/10/15 is the award announcement date, for New York Consolidated
Funding Application (CFA) and Upstate Revitalization Initiative winners.
B. NYS Department of Transportation (DOT) Maintenance Facility Redevelopment
Feasibility Study — Update
Bohn reported the City completed the principal phase of the feasibility analysis for
relocating the DOT maintenance facility at the waterfront to a vacant property in
Dryden, NY. The analysis included information on how much the relocation would cost,
as well as how much the current site could be sold for to defray some of the relocation
costs. Bohn noted the DOT definitely wants to consolidate its Cortland and Tompkins
County facilities, but it has not yet committed any funding of its own for the relocation.
The results of the feasibility analysis indicate it would cost $10‐14M to complete the
relocation and identified the likely value of the waterfront lot at around $2M. The
feasibility analysis also examined options for using the waterfront lot for an expansion
of the Ithaca Farmer’s Market operations. The next phase of the project is for the
consultant to develop an RFP request for interested developers for the site — however,
that is contingent on the DOT’s decision to pay for some or all of the relocation cost.
VII. Reports
A. IURA Loan & Lease Repayment Report: October 2015
Bohn reported the Bandwagon Brew Pub and State Theatre are both now current. The
Art & Found remains delinquent and a demand letter has been mailed to them. The
IURA is secured by the store’s inventory and the owner’s personal financial guarantee.
Bohn also indicated the IURA has been repaid for entire Argos Inn loan.
IURA EDC Minutes
December 2, 2015
Page 10 of 10
Bohn reported that the Carpenter Business Park property recently sold to a buyer,
generally believed to be Maguire Ford, which has been looking to expand. The City’s
Comprehensive Plan defined that part of the city as a focus area with the intent to
connect the waterfront to the Northside neighborhood, which an auto dealership would
not be compatible with. Common Council will likely discuss what zoning would be
appropriate for that area (currently zoned as “Industrial”).
B. Loan Pipeline
Bohn reported that a climbing wall company may be interested in a location in the city.
In addition, a farm‐and‐produce business and a restaurant are both interested in
establishing a location in downtown Ithaca.
C. Staff Report
None.
VIII. Adjournment
The meeting was adjourned by consensus at 5:10 P.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.