HomeMy WebLinkAboutMN-IURAED-2016-10-11Approved: 12/8/16
108 E. Green Street
Ithaca, New York 14850
(607) 274-6565
(607) 274-6558 (fax)
MEETING MINUTES
ITHACA URBAN RENEWAL AGENCY
Economic Development Committee (EDC)
3:30 PM, Tuesday, October 11, 2016
Common Council Chambers, City Hall, Ithaca, NY
Present: Doug Dylla, Chris Proulx, Heather Harrick, Charles Hamilton
Excused: Leslie Ackerman
Vacancies: 1
Staff: Nels Bohn, Charles Pyott
Guests: Benjamin Brotman, Liquid State Brewing Company, Inc.
I. Call to Order
Chair Dylla called the meeting to order at 3:31 P.M.
II. Agenda Additions/Deletions
None.
III. Review of Meeting Minutes: September 13, 2016
Hamilton moved, seconded by Harrick, to approve the September 13, 2016 minutes,
with no modifications. Carried Unanimously 4‐0.
IV. Public Comments (3‐minute maximum per person) ― None.
V. New Business
A. Request from Liquid State Brewing Company, Inc. for Loan Assistance for Start‐Up
Craft Micro‐Brewery with Taproom at 527 W. Green St. (PB‐LF #9)
Bohn reported that the IURA recently received a funding application for a
brewery/taproom start‐up, to be located in the former Cornell Laundry building. It
would be an eligible activity for the Priority Business Loan Fund, which does permit
alcohol sales. There is a considerable amount of equity associated with the project; and
bank funding has already been secured.
Ithaca
Urban
Renewal
Agency
IURA EDC Meeting Minutes
October 11, 2016
Page 2 of 7
Bohn explained that the IURA is being asked to provide $70,000. The project would
create at least 2.5 full‐time equivalent (FTE) jobs (not counting the two co‐owners), so it
would meet IURA job‐creation requirements. The underwriting report concludes the
project meets underwriting standards. While neither of the two co‐owners has direct
retail experience, they have hired a retail manager with considerable retail experience.
The only underwriting issue would be the standard risk associated with any start‐up
venture. There is also a limited amount of collateral. The project has a robust business
plan, with good debt‐coverage ratios. The applicants developed a budget that provides
sufficient working capital and establishes a detailed list of costs. IURA staff recommends
approval of the loan application, with a second lien on business assets.
Brotman walked through an overview of the proposal, noting the 5,000‐SF operation
would be located in a very promising section of the city’s West End. The brewery could
probably produce 500 gallons of beer in each batch. The vast majority of the operation
would be retail, with some wholesale operations in the surrounding community.
Brotman noted he has worked with five breweries. The brewery would be a small
artisan operation, but would include a laboratory with a serious quality assurance
program. The brewery would also include other elements (e.g., beerhall, skeet ball
machines, merchandise, occasional live music). While it would not feature a full kitchen,
it would have a limited menu of food selections, possibly in collaboration with a rotating
selection of local food trucks. The applicants eventually plan to establish outdoor
seating.
Proulx asked how the applicants would position themselves vis‐à‐vis the local
competition. Brotman replied that even in the recent economic downturn craft brewing
has performed very well. He has carefully examined the projected sales figures, which
were partially based on the Empire Brewing Company in Syracuse, as well Livingston
Manor in the Catskills. Brotman indicated his plan would be for the operation to
become the primary local brewery. Some towns the size of Ithaca have as many as four
breweries in their downtown areas; and they are performing well. He does not believe
the Ithaca market is anywhere near to being saturated. The operation’s labor costs
would also be low.
Harrick asked what the seating capacity would be. Brotman replied it would have a
maximum capacity of 99, although they could potentially exceed that figure if they
sprinklered the building. Harrick asked if the applicants included that possibility in their
proposal. Brotman replied, no. Building improvements would probably be around
$15,000‐$20,000, although the building owner has also been paying for some
improvements. Brotman added that the brewery’s physical space would be very
different from any other space in Ithaca, differentiating it well from other
establishments.
IURA EDC Meeting Minutes
October 11, 2016
Page 3 of 7
Hamilton asked how the applicants are doing in terms of their timeline for obtaining the
requisite permits. Brotman replied that the Federal license application was submitted a
month ago. A State license application was submitted this week, which should take a
couple of months to approve. The applicants do not need the alcohol permits to
proceed with the Building Permit. The opening is anticipated to be in March 2017.
Hamilton asked if the applicants would need any kind of wastewater permit. Brotman
replied he is not aware of any such requirement and does not expect it to be an issue as
they will use much less water than the prior clothes cleaning use.
Proulx inquired into the operation’s parking capacity. Brotman replied they would have
48 shared parking spaces on the property (which should be largely vacant after 5:00
p.m.).
Proulx moved, seconded by Hamilton:
Loan Assistance to Liquid State Brewing Company, Inc. (PB‐LF #9)
WHEREAS, on August 19, 2016 the Liquid State Brewing Company, Inc. (LS Brewing)
applied for a $70,000 IURA loan for a start‐up micro‐brewery with taproom at 527 W.
Green Street; 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, including a brewpub; and
WHEREAS, the proposed business is substantially similar to a brewpub and therefore
eligible for loan assistance through the PB‐LF; and
WHEREAS, the proposed uses of project funds are:
$16,000 Lease deposit
$98,000 Leasehold improvements
$335,000 Equipment
$35,000 Furniture & fixtures
$35,200 Fees/Soft costs
$125,800 Working capital
$645,000 Total, and
WHEREAS, the proposed sources of project funds are:
$200,000 Equity
$350,000 M&T Term Loan
IURA EDC Meeting Minutes
October 11, 2016
Page 4 of 7
$25,000 M&T Line of Credit
$70,000 IURA
$645,000 Total, and
WHEREAS, the primary owners of LS Brewing are Jamey Tielens and Benjamin
Brotman, and
WHEREAS, the project is projected to create at least 2.5 full‐time equivalent (FTE)
employment positions, of which at least 51% will be filled by low‐ and moderate‐
income persons, resulting in $28,000 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, 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 project does not require further consultation with respect the federal
laws listed at 58.5, such as flood hazard regulations, and therefore converts to an
Exempt activity for 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 October 11, 2016meeting, the IURA Economic Development
Committee reviewed the loan application, a credit analysis prepared by Richard Rickli
of 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 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: Liquid State Brewing Company, a New a New York State
Corporation
Loan Amount: Up to $70,000
IURA EDC Meeting Minutes
October 11, 2016
Page 5 of 7
Project: Establishment of a start‐up micro‐brewery with taproom at
527 W. State Street, Ithaca, NY.
Total Project Cost: $645,000
Projected Use of IURA
Funds:
Purchase of beer brewing production equipment, furnishings
and fixtures
Term: 90 months (7 years and six months)
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 84 months (approximately $941/month) and subject to a
revised P&I amount upon rate reset.
Loan Collateral: 1. General security interest on all business assets including
accounts, inventory, furniture, fixtures and equipment
now owned or hereafter acquired, subordinated to the lien
of M&T Bank.
Personal Guarantor(s): Benjamin J. Brotman and Jamey T. Tielens, joint and several. .
Job Creation Requirement: Creation of at least two and one‐half (2.5) FTE employment
positions of which at least 51% must be held by low‐ and
moderate‐income persons.
Loan Disbursement: In full, upon receipt of invoices for production equipment and
or furnishings and fixtures in an amount equal to or greater
than the loan amount.
Conditions: 1. All related party debt shall be fully subordinated to IURA
debt in both lien and payment.
2. Completion of NEPA environmental review by staff.
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,
IURA EDC Meeting Minutes
October 11, 2016
Page 6 of 7
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
VI. Old/New/Other Business
A. Restore NY Update
Bohn reported that the Restore New York Initiative (Round 4) grant application was
submitted, as was discussed at the last Committee meeting. He has also spoken with
some of the other applicants who were not selected, to determine ways those projects
could move forward. Common Council voted unanimously in support of the application.
B. IURA Loan & Lease Repayment Report & Grants Summary: August 2016
Bohn indicated all loans are current, except the State Theatre and Diane’s Downtown
Auto. Since the report was generated, however, Diane’s Downtown Auto has become
current and the State Theatre has made two payments. Bohn invited representatives of
the State Theatre to meet with the Committee to discuss the theatre’s operations, sales,
and budget projections. The State Theatre recently lost one of its tenants, New Roots
Charter School, which has placed some stress on its cash flow.
Bohn reported that all grants are in good shape. The oldest grant is the Ithaca Falls
Overlook Site Cleanup project, which is subject to an upcoming State Department of
Environmental Conservation (DEC) public hearing. That budget line has been kept open
to ensure the IURA has resources available to address any issues that could conceivably
emerge. The IURA’s consultants have determined there should be no need for further
remediation action.
C. Staff Report
Bohn reported that Ithaca Neighborhood Housing Services (INHS) will be approaching
Common Council for approval to accept a $4M grant award, on behalf of INHS, to
rehabilitate its scattered‐site housing rental units.
IURA EDC Meeting Minutes
October 11, 2016
Page 7 of 7
VII. Adjournment
The meeting was adjourned by consensus at 4:30 P.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.
j:\community development\admin files\minutes\edc\2016\edc minutes 10‐11‐16 ‐ draft nb.doc