HomeMy WebLinkAboutMN-IURA-2017-06-21Approved: 7/27/17
108 E. Green St.
Ithaca, NY 14850
(607) 274-6565
MINUTES
ITHACA URBAN RENEWAL AGENCY
Common Council Chambers, City Hall
10:00 A.M., Wednesday, June 21, 2017
Members: Mayor Svante Myrick, Chair; Tracy Farrell; Karl Graham; Chris Proulx; Graham Kerslick
(Common Council Liaison)
Excused: Eric Rosario
Staff: Nels Bohn; Anisa Mendizabal; Charles Pyott
Guests: None
I. Call to Order
Chair Myrick called the meeting to order at 10:22 A.M. (immediately following an IURA Audit
Committee meeting).
II. Agenda Additions/Deletions
No changes were made to the agenda.
III. Public Comment
None.
IV. Review of Draft Meeting Minutes: March 23, 2017 & April 13, 2017
Farrell moved, seconded by Graham, to approve the March 23, 2017 and April 13, 2017
meeting minutes, with no modifications.
Carried Unanimously 4‐0
V. Audit Committee Report
A. Election of Committee Chairperson
Moved by Farrell, seconded by Proulx:
2017 Appointment of IURA Audit Committee Chairperson
WHEREAS, the IURA By‐laws provide that the committee membership shall elect its own
committee Vice‐Chairperson and nominate a member to serve as Chairperson, and
Ithaca
Urban
Renewal
Agency
IURA Minutes
June 21, 2017
Page 2 of 13
WHEREAS, officers of each committee serve a one‐year term, but continue to hold office until
their successor is selected or appointed, and
WHEREAS, the current committee officers are:
Chairperson: Eric Rosario
Vice‐Chairperson: Karl Graham, and
WHEREAS, at their June 21, 2017 meeting, the IURA Audit Committee elected Karl Graham as
Vice‐Chairperson and nominated Eric Rosario as Chairperson for consideration by the Agency;
now, therefore be it
RESOLVED, that the IURA hereby appoints Eric Rosario as Chairperson of the IURA Audit
Committee.
Carried Unanimously 4‐0
B. Approval of Audited 2016 IURA Financial Report
Moved by Farrell, seconded by Graham:
Approve Audited 2016 IURA Financial Report
WHEREAS, the Ithaca Urban Renewal Agency (IURA) derives the majority of its finances from grants
awarded to the City of Ithaca, and
WHEREAS, for financial reporting purposes the IURA is a blended component unit of the City of
Ithaca whose financial activity is reported in the Special Grant Fund, a governmental fund of the City
of Ithaca financial statements, and
WHEREAS, the IURA contracts separate from the City to have its finances audited within 90 days of
the end of its fiscal year to comply with the Public Authorities Accountability Act, and
WHEREAS, the IURA received an audited 2016 IURA financial report prepared by Insero & Company,
LLP on March 9, 2017, and
WHEREAS, at their April meeting the IURA Governance Committee reviewed the financial report and
attached correspondence, and
IURA Minutes
June 21, 2017
Page 3 of 13
WHEREAS, at their June meeting, the IURA Audit Committee reviewed the financial report and
attached correspondence and recommends the following; now, therefore, be it
RESOLVED, that the Financial Report of the Ithaca Urban Renewal Agency for the period January 1,
2016, through December 31, 2016, prepared by the accounting firm of Insero & Company, LLP, be
approved.
Carried Unanimously 4‐0
VI. Governance Committee (GC) Report
A. Approval of FY2016 Public Authorities Accountability Reports
Moved by Graham, seconded by Proulx:
Approval of FY2016 Reports Submitted to New York State Authorities Budget Office
WHEREAS, pursuant to the Public Authorities Accountability Act, as amended, the IURA is
required on an annual basis to submit reports to the New York State Authorities Budget Office
(ABO), and
WHEREAS, the IURA Director of Community Development is designated to certify accuracy of the
reporting, and
WHEREAS, the reporting is due to be submitted within 90 days of the end of the fiscal year, and
WHEREAS, it is appropriate that IURA members exercise oversight over the staff reporting to the
ABO, and
WHEREAS, at their meeting of April 20, 2017, the IURA Governance Committee reviewed the
reporting and recommends the following action; now, therefore, be it
RESOLVED, that the IURA hereby approves FY 2016 IURA reports submitted to the New York
State Authorities Budget Office, including the following:
Budget report
Annual report
Procurement report
Investment report
Certified financial audit report
Carried Unanimously 4‐0
IURA Minutes
June 21, 2017
Page 4 of 13
B. Committee Chairperson Report
Bohn reported that the Committee has continued to pursue possibly enrolling the IURA in the
Greater Tompkins County Municipal Health Insurance Consortium to reduce staff health insurance
premiums. He will consult with the City Controller to determine what may be possible in terms of
making the IURA eligible for the Consortium.
VII. Economic Development Committee (EDC) Report
A. Request from LAG Restaurant Group, LLC for 2nd Amendment to Loan Agreement (CD‐RLF #40) ‐
Proulx reported the applicant is current on all its payments to the IURA, has met its job‐creation goal,
and has been operating profitably. The Committee has no objections to the request.
Moved by Proulx, seconded by Farrell:
LAG Restaurant Group, LLC, dba The Rook, Loan Modification #2 (CD‐RLF #40)
WHEREAS, on April 25, 2016, the IURA issued a six‐year $40,000 loan to LAG Restaurant Group,
LLC (LAG) to open The Rook restaurant at 404 W. State/M.L.K., Jr. Street, and
WHEREAS, the IURA loan was secured by a 1st security lien on business assets, personal
guarantees from each of the three owners and from Deborah and Davis Osherow, and
WHEREAS, LAG seeks approval to substitute a personal guarantee from Francisco Donaruma and
release for Deborah and Davis Osherow from their financial guarantee, and
WHEREAS, the outstanding balance on the loan is $33,848.53 as of May 31, 2017, and
WHEREAS, LAG is current on IURA loan repayments and satisfied their 6 FTE job creation goal,
and
WHEREAS, based on FY16 financials, the business is operating profitably, and
WHEREAS, the proposed substitute guarantor possesses sufficient net worth and liquidity to
satisfactorily secure the IURA loan, and
WHEREAS, at their June 13, 2017 meeting the Economic Development Committee reviewed this
matter and recommended the following; now, therefore be it
RESOLVED, that the IURA hereby approves a loan modification to accept a personal guarantee
from Francisco Donamura to substitute for the existing guarantee of Deborah and Davis Osherow
that serves to secure an IURA loan to LAG Restaurant Group LLC, and be it further
IURA Minutes
June 21, 2017
Page 5 of 13
RESOLVED, that the IURA Director of Community Development is authorized, subject to review
by IURA legal counsel, to implement this resolution.
Carried Unanimously 4‐0
C. Request from Urban Core, LLC for Loan Assistance (CD‐RLF #42)
Proulx explained that the applicant is the same developer that successfully renovated Press Bay Alley.
The proposal would aim to develop a similar, adjacent project, using IURA funds to acquire the
property, generating at least 6 full‐time equivalent (FTE) positions. Proulx noted the IURA ordinarily
limits Revolving Loan Fund assistance to $150,000, which can be waived for project demonstrating
significant public benefit, which the proposed project appears to do. The applicant has a history of
developing successful projects with stable tenants, and creating new downtown business activity.
Moved by Proulx, seconded by Farrell:
Loan Assistance to Urban Core, LLC (CD‐RLF #42)
WHEREAS, on May 15, 2017, Urban Core, LLC (Urban Core) applied for a $200,000 loan for a
$897,500 project to acquire and rehabilitate a commercial, mixed‐use property located at 108‐
114 W. Green Street, Ithaca, NY; and
WHEREAS, the primary objective of the Community Development Revolving Loan Fund (CD‐RLF)
is provision of direct financing for economic development activities that create employment
opportunities, facilitate the expansion of business activity within the City of Ithaca and expand
the commercial and industrial tax base, and
WHEREAS the project will generate additional pedestrian traffic for the downtown, renovate and
fill a predominantly vacant building with new businesses in a strategic area of downtown, and
increase the commercial tax base, and
WHEREAS, a total of six (6) new jobs and/or microenterprise businesses are projected to be
created by the project, and
WHEREAS, the proposed uses of project funds are:
$650,000 Property acquisition
$207,500 Renovation/construction
$40,000 Fees/Soft costs
897,500 Total, and
WHEREAS, the proposed sources of project funds are:
$116,250 Equity
$581,250 Bank
$200,000 IURA
$897,500 Total, and
IURA Minutes
June 21, 2017
Page 6 of 13
WHEREAS, the applicable CDBG public benefit standard requires at least one FTE job or new
microenterprise business be created for every $35,000 of loan assistance, and
WHEREAS, the project will generate at least six (6) FTE jobs and/or microenterprise businesses
owned by a low/mod income person, resulting in $33,333 of loan assistance per beneficiary, and
WHEREAS, the CD‐RLF establishes the maximum amount of financing for non‐retail businesses at
$150,000 unless a project will result in extraordinary degree of public benefit, and
WHEREAS, as the project involves acquisition and renovation of existing building, 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 project constitutes a Type II action under the City of Ithaca Environmental
Quality Review Ordinance and therefore is not subject to further local environmental review, and
WHEREAS, at their June 13, 2017 meeting, the IURA Economic Development Committee
reviewed the loan application, a credit analysis prepared by Elizabeth Kraus 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 finds the project will likely result in an extraordinary degree of
public benefit and therefore authorize increasing the maximum loan amount for this project to
$200,000, and be it further
RESOLVED, that the IURA hereby approves a loan from the Community Development Revolving
Loan Fund (CD‐RLF) in accordance with the loan application, and supplemental submissions,
subject to the following terms:
Borrowers: Urban Core, LLC, a New a New York State limited liability company
Loan Amount: Up to $200,000
Project: Acquisition, renovation and lease up of a mixed use
commercial/residential building for multiple tenants, located at 108‐
114 W. Green Street, Ithaca, NY.
Total Project Cost: $897,500
IURA Minutes
June 21, 2017
Page 7 of 13
Projected Use of IURA Funds: Property acquisition and soft costs/fees only
Term: 246 months (20 years and six months)
Amortization Term: 240 months
Interest Rate: 3.5% annually for the first 126 months. The initial interest rate shall
be 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.
Interest Rate Reset: At 126 months, the interest rate shall be reset to 62% of the Wall
Street Journal Prime Rate or remain unchanged, whichever is higher.
Repayment: Interest‐only payments for six (6) months, followed by level monthly
payments of principal and interest to fully amortize the loan over 240
months (approximately $1,159.92/month) and subject to a revised
P&I amount upon rate reset at year #10.
Loan Collateral: 1. Second mortgage lien on commercial property located at 108‐
114 W. Green Street, Ithaca, NY behind Tompkins Trust
Company first mortgage in the amount of $581,250.
Personal Guarantor(s): John A. Guttridge and David Kuckuk, joint and several
Job Creation Requirement: Creation of a minimum of six (6):
FTE employment positions of which at least 51% must be
held by low‐ and moderate‐income persons; and/or
Microenterprise businesses owned 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/microenterprise businesses
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
IURA Minutes
June 21, 2017
Page 8 of 13
D. Cayuga Green ― Request to Authorize Conveyance of Various Private Sector Components of
Public‐Private Mixed‐Use Project
Proulx explained that Cayuga Green, LLC and The Lofts on Six Mile Creek, LLC would like to sell their
interests in the Cayuga Street parking garage, Cayuga Place, and The Lofts at Six Mile Creek to another
owner, which would then pay off the associated loan balances to the IURA. The transaction would
present very little risk to the IURA.
Graham asked if the loan repayments would create any issues for the IURA. Bohn replied that IURA
staff would need to examine how an early pay‐off would impact IURA financial resources. Strictly
speaking, the New York State Public Authorities Law states that unless the IURA’s own enabling
legislation authorizes making loans using its own funds, the IURA would be barred from doing so, which
would restrict what the IURA could do with the loan repayments. Ordinarily, the IURA makes loans
using Federal funds, but no Federal funds are tied up in these particular properties. So the IURA would
need to determine how best to make use of the loan repayments. It could conceivably give the funds
to the City, which could then authorize the IURA to administer them.
Moved by Proulx, seconded by Graham:
Cayuga Green Project ― Conveyance of Various Private Sector Components
WHEREAS, the Cayuga Green public‐private project redeveloped underutilized downtown sites
including:
235 S. Cayuga Street ― a 679 space public parking garage with 23,000 sq. ft. of ground floor
commercial space;
131‐135 E. Green Street ― Cayuga Place containing 68 apartments and 20,000 square feet of
commercial space;
120 E. Green Street ― a 11,000 sq. ft. 5‐screen cinema (Cinemapolis);
217 S. Cayuga Street ― The Lofts at Six Mile Creek, a 46‐unit residential building with
pedestrian connector to the Cayuga garage;
The 600 linear foot public Six Mile Creek Walk; and
WHEREAS, the IURA’s private sector partners, Cayuga Green, LLC and The Lofts on Six Mile Creek,
LLC (the Lofts), each have entered a purchase and sale agreement for conveyance, respectively,
of 131‐135 E. Green Street and 217 S. Cayuga Street, as well as for Cayuga Green, LLC’s
assignment of the ground floor master lease at 235 S. Cayuga, all to Laureate House Ithaca Mgmt
Co., LLC (Laureate), or an entity to be formed controlled by the same principals as Laureate, and
WHEREAS, on June 6, 2017, the IURA received written requests from the Lofts and Cayuga Green,
LLC for various consents and assignments to facilitate the proposed conveyances and assignment,
and
IURA Minutes
June 21, 2017
Page 9 of 13
WHEREAS, outstanding IURA loan balances totaling approximately $964,000 on IURA mortgage
loans issued to the Lofts and Cayuga Green, LLC will be paid in full upon conveyance, and
WHEREAS, upon the IURA’s receipt of payment in full of its mortgage loan balances, the IURA’s
assignment of the mortgages to the lender that provides financing for these acquisitions, in place
of the discharge or satisfaction of said mortgages, will facilitate the acquisition of these
properties by Laureate (or an entity to be formed controlled by the same principals as Laureate),
and
WHEREAS, the proposed conveyances will not impact operation or ownership the public parking
garage, the Six Mile Creek Walkway or Cinemapolis, and
WHEREAS, the Economic Development Committee reviewed this matter at their June 13, 2017
meeting and recommended the following; now, therefore, be it
RESOLVED, the Ithaca Urban Renewal Agency hereby approves the consents, assignments and
agreements requested in June 6, 2017 correspondence received from Cayuga Green LLC and The
Lofts on Six Mile Creek, LLC, to facilitate conveyance of various private sector components of the
Cayuga Green project, including but not limited to:
1. Consent to assignment, including estoppel language, of Cayuga Green, LLC’s interest in the
Master Lease with the IURA for the ground floor commercial space at 235 S. Cayuga Street,
dated 1/29/2007 to Laureate, or an entity to be formed controlled by the same principals as
Laureate;
2. Consent to leasehold mortgage of 235 S. Cayuga Street to Laureate’s lender, or the lender of
an entity to be formed controlled by the same principals as Laureate;
3. Consent to assignment and assumption, including estoppel language, of the Lofts’ interest in
the Pedestrian Walkway agreement to Laureate, or an entity to be formed controlled by the
same principals as Laureate;
4. Consent to assignment and assumption, including estoppel language, of the Lofts’ interest in
the Parking Agreement to Laureate, or an entity to be formed controlled by the same
principals as Laureate;
5. Assignment of the mortgages, including estoppel language, held by IURA to Laureate’s lender,
or the lender of an entity to be formed controlled by the same principals as Laureate upon
receipt of payment in full of the mortgage loan balances;
6. Estoppel Agreement for the Master Lease; and be it further
RESOLVED, the IURA Chairperson is hereby authorized, subject to advice of IURA legal counsel, to
execute any and all necessary documents to implement this resolution.
Carried Unanimously 4‐0
IURA Minutes
June 21, 2017
Page 10 of 13
E. Election of Committee Chairperson
Moved by Proulx, seconded by Farrell:
2017 Appointment of IURA Economic Development Committee Chairperson
WHEREAS, IURA By‐laws provide that the committee membership shall elect its own committee
Vice‐Chairperson and nominate a candidate for committee Chairperson for consideration by the
Agency, and
WHEREAS, per the Bylaws, an Agency member shall fill either the committee Chairperson or
committee Vice‐Chairperson position, and
WHEREAS, officers of each committee serve a one‐year term, but continue to hold office until
their successor is selected or appointed, and
WHEREAS, the current Committee officers are:
Chairperson: Doug Dylla
Vice‐Chairperson: Chris Proulx, and
WHEREAS, at their June 13, 2017 meeting the IURA Economic Development Committee elected
Doug Dylla as Vice‐Chairperson and nominated Chris Proulx as Chairperson for consideration by
the Agency; now, therefore be it
RESOLVED, that the IURA hereby appoints Chris Proulx as Chairperson of the IURA Economic
Development Committee.
Carried Unanimously 4‐0
F. Committee Chairperson Report
Proulx reported that the Committee discussed how to make more effective use of IURA loan funds,
including how to better market and target the funds. As Federal funding of the IURA continues to
decrease, there is a growing need to identify additional revenue sources.
VIII. Neighborhood Investment Committee (NIC) Report
A. HUD Entitlement Program ― 2nd Amendment to Citizen Participation Plan to Incorporate
Requirements for Assessment of Fair Housing
Graham explained the Citizen Participation Plan needs to be amended to meet HUD’s new Assessment
of Fair Housing requirement. The Committee reviewed the proposed language at its last meeting and
had no objections to it.
IURA Minutes
June 21, 2017
Page 11 of 13
Moved by Graham, seconded by Proulx:
2nd Amendment to HUD Entitlement Citizen Participation Plan
WHEREAS, the Citizen Participation Plan establishes the City of Ithaca’s procedures for involving
the public in development and implementation of the HUD Entitlement Program, and
WHEREAS, grantees of HUD Entitlement funding have a statutory obligation to affirmatively
further fair housing, but the statute did not establish clear guidelines for grantees, and
WHEREAS, in 2015, the U.S. Department of Housing and Urban Development (HUD) adopted a
Affirmatively Furthering Fair Housing rule in 2015 that revised the process for grantees to assess
fair housing issues and promote fair housing choice, and
WHEREAS, Ithaca is now required to submit an Assessment of Fair Housing to HUD every five
years that incorporates a specific consultation and citizen participation process, and
WHEREAS, at their June 9, 2017 meeting the IURA Neighborhood Investment Committee has
reviewed the proposed 2nd amendment to the Citizen Participation Plan, dated June 9, 2017;
now, therefore, be it
RESOLVED, that the Ithaca Urban Renewal Agency hereby recommends adoption of the 2nd
amendment to the HUD Entitlement Citizen Participation Plan, dated July 9, 2017, to comply with
the Affirmatively Furthering Fair Housing rule.
Carried Unanimously 4‐0
B. Election of Committee Chairperson
Moved by Myrick, seconded by Proulx:
2017 Appointment of IURA Neighborhood Investment Committee Chairperson
WHEREAS, IURA By‐laws provide that the committee membership shall elect its own committee
Vice‐Chairperson and nominate a candidate for committee Chairperson for consideration by the
Agency, and
WHEREAS, per the Bylaws, an Agency member shall fill either the committee Chairperson or
committee Vice‐Chairperson position, and
WHEREAS, officers of each committee serve a one‐year term, but continue to hold office until
their successor is selected or appointed, and
IURA Minutes
June 21, 2017
Page 12 of 13
WHEREAS, the current Committee officers are:
Chairperson: Karl Graham
Vice‐Chairperson: Tracy Farrell, and
WHEREAS, at their May 12, 2017 meeting the IURA Neighborhood Investment Committee elected
Tracy Farrell as Vice‐Chairperson and nominated Karl Graham as Chairperson for consideration by
the Agency; now, therefore be it
RESOLVED, that the IURA hereby appoints Karl Graham as Chairperson of the IURA Neighborhood
Investment Committee.
Carried Unanimously 4‐0
C. Committee Chairperson Report
Graham remarked that one of the approved 2017 Action Plan activities, the Lakeview Ithaca project
(Lakeview Health Services, Inc.), discovered that the number of residents on the proposed project site
were more numerous than projected, which would require spending more on relocation assistance. As
a result, the applicant is no longer seeking IURA funding, since the associated HUD relocation
requirements would create a financial burden exceeding the $50,000 award. Graham also indicated
the Gianellis Child Care Center project (Tompkins Community Action) did not receive as much funding
as planned, so the applicant reduced the number of FTE jobs it is committing to creating, from 8 to 5. It
may also seek additional IURA funding from the Revolving Loan Fund.
IX. Other New/Old Business
A. Review of IURA Financials: May 2017
Bohn reported that the IURA does not yet have its 2017 financial figures incorporated into the
report, since it had been waiting for HUD to formally announce its funding allocation. The largest
projects with unexpended funds are the Spencer Road Sidewalks and Wading Pool Renovation
projects, both of which are City‐operated projects.
Bohn reported that the IURA received a letter from HUD regarding the IURA spend‐down ratio. The
letter indicated the IURA is not compliant with the timeliness of its Community Development Block
Grant (CDBG) expenditures. (“A grantee is considered to be in compliance if, 60 days prior to the
end of its program year, there is no more than 1.5 times its annual grant remaining in the line of
credit, including any program income on hand.”) IURA staff had historically understood HUD spend‐
down requirements to exclude program income. IURA staff is discussing the issue with its
community development/HUD consultant. If the IURA remains non‐compliant, HUD could
conceivably reduce future funding to the IURA. (“When a grantee fails the timely expenditure
requirement for a second consecutive year, the grantee's future grant may be reduced by the dollar
amount by which the grantee exceeded the 1.5 timely expenditure standard.”)
IURA Minutes
June 21, 2017
Page 13 of 13
B. IURA Chairperson Report
Myrick reported that the City’s new Waterfront zoning plan has been working its way through
Common Council, with a projected August 2017 vote. Common Council also passed a resolution in
opposition to the proposed 2018 Federal government budget and its impact on Ithaca’s low‐income
residents.
C. Common Council Liaison Report
None.
D. Staff report
Bohn reported that the IURA received formal HUD notice of its 2017 funding allocations:
Community Development Block Grant (CDBG): $644,410
HOME lnvestment Partnerships (HOME): $215,651
The allocations represent an overall 6% reduction in funding, compared to 2016. The 2017 Action Plan
funding levels have therefore been reduced on a prorated basis.
IX. Adjournment
The meeting was adjourned by consensus at 11:32 A.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.