HomeMy WebLinkAboutMN-IURA-2017-12-01Approved: 12/21/17
108 E. Green St.
Ithaca, NY 14850
(607) 274-6565
MINUTES
ITHACA URBAN RENEWAL AGENCY
― SPECIAL MEETING ―
Common Council Chambers, City Hall
8:30 A.M., Friday, December 1, 2017
Members: Mayor Svante Myrick, Chair; Tracy Farrell, Vice‐Chair; Karl Graham; Graham Kerslick
(Common Council Liaison)
Excused: Chris Proulx; Eric Rosario
Staff: Nels Bohn; JoAnn Cornish; Charles Pyott
Guests: None
I. Call to Order
Chair Myrick called the meeting to order at 8:32 A.M.
II. Agenda Additions/Deletions
No changes were made to the agenda.
III. Public Comment
None.
IV. Special Order of Business
A. INHS Scattered Site Rental Housing Preservation Project: Waive Right‐of‐First‐Refusal for Purchase
of Alice Miller Way Parcel ― ResoluƟon
Bohn explained that an issue arose during the title review process for the property. The IURA’s right‐
of‐first‐refusal remains on the deed to the property, so the project funders, who will hold a mortgage
lien on the property, asked that it be waived. Although the right‐of‐first‐refusal would have elapsed
after 60 days, the current tax reform bill being considered by the U.S. Congress includes a substantial
corporate tax cut which would jeopardize the Low‐Income Housing Tax Credit (LIHTC) investment in the
project. The resolution includes language indicating INHS will have day‐to‐day management
responsibility and control of the property.
Ithaca
Urban
Renewal
Agency
IURA Special Meeting Minutes
December 1, 2017
Page 2 of 6
Moved by Farrell, seconded by Myrick:
Ithaca City Apartments Housing Development Fund Corporation (“ICAHDFC”) ― Waive &
Subordinate IURA’s Option to Reacquire 512 Alice Miller Way Property
WHEREAS, Ithaca Neighborhood Housing Services, Inc. (“INHS”) is the owner and developer of an
affordable housing project located at scattered sites in the City of Ithaca, Tompkins County, New
York now known as Ithaca City Apartments (the “Project”); and
WHEREAS, the Project was previously known as the INHS Affordable Housing Scattered Site
Preservation project; and
WHEREAS, the Project includes, but is not limited to, those certain existing units of affordable
housing located in 15 buildings situate at 512 Alice Miller Way (SBL# 25.‐3‐1.21) (the “Property”);
and
WHEREAS, INHS acquired title to the Property from Mutual Housing Association of Tompkins
County, Inc. by deed dated January 3, 2013 and recorded in the Tompkins County Clerk’s Office on
January 17, 2013 as Instrument #2013‐00808; and
WHEREAS, IURA previously waived and subordinated its right of first refusal over the Property (the
“ROFR”) by a resolution unanimously adopted by IURA on October 27, 2011 and recorded in the
Tompkins County Clerk’s Office on January 17, 2013 as Instrument #2013‐00803; and
WHEREAS, in furtherance of the financing of the redevelopment of the Project, the continuing
operation of the Project as affordable housing, and the rehabilitation of the Property (the “Current
Transactions”), which Current Transactions shall include, but are not limited to, the issuance of tax
exempt bonds and syndication of low‐income housing tax credits, INHS has formed ICAHDFC, a
New York housing development fund corporation, for the purposes of holding the record title to
the Project and is its sole sponsor; and
WHEREAS, in furtherance of the Current Transactions, INHS desires to convey its fee interest in the
Property to ICAHDFC; and
WHEREAS, in furtherance of the Current Transactions, INHS has caused the formation of Ithaca City
Apartments, LLC, a New York limited liability company (the “Company” and together with INHS and
ICAHDFC, the “Requesting Parties”) to hold the beneficial interest in the Project and the Property
and will be the managing member of the managing member of the Company; and
WHEREAS, in furtherance of the Current Transactions, ICAHDFC desires to convey the beneficial
interest in the Project and the Property to the Company, retaining for itself the nominal fee title in
the Project and the Property; and
IURA Special Meeting Minutes
December 1, 2017
Page 3 of 6
WHEREAS, INHS now requests that IURA waive its ROFR to reacquire the Property in connection
with the conveyance by INHS to ICAHDFC, the conveyance by ICAHDFC to the Company, and in any
future conveyance by either ICAHDFC, the Company and/or INHS provided that INHS retains day to
day control of the Property (collectively, the “Permitted Conveyances”); and
WHEREAS, the Requesting Parties now request that IURA subordinate the ROFR to one or more
mortgage liens and/or security securing the interests of any lender/bond purchaser of the Property
in furtherance of the Current Transactions and Permitted Conveyances; now, therefore be it
RESOLVED, that in order to induce the Requesting Parties to acquire the Property pursuant to the
Permitted Conveyances, IURA hereby agrees to waive its ROFR with respect to the Permitted
Conveyances; and be it further
RESOLVED, that IURA agrees to subordinate its ROFR to any mortgage or other lien and/or security
interest in the Property in connection with the Current Transactions or in the future provided that
INHS, or another entity in which INHS holds a majority interest, retains control of the managing
member of the entity, or entities, that own the Project and Property; and be it further
RESOLVED, that the IURA Chairperson, upon advice of IURA legal counsel, is hereby authorized to
execute all necessary and appropriate documents to implement these resolutions, subject to IURA
reimbursement of any legal expenses incurred.
Carried Unanimously 3‐0
B. Cayuga Green Project: Loan Modifications to Facilitate Refinancing ― Substitute Resolution to
Replace Resolution Adopted on 11/19/17
Bohn explained that in November 2017 the IURA authorized loan modifications for Cayuga Green, LLC,
conditioned on a sufficient collateral value of the Cayuga Green master leases to secure both the $2
million commercial loan and the outstanding $946,000 principal balance of IURA loans. To meet this
standard, the appraised value of the master leases would have needed to exceed $3.04 million.
Following that November meeting, however, independent appraisals of the Cayuga Green master
leases valued them at over $4.5 million. One sub‐lease also contained a buy‐out clause that authorized
a tenant to buy‐out the master lease for a lump‐sum payment at a fixed amount. The appraiser capped
the appraised value of one of the master leases at the lump‐sum amount, reducing the overall
appraised value of the master leases to $2.89 million, but that collateral value was insufficient to satisfy
IURA conditions adopted on 11/19/17. On closer review, it was revealed the IURA leases to Cayuga
Green, LLC require prior written IURA approval for any assignment or sale of the master leases. Since
the buy‐out clause cannot be exercised without IURA approval, the IURA may consider the full market
value of the master leases (over $4.5 million) in evaluating the value of collateral securing IURA loans.
The proposed substitute resolution therefore makes the IURA loans due and payable upon any
assignment or sale of the master lease. It also establishes the condition for any assignment or sale is a
lump‐sum repayment of IURA loans in full. The substitute resolution would supersede and replace the
prior adopted IURA resolution.
IURA Special Meeting Minutes
December 1, 2017
Page 4 of 6
Moved by Farrell, seconded by Graham:
Cayuga Green Project ― Refinancing Private Sector Components
WHEREAS, the Cayuga Green public‐private project redeveloped underutilized downtown sites
including:
235 S. Cayuga Street ‐ a 679 public parking garage with 23,000 sq. ft. of ground floor
commercial space;
131‐135 E. Green Street – Cayuga Place with 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, a previously proposed conveyance of property at 131‐135 E. Green Street and 217 S.
Cayuga Street did not proceed to closing, and
WHEREAS, the IURA’s private sector partners, Cayuga Green LLC and The Lofts at Six Mile Creek,
LLC (collectively known as Bloomfield/Schon) seek to refinance existing debt on Cayuga Green
from Fannie Mae, and
WHEREAS, Fannie Mae loan terms prohibit subordinate mortgage liens on property they
finance, and
WHEREAS, the existing terms of IURA loans on Cayuga Green properties are:
Existing Terms 217 S. Cayuga Street 131‐135 E. Green Street
Borrower: Lofts on Six Mile Creek, LLC Cayuga Green, LLC
11/1/17 Loan Balance: $222,279.45 $723,899.31
Interest Rate: 4% 5.5%
End of Loan Term: 4/1/29 (137 months) 8/1/38 (247 months)
Monthly Payment: $2,023.70 $4,881.04
Loan Security: 2ND mortgage(behind $7
million)
Personal financial
guarantees of Bloomfield &
Schon
5th mortgage (behind $16
million)
Allocation of Loan
Payments:
IURA $40k to IURA, remainder to
City
and,
IURA Special Meeting Minutes
December 1, 2017
Page 5 of 6
WHEREAS, Bloomfield/Schon have agreed to enhance loan repayment terms to the IURA in
consideration of substitute loan security that excludes mortgages on 217 S. Cayuga Street and
131‐135 E. Green Street, and
WHEREAS, Bloomfield/Schon offer a 2nd leasehold mortgage (behind only Tompkins Trust
Company in an amount not to exceed $2, 000,000) on the Cayuga Green master leases covering
spaces occupied by Merrill Lynch, Coltivare and Cinemapolis, and personal financial guarantees
as substitute loan security, and
WHEREAS, an independent appraisal of the master leases estimate their value at over $4.5
million, but due to a lump sum buy‐out clause in the sublease with a tenant, the valuation is
capped at $2.89 million, and
WHEREAS, the executed master lease agreement from the IURA to Cayuga Green LLC of
premises at 217 S. Cayuga Street requires prior written IURA consent for any assignment of the
lease, which consent may be withheld, or granted, at the IURA’s sole discretion, and
WHEREAS, the proposed modified loan terms are summarized in the table below:
Revised Terms 217 S. Cayuga Street 131‐135 E. Green Street
Interest Rate: 6% 6.25%
Monthly Payment: $2,233.86 $5,189.02
Shared Loan Security: 2nd leasehold mortgage on master leases covering the
ground floor premises of the Cayuga Garage at 235 S.
Cayuga Street and cinema lease space at 120 E. Green
Street
Personal financial guarantees of Bloomfield & Schon
And,
WHEREAS, the Economic Development Committee reviewed this matter at their November 7,
2017 meeting and recommended the following; now, therefore, be it
RESOLVED, the Ithaca Urban Renewal Agency hereby approves modifications to the above
reference Cayuga Green loans as follows:
Increase interest rate to 6% from 4% on the 217 S. Cayuga Street loan
Increase interest rate to 6.25% from 5.5% on the 131‐135 E. Green Street loan
Discharge subordinate mortgages on 217 S. Cayuga Street and 131‐135 E. Green Street
Obtain a 2nd leasehold mortgage on leases covering 23,000 square feet of commercial lease
space at 235 S. Cayuga Street and 11,000 square feet of commercial lease space at 120 E.
Green Street
Obtain unlimited personal financial guarantees from Steven Bloomfield and Ken Schon, joint
and several, as security on the 131‐135 E. Green Street loan, and be it further
IURA Special Meeting Minutes
December 1, 2017
Page 6 of 6
RESOLVED, that IURA loans shall:
1. become due and payable in full in the event of assignment or sale of all or a portion of the
property covered by the Cayuga Green master lease, and
2. that terms for the IURA consent to an assignment of all or a portion of the master lease will
include, but not be limited to, payment in full of the then‐outstanding principal balance and
all accumulated interest, fees and penalties of the IURA loans, 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, and be it further
RESOLVED, that this resolution shall supersede and replace the resolution on this matter
adopted on November 19, 2017.
Carried Unanimously 3‐0
V. Adjournment
The meeting was adjourned by consensus at 8:46 A.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.