HomeMy WebLinkAboutMN-IURAED-2019-02-19Approved: 3/12/19
108 E. Green St.
Ithaca, NY 14850
(607) 274-6565
MEETING MINUTES
ITHACA URBAN RENEWAL AGENCY
Economic Development Committee (EDC)
3:30 P.M., Tuesday, February 19, 2019
Common Council Chambers, City Hall, Ithaca, NY
Present: Chris Proulx, Chair; Leslie Ackerman; Charles Hamilton
Excused: Heather Harrick; Doug Dylla, Vice‐Chair
Vacancies: 1
Staff: Nels Bohn; Charles Pyott
Guests: Diane Cohen, Executive Director, Finger Lakes ReUse, Inc.
Doug Levine, Executive Director, The State Theatre
I. Call to Order
Chair Proulx called the meeting to order at 3:32 P.M.
II. Agenda Additions/Deletions
None.
III. Review of Meeting Minutes: November 13, 2018
Ackerman moved, seconded by Hamilton, to approve the November 13, 2108 minutes, with no
modifications.
Carried Unanimously 3‐0.
IV. New Business
A. HUD Entitlement Grant Program
1. Request from Finger Lakes ReUse, Inc. (FLRU) for Program Amendment to Use $100,000 in CDBG
Funds for Site Acquisition in Lieu of Retail Building Expansion at 213 Old Elmira Rd. (Project #13,
2018)
Bohn reported that the proposed expansion of a construction materials warehouse on the ReUse
Center property ultimately failed to proceed, primarily due to the cost of complying with
requirements for construction in a 100‐year flood zone. FLRU is also now confronted with an
imminent February 28, 2019 deadline for making a $1.5 million balloon payment to the seller of
the 213 Old Elmira Road property.
IURA EDC Meeting Minutes
February 19, 2019
Page 2 of 9
Bohn explained the IURA originally committed $100,000 in 2018 from its Urban Development
Action Grant (UDAG) fund to serve as bridge financing for the project, which would ultimately
have been funded with CDBG funds. At this time, FLRU faces an impending loan foreclosure if it
defaults on the balloon payment, resulting in the potential loss of the property and job losses of at
least 3 full‐time equivalent (FTE) positions held by low/moderate‐income (LMI) persons. The
proposed Program Amendment would employ $100,000 in CDBG funds for site acquisition costs,
allowing the retention of the 3 FTE positions. The critical component of the acquisition is the bank
financing, along with additional FLRU fundraising and cash‐on‐hand, leaving a financing shortfall of
$100,000, which the IURA would provide. Although there are a few unknowns associated with the
proposal, it would safeguard the investments the IURA and the community have made in the ≈25‐
person facility. It will be important for the IURA structure its funding to ensure the bank financing
is be finalized.
Cohen added that FLRU has been negotiating with three local banks about a three‐way
participation loan. FLRU is trying to finalize an agreement with the banks as expeditiously as
possible. The situation appears promising, although no funding commitments have yet been
made.
Bohn noted the proposed IURA loan would include a subordinate lien position for the IURA. Since
the IURA determined FLRU does not have sufficient income to repay the IURA loan, Bohn
recommends structuring it as a forgivable loan (contingent on retention of at least 3 FTE jobs held
by LMI persons).
Cohen indicated FLRU has also been working with Integrated Business Ventures, which helps
organizations improve their internal systems and procedures to increase their effectiveness and
profitability. Integrated Business Ventures should help FLRU reach a 75% threshold towards
financial self‐sufficiency and also improve the accuracy of its long‐term revenue projections.
Hamilton indicated he fully supports the proposal.
Bohn noted one condition of the loan would be FLRU’s submission to the IURA by March 29, 2019
of a bank loan commitment. Cohen replied she believes that should be possible.
Hamilton asked if the IURA could conceivably provide more than $100,000 in assistance. Bohn
replied, yes, in theory, but since it would need to come from 2019 Action Plan funds it would leave
less funding for other CDBG projects. As currently proposed, the $100,000 IURA forgivable loan
would decrease the amount of CDBG funding available for other 2019 CDBG projects to
approximately $400,000.
Bohn noted a second condition of the current proposal would be a mortgage lien on the 214 Old
Elmira Road property of $1.5 million; however, that amount could be reduced, if it is not realistic.
IURA EDC Meeting Minutes
February 19, 2019
Page 3 of 9
Hamilton moved, seconded by Ackerman:
HUD Program Amendment ― Finger Lakes ReUse, Inc.,
Modify Use of Funding for Property Acquisition in Lieu of Building Expansion (CDBG #13,
2019)
WHEREAS, on February 1, 2019, Finger Lakes ReUse, Inc. (FLRU) submitted a request to
modify the use of $100,000 in funding assistance committed in the 2018 HUD Action Plan
from expansion of the ReUse Center to acquisition of the ReUse Center property at 214 Old
Elmira Rd., Ithaca, NY, and
WHEREAS, the proposed expansion of a building materials warehouse on the ReUse Center
property failed to proceed due to the cost of complying with requirements for construction
within a 100‐year flood zone, and
WHEREAS, on February 28, 2019, a $1.5 million balloon payment is due to pay a seller’s note
per the purchase and sale agreement executed in 2014 between FLRU and Grand Cheese,
Inc., and
WHEREAS, FLRU faces an impending loan foreclosure if it defaults on the balloon payment,
resulting in job losses of at least three (3) FTE jobs held by low/moderate‐income persons,
and default on the mortgage loan leading to foreclosure, and
WHEREAS, FLRU is in the process of securing financing and contributions to pay off the 5‐year
balloon payment due to the seller, and
WHEREAS, a total of $1,807,600 is required to refinance an existing renovation loan and close
on a $1,575,000 bank loan to acquire the property with a 20‐year mortgage, and
WHEREAS, the projected uses of funds are:
$1,500,000 Balloon payment due to Seller
$274,930 Payoff renovation loan
$32,670 Loan closing costs
$1,807,600 Total, and
WHEREAS, the projected sources of funds are:
$1,575,000 Bank loan
$96,600 FLRU cash equity on‐hand
$36,000 Fundraising
$100,000 IURA
$1,807,600 Total, and
IURA EDC Meeting Minutes
February 19, 2019
Page 4 of 9
WHEREAS, the original HUD CDBG project was categorized as an eligible CDBG economic
development activity that meets the low/moderate‐income national objective through
projected job creation, and
WHEREAS, due to uncertainty of project implementation, the original project funding was
committed from Urban Development Action Grant (UDAG) Program Income funds acting as a
bridge loan until CDBG funds could be allocated in the 2019 Action Plan, and
WHEREAS, the proposed modified project is also categorized as an eligible CDBG economic
development activity that meets the low/moderate‐income national objective through
retention of at least three (3) full‐time equivalent (FTE) jobs held by low/moderate‐income
persons, and
WHEREAS, the proposed bank loan is projected to require monthly loan payments of $10,835
($130,020 annually), and
WHEREAS, FLRU has significantly increased revenues from merchandise sales by 54% to over
$1.25 million since 2016, although FLRU management projects the need to continue to raise
unearned income to generate positive cash flow until 2025, when earned income is projected
to meet all operating expenses and debt service, and
WHEREAS, for the foreseeable future, FLRU will rely on fundraising to close an operating
deficit and is not in a financial position to pay principal and interest on an IURA loan, and
WHEREAS, FLRU is a certified living wage employer with over 25 employees, and
WHEREAS, the UDAG program income account has a balance of $144,169 as of 1/31/19, and
WHEREAS, FLRU is a New York State not‐for‐profit corporation with a mission to improve the
community, economy, and environment through reuse and operates two reuse centers to
receive, process, and resell over 175 tons per year of materials, and
WHEREAS, the IURA Economic Development Committee reviewed this matter at its February
19, 2019 meeting, and recommends the following; now, therefore, be it
RESOLVED, that the IURA hereby approves the requested Program Amendment to use
funding assistance committed in the 2018 Action Plan for acquisition of the ReUse Center
property located at 214 Old Elmira Road, and be it further
RESOLVED, that the IURA hereby approves a loan from the UDAG Program Income fund,
intended as a bridge loan until CDBG funds recommended to be allocated in the 2019 HUD
Action Plan become available, subject to the following terms:
IURA EDC Meeting Minutes
February 19, 2019
Page 5 of 9
Borrower: Finger Lakes ReUse, Inc., a New a New York State not‐for‐profit
corporation
Loan Amount: Up to $100,000
Funding Source: UDAG program income bridge loan until CDBG funds become
available
Project: Acquisition of property located at 214 Old Elmira Rd., Ithaca, NY.
Total Project Cost: $1,807,600
Projected Use of IURA
Funds:
Property acquisition
Term: 20 years
Interest Rate: 0.0%.
Repayment: No repayment is due provided property continues to be owned
and operated by Finger Lakes ReUse as a reuse center. The loan is
due and payable in full upon conveyance of the property during
the loan term.
Loan Collateral: Mortgage lien on property located at 214 Old Elmira Rd.
subordinated only to the principal lender for the project.
Personal Guarantor(s): None
Job Creation/Retention
Requirement:
Retention of at least three (3) FTE jobs held by low‐ and moderate‐
income persons.
Loan Disbursement: Loan disbursement shall not occur until full project funding is
secured in an amount sufficient to repay the balloon payment due.
Conditions: 1. Documentation of retention of at least three (3) jobs held by
low/moderate‐income employees prior to execution of the
loan agreement.
2. Submission to the IURA by March 29, 2019 of a bank loan
commitment in an amount sufficient to complete the project.
3. 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 retained for 2 years.
3. Documentation of project Match Funding.
IURA EDC Meeting Minutes
February 19, 2019
Page 6 of 9
And be it further,
RESOLVED, that the IURA hereby agrees to subordinate its mortgage liens on the property located
at 214 Old Elmira Rd. to the primary lender, 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 3‐0
B. Community Lending
1. Request from State Theatre of Ithaca, Inc. for 10‐Year Extension of Its Existing Loan for
Acquisition of State Theatre Building at 117 W. State St. (CD‐RLF #2)
Bohn explained that the IURA issued a $458,500 loan on March 5, 2009 to the State Theatre of Ithaca
(STI) for acquisition and operation of the historic 1,600‐seat theatre, which would otherwise have been
shuttered. The loan carries an interest rate of 2% with level monthly payments of $1,741.96 due,
to amortize the debt over 30 years, and with a balloon payment due at the end of Year #10 on
April 1, 2019 for the outstanding principal balance. STI has been repaying the loan on a monthly
basis, with a current outstanding principal balance of $347,788.29. The loan conditions would
remain the same, with just one added requirement that STI set up an automatic loan repayment
system with its bank. The theatre has been very successful, hosting over 85 events each year,
attended by approximately 50,000 patrons, and generating an estimated $2.5 million of economic
activity. Bohn recommended the loan be extended another 10 years.
Hamilton indicated he fully supports the proposal, since it ensures the financial stability of the
theatre, which provides considerable economic benefit to the community.
Ackerman moved, seconded by Hamilton:
Loan Extension ― State Theatre of Ithaca, Inc. (PB‐LF #2)
WHEREAS, on January 30, 2019, the State Theatre of Ithaca, Inc. (STI) submitted a request for
an extension of their loan with the IURA in lieu of the balloon payment due, and
WHEREAS, on March 5, 2009, the IURA issued a $458,500 loan to STI for acquisition and
operation of the historic 1,600‐seat State Theatre, which was scheduled to close, and
IURA EDC Meeting Minutes
February 19, 2019
Page 7 of 9
WHEREAS, STI is a New York State not‐for‐profit corporation with offices at 105 West State
Street, Ithaca, NY, whose mission is to enhance the cultural life of Ithaca and the Finger Lakes
by preserving, operating, and promoting the historic State Theatre as an active venue for
national, international, and community performances and programming, and
WHEREAS, the loan carries an interest rate of 2% with level monthly payments of $1,741.96
due to amortize the debt over 30 years, with a balloon payment due at the end of Year #10 on
April 1, 2019 for the outstanding principal balance, and
WHEREAS, as of January 31, 2019, the outstanding principal balance remaining was
$347,788.29, and
WHEREAS, STI has successfully operated the State Theatre for ten years, including meeting
job retention/creation goals and investing over $1.5 million to improve the theatre, and
WHEREAS, the State Theatre hosts over 85 events each year, attended by approximately
50,000 patrons, that generate an estimated $2.5 million of economic activity in Tompkins
County, and
WHEREAS, STI financially operates at a very modest net profit level and has frequently
incurred penalty fees on late loan payments, and
WHEREAS, STI remains one month past due as of January 31, 2019 and pledges to set up an
automatic loan payment system with its bank, and
WHEREAS, STI projects it will generate sufficient net operating income to service IURA debt
service payments at the current monthly rate, and
WHEREAS, the IURA loan is secured by the following collateral and financial guarantees,
which provide a value that significantly exceeds the outstanding principal balance of the loan:
1st mortgage lien on the State Theatre building located at 107 W. State Street;
2nd mortgage lien on property located at 209‐17 W. State Street;
$200,000 limited personal guarantee of M. and C. Travis, and
WHEREAS, the IURA Economic Development Committee reviewed this matter at its February
19, 2019 meeting, and recommends the following; now, therefore, be it
RESOLVED, that the IURA hereby approves the request from State Theatre of Ithaca, Inc. to
extend the loan for an additional 10‐year term at the current interest rate of 2% and monthly
payments of $1,741.96 on condition that the borrower sets up an automatic payment system
to make timely monthly loan payments, and be it further
IURA EDC Meeting Minutes
February 19, 2019
Page 8 of 9
RESOLVED, that the Loan Agreement shall be amended to include a positive covenant
requiring the borrower to establish and continue an automatic loan payment through a
financial institution to make timely monthly loan payments on this loan, where failure to
comply with the covenant shall constitute an event of default, and be it further
RESOLVED, that IURA Chairperson, upon the advice of IURA legal counsel, is hereby
authorized to execute all necessary and appropriate documents to implement this resolution,
including, but not limited to, executing an amended Loan Agreement.
Carried Unanimously 3‐0
V. Other Business
A. Job Training/Placement Programs & Performance Outcomes Report
Bohn reported that the “IURA Job Readiness, Training, & Placement Programs Comparative
Outcomes Summary (2013‐2018)” included in today’s meeting packet provides a numeric analysis
of the IURA’s job‐readiness, training, and placement programs over the past few years, including
successful long‐standing programs, like Historic Ithaca’s Work Preserve Program and Greater
Ithaca Activities Center’s (GIAC) Hospitality Employment Training Program (HETP).
B. Green St. Garage Redevelopment Project ― Report
Bohn reported the Exclusive Negotiation Agreement (ENA) with Vecino Group New York, LLC has
been drafted and awaits signatures. The Vecino Group has been meeting with a consultant
regarding the proposed conference center and it has been examining various options, including
financing models. The Vecino Group expects to be able to start construction in late 2020,
depending on a variety of factors (e.g., conference center, Environmental Review, Site Plan Review,
New York State funding).
C. Allocation of NYS Small Cities CDBG Program Income ― Report
Bohn explained, as discussed at a prior meeting, that the IURA needs to spend its unused NYS
Small Cities CDBG Program Income funds by March 31, 2019, or return it to the State. Funds
would not have to be spent by that date, but they would need to be formally committed under
contract. The IURA Board and Common Council voted to fund the City’s Aurora Street Sidewalk
Extension Project with some of the Program Income. And the IURA Board and Common Council
also recently voted to use the remaining $175,000 towards the acquisition of the former
Immaculate Conception School gymnasium for use by Greater Ithaca Activities Center (GIAC).
IURA EDC Meeting Minutes
February 19, 2019
Page 9 of 9
D. IURA Loan & Lease Payments Report: January 2019
Bohn reported most grant activities are progressing on schedule. Although the Spencer Road
Sidewalks Project has now been successfully completed in its entirety, the City of Ithaca
Department of Public Works (DPW) did not meet its deadline for expending CDBG funds, due to a
series of unanticipated disagreements with its prime contractor regarding the project's costs and
disbursements, which it is actively working to resolve. DPW has indicated a partial submission of
remaining expenses will be provided to the IURA within 2‐4 weeks.
Bohn reported all IURA loan repayments are current, except The State Theatre, although there
was some confusion with M&T Bank about that particular payment. All lease payments are
current.
Bohn remarked that the IURA’s CDBG Spend‐Down Ratio, which needs to be less than 1.5 by June
1st, is currently on target to meet that threshold, at 1.454.
Bohn reported that a $400,000 loan application from GreenStar Cooperative Market, Inc. has been
received and will be reviewed at next month’s Committee meeting. GreenStar proposes to
relocate and expand its flagship food market to 770 Cascadilla Street, creating approximately 40
new living wage jobs.
E. Staff Report
Bohn reported that the Cherry Street public road extension and Emmy’s Organics, Inc. relocation
project have stalled, because of poor soil conditions for the building foundation. Emmy’s Organics
indicated it is under an acute time constraint and needed to find another facility, to increase
production and meet demand.
Bohn reported he received an inquiry from someone interested in serving on the Committee. The
individual appears to be a good candidate. Bohn has not yet received any feedback from the
Mayor about the individual.
Hamilton and Ackerman both agreed to recommend that the Mayor appoint the candidate.
VI. Adjournment
The meeting was adjourned by consensus at 4:39 P.M.
— END —
Minutes prepared by C. Pyott, edited by N. Bohn.