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Home My WebLink AboutMN-IURAED-2020-09-15Approved: 11/10/20 108 E. Green St. Ithaca, NY 14850 (607) 274-6565 MEETING MINUTES ITHACA URBAN RENEWAL AGENCY Economic Development Committee (EDC) 3:30 P.M., Tuesday, September 15, 2020 Present: Chris Proulx, Chair; Doug Dylla, Vice‐Chair; Leslie Ackerman; Charles Hamilton Excused: None. Vacancies: 2 Staff: Nels Bohn; Charles Pyott Guests: Scott Dolphin, Home Cooking Ithaca, LLC Jan Rhodes Norman, Ithaca Farmers Market Jared Hutter, Aptitude Development, LLC I. Call to Order Chair Proulx called the meeting to order at 3:30 P.M. II. Agenda Additions/Deletions Bohn noted the proposed developer of the Green Street Garage’s Eastern Section would like to present an update on the project. No objections were raised. III. Public Comments None. IV. Review of Meeting Minutes: August 18, 2020 Dylla moved, seconded by Ackerman, to approve the minutes, with no modifications. Carried Unanimously: 4‐0 V. Green Street Garage Redevelopment Urban Renewal Project A. Eastern Section of Project Site: Rothschild Building (Ithaca Properties, LLC) ― Update Hutter announced that Ithaca College will be leasing (long‐term) the front portion of the building (former Finger Lakes School of Massage space) for its new 18‐month graduate physician’s assistant training program, beginning around January 2021. Hutter remarked the developer continues to struggle with the affordable housing issue. The 20% on‐site affordable housing goal still does not appear feasible from a long‐term perspective, for a variety of reasons, which the developer will address in more detail at the Committee’s October meeting. IURA EDC Meeting Minutes September 15, 2020 Page 2 of 7 VI. Property Leasing: Request from Ithaca Farmers Market Cooperative for Lease Concessions at Steamboat Landing Site Due to COVID‐19 Impacts Norman explained that social distancing requirements forced Ithaca Farmers Market (IFM) to reduce its hours of operation and the number of vendors/booths (60‐70% occupancy), as well as cancel its pavilion rentals for the remainder of the year. IFM has been trying to project its financial outlook based on what it has been experiencing to date, although there remains considerable uncertainty, which is what led the organization to seek lease concessions from the IURA/City. IFM does not want to risk placing itself in a tenuous financial situation. Ackerman noted the resolution only cites a 50% rent discount, although IFM’s original request also mentioned a rent deferment. She asked if rent deferment could be an option. Bohn replied, yes, that would certainly be possible. Norman agreed it may be helpful to combine a rent discount and rent deferment. Dylla asked about IFM’s fundraising efforts. Norman replied IFM just launched a big fundraising campaign, asking people in the community for donations, and Ithaca Hummus subsequently agreed to match any donations up to a certain amount. IFM also applied for Paycheck Protection Program (PPP) funding, which it received. At this time, IFM is leery of risking ‘donor fatigue’, so it is unlikely to launch another fundraising campaign in the near future. Dylla moved, seconded by Hamilton (as amended): Ithaca Farmers Market COVID‐19 Lease Concession WHEREAS, on September 11, 2020, the IURA received a request from the Ithaca Farmers Market Cooperative, Inc. (IFM) for a rent concession on leased property at Steamboat Landing, and WHEREAS, in compliance to COVID‐19 health guidelines, the Farmers Market has been limited to 150 attendees at any one time in the market pavilion for the full 2020 season and prohibited from hosting events in the pavilion, and WHEREAS, IFM has an annual net operating loss of $57,000 through August, which is projected to rise to $92,000 by year‐end, and WHEREAS, such a loss will reduce IFM net equity to approximately $238,000, and WHEREAS, the lease premises are owned by the City of Ithaca, leased to the IURA, and subleased to IFM, and WHEREAS, rents collected from IFM by the IURA are paid over to the City of Ithaca general fund, and WHEREAS, IFM’s producer‐to‐consumer market at Steamboat Landing is a top tourism draw of the City, offers healthy and fresh local produce and food, acts as an incubator for new small businesses, and generates significant sales tax revenue, and IURA EDC Meeting Minutes September 15, 2020 Page 3 of 7 WHEREAS, 2020 annual rent to IFM is $34,876 due in four payments of $8,719 that align with the market season, and WHEREAS, IFM has paid rent of $8,719, leaving $26,157 due for the remainder of 2020, and WHEREAS, IFM requests all remaining 2020 rent be forgiven in recognition of adverse COVID‐19 impacts, and WHEREAS, the IURA has worked with other lessees with tenants impacted by COVID‐19 restrictions by providing 50% rent discounts and deferrals as reasonably requested, and WHEREAS, the City of Ithaca implemented over 80 employee furloughs in 2020 and is facing a difficult 2021 budget year due to COVID‐19, and WHEREAS, the IURA Economic Development Committee considered this matter at their September 15, 2020 meeting and recommends the following action; now, therefore, be it RESOLVED, that the IURA hereby approves the following rent concession to IFM to share the adverse financial impact of COVID‐19 equally between the City and IFM: • 2020 rent discount: 50% of total 2020 rent due: $17,438 ($34,876 * 0.5 = $17,438), • 2021 rent deferral: 50% of total 2021 rent due And be it further RESOLVED, that IURA is open to consider 2021 rent concessions if COVID‐19 restrictions remain in place for the 2021 season, and be it further RESOLVED, that the Director of Community Development is authorized to implement this resolution through a letter agreement amending the lease to implement this resolution. Carried Unanimously: 4‐0 VII. Community Lending: Request from Home Cooking Ithaca, LLC for $100,000 in Loan Assistance for Multi‐Faceted Retail Business on The Commons at 171 E. State/M.L.K., Jr. St. Bohn reported the underwriter’s loan analysis concluded the loan would be an appropriate use of loan funds, representing only a moderate degree of risk. The applicant did account for potential COVID‐19‐ related financial impacts in the loan proposal. The loan would also be secured by two strong personal financial guarantees. The project is situated in a critical section of The Commons and the downtown area. Bohn recommended approving the loan application. IURA EDC Meeting Minutes September 15, 2020 Page 4 of 7 Dolphin remarked, despite the recent crash in national retail fashion revenue, Breathe saw a significant amount of steady business in some areas, especially from tourism traffic. 15 Steps’ 2020 revenue has ended up being close to 80% of its 2019 revenue. 15 Steps also saw increased traffic on its web site. The new combined business would incorporate fashion, jewelry, gifts, artwork, and cookware, while expanding its cookware offerings. Dylla moved, seconded by Ackerman: Loan Assistance to Home Cooking Ithaca, LLC (PB‐LF #12) WHEREAS, on August 26, 2020, Home Cooking Ithaca, LLC applied for $100,000 in loan assistance from the IURA for a 3,705 square foot multi‐faceted retail business located at 171 E. State/MLK Jr. on The Commons, Ithaca, NY, and WHEREAS, the project involves the acquisition of an existing business, 15 Steps, merger of the existing Breath of Ithaca clothing business, and renovation and expansion of the 15 Steps into the adjacent vacant storefront to establish a business that will sell jewelry, sportswear, specialty cookware and foods, home goods, and include a test kitchen and a studio that will offer hands‐on craft classes taught by artisans, 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 designated Density District of the community that have been defined by the community as highly desirable or substantially increases foot traffic thereby strengthening downtown vitality; and WHEREAS, the project site is located within the Density District and a clothing store and other businesses that implement locally adopted plans, are listed as an eligible use for loan assistance through the PB‐LF; and WHEREAS, the proposed uses of project funds are: $142,733 Business Acquisition $37,345 Renovations $9,300 Machinery, Equip., Furnishings & Fixtures $51,500 Inventory $45,122 Working Capital $286,000 Total, and WHEREAS, the proposed sources of project funds are: $137,000 M&T Bank $100,000 IURA $25,000 Ithaca Anchor Storefront Loan Program $24,000 Owner Equity $286,000 Total, and IURA EDC Meeting Minutes September 15, 2020 Page 5 of 7 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 sets a maximum loan amount of $250,000, and WHEREAS, the project is projected to retain two (2) full‐time equivalent (FTE) jobs and create one (1) FTE employment positions, resulting in $33,333 of loan assistance per job created/retained, and WHEREAS, both retained jobs are held by low/mod income persons, and WHEREAS, as an economic activity not associated with new construction the activity qualifies at 58.35(b)(4) as a Categorically Excluded from the National Environmental Protection Act (NEPA), but is subject to Federal flood hazard regulations, and WHEREAS, the project site is not located within a 100‐year flood hazard area, and WHEREAS, at its September 15, 2020 meeting, the IURA Economic Development Committee reviewed the loan application and the September 2020 credit analysis prepared by Elizabeth Krause of H. Sicherman & Company, Inc., and recommend the following action; now, therefore, be it RESOLVED, that the IURA hereby approves a loan from the PB‐LF in accordance with the loan application and supplemental submissions, subject to the following terms: Borrowers: Home Cooking Ithaca, LLC, a Delaware limited liability corporation established in July 2019 Loan Amount: Up to $100,000 Project: Variety of retail stores under one roof selling jewelry, gifts, sportswear, cookware and artisanal merchandise and offering cooking & craft classes at 171 E. State/MLK Jr. Street, Ithaca, NY. Total Project Cost: $286,000 Projected Use of IURA Funds: Machinery, equipment, furnishings and fixtures, inventory, supplies, working capital and start‐up costs Term & Amortization: Interest only for six (6) months followed by a seven‐year term, seven‐ year amortization. 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 if borrower remains in compliance with all other terms of the loan agreement. IURA EDC Meeting Minutes September 15, 2020 Page 6 of 7 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 $1,343.99/month) and subject to a revised P&I amount upon rate reset. Loan Collateral: General security interest lien on all business assets, including new equipment, furnishings and fixtures located at 171 E. State/MLK Jr. Street, Ithaca, NY. Lien subordinate to filings of M&T Bank. Personal Guarantor(s): Todd Nau and Carol Travis. Job Creation/Retention Creation/Retention of at least a total of 3 full‐time equivalent (FTE) Requirement: jobs. Retention of at least two (2) FTE employment positions held by low‐ and moderate‐income persons and creation of at least one (1) FTE employment position. Loan Conditions: 1. Submission of proof of bank financing in an approximate amount of $137,000 on terms and conditions consistent with the Sicherman loan analysis. 2. Confirmation that the company has authority to conduct business in New York State as the LLC is registered in Delaware and therefore a foreign business entity Reporting: 1. Annual company Federal tax returns and annual internally prepared financial statements. 2. Job retention/creation reporting. 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 EDC Meeting Minutes September 15, 2020 Page 7 of 7 VIII. Other Business A. IURA Loans & Lease Payments Report: August 2020 Bohn remarked there is no loan report to review this month, but the situation is similar to last month’s. All borrowers are current, except the Finger Lakes School of Massage, as previously reported. Bohn reported all lease payments are current, as of today. B. Staff Report Bohn reported the original preferred developer for the Inlet Island Urban Renewal Project will be providing written communication next month to the IURA about a potential project proposal. Bohn reported the City was just awarded its final tranche of CARES Act CDBG‐CV funding of $367,837, for which $294,270 would be available to fund projects. IX. Adjournment The meeting was adjourned by consensus at 4:41 P.M. — END — Minutes prepared by C. Pyott, edited by N. Bohn.