Loading...
HomeMy WebLinkAboutMN-IURAED-2022-01-11Approved: 2/8/22 108 E. Green St. Ithaca, NY 14850 (607) 274-6565 MEETING MINUTES ITHACA URBAN RENEWAL AGENCY ECONOMIC DEVELOPMENT COMMITTEE (EDC) 3:30 P.M., Tuesday, January 11, 2022 Present: Chris Proulx, Chair; Doug Dylla, Vice-Chair; Leslie Ackerman; Charlotte Hamilton Excused: None. Vacancies: 2 Staff: Nels Bohn; Charles Pyott Guests: Diane Cohen, Finger Lakes ReUse, Inc. (FLRU) Rob Brown, Finger Lakes ReUse, Inc. (FLRU) Robin Elliott, Finger Lakes ReUse, Inc. (FLRU) Doug Firth, Precision Filters, Inc. Peter Grossman, Precision Filters, Inc. (Legal Counsel) I. Call to Order Chair Proulx called the meeting to order at 3:30 P.M. II. Agenda Additions/Deletions None. III. Public Comments (3-minute max. per person) None. IV. Review of Meeting Minutes: December 14, 2021 Ackerman moved, seconded by Dylla, to approve the minutes, with no modifications. Carried Unanimously:4-0 V. New Business A. Cherry Street Industrial Park: Request to Assign Lease/Purchase Agreement, Precision Filters, Inc. Bohn explained that the lease between the IURA and Precision Filters, Inc. (PF) is a lease-purchase agreement, which lasts 99 years. The IURA established the buyout price at the assessed value of the real estate at the time the initial lease was executed. PF can acquire the lease at any time. The IURA is required to approve it, but cannot unreasonably withhold consent to sign the lease. In this case, PF has met its obligations under the original agreement to construct a building and operate the facility. IURA EDC Meeting Minutes January 11, 2022 Page 2 of 9 Bohn reported that PF has requested assignment of the lease to a new company, which would acquire PF’s assets, but would continue to operate the facility. Bohn recommended approving the resolution with two contingencies: (1) that PF agrees to pay any legal costs incurred by the IURA; and (2) that the approval would expire within 12 months or the end of the calendar year, since PF has not identified the new company. Firth remarked that Precision Filters has the opportunity to sell the company in the form of an asset purchase. The group that would acquire Precision Filters intends to operate the company at the current Cherry Street facility and retain all existing employees. Firth will continue to serve as President and CEO of the new company for the foreseeable future. Dylla asked if it were possible the new company would relocate out of Ithaca. Firth replied, no. The company would continue to operate on the site and there has been absolutely no mention of relocating it. Dylla moved, seconded by Hamilton: Approve Assignment of Lease Agreement for 240 Cherry Street WHEREAS, in 1980 the IURA executed a 99-year lease agreement with Precision Filters, Inc. (PF) for real property located at 240 Cherry Street (Tax Parcel #96.-2-1.1) for the purpose erecting a manufacturing facility, and WHEREAS, PF constructed a manufacturing facility in accordance with lease requirements and continues to operate at 240 Cherry Street, and WHEREAS, PF requests IURA approval to assign the lease to a corporation to be formed for sale of substantially all of PF’s assets, and WHEREAS, section 10 of the lease agreement prohibits PF from assigning their interest in the lease agreement without approval of the IURA and specifies that such IURA approval may not be unreasonably withheld, and WHEREAS, the new company intends to continue operating the business in the existing Cherry Street facility in substantially the same manner as it has been operated in the past, and WHEREAS, at their January 11, 2022 meeting, the IURA Economic Development Committee reviewed this matter and recommend the following; now, therefore be it RESOLVED, that the IURA hereby approves the January 4, 2022 request from Precision Filters, Inc. to authorize assignment of the lease agreement, and be it further RESOLVED, that IURA Chair is authorized, subject to review by IURA legal counsel, to execute an agreement to implement this resolution, and be it further IURA EDC Meeting Minutes January 11, 2022 Page 3 of 9 RESOLVED, that all reasonable legal fees incurred by the IURA shall be reimbursed, and be if further RESOLVED, as a transaction to sell assets of Precision Filters, Inc. is characterized as a “proposed” transaction and the assignee is a new corporation yet to be formed, this approval to assign the lease agreement shall expire on December 31, 2022. Carried Unanimously: 4-0 VI. Old/Other Business A. Loan Application: Finger Lakes ReUse, Inc. (FLRU) Bohn explained that Proulx reported the Committee’s recent discussions with FLRU in detail to the full IURA Board. Bohn’s 12/15/21 memorandum to the Board provides a good summary of the issues involved with the funding request, as excerpted below: The Economic Development Committee (EDC) met on December 14th and reviewed a $150,000 request from Finger Lakes ReUse Inc. (FLRU) for a forgivable loan to retain 5 Full-Time Equivalent (FTE) jobs. The EDC did not adopt any resolution on the matter and plans to continue discussion in January after FLRU has adopted a 2022 operating budget. No action on this item is recommended at the 12/16/21 IURA meeting. In many ways, FLRU is a community economic development dynamo. They now have 80 employees who each earn a living wage. FLRU has a long history of hiring people facing barriers to stable employment. 25% of their workforce were receiving public assistance prior to being hired. FLRU diverts over 700 tons of materials annually away from the waste stream. FLRU also works with several service agencies to provide furnishings and household goods to outfit apartments for persons lacking household goods and furnishings. Through the pandemic they have continued to increase sales by 20%/year at reuse stores and the volume of materials received has soared. The pandemic restrictions and health warnings also resulted in the loss of much of their volunteer workforce that was critical to receiving, sorting, and processing recyclables. Volunteer workers were replaced with new employees that increased the payroll of FLRU. Without increased financial support, FLRU will need to make staff reductions in 2022. Complicating matters is a CDBG prohibition on loans to non-profits except for property acquisition and construction activities, so FLRU is not eligible for a loan from the ED loan fund to retain jobs. However, FLRU is eligible for CDBG assistance to a Community Based Development Organization (CBDO) to carry out a community economic development project. In 2020 and 2021 the IURA funded FLRU to carry out job training/placement programs as a CBDO. Approximately $70K-$100K is potentially available to reprogram from job training to job retention without disrupting delivery of job training services as the COVID pandemic slowed implementation of job training activities. It will assist the EDC if the IURA provides general guidance on how to approach the FLRU funding request. Following are options for IURA consideration moving forward on the funding request based upon the following common financial assistance framework: IURA EDC Meeting Minutes January 11, 2022 Page 4 of 9 Amount: $150,000 Form of Assistance: Forgivable Loan CDBG Eligibility: CBDO special activity carrying out a community economic development project resulting in job retention of low/mod income persons at no more than $35K/job Funding Sources: Reprogram $75K from 2020 FLRU job training award plus $75K reprogrammed from ED loan fund (current ED loan balance is $230K) Outcomes/Goal: Job retention of 5 FTEs held by low/mod persons and achievement of $2.3M in 2022 earned revenues Interest Rate: 0% Term: 2 years Repayment: No repayment due if 5 FTE jobs retained for 18 months. If jobs not retained, full repayment of 1/5 of loan for every job not retained is due at the end of the loan term. Collateral/Security: None Bohn reported that, at the conclusion of its discussion, the IURA Board unanimously agreed it would be worth continuing to explore the potential for the funding assistance, provided any risks to the IURA are sufficiently addressed (i.e., being obligated to return the funds to HUD, if the job-retention outcomes were not satisfied). Board members were also interested in determining precisely how the proposed funding assistance would actually ensure FLRU’s long-term fiscal sustainability. Bohn added any IURA approval of funding assistance would require Common Council approval of a Substantial Amendment to the 2021 HUD Entitlement Action Plan to reallocate funds from FLRU’s 2021 “ReUse Job Training for Career Pathways Program” and Economic Development Loan Fund. Subsequent to the IURA Board meeting, Bohn e-mailed FLRU several questions and requests for supplemental information, which FLRU responded to in detail, and which have been shared with this Committee. Brown remarked that FLRU shared with Bohn the contingent 2022 budget, which its Board adopted at the end of December 2021. It has been examining FLRU’s actual financial performance very closely. The budget also included some aspirational fundraising goals for securing approximately $500,000 in government funding from various sources. Cohen added that FLRU does have some funding from the County and will issue an RFP to hire a consultant to conduct a comprehensive assessment of FLRU’s business operations and recommendations for heightened efficiencies and operational improvements. Ackerman asked, if no funding were available to retain the 5 positions in question, what the impact would be on the organization. Cohen replied FLRU has been looking very actively at its productivity, in terms of sales per labor-hour. If IURA funding were not available, it would undermine FLRU’s mission to put more materials on its shelves and increase revenues. IURA EDC Meeting Minutes January 11, 2022 Page 5 of 9 Dylla observed that FLRU appears to have ceased collecting household goods, but household goods are presumably among FLRU’s most profitable items. Cohen replied that decision was made, because household goods represent some of FLRU’s greatest backlog of unprocessed donations. Hamilton expressed strong support for providing the funding assistance because of Cohen’s point about FLRU not being able to take full advantage of all its resources without it. Proulx remarked he is probably the most skeptical of the proposal, because of his concerns with the potential risk to the IURA. He wondered how FLRU would endure should it not secure the government funds it is seeking, with only the resources it currently has. Cohen responded one thing to consider is that FLRU’s budget is very conservative. Both the State and County have also been very supportive of FLRU’s funding requests. Ackerman remarked, while the Committee’s task is to fully analyze the risks and benefits associated with the proposed funding assistance, there is also the issue of the significant community benefit associated with FLRU’s continued growth and the multiplier effects of all the work it does for the wider community, which lead her to believe it would be worth making the investment in the organization, even considering the potential risk involved. Ackerman moved, seconded by Hamilton: Loan Assistance to Finger Lakes ReUse, Inc. (FLRU) to Carry Out Community Economic Development Project WHEREAS, on December 8, 2021, Finger Lakes ReUse, Inc. (FLRU) applied for $150,000 in loan assistance from the IURA to retain 5 jobs held by low- and moderate-income persons at their recycling and retail facility located at 214 Elmira Rd, Ithaca, NY and meet their $2.3M revenue sales target in 2022 to continue sustainability and growth of FLRU operations, and WHEREAS, FLRU requests the IURA to repurpose $75,000 of 2020 CDBG funds awarded to FLRU for job training/placement activity to a job retention forgivable loan to retain at least 2 Full-Time Equivalent (FTE) jobs at the Ithaca ReUse Center located in Ithaca, and WHEREAS, FLRU further requests an additional $75,000 in loan funds as a forgivable loan to retain three additional jobs, and WHEREAS, FLRU is a non-profit corporation employing over 75 persons whose mission is to enhance community, economy, and the environment through reuse, and WHEREAS, FLRU activities divert over 700 tons of materials from landfills through their reuse operations and retail stores, and provide job skill training and experience to under-employed, low- income persons experiencing barriers to employment, and IURA EDC Meeting Minutes January 11, 2022 Page 6 of 9 WHEREAS, FLRU is an IURA-designated Community-Based Development Organization (CBDO), and WHEREAS, eligible CDBG activities must be both a listed eligible activity and meet a National Objective, and WHEREAS, retention of jobs held by low- and moderate-income persons meets a National Objective when job loss would occur, but for provision of CDBG assistance and impacted jobs are held by low- and moderate-income persons, and WHEREAS, CDBG economic development loan assistance to non-profit sub-recipients under 24 CFR 570.203 is limited to acquisition, construction, or rehabilitation activities, therefore FLRU’s proposed activity is not an eligible use of economic development loan funds, and WHEREAS, FLRU’s proposed use of funds is eligible as a Special Activity carried out by a Community- Based Development Organization (CBDO) authorized at 24 CFR 570.204 to implement a community economic development project, if the FLRU board continues to meet CBDO composition requirements, and WHEREAS, a type of project that “increases economic opportunity, principally for low- and moderate- income persons, or that are expected to create or retain businesses or permanent jobs within the community” qualifies as an eligible community economic development project, and WHEREAS, FLRU’s project will retain jobs essential for achieving FLRU’s goal to increase earned revenues to $2.3M in 2022 as a means to sustain and grow FLRU operations and jobs, and WHEREAS, the applicant has provided financial information and projections that reasonably documents the job positions to be retained will be terminated without financial assistance, and WHEREAS, it is prudent to use public funds for job retention activities only when jobs retained are projected to remain financially sustainable, and WHEREAS, the following jobs are projected to be retained as a result of requested financial assistance: $150,000 loan (5 jobs) • Building Materials Specialist • Assistant Manager • Warehouse Assistant (x2) • Project Coordinator WHEREAS, each of the above positions is held by low- and moderate-income persons, and WHEREAS, the proposed uses of project funds are: $218,332 Salary/Wages & Benefits $218,332 Total, and IURA EDC Meeting Minutes January 11, 2022 Page 7 of 9 WHEREAS, the proposed sources of project funds are: $68,332 FLRU revenues $150,000 IURA $218,332 Total, and WHEREAS, the applicable CDBG public benefit standard for economic development projects requires at least one full-time equivalent (FTE) job be retained for every $35,000 of loan assistance, and WHEREAS, retention of five (5) full-time jobs resulting from $150,000 of CDBG assistance satisfies the CDBG public benefit standard, and WHEREAS, FLRU is a certified living wage employer, and WHEREAS, FLRU has secured funding from Tompkins County to complete a business operations assessment in early 2022 to improve business efficiencies, and WHEREAS, based on financial information provided, it is reasonable to conclude that but for CDBG assistance, the five job positions would not be retained, and WHEREAS, management’s financial projections indicate the retained jobs will continue throughout for at least six quarterly job reporting periods, 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, at its December 14, 2021 and January 11, 2022 meetings, the IURA Economic Development Committee reviewed the loan application and recommends the following action; now, therefore, be it RESOLVED, that the IURA hereby approves a community economic project to be carried out by a CBDO pursuant to 24 CFR 570.204 in accordance with the loan application and supplemental submissions, subject to the following terms: Borrowers: Finger Lakes ReUse, Inc. as a Community-Based Development Organization (CBDO) Loan Amount: Up to $150,000 Source of Funds: Reprogramming $98,025.60 from the 2021 ReUse Job Training for Career Pathways project awarded to Finger Lakes ReUse, Inc. and $51,974.40 from the ED Loan Fund. Project: Carry out a community economic development project resulting in job retention of at least five (5) FTE jobs held by low- and moderate-income persons at the Ithaca ReUse Center located in the City of Ithaca to sustain and grow job opportunities. IURA EDC Meeting Minutes January 11, 2022 Page 8 of 9 Total Project Cost: $218,332 Projected Use of IURA Funds: Wages and Salaries Interest Rate: 0.0% Term: 2 years Repayment: No repayment due and loan forgiven provided borrower complies with quarterly job reporting documenting the job retention goal is satisfied for six (6) consecutive quarters and the positions remain filled through June 2023. If the job retention goal is not achieved, then the full loan balance is due and payable at the end of the loan period. Loan Collateral: None Personal Guarantor(s): None Job Creation/Retention: Retention of at least five (5) FTE employment positions held by low- and moderate-income persons. Loan Conditions: 1. Confirmation that the FLRU Board satisfies CBDO composition requirements. 2. Common Council approval of a Substantial Amendment to the 2021 HUD Entitlement Action Plan to reallocate funds from the FLRU job training and Economic Development Loan fund activities. Reporting: 1. Quarterly of in-house income and expense report. 2. Notification of material financial changes. 3.Adopted revisions to the 2022 or 2023 operating budget. 4. Annual company Federal tax returns and annual internally prepared financial statements, including Form 990s. 5. Job retention/creation reporting. 6. Documentation of project’s Match Funding. And be it further, RESOLVED, that the IURA hereby approves a $150,000 substantial amendment to the 2021 HUD Action Plan to reprogram $98,025.60 from the ReUse Job Training for Career Pathways Project and $51,974.40 from the Economic Development Loan Fund activity to this FLRU community economic development job retention project, and 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 IURA EDC Meeting Minutes January 11, 2022 Page 9 of 9 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 B. IURA Financials Review: December 2021 Bohn reported all CDBG and HOME projects are in good standing in terms of expenditures and overall progress, with the exception of a few slow moving CDBG-CV projects (e.g., Salvation Army’s homeowner mortgage payment assistance project). All loan payments are current, except the Canopy Hotel, which owes interest-only payments for one month in 2020. Lease payments are also in good shape, but Ithaca Farmers Market (IFM) is one month delinquent because the City inadvertently cashed a check that was intended for the IURA. He noted there is some concern the IURA may not meet HUD’s June 1st, 2022 CDBG spend-down ratio deadline; however, the FLRU funding assistance will help the IURA move closer to that goal. C. Staff Report Bohn reported the Mayor has announced his resignation, so Common Council member Laura Lewis, as Acting Mayor, will assume mayoral duties until the election of a new Mayor. Bohn reported that the State released its Low-Income Housing Tax Credit (LIHTC) awards, but no Tompkins County projects were selected for the first time in several years. Proulx remarked he would really like to fill the Committee’s current vacancy as soon as possible. VII. Adjournment The meeting was adjourned by consensus at 4:30 P.M. — END — Minutes prepared by C. Pyott, edited by N. Bohn.