tompkins county industrial development agencyaugust 13, 2015 at 4:00 p.m. the following resolution...

Tompkins County Industrial Development Agency

401 E. MLK Jr., Street, Suite 402B, Ithaca, New York 14850 • phone: (607) 273-0005 • fax: (607) 273-8964

Administration provided by TCAD

TOMPKINS COUNTY INDUSTRIAL DEVELOPMENT AGENCY

BOARD OF DIRECTORS MEETING

• Thursday, August 13, 2015 •

4:00 – 5:30 PM Legislative Chambers

Governor Daniel D. Tompkins Building 121 E. Court Street, Ithaca NY

AGENDA

1. CALL TO ORDER 2. PRIVILEGE OF THE FLOOR 3. BUSINESS Cayuga Green Project – Transfer of Ownership Request Arrowhead Ventures Project – Transfer of Ownership Request 209-215 Dryden Associates, LLC Application Ithaca Neighborhood Housing Services, Inc. (210 Hancock Street) Application Affirmation of Administrative Director of TCIDA 4. STAFF REPORT 5. APPROVAL OF MEETING MINUTES – July 9, 2015 6. ADJOURNMENT

Next Meeting: September 10, 2015

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RESOLUTION

Cayuga Green, LLC conveyance to 131 East Green Street, LLC& refinance with Rialto Mortgage Finance, LLC

131 East Green Street (“Parcel E”), City of Ithaca

A regular meeting of the Tompkins County Industrial Development Agency was convened onAugust 13, 2015 at 4:00 p.m.

The following resolution was duly offered and seconded, to wit:

Resolution authorizing the Tompkins County Industrial Development Agency (“the Agency”)to execute all necessary documents in connection with:

a) the conveyance of 131 East Green Street (“the Premises”) to a new single-purpose entity(131 East Green Street, LLC) owned and operated by the same principals as Cayuga Green,LLC, thereby separating ownership of the Premises from that of other premises, for thepurpose of

b) the refinance of the existing mortgage debt on the Premises with Rialto Mortgage Finance,LLC (“the Bank”) through a new mortgage to be obtained by 131 East Green Street, LLC(“the Company”) to consolidate, refinance, and extend existing mortgage debt; and

c) the assignment of the Lease Agreement, Leaseback Agreement, and PILOT Agreement, andany related agreements, between the Agency and Cayuga Green, LLC to 131 East GreenStreet, LLC.

WHEREAS, the Agency holds a leasehold interest in certain real property in the City of Ithaca,located at 131 East Green Street (hereinafter “the Premises”) in order to deliver tax abatements to CayugaGreen, LLC pursuant to an Inducement Resolution adopted by the Agency on September 8, 2006; and

WHEREAS, the Agency and Cayuga Green, LLC entered into Lease and Leaseback Agreementsdated August 9, 2007, Memoranda of which were recorded in the Tompkins County Clerk’s Office onAugust 17,2007 as Instrument numbers 513532-001 and -002; and

WHEREAS, 131 East Green Street, LLC has applied for and obtained financing from the Bank inthe approximate amount of $13,200,000.00 to consolidate, refinance, and extend existing indebtednesssecured by mortgages held by Key Bank National Association and NDC New Markets Investments VI, L.P.on the Premises; and

WHEREAS, as a condition of such financing, the Bank requires that ownership of the Premises betransferred to a newly formed, single-purpose entity; and

WHEREAS, 131 East Green Street, LLC has been formed for this purpose; and

WHEREAS, the instruments consenting to such conveyance and financing must be executed by theAgency because the Agency holds a leasehold interest in the Premises;

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NOW, THEREFORE, BE IT RESOLVED BY THE MEMBERS OF THE TOMPKINS COUNTYINDUSTRIAL DEVELOPMENT AGENCY AS FOLLOWS:

Section 1. The Agency hereby approves and consents to the conveyance the Premises to 131 East GreenStreet, LLC; the refinance of the existing mortgage debt on the Premises with the Bank; and the assignmentof the Lease Agreement, Leaseback Agreement, and PILOT Agreement, and any related agreements,between the Agency and Cayuga Green, LLC to 131 East Green Street, LLC.

Section 2. The Chairperson, Vice Chairperson and/or the Administrative Director of the Agency are herebyseverally authorized, on behalf of the Agency, to execute a mortgage in the amount of up to $13,200,000.00to Rialto Mortgage Finance, LLC (“the New Mortgage”), a collateral assignment of rents as further securitytherefor, and all other necessary documents in connection with the New Mortgage, provided that:

a. No Event of Default under all agreements entered into between Cayuga Green, LLC andthe Agency shall have occurred and be continuing; and

b. The execution of the New Mortgage (a) is permitted by law in effect at the time, and(b) will serve the public purposes of the Act; and

c. 131 East Green Street, LLC shall be responsible for and shall pay, from the proceedsthereof or otherwise, the costs and expenses incidental to the additional financing or refinancing of suchexisting mortgages, including, without limitation, actual counsel fees for Agency’s counsel and theAgency’s administrative fee, if any; and

d. The New Mortgage shall contain the non-recourse/special obligation provisions as setforth in the Lease and Leaseback Agreements between the Agency and the Cayuga Green, LLC.

Section 3. This resolution shall take effect immediately.

The question of the adoption of the foregoing resolution was duly put to a vote, which resulted asfollows:

Member names Yea Nea Abstain Absent

Jim Dennis, Chairperson [ ] [ ] [ ] [ ]Svante L. Myrick [ ] [ ] [ ] [ ]Will Burbank [ ] [ ] [ ] [ ]Nathan Shinagawa [ ] [ ] [ ] [ ]Grace Chiang [ ] [ ] [ ] [ ]Martha Robertson [ ] [ ] [ ] [ ]Jennifer Tavares [ ] [ ] [ ] [ ]

The resolution was thereupon duly adopted.

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I, Svante L. Myrick, as Secretary of the Tompkins County Industrial Development Agency, herebycertify that the above is a true and correct copy of a duly authorized resolution of the Tompkins CountyIndustrial Development Agency.

Dated: August 13, 2015 _____________________________________Svante L. Myrick, Secretary of the Tompkins County Industrial Development Agency

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401 East MLK Jr. Street, Suite 402B, Ithaca, New York 14850 • phone: (607) 273-0005 • fax: (607) 273-8964

Administration provided by ▲TCAD 209-215 Dryden Associates, LLC – Community Benefits Overview 8/13/15 Project Overview The project consists of a new six-story, 73,000 square foot building in the heart of Collegetown. The sole tenant will be the Cornell University Johnson School of Management Executive Education Program. The building will include classrooms, meeting rooms, staff and faculty offices, and a large atrium for public assembly. Cost-Benefit Analysis • Extent to which project would create and/or retain private sector jobs

One direct job will be created by the applicant – an on-site operations manager; indirect jobs that will be retained and or created by the tenant could be as many as 150 at full capacity.

• Estimated value of tax exemption Property Taxes – The value of the tax exemption is negative for the applicant. The PILOT will require the applicant to pay property tax payments of $3,094,150 over 15 years and $16,373,949 over 50 years; without the PILOT the property would be exempt from property taxes by virtue of the educational nature of the sole occupant. Sales Tax – $2,016,000 Partial Mortgage Recording Tax – $87,500

• Estimate of private sector investment to be generated by the project

$39,350,000 • Likelihood of completing project in a timely manner

The likelihood of completing this project by May 2017 is very high. The applicant has a strong track record of developing large, highly specialized buildings in Ithaca and the Cornell Business and Technology Park. This project, like many others developed by this entity, is already moving on a very fast timeline.

• Extent to which project would generate additional sources of revenue for local taxing jurisdictions The building will have the capacity for approximately 600 persons with a projected utilization and occupancy initially expected at 420. There will be significant additional sales tax dollars from the associated local retail spending along with support for local restaurants and food establishments.

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• Other benefits that might result from the project:

Infill Development – The proposed project is proposed on a vacant and underutilized parcel in the heart of Collegetown where increased density is supported by the City’s 2009 Collegetown Urban Plan. Collegetown Revitalization – The tenant will be instrumental in creating a 365-day economy in Collegetown as envisioned in the City’s 2009 Collegetown Urban Plan. The number of employees, program participants, and visitors will strengthen the retail establishments in the area.

Green Building and Design – The building is being designed with energy use goals at 30% below a baseline (ASHRAE90.1 2007) building. A detailed list of efficiency and sustainability features is included in the application. Multi-Modal Transportation Options – There will be no negative impacts on parking in Collegetown as the majority of building occupants will use alternative modes of transportation. Faculty and staff will continue to park in A-lot and other campus parking garages and then either walk or take the bus to the facility. Program attendees travel to Ithaca from out of town and stay at the Statler Hotel. They rarely bring cars. They will walk or take the bus to the facility.

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Administration provided by ▲TCAD INHS/210 Hancock Street – Community Benefits Overview 8/13/15 Project Overview Ithaca Neighborhood Housing Services is planning an anchor in-fill construction project at 210 Hancock Street in the North Side Neighborhood that will transform an entire city block from two underutilized buildings and a surface parking lot into mixed-use, mixed-income housing and community services space. The project includes the new construction of a 65,000 square foot mixed use building, twelve 1,200 square foot, three-bedroom townhouses, and the reconstruction of two City streets to eliminate automobile traffic and create a pedestrian/bicycle path and playground connecting the site to a larger pedestrian/bicycle network. The mixed-use building will include 54 one and two bedroom apartments, a community room, leasing office, a Head Start facility, commercial office suite and covered parking. Cost-Benefit Analysis 1. Extent to which project would create and/or retain private sector jobs

2 new direct jobs created by the applicant: A new Head Start Facility on-site will create 9 new jobs; a future tenant of the 2,600 square foot commercial space will create an undetermined number of jobs at this time.

2. Estimated value of tax exemption $4,326,982 over 30 years – there will be no sales tax or mortgage recording tax benefits.

3. Estimate of private sector investment to be generated by the project

$21,706,403 4. Likelihood of completing project in a timely manner

INHS has a track record of completing tax credit projects in Tompkins County. The project should have all City approvals in late September and a tax credit application will be submitted in October. Construction will begin in May 2016 and is scheduled for completion in July 2017.

5. Extent to which project would generate additional sources of revenue for local taxing jurisdictions There will likely be new sales tax revenues from spending by new residents with the addition of 66 new affordable housing units.

6. Other benefits that might result from the project:

Infill Development/Neighborhood Revitalization – transform a parking lot and two underutilized buildings on a 2 acre city block into a mixed use development. Affordable Housing – 66 new mixed income units serving families and individuals with incomes between 48% and 90% of the area median income.

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Accessibility – four apartments will be fully accessible and two will be adapted for individuals with a hearing or vision impairment. Bike-Pedestrian Link – Connecting to Conley Park (adjacent to the Sciencenter) and the 6-mile Cayuga Waterfront Trail. Green Building and Design – developed to LEED and Energy Star standards, including a photovoltaic roof system, a 26% reduction in parking, a covered bus Shelter, an Ithaca CarShare site, replacing an automobile oriented street with bike/pedestrian connections designed to reduce the carbon footprint of the project and promote alternative modes of transportation. Head Start Facility – operated by Tompkins Community Action to provide early education to 30 children between the ages of 0 and 3, filling a critical need for quality childcare options. Commercial Space – a 2,600 square foot space that will be available for a for-profit or non-profit business to provide services to the larger community. The future tenant will create additional jobs.

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August 5, 2015

Heather D. McDaniel Vice President, Director of Economic Development Services Tompkins County Area Development 401 E. State St. | E. MLK Jr. St., Suite 402B Ithaca, New York 14850

RE: Request for Payment In Lieu of Tax Agreement for 210 Hancock Street

Dear Ms. McDaniel:

Enclosed please find an application for a Payment In Lieu of Tax Agreement (PILOT) property tax exemption for the redevelopment of 210 Hancock Street.

In August of last year INHS purchased 210 Hancock Street and 423 First Street - a 2 acre site that was in jeopardy of going into foreclosure. While the purchase of this property posed considerable risk for the organization it also represented an extremely exciting opportunity. Board members and staff saw this site as one of the few places downtown where a real mixed-income/mixed-use project could be developed. We could design a project that would transform a block that has played such a valuable role in the neighborhood’s history but was badly in need of improvement.

After purchase, INHS made the decision to engage the community and held four interactive design sessions focused on neighborhood character, sustainable design, building architecture, greenspace, parking and public benefits. These sessions were attended by over 250 people and were instrumental in organizing the final design. A concept that includes a four story building similar in character to local landmark buildings with: 54 mixed-income apartments, a Head Start center and commercial office suite, 12 townhouses, and the discontinuance of Lake Avenue and a portion of Adams Street to create a public bike/pedestrian path that will connect to the Water Front Trail on Dey Street.

The enclosed application requests a 30 year PILOT from the IDA that would run co-terminus with financing provided by the State of New York. INHS has not had to request a PILOT in the past; however, the complexity of this project including the more expensive acquisition, demolition and deep pile foundations requires a reduction in property taxes if the rents are to be kept affordable. While we understand that this request falls outside of the IDA’s typical PILOT program, this is a type of PILOT used in other communities and we feel that the benefits of such a high quality project to the community - providing affordable green housing, providing community services, extending a public path, and redeveloping a largely underutilized block - far outweigh the impacts of the requested exemptions.

INHS is planning to submit an application for financing to the State of New York in early October. We respectfully request that the IDA consider this request so that it can render a decision prior to this application deadline. If you have any further questions please do not hesitate to contact me.

Sincerely,

Paul Mazzarella Executive Director

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Year 1 2 3 4 5 6 7 8 9 10

Expected Income $741,410 $741,410 $756,238 $771,363 $786,790 $802,526 $818,577 $834,948 $851,647 $868,680

PILOT Taxes $88,969 $88,969 $67,508 $68,815 $70,147 $71,504 $72,886 $74,295 $75,731 $77,194

581a Taxes $157,681 $157,681 $162,411 $167,283 $172,302 $177,471 $182,795 $188,279 $193,927 $199,745

Difference ($68,711) ($68,711) ($94,903) ($98,468) ($102,155) ($105,967) ($109,909) ($113,984) ($118,196) ($122,551)

Year 11 12 13 14 15 16 17 18 19 20

Expected Income $886,054 $903,775 $921,850 $940,287 $959,093 $978,275 $997,840 $1,017,797 $1,038,153 $1,058,916

PILOT Taxes $78,685 $80,203 $81,751 $83,328 $84,934 $86,571 $88,239 $89,938 $91,669 $93,433

581a Taxes $205,737 $211,910 $218,267 $224,815 $231,559 $238,506 $245,661 $253,031 $260,622 $268,441

Difference ($127,053) ($131,706) ($136,516) ($141,487) ($146,625) ($151,935) ($157,423) ($163,093) ($168,953) ($175,008)

Year 21 22 23 24 25 26 27 28 29 30

Expected Income $1,024,430 $1,044,919 $1,065,817 $1,087,133 $1,108,876 $1,131,053 $1,153,675 $1,176,748 $1,200,283 $1,224,289

PILOT Taxes $122,932 $125,390 $127,898 $130,456 $133,065 $135,726 $138,441 $141,210 $144,034 $146,915

581a Taxes $276,494 $284,789 $293,332 $302,132 $311,196 $320,532 $330,148 $340,053 $350,254 $360,762

Difference ($153,562) ($159,399) ($165,434) ($171,676) ($178,131) ($184,806) ($191,707) ($198,843) ($206,220) ($213,847)

PILOT Taxes - Total $2,960,836

581a Taxes - Total $7,287,818

Total Difference ($4,326,982)

Per std funder allowed projections - Income is allowed to rise 2% per year and expenses are projected to rise 3% per year.

210 Hancock St Projected Taxes

Budgets for PILOT Application/PILOT vs 581a Taxes - 08/06/2015 46

Legal Structure (During Construction)

DevelopmentAgreement Nominee Agreement

Mortgageloan (1) Lease (2) Lease- back

INHS Hancock St LLC (Beneficial Owner)

Lender TCIDA*

(99.99% Investor Member)

INHS

INHS Hancock - (Affiliate Corp.) 0.01% Member

INHS (100% Member)

INHS Hancock St HDFC (Fee Owner)

* With a Housing Development Fund Corporation

210 Hancock St Project

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210 Hancock PILOT Application Submitted August 5, 2015

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210 Hancock Project Narrative

Project Description:

Ithaca Neighborhood Housing Services (INHS) is requesting a Payment In Lieu of Tax Agreement (PILOT) for the redevelopment of 210 Hancock Street (the “Project”) - an anchor in-fill construction project that will transform an entire city block from two underutilized buildings and a surface parking lot into mixed-use, mixed-income housing and community service space. The project includes the new construction of a 65,000 sq. ft. mixed use building, twelve 1,200 sq. ft. townhouses, and the reconstruction of two City streets to eliminate automobile traffic and create a pedestrian/bicycle path and playground connecting the site to a larger pedestrian/bicycle network. The mixed use building will include 54 one and two bedroom apartments, a community room, leasing office, a Head Start facility, commercial office suite and covered parking. The townhouses will all be three bedrooms. All of the residential units will be visitable by a person with a physical disability. Four units will be fully adapted move in ready for a person with a physical disability and two units will be fully adapted for a person with a hearing/vision impairment.

Exemption Request:

This proposal requests a 30 year PILOT that would be based on a flat % of gross revenue. INHS is proposing annual payments of 12% of gross revenue. INHS is applying to the New York State Homes and Community Renewal for Federal Low Income Housing Tax Credits, State Low Income Housing Tax Credits and a Housing Trust Fund mortgage in October of this year. In order to include the PILOT in that application the PILOT would need to be awarded in September. This funding will also require that the PILOT be co-terminus with the 30 year State Housing Trust Fund mortgage.

Because this project will be regulated by the State of New York it will fall under Section 581A of the NYS Real Property Tax Law. This law requires assessors to reduce valuations to actual income and expenses for affordable rental housing developments. This is important when determining the difference between what the project will pay under the PILOT and what it would pay under 581A. Even with the 581A valuation the project does not break even on an annual basis without a significant increase in rents; increasing rents is not possible for this project because it is designed to meet the requirements of the Federal and State Low Income Housing Tax Credits. Attached to this application is a 30 year projection of how the property taxes would be calculated on this project under the PILOT and what the difference will be if a PILOT is granted.

In the past INHS has not had to request a PILOT. The redevelopment of 210 Hancock is different for a number of reasons. First, it is a mixed-use building that includes commercial and Head Start components. While the Head Start space can be partially financed by Tax Credits the commercial suite cannot. Second, INHS is committing to improve both Lake Avenue and Adams Street for public use and maintain those improvements for 50 years. The redevelopment of these streets will cost the project in excess of $200,000 that cannot be paid for by State housing funds. Third, the 2 acre project site was purchased with two buildings for a price in excess of its value as a vacant lot. To prevent the site from being sold through foreclosure and secure the site to hold it while INHS initiated a public dialogue around the design and development of the project, INHS has spent over 2 million dollars; only a portion of these expenditures can be repaid through the State funds being requested. Fourth, INHS is committing to building an Energy Star and LEED certified project with high quality materials. Finally, the site is in a flood plain on extremely poor soils. The flood plain requires that the site be raised four to six feet above grade and that an 80 feet deep pile foundation be used. This foundation system greatly increases cost of the project when compared to similar developments on good soils.

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All of these additional costs have been mitigated to the extent possible through an extensive value engineering process. A relatively small amount of money might be saved by lowering the quality of the development; however, INHS is unwilling to reduce the quality of materials and design that are the result of over four months of community planning/engagement and four months of discussion with the City Planning Board. It is our opinion that the benefits of such a high quality project to the community - providing affordable green housing, providing community services, extending a public path, and redeveloping a largely underutilized block - far outweigh the impacts of the requested exemptions.

Below is a further description of the project and its benefits:

Project Location:

210 Hancock is located in one of the most vibrant mixed-use neighborhoods in the City of Ithaca. It is bordered by Lake Avenue, Hancock Street, First Street, and Adams Street. It is within a quarter mile of a grocery store, a wellness center, a day care center, a science museum, Cornell Cooperative Extension, three public parks, a butcher shop, multiple restaurants, and a convenience store. Within a half mile is the Ithaca Farmer’s Market, two elementary schools, a State Park, a municipal golf coarse, a pharmacy and a dentist. Just over half a mile away is the City’s downtown, the Commons (Ithaca’s pedestrian mall), the public library, and the Ithaca High School. A TCAT bus stops on the corner of Hancock and First Street.

Public Private Partnerships:

The project includes partnerships between the non-profit sponsor INHS, the City of Ithaca, Tompkins County, Tompkins Community Action, Ithaca CarShare, and a team of green building and design professionals. The role of each is described below:

Ithaca Neighborhood Housing Services, Inc. - INHS is the project sponsor, co-owner, developer, and management agent. INHS is responsible for overseeing all aspects of the development including financing, coordination of development team, construction, contract administration, and management.

The City of Ithaca - The City of Ithaca supports the project’s proposal to discontinue the use of Lake Avenue and a portion of Adams Street so that it can be redeveloped into a bike and pedestrian pathway. The Board of Public Works has recommended to the City Attorney’s office that an agreement be developed that outlines the roles and responsibilities of INHS and the City in this process. The City has already committed $457,326 in HOME/CDBG financing for the project through the City’s Urban Renewal Agency.

Tompkins County – Tompkins County has awarded $200,000 in financing through its affordable housing fund.

Tompkins Community Action (TCA) – TCA is a 40 year old non-profit organization that provides housing, Head Start education, workforce development, and energy efficiency services to Tompkins County. TCA has agreed to operate an early Head Start Facility out of the mixed-use building. INHS has included a 4,000 sq. ft. facility that includes three classrooms, a commercial kitchen, two offices, and a dedicated playground.

Ithaca CarShare is a local non-profit that provides shared vehicles to the community; its mission is to enhance community access to transportation while reducing negative environmental and economic impacts. Ithaca CarShare has agreed to provide a car at the Project site and INHS has agreed to market the car to its tenants and the larger neighborhood with the goal of reducing automobile dependence.

Steven Winter Associates and Taitem Engineering are the project’s green building consultants. Steven Winter Associates is providing energy analysis, green building design support and LEED and Energy Star rating oversight.

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Taitem Engineering has designed the project’s photovoltaic array and will oversee the installation of the system.

HOLT Architects is leading the design team with Trowbridge Wolf Michaels providing Landscape Architecture services, TG Miller Engineers is the civil engineer and Elwyn & Palmer Engineering is designing the structural and deep foundation system.

Community Engagement and Status of Local Approvals:

Starting in November 2014, INHS initiated an extremely successful community engagement process with over 250 people participating in four interactive design sessions. This outreach effort attracted residents who live around the project but also a wide variety of local stakeholders including public officials, representatives of community development, and energy services organizations as well as the larger business community.

The first design session asked participants to consider the general issues of density, architecture, parking, and green space. The second session asked participants to comment on three potential site plans. Comments from this meeting generated six guiding principles for the Project:

1. Limit traffic on Lake Ave. and provide pedestrian amenities along the creek.

2. Make green space/public space more accessible to the wider community.

3. Provide lower scale development along the creek.

4. Minimize surface parking.

5. Locate commercial space along Hancock Street.

6. Provide a mix of uses – commercial and residential.

Two plans were presented at the third meeting based on these principles and a final plan was presented at the last public meeting on February 11, 2015. The concept attached to this request was preferred by over 70% of participants at the final community meeting.

The Planning and Development Board of the City of Ithaca has completed SEQR and found no adverse environmental impact. The City of Ithaca has completed its NEPA review and is awaiting HUD approval. The State Historic Preservation Office has found no significant impact. The project requires a variance from the Board of Zoning Appeals which is scheduled for August 11th with Final Site Plan approval expected in September.

Community Benefits:

While the PILOT would reduce the property taxes paid, the PILOT tax amount is still well above the site’s previous property taxes. As an unimproved block and grocery store, the site was assessed at $940,000 and generated about $36,000 in property taxes for the County, City and ICSD. Under the proposed PILOT, the site would be pay about $89,000 per year in property taxes, a 250% increase over the former tax amount.

Additionally, the project addresses multiple community needs and will provide a range of benefits that far outweigh the reduction in property taxes from a PILOT. Below is a list of those benefits with an explanation of each.

o Construction and Professional Jobs: The development of a large scale project requires the services ofarchitects, engineers, environmental engineers, surveyors, attorneys, accountants, and other professionalservices. It also employees construction labor to build the project including MBE and WBE construction

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firms. Local, regional, and statewide suppliers are utilized to provide materials and deliver them to the construction project. All of these suppliers and delivery operations have employees.

o Permanent On-Site Jobs: INHS will hire one additional full time site manager and one additional fulltime maintenance person as a result of the project. Tompkins Community Action will employee 9 full timestaff at the facility and there is the potential for additional jobs in the 2,600 sq. ft. office space.

o Affordable Housing: The project directly addresses the critical need for affordable housing in the county.Tompkins County and the City of Ithaca have the highest rent burdens in the Southern Tier. With less thana 1% rental vacancy rate, working low and even middle income families cannot find housing that isaffordable. As a result they must drive in from surrounding counties where housing prices are moreaffordable. Provision of 66 units of affordable housing for low and moderate income individuals close tojobs and on public transportation directly addresses this issue. This is a mixed income project that willserve families and individuals with incomes between 48% and 90% of the area median income.

o Accessibility: Four of the apartments will serve people with physical disabilities that require a fullyaccessible apartment and two of the apartments will by fully adapted for individuals with a hearing orvision impairment. 100% of the units will be visitable by a person with a physical disability. The project isalso designed to be multi-generational. The mixed-use elevator building includes all 1 and 2 bedroomapartments that will attract seniors and small families. The three bedroom townhouses will attract largerfamilies with children.

o Creation of Bike-Pedestrian Link: The project will discontinue two City streets to eliminate automobiletraffic and connect the project to a network of bike/pedestrian paths to the north. The new path will connectto Connely Park (adjacent to the Sciencenter, a non-profit science museum for children), and the CayugaWater Front trail (a 6 mile network of bike/pedestrian paths). The Waterfront Trail is transforming thewaterfront in the City into a tourist destination and connects City parks to retail and food servicebusinesses.

o Addition of Commercial and Educational Space: The project will construct an early Head Start facilityand create a 2,600 square foot commercial space. The Headstart facility will be operated by TompkinsCommunity Action a non-profit community development organization and provide early education to 30children between the ages of 0 and 3. The Headstart program also provides nutrition, wellness, andparenting classes to families. TCA has stated that the opening of this facility will create 9 new FTEs. Thesecond commercial office space will be available to a for-profit or not-for-profit business to provideservices to the larger community. This office space is not yet leased but several organizations have showninterest.

o Green Building and Design: Included in the design is a 26% reduction in the required parking, a coveredbus shelter, and a partnership with Ithaca CarShare to provide a shared car on site. Each of these aspects ofthe project is designed to reduce the carbon footprint of the project and its residents and promote walking,biking, and public transit. By developing to LEED and Energy Star standards, removing an automobileoriented street and replacing it with a bike-ped path, and installing a photovoltaic roof system the projectsupports energy efficiency and renewable energy. By building downtown in close proximity to services theproject encourages walking and use of public transit.

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Project Schedule:

Purchase of Site ........................... August 2014

Community Engagement ............. November 2014 - February 2015

Public Approvals ........................ September 2015

Application for NYS Funding ..... October 2015

NYS Funding Awarded ............... January 2016

Financing Closing ....................... April 2016

Construction Start ........................ May 2016

Construction Completion ............ August 2017

Lease-Up Complete ..................... January 2018

Attachments:

Comparison of 581-A Taxes to PILOT TaxesLegal Structure - with an HDFC

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MARIETTE GELDENHUYSATTORNEY AND MEDIATOR

GATEWAY CENTER401 EAST STATE STREET, SUITE 306

ITHACA, NEW YORK 14850ALLISON M. MYERS, PARALEGAL/OFFICE MANAGER TELEPHONE (607) 273-2272 E-MAIL: [email protected]

MATTHEW A. KEMP, LEGAL ASSISTANT FACSIMILE (607) 273-4726 (NOT FOR SERVICE OF PROCESS) [email protected]

WWW.GELDENHUYSLAW.COM [email protected]

MEMORANDUMTO: Tompkins County Industrial Development Agency (TCIDA)

FROM: Mariette Geldenhuys, Esq.Local Counsel

RE: Ethics and conflict of interest issues raised in the State Comptroller’s audit (“BoardOversight Report of Examination, January 1, 2013 - June 12, 2014")

DATE: July 29, 2015

I. BACKGROUND

The Office of the State Comptroller (“OSC”) performed an audit entitled “Board Oversight, Reportof Examination, Period Covered: January 1, 2013 - June 12, 2014, 2015M-15” (the “Audit”). A draft Auditreport was provided to TCIDA, and TCIDA was given 30 days to respond to its recommendations.

One of the comments in the Audit addresses the appointment of the President of TCAD as theAdministrative Director of TCIDA. The Audit raises the question whether such appointment constitutes aconflict of interest under Article 18 of the General Municipal Law (“GML”) or TCIDA’s Code of Ethics.

TCIDA is governed by a seven-member Board of Directors (“the TCIDA Board”) and does not haveany employees. It enters into an annual Memorandum of Understanding with TCAD, whereby TCADemployees provide staff services to TCIDA on a contractual basis. The Administrative Director of TCIDAis a staff position, and the person in this position supervises the delivery of staff services to the IDA.

II. QUESTIONS PRESENTED

A. Is it a conflict of interest for the President of TCAD to serve as the Administrative Directorof TCIDA?

B. Are the positions of President of TCAD and Administrative Director of the IDAincompatible?

1IDA\2015 Audit - Conflict of Interest Memo 7/29/15

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III. LEGAL ANALYSIS

A. Article 18 of the General Municipal Law: Conflict of Interest

This Article governs the conduct of municipal officers and employees and applies to contracts withindustrial development agencies. GML §800. A municipal officer is prohibited from having an interest in

“ ... any contract with the municipality of which he is an officer or employee, when such officer oremployee, individually or as a member of a board, has the power or duty to [a] negotiate, prepare,authorize or approve the contract or authorize or approve payment thereunder [b] audit bills orclaims under the contract, or [c] appoint an officer or employee who has any of the powers or dutiesset forth above.” GML § 801.

The contracts listed in GML 802 are exempt from the prohibition in GML §801. The list of exemptcontracts includes “A contract with a membership corporation or other voluntary non-profit corporation orassociation including, but not limited to, rural electric cooperatives....” GML § 802(1)(f). TCAD is a not-for-profit corporation, which means that GML §801 does not apply to its contract with TCIDA (as concededin the Audit).

Furthermore, even if the contract with TCAD were not exempt from GML §801, the AdministrativeDirector does not have an “interest” in the contract between TCIDA and TCAD for staff services, as definedin Article 18 of the GML.

A municipal officer or employee is defined as “an officer or employee of a municipality, whetherpaid or unpaid, including members of any administrative board, commission or other agency thereof .” GML§800. The Administrative Director of TCIDA is in the position of an employee. (Although TCIDA doesnot have its own employees, staff services for TCIDA are provided by TCAD employees by contract.)

The Administrative Director of TCIDA is not a member of the TCIDA Board and does not have anydecision-making authority over contracts entered into by TCIDA (or any other formal actions taken byTCIDA). The Administrative Director holds a staff position, and along with other TCAD staff, implementsthe decisions of TCIDA, which are made by formal resolutions adopted by TCIDA at its meetings.

As set forth above, the conflict of interest prohibition set forth in GML §801 only applies “... whensuch officer or employee, individually or as a member of a board, has the power or duty to [a] negotiate,prepare, authorize or approve the contract or authorize or approve payment thereunder, [b] audit bills orclaims under the contract, or [c] appoint an officer or employee who has any of the powers or duties set forthabove.”

The Administrative Director does not have the duty to prepare, negotiate, authorize or approve thecontract on behalf of TCIDA, because he is not a member of TCIDA Board and has no decision-makingauthority. He does not audit bills or claims under the contract; this duty falls to TCIDA treasurer. Hisposition is similar to an employee of an agency who prepares and presents a budget which includes thesalaries of the employees. If the Administrative Director were considered to have an “interest” in thecontract, any employee of an IDA or similar agency would have an “interest” in budgetary decisions ofTCIDA, because TCIDA pays that person’s salary. This would also apply to a county administrator or other


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staff in a municipality, such as a zoning officer, when their compensation is discussed by the municipality. Performing the duties of a staff position does not create an “interest” in the contract for the staff member’sperformance of his or her duties. This is clearly not the intent of GML §801.

The Audit states that the Administrative Director must disclose his interest in the contract to TCIDA,pursuant to GML §803. This is inapplicable, because he does not have an “interest” in the contract, ascontemplated by GML §801. Even if such an “interest” were to exist, all members of the TCIDA Boardare fully aware that TCAD provides staff services to TCIDA, because TCIDA enters into the annual contractwith TCAD for such services. Therefore, “disclosure” in this context would be akin to requiring anemployee of and IDA to “disclose” that he or she has an interest in the budget, which includes staff salaries.

B. Compatibility of Positions

The Audit recommends that TCIDA attorney review TCIDA’s code of ethics “ ... to determinewhether any provisions are contravened by the holding of the two positions at the same time.”

This comment appears to raise the question of compatibility of positions, i.e., whether there is aninconsistency between the functions of the positions of Administrative Director of the IDA and Presidentof TCAD, so that they ought not to be held by the same person. The issue of incompatibility is relevantwhere a person holds two public offices (not one public office and a private one, as is the case here), andit is therefore unclear why this issue was raised in the Audit.

Two offices are incompatible if “one is subordinate to the other or if there is an inherentinconsistency between the two offices.” People ex rel. Ryan v. Green (58 NY 295 [1874]). The personholding one office cannot be subject to review, approval and authorization by the person holding the secondoffice; i.e., a person cannot be their own supervisor. 1989 Op Atty Gen 172.

The positions of President of TCAD and Administrative Director of TCIDA are not incompatible. Neither position has supervisory authority over the other. The Administrative Director is supervised byTCIDA. The President of TCAD is supervised by the TCAD Board. There is no inherent incompatibilitybetween the two positions.

TCIDA’s Standards of Conduct/Code of Ethics does not contain any provisions which arecontravened by the Administrative Director holding the position of President of TCAD and providing staffservices to TCIDA on a contract basis. Paragraph (f) of the Standards of Conduct provides that a boardmember, employee or administrator of TCIDA shall not “... engage in, solicit, negotiate for or promise toaccept private employment or render services for private interests when such employment or service createsa conflict with or impairs the proper discharge of official duties.”

The positions of Administrative Director of the IDA and President of TCAD do not create a conflictor impair the proper discharge of official duties. The economic development mission of TCAD is similarto the statutory purpose of the IDA. Rather than impairing the proper discharge of official duties, thePresident of TCAD has compatible responsibilities in both positions.


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IV. CONCLUSION

The President of TCAD does not have an “interest” in the contract for staff services with the IDA,as defined and contemplated in §801 of the General Municipal Law. The offices of President of TCAD andAdministrative Director of the IDA are compatible and do not constitute a conflict of interest.


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Tompkins County Industrial Development Agency Board of Directors Meeting DRAFT Minutes

June 11, 2015 Tompkins County Legislative Offices

121 E. Court Street, Ithaca, NY

Present: Jim Dennis, Will Burbank, Svante Myrick, Jennifer Tavares, Martha Robertson, Nathan Shinagawa

Excused: Grace Chiang Staff Present: Heather McDaniel, Martha Armstrong, Mariette Geldenhuys,

Ina Arthur (recording), Marybeth Frantz (Harris Beach) Guest Present: Greg Hartz, Greg Wilder (Tompkins Trust Company), Irene

Weiser, Brian Noteboom, Stacey Black, Alex Huland, Marcus Williamee, Philly DeSarno

CALL TO ORDER The meeting was called to order at 4:15 PM PRIVILEGE OF THE FLOOR Alex Huland (Town of Ithaca) Mr. Huland spoke regarding the local labor policy discussions. He is an apprentice in a local union and has been unemployed for most of 2015. He lives in Tompkins County and would like to remain here. He would not like to sell his house. He feels that apprentice programs are important in order to ensure safe working conditions. He feels that taxpayer subsidized businesses should pay for and hire local labor. Irene Weiser – Ms. Weiser spoke regarding the Tompkins Trust Company application. She feels that the company is a good corporate citizen but feels that the company should have more of a commitment to using local labor. Using non-‐local labor companies sends money out of the community. She feels that if a company commits to using local labor that perhaps more than a 10-‐year PILOT agreement could be offered. This would send a message and raise the bar. She also requested that future public hearing notices be accompanied by a press release so that the local media would publish information about them beyond the usual legal notice in the Ithaca Journal (and the IDA website). BUSINESS Tompkins Trust Company – Final Approval Jim Dennis moved the inducement resolution granting the Tompkins Trust Company application for final approval. Jennifer Tavares seconded the motion.

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The minutes of the public hearing were distributed to the board. Also an addendum to the application which clarifies the “retail” portion of the building to be only on one floor, was also distributed. Mr. Hartz from the Tompkins Trust Company spoke to the statement of financial need and the various studies that were done to support the request for the enhanced PILOT agreement (10-‐years vs. 7-‐years). The company used the same consultant that Cornell University used when planning it’s New York City campus. The consultant studied the consolidation alternatives to building in the City core vs. at a rural site and the costs associated with both options over 20 years. The consultant also studied the cost of actually constructing downtown vs out of town. HOLT architects did a similar assessment of cost differentials. Both came up with similar numbers as to the cost of construction -‐ $3M more to build downtown. The long-‐term occupancy costs were found to be four times less in a rural site. Ms. Robertson asked for clarification. Mr. Hartz stated that these are the long-‐term occupancy costs over 10-‐20 years – costs for building lease, upkeep, parking, etc. It basically comes down to whether you build or lease, it is four times more expensive to have a building in the City than outside of the City. Mr. Burbank asked about the use of local labor during the construction of the building. Mr. Hartz commented that they are currently drafting the documents to send them out to bid to potential developers. The document contains a request to use local labor when possible, but it is not a condition. He does not want to tie the hands of the contractors and thus impede the building project. Mr. Burbank asked if the use of local labor could be tied to granting the enhanced abatement. Ms. Geldenhuys stated that there are no clear guidelines to allow this link. The enhanced abatement would increase the normal 7-‐year PILOT time frame to a 10-‐year PILOT beginning at 100% abatement of property taxes and decreasing over 10 years in equal increments. Mr. Burbank also asked about the use of heat pumps and other energy sources of the new building. Mr. Hartz stated that the drawings for the building are still being done and the meeting relating to this topic requested by a public citizen with the architect/engineer has not yet happened. A vote was taken on the resolution. The motion passed unanimously. Kaida/Global Phoenix Resolution – approval of parking lot

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Ms. McDaniel outlined a resolution authorizing the Global Phoenix (Kaida) IDA project to build a parking lot at their building site. The building has been partially leased and there is a need to increase the parking. Jim Dennis moved to approve the resolution regarding authorization of building a parking lot by the Kaida/Global Phoenix project. Will Burbank seconded the motion. The motion passed unanimously. TCIDA Policy and Procedures Update Recommendation Ms. McDaniel reviewed changes to the TCIDA Policy and Procedures (UTEP) document as well as changes to the TCIDA Recapture Policy. These changes are a result of recommendations we anticipate from the State Comptrollers Office audit of the IDA. In addition to these updates, the definition of eligible projects was aligned with current NYS regulations. TCIDA Mission, Policies, and Procedures Policies. B. Fees -‐ Changes to the fee structure so that lower cost projects receive a reduction in fees rather than a reimbursement through property tax credits. The reimbursement through property tax credits happened so rarely (because there are so few projects in that low cost range) that is was confusing for taxing jurisdictions to apply the credit over multiple years. TCIDA Economic Incentive Recapture Policy Recapture Provisions 3 & 4 – added language outlining a process whereby companies that do not meet job creation goals as reported on the annual jobs report each year are contacted and reasons for failure to meet goals are communicated to the IDA. The IDA shall then determine, by a vote if recapture of incentives is necessary. PILOT Payment Verification Process The auditors found one instance where the abatement percentage was applied incorrectly by one of the taxing jurisdictions one year, and as a result the payment was incorrect. TCIDA staff met with Helen Beach (County Finance) and Jay Franklin (County Assessment) to better understand the process for billing PILOT projects and we agreed to institute an additional step as a check and balance to ensure that this does not happen in the future. Each year, Helen Beach will cross check the actual assessment and the abatement amounts per the PILOT schedule against the actual tax bills sent by the taxing jurisdictions. She will forward the spreadsheets with this data to TCIDA staff for review each year in August for the previous year. Process to ensure accuracy of abatement estimates on applications

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After a project is completed and fully assessed, staff will compare the actual assessed value and resulting tax payments and abatement amounts to the estimates included in the application. Verifications will be reported to the IDA and will also help guide future project tax payment and abatement estimates. Martha Robertson moved to approve the proposed changes to the TCIDA Uniform Tax Exemption Policy (UTEP) and the TCIDA Recapture Policy. Jim Dennis seconded the motion. The motion passed unanimously. STAFF REPORT Ms. McDaniel reported that the OSC Draft Audit of the TCIDA has been received. The IDA will have 30 days to respond. The IDA can also develop a corrective action plan if it so chooses. Ms. McDaniel reported that the local labor subcommittee has talked with some general contractors about the bidding process. Two more meetings of the sub committee will be set up. The first will be to talk with representatives from local labor unions and the second will be to discuss the information received from the general contractors. It is the hope of the sub committee to have a policy recommendation to the full board by October. Mr. Dennis reported that the City has set up its committee to review the current CIITAP policy. It is the hope of that committee to have recommendations on any changes by November. Ms. McDaniel also reported that the TCIDA and TCDC websites have been updated. Mr. Burbank thanked all for their hard work on the websites. He hopes that applications can be posted as soon as possible and that a link from the public hearing notice to the application can be made. Will Burbank made a motion to set up a moratorium on any new project approvals pending the CIITAP policy discussion and pending the TCIDA Local Labor policy discussion. Martha Robertson seconded the motion. Mr. Dennis commented that the process with this motion troubles him. Any motions or discussions should be added to the agenda at the beginning of the meeting. This was not done. Ms. Geldenhuys commented that exact procedures are not clear at this time. Mr. Burbank commented that he feels while there are good efforts being made on reviewing the CIITAP and IDA Local Labor Policy, things are taking too long. His hope is that a moratorium will speed things up.

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Mr. Myrick stated a moratorium is more than just a way to pause. It stops things dead in their tracks. He feels that a moratorium should be used only if it is felt that the current policy is bad or would be worse than a potentially new policy. This could stop potential projects completely due to the delicate nature of planning and financing. He gave the example of the Collegetown building moratorium – this stopped growth in that area. He will not support this motion. Ms. Robertson stated that she would support the motion. Currently there are no new IDA applications, so she feels it is a good time for this action. Ms. Robertson disclosed that during her US Congressional Campaign, she did receive contributions from the Union Labor Organizations. Ms. Tavares commented that local labor is not just union labor. She is concerned that the IDA, which is an economic development agency, will stop doing its job. This goes back to businesses having rights to make their own decisions as to who they use to build their buildings. She agrees with Mr. Myrick that this moratorium will affect future projects that are beginning to look at planning and financing. Ms. Geldenhuys commented that she would like to have some time to research the issue. This is central to the IDA’s mission and to decide to stop the process could have legal consequences. There is also a concern that there has been no notice to the public about this or a public hearing. Mr. Shinagawa commented that he does not feel that this issue is central to the IDA’s mission. There should be a defined amount of time for the moratorium. He asked if there were any projects “in the works” that would becoming to the IDA soon. Ms. McDaniel commented that there are two getting ready. Ms. Robertson suggested withdrawing the motion on the table and coming back to the August 13th IDA meeting with this as an agenda item with a resolution. Mr. Burbank as the one who made the motion agreed to withdraw his motion. He asked that this topic be put on the August IDA agenda for consideration. Follow up to 2014 Job Report – Executive Session Martha Robertson moved to take the meeting into Executive Session to consider a follow up to the 2014 Job Report and employment numbers. Will Burbank seconded the motion. The motion passed unanimously. Jim Dennis moved to take the meeting out of Executive Session. Martha Robertson seconded the motion. The motion passed unanimously. Jim Dennis moved to accept the Follow Up Report to the 2014 Job Report and not to begin recapture procedures on the companies that did not meet their

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goals. Martha Robertson seconded the motion. The motion passed unanimously. MINUTES Martha Robertson moved to approved the minutes from the June 11, 2015 TCIDA Board meeting. Nathan Shinagawa seconded the motion. The motion passed unanimously. The meeting was adjourned at 5:55 pm

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tompkins county industrial development agencyaugust 13, 2015 at 4:00 p.m. the following resolution...

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