Thursday, August 29, 2013

City Council Delays Vote on Million-Dollar Grant to GEDP

By Christina Georgiou

Easton City Council members decided to table a vote on a $1 million grant
to the Greater Easton Development Partnership that would enable the
private non-profit corporation to purchase the vacant Weller Center
building on Northampton Street without taking out a loan or mortgage.
 Easton City Council members decided to delay voting Wednesday evening on a resolution that would  grant the Greater Easton Development Partnership (GEDP) $1 million to fund the purchase of the Weller Center building at 325 Northampton St. in Downtown Easton.

The Weller building, which GEDP has agreed to purchase, is set to house a year-round, indoor, expanded version of the Easton Farmers' Market (EFM), as well as house the offices of GEDP and the programs the private non-profit corporation runs, including the Easton Main Street Initiative, the Easton Ambassadors, and the EFM. The Weller Center's offices would also be located on the second floor of the building for about a year, with the Weller foundation leasing back space for about a year, Weller representatives have said.

The grant, if the council votes in favor of it, would cover the entire purchase price of the vacant building, as well as some "soft costs" and preliminary construction funding, according to the resolution presented before the city council. The document indicates the selling price of the building has been agreed upon at $900,000.

The source of the grant to GEDP would be tax-exempt bonds issued by the City of Easton, the proposed resolution states.

While Gretchen Longenbach, who serves as both a city employee as its redevelopment authority director and as executive director for GEDP told city council the new farmers' market plan was a sound one, some board members said that while they support the new market, they were not convinced a grant from the city is a sound investment before having seen the non-profit's business plan and financial projections for the project.

Gretchen Longenbach, who serves as both the city's
redevelopment authority director and as executive director
for GEDP, talks about the benefits a proposed $1 million city
grant would have for the new Easton Public Market, a year-
round, expanded, indoor version of the Easton Farmers'
Market that would occupy the vacant Weller Center
building on Northampton Street. City Finance Director Chris
Heagele, right, did not provide any comment on the matter.
"We're giving one million dollars away," Councilman Roger Ruggles said. "I've got a problem with that...I've got nothing in front of me that shows me the potential of what this thing is going to return."

Mayor Sal Panto said that while a pro forma document has not been presented to the city for review by GEDP, he's confident the grant would be a sound investment.

"I'm under the impression that doing this reduces (GEDP) reliance on city funding," he said.

But city solicitor William Murphy said while that might be true, there's no guarantee of it or of the new "Easton Public Market" being financially successful.

"We as the city have no control over how GEDP conducts its affairs," he noted. "The conditions upon which (the million dollars) is given is that it is non-refundable."

The City of Easton's current annual contribution to GEDP is $375,000, much of which is used to fund the Main Street, Ambassadors, and current farmers' market.

Longenbach said that while the grant would ultimately be likely to reduce the amount of funding GEDP relies upon from the city, that wouldn't happen for at least a few years, until the new market starts to show a definite profit.

While GEDP is a non-profit corporation, the Weller venture would not be tax-exempt due to the fact the organization will be renting space to for-profit small businesses, Longenbach said. She added that the project not being tax-exempt means if GEDP were to have to resort to a traditional loan or mortgage situation to pay for the building, it would not only have to start paying back the money immediately, but would also be subject to paying taxes and fees, raising the cost of the project.

"The only scenario under which we could use bond funds was this one," she said. "It also makes our construction loan a much more doable deal."

She added, "This particular structure has the best chance of success."

"My problem is I'm being asked to vote on a resolution that gives away a million dollars, and I've not seen any numbers. None," said Ruggles. "I can't do that responsibly."

Councilwoman El Warner also said she was uncomfortable with the situation.

"I want the market to happen, but I'm not comfortable handing over one million dollars in taxpayer dollars...While I'd like to give (the public) the market, I'm not sure it's in the top five things (they want)," Warner said.

Preliminary plans for the new indoor market at the vacant
Weller Center building were shown during an announcement
of the plan in July, but some city council members say they
want to see more of the business plan and revenue projections
before voting on whether to grant $1 million to GEDP for
the project.
Click on the image for a full-size view

She added that she wanted to see more numbers and specific revenue projections from GEDP before she makes a final decision on the matter.

"We could vote tonight, but I'd have to vote no," she said. "If you gave me two weeks, I might change my mind."

Longenbach said the project could still move forward with the delay, but warned further delays could imperil the plan to close the sale of the building in October.

"It's imperative, whether through a grant from the city or otherwise that we be able to move forward so we don't jeopardize that," she told council members.

While Panto agreed the request for more specific financial information and GEDP's business plan for the space was reasonable, he said he's personally satisfied with the little that's been presented so far, noting a lot of the information will be contingent on what happens after the building is purchased.

"My concerns on this were satisfied today," he said, adding that he feels the new market is the best use for the space. "That building is just too big to attract a private developer. I think it's a good project, and it has my full support."

Longenbach promised to deliver more specific information to council members in coming days, and the matter is expected to be discussed again at the city council committee meeting on Tuesday, Sept. 10, with the resolution set to be revisted at the council's next regular meeting on Wednesday, Sept. 11.

No comments:

Post a Comment