WESTERN NEW YORK POWER PROCEEDS ALLOCATION BOARD

 

MINUTES

 

June 26, 2013 – 10:00 A.M.

Empire State Development Corporation

95 Perry Street

Buffalo, New York 14203

 

 

Table of Contents

 

 

            Subject                                                                                                Page No.                     Exhibit

 

Opening Remarks                                                                         2    

 

1.                  Adoption of the Proposed Meeting Agenda                                  2

 

2.                  Adoption of May 13, 2013 Meeting Minutes                                2

 

3.                  Fund Balance Update                                                                   3                             3-A

 

4.                  Round Two - Award of Fund Benefits                                         3                             4-A-1, 4-A-2,

                                                                                                                                    4-B, 4-C, 4-D, 4-E, 4-F

5.                  Next Meeting and Adjournment                                                    9

 

 


Minutes of the Meeting of the Western New York Power Proceeds Allocation Board held via video conference in Buffalo, New York.

 

Board Members Present:

Anthony J. Colucci III (Chairman)

Deanna Alterio Brennen

Dennis W. Elsenbeck

Brenda Williams McDuffie

Henry F. Wojtaszek

 

NYPA Staff Present:

Karen Delince              Corporate Secretary (via video in White Plains)

Vincent Esposito          Assistant General Counsel (via video in Albany)

            James Pasquale                        Senior Vice President – Economic Development and Energy Efficiency

                                                             (via video in White Plains)

            Michael Huvane          Vice President Marketing – Business & Municipal Marketing

            John Giumarra             Account Executive, Business Marketing & Economic Development

                       

ESDC Staff Present:

Richard Ball                 Project Manager

Christina Orsi               ESDC’s Western New York Regional Director

 

 


 

 

Opening Remarks

 

            Chairman Colucci welcomed members of the Board, the staff of Empire State Development Corporation (“ESDC”), and the staff of the New York Power Authority (“NYPA”).  He stated that this meeting of the Board had been duly noticed as required by the Open Meetings law.

 

 

1.                  Adoption of Agenda

 

The agenda for the June 26, 2013 meeting was unanimously adopted.

 

 

2.                  Adoption of May 13, 2013 Meeting Minutes

 

Member Wojtaszek made the following statement to correct the record of the May 13 meeting. He said that he had voted in favor of Diversified Manufacturing, Inc.’s application without realizing that the company is a client of Harris Beach where his law firm is Of Counsel.  Although the firm represents Diversified Manufacturing on matters unrelated to the application and he has had no dealings with this company, had he realized the connection prior to the May 13 meeting he would have disclosed this apparent conflict and recused himself.  Given that this application would have been approved without his vote, he believed there was no need to reconsider this application but wanted the record of this meeting to reflect his conflict. 

 

Member Elsenbeck stated that he would like an opportunity to amend the minutes.

 

The adoption of the minutes was deferred until the next meeting and members were given until August 1 to submit amendments to the minutes to the Corporate Secretary’s office.

 

         Conflicts of Interest

 

Before moving forward with the agenda, Chairman Colucci asked if any member had a conflict of interest that would prevent him/her from participating in and voting on a particular matter before the Board.

 

Chairman Colucci stated that he had a conflict of interest with 425 Michigan Avenue LLC and Buffalo Olstead Park Conservancy.  Regarding Buffalo Olstead Park Conservancy, he said while he has no business interest in the organization, he wanted the record to note that his spouse is a board member and secretary to this not-for-profit organization.  In order to avoid any appearance of impropriety, he wanted to withdraw from consideration of the application and will not vote on it.

 

Member McDuffie stated that at the last meeting she had indicated that she had a conflict of interest with respect to 425 Michigan Avenue, LLC, a company that had withdrawn its application from consideration at the last meeting and is now being considered at this meeting.  She consulted with counsel after the last meeting and counsel found no conflict of interest existed in this case.  As a result, she planned on voting on the application at this meeting.

               

Member Wojtaszek stated that he had a conflict of interest with three applications that were not being recommended for fund benefits, Cornell Cooperative Extension of Niagara County, Kaleida Health and Niagara University.

 

 

3.                  Fund Balance Update

 

Mr. Michael Huvane submitted the following report:

 

As of May 30th there is $17,010,204 available to allocate as Fund Benefits.  The two recommended awards total $800,000; this will leave approximately $16,210,204 available for future consideration. At present, there is 108 MW of unallocated power; the Authority is expected to make the next quarterly deposit to the fund in July.  He noted that, under the law, a minimum of 15% of the funds must be awarded to “energy-related projects, programs and services.”  Staff is keeping a separate accounting of these projects.

 

Chairman Colucci asked Mr. Huvane to highlight the value of the 15% requirement based on the anticipated amount of money in the fund in 2013 for the Board at the next meeting.  In response to a question from Member McDuffie, Mr. Huvane said that there is no specific timeframe to spend 15% on energy related projects.  

 

In response to a request from Chairman Colucci, Mr. Huvane reported that a meeting was held with the Western New York economic community to discuss the Proceeds Board.  Thirty people participated in this informative discussion.  

 

Member Elsenbeck asked Mr. Huvane to provide a break-down of the allocated and unallocated MW in future fund balance updates.

 

 

4.                  Round 2 – Award of Fund Benefits   

 

Ms. Christina Orsi, ESDC’s Western New York Regional Director, submitted the following report and resolution for consideration and adoption:

 

SUMMARY

           

The Western New York Power Proceeds Allocation Board (“Allocation Board” or “Board”) is requested to recommend to the Board of Trustees of the Power Authority of the State of New York (“NYPA” or “Authority”) that awards of Fund Benefits be made to the two applicants identified in Exhibit “4-A-1” and Exhibit “4-A-2” in the amounts indicated in each such Exhibit.

 

The Board is also requested to find and determine that: (1) the applications listed in Exhibit “4-B” will not receive a recommendation for an award of Fund Benefits based upon the application of the relevant program criteria to such applications; and (2) the applications listed on Exhibit “4-C” propose projects that are not “eligible projects” for Fund Benefits for the reasons described below.

 

The Board is also requested to defer the applications listed in Exhibit “4-D” for consideration at a later time.

 

For the Board’s information, Exhibit “4-E” identifies those applications for Fund Benefits that have been withdrawn or that are incomplete. No action by the Board is required on these applications at this time.

BACKGROUND

 

1.      Western New York Power Proceeds Allocation Act

 

On March 30, 2012, Governor Cuomo signed into law the Western New York Power Proceeds Allocation Act (the “Act”).  The Act provides for the creation, by the Authority, of the Western New York Economic Development Fund (“Fund”).  The Fund consists of the aggregate excess of revenues received by the Authority from the sale of Expansion Power (“EP”) and Replacement Power (“RP”) produced at NYPA’s Niagara Power Project that was sold in the wholesale energy market over what revenues would have been received had such energy been sold on a firm basis to an eligible EP or RP customer under the applicable tariff or contract.

 

            Under the Act, an “eligible applicant” is a private business, including a not-for-profit corporation.  “Eligible projects” is defined to mean “economic development projects by eligible applicants that are physically located within the state of New York within a thirty mile radius of the Niagara power project located in Lewiston, New York that will support the growth of business in the state and thereby lead to the creation or maintenance of jobs and tax revenues for the state and local governments.”  Eligible projects include, for example, capital investments in buildings, equipment, and associated infrastructure owned by an eligible applicant for fund benefits; transportation projects under state or federally approved plans; the acquisition of land needed for infrastructure; research and development where the results of such research and development will directly benefit New York state; support for tourism and marketing and advertising efforts for western New York state tourism and business; and energy-related projects.

 

Eligible projects do not include public interest advertising or advocacy; lobbying; the support or opposition of any candidate for public office; the support or opposition to any public issue; legal fees related to litigation of any kind; expenses related to administrative proceedings before state or local agencies; or retail businesses as defined by the board, including without limitation, sports venues, gaming and gambling or entertainment-related establishments, residential properties, or places of overnight accommodation.

 

Fund Benefits are payable to successful eligible applicants for eligible projects in the form of grants. It is anticipated that Fund Benefits will be disbursed by NYPA as reimbursement for expenses incurred by the Eligible Applicant.   

 

At least 15% percent of Fund Benefits must be dedicated to eligible projects which are “energy-related projects, programs and services,” which is “energy efficiency projects and services, clean energy technology projects and services, and high performance and sustainable building programs and services, and the construction, installation and/or operation of facilities or equipment done in connection with any such projects, programs or services.”

 

Allocations of Fund Benefits may only be made on the basis of moneys that have been deposited in the Fund. No award may encumber funds that have not been deposited in the Fund.

 


 

2.      Western New York Power Proceeds Allocation Board

 

Under the Act, the Allocation Board is charged with soliciting applications for Fund Benefits, reviewing applications, making eligibility determinations, evaluating the merits of applications for Fund Benefits, and making recommendations to NYPA on Fund Benefit awards.  The Allocation Board uses the criteria applicable to EP, RP and PP allocations, and for revitalization of industry, provided for in Public Authorities Law § 1005. Additionally, the Board is authorized to consider the extent to which an award of Fund Benefits is consistent with the strategies and priorities of the Regional Economic Development Council having responsibility for the region in which an eligible project is proposed. 

 

At its meeting on March 4, 2013, the Board, in accordance with the Act, adopted by-laws, operating procedures, guidelines related to the application, and a form of application.  A copy of the relevant criteria (collectively, “Program Criteria”), adapted from this Board’s “Procedures for the Review of Applications for Fund Benefits,” is attached as Exhibit “F.”  The Board also defined “retail business” to mean “a business that is primarily used in making retail sales of goods or services to customers who personally visit such facilities to obtain goods or services.”

 

Finally, the Board designated the Western New York Regional Director, Empire State Development Corporation to act on its behalf for administrative matters and to provide staff services (“Staff”).  Among other things, Staff was authorized to perform analyses of applications seeking Fund Benefits and to make recommendations to the Board on the applications. 

 

3.      Application Process

 

            The Allocations Board established a series of application due dates coupled with a schedule of dates through the end of 2013 on which dates the Board expected to meet to consider applications.  In addition, the application process was promoted through a media release and with assistance from state and local entities, including the Western New York and Finger Lakes Regional Economic Development Councils, the Empire State Development Corporation and other local and regional economic development organizations within the State.  A webpage was created that is hosted on WWW.NYPA.GOV/WNYPPAB with application instructions, a link to the approved application form and other program details including a contact phone number and email address staffed by the Western New York Empire State Development regional office.

 

After the Board’s first round of recommendations made at its May 13, 2013 meeting, NYPA made three awards of Fund Benefits.

 

As of May 7, 2013, the second application due date, the Board received 45 applications, over two rounds, collectively seeking over $100 million in Fund Benefits.

 

To facilitate the Board’s second round of application review, Staff analyzed applications and is now making recommendations to the Board on all outstanding applications except those listed on Exhibit “4-D,” which are being deferred for future consideration, and Exhibit “4-E,” which have been withdrawn by the applicants. Staff’s recommendations are discussed in the next section.


 

DISCUSSION AND RECOMMENDATIONS TO THE BOARD

                       

Staff has reviewed the applications received during the second solicitation round, and is making the following recommendations to the Board.

 

1.       Recommendations for Awards of Fund Benefits

 

            Based on a review of the applications and an application of relevant Program Criteria, Staff recommends that the Allocation Board recommend to NYPA Trustees that two applications listed on Exhibit “4-A-1” and Exhibit “4-A-2” each receive an award of Fund Benefits in the amount indicated. The applicants have indicated that the proposed projects would create or retain upwards of 345 jobs in Western New York.  The total amount to be expended on the project proposed by these applicants is expected to exceed $20M. 

 

2.      Recommendations for No Award

 

Based on a review of the applications and relevant Program Criteria, Staff recommends that the Allocation Board determine that no recommendation for an award of Fund Benefits will be made to the NYPA Trustees for the applications listed in Exhibit “4-B.” 

 

3.      Ineligible Projects

 

Economic Development Law (“EDL”) § 189-a(5) defines “eligible projects” and further excludes certain categories of projects from such definition, including “retail businesses” as defined by the WNYPPAB and “residential properties”.  As noted above, the Board has defined “retail business” to mean “a business that is primarily used in making retail sales of goods or services to customers who personally visit such facilities to obtain goods or services.” 

 

Based on a review of the applications and the Board’s definition of “retail business,” Staff recommends that the Board find and determine that each of the four applications listed in Exhibit “4-C” proposes a project that is not an eligible project.  As described in Exhibit “4-C,” the applications submitted by Kaleida Health, Mark Hutchinson, Vazquez Family Service, LLC and Try-It Distributing Company, Inc. each propose a project that constitutes a “retail business.”

 

4.        Recommendation for Future Consideration

 

The Board is also requested to defer the application listed in Exhibit “4-D” for consideration at a later time.

 

5.      Other Applications

 

For the Board’s information, Exhibit “4-E” lists those applications that have been withdrawn or which Staff has determined are incomplete.  No action is required by the WNYPPAB on these applications at this time.

 


 

PROJECT STATUS

 

Under the Act, a recommendation for Fund Benefits by the Allocation Board is a prerequisite to an award of Fund Benefits by NYPA.  Upon a showing of good cause, NYPA has discretion to adopt the Allocation Board’s recommendation, or to award Fund Benefits in a different amount or on different terms than recommended by the Board.  In addition, the Authority is authorized to include in any contract providing for the implementation of an award (“Award Contract”) any terms and conditions that NYPA deems appropriate.

 

Given the preliminary stage of the projects identified on Exhibit “A-1” and Exhibit “4-A-2,” Staff is not in a position to recommend any specific terms and conditions to the Board that might be included in the Board’s recommendation for award.  It is anticipated that NYPA staff, in consultation with Board Staff, will negotiate final terms and conditions with successful applicants after the receipt of more detailed information concerning the projects. 

 

Recommendation

 

Based on the foregoing discussion and information, Staff recommends that the Allocation Board:

 

(1)   recommend to the NYPA Board of Trustees that the applicants listed in Exhibit “4-A-1” and “4-A-2” each receive an award of Fund Benefits in the amounts indicated;

(2)   find and determine that none of the applications listed in Exhibit “4-B” will receive a recommendation for an award of Fund Benefits;

(3)   find and determine that the applications listed on Exhibit “4-C” each proposes a project that is not an eligible project; and

(4)   find and determine that the applications listed in Exhibit “4-D” be deferred for consideration at a later time.

 

            For the reasons stated, Staff recommends the adoption of the above-requested action by adoption of a resolution in the form of the foregoing draft resolution.

 

R E S O L U T I O N

 

            NOW THEREFORE BE IT RESOLVED, That the Western New York Power Proceeds Allocation Board (“Allocation Board”) hereby recommends that the Power Authority of the State of New York (“NYPA”) grant an award of Fund Benefits to each applicant listed in Exhibit “4-A-1,” and Exhibit “4-A-2” in the amounts indicated therein, for the reasons set forth in the attached memorandum and the attachments thereto; and be it further

 

RESOLVED, That the Allocation Board hereby finds and determines that the applications listed in Exhibit “4-B” are not recommended for an award of Fund Benefits for the reasons set forth in the attached memorandum and the attachments thereto; and be it further

 

RESOLVED, That the Allocation Board hereby finds and determines that the applications listed in Exhibit “4-C” propose projects that are not eligible projects for the reasons set forth in the attached memorandum and the attachments thereto, and therefore are not eligible to receive Fund Benefits; and be it further

 

RESOLVED, That the Allocation Board hereby finds and determines that the applications listed in Exhibit “4-D” will be deferred for consideration at a later time; and be it further

 

            RESOLVED, That Staff is authorized on behalf of the Allocation Board to transmit the Board’s decision to NYPA, and to do any and all things and take any and all actions to effectuate the Board’s decision and the foregoing resolution.

 

Ms. Orsi, said that for this round, 27 applications were received with amounts requested totaling more than $74,500,000.  Two projects, totaling $800,000, are being recommended at this time.  The applications submitted were from various tracts:  7 from Business Investment; 4 from Infrastructure/ Downtown Investment; 4 from Tourism/Marketing; 3 from Innovation/Entrepreneur Development; 2 from Workforce Development; and the remainder applied to a combination of these tracks or various other tracts.

 

In this round two applications for awards are being recommended; 9 applications are not being recommended; 4 applications are being recommended ineligible; 6 applicants have withdrawn their applications from consideration and 6 applications are being deferred to conduct further due diligence to ensure fully informed recommendations.

 

The two recommended projects are: Ascension Industries, Inc. and 425 Michigan Avenue-Compass East.

 

·         Ascension Industries, Inc.

 

Ms. Orsi presented the recommendation for Ascension Industries, Inc.  She said Ascension Industries, Inc. is recommended for an award of $300,000 and the total project cost is approximately $2,700,000.  The company plans to convert post-recycled municipal waste into green power.  The application supports the first build of this product and will create 15 jobs in advance manufacturing and help retain 131 jobs in Western New York.

 

            Upon motion made by member Wojtaszek and seconded by member McDuffie, the recommendation was adopted unanimously.

 

·         425 Michigan Avenue, LLC Compass East

 

Ms. Orsi presented the recommendation for 425 Michigan Avenue, LLC Compass East.  She said 425 Michigan Avenue, LLC Compass East is recommended for an award of $500,000 and the total project cost is estimated at $20,836,889.  This workforce development project will assist unemployed residents of the Eastside of Buffalo advance into the healthcare field profession by giving them CNA training.  The company expects to train and place 200-250 people per year.

 

            Upon motion made by member McDuffie and seconded by member Brennen, the recommendation was adopted with four members voting in favor and Chairman Colucci abstaining.

 

 

 

 

·         Recommendations for No Award

 

            Upon motion made by member McDuffie and seconded by member Brennen, the resolution not recommending the applicants listed in Exhibit “4-B” (Buffalo Niagara RIVERKEEPER; Buffalo Olmsted Parks Conservancy; Cleveland BioLabs, Inc.; Cornell Cooperative Extension of Niagara County; Empire State Shippers’ Association, Inc.; Forest Lawn Heritage Foundation; Martin House Restoration Corporation; SiGNa Chemistry, Inc.; Time Release Sciences, Inc.) for an award of Fund Benefits was adopted with  members voting in favor of the resolution, with the exception of Chairman Colucci who abstained with respect to Buffalo Olmsted Parks Conservancy and member Wojtaszek with respect to  Cornell Cooperative Extension of Niagara County.

 

·         Recommendation for Ineligible Projects

 

            Upon motion made by member McDuffie and seconded by member Brennen, the recommendation finding applicants listed in Exhibit “4-C” (Kaleida Health; Marl Hutchinson, Vazquez Family Service, LLC, and Try-it Distributing) not eligible for an award of Fund Benefits was adopted with members voting in favor of the resolution, with the exception of member Wojtaszek who abstained with respect to Kaleida Health.

 

·         Recommendation for Future Consideration

 

Upon motion made by member Wojtaszek and seconded by member Elsenbeck, the recommendation to defer consideration of the applicants listed in Exhibit “4-D” (Global Outreach Mission, Inc.; Lockport Main Street, Inc.; Field and Fork Network; Niagara University; Aquarium of Niagara; Michigan Street African American Heritage Corridor Commission, Inc.) was adopted with members voting in favor of the resolution, with the exception of member Wojtaszek who abstained with respect to Niagara University.

 

 

5.   Next Meeting and Adjournment

 

            Chairman Colucci said the next meeting of the Board is scheduled for August 26, 2013.  A motion to adjourn the meeting, made by member Elsenbeck and seconded by member Wojtaszek, was entertained by the Chairman and unanimously adopted.