ITHACA, N.Y. – Finger Lakes ReUse has put plans to expand its Ithaca location on hold indefinitely after flooding risks and unstable soils at its Elmira Road site made estimated construction costs climb. The non-profit is now trying to maintain its existing operations with a deadline to make a payment on its downtown property looming.
Initially, ReUse was due to make a payment of about $1.5 million to purchase the 214 Elmira Rd. site from current owners on Feb. 28, 2019. Executive Director Diane Cohen said she expected to have sufficient equity to finance the purchase from grants awarded for the expansion project. However, after scuttling construction plans in September, the non-profit has rushed to find another way to finance the property acquisition. The site’s owners granted a 60-day extension, so ReUse now has until the end of April to secure financing and avoid foreclosure.
Cohen said she is optimistic financing will come through.
The board began a fundraising push in the fall to raise cash equity before applying for bank financing. As of the end of February, they have raised about $375,000, Cohen said.
Small donations make up just a sliver of the fundraising total, but Cohen said public outreach through the Reinforce ReUse Challenge has demonstrated strong community support.
“(Reinforce ReUse) engaged more than 100 new financial donors and raised awareness that we still need support from the community to secure the Ithaca ReUse Center as a permanent fixture and as we continue to build up the appropriately-sized reuse infrastructure this community needs,” Cohen said.
But while ReUse has exceeded its fundraising goals, it has not yet secured a commitment from lending institutions. The non-profit is seeking about $1.6 million in bank loans to cover site purchase and closing costs as well as renovations, according to a letter Cohen submitted to the Ithaca Urban Renewal Agency.
The IURA has a stake in the organization’s finances because ReUse was awarded $100,000 from the Community Development Block Grant program in 2018 to support the creation of at least three full-time jobs. The agency voted Thursday, Feb. 28, to allow ReUse to apply those funds for job retention rather than job creation, but the loan is contingent on ReUse securing bank financing by the April purchase deadline.
Cohen told the IURA on Thursday that ReUse is in a strong position to secure loans, citing growing revenue from retail sales. According to a profit and loss report submitted to the agency, ReUse brought in about $1.3 million in retail sales revenue in 2018, about a 27 percent increase over sales in 2017. Given the sizable year-to-year growth, Cohen said even conservative projections of future growth point toward the organization’s sustainability.
“I think we’re going to be able, with some confidence, to say this is the best case scenario, this is the worst case scenario, but either way we’ll be able to service the debt,” Cohen said at the meeting.
She said ReUse has been working with business consultants to get on a path to being self-sustaining rather than relying on fundraising. The organization has had to adapt its business plan since it will not be able to add facilities on Elmira Road – and thereby increase retail volume – in the short-term.
ReUse’s donation and sales volumes have increased significantly since its Triphammer Road location first opened 10 years ago. With the addition of the Elmira Road location in 2015, it has about 22,000 square-feet of retail space, but original business plans called for 25,000 to 65,000.
“The need to expand our operations is clear as we continue to receive more material donations than we can safely manage (we estimate material donations increased by 52% in 2018),” Cohen wrote to the IURA.
According to a press release announcing the non-profit’s 10th anniversary, ReUse turned over about 1.4 million items in 2018 while providing 37 living wage jobs. If the Elmira Road expansion had moved forward as planned, it would have added to those numbers. Instead, the organization is now working to avoid losing the Elmira Road site and shrinking its operations.
Cohen said she still plans to expand ReUse after regrouping, but for now growth has been put on the back burner.
Featured image: The Ithaca ReUse Center at 114 Elmira Rd. (Kelsey O’Connor/The Ithaca Voice)