SUBJECT:
Title
A Resolution of the Board of Commissioners of the Town of Erie Urban Renewal Authority Approving a First Amendment to the Reimbursement Agreement with SpenALu LLC
Department
DEPARTMENT: Economic Development
Presenter
PRESENTER(S): Jack Hill, Business Development Specialist
end
Time
TIME ESTIMATE: 30 minutes
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Fiscal
FISCAL SUMMARY:
Cost as Recommended: $200,000
Balance Available: $80,000
Fund Urban Renewal Authority
Line Item Number: 800-90-872-576000-000000
New Appropriation Required: Yes, in supplemental appropriation.
Policy
POLICY ISSUES:
Supports Urban Renewal Authority goals to incentivize commercial development, remediating blighted real estate and increasing long-term sales tax revenue.
Recommendation
STAFF RECOMMENDATION:
Approve the First Amendment to the Reimbursement Agreement with SpenALu LLC, increasing the maximum reimbursement amount and adding a lump sum payment provision. This will require a supplemental appropriation, which must be approved or the funds will not be available.
Body
SUMMARY/KEY POINTS
• This agreement increases the reimbursement cap from $566,000 to $725,000 and adds a $200,000 lump sum payment.
• Approving the agreement extends project deadlines and clarifies repayment obligations if milestones are not met.
• This agreement maintains sales tax increment reimbursement structure with updated cap and termination date.
BACKGROUND OF SUBJECT MATTER:
The Town of Erie Urban Renewal Authority (TOEURA) originally entered into a Reimbursement Agreement with SpenALu LLC on Jan. 14, 2025, to support the development and construction of a new restaurant project within the urban renewal area. The original agreement provided for reimbursement of certain eligible costs through sales tax increment, with a maximum reimbursement amount of $566,000.
Since the execution of the original agreement, the developer has encountered increased project costs and delays in timeline due to financial constraints. To address these changes and ensure project completion, Economic Development staff and SpenALu LLC have negotiated a First Amendment to the agreement.
This amendment includes several modifications:
• Increase in Maximum Reimbursement: The cap is raised from $566,000 to $725,000 to reflect updated cost estimates.
• Addition of Lump Sum Payment: A one-time payment of $200,000 will be made upon issuance and approval of all required building permits, providing upfront financial support to the developer.
• Extended Deadlines:
o Certificate of Occupancy deadline extended from Dec. 31, 2026 to Dec. 31, 2027.
o Commencement of construction deadline extended from June 30, 2025 to June 30, 2026.
• Sales Tax Reimbursement Structure: Maintains reimbursement of 100% of sales tax increment, capped at $525,000, within the overall $725,000 limit.
• Repayment Obligation: If the developer fails to obtain a Certificate of Occupancy by Dec. 31, 2027, the lump sum payment must be repaid within 90 days of notice.
• Agreement Term: Continues until full reimbursement or Dec. 31, 2035, whichever occurs first, with certain provisions surviving termination.
These changes are intended to ensure the viability of the project, support economic development goals, and maintain compliance with urban renewal objectives.
ATTACHMENT(S):
1. Resolution
2. First Amendment
3. Original Agreement
4. Presentation
5. Amended Feasibility Analysis
6. Original Funding Gap Analysis