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State of Ohio - Controlling Board Request
STATE OF OHIO
CONTROLLING BOARD
30 East Broad Street, 34th Floor
Columbus, Ohio 43215-3457
(614) 466-5721 FAX:(614) 466-3813
OPERATING REQUEST Controlling Board No.
DEV0103246
Status:  Approved
Meeting Date:  12/4/2017

GENERAL INFORMATION
Agency
Development Services Agency


Division/Institution
Development Services Agency
Waiver of Competitive Selection  (Revised Code Section 127.16B)
      No Competitive Opportunity
      Agency Released Competitive Opportunity
Agency Released Competitive Opportunity (Revised Code Section 127.162)
Other Statutory Authority/Bill Section:166.07
Operating Transfer Request  (Revised Code Section 127.14)
      Appropriation
      Cash
      Other Statutory Authority/Bill Section:
Fiscal Year(s)
2018
Bill No.
HB 49
Eligible for OBM
Director Approval?
No

VENDOR INFORMATION
For FYAmountNameAddressCityStateCountyZip Code
   

FUNDING INFORMATION
Fund GroupFund CodeAppropriation Line ItemAppropriation Line Item NameFYAmountFYAmount
7037 195615 Facilities Establishment 2018 $7,600,000.00 $.00

SIGNATURES
     
David Goodman 12/04/2017
   
Agency Director or Authorized Agent On The Date Of
   
11/13/2017 Christine Morrison
   
Date Controlling Board President/OBM Director
   
AGENCY CONTACT
Name:  Rachel Near Title:  Director of Legislative Affairs
Phone:  (614) 644 - 8630 Fax:  (614) 728 - 4920 E-Mail:  Rachel.Near@development.ohio.gov
REQUIRED EXPLANATION OF REQUEST
  The Development Services Agency (DSA) respectfully requests Controlling Board approval to release $5,015,950.00 and $2,584,050.00 for a total of $7,600,000.00 from fund 7037, ALI 195615, 166 Direct Loan in FY18 to COCRF Investor 109, LLC (COCRF) and Fortuity Holding, LLC (Fortuity Holding), respectively, for financing the acquisition, renovation, and expansion of commercial real estate (the Project) located at 750 Mount Carmel Mall, Columbus, Ohio 43222 (Franklin County) (the Project Site).  
  COCRF Investor 109, LLC was created as part of a New Markets Tax Credit (NMTC) structure to provide a Leverage Loan that will be combined with an equity investment from Capital One, National Association into a project investment fund to provide financing to Fortuity Holding, LLC for costs associated with the Project. Fortuity Holding, LLC is the real estate holding company for Fortuity Calling, LLC (the Operating Company), a call center and social enterprise designed to create hundreds of living wage jobs in the Franklinton area, the oldest and poorest neighborhood in the two million-person Central Ohio major metropolitan area. In addition to living-wage call-center jobs, Fortuity Calling, LLC will provide the tools underemployed workers need to obtain and maintain employment. These tools include job skills training and access to support services such as child daycare, healthcare services, continuing education, and access to fresh and healthy food programs.

Sources of Funds
$ 5,015,950 166 Direct Loan (Leverage Loan)
$ 2,584,050 166 Direct Loan (Project Loan)
$ 2,864,050 Net NMTC (New Markets Tax Credit) Proceeds (Capital One Equity)
$ 1,050,000 Developer Equity
$ 1,081,916 PACE (Property Assessed Clean Energy) Financing
$    400,000 Revitalization Grant
$12,995,966 Total

Uses of Funds
$ 4,500,000 Purchase of 750 Mount Carmel Mall
$    100,000 Purchase of Graham and Miller lots
$ 5,710,148 Expansion, Repairs, and Renovations
$    185,818 Developer Fee
$    500,000 Call Center Equipment (1st year only)
$ 2,000,000 Call Center Working Capital
$12,995,966 Total

DSA's financing assistance represents not more than 75% of the total project investment at the Project Site. As a result of this project and state assistance provided, Fortuity Calling, LLC has committed to create 200 new jobs at the Project site. The loans will have a term of 25 years with an interest rate of 0.50% years 1 through 7 and 2.50% years 8 through 25. The interest rate may increase to 4.00% in the event of default under the Project Loan documents.

DSA will require collateral and security as follows on the $5,015,950 Loan to COCRF Investor 109:

- DSA will enter into a loan agreement, a promissory note and a pledge agreement with COCRF which will provide for COCRF's pledge of all its membership interest in the CDE Lenders and all proceeds and products thereof to DSA subject to documentation acceptable to the Director.
- The Leverage Loan documents will include a forbearance agreement during the NMTC compliance period (years 1 through 7).
- A $1 million Key Man life insurance policy on Fred Brothers during years 1-7 which shall be payable to Fortuity Holding, with collateral assignment to the Director.
- DSA may require additional collateral & security for the Leverage Loan during years 8 through 25 upon expiration of the forbearance period under the documents evidencing this Leverage Loan and such additional documentation as reasonably required by the Director during the term of the Leverage Loan
- An unconditional construction completion guaranty of Fred Brothers covering all costs to complete the Project. DSA will also require an unconditional and uncapped guaranty of Fred Brothers covering all operating deficits of the Borrower occurring during the New Market Tax Credit compliance period (years 1-7 of the term).

DSA will require collateral and security as follows on the $2,584,050 Loan to Fortuity Holding, LLC:

- A first priority open-end mortgage, assignment of rents and leases and security agreement on all assets of the Fortuity Holding including the Project.
- Collateral assignment of all construction contracts and architectural and engineering agreements, plans and specifications, and all licenses, permits and the like needed for the construction of the Project and operation of the Project.
- A $1 million Key Man life insurance policy on Fred Brothers during years 1-7 which shall be payable to Fortuity Holding, with collateral assignment to the Director.
- An unconditional construction completion guaranty of Fred Brothers covering all costs to complete the Project. DSA will also require an unconditional and uncapped guaranty of Fred Brothers covering all operating deficits of the Borrower occurring during the New Market Tax Credit compliance period (years 1-7 of the term).
 
   
Attachments Controlling Board Request No.: DEV0103246
Attachment TypeAttachment Description
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