Empire State 5 NEWYORK swear orpanruumc FOR CONSEDERATIQN January 23, 2017' TO: FROM: SUBJECT: - REQUEST FOR: . Development The Directors Howard A. Zemsky Rechester (Finger Lakes Region Monroe County) AIM Photonics TAP Facility Capital and Working Capital Upstate Revitalization initiative (Capital and Working Capital Grant) Findings and Determinations Pursuant to Section 10(g) of the Act; Authorization to Adopt the Proposed General Project Plan; Authorization to a Make a Grant and to Take Related Actions General Project Plan I. . ProiectSummarv Grantee: investment: The Research Foundation for-the State University of New York on behalf of SUNY Polytechnic institute on behalf of American Institute of Manufacturing integrated Photonics Photonics" or the ?institute?) - 1 A Grant of up to $28,000,000 to be used for the?cost of building renovations, purchase of machinery, equipment and tooling, and operating costs for the Federally designated institute?s Testing, Assembly and Packaging facility The New York State Urban Development Corporation doing business Project Location: Proposed Project: Project Type: Regional Council: as Empire State Development (?550? or the ?Corporation?) 1964 Lake Avende, Rochester, Monroe County Renovate, equip and operate the TAP facility for use by Photonics and its consortium of industry/universitypartners Federal, state, university, and industry partnership The Finger Lakes Regional Economic Development Council (the _?Council?) has been made aware of this item. The project is censiStent with the Council?s Plan to support and grew the region's optics, photonics and imaging industry, identified by the Council as the region?s top industry Cluster. Empire State Development 633 Third Avenue, New York. NY 10017 (212) 803-3100 I li.? Proiect Cost and Financing Sources Financing Uses Amount Site Selection $100,000 Design/Engineering 1,200,000 Lab Space Renovations, including - Equipment 3,200,000 Clean Room Renovations, including Equipment 11,200,000 Office Renovations, including . Furnishings Equipment 1,200,000 Building-Driven Contingencies* 1,900,000 Lease Pro-payment (3.5 years)M 2,800,000 De?installation of Equipment 6,400,000 Total Project Costs 528,000,000 Note: Financing uses are estimates based on previous experience With advanced technology engineering projects by SUNY Polytechnic institute facilities staff, and are consistent with per square- -foot costs. Although there was an initial facility survey by a real estate consultant hired by ESD and follow- -up estimates by SUNY Polytechnic, there are building driven contingencies as explained below. Refers to special work/installations required due to the existing building Configuration. These are expected to deal mainly with vibration issues. Most of this work is? expected be done by the specialized equipment manufacturers, but for an add on cost to be determined. Grantee will pre- pay this to the building? 5 owner, covering such things as rent, insurance and preventive maintenance to be undertaken by the landlord for 3.5 years of a 5?year lease, which is expected to begin in mid?2017. . Refers to a reserve/contingency fund for removal of leasehold improvements and process tools at the end of AIM Photonics? 5-year lease, as required by the landlord. The details of this fund will not be known for approximately 5 years. Financing Sources Amount Percent ESD-Grant . . 523,000,000 100% ITotalP?rojeCtFinancing_ $8,000,000 100%. A Proiect Description A. I Organization Industry: 7 Photonics, Optics and imaging .. Organizational History: Established in 1951, the Research Foundation'for the State University of New York on behalf of SUNY Polytechnic Institute administers externally 2 Ownership: Size: Background: funded contracts and grants for and on behalf of the State University of New York. SUNY RF provides the administrative flexibility to respond quickly to the special demands of externally funded contracts. and grants in a manner that facilitates their scientific or technical execution. SUNY RF is a not?for?profit educational corporation. SUNY RF has over 17,000 employees statewide. On July 27, 2015, Vice President Biden announced that Rochester was selected as the location of the American institute for Manufacturing integrated Photonics. The Research Foundation for the State University of New York on behalf of SUNY Polytechnic Institute will lead the Institute to secure U.S. leadership in the manufacture of the transformational technology of integratedphotonics. Just as integrated electronic cirCuits allowed for advanced processing in computers and cellphones, integrated photonic components can pack even more processing power into a single chip, creating new possibilities for computing and telecommunications; As a technology for carrying light?. waves, integrated photonics has the potential to revolutionize entire industries from increasing the carrying capacity of broadband communications ten~fold, to creating needle-free tests for common conditions like diabetes, and improving imaging capabilities in defense operations. The Department of Defense awarded AIM Photonics to a consortium of 124 companies, not-for-profits, and universities led by SUNY RF. With a? total investment of over $610 million $110 million in federal funds, and more than $500 million in non?federal contributions, including $250 million from New York State over five years- it is the largest public- private commitment to date for such an institute launched In the U. S. The Institute is the sixth In the National Network of Mantifacturing Innovation, each dedicated to securing U. 5. leadership In - the emerging technologies required to win the next generation of advanced manufacturing. The region?s photonlcs cluster is already a fast?growing sector. AIM Photonics will help spark new growth in manufacturing, building on the area?s legacy of leading optical and photonics technology capabilities. The Institute will bridge advanced research and commercial product development, yielding critical defense and telecommunications advances while also investing in education and workforce development to train and position the next generation of manufacturers in integrated. 7 - photonics. Itwill bring together companies, universities, other academic and training institutions, and Federal agencies to 'co~invest in key ESD involvement: Competition: Past ESD Support: . emerging technology areas that can encourage investment and production in the U.S. The AIM Photonics Board of Officers, at its January 21, 2016, meeting designated ESD as the fiscal agent for the New York State funds, and at its June 22, 2016, meeting approved an initial $106 million in NYS funds. NYS has committed $250 million to support AIM Photonics, leveraging the $110 million DOD award and $250 million in private support for a total investment of more than $600'million. 'The budget will focus on economic development, workforce development and academic research, with a breakdown as follows: $250 million over five years to support operations, staff, and research development with investment?ln the Rochester area and in Albany on a wafer fabrication line to build'and equip the facilities, and business operations in Rochester, including investments in academic facilities in the region at SUNY Polytechnic?s Canal Ponds site, at the University of Rochester and at the Rochester institute of Technology.- On July 21, 2016, the Directors approved an initial $78 million for tooling, equipment, technology licenses, and operations. The Directors materials stated'that the remaining $28 million of the $106 million approved funding, designated for acquisition or lease, construction or rendvation of . the TAP facility, would be requested following a competitive procurement process to identify a site for the TAP facility, to bathe location for testing, packaging, reSearch/development, and future manufacturing. - The AIM Photonics Board of Officers, at its December 14, 2016, meeting designated ?the TAP site, a portion of a former Kodak building now owned by ON Semiconductor, to be leased to AIM Photonics. Accordingly, the Directors are being asked to approve an additional $28 million for the project (cumulative $106 million) to renovate, equip and operate the TAP facility now that a site has been selected. ON Semiconductor?s facility was chosen from 11 proposed site's. Real estate consultant Newmark Grubb Knight Frank (the ?Site Selection Consultant?), hired by ESD, conducted reviews of potential sites in the region. (As previously mentioned to the Directors on July 21, 2016, - Rochester beat out the two other competing locations for AIM Photonics, San Diego, CA and Tampa, FL.) Although ESD hascommitted millions of dollars in past funding to projects benefitting from SUNY RF throughout the State, ESD has previously assisted SUNY In the Finger Lakes Region as summarized' In the following chart: Date Start (ESD Date End Program Project ii - Amount Directors? (Project Completion: Purpose - Approval date) Contract Expiration) Photonics Upstate - ciaiL?iali?mVX??il?i'?i Revitalization A3070 $68,000,000 July 21,2016 December 31, 2018 . .1 . equipment, tooling, initiative . technology licenses 8i operating'costs Photonics New York Works A8071 $10,000,000 July 21, 2016 December 31, 2018 mammal" . 4 equipment, tooling?Si instruments B. TheProiect Completion: December 2017 (substantial completion); full completion by April 2018 Activity: Alli/l Photonics, in ecoperation with its partners, will undertake engineering, facility renovations, and acquire and install specialized instruments, tooling and equipment to-support the Institute?s TAP facility. It will lease the building from ON Semiconductor. Results: By attracting hundreds of miilions of dollars of new investment in Economic Growth investment Project: Grantee Contact: ESD Project No.: photonics, and convening leading photonics capabilities from across the . nation in Rochester, the institute will accelerate the growth of this industry in the upstate New York area, bringing thousands ofjobs and millions of dollars in investment. No Benefit-Cost Analysis is required since these projects generate long-term benefits not captured in the short term period used for the BCA of analysis and may involve no permanent job commitments. Michael Liehr, CEO AIM Photonics c/o so NY Polytechnic institute 257 Fuller Road Albany, NY 12203 Phone: (518)437-8686 A3496 Project Team: Origination - Vincent Esposito Project Management Edward Legal . Stephen Gawlik Contractor 8t Supplier Diversity Geraldine Ford Finance John Bozek - Environmental Soo Kang C. Financial Terms and Conditions 1. The Grantee shall reimburse ESD for all out-of?pocket expenses incurred in connection With the project, and upon execution of the grant diSbursement agreement, shall reimburse ESD for public hearing?related costs. Any other out- of?pocket expenses . including the Site Selection Consultant?s fee paid by ESD, shall be handled through the normal payment requisition process.? 2. The Grantee will demonstrate no materially adverse changes In its financial condition prior to disbursement. 3. The Grantee will be required to contribute a minimum of 10% of the total project cost in the form of equity contributed after announcement of the project. For this project however, grants constitute the equity contribution. 4. Disbursement will occur in two phases: Up to $21,600,000, covering budgeted items except for De-installation of Equipment Reserve, will be disbursed to Grantee following execution of a Grant Disbursement Agreement limited to $21,600,000- Disbursement shall be in a manner to be determined, allowing for advances to allow the Grantee to place advanCe orders for the purchase of instruments, tooling and equipment substantially as described in these materials, all project approvals have been completed and funds are available. Payment will be made upon presentationto ESD of an invoice and such other documentation as ESD may reasonably require. All disbursements of $21,600,000 must be requested by April 1, 2019. The remaining $6,400, 000, Will be disbursed to Grantee upon submission of a budget - detailing the uses of the De~ installation of Equipment Reserve fund, expected' In approximately five years, and after execution of a Grant Disbursement Agreement or Amendment thereto for an additional 400:, 000. Disbursement shall be In a manner to be determined. All disbursements of the remaining 400, 000 must be requested by a date to be determined. 5. ESD may reallocate the project funds to another form of assistance, at an amount no greater than $28 million for this project if ESD determines that the reallocation of the assistance would better serve the needs of the Grantee and the State of New York. in no event shall the?total amount Of any assistance to be so reallocated exceed the total amount of assistance approved by the Directors. IV. Statutory Basis Upstate Revitalization initiative The funding was authorized in the 2015-2016New York State budget and reapp?ropriated in the 2016-2017 New York State budget. No residential relocation is required as there are no families or individuals residing on the site. V. Environmental Review ESD staff has determined that the project constitutes a Type ll action as defined by the New York State Environmental Quality Review Act and the implementing regulations of the New York State Department of Environmental Conservation. No further environmental review is required in connection with the project. VI. Non-Discrimination and Contractor Sopplier Diversitv Non? Discrimination and Contractor Supplier Diversity policies will apply to this project. The Grantee shall be required to include minorities and women in anyjob opportunities created, to solicit and utilize Minority and Women Business Enterprise for any contractual opportunities generated in connection with the project and shall be required to use Good Faith to 5 ?142.8) to achieve an overall MWBE Participation Goal I of 30% related tothe eligible categories totaling approximately $16,000,000. As such, the MWBE utilization goal shall be no less than $4,800,000. it is noted that MWBE participation for $6.4 mm for De-installation of Equipment Reserve will be determined once that budget has been submitted to ESD. - Vii. ESD Emplovment Enforcement Policv ESD's Employment Enforcement Policy will not apply since the "project will not directly create or retain jobs. - . ESD FinanciaI?Assistance Subject to Availabilitv of Funds and Additional Approval The provision of ESD financial assistance is contingent upon the availability of funds and the approval of the State Division of the Budget iX- Additional Submissions to Directors Resolutions New York State Map Project Finance Memorandum . . I 7 January 23, 2017- Rochester (Finger Lakes Region - Monroe County) Photonics Institute TAP Facility Capital and Working Capital Upstate Revitalization initiative (Capital and Working Capital Grant) Findings and Determinations Pursuant to Section 10(g) of the Act; Authorization to Adopt the PropOSed General Project Plan; Authorization to Make a Grant and to Take Related Actions RESOLVED, that on the basis of the materials presented to this meeting, a copy of which is hereby ordered filed with the records of the Corporation, relating to the Rochester (Finger Lakes Region .- ?Monroe County) Photonics institute TAP Facility Capital and Working Capital - Upstate Revitalizatibn.?lnitiative (Capital and Working. Capital Grant) Project (the, the Corporation hereby determines pursuant to'Section 10(g) of the New York State Urban Development Corporation Act of 1968, as amended (the that there are no families or individuals to be displaced from the project area; and be it further RESOLVED, that the Corporation does hereby adopt, subject to therequirements of Section 16(2) of the Act, the proposed General Project Plan (the ?Plan"-) for the Project submitted to this meeting, together with such changes therein as the PreSident and Chief Executive Officer of the Corporation or his designee(s) may deem appropriate, a copy of which Plan, together with such changes, iS hereby ordered filed with the records of the Corporation; and be it further RESOLVED, that upon written finding of the President and Chief Executive Officer of the Corporation or his no substantive negative testimony or comment has been received at the public hearing held on the Plan, such Plan shall be effective at the conclusion of - such hearing, and that upon such written finding being made, President and Chief Executive Officer of the Corporation or his designeeis) be, and each of them hereby is, authorized to make to grants to The Research Foundation for the State University of New York for a total amount not to exc?eed Twenty Eight Million Doliars ($28,000,000) from the Upstate Revitalization initiative for the purposes, and substantially on the terms and conditions, set forth in the materials presented to this meeting, with such changes as the President and Chief Executive Officer of the Corporation or his designee(s) may deem appropriate, subject to the availability of funds and the approval of the State Division of the Budget; and be it flirther RESOLVED, that the President and Chief Executive Officer or his designee(5) be, subsequent to the making of the grant, and each of them hereby iS, authorized to take such actions and make such modifications to the terms of the grant as he or she may deem necessary or apprOpriate in the administration of the grant, and be it further RESOLVED, that the provision of ESD financial assistance is expressly contingent upon: (1) the I approval of the Public Authorities Control Board, if applicable, and (2) receipt of all other necessary approvals; and be it further RESOLVED, that the President and Chief Executive Officer or his designee(s) be, and each of . them hereby is, authorized in the name and on behalf'of the Corporation to execute and deliver any and all documents and to take all actions her sele discretion consider to be necessary or proper to effectuate the foregoing resolutions. *aeac