7.0. EDSR 02-14-2005 - Laserfiche WebLink

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BUSINESS INCUBATOR Economic Development Authority(EDA) discussion on the establishment of a business incubator program began in earnest in 1996. These discussions led to the EDA entering into a lease for office space and completing some building leasehold improvements in 1997. This followed with the first business incubator tenants occupying office space in 1998. The goal of the business incubator program is to develop long-term relationships with young, growing companies that have an emphasis on new technologies and to help these companies become established. After a few years in the city business incubator office space, the companies should be sufficiently established so they can go out into the Elk River community and either rent building space at market value or hopefully, construct a facility for their business. The concept behind the business incubator program is to offer discounted office space for emerging businesses so that these companies will have time to develop without the burden of having a significant cash outflow for operating expenses. The city works with Harlan Jacobs of Genesis Business Centers to recruit prospects for the incubator program and also to provide technical advice to the young companies on establishing business plans. Another piece of the collaborative puzzle is the city working with the Anoka-Sherburne County Capital Fund, the Elk River Investment Club, and the Central MN Initiative Foundation in order to help provide venture capital investments for new businesses. The city incubator program is located at 16820 Highway 10. In 2003, the EDA renewed • its lease for two years, but on only 7,037 square feet. The space leased includes three office suites, common space, and one small conference room. In addition the building owner, Larry Hickman, assumes responsibility for all building maintenance. (This current lease is a slight reduction from 7,500 square feet and 4 offices that was in the previous lease and a big reduction from 6 offices and 13,000 square feet that was in the original 1997 lease.) Currently two of the office suites are occupied and the EDA staff and incubator consultant are actively soliciting proposals for additional tenants. In 2002 the EDA directed staff to explore moving the incubator program into a building that would be more "technology-friendly"for the types of companies that are being recruited. Limitations of the present building include lack of municipal services and production/assembly space. Identifying a new site has been a challenge due to finding the right building owner with interest in the incubator program, and the cost of a new building causes a change in the economic structure of the program. Funding for the business incubator program comes from the cash rent that the EDA receives and from a transfer out from the loan program that was established for this type of project. With minimal rents being received and minimal leasehold improvements being required, it is estimated that the loan fund for this project will last only another 4 years. At the time of evaluating new site options for the program, discussions also need to take place regarding the success of the program, funds for the program after 4 more years, and the desirability to continue the program. Expenditures for the business incubator program are shown on the adjacent page. The other professional services line item is for the consulting contract with Mr. Jacobs. In 2003 the EDA increased the monthly consulting services to$1000 for Mr. Jacobs'work to identify prospects, complete due diligence of prospects, and to assist companies in the incubator. The other expenses in the budget are self-explanatory. •