HomeMy WebLinkAbout2007 07 23 Regular 600 Expansion of Business Incubator Program into Winter Springs
COMMISSION AGENDA
ITEM 600
Consent
Informational
Public Hearing
Regular X
July 23, 2007
Regular Meeting
~
Mgr. / Dept.
Authorization
REQUEST:
City Manager requests the Commission to consider authorization of a one
time economic development partnership grant to the University of Central
Florida for the purpose of expanding its Business Incubator Program into
Winter Springs.
PURPOSE:
This agenda item is needed for the City Commission to determine if it
desires to assist the University of Central Florida in expanding its Business
Incubator Program into Winter Springs.
CONSIDERATIONS:
The University of Central Florida is interested in expanding its Business
Incubator Program into Winter Springs.
Seminole County has committed $900,000 over a three year period of
time. Additional assistance is needed from the City of Winter Springs.
The University of Central Florida has chosen the new office building
constructed by Tom Corkery at the interchange of State Road 434 and 417
for their expansion site in Winter Springs.
The size of these operations will be contingent upon the City's willingness
to assist with the cost of establishing the expansion site as follows:
SIZE
6,000 s uare feet
8,000 s uare feet
10,000 s uare feet
13,000 s uare feet
ONE TIME GRANT REQUEST
$ 0
$100,000
$200,000
$395,000
The Director of the University of Central Florida Incubator Program
indicates that 8,000 square feet of floor space is needed to reach the
critical mass needed for a successful program. The Director would
obviously like to have the full 13,000 square feet. Tom Corkery has
committed to construction of the second building of his two building
office complex if the City commits to at least the 8,000 square foot option.
FUNDING:
The City Commission will have to make a supplemental appropriation
from the general fund if it chooses to help fund the project.
RECOMMENDATIONS:
It is recommended that the Commission determine if it desires to provide
financial assistance to the University of Central Florida to expand its
Business Incubator Program into Winter Springs in the form of a one time
grant, and if so, what size grant the City Commission would deem
appropriate, and to authorize the City Attorney and City Manager to
prepare and execute an agreement in accordance with the Commission's
choice.
A TT ACHMENTS:
July 2,2007 e-mail from the University of Central Florida's Incubator
Program Director Thomas O'Neal
COMMISSION ACTION:
2
Page 1 of 1
Jan Palladino
From: Thomas O'Neal [oneal@mail.ucf.edu]
Sent: Monday, July 02, 2007 3:24 PM
To: daveaxel@axelrealestate.com; David Chapin
Cc: TJCorkery1 @aol.com; Nick Poole; Esther Vargas-Davis; William McDermott; John F. Bush
Subject: Re: revised vistawilla LOI
Attachments: Seminole County Incubator - Proposal for Winter Springs - 02juI07.doc; revised budget
including Winter Springs.xls
Please find the attached proposal for a UCF, Seminole County, Winter Springs incubator.
I focused on 8,000 sq ft because that's where the numbers work out well financially and its still a significant
footprint at that size as well. That works with $100K from the City, 10,000 sq ft works for $200K. The 6,500 sq
ft works with no money from the City.
I attached the budget worksheet with calculations for other size facilities.
That is with the agreement to do a 3 year lease for 22.50 / sq ft all inclusive.
I look forward to hearing from you.
Tom
7/612007
The UCF -Seminole County Business Incubator
Introduction
We propose to establish a partnership between the University of Central Florida (UCF), Seminole
County, and Winter Springs to establish a business development incubator in Seminole County. The
main thrust of this program is to complement and build upon the award-winning model incubator program
at UCF.
The goal of this program would be to establish a program and facility that would serve as a business
development program for new and growing businesses in Seminole County. The Seminole County based
Incubator will receive additional funding support from the Florida High Tech Corridor Council.
The UCF Technology Incubator (UCFTI), which will serve as the model for the Seminole County
incubator, opened for business in October 1999, with six clients. After 7 years of operation, the UCFTI
has served 90 companies, including 50 current clients and 21 graduates. Of the 21 graduates, two were
purchased by Seminole County based companies - one of which is a Premium Trades. Most of the 21
have located their operations in Metro Orlando.
In addition to the above stats, Rini Technologies, a 2005 graduate of the UCFTI, purchased a 12,500
square foot building in Seminole County (582 S. Econ Circle, Oviedo). While in the incubator, CEO,
Dan Rini, and his team received the most Small Business Innovation Research (SBIR) grants in Florida.
They currently have 18 employees and plan to grow to 50 within two years.
Collectively, UCFTI clients and graduates have created over 750 jobs with an average salary of $59K.
They have received over $120M of investment capital and generate over $175M of revenue each year.
Because of its successful client support and strong community partnerships, the UCFTI was named "2004
Incubator of the Year" by the National Business Incubation Association. The success of the Incubator is
due, in large part, to the vital support of community partners.
The total estimated cost of the 8,000 square foot Seminole County Business Incubator program is $1.2M
over three years (see attached budget). Funding for the effort has thus far been secured from Seminole
County, UCF, and the Florida High Tech Corridor Council. We hereby respectfully request $100,000
from the City of Winter Springs to help defray the upfront build out costs for the new Incubator building.
UCF's Role in Partnership
Partnering with the City of Winter Springs, Seminole County, and other appropriate organizations, UCF
will expand its current incubation program to include a new Seminole County facility. This incubator
will be used to stimulate economic growth in Seminole County by attracting new industries and
businesses to Seminole County, or by encouraging the expansion of existing industries and businesses
within Seminole County.
UCF will leverage the resources and infrastructure in place at UCF to aide in the development of
companies located in the Seminole County Business Incubator at Winter Springs. This includes:
. Use the existing client application and screening process and oversee selection process. This
includes using the Excellence in Entrepreneurship Course developed for the UCF Technology
Incubator.
. Utilize UCF service provider network and expand to include additional resources from the Winter
Springs and Seminole County communities.
UCF currently utilizes a solid network of partner organizations that provide services and
advice to UCFfI clients. Many of the professional service provider partners provide
initial advice and guidance on a pro bono basis. Some of them offer reduced fees for
initial incubator client services. All of them have been vetted so as to ensure the quality
of their services and their understanding of small business needs.
. Utilize educational programs available through the Disney Entrepreneur Center and resident
small business service providers.
The Disney Entrepreneur Center represents a community of small business and
entrepreneurial service providers that already offer a broad array of educational
programs, counseling services, and funding programs. Clients of "The Seminole County
Business Incubator" will be linked to the various service providers and programs at the
Disney Entrepreneur Center for appropriate assistance.
. Provide marketing for the Incubator and its clients.
Developing and carry out a marketing plan for the Incubator. Working with the City of
Winter Springs and Seminole County, UCF and members of the incubator will promote
"The Incubator". In addition, existing UCF marketing channels will be utilized to
promote the program.
. Use existing criteria to graduate companies out of the incubation program.
In addition, UCF will:
. Oversee the selection of location and design for the Incubator
UCF management will work with the City of Winter Springs and Seminole County to
secure an appropriate location and functional design for the incubator.
. Provide staffing for Incubator
Hiring of appropriate management and administrative staff is a key element of the
success of the Incubation program. UCF management will develop the job descriptions;
organize the selection committee; and hire the incubator staff.
In summary, UCF will leverage its current award winning incubator program by establishing and
operating an incubator in partnership with Seminole County and the City of Winter Springs. This
includes hiring, training, and managing staff, selecting and managing clients, establishing mentoring and
coaching programs, and establishing criteria for graduating companies into the community.
Program Costs
The UCF Seminole County Business Incubator will be a true community partnership with investment
being provided by numerous sources. The total cost for the program is $1.2M over three years for an
8,000 sq foot facility. The funding for the effort will come from Seminole County ($900K), the City of
Winter Springs ($100K), UCF ($120K), the Florida High Tech Corridor Council ($30K), and fees
charged to clients ($224K). The largest expense for the incubator program is rent for the facilities. In
order to provide the adequate space required to house targeted incubator companies, the incubator facility
will ideally require a minimum of 8,000 sq ft. This amounts to $556K in rent over three years, with the
rest of the expenses devoted to staff and operational related expenses.
Budget Estimate (8,000 sq ft)
Income
Seminole County
City of Winter Springs
FHTCC
Total Funding
Anticipated user fees and rents
Total Anticipated Income
Expenses
Cost of facility
Rent 8,000 sq ft @ 22.50sq ft
Technology Equip./Maint.
Regular build out and modification costs
Staff
Dedicated on-site staff wi benefits
Program costs (workshops, curriculum,
marketing, etc.)
Total Costs
Variance
Additional staffing & support from UCF*
Year 1 Year 2 Year 3 Total
$300,000 $300,000 $300,000 $900,000
100,000 $100,000
$10,000 $10,000 $10,000 $30,000
$410,000 $310,000 $310,000 $1,030,000
$36,000 $ 74,160 $114,577 $224,737
$446,000 $384,160 $424,577 $1,254,737
It'I10^^^^ $185,400 $190,962 $556,362
;J>10V,VVV
$20,000 $5,000 $5,000 $30,000
$160,000 $20,000 $20,000 $200,000
$120,000 $123,600 $127,308 $370,908
$40,000 $25,000 $20,000 $85,000
$520,000 $359,000 $363,270 $1,242,270
($74,000) $25,160 $61.307 $12,467
$40,000 $40,000 $40,000 $120,000
What is a Business Incubator?
A business incubator is an economic development tool designed to accelerate the growth and success of
entrepreneurial companies through an array of business support resources and services developed or
orchestrated by incubator management and offered both in the incubator and through a network of
contacts. These companies have the potential to create jobs and increase wealth, revitalize neighborhoods,
commercialize new technologies and strengthen local and national economies.
Incubators provide management guidance, technical assistance and consulting tailored to young, growing
companies. They provide access to space, shared equipment, technology support and assistance in
obtaining financing necessary for company growth. Clusters of firms in an incubator derive strength from
working with one another, thus encouraging innovation. The goal is to produce successful firms that will
graduate from the program as financially viable and freestanding companies.
Critical to the definition of an incubator is on-site management, which develops and orchestrates business,
marketing and management resources tailored to a company's needs. Client companies usually have
access to appropriate rental space and flexible leases, shared basic office services and equipment,
technology support services, and assistance in obtaining the financing necessary for company growth.
Nationally, the track record for incubation programs is excellent. Over 87 percent of companies that
graduate from incubator programs remain viable, successful businesses five years after graduation. More
than 85 percent of companies that graduate from an incubator locate within five miles of the incubator,
resulting in a significant and tangible return on investment for the local community.
Industry Best Practices in Incubation
Model business development programs are distinguished by a commitment to incorporate industry best
practices, as defined by the National Business Incubation Association. Successful programs strive to:
. Commit to two core principles that characterize effective business incubation:
1) The incubator aspires to have a positive impact on its community's economic health by
maximizing the success of emerging companies.
2) The incubator itself is a dynamic model of a sustainable, efficient business operation.
. Obtain consensus among partners, economic development organizations and supporters on a
mission that meets market needs (i.e. technology vs. mixed use vs. other) and defines its role in
the community.
. Develop a strategic plan containing quantifiable objectives to achieve the program mission.
. Seek to integrate the program and activities into the fabric of the community and its broader
economic development goals and strategies as a way to strengthen the role of small- to medium-
sized enterprises and reduce dependence on corporate recruitment.
. Structure for financial sustainability by developing and implementing a realistic business plan.
. Recruit and appropriately compensate management capable of achieving the mission of the
program and having the ability to help companies grow.
. Build an effective board of directors committed to the program's mission and to maximizing
management's role in developing successful companies.
. Develop effective screening of applicants, and consistently push companies to pursue activities
necessary to continue strong growth and graduate within a prescribed time.
. Prioritize management time to place the greatest emphasis on client assistance, including
proactive advising and guidance that results in company success and wealth creation.
. Develop a facility, resources, methods and tools that contribute to the effective delivery of
business assistance to client firms and that address the developmental needs of each company.
. Develop stakeholder support, including a resource network that helps the program's client
companies and supports the program's mission and operations.
. Maintain a management information system and collect statistics and other information necessary
for ongoing program evaluation, thus improving a program's effectiveness and allowing it to
evolve with the needs of the clients.
Examples of how UCF and its commercialization and incubation programs are impacting Seminole
County:
1) Applicote (current client) founded by Dr. Nat Quick is housed in the STBIC and Dr. Quick lives in
Seminole Co. The company is experiencing solid growth and is substantially involved in joint
research and development with UCF.
2) ScienceSouth (current client) founded by David Byron partnered with Supreme Cheesecakes in Lake
Mary to develop a new artificial sweetener (Zugar) that is being used in the company's new line of
carb-free and gluten-free cheesecakes. In fact, a High Tech Corridor matching grant was used by
ScienceSouth to partner with USF for some of the development work. This new product being used
by Supreme Cheesecakes has enabled them to expand their business and increase their sales to
Disney, Universal, and many of the major hotels and cruise lines. They also are now able to sell via
the web and ship the cheesecakes which use the sweetener since this sweetener (unlike many others)
can be frozen and will maintain its integrity.
3) Welnia (current client) has already completed beta tests and will soon be going to market with their
innovative health and wellness device and program. Welnia is a spin-out of Central States
headquartered in Heathrow. Part ofWelnia's "go to market" strategy includes a partnership with
Florida Hospital which we helped them form as well as a joint project with UCF.
4) Datariautix (current client) is a new company founded by Sanjay Patel. Sanjay was formerly CEO of
one of our graduate companies - iBack Office - which graduated when they were acquired by a
multinational company based in India. Sanjay is a Seminole County resident.
5) And of course we have already discussed Rini's capital investment in purchasing a I2K sq ft building
in Oviedo and the impact on PremiereTrade when they acquired Software Design Corporation in
2004 which was one of our client companies.
6) Crystal Photonics. Major manufacturer of optical crystals for medical and other applications. CPI's
established a large manufacturing site in Sanford. CPI is a spin out company from UCF's Center for
Research and Commercialization in Optics and Lasers (CREOL).
7) (Rob's Company) Medical Laser company as based on Laser Technology from UCF's Center for
Research and Commercialization in Optics and Lasers.
Proposal for 6,500 sq ft
Income Year 1 Year 2 Year 3 Total
Seminole County $300,000 $300,000 $300,000 $900,000
City of Winter Springs
FHTCC $10,000 $10,000 $10,000 $30,000
Total Funding $310,000 $310,000 $310,000 $930,000
Anticipated user fees and rents $29,250 $60,255 $93,094 $182,599
Total Anticipated Income $339,250 $370,255 $403,094 #########
Expenses
Cost of facility
Rent 6,500 sq ft @ 22.50sq ft $146,250 $150,638 $155,157 $452,044
Technology Equip./Maint. $20,000 $5,000 $5,000 $30,000
Regular build out and modification costs $130,000 $20,000 $20,000 $170,000
Staff
Dedicated on-site staff wi benefits $120,000 $123,600 $127,308 $370,908
Program costs (workshops, curriculum, marketing, etc.) $40,000 $25,000 $20,000 $85,000
Total Costs $456,250 $324,238 $327,465 #########
Variance ($117,000) $46,018 $75,629 $4,647
Additional staffing & support from UCF* $40,000 $40,000 $40,000 $120,000
Proposal for 8,000 sq ft
Income Year 1 Year 2 Year 3 Total
Seminole County $300,000 $300,000 $300,000 $900,000
City of Winter Springs $100,000
FHTCC $10,000 $10,000 $10,000 $30,000
Total Funding $410,000 $310,000 $310,000 #########
Anticipated user fees and rents $36,000 $74,160 $114,577 $224,737
Total Anticipated Income $446,000 $384,160 $424,577 #########
Expenses
Cost of facility
Rent 8,000 sq ft @ 22.50sq ft $180,000 $185,400 $190,962 $556,362
Technology Equip./Maint. $20,000 $5,000 $5,000 $30,000
Regular build out and modification costs $160,000 $20,000 $20,000 $200,000
Staff
Dedicated on-site staff wi benefits $120,000 $123,600 $127,308 $370,908
Program costs (workshops, curriculum, marketing, etc.) $40,000 $25,000 $20,000 $85,000
Total Costs $520,000 $359,000 $363,270 #########
Variance ($74,000) $25,160 $61,307 $12,467
Additional staffing & support from UCF* $40,000 $40,000 $40,000 $120,000
Proposal for 10,000 sq ft
Income Year 1 Year 2 Year 3 Total
Seminole County $300,000 $300,000 $300,000 $900,000
City of Winter Springs $200,000
FHTCC $10,000 $10,000 $10,000 $30,000
Total Funding $510,000 $310,000 $310,000 #########
Anticipated user fees and rents $45,000 $92,700 $143,222 $280,922
Total Anticipated Income $555,000 $402,700 $453,222 #########
Expenses
Cost of facility
Rent 10,000 sq ft @ 22.50sq ft $225,000 $231,750 $238,703 $695,453
Technology Equip./Maint. $20,000 $5,000 $5,000 $30,000
Regular build out and modification costs $200,000 $20,000 $20,000 $240,000
Staff
Dedicated on-site staff wi benefits $120,000 $123,600 $127,308 $370,908
Program costs (workshops, curriculum, marketing, etc.) $40,000 $25,000 $20,000 $85,000
Total Costs $605,000 $405,350 $411,011 #########
Variance ($50,000) ($2,650) $42,211 ($10,439)
Additional staffing & support from UCF* $40,000 $40,000 $40,000 $120,000
Proposal for 13,000 sq ft
Income Year 1 Year 2 Year 3 Total
Seminole County $300,000 $300,000 $300,000 $900,000
City of Winter Springs
FHTCC $10,000 $10,000 $10,000 $30,000
Total Funding $310,000 $310,000 $310,000 $930,000
Anticipated user fees and rents $58,500 $120,510 $186,188 $365,198
Total Anticipated Income $368,500 $430,510 $496,188 #########
Expenses
Cost of facility
Rent 13,000 sq ft @ 22.50sq ft $292,500 $301,275 $310,313 $904,088
Technology Equip./Maint. $20,000 $5,000 $5,000 $30,000
Regular build out and modification costs $260,000 $20,000 $20,000 $300,000
Staff
Dedicated on-site staff wi benefits $120,000 $123,600 $127,308 $370,908
Program costs (workshops, curriculum, marketi $40,000 $25,000 $20,000 $85,000
Total Costs $732,500 $474,875 $482,621 #########
Variance ($364,000) ($44,365) $13,567 ($394,798)
Additional staffing & support from UCF* $40,000 $40,000 $40,000 $120,000