Consideration and Approval of Leasing Options: at the Business Accelerator.

The purpose of the leasing option is to assist and encourage NACET clients and future entrepreneurs to become tenants at the Business Accelerator. This is a very common tool used for incubators and accelerators. Both new tenants and existing tenants (upon renewal) can take advantage of the rent subsidy. The city of Flagstaff's economic development incentive fund would subsidize rent while one-time funds last.

There are two leasing options for potential clients to choose from. Option one provides a prospective tenant two months of subsidized rent for various marketing and promotional outreach efforts with the signing of a one-year lease. Option two would give a prospective tenant six months of subsidized rent for various marketing and promotional outreach efforts when a two-year lease is signed. Outreach efforts have been divided in two tiers. Tier one efforts are easier to achieve and therefore worth a lower dollar amount that is applied to the tenants rent. Tier two requires more effort and therefore a higher dollar amount is applied.

Funding used to cover the leasing options would come from the economic development incentive fund that currently has approximately $90,000. Should leasing options be approved, this would significantly help entrepreneurs to accelerate their business the first couple of months as well as help market the building to like minded businesses.  The additional tenants will assist the city of Flagstaff in generating the revenue needed to make the pro forma.

Not applicable.

Regional Plan Economic Development Goal 3: Regional economic development partners support the start-up, retention, and expansion of existing business enterprises.

Regional Plan Economic Development Goal 4: Support efforts to recruit diverse new businesses and industries compatible with the region.

Council Goal 9: Improve the economic quality of life for Flagstaff through economic diversification, and by fostering jobs and programs that grow wages and revenues.

City of Flagstaff Strategic priority 3: Foster a resilient and economically prosperous city.

This is a new strategy we are hoping to implement to increase occupancy. No Council decision has been made since the approval of the master lease agreement in 2015. 

Option 1: Approve lease options.
Option 2: Deny lease options and provide direction or preferences.
Option 3: Reject lease options.

The Business Accelerator is the second phase of Innovation Mesa and had a soft opening in July 2015.  This 28,000 square foot building includes  wet and dry labs, office space, light manufacturing space and a conference room/alternate secondary emergency operating center. The primary purpose of the Business Accelerator is to provide space for companies that are past business incubation stage, but not quite ready to be on their own in the commercial world.  This includes graduates of the Business Incubator, as well as business startups with the intention of advancing entrepreneurship and economic gardening programs within the region.  The building was recently awarded Silver LEED status.  The current lease agreement with NACET requires 25% of leasable square footage or 4,706 square feet to be occupied within the first year. 

The Innovation Mesa Project is a shared vision with federal, state, local, and private entities. This collaborative partnership involves the City of Flagstaff, Northern Arizona University, Economic Collaborative of Northern Arizona, Northern Arizona Council of Governments, U.S. Department of Commerce Economic Development Administration, and the Northern Arizona Center for Entrepreneurship and Technology. This collaborative partnership has already shown a proven ability to work together to advance the economic needs of the region. The operation of both the Incubator and Accelerator requires a long-term City commitment for both monitoring and financial operations. The City has the responsibility to ensure to the EDA that the facilities are being used for economic development purposes in line with both EDA grants, or the City could face recapture of the funding.

 If a tenant does not complete the outreach efforts, they would not qualify for rent reduction. The tenant would be required to pay the city of Flagstaff for any deductions where outreach efforts were not performed. A tenant does not have to take advantage of the leasing option program. The city of Flagstaff sets the terms for rent as outlined in the Master Accelerator lease. Outreach efforts performed by tenants will be monitored on a quarterly basis. Leasing options are valid for new or renewed leases only and are based upon availability. They are subject to end without notice at any given time.

The intent of the program is to enhance entrepreneurship and small business development in Flagstaff.  The Business Accelerator requires a percentage of occupancy to fullfill the pro forma and generate the revenues necessary to offset City expenses.  The EDA grant is to show good faith effort in assisting entrepreneurs to produce 300 jobs and 20 million dollars in private investment. We report on the status of this metric to the EDA every three, six and nine months from the project completion.

Given the success of the Business Incubator, the intent of the Business Accelerator is to provide the next stage of business support, and as such the Business Accelerator will provide "soft landing" space for companies not quite ready for commercial space and graduates exiting NACET’s incubation program, and allow new companies wishing to enter the program to have space in Phase 1 (Incubator).

The Business Accelerator allows the community to retain local businesses that may have otherwise left the region to seek these types of services and facilities. Specifically, this project will benefit four groups:

• High technology and bioscience startups will result from technology transfer and commercialization of research conducted by NAU faculty and students. 
• Local entrepreneurs will become more competitive in the global market through the technical and business advice from NACET staff and their statewide mentors group.
• Existing firms and new firms will locate facilities in Northern Arizona to take advantage of the Innovation Mesa’s facilities and to be near growing industry clusters. However, this facility is unlikely to compete with existing commercial facilities due to small lease areas, non-traditional finance terms, and filling a lack of lab space.
• Native American culturally specific businesses will be encouraged to expand their service areas through guidance from and access to NACET staff and business leaders serving on NACET's Advisory Committee. 

The Business Accelerator also serves other agencies an alternate/secondary emergency operations center for first responders to efficiently deliver vital services to communities and tribal nations during emergency disasters. Overall, the facility helps build economic resiliency through long term economic stability in the community.

Leasing options discussions involved NACET.