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15.C.

Meeting Date:	04/01/2014
From:	Stacey Brechler-Knaggs, Grants Manager

Information

TITLE:

Consideration and Approval of an Intergovernmental Agreement: Between the City of Flagstaff and Northern Arizona University (NAU) for finanical contribution to the Innovation Mesa Business Accelerator Project.

RECOMMENDED ACTION:

Approve the Intergovernmental Agreement (IGA) with NAU for the Innovation Mesa Business Accelerator Project in the amount of $1,100,000 for the purpose of funding the Design and Construction of the project facility.

Policy Decision or Reason for Action:

NAU was awarded $1.0 million from the Arizona Commerce Authority (ACA), and will provide an additional $100,000 to partner with the City of Flagstaff and Northern Arizona Center for Entrepreneurship and Technology (NACET) . Acceptance of the IGA will provide the remaining funds needed to design and construct the Innovation Mesa Business Accelerator.

Financial Impact:

The total project cost is estimated to be $7,762,500. Funding is broken down as follows:

$4,000,000 - Federal Economic Development Administration Grant
$2,662,500 - City match via Bond capacity
$1,100,000 - Northern Arizona University

Connection to Council Goal:

Retain, expand, and diversify economic base
Effective governance

Has There Been Previous Council Decision on This:

Yes, Council approved the EDA grant on November 6, 2012, for the Innovation Mesa Business Accelerator.
Yes, Council approved an initial IGA with NAU on July 16, 2013; however, it was never executed because NAU was continuing to negotiate their agreement with ACA. The current IGA being considered reflects a fully negotiated agreement between the City and NAU, based on the signed agreement between NAU and ACA.

Options and Alternatives:

Approve the IGA between the City and NAU to allow the funding for the project.
Reject the IGA between the City and NAU which would not allow the project to proceed, or the City would have to provide the remaining funds.

Background/History:

The Science and Technology Park was conceived in 2003, and during the 2004 election bonds in the amount of $61.2 million were approved by the voters to advance the project. The bonds are paid with revenue from the project and not property tax revenue. McMillan Mesa was chosen as an ideal site due to the existing, nearby USGS Campus. Through investigation, a critical part of the science park would be a business incubator for entrepreneurs and business start-ups. An overall science park master plan was developed around 2005.

The master plan included a remodeled USGS Campus, a 10,000 square foot business incubator, and a science park on nine acres of adjacent land. The business incubator was constructed in 2008 through a U.S. Department of Commerce Economic Development Administration (EDA) grant and is currently operated by Northern Arizona Center for Entrepreneurship and Technology (NACET), a separate private non-profit.

The Innovation Mesa Business Accelerator and Emergency Operations Center is intended to be the first of three buildings located adjacent to the USGS Campus and the business incubator, and will include a 25,000 square foot building featuring wet and dry labs/office space (80%) and light manufacturing space (20%), a conference room/alternate secondary EOC, and server facilities. The primary purpose of the Business Accelerator is to provide space for Tier 2 companies and graduates of NACET, as well as grow business startups and advance entrepreneurship and economic gardening programs within the region, and to retain and expand existing businesses through the creation of 300 jobs and $20 million in private investment. The building will feature a secondary or alternate EOC (as part of the conference room) should disaster related circumstances arise and warrant the need by either City and/or County personnel. It is not the City’s intent to develop the remaining 50,000 square feet of this campus. Rather, upon completion of the Business Accelerator, an evaluation will be done with Council to determine the disposition of the remaining development.

Key Considerations:

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.

More specifically, this project will allow NAU to house its expanded venture acceleration and ongoing business incubation work on Innovation Mesa. This will be an important step forward for Northern Arizona, the City and NAU in accelerating job creation and capital investment through:

Access to the technical expertise, mentoring, and consulting of NAU business and engineering faculty, NAU economic development practitioners, research faculty, MBA and engineering graduate students, interns, engineering, marketing, finance, and laboratory equipment.
Intellectual property and technology transfer developed by NAU and cooperating universities such as ASU, UA, MIT, Stanford, and many more.
Connections to local, state, and national business incubation and acceleration resources.
Assistance and access to capital in the form of grants from the EDA, NSF, NIH, U.S. Department of Commerce, SBIR grants, and many more.
Access to capital from angel and venture investors.
Mentoring from a network of professionals such as patent attorneys, CPAs, experienced entrepreneurs, engineers, as well as sales and marketing professionals.
Laboratory, production, and manufacturing space with advanced technology and equipment.
Incubation and acceleration coaching and oversight.

Community Benefits and Considerations:

This project will enable the region to create an environment that provides facilities for incubator graduates and Tier 2 companies to expand and grow their businesses. It also provides other agencies an alternate secondary emergency operations center for first responders to efficiently deliver vital services to communities and tribal nations during natural disasters. The facility helps build economic resiliency through long term economic stability in the community. It will benefit the following 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 NAU Venture Acceleration Program, NACET staff and their statewide mentors group.
Existing firms and new firms will locate in Northern Arizona to take advantage of 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 access to lab space not available in the current commercial real estate market.
Native American culturally specific businesses will be encouraged to expand their service areas through guidance from and access to NAU and NACET staff, business leaders, and programs.

Community Involvement:

Inform and Collaborate

Expanded Options and Alternatives:

Approve the IGA between the City and NAU to allow the funding for the project.
Reject the IGA between the City and NAU which would not allow the project to proceed, or the City would have to provide the remaining funds.

Attachments
IGA with NAU for Innovation Mesa
Exhibit A-Proposal to ACA from NAU
Exhibit B-ACA between NAU Grant Agreement

Form Review

Inbox	Reviewed By	Date
Purchasing Director	rcompau	03/18/2014 07:17 AM
Form Started By: Stacey Brechler-Knaggs		Started On: 03/07/2014 12:39 PM
Final Approval Date: 03/21/2014