Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Economic Development topic
No spam. Unsubscribe anytime.
Committee agrees to send central kitchen incubator plan to council after financial questions
Summary
Staff asked to begin negotiations and produce operations and financial models for a proposed central commercial kitchen incubator; the committee voted to refer the project to council while asking staff to deliver detailed pro forma, bond details, and risk analyses.
Meredith Smith, the city’s economic development officer, presented staff follow-up on a proposed central commercial kitchen incubator and told the Business and Economic Development Committee staff’s next step is to enter negotiations with a construction manager and finalize operations and financial models.
Smith said industry data show incubator participants typically have higher survival rates: "Business incubation research across industries show that businesses participating in incubator programs report 5-year survival rates of approximately 87 percent compared to 44 percent for businesses that do not participate," and noted staff have engaged an operations consultant and a construction-manager procurement is underway.
Council members pressed for clarity about funding and risk. Several asked who pays the first five years’ operating costs and whether projected early losses would require drawing on the economic development enterprise fund. Finance Director Stephanie Kiphol said a $5,000,000 bond is the principal financing vehicle under discussion: "$5,000,000 that is going to be bonded. $2,900,000 of that has not yet been authorized … 2,000,000 of that has already been approved through the budget process and authorized to be issued," and she added $1,500,000 in grants are available.
On concerns about operating losses, staff said tenants will pay subscription fees and that cold-storage and other revenue streams are planned to help close gaps. Smith said staff have paid a consultant roughly $24,000 to begin financial modeling and planned to produce a new market-feasibility study and multi-year pro forma so councilors can see potential breakeven scenarios.
After questions and discussion, a motion to refer the central kitchen item to the full council carried on a roll-call vote; the committee directed staff to return to council with the negotiated construction estimate, detailed operating models and updated market analysis before council makes a final decision.
