AGENDA #4d
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBEJCT: Request from EmPOWERment, Inc. to Modify its Performance Agreement Regarding Operation of the Midway Business Center
DATE: February 28 , 2005
The purpose of this memorandum is to respond to a request from EmPOWERment, Inc. to modify the terms of the Performance Agreement between the Town and EmPOWERment for the operation of the Midway Business Center (please see Attachment 1).
The attached resolution would authorize an amendment to the Town’s Performance Agreement with EmPOWERment to allow certain non-incubator businesses to occupy up to 925 square feet of space in the Midway Business Center.
On June 28, 1998, the Town entered into a Performance Agreement with EmPOWERment for use of $150,000 of Community Development funds to purchase the property where the Midway Business Center is now located on North Graham Street.
On February 28, 2000, the Council authorized an amendment to this Agreement for use of an additional $60,120 of Community Development funds to assist with the construction of the Midway Business Center. The funds were used for professional services related to the construction of the building.
On September 9, 2002, the Council authorized a second amendment to the Agreement to eliminate the square footage cap in the Midway Business Center for non-profit organizations. Non-profit organizations are treated as incubator businesses and are subject to the income, residency, and three-year tenancy requirements.
EmPOWERment has established three primary goals for the Midway Business Center: (1) Revitalize the Midway Business District; (2) Promote entrepreneurship in economically disadvantaged communities; and (3) create quality jobs for Orange County residents.
The Midway Business Center provides affordable office space, shared facilities and equipment (i.e. conference room, office equipment), and hands on technical assistance to start-up business. According to EmPOWERment, the Center targets women- and minority-owned businesses and other new start up companies with growth potential.
Currently, eligible applicants must live or work in Orange County, and at least 51% of the employees of each business must be of households earning less than 80% of the area median income.
In addition, applicants must be incubator businesses. In this case, incubator businesses are defined as start-up businesses, businesses owned by low- and moderate-income individuals, and that have not previously occupied office space. In addition, incubator businesses may only occupy space in the Midway Business Center for three years.
In letters dated January 28, 2005, and February 23, 2005 (please see Attachments 1 and 2), EmPOWERment requests that the Town amend the Performance Agreement to allow EmPOWERment to rent space to certain non-incubator tenants. EmPOWERment states that it would work to recruit locally-owned businesses/franchises but not “national chain merchants”. Cited examples include an established clothing store, coffee shop, or local law, accounting or advertising firms.
According to the documentation submitted, EmPOWERment requests permission to allow non-incubator tenants to occupy up to 925 square feet (25%) of the total leasable space in the Midway Business Center (3,700 square feet). EmPOWERment would continue to require these tenants to meet the residency requirement (live or work in Orange County), but they would not be subject to the income requirements (households earning less than 80% of the area median income), or the maximum three-year tenancy requirement, and would not be required to receive technical assistance from EmPOWERment’s staff. EmPOWERment also states that non-incubator tenants would pay rent similar to what incubator tenants pay.
DISCUSSION
The Town’s current Performance Agreement with EmPOWERment requires all tenants of the building to be incubator businesses, and that the building will not be used for market-rate commercial, retail or office space. The intent of this stipulation was to reserve space in the Midway Business Center for small, start-up incubator businesses owned by lower income Orange County residents.
If the Council approves this request, the Midway Business Center would be occupied as follows:
Incubator Businesses: 1,653 square feet (45%)
Non-Incubator Businesses: 925 square feet (25%)
EmPOWERment’s Offices: 618 square feet (16%)
Non-profit organization: 504 square feet (14%)
3,700 square feet
Therefore, if the request was approved, 2,157 of leasable square feet (58%), excluding EmPOWERment’s offices, would be available for incubator businesses (including non-profit organizations).
The requested modification would allow EmPOWERment to continue to meet its goals for the Midway Business Center. It would also continue to meet the objectives of the Community Development program as long as at least 51% of the employees located in the Center would be of low- and moderate-income households. The proposed change would also assist EmPOWERment with achieving its goal of the Center becoming a financially viable project. The proposed non-incubator tenants would not require the technical assistance currently required by start-up businesses, and would allow EmPOWERment more flexibility when identifying tenants. Non-incubator tenants would meet the residency requirement (live or work in Orange County) therefore the project would continue to benefit Orange County residents.
RECOMMENDATION
That the Council adopt the attached resolution to approve an amendment to the Town’s Performance Agreement with EmPOWERment, Inc. to allow non-incubator tenants meeting the residency requirement (live or work in Orange County) to occupy no more than 925 square feet (25%) of the building.
ATTACHMENTS
1. January 28, 2005 Letter from EmPOWERment to the Town Manager (p. 5).
2. February 23 , 2005 Letter from EmPOWERment to the Town Manager (p. 14).
A RESOLUTION AUTHORIZING A MODIFICATION OF THE TERMS OF THE TOWN’S PERFORMANCE AGREEMENT WITH EMPOWERMENT, INC. FOR THE MIDWAY BUSINESS CENTER (2005-02-28/R-3)
WHEREAS, the Town executed a Performance Agreement with EmPOWERment for use of Community Development funds to develop the midway business Center on North Graham Street for a small business incubator; and
WHEREAS, in letters dated January 28, 2005, and February 15, 2005, EmPOWERment requested that the Town modify its Performance Agreement with EmPOWERment to allow up to 25% of the space in the Midway Business Center to be rented to non-incubator tenants, and to release incubator tenants from the income restrictions for the Midway Business Center tenants;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council approves an amendment to Section 3. Terms of the Performance Agreement to add:
“EmPOWERment may rent up to 925 square feet of the office space in the Midway Business Center to non-incubator tenants that currently live or work in Orange County. Non-incubator tenants shall not be subject to the household income requirement or the three-year maximum tenancy requirement”
BE IT FURTHER RESOLVED that EmPOWERment Inc. will continue to annually certify that 51% of the jobs created by the businesses located in the Midway business Center must benefit lower and moderate-income individuals (individuals earning less than 80% of the area median income by household size).
BE IT FURTHER RESOLVED that the Council authorizes the Manager to execute an amendment to the Town’s Performance Agreement with EmPOWERment to reflect this change.
This the 28th day of February, 2005.