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Home My WebLink AboutCOUNCIL - COMPLETE AGENDA - 07/23/2013 - COMPLETE AGENDAKaren Weitkunat, Mayor Council Information Center Gerry Horak, District 6, Mayor Pro Tem City Hall West Bob Overbeck, District 1 300 LaPorte Avenue Lisa Poppaw, District 2 Fort Collins, Colorado Gino Campana, District 3 Wade Troxell, District 4 Ross Cunniff, District 5 Cablecast on City Cable Channel 14 on the Comcast cable system Darin Atteberry, City Manager Steve Roy, City Attorney Wanda Nelson, City Clerk The City of Fort Collins will make reasonable accommodations for access to City services, programs, and activities and will make special communication arrangements for persons with disabilities. Please call 221-6515 (TDD 224- 6001) for assistance. WORK SESSION July 23, 2013 6 p.m. 1. Call Meeting to Order. 2. Exterior Property Maintenance Codes. (staff: Beth Sowder, Mike Gebo, Polly Lauridsen; 45 minute discussion) The purpose of this work session is to discuss possible solutions regarding on-going exterior residential property maintenance issues that create a negative impact on neighboring residential properties and that are not currently addressed by existing codes. This discussion focuses on three items that have a significant impact to the neighborhood and the general public because they are viewable from the public right-of-way. Neighbors have expressed that these conditions have a negative impact on their property values, quality enjoyment of their properties, and a general feel of neglect and deterioration. These items include: • Exterior Surface Deterioration • Vacant and Dangerous Buildings • Excessive Storage of Personal Property Viewable from the Public Right-of-Way. July 23, 2013 3. Rocky Mountain Innosphere Report and Business Incubation Strategy Overview. (staff: Bruce Hendee, Josh Birks; Mike Freeman, Chief Executive Officer, Rocky Mountain Innosphere, 1 hour discussion) The purpose of this work session is to provide City Council with an update regarding the activities of the Rocky Mountain Innosphere and an overview of the City’s incubation strategy. Staff from the Economic Health Office will provide an overview of the City’s business incubation strategy. The overview will describe current and future activities related to business incubation. In addition, the overview will describe how incubation fits into the larger economic health strategy of the City. Staff from the Rocky Mountain Innosphere will provide an update on activities during the first part of 2013 and a review of the 2012 annual report. A focus of the update will be activities by Innosphere in developing access to capital for client companies and growing the pipeline of potential client companies. 4. Other Business. 5. Adjournment. DATE: July 23, 2013 STAFF: Beth Sowder, Mike Gebo, Polly Lauridsen Pre-taped staff presentation: available at fcgov.com/clerk/agendas.php WORK SESSION ITEM FORT COLLINS CITY COUNCIL SUBJECT FOR DISCUSSION Exterior Property Maintenance Codes. EXECUTIVE SUMMARY The purpose of this work session is to discuss possible solutions regarding on-going exterior residential property maintenance issues that create a negative impact on neighboring residential properties and that are not currently addressed by existing codes. This discussion focuses on three items that have a significant impact to the neighborhood and the general public because they are viewable from the public right-of-way. Neighbors have expressed that these conditions have a negative impact on their property values, quality enjoyment of their properties, and a general feel of neglect and deterioration. These items include: • Exterior Surface Deterioration • Vacant and Dangerous Buildings • Excessive Storage of Personal Property Viewable from the Public Right-of-Way. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Does Council wish to move forward with the options presented? 2. Does Council have any additional feedback or direction? 3. Does Council agree with the proposed timeline for bringing these items to Council for consideration? BACKGROUND / DISCUSSION Over the past several years, citizens have complained and inquired about residential properties that appear unkempt, deteriorated, and in disrepair. Staff addressed concerns at the identified properties that are currently a violation of the Municipal Code; however, there continues to be existing, ongoing issues that are not violations of the Code. In response to these continued concerns, staff researched whether other communities have codes that address owner-occupied dwellings that appear unkempt, deteriorated, and in disrepair, as well as explored other possible options. Staff documented the properties in Fort Collins that currently have various exterior property maintenance issues that negatively impact their neighborhood, but are not in violation of the Code. There are relatively few properties that meet this description (approximately 6-10), but they have 3 of 99 July 23, 2013 Page 2 a significant negative impact on their neighbors. These identified properties have been deteriorating for several years, even decades in some cases. Some negative impacts that neighbors have expressed include: declining property values, loss of quality enjoyment of their property, safety hazards, unwanted wildlife and insects, and a general feeling that no one cares about their neighborhood. City Council discussed this at its work session on March 12, 2013. (Attachment 1) Based on Council feedback, staff organized an approach to address the exterior maintenance concerns into two phases. Phase 1 includes the main discussion points for this work session, and Phase 2 includes items that will be brought back to Council at a later date. Phase 1 - Includes items that have a greater negative impact because they are in public view, including: • Exterior surface deterioration • Vacant and dangerous building registry • Excessive storage of personal property viewable from the public right-of-way Phase 2 – Includes items that have a negative impact to adjacent neighbors, including: • Excessive storage of personal property not viewable from the public right-of-way (e.g., in a backyard behind a privacy fence but viewable from a neighbor’s deck) • Storage of inoperable motor vehicles not viewable from public right-of-way • Dead shrubs if within 3 feet of property line or building This work session focuses on the Phase 1 items. If these items can be resolved, they will address health and safety concerns, as well as aesthetic issues that impact the neighborhood or general public. Staff recommends implementing and evaluating the impacts of the Phase 1 items before further pursuing the Phase 2 items. If Council agrees with this timeline, Phase 2 will be brought to Council for discussion in approximately a year. Exterior Surface Deterioration Current Problem The 2006 International Property Maintenance Code (IPMC) as adopted provides four classifications of buildings that require some degree of correction. “Dangerous” is an imminent hazard to the occupants or the public; “Unlawful” is created without a permit or City approval; “Unfit for Occupancy” is not allowed to be occupied due to a health risk, and “Substandard” applies to all buildings commercial and residential that have deficiencies that require general maintenance but has not been declared dangerous. When adopting the IPMC, there was a specific exemption for residential properties that are owner-occupied from the “substandard” classification. The dilemma occurs when an owner-occupied home has deterioration in the roof or siding; there is no requirement to make repairs and it continues to deteriorate. The City can require repairs to be made only when the deterioration becomes “dangerous”. 4 of 99 July 23, 2013 Page 3 Suggested Remedy Create a new IPMC category called “Deficient” placed between “substandard” and “dangerous” that will address a building’s exterior components and require a building to be weatherproof. This new classification will apply to all structures, including owner-occupied residences. A building or structure will be “deficient” when through neglect, disrepair, or lack of maintenance the building or structure is no longer considered to be weather resistant using approved materials, allows the entrance of rodents or insects through holes in the exterior envelope, or the exterior materials are displaced or lack sufficient covering to provide the weather resistant barrier originally approved. This new category will prevent the types of exterior conditions shown in the attached photos (Attachment 2). Vacant and Dangerous Building Registry Current Problem Vacant buildings that have become “dangerous” as a result of continuous break-ins become a visual blight to the community and can be an attractive nuisance causing safety concerns (Attachment 3). The City attempts to work with property owners (who may be located out of town/state) to keep the property secure and require nuisance violations to be corrected. Currently, there is no requirement for the owner of a vacant and dangerous property to have a local contact person who will routinely monitor the property and respond quickly to violations. Suggested Remedy Create a new IPMC section “Vacant Dangerous Building Registry”. Require that vacant buildings declared “dangerous” by Building Services have a local contact person registered with the City who will be responsible for ensuring that the property is secure and who will respond to any nuisance violations. Many other communities across the country have adopted Vacant Building Registries. Excessive Storage of Personal Property Viewable from the Public Right-of-Way Current Problem There is no limit to the amount of personal materials that are normally stored outdoors in residential areas in public view (front or side yards). There are properties that have an excessive amount of materials stored in public view creating an eyesore for neighboring properties (Attachment 4). Neighbors indicate this practice negatively impacts their property values, their ability to enjoy their properties, and gives a general feeling of neglect and deterioration in their neighborhood. Suggested Remedy Add a provision to the Nuisance Section of the Code limiting the excessive storage of items that are viewable from the public right-of-way (front or side yards). Utilizing other communities’ ordinances as models, staff suggests carefully defining what “excessive storage” is so that it is clearly defined. This could include language such as “the excessive storage of personal property reduces the orderly and aesthetic appearance of the neighborhood, is detrimental to the nearby property or property values, or that all outdoor storage must be located on the rear portion of the 5 of 99 July 23, 2013 Page 4 lot and screened from public view”. Staff continues to work with the City Attorney’s Office to ensure that the language matches the intent of applying this standard only to properties that create the most egregious problems. Public Outreach Public outreach to date includes: • Coloradoan Article • CityNews • Neighborhood News • Focus Group meetings • Fort Collins Board of Realtors Governmental Affairs group • Social media • Affordable Housing Board – June 6, 2013 • Building Review Board – July 25, 2013 (scheduled) Feedback included support primarily for items that are in Phase 1, and most of the divided responses are for items in Phase 2. Most of the people who have expressed a high level of support are immediate neighbors of the identified problem properties. Most people who expressed opposition to these codes said that they feel it is too much government intervention, especially the Phase 2 items. One common area of concern from the stakeholders, as well as the Affordable Housing Board, was whether there would be any assistance available for people who cannot afford to make the necessary corrections. Staff contacted the Larimer Home Improvement Program, and they confirmed that people who met the income qualifications could get assistance for needed home repairs (Attachment 5). Additionally, staff would be able to work with people regarding the amount of time they need to make the corrections. If Council chooses to move forward with these options, staff will conduct public outreach inform people of the new requirements. Next Steps/Timeline If Council agrees, formal consideration of these Codes is scheduled for the September 17, 2013 City Council meeting. ATTACHMENTS 1. Work Session Summary March 12, 2013 2. Example Photos of Exterior Surface Deterioration 3. Example Photos of Vacant and Dangerous Buildings 4. Example Photos of Excessive Storage of Personal Property Viewable from the Public Right- of-Way 5. Larimer Home Improvement Program brochure 6. Powerpoint presentation 6 of 99 ATTACHMENT 1 7 of 99 ATTACHMENT 2 COUNCIL WORK SESSION - JULY 23, 2013 1 EXTERIOR PROPERTY MAINTENANCE CODES AIS EXTERIOR SURFACE DETERIORATION EXAMPLES 8 of 99 ATTACHMENT 3 COUNCIL WORK SESSION - JULY 23, 2013 1 EXTERIOR PROPERTY MAINTENANCE CODES AIS VACANT AND DANGEROUS EXAMPLES 9 of 99 ATTACHMENT 4 COUNCIL WORK SESSION - JULY 23, 2013 1 EXTERIOR PROPERTY MAINTENANCE CODES AIS EXCESSIVE STORAGE EXAMPLES 10 of 99 COUNCIL WORK SESSION - JULY 23, 2013 2 EXTERIOR PROPERTY MAINTENANCE CODES AIS EXCESSIVE STORAGE EXAMPLES 11 of 99 ATTACHMENT 5 12 of 99 13 of 99 1 Exterior Property Maintenance Codes City Council Work Session July 23, 2013 Beth Sowder, Neighborhood Services Manager Mike Gebo, Chief Building Official Polly Lauridsen, Code Compliance Supervisor ATTACHMENT 6 14 of 99 2 Purpose 15 of 99 3 Direction Sought 1. Does Council wish to move forward with the options presented? 2. Does Council have any additional feedback or direction? 3. Does Council agree with the proposed timeline for bringing these items to Council for consideration? 16 of 99 4 Background Information • Citizen complaints and inquiries for past several years • Properties appear unkempt, deteriorated, disrepair • Negatively impact neighborhood: – Declining property values – Loss of quality enjoyment of their property – Safety hazards – General feel of neglect and deterioration 17 of 99 5 Council Work Session March 12, 2013 Council direction included: • Continue public outreach • Revisit at another work session • Options for financial assistance • Carefully define “excessive accumulation of storage” • Apply to most egregious problems • Health and safety issues first 18 of 99 6 Phase 1 and 2 Phase 1: • Exterior Surface Deterioration • Vacant and Dangerous Building Registry • Excessive Storage of Personal Property Viewable from the Public Right-of-Way Phase 2: • Excessive Storage of Property Not Viewable • Storage of Inoperable Motor Vehicles Not Viewable • Dead Shrubs 19 of 99 7 Exterior Surface Deterioration 20 of 99 8 Suggested Remedy • Create new IPMC category – “Deficient” • Place between “Substandard” and “Dangerous” • Address building’s exterior components • Require building to be weatherproof • Apply to all structures – including owner- occupied residences 21 of 99 9 Vacant & Dangerous Building Registry 22 of 99 10 Suggested Remedy • Create new “Vacant Dangerous Building Registry” • Require local contact person • Responsible for ensuring property is secure • Respond to nuisance violations • Many other communities have Vacant Building Registries 23 of 99 11 Excessive Storage of Property 24 of 99 12 Suggested Remedy • Add provision limiting excessive storage in public view • Define “excessive storage” so it is clear – Reduces the orderly and aesthetic appearance of the neighborhood, – Detrimental to the nearby property or property values, – Storage must be located in rear portion of the lot 25 of 99 13 Public Outreach • Coloradoan Article • Neighborhood News and CityNews • Focus Group meetings • Fort Collins Board of Realtors Governmental Affairs group • Social Media • Affordable Housing Board – 6/6/13 • Building Review Board – 7/25/13 26 of 99 14 Feedback • Support primarily for Phase 1 items • Phase 2 items – divided responses • High level of support from immediate neighbors • People opposed concerned about too much government intervention • Assistance available for people in need – common concern from stakeholders and Affordable Housing Board – Larimer Home Improvement Program 27 of 99 15 Next Steps • Public Outreach • Council Consideration – September 17, 2013 28 of 99 16 Direction Sought 1. Does Council wish to move forward with the options presented? 2. Does Council have any additional feedback or direction? 3. Does Council agree with the proposed timeline for bringing these items to Council for consideration? 29 of 99 DATE: July 23, 2013 STAFF: Bruce Hendee, Josh Birks Pre-taped staff presentation: none WORK SESSION ITEM FORT COLLINS CITY COUNCIL (Mike Freeman, Chief Executive Officer, Rocky Mountain Innosphere will be present) SUBJECT FOR DISCUSSION Rocky Mountain Innosphere Report and Business Incubation Strategy Overview. EXECUTIVE SUMMARY The purpose of this work session is to provide City Council with an update regarding the activities of the Rocky Mountain Innosphere and an overview of the City’s incubation strategy. Staff from the Economic Health Office will provide an overview of the City’s business incubation strategy. The overview will describe current and future activities related to business incubation. In addition, the overview will describe how incubation fits into the larger economic health strategy of the City. Staff from the Rocky Mountain Innosphere will provide an update on activities during the first part of 2013 and a review of the 2012 annual report. A focus of the update will be activities by Innosphere in developing access to capital for client companies and growing the pipeline of potential client companies. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Does City Council need additional information regarding the City’s business incubation strategy? 2. Does City Council need additional information regarding Rocky Mountain Innosphere’s recent activity? BACKGROUND / DISCUSSION The City of Fort Collins approved an Economic Action Plan in 2005, with a vision of “a healthy economy reflecting the value of our unique community in a changing world.” This vision continues to guide the City regarding Economic Health activities. Furthermore, the Action Plan clearly stated that the City’s priorities (in order) are Retention, Expansion, Incubation and Attraction of primary employers. The 2012 Economic Health Strategic Plan (“EHSP”), approved by City Council in June 2012, reinforces this vision and commitment to primary employment. However, the EHSP expands the City’s thinking on business incubation support to include “Enhanc[ing] the innovation ecosystem and economy that supports companies at all stages…” July 23, 2013 Page 2 Overview of the Innovation Economy With Colorado State University (CSU), federal research labs, and a long list of innovative companies, Fort Collins has numerous sources of innovation, intellectual property, and inventions within its city limits. As a result, the city has one of the highest rates of innovation in the U.S., producing 10 patents per 10,000 residents. This fact, coupled with the recognition that entrepreneurship can be a powerful engine of economic prosperity, has led the City to identify innovation, in both the 2005 Economic Action Plan and the 2010 City Plan, as a cornerstone of the Fort Collins economy. While having these sources of intellectual capital is essential to an innovation economy, they are not sufficient. The City must also have a culture and support system that encourages this intellectual capital to be commercialized, and for that commercialization (ideally) to take place in the city. In addition, it must provide an environment that fosters business formation and expansion. Fortunately, Fort Collins has many of these essential elements. There are, however, significant gaps in its “innovation ecosystem” that are outlined in the City’s EHSP. • Access to Capital – In all of Colorado, 89 venture capital deals were funded in 2010, the large majority of which went to the industrial/energy sector. Of these, less than 10 went to Fort Collins companies. Fort Collins is not on the radar screens of most venture capital firms, even the ones in Colorado. To foster the level of economic activity around the innovation occurring in Fort Collins, companies must have better access to the capital needed to launch and grow their businesses. • Entrepreneurial Culture – The City and the university should encourage innovators to spin-out companies around their discoveries and support entrepreneurs once the companies have been formed. While the community does have an entrepreneurial spirit, its reach could be greater, especially among CSU faculty and students. • Retain Incubated Businesses – Fort Collins has three incubator facilities to support start-up companies – the Rocky Mountain Innosphere (Innosphere), the Research Innovation Center (RIC), and the Engines and Energy Conversion Lab (EECL). It does not, however, have many sites to accommodate those companies ready to graduate from these incubation facilities. Many of the communities surrounding Fort Collins do – these communities include Loveland, Longmont, and Greeley – and some of those are willing to incentivize moves. This situation leaves the City at risk for subsidizing start-up businesses and then losing them (once a return on the City’s investment would be realized). Furthermore, retaining the entrepreneurial talent itself is as important as retaining these companies. Overview of the Incubation Strategy A well-functioning Innovation Economy provides a stronger foundation for business incubation activities. As a result, the EHSP lays out several strategies to address the gaps described above. The complete EHSP can be found online at: http://www.fcgov.com/business/. A brief outline of the strategies is provided below as a summary. July 23, 2013 Page 3 1. Create a stronger nexus for innovation in both Fort Collins and the Front Range. a. Quadruple Helix – foster continuous collaboration between academia, the private sector, the public sector, and non-profits to promote an entrepreneurial culture and train entrepreneurial leadership and talent. b. Industry Cluster Support – continue to provide support for clusters as a venue for quadruple helix collaboration. Differentiate between existing cluster and emerging clusters. c. Incubation – Continue to support the provision of incubation services to start-ups through our partners, such as Innosphere, with a renewed focus on successful funding and exit. d. Outreach and Exchange – Strengthen ties to other innovation-driven communities. 2. Retain, develop, and recruit entrepreneurs and cutting-edge companies that align with Fort Collins’ culture and values. a. Entrepreneurial Culture – Foster a nurturing entrepreneurial culture that anchors talent and companies to Fort Collins. b. Access to Capital – Build a robust capital network by formalizing access to the capital already present in Fort Collins, building better relationships to the venture community outside of Fort Collins, and developing new and innovative capital sources locally. c. Selective Business Attraction – Work with the Northern Colorado Economic Development Corporation (NCEDC) and other community partners to recruit those companies vital to the success of Fort Collins’ industry cluster initiatives. d. Awareness – Raise awareness of Fort Collins as a hotbed of innovation to attract or engage both investors and entrepreneurial talent. e. Technology Transfer / Commercialization – Expand Fort Collins’ capacity to support technology commercialization and product development. f. Resource Needs – Ensure that companies have the appropriate space to grow within Fort Collins’ city limits and the appropriate talent to support their growth. Summary of Recent Innovation Economy Activities A quick summary of some recent activities by the Economic Health Office (EHO) and our partners regarding the Innovation Economy is provided below: • Fort Collins Bicycle Industry Alliance – The EHO in partnership with Innosphere and the local manufacturing bicycle businesses launched the Fort Collins Bicycle Industry Alliance, a group of businesses that produce and sell products related to the cycling industry. Members are businesses with a focus in the cycling industry. • Software Industry Initiative – The EHO, in partnership with Innosphere, has launched New Tech Meetup. Fort Collins New Tech is a monthly meet-up group dedicated to fostering new technology and entrepreneurship in Fort Collins and Northern Colorado. It provides social networking for technologists, and a forum for early stage tech companies to present and receive feedback from potential investors, recruiters, and peers. In addition, Innosphere is working with the local software development and entrepreneurial community to host events on industry technical topics throughout the year. July 23, 2013 Page 4 • NoCoBio – The EHO, in partnership with Innosphere, relaunched the biosciences cluster organization, NoCoBio. The focus of the initiative is to support early stage bioscience ventures and coordinate activities with the Colorado Bioscience Association. Partners include City of Fort Collins, CSU, University of Colorado Health Systems, Colorado Bioscience Association, Burns Marketing, and Innosphere. • Food cluster – The EHO, in partnership with Social Sustainability, the Gardens on Spring Creek, and Planning, is evaluating the potential for an industry cluster focused on local food production. The cluster would use a similar model to other industry cluster, but modify the approach to better fit this industry. This activity supports the strategy of Supporting Industry Clusters by evaluating emerging clusters. • Trade Mission – The EHO, in partnership with NCEDC, is planning a trade mission to the Research Triangle in North Carolina for the fall. This mission is intended to foster business- to-business connections as well as connect our two innovation communities. This activity supports the Outreach & Exchange activity. • Ongoing Support of Innosphere – The City continues to provide operational support of Innosphere annually. This support is in addition to the support provided through the New Market Tax Credit financing authorized in 2010. This activity supports the Incubation activity. • CSU Venture Reorganization – The City’s partner, CSU Ventures, a part of the Colorado State University Research Foundation, reorganized its structure in 2012. This reorganization focused on enhancing the ability of Colorado State University (CSU) professors to commercialize their research and spin-out new companies. This activity relates to the Technology Transfer / Commercialization strategy. • Smart Grid Live 2012 and Net Zero Cities – The City sponsored with funds from the EHO budget both the Smart Grid Live 2012 and Net Zero Cities conferences in 2012. These conferences attracted numerous national and international experts in the clean technology field. It provided an opportunity for Fort Collins to showcase our community and our support of innovation. This activity supports the Awareness strategy. Summary of Rocky Mountain Innosphere Activities Innosphere continues to have a positive impact on the local economy and the entrepreneurial culture of the community. The 2012 Annual Report is provided as Attachment 1 and includes the following summary statistics: • 35 client companies served • $7.9 million in revenues for current client companies • 178 full and part-time employees • $70,000 average annual salary of company employees • $19.1 million capital raised in 2012 • $54.2 million capital raised to date by current client companies Other interesting facts regarding Innosphere client companies: • 73% of companies indicate their goal is to “Establish a headquartered company” • 37% of companies plan to growth through direct revenue growth rather than outside investment • 23% of companies self-identify as clean tech companies (clean energy and water innovation) July 23, 2013 Page 5 In addition to these outcomes, Innosphere has been engaged in several activities directly related to the City’s Innovation Economy goal, including: Entrepreneurial Culture • Enhancing the number and quality of pipeline partners – These partners help to create and identify potential client companies for Innosphere. Improving these relationships improves both the number of potential clients and the quality of the companies seeking participation in Innosphere. • Innovation Afterhours – Innosphere continues to host monthly Innovation Afterhours events. These events are intended to showcase current innovation taking place in the community and are tied specifically to the target industry clusters of the City. In addition, they provide an opportunity for entrepreneurs to network. • Entrepreneurial education – Innosphere hosts myriad events for the entrepreneurial community including Kauffman Foundations award winning FastTrac program. Access to Capital Innosphere has been working diligently in 2012/2013 to develop a full spectrum of capital access tools for start-ups and entrepreneurs, including: • Fund for Innovation – In partnership with the Community Foundation of Northern Colorado, Innosphere has developed a donor fund intended to provide seed capital to start-ups and entrepreneurs. • Innosphere & Colorado Enterprise Fund (CEF) partnership – In late 2012, Innosphere formalized a partnership with CEF by creating an Early Stage Loan Pool. The partnership with CEF and Home State Bank, and 1st National Bank to make available up to $800,000 in early-stage venture debt. • Community Development Venture Capital Fund – In partnership with a statewide Community Development Financial Institution (CDFI) the intent of this program is to provide first-in matching capital for Series A funding rounds. These are the initial venture rounds for companies following this path to capital. • Colorado Angel Investors – Innosphere has aided in the formation of an independent angel investment group formed by and of accredited local investors. This group has evaluated numerous potential investments and has made a series of investments in companies this year – many of them Innosphere client companies. Incubation In pursuit of continuous improvement, Innosphere has refined its incubation support services in the following ways: • Formalized Intake Evaluation Process – Innosphere has refined its new client intake process to strengthen the quality and rigor of the process needed to become a client company. Through pipeline partners Innosphere evaluates over 100 potential clients annually. These are then refined down to a class of around 15 new companies per year that admitted as clients. Many of the potential clients remain too early in their development life-cycle to benefit from formal admittance to Innosphere. These companies are typically connected July 23, 2013 Page 6 with a host of pre-incubation advisors that Innosphere has helped to develop and maintain. At any given time there are generally 30+ companies in pre-incubation that are receiving services but are too early stage to achieve client status. • Enhanced Mentoring and Advising Services – Innosphere meets biannually with each client company, evaluating a wide range of metrics regarding company progress. These meetings focus on understanding the challenges facing the client company and identifying resources and advisors to assist with navigating those challenges. These are formal check-in meetings with the result being a refined strategy and milestone development created between the client company and Innosphere. • Partnerships – Innosphere has worked to enhance its partnerships in several ways, including: (a) improving relationships with numerous pipeline partners; (b) strengthened relationships with venture capital partners providing greater access to capital; (c) formalizing relationships with several accelerators in Colorado and other states. ATTACHMENTS 1. Rocky Mountain Innosphere 2012 Annual Report 2. Memorandum to City Council: Response to Allegations Regarding Rocky Mountain Innospere Financing, February 2, 2012 3. Powerpoint presentation ROCKY MOUNTAIN INNOSPHERE 2012 ANNUAL REPORT Accelerating Entrepreneurship and Job Creation ATTACHMENT 1 36 of 99 Dear friend of Innosphere, On behalf of the clients, board of directors and staff of Rocky Mountain Innosphere, we are pleased to present our 2012 Annual Report. 2012 was a year of exciting changes, building on the foundation of our past while creating an organization for the future. We welcomed new board members, new staff and 13 new client companies. We developed new partnerships and initiatives to better meet the needs of our entrepreneurs who are growing businesses and creating jobs in our key impact areas of Cleantech, Water Technologies, Bioscience and Software. The highlights of our annual report feature major accomplishments from this past year, an overview of the economic impact Innosphere client companies are producing, and an overview of Innosphere’s latest initiative – access to capital. Our successful year would not have been possible without support from you, our stakeholders, partners and supporters. We are thankful to have you as part of our team and look forward to working and growing with you in 2013. Sincerely, Thank You to our Innosphere Funding Partners Mike Freeman Rocky Mountain Innosphere CEO Mark Wdowik Rocky Mountain Innosphere Board Chair 37 of 99 14 8 6 2 2 3 Software Bioscience Cleantech Water Other Cleantech Energy Cleantech Engines 35 client companies served $7.9M revenues of current client companies 178 full and part-time employees of companies $70K average annual salary of company employees $19.1M capital raised in 2012 $54.2M capital raised to date by current client companies Economic Impact of 2012 Rocky Mountain Innosphere Innosphere is a 501(c)3 non-profit organization located in a qualified Colorado Enterprise tax zone and Urban Renewal Area. As a technology incubator, the Innosphere: • Accelerates the success of high-impact scientific and technology startup companies. • Promotes the development of an entrepreneurial ecosystem throughout Colorado. • Is building a portfolio of the most innovative companies in Colorado with a focus on growth, jobs and wealth creation for our communities. The resources we provide to entrepreneurial startup companies: • A network of advisors, mentors and professional service providers. • Educational and networking opportunities for realizing business success. • Access and connections with academic and government institutions. • Assistance with raising capital. Industry Portfolio of 2012 Client Companies: Resident & Non-Resident 38 of 99 Log mesh TM Technologies, LLC One Third of clients have a CSU affiliation Innosphere Client Companies: Class of 2012 Blue Margin Clean Engines Community Funded FishChoice GreenRx Jobzology KromaTiD MoCo Development Co. Memory Bistro Newaya Recycling OptiEnz Scout VetDC Innosphere Client Companies Advanced MicroLabs Advanced Regenerative Therapies Begin Again Canvasback Legal Technologies Carbo Analytics Clear Path Labs Crashboxx Czero Delta Circuit Desin DH2i Eckstien Diagnostics Forston Labs Logimesh Membrane Protective Technologies Inc. Propel Labs Smart Move, Inc. Ridekick International St. Renatus Stewart Energy Symbios Technologies WeatherFlow YouSEEU Past Graduates Advanced MicroLabs Begin Again Clear Path Labs Datasplice DVM Systems Inviragen Panda Bicycles Sprig Toys Stewart Energy VanDyne Superturbo ZeroHero Born in the Colorado State University research and development machine, OptiEnz is a great example of the effectiveness of CSU Ventures in translating faculty innovations into entrepreneurial enterprises in water innovation. Capital Access Strategy Moves Innovation Forward Without access to the appropriate capital at the appropriate time, many promising businesses stall or even fail. We are committed to our Access to Capital initiative to match entrepreneurs to capital: 1. Path to Capital: education for entrepreneurs on potential capital sources for their business, based on the appropriate growth strategy for their business. 2. Investor Network: expediting the time it takes to fund a promising Innosphere Client Company by forming strong investor networks and strategic connections to create funding opportunities. 3. Capital Access Pools: the Innosphere has initiated or established innovative internal funding solutions to increase access to capital for select companies, including: Primary Funding Path One of the key services in Access to Capital is helping entrepreneurs understand their primary funding path. By working with the entrepreneur to best understand the type of company they are trying to build, we are able to target their funding approach and help them tailor their pitch to stay focused on the appropriate funding sources. This maximizes time in the business and minimizes unproductive pitches. 73% of Innosphere clients describe their company goal as “Establishing a headquartered company” and growing their company through revenue, debt and angel investor funding. 37% 36% 12% 9% 6% Revenue Angel Strategic Grants VC • Fund for Innovation: a seed stage fund established at the Community Foundation of Northern Colorado • Innosphere Early Stage Pipeline Development is key to success We spend a significant amount of time working with outside partners to develop a strong pipeline of new companies. Many are surprised at the number of companies we work with in the pre-incubation stage. Our process ensures a strategic vetting process for companies to go from pre-incubation to Innosphere client company. While the 13 client companies admitted in 2012 represent a diversity of industries, all are viable businesses with the ability to have a significant economic impact in the region. This diversity of industries makes developing a tailored process for each client even more vital to their success. Colorado State University Ventures: initiated a new process to discuss early research projects that heading toward commercialization in 12 to 24 months. Colorado State University, Infectious Disease Research Center: launched a new partnership with the IDRC management team to provide programs and services for companies within the Research Innovation Center incubator. University of Colorado, Cleantech Program: Innosphere is now working with start-ups from the Cleantech program. It is expected that 4-6 companies each year will be applying for Innosphere membership. Colorado Institute for Drug, Device, and Diagnostic Discovery: to better support Bioscience companies, the Innosphere teamed up with CID4 to provide early stage assistance, funding, and technical expertise for client companies. Colorado State University’s Institute for Entrepreneurship: This partnership helps foster the development of collegiate entrepreneurs. CSU’s Institute for Entrepreneurship recently launched the New Economy Venture Accelerator to provide students with resources to achieve the ultimate goal of creating self-sustaining, funding-ready ventures. Pre-incubation services help entrepreneurs determine if there is a scalable business opportunity around their technology innovation. Innosphere client companies receive help from Innosphere in accelerating development from business concept to company. Pipeline partners are essential in connecting Innosphere to the most promising technologies being developed in our region as well as assisting us in vetting technologies that come from outside of the network. CSU CSU Ventures CID4 CU-Cleantech Univ. of CO Health Corp. Ventures Venture Capital Family Oces SAGE Advisors CSU SBDC Great ideas don’t grow into great businesses on their own Even with a terrific business plan, an entrepreneur needs the right support. The Innosphere would not exist without the support of our volunteers, community partners and investors. We invite you to join our entrepreneurial ecosystem and share your: • Time & Talent: Advisors, Mentors, Executives • Treasure: Fund for Innovation, Colorado Angel Investors Join us! We welcome partners who: • Wish to enable game changing technologies in areas of Cleantech, Water Technologies, Bioscience and Software • Want to support the creation of high-paying jobs • Want to roll-up their sleeves and help entrepreneurs tackle the critical challenges that will make or break their business 2013 priorities • Additional investments out of the Fund for Innovation • The formation and implementation of the Community Development Venture Capital Fund • Launch new collaboration with CSU’s Powerhouse For more information on how to be involved with Innosphere, please contact Mike Freeman, CEO. For more information on fund-raising programs, contact Doug Johnson, Vice President of Capital Access. Please call the main line at 970-221-1301. Northern Colorado Bioscience Cluster (NoCoBio) Nurturing Ideas. Building Bioscience. You have an idea, and you’ve demonstrated it can work. Now what? NoCoBio is the resource that helps you answer that question. We’re your connection to the biosciences community – and the boost you need to move your innovation forward. NoCoBio in the News: Burns Marketing, a full-service marketing agency with offices in Northern Colorado and Denver, announced a major in-kind sponsorship to the Innosphere to advance the Northern Colorado BioScience initiative (NoCoBio). The in-kind services are valued at more than $60,000, making it the largest in-kind sponsorship to ever come through the Rocky Mountain Innosphere. The Colorado Institute for Drug, Device and Diagnostic Development (CID4), a not-for-profit entity focused on advancing the Colorado life science ecosystem through company creation and job growth, announced a partnership with Rocky Mountain Innosphere to support the technology incubator’s bioscience companies. Tax Credit Example for Innosphere Donors Innosphere Contribution Amount $100,000 320 East Vine Drive, Fort Collins, CO 80524 970.221.1301 rmi2.org We are more than a building, an incubator, or a network. We are a force—borne of ideas and shaped by passion. We are a community of entrepreneurs, leaders and supporters. We are an ecosystem for innovation. We are an engine for economic opportunity. We are a catalyst for progress. We are Rocky Mountain Innosphere. Bring your vision. printed on 100% post-consumer waste recycled paper Join the Conversation Innosphere is a 501c3 tax exempt non-profit organization Arrange a tour of our facility to learn more about the Innosphere – call the main line at 970-221-1301 43 of 99 ATTACHMENT 2 44 of 99 45 of 99 46 of 99 47 of 99 48 of 99 49 of 99 50 of 99 51 of 99 52 of 99 53 of 99 54 of 99 55 of 99 56 of 99 57 of 99 58 of 99 59 of 99 60 of 99 61 of 99 62 of 99 63 of 99 64 of 99 65 of 99 66 of 99 67 of 99 68 of 99 69 of 99 70 of 99 Fort Collins City Council July 2013 Innosphere Overview & Update ATTACHMENT 3 71 of 99 BACKGROUND INFORMATION 2 72 of 99 Our Evolution 98‐06 FCTI 06‐11 RMII 10 ‐ 11 Innosphere 2012 2013‐2014 Kathy Kregel Mark Forsyth Kelly Peters Nicole Franklin Mark Forsyth Ryan Speir Ryan Daniel Jamie Sherwood Mike Freeman Doug Johnson Maggie Flanagan Emily Wilson Ryan Daniel Whitney Baggett 3 *Current Staff: 501(c)3 3 employees Building LLC 2 employees Clusters 1 employee Strategic Direction…. Capital Geography Industries Business Model 73 of 99 We are more than a building. We are more than an incubator. We are more than a network. We are a force—borne of ideas and shaped by passion. We are a community of entrepreneurs, leaders and supporters. We are an ecosystem for innovation. We are an engine for economic opportunity. We are a catalyst for progress. We are Rocky Mountain Innosphere. Bring your vision. 4 74 of 99 Industry Focus & Geography Served 5 •Biomedical Drugs & Discovery, Diagnostics and Devices, Agricultural and Animal Products, Bio‐based products • Capital: grants, angel, strategic, venture • Geography: Northern Colorado Biosciences •Infrastructure software, Enterprise software, Security software, Web 2.0 • Capital: angel, strategic, venture • Geography: Northern Colorado Software •Energy, water, transportation, smartgid, etc. • Capital: grants, angel, strategic Cleantech • Geography: Front Range 75 of 99 ORGANIZATIONAL INFORMATION 6 76 of 99 THANK YOU Innosphere Funding Partners 77 of 99 Nonprofit Funding Model $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 2013 2014 2015 2016 2017 Building Income Powerhouse Cleantech* Sponsorships* Fund for Innovation* Fundraising Income* Program Revenues Cluster Support Funding Partners *implies more risk – uncertain who the investor always is 8 Projected Expenses 78 of 99 2012 Economic Impact 35 • Client Companies $7.9M • Annual client revenue 178 •Full and part‐time employees $70,000 •Average annual salary $19.1M • Client capital raised $54.2M • Cumulative capital raised 9 79 of 99 Productivity over time 1998‐2006 2010 2011 2012 Current* Number of client companies 20 27 30 35 41 Number of Graduates 14 2 4 4 12 Est. Total employees (FT+PT) 151 198 173 178 Avg. annual salary $65,000 $65,000 $55,000 $70,000 Capital raised $40.6M $11.8M $9.4M $19.1M * Client metrics are collected at end of calendar year. In 2013, Innosphere anticipates 13 graduate companies. Since inception, the incubator has served 85 client companies, 27 of which are considered successful graduates. 80 of 99 Innosphere companies nFusion Technologies Ergonomic Health Systems Online Marketing Netowrk Rocky Soft Sixth Dimension Spatial Data Technologies Greyrock Services OptiBrand RaqRider BekkTech Cerience NGI Data Splice Engineered Intelligence HorseSportsWorld.com Logisens Privacy NETworks Triad Systems Engineering Ruffdogs InViragen Sprig Toys AGP Advanced Microlabs ART BeginAgain Canvasback Technologies Crystal Creek Energy Czero Delta Circuit Design DH2i Eckstein Diagnostics Forston Labs Logimesh Ridekick International Weatherflow Wirsol Solar Yewsavin YouSeeU CarboAnalytics Clear Path Labs Crashboxx DVM Systems Membrane Protective Tech Panda Bicycles Smart Move, Inc. Propel Laboratories St. Renatus Stewart Energy Symbios VanDyne SuperTurbo ZeroHero Blue Margin Clean Engines Community Funded FishCoice ExchangeMeds Jobzology KromaTiD MoCo Development Co. Q2 – 2013 Pipeline Report 23 applicants 8 disqualified 8in‐review 7 accepted Pre‐incubation 25 Client Companies 36 12 CSU Hatchery Companies 3 82 of 99 Client Management Plan YE 2012 Q2 YE 2013 Resident 16 17 20 Non‐resident 19 17 15 CleanTech Initiative 017 Graduates +8 +2 +12 Early Exits +8 +3 +1 83 of 99 Primary Funding Path 8% 14% 19% 27% 32% Venture Strategic Grants Revenue Revenue 84 of 99 Industry Portfolio – Number of Companies Other, 1 Cleantech Energy, 3 Cleantech Water, 4 Cleantech Engines, 4 Bioscience, 10 Software, 15 85 of 99 INCUBATION PROCESS & PROGRAMS 16 86 of 99 Pipeline Development –Quarterly Admission Process Our Strength is Developing Partnerships to Identify New Client Companies 17 87 of 99 Our Incubation Process This process helps entrepreneurs manage time and resources relative to their stage of development and ensures market demand. Market Growth Market Growth Product Customers Product Customers Technology Market Technology Market Venture Strategic Venture Strategic Angel Debt Angel Debt Grants Seed Grants Seed Client Focus Path to Capital 18 88 of 99 Programs •Kauffman Foundation’s FastTrac Tech Venture • Lunch & Learns Education •Social and Advisory Group for Entrepreneurs (SAGE) •Executives in Residence (EIR) Mentors •Advisors in Residence (AIR) Networks • Industry events 89 of 99 20 Capital Access Programs 1. Fund for Innovation Seed Fund ‐ Established  Established the fund at the Community Foundation of Northern Colorado – fundraising $500,000 2. Innosphere Early Stage Loan Pool ‐ Completed  Colorado Enterprise Fund andHomeStateBankpledgedupto $500,000 for early‐stage venture debt (pre‐SBA or traditional lending) 3. Innosphere Community Development Venture Capital Fund– In Progress  Being developed with a statewide CDFI to provide first‐in matching capital for Series A funding rounds 4. Colorado Commercialization Fund ‐ Planned  Form a joint Tallwave – Innosphere Venture Fund 2014+ 90 of 99 BUILDING INFORMATION & FINANCING 21 91 of 99 Building Overview Building basics 30,000+ square feet Laboratory space equipped for fume hoods Shared print/copy/fax workroom Shared kitchen and café meeting room Showers and changing area Meeting places Large conference/event spaces with high-quality audio/video Smaller conference rooms and creative spaces A lounge-café that is ideal for informal meetings 92 of 99 Big Picture Building Budget Leasing Income $505,000 Expenses $659,000 (includes depreciation) Net Income -$154,000 Net Income $15,000 (without depreciation) 23 Significant Expense Categories: Property Taxes $143,000 Interest Expense $127,000 Building Mgmt. $77,000 These make up 70% of the total building budget 93 of 99 2013 Building Budget 24 • 95%+ leased currently (June, 2013) • Ahead of budget now – but major lease ending • Commitments to be 90% leased by September 1 • Remaining leasing a priority for 4th Quarter • On track to meet adopted budget for Net Income 94 of 99 Building Next Steps 25 • Complete the mandatory 7 year New Market Tax Credit Term • End of 7 years – either refinance with a bank, or pay off debt • Building becomes an asset to the Nonprofit following year 7 95 of 99 CLOSING 26 96 of 99 Strategic Priorities Strategically linked to City Economic Health strategy Source companies to Power House and RIC (CSU) Central to industry cluster strategies Part of the redevelopment program for Vine – Lot B Open NREL office Grow pipeline in medical device and software 97 of 99 City URA NMTC* Debt Private Investor NMTC* Equity $5.3 Million Loan $5.3 Million Loan $2.0 Million Contribution RMI2 Properties, LLC $7.3 Million Construction Loan *New Market Tax Credit (NMTC) Financing Program: A Federal program designed to leverage private for‐ profit contributions to achieve economic development objectives. 2009 2010 98 of 99 2017: Refinance 2017‐2029: No Refinance OPTION 1 RMI Payment $2.5 Million TIF Pledge $2.8 Million Original Loan $5.3 Million One Time Payment in 2017 to URA URA uses a Portion of TIF Revenue from the Project to repay loan Principle & Interest Paid in full by 2029 OPTION 2 RMI Assumes NMTC Loan $5.3 Million Original Loan $5.3 Million Interest Only Payments Continue to 2029; Principal Paid in 2029 Principle & Interest Paid in full by 2029 Comments: • Preferred Scenario • Accelerated City principal repayment • Reduced long‐term cost to RMI Comments: • No Impact to City Loan • Delays URA principal repayment • Delays usability of TIF; 2029 • Increased cost to RMI 99 of 99 Memory Bistro Newaya Recycling OptiEnz Scout VetDC White Cheetah SI-Technology Open Source Water Foundation Meritage Systems Innotrieve Fluonic Firefly Medical Inc. Boulder Electric Vehicle Avani MetStat Avivid Technologies Group Navitus Power Services Fort Collins Innovative Foods Origin WildFit Gyms EcoVapor Solid Power Fabriq US e-Chromic Order Storm Pneumaticoat Technologies 81 of 99 Assumed 35% Federal Tax Rate -$35,000 4.63% Colorado Tax Rate -$4,630 Colorado EZ Tax Credit -$25,000 Adjusted “Cost to the Contributor” $35,370 (35.37% of Total Contribution) 42 of 99 Econ. Devel. Advisors Executives Space Capital Access 4 Seed Investments 6 Angel Investments 8 Debt Placements 2 Venture Investments PIPELINE PARTNERS PRE- INCUBATION CLIENT COMPANY ANNUAL TARGETS 100+ 12+ 100+ 12+ PIPELINE PARTNERS PRE-INCUBATION CLIENT COMPANY CSU CSU Ventures CID4 CU-Cleantech Univ. of CO Health Corp. Ventures Venture Capital Family Oces Others SAGE Advisors CSU SBDC Econ. Devel. Advisors Executives Space Capital Access Programs 4 Seed Investments 6 Angel Investments 8 Debt Placements 2 Venture Investments ANNUAL TARGETS Our strength is developing partnerships to support our Client Companies. In 2012, we strengthened relationships and created new partnerships that help ensure a strong flow of new companies, including: 41 of 99 Loan Pool: established in partnership with Colorado Enterprise Fund and Home State Bank of up to $500K for early-stage venture debt • Community Development Venture Capital Fund: being developed with a statewide Community Development Financial Institution to provide first-in matching capital for Series A funding rounds. • Colorado Angel Investors: an independent angel investment group formed by accredited, local investors. 40 of 99 DH2i is saving customers thousands of dollars, their software has re-imagined server virtualization and their technology has attracted the attention of outside investors. Logimesh Technologies was awarded the “Best Technology Development of Energy Harvesting” award at IDTechEx, the world’s largest energy harvesting conference. Carbo Analytics was awarded “Outstanding Venture 2012” at the U.S. Department of Energy’s NREL Industry Growth Forum. Nationally, this is the highest profile startup company forum in the clean energy space. A productive collision in the Innosphere hallways turned into an innovative joint venture when Crashboxx and Canvasback Enterprises combined forces to improve the bail bond industry with their Automatic Defendant Locator System. We love promoting our client companies’ successes and achievements 2012 Highlights: 39 of 99