HomeMy WebLinkAboutMINUTES-05/12/2009-AdjournedMay 12, 2009
COUNCIL OF THE CITY OF FORT COLLINS, COLORADO
Council -Manager Form of Government
Adjourned Meeting - 6:00 p.m.
An adjourned meeting of the Council of the City of Fort Collins was held on Tuesday, May 12, 2009,
at 6:00 p.m. in the Council Chambers of the City of Fort Collins City Hall. Roll Call was answered
by the following Councilmembers: Hutchinson, Kottwitz, Ohlson, Poppaw, Roy and Troxell.
Councilmember Absent: Manvel
Staff Members Present: Atteberry, Krajicek, Roy.
Ordinance No. 053, 2009,
Appropriating Funds From the City's General Fund Reserves for Transfer
to the Fort Collins Urban Renewal Authority for the Purpose of Providing
a Loan for the Rocky Mountain Innovation Initiative Project, Adopted on First Reading
The following is staff s memorandum for this item.
"FINANCIAL IMPACT
The construction of the Rocky Mountain Innovation Initiative (RMI2) facility will benefit both the
Fort Collins Urban Renewal Authority (URA) and the City of Fort Collins (City):
URA — Benefits from additional property tax increment, a portion of which will be dedicated
to the project.
CITY— Benefits from continued economic development by RMI2 through the support and
expansion of science and technology businesses, high -vvage jobs, and venture capital and
grant investment.
The City will support the effort by making a $5.3 million dollar loan to the URA to fund the
development and construction ofa 31,000 square foot, 4-story, LEED Gold certified building. The
building will include approximately 29,000 square feet of rentable offzce space and 3,000 square
feet of wet lab space_ The top floor'will be rented at market rates to further subsidize the lease rates
for RMI2 participants. The cash for the loan between the City and the URA will come from the
City's investment funds. The City will earn a return of 2.5 percent on this cash while it is tied up
in this arrangement, roughly equal to the Treasury Bill return at the time of initial negotiations with
RMI2.
The newfacility will generate approximately $4.3 million in tax increment revenue over the 20 years
remaining for the URA. The proven success of RMI2 as an economic development stimulus engine
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makes the project worthy of URA assistance. The project needs $2.8 million or 65 percent of the
estimated total in URA assistance to subsidize lease rates near the current level. The $2.8 million
in TIF will be pledged alongside lease revenue from RMI2 to fund loan payments on the $5.3 million
loan made by the City to the URA allowing lease rates for RM12 participants to remain below
market rates_
EXECUTIVE SUMMARY
The new facility for- RM12 will cost approximately $7.1 million to develop and construct. The City
will provide a loan of $5.3 million to the URA to cover development and construction costs, a
portion of which will be offset by the $2.8 million in pledged TIF. The proposed New Market Tax
Credit (NMTC) financing solution will contribute $1.8 million in project equity. In the long-term,
RMI2 will owe approximately $2.6 million on a $7.1 million project as a result of this financing
solution.
Ordinance No. 053, 2009, authorizes a loan, as authorized by City Council Resolution 2008-121,
to the URA in the amount of $5,303,939. The loan will enable the URA to tend Rocky Mountain
Innovation Initiative Properties, LLC (RMI2 Properties, LLC) the funds necessary to construction
a nely facility for the business incubation program. RM12 Properties, LLC is associated with the
Rocky Mountain Innovation Initiative, which runs a successful science and technology incubation
program on behalf of the City and other sponsors.
The deliberations as City Council should focus on the worthiness of this investment as a key
economic development tool for the City and Region. The underlying details of the project and the
financing solution should be questioned and discussed by the URA Board of Commissioners.
The loan will have a 20 year term, 2.5 percent interest rate, and stipulate interest onlvfor the first
seven years consistent with the City's Investment Policy. In addition, the loan agreement stipulates
tivo disbursements from the loan. These disbursements will mirror the anticipated disbursements
required to fund the construction of the RM12 facility, which will be owned and operated by RMI2
Properties, LLC. The first disbursement of $1,100,000 will be used to.fund a "Bridge Loan " to
RMI2 Properties. LLC for the development costs occurring prior to the closing of the NMTC loans.
These development costs include: subdivision of the property, entitlement, development review,
building design, and land acquisition. The second disbursement of $4,203,939 will occur when the
NMTC loans close and provide the URA the necessary cash to fund the senior leverage loan in the
NMTC structure.
BACKGROUND
RMI2, originally the Fort Collins Technology Incubator program launched in 1998, has evolved
from its original program to a 501(c)3 non profit organization with an expanded mission and
regional focus. Its mission to enable and accelerate the success of innovation -based start up
companies and promote the entrepreneurial culture ofscientific and technology based companies
has generated 162 high -wage jobs, generated $53 million in investment and grants, and created
numerous programs and services.for entrepreneurs, since 1999.
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RM12 enables and accelerates the success ofinnovation-based start-up companies and promotes the
entrepreneurial culture of scientific and technology based companies in the Northern Colorado
region. This has been a vital component ofsome of Fort Collins economic development successes,
i.e., Sprig Toys, 2009 Toy of the Year maker is a graduate of the program. The City of Fort Collins
graciously made City -owned facilities available to RM12 and its clients. The first facility was made
available in 2009 and tu;o additional facilities in 2007. The value of these facilities provided by the
City, of at cost only (e.g., Utilities) is approximately $200,000 annually. In addition, the City
provides approximately S100,000 annually in operation revenues directly to RM12.
The proposed RM12 facility will enable the program to:
• Continue its current programs,,
• Expand the capacity the program to offer space to start-up companies:
• Offer new vvet lab facilities for bioscience participants;
Continue to offer below market rate rents for participating companies;
• Offer a central location near downtown for entrepreneurial events and activities,- and
• Relieve the City of the provision of facilities, subsidized lease rates, and property
management.
The program is rapidly out -growing its current facility. As a result, RM12 approached the Northern
Colorado Economic Development Corporation (NCEDC) for assistance with the site selection for
the facility. NCEDC managed the site selection process according to the normal process. The
process includes advertising the request and soliciting responses through the NCEDC broker and
developer distribution list. Based on the responses, the proposed site was selected for construction
ofthe newfacility because it met the requirements and was within the North College Urban Renewal
Area boundary allowing for tax increment assistance.
The proposed site is in the planned Inverness Innovation Office Park located on the 200-500 block
of East Vine Drive. The property is located on the former Waste Management site. The master site
plan for the site includesfour commercial buildings catering to similar high-tech and energy tenants
to the participants in the RM12 program. The development plan for the site includes both the north
and south side of East Vine Drive and will require significant public improvements. The southern
portion of the property is located within the Downtown Development Authority (DDA) boundary,
while the northern portion of the site is located in the URA. Eventually both entities will contribute
to the development and construction of public improvements along East Vine Drive and the river.
RM12 is a non-profit organization that receives funding through donations and contributions from
regional partners including: the City of Fort Collins (largest contributor), the City of Loveland,
Colorado State University, CSU Research Foundation, and the NCEDC RM12 cannot provide the
upfront revenue to fund the hefty costs associated with development and construction of a new
facility. The use of property TIF assistance and the NMTC program make the project financially
feasible by providing the necessary upfront revenue to fund development and construction of the
facility. Furthermore, this financial assistance reduces the loan payments significantly allowing the
projected revenue from RM12 participant leases to fund the loan payment associated with the
project. Therefore, the City will realize an immediate savings of $200,000 annually in real estate
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value by freeing up the current space occupied by RMI2 for market rate leases or other use by the
City (both of which are currently prevented by the presence of RMI2 in the facilities).
SUMMARY OF KEY BENEFITS
• The City gains a LEED Gold Certified facility to house the Rocky Mountain Innovation
Initiative a key part of the City's economic development strategy.
• The City benefits from street improvements to East Vine Drive that include sidewalks, curbs,
gutters and much needed public infrastructure that is currently non-existent.
• The City helps RM12 move towards the eventual goal ofself suff ciency by assisting to jmd
a building that will ultimately generate revenue for the program to subsidize leases and
offset operating expenses.
• The URA gains a redevelopment project that helps to revitalize the North College area and
East Vine Drive specifically.
• The URA provides financial assistance to a primaryjob generator that has a proven record
for creating high -wage jobs and new companies that remain in the City.
• The URA gains an additional $1.5 million for other public improvements in the Plan Area.
SUMMARY OF PROJECT COSTS
The proposed facility will cost approximately $7,114,950 to develop and construct, as shown in
Table I (refer to the detailed budget included in URA application/packet). Staff has had on going
discussions with the project applicant and has reviewed the details supporting these cost estimates
for propriety and reasonableness. A timeline for construction has been attached (refer to the URA
applicant/packet) and shows construction beginning in November 2009 with completion
approximately 12 months later. The project applicant will be available to discuss the costs and
timeline for construction.
Table 1
Summary of Project Costs
Item Phase I Phase 11 I Total Percent
Raw Land
Development Costs
Professional Fees
Development& Permit Fees
Subtotal
$520,533
$411,940
$25,104
$437,044
$0
$67,635
$289,342
$356,977
$520,533
$479,575
$314,446
7.3%
67%
4.4%
$794,021
11.2%
Construction Costs
Hard Costs
$0
$4,657,764
$4,657,764
65.5%
Owner FF & E
$0
$75,000
$75.000
1.1 %
Developer Fee - UDP
$25,001
$226,382
$251,383
3.5%
$4,984,147
70.1%
Subtotal $25,001 $4,959,146
Financing
$53,000
$407,177
$460,177
6.5%
Contingency
$64,422
$291,650
$356,072
5.0%
Total Cost
$1,100,000
$6,014,950
$7,114,950
100.0%
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SUMMARY OF FINANCING
The proposed financing solution includes a combination of fimds including a loan, URA T IF
revenue, and NMTC equity. The complete financing solution distributes the cost and risk between
these three revenue sources. The total cost, including costs associated with the NMTC program, will
be approximately S7.3 million. The City will provide approximately $5.3 million or 72 percent of
the total amount through a loan to the URA amortized over 20 years at 2.5 percent. The first seven
years will be interest only with payments deferred for the first four years because of the NA4TC
requirements. The NMTC equity investor, US Bank Community Development Corporation
(USBCDC), will provide $2.0 million in gross equity. The project will use approximately S7.1
million of the fimds for construction with the balance funding the cost of the NMTC financing
structure (approximately S200,000, paid for out of the NMTC equity investor contribution), as
shown in Table 2.
Table 2
NMTC Revenue
Amount
Percent
NMTC Revenue
URA Senior Leverage Loan
$5.3 Million
73%
USBCDC Gross Equity
$2.0 Million
27%
Subtotal
$7.3 Million
100%
Less: NMTC Fees
$0.2 Million
3%
Net NMTC Revenue
$7.1 Million
97%
The URA will make two loans to the project, as shown in Table 3. The first loan will be made to
cover development costs. This "Bridge Loan" will be for one year at 2.5 percent interest. The
second loan will be made for S5.3 million to the NMTC structure as the senior leverage lender,
meaning that the URA will have the senior position within the debt structure that ultimately funds
the construction of the RM12 facility. This loan will be funded by the remaining $4.3 million from
the City to URA loan and the proceeds from the repayment of the Bridge Loan, which will occur at
the time the NMTC loans close, at or near the beginning of construction'in November 2009. The
loan will be for 20 years with the first seven years will be interest only at 1.5 percent. In the eighth
year, the loan will re -amortize for 20-years on the remaining principal (estimated at 52.6 million)
and re -price to 2.5 percent interest to maintain the City's targeted return of 2.5 percent.
Table 3
URA Loan Disbursements
NMTC
URA Loan Disbursements
Phase I - Development ("Bridge Loan") $1.1 Million
Phase I I - Construction $4.2 Million
Total Loan Amount $5.3 Million
NMTC Net Equity
Total Net Revenue
$1.8 Million
$7.1 Million
May 12, 2009
During the NMTC compliance period, a seven year period that provides the tax credit benefit to the
equity investor, the URA loan to the NMTC structure will remain fixed at 1.5 percent. However, the
proposed financing solution includes the proposed dedication of 65 percent or $2.8 million of the
TIF associated with the project. These TIFmonies will be available once Larimer County has issued
the Certificate of Occupancy, likely to occur after construction is completed. Therefore, the TIF
revenue will be available starting in the third year (due to the delay caused by payment in arrears
for property tax) to offset the loan payments fi-om the URA to the City on the original loan. These
monies combined with the interest payment coming from RM12 Properties, LLC will exceed the
City's target of 2.5 percent return,- therefore, the URA can offer a discount on the interest rate to
RM12 Properties, LLC during the NMTC compliance period.
The result of the proposed financing solution is a long-term debt to RM12 Properties, LLC of
approximately $2.6 million, as shown in Table 4.
Table 4
RM12 Long -Term Debt Summary
NMTC
Total Project Cost $7.1 Million
Less: NMTC Equity $1.8 Million
Less: URA Contribution $2.8 Million
RMII Long -Term Debt' $2.6 Million
Includes $100,000NMTC Exit Fee
APPLICABLE URA POLICIES
"The URA will only assist development and redevelopment projects that meet the
identified objectives of the respective Urban Renewal Plan (URP) area.
URA staff has identified the following components in conformance with the North College Urban
Renewal Plan and integrated into the RMI2 proposed facility.
"To facilitate redevelopment and new development by private enterprise through
cooperation among developers and public agencies to plan, design and build needed
improvements. " The proposed project will be a private/public partnership that includes the
construction of a major catalyst project in the plan area that will generate primary jobs for
the City.
"To effectively utilize undeveloped and underdeveloped land. " This site was historically
used by Waste Management. The proposed use of the site for as the Innovation Of�ice Park
constitutes a higher and better use of the property, which currently sits vacant.
• "To ultimately contribute to increased revenues for all taxing entities. " The proposed
property tax increment generated from this project will ultimately increase the valuation of
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the surrounding areas and benefit all taxing entities. This project will be the first of four
proposed buildings on the property and set the stage for future development of the site.
"To watch for market and/or project opportunities to eliminate blight, and when such
opportunities exist, to take action within the financial, legal, and political limits of the
Authority to acquire land, demolish and remove structures, provide relocation benefits, and
pursue redevelopment, improvement and rehabilitation projects. " The project reuses an
existing site that is vacant and includes dilapidated buildings. The project will remove these
physical symbols of blight and help to revitalize the surrounding area.
SUMMARY OF TIF USAGE
Although a formal dedication of TIF is not being considered at this time, the project has requested
a TIFallocation ofS2.8 million, which is consistent with the staffand NCCAG recommendation. The
TIF will be used to o fset a variety of costs show in Table 5. This preliminary information provides
background for the discussion concerning the bridge loan and future resolution on TIF dedication.
Table 5
Tax Increment Financing Usage
Item
Amount
Fagade & Roofing
$781,318
Site Improvements
$250,000
Site Prep & Processing
$40,510
LEED Gold Certification
$299,767
Land Acquisition and Shared Detention
$520,403
Construction Hard Costs
$908,002
TOTAL URA Contribution
$2,800,000
This project is consistent in achieving the following URA policies and will help accomplish the goals
within the North College Urban Renewal Plan by:
• Revitalization on blighted property,-
• Stimulating private investment within the project and the surrounding area;
• Attracting primaryjobs;
• Facilitating infrastructure improvements; and
• Achieving green built goals through LEED Gold certification.
Staff has reviewed the RMI2 development pro forma to evaluate the need for financial assistance.
This analysis shows that RMI2, which operates as a non-profit company, clearly needs financial
assistance to provide subsidized office and wet lab space to participants of the incubation program.
Therefore, the financial assistance proposed does not provide an unreasonable financial return to
RMI2. Any financial assistance ultimately goes to subsidize the lease rates for participants and the
operating costs of RM12- "
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Mike Freeman, Chief Financial Officer, stated the Ordinance will authorize an interfund loan from
the City to the URA to enable the construction of a 31,000 square foot facility to house RMI2. The
loan is for $5.3 million, with a term of 20 years and a 2.5% interest rate. The mission of RMI2 is
to enable and accelerate the success of innovation -based start up companies and promote the
entrepreneurial culture of scientific and technology based companies. The company is currently
leasing office space in City properties.
Mark Forsyth, Chief Executive Director of RM12, stated the purpose of RMI2 is to nurture the
development of entrepreneurial companies in their early years when they have a high tendency to
fail. The successful companies raise capital, create jobs, help diversify the economy and help
support the acceleration and creation of the targeted industry clusters. Statistics show that 84% of
businesses that graduate from incubators stay in business in their communities and use community
services. RMI2 has assisted 27 start-up companies with its incubator program and assisted over 100
businesses through other programs. Almost half of the companies currently in RMI2 are in the clean
energy industry. RMI2 offers other resources to start-up companies such as programs to help
beginning companies raise capital, provide business advice and creation of business plans, finding
professional service providers to assist beginning companies. RMI2 hosts also educational seminars
for clients.
RMI2 has filled each City facility it has leased and now has nine companies located in three City
buildings. The demand exists for more space to add more start up companies. RMI2 offers office
space to companies at below market rates because companies are in a cash flow bind when they are
started. Having companies located close together breeds synergy and collaboration between the
companies.
The new facility will be located at Inverness Innovation Office Park, now being developed on Vine
Drive. The site is located with the North College Urban Renewal Area. The proposed building will
be either three or four stories, have about 29,000 square feet of rentable space with some space
available for an incubator graduate company that would pay rates closer to market rental rates. The
facility will have 3,000 square feet of bio-science wet lab space, which is currently not available to
start up companies in the area. The building will be LEED certified gold, bring new businesses and
primary jobs to the North College area and will facilitate educational seminars, community events
and serve as a hub for entrepreneurial activity.
If Council approves the Ordinance, the actual construction of the building will begin in November
or December and will be finished by Fall 2010.
Freeman stated RMI2 went through the site selection process developed by the Northern Colorado
Economic Development Corporation (NCEDC). The benefits provided by the proposed loan to
RMI2 will allow continued operation of the incubator. The space currently occupied by RMI2 will
eventually be used for other purposes by the City. The capacity of RMI2 will be expanded which
will bring in more businesses. The redevelopment of Vine Drive will benefit the City. The building
will be LEED certified and will be an environmental showcase. Infrastructure improvements will
improve Vine Drive with curbs, gutters and sidewalks.
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Josh Birks, Economic Advisor, stated the City will loan the URA $5.3 million that will enable the
URA to provide funding to RMI2 to pursue a new facility. The use of new market tax credits to
provide additional equity for the project will reduce the amount of the City's loan to the URA. The
first seven years of payments on the loan will be interest only, as required by the rules for new
market tax credits. The loan payments will be lower and will allow RM12 to charge lower lease rates
to companies starting up in the program.
The following citizens supported the proposed project and urged Council to adopt the Ordinance:
Maury Dobbie, Northern Colorado Economic Development Corporation CEO and President
Greg Woods, North College Citizen Advisory Group Chair
Greg Fuhnnan, Van Dyne Chief Financial Officer of Superturbo, Inc., an incubator company
Dr. Dale Willard, Vance Microlabs, a CSU bioscience start-up company and potential beneficiary
of the RM12 programs
Rick Jones, Symbios Technologies, an RMI2 company
Bill See, North Fort Collins Business Association member
Kathy Gilliland, DK Innovative Solutions President
Doug Johnson, UniverCity Connections Director
Kathy Bauer, 1 103 Kirkwood Drive, Integrated Computer Consulting
Joe Rowen, Funding Partners Executive Director
Ed King, Spectra Digital, Inc. President
G. J. Pierman, Wirsol Solar, an RM12 company
Guy Babbit, Co-founder of Czero, an RM12 company
David Cunningham, business development specialist
Ron Lautzenheiser, North College business owner, North College Citizen Advisory Group member
Patrick Gill, Northern Colorado Entrepreneur's Network co-founder
Jim Doherty, 5179 Torrey Pines Court
Mark Montgomery, Foil Collins resident, Van Dyne Superturbo employee
Godon Nuttall, NoCoNet and Longs Peak Networking Director
Mike Jensen, Fort Collins realtor
Sam Solt, Clear Path Labs co-founder, an RM12 company
David May, 225 South Meldrum, Chamber of Commerce President,
Eric Sutherland, 631 LaPorte, urged Council to use caution before lending the funds to the Urban
Renewal Authority because many similar enterprises have failed across the country. He did not
believe the loan was a prudent use of taxpayer funds.
Councilmember Roy asked if the use of reserves for the loan will jeopardize other City programs.
City Manager Atteberry stated, if Council approves, the City is scheduled to use reserves to cover
gaps in the 2009 budget, as well as the 2010/2011 budget. Freeman stated the City has almost $300
million invested reserves across the organization, with about half in Utilities. The $5 million for this
loan is not coming out of any one "pot." The City will earn more interest on the loan than it could
with other investments. The City's investment policy is extremely restrictive to very safe
investments, which currently do not provide much return.
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Councilmember Roy asked if new health and safety issues will confront emergency personnel as a
result of the new types of industries proposed for RMI2. Freeman stated one specific of the proposal
is that RM12 would only allow low -end bio-work. CSU's new Research Innovation Center will
contain companies that are doing sponsored research with CSU and need high -end labs or handle
infectious diseases.
Councilmember Poppaw asked if platinum LEED certification was considered for the building.
Freeman stated gold LEED certification adds significant costs to the building and the platinum level
was not considered. The RMI2 Board intends to make the building a showcase facility for Fort
Collins. Some aspects of the building will be above gold LEED certification criteria.
Councilmember Poppaw asked for the cost of bringing the building to platinum LEED certification.
Councilmember Ohlson asked what will be the total amount of rented incubator space. Freeman
stated the building will contain 29,000 square fee of leased space which will triple the size of RMI2.
The 4th floor will be leased at market rates for probably no more than five years or until such time
as RMI2 needs the space for expansion of its programs. The indirect benefit will be to lower the
initial lease rate for RMI2 companies.
Councilmember Ohlson asked if Council voted for RMI2 to be a nonprofit organization. Freeman
state RM12 pursued the nonprofit status.
Councilmember Ohlson asked for the governance model for RMI2 and who selects the Board
members. Freeman stated the major stakeholders who fund RMI2 sit on the Board, plus five
additional Boardmembers selected at -large. The funding groups include the City of Fort Collins,
CSU, NCEDC, City of Loveland and CSU Ventures. He is a member of the RM12 Board.
Councilmember Ohlson asked if RMI2 will own the building and the land. Freeman stated RM12
will own the land and building, once it is built and conveyed.
Councilmember Ohlson noted only162 high paying jobs have been created through RM12 over the
past 10 years. Freeman stated three years ago RM12 recognized it was not responding to the needs
of entrepreneurial companies because of lack of space. RM12 received more building space from
the City, installed a new director and increased its staff to support the organization with more
services and programs. If additional space had been available much earlier, more jobs would have
been created. Birks stated most of the jobs generated have been in the past few years.
Councilmember Ohlson asked what the City will do with the space currently occupied by RMI2.
Freeman stated the decision has not yet been made about use of the current space.
Councilmember Ohlson asked for information about the new market tax credits. Birks stated the
new market tax credit program has the mission to encourage economic development in distressed
areas. The property RMI2 plans to build on meets the federal requirements for a distressed area. The
tax credits leverage private monies as equity into a deserving project. The private investor gets the
benefit of a tax credit. The U.S. Bank Community Development Corporation will purchase those
tax credits. The U.S. Bank Community Development Corporation was brought into the program by
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the Colorado Housing Finance Authority, which is the state organization the federal government
gives the ability to allocate tax credits. The federal requirements contain a rigorous set of criteria
and applies to certain areas in a community that qualify as blighted.
Councilmember Poppaw asked what percentage of the companies assisted by RM12 and have
graduated from the program have remained in Fort Collins or the region. Forsyth stated two
companies have left the area.
Councilmember Poppaw asked if any environmental mitigation measures will be needed since the
site is a former Waste Management site. Freeman stated the developer of the property has shared
information from the Phase I and Phase 2 environmental studies. Both studies show there are no
environmental issues with the property, which was a key consideration in determining if the site was
suitable for RM12.
Councilmember Troxell stated one huge benefit of an incubator is the development of the
entrepreneurial atmosphere and asked for the requirements to become an RM12 company. Forsyth
stated the start-up companies are mentored by volunteers who are experts in their fields, which helps
the companies develop and grow. One value of being in the program is that RM12 serves as a
connecting platform that brings together resources in the community that are used by the start-up
companies to grow and expand. RM12 also provides marketing for the companies that brings in
investors. Companies are chosen based on their industry. RM12 targets bioscience, clean energy
and information technology industry clusters, but any innovative company developing new
technologies, products or processes will be considered. A company will be interviewed by RMI2
advisors who are experts in their field and RM12 staff reviews the company's business plan to assess
the viability of the plan. RM12 is looking for companies that need the support and will be good
participants because much of the value of the RM12 program comes from the various companies
working with each other. RM12 has a three year program that increases a company's rent each year
so the company is paying close to market rates at the end of that time. The RM12 Board has the
option of extending the lease time because some companies need more than three years. A company
is ready to graduate once it has secure financing and has reached a point in their business plan that
they can be supported by the business community.
Councilmember Kottwitz asked about the decision to build an new facility instead of renovating an
existing building and for information about the inclusion of a wet lab. Freeman stated one criteria
for choosing the site was to have the building located within the Downtown Development Authority
or the North College Urban Renewal Area because the facility would need public assistance through
tax increment financing. The project went through the fonnal site selection process administered
by NCEDC. The unique financing package, including the new market tax credits, requires the site
to be located in an area that meets the requirements to obtain those tax credits. Forsyth stated the
facility will be a long term investment and the lower lease rates that RM12 will be able to offer
participating companies as a result of the financing package, will be critical to making the program
viable. Bioscience start-up companies need access to a wet lab as a vital part of their development.
The wet lab will be a basic lab, but will provide bio-science companies with lab space to develop
their products.
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Councilmember Roy asked for clarification of the vision of the future campus and the public
improvements to be made near the Poudre River. Freeman stated the vision of the campus is a larger
master plan developed by the property owner with RM12 as part of the campus. The Inverness Park
Project will be on the north and south sides of Vine Drive. The RM12 project will be located on the
north side of Vine.
Councilmember Ohlson asked if any of the companies had moved their manufacturing processes
offshore and ifthere was any provision that would require manufacturing to be done locally. Forsyth
stated one company is looking to Mexico and Canada as possible manufacturing sites. The company
looked for local manufacturers that could produce what they needed, but they were unable to locate
any in this area.
Councilmember Ohlson asked what improvements are planned along the River. Freeman stated
some stormwater improvements will be constructed as part of the project. The building itself will
not be adjacent to the River.
Councilmember Ohlson asked if the design of the building could be changed. Forsyth stated the
drawings provided to Council were very preliminary and the final draft will probably look very
different.
Mayor Hutchinson asked for a summary of the risk assessment done by staff on this project.
Freeman stated the covenant with RM12 provides great protection for the City. The project will not
happen without the tax increment, which will be created by this project. The new market tax credits
lower the City's risk on this project because a private party is providing part of the loan. The project
meets all City investment criteria and was not given any special treatment. The City is protected by
the covenant and would acquire the property, should RM12 cease operations.
Councilmember Ohlson made a motion, seconded by Councilmember Troxell, to adopt Ordinance
No. 053, 2009 on First Reading.
Councilmember Ohlson stated providing support for RMI2 enables local start-up companies to
succeed and provide jobs for this area. The project meets the goals outlined in the City's Economic
Plan.
Councilmember Roy stated companies will achieve success through this program. He asked the
RM12 Board consider endowments back to the community. He noted Freeman is a member of the
RMI2 Board and he requested that future requests not include similar situations. Atteberry stated
lie and Deputy City Manager Jones have previously served on the RM12 Board and this business
model works and is ethical. He will share more information with Council at a later time.
Councilmember Poppaw stated the project will generate high quality primaryjobs in the community.
The project will help the redevelopment of North College.
CounciImember TroxelI stated the project is important for the redevelopment of North College. The
project will develop a unique facility that serves a good purpose and is deserving of public support
for financing.
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Councilmember Kottwitz stated the project is a good example of encouraging partnerships,
imiovation and investing in the future of Fort Collins.
Mayor Hutchinson stated the City's role in the economic health of the community is to act as a
catalyst to create an environment where entrepreneurs can succeed. This project accomplishes that
goal.
The vote on the motion was as follows: Yeas: Hutchinson, Kottwitz, Ohlson, Poppaw, Roy and
Troxell. Nays: none.
THE MOTION CARRIED.
Adjournment
The meeting adjourned at 8:05 p.m. .�
Mayor
ATTEST:
City Clerk
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