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8/29/2012 1:27:00 PM
Editorial: Looking for Clarity, Uniformity in the Allocation of Economic Development Funds

The Economic Development Committee took a step backward last week when it refused to allow City Council to consider whether to continue to fund the Technology Innovation Center ("The Incubator") with $50,000. The Incubator is a business concept that offers reduced rent, flexible leases and spaces, free legal advice, inroads to talent at Northwestern University and a chance for collegial conversations to startup businesses in Evanston. Two privately owned buildings – 812 Chicago Ave. and 820 Davis St. – comprise the Incubator space at present.

The Incubator, or TIC, began as a joint venture of the Northwestern University Evanston Research Park , an entity that was dissolved several years ago when the City Council saw the City’s future in commerce rather than scientific research. The Hilton Garden Inn, the Maple Avenue garage, Chili’s, Blick Arts, Francesca’s, Bravo and Century Theatres stand where small technology companies were once envisioned. The idea of fledging technology startups moved from the north Maple Avenue corridor into downtown and south Evanston.

The Economic Development Committee’s main concern when it considered TIC’s request for funding appeared to be was that only four people – including the owner, Chuck Happ, and his wife, along with TIC Executive Director Tim Lavengood – sit on the board. The fourth TIC board member is a member of City staff. Other concerns were related to the City’s return on investment and seemed to be centered on the length of time companies remain in the Incubator and the exit of many of them from Evanston.

Now We’re Cookin’ (which recently received a grant from the City) and Heartwood Center (which has requested a loan) now call themselves "incubators," a term that is becoming an economic development buzzword. Don’t get us wrong – we think buzzwords are fine and incubators are great.

Less than great, however, has been the City’s consistency in its approach toward economic development. If City officials are starting to take note of incubators as potential engines for economic development, for example, we urge them to decide on what defines such an entity, or to at least be made aware that more than a single concept of an incubator exists. As one of the TIC tenants pointed out, incubators are like churches: Each one is unique. And for each incubator, would the City appoint another staff member to its board based on the amount of City funds received? In light of the committee’s issues with TIC, this hardly seems like efficient oversight. Clarity on these aspects could help avoid considerable confusion moving forward as the City evaluates the economic potential of these "incubators" – from the tech entrepreneurs at TIC to the artists at Noyes Cultural Arts Center.

The approval or denial of public moneys to support local businesses seems to be a flawed process as well. We balk at a lack of uniformity: First, a substantial amount of City funding has gone to businesses that have been "invited" by City staff or aldermen to apply for funding. This process creates an inner loop and de facto leaves out many businesses that could find a good home here. Second, the process of approval has lately seemed to hinge on personalities and animus rather than a stringent accountability rubric. And even if it is not the case, the lack of a uniform process only fuels the notion that the City is playing favorites when it comes to dolling out low-interest loans and economic development grants.

Alderman Donald Wilson, 4th Ward, has frequently objected to the allocation of certain funds, not because the recipients were undeserving but because he felt the process was not open, and that other deserving businesses, had they known financial assistance was available, may have approached the City.

Mayor Elizabeth Tisdahl recently told the RoundTable she felt the City" should have parameters by which we judge all proposals." As we move forward with much needed economic development, consistent parameters will ensure that we have a process that not only brings in revenue, but one that is fair and open to all.

As that process evolves, we trust that the TIC will receive another hearing and we hope that the Economic Development Committee members will vote to move the discussion of additional funding for the TIC on to City Council.





Reader Comments

Posted: Friday, August 31, 2012
Article comment by: Brad Morehead

As an Evanston business owner (CEO of SafeMart.com), founding member of Wildcat Angels, Evanston resident and Northwestern grad, it is exciting to see this discussion about entrepreneurship and accountability in Evanston. TIC has played a great role in the development of outstanding companies like Peapod and Leapfrog, among others. Companies that come to TIC realize they have the opportunity to get much more than reduced-rate real estate. More information on these other value-added services and their corresponding results seems to be what the city is requesting in exchange for its $50,000 investment.

I support TIC, entrepreneurship and Evanston. However, as an investor, business owner and taxpayer, I support accountability as well. As was mentioned in the article, there are many different kinds of incubators and the definition is rapidly evolving with new co-working spaces, accelerators and summer entrepreneurship programs (like Excelerate Labs, Social Impact Engine, TechNexus and more). Each of these types of organizations serves different people in different ways, but the bottom line is they (like all organizations including the city) have to be accountable for how they spend their time and money. The challenge here seems to be how the demands and expectations of results and accountability were communicated to TIC, but I donít think anyone can fault the city administrators for raising the bar for results and clarity.

Technology jobs in high-growth industries in downtown Evanston leverage the best of what we have: a world-class university population with excellent public transportation access to downtown and a gorgeous setting by the lake. These highly scalable companies in fast growing sectors give us a strong labor market of highly-sought after jobs that has ripple effects throughout our local economy. It improves our downtown retail base causing those companies to hire and pay more. It leads to a stronger housing market because more people want to live near where they work. Which in turn increases our property tax base and sales tax revenue to give us capital to invest in other projects that benefit our infrastructure, education, safety and community. These tech companies have a multiplier effect on the businesses around them. Think about this, if the Silicon Valley community spent its time and capital building a restaurant here or a small shop there, then they would have one small shop or restaurant with a few jobs. Instead, Silicon Valley focused on tech companies, infrastructure, transportation, etc. that attract talent, companies and money. Then the restaurants and shops follow because you have the people, companies and money already there. Letís make sure we understand the order of how to attack this problem. We have a best-in-class university, recruiting students from all over the world to Evanston. We have students that want to work for entrepreneurs and be entrepreneurs. If we help funnel and fuel those high-growth companies, then the shops, restaurants, schools and city will all benefit. If we just focus on another restaurant, real estate investment, building or worse, then we will not see this multiplier effect.

Letís help TIC and the city create an ecosystem that builds the education and labor pool in our community for fast-growing companies while giving those high-growth companies a fertile garden to plant their roots for the long term. Just like any investor, we want to see clear communication, strong ROI and accountability from all sides. We need more entrepreneurs starting and building growth companies in Evanston so that we can have the jobs, safety, education and community that Evanston deserves.




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