DDA not ready to hatch incubator program

August 19, 2011
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The Grand Rapids Downtown Development Authority has decided to take a step back from initiating its proposed retail incubator program following a recommendation from one of its three newly formed action groups.

The Economy Committee, which is charged with looking at all things economic in the district, reported the board needs more information on retail activity before it goes ahead with the program. The group also said if the program goes forward, the DDA should consider offering a different incentive than the rent subsidy that was discussed in April.

“The committee felt that we were putting the cart before the horse,” said DDA Executive Director Jay Fowler.

The economy group said a retail-merchandising plan should be formed before starting the program. Such a plan would look at demographics and consumer buying patterns to identify the types of stores the DDA should bring into the district. The committee also said the board should undertake a feasibility study as an effort to determine how successful an incubator program would be.

“We’ll keep some incentive on the table as we do our study,” said Fowler.

In April, the board set aside $150,000 to be used as an incentive to help the businesses that would be admitted into the program. That money was then designated to provide selected business owners with varying levels of rent subsidies for up to 18 months. But now $40,000 of that total will go into the DDA’s building-reuse program to help owners build out their storefronts. A maximum grant would be $10,000.

“The $40,000 is for build-outs, and the $110,000 is totally up in the air. The incubator program was approved in concept only. When the merchandising plan comes back, with the feasibility study, it’s going to be reviewed whether to go forward or not with an incubator program, as it was seen,” said Anne Marie Bessette, a retail specialist with the DDA, who leads the board’s effort to draw retailers downtown.

“The $40,000 is part of the incubator program and is still going to be handed out to participants in the same way that the subsidy money would have been. They still have to be part of the program where they would agree to work with the Small Business Technology and Development Center and Grand Rapids Opportunities for Women to make sure they are supported by professionals, and it has to be start-up businesses,” she added.

The rent incentive is being set aside for the time being because Bessette said the cost of building out a retail space can often be a bigger barrier for some fledgling business owners to overcome than rent.

“Two months ago, it was discussed whether there should be an option that someone should have build-out money or the subsidy. It’s the same amount of money but not everybody needs a build-out. But people who do need a build-out find it to be a costly thing to do. So maybe that’s the biggest barrier for some,” she said.

“We want to continue the support of new businesses starting in downtown and that’s why we really wanted to have the build-out possibility to show that we’re still working on that goal for retail,” she added.

The DDA also agreed in April to create lease agreements with First Ward LLC and Dwelling Place of Grand Rapids. First Ward owns 50 Louis St. SW, while Dwelling Place owns multiple storefronts along Division Avenue. Both firms requested to have their spaces designed by the DDA as incubators. The contracts were to have come back to the board in May, but didn’t.

“I think we’ll probably want to focus on Division,” said Fowler.

The idea behind the incubator program is to foster business development. The SBTDC and GROW have signed on as partners with the DDA in the program and will serve as mentors to the selected business owners. The DDA also established an advisory committee for the effort.

“I would assume that the board would like to see this study move forward quickly,” said Kayem Dunn, DDA chairwoman.

During the last fiscal year, the DDA awarded $178,000 in building re-use grants, $50,000 to retailers, and $1.5 million in total support for development. The board also reimbursed developers $721,472 last year for projects they’ve completed and spent another $1 million for streetscape improvements.

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