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HomeMy WebLinkAbout09 16 2013 EDA Report 7A-3 BUSINESS PLAN TECHNOLOGY VILLAGE BUSINESS ACCELERATOR PHASE II CITY OF PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY 4646DSSE AKOTA TREET PL,MN55372 RIOR AKE 952-447-9813 drogness@cityofpriorlake.com www.cityofpriorlake.com TC ABLE OF ONTENTS SECTION TITLE PAGE 1.0 EXECUTIVE SUMMARY 2 1.1 History 1.2 Current Circumstances 1.3 Technology Village Phase II Overview 2.0 MISSION 4 3.0 PROGRAM PARTICIPANT FOCUS 4 3.1 Program Participants 4.0 ORGANIZATION & MANAGEMENT 6 4.1 Board of Directors 5.0 CURRENT RENTAL RATES 7 6.0 SELECTION CRITERIA 8 7.0 STAFFING PLAN 9 8.0 2014 OPERATING BUDGET 9 8.1 Projected Program Demand 8.2 Funding Request 9.0 MICROENTERPRISE LOANS 11 Appendix A - Current Technology Village Floor Plan Appendix B - Sample Rent Scenarios Technology Village Business Plan – Phase IIPage 1 1.0ES XECUTIVE UMMARY This Phase II Technology Village Business Accelerator Business Plan was drafted by the Technology Village Board of Directors. The Board of Directors was appointed by the Prior Lake City Council on November 26, 2012 to act in an advisory capacity to the Economic Development Authority (EDA) and advise the EDA on matters related to Technology Village. This business plan will help achieve some of the duties and responsibilities assigned to the board, which include the planning and formulating of policy to guide the programming and direction of the Technology Village program as well as ensuring the overall financial viability of the accelerator. The original Technology Village business plan anticipated five Technology Village program participants by the third year of operation. The program is currently in the ninth month of operation and three program participants have entered into a lease agreement with the EDA. Two additional potential program participants have received approval of their program application from the board. The demand for office space within Technology Village demonstrates a need for this type of program in the community. This Phase II Business Plan serves as the next step in developing the Prior Lake Technology Village Business Accelerator. 1.1 H ISTORY In the fall of 2011, the Prior Lake EDA appointed a Technology Village subcommittee in an effort to assemble and organize human resources to establish a business incubator in the community, which was identified as a key objective of the EDA. The EDA provided the subcommittee with direction to begin evaluating options to implement a technology business incubator facility in Prior Lake, including a report that covers these primary issues:  Identify models of business incubation (public, private, or combination);  Outline financial models to support start-up and ongoing operational costs;  Evaluate opportunities for business incubation in Prior Lake; and  Identify a preferred plan for Prior Lake. The subcommittee completed and presented its initial Report and Recommendations to the EDA on February 13, 2012. The report identified different models of business incubation, outlined financial options to support start-up and ongoing operational costs, evaluated opportunities for business incubation in Prior Lake and identified a preferred plan for the city. A business plan for the Technology Village Business Accelerator was then drafted by the subcommittee and presented to the EDA which detailed a preferred industry focus, organizational structure, Board of Director composition, services and programs offered through Technology Village, rental rates, marketing, application and acceptance criteria, staffing plan, facility information, budgets and financials, as well as potential funding sources. After discussion and revisions, the EDA approved the business plan for the Technology Village Business Accelerator on July 16, 2012. On September 10, 2012, after a review of the Technology Village business plan, the Prior Lake City Council approved an amendment to the 2012 Prior Lake General Fund and Economic Development Authority budget in the amount of $50,000 to fund the initial phase of Technology Village. Technology Village Business Plan – Phase IIPage 2 1.2 CC URRENT IRCUMSTANCES The program currently has three program participants under lease agreement. Technology Village opened on January 2, 2013 and is located on the main floor of Prior Lake City Hall within a previously underutilized office space of approximately 2,000 square feet. The space consists of five hard-walled offices, one conference room and a 775 square foot open office area. Initiating the program in the existing city hall building helped minimize start-up costs and also allowed for the shared use of services already in place serving City of Prior Lake staff, including; internet, phone, copy machine, printer, meeting space, cafeteria/break room, etc. The office space within city hall also provided the added locational benefit of allowing the program participants to be in close proximity to city staff who administer the day-to-day program operations. 1.3 TVPIIO ECHNOLOGY ILLAGE HASE VERVIEW One of the EDA’s goals was to establishing a business incubator in the community, which has been accomplished with Technology Village. By providing the resources necessary to implement Phase II of the Technology Village plan, the EDA would be further endorsing Technology Village as an important tool to achieve the overall objectives of the EDA and 2030 Vision and Strategic Plan by removing obstacles to economic development, promoting growth and diversifying the city’s tax base. The Board of Directors is recommending a Phase II expansion which will allow the program to maintain its current program participants and provide additional office space in privately owned properties to serve not only emerging technology businesses but a wider variety of growing companies. As was anticipated with the original Technology Village business plan, Phase II will require additional financial commitments from the City of Prior Lake EDA. Every effort will be made to locate program participants in the existing city hall facility. However, this is unlikely once five businesses occupy the phase I facility for two reasons; i) the Prior Lake – Spring Lake Watershed District would like to occupy a portion of city hall which could consume any expansion space presently available, and ii) it is likely that city staff additions will be necessary in the next year to provide services to our growing community. Assuming City Hall Technology Village office space is occupied, the Executive Director and Board of Directors will work with existing property owners to maintain a list of available privately owned office space and allow program participants to lease space in multiple locations throughout the community. Technology Village program participants located outside of city hall will be eligible to receive a reimbursement of gross rental costs from the City of Prior Lake Economic Development Authority. The reimbursed rental amount will be calculated based on the actual number of employees and actual area of lease space, not to exceed 200 square feet for single employee businesses and 150 square feet per employee for multiple employee businesses. The Technology Village subcommittee originally considered the option of the EDA leasing space in privately owned office space in the community and then sub-leasing that space to program participants at a reduced rental rate. This option was ultimately not pursued because of the anticipated cost to the EDA. This phase II business plan also envisions private lease space in Prior Lake; however, under this proposal the EDA would not be entering into a lease agreement with a private landlord. The program participant would be required to locate their own office space, with the assistance of city staff and the Technology Village board, and then a rental reimbursement would be provided by the EDA to the participant after the monthly rent payment was received by the landlord. This will drastically reduce the Technology Village Business Plan – Phase IIPage 3 cost responsibilities of the EDA and will also eliminate the risk of the EDA leasing and paying for space which is not occupied by program participants. Each program participant will commit to three years of program participation which will be secured with a program participation agreement. For single employee businesses, each program participant will be eligible for reimbursement in the amount of $12 per square foot of lease space or two-thirds of the gross rental rate during the first year, whichever is less. During the second year, each program participant will be eligible for reimbursement in the amount of $6 per square foot of lease space or one-third of the gross rental rate, whichever is less. During the third year, the program participant will be responsible for all costs associated with the private lease agreement. The rental reimbursement will be based on the actual area leased with a maximum area allowance of 200 square feet. Any additional space leased above 200 square feet will be the sole responsibility of the program participant. Should a program participant have multiple employees working full-time within the approved office location, the rental reimbursement amounts will be the same as a single employee business; however, the maximum area allowance will be 150 square feet per employee who works full time from the approved office location. Program participants with multiple employees will be required to submit a certificate of compliance annually which certifies the number of full-time equivalent positions working within the approved office location. In the event office space outside of the existing city hall Technology Village location is desired by a potential program participant, the City of Prior Lake will make no assurances or guarantees as to the quality of office space, furnishings or other amenities and technology offered by the private landlord. The EDA will not furnish office space outside of city hall; however, microenterprise loan funds will be made available for this purpose as described in greater detail below in section 9.0. All lease agreements for space outside of city hall will be executed between the program participant and the private landlord; the City of Prior Lake will not be a party to the private lease agreements and will make no guarantees of lease payments or any other obligations of the program participant. 2.0 M ISSION Technology Village Mission Statement – Technology Village supports the growth of emerging technology-based businesses within an entrepreneurial environment that encourages collaboration, fosters job creation and provides connections to local & regional resources. In general, the mission of any business accelerator is to aid in the successful development of emerging businesses. Ideally, businesses will grow and move from Technology Village out into the community and contribute to the overall vitality, diversity, and growth of the economy. Not only do participants of the Technology Village Program benefit, but the program is designed so the City of Prior Lake benefits through greater economic development activity, new employment opportunities, enhanced community image, increased entrepreneurialism and additional tax revenues that support services. 3.0 PPF ROGRAM ARTICIPANT OCUS Incubators and business accelerator programs throughout the nation vary in the way they deliver their services, in their organizational structure, and in the types of businesses they serve. Due to space limitations and the awareness that the Prior Lake Technology Village simply cannot meet the needs of Technology Village Business Plan – Phase IIPage 4 all potential program participants, the recommendation of the Technology Village subcommittee and the focus of the Board of Directors has been on emerging technology businesses. For the purposes of Technology Village, emerging technology is defined as any technology product or service that is currently developing or will be developed that can be commercialized and has the ability to alter a business or social environment. The board feels emerging technology businesses provide the greatest opportunity to positively impact the community and assist with high quality job growth. By narrowing the focus to emerging technology, the board felt confident in its ability to create a collaborative environment where complimentary businesses can work together and share information and resources to fully capture the business accelerator concept and provide the greatest opportunity for program success. The Phase II program focus will continue to be on emerging technologies; however, program expansion into alternate office locations in the community will allow the board and EDA to provide Technology Village services to non-tech companies with high growth and high employment potential. The city hall office space is proposed to be reserved for tech related companies while other businesses with a focus on other industries will be able to take advantage of this program at an alternate office location. Due to space restrictions, funding limitations and available staff and board consulting time, the board cannot possibly approve each and every program application. The board has and will continue to work to maximize the funding provided by the EDA to support those businesses that, in the board’s judgment, have the greatest opportunity for success and job creation. The ability of a potential program participant to demonstrate their business will most likely achieve the goals of job creation and community investment and therefore address the most pressing public purpose will be the primary factor in determining whether a business is accepted into the Technology Village program. 3.1 PP ROGRAM ARTICIPANTS Below is a list of current program participants. Technology Village has three existing program participants and two future participants who have a pending lease agreement. The current Technology Village floor plan with program participant spaces identified is attached as Appendix A for reference. design a tivity design a tivity, llc is a single employee graphic design studio with areas of expertise including website development, logos, brand identity, product literature and brochures, invitations, advertising, publications, packaging and product design & development. Innovative Computer Professionals Innovative Computer Professionals provides consulting services and solutions to the ATM (Automated Teller Machine) and POS (Point-of-Sale) industry with specialization in gaming, card encoding/embossing, ATM/POS host systems, and PCI DSS compliance. Argos Risk Argos Risk develops software which helps businesses monitor the financial health of their customers, suppliers and competitors. Blackdog Computer Services (Lease Agreement Pending) Blackdog Computer Services is a software development firm specializing in the banking and financial industry; primarily fraud detection and fraud investigations software. Technology Village Business Plan – Phase IIPage 5 Akicita Technology (Lease Agreement Pending) Akicita Technology is a consulting, engineering and integration firm offering a one-stop-shop for a full range of IT services which specializes in the sale of compliance software for the gaming industry. 4.0 O&M RGANIZATION ANAGEMENT Technology Village is a publicly sponsored business accelerator with its primary funding provided by the City of Prior Lake Economic Development Authority. The organizational structure of Technology Village includes the Prior Lake Economic Development Authority, Technology Village Board of Directors, an Executive Director and City of Prior Lake staff support. The Executive Director implements the goals of the organization and manages the day to day activities with the assistance of City of Prior Lake staff. The Board of Directors acts in an advisory capacity to the EDA and advises on matters related to Technology Village. The duties and responsibilities of the board include:  Plan and formulate policy to guide the programming and direction of the Technology Village program;  Assist in the hiring of the Executive Director position;  Assist in screening prospective accelerator clients;  Ensure the overall financial viability of the program;  Serve as a liaison between city government and the community; and  In conjunction with EDA members or city staff, introduce potential or new business representatives to others in the commercial community. 4.1 BD OARD OF IRECTORS The Board of Directors consists of individuals that share the vision of Technology Village as an economic development initiative and who are able to provide expertise that will help fulfill the program’s mission. The board has been instrumental in promoting Technology Village in the community and generating awareness and understanding of the Technology Village program as an important economic development tool for the City of Prior Lake and surrounding Scott County communities. The members have provided network connections and assistance to the Executive Director in creating links to investment and professional resources that support the success of Technology Village businesses. Below is a list of the Technology Village Board of Directors: Gerry Hughes, Vice-Chair With more than 25 years of Healthcare experience, Mr. Hughes is a proven and successful professional services leader within the business software industry with such well-known companies Lawson Software, Oracle, and Healthland. Through direct efforts related to professional consulting service contracts, product sales support, project implementation leadership and oversight, Gerry is known for being a strategist and passionate leader who understands the importance of a goal driven organization to meet operational objectives and maximize organic growth. Gerry is an innovative thinker adept at identifying client and company business needs, making decisions, problem solving, mentoring and initiating company culture change. Lori Frank Lori Frank currently serves as the president of Argos Risk, an online credit risk management business based in Minneapolis, Minnesota. With over 25 years of executive management experience in the areas Technology Village Business Plan – Phase IIPage 6 of technology and finance, Lori is a visionary leader who has led several start-up companies into market dominance. She has served as CEO of both public and private companies over her tenure and thrives in diverse and challenging enterprises that need a focused, motivated leader. Bob Jader Mr. Jader has been active in economic development in Prior Lake for many years. Bob has an extensive background in information technology, both from a technical perspective and as a business owner. As an entrepreneur, Bob was the founder of three successful IT companies. His extensive management and consulting experience, working with early stage IT companies, makes Bob an important asset for helping grow companies participating in Technology Village. Kris Pauna A Prior Lake resident since 2003, Kris moved here to start and raise his family. As a member of the board he provides a diverse experience in finance, operations and marketing with a perspective from medical device, agriculture, manufacturing and retail management. David Rech Dave has spent over 30 years as an executive in the technology sector focused on selling to the masses. He presently owns his own consulting firm and is actively involved in real estate development and sales. Previously he’s held global executive management positions with The Walt Disney Company, Twentieth Century Fox, Digital River and Globalware Solutions as well as multiple distribution companies. Dave was born and raised in New Prague, MN and his family have been residents of Prior Lake for over 13 years, they also spent 10 years in California. As a member of the board Dave brings sales, marketing, ecommerce, contract management, coaching and SaaS experience to the mix. Dan Rogness, Executive Director Mr. Rogness is the Executive Director of Technology Village as well as the Community & Economic Director for the City of Prior Lake. Dan manages the day to day operations of Technology Village and fills an important role as a conduit to the Economic Development Authority. Bob Morris Bob Morris was appointed to the Technology Village Board of Directors as a member of the EDA. Mr. Morris has since resigned from both the EDA and the Technology Village Board of Directors as he is planning to relocate to another community. Although Mr. Morris is no longer involved in Technology Village, his previous experience and efforts through the planning, design and implementation phases were extremely valuable. 5.0 CRR URRENT ENTAL ATES The Technology Village Board of Directors will continue the escalating rent structure for rental space within the city hall location. The rental subsidy contemplated in this plan for office space outside of city hall decreases over the three year term which will achieve the same purpose; to have the program participant pay a larger share of their operating costs as their business grows. Currently, program participants pay an escalating rent payment over the lease term and the payment received is used to subsidize Technology Village program operations. For example, the Board of Directors has establish a standard market lease rate of $15 per square foot for the hard walled office area; however, a business is only required to pay $5 per square foot for the first year, $10 per square foot for the second year, followed by $15 per square foot during the third year of the lease term. Technology Village Business Plan – Phase IIPage 7 In addition to the annual lease savings, the Technology Village Board has established an estimated value of $18.19 per square foot for program costs paid for or provided by the City of Prior Lake. These services, which are provided at no cost to program participants and are detailed in each lease agreement include; program management, city staff time, office equipment, furnishings, property insurance, janitorial service, grounds maintenance, snow removal, common area building maintenance, equipment maintenance, trash removal and payment of utilities including gas, electric, sewer and water. These no cost services and below market lease rate savings are considered the City of Prior Lake’s “equity investment” in the participant’s business. The lease agreement requires the equity investment to be repaid to the City of Prior Lake should the business relocate to another community prior to or upon graduation. If the business remains in Prior Lake, or Scott County at the EDA’s discretion, for a term of five years after graduation the city’s equity investment will be forgiven. Based on recent conversations with potential program participants and the questions and concerns they expressed, the board recommends that the value of the services provided through the program are emphasized and the consulting and mentoring time provided by the board be quantified so that program participants will have clear expectations of the services they will receive and the natural dollar amount thereof. Reimbursement of the city’s equity investment is reduced by an equal amount over a five year period following expiration of the lease term. If the participant chooses to relocate its business outside of Prior Lake city limits prior to or upon graduation they are required to reimburse the full equity investment. During the second year after lease termination 20 percent of the city’s equity investment will be forgiven and the repayment amount decreases by an equal amount during each subsequent year until the equity investment is $0.00. Program participants located outside of city hall will be also be responsible for reimbursement of rental subsidies and the City of Prior Lake’s equity investment; however, the equity investment will be less for those located in a privately owned office space because they will not be utilizing the city hall services and they will be responsible for a portion of common area maintenance fees at their alternate location. 6.0 SC ELECTION RITERIA Because Phase II of the Technology Village program will make the program available for high growth and high employment businesses, which may not meet the definition of emerging technology, it will be very important to ensure all future program participants meet the selection criteria. Due to limited funding and limited space options, the Technology Village Board of Directors cannot accept every business into the program. To determine which business start-ups have a strong potential to succeed and create employment opportunities in the community, the following eligibility requirements were drafted after a review of best practices of existing incubator/accelerator organizations.  The applicant must be in the early stages of business development (first three years). Small companies involved in a significant change in direction or launching a new business product are also eligible to apply.  The applicant must be a for-profit business with growth potential.  The applicant must demonstrate a strong market for products and services.  The applicant must have potential for positive economic impact on the community through: A technology, product, or service deemed to have a high marketplace potential. o Technology Village Business Plan – Phase IIPage 8 A potential for company growth and the associated creation of desirable jobs within Prior o Lake or surrounding Scott County communities.  The applicant must have a product or service that can be commercialized within the time set forth in the lease agreement.  The applicant must plan to remain headquartered within the City of Prior Lake.  The applicant must have a written description of the business or a draft business plan.  The applicant must show the ability to pay rent while they develop positive cash flow.  The applicant must be willing to accept advice from an established Technology Village advisory board.  The applicant business must be willing to take advice from the professional network and/or the Executive Director.  The applicant must desire to take advantage of and be able to benefit from the value-added services and guidance provided through the Technology Village program. 7.0 SP TAFFING LAN Phase I staffing has been accomplished with existing City of Prior Lake staff. Dan Rogness, Community and Economic Development Director for the City of Prior Lake has been serving as the Technology Village Executive Director. The Executive Director is assisted by Prior Lake Community Development staff and existing City of Prior Lake support staff. Additionally, members of the Board of Directors have taken a hands-on approach to assist in the program’s staffing needs. The Executive Director and city staff, along with members of the board, have coordinated and provided services to program participants, cultivated resource networks, managed facility development, and managed ongoing operations. The original Technology Village Business Plan anticipated the hiring of a full-time Executive Director with Phase II development due to subsequent increases in staffing hours, increases in workload, and additional funding availability. However, at this time the Board of Directors is recommending to maintain the current staffing levels. Should the Technology Village program continue to prove successful, a full-time, on-site Executive Director should be hired in year three or four to manage the operations of the accelerator, provide direct business assistance to program participants and continue to grow and expand the reach of the program. 8.0 2014OB PERATING UDGET Below is the estimated operating budget for 2014 Technology Village operations. Annual rental revenue for existing Technology Village businesses is estimated to be $7,185 in 2014. These anticipated revenues will be used to subsidize the costs for Technology Village operations. The estimated operating budget identifies a shortfall of $19,315 in 2014. Note, the anticipated lease revenue in 2014 includes the three program participants currently under lease agreement with the EDA and the two pending participants who have received board approval of their program application. Technology Village Business Plan – Phase IIPage 9 Revenue Acct.Account Name20132014 34760Incubator Leases $2,700$7,185 TOTAL REVENUE $2,700$7,185 Expenses Acct.Account Name20132014 (1)2014 (2)Description 201Office Supplies$1,500$1,500$500Miscellaneous office supplies 304Legal Fees$0$0$0XXXXX 309Software Design$0$0$0XXXXX 321Communications$2,750$2,750$2,500Marketing Costs; Website Update 433Dues & Subscriptions$1,000$1,000$2,500NBIA ($1000); Collaborative ($1000); Chamber ($500) 437Miscellaneous$1,200$1,200$2,500Internship support ($1500); Other ($1000) 520Building & Structures$0$0XXXXX 560Furniture & Fixtures$0$0XXXXX 580General Equipment$37,000$0$4,000Office Furniture; Equipment; Building space ADDProperty Taxes $0$0$1,500Estimated property tax payment for leased space ADDBusiness Assistance$0$0$3,000Training for business tenants ADDRent Subsidies$0$0$10,000Budget estimate for participants outside of City Hall TOTAL EXPENSES $43,450$6,450$26,500 ($19,315) NET INCOME/LOSS Notes: (1) Initial budget proposal without Technology Village Phase II. (2) Revised budget proposal with Technology Village Phase II. 8.1 PPD ROJECTED ROGRAM EMAND It is very difficult to estimate the program’s financial needs in 2014 because it is not known how many program participants will be accepted into the program, when they will be accepted, their space needs or number of employees per organization. For the purpose of these budget assumptions, the board anticipates three new Technology Village program participants will be identified in 2014; two, single employee businesses and one, two employee business. Assuming two single employee business and one, two employee businesses are identified, the following rental subsidy would be required. Although, it is noted the assumptions below assume all three tenants would begin occupying space on January 1, 2014. Year 1 Rental Rate Year 2 Rental Rate Year 3 Rental Rate Total Rental Rate (2014)(2015)(2016) # of Space Rental Annual EDA EDA EDA EDA BusinessBusiness BusinessBusiness Business Employees Needs (SF) Rate (SF)Rental RateSubsidySubsidySubsidySubsidy Business A1200$19$3,800$2,400.00$1,400.00$1,200.00$2,600.00$0.00$3,800.00$3,600.00$7,800.00 Business B 2400$18$7,200$3,600.00$3,600.00$1,800.00$5,400.00$0.00$7,200.00$5,400.00$16,200.00 Business C1125$15$1,875$1,250.00$625.00$625.00$1,250.00$0.00$1,875.00$1,875.00$3,750.00 TOTAL $7,250.00$5,625.00$3,625.00$9,250.00$0.00$12,875.00$10,875.00$27,750.00 Additional rent subsidy scenarios are attached as Appendix B to this document. The board will first attempt to find available office space within the city hall location, which would not require an out of pocket rental subsidy. If space is not available, or suitable, in the city hall location then office space within the community will be used, which will require a rental subsidy. If additional businesses are identified for the program resulting in an increase in the allocated funding amount, the Technology Village Business Plan – Phase IIPage 10 board would request EDA approval and funding allocation (if needed) prior to entering into additional lease agreements. 8.2 FR UNDING EQUEST Although it is difficult to anticipate the space needs of future program participants and the actual dates where lease terms would begin, the board has attempted to provide an accurate estimate of future funding needs. Based upon the estimated budget information detailed above, the Technology Village Board of Directors is recommending a funding allocation of $19,315 to the Technology Village program in 2014. 9.0 ML ICROENTERPRISE OANS The Board of Directors is not proposing to furnish office space for program participants who locate outside of the city hall location. However, the recently approved City of Prior Lake Economic Development Revolving Loan Fund Guidelines, adopted on May 7, 2012, allow microenterprise loans to be provided to eligible Technology Village program participants. A microenterprise is defined as a commercial enterprise that has five (5) or fewer employees, one or more of whom owns the enterprise. The available revolving loan funds consist of federal and state funds capitalized through funding made available to the City of Prior Lake from the Minnesota Department of Employment and Economic Development. Federal funds are subject to the rules and regulations established by the U.S. Department of Housing and Urban Development (HUD) for the State of Minnesota Community Development Block Grant (CDBG). When using federal funds, national objectives and other program requirements must be met as identified in the federal HUD program requirements for Small Cities CDBG. The Revolving Loan Fund guidelines allow microenterprise/business accelerator businesses to be eligible for both low-interest and deferred loans. The EDA, not the Technology Village Board of Directors, will review all Technology Village microenterprise loan requests and determine the terms of the loan. Deferred loans are provided at an interest rate of zero (0) percent and the loan principal repayment shall be deferred based on conditions established for each business. For example, microenterprise/incubator deferred loans may not have to be repaid until three (3) years from the date of assistance. Incentives could also include partial/full loan forgiveness based on the business meeting certain thresholds. Principal collected from loan repayments will be returned to the revolving loan fund for relending. The maximum amount of a microenterprise loan shall be $10,000.00 and the minimum amount shall be $2,000.00. Operating costs and working capital are not eligible loan costs. Technology Village Business Plan – Phase IIPage 11 AA PPENDIX Current Technology Village Floor Plan Technology Village Business Plan – Phase IIPage 12 AB PPENDIX Sample Rent Scenarios Example Scenario 1: Program participant leases a 200 square foot office in a private building at a gross rental rate of $19 per square foot. Because two-thirds of the gross lease rate is in excess of $12/SF, the EDA will reimburse at the rate of $12 per square foot. EDA reimbursements will be paid to program participants on a quarterly basis after the Executive Director verifies rent payments for the previous quarter have been paid in full. First Year  200 SF X $19 = annual lease rate of $3,800; monthly lease rate of $316.67.  EDA would reimburse $12 X 200 SF = annual reimbursement of $2,400; monthly reimbursement of $200.  Program participant would be responsible for the annual lease rate balance of $1,400; monthly lease rate balance of $116.67. Second Year  200 SF X $19 = annual lease rate of $3,800; monthly lease rate of $316.67.  EDA would reimburse $6 X 200 SF = annual reimbursement of $1,200; monthly reimbursement of $100.  Program participant would be responsible for the annual lease rate balance of $2,600; monthly lease rate balance of $216.67. Third Year  200 SF X $19 = annual lease rate of $3,800; monthly lease rate of $316.67.  EDA would not reimburse lease rates during the third year.  Program participant would be responsible for the annual lease rate of $3,800; monthly lease rate of $316.67. Total EDA contribution = $3,600 Total program participant contribution = $7,800 Example Scenario 2: Program participant leases a 125 square foot office in a private building at a gross rental rate of $15 per square foot. Because two-thirds of the gross lease rate is less than $12/SF, the EDA will reimburse two-thirds of the gross lease rate. EDA reimbursements will be paid to program participants on a quarterly basis after the Executive Director verifies rent payments for the previous quarter have been paid in full. First Year  125 SF X $15 = annual lease rate of $1,875; monthly lease rate of $156.25.  EDA would reimburse two-thirds of the gross rental rate ($10/SF) X 125 SF = annual reimbursement of $1,250; monthly reimbursement of $104.17.  Program participant would be responsible for the annual lease rate balance of $625; monthly lease rate balance of $52.08. Second Year  125 SF X $15 = annual lease rate of $1,875; monthly lease rate of $156.25.  EDA would reimburse one-third of the gross rental rate ($5/SF) X 125 SF = annual reimbursement of $625; monthly reimbursement of $52.08.  Program participant would be responsible for the annual lease rate balance of $1,250; monthly lease rate balance of $104.17. Third Year  125 SF X $15 = annual lease rate of $1,875; monthly lease rate of $156.25.  EDA would not reimburse lease rates during the third year.  Program participant would be responsible for the annual lease rate of $1,875; monthly lease rate of $156.25. Total EDA contribution = $1,875 Total program participant contribution = $3,750 Technology Village Business Plan – Phase IIPage 13 Example Scenario 3: Program participant has a total of two employees and leases a 400 square foot office in a private building at a gross rental rate of $18 per square foot. Because two-thirds of the gross lease rate is in excess of $12/SF, the EDA will reimburse at the rate of $12 per square foot. EDA reimbursements will be paid to program participants on a quarterly basis after the Executive Director verifies rent payments for the previous quarter have been paid in full. First Year  400 SF X $18 = annual lease rate of $7,200; monthly lease rate of $600.  EDA would reimburse $12 X 300 SF (150SF/employee) = annual reimbursement of $3,600; monthly reimbursement of $300.  Program participant would be responsible for the annual lease rate balance of $3,600; monthly lease rate balance of $300. Second Year  400 SF X $18 = annual lease rate of $7,200; monthly lease rate of $600.  EDA would reimburse $6 X 300 SF (150SF/employee) = annual reimbursement of $1,800; monthly reimbursement of $150.  Program participant would be responsible for the annual lease rate balance of $5,400; monthly lease rate balance of $450. Third Year  400 SF X $18 = annual lease rate of $7,200; monthly lease rate of $600.  EDA would not reimburse lease rates during the third year.  Program participant would be responsible for the annual lease rate of $7,200; monthly lease rate of $600. Total EDA contribution = $5,400 Total program participant contribution = $16,200 Example Scenario 4: Program participant has a total of two employees and leases a 300 square foot office in a private building at a gross rental rate of $15 per square foot. Because two-thirds of the gross lease rate is less than $12/SF, the EDA will reimburse two-thirds of the gross lease rate. EDA reimbursements will be paid to program participants on a quarterly basis after the Executive Director verifies rent payments for the previous quarter have been paid in full. First Year  300 SF X $15 = annual lease rate of $4,500; monthly lease rate of $375.  EDA would reimburse two-thirds of the gross rental rate ($10/SF) X 300 SF = annual reimbursement of $3,000; monthly reimbursement of $250.  Program participant would be responsible for the annual lease rate balance of $1,500; monthly lease rate balance of $125. Second Year  300 SF X $15 = annual lease rate of $4,500; monthly lease rate of $375.  EDA would reimburse one-third of the gross rental rate ($5/SF) X 300 SF = annual reimbursement of $1,500; monthly reimbursement of $125.  Program participant would be responsible for the annual lease rate balance of $3,000; monthly lease rate balance of $250. Third Year  300 SF X $15 = annual lease rate of $4,500; monthly lease rate of $375.  EDA would not reimburse lease rates during the third year.  Program participant would be responsible for the annual lease rate of $4,500; monthly lease rate of $375. Total EDA contribution = $4,500 Total program participant contribution = $9,000 Technology Village Business Plan – Phase IIPage 14