HomeMy WebLinkAboutResolutions - 1985.12.12 - 11337BY: PUBLIC SERVICES COMMITTE CHtUL L.-
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MISCELLANEOUS RESOLUTION #85379 December 12, 1985
IN RE: ECONOMIC DEVELOPMENT (7,R.(7“.IP - GRANT APPLICATION TO MICHIGAN
STATE DEPARTMENT OF
TO THE OAKLAND COUNTY BOARD OF CO....1 ...IS.STONERS
Mr. Chairperson,'Ladies and Gentlerner
d
.2-tate Department of
,DIan, has appropriat.
for up to five communities to develop business incubat
WHEREAS the County Executive s utilized ;3 -TPA (Title Ha) funds to retain Business
Incubator Consultants of Saginaw to uct a fe study as a basis for the State grant
application; and
WHEREAS the consultants have recommended the establishment of a business
incubator in Oakland County and the C.iord Co: Growth Alliance unanimously concurs. -
NOW THEREFORE BE IT RESOLVED that the Oakland .County Board of
Commissioners does hereby authorize submission of a grant application to the Michigan
State Department of Commerce for purposes of 'funding the development of a business
incubator center in Oakland County.
BE IT FURTHER RESOLVED that quarterly status reports will be provided to the
Public Services Committee.
Mr. Chairperson, on behalf of the Finance Committee, I move the adoption of the
foregoing resolution.
PUBLIC SERVICES COMMITTEE
PhilLi/j. Meag r, r.
Chairperson
Oakland County
Community Growth Alliance
PROPOSAL
FOR
BUSINESS INCUBATOR CENTER START-UP FUNDING
SUBMITTED
TO
GERI LARKIN
OFFICE OF NEW ENTERPRISE SERVICES (ONES)
HOLLISTER BUILDING
ROOM 212
106 WEST ALLEGAN
LANSING, MICHIGAN 48913
SUBMITTED
BY
COUNTY OF OAKLAND
EXECUTIVE OFFICE BUILDING
1200 N. TELEGRAPH ROAD
PONTIAC, MICHIGAN 48053
(313) 858-0732
PRIMARY CONTACT PERSON
JOSEPH JOACHIM
DIRECTOR
OAKLAND COUNTY ECONOMIC GROUP
Daniel T. purphy
County Executive
JosepliJoachim,/EXec. Director
Oakland&County
Community Growth Alliance
-
INTRODUCTION
Oakland County, on behalf o Community Growth Alliance,
isrequesting a grant of 100,000, under the Michigan Business
Incubation Act. Grant funds will be used for start-up costs
involved in implementing the Oakland Entrepreneurial Center, a
business incubator facility which will foster long term economic
growth with initial emphasis placed on the Southeast area of the
County. The Center is being supported by the governments of
Oakland County and the City of Ferndale, MI.
The Oakland Entrepreneurial Center will be the focus of a Job
Creation Network designed to foster entrepreneurship and assist,
promote and participate in the start-up and development of small
business enterprise. This network will have the following
essential components:
1. An Incubator Building to provide a supportive, entrepre-
neurial environment for new and emerging small busi-
nesses. This will include affordable office, light
manufacturing and laboratory space, and shared facil-
ities such as library, conference room, etc., on a
short term lease basis.
2. A support Service Network to provide a wide range of profes-
sional office, telephone, building management and many other
support services on a cost shared basis.
3. A Business Assistance Office to provide management and tech-
nical assistance to new and emerging small businesses. Al-
though it works primarily with businesses housed in the incu-
bator, this office is also available to assist other small
businesses in the area.
4. A Seed Capital Fund to provide high risk, low dollar invest-
ment capital, on an equity basis, to small businesses which
may not be eligible or ready for more traditional types of
financing. Like the Business Assistance office, its
services are available to businesses both within and outside
the incubator.
The Oakland Entrepreneurial Center will function as a catalyst to
relate the needs of small business to a variety of resr,7.•e7 and
facilities. It will help to initiate and promo rc .'1();--)--
ment by actively participating in new business start-up, aidin
the retention and expansion of existing business and industry,
and attracting new business.
The site selected to implement the Center is the former Ethyl
Corporation Research Complex located at 1600 West Eight Mile Road
in Ferndale, Michigan. This site offers the opportunity to de-
velop a unique business incubator complex. In addition to the
very large main building which will house the incubator, the land
includes seventeen smaller buildings which will be ideal second
stage, development sites for "graduating" tenants. There is also
approximately 10 acres of vacant land available for future devel-
opment of an adjacent industrial park.
Utilization of the Ethyl Complex as an incubator site is possible
through an outstanding example of the public and private sectors
working together. Ethyl Corporation has agreed to donate the
Research Complex, valued at over $2,500,000, to Oakland County
for use as a business incubator facility. (See Exhibit 1 on the
following page) In addition to providing the appropriate zoning
of the land for use as an incubator, some form of financial sup-
port is anticipated from the City of Ferndale.
The Oakland Entrepreneurial Center will be a multi-community,
countywide effort that will revitalize the immediate area and its
future investment concern. It will also provide a countywide
opportunity for entrepreneurial development. Financial support
will be realized from a broad base of both public entities and
private businesses. This project is an effective example of a
public-private partnership at its best.
SPONSORING ORGANIZATION AND GOVERNING BOARD
The initial sponsor of the Oakland Entrepreneurial Center is the
County of Oakland. The Oakland County Community Growth Alliance
is sponsoring the formation of a non-profit corporation to govern
and operate the Center. The Board of the governing corporation
initially consist of representatives from Oakland County,
the City of Ferndale and the Oakland County Community Growth
. A11 4 r ,--e. Board members will be representative of the financial,
bu-s, labor, educational and political sectors of the County.
POTENTIAL FOR JOB CREATION
Oakland County is geographically large with a great diversity in
population distribution and economic activity. Even though the
County is leading the State in new economic growth, it is
concentrated in only a few areas which have been relatively
undeveloped to date. This growth has taken place at the expense
of those areas which have provided the traditional economic base
of the County but which are now experiencing drastic economic
decline, high unemployment and loss of tax revenue.
Employment in Oakland County has changed dramatically over the
ten year period from 1974 to 1964. Growth in employment has been
primarily in the services sector, such as health and business.
In the top 15 growth industries the only manufacturing jobs
created were in rubber and miscellaneous plastic products. The
greatest economic decline has occurred in the communities of
Pontiac, Hazel Park, Oak Park, Ferndale, and Southern Madison
Heights. Construction of new industrial and commercial buildings
reached its lowest level in 1982 - 83. However, new growth is
beginning to occur in the industrial and commercial buildings
sector in the Novi, Waterford Township, Auburn Hills, Rochester
Hills, Farmington Hills, Southfield and Northern Madison Heights
areas of the county.
The trend of new jobs in the services sector and a shift of indus-
trial facilities to the above areas has left the cities of
Pontiac, Hazel Park, and Ferndale with decaying buildings, higher
unemployment rates, and a declining tax base. (See Exhibit 2, on
the following page, for areas of economic decline in Oakland
County.)
Estimated Jobs to be Created
The statistical analysis of information on incubators in opera-
tion since 1979 has now become broad enough to provide a fairly
reliable basis on which to extrapolate their job creation poten-
tial. Tenant businesses average 3.5 jobs created, not including
the founder(s), while in the incubator and 3.08 additional jobs
created after leaving.
EXHIBIT
LETTER OF INTENT
BETWEEN
OAKLAND COUNTY ECONOMIC DEVELOPMENT GROUP
1200 North Telegraph Road
Pontiac, Michigan 48052
and
ETHYL CORPORATION
P. O. Box 2189
Richmond, Virginia 23217
November 25, 1985
SUBJECT: Gift of property known as 1600 West Eight Mile Road,
Ferndale, Oakland County, Michigan
This Letter of Intent confirms the understandings between
the Oakland County Economic Development Group (OCEDG) and Ethyl
Corporation (EC) concerning a donation by EC of some 34 acres,
more or less, of land owned by EC and located in Oakland County,
Michigan, described in the Exhibit "A" attached hereto. The
donation will be made on an "as-is, where-is" basis; that is EC
makes no representations or warranties, either express or im-
plied, as to the land or the improvements there on or their
respective condition or fitness.
This donation is subject to the negotiation and execution
of a mutually acceptable definitive agreement and related deed
of gift. The donation is further conditioned upon the accep-
tance of the donation by the Oakland County Board of Commissioners
and completion of the donation on or before December 31, 1985.
OAKLAND COUNTY ECONOMIC
DEVELOPMENT GROUP ETHYL CORPORATION
By:
Mr. Joseph Joachim, Dir.
Date:
It is mutually acknowledged that the anticated use of the
donated property will be as a business incubator.
Each of the respective signatories hereto believes the
foregoing adequately summarizes the initial understanding of
the donation being contemplated.
a •
•EXHIBIT "A"
Description of Ferndale Property
1. Description as used on tax bills
Part of the W of the SE .1: of Sec. 33, T 1 N. R 1
containing 24.65 acres net, more or less, further described
as:
Beginning at a point on the center line of Pinecrest Drive,
being the W line of Sherborne Park Subdn., and 171 ft. N'ly
from the S line of said Sec. 33; thence S 88°44'40" W and
parallel with the S line of said section 792 ft. to a point;
thence N 1°29' W and parallel with the center line of Pine-
crest Drive 750 ft. to a point; thence S 88°44'40" W 449.29 ft.
more or less to a point on the E'ly line of Det royal Park
Subdn.; thence N 2 °03'35" W along the Ely line of said subdn.
417.06 ft. more or less to a point; thence N 88°44'40" E
1245.48 ft. more or less to the center line of Pinecrest Drive;
thence S 1°29' E along said center line 1167.02 ft. to the
point of beginning.
2. Legal description
Situate and being in the City of Ferndale, County of Oakland
and State of Michigan, described as follows, to-wit:
Part of the west 1/2 of the southeast 1/4 of section 33,
T.1 N., R.Il E., situated at the northwesterly corner of the
northerly line of Eight Mile Road extended and the center
line of Pinecrest Drive (Ridge Road), 65.00 feet wide.
Beginning at the southwest corner of the southeast 1/4 of
section 33, T.1 N., R.Il E.; thence N. 2° 03' 35" W, along
the north and south 1/4 line of said section 33, 171.00 feet
to a point on the northerly line of Eight Mile Road as widened
to 204.00 feet; thence along said northerly road line on a
course N. 88° 44' 40" E. 441.75 feet to a point, the last
mentioned point being one of the southwesterly corners, and
the place of beginning, of the parcel herein intended to be
described; thence N. 1 0 29' W. on a line 792.00 feet westerly
of (measured at right angles) and parallel to the center line
of Pinecrest Drive (Ridge Road) 750.00 feet to a point; thence
S 88 0 44' 40" W. 449.29 feet to a point on the westerly limits
of the City of Ferndale and upon the easterly boundary line of
Detroyal Park subdivision, as recorded in Liber 13 of Plats on
page 15, Oakland County Records; thence along said westerly
limits and said easterly boundary line on .a course N. 2 0 03' 35"
W. 417.06 feet to a point; thence N. 88° 44' 40" E. 1245.48 feet
to a point in the center line of Pinecrest Drive (Ridge Road),
which is 66.00 feet wide; thence along the center line of Pine-
crest Drive on a course S. 1 ° 29' E. 1167.02 feet to a point on
an easterly prolongation of the northerly line of Eight Mile
Road; thence along said easterly prolongation and along the
northerly line of Eight Mile Road on a course S. 88 0 44' 40" W.
792.00 feet to the place of beginning.
-- and --
EXHIBIT "A" (Continued)
A parcel of land being a part of the West 1/2 of the
Southeast 1/4 of Section 33, Town 1 North, Range 11 East,
City of Ferndale, Oakland County, Michigan, more particu-
larly described as:
Beginning at a point in the center line of Pinecrest
Drive (66 feet wide) said point being North 10 29' West
1,338.02 feet, measured along the center line of Pinecrest
Drive, from the South line of said Section 33; thence North
1 0 29' West, along the center line of Pinecrest Drive,
324.11 feet to a point; thence South 88° 44' 40" West,
parallel to the South line of said Section 33, 1,248.74
feet to a point on the East line of Detroyal Park
Subdivision of part of Section 33, Town 1 North, Range
11 East, according to the plat thereof as recorded in
Liber 13 of Plats, on page 15, Oakland County Records;
thence South 2° 03' 35" East, along the East line of said
Detroyal Park Subdivision, 324.14 feet to a point; thence
North 88° 44' 40" East, parallel to the South line of said
Section 33, 1,245.48 feet to the point of beginning, con-
taining 9.2791 acres of land, more or less.
orr
Exhibit 2
F Coots Morintrag
Based on a 50% occupancy rate for the first year (approximately
50 companies) and a 90% occupancy rate the second year (approxi-
mately 90 companies), there is ac tial for 315 New jobs to be
created in the first two years. This does not take into account
any turnover in tenants nor jobs created after graduation.
A more realistic estimate of total jobs created can be gained by
conservatively estimating a graduation rate of 10% of the tenants
each year for a total of 43 additional new jobs. This would mean
that a total of 358 new jobs could be created within two years as
a result establishing the Oakland Entrepreneurial Center.
THE BUSINESS INCUBATOR FACILITY
Description
The site selected for the Oakland Entrepreneurial Center is the
former Ethyl Corporation office and research complex located in
Ferndale at 1600 W. Eight Mile Road. The complex consists of 18
buildings, totaling 165,000 ft 2 , on more than 33 acres of land
zoned MXD (mixed use) specifically for the incubator facility.
(A summary description of the site is provided by Exhibit 3 on
the following page. A complete, detailed description of the com-
plex and all of its facilities is contained in Appendix I.)
As a result of extensive dialogue and negotiations between Oak-
land County and the Ethyl Corporation, the entire facility, in-
cluding all equipment, will be donated to Oakland County. Esti-
mated value of the property and facilities is $2,500,000.
The Ethyl Complex was the site of all research and development
activities of the Corporation for more than forty years. The
main building (117,000 ft 2 ) consists of a two story office com-
plex (33,700 ft 2 ) with three, one story, wings containing
offices, wet chemistry laboratories, machine shops and extensive
engine and chassis dynamometer facilities. Most of the buildings
were constructed in the early 1940s. Even though the Facility
has been vacant for nearly three years, all buildings, heating
systems and equipment have been well maintained and are in
excellent condition. The Complex has more than adequate parking
and is entirely surrounded by a 10 ft high security fence with a
guard controlled access gate.
EXHIBIT 3
formerly the Ethyl Corporation
Exce"- nt sh:s for Retail, C:Dmmercial, or
-ht Industrial re-development.
1600 W. 8 Mile Road, Ferndale
Main Building: 117,000 sq. ft. Office and Research space.
Frontage: 8 Mile Road, approximately 759 feet.
Size: 33.75 + acres.
Zoning: Proposed MXD, mixed uses.
Total all Buildings: 18 separate buildings totaling 165,000 sq. ft.
Power: 2,200 KVA.
Utilities: 8" water, 18" combined storm and sanitary sewer & 6" gas main.
X-Way Access: 2 miles to 1-75, 2-1/2 miles to Lodge Freeway.
Bus Routes: 8 Mile East and West, Livernois South.
Rehabilitation
The total cost to renovate the 7esearch Complex for
use as business incubator and industrial village site is esti-
mated not to exceed $1,000,000 or approximately $6.00 per ft 2 . A
team of Oakland County building engineers inspected the site in
detail and and found no major structural or mechanical problems.
Most of the renovation would involve repainting the interiors of
buildings and modifying the internal floor space to provide
small, light manufacturing space.
Except for initial repainting and slight refurbishing of the main
two story office structure, all renovation would be phased over a
two year period on an "as needed" basis to accommodate tenants as
they move in. Occupancy of the office space could begin within
one to months after project start with some light manufacturing,
laboratory and dynamometer operations beginning shortly there-
after. (A detailed schedule for renovation and occupancy is pre-
sented in Exhibit 4, on the following page.)
All of the buildings in the Complex are heated and air condi-
tioned. Heat can be supplied by either two small steam boilers,
used during moderately cold temperatures, or two large steam
boilers when temperatures are very cold. All boilers are nor-
mally gas fired but have the capability of burning fuel oil. All
heating and air conditioning can be regulated by zones. A review
of Ethyl Corporation's records of utility costs for the Complex
indicate an annual utility expense of $105,000 to $110,000 for
gas, electricity and water.
PROJECT FINANCING
As stated earlier, Ethyl Corporation has agreed to donate its
Research Complex as the site for the Oakland Entrepreneurial
Center. This immediately places the project in an equity
position position of holding real estate valued at a minimum of
$2,500,000.
Initial financing of the Center will be accomplished through an
interest free loan, of up to $1,000,000, from Oakland County.
Any funds borrowed under this arrangement will be repaid over a
ten year period. Some form of financial support is also antici-
pated from the City of Ferndale.
Building C
Building DAS
Total Cost
33,673
Dyno facility 29,959
Conference Rm 2,974
202,038
179,754
17,844
$399,636
6.00
6.00
6.00
Building A Office
Total Cost $218,022
FIRST YEAR REQUIREMENTS $617,658
Building DA Office 7,040 6.00
$84,522
$702,180
Exhibit IV
REHABILATION SCHEDULE OF ETHYL RESEARCH BUILDING
Building Type of space SQ FT Cost/SQ Tota
PHASE I (Month 1 to 6)
PHASE II (Month 6 to 12)
Building D Chemical Labs 13,687 6.00 82,122
Building B Machine/Auto 22,650 6.00 135,900
PHASE III (Month 12 to 24)
Building DAN Chemical Labs 7,047 6.00 42,282
42,240
Total Cost
TOTAL INCUBATOR BUILDING COST
PHASE IV (As needed)
Buildings E,H,F,G,M,AN,O,U,& UA only as tenants
and graduates sign leases $297,820
TOTAL ESTIMATED COST OVER 2 YEARS $1,000,000
A campaign is already underway to secure additional financing
from both the private and public sectors of Oakland County.
Several large corporations, headquartered in -the Cou- have
expressed interest in providing financial support. Oakland
County EDCs and LDCs are currently in the process of putting to-
gether their FY 86 budgets. A number of these budgets contain
stipulations for support of the Center.
The Oakland County PIC is making available $50,000, on a competi-
tive basis, for job creation activities in incubators in the
County. It is anticipated that some of these funds will be avail-
able to the Center.
MARKET
Desired Image
The Oakland Entrepreneurial Center will project an image of pro-
viding a supportive business environment unique in Oakland County.
Although prospective tenants can lease space anywhere, they will
be unable to find a comparable entrepreneurial environment with
packaged support services. Included in the package are low-cost
office, light manufacturing and laboratory space, professional
and affordable support services, access to professional business
assistance and a sincere commitment to understanding the problems
of small business. The Facility will be viewed as the alterna-
tive to operating out of one's garage, basement, car or not going
into business at all. It will be in business to help businesses.
Target Markets
The market for the Oakland Entrepreneurial Center is segmented by
location preference, business size and business type. Each is
described more fully below.
Location Preference - The Facility will target start-up and
emerging businesses which have a good reason to be cost
effective in serving the Ferndale, Oak-Park and Hazel Park
areas of Southern Oakland County. Such businesses might
include business associations, new attorneys and account-
ants, psychological firms, financial planners, consultants,
technology based and research oriented firms, security firms
and janitorial service firms.
Business Size - One priority will be to identify small bus!-
messes which have space requirements An the 150•to 1,177 ft 2
range. These will primarily be -ta-t-up and emeryi71
panics not capable of acquiring sp -ae in the current rental
market. The Incubator Facility will not actively seek busi-
nesses capable of leasing space and services from current
landlords and service providers. It will not actively com-
pete with traditional real estate companies.
Business Type - The business incubator concept is not de-
signed for all businesses. To more effectively market the
facility, it will be necessary to target specific types of
business. The design and technical facilities provided by
the complex will tend to attract technology based businesses.
The ideal business will have a need for the support and com-
plete service environment provided by the complex. Such
businesses would include;
Research & Development
Chemical Technology
High-Tech Testing
Technical Training
Manufacturers Reps.
Computer Technology
Dynamometer Testing
Automotive Engineering
Technical Consultants
Technical Marketing
Recent changes in the automotive industry have created the need
for suppliers to be in close proximity to the final product manu-
facturer. This will help attract start-up firms and technology
based spin-offs from existing automotive related companies to the
general area. An incubator environment is ideal for such firms
to get started.
According to the April 15, 1985 edition of the Detroit Free
Press, Oakland County surpasses all other Michigan counties in
the number of high-tech firms with 40% of the State's total. An
analysis such market data reinforces the concept of an office/in-
dustrial complex to support the growing number of new and emerg-
ing technology based businesses in Oakland County. The lack of
affordable office space, industrial facilities and support ser-
vices has hampered economic revitalization and growth in the
Ferndale, Oak Park and Hazel Park communities to date.
Market Share
There is approximately 36,400,00 ft 2 of c.fce space ava'iable in
Oakland County at an average cost of $14.25 / ft 2 . Iustrial
space is going as high as $4.75 / ft 2 . The increase in demand
for industrial space in the 10,000 to 50,000 ft 2 range has driven
up the price dramatically. Laboratory space and dynamometer test-
ing facilities are not readily available at any price in Oakland
County or adjacent areas.
The Business incubator Facility would focus on the $2.50 to
$10.50 / ft 2 market where there is little or no space available.
The current space occupancy rate in the Oakland County market is
90 to 95%. To fill the Complex, 8 to 10% of the $2.50 to $10.50
market would have to be captured.
RENT AND SERVICES
The Oakland Entrepreneurial Center is designed to provide afford-
able office, light manufacturing and laboratory space to new and
emerging businesses. Rental rates will be at, or slightly below,
prevailing rates for similar types of space in Oakland County.
Rental rates will include the the cost of normal utilities,
security, janitorial services, receptionist, conference room and
general building maintenance. Tenants whose businesses involve
higher than normal utility costs, such as energy intensive
manufacturing operations, will be assessed additional fees to
cover those costs.
Operating experience of other incubators has shown that it is
best to seperate the cost of support services, such as secre-
tarial, phone answering, etc. from the rental rate. Since one of
the underlying principals of an incubator is to pay only for the
services you use, when you use them, it would be counter produc-
tive to have all tenants share the cost of all services avail-
able.
The following are examples of typical rental situations:
Office
200 ft 2 a $9.50
Furniture Rental (Optional)
Secretarial Package (Optional)
Monthly Cost
$159.00
35.00
100.00
Total $294.00
Manufacturing/Laboratory
1,000 ft 2 @ $4.00
Secretarial Package (Optional)
Total $434.00
Minimum Core Services to be Provided
The core services to be provided on a cost shared basis will
include:
$334.00
100.00
General Typing
Copy Service
Mailbox
Furniture Rental
Computer Time
Mailing List Service
Typewriter Rental
Computer Software Programs
Business Assistance Office
Word Processing
Phone Answering
Business Address
AV Equipment Rental
24 hr Telephone Dictation
Database Access
Bookeeping Service
The Business Assistance Office is designed to operate in conjunc-
tion with the Oakland Entrepreneurial Center and ultimately, a
seed capital fund. Its purpose is to provide practical and time-
ly advice, information, assistance and support to small busi-
nesses. In this way the Business Assistance Office becomes a key
component in the network for job creation. •
The first step in working with an entrepreneur or small business
is an overall evaluation to determine the nature and amount o2
assistance required. A decision is then made on the feasibi:
of establishing a cooperative working arrangement with the bu7-
mess. The Business Assistance Office is organized to provide
management and technical assistance to small businesses from a
variety of resources and facilities. The initial assistance is .
usually provided at no cost or obligation to the client.
If the results of the initial research and/or assistance indicate
the product or idea has market potential, or that the business
has growth potential, clients are free to pursue further develop-
ment on their own, without any residual obligation. However,
should the client and Business Assistance Office agree that the
potential for success would be optimized by a more formal working
relationship, a written agreement may be executed specifying the
assistance to be provided and the compensation expected from the
client.
Business assistance provided includes:
Business plan development
Financial Planning
Crisis analysis for small business management
Technical proposal development
Evaluation of new product ideas
Technology transfer agreements
Education and training programs
Identification of risk capital sources
The Business Assistance Office also serves as an interface in
setting up cooperation between small business and the college or
university sector. Technical information, access to specific
laboratory facilities, consulting assistance and evaluation of
new product ideas are some of the services which can be provided.
Initial arrangements have already been made with the following
colleges and universities for business assistance:
Oakland University
Oakland County Community College
Walsh College of Accountancy & Business
Lawrence Institute of Technology
Letters of support are included in the Appendix.
• Seed Capital Fund
It is the in -3 of the Oakland Entrepreneurial Center to assist
in the establishment of a seed capital fund and posssibly partici-
pate in its operation. The seed capital fund will be designed to
assist high growth potential firms to a point were they become
viable candidates for other forms of financing. One of the keys
to operating a profitable seed capital fund is to keep management
costs to a minimum and optimize the success rate of those
businesses supported. This can be partially achieved by
operating the fund in cooperation with the Center and Business
Assistance Office.
A seed capital fund offers a mechanism for accelerating the in-
fusion of capital from public and private sources into business
growth and new job creation by assisting and encouraging start-up
entrepreneurs. The overall objective of the fund is to:
Help bring new technology oriented businesses to the stage
Where they are qualified candidates for venture capital or
other second stage financing.
Assist businesses in reaching a state of high earnings more
rapidly. These earnings can then provide an acceptable
return on the fund investment or make the business a candi-
date for sale or merger.
Add value to technology when transfer is most appropriate
for further development.
STAFFING REQUIREMENTS
The Oakland Entrepreneurial Center will initially require four
full time persons to begin operation. They include:
Center Manager
Administrative Assistant
Licensed Boiler Operator and Facility Supervisor
General Maintenance Person
Salaries for the above are included in the Cash Flow Projection
which iF a part of this Grant Proposal.
Since the secretarial services, Business Assistance Office and
other services will be operated as seperate cost centers, their
personnel costs are not included as a part of this proposal.
SUMMARY
The Oakland Entrepreneurial Center and Job Creation Network is an
example of a public-private partnership at its best. It will
become an important component of the overall, long-range economic
development strategy of Oakland County by providing critical
support to new and emerging small business both within and
outside the Center.
A Cash Flow Projection of income and expense for the first three
years of operation of the Oakland Entrepreneurial Center is pre-
sented on the following page.
70,000
18,000
43,875
80,000
3.000
1,000
6,000
221,875
(182,338)
100,000
500,000
(15,000)
A00,000)
OAKLAND ENTREPRENEURIAL CENTER
CASH FLOW PROJECTIONS
1st !7;ix 2nd Six Summary Second Third
Months Months 1st Year Year Year _
BEGINNING CASH BALANCE -0- 2,612 -0- 44,550 2,038
Income
Projected Tenant OccupaLcy Rate 10% 50% 75% 90%
Rental Income
@ 6.75/sq.ft./yr (B1cJided Rate, 39,487 197,438 236,925 592,313 710,775
$9.50 offfice, $4.0 mfg.)
TOTAL 39,487 197,438 236,925 592,313 710,775
Exaenses
Building Management
& Operating Personnel
Advertising & Marketing
Building Lease @ .75/sqc ft.
.Utilities, Maintenance, •Ins.,
maint. Reserve, etc.
Janitorial Service
Telephone Service
Loan Repayment
Legal & Accounting Expense
TOTAL
NET CASH FROM (USED FOR) (ThERATIONS
State of Michigan Grant
Other Contributions & investment
Loan Funds - Oakland County
Start-up Expense
Telephone Equipment &
Building Renovation & 1,trtodeling
ENDING CASH BALANCE 2,612
70,000
12,000
43,875
80,000
14,625
1,000
4,000
225,500
(28,062)
200,000
100,000
(10,000)
(220,000)
44,550
140,000
30,000
87,750
160,000
17,625
2,000
10,000
447,375
(210,450)
100,000
200,000
600,000
(25,000)
(620,000)
44,550
154,000 169,000
25,000 20,000
87,750 87,750
172,000 189,000
43,875 53,650
1,200 1,200
60,000 60,000
6,000 6,000
549,825 385,600
42,498 125,175
(85,000)
127,213 2,038
APPENDIX
I. Detailed Description of Ethyl Research Complex
II. Letters of Support
APP
ETHYL RESEARCH BUILDING
Building Descriptions for Incubator
"A" Building
Two story office building including offices, cafeteria, library,
and machine shop. Asphalt tile floors, Houserman partitions,
steel windows, accoustical ceilings, fluorescent ceiling hung
fixtures, air conditioning. There is no elevator. The library
has high accoustical ceilings and panelled walls.
TOTAL AREA: 33,673 Square Feet
"B" Building
One story brick industrial building. Contains some offices, a
machine shop tool crib, and a garage area. Offices have accousti-
cal ceilings, plaster walls, asphalt tile floors, and steel win-
dows. The tool crib serves the machine shop in Building A. There
is a locker room. The garage section is similar in size to the
office area has a concrete floor, high ceiling, steel frame with
trusses and steel deck, four overhead doors and shopoffice.
TOTAL AREA: 22,650 Square Feet
"C" Building
One story brick industrial building with offices and dynamometer
area, floors are tile. There are accoustical walls and ceilings.
A fuel testing room, hot and cold testing rooms, and other test-
ing rooms line both sides of the hall.
TOTAL AREA: 29,959 Square Feet
"D" Building
One story brick industrial and office building with one-half
office and one-half laboratories. There are asphalt tile floors,
accoustical ceilings in offices. The chemical labs have asphalt
tile floors, open ceilings with exposed steel and block walls.
TOTAL AREA: 13,687 Square Feet
-1-
"BA" Building
One story brick industrial building
TOTAL AREA: 2,006 Square Feet
"DAN" Building
One story chemical laboratory building with block walls, asphalt
tile floors, steel windows and individual air conditioning units.
There is a sprinkler system. There are make-up air facilities
for labs.
Considerable built-in equipment in this building with lab tables
and other equipment.
The make-up air facilities are elaborate. A boiler room in this
building serves buildings "DA" and "DAN" with hot water heat.
TOTAL AREA: 7,047 Square Feet
"DA" Building
Two story brick office building. Asphalt tile floors, high ceil-
ings with hanging fluorescent fixtures, exposed pipes near ceil-
ing, block walls, some Houserman partions on second floor. There
are air conditioning units in the hall (not central air). The
windows are steel.
TOTAL AREA: 7,040 Square Feet
"DAS" Building
One story office type building with asphalt floors, block walls,
high ceilings with pipes exposed, and steel windows. The audito-
rium has a very high ceiling and a projection booth. Thereare
restrooms for men and women.
TOTAL AREA: 2,974 Square Feet
SUMMARY
The incubator will consist of 117,000 square feet of space on the
front of the 33 acre property. The remaining properties contain-
ing over 57,000 square feet will be used to house graduates and
tenants who desire their own building.
-2-
ETHYL RESEARCH BUILDING COMPLE
GRAPHIC LAYOUT OF ALL BUILDINGS--No Scale
Total Area Of All Buildings & Sheds 1,4,901
Numbers Indicate Gross Area
APPENDIX II
Letters of Support
Lawres •:e
MSTITUTE OF ITCH' D_OGY
Office of the President
21000
Southfield,
Teiep hone (313) 356-C2•70
November 26, 1985
Mr. Philip J. Meagher, Jr.
Chairman, The Ccmunity Growth Alliance
c/o Oakland County Economic Development Group
Executive Office Building
1200 N. Telegraph Road
Pontiac, MI 48053
Dear Phil:
Lawrence Institute of Technology, in support of the proposed Incubator
Center to be established within Oakland County, is prepared to
offer assistance in the form of technical consultation with the
prospective client(s) who would occupy such a Center.
It would seem that, depending upon the nature of the Incubator Center
client(s), we could provide a mechanism by which they could seek guidance
and advice through the appropriate LIT School, i.e., Engineering, Manage-
ment, Architecture, etc. Since many of our faculty are currently active
in their fields while they teach, they are extremely well qualified to
offer this type of service.
The LIT Library, Computer Center, and other specialized activities are
available to provide high technology services which might be essential for
success. For example, the LIT Computer Center is recognized as perhaps the
most expert of all computer centers in the State of Michigan in the applicati
of the advanced Digital Equipment Corporation "VAX" computers to the
use of complex engineering programs such as the -famous RS/1 software of
the Massachusetts-based consulting firm of Bolt, Beranek and Newman.
In other words, we are prepared to provide consulting services from across
this entire College to assist in the incubation process.
Further details are available as needed.
Sincerely,
Dr. Richard E. Marburger
President
School of Architecture • School of Arts and Science • School of Management _
School of Engineering • School for Associate Studies
Accredited by the Norm h Central Association 01 Colleges and Schools Member 01 the Asaociation ollredepeoctent Colleges and Universities of Michigan
OAKLAND UNIVERSITY R oc he s te r. Michkzn
Area 313 37O-2O
OFFICE OF THE SENIOR VICE PRESIDENT
FOR UNIVERSITY AFFAIRS A ND PROVOST
November 26, 1985
Mr. Philip J. Meagher
President
Oakland County Community Growth Alliance
1200 North Telegraph Road
Pontiac, MI 48053
Dear Phil:
Oakland University supports the "Incubator Proposal" for Oakland County.
As a public institution involved in economic development and technology
transfer, we stand ready to provide educational support for incubators in
Oakland County.
We believe these are areas that we can help tenants using incubator space;
namely,
Library Facilities
Student/faculty classroom projects to assist tenants in market
research, etc.
Lab Facilities - when available in the engineering and chemistry areas
Retired Executive Support - advising and teaching
Computer Software/Support - programs in the public domain, etc.
We are anxiously awaiting approval for the County's first incubator and look
forward to additional ones in the future.
Regards,
r 1\
/-1/` /
Frank P. Cardimen, Jr.
Director
Center for Economic Development
and Corporate Services
FPC:gs
Oakland Community Collecx Bs:
Bee Adminis cu
"?"- ivke Road P.O.
crr Hills, Michigan 48303-0512
Tr: )pore: (313)540-1534
November 26, 1985
ute
Mr. Teffery A. Kaczmarek
Manager, Business Development
01,-.1and County Economic Development
1200 North Telegraph Road
Pontiac, 2,11 48053
Dear Jeff:
Oakland Community College has five campus sites; located strategically for
convenient access from any part of Oakland County. The proposed Business Incubator
Center could benefit from the .numerous services and the expertise that is available
at the College.
Oakland Community College has a staff of technical and business instructors as
well as Paraprofessionals that could assist business. Facilities at the College that
would be of assistance to businesses include a Learning Resource Center for training,
chemistry and biology laboratories, and a comprehensive curricula — liberal arts,
allied health, al:Tiled technology, and business.
The Business Incusbator Center's ready access to the many services and the expertise
Oakland Conn nlunity College has will provide a much needed support system.
The Business and Professional Institute of OCC provides customized programming
to meet the specific needs of a business. Attached is a brochure describing these
services.
For additional information, please call 540-1534.
Since rely,
Dr. Carol F. Stencel, Dean
Business & Professional Institute and Development
C ITS
Attachment
of , cy and Business Administration
-• --is Road
P.O. Box 7006
Troy, Michigan 48007-7006
313/689-8282
WALSH COLLECT CONTRIBUTIONS TO INCUBATOR CE -ATER
Walsh's contribution to OC Incubator would primarily be in human
and educational resources. The following represent possible
options, although none of the alternatives may be instituted without
appropriate authority:
1) Consulting Services
A) Walsh Faculty as consultants
B) Walsh CPE Faculty as consultants
C) Walsh student consultants (under SBA - type progra7)
2) Seminars
A) CPE seminars
B) Courses for Incubator members
C) Consortiums, round tables, etc.
3) Administrative Services
A) Student CO-OPS
ea'
Michael F. Cameron
Vice President November 19, 1985
Jeffrey A. Kaczmarek
Secretary
C. Hugh Dohany
Treasurer
(313) 858-0732
Executive Office Building • 1200 North Telegraph Road • Pontiac, Michigan • 48053
gincere
4r #1,1 vak‘e 614.
lp
4.
Linda J. Russell, C.P.A.
LDC Chairperson
.......
cz, 1 Z ---!opment Cor.ir
Oaklard Cnunty, Michigan
Linda J. Russell
Chairperson
Martin W. Hollander
President
Mr. Philip J. Meagher, Jr.
Chairperson
Oakland County Community Growth Alliance
1200 North Telegraph Road
Pontiac, Michigan 48053
Dear Mr. Meagher:
At today's meeting of the Oakland County Local Development Company (LDC),
a unamimous resolution of support for the proposed Oakland County Business
Incubator Facility was passed.
The LDC's primary motivation is the creation of new private sector jobs
via the stimulation of small business development. Our small business
loan program is directed to this end and we feel that the proposed Business
Incubator Facility will contribute greatly to this job creation and small
business support objective.
With this in mind, the following resolution was adopted by the LDC Board
of Trustees on November 19, 1985:
"Moved by Robert Olsen, supported by Peter Christiano,
that the Oakland County Local Development Company fully
endorses the concept of a Business Incubator Facility
as described, and will support the Oakland County
Community Growth Alliance and County of Oakland in the
establishment of this facility, and furthermore will
assist clients of the Business Incubator Facility in
financial counseling and in obtaining small business
loans where appropriate." Motion carried unanimously.
We look forward to working with you on this exciting project.
REPORT TO PUBLIC SERVICES COMMITTEE
BY: FINANCE COMMITTEE, DR. G. WILLIAM CADDELL, CHAIRPERSON
IN RE: ECONOMIC DEVELOPMENT GROUP - GRANT APPLICATION TO MICHIGAN STATE
DEPARTMENT OF COMMERCE
The Finance Committee has reviewed the concept for the proposed grant
application and finds:
1) The Michigan State Department of Commerce has appropriated $250,000
for a pilot grants program for up to five communities to develop
business incubator centers.
2) To foster long term economic growth in the area, the Oakland County
Community Growth Alliance recommends the establishment of an incubator
center(s)-in Oakland County.
3) Although small business has been the backbone of the recent economic
recovery, starting a small business is a high risk proposition;
approximately 50% of small business starts fail within the first year
and 80% no longer exist at the end of five years. Current statistics
indicate a success rate of over 80% for small businesses developing
through incubators.
41 The incubator facility will be the focus of a Job Creation Network
designed to foster entrepreneurship and assist, promote and participate
in the start-up and development of small business enterprise. This
Network has four essential components:
a. An Incubator Building to provide a supportive, entrepreneurial en-
vironment for new and emerging small businesses, including affordable
office, light manufacturing and laboratory space, and shared facili-
ties such as library, conference room, etc.,
b. A Support Network to provide a wide range of professional office,
telephone, building management and many other support services paid
for by the tenants on an as needed basis,
c. A Cooperation Office to provide management and technical assistance
to new and emerging small businesses,
d. -A Seed Capital Fund to provide high risk, low dollar investment capital,
n•n
on an equity basis, to small businesses which may not be eligible or
ready for more traditional types of financing.
5) Grant funds may be used by recipients to cover initial costs
of establishing an incubator center, i.e., architectual design
expenses, up-front rehabilitation costs, development staff
expenses, etc.
6) Grant applications must be submitted by November 29, 1985 and
the grant period begins January 1, 1986.
7) The grant funds will be used to supplement federal, county and
local funds, as well as, private capital to finance the incubator
project. Details are being developed and will be presented at
the acceptance stage of the grant process.
Mr. Chairperson, on behalf of the Finance Committee, I move the acceptance
of the foregoing report, and referral of the information contained therein to
the Public Services Committee, in accordance with Miscell'aneous Resolution #8145,
Revised Federal and State Grant Application procedures.
FINANCE COMMITTEE
#8 5379 December 12, 1985
12th day of Dec 19 85
. ALLEN
County —Flerk/Register of Deeds
Moved by Lanni supported by McPherson the resolution be adopted.
AYES: R. Kuhn, S. Kuhn, Lanni, Law, McConnell, McPherson, Moffitt, Moore,
Nelson, Olsen, Page, Perinoff, Pernick, Price, Rewold, Skarritt, Webb, Wilcox, Caddell,
Calandro, Doyon, Fortino, Gosling, Hobart. (24)
NAYS: None. (0)
A sufficient majority having voted therefor, the resolution was adopted.
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, Lynn D. Allen, Clerk of the County of Oakland and having a seal,
do hereby certify that I have compared the annexed copy of
Miscellaneous Resolution adopted by the Oakland County Board of Commissioners
at their meeting held on December 12, 1985.
with the orginial record thereof now remaining in my office, and
that it is a true and correct transcript therefrom, and of the
whole thereof.
In Testimony Whereof, I have hereunto set my hand and affixed the
seal of said County at Pontiac, Michigan
this