City funds requested for ‘incubator’ plan

Hillsboro Ventures Inc. outlined an initial three-year plan to “accelerate the success of innovative entrepreneurs” in the area, and asked the Hillsboro City Council, at its July 18 meeting, to designate taxpayer funding to support the new initiative.

In turn, city council wanted to know: Will the city and its citizens get their money’s worth?

HVI, an economic strategy HDC announced earlier this spring, is being spearheaded by the Hillsboro Development Corp. in consultation with the Innovation Center at Kansas State University.

The heart of the program is to develop a “business incubation center” that will provide new or existing businesses with services and resources that will help those businesses become financially successful.

Services could include anything from marketing assistance to accounting. Businesses can pay for these services through direct fees or by giving HVI equity in the businesses.

In addition to its connection with the Innovation Center, it plans to explore a relationship with the business department at Tabor College.

Mike Kleiber, HDC president, along with fellow officers Lyman Adams and Brad Bartel, presented a two-phase plan for the first year of operation.

The first phase would be to more fully develop the incubation-center concept and its relationship with KSU and Tabor, as well as determine the services it will offer.

The second phase will be to market the incubation center with the goal of having four service contracts by the end of Year 1. Another goal is to begin to identify venture capitalists to invest in the needs of those clients.

Kleiber said the hope is to be up and running by Jan 1.

The income goal for 2007 is $105,000, including an investment of $15,000 from HDC reserve funds, $25,000 from the city of Hillsboro through the 1 mill levy designated for its Industrial Fund, $60,000 in private pledges and $5,000 in consulting income.

The budget goal for is projected at $120,000 for 2008 and $135,000 for 2009-with the increases coming from growing consulting income. The other funding sources would contribute at the same level.

The goal of HVI would be to become financially self-sufficient, Kleiber said.

Operational expenses are projected to be just under the projected income. Kleiber said the enterprise will require the attention of a full-time staff person to be successful.

Kleiber said HDC members have already demonstrated they will be “strong backers” of the project. Several have already made personal pledges toward the $60,000 goal.

Councilor Len Coryea identified several issues regarding the use of city funds. One issue was whether the HVI would be able to document its progress with measurable instruments.

Kleiber said HVI would be willing to submit monthly reports if the council wanted them. Also, because HDC members will be contributing to the enterprise, they would also insist on proof that their investment was paying off.

Coryea also expressed concern that HVI’s business clients, particularly new businesses, would not necessarily be required to locate in Hillsboro.

Kleiber said HVI would not take on every client that came its way, but would focus on those that would “fit” with Hillsboro. At the same time, HVI would not insist that clients locate in Hillsboro if that was not the best location for success.

Adams encouraged the council to look at the bigger objective-to bring wealth back into the community by generating income through the services HVI would be offering to all clients.

A third question which emerged was whether the 1 mill the city of Hillsboro had designated in 1965 for an Industrial Fund was restricted for use within the industrial park.

Later, it was clarified that Ordinance 537 does not limit the 1 mill to the industrial park, but for “creating a fund to be used in securing manufacturing institutions” for Hillsboro.

Mayor Delores Dalke said she liked the HVI plan for several reasons:

developers have done a thorough job of projecting expenses, which some economic-development initiatives fail to do.

HDC members are willing to invest personal funds toward its success rather than depending on taxpayer money. “They’re planning to use their own money to fund it, and not just somebody else’s,” she said.

the staff person will be focused on only one area-HVI agenda-and will be held accountable for what is accomplished.

The council did not take action on the proposal at this meeting, but will consider HVI’s funding request as part of its 2007 budget planning.

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