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August 9, 2013

3 Warrenton sites studied for business incubator

Having a university involved strengthens the project. It gives George Mason a footprint here and serves as a symbol of our seriousness about business. It sends a message to the businesses inside and outside the community.
— Miles Friedman, county economic development director
Business accelerator
> Poll: Do you support potential county funding? Click here to vote.

• What: A center with inexpensive office space, meeting/training rooms, equipment and technical support to help startups and small businesses grow and “graduate” to their own offices.

• Where: At least 5,000 square feet on or near Main Street in Warrenton.

• Partners: County government, George Mason University and possibly chambers of commerce.

• Operating costs: Estimated $123,430 in first year, rising to $158,240, when it would generate surplus revenue.

• Director: Mason Enterprise Center employee, earning $70,000 salary, included in operating costs.

• Up-front costs: Estimated at $63,500 for furniture, AV equipment, phones, network equipment, etc. Excludes real estate.

• Real estate: Options include renting at $88,000 a year, buying/renovating for about $1 million and building at $3 million or more.

• Decision: Rests with board of supervisors, which soon will consider real estate options in greater depth.

• Other centers: Mason has business incubators in Fairfax, Leesburg, Prince William and Springfield.

• Website: http://www.masonenterprisecenter.org
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Editor
Fauquier’s supervisors this week expressed enthusiastic but guarded support for creation of a business incubator/accelerator that could represent a multimillion-dollar investment.

Economic Development Director Miles Friedman outlined three options for housing the center, which the county would operate in cooperation with George Mason University.

The supervisors in June toured a similar center in downtown Leesburg.

“We call it an accelerator . . . because we’re talking about small, existing businesses,” Mr. Friedman told the board Thursday afternoon.

In downtown Warrenton, the accelerator would provide inexpensive leased office space and technical support from the Mason Enterprise Center to help young companies grow. Eighty-four percent of such businesses “graduate” from Mason’s incubation centers around Northern Virginia and move to their own offices, Mr. Friedman explained.

First-year operating costs would total $123,000 versus revenue of $86,000, according to the economic development director. It would require a subsidy from county government and/or other funding sources.

But, by the third year the center would generate an operating “profit” of $24,500 with revenue of $182,800, he said.

Those projections, however, exclude the cost of the space — whether the county owns or leases it — and furniture and equipment. “Up-front costs” would total an estimated $63,500.

At the supervisors’ request, Mr. Friedman on Thursday presented three options for housing the center in Warrenton:

• Leasing 5,200 square feet in the large office building at 70 Main St.

That space would cost $17 per square foot or $88,400 annually. It also would need some renovation, at the tenant’s expense.

• Buying the 6,600-square-foot “Mural Building” at 25 S. Fourth St.

That two-story, bank-owned building has an asking price of $1 million. But, the county probably could buy it for significantly less.

Still, the building would need perhaps $200,000 in renovations, including an elevator and a new rear entrance, facing the public parking lot on South Fifth Street.

• Building at least 10,000 square feet — in two or three stories — on county-owned land at 24 Pelham St.

Modular buildings house the Cooperative Extension Service there. A new structure might include the extension and county agricultural development offices, along with the accelerator and Fauquier’s economic development office.

With parking and site development, a new building probably would cost at least $3 million, County Administrator Paul McCulla estimated.

In that case, the county would borrow funds for the project, Mr. McCulla said. With a less expensive option, such as the “Mural Building,” the county might fund the project with cash reserves, he said.

County officials could have as much as $2.5 million in cash available by the end of September, when they finish reconciling the books for fiscal 2013, which ended June 30.

“I like the concept,” Supervisor Peter Schwartz (Marshall District) said. “But, I was hoping to see a pro forma (on total costs). I don’t even mind acquiring a building.”

He wants to make sure that the county wouldn’t lose money if the center failed to meet expectations and closed, Mr. Schwartz said.

“I think it’s a great presentation, but it all comes down to dollars and cents,” Supervisor Chester Stribling (Lee District) said. “We want to be careful.”

The three other supervisors agreed. They all support the concept, which includes a full-time center director from the Mason Enterprise Institute, at an estimated $70,000 salary.

But, the supervisors have cut staffing and departmental budgets over the last five years, because of economic conditions.

As a group, they support increased economic development efforts and praise the work Mr. Friedman has done since his hiring earlier this year.

They want more details before committing to fund the accelerator/incubator.

The Fauquier County Chamber of Commerce and the Greater Warrenton Chamber of Commerce have endorsed the project. And, the center might house a chamber office, Mr. Friedman said.

“Having a university involved strengthens the project,” Mr. Friedman said. “It gives George Mason a footprint here and serves as a symbol of our seriousness about business. It sends a message to the businesses inside and outside the community . . . .

“If you get George Mason out here . . . they will offer business assistance to any business in the community.”

Business accelerators affiliated with universities have the highest success rates, Mr. McCulla said, citing a Syracuse University study.

“George Mason has a community focus,” offering fellowships, internships and access to a range of technical support for businesses, Mason Enterprise Center Managing Director Keith Sergerson told the board.

The supervisors asked Mr. Friedman to develop more detailed financial information for each of the real estate options, which the board plans to discuss in a closed session. Virginia’s open government law allows secrecy for consideration of real estate deals, such as the county’s potential purchase of the “Mural Building.”

Mr. Friedman explained that he considered potential locations beyond the three options presented Thursday. But, based on the Leesburg model, he believes the incubator/accelerator should be near Warrenton’s Main Street. That would allow easy access to restaurants and government agencies.

“I’m very supportive of this,” Supervisor Chris Granger (Center District) said. “The Leesburg building on the Pelham Street site would be almost perfect to me.”

Mr. Granger expressed concern about “not outgrowing a facility and filling it up with county departments.”

While renting space or buying the existing building would allow the center to open relatively soon, construction of a new structure probably would take a couple of years. The county would need Town of Warrenton approval, including that of the Architectural Review Board.

The county in the early 1990s purchased 2.4 acres that includes the extension service office site. Near the Warrenton Cemetery, that parcel has frontage on Chestnut, Lee, Pelham and Waterloo streets.

Former Sheriff Joe Higgs about 15 years ago proposed a large county detention center across West Lee Street, and the county spent hundreds of thousands of dollars to develop architectural plans — without consulting town officials.

The ARB objected to the proposed jail’s scale and denied a certificate of appropriateness, required for a building permit in the town historic district. On appeal, the town council upheld the ARB decision. The jail plan fizzled.

Approval for a new office building on Pelham Street stands a better chance of winning town approval.

Town officials probably would oppose construction of an office building at Chestnut and Waterloo streets — the parcel’s largest open area, Mr. McCulla told the supervisors. Building there would encroach on a residential area, he said.

The supervisors seem determined to move forward with an incubator/accelerator, if the financial terms make sense to them.

“I’m delighted,” Chairman Holder Trumbo (Scott District) told Mr. Friedman. “This is exactly what I wanted you to be doing . . . . I think we’re all anxious to see this move forward.”
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RGLJA · August 12, 2013 at 2:18 pm
The benefits of government sponsored business incubators are vastly over-rated. The frequently cited 1997 study was conducted during the height of the dotcom boom. Since then, the record then has been terrible, or mixed at best.
More government spending of taxpayer dollars on facilities and consultants is not what business needs. How well did all that Stimulus spending work out? Solyndra? GreenTechAutomotive? This kind of government interference in the market has been a failure at the federal level and there is no reason to believe it will work any better in Fauquier county.
If government really wants to encourage small businesses there are many ways to help such as reducing the burdens on business e.g., unnecessary regulation, bureaucracy, and excessive taxes.
In any case, our county government should not need be directly involved in the operation of small businesses or advising businesses, or building facilities for a particular set of businesses. That's an invitation for the kind of corruption we already have at the national level. Our citizens do not need to be taxed even further so that our county government can directly subsidize a few favored businesses. It will not be done fairly, it will distort natural market competition, it will inevitably lead to politicization of the subsidized businesses, and it will almost certainly waste more money than can ever be recovered in promised future tax revenues. Instead we should be trying to build a business friendly environment so that good, healthy businesses will want to move to Fauquier County and thrive here. Subsidized office space and "advisors" are not going to attract that kind of business at all.
Freedom warrior · August 9, 2013 at 11:27 pm
No, this is yet another encroachment of government into private affairs. We need to STOP THE NANNY GOVERNMENT!!! Start with farm subsidies at all levels of government. Farmers don't need government for anything. Hands off our pie and pig postcards! Disbanding the AG development office should be the first step to farm freedom in fauquier. Government GET OFF OUR LAND.

FITZGIBBONS FOR SENATE 2014!
Uh....No · August 9, 2013 at 10:33 am
Would the Board not have more funds for this local business support venture if it had not spent money on the trips to China? Uh....yes perhaps?
Mr. Trumbo or anyone else on the County Board of Supervisors, exactly how much taxpayer money did you spend on those China trips?? I think your taxpayers would like to know and this would be the second public request.
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