The James City County Business Incubator could soon become a regional effort to grow businesses and keep them in the Historic Triangle.
The economic development authorities of James City County, York County and the city of Williamsburg have adopted memorandums of understanding to jointly fund and participate in the business incubator, which James City County opened in 2007. On Tuesday, the York County Board of Supervisors became the first of the three governing boards to approve the plan.
The economic development authorities also want to jointly govern the existing incubator, appointing two members from each EDA to its board. All three EDAs would have equal access to the incubator’s clients, with the hope that when the clients graduate from the incubator, they will feel supported to set up their businesses in one of the three localities.
The authorities would also split the costs to run the incubator, which is located at 5300 Palmer Lane in James City County. The incubator’s annual budget is $103,500, which includes a $70,000 management fee paid to the College of William & Mary and an annual rent of $33,500, which is paid to James City County.
W&M’s Technology and Business Center partnered with James City’s EDA to manage the incubator in 2010; its contract will expire in 2013, but York County Economic Development Director Jim Noel said he fully expects that contract will be renewed.
Businesses accepted into the incubator are expected to enter three-year leases, but the leases can be negotiated to be shorter or longer. A business “graduates” when its lease term expires or if it chooses to relocate earlier. Graduated businesses must locate in the Historic Triangle for at least five years or will have to repay all or a portion of the subsidized rent and other costs associated with their time in the incubator.
The authorities hope to funnel rental income and some tax revenues back into the incubator to ensure its financial stability. They propose the first $10,000 in rents collected in any fiscal year be divided equally among the three authorities, 50 percent of funds received in excess of that $10,000 be applied to the management fee and any balance be split three ways.
The EDAs are also asking their governing bodies to let the revenue collected from graduated businesses’ Business, Professional and Occupation License (BPOL) taxes, local sales taxes, taxes on machinery and tools and other business personal property be allocated to EDAs for a period no longer than five years. The funds would then go back into the incubator.
If the full amount of the tax revenue collected isn’t needed to fund the cost of the incubator, the localities will be able to reduce the amount of money allocated to the EDA for that purpose.
In his presentation to the York board, Noel said there has been a paradigm shift in economic development since the recession began in 2008, with a new focus on growing small businesses and helping entrepreneurs. He said the revenue-sharing piece would allow the EDA to “make this self-sustainable.” In response to a question from member Sheila Noll about the success rate of businesses from the incubator, Noel said success has been moderate but he believes incubators are “the way of the future.”
“An incubator is a valuable tool to facilitate development. It’s also very cost-effective and links us even closer to the college,” Noel told WY Daily earlier this year. “That’s really important, because colleges and universities are absolutely the economic generators and where entrepreneurs are coming from.”
Joining the incubator gives York County and Williamsburg new opportunities to market their locations to entrepreneurs. “By being a funding partner, it gives me access to extol the virtues of York County,” Noel said. “From a marketing standpoint, I can say to businesses, you can come here and we have an incubator that you could utilize. It becomes another arrow in my quiver.”
For Williamsburg, it provides another way to support small businesses, which has been a focus of its EDA in recent years; the Williamsburg EDA has also created e-commerce site development grants and supported the creation of the Arts District, which provides incentives for creative professionals to locate their businesses in the area near the intersection of Monticello Road and Richmond Road.
“I truly believe small businesses are the backbone of the economy,” said Monty Mason, chair of the Williamsburg EDA, last week. He said the incubator will allow the city to give more support to local business owners.
From James City County’s standpoint, banding together with York and Williamsburg can only make the incubator grow more successful. “We’re very interested in working with the city and county to make it an even better approach. It’s a good opportunity for all of us,” said Russ Seymour, economic development director for James City. “From a regional standpoint, this made a lot of sense. This is a time we’re seeing more people start businesses, including retirees and college students. Why not now?”
The JCC business incubator was launched in 2007 under the management of the Hampton Roads Technology Council in an effort to boost technology business in the region; HRTC also operates an incubator in Hampton. In 2010, HRTC encouraged James City County to make its incubator inclusive of other types of businesses, and the county entered the new management contract with W&M.
The incubator is a 2,260-square-foot office featuring low-cost office space, common areas, a conference room, a kitchen, restrooms, maintenance services and unreserved parking. The offices have high-speed Internet access, audio-visual equipment and a copier and printer. Its partnership with W&M affords entrepreneurs chances to get business advice from professors and students, along with pro bono mentorship from advertising firms, lawyers and other experts.
In the past two years, the incubator has graduated three businesses and has four in the incubator currently, Seymour said. Two of the recent graduated businesses stayed in James City County.
Incubator graduates include Breathe Healthy, a locally owned manufacturer of washable masks made of moisture-wicking fabric. The product got its first big break when Ace Peninsula Hardware on Richmond Road ordered the masks; in 2011, Saudi Arabia-based TamayzMedical signed a distribution agreement with Breathe Healthy.
Another graduate, Phenom Technologies, Inc., received a $100,000 award from NASA through its Small Business Technology Transfer Program in 2011. The company aims to commercialize new technology related to hydrogen energy and fuel cell technology. The company was founded by two W&M graduate students.
With York County’s stamp of approval, the plan next will be presented to the James City County Board of Supervisors on Dec. 11 and to the City Council on Dec. 13.
