Business Incubator Background
The City’s Small Business Incubator Buildings were built in 1985 with a $625,000 grant from the Economic Development Administration of the U. S. Department of Commerce. The original grant was intended for disaster-affected businesses. More recent guidelines focus on the use of these buildings for “new” (incubator) businesses. The terms and conditions of the original grant cannot be changed without EDA approval. The City’s policy is to utilize these buildings to assist the City in meeting its goal of strengthening the Downtown commercial base.
The Concept of a Small Business Incubator
The concept of a small business incubator is that a start-up business needs time to establish itself (incubate). When the business reaches the point where it is able to succeed on its own, it is expected that the business will expand out of the “nest” into its own facilities. The City’s rent structure for the EDA buildings is based on its overall policy to assist new businesses by providing below market (subsidized) rent to new businesses. The idea is that as the business moves forward, it moves toward an unsubsidized rent that parallels the market rate at the end of five years. At that time, it is anticipated (under the incubator concept) that the business should seek private sector unsubsidized space, creating an opportunity for another new business.
The intent of the escalated lease is to remove the economic incentive for occupying incubator space beyond the 5- year term of the lease. In some non-retail incubators, businesses are required to move out of the incubator within 3 years.
In managing these buildings, the City must satisfy the Economic Development Administration’s Property Management Standards, which limit what the City can do with these buildings.
Consistent with the guidelines noted above, only “new” businesses shall be considered for occupancy in one of the City’s small business incubator buildings. A “new” business is defined as any business or firm that has not existed in Coalinga during the most recent two-year period.
The current rent structure for the EDA Buildings is set forth as follows:
|Time in Business||Monthly Rate|
|0-1 Years||$0.24/sq. ft.|
|1-2 Years||$0.32/sq. ft.|
|2-3 Years||$0.37/sq. ft.|
|3-4 Years||$0.45/sq. ft.|
|4+ Years||$0.51/sq. ft. (Market Rate)|
(The City will conduct studies to determine the market rate, and adjust its rent structure accordingly.)
Also, the City Council has directed that future leases be for one year periods, subject to renewals not to exceed five years as a tenant in these buildings. The City will assist tenants in the last year of their lease to find a new location.PDF Files: