Shared retail incubation space downtown emerges as an attractive idea
Buoyed by federal grants and with the City of Crookston as its owner, Valley Venture Park was constructed and opened on the northern fringes of the University of Minnesota Crookston campus as an incubator of fledgling business start-ups. As stakeholders slowly came to realize over the years, business incubation costs a lot of money; forget about making a profit, it’s almost impossible to stay out of the red.
So as Valley Venture Park’s scope and mission were modified, it became Valley Technology Park. But, still, it presented an annual hit on the City’s books in the form of a deficit of around $30,000. There was interest on the UMN Crookston campus in taking the entire building off the City’s hands, but that never happened.
Instead, with the Crookston Housing & Economic Development Authority (CHEDA) housed at VTP and serving as the building’s manager and landlord, the rules were eased for businesses being incubated within its walls. Two large, long-term tenants moved in, the Agricultural Utilization Research Institute and U of M Extension, and suddenly VTP had two consistent sources of revenue each month, to go along with rent paid from other, smaller tenants such as the United Way of Crookston.
Meanwhile, in the large bays in the rear of the building, a start-up business, Vertical Malt, continues to find its footing and grow, with an eye on building a facility on Crookston’s south end and moving out.
Add it all up, and the red ink has been erased, replaced by an annual net profit of around $30,000, CHEDA Executive Director Craig Hoiseth reported at a two-hour CHEDA planning session this week. As a result, VTP’s bottom line is currently showing a positive balance approaching $180,000.
“What should we do with the funds?” Hoiseth asked the full conference room at VTP on Tuesday. “Invest? Or just let it keep building?”
The consensus in the room leaned toward investing some of the money. But in exactly what is still up for plenty of continued debate.
Although $25,000 from CHEDA capital funds is currently being spent on VTP lobby upgrades that will result in a coffee bar, meeting and co-working space that showcases Crookston businesses, Hoiseth and others in the room agreed that a similar co-working space closer to Crookston’s “core” in or near downtown might be an attractive way to spend some VTP dollars.
“We’re trying to make this space (better) for $25,000, but it’s not a long-term solution, it’s simply an experiment,” Hoiseth said. “Can we get an ecosystem working here? That could happen, but not by just changing the carpet.”
Some in the room feel such a space needs to be headquartered at VTP because of its close proximity to the UMN Crookston campus and its resources. Others, meanwhile, feel that if some VTP money is to be invested in such a venture, it needs to be downtown.
“It’s the same concept as in-fill housing; you build from the core out and the rest will be strong,” City Administrator Shannon Stassen said. “It doesn’t mean you stop at your perimeter, but you don’t neglect your core.”
A smaller-scale business incubation space downtown could add life and traffic there, Ward 1 City Council Member Jake Fee said. To that, Hoiseth said it could take the form of a “retail incubation center” featuring small spaces that would be co-oped/co-shared. Like maybe someone does fingernails in one area of the space, while someone else sells craft jewelry. If and when one business moves out, another one could move in.
“Business incubation bleeds money, it’s a proven fact, because the people you’re incubating don’t have any money,” Hoiseth explained, adding that the VTP budget appears to have a sustainable funding source to potentially make something happen. “Extension and AURI are extremely happy campers here, and they’re paying the bills,” he said. “I don’t think we should sit on these funds, either, and retail incubation is a great idea.”