04/29/2013 COMMUNITY REDEVELOPMENT AGENCY MEETING MINUTES
CITY OF CLEARWATER
April 29, 2013
Present: Chair/Trustee George N. Cretekos, Trustee Paul Gibson, Trustee
Doreen Hock-DiPolito, Trustee Bill Jonson, and Trustee Jay E.
Polglaze.
Also Present: William B. Horne 11 - City Manager, Jill S. Silverboard - Assistant City
Manager, Rod Irwin — CRA Executive Director/Assistant City Manager,
Pamela K. Akin - City Attorney, Rosemarie Call - City Clerk, and Nicole
Sprague - Official Records and Legislative Services Coordinator.
To provide continuity for research, items are in agenda order although not
necessarily discussed in that order.
1. Call to Order— Chair George N. Cretekos
The meeting was called to order at 1:00 p.m. at City Hall.
2. Approval of Minutes
2.1 Approve the minutes of the March 18, 2013 CRA Meeting as submitted in written
summation by the City Clerk.
Trustee Bill Jonson moved to approve the minutes of the March 18, 2013 CRA Meeting
as submitted in written summation by the City Clerk. The motion was duly seconded
and carried unanimously.
3. Citizens to be Heard re Items Not on the Agenda — None.
4. CRA Items
4.1 Approve Rental Assistance Agreement, Promissory Note and Personal Guaranty
of Agreement between the Community Redevelopment Agency (CRA) of the City
of Clearwater and Great Circle Studios, LLC., a web site development company
participating in the City Virtual Incubator Program , concerning the provision by
the CRA of loan-to grant rental assistance in the amount of$20,000,
distributable monthly over a twenty-four month period in equal monthly
distributions of$833.33, to facilitate the consolidation and expansion of
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operations into the premises known as 600 Cleveland Street , Suite 200,
Clearwater, Florida, and authorize the appropriate officials to execute same.
The Economic Development Strategic Plan adopted by the City Council
recognizes the potential of establishing and fostering the existing IT/software
presence in the Cleveland Street District as one strategy for increasing the
economic base, expanding the base of above-average employment opportunities,
as well as assisting in the redevelopment of the Downtown area.
The initiative involves both recruitment of established firms to the Technology
District and, particularly in the case of IT/software industry clusters, providing an
environment for start-up, early stage and accelerator firms to develop and grow
through the collaborative interaction of the industry concentration in the District.
Most job growth in the IT/software space comes from the growth and expansion of
these start-up firms, and not from recruitment of established firms. Great Circle
Studios is one of the accelerator firms in the District, poised to expand and grow
with the appropriate support and assistance.
The traditional approach to supporting the latter group of start-up, early stage and
accelerator firms is through establishment of an Incubator facility with supportive
services and management. The facility and operational costs are usually
underwritten by the governmental sponsor, with industry members assisting with
services and counseling. It involves significant contributions of capital and
operating funds and usually needs a ready collection of clients to warrant the
investment.
Since the City/CRA are in the early stages of Technology District development,
and the numbers of potential Incubator candidates are limited, pursuit of an
Incubator does not appear to be cost effective or feasible. Rather, the City/CRA
have chosen to pursue a Virtual Incubator strategy, with services provided to
target firms in commercial office buildings in the CRA area, and services provided
under contract by the Tampa Bay Innovation Center, located at the County STAR
Center. It is a more cost effective and efficient approach for where the Technology
District finds itself from an evolutionary standpoint.
However, a current impediment to fostering startups and accelerator firms is the
lack of affordable lease space in the Downtown market. Virtually all available,
suitable space is in the B+-A category with per square foot rentals between $15
and $22, far above the rate affordable for an early stage firm. Comparable firms
can find rental space in Tampa for $749 per square foot. Clearwater is at a
distinct disadvantage in this regard, and must offset this impediment to allow the
market to flourish. The Technology District Incentives fund approved by the CRA
Board last year is intended to be utilized, in part, to even the playing field in that
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regard and fashion assistance initiatives to allow early stage firms to develop and
expand in the collaborative Technology District environment critical to success.
The Great Circle Studios rental assistance agreement falls into this category. The
firm has negotiated a favorable lease to move into 1,812 square feet of the Bank
of America building, with the landlord providing a built out suite, as well as rent
concessions, to provide a turnkey occupancy and a five-year lease with enough
expansion space to accommodate their growth projections. They have been
successfully vetted by the Tampa Bay Innovation Center intake board and have
agreed to a service program provided by the Center going forward.
However, the required monthly rental of$2,337.92 ($15.50 per square foot) is
beyond the ability of Great Circles to absorb over the next 24 months of company
expansion and growth. They can only absorb a rental rate of$10+/- per square
foot. The CRA rental Assistance Loan-to Grant is designed to bridge that
affordability gap and allow the lease to be underwritten.
The $833.33/month rental assistance, continuing for 2 years of a five-year lease,
will be distributed directly to the landlord on behalf of the tenant, with the loan
supported by a Promissory Note and Personal Guaranty executed and
enforceable against all of the principals of Great Circle Studios. The assistance is
structured as a loan-to-grant with amortization 20% per year over the term of the
lease. Liability for repayment will be based upon failure to perform under the lease
and /or breach of contract terms.
Staff supports this Agreement for the following reasons:
1) The assistance is 100% funded by CRA TIF revenues, which by design are
intended to allow CRA's the flexibility to address the particular challenges of
redevelopment and growth in CRA areas in a more creative and innovative way
than is the case with general governmental funds. Greater risk and creativity are
required and anticipated.
2) This agreement offsets the structural impediment to our Technology District
development, namely the unavailability of reasonable office space for early-stage
and accelerator firms. The City/CRA must creatively address this issue in the
short term to achieve the larger goal of economic expansion of IT/software
clusters in Downtown.
3) This type initiative is facilitative of the City/CRA virtual incubator strategy,
thereby avoiding the possibility of greater long-term cost and operational impact of
a physical incubation facility at this point. Some additional risk is offset by greater
cost avoidance.
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4) Staff would consider this primarily a one -off solution to a particular set of
circumstances and not a precedent for our technology incentive initiative. The
basic approach in the past, and going forward, will continue to be assistance
through participation in capital and TIA, with security for the investment based
upon a security agreement with the building ownership. However, the particular
circumstances of this situation, a turnkey occupancy needing no capital
improvements and a property under transitional ownership not desiring to
complicate marketability, indicated a different approach required to get the deal
completed.
5) The structure of this Agreement is such that the funds are distributed over a
twenty -four month period, not at the outset, which will give the CRA risk exposure
control to assess the performance of the lease before all the funds are released.
If approved, staff recommends funding from CRA Project 94872, Technology
District Incentives.
In response to questions, Great Circle Studios, LLC representative John Stanard said
the company focuses on social media marketing and search engine optimization for
small businesses and the company has grown 2 1/2 times its size in the last year.
Trustee Doreen Hock - DiPolito moved to approve Rental Assistance Agreement,
Promissory Note and Personal Guaranty of Agreement between the Community
Redevelopment Agency (CRA) of the City of Clearwater and Great Circle Studios, LLC.,
a web site development company participating in the City Virtual Incubator Program ,
concerning the provision by the CRA of loan -to grant rental assistance in the amount of
$20,000, distributable monthly over a twenty -four month period in equal monthly
distributions of $833.33, to facilitate the consolidation and expansion of operations into
the premises known as 600 Cleveland Street , Suite 200, Clearwater, Florida, and
authorize the appropriate officials to execute same. The motion was duly seconded and
carried unanimously.
The meeting adjourned at 1:18 p.m.
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