Study cites areas of opportunity for technology development

By Angelica LaVito and Eli Murray

Urbana attempts to spark development  of economy in 2014

In 2013, Urbana saw  38 businesses open or expand, indicating the city’s strong emphasis on economic development. 

Andrew Scheinman, a patent attorney who works with technology start-up companies, encouraged the city to build such a relationship with the University following the release of the Identification of Technology Clusters for Economic Development report, commissioned by the Research Park.

In line with the report, the City of Urbana is doing its part to encourage economic development. Last year the city gave out more than $70,000 in tax increment finance program incentives in the form of business development grants, business opening grants and redevelopment incentive program grants. 

Tax increment financing is a tool that Urbana utilizes to incentivize development of certain districts. TIF allows businesses to develop an area without paying property taxes for the increase in value generated by the development over a 23 year period. For example, if a building in a TIF district had a value of $1000, but over a period of 23 years the value grew to $2000, the property owners would only pay taxes on the $1000 evaluated at the beginning of the TIF period until the period is over.

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The intent of TIF is to recoup the loss in property taxes after redevelopment raises the assessed value of the property. Additionally, developing a property raises the value of the properties around it, generating further revenue.

As Alderman Eric Jakobsson, Ward 2, puts it: “(Urbana doesn’t) have any money, but tax increment financing provides a way to leverage support.”

A new business in Urbana, [co][lab] , is also trying to spur economic development through a collaborative workspace.

Founded by Matthew Cho, [co][lab] works with entrepreneurs, artists and local businesses to collaborate in a shared space. 

“If you’ve ever worked in an office-type setting, it can get pretty dull,” he said. “We’re trying to encourage experimentation.”

Although [co][lab] is relatively new, having just opened last July, Cho has garnered a lot of attention from the community, receiving a nomination for the Entrepreneurial Excellence Social Venture Award. Cho said there has been some skepticism, however. 

“Doing coworking in a non-urban area is kind of counterintuitive … especially in an area like this with a lot of surplus office space … (but) we’re really trying to promote the value of what coworking brings to a community,” he said.

Urbana City Council Member Charlie Smyth, Ward 1, has shown interest in bringing another benefit to businesses in Urbana — connection to the UC2B fiber optic cable network. This network allows for data transmission exceeding a gigabit per second.

Right now, the UC2B network only extends along a small portion of University Avenue in Urbana. Smyth would like to extend connections to the downtown area.

“We need UC2B in downtown Urbana … there is no cheap way to get on UC2B, and we need that,” he said.

Bill Gray, director of Urbana Public Works, agreed that a fiber optic network would “provide a tremendous advantage to attract and retain businesses and people,” but that it may be impossible to build the network without UC2B finding a potential provider to partner with, as build out costs could approach $70 million.

Urbana is also receiving community support to find a working relationship with research and development teams at the University to further foster economic growth.

The economic development report indicated that by making the surrounding cities more welcoming to young professionals, many companies could make use of the research facilities at the University while still offering the urban environment that would attract skilled managers.

“If everybody steps up to the plate, I think fantastic things can be accomplished. And so, the fact that the University is going out of its way to make this a public offer is phenomenal,” Scheinman said.

Libby Tyler, Urbana’s community development director, said that Public Works staff have already begun reaching out to Research Park to see what sort of collaboration is possible. In the meantime, Urbana has scheduled a Downtown Urbana’s Emerging Innovation Ecosystem luncheon featuring local business owners to speak on the future of economic development in Urbana on Tuesday. 

Eli can be reached at [email protected] or @eli_mur.

Report identifies strength of University’s technology, areas of opportunity

An assessment of the University’s technology community identified Champaign-Urbana’s strengths in technology and how to capitalize on them.

The report was prepared for the University’s Research Park and suggests focusing on expanding data analytics and computing, biomedical and bioengineering, and energy.

“One of the objectives was to find out what technology areas do we have strengths in, both from a research standpoint, as well as existing reputation and experience in starting companies around these sectors,” said Research Park Director Laura Frerichs.

The technology clusters were identified after interviewing more than 35 representatives from the University and community. Frerichs said she was not surprised that data analytics was chosen as one of the clusters.

“This community and University has a long-standing reputation that was easily acknowledged by stakeholders and interviewees as revolving around computing and enterprise software and data,” Frerichs said.

The data cluster recently grew with Yahoo’s Research Park expansion.

But growing the biomedical and bioengineering cluster could present challenges, she said, because of the lack of a full-scale medical program and an academic hospital, according to the report.

“I don’t think we can do so entirely on our own,” Frerichs said. “These are partnerships that have to happen with the University, with our local hospitals, and understanding that it’s going to take some time to get to the maturity level of the computing side.”

Energy was selected as the final cluster because of the potential for an expanding market and the research taking place at the University. One challenge the cluster could face is the need for financing after a company completes the start-up phase and wants to grow.

“As they go from start-up company early stage to a growth stage company, they usually require scaled-up facilities, and those are expensive to construct,” Frerichs said.

Frerichs said these companies often require government incentives, which Champaign and the state of Illinois can provide, but these companies often relocate to places that have existing facilities.

“When trying to build investment networks for private business developments, our incentive programs aren’t going to replace capital investments,” said Bruce Knight, director of Planning for the City of Champaign. “That’s an area where we really need the private sector to step up and do its part.”

Research Park’s EnterpriseWorks incubator helps launch startup companies, allowing companies to lease space for an average of three years. More than 150 companies have gone through the incubator over the last 10 years, according to EnterpriseWorks’ website.

Frerichs said about 70 percent of these companies remain in Illinois, with half staying in Research Park, while others relocate to more mature business ecosystems that can offer more talent, or capital resources.

“We need to recognize that we have a strong core to build off of, but need to put resources and attention to growing it so we can continue to succeed in that space and build to a larger degree,” Frerichs said.

One issue cited in the report was a lack of transportation, including air and rail. Knight said there have been conversations about increasing the frequency of trains to Chicago, but any changes will take time.

Although the University provides companies with talent, the report cited a lack of management talent and a need for attracting young professionals to the area.

Knight said the city will continue to cultivate places like downtown to create a vibrant community and market the area to young people who may be considering locating to a large city.

“You have essentially a quality of life of living in a smaller community with a lot of the larger city amenities that someone might be looking for,” Knight said.

The report focuses on technology development in the area, but Knight says the city must focus on a wide-range of employment opportunities.

“The report is right on target with regards to tech-related business development,” Knight said. “Certainly from a community standpoint, we’re interested in developing manufacturing jobs and employment for a wide-range of people.”

Angelica can be reached at [email protected]