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Innovation Center
Innovation Center Determined Not Feasible
U.S. EDA Grant Offer for $3.5 Million To Be Terminated and Deobligated

During a June 4 meeting, members of the Pleasant Prairie Village Board will consider the termination of a $3.5 million U.S. Economic Development Administration (EDA) grant offer. The EDA had awarded the grant offer to the Village for the construction of a biomedical innovation center intended to accommodate new biomedical startup companies. Since 2010, the Village has been investigating the feasibility of undertaking such an endeavor.

A market and building feasibility study, conducted by Prescience International of San Francisco, was completed for the project in August of 2011. The study verified building and equipment costs; market rates and vacancies for lab space; salaries; a simulated three-year operating budget; and start-up costs. After an in depth review of the study, the Village and EDA have concluded that it would not be in either party’s best interest to proceed with the project.

John Steinbrink, Village President, explained, “With the help of the State Department of Commerce and the EDA, we were able to investigate how feasible it would be to provide an environment for new business development in the biosciences. The data returned indicated that the risk involved with the project was beyond of our comfort level. It just wasn’t fiscally prudent to proceed at this point in time.” The study estimated approximately $1.5 million in net loss over the first four years of operations before the facility could become self-sustainable in year five. The estimate was based on an optimistic 90% lease rate beginning in year two.

During 2010, as part of continuing efforts to provide a fertile environment for quality economic development, the Village prepared an initial proposal to obtain funding from the Wisconsin Department of Commerce for the creation of a bio-medical incubator facility. In August 2010, the State awarded the Village Community Development Authority a $70,000 Economic Development Grant. The State also directed staff to the EDA. Community Development Authority staff, in partnership with the Kenosha Area Business Alliance (KABA), cooperatively prepared a more in-depth proposal, and the two entities jointly applied for and received $3.5 million in grant funding through the EDA.

The $70,000 state grant was used to hire an outside firm to conduct a market study to consider the viability of such a facility and business plan. The proposal called for the construction of a 40,000 square foot building near the future Village Green Center, a downtown area in the design stage that is set at the demographic center of Pleasant Prairie, west of 39th Avenue between Springbrook Road and Highway 165. The plans included office, laboratory and flexible research and development space for entrepreneurs and business startups in the life science, bio-medical and biotechnology fields. Intentions were to provide bio-medical entrepreneurs, who were in the process of developing new companies, a state-of-the-art facility in which to grow their business.

In addition to the $3.5 million in federal grant funding, the Village Community Development Authority and KABA would have had to commit $2 million each towards the project. Expenses beyond the $3.5 million would have been funded locally through a Tax Increment District, so that property taxpayers would not have borne any risk for the project. If the termination of the grant agreement is approved at this evening’s meeting, the EDA will look at the possibility of reimbursing the Village for any eligible expenses that were not covered by the state grant. This could include items such as property appraisals. Once the funds have been deobligated by the EDA, they will become available for use elsewhere.

The Village has used market and feasibility studies to evaluate projects prior to undertaking them in the past. Studies were completed prior to the initial construction of RecPlex and prior to two subsequent additions. “The studies help us gain enough information to determine if a project’s potential for success and benefit to the community outweigh any risk involved,” Steinbrink explained. “Although this project is not feasible, we will continue to work for a balance in the community between economic development, residential development and lifestyle amenities that does not put our taxpayers at risk.”

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