PEDA Commits More Funding For Berkshire Innovation Center
The Pittsfield Economic Development Agency pledged a grant of up to $300,000, subject to negotiations, to keep the BIC operating in 2018 and in hopes of releasing the state's commitment for construction.
The BIC officials came to PEDA on Wednesday morning asking for what board members called the final piece to the puzzle to the tune of $750,000. BIC officials said the organization had secured the construction funding but was short on operating costs.
"We have looked in every corner in the state and beyond for additional dollars," BIC Chairman Stephen Boyd said. "It is cause for great concern and risk. Nobody wants to see this die on the vine but we will have to suspend operations."
The innovation center has been in the works since 2013 and when it went to bid in 2015, a $3 million funding gap was identified. The city earlier this year put forth $1 million to close the gap and the Massachusetts Life Science Center has "verbally agreed" to fund another $2 million, according to Boyd. That wrapped up the construction costs but the organization was still short on the "soft costs."
The state then upped its commitment to $2.3 million, $300,000 of which will offset some of the cost for operations, Boyd said. The BIC has been looking to secure $1.2 million in total to continue operations for 18 months. It plans to raise $200,000 itself, received the $300,000 additional from the state, and now looked for $750,000 from PEDA.
"We have an opportunity that comes in the form of a challenge that requires $750,000 as a final piece of development operating funds to launch to Berkshire Innovation Center's groundbreaking," Boyd said.
PEDA officials, however, were a little more reserved. The organization had previously granted the BIC $250,000 for operational costs and its own funds have been dwindling.
"If there is a project we would want to pledge a kidney to, it would be this project. But we already gave a kidney and now you are back asking for another one," said board member Michael Matthews.
PEDA does want to see the project move along. The state's additional $300,000 was contingent on the BIC raising money on its own. PEDA's vote on Wednesday didn't grant the organization the full $750,000 but officials hope it is enough to get the state to start construction on the building. PEDA also promised to work with the BIC and the city to secure the rest of any needed funding.
The BIC has been in a "very complex and fluid situation," according to Boyd.
In 2013, the city had hired New England Expansion Strategies to do a feasibility study on an incubator building. That was based on what was originally a state earmark of $6.5 million. That study led to the development of a new concept of an innovation center. Instead of focusing on a place for brand-new businesses, the center is eyed to be a membership-based model of small and medium-size companies to access high-tech equipment for research and development.
An educational piece was added with multiple colleges and universities joining the program to help provide a pipeline of employees to the companies.
"This is going to be an enormous component to keeping our young here and giving our companies a chance to work with these young folks with this technology," said William Mulholland, who represents Berkshire Community College.
PEDA and the city matched each other with $250,000 each for the soft operating costs and the state upped its commitment to $9.7 million for construction and equipment in 2015.
But when it went to bid, the BIC came up short on funds.
Then there was a shift in administrations at both the state and local level. The organization advocated for more funding but it took time. Secretary of Housing and Economic Development Jay Ash asked the organization to look into reusing currently vacant facilities in the city, such as the Masonic Temple and the former SABIC headquarters.
"Ultimately we worked hard to convince Secretary Ash that the original plan was the best plan," Boyd said.
The construction costs were estimated to increase by 3.5 to 5 percent because of inflation. The BIC has since cut its equipment budget in half -- from $2 million to $1 million -- to cover the inflation.
The additional $3 million committed, plus BIC's cuts to the equipment budget, has closed the gap to build the center at the William Stanley Business Park. But, during the delay, the organization's operating funds dried up.
Project Manager Rod Jane said the BIC will have to cease operations by the end of the year if the funding isn't approved.
"We will be at zero, slightly negative, at the end of this month. We will be out of cash at the end of this month," Jane said.
Boyd said the BIC has looked everywhere for funding for the operations to no avail. The hope was to get have enough to sustain the organization for another 18 months with a budget that included six months of a reserve, to the tune of $350,000, in case there are any delays in construction and/or securing additional memberships.
Jane said the organization has 20 letters of commitment from companies, 10 of which have already signed on and stayed on during the delays. But, Jane said he doesn't know how many of those remaining companies and educational institutions will sign on right when the building starts construction or opens doors and how many will want to see the operation for a period of time. The reserve would help sustain any delays in organizations signing on.
The request is hoped set the BIC up for a groundbreaking in spring or summer 2018. Mayor Linda Tyer urged PEDA to put approve the request.
"I encourage the board to support the request to the best of your ability," Tyer said.
The approval keeps the BIC somewhat afloat, pending negotiations and another vote of the PEDA board. The state still hasn't announced its $2.3 million for construction.
Tags: berkshire innovation center, PEDA,
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