Local Development Financial Authority (LDFA) 2014 Board Book

Local Development Financial Authority (LDFA) 2014 Board Book

Kara Wood, Executive Director [email protected] Office: 616-456-3196 Cell: 616-350-6772 SmartZone Website: http://grcity.us/design-and-development-services/EconomicDevelopment/Pages/SmartZone.aspx

2014 Meeting Schedule

SmartZone Local Development Financing Authority Approved November 15, 2013

2014 Meetings Notice The regular meetings of the SmartZone Local Development Financing Authority for 2013 are scheduled as follows: Friday Friday Friday Friday Friday Friday

January 17, 2014 March 21, 2014 May 16, 2014 July 18, 2014 September 19, 2014 November 21, 2014

7:30 a.m. 7:30 a.m. 7:30 a.m. 7:30 a.m. 7:30 a.m. 7:30 a.m.

All meetings will be held at GVSU’s Cook-DeVos Center for Health Sciences building, 301 Michigan Street NE, 5th Floor, Conference Room 540. Please contact Kara Wood in the Economic Development Office at 456-3431 if you have any questions prior to the meeting.

Distribution List: City Manager - Jane Bush City Clerk – Robin Boss

Roster

SMARTZONE LDFA ROSTER Updated: February 19, 2014 Chairperson Mr. Jerry Kooiman Michigan State University College of Human Medicine 234 Division North, Suite 400 Grand Rapids, MI 49503 PH: 616-234-2604 Email: [email protected] Term Exp. 12-31-17 Treasurer Ms. Lisa Freiburger Grand Rapids Community College 143 Bostwick Grand Rapids, MI 49503 PH: 616-234-4025 Email: [email protected] Term Exp. 12-31-15 Secretary Mr. Jim Bachmeier Grand Valley State University 1 Campus Drive Allendale, MI 49401 PH: 616-331-2188 Email: [email protected] Term Exp. 12-31-16 Commissioner Walter Gutowski 300 Monroe Avenue NW Grand Rapids, MI 49503 PH: 616-540-4263 Email: [email protected] Term Exp. 12-31-16 Ms. Mary Swanson Kent County 300 Monroe Ave. NW Grand Rapids, MI 49503 PH: 616-632-7578 Email: [email protected] Term Exp. 12-31-16 Ms. Therese Thill The Right Place, Inc. 161 Ottawa Ave. NW Ste. 400 Grand Rapids, MI 49503-2701 PH: 616-771-0571 Email: [email protected] Term Exp. 12-31-16

Mr. Keith Brophy CEO, Health Tech Company Suite 206 648 Monroe Avenue NW Grand Rapids, MI 49503 PH: 616-723-9611 Email: [email protected] Term Exp. 12-31-17 Mr. Gerald Callahan Van Andel Institute 333 Bostwick Ave NE Grand Rapids, MI 49503 PH: 616-234-5586 Email: [email protected] Term Exp. 12-31-14 Dr. Wendy VerHage Falb Grand Rapids Public School Board 1131 Franklin SE Grand Rapids, MI 49501 PH: 616-818-8873 Email: [email protected] Term Exp. 12-31-17 Mr. John Helmholdt Grand Rapids Public Schools 1131 Franklin SE Grand Rapids, MI 49501 PH: 616-819-3740 Email: [email protected] Term Exp. 12-31-17 Executive Director Ms. Kara Wood City of Grand Rapids 300 Monroe Ave. NW Grand Rapids, MI 49503 PH: 616-456-3196 Email: [email protected] Legal Counsel Mr. Richard Wendt Dickinson Wright PLLC 200 Ottawa Ave NW Suite 900 Grand Rapids, MI 49503-2426 PH: 616-458-1300 Email: [email protected]

Development Plan

SMARTZONE DEVELOPMENT PLAN Table of Contents CHAPTER I - Introduction A. Purpose of the SmartZone LDFA – P.A. 248. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Creation of the Grand Rapids SmartZone. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Establishment of the Grand Rapids SmartZone District and Authority . . . . . . . . . . . . .

1 1 2

CHAPTER II – Land Use and District Characteristics A. Boundaries of the SmartZone District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Location of Streets and Public Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Existing Land Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Existing Zoning ..................................................... E. Other Initiatives in the SmartZone District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Recent Projects and Proposed Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Underutilized Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H. Persons Residing in the SmartZone District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 3 4 4 4 4 5 5

CHAPTER III - Development Plan A. Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Development Plan Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Development Cost Estimates and Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Method of Financing Public Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E. Lease, Sale or Conveyance of Public Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Persons Leasing or Buying Public Facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Other Pertinent Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6 8 9 10 11 11 12

CHAPTER IV – Tax Increment Financing Plan A. Tax Increment Financing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Estimated Captured Assessed Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Estimated Tax Increment Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Explanation of the Tax Increment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E. Note or Bonded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Operating and Planning Expenditures of the Authority . . . . . . . . . . . . . . . . . . . . . . . . . . G. Advances Incurred by the City of Grand Rapids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H. Other Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Costs to be Paid from Tax Increment Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J. Duration of the Development Plan and the Tax Increment Financing Plan . . . . . . . . . . . K. Estimated Impact of Tax Increment Financing on Taxing Jurisdictions in the SmartZone District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L. Legal Description of the Eligible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M. Estimated Number of Jobs to be Created . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N. Proposed Boundaries of a Certified Technology Park . . . . . . . . . . . . . . . . . . . . . . . . . . . O. Real Property Within the Certified Technology Park . . . . . . . . . . . . . . . . . . . . . . . . . . . . P. Exemption of Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attachments 1. City Commission Resolution to Create a SmartZone LDFA October 16, 2001 2. City of Grand Rapids SmartZone Proposal March 28, 2001 Maps 1. SmartZone Boundary Map 2. Public Facilities 3. Existing Land Use 4. Zoning Districts 5. Economic Development Districts 6. Underutilized Sites 7. Recent Projects & Proposed Improvements Tables 1. Initial Assessed Value of all Property 2. Estimated Captured Assessed Value 3. Tax Increment Revenues – Fiscal Year 2002-03 4. Total Tax Increments Captured for 30 Years 5. Impact on Taxing Units-Tax Levy and Percent of Taxable Value 6. Impact on Taxing Units-Percent of Millage and Total Tax Increments SmartZone Summary of All Included Property Roll Year 2001 7.

13 13 13 14 15 15 15 15 16 16 16 17 18 18 18 18

CHAPTER 1 Introduction A.

Purpose of the SmartZone LDFA – P.A. 248 The State is spearheading a comprehensive effort to promote Michigan as an ideal location for high-tech businesses. In 2000, the legislature made amendments (P.A. 248) to the Local Development Financing Act (LDFA) to allow and, in limited cases, broaden the use of tax increment financing techniques authorized under the LDFA for the development of business incubators and businesses engaged in certain “high-technology activities.” The Michigan Economic Development Corporation (MEDC) has selected ten communities, which will be allowed to designate LDFA SmartZone districts, which will attract and grow high-tech types of business. The SmartZone Authority can utilize tax capture not only for certain infrastructure improvements but also, unlike traditional LDFA Authorities, for building and operating incubators for high-tech businesses.

B.

Creation of the Grand Rapids SmartZone In March 2001, the City of Grand Rapids, The Right Place Program, the Van Andel Institute, Grand Valley State University and Grand Rapids Community College submitted a joint proposal to the MEDC to designate a SmartZone district in the City. All five partners have individual strengths, resources and goals, which support the purpose of the SmartZone program. Their vision is to create an environment that utilizes the strengths of the Van Andel Institute, the renaissance of the downtown and the commitment of regional institutes of higher education to grow a diversified economy based on life science initiatives. 1.

Van Andel Institute

The Van Andel Institute (VAI) provides the wellspring of this effort--molecular cancer research. Through the process of discovery, VAI’s scientists will produce technologies that will be relevant to the commercial market. VAI, as a singular presence, will provide the overall basis for an attraction strategy based on life science. VAI also brings connections to the Michigan Life Science Corridor and worldwide relationships that will naturally grow out of research excellence. 2.

Grand Valley State University

Grand Valley State University (GVSU) has made and continues to make major investments in downtown Grand Rapids. GVSU is constructing a new $60 million Health Professions facility two (2) blocks from the VAI. Within this new facility, GVSU will dedicate up to 30,000 square feet for life science “incubator” space. GVSU will manage the facility and provide all necessary services. GVSU will work with VAI and life science companies to help place students and faculty in the research and commercialization process.

3.

Grand Rapids Community College

Grand Rapids Community College (GRCC) has recently completed a $30 million stateof-the-art science center that includes organic and inorganic chemistry labs, a microbiology lab, anatomy labs and a cadaver lab. In addition, GRCC has received grant funding for a new Michigan Technology Education Center (M-TEC). GRCC will connect its facilities to the needs of core SmartZone activities and will serve as a key training partner in preparing a life science workforce. 4.

The City of Grand Rapids

The City of Grand Rapids (City) is contributing tax increment revenues from a local development financing authority. The City is continuing an impressive urban renewal and longer range plans will prioritize public works projects that help sustain the needs of private developers building attractive urban housing, office, retail and facilities that enhance business development in the SmartZone community. 5.

The Right Place Program

The Right Place Program (RPP) will be the principal marketing agent and client liaison for the effort. Its extensive work with area manufacturers and international business has positioned them to aggressively seek and recruit high technology businesses to the SmartZone. The RPP facilitates a high technology user group to help support and strengthen existing and new business.

C.

Establishment of the Grand Rapids SmartZone District and Authority On October 16, 2001, the Grand Rapids City Commission (City Commission) by resolution, Attachment I, established a local development financing authority and designated the boundaries of an authority district pursuant to the Local Development Financing Act, Act 281 of the Public Acts of Michigan of 1986, amended specifically by Act 248 of the Public Acts of Michigan of 2000, MCL 125.2151. Thereafter the Grand Rapids City Commission and appropriate taxing jurisdictions appointed eleven individuals to serve on the SmartZone Authority’s Board of Directors. On December 18, 2001, the City Commission approved the Local Development Financing Authority’s Rules of Procedure. Finally, on January 22, 2002, the City Commission approved an agreement with the MEDC for establishment of a SmartZone district and use of the SmartZone logo.

CHAPTER II Land Use and Development Characteristics A.

Boundaries of the SmartZone District The Development Plan and Tax Increment Financing Plan applies to the entire SmartZone District, which is identified on Map 1, attached. The property included in the SmartZone District is generally described as follows: Commencing at the southeast corner of Lyon Street and Bostwick Avenue north along the east boundary of Bostwick Avenue to Michigan Street then east along the south boundary of Michigan Street to Barclay Avenue then south along the west boundary of Barclay Avenue approximately 476 feet then east along the south boundary of Crescent Street to Claremont Place then north along the east boundary of Claremont Place approximately 320 feet to the north end of Claremont Place then east along the back property lines of properties on the south side of Michigan Street to College Avenue then north on College Avenue along the east boundary of College Avenue to the I-196 Expressway right-of-way then west along the south boundary of the I-196 Expressway right-of-way to Division Avenue then north along the east boundary of Division Avenue to Coldbrook Avenue then west along the north boundary of Coldbrook Avenue to the Grand River then south along the east bank of the Grand River to the I-196 Expressway right-of-way then east along the north boundary of the I-196 Expressway right-ofway to Monroe Avenue then north along the east boundary of Monroe Avenue to Trowbridge Street then east along the south boundary of Trowbridge Street to Bond Street then south along the west boundary of Bond Street to the I-196 Expressway right-of-way then southeast along the southwest boundary of the I196 Expressway right-of-way to Ottawa Avenue then south along the west boundary of Ottawa Avenue to Michigan Street then west along the north boundary of Michigan Street to the Grand River then south along the east bank of the Grand River approximately 600 feet then east approximately 475 feet to Monroe Avenue then south approximately 380 feet along the west boundary of Monroe Avenue then east along the north property line of 250 Monroe Avenue, N.W. then south along the east property line of 250 Monroe Avenue, N.W. and 200 Monroe Avenue, N.W. to Lyon Street then east along the south property line of Lyon Street to point of beginning.

B.

Location of Streets and Public Facilities The existing streets within the SmartZone District are identified on Map 1, attached. Other public facilities within the SmartZone District include administrative and justice facilities of Federal, state, and local governments, the Health Professions Building of GVSU, DeVos Place Convention Center and three parks. All public facilities are shown on Map 2, attached.

C.

Existing Land Uses The SmartZone district is a diverse, intensively developed urban area containing a wide array of public and private land uses. Public and private existing land uses are identified on Map 3, attached, by the following categories: Residential, Office Commercial, Mixed Commercial/Residential, Industrial, Medical Facilities, Public/Quasi Public, Parks, Parking Lot, and Vacant/Under Construction. Major changes in land use patterns are not anticipated to result from the implementation of this plan.

D.

Existing Zoning The existing zoning districts in the SmartZone District are identified on Map 4, attached. A majority of the land in the District is zoned C-3a (City Center Mixed Use District) or C-3b (City Center Service District). Major revisions to the regulations affecting properties in these districts were adopted in 1998. These changes are intended, in part, to accommodate uses and developments consistent with the SmartZone. No further zoning changes are planned at this time. Existing zoning districts are shown on Map 4, attached.

E.

Other Initiatives in the SmartZone District The City has been successful in promoting economic development within its boundaries, using all appropriate incentives and programs available. The SmartZone Authority intends to coordinate its activities with several other agencies and authorities having overlapping jurisdiction over properties within the District. Several other economic development programs operating within the SmartZone District include the Monroe North Tax Increment Financing Authority District, the Grand Rapids Renaissance Zone – Furniture Campus District, and the City of Grand Rapids Downtown Development. These are shown on Map 5, attached.

F.

Recent Projects and Proposed Improvements There have been a number of projects undertaken or proposed within the SmartZone District in recent years, which are shown on Map 6, attached. Investment in the Monroe North area has concentrated mainly on infrastructure improvements including two riverfront parks. A number of older vacant industrial and warehouse buildings have been converted to loft-style housing, office and retail spaces. On Michigan Street hill is the medical district of the SmartZone. Here is located the new Van Andel Institute adjacent to Spectrum Hospital and Grand Rapids Community College. Two major projects are under construction: GVSU’s new Medical Professions Building and Spectrum’s Heart Research Center. Between the years 1998 and 2004 there will have been nearly one-half billion dollars invested in this area.

G.

Underutilized Sites There are at least nine key sites shown on Map 7, attached, which are currently vacant or underutilized. The most significant of these is approximately four acres of riverfront property, which is currently used as parking.

H.

Persons Residing in the SmartZone District There are approximately 340 dwelling units in the SmartZone District. An estimated 600 persons live within these dwelling units. No families or individuals will be displaced as a result of the Development Plan.

Chapter III Development Plan A.

Concept The SmartZone District is located in downtown Grand Rapids to take advantage of the area’s vibrant quality of life and proximity to the Van Andel Institute, Grand Valley State University and Grand Rapids Community College. The resources of these institutions and other downtown services will create an environment for growing and attracting new and established high-tech businesses. 1.

Incubators A key component of the SmartZone will be the operation of a full service incubator(s), which will provide space and support for start-up high-tech businesses. Between 10,000 to 30,000 square feet will house wet labs, office space, product development areas and common space. Besides low cost rent, occupants will be provided shared support services (e.g. clerical, copiers, faxes, meeting rooms), education and assistance for preparing commercialization, business and marketing plans, legal counsel, and access to government grants, venture capital and other financing sources.

2.

Site Development The SmartZone LDFA Authority will identify, assemble and prepare sites for commercial and light industrial space for businesses graduating from the incubator, expanding into the SmartZone District or relocating from other areas to take advantage of the clustering synergy of this high-tech environment. In recent years, downtown Grand Rapids has grown beyond its traditional office boundaries into surrounding areas, which are characterized by vacant, outdated industrial properties and warehouses. Economic development programs like Renaissance Zones and Brownfield Redevelopment Authority financing have spurred reinvestment and reutilization in dozens of these buildings. The results are hundreds of new housing units, loft offices, restaurants and theaters. In addition, the building of a new 12,000 seat multi-purpose arena and $220,000,000 convention center, a downtown Grand Valley State University campus, and the $100,000,000 Van Andel Institute have added to the renaissance and vibrancy of Grand Rapids, Michigan’s second largest city. There are several sites, which are being studied for potential new development. Most prominent are four adjacent parcels of vacant property along the Grand River, which are under ownership of three parties, one of which is the City. Twothirds of the approximately four acres is currently used for surface parking for The

Grand Rapids Press and nearby offices. The City is in discussions with the Press and the third party about their willingness to offer the land as a single development site for mixed use, which could include high-tech businesses, offices, retail, housing, and possibly a hotel. Several other sites surrounding downtown would be appropriate for light manufacturing for high-tech businesses. The City and SmartZone LDFA Authority will work with property owners to place new high-tech businesses at these sites. The SmartZone LDFA will also examine opportunities to purchase properties to prepare for high-tech development. 3.

Infrastructure Since much of the SmartZone District is older industrial space, the area needs upgraded and improved streets, sidewalks, water, sewer and fiber optics and public spaces to make it attractive and useful for high-tech businesses. In the last few years, the City has invested $9,400,000 to upgrade one of the main arteries in the SmartZone, Monroe Avenue. A Core Community Initiative grant, DNR grant and other monies from water and sewer funds were used to make utility and road improvements, to build a new riverside park and refurbish a second park.

4.

Marketing A communications effort will be launched to showcase the benefits of the SmartZone District as a location for high-tech businesses and to advertise incubator space and services. These materials will highlight the quality of life of downtown and the world class Van Andel Institute. Marketing will be local and international. Plans include participation at national and international high-tech trade shows, a web site and publicity of related business development in the SmartZone District.

5.

Technology Transfer The partners will coordinate their resources in order to encourage and support successful transfer of technology ideas from GVSU, GRCC and the VAI into product development efforts.

6.

Education GVSU and GRCC will identify training programs needed by local high-tech industries in order to prepare students for future employment needs of new hightech businesses. Students at both downtown institutions can also offer valuable, trained research assistance to new and established high tech businesses.

B.

Development Plan Objectives The City’s five-year strategic plan has as one of its chief focus areas economic vitality. One of the outcomes of that focus is to “Increase high-tech skills oriented employment”. The SmartZone LDFA Authority objectives, which support that outcome are: 1.

Provide incubator space, which will support start-up high-tech business endeavors and technology transfer from local and national universities and research institutions.

2.

Offer support services for high-tech business start-ups including, but not limited to, business plan development, office support, financing linkages, grant writing, legal counsel and accounting services.

3.

Improve infrastructure in the SmartZone District, which will enhance the efficiency and attractiveness for pedestrian and mobilized traffic, provide necessary utilities and communications linkages to enable the development of high-tech facilities.

4.

Work closely with the private market to acquire and/or make available sites for high-tech commercial and industrial business development in the area.

5.

Implement a marketing plan, which promotes the SmartZone District as an outstanding location for new and expanding high-tech business.

6.

Work with higher education entities to develop and promote high-tech skills programs for students.

7.

Work with higher education entities and research institutes to promote technology transfer to for-profit business ventures.

C.

Development Cost Estimates and Financing The following are proposed to the extent funds are available:

1.

Infrastructure a.

b.

c.

d.

2.

Broadband Link-ups Provide funds to construct broadband linkages between the public right-of-way and buildings housing high-tech businesses.

Substation Relocation Relocate consumers power substation from valuable riverfront property to a less intrusive site.

Other Provide utility and street improvements within the SmartZone District.

estimated cost estimated completion

$1,200,000 2005

estimated cost estimated completion

$500,000 2015

estimated cost estimated completion

$6,000,000 2015

estimated cost estimated completion

$6,500,000 2030

estimated cost estimated completion

$4,000,000 2010

estimated cost estimated completion

$2,000,000 2010

estimated cost estimated completion

$6,000,000 2006

Land Acquisition a.

b.

3.

Bond Street Improvements Remove rail spur, reconstruct street and install sidewalks and lighting.

Purchase and assemble riverfront property for high-tech business facility development.

Acquire other suitable properties, which can be marketed for high-tech business development.

Incubator a.

Construct up to 30,000 square feet of high-tech incubator space including equipment.

b.

c.

4.

Provide costs for operating space (utilities insurance, janitorial services, common areas).

estimated annual cost

$150,000

Provide administrative support to start-up high-tech businesses, including but not limited to legal, accounting, marketing, and business plan development. Administrative support such as clerical assistance, office equipment usage, accounting and human resource management, joint purchasing, grant writing assistance and estimated annual cost linkages with financing opportunities.

$200,000

Administration Staff support for administration of the SmartZone Authority, legal fees, appraisals, design services, environmental testing, etc.

5.

$100,000

estimated cost estimated completion

$5,000,000 2030

estimated annual cost

$100,000

Marketing Development of a SmartZone marketing program will include creation of a web site, brochures and printed materials, advertisement and public relations campaigns, conferences and trade shows.

D.

estimated annual cost

Acquisition of Public Facilities Construction of conference, laboratory, research space in support of high-tech business development.

7.

$100,000

Improvements to Public Facilities Make buildings handicap accessible.

6.

estimated annual cost

Method of Financing Public Facilities The LDFA, pursuant to which the SmartZone Authority is organized, authorizes several potential sources for the SmartZone Authority to use in the financing of its activities, including the following: 1.

Contributions or donations.

2.

Revenues from any property, building or facility owned, leased, licensed or operated by the SmartZone Authority or under its control.

3.

Tax increment revenues.

4.

Proceeds of tax increment bonds.

5.

Proceeds of revenue bonds.

6.

Money obtained from any other legal source approved by the Grand Rapids City Commission or otherwise authorized by law for use by the SmartZone Authority or the City of Grand Rapids to finance public facilities identified in this Development Plan.

7.

Loans and grants from the Michigan Strategic Fund, Michigan Economic Development Corporation or any other State Agency.

8.

Loans and grants from the Federal government or an agency thereof.

While financing for SmartZone Authority activities could come from all of these sources, the SmartZone Authority believes the major source of revenue will be tax increment revenues and/or proceeds from tax increment bonds. The LDFA permits the SmartZone Authority, with the approval of the City of Grand Rapids and in some cases the Michigan Economic Development Corporation, to “capture” a portion of ad valorem real and personal property taxes to implement this Development Plan. The SmartZone Authority believes that funding from the above sources including specifically tax increment revenues and tax increment bonds will be sufficient to implement this Development Plan. Further details are set forth in the Tax Increment Financing Plan of the SmartZone Authority. E.

Lease, Sale or Conveyance of Public Facilities No procedures for the leasing, purchasing or conveying of public facilities have been developed at this time since no public facilities currently exist. The Authority expects to develop such procedures, as applicable, as public facilities are acquired, completed or become available for lease, purchase or other conveyance.

F.

Persons Leasing or Buying Public Facilities As part of this Development Plan the SmartZone Authority intends to directly or indirectly support a business incubator(s). It is contemplated that this space would be leased to individual scientists/college professors/entrepreneurs to further development of life science and high-tech products, which will lead to the commercialization of such products.

It is also likely that other public facilities referenced in this Development Plan may in the future be leased, sold or conveyed by the SmartZone Authority in the furtherance of the Development Plan, however, further specific information is not available at this time. G.

Other Pertinent Information The SmartZone Authority incorporates by reference the “Proposal to Establish a Certified Technology Park Pursuant to Public Act 248 of 2000” dated March 28, 2001, submitted to the Michigan Economic Development Corporation by the City of Grand Rapids, The Right Place Program, the Van Andel Institute, Grand Valley State University and Grand Rapids Community College attached as Attachment II.

CHAPTER IV Tax Increment Financing Plan A.

Purpose of the Tax Increment Financing Plan Through its Development Plan and this Tax Increment Financing Plan, the SmartZone Authority will market property within the SmartZone District for use as eligible property and work to attract the development of eligible property within the SmartZone District. The SmartZone Authority's efforts will include the direct or indirect support of one or more business incubators within the SmartZone District including a life science product development center. It is contemplated that space in these business incubators will be leased to individual scientists/college professors/entrepreneurs to further the development of life science products and other high technology activity which will lead to the commercialization of such products and activities. The SmartZone Authority also anticipates being involved directly or indirectly in or encouraging the assembly and disposal of land for use in the development of eligible property. Further, the SmartZone Authority will cause needed infrastructure improvements to be made from time to time for the benefit of eligible property. All of these activities will increase (i) the assessed value, i.e., taxable value of properties within the SmartZone District and (ii) the captured assessed value within the SmartZone District which otherwise would not be expected to occur.

B.

Estimated Captured Assessed Value For each year of this Tax Increment Financing Plan, the SmartZone Authority will use all of the captured assessed value of both real and personal property in the SmartZone District and all of the tax increment revenues attributable to the levy of ad valorem property taxes on such captured assessed value by each taxing jurisdiction levying property taxes within the SmartZone District as limited or as may be limited by the LDFA. The initial assessed value or base value of all real and personal property within the SmartZone District is set forth in the attached Table 1. An estimate of captured assessed value for each year of this Tax Increment Financing Plan is attached as Table 2.

C.

Estimated Tax Increment Revenues The SmartZone Authority anticipates capturing all tax increment revenues permitted by the LDFA during each year of this Tax Increment Financing Plan. This includes the ad valorem property taxes and specific local taxes (as defined in the LDFA) levied by all

taxing jurisdictions, except as limited in the immediately succeeding two sentences, upon the captured assessed value of taxable real and personal property located within the SmartZone District. Specifically, excluded from capture are ad valorem property taxes levied for the payment of principal and interest on obligations approved by the electors or obligations pledging the unlimited taxing power of the local governmental unit or specific local taxes attributable to such ad valorem property taxes. Further, as limited by the LDFA, the SmartZone Authority intends to capture, upon approval of the State Treasurer, 50% of the state education tax and Grand Rapids Public Schools and Kent Intermediate School District general tax levies for only the first 15 years of the Tax Increment Financing Plan. An estimate of the capture of tax increment revenue for the first year of the Tax Increment Financing Plan is set forth in the attached Table 3. The estimated tax increment revenues for each year of the thirty years of this Tax Increment Financing Plan is summarized in the attached Table 4. D.

Explanation of the Tax Increment Procedures The tax increment procedure, as outlined in the LDFA, requires that the SmartZone Authority prepare, approve and recommend to the Grand Rapids City Commission the Development Plan and this Tax Increment Financing Plan (collectively, the "Plans"). The City Commission is required to notify and give an opportunity for comment on the Plans to each of the taxing jurisdictions levying ad valorem property taxes in the SmartZone District and conduct a public hearing on the Plans after proper notice as prescribed by the LDFA. In order for the Plans to become effective, the City Commission must by resolution approve the Plans making certain findings prescribed by the LDFA and determining the Plans constitute a public purpose. The initial assessed value or base value of all taxable real and personal property within the SmartZone District is determined based on the December 31, 2000, property tax assessment roll. Tax increment revenues will be determined each year based on the captured assessed value for that year. The captured assessed value is the difference between the December 31, 2000, base value and the current assessed value based on the December 31 tax assessment roll for each subsequent year, i.e., December 31, 2001, December 31, 2002, December 1, 2003, etc. Current millage rates of tax jurisdictions levying ad valorem property taxes in the SmartZone District are multiplied by the captured assessed value to determine tax increment revenues each year. During each year of this Tax Increment Financing Plan all taxes levied on the captured assessed value (except elector approved tax levies used or pledged to pay debt service on obligations issued by the taxing jurisdiction) by the City of Grand Rapids, Kent County, Grand Rapids Community College and the Interurban Transit Partnership are SmartZone Authority tax increment revenues to be used to carry out the activities in the SmartZone Authority's Development Plan. Upon approval of the State Treasurer, 50% of the taxes levied for the first 15 years of this Tax Increment

Financing Plan on the captured assessed value by the State of Michigan as the State education tax and by the Kent Intermediate School District and Grand Rapids Public Schools (except elector approved tax levies used or pledged to pay debt service on obligations issued by such school district) are also SmartZone Authority tax increment revenues to be used to carry out the activities in the SmartZone Authority's Development Plan. Tax increment revenues are collected in the same manner as other ad valorem property taxes. After collection such tax increment revenues are credited or paid over to the account of the SmartZone Authority. E.

Note or Bonded Indebtedness Since the SmartZone Authority will rely primarily on annual tax increment revenues, it anticipates it will issue or cause to be issued bonds or notes from time to time to carry out the projects identified in the Development Plan. The maximum amount of such indebtedness is not known at this time, however, the total amount of such indebtedness will not exceed tax increment revenues available to service such indebtedness.

F.

Operating and Planning Expenditures of the Authority It is currently estimated that SmartZone Authority operating and planning expenditures, i.e., administrative costs including staff support, appraisals, consultants, auditing and legal will be $100,000 per year. Over the duration of the Plans it is expected that this amount will increase because of inflation or the SmartZone Authority undertaking specific activities in the Development Plan.

G.

Advances Incurred by the City of Grand Rapids The City of Grand Rapids has advanced an estimated $25,000 to cover the SmartZone Authority's organizational costs. It is anticipated that the SmartZone Authority will reimburse the City the amount advanced from tax increment revenues as they become available. The City has incurred no indebtedness on behalf of the SmartZone Authority.

H.

Other Advances No amounts have been advanced by others which would be repaid from tax increment revenues.

I.

Costs to be Paid from Tax Increment Revenues The SmartZone Authority anticipates paying administrative costs including operating and planning costs and costs of marketing property in the SmartZone District, and attracting development within the SmartZone District from tax increment revenues as received. It is also possible that from time to time tax increment revenues as received would be used to pay operational costs of a business incubator(s) to the extent permitted by the LDFA and to pay on a pay-as-you-go basis for the costs of some of the capital improvement activities identified in the SmartZone Authority's Development Plan. It is however anticipated that most capital improvement projects, because of their cost, will be financed by the issuance of notes or bonds to be repaid from tax increment revenues.

J.

Duration of the Development Plan and the Tax Increment Financing Plan The duration of the Development Plan and this Tax Increment Plan is through December 31, 2032. The duration may in the future be extended by amendment to this Tax Increment Financing Plan as permitted and in accordance with the LDFA.

K.

Estimated Impact of Tax Increment Financing on Taxing Jurisdictions in the SmartZone District The taxing jurisdictions affected by this Tax Increment Financing Plan are:       

City of Grand Rapids Kent County Grand Rapids Community College Interurban Transit Partnership Grand Rapids Public Schools Kent Intermediate School District State of Michigan (State education tax only)

When determining the impact of tax increment financing on the taxing jurisdictions levying ad valorem property taxes in the SmartZone District, the following must be considered: 1.

The number of mills levied by each taxing jurisdiction.

2.

The taxable value of property in the SmartZone District versus the total taxable value of property within the entire taxing jurisdiction.

3.

The additional property taxes the taxing jurisdiction would receive if tax increment revenues were not captured.

4.

The overall benefit to the community by establishing the SmartZone Authority and carrying out the SmartZone Authority's activities as set forth in the Development Plan.

Table 5 attached, identifies each taxing jurisdiction's 2002 tax levy and compares the base taxable value of all real and personal property in the SmartZone District with the total taxable value of real and personal property within each taxing jurisdiction. Table 6 attached, shows each of the taxing jurisdiction's percentage of total millage subject to capture in the SmartZone District and projects, based on the estimates contained in Table 4 attached, total tax increments captured over the 30-year life of the Tax Increment Financing Plan from taxes levied from each of the taxing jurisdictions. The SmartZone Authority's Development Plan will provide significant long-term benefits to the community. The capture and use of tax increment revenues for purposes identified in the Development Plan will increase the tax base throughout the City and create many new jobs. By foregoing tax increment revenues from the SmartZone District the taxing jurisdictions will only lose the use of tax revenues from the growth in taxable value over the 2000 base year. The tax units will continue to levy and retain tax revenues from the base year taxable value of real and personal property in the SmartZone. The SmartZone Authority believes that the development that will occur because of implementation of the Development Plan will over time return to the taxing jurisdictions many fold the tax increment revenues captured from the taxing jurisdictions' tax levies. Further, the capture of the State education tax increment revenues and tax increment revenues from taxes levied by the Grand Rapids Public Schools and Kent Intermediate School District will not adversely affect the school operating funds those Districts annually receive from the State of Michigan. L.

Legal Description of the Eligible Property This Tax Increment Financing Plan applies to the entire SmartZone District identified on Map 1 attached. The boundaries of the SmartZone District are described in paragraph A Chapter II above of the Development Plan. The precise location of eligible property within the SmartZone District cannot be determined at this time. It is expected that over time eligible property will be located at many locations throughout the SmartZone District. The SmartZone Authority in conjunction with Grand Valley State University does plan to locate a life science product development center, i.e., business incubator in the University's Center for Health Professions located at 301 Michigan Street, N.E. within the SmartZone District. A listing of all personal and real property included in the SmartZone LDFA is shown in Table 7, attached.

M.

Estimated Number of Jobs to be Created It is estimated that during the initial 30-year term of the Tax Increment Financing Plan minimum 1,000 new jobs will be created.

N.

Proposed Boundaries of a Certified Technology Park The boundaries of the certified technology park, i.e., SmartZone District are shown on Map 1 attached. The boundaries of the SmartZone District are described in paragraph A of Chapter II above of the Development Plan. The SmartZone District boundaries will be the applicable certified technology park boundaries created under the Agreement with the Michigan Economic Development Corporation.

O.

Real Property Within the Certified Technology Park All real property within the certified technology park, i.e., SmartZone District is included in this Tax Increment Financing Plan. Those properties are identified by parcel number and property address in Table 1 attached.

P.

Exemption of Personal Property Personal property located in the certified technology park, i.e., SmartZone District will not be exempt from determining tax increment revenues.

Rules of Procedure

As amended through 2/5/04 CITY OF GRAND RAPIDS SMARTZONE LOCAL DEVELOPMENT AUTHORITY RULES OF PROCEDURE

Article I Governing Body of Authority Section 1. Governing Body. The Authority shall be under the supervision and control of the Board pursuant to the Local Development Financing Act, Act 281 of the Public Acts of Michigan of 1989, as amended specifically by Act 248 of the Public Acts of Michigan of 2000 (the "Act").

Article II Board Section 1. Composition of Board. The Board of the Authority shall consist of eleven members and one ex-officio member. Seven members shall be appointed by the City of Grand Rapids Mayor and approved by the Grand Rapids City Commission. One member shall be appointed by the Kent County Board of Commissioners, one member shall be appointed by the President of Grand Rapids Community College, and two members shall be appointed by the Superintendent of Grand Rapids Public Schools. The ex-officio member shall be designated by the Michigan Economic Development Corporation or its successor, shall serve so long as it shall determine, shall not have a vote and shall not count towards a quorum. Section 2. Term of Office. The members of the Board shall be appointed for a term of four years except that (a) of the members first appointed by the City of Grand Rapids, one shall be appointed to a term of one year, two shall be appointed to a term of two years, two shall be appointed to a term of three years and two shall be appointed to a term of four years; (b) the member first appointed by the Kent County Board of Commissioners shall be appointed to a term of three years; (c) the member first appointed by the President of Grand Rapids Community College shall be appointed to a term of one year; and (d) of the members first appointed by the Superintendent of Grand Rapids Public Schools, one shall be appointed to a term of one year and one shall be appointed to a term of four years. A member whose term has expired shall, however, continue to hold office until the member's successor is appointed. Section 3. Effective Date of Appointment. The term of office of Board members shall begin on January 1, except for those members first appointed, whose terms shall commence on the effective date of appointment and expire the stated number of years after January 1, 2002. Section 4. Filling of Vacancies. If a vacancy is created due to the death, resignation or removal of a Board member, a successor shall be appointed within sixty days in the same manner as the original appointment to serve for the remainder of the term vacated.

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Section 5. Removal of Board Member. Pursuant to proper notice and an opportunity to be heard, a Board member may be removed from office before the expiration of his or her term for neglect of duty including nonattendance at meetings, misconduct, malfeasance or for any other good cause by majority vote of the remaining members of the Board. Removal of a Board member is subject to review by the Kent County Circuit Court. Section 6. Compensation of Board Members. Board members shall serve without compensation, but shall be reimbursed for actual and necessary expenses, as approved by the Board. Section 7. Disclosure of Interest. A Board member who has a direct interest in any matter before the Authority shall disclose his or her interest prior to the Authority taking any action with respect to the matter. Such disclosure shall become a part of the record of the Authority's official proceedings. Any Board member making such disclosure shall refrain from participating in the Authority's decision-making process relative to such matter. Section 8. Oath of Office. Before assuming the duties of office, a Board member shall qualify by taking and subscribing to the constitutional oath of office.

Article III Power of Board Section 1.

Board Powers. The Board may:

(a) Study and analyze unemployment, underemployment and joblessness and the impact of growth upon the Authority district; (b) plan and propose the construction, renovation, repair, remodeling, rehabilitation, restoration, preservation or reconstruction of public facilities; (c) develop long-range plans to promote the growth of the Authority district and take the necessary steps to implement the plans to the fullest extent possible including receiving the designation of the Authority District as a certified technology park in order to create jobs and promote economic growth; (d) implement any plan of development necessary to achieve the purposes of the Act in accordance with the authority granted by said Act; (e) make and enter into contracts necessary or incidental to the exercise of the Board's powers and the performance of its duties; (f) acquire by purchase or otherwise on terms and conditions and in a manner the Authority considers proper; own or lease as lessor or lessee; convey, demolish, relocate, rehabilitate or otherwise dispose of real or personal property, or rights or interest in that property, which the Authority determines is reasonably necessary to

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achieve the purposes of the Act, and to grant or acquire licenses, easements and options with respect to the property; (g) improve land, prepare sites for buildings, including the demolition of existing structures, and construct, reconstruct, rehabilitate, restore and preserve, equip, improve, maintain, repair or operate a building and any necessary or desirable appurtenances to a building as provided in the Act for the use, in whole or in part, of a public or private person or corporation, or a combination thereof; (h) fix, charge and collect fees, rents and charges for the use of a building or property or a part of a building or property under the Authority's control, or a facility in the building or on the property, and pledge the fees, rents and charges for the payment of revenue bonds issued by the Authority; (i) lease a building or property or a part of a building or property under the Authority's control; (j) accept grants and donations of property, labor or other things of value from a public or private source ; (k)

acquire and construct public facilities;

(l) incur costs in connection with the performance of the Board's authorized functions including, but not limited to, administrative costs, and architects, engineers, legal and accounting fees; and (m) plan, propose and implement an improvement to a public facility on eligible property to comply with the barrier free design requirements of the State of Michigan construction code.

Article IV Officers of the Board Section 1. Elected Officers of the Board. The Board shall elect from its members a Chairperson, Secretary and Treasurer. Section 2. Term of Office. The officers of the Board shall serve a one year term. An officer whose term has expired shall, however, continue to hold office until a successor is appointed. Section 3. Effective Date of Appointment. The term of office of an officer of the Board shall begin on February 1, except for those officers first elected, whose term shall commence on the date of election and expire on January 31, 2002.

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Section 4. Filling of Vacancies. If a vacancy is created due to the death, resignation or removal of an officer of the Board, a successor shall be elected by the Board within sixty days to serve for the remainder of the vacated term. Section 5.

Duties of Officers.

The following officers shall have the following

duties: (a) Chairperson – the Chairperson shall preside at all meetings of the Board and shall discharge the duties of a presiding officer. (b) Secretary – the Secretary shall maintain custody of the official seal and the records, books, documents or other papers of the Authority not required to be maintained by the Treasurer. The Secretary shall keep or cause to be kept a record of the proceedings of the Board and shall perform other duties as may be delegated by the Board. (c) Treasurer – The Treasurer shall keep the financial records of the Authority and shall, together with the Executive Director, approve all vouchers for the expenditures of the Authority. The Treasurer shall perform such other duties as may be delegated by the Board and shall furnish a bond in an amount as may be prescribed by the Board. The premium of any required bond shall be paid for by the Authority.

Article V Appointment and Retention of Other Personnel Section 1. Appointment of Executive Director. The Board shall appoint an Executive Director. The Executive Director shall be the chief executive officer of the Authority and shall serve at the pleasure of the Board. A Board member is not eligible to hold the position of Executive Director. The Executive Director shall furnish a bond in an amount as may be prescribed by the Authority. The premium of any required bond shall be paid for by the Authority. Before entering upon the duties of the office, the Executive Director shall take and subscribe to the constitutional oath of office. Subject to the approval of the Board, the Executive Director shall supervise and be responsible for the preparation of plans and the performance of the functions of the Authority in the manner authorized by the Act. The Executive Director shall attend all meetings of the Board and shall provide to the Board and the Grand Rapids City Commission a regular report covering the activities and financial condition of the Authority. The Executive Director shall also furnish the Board with information or reports governing the operation of the Authority as the Board may from time to time require. If the Executive Director is absent or disabled, the Board may designate a qualified person as acting Executive Director to perform the duties of the office who shall before entering upon the duties of the office take and subscribe to the constitutional oath of office and furnish such bond as required of the Executive Director.

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Section 2. Retention of Legal Counsel. The Board may retain legal counsel to advise the Board in the proper performance of its duties. Legal counsel may represent the Authority in actions brought by or against the Authority. Section 3. Other Personnel. The Board may appoint or retain other personnel as it considers necessary including, but limited to, an assistant secretary to assist the Secretary and an assistant Treasurer (who shall furnish such bond as required by the Board) to assist the Treasurer.

Article VI Meetings of the Board Section 1. Annual Meeting. An annual meeting of the Board shall be held in January of each year at a time and place to be set by the Board. The election of officers shall be held at the annual meeting. If the election of officers shall, for any reason, not be held at the annual meeting, the Board shall elect officers at a regular or special meeting of the Board within ninety days of the annual meeting. Section 2. Regular Meetings. Regular meetings of the Board shall be held at times and places set by the Board in compliance with the Open Meetings Act, Act 267 of the Public Acts of Michigan of 1976, as amended. At each regular meeting expenses of the Authority shall be considered and approved by the Board. Section 3. Special Meetings. Special meetings of the Board may be called by the Chairperson, Executive Director, any three members of the Board or the Grand Rapids City Commission by giving Board members twenty-four hours written or telephonic notice of the special meeting and the purpose of the meeting. Notice of the meeting shall also be posted eighteen hours in advance in compliance with the Open Meetings Act. Section 4. Meetings to be Public. All meetings of the Board shall be open to the public and provide for public participation in compliance with the Open Meetings Act. Section 5. Meeting Agendas. The Executive Director shall prepare the agenda for all meetings and whenever possible mail or deliver the agenda for receipt by Board members at least twenty-four hours prior to the meeting. At the beginning of any regular meeting any Board member may add an item to the meeting's agenda. Section 6. Quorum and Voting. A majority of Board members in office shall constitute a quorum for the transaction of business of the Board. The concurring vote of a majority of those present and voting shall constitute the action of the Board unless the concurring vote of a larger number is required by law or elsewhere in these rules. In the event that the effective membership of the Board is reduced because of the disclosure of interest pursuant to Article II, Section 7 hereof, the concurring vote of a majority of the remaining Board members eligible to vote shall constitute the action of the Board.

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Section 7. Rules of Order. Unless otherwise required by law or provided in these rules, the most recent version of Robert's Rules of Order shall govern the conduct of all meetings of the Board.

Article VII Committees and Advisory Boards Section 1. Committees. The Board by resolution may designate one or more committees to advise the Board. Committee members shall be members of the Board. The Chairperson of the Board shall appoint the members and shall select the chairperson of each committee. Committees may be dissolved by vote of the Board. At each annual meeting of the Board, all committees will be evaluated and either continued or dissolved. A majority of the members of a committee constitutes a quorum. The concurring vote of a majority of committee members present at a meeting at which a quorum is present shall constitute the action of the committee. Section 2. Advisory Boards. The Board by resolution may designate one or more advisory boards to advise the Board. Members of advisory boards need not be members of the Board. The Chairperson of the Board shall, with the advice and consent of the Board, select members of each advisory board. The members of each advisory board shall select a chairperson of the advisory board. An advisory board may be dissolved by vote of the Board. At each annual meeting of the Board, all advisory boards will be evaluated and either continued or dissolved. A majority of the members of an advisory board constitutes a quorum. The concurring vote of a majority of committee members present at a meeting at which a quorum is present shall constitute the action of the advisory board.

Article VIII Contracts, Funds and Gifts Section 1. Contracts. The Board may authorize any of the officers of the Board, the Executive Director or any agent of the Authority to enter into any contract or to execute and deliver any instrument on behalf of the Authority within the limits authorized by the Act. The authorization of the Board may be general or limited to a specific contract or instrument. Section 2. Authority Funds. All funds of the Authority shall be placed in such banks, trust companies or other depositories as selected by the Board. All checks, drafts or other orders for the payment of money shall be signed by the Treasurer or an assistant treasurer and countersigned by the Executive Director. All bonds, notes or other evidence of indebtedness issued in the name of the Authority shall be signed by any two officers of the Board. Section 3. Gifts and Grants. The Board may accept on behalf of the Authority any gift, grant, contribution or bequest for the general purposes or for any special purpose of the Authority.

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Article IX Books, Records, Audits and Financial Reports Section 1. Books and Records. The Authority shall keep current and complete records of the books and accounts of the Authority and minutes of all meetings of the Board. All records and minutes shall be kept at the principal office of the Authority at the Grand Rapids City Hall and shall be open to the public unless otherwise provided by law. The records of the Authority shall include the names and addresses of all Board members and advisory board members. Section 2. Annual Audit. An annual audit of the Authority's financial books and records shall be conducted by an independent certified public accounting firm. Section 3. Annual Report of Tax Increment Financing Plan. The Authority shall submit annually to the Grand Rapids City Commission and the Michigan State Tax Commission a financial report of the status of any tax increment financing plan of the Authority.

Article X Funding of Authority Activities Section 1. Sources of Funding. The activities of the Authority may be financed from one or more of the following sources: (a)

contributions to the Authority for the performance of its functions;

(b) revenue from any property, building or facility owned, leased, licensed or operated by the Authority or under its control; (c) tax increments received pursuant to a tax increment financing plan established pursuant to the Act; (d)

proceeds of tax increment bonds issued pursuant to the Act;

(e)

proceeds of revenue bonds issued pursuant to the Act; and

(f) money obtained from any other legal sources approved by the Grand Rapids City Commission. Section 2. Borrowing Money. The Authority may borrow money and issue its (i) negotiable revenue bonds pursuant to the Revenue Bond Act, Act 94 of the Public Acts of Michigan of 1933, as amended, or (ii) tax increment bonds pursuant to the Act. The City of

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Grand Rapids by majority vote of the City Commission may make a limited tax pledge to support the Authority's revenue bonds or tax increment bonds or, if authorized by the voters of the City, may pledge its full faith and credit to support such revenue bonds or tax increment bonds. Article XI Miscellaneous Section 1. District Boundaries. The Authority shall exercise its powers within an Authority district established or amended from time to time by the Grand Rapids City Commission pursuant to the Act. Section 2. Fiscal Year. The fiscal year of the Authority shall begin on July 1 of a year and end on June 30 of the following year, provided, however, the first fiscal year of the Authority shall begin December 6, 2001, and end June 30, 2002. Section 3. Annual Budget. The Executive Director shall prepare or cause to be prepared and shall submit for the approval of the Board a budget for the operation of the Authority for the ensuing year. The budget shall be prepared in the manner and contain the information required by the municipal departments of the City of Grand Rapids. Before the budget may be adopted by the Board, it shall be approved by the Grand Rapids City Commission. Section 4. Amendment to Rules. These rules may be altered, amended or repealed and new rules adopted by majority vote of the Board members present at a Board meeting and upon approval of the Grand Rapids City Commission.

Approved by the Board on December 6, 2001 Approved by the Grand Rapids City Commission on December 18, 2001, Res. #69417 Amendment to Article II, Section 1 approved by the Board on February 5, 2004 Amendment to Article II, Section 1 approved by the City Commission on March 2, 2004, Res. #72212

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Map of the Grand Rapids sm SmartZone

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Business Plan

Revised Draft 2011 Strategic and Business Plan for the Grand Rapids SmartZoneSM For the SmartZone Local Development Finance Authority 22 August 2011

22 August 2011

Ms. Birgit Klohs Chairperson Grand Rapids SmartZoneSM Local Development Finance Authority 300 Monroe Ave., N.W. Grand Rapids, MI 49503 Revised Draft Strategic and Business Plan for the Grand Rapids SmartZoneSM LDFA Dear Birgit: On behalf of the SmartZoneSMstrategic planning committee, I am pleased to present this draft 2011 strategic and business plan for the Grand RapidsSmartzoneSM. The purpose of the plan and performance measures are to assist the Grand Rapids SmartZoneSM adapt to continuing changes in the marketplace, as it addresses services and competencies required by area businesses and entrepreneurs to expand innovative capacity, commercialization and related economic development. The plan and performance measures (or “Combined Plan”) are intended to assist the Local Development Finance Authority (LDFA) in exercising its duty of care in stewarding financial assets, and overseeing on-going progress of the SmartZoneSM toward achieving a set of strategic and business objectives over the five year period through 2017. The combined plan will serve as a basis for monitoring strategic execution and effective utilization of LDFA budgets and investment. As such, it has been designed to support: increased organizational focus, joint accountability and enhanced feedback/learning among regional service providers for addressing strategic and operational plans for the SmartZoneSM and monitoring related performance. Development Procedures for development of the strategic and business plan are summarized in the Introduction contained in Section I. The plan was facilitated by Schaefer & Company LLC, a strategic and technology management consulting firm. While Schaefer & Company designed and facilitated processes for strategic development, it assumes no responsibility for strategic, operational or financial assumptions or decisions made in development of the strategic and business plan, which are appropriately those of the LDFA and its management.

300 Monroe Ave., N.W., Grand Rapids, MI 49503

Assistance provided by Schaefer & Company LLC in facilitating the strategic/business plan is further subject to limiting conditions and assessed risk factors contained in its Letter of Transmittal and Letter of Engagement with the LDFA and incorporated herein by reference. The plan and assumptions were developed with involvement of a strategic planning committee whose members included: Mr. Keith Brophy, Ideomed, Inc. Mr. Jim Bachmeier, Grand Valley State University Mr. Eric DeLong, City of Grand Rapids, MI Dr. Jeffrey Dwyer, MSU College of Human Medicine Mr. Dale Grogan, Michigan Accelerator Fund I Ms. Birgit Klohs, President and CEO, The Right Place, Inc. Mr. Peter Hungerford, ADAC Automotive Ms. Carol Lopucki, MI SBTDC Mr. Brent Mulder, Van Andel Institute Mr. Ron Williams, MedBio inc. Mr. Dick Wendt, Dickinson Wright Pllc Ms. Kara Wood, Director, Grand Rapids Economic Development We appreciate the time and involvement of these individuals who attended planning workshops and provided comments on subsequent draft materials. The strategic and business plan is submitted to the LDFA Board in revised draft form, following review and comment by an independent review committee. Included in the appendices, these comments were considered as part of developing an implementation plan, also attached for your review.

Sincerely, Kara Wood Executive Director Grand RapidsSM LDFA

300 Monroe Ave., N.W., Grand Rapids, MI 49503

Table of Contents EXECUTIVE SUMMARY Mission Statement ....................................................................................................................................................... i I. INTRODUCTION Introduction ................................................................................................................................................................. 1 Situational Review ...................................................................................................................................................... 3 II. KEY STRATEGIC PLAN ELEMENTS Strategic Vision........................................................................................................................................................... 9 Mission .................................................................................................................................................................... 10 Strategic Priorities ................................................................................................................................................... 11 Description of SmartZoneSM Strategic Partners ........................................................................................................ 12 Strategic Management Methods .............................................................................................................................. 13 Strategy Map for the Grand Rapids SmartZoneSM .................................................................................................... 14 Summary of Strategic Goals and Objectives ............................................................................................................ 16 III. BUSINESS PLAN Description of SmartZoneSM Operations ................................................................................................................... 18 A. B. C. D. E. F.

Legal Structure ................................................................................................................................................................................... 18 Description of SmartZones by MEDC................................................................................................................................................. 18 Services Supported by The Grand Rapids SmartZoneSM ................................................................................................................... 19 Principal SmartZoneSMOperating Foci ................................................................................................................................................ 21 Target Markets/Economic Clusters .................................................................................................................................................... 23 Marketing and Sales Strategy ............................................................................................................................................................ 25

G. Operating Structure ............................................................................................................................................................................ 27 H. Concierge Service Delivery Process .................................................................................................................................................. 29 I. Investment……………………………………………………………………………………………………………………………………… 30

SmartZoneSMStrategy Map ........................................................................................................................................ 31 2011 Performance Measures for Strategic/Operational Management ...................................................................... 32 Appendices Review Comment Summary.........................................................................................................................................2 Implementation Plan.....................................................................................................................................................5

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List of Abbreviations BBCetc

Biotechnology Business Consultants

CEI

Center for Entrepreneurial Innovation (at GVSU)

EIR

Executives in Residence

GVSU

Grand Valley State University

LDFA

Local Development Finance Authority

MEDC

Michigan Economic Development Corporation

MI-SBTDC

Michigan Small Business & Technology Development Center

MSU

Michigan State University

MSU CHM

Michigan State University College of Human Medicine

SBIR

Small Business Innovation Research

STTR

Small Business Technology Transfer

TAC

Technical Assessment Committee

TGEN

Translational Genomics Research Institute

TIF

Tax Increment Finance District

WMSTI

West Michigan Science and Technology Initiative

VARI

Van Andel Research Institute

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EXECUTIVE SUMMARY M I S S I O N

A N D

S T R A T E G I C

P R I O R I T I E S

Executive Summary Mission Statement The mission of the GR SmartZoneSM is to support growth in new life-sciences and medical device industry companies in Grand Rapids, Michigan through accelerated technology commercialization. With a primary focus on life-science/med device technology commercialization, SmartZoneSM investments support three critical innovation service areas for business start-ups that include:  ‘Idea generation’ to support development and acquisition of new products, services and processes;  Access to capital and;  Improved delivery platforms supporting each of the above (e.g. technologies, processes, knowledge, people and relationships etc.) Support for services in these areas will be provided through a ‘Concierge’, backed by a shared services network of economic development, community and strategic partner organizations (referred to as Grand Rapids SmartZoneSM Partners). Strategic Priorities of the Grand Rapids SmartZoneSM

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1.

‘Concierge Shared Services’: coordinates business accelerator assistance through the ‘Concierge’ shared services network. Through a referral based system, the network provides direct management expertise, legal advice, technology commercialization assistance and other seed-stage development.

2.

Virtual Incubator: The Virtual Incubator utilizes flex and wet lab space available in the District on an ‘as needed’ basis, with a SmartZoneSM office and conference room(s), from which SmartZoneSM activities are coordinated and administered. This space also provides offices for Executives in Residence (EIR) and related interactions with business start-ups. The Local Development Finance Authority (LDFA) will provide flexible commercial space and rent support for business start-ups admitted to the virtual incubator.

3.

Marketing Communications and ‘Innovation Place-Making’: Innovation Place-Making refers to enhanced branding of the SmartZoneSM as a destination for new businesses, inventors and researchers. Integrated marketing communications will support direct business development activity of the SmartZoneSM and include: direct marketing; advertising; public relations strategies; web-enabled marketing and social networking media.

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4.

Event and Trade Show Marketing: This involves attendance at trade shows, exhibitions, trade fairs and other events on a continuing basis for the purpose of marketing Grand Rapids as a leading innovation community. SmartZoneSM investments cover a number of related costs such as travel, accommodations, promotional literature, space rental and displays.

5.

Collaborative Networks: Collaborative networks refer to the formal and informal networks linking existing and emerging economic clusters with the innovation infrastructure. The quality of such linkages is a primary factor influencing innovative capacity. Collaborative activity will focus on:  Competency groups for providing technical and managerial competencies needed by business start-ups for commercialization;  Developing university-industry applied research partnerships and;  Industry consortia.

6.

Innovation Infrastructure Fund: This fund will be developed through capitalizing the current LDFA fund balance and incremental fund value to make investments in innovation or physical improvements in the LDFA district that will support innovation.

Grand Rapids SmartZoneSM Strategic Partners 1. Grand Rapids SmartZoneSM LDFA: Under the Executive Director, the LDFA service organization is responsible for strategic and operational management, including marketing communications in Greater Grand Rapids, and directing the ‘Concierge’ shared services network. The Executive Director reports directly to the LDFA Board. 2. Michigan Small Business & Technology Development Center: Headquartered in Grand Rapids at Grand Valley State University (GVSU), the MI-SBTDC provides counseling, training, research and advocacy for new ventures, existing small businesses and technology companies, through a cooperative agreement with the U.S. Small Business Administration. 3. Michigan Accelerator Fund I is a venture capital fund investing in early stage companies that fall into one of the four categories: life-sciences technology; advanced automotive, manufacturing and materials technology; homeland security and defense technology; and alternative energy technology.

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4. The Right Place/Innovation West Michigan is responsible for developing and managing collaborative networks (involving competency groups, university-industry partnerships and consortia (including the West Michigan Medical Device Manufacturer’s Consortium) and event/trade show marketing to support regional innovative capacity. This will include select marketing communications aimed at positioning Greater Grand Rapids in national and international markets as a leading innovation community. 5. Center for Entrepreneurship and Innovation (CEI) of GVSU encourages entrepreneurial development in Grand Rapids through programs, resources and information services. 6. Other service providers, as needed representing referrals to a larger network of service providers in: innovation training; business counselors/mentors/Executives in Residence and grant writing.

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I.INTRODUCTION S I T U A T I O N A L

A S S E S S M E N T

Introduction Summary of the Planning Process

In latter January 2011, The Grand Rapids SmartZone LDFA began development of a five year strategic/business plan and related performance measures for the Grand Rapids SmartZoneSM. The purpose of the plan and performance measures are to assist the LDFA adapt to continuing changes in the marketplace for business startups and related innovation, in addressing service and competency needs of area businesses and entrepreneurs. Development of the strategic/business plan has been facilitated by the management consulting firm, Schaefer & Company LLC. The plan and performance measures are intended to assist the LDFA in overseeing on-going progress of the SmartZoneSM in achieving a set of business and economic objectives. It will also serve as a basis for monitoring the effectiveness of strategic execution by the LDFA, and regional service providers to ensure focus and alignment, joint accountability and enhanced feedback/learning pertaining to strategic goals and objectives. A. Summary of Procedures The following represents a summary of procedures undertaken in the planning process. 1. Profile of Leading Practices at Other Business Accelerators and Michigan SmartZones: Schaefer & Company conducted interviews with business accelerators identified by LDFA for leading practices, to understand strategic priorities, operational plans and performance measures. These organizations included SW Michigan Innovation Center, Ann Arbor SPARK, Purdue Technology Centers, The Ben Franklin Tech Venture Center in Lehigh, Pennsylvania, and The Life Science Greenhouse of Central Pennsylvania. 2. Development of Strategic and Business/Operations Plan: The process involved three facilitated planning workshops with regional innovation stakeholders, for purposes of developing the five year strategic vision, operational plans and performance measures for the Grand Rapids SmartZoneSM. 3. Develop Recommended Performance Measures: To monitor implementation and gauge organizational responsiveness among SmartZoneSM strategic partners, a balanced scorecard of performance measures was developed. The scorecard includes a set of key performance indicators and desired outcome measures to support management and monitoring of LDFA strategic/business plans.

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Situational Review Summary of Strengths, Weaknesses, Opportunities and Threats

The Grand Rapids SmartZoneSM is a technology corridor designed to spur the growth of technology and/or research oriented businesses and employment opportunities, attract businesses and highly skilled employees. The intent of SmartZoneSM is to bring technology firms, biomedical businesses, universities and private research institutes together to form efficient “smart clusters”, as a source of economic development. The Michigan SmartZoneSM program was created in 2000 by the Michigan Economic Development Corporation (MEDC) through amendments to the Local Development Financing Act. This amendment allowed municipalities to use tax increment financing for property acquisition, infrastructure, business incubators and other facilities, as well as management and marketing. Grand Rapids is one of 15 SmartZones located throughout Michigan. It was created in 2001 from a joint proposal to the MEDC by five partner organizations including: Van Andel Research Institute (VARI); Grand Valley State University (GVSU); The City of Grand Rapids; Grand Rapids Community College and; The Right Place, Inc. B. Opportunity and Threat Assessment The City of Grand Rapids and the LDFA have conducted an assessment of the SmartZoneSM as part of a ‘plan-docheck-act’ evaluation and update. This assessment evaluated continuing service needs for innovation. Research included a survey of regional innovation managers, corporate executives, economic development and public officials in West Michigan, regarding satisfaction levels with innovation services provided by West Michigan Science and Technology Initiative (WMSTI) and other service organizations in the region. The following represents a summary of assessed threats and opportunities, based on findings. Assessed Primary Weaknesses, Threats and Risks to Strategic and Operational Effectiveness Assessed Confusion about Mission and Measures of Success 

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The Grand Rapids SmartZoneSM LDFA is a tax increment finance (TIF) district designed to foster technology commercialization and related jobs through resource collaborations between technology-based start-ups, university researchers and government.

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The focus of the TIF District in creating tax recapture revenues from increased property values has at times, overshadowed the primary purpose of the SmartZoneSM. This purpose is to support “new and emerging businesses in SmartZoneSM technology clusters, primarily focused on commercializing ideas, patents and other opportunities surrounding corporate, university or private research institute R&D efforts”.

Assessed Confusion and a Lack of Knowledge about Service Offerings   

Based on a survey of 145 innovation stakeholders, SmartZoneSM and its lead service provider, WMSTI had little market recognition among study participants, and related services were also not well known or understood. There was both confusion and a lack of knowledge among executives regarding many of the regional innovation/entrepreneurial support organizations providing innovation services; Similar concerns were noted about how regional innovation services could be better accessed/coordinated.

Continuing Challenges to Regional Entrepreneurship and Business Startups   

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The Grand Rapids SmartZoneSM was originally designed to serve the market for entrepreneurs and start-up companies. Concerns were assessed relating to the depth of the market and related trends for business start-ups in West Michigan serving as a basis for demand of incubator and other services. A recent study by professors at GVSU assessed continuing challenges in the regional entrepreneurial climate; Comparing Grand Rapids with a series of comparable benchmark cities, the region performed less favorably in such areas as: growth in absolute patents granted to inventors; Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grant investment per person; reported venture capital investment and; talent related measures. Another key reference point considered in the research was the Kauffman Index of Entrepreneurial Activity, which measures rates of business creation among U.S. metropolitan statistical areas (MSAs) by specific demographic groups. As shown in the following table, when comparing rates of business creation in the Grand Rapids MSA with those of Michigan and the U.S. in two distinct time periods, from 1996-‘98 and 2007-’09, the Grand Rapids MSA performed less favorably than both the State of Michigan and the U.S.

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Entrepreneurship Rates by Geographical Area (1996-1998) (2007-2009)

Kauffman Index Grand Rapids MSA

Michigan Total

U.S. Total

Year

Entrep. Index

Sample Size

Entrep. Index

Sample Size

Entrep. Index

Sample Size

1996-1998

0.16%

6,694

0.24%

56,562

0.29%

1,549,978

2007-2009

0.18%

6,848

0.28%

42,684

0.32%

1,762,863

Diffused Operating Model and Need for Alignment 

The SmartZoneSM will operate using a shared services model. Such models are highly diffused, and can be challenging from an operations standpoint. Shared services require a strong central management function, with services agreements organized among a series of strategic partner organizations. While not a strategic partner, another key service organization is the Technical Assessment Committee (TAC), a volunteer group selected by the LDFA for assessing technology and company candidates for the virtual incubator.

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Critical to the success of shared services is the degree of alignment, organizational focus and accountability among such service organizations in working together to achieve a set of common business objectives. While effective business processes and performance measures are important enablers, much of SmartZone’s success will depend on the willingness of partners to ensure cooperation and effective teaming in focusing on common goals for the SmartZoneSM, when each partner will have different or conflicting goals of its own.

Intellectual Property 

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Technology commercialization is influenced by intellectual property (IP) management issues. Important principles in managing IP interests include: understanding of the mission and needs of each partner; and that interactions, related goals and relationships must be managed specifically in regard to distinct segments of basic/applied research, and development. While a unified IP policy was previously developed for the

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SmartZone District, Key SmartZoneSM partners’ IP interests may vary and this will require continued business focus and flexibility in support of strong commercialization results. Primary Assessed Strengths and Opportunities Strong Comparative Tax Increment Performance among Michigan SmartZones  

Compared with the 15 other Michigan SmartZones, Grand Rapids is reportedly one of the three strongest Districts measured by annual tax recapture revenues. Annual tax re-capture in the Grand Rapids SmartZoneSM over the past five years has averaged $1.5 million and the current fund balance for the LDFA is approximately $2.4 million.

A Region Known for Collaboration 

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Grand Rapids and West Michigan have a strong tradition of collaboration in support of regional economic development, providing an important foundation for potential resource collaboration in support of new business and innovation activity. The SmartZoneSM itself was a collaborative between the City, VAI, GVSU, Grand Rapids Community College and The Right Place, Inc. Other collaborations include The Right Place, Inc., and West Michigan Manufacturers Council, West Michigan Medical Device Manufacturer’s Consortium, and The Grand Rapids Inventors Network (GRIN).

Emerging Life Sciences Cluster Development 

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Led by VARI, Spectrum Health Systems and Spectrum Innovations, St. Mary’s, Michigan State University’s (MSU) College of Human Medicine (CHM) and GVSU Cook DeVos Center for Health Sciences, the medical/life-sciences cluster has increased research, technology transfer and commercialization capabilities through dedicated professionals and staffing. In 2009, VARI and the Translational Genomics Research Institute (TGen) formed a strategic alliance to focus on translational (‘bench to bedside’) research. Plans include development of cross-organizational programs which support new drug development and discovery, and establishing a Phase I Clinical Trial program.

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The MSU College of Human Medicine opened in the fall of 2010. While representing a teaching university campus, MSU CHM in Grand Rapids will also have a significant research emphasis. Recently, MSU was awarded research investment for a new Center for Women’s Health and Reproductive Research and another grant for Parkinson’s research from the National Institute for Neurological Disorders and Stroke at the National Institutes for Health. The GVSU Cook DeVos Center for Health Sciences was opened in 2003 and offers over 200,000 square feet of teaching, wet lab, conference and other facilities. The facility houses GVSU’s Vice Provost for Health and numerous departments and programs associated with the university including medical imaging, cell and molecular biology, clinical laboratory science and others. As all of these entities grow, it will bring an influx of medical, research and technical talent to Greater Grand Rapids that provides a basis of potential demand for new business start-up activity.

High Degrees of ‘Innovation Awareness’ Matched with Traditional Strength in Resources and Investment   

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West Michigan is a region rich in business and civic investment and resources. It is also a region where innovation is highly recognized for its importance in creating and sustaining global competitiveness. This is underscored by over 30 current organizations in the region which provide some form of innovation and entrepreneurial services. Among these include:  The Right Place, Inc. / Innovation West Michigan which works with existing small-to-mid-sized enterprises and larger firms in developing increased innovative capacity through collaborative networking, university-industry partnership development and other mechanisms;  The MI-SBTDC which provides services to new ventures;  The Michigan Accelerator Fund I, a venture capital fund investing in early stage companies headquartered in Grand Rapids and;  GVSU CEI which supports entrepreneurial development in Grand Rapids through programs, resources and information services. CEI now provides an Entrepreneur in Residence program for mentoring of entrepreneurs.

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II.KEY STRATEGIC PLAN ELEMENTS R E D E F I N I N G

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S T R A T E G I C

V I S I O N

A N D

M I S S I O N

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Strategic Vision Technology Commercialization  New Business Start Ups  Jobs  Life-Sciences Cluster Development

Grand Rapids SmartZoneSM Strategic Vision The strategic vision for the Grand Rapids SmartZoneSM is to be a primary strength of emerging lifesciences and medical device business development in Grand Rapids, Michigan through accelerated technology commercialization. Our primary focus is providing business incubation and acceleration services to business start-ups, helping them succeed in the marketplace for new ideas. The SmartZoneSM will draw on the strengths of economic development, community and strategic partner organizations to provide innovation services in a fully ‘networked approach’. To achieve this strategic vision, the SmartZoneSM will foster and promote resource collaborations between technology-intensive companies, universities, research organizations, government and other community institutions, as part of innovation service programs supporting growth of technology-based businesses and jobs. We will chart our progress based on a set of desired outcomes and metrics, enabling us to monitor performance and make strategic adjustments, where necessary. Through developing quality linkages between people, technology and businesses, we aspire to make the Grand Rapids SmartZoneSM the leading innovation community in the U.S.

The strategic vision is intended to create a clear sense of direction for the LDFA service organization’s strategic plans and operating initiatives, and serves to align and coordinate the interests of SmartZoneSM strategic partners in providing services for new business start-ups. The main themes are:  Life-sciences business start-ups: which refer to new company formations in drug development, therapeutics, and diagnostics businesses, as well as medical device companies;  Technology commercialization: which refers to development of new products, processes and services from ideas, research and technologies;  Business incubator and acceleration services: Business incubators offer space for business startups, and more limited business services. Business accelerators assist companies in forming legal entities, lending direct management expertise and in providing other seed-stage development.  Collaboration: describing relationships between inventors, companies, university and other researchers for purposes of knowledge and resource sharing, technology diffusion, joint development and learning.

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Mission

Mission Statement The mission of the GR SmartZoneSM is to support growth in new life-sciences and medical device industry companies in Grand Rapids, Michigan through accelerated technology commercialization. With a primary focus on life-science/med device technology commercialization, SmartZoneSM investments support three critical innovation service areas that include:  ‘Idea generation’ to support development and acquisition of new products, services and processes;  Access to capital and an;  Improved delivery platform (consisting of common technologies, processes, people and relationships etc.) supporting each of the above. Support for services in these areas will be provided through a ‘Concierge’, backed by a shared services network of economic development, community and strategic partner organizations (referred to as Grand Rapids SmartZoneSM Partners) that include:  The Grand Rapids SmartZoneSM LDFA  MI SBTDC (as primary service provider to business start-ups);  Michigan Accelerator Fund I/The Charter Group  The Right Place/Innovation West Michigan  Center for Entrepreneurship and Innovation (CEI) of GVSU  Other strategic partners, as needed 

The mission statement of an organization describes its fundamental purpose and ‘reason for being’. In the case of the SmartZoneSM, the mission provides an important reference point in how the organization defines its success and focuses its operating resources and partnering relationships on desired outcomes.

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Strategic Priorities

Strategic Investment Priorities of the Grand Rapids SmartZoneSM LDFA 1. ‘Concierge Shared Services’: Through a referral based system, the Concierge coordinates business accelerator assistance through the shared services network. This network provides direct management expertise, legal advice, technology commercialization assistance and other seed-stage development. 2. Virtual Incubator: The Virtual Incubator utilizes flex and wet lab space available in the District on an ‘as needed’ basis, with a SmartZoneSM office and conference room(s), from which SmartZoneSM activities are coordinated and administered. This space also provides offices for Executives in Residence (EIR) and related interactions with business start-ups. The LDFA will provide flexible commercial space and rent support for business start-ups admitted to the virtual incubator. 3. Marketing Communications and ‘Innovation Place-Making’: Innovation Place-Making refers to enhanced branding of the SmartZoneSM as a destination for new businesses, inventors and researchers. Integrated marketing communications will support direct business development activity of the SmartZoneSMand include: direct marketing; advertising; public relations strategies; web-enabled marketing and social networking media. 4. Event and Trade Show Marketing: This involves attendance at trade shows, exhibitions, trade fairs and other events on a continuing basis for the purpose of marketing Grand Rapids as a leading innovation community. SmartZoneSM investments cover a number of related costs such as travel, accommodations, promotional literature, space rental and displays. 5. Collaborative Networks: Collaborative networks refer to the formal and informal networks linking existing and emerging economic clusters with the innovation infrastructure. The quality of such linkages is a primary factor influencing innovative capacity. Collaborative activity will focus on:  Competency groups for providing technical and managerial competencies needed by business start-ups for commercialization;  Developing university-industry applied research partnerships and;  Industry consortia. 6. Innovation Infrastructure Fund: This fund will be developed through capitalizing the current LDFA fund balance and incremental fund value to make investments in innovation or physical improvements in the LDFA district that will support innovation.

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Description of SmartZoneSM Strategic Partners

SmartZoneSM Strategic Partners 1. Grand Rapids SmartZoneSMLDFA Operating under an Executive Director, the LDFA service organization is responsible for strategic and operational management, and directing the ‘Concierge’ shared services network. The Director reports directly to the LDFA Board. 2. Michigan Small Business & Technology Development Center: Headquartered in Grand Rapids at Grand Valley State University, the MI-SBTDC provides counseling, training, research and advocacy for new ventures, existing small businesses and technology companies, through a cooperative agreement with the U.S. Small Business Administration. 3. Michigan Accelerator Fund I is a venture capital fund investing in early stage companies that fall into one of the four categories: life sciences technology; advanced automotive, manufacturing and materials technology; homeland security and defense technology; and alternative energy technology. 4. The Right Place/Innovation West Michigan is responsible for developing and managing collaborative networks (involving competency groups, university-industry partnerships and consortia including the West Michigan Medical Device Manufacturer’s Consortium) and event/trade show marketing to support regional innovative capacity. 5. CEI of GVSU encourages entrepreneurial development in Grand Rapids through programs, resources and information services. 6. Other service providers, as needed representing referrals to a larger network of service providers in: innovation training; business counselors/mentors/Executives in Residence and grant writing. Shared services will be provided by a group of SmartZoneSM Strategic Partners described above. Responsibilities will be organized through a series of formal service agreements between the LDFA and each partner organization. The purpose of the service agreements is to effectively align the efforts of each Strategic Partner to customers, and along with the Balanced Scorecard, provide a basis of accountability for customer performance.

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Strategic Management Methods To Support Focused Execution and Joint Accountability

In conjunction with proposed, key elements of the strategic and business plan, a set of performance measures has been recommended for use in monitoring implementation of the Grand Rapids SmartZoneSM strategic/business plan. A summary of the performance measures can be found on page 32. The framework used for developing performance measures is the Balanced Scorecard. About Balanced Scorecard The Balanced Scorecard method of performance measurement was originally developed by Kaplan and Norton and is a generally accepted method of measurement in many large public and private organizations. When implemented effectively, Balanced Scorecard methods form the basis for a comprehensive strategic management system, linking strategic, operational and other leading performance indicators (commonly referred to as performance drivers) with desired performance outcomes. Original development of Balanced Scorecard methods posited that strategies for any organization represent a series of hypotheses, or ‘if-then propositions’ in which proposed causal linkages exist between strategies (involving strategic investment, operational and other performance drivers) and desired performance outcomes. These indicators and outcome measures are used over time as a factual basis for monitoring the effectiveness of strategic and operational plans and making strategic adjustments, where necessary. Developing a Strategy Map for SmartZoneSM Proposed strategic linkages between desired performance outcomes and business drivers were organized within a strategy map, shown on page 15. The strategy map tells the story of the SmartZoneSMstrategic plan, linking key strategic and operational priorities with desired business/economic outcomes. Linking Performance Indicators and Desired Outcomes Desired performance outcomes for the SmartZoneSM were confirmed in planning sessions and include:    

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Growth in technologies commercialized; Related business start-up activity (new company formation); Related revenue, profits and related wealth creation, and; Increased jobs.

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Strategy Map for the Grand Rapids SmartZoneSM Summarizing Proposed Business Drivers and Desired Outcomes

A primary objective in developing the Balanced Scorecard is to evaluate the range of potential factors that could most influence aspirational goals in these areas. The fundamental premise applied in the scorecard is that desired growth in area jobs will result from applied research, technology commercialization and related start-up business activity occurring within the SmartZoneSM district. Performance measures within the Balanced Scorecard are organized within four measurement perspectives including:    

Core operational and internal business processes influencing day-to-day operations of the Concierge Services Network and proposed incubator; Customer services (provided through the Concierge network and proposed incubator) and satisfaction ; Learning and growth perspective, involving employee satisfaction and organizational alignment; Economic and financial outcome measures (e.g. new business start-up activity, related revenues, profits and employment).

By developing a set of performance indicators and outcome measures in each of these measurement perspectives, the Balanced Scorecard can be used as a management tool to: • • • •

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Clarify and translate the vision of the LDFA for the Grand Rapids SmartZoneSM to regional innovation stakeholders; Serve as a basis for communicating and linking activities among key service organizations in support of strategic objectives of the Grand Rapids SmartZoneSM; Increase joint accountability and organizational focus among LDFA strategic partner organizations for achieving desired strategic objectives of the LDFA and; Provide a basis for improved feedback and learning on needed services and potential areas of strategic adjustment.

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Strategy Map for the Grand Rapids SmartZoneSM

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Summary of Strategic Goals and Objectives

In the strategy map above, required areas of operational excellence for the SmartZoneSM are shown in the Operational/Internal Business Process Perspective. The four principal operating areas include: (1) offering virtual business incubator space to business start-ups; (2) Concierge shared services, related business development and technology assessment activities; (3) marketing communications and; (4) trade show/event marketing. Management of these four areas is expected to contribute directly to desired operational improvements in each of the ‘desired business and economic outcomes shown in the top portion of the diagram. Strategic/Business Plan Goals for Grand Rapids SmartZoneSM; 2012-2017 Desired Outcomes

2012-2017

Total Number of Ideas and Technologies Commercialized

20

Number of Assists (service referrals to start-ups and inventors)

250

Number of Companies Formed (New Business Start-Ups in Grand Rapids SmartZoneSM) Revenue Growth Among Companies ideas/technologies commercialized Number of Jobs Created (in District)

from

135

new Tracked* 120

* To be tracked over time based on benchmark data. Also monitored will be: 1.) Revenue SM from commercialization as a ratio of SmartZone investment and; 2.) Grants/direct investment secured SM as ratio of investment by SmartZone .

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III.BUSINESS PLAN O P E R A T I N G

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P L A N

A N D

K E Y

P E R F O R M A N C E

M E A S U R E S

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Description of SmartZoneSM Operations

A. Legal Structure The Grand Rapids SmartZoneSM LDFA was established by the City of Grand Rapids in October 2001, pursuant to Act 281 for the purpose of encouraging, promoting and enabling high technology activities within a certain area of the City designated as a certified technology park (called the SmartZoneSM). The Authority is governed by an eleven member board. On June 12, 2002, the LDFA, City and MEDC entered into an agreement to permit the inclusion of certain school taxes from SmartZoneSM as Tax Increment Revenues for a period of not more than 15 years (the SmartZoneSM agreement). Tax increment financing permits the Authority to capture certain tax revenues attributable to increases in the value of all real and personal property located in the SmartZoneSM District. At the time plans for the SmartZoneSM were approved by the City, the value of the property was established and in each subsequent year for the duration of the Amended Plans, the “Current Assessed Value” of the property in the SmartZoneSM is determined. This value represents the taxable value of the property for that year. The amount by which the Current Assessed Value exceeds the Initial Assessed Value in any one year is the “Captured Assessed Value” which is maintained in a fund balance for potential future investment. For the duration of the Plans, the taxing jurisdictions will continue to receive tax revenues based on the Initial Assessed Value. B. Description of SmartZones by MEDC The following represents the current description of SmartZones by the MEDC. “SmartZones provide distinct geographical locations where technology-based firms, entrepreneurs and researchers locate in close proximity to all of the community assets that assist in their endeavors. SmartZoneSM technology clusters promote resource collaborations between universities, industry, research organizations, government and other community institutions, growing technology-based businesses and jobs.”

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New and emerging businesses in SmartZoneSM technology clusters are primarily focused on commercializing ideas, patents and other opportunities surrounding corporate, university or private research institute R&D efforts. SmartZones include technology business accelerators and incubators that provide such services as: business development mentoring; networking events; business feasibility studies and planning; entrepreneurial training; grant writing; wet lab space; grant writing; SBIR/STTR assistance; management recruitment; product development; technology assessments; technology transfer; venture capital preparation and venture investment.” C. Services Supported by The Grand Rapids SmartZoneSM Entrepreneurial Services Based on inputs from the three strategic planning sessions, the following were recommended as primary service areas for business start-ups supported by Grand Rapids SmartZoneSM LDFA:

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Accelerator Service Referrals for legal advice, direct management expertise, technology commercialization, venture investment, innovation training, business counselors/ EIR’s and grant writing.

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EIR /Business Mentoring: Patterned after leading practices in the Pittsburgh Life Sciences Greenhouse and other EIR programs, the Grand Rapids SmartZoneSM will offer EIR’s to assist new companies with executive talent in such areas as: business and strategic planning; identifying sources of capital; building connections with key business partners; development of operational and technology commercialization plans. EIR’s provide executive assistance to an existing owner or management group, or play a handson management role, depending on mutual business interests.

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SBIR/ STTR Investment: SBIR and STTR Programs are administered by The U.S. Small Business Administration (SBA) Office of Technology. These two programs provide small, high-tech, innovative businesses R&D and other investment. The Michigan Small Business & Technology Development Center (MISBTDC) is partnering with BBCetc to provide SBIR and STTR training services across the state of Michigan. The comprehensive SBIR/STTR grant assistance program includes:

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    

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Grant sourcing and identification of investment opportunities Strategic planning to integrate grant investment with business strategy Training programs ranging from grant basics to intensive proposal preparation Scientific, business and administrative proposal review Post-award administration and grant management

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Pre-Seed, Seed and Early Stage Investment: For companies or inventors that have recently conceived of an idea and are in process of developing product or business plans, SmartZoneSM services are available to refer clients to pre-seed and other capital sources. Such financing can be used to support: prototype development; IP management and protection; academic or applied research; business planning or facility needs. For companies that have achieved proof-of-concept, services are available for referral to potential early stage capital sources.

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Entrepreneurial Training: SmartZoneSM services support on-going training programs in the area which support new businesses and owners. The MI SBTDC, a SmartZoneSM strategic partner, offers a full array of training programs and workshops in such areas as:  Business accounting and budgeting  Business planning  Fundamentals of starting a business  E-Commerce  Finance  Legal  Managing the on-going business and  Marketing and sales

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D. Principal SmartZoneSM Operating Foci To support these areas and technology commercialization, the City has identified the following as SmartZoneSM Priority Investment Areas: 1. ‘Concierge Services Network’ Support to new business start-ups will be provided through a ‘Concierge’ shared services network. The network will be managed by the LDFA Executive Director, reporting directly to the LDFA Board; working with a network of economic development, community and strategic partner organizations (referred to as Grand Rapids SmartZoneSM Partners). These partners and a description of their roles and responsibilities include: 

    

The Grand Rapids SmartZoneSM LDFA (responsible for managing the Concierge shared services network, business development and identification of companies and technologies as candidates for the virtual incubator, and management of the virtual incubator in the SmartZoneSM.) The Right Place/Innovation West Michigan (trade show and event marketing, collaborative and competency networks, WMMDMC and other consortia activity); MI SBTDC (primary service provider to business start-ups); Michigan Accelerator Fund I/The Charter Group (pre-seed and gap investment for life-science and technology companies) CEI of GVSU (program support for entrepreneurs) Other strategic partners, as needed

The Concierge office will serve as network integrator and connector to SmartZoneSM service providers. It will be staffed by business development person(s) employed by the LDFA. The primary responsibilities of these persons include: (1) identifying companies and technologies for potential location within the Grand Rapids SmartZoneSM District; (2) business accelerator service referrals for new companies; (3) identifying candidates for the virtual incubator; (4) monitoring progress of incubator users and; (5) connecting companies and inventors to the broader innovation community in the region. An important resource for the Concierge network are EIR’s who are funded by the LDFA and can help new business owners navigate and manage key start-up and technology commercialization activities.

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2. Virtual Business Incubator The Virtual Incubator utilizes flex and wet lab space available in the SmartZoneSM District on an ‘as needed’ basis, hosted by a SmartZoneSM office and conference room(s), from which SmartZoneSM activities could be coordinated and administered. This space will also allow areas for interactions between business start-ups and selected EIR’s. 3. Collaborative/Competency Networks Collaborative networks are critical to the SmartZoneSM strategic plan, and refer to the formal and informal networks linking existing and emerging economic clusters with the innovation infrastructure. Specifically they describe relationships between inventors, companies, university and other researchers for purposes of knowledge and resource sharing, technology diffusion, joint development and learning. Managed by The Right Place, Inc./ Innovation West Michigan, collaborative networks will focus on:   

Competency groups and critical technical/managerial competencies needed by business start-ups and other area companies in order to commercialize technologies into new products, services and processes; University-industry applied research partnerships; Consortia with a primary, initial focus on re-invigorating the West Michigan Medical Device Manufacturer’s Consortia.

4.Trade Show and Event Marketing Another area managed by The Right Place, Inc./ Innovation West Michigan, this involves attendance at trade shows, exhibitions, trade fairs and other events on a continuing basis for the purpose of marketing Grand Rapids as a leading innovation community. SmartZoneSM investments in trade show and event marketing cover a number of related costs such as travel, accommodations, promotional literature, space rental and displays.

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5. Innovation Infrastructure Fund One area of proposed investment is establishing an innovation infrastructure fund. This fund would result from capitalizing the current LDFA fund balance and incremental fund value. Approved by the LDFA Board, this fund will be developed through capitalizing the current LDFA fund balance and incremental fund value to make investments in innovation or physical improvements in the LDFA district that will support innovation. Initial ideas considered for such investments include: expanded internet access for business incubator tenants; constructing new pedestrian walkways between buildings in the SmartZoneSM LDFA District and other proposed needs, as identified. 6. Marketing Communications A key element in the business plan will be increased marketing communications to improve the identity and understanding of SmartZoneSM services and district as a resource for technology-based business start-ups and; support increased business development activities of the Grand Rapids LDFA in identifying companies and technologies for SmartZoneSM incubator space. (See sales and marketing plans on following page.) 7. Technology Assessment Committee (TAC) Central to the mission of the Grand Rapids SmartZoneSM , the TAC will be responsible for all technology and commercial assessments of candidate companies, ideas and technologies considered as candidates for location in the Virtual Incubator. Part of TAC responsibilities will be developing criteria and processes for evaluating and selecting technology and company candidates to ensure that selection standards are well understood by prospective entities. Members of TAC will be selected on an “ad hoc” basis by the LDFA. E. Target Markets/Economic Clusters Industry Focus Due to the location of the Grand Rapids SmartZoneSM, the primary industry focus will continue to be life-sciences, medical devices and other complimentary industries.

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Geographic Focus Due to the statutes under which the SmartZoneSM program was organized, the primary geographic focus will be on supporting new business start-up and technology commercialization in the SmartZoneSM district. This area is irregularly shaped and bounded by Coldbrook on the north, Lyon on the south, and College and Taylor on the east. Primary Focus on Business Start-Ups

The primary strategic and operating focus on the Grand Rapids SmartZoneSM will be on coordinating business accelerator services for inventors, entrepreneurs and business start-ups. This focus serves an important market in local economic development dealing with encouraging entrepreneurial activity and new company formations. Through successful products and services and related profitable growth, these companies increase the potential to grow into SME’s and larger firms which support increased employment growth. In later stages of development, such SME’s and larger firms are served by The Right Place, Inc. /Innovation West Michigan in economic development and related innovation support.

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Methods by Which Prospective Companies and Technologies Can be Identified Recommend priority target markets have been developed with input from leading practices benchmarks and include such areas as:        

Networking with regional and local economic development organizations and Chambers Networking with Angel investors, pre-seed and seed capital sources Interactions with university technology transfer and industry liaison offices Direct calls on inventors, entrepreneurs Attendance at Venture Fairs Angel capital events Trade show events Technology user group events

F. Marketing and Sales Strategy Primary Objectives The primary objectives of the marketing and sales strategy are: (1) to improve the identity and understanding of SmartZoneSM services and district as a resource for technology-based business start-ups and; (2) support increased business development activities of the Grand Rapids LDFA in identifying potential inventors, companies and technologies for potential location in the virtual incubator. Marketing Channels     

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Regional and local economic development organizations and the Chambers of Commerce Capital sources Interactions with university technology transfer and business liaison offices Collaborative networks and competency groups including technology user group events Marketing support for events involving trade shows, venture fairs, Angel capital events

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 

Direct calls on inventors, entrepreneurs Social media

Marketing Mix Strategies Enhanced marketing communications will focus on ‘place branding’ of the Grand Rapids SmartZoneSM as a destination for new businesses, inventors and researchers. Marketing mix strategies will focus on improving the identity of the District with potential life-sciences, business start-ups and regional innovation stakeholders. Place branding refers to an integrated set of marketing communications primarily designed to support business development activity. ‘Place branding’ will be applied to two target markets including:  

The local/regional market in Greater Grand Rapids for inventors and entrepreneurs National and international markets for positioning Grand Rapids as a leading innovation community

The marketing mix to address these objectives focuses primarily on ‘promotion’ and ‘place’ elements. In the promotional area the proposed marketing mix includes the following:

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

Local/Regional Business Development: involving identification of potential technologies and companies for location in the Grand Rapids SmartZoneSM and incubator space utilizing business development professionals in marketing channels above;



Trade Show and Event Marketing/National/International Business Development: including participation at trade shows, conventions, and other events to support place marketing and positioning of Greater Grand Rapids as a leading innovation community for new business growth;



Direct marketing communications: including advertising in trade, university and local publications, marketing capabilities brochures, and bulk mailings, web-enabled marketing, social media and public relations for the purpose of supporting primary business efforts with a ‘call to action’ for prospective inventors, entrepreneurs and business owners.

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G. Operating Structure The SmartZoneSM will be operated utilizing a shared services network model. The LDFA will provide the central management function through the SmartZoneSM ‘Concierge’ in managing the incubator and strategic partner relationships. Service Agreements Strategic relationships will be managed through services agreements between the SmartZoneSM and strategic partner organizations. These agreements are essential to effective management of shared services and define expectations regarding service performance and related costs. Critical to the success of shared services are the degree of alignment, organizational focus and accountability of the partner organizations in working together to achieve desired business objectives. Important enablers include customer feedback mechanisms, processes and performance measures. Central Management Function The Grand Rapids SmartZoneSM will be managed by the Executive Director of the LDFA. This person will be responsible for managing and monitoring services, and related performance of the Grand Rapids SmartZoneSMand its strategic partner organizations in serving inventors and companies located in the virtual incubator. Key Functions in Central Management Function The following are key positions and functions within SmartZoneSM central management: 

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Concierge/Business Development Person(s) responsible for (1) identifying companies/technologies for potential location within the Grand Rapids SmartZoneSM; (2) business accelerator service referrals for new companies; (3) identifying candidates for the virtual incubator; (4) monitoring progress of incubator users and; (5) connecting companies and inventors to the broader innovation community in the region.

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Key Service Functions to be Contracted 

 



Technology Assessment Committee (TAC): Technology assessments are a critical function supporting commercialization and thus, the strategic mission of the Grand Rapids SmartZone.. They will be conducted by a volunteer council of cross-functional experts with significant commercialization experience, selected bi-annually by the Executive Director and the LDFA Board. Marketing Communications will be contracted to a local marketing services company; Property Management involving lease management and tenant services in the virtual incubator space will be contracted to a local service provider or an entity such as GVSU, which will coordinate with property owners and; Trade show and event marketing/collaborative networks and consortia will be contracted to a local service provider, currently planned as The Right Place, Inc./ Innovation West Michigan.

Oversight The Executive Director will report to an Executive Committee of the LDFA Board. The Executive Committee will have responsibility for overseeing effective implementation of the strategic and business plan for the LDFA SmartZoneSM, and related performance. The Executive Committee will report to the broader LDFA Board.

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Service Delivery

H. Concierge Service Delivery Process The diagram below describes the SmartZoneSM service delivery process beginning with identification of companies and technologies by the SmartZoneSM business development persons, who also make recommendations regarding admittance to the Virtual Incubator. Once recommendations are made, the Technology Assessment Committee (TAC) will assess recommended companies and technologies to either approve or not approve as prospective candidates for admittance to the Incubator. Once start-up companies are admitted, the SmartZoneSM Concierge and TAC are responsible for jointly monitoring the start-up company’s performance according to pre-set milestones, for continued location within the SmartZoneSM virtual incubator.

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Proposed Operating Budget

I. Investment Current Investment Requirements The current operating budget for the SmartZoneSM is approximately $400,000, which primarily supports operating activities of WMSTI. Approximately $340,000 of the current budget is allocated to WMSTI by the LDFA, while GVSU provides nearly $60,000 annually. Estimated Future Investment Requirements and Budget To support the Concierge shared services network and virtual incubator, current plans are to increase the annual operating budget to $570,000 in 2012. This increase will primarily focus on an increase in contract services needed to support expanded services and an increase in the marketing communications category. Current Estimated 2012 Budget Budget Line Item Staff (6 months in FY ’12) Marketing Communications Event and Trade Show Marketing Contract Services* Est. Total 2012 Operating Budget 

FY ’12 Est. Budget $100,000 100,000 70,000 300,000 $570,000

FY ’13 Est. Budget $200,000 100,000 70,000 300,000 $670,000

Includes transition from current space/operation

Sources and Uses of Funds As prior, the primary source of operating funds comes from tax recapture revenues of the SmartZoneSM local development finance authority. This will be augmented on an as needed basis through use of capitalized fund balances and managed by the Executive Director and LDFA Board.

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Strategy Map for the Grand Rapids SmartZone

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2011 Performance Measures for Strategic/Operational Management

Balanced Scorecard Performance Measures For each of the four measurement perspectives in the strategy map, the following represent desired outcome and key performance indicators selected in the strategic development process. These measures will be used over time as a basis for monitoring implementation of strategic/operational plans and making strategic adjustments, where necessary.

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Customer Perspective

Operational/Business Process Perspective

 Number of companies receiving services referred by ‘Concierge Services Network’  Number of companies entering incubator space  Number of companies exiting/ surviving

 Number of research/technology collaborations and competency groups  Number of business development calls involving companies/technologies  Number of potential companies and technologies identified  Conversion rate (companies/technologies admitted to virtual incubator from bus. development calls made)  Number selected for incubator/early funding support  Number of ideas/technologies commercialized

Learning and Growth Perspective

Economic/Financial Outcome Perspective

 Employee satisfaction of Smartzone and strategic partner organizations with : - Organizational alignment/engagement of Strategic Partners - ‘Concierge Service Network’ - Incubator space/ related services

 Companies formed  Total funding raised to support companies/products - Gap/Pre-seed - Matching - SBIR/STTR - Venture and other outside funding attracted  Revenue growth among companies from ideas/technologies commercialized  Jobs created/ jobs retained

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APPENDICES R E V I E W

C O M M E N T S

A N D

I M P L E M E N T A T I O N

P L A N

Summary of Review Comments

I. Comment Summary Upon receiving the draft 2012 strategic and business plan for the Grand Rapids SmartZone, LDFA Board members and a review committee provided comment in the following five topical areas: 1. Virtual incubator 

Board members suggested that tenancy in the virtual incubator would not be a necessary condition or consideration for Concierge services to be provided. This needs to be clarified in the draft plan, along with potential implications in terms of business development, case management and other potential HR needs. Another reviewer shared concerns that “the concept of rented incubator space has the risk of losing the synergies created between new companies the services provided (currently by WMSTI) as well as the connection to academic and student talent.”

2. Required personnel and budget 

Board members emphasized the importance of finding the right people in support of implementation. Concerns included the need for a senior director of operations and the challenges associated with achieving desired technology commercialization and other objectives.



The LDFA goal is to see 20 technologies commercialized and 135 related new start-up companies formed within five years. It is not unreasonable that over 200 potential technologies will need to be identified, in addition to a significantly increased number of prospective entrepreneurs. In light of the actual experience over the past nine years in which only six technologies were commercialized, this will clearly be a challenge.



The current plan assumes one business development person and an annual budget of $200,000 to do this. In addition, it is envisaged this person will need to fulfill his or her responsibilities in case management and referrals of the Concierge, as well as marketing communications. This is not realistic, if our intent is to be more pro-active in management, compared with past practices.

3. Implementation plan 

The draft plan was approved by the Board pending development of a full implementation plan. Comments underscored that the success of the strategic/business plan will rest on the details, reasonableness and coherence of the implementation plan. Review committee members stressed the business plan must be ‘actionable’, with input from strategic partners. The plan should include the key elements to be included in shared service agreements with strategic partners and specific plans for each element of the marketing mix in the marketing plan. To assist in these efforts, attached is a recommended outline for an implementation plan.

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4. Technology assessment 

The mission for the SmartZonesm emphasizes technology commercialization as a key element. Technology commercialization refers to the development of new products, processes and services from ideas, research and technologies. Successful technology commercialization requires significant focus and a set of competencies and skills in innovation management. The shared services model proposed for the Grand Rapids SmartZonesm will rely on a volunteer Technology Assessment Committee (TAC) to conduct assessments of technologies. The implementation plan must provide specific details on what types of individuals will serve on the TAC, the specific criteria they will use for evaluation, and the types of companies and technologies that should be the focus of the technology assessment process.

5. Risks to annual operating budget 

Related to Item 2 above, one reviewer shared that he “did not believe the budget as proposed is large enough to provide the needed services and space.” Another review committee member emphasized the need to analyze risks to the annual operating budget from the plan, if tax revenues remained the same and operating costs increased; and suggested the possible need for financial sensitivity analyses in evaluating such risks.

II. Draft Implementation Plan Outline I.

Detailed HR plan and budget to accomplish plan objectives a. Operations b. Case management and coordination of services with incubator tenants c. New business development d. Technical assessment e. Transition plan from WMSTI to new structure to ensure continuity f. Job specifications, performance expectations and links to Balanced Scorecard

II.

Elements of Service Agreements with Strategic Partners a. Defined roles and responsibilities b. Timing c. Joint goals and expectations d. Performance criteria to be included and links back to Balanced Scorecard e. Incentives

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III. Implementation Plan for the Virtual Business Incubator a. Identification/inventory of available incubator central office space b. Finish out plan c. Methods for space allocation d. Property management and service plan e. Pricing plan (proposed rent subsidies and related criteria) f. Marketing plan g. Lease, renewal and non-renewal plans IV. Marketing Plan a. Situational analysis b. Objectives c. Marketing mix plan a. Sales/business development b. Trade show and event marketing c. Direct marketing mix elements d. Marketing implementation and media purchasing plan V. Operating Plan a. Description of Entrepreneurs in Residence services and related service agreement terms b. Selection of a Steering Committee to guide development of TAC c. Co- development of processes and criteria for assessing technologies by TAC, to ensure understanding in the market and among strategic partners d. Description of the processes and criteria for company evaluation for the Virtual Incubator e. Development of the customer satisfaction survey for use in receiving feedback on shared services f. Development of the actual Balanced Scorecard to used to monitor performance g. Implementation plan for Balanced Scorecard including process ownership, management, updating and delivery responsibilities, intended periodicity, communications planning and related decision processes VI. Financial Plan a. Refinement of the annual operating budget and support for intended increases of $340,000 annually in light of the above b. Analysis of risks

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Implementation Plan

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Agenda Packet

SmartZone – Local Development Finance Authority Friday, January 17, 2014 @ 7:30 a.m. – 9:00 a.m. GVSU Cook-DeVos Center for Health Sciences – 301 Michigan NE, Room 540 \\

Members:

Jerry Kooiman, Chairperson Jim Bachmeier, Secretary Lisa Freiburger, Treasurer

Executive Director:

Kara Wood

City Staff:

Kara Wood, Jodi Griffin, Jana Wallace and Eric DeLong

Legal Counsel:

Dick Wendt

Copies To:

Eric DeLong Kevin McCurren

Com. Walt Gutowski Mary Swanson Keith Brophy

Scott Buhrer Jeff Royce

Therese Thill Jerry Callahan Roselyn Zator (ex-officio)

Jana Wallace

AGENDA 1. Call to Order

Jerry Kooiman

2. Meeting Minutes from November 15, 2013*

Jerry Kooiman

3. FY2013 Annual Financial Audit*

Jana Wallace

4. FY14 Financial Statements as of December 31, 2013*

Jana Wallace

5. FY2014-FY2021 Priority Plan Update

Jana Wallace

6. Election of Officers Committee

Kara Wood

7. Obsolete Property Rehabilitation Exemption application

Kara Wood

- Lofts on 820, LLC located at 820 Monroe Ave NW* 8. Project Update - Michigan Street Development, LLC 9. Administration Update o

E-merge/Connect Update

o

234 N. Division Update

o

iStart Update

Joe Hooker, Christman Construction Kara Wood

10. GR Current Incubator Update o

Pre-seed Fund Update

o

Business Accelerator Fund Update

11. The Right Place, Inc. Update

Jeff Royce

Therese Thill

12. Information Item: Michigan Street Corridor Plan Update 13. Other Business 14. Public Comment 15. Adjournment * Motion Required to Approve

Next Meeting – March 21, 2014 @ 7:30 a.m. – 9:00 a.m. GVSU Center for Health Sciences Building – 301 Michigan NE, Room 540

City of Grand Rapids SmartZone Local Development Financing Authority (LDFA) Cook-DeVos Health Science Building, Room 540 301 Michigan Street, NE Minutes from November 15, 2013 sm

Members Present: Jerry Kooiman (Chair), Jim Bachmeier, Mary Swanson and Therese Thill and Roselyn Zator (ex-officio/MEDC) Members Excused: Commissioner Walt Gutowski, Lisa Freiburger and Keith Brophy City Staff: Kara Wood, Eric DeLong, Jodi Griffin and Jana Wallace Legal Counsel: Richard Wendt Guests: Kevin McCurren, Jeff Royce, Brent Nowack, Eric Icard and Alex Roy and Tim Mroz Copies to: Scott Buhrer 1. Call to Order Jerry Kooiman called the meeting to order at 7:35 a.m. 2. Meeting minutes 9/20/13 The SmartZoneSM LDFA board reviewed the minutes of the September 20, 2013 meeting. Motion by Therese Thill, supported by Jim Bachmeier to approve the SmartZoneSM LDFA board minutes of the September 20, 2013 minutes, as amended. Motion carried. 3. FY14 Financial Statements as of September 30, 2013 Jana Wallace provided a review of the financial statements for the first quarter of fiscal year 2014. Motion by Jim Bachmeier, supported by Therese Thill to approve the Statement C which serves as the warrant for the Authority. Motion carried. 4. Prospective Incubator Tenant Brent Nowack, introduced himself as a former Michigan resident and has been in Texas for the past 25 years. He is an engineer and is co-founder of Syzygy Biotech and has moved back to the area to start a company. He is currently a visiting professor at GVSU in bioengineering and mechanical engineering and is seeking a tenure track professorship. Mr. Nowack shared examples of his work and how he looks for a better way to take care of problems. In particular, Mr. Nowack has been working to improve the repair of mandibular bone fractures at a faster rate and

improving on current technologies and techniques. Mr. Nowack has made connections with Stryker and is raising funds to do further testing and trials. Mr. Kooiman asked what led Mr. Nowack to Grand Rapids. Mr. Nowack replied that family and others that founded Syzygy (a PDC tenant) brought him back to the area. Mr. McCurren added that when they heard about his interest in returning, they brought him up and did a road show to showcase the area and find a place for him to get started in the community. Mr. Kooiman asked what else could be beneficial to starting up. Mr. Nowak replied that he is currently looking for office and lab space and working with labs in the area. He added the life sciences space is great, but having a similar space for the technology side of things would be helpful. Computational and electrical engineering space are needed to build little devices in a short amount of time to show them and grow those ideas. Mr. DeLong added that at the subcommittee level, bringing in a tech-focus space has been discussed and TechShop could be supported in the SmartZoneSM. Mr. Nowak noted that innovators who have access to the university system often have are able to compete for funds to further projects, produce white papers, obtain preliminary results and craft full proposals to large funders. He stated that this type of funding and connections move ideas forward. Mr. McCurren stated that Mr. Bob Smart worked on the tech transfer grant and gave him the opportunity to utilize Mr. Nowack as a mentor in residence for other device companies. Mr. Nowack commented that the area needs more faculty, thinkers and do-ers to make a critical mass and that more people like him should be recruited to grow the area and network.

5. Administration Update Priority Plan Update Ms. Wood provided an updated version of the priority plan, including the projected lease revenues. Non-profit Filing Ms. Wood noted that the nonprofit filing was completed and the milestone was met in October.

E-merge/Connect update Ms. Wood added that Talent 2025 is fundraising for E-merge West Michigan and Springboard and the total goal is $220,000 for both programs. Ms. Thill asked who would be running those programs; Ms. Wood responded that the Grand Rapids SmartZoneSM would be responsible. Mr. Bachmeier asked about board membership of E-merge West Michigan. Mr. Wendt replied that the LDFA members would be the board until recommendations for terms. Bylaws will provide for a board that is larger than the current LDFA board. The current thinking is to provide the greatest amount of flexibility for the nonprofit. Ms. Thill asked if there have been any thoughts on sustainable funding. Mr. DeLong added that Talent 2025, funders and the SmartZoneSM will be part of that planning process. 234 N. Division Lease Ms. Wood stated that the 234 N. Division lease is in accordance with the terms discussed at the last meeting. The only difference noted was the term of the lease. There will be an initial four-year term going to December 31, 2017 and then two fiveyear options for renewal after that. Ms. Wood continued that there is a $129,000 allowance for improvements and that she has met with the architect to price out those improvements to the space. If approved, the lease will begin on January 1, 2014 and the first two months will be provided rent-free. Mr. Bachmeier asked if the space would be suitable for Mr. Nowack’s needs mentioned earlier. Mr. McCurren replied that Mr. Nowack is looking for a quick prototyping space, more like TechShop. Mr. Kooiman suggested that space on North Monroe may be most appropriate for his needs. Motion by Jim Bachmeier, supported by Mary Swanson, to approve and authorize execution of a lease with the Van Andel Institute for 234 North Division Avenue. Motion carried. 2012 Business Incubator Grant Report update Ms. Wood stated that the grant progress report was submitted and accepted. SBTDC Business Accelerator Fund Contract Extension Ms. Wood reported that Mr. McCurren extended the contract to March 2014 and that Mr. McCurren is providing service through the LDFA and access to the business accelerator fund for small businesses. Mr. DeLong added that funds are running low through the state. Ms. Zator added that there is a request for proposal out right now to procure a service provider for additional funding. 2013 Business Incubator Grant/Contract with GVSU

Ms. Wood stated that this is regarding the iStart program and believes that by the January meeting, the contract should be in place. Ms. Wood added that TechShop representatives could not be here today, but are planning to present at the January meeting. TechShop would be a separate LLC and operational entity. Ms. Wood continued that it is a for-profit entity and the model is from San Jose, California. It is a membership-based model. The capital raise needs to be $2.5-3 million for building, build out, equipment and the first year’s operations. Another TechShop is based in Detroit at a former Ford facility. Ms. Thill stated the concept was tested with a local manufacturing association and there is support for this type of entity. Ms. Wood stated that the site at 801 Ionia has been identified for TechShop. Ms. Zator asked about how the Shop is run. Ms. Wood responded that the company will hire locals to run the Shop. Further, Ms. Wood stated that they offer a professional administration environment, safety courses, swipe card security, new and well maintained equipment for textiles, wood, metal work and plastic injection molding. Ms. Wood added that one of the more wellknown devices prototyped in TechShop was the Square device. Ms. Thill added that industrial manufacturing operations looking to expand on industrial sewing would also be interested. 6. GR Current Update Mr. Royce provided a review of the highlights from the past two months. He mentioned GR Current will be partnering with Start Garden, The Collaborative and the Goei Center on the calendar of events in 2014 and will be looking to expand the audience. The proposed marketing plan will incorporate milestones from the HUB. Mr. Royce continued that there has been assistance with the Business Accelerator Fund and the request for proposals is available now. The Accelerator Michigan conference was this week with a business competition including business and student categories. There were four GVSU teams; three made it to the finals and one won the $25,000 prize. In the overall competition, Brian Vaughn and Varsity News Network won for its industry category. Ms. Wood asked if staff will continue to work with the student business plans to continue to accelerate and Mr. Royce responded they would. Ms. Wood suggested that attracting Varsity News Network to the Grand Rapids SmartZoneSM would be a nice success story. Mr. McCurren added that the West Michigan Challenge has kicked off and there currently 80 participants. 7. The Right Place, Inc. Therese introduced new staff at The Right Place, Inc., Alex Roy, web manager and Eric Icard, Business Development Manager.

Ms. Roy provided an overview of the new MiDevice website, www.midevice.org. Ms. Wood asked if there was any content about regional talent base, college or feeder programs and Therese replied that content would be added. Tim Mroz added that this website was updated to enhance the platform, information features and for mobile accessibility. The look and feel was built based on other benchmark communities such as Cleveland and Atlanta. 8:28am Jim Bachmeier left Mr. DeLong asked what the membership cost was and how many members. Mr. Icard responded the cost is $700 annually and currently there are 25 members. Ms. Zator asked if Michigan Business Connect is being encouraged and Mr. Icard confirmed it was encouraged to all. Mr. Icard provided an update on the MD&M – Minneapolis show. Eric and Karen Benson attended with eight companies from Michigan who joined at the booth: DornerWorks, Extol, Keystone Solutions, Koops, Laimin Medical, Rose Technologies, Safari Circuits and SSI Electronics. Mr. Icard noted there were 23 customer visits and 129 leads. Of those leads, 38 were solid and companies have received some orders already. Mr. Icard added that he had the opportunity to meet with OEMs in the Twin cities and discussed the excise tax on medical devices. Mr. Icard noted that it would be helpful in the future to go with some of the companies to meet and greet around the show. He noted seven other companies (Oliver Tolas, Motion Dynamics, Medbio, Harding Energy, Hart Enterprises, Vention Medical and HyTech Spring) had their own booths. Kara asked if The Right Place, Inc. had their own booth and Mr. Icard replied yes, it was commissioned over the summer and has various configurations to accommodate up to eight companies. Mr. Icard continued that at the next show they will have a 20’x20’ booth and have recruited seven companies and will see if they can get an eighth. They will plan to go out a little early and visit with other companies to maximize the time spent in the area. Further, Mr. Icard added that The Right Place, Inc. is currently polling member companies to see what shows are best to attend and that they will rely on Van Andel Institute representatives to connect and bring back information from the Bio shows. Ms. Thill added that later this year, The Right Place would be participating with MEDC at MEDICA, an export and business attraction show in Germany. Mr. Kooiman asked if there are other economic development organizations going to

these shows too. Mr. Icard responded that he did not see others from Michigan, but other states had regionally-based organizations represented. Mr. Icard included that he met with the MIDevice executive counsel and together are developing strategy towards goals and marketing efforts to focus attention here in West Michigan. 8. 2014 Meeting Schedule Ms. Wood shared the 2014 meeting schedule. Meetings will continue to be held every other month on the third Friday at 7:30 a.m. in the GVSU Cook-DeVos Center for Health Sciences building. 9. Other Mr. Kooiman noted that the Authority is still a couple members short. Ms. Wood replied that Grand Rapids Public Schools has not yet made an appointment but will follow up. Van Andel Institution is expected to make an appointment as well. 10. Public Comment None. 11. Adjournment Meeting adjourned at 8:39 a.m. Minutes recorded by Jodi Griffin.

Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan)

Financial Statements and Supplementary Information For the Year Ended June 30, 2013

The report accompanying these financial statements was issued by BDO USA, LLP, a Delaware limited liability partnership and the U.S. member of BDO International Limited, a UK company limited by guarantee.

Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan)

Financial Statements and Supplementary Information For the Year Ended June 30, 2013

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Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Contents

Independent Auditor’s Report

5-7

Management’s Discussion and Analysis

9-12

Financial Statements Statement of Net Position and Governmental Fund Balance Sheet

15

Statement of Activities and Governmental Fund Revenues, Expenditures and Changes in Fund Balance

17

Notes to Financial Statements

19-22

Supplementary Information Schedule of Projects (Unaudited)

25-26

Schedule of Net Position by District (Unaudited)

27

Schedule of Activities by District (Unaudited)

28

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Tel: 616-774-7000 Fax: 616-776-3680

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200 Ottawa Avenue NW, Suite 300 Grand Rapids, MI 49503

Independent Auditor’s Report Members of the Grand Rapids SmartZone Local Development Finance Authority Grand Rapids, Michigan Report on the Financial Statements We have audited the accompanying financial statements of the Grand Rapids SmartZone Local Development Finance Authority (the Authority) as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Authority’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Grand Rapids SmartZone Local Development Finance Authority as of June 30, 2013, and the respective changes in financial position for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Other Matters Prior Year Comparative Information We have previously audited the Authority’s 2012 financial statements, and we expressed an unmodified audit opinion on the 2012 financial statements in our report dated December 12, 2012. In our opinion, the comparative information presented herein as of and for the year ended June 30, 2012 is consistent, in all material respects, with the audited financial statements from which it has been derived. Required Supplementary Information Accounting principles generally accepted in the United States of America require that management’s discussion and analysis on pages 9–12 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Authority’s basic financial statements. The Schedule of Projects, Schedule of Net Position by District and the Schedule of Activities by District are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

December 10, 2013

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Management’s Discussion and Analysis This section of the Grand Rapids SmartZone Local Development Finance Authority (the Authority) financial report presents a discussion and analysis of the Authority’s financial performance for the fiscal year ended June 30, 2013. This discussion has been prepared by management, along with the financial statements and related footnote disclosures, and should be read in conjunction with, and is qualified in its entirety by, the financial statements and footnotes. This discussion and analysis is designed to focus on current activities, resulting changes and currently known facts.

Using the Financial Report This financial report consists of two financial statements that focus on the financial condition of the unit of government and the results of its operations as a whole. One of the most important questions asked about governmental finances is whether the unit of government as a whole is better off or worse off as a result of the year’s activities. The keys to understanding this question are the Statement of Net Position and the Statement of Activities. The Statement of Net Position presents financial information on all of the Authority’s assets and liabilities with the difference reported as net position. It is prepared under the accrual basis of accounting, whereby revenues and assets are recognized when the service is provided and expenses and liabilities are recognized when others provide the service, regardless of when cash is exchanged. The Authority’s net position is one indicator of the Authority’s financial health. Over time, increases or decreases in net position indicates the improvement or erosion of the Authority’s financial health. Condensed Statements of Net Position June 30, Assets Current assets

2013

2012

% Change

$ 3,969,674

$

2,841,723

39.7

Liabilities Current liabilities Noncurrent liabilities

$

414,085 2,061

$

419,987 4,319,366

(1.4) (100.0)

Total Liabilities

$

416,146

$

4,739,353

(91.2)

Net Position

$ 3,553,528

$

(1,897,630)

287.3

Current Assets Equity in Pooled Cash and Investments and Interest Receivable The City of Grand Rapids (the City) maintains an investment pool for most City funds and component units. The Authority’s portion of the investment pool is displayed on the Statement of Net Position as “equity in pooled cash and investments.” The Authority’s 39.7% increase in current assets in the fiscal year 2013 compared to fiscal year 2012 is the result of higher tax increment revenues than in fiscal year 2012 and lower expenses.

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Current Liabilities Accounts Payable and Accrued Interest Payable Current liabilities consist of accounts payable due to a variety of vendors, a developer reimbursement payment, estimated settlements for property tax appeals, and in fiscal year 2012 accrued interest payable on debt. The 1.4% decrease between June 30, 2012 and June 30, 2013 occurred because there was no interest payable outstanding on June 30, 2013.

Noncurrent Liabilities Due to Primary Government and Bonds Payable The Authority’s Series 2004 Local Development Bonds (the Bonds) were issued in anticipation of future capital improvements by one or more businesses within the Authority’s Plymouth/Satellite District (the District) boundaries. Because the exact timing of these capital investments was uncertain when the Bonds were issued, an agreement between the Authority and the City of Grand Rapids Water Supply System (the System) required the System to provide to the Authority any shortfall between the pledged District tax increment revenues and the amount of debt service. The System had been regularly advancing funds to the Authority to cover the debt service for several years. With no likelihood that that situation would change in the future, the System used the favorable interest rate environment during fiscal year 2013 to refund the bonds. In total, $4.6 million dollars of long-term obligations were removed from the Authority’s balance sheet.

Net Position Net position represents the difference between Authority’s assets and its liabilities. The Authority had a positive net position of $3,553,528 at June 30, 2013 compared to a deficit of $1,897,630 at June 30, 2012 due to the refunding of the Bonds as described immediately above.

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The Authority’s net position is restricted by the requirements of Michigan Public Act 281 of 1986, as amended, which limits expenditures to those that further the Authority’s development program. Statements of Activities Year ended June 30, Revenues Property taxes Other revenues

2013 $ 1,861,511 170,093

$

2012

% Change

1,574,404 29,674

18.2 473.2

Total revenues

2,031,604

1,604,078

26.7

Expenses Urban development Interest and paying agent fees

1,191,355 71,646

1,278,109 172,296

(6.8) (58.4)

Total expenses

1,263,001

1,450,405

(12.9)

Special Item Transfer of long-term obligations to the Water Supply System Fund

4,682,555

-

100.0

Change in net position

5,451,158

153,673

3,447.2

Net Position, beginning of year Net Position, end of year

(1,897,630) $ 3,553,528

$

(2,051,303)

7.5

(1,897,630)

287.3

Revenues Property Taxes The Authority’s revenues are generated primarily through the use of property tax increment financing, in which the Authority captures ad valorem property tax and industrial facility tax revenues attributable to increases in the value of real and personal property within the District boundaries above a base year valuation. Property tax revenues for the year ended June 30, 2013 include property taxes levied July 1, 2012 and December 1, 2012. There was an 18.2% increase in property tax increment revenues between fiscal years 2012 and 2013. The increase is due to the scheduled decrease in Renaissance Zone property tax exemptions from 25% in fiscal year 2012 to 0% in fiscal year 2013, and property value increases related to Medical Mile capital investments. Other Revenues An iStart Grant from the Michigan Economic Development Corporation has been awarded. The Authority serves as a conduit of funds that provide seed capital for start-up companies developed within the SmartZone district. Additional revenue comes in the form of interest earnings on the Authority’s cash and investment balances.

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Expenses Urban Development During the two-year period of these statements, urban development expenditures include administrative costs, development project tax increment revenue reimbursements, and support for marketing, business incubators and other business development services. Fiscal year 2013 expenditures are 6.8% lower than fiscal year 2012 expenditures due to the completion of the Michigan Street Development developer reimbursement agreement requirements.

Special Item Due to long-term projections showing that the Authority’s Plymouth/Satellite District would have little or no future tax increment revenues to provide a means of repaying advances for debt service, the System forgave the expected repayment of the $1.5 million advanced to the Authority during the prior and current fiscal years, and repaid all outstanding bonds issued by the Authority by issuing the System’s Series 2013 Revenue Refunding Bonds (see Note 5).

Overall Financial Position Management believes the Authority is in good condition financially. Current tax increment and other revenues are adequate to cover current administration and project commitments in the SmartZone - Downtown District. The Plymouth/Satellite SmartZone District has had its obligations retired during the fiscal year and is currently inactive.

Requests for Information This financial report is designed to provide a general overview of the Grand Rapids SmartZone Local Development Finance Authority finances for the general public. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Grand Rapids Comptroller’s Department, 300 Monroe NW, Grand Rapids, Michigan 49503.

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Financial Statements

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Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Statement of Net Position and Governmental Fund Balance Sheet

2013 Governmental Fund

June 30,

Adjustments Statement of (Note 3) Net Position

Statement of Net Position 2012

Assets Equity in pooled cash and investments Receivables

$ 3,961,346 $ 8,328

- $ 3,961,346 $ 8,328

2,835,987 5,736

Total Assets

$ 3,969,674

-

3,969,674

2,841,723

$

406,590 -

-

406,590 -

184,064 13,977

-

7,495 2,061

7,495 2,061

221,946 4,319,366

406,590

9,556

416,146

4,739,353

-

-

Liabilities Accounts payable Accrued interest payable Noncurrent liabilities (Note 4): Due within one year Due in more than one year Total liabilities Fund Balance Restricted for authorized projects

3,563,084

Total Liabilities and Fund Balance

$ 3,969,674

(3,563,084)

Net Position Restricted for authorized projects Unrestricted

3,553,528 -

Total Net Position

$

3,553,528 -

2,649,580 (4,547,210)

3,553,528 $ 3,553,528 $ (1,897,630)

See accompanying independent auditor’s report and notes to financial statements.

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Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Statement of Activities and Governmental Fund Revenues, Expenditures and Changes in Fund Balance 2013 Year ended June 30,

Governmental Fund

Revenues Property taxes State grants Investment earnings Miscellaneous

$ 1,861,511 150,000 20,081 367,316

Adjustments (Note 3) $

Statement of Activities

Statement of Activities 2012

- $ (367,304)

1,861,511 $ 1,574,404 150,000 20,081 29,674 12 -

Total revenues

2,398,908

(367,304)

2,031,604

1,604,078

Expenditures/Expenses Urban development Principal repayment Interest and paying agent fees

1,189,878 215,000 88,605

1,477 (215,000) (16,959)

1,191,355 71,646

1,278,109 172,296

Total expenditures/expenses

1,493,483

(230,482)

1,263,001

1,450,405

905,425

(136,822)

768,603

153,673

Excess of revenues over (under) expenditures/expenses Special Item (Note 5) Transfer of long-term obligations to the Water Supply System Fund

-

4,682,555

4,682,555

-

Changes in fund balance/net position

905,425

4,545,733

5,451,158

153,673

(4,555,289)

(1,897,630)

Fund Balance/Net Position, beginning of year

2,657,659

Fund Balance/Net Position, end of year

$ 3,563,084

$

(9,556) $

(2,051,303)

3,553,528 $ (1,897,630)

See accompanying independent auditor’s report and notes to financial statements.

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Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Notes to Financial Statements

1. Reporting Entity The Grand Rapids SmartZone Local Development Finance Authority (the Authority), a component unit of the City of Grand Rapids, Michigan (the City), was created by the City in 2002 under the provisions of Act 281, Public Acts of 1986 of the State of Michigan. The purpose of the Authority is to promote the development of high-tech business within the boundaries of the Downtown SmartZone and Plymouth/Satellite SmartZone areas in the City.

2. Summary of Significant Accounting Policies Basis of Presentation The statement of net position/balance sheet and the statement of activities/revenues, expenditures and changes in fund balance report information on the activities of the Authority. The adjustments columns are used to reflect the conversion from the balance sheet to the statement of net position, and the conversion of revenues, expenditures and changes in fund balance to the statement of activities. Measurement Focus and Basis of Accounting The Authority uses the current financial resources measurement focus and modified accrual basis of accounting. Revenues are recognized when they become measurable and available to finance expenditures of the current period. The Authority considers revenues available if earned and collected within 60 days after year-end; however, property tax increment revenues are recognized as revenue in the fiscal year for which they were levied. Expenditures generally are recognized when the related fund liability is incurred. For presentation of the year-end audited financial data, the Authority uses the total economic resources measurement focus and the accrual basis of accounting to prepare the statement of net position and the statement of activities. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. The column of adjustments shows the conversion between the two presentation formats. Prior Year Columns The columns labeled statement of net position 2012 and statement of activities 2012 are presented for informational purposes only. These statements do not include the governmental fund balance sheet and the statement of revenues, expenditures and changes in fund balance for 2012, which are necessary for a complete presentation in accordance with accounting principles generally accepted in the United States of America. Budget The Grand Rapids City Commission annually approves the Authority’s budget after the Authority Board members have reviewed and recommended it. After the City Commission approves the budget, the Authority Board members adopt it. The budget for the Authority is a project budget rather than an annual budget. Therefore, budget to actual information has not been reflected in the financial statements.

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Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Notes to Financial Statements

Cash and Investments The City maintains an investment pool for most City funds, including component units such as the Authority. The Authority’s portion of the investment pool is displayed on the balance sheet as equity in pooled cash and investments. Deposits consist primarily of certificates of deposits with original maturities of greater than three months at the date of purchase, and money market funds. State statutes require that deposits be maintained in financial institutions with offices in the State of Michigan. Most deposits are uninsured and uncollateralized. Investments are primarily commercial paper rated A or higher by two nationally recognized statistical rating organizations. Investments are carried at fair value. Interest income earned as a result of cash and investment pooling is distributed by the City Treasurer to the appropriate funds. Investment policies and categorization of cash and investments are included in the Comprehensive Annual Financial Report of the City of Grand Rapids to give an indication of the level of risk assumed by the City at year-end. It is not feasible to allocate the level of risk to the various component units of the City. Property Taxes A significant portion of the Authority’s revenues are generated through property tax increment financing. Summer taxes are levied on July 1 and attach as an enforceable lien at that time. Summer taxes are due without penalty on or before July 31. Winter taxes are levied on December 1 and attach as an enforceable lien at that time. Winter taxes are due without penalty on or before February 14. Net Position The Authority adopted the provisions of the Governmental Accounting Standards Board Statement No. 63 in fiscal year 2013. The prior year financial statements have not been restated to conform to the new standard because the only element affected by the standard was the presentation of net position. Net position represents the difference between assets and liabilities. Net position is reported as restricted when there are limitations imposed on its use either through legislation or other external restrictions. In the case of the Authority, enabling legislation (Michigan Public Act 281 of 1986, as amended) restricts the use of all of the Authority’s resources. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

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Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Notes to Financial Statements

3. Reconciliation of Government-Wide and Fund Financial Statements Amounts reported in the statement of net position and the statement of activities are different from amounts reported in the governmental fund because of the following: Governmental fund total fund balances

$

Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental fund balance sheet. Net OPEB obligation Compensated absences

3,563,084

2,533 (12,089)

Government-Wide Net Position

$

3,553,528

Net change in fund balances – government funds

$

905,425

Bond proceeds provide current financial resource to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of bond and contract principal is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Repayment of principal on bonds and contracts

215,000

Advances from the primary government provide current financial resources to governmental funds, but increase long-term liabilities on the statement of net position.

(367,304)

The transfer of long-term obligations to the primary government has no effect on current financial resources, but decreases long-term liabilities on the statement of net position.

4,682,555

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Accrued interest Amortization of bond premium Compensated absences Unfunded OPEB obligation Change in Net Position of Governmental Activities

21

13,977 2,982 (702) (775) $

5,451,158

Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Notes to Financial Statements

4. Long-Term Obligations Changes in long-term obligations are as follows: Beginning Balance

Additions

Reductions

Ending Balance

Due Within One Year

Bonds payable Premium on bonds payable Advance from Water System Net OPEB obligation Compensated absences

$ 3,320,000 $ 47,716 1,165,517 (3,308) 11,387

367,304 775 4,091

$ 3,320,000 $ 47,716 1,532,821 3,389

- $ (2,533) 12,089

7,495

Total

$ 4,541,312 $

372,170

$ 4,903,926 $

9,556 $

7,495

In May 2004, the Authority issued $3,805,000 of Local Development Bonds. As explained below, the outstanding bonds were refunded during fiscal year 2013 and are no longer an obligation of the SmartZone LDFA.

5. Special Item The Authority’s Series 2004 Local Development Bonds (the Bonds) were secured by Plymouth/Satellite District (the District) property tax increment revenues and were issued in anticipation of future capital improvements by businesses, primarily Siemens Dematic Corporation, within the District boundaries. The Bonds were issued to finance, in part, the relocation of a City Water Supply System (the System) facility to allow for the proposed expansion of Siemens Dematic Corporation manufacturing and design facilities on Ball Avenue NE. Because the exact timing of the planned Siemens Dematic capital investments was uncertain at the time the Bonds were issued, an agreement between the Authority and the System required the System to provide to the Authority funds for any shortfall between the pledged District tax increment revenues and the amount of debt service. In August 2006, Siemens Dematic Corporation sold its operations in the District to another investor who decided not to proceed with the planned expansion. Other recent changes in property ownership and land use caused the District’s current assessed values to fall to values lower than the District’s 2002 initial assessed values. As a result, the System had been required to advance funds to the District for 100% of annual debt service requirements in recent years. In the judgment of the Authority’s Board, there was little likelihood of the District’s assessed values increasing sufficiently in the next ten years to offset the current negative captured assessed values plus the additional growth in revenues needed for the annual debt service increases. Further, the Authority’s ability to capture tax increment revenues resulting from the State Education Tax, Grand Rapids Public Schools, and Kent Intermediate School District millages is expected to cease beginning with the fiscal year ending June 30, 2018. Early in 2013, favorable interest rates offered an opportunity to refund the Bonds at a reduced interest cost. Therefore, in March 2013, the System issued its Series 2013 Revenue Refunding Bonds to refund the Authority’s Series 2004 bonds. The System also wrote off the advances to the Authority as uncollectable. The Authority recorded that transaction as a special item in the amount of $1,532,821 from the forgiveness of advances from the System and $3,149,734 from the refunding of the remaining outstanding bonds. 22

Supplementary Information

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Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Schedule of Projects (Unaudited)

Downtown SmartZone Area The initial SmartZone boundaries were established in the northern section of downtown Grand Rapids to facilitate development by leveraging the adjacency and synergy of the area’s medical, research, educational, financial, governmental and nonprofit institutions. The Authority’s mission is to support growth in new life-sciences and medical device industry companies in Grand Rapids Michigan. The Authority works directly with five strategic partners: the City of Grand Rapids, Grand Valley State University (GVSU), The Right Place Inc., Grand Rapids Community College (GRCC), and Van Andel Institute. The coordinated resources available through these partners support three essential components of new business development: idea generation, access to capital, and improved business services by utilizing a shared service delivery platform. The Authority accomplishes its goals by creating and using the following tools. Incubators A key component of the Downtown SmartZone is the operation of full-service and “as needed” incubator facilities, which provide space and support for start-up businesses. The Authority’s first incubator is fully leased. Site Development The Authority identifies, assembles and prepares sites for commercial and light industrial space for businesses graduating from the incubators, expanding into the SmartZone area or relocating from other areas to take advantage of the SmartZone’s high-tech environment. Infrastructure Because much of the northern Downtown SmartZone Area is older, former or currently existing industrial space, the area is in need of upgraded and improved infrastructure (streets, sidewalks, water, sewer, fiber optic conduits and public spaces) to make it attractive and useful for hightech businesses. The Authority, the Grand Rapids Community Foundation and the Monroe North Tax Increment Finance Authority jointly funded the Monroe North Area Specific Plan, which provided recommendations for land use, circulation, parking and development character that build and expand on the objectives and policies of the City of Grand Rapids Master Plan. The Authority adopted a Priority Plan for fiscal years 2014 through 2018 that includes commitments to fund a number of infrastructure projects. These include the Michigan Street Corridor Improvement Plan, Michigan Street/College Avenue streetscape improvements, and Michigan Street tele-communication infrastructure. Marketing International and regional marketing and communication regarding the SmartZone’s programs and infrastructure are another important part of the Authority’s work. With financial support from the Authority and other investors, The Right Place initiates and provides ongoing marketing to promote the Grand Rapids SmartZone and West Michigan as prime locations for high-tech businesses from both clinical and supply chain perspectives. The Right Place also promotes the Authority’s incubator spaces and business development services at international events like the 25

Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Schedule of Projects (Unaudited)

Medical Device and Manufacturing regional conferences and the West Michigan Medical Device Consortium. Technology Transfer Identifying companies and technologies that would benefit from the services the SmartZone provides, persuading them to locate in the SmartZone, and linking them to resources within the broader innovation community is a key function of the SmartZone. Many of these new ideas suitable for development are expected to come from educational institutions within the SmartZone: GVSU, GRCC, Michigan State University’s College of Human Medicine and the Van Andel Institute. Education GVSU and GRCC identify training programs needed by local high-tech industries in order to prepare students for the future employment needs of new high-tech businesses. Students at both GVSU and GRCC also offer valuable, trained research assistance to start-up and established high-tech businesses.

Plymouth/Satellite SmartZone District On November 19, 2002, the Grand Rapids City Commission approved the Authority’s request for the establishment of a Plymouth/Satellite SmartZone District. Due to delays resulting from state staff turnover, not until early in 2004 did the State Treasurer and the Michigan Economic Development Corporation approve the Authority’s request to create a satellite SmartZone District in the area north of Michigan Street and east of Ball Avenue and including parcels along Plymouth Avenue and Oak Industrial Drive. Tax increment revenue captured in this District was meant to support the District’s $3,805,000 Series 2004 bonds issued to partially offset the cost of relocating City of Grand Rapids Water Supply System administrative and service operations on Ball Avenue into a newly constructed building on Oak Industrial Drive. The System agreed to relocate its operations to allow Siemens Dematic Corporation to expand its existing manufacturing and design facilities into property formerly occupied by the System. However, in August 2006, Siemens Dematic Corporation operations in the District were acquired by another owner, and the planned expansion never occurred. Other properties in the District have been removed from the tax rolls due to changes in usage and ownership, resulting in an expectation that no tax increment revenues would be available to support the Bonds in the foreseeable future. Based on this expectation, the System issued its own debt to refund the outstanding Bonds and eliminated the inter-entity payable and receivable for previous advances to the District from the System. At the present time, the future of the District remains undecided.

Financial Schedules On the following pages are schedules showing the net position and activities of the Authority’s two development districts for the year ended June 30, 2013.

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Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Schedule of Net Position by District (Unaudited)

June 30, 2013 Assets Equity in pooled cash and investments Receivables

$

Total assets Liabilities Accounts payable Noncurrent liabilities: Due within one year Due in more than one year Total liabilities Net Position Restricted for authorized projects Total Net Position

Plymouth/ Satellite District

Downtown District

$

27

3,961,346 8,328

$

-

Total SmartZone LDFA $

3,961,346 8,328

3,969,674

-

3,969,674

406,590

-

406,590

7,495 2,061

-

7,495 2,061

416,146

-

416,146

3,553,528

-

3,553,528

3,553,528

$

-

$

3,553,528

Grand Rapids SmartZone Local Development Finance Authority (A Component Unit of the City of Grand Rapids, Michigan) Schedule of Activities by District (Unaudited)

Year ended June 30, 2013 Revenues Property taxes State grants Investment earnings Miscellaneous

Plymouth/ Satellite District

Downtown District $

1,925,210 150,000 20,081 12

$

Total SmartZone LDFA

(63,699) $ -

1,861,511 150,000 20,081 12

Total revenues

2,095,303

(63,699)

2,031,604

Expenditures/Expenses Urban development Interest and paying agent fees

1,191,355 -

71,646

1,191,355 71,646

Total expenditures/expenses

1,191,355

71,646

1,263,001

-

4,682,555

4,682,555

903,948

4,547,210

5,451,158

(4,547,210)

(1,897,630)

Special Item Transfer of long-term obligations to the Water Supply System Fund Changes in net position Net Position, beginning of year Net Position, end of year

2,649,580 $

28

3,553,528

$

-

$

3,553,528

DATE:

January 10, 2014

TO:

Jerry Kooiman, Chair SmartZone Local Development Finance Authority

FROM:

Jana M. Wallace SmartZone LDFA – Assistant Treasurer

SUBJECT: FY2014 Financial Statements through December 31, 2013

Attached are the SmartZone Local Development Finance Authority FY2014 financial statements for the first half of the fiscal year ending June 30, 2014. These statements include the following: Statement A: Balance Sheet Statement B: Statement of FY2014 Budget vs Actual Results Statement C: Schedule of November 1 through December 31, 2013 Expenditures In November, the Authority received $100,000 from the Michigan Strategic Fund. On Statement B, expenditures for the Accelerator Contractual Services are negative $5,626. This is because the June 30, 2013 accrual was based on two Grand Valley State University invoices. When Executive Director Kara Wood audited the documentation for the invoices, she determined some charges were not eligible for reimbursement so she reduced the amounts which were paid to Grand Valley. As a result, the FY2013 year-end accrual reversal was higher than the amounts actually paid which resulted in the negative expenditure. The Authority continues to have sufficient cash to meet budgeted expenditures. Please contact me at 616-456-4514 or at [email protected] if you have any questions. Attachments

STATEMENT A CITY OF GRAND RAPIDS, MICHIGAN SMARTZONE LOCAL DEVELOPMENT FINANCE AUTHORITY BALANCE SHEET DECEMBER 31, 2013

Downtown ASSETS Cash and Investments TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities Net Retiree Health Care Obligation 1 Prior Year Property Tax Appeals TOTAL LIABILITIES

$ $

$

Fund Balance Reserve for Encumbrances Designated for Projects & Developer Reimbursements Reserve for Compensated Absences TOTAL FUND BALANCE TOTAL LIABILITIES and FUND BALANCE

5,276,245 5,276,245

(2,533) 99,520 96,987

147,526 5,019,643 $

12,089 5,179,258

$

5,276,245

Note 1: This line is the accumulated amounts of the actuarially determined Annually Required Contributions (ARC) for pre-65 year old retiree health insurance in excess of the "pay as you go" charges disbursed from the RHIF, plus interest, on the unpaid portion of the prior year's liability. Note 2: The cost of earned vacation & vested sick leave not used through June 30, 2013 including the cost of employer's FICA obligation.

2

STATEMENT B CITY OF GRAND RAPIDS, MICHIGAN SMARTZONE LOCAL DEVELOPMENT FINANCE AUTHORITY STATEMENT OF FY2014 BUDGET vs ACTUAL RESULTS JULY 1, 2013 - DECEMBER 31, 2013 Downtown Tax Increment Budget Original Revised on Budget 09/20/2013 Actual REVENUE Tax Increment - General Tax Increment - Icon on Bond Development Tax Increment - Michigan Street Development Tax Increment - Prior Year Appeals Rent - Cook-DeVos Incubator/ Product Devel Center Interest on Investments Other Program Revenue - Spring-Board Other Program Revenue - Business Accelerator Fund Grants - MSF 2012 and 2013 - Incubator Grant Grants - MSF 2012 - Incubator Grant Grants - MSF 2013 - iStart Grant Miscellaneous Reimbursements From/(To) Fund Balance Total Revenue EXPENDITURES Committed and Ongoing Annual Audit Contractual Services - Legal Fees and Notices Contractual Services - Miscellaneous Developer Reimbursements - Icon on Bond Facilities - Office Space and Maintenance General Liability Insurance Professional Development Staff Support Services Allocation - A-87 Telephone - Cellular Technology and VOIP Services Sub-Total

$

305,294 197,764 1,421,916 (75,000) 166,800 18,869 904,000 30 (142,785) 2,796,888

$

305,294 197,764 1,421,916 (75,000) 72,069 18,869 82,560 20,000 225,000 252,000 30 (76,601) 2,443,901

$

465,031 190,733 1,190,853 (83,590) (6,101) 120,000 17 1,876,943

$

4,700 30,000 3,000 197,764 6,859 4,035 2,200 100,470 10,781 200 12,526 372,535

$

4,700 30,000 3,000 197,764 6,859 4,035 2,200 100,470 10,781 200 12,526 372,535

$

4,700 6,516 338 190,765 2,286 2,019 780 30,744 5,390 127 6,263 249,928

Science and Technology Initiatives Accelerator Contractual Services Accelerator Contractual Services - MSF 2012 Grant Accelerator Contractual Services - MSF 2013 Grant Cook-DeVos Incubator (Product Development Ctr) Tradeshows and Regional Innovation Virtual Incubator Support Infrastructure Development College and Michigan Corridor Plan Improvements Michigan Street Bridge - Debt Service Michigan Street Streescape Improvements Michigan Street Telecommunications Infrastructure Infrastructure - To Be Determined Sub-Total Total Expenditures OPERATING EXCESS / (DEFICIT)

$

1,639,353 170,000 260,000 2,069,353

832,536 225,000 252,000 186,830 170,000 50,000 1,716,366

55,000 25,000 100,000 75,000 100,000 355,000

55,000 25,000 100,000 75,000 100,000 355,000

2,796,888

2,443,901

-

$

-

(5,626) 19,000 13,374 263,302 $ 1,613,641

Note 1: Winter 2013 and negative industrial facilities taxes have not been distributed yet. sz-dec13.xls jmw 01102014

1

STATEMENT C CITY OF GRAND RAPIDS, MICHIGAN SMARTZONE LOCAL DEVELOPMENT FINANCE AUTHORITY SCHEDULE OF EXPENDITURES NOVEMBER 1 THROUGH DECEMBER 31, 2013 Source Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown Downtown

Vendor Grand Valley State University Grand Valley State University City of Grand Rapids City of Grand Rapids BDO USA LLP City Treasurer - Info Technology City Treasurer - Info Technology City Treasurer - Budget Office City Treasurer - Budget Office Dickinson Wright PLLC City Treasurer - Facility Mnmt City Treasurer - Risk Managemt City Treasurer - Risk Managemt Dickinson Wright PLLC Dickinson Wright PLLC Grand Valley State University Verizon / Cellco Partnership Kara Wood Dickinson Wright PLLC Kara Wood Fifth Third P-Card Fifth Third P-Card

Downtown = Downtown Area Tax Increment sz-oct13prelim.xls jmw 01102014

Purpose/Project Description Amount Accelerator Contractual Services LDFA-funded - 04/01-06/30/2013 services $ 152,209.44 Accelerator Contractual Services LDFA-funded - 01/01-03/31/2013 services 67,953.42 Staff Staff services - November, 2013 6,011.77 Staff Staff services - December, 2013 5,944.45 Annual Audit Financial audit for FYE 06/30/2013 4,700.00 Technology and VOIP Services Monthly fee - December, 2013 1,043.83 Technology and VOIP Services Monthly fee - November, 2013 1,043.83 Support Services Allocation-A87 Monthly fee - December, 2013 898.42 Support Services Allocation-A87 Monthly fee - November, 2013 898.42 Contractual - Legal Fees/Notices Legal services - strategic/biz plan May 2013 855.40 Office Space and Maintenance Monthly charges - October, 2013 571.55 General Liability Insurance Monthly fee - December, 2013 336.00 General Liability Insurance Monthly fee - November, 2013 336.00 Contractual - Legal Fees/Notices Legal services - Plan B September 2013 236.60 Contractual - Legal Fees/Notices Legal services - misc matters August 2013 109.20 Contractual Services - Misc November, 2013 meeting refreshments 70.80 Telephone - Cellular Share of Kara Wood cell phone - Oct, 2013 68.82 Professional Devopment Mileage to State SmartZone meeting - 9/11/2013 57.69 Contractual - Legal Fees/Notices Legal services - strategic/biz plan August 2013 54.60 Professional Devopment Mileage for Broadband Conference 51.80 Professional Devopment Economic Club meeting 30.00 Professional Devopment Broadband Conference registration for K Wood 15.00 EXPENDITURES - NOVEMBER 1 THROUGH DECEMBER 31, 2013 $ 243,497.04

CITY OF GRAND RAPIDS, MICHIGAN SMARTZONE LOCAL DEVELOPMENT FINANCE AUTHORITY - DOWNTOWN DEVELOPMENT DISTRICT FY2013 ESTIMATE AND FY2014 - FY2021 PRIORITY PLAN January 15, 2014 FY2013 Revised Budget

FY2012 FINAL Table 1 - Projected Revenue Tax Increment - General District-Wide $ 396,379 Tax Increment - Icon on Bond 146,043 Tax Increment - Michigan Street Development 1,087,487 Prior Year Tax Increment Adjustments (55,505) Rent - Cook-DeVos Incubator / Product Devel Center Interest on Investments 29,674 Other Program Revenue - Spring-Board Other Program Revenue - Business Accelerator Fund Grants - Michigan Strategic Fund 2012 - Incubator Grant Grants - Michigan Strategic Fund 2013 - iStart Miscellaneous Reimbursements Total Revenue 1,604,078

$

FY2013 FINAL

FY2014 Original Budget

FY2014 Adjusted Budget

FY2014 Actual Thru 12/31/13

FY2015 Forecast

FY2016 Forecast

FY2017 Forecast

FY2018 Forecast 1

491,426 $ 411,391 $ 305,294 $ 305,294 $ 465,031 $ 306,820 $ 308,355 $ 309,896 $ 197,336 197,336 197,764 197,764 190,733 198,753 199,747 200,745 1,322,118 1,322,118 1,421,916 1,421,916 1,190,853 857,415 861,702 866,011 (25,000) (5,635) (75,000) (75,000) (83,590) (50,000) (25,000) (25,000) 166,800 68,984 77,030 86,075 86,075 27,912 20,081 18,869 18,869 (6,101) 15,216 10,792 7,639 82,560 110,080 112,171 115,019 20,000 20,000 500,000 150,000 904,000 225,000 120,000 125,000 252,000 168,000 252,000 12 30 30 17 30 30 30 2,513,792 2,095,303 2,939,673 2,517,417 1,876,943 1,828,344 1,805,872 1,560,416

FY2019 Forecast

FY2020 Forecast

FY2021 Forecast

TOTAL

165,378 $ 107,129 462,151 (25,000) 12,934 28,934 30 751,556

166,205 $ 107,664 464,462 (25,000) (2,024) 30 711,336

167,036 $ 108,203 466,784 (25,000) (7,933) 30 709,120

167,871 $ 2,361,885 108,744 1,419,481 469,118 7,060,413 (25,000) (358,590) 318,164 (14,056) 35,336 448,764 40,000 470,000 672,000 30 257 706,707 $ 12,467,710

Table 2 - Committed and Ongoing Expenditures Annual Audit Contractual Services - Legal Fees and Notices Contractual Services - Miscellaneous Developer Reimbursements - Icon on Bond Developer Reimbursements - Michigan Street Facilities - City Hall Office Space and Maintenance Insurance - General Liability Professional Development Staff Support Services Allocation - A-87 Technology and VOIP Services Telephone - Cellular Total Committed & Ongoing Expenditures

4,600 22,351 1,705 146,141 552,880 1,409 1,410 1,095 73,401 7,784 12,289 261 825,326

4,600 20,000 3,000 197,336 149,077 5,652 1,743 2,200 100,470 9,217 11,351 300 504,946

4,600 33,506 1,017 197,337 149,078 6,187 1,743 2,769 62,491 9,217 11,351 206 479,502

4,700 30,000 3,000 197,764 6,859 4,035 2,200 100,470 10,781 12,526 200 372,535

4,700 30,000 3,000 197,764 6,859 4,035 2,200 100,470 10,781 12,526 200 372,535

Table 3 - Project Expenditures: Committed and Planned Science and Technology Initiatives Accelerator Contractual Services Accelerator Contractual Services - MEDC Grant 2012 Accelerator Contractual Services - MEDC Grant 2013 Virtual Incubator Support Tradeshows / WMMDC / Regional Innovation Cook-DeVos Incubator / Product Devel Center Incubator Needs Assessment Consultant Sub-total - Science and Technology

66,148 290,000 4,740 360,888

334,462 125,000 50,000 170,000 121,438 800,900

276,760 125,000 160,000 120,613 682,373

1,639,353 260,000 170,000 2,069,353

832,536 225,000 252,000 50,000 170,000 186,830 1,716,366

Infrastructure Improvements Bostwick Avenue Reconstruction - Crescent to Michigan 16,061 College & Michigan Improvs - Michigan Corridor Plan Michigan Street Tele-Communication Infrastructure Michigan Street Streetscape Improvements Streetscape - Coit/Lafayette/College Bridges over I-196 15,834 Michigan Street Bridge - Debt Service 25,000 Michigan Street Corridor Plan 35,000 Infrastructure Projects - Miscellaneous Sub-total - Infrastructure Improvements 91,895 Total Expenditures $ 1,278,109

25,000 100,000 125,000 $ 1,430,846

4,479 25,000 29,479 $ 1,191,354

55,000 75,000 100,000 25,000 100,000 355,000 $ 2,796,888

55,000 75,000 100,000 25,000 100,000 355,000 $ 2,443,901

Table 4 - Excess / (Deficit) of Revenues Over Expenditures Fund Balance, Beginning of Year $ 2,323,611 Plus: Projected Revenue 1,604,078 Less: Committed & Ongoing Expenditures (825,326) Less: Project Expenditures (452,783) Fund Balance, End of Year $ 2,649,580

$ 2,649,580 $ 2,649,580 $ 3,553,529 $ 3,553,529 $ 3,553,529 $ 3,627,045 $ 2,772,489 $ 1,919,337 $ 1,258,976 $ 175,792 $ (987,597) $ (2,193,416) $ 3,553,529 2,513,792 2,095,303 2,939,673 2,517,417 1,876,943 1,828,344 1,805,872 1,560,416 751,556 711,336 709,120 706,707 12,467,710 (504,946) (479,502) (372,535) (372,535) (249,928) (376,270) (380,943) (385,846) (296,560) (302,250) (307,140) (312,032) (2,983,503) (925,900) (711,852) (2,424,353) (2,071,366) (13,374) (2,306,630) (2,278,081) (1,834,931) (1,538,180) (1,572,475) (1,607,800) (1,644,184) (14,867,021) $ 3,732,526 $ 3,553,529 $ 3,696,314 $ 3,627,045 $ 5,167,170 $ 2,772,489 $ 1,919,337 $ 1,258,976 $ 175,792 $ (987,597) $ (2,193,416) $ (3,442,925) $ (1,829,284)

4,700 6,516 338 190,765 2,286 2,019 780 30,744 5,390 6,263 127 249,928

(5,626) 19,000 13,374

$

263,302

4,800 30,000 3,000 198,753 7,238 4,156 2,200 102,479 11,104 12,340 200 376,270

4,900 30,600 3,000 199,747 7,616 4,322 2,200 104,529 11,438 12,291 300 380,943

5,000 31,212 3,000 200,745 8,005 4,495 2,200 106,620 11,781 12,473 315 385,846

5,100 31,836 3,000 107,129 8,277 4,720 2,300 108,752 12,134 12,981 331 296,560

5,200 32,473 4,000 107,664 8,608 4,862 2,300 110,927 12,498 13,370 347 302,250

5,300 33,122 4,000 108,203 8,952 5,007 2,400 113,146 12,873 13,772 365 307,140

5,400 33,785 4,000 108,744 9,310 5,158 2,400 115,408 13,259 14,185 383 312,032

45,100 259,545 27,338 1,419,513 67,152 38,774 18,980 893,075 101,258 110,201 2,568 2,983,503

1,151,800 125,000 168,000 50,000 170,000 186,830 1,851,630

1,124,251 252,000 50,000 220,000 186,830 1,833,081

1,198,101 50,000 220,000 186,830 1,654,931

1,143,180 50,000 220,000 1,413,180

1,177,475 50,000 220,000 1,447,475

1,212,800 50,000 220,000 1,482,800

1,249,184 50,000 220,000 1,519,184

9,083,701 350,000 672,000 400,000 1,679,000 747,320 12,932,021

55,000 175,000 100,000 25,000 100,000 455,000 $ 2,682,900

55,000 165,000 100,000 25,000 100,000 445,000 $ 2,659,024

55,000 25,000 100,000 180,000 $ 2,220,777

25,000 100,000 125,000 $ 1,834,740

25,000 100,000 125,000 $ 1,874,725

25,000 100,000 125,000 $ 1,914,939

25,000 100,000 125,000 $ 1,956,216

220,000 415,000 300,000 200,000 800,000 1,935,000 $ 17,850,523

Note 1: The SmartZone's capture of school related millages ends beginning with FY2018. Note 2: Michigan Street Development LLC sold the majority of the real property associated with this project to Spectrum Health in late 2013 thus removing this real property from the ad valorem roll. Revenues for FY2015 and beyond have been reduced by 40% to reflect this change. For Table 3 expenditures for FY2014-2021, the boxed in expenditures indicate there are contractual agreements. Non-boxed in expenditures are included here for planning purposes.

FY2014 forecast plus 0.5% growth annually Ren Zone expired in FY2013. Later, 0.5% growth annually. 2

THIS REV WILL DECREASE SIGNIFICANTLY BEG'G FY2015 -Rental revenues per contract; adjusted by J Griffin 12/26/13

Staff estimates - interest rates estimated 1.0 to 1.5% Contributions from other partners for 2/3 of program costs Program support Total grant is $500,000 Total grant is $840,000 Personal use of cellular phone - proposed City Comm Policy

FY2014 per contract. Remaining years, staff estimates. Staff estimates Staff estimates 100% of project-related revenue plus interest Contractual reimbursement completed in FY2013 Per City of Grand Rapids Budget Instructions, Exhibit H Per City of Grand Rapids Budget Instructions, Exhibit E Staff estimates Staff estimates Per City of Grand Rapids Budget Instructions, Exhibit G Per City of Grand Rapids Budget Instructions, Exhibit D Share of Executive Director cellular telephone

Contract with GVSU - CEI

Lease subs ($210k build out; $50k virtual incubator support) Contract with The Right Place Inc.

Approved May 14, 2010. Estimated cash cost for project, subject to bid. Estimated cash cost for project, subject to bid. Estimated cash cost for project, subject to bid. $484,000 approved July 18, 2008 Approved July 18, 2008. CIB 2007 debt share until 9/1/2027. Approved 1/21/2011 Staff estimate

szbudgets14-18.xls jmw 01152014

1. Date:

January 10, 2014

To:

SmartZone℠ Local Development Finance Authority Board

From:

Kara L. Wood Executive Director

Subject:

Obsolete Property Rehabilitation Exemption Application – Lofts on 820, LLC located at 820 Monroe Avenue NW

An application for an Obsolete Property Rehabilitation District and a ten-year Obsolete Property Rehabilitation Exemption Certificate under PA 146 of 2000 has been filed by Lofts on 820, LLC for the property located at 820 Monroe Avenue NW. The proposed project is within the SmartZone℠ development district and approval of the application would impact future tax increment revenues of the SmartZone℠ Local Development Finance Authority; therefore, by City Commission policy the SmartZone℠ Local Development Finance Authority board is required to consider the application for approval before it can be considered by the City Commission. Lofts on 820, LLC (“Developer”) has acquired 820 Monroe Avenue NW, a four-story, 156,600 square foot building which was originally constructed in 1900 with multiple additions having been added between 1920 and 1950. Originally built for manufacturing by the Sackner Products Company, the building has more recently been utilized for office and retail; however, the occupancy rate has been less than 50% for the past several years. The Developer, which is a limited liability company associated with 616 Development, has developed a plan for the property including the removal of several of the poorly constructed additions to reduce the usable square footage of the building to approximately 120,000 square feet. Included in the plan are approximately 86 marketrate rental apartments encompassing 72,000 square feet; 13,700 square feet of retail space on the first floor; and 13,300 of commercial office space on the first and second floors. The Developer has also acquired the parking lot at 804 Bond Avenue NW which is adjacent to 820 Monroe Avenue NW, although that property is not contemplated for inclusion in the Obsolete Property Rehabilitation District. The total project costs are estimated to be approximately $21.8 million including hard construction costs of approximately $15.5 million. The rehabilitation will include removal of existing additions and large-scale interior demolition to accommodate the proposed floor plan. Upgrades will be required to elevators and fire suppression systems and the HVAC and electrical systems will require replacement. Additional investments will be made in new windows, roof and exterior brickwork restoration. Based on the extent of repair and reconfiguration required, the assessor has determined that the building is functionally obsolete and unable to be used and adequately perform the function of the

proposed usage. The project will result in the complete rehabilitation of the original structure. If approved, the Obsolete Property Rehabilitation Exemption would freeze the current taxable value of the building and reduce the millage rate levied against the value of the real property improvements. These taxes would be levied on the Obsolete Property Tax roll. The land and land improvements remain on the ad valorem tax roll. Pursuant to the Local Development Finance Authority act (Act 281 of 1986) and the SmartZone℠’s Development Plan, the SmartZone℠ is permitted to capture OPRA taxes (subject to the limitation of capturing 50% of state education and local school operating taxes); therefore, the SmartZone℠ would see a base capture from the property equal to the FY2013 value for the term of the exemption, and would realize an increase in revenues equivalent to 50% of the amount of state education and local school operating taxes levied against the real property improvements to be completed as part of the project. Although no office or retail tenants have been secured, the Developer estimates that approximately 20 full-time and 20 part-time office and retail jobs will be created at the property and will pay an average of $16 per hour. The Developer is working cooperatively with the previous property owner to accommodate and/or relocate the building’s existing tenants. The project is also located within the development district of the Monroe North Tax Increment Finance Authority (MNTIFA) and the Developer received the approval of that board on January 8. Although the MNTIFA was established prior to the SmartZone℠, the MNTIFA is not permitted to capture taxes levied on the Obsolete Property Rehabilitation Act tax roll. The project was also reviewed by the City’s Economic Development Project Team on January 7, 2014. The proposed project is in accordance with the zoning ordinance and the City’s Master Plan, there are no outstanding environmental issues at the property and the Developer is current on all its tax liabilities to the City. PROJECT PROJECTIONS LOFTS ON 820, LLC – 820 MONROE AVENUE NW Total Amount SmartZone℠ Portion Real Property Investment Existing Jobs Retained New Jobs (FTE) Average Hourly Wage Total New Taxes Generated per year New Taxes Abated per year New Taxes Paid per year New City Income Taxes KLW/jk

$15,500,000 0 30 $16.00 $391,628

$93,930

$297,699 $93,930 $9,984

$46,965 $46,965 N/A

Summary – A Year in Review With the last two months of the 2013 coming to completion, we had a chance to look back and take note of where our incubator was at the beginning of 2013 and where it stands at year end. Many successes have been accomplished with GR Current and the SmartZone. Looking back on the year 2013, these twelve months have gone by quickly with plenty of progress made and more to come. Some of the highlights from the first twelve months include:            

       

Established the name GR Current as critical part of the entrepreneur ecosystem. Created new name, logo, website and marketing material Brought new energy and name recognition to the Grand Rapids SmartZone and GR Current Grew the GR Current team from two people to our current staff of seven including Director, Operations Manager, Marketing Manager, Business analysts and Entrepreneur-in-Residence. Held our Grand Opening Event in June 2013 – with over 550 people attending Increased activity in our physical space, leaving only two offices and ½ lab available Establishment of our Virtual Incubator Approval of $84,570 in BAF funds (another $40,500 is pending approval) Approval of $100,000 in Micro Loans Approval of $250,000 in Pre-Seed Investment Match Clients we worked with raised a total of $15.2M in outside capital investments Graduation of our first tenant, NxGen. Due to their expedited success, NxGen needed additional, permanent space as well as additional lab certification. GR Current played a significant role in their growth by providing both subsidized lab space, BAF funding and numerous networking connections. GR Current continues to work with them as a Client. Grown strong relationships with other entrepreneur centered groups – Start Garden, The Factory, Co-Lab, Goei Center, etc… Continued collaborative partnerships with MEDC, The Right Place, GVSU, City of Grand Rapids, Spectrum Innovations, surrounding universities, state-wide SmartZone Incubators, etc… Started work on a self-sustained plan by cultivating key relationships with groups like TALENT 2025, GRID70, area corporations, etc… Successful recruitment of Brent Nowak, PhD and Stan Samuels, PhD to Grand Rapids Due to increased activity, created the need for additional space in the form of 234 Division Awarded MEDC Grant for iStart (now called Xcelerator) ($840,000) Awarded MIIE Grant ($75,000) with Spectrum Innovations matching $75,000 and GVSU on funding for medical device commercialization development. With CEI & Start Garden, initiated the West Michigan Challenge, a regional wide business plan competition in partnership with eight West Michigan based colleges and universities. Grant Milestones Achieved (2013)

    

Establishment of Virtual Incubator Program Established Entrepreneur in Residence Program th Relaunch Grand Rapids SmartZone (by way of Grand Opening Event on June 4 ) 20 ideas/technologies commercialized, 120 assists or service referrals, 10 new companies formed, 5 new jobs created and $1.5M capital raised 501(c)3 established



Re-establish Life Science Advisory Board

Activity Update for November and December Month November December

Company Contacts/Meetings 43 52

BAF Applications Submitted/Approved Program out of funding 0/0

Micro Loan & Pre-Seed Applications Approved N/A – program on hiatus N/A – program on hiatus

Events

Upcoming in 2014

    

Marketing and Events plan - networking, training and educational events and classes (see attached) Build out of e-Merge website platform Hire e-Merge Manager and part-time marketing Hire both Director and Instructor for iStart (now called Xcelerator) First cohort begins at Xcelerator

1 3

GR Current Event/Network Schedule Completed to date Culture & Cocktails Art and Entrepreneurs Medical Device Start Up Panel (hosted at Start Garden) UX Design with MJ Broadbent (Speaker Series) “Labs meet GR Current” Network Event

SmartZone? N N N N Y

(1) (2) (3) (4) (5)

January th Med Device Startup Discussion – January 8 (CHS) th Start Garden’s Sorta Summit – January 16 (Speak EZ) GR Current/Co-Lab Entrepreneur event (at Co-Lab space)

(6) (7) (8)

Y Y N

February Class (1) – TBD, Coordinate with Start Garden Grand Angels Meeting Touch Screen Tech Event (with Start Garden and Co-Lab)

(9) (10) (11)

N Y Y

Grand Opening of 234 Event (Networking) Class (2) – Accounting for Startups – Dan Carter Networking Event - Future of Design Innovation with KCAD Class (3) – Sales and startups – Jack Cottrell

(12) (13) (14) (15)

Y Y Y Y

Class (4) – Lessons Learned – TBD Networking Event – Advanced Manufacturing

(16) (17)

Y N

Class (5) – TBD Networking Event – Urban Planning and Importance of SmartZone

(18) (19)

Y Y

Networking Event – VCs and women entrepreneurs

(20)

Y

March

April

May

June

Milestone requirement by June 30, 2014:

(20)

Examples: On line Application for the Month of December

Company Name – CentriCycle Founder - Katie Kirsch Idea:

CentriCycle is developing a manual powered centrifuge for medical diagnostics in rural areas (specifically India). The team of recent UofM graduates contacted GR Current to gain access to incubator lab space and assistance in raising capital. The GR Current Team has an initial meeting scheduled with CentriCycle on Monday the 13th.

Company Name – CloudPatch Founder - Rocky Witt Idea:

CloudPatch is developing software products for hands-off system vulnerability detection, targeted at providers of cloud based webhosting. The company is currently covering operational and development expenses with consulting income but is in need of a small amount of working capital. The GR Current team met with CloudPatch and discussed funding options, came up with a plan, and introduced the CEO to potential funding sources.

Company Name - Modern Tenacity Founder - Anthony Momany Idea:

The company has a software platform called IntegriSync which allows companies to share their financial data with their CPA firms securely and in real-time. An initial meeting is scheduled for Monday the 20th to discuss the company’s needs and the resources that GR Current can offer. The company will likely need an introduction to a local IP firm.

Company Name – TBD Founder – Joe Schwarz Idea:

Joe’s company is in the idea stage (still un-named) and is working on developing a product for systematizing the tracking of the progress of physical therapy patients. We are in the process of setting up an initial meeting.

Marketing Update January 8, 2014

Projects Rapid Growth Media With  a  new  space,  projects,  speaker  series,  clients,  partnerships  and more,  there  is  a  lot  to  celebrate.  As  such,  we  view  both  organic  and non-­organic  PR  will  be  needed  to  maintain  community  informed  and engaged  with  our  activities.  Rapid  Growth  Media  is  proposing  the  following schedule  of  featured  stories  about  GR  Current  and  workings  within  the entrepreneurial  ecosystem  at  large. Rapid  Growth  Circulation  and  Demographics ● Over  13,700  weekly  newsletter  subscribers ● Average  33,000  unique  visitors  each  month ● Average  60,000  page  views  per  month

Rapid  Growth  will  do  the  following: ● Publish  a  series  of  articles,  blogs,  profiles  and  embedded  videos highlighting  high  growth,  stage  2,  venture  capital  and  biotech  firms in  West  Michigan ● Published  in  the  Feature  section  of  the  publication,  and  appear  on the  homepage  and  in  the  newsletter ● A  focus  page  created  on  the  publication  to  aggregate  all  related content ● Sponsors  for  this  program  would  be  shown  as  program  underwriters, affiliating  their  individual  brands  as  being  an  integral  part  of  the economic  impact  of  these  firms  and  trends  to  the  area Annual  investment: ● 1  piece  of  content  per  month,  12  per  year,  affiliated  focus  page, “Sponsored  By”  logo  on  the  Rapid  Growth  site  for  each  sponsor: $8,000/year ● GR  Current  will  pay  for  half  of  expense,  sourcing  the  remainder  from community  stakeholders  wanting  media  exposure

Client Graduation We  are  planning  a  graduation  “ceremony”  for  one  of  our  clients,  NxGen. This  will  be  in  the  form  of: ● Graduation  Certificate ● Chamber  of  Commerce  Announcement ● Mention  in  Rapid  Growth  article ● Social  media  blasts ● Mini-­mixer Ceremonies  of  this  nature  will  help  increase  awareness  of  GR  Current assists,  and  promote  the  idea  of  startups  via  our  incubators  and accelerators.  First  graduation  to  take  place  late  January.

GR Flow Filling  the  need  to  inform,  track  and  celebrate  the  entrepreneurial community  in  the  area,  we  have  developed  an  external  media  outlet  known as  GR  Flow.  Through  the  use  of  text/video/photographs,  we  hope  to represent  the  inner  workings  of  entrepreneurship.

We  are  currently  identifying  what  topics  will  be  covered  as  education/social on  the  platform.  It  will  be  included  in  new  website  design  and  pushed heavily  through  social  media  and  leverage  as  PR. Below  is  a  snapshot  of  current  videos  known  as  Confessionals.  This  has received  great  success  and  started  buzzing  in  the  social  media  circles  and physical  community.

Tentative  show  names.  Please  be  aware  that  they  will  be  refined  as  we  develop  material: ● 616  Made:  reviews  products  made  in  the  area ● Entrepreneurial  Quest:  true  accounts  from  real  entrepreneurs ● E^2  (Entrepreneurial  Ecosystem):  defining  entrepreneurial  resources ● Artrepreneur:  stories  of  the  fusion  of  the  creative  with  the  entrepreneurial ● Vchat:  probing  the  mind  of  the  venture  capitalist ● MeDev:  conceptualizing  the  medical  device  industry ● Confessionals:  raw  advice  to  entrepreneurial  stakeholders/policymakers Current  video  depicts  Confessionals,  with  the  following  metrics  from  a  soft  launch campaign:

Website  Dev

GR  Current’s  web  portal  has  reached  an  exceptional  level  of  viewership  and  interaction. Although  our  site  has  basic  information  and  has  standard  features,  backend  has  been issue-­ridden,  incongruent,  and  insufficient  to  depict  the  brand  and  force  of  GR’s  tech  talent. Therefore,  we  have  established  a  partner  deal  with  Mutually  Human,  a  local  firm,  to redevelop  our  web  portal.

The  grcurrent.com  webpage  will  also  host  grflow.org  internally,  minimizing  costs  and  having a  one  stop  shop  for  backend  development.  Mutually  Human  has  been  instructed  to  make  it a  representation  of  human  centered  design  techniques,  with  dynamic  content,  and feasibility  of  use.  It  will  be  a  heavy  graphic  and  video  site,  offering  infographics  as  a  best practice  in  tracking  development  for  GR  Current  and  region. Web  portal  is  under  development,  and  will  be  available  before  our  new  space  opening,  end of  February. Social Media Facebook Facebook  has  seen  the  most  interaction,  due  to  heavy  focus  as  medium  of  choice.  Our recent  activity  has  resulted  in  high-­level  of  engagement  and  views.  Photography  during  this speaker  event,  and  later  posted,  helped  raise  engagement  level. Other Channels Future  focus  will  be  placed  on  Twitter/LinkedIn  as  alternative  mediums  to  send  out information.  To  achieve  this,  we  will  be  implementing  content  strategy  and  the  usage  of Hootsuite,  to  streamline  and  schedule  blasts. Events Speaker Series: MJ Broadbent On  December  20th,  GR  Current  hosted  our  first  speaker  series,  bringing  in  renown  UX designer  MJ  Broadbent,  discussing  visualization  of  ideas.  This  event  pooled  designers, marketers,  early  stage  startups,  artists,  tech/financial  business  owners  and  media, surpassing  our  initial  40  person  cap.

Facebook  Numbers In  excess  of  2k  views  with  high  engagement  levels

Networking: Mad Science Mixer On  December  11th,  GR  Current  hosted  a  holiday  party  with  current  tenants,  external stakeholders,  and  members  of  the  tech  and  maker  community.  We  wanted  attendance  to be  moderate  at  50,  but  70  people  applied.  Yet  again,  we    surpassed  initial  counts  on  an organic  invite  model. We  invited  local  tech  gurus  from  the  Geek  Group,  GR  Makers,  inventors,  government  and non-­profit  groups,  close  service  providers,  artists  and  media.  This  sparked  a  featured  story in  Rapid  Growth  Media,  spreading  above  throughout  the  community.

Facebook  Numbers In  excess  of  4k  views  with  high  engagement  levels

LDFA: November/December Assists Client Name Advanced Orthopedic Solutions AirDrop Gaming All Things Weaved BAHRS BioSavita Chart House Energy Conceptz Conpoto Cunable Dezign Intelligence, LLC Dollar-Answer (Sandbox International LLC) FabFarm Fans.lu Flip Learning HealthySmileLab LLC In The Groove Mavin Global Mull-It-Over Robotic Patient Aid Sitting in a Tree Social 2 Step Soletics Sportsman Tracker - (Buoy 76) Swallow Solutions Syzygy Tetra Discovery Partners, LLC UV Partners Varsity News Network Grays Bone and Joint Models All Care Healthcare Back 2 Sports Birdhouse CFC LLC Freedom Wand Revolar Energy, LLC The Mackinac Technology Company Autocam Medical Saliva Systems Avegant CloudPatch CentriCycle Coravon Modern Tenacity lan.io Xcend Videos4music, LLC NxGen CastNotice GeLo Throughpoint Technologies Herd Instincts, LLC Synosteo Open Device Lab Doorganics

City Greenville Holland Grand Rapids Grand Rapids Plymouth Chicago Grand Rapids Holland Grand Rapids Ada Grand Rapids Holland Grand Rapids Holland Grand Rapids Saginaw Rockford Grandville Holland Grand rapids Ada Troy Grand Rapids Grand Rapids Grand Rapids Grand Rapids Wyoming Grand Rapids Greenville Newaygo Grand Rapids BLOOMFIELD HILLS Troy Zeeland West Lafayette Grand Rapids Grand Rapids White Lake Ann Arbor Grand Rapids CHASSELL Ann Arbor ALLENDALE Grand Rapids Brighton Grand Rapids Saugatuck Douglas Holland Grand Rapids Hudsonville Grand Rapids Grand Rapids Grand Rapids

Contact Steve Homich Brandon Buckingham Ulandra Reynolds Miles Smith Savita Nikam Rob Rafson Magdalene Law Matt Lepard John Grace Pei Zhan Scott Daigger Marty Boysen Dave Padula Christian Spielvogel Suzette Ona Spencer Toth John Hoyle Bruce Burgess Jim Shaddelee Laura Vaughn Susan Burke Lindsey Noonan Jeff Courter Adam Fox Craig Pippel Mark Gurney Ted Cole Ryan Vaughn Steve Homich Valerie Oberchain Tom Hernon Adam Milgram Stephen Cook Deb Tacoma Terrence Harper John Slagter John Kennedy Rebecca Altounian Jonathan Zagel Rocky Witt Katherine Kirsch Reed Shick Anthony Momany John Hwang Ron Schoenherr Tom Bowman Alan Mack David Petro Jason Hall Adam Fox Justin Herd Dr. Brent Nowak Eric McKee Mike Hughes

Phone (616) 901-0291 (269) 615-0831 (269) 830-3827 (616) 298-6957 (734) 233-3146 (312) 961-0043 (616) 836-5681 (616) 335-1850 (616) 331-5854 (608) 335-5526 (616) 298-2051 (818) 943-4273 (269) 760-8458 (616) 281-2038 (989) 239-5022 (616) 617-1493 (616) 730-2162 (616) 836-6558 (248) 721-0768 (616) 240-9853 (517) 316-5094 (616) 240-3185 (231) 740-7350 (616) 331-5858 (616) 635-0937 (616) 690-1862 (616) 848-9468 (616) 331-5845 (231) 652-1062 (616) 451-4716 (248) 302-4738 (574) 575-6512 (616) 566-0291 (404) 729-5640 (616) 915-5715 (616) 698-0707 (248) 408-0086 (734) 308-7718 (616) 617-9953 (269) 370-1014 (989) 430-9041 (616) 822-2981 (616) 635-9768 (810) 494-7144 (616) 450-1020 (847) 343-0402 (917) 686-6367 (616) 405-1856 (231) 740-7350 (616) 717-2935 (210) 325-2780 (616) 780-6838 (888) 387-1187

Company Bio Industry Cluster Patient Specific Orthopaedic Surgical Tooling Life Science Technology Tech Products for consumer gaming Advanced Materials Social media platform for African American women Mobile Software Break Away Lure, Hook Release System Advanced Manufacturing Accelerated Biologics Development Life Sciences Developing, owning and operating sustainable clean on site energy generation Alternative systems Energy Fine art bidding and research platform Mobile Software Online Reward System Information Technology Self publishing software Software Autocad for tablets Software Online market research platform Information Technology Shop/farm organizational shelving Advanced Manufacturing Web based point of sale system for artists Information Technology Digital textbooks (ebooks) Business Services Form fitted mouth guards Advanced Manufacturing Advanced Knee Brace for military application Life Science Technology Software contracting and IT consulting Software 1 hour fire rated sound barrier mullion trim cap Advanced Manufacturing Robotic assistance for those with limited mobility Advanced Manufacturing Wedding planning online templates Information Technology B2B Rewards Program Software Solar powered apparel Advanced Materials Mobile app for tracking external wildlife movement Mobile Software Device to help patients with dysphagia Life Science Technology PCR Kits Life Sciences Neuroscience research Life Sciences Commercial lighting insulation using UV Alternative Energy Web platform for high school sports reporting Information Technology Artificial cadavers Advanced Manufacturing A gas flow warning alarm device Life Science Technology Wheelchairs for outdoor sports recreation Advanced Manufacturing Web based tools and support for caretakers of autistic children Software Vehicular aeronautics Transportation Patient Disinfectant Life Science Technology Energy audits and solar PV project analysis Alternative Energy Transparent window insulation system Alternative Energy Machine surgical components Advanced Manufacturing Saliva control system for patients Life Sciences Virtual retinal display technology Software Security software for cloud providers Software Manual Centrifuge for field work Life Science Technology Ceramic like material manufacturer Advanced Materials File sharing for CPA's and their clients Information Technology CRM for churches and non-profits Software Metric driven software platform Software Independent videos made for music Data Communications Rapid genetics testings Life Sciences Alert system for casting in theatrical and movie productions Information Technology Blue tooth mobile positioning Information Technology Food Logistics safety software Software Redesigned kitchen products Advanced Manufacturing Bone stretch and healing device Life Science Technology Community based tech sharing service Information Technology Door to door delivery of organic produce Logistics

Trade Show Review – MEDICA 2013 Therese Thill attended the MEDICA World Forum in Dusseldorf Germany from November 19 – 23, 2013. This annual show will run again November 12-15, 2014. MEDICA had 4,400 exhibitors and more than 132,000 visitors from 168 countries. MEDICA covers all medical and surgical products with 18 Cobo-sized halls on the trade show grounds. One of the halls hosts COMPAMED, the leading trade fair for the supplier market for medical technology manufacturing. The Right Place, Inc. participated in a booth coordinated by the MEDC which was located in the US Pavilion. The booth had the Pure Michigan logo and graphics. The Right Place was a sponsor and had signage on the booth and displayed RPI and MiDevice literature in racks. Four companies exhibited in that space, including Wallbro representing MiDevice, Michigan Instruments, located in Grand Rapids, Biopro and Gramedica from Port Huron and Macomb respectively. Each company had signage and a directory listing. The booth was coordinated by the MEDC Export office so participating companies had to have an export focus to be included. Unlike other events, companies were charged $4,900 for participating in the booth and for a separate matchmaking service. The companies are required to report back to the MEDC on leads and export sales generated by the show. RPI used SmartZone funds to offset the cost of booth space and matchmaking for Walbro. Growth/Retention: The booth participants worked the show for customers and new suppliers. I met with west MI companies exhibiting separately at MEDICA, including Skytron, Hillrom and Oxford. Attraction: I met with trade and investment staff from the Netherlands, Israel, Japan and the UK in anticipation of extending our attraction efforts in these markets. We networked extensively with the Medical Device team at the US Dept of Commerce Pavilion. I met contractors currently working with other MI medical companies who were interested in new business. I also met with several fdi contractors about making introductions and lead generation. I identified two solid prospects from MEDICA. I also met with representatives from a med device cluster/ incubator in the Netherlands which could be a model for west Michigan’s efforts. We’ve met this group on several occasions in the past and continue to leverage the relationship.

Recommendation: Although the size and scope is a bit daunting, MEDICA continues to be a worthwhile show. I will recommend to the MEDC that we continue to attend/partner at this show but take booth space in the COMPAMED pavilion which is better aligned to capabilities of the MI participants.

THE RIGHT PLACE LDFA Board Report Jan. 17, 2014 TRADE SHOWS

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Vice President of Business Development Therese Thill attended MEDICA in Dusseldorf, Germany Nov 19 – 23, 2013. The Right Place recruited MiDevice member Walbro and Michigan Instruments to participate in a booth coordinated by the MEDC in the US Pavilion. She continues to follow up on leads generated from the show. See attached trade show report. MiDevice has recruited seven companies to participate at MD&M West in Anaheim, CA in February utilizing the new tradeshow booth. Organizational efforts for the show continue.

MiDevice (formally WMMDC)

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MiDevice took out an ad in the Medical Products Outsourcing annual Capabilities Directory. This ad has a year-long shelf life and features the capabilities of the combined MiDevice membership. The SmartZone logo has been included. The cost of the ad was paid by The Right Place and some contribution from MiDevice members. MiDevice continues to court the Medial Products Outsourcing/Orthopedic Design and Technology Conference to Grand Rapids.

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MiDevice held the November meeting at Laminin Medical with speakers from the US Commercial Service and MEDC to talk about trade opportunities and assistance for companies interested in exporting. About 25 members attended.

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Programming for 2014 will include meetings at Mary Free Bed, Keystone Solutions, Michigan Spring and Stamp, DornerWorks, Firstronic, and The Geek Group.

INNOVATION - TECH TRANSFER MEETING/EVENT

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The Right Place Manufacturers Council hosted Stephen Moore, a member of the editorial board and senior economics writer on Dec 11. He had dinner with a half a dozen manufacturing leaders from West Michigan and then spoke to the full Council at their Innovation-focused meeting the following morning. His topic: America's Energy Boom: How it Will Change US Manufacturing and Recharge the US Economy. The Key Sponsor for the event was Inno-versity.

INNOVATION COOPERATIVE: STEELCASE, FAURECIA, WHIRLPOOL, BISSELL 

The Right Place Innovation Cooperative members (Faurecia, Steelcase, Bissell, and Whirlpool) met with area funding partners/venture and angel capital groups on November 26 to discuss connecting their technology clients with appropriate funding so that these larger companies can then provide global access to markets. A Technology Wish List was developed to assist the funding partners in finding these key technologies out in the marketplace.

From: Steffen, Jay Sent: Friday, December 20, 2013 5:41 PM Subject: Michigan Street Corridor Plan Update

Dear Michigan Street Corridor Plan Steering Committee members and interested parties, Wow, where did the time go since our meeting in August? We wanted to provide an update on the activity which has taken place since and to provide a plan of action for 2014. Recent Activities:      

A meeting with MSHDA to discuss the housing portion of the plan – more work needs to be done on the target market analysis GVSU Community Research Institute Updated the HUD Indicators data Meetings have been held with MDOT to discuss potential sources of funding for future projects Grand Valley State University announced the acquisition of property north of I-196 A HUD Grant Convening was held in Washington DC where we shared information with other Grantees and learned about best practices from other communities The MSCP plan is undergoing an expansion of content to include additional information such as; Universal Design Principles, Crime Prevention Through Environmental Design, Climate Resiliency, Right Tree/Right Place and other important topics

A good meeting was held this week with Grand Valley State University to discuss their recent acquisition. While GVSU does not plan to develop this area for a few years, we believe the Corridor Plan needs to address this development. We will be working together to conduct an assessment of the infrastructure and to perform additional transportation modeling. We will focus on the future land use, applying the Michigan Street Corridor Design Principles for development, and exploring the impacts or changes to several of the transportation recommendations, particularly for Hastings, and the College/Michigan intersection. Look for the next version of the Michigan Street Report in January and an invitation to a Steering Committee meeting on Wednesday, February 26, 2014. Please have a happy and safe holiday season! Jay D. Steffen Assistant Planning Director City of Grand Rapids 1120 Monroe Ave, NW Grand Rapids, MI 49503 P: (616) 456-4308 F: (616) 456-4546 [email protected]

grcity.us/planning

GR Current Report

Summary – A Year in Review With the last two months of the 2013 coming to completion, we had a chance to look back and take note of where our incubator was at the beginning of 2013 and where it stands at year end. Many successes have been accomplished with GR Current and the SmartZone. Looking back on the year 2013, these twelve months have gone by quickly with plenty of progress made and more to come. Some of the highlights from the first twelve months include:            

       

Established the name GR Current as critical part of the entrepreneur ecosystem. Created new name, logo, website and marketing material Brought new energy and name recognition to the Grand Rapids SmartZone and GR Current Grew the GR Current team from two people to our current staff of seven including Director, Operations Manager, Marketing Manager, Business analysts and Entrepreneur-in-Residence. Held our Grand Opening Event in June 2013 – with over 550 people attending Increased activity in our physical space, leaving only two offices and ½ lab available Establishment of our Virtual Incubator Approval of $84,570 in BAF funds (another $40,500 is pending approval) Approval of $100,000 in Micro Loans Approval of $250,000 in Pre-Seed Investment Match Clients we worked with raised a total of $15.2M in outside capital investments Graduation of our first tenant, NxGen. Due to their expedited success, NxGen needed additional, permanent space as well as additional lab certification. GR Current played a significant role in their growth by providing both subsidized lab space, BAF funding and numerous networking connections. GR Current continues to work with them as a Client. Grown strong relationships with other entrepreneur centered groups – Start Garden, The Factory, Co-Lab, Goei Center, etc… Continued collaborative partnerships with MEDC, The Right Place, GVSU, City of Grand Rapids, Spectrum Innovations, surrounding universities, state-wide SmartZone Incubators, etc… Started work on a self-sustained plan by cultivating key relationships with groups like TALENT 2025, GRID70, area corporations, etc… Successful recruitment of Brent Nowak, PhD and Stan Samuels, PhD to Grand Rapids Due to increased activity, created the need for additional space in the form of 234 Division Awarded MEDC Grant for iStart (now called Xcelerator) ($840,000) Awarded MIIE Grant ($75,000) with Spectrum Innovations matching $75,000 and GVSU on funding for medical device commercialization development. With CEI & Start Garden, initiated the West Michigan Challenge, a regional wide business plan competition in partnership with eight West Michigan based colleges and universities. Grant Milestones Achieved (2013)

    

Establishment of Virtual Incubator Program Established Entrepreneur in Residence Program th Relaunch Grand Rapids SmartZone (by way of Grand Opening Event on June 4 ) 20 ideas/technologies commercialized, 120 assists or service referrals, 10 new companies formed, 5 new jobs created and $1.5M capital raised 501(c)3 established

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Re-establish Life Science Advisory Board

Activity Update for November and December Month November December

Company Contacts/Meetings 43 52

BAF Applications Submitted/Approved Program out of funding 0/0

Micro Loan & Pre-Seed Applications Approved N/A – program on hiatus N/A – program on hiatus

Events

Upcoming in 2014

    

Marketing and Events plan - networking, training and educational events and classes (see attached) Build out of e-Merge website platform Hire e-Merge Manager and part-time marketing Hire both Director and Instructor for iStart (now called Xcelerator) First cohort begins at Xcelerator

1 3

GR Current Event/Network Schedule Completed to date Culture & Cocktails Art and Entrepreneurs Medical Device Start Up Panel (hosted at Start Garden) UX Design with MJ Broadbent (Speaker Series) “Labs meet GR Current” Network Event

SmartZone? N N N N Y

(1) (2) (3) (4) (5)

January th Med Device Startup Discussion – January 8 (CHS) th Start Garden’s Sorta Summit – January 16 (Speak EZ) GR Current/Co-Lab Entrepreneur event (at Co-Lab space)

(6) (7) (8)

Y Y N

February Class (1) – TBD, Coordinate with Start Garden Grand Angels Meeting Touch Screen Tech Event (with Start Garden and Co-Lab)

(9) (10) (11)

N Y Y

Grand Opening of 234 Event (Networking) Class (2) – Accounting for Startups – Dan Carter Networking Event - Future of Design Innovation with KCAD Class (3) – Sales and startups – Jack Cottrell

(12) (13) (14) (15)

Y Y Y Y

Class (4) – Lessons Learned – TBD Networking Event – Advanced Manufacturing

(16) (17)

Y N

Class (5) – TBD Networking Event – Urban Planning and Importance of SmartZone

(18) (19)

Y Y

Networking Event – VCs and women entrepreneurs

(20)

Y

March

April

May

June

Milestone requirement by June 30, 2014:

(20)

Examples: On line Application for the Month of December

Company Name – CentriCycle Founder - Katie Kirsch Idea:

CentriCycle is developing a manual powered centrifuge for medical diagnostics in rural areas (specifically India). The team of recent UofM graduates contacted GR Current to gain access to incubator lab space and assistance in raising capital. The GR Current Team has an initial meeting scheduled with CentriCycle on Monday the 13th.

Company Name – CloudPatch Founder - Rocky Witt Idea:

CloudPatch is developing software products for hands-off system vulnerability detection, targeted at providers of cloud based webhosting. The company is currently covering operational and development expenses with consulting income but is in need of a small amount of working capital. The GR Current team met with CloudPatch and discussed funding options, came up with a plan, and introduced the CEO to potential funding sources.

Company Name - Modern Tenacity Founder - Anthony Momany Idea:

The company has a software platform called IntegriSync which allows companies to share their financial data with their CPA firms securely and in real-time. An initial meeting is scheduled for Monday the 20th to discuss the company’s needs and the resources that GR Current can offer. The company will likely need an introduction to a local IP firm.

Company Name – TBD Founder – Joe Schwarz Idea:

Joe’s company is in the idea stage (still un-named) and is working on developing a product for systematizing the tracking of the progress of physical therapy patients. We are in the process of setting up an initial meeting.

Marketing Update January 8, 2014

Projects Rapid Growth Media With  a  new  space,  projects,  speaker  series,  clients,  partnerships  and more,  there  is  a  lot  to  celebrate.  As  such,  we  view  both  organic  and non-­organic  PR  will  be  needed  to  maintain  community  informed  and engaged  with  our  activities.  Rapid  Growth  Media  is  proposing  the  following schedule  of  featured  stories  about  GR  Current  and  workings  within  the entrepreneurial  ecosystem  at  large. Rapid  Growth  Circulation  and  Demographics ● Over  13,700  weekly  newsletter  subscribers ● Average  33,000  unique  visitors  each  month ● Average  60,000  page  views  per  month

Rapid  Growth  will  do  the  following: ● Publish  a  series  of  articles,  blogs,  profiles  and  embedded  videos highlighting  high  growth,  stage  2,  venture  capital  and  biotech  firms in  West  Michigan ● Published  in  the  Feature  section  of  the  publication,  and  appear  on the  homepage  and  in  the  newsletter ● A  focus  page  created  on  the  publication  to  aggregate  all  related content ● Sponsors  for  this  program  would  be  shown  as  program  underwriters, affiliating  their  individual  brands  as  being  an  integral  part  of  the economic  impact  of  these  firms  and  trends  to  the  area Annual  investment: ● 1  piece  of  content  per  month,  12  per  year,  affiliated  focus  page, “Sponsored  By”  logo  on  the  Rapid  Growth  site  for  each  sponsor: $8,000/year ● GR  Current  will  pay  for  half  of  expense,  sourcing  the  remainder  from community  stakeholders  wanting  media  exposure

Client Graduation We  are  planning  a  graduation  “ceremony”  for  one  of  our  clients,  NxGen. This  will  be  in  the  form  of: ● Graduation  Certificate ● Chamber  of  Commerce  Announcement ● Mention  in  Rapid  Growth  article ● Social  media  blasts ● Mini-­mixer Ceremonies  of  this  nature  will  help  increase  awareness  of  GR  Current assists,  and  promote  the  idea  of  startups  via  our  incubators  and accelerators.  First  graduation  to  take  place  late  January.

GR Flow Filling  the  need  to  inform,  track  and  celebrate  the  entrepreneurial community  in  the  area,  we  have  developed  an  external  media  outlet  known as  GR  Flow.  Through  the  use  of  text/video/photographs,  we  hope  to represent  the  inner  workings  of  entrepreneurship.

We  are  currently  identifying  what  topics  will  be  covered  as  education/social on  the  platform.  It  will  be  included  in  new  website  design  and  pushed heavily  through  social  media  and  leverage  as  PR. Below  is  a  snapshot  of  current  videos  known  as  Confessionals.  This  has received  great  success  and  started  buzzing  in  the  social  media  circles  and physical  community.

Tentative  show  names.  Please  be  aware  that  they  will  be  refined  as  we  develop  material: ● 616  Made:  reviews  products  made  in  the  area ● Entrepreneurial  Quest:  true  accounts  from  real  entrepreneurs ● E^2  (Entrepreneurial  Ecosystem):  defining  entrepreneurial  resources ● Artrepreneur:  stories  of  the  fusion  of  the  creative  with  the  entrepreneurial ● Vchat:  probing  the  mind  of  the  venture  capitalist ● MeDev:  conceptualizing  the  medical  device  industry ● Confessionals:  raw  advice  to  entrepreneurial  stakeholders/policymakers Current  video  depicts  Confessionals,  with  the  following  metrics  from  a  soft  launch campaign:

Website  Dev

GR  Current’s  web  portal  has  reached  an  exceptional  level  of  viewership  and  interaction. Although  our  site  has  basic  information  and  has  standard  features,  backend  has  been issue-­ridden,  incongruent,  and  insufficient  to  depict  the  brand  and  force  of  GR’s  tech  talent. Therefore,  we  have  established  a  partner  deal  with  Mutually  Human,  a  local  firm,  to redevelop  our  web  portal.

The  grcurrent.com  webpage  will  also  host  grflow.org  internally,  minimizing  costs  and  having a  one  stop  shop  for  backend  development.  Mutually  Human  has  been  instructed  to  make  it a  representation  of  human  centered  design  techniques,  with  dynamic  content,  and feasibility  of  use.  It  will  be  a  heavy  graphic  and  video  site,  offering  infographics  as  a  best practice  in  tracking  development  for  GR  Current  and  region. Web  portal  is  under  development,  and  will  be  available  before  our  new  space  opening,  end of  February. Social Media Facebook Facebook  has  seen  the  most  interaction,  due  to  heavy  focus  as  medium  of  choice.  Our recent  activity  has  resulted  in  high-­level  of  engagement  and  views.  Photography  during  this speaker  event,  and  later  posted,  helped  raise  engagement  level. Other Channels Future  focus  will  be  placed  on  Twitter/LinkedIn  as  alternative  mediums  to  send  out information.  To  achieve  this,  we  will  be  implementing  content  strategy  and  the  usage  of Hootsuite,  to  streamline  and  schedule  blasts. Events Speaker Series: MJ Broadbent On  December  20th,  GR  Current  hosted  our  first  speaker  series,  bringing  in  renown  UX designer  MJ  Broadbent,  discussing  visualization  of  ideas.  This  event  pooled  designers, marketers,  early  stage  startups,  artists,  tech/financial  business  owners  and  media, surpassing  our  initial  40  person  cap.

Facebook  Numbers In  excess  of  2k  views  with  high  engagement  levels

Networking: Mad Science Mixer On  December  11th,  GR  Current  hosted  a  holiday  party  with  current  tenants,  external stakeholders,  and  members  of  the  tech  and  maker  community.  We  wanted  attendance  to be  moderate  at  50,  but  70  people  applied.  Yet  again,  we    surpassed  initial  counts  on  an organic  invite  model. We  invited  local  tech  gurus  from  the  Geek  Group,  GR  Makers,  inventors,  government  and non-­profit  groups,  close  service  providers,  artists  and  media.  This  sparked  a  featured  story in  Rapid  Growth  Media,  spreading  above  throughout  the  community.

Facebook  Numbers In  excess  of  4k  views  with  high  engagement  levels

GR SmartZone Metrics Report November 1 - December 31, 2013

Unique Assists (60)

Location

Contact Name

Phone

Advanced Orthopedic Solutions AirDrop Gaming All Care Healthcare All Things Weaved Autocam Medical Avegant Back 2 Sports BAHRS BioSavita Birdhouse CastNotice CentriCycle CFC LLC Chart House Energy CloudPatch Conceptz Conpoto Coravon Cunable Detroit R&D Dezign Intelligence, LLC Dollar-Answer (Sandbox Doorganics FabFarm Failure-Lab

Greenville Holland Newaygo Grand Rapids Grand Rapids Ann Arbor Grand Rapids Grand Rapids Plymouth BLOOMFIELD Douglas CHASSELL Troy Chicago, IL Grand Rapids Grand Rapids Holland Grand Rapids Grand Rapids Detroit Ada Grand Rapids Grand Rapids Holland Grand Rapids

Steve Homich Brandon Valerie Oberchain Ulandra Reynolds John Kennedy Jonathan Zagel Tom Hernon Miles Smith Savita Nikam Adam Milgram David Petro Katherine Kirsch Stephen Cook Rob Rafson Rocky Witt Magdalene Law Matt Lepard Reed Shick John Grace Mary LeDuc Pei Zhan Scott Daigger Mike Hughes Marty Boysen Jordan O'Neil

(616) 901-0291 (269) 615-0831 (231) 652-1062 (269) 830-3827 (616) 698-0707 (734) 308-7718 (616) 451-4716 (616) 298-6957 (734) 233-3146 (248) 302-4738 (917) 686 6367 (269) 370-1014 (574) 575-6512 (312) 961-0043 (616) 617-9953 (734) 646-6186 (616) 836-5681 (989) 430-9041 (616) 335-1850 (248) 330-3302 (616) 331-5854 (608) 335-5526 (888) 387-1187 (616) 298-2051 (616) 292-7277

Fans.lu

Grand Rapids

Dave Padula

(818) 943-4273

Flip Learning

Holland

Christian Spielvogel (269) 760-8458

Freedom Wand

Zeeland

Deb Tacoma

(616) 566-0291

GeLo

Holland

Jason Hall

(616) 405-1856

Grays Bone and Joint Models

Greenville

Steve Homich

(616) 331-5845

HealthySmileLab LLC Herd Instincts, LLC

Grand Rapids Hudsonville

Suzette Ona Justin Herd

(616) 281-2038 (616) 717-2935

In The Groove

Saginaw

Spencer Toth

(989) 239-5022

lan.io

Grand Rapids

John Hwang

(616) 635-9768

Mavin Global

Rockford

John Hoyle

(616) 617-1493

Modern Tenacity

ALLENDALE

Anthony Momany

(616) 822-2981

Mull-It-Over

Grandville

Bruce Burgess

(616) 730-2162

NxGen

Grand Rapids

Alan Mack

Open Device Lab

Grand Rapids

Eric McKee

(616) 780-6838

Porterhouse Productions

Traverse City

Sam Porter

(231) 499-4968

Revolar Energy, LLC Robotic Patient Aid

West Lafayette, IN Holland

Terrence Harper Jim Shaddelee

(404) 729-5640 (616) 836-6558

Saliva Systems

White Lake

Rebecca Altounian

(248) 408-0086

Industry Cluster

Total Assists (85)

How Did we Assist

Life Sciences Advanced Life Sciences Other Innovative Advanced Advanced Advanced Advanced Life Sciences Information Information Life Sciences Advanced Alternative Energy Information Information Information Advanced Materials Information Advanced Information Information Traditional Advanced Other Innovative Technologies Other Innovative Technologies Other Innovative Technologies Life Sciences

Tech/Idea Commercialized (44)

New Jobs Capital Created Transaction (6) ($1,231,000) 1 0 0 0 0 0 0 0 0 0 0 0 0 0 350000 0 1 0 300000 0 0 0 0 0 0 0 0

Space Investment Strategy Investment Introductions / Space Strategy Investment Strategy Strategy Straegy Strategy Strategy Investment Strategy Strategy Strategy Strategy Strategy Introductions / Investment Strategy Introductions / Introductions / Introductions / Referrals Introductions / Referrals Introductions / Referrals Introductions / Referrals Introductions / Referrals Space

2 1 1 2 1 1 2 2 2 1 1 1 2 2 1 2 2 1 2 1 2 2 2 1 1

Patient Specific Tech Products for A gas flow warning alarm Social media platform for Machine surgical

1 2

Web based point of sale system for artists Digital textbooks (ebooks)

2

Patient Disinfectant

0

2

Blue tooth mobile positioning Artificial cadavers

0

Strategy Investment

1 1

0 6000

Strategy

1

Form fitted mouth guards Redesigned kitchen products Advanced Knee Brace for military application

Information Technology Information Technology Information Technology Advanced Materials

Introductions / Referrals Strategy

1

Strategy

1

Strategy

2

Life Sciences

Investment

1

Other Innovative Technologies Other Innovative Technologies Alternative Energy Advanced Manufacturing Life Sciences

Introductions / Referrals Introductions / Referrals Strategy Strategy

1

0

1

0

Investment

1

Information Technology Advanced Manufacturing Life Sciences Advanced Manufacturing Life Sciences

1

2

1

1 2

Wheelchairs for outdoor Break Away Lure, Hook Accelerated Biologics Web based tools and Alert system for casting in Manual Centrifuge for field Sustainable clean on site

Online Reward System Ceramic like material Self publishing software Autocad for tablets Online market research Shop/farm organizational

Robotic assistance for those with limited mobility Saliva control system for patients

Bank Loan & Owner

Angel

0 1

0

0

0 0

Software contracting and IT consulting File sharing for CPA's and their clients 1 hour fire rated sound barrier mullion trim cap Rapid genetics testings

Source of Investment

0 0 0 0

0 0 0

Start Garden

GR SmartZone Metrics Report November 1 - December 31, 2013

Unique Assists (60)

Location

Contact Name

Phone

Industry Cluster

Sip Organic

Grand Rapids

Tom Pohlman

616-238-2939

Traditional

Sitting in a Tree

Grand rapids

Laura Vaughn

(248) 721-0768

Social 2 Step

Ada

Susan Burke

(616) 240-9853

Soletics

Troy

Lindsey Noonan

(517) 316-5094

Other Innovative Technologies Information Technology Alternative Energy

Sportsman Tracker - (Buoy 76)

Grand Rapids

Jeff Courter

(616) 240-3185

Swallow Solutions

Grand Rapids

Adam Fox

Synosteo

Grand Rapids

Syzygy Tetra Discovery Partners, LLC

Total Assists (85)

How Did we Assist Introductions / Referrals Investment

1

Strategy Investment

(231) 740-7350

Information Technology Life Sciences

Dr. Brent Nowak

(210) 325-2780

Life Sciences

Grand Rapids Grand Rapids

Craig Pippel Mark Gurney

(616) 331-5858 (616) 635-0937

2 2

The Mackinac Technology Company Grand Rapids

John Slagter

(616) 915-5715

Throughpoint Technologies

Grand Rapids

Adam Fox

(231) 740-7350

UpTown Kitchen

Grand Rapids

Kelly LeCoy

(616) 648-4983

Life Sciences Space Homeland Space Security/Defense Advanced Materials Introductions / Referrals Information Investment Technology Traditional Introductions / Referrals

UV Partners

Wyoming

Ted Cole

(616) 690-1862

Alternative Energy

2

Varsity News Network

Grand Rapids

Ryan Vaughn

(616) 848-9468

Information Technology

Introductions / Referrals Strategy

Videos4music, LLC

Grand Rapids

Tom Bowman

(616) 450-1020

Strategy

1

Workpack LLC

Marne

Kristie Vos

(616) 647-7333

Brighton

Ron Schoenherr

(810) 494-7144

Introductions / Referrals Strategy

1

Xcend

Other Innovative Technologies Information Technology Information Technology

2

2

Tech/Idea Commercialized (44)

New Jobs Created (6)

Capital Transaction ($1,231,000) 0 0

2

Wedding planning online templates B2B Rewards Program

2

Solar powered apparel

25000

Investment

2

0

Strategy

2

Mobile app for tracking external wildlife movement Device to help patients with dysphagia

Strategy

1

Bone stretch and healing device PCR Kits

0

1 1

Transparent window insulation system Food Logistics safety software

2

2

1

Source of Investment

0 Other (Accelerate MI Competition)

0

2

0 0

1

0 0 0

Commercial lighting insulation using UV Web platform for high school sports reporting

50000

Undisclosed

500000

Other (Accelerate MI Competition)

0 Metric driven software platform

0

Priority Plan

SmartZone Local Development Finance Authority (LDFA) Priority Plan FY 2014-2018

City of Grand Rapids Economic Development Ninth Floor, City Hall Grand Rapids, MI 49503 Phone: 616-456-3431 May 17, 2013

Priority Plan – Local Tax Increment Funds The following chart shows the projected revenues and proposed expenditures of the SmartZone LDFA local tax increment fund for fiscal years 2014 through 2018. Table 1 – Projected Revenue The primary source of revenue for the SmartZone LDFA comes from a portion of the local tax increment amounting to approximately $1.9 million in FY2014 and estimating a .5% growth annually through FY2018. The SmartZone LDFA collects all of the local tax increment for 30 years (through 2032) and one-half of the school increment for 15 years (through 2017). This revenue is available to the SmartZone LDFA for ongoing development. Revenue projections from this and other sources are shown in Table 1. Currently, SmartZone LDFA has development and reimbursement agreements with the following two projects: 

Icon on Bond Located at 538 and 601 Bond Street, this is a residential development project with a projected investment of $60 million. The developer has built a nine-story apartment/condominium structure, including parking. The SmartZone tax increment from the development is reimbursed to the developer for reconstruction of Bond and Trowbridge Streets adjacent to the development. The City’s Water and Sewer System also reimburse the developer for the additional improvements to the infrastructure not related to the development. Icon on Bond was within the Renaissance Zone until 2011. Tax increment that can be reimbursed to the developer is limited to $1,658,218 over 30 years. One hundred percent (100%) of the annual tax increment will be used to reimburse the developer for eligible activities. The current principal balance due is $1,251,823 plus 4.5% interest.



Michigan Street Development This development includes construction of 2,300 parking spaces in a multi-level parking structure and four medical/research towers. The developer is Christman Company. The SmartZone tax increment will be used to reimburse the developer $1.5 million for eligible activities plus interest for eligible expenses. The payments for this project are complete; and, therefore, there are no payments budgeted.

Table 2 – Committed Ongoing Expenditures Expenses of an on-going nature are listed in Table 2. These include LDFA administration and reimbursement payments to Icon on Bond and Michigan Street Development.

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Table 3 – Project Expenditures: Committed and Planned Project estimates for the most recent and current fiscal years are shown. Table 3 also contains a list of recommended projects and a multi-year improvement program compiled to demonstrate the capacity of the SmartZone LDFA to accomplish significant improvements in the SmartZone District. The following projects have either been approved for funding by the SmartZone LDFA, or are now proposed. Science and Technology Initatives 

Accelerator Contractual Services/Marketing and Communications/Staff Estimates recommended in the Strategic & Business Plan adopted by the LDFA Board.



Marketing & Trade Shows Marketing efforts are local and international. Plans include participation at national and international high-tech trade shows, such as Biotechnology Industry Organization (BIO) International Convention and Medical Device Manufacturing Shows in Minneapolis and Anaheim. In addition, The Right Place, Inc. is partnering with Michigan State University of Human Medicine on the Medical Device Manufacturing Summit.



Cook DeVos Incubator Operating Support The West Michigan Science & Technology Initiative (WMSTI) dedicates time to helping science and technology entrepreneurs commercialize their discoveries. WMSTI was formed in 2003 as a partnership between The Right Place, Inc., Van Andel Research Institute, Grand Valley State University, the City of Grand Rapids and Grand Rapids Community College. The partnership has recently expanded to include Michigan State University Medical School, Spectrum Health, Saint Mary's Health Care, Mary Free Bed Rehabilitation Hospital and the Grand Angels. This partnership was formed to bring together the product development tools, amenities and community assets that an innovator, entrepreneur, or small business needs to make their ideas a business reality. WMSTI also accommodates client needs by offering incubator/accelerator amenities through the Product Development Center located on the fifth floor of the Cook DeVos Health Services building. The SmartZone LDFA is a partner in funding the program. The Authority committed to fund the program for three years (FY2008-FY2010) at $170,000 annually. In FY2009, the annual contribution was increased to $340,000 annually. In FY2012 the annual contribution was decreased to $290,000 as a result of GVSU terminating the lease on their Coopers Landing lab space. Future commitments are estimated to only be associated with leasing incubator lab space.

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

Needs Assessment for Future Business Accelerator Services and/or Incubator Space As a result of the contract between GVSU and the LDFA, the LDFA needs to assess where the Business Accelerator will be located and what services will be made available and how they will be provided. The LDFA approved $177,927 for a needs assessment for the development of additional incubator space which will provide space and support for life science entrepreneurs. There were two major phases of the contract and the work was completed in August of 2011.

Infrastructure Improvements 

Bostwick Avenue – Crescent Street to Michigan Street As part of Spectrum Health Hospitals’ Helen DeVos Children's Hospital project, the Hospital committed to reconstructing Bostwick Avenue from 400’ South of Michigan Street to Michigan Street, including watermain, sanitary sewer, and storm sewer. Also, Interurban Transit Partners have been approved for a grant for a Bus Rapid Transit (BRT) system and Bostwick Avenue from Crescent Street to Michigan Street is part of the preferred route. In preparation for the BRT system coming on line in 2013 or 2014, the City and SmartZone committed to reconstruct the portion of Bostwick Avenue from Crescent Street to 400’ South of Michigan Street and the Hospitals agreed to include the reconstruction and watermain replacement work in their project and to be reimbursed for the cost of the same. The estimated cost of the additional work is $285,000 of which the City’s Water Fund committed $150,000 and the SmartZone provided $135,000 for a portion of the reconstruction of the street, curb and gutter, sidewalk, and street trees. The work was completed in 2010. The lead City department for this project was Engineering. This project is now complete and has been removed from the Priority Plan.



College and Michigan Improvements A traffic study was completed in FY2010 to determine the feasibility of a roundabout and to analyze geometric alternatives for the eventual reconstruction of the intersection and to review the potential for alternative access to the Michigan corridor via Hastings. Debt service for the implementation of the infrastructure improvement upon completion of the study has been delayed until 2014. The cost to the SmartZone is estimated at $650,000. The lead City department for this project is Traffic Safety. As this project progressed, the Michigan Street Plan was supported by the LDFA Board with an additional $35,000.



Michigan Street Tele-Communication Infrastructure The project consists of the design and three-year phased implementation of the City underground system that will provide secondary telecommunications access

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to the Michigan Hill & North Monroe areas. Estimated costs are $315,000. The lead City department for this project is Traffic Safety. 

Michigan Street Streetscape Improvements The College Avenue Bridge over I-196 project consisted of the rehabilitation of the bridge including the replacement of storm sewer, drainage structures, curb/gutter, pavement/sidewalk, and the installation of decorative pedestrian fencing and conduit for traffic signals and street lighting. The total estimated cost was $5,556,550. The funding for the project consisted of a Federal grant of $4,587,750, MDOT participation of $830,150 and a local share of $181,000. The City’s Street Fund provided $155,000 and the SmartZone contributed $26,000 for the local share. The work was completed in 2009. In 2010, MDOT began the reconstruction and widening of the I-196 Freeway corridor from the Grand River to I-96. The project included the replacements of the Coit Avenue bridge, the two I-196 bridges over Lafayette Avenue, the Eastern Avenue bridge, concrete joint repairs and shoulder paving from Fuller Avenue to I-96, the addition of a third lane in each direction, the addition of a weave merge lane between Ionia/Ottawa Avenues and College Avenue and College Avenue and Fuller Avenue, public and private utility improvements, enhancements to the Coit Avenue, Lafayette Avenue and Eastern Avenue structures which include wider widths for pedestrians, decorative fencing and ornamental lighting. The project was estimated at $38,122,000 of which the Federal grant and MDOT’s shares were estimated to be $36,972,900 and $266,100, respectively. The City’s share, of $884,000, was financed by the City’s Street Capital Fund ($157,000), City’s Water Fund ($527,000), City’s Capital Improvement Fund ($15,000) and by the SmartZone ($185,000). The majority of the project costs were financed by American Recovery and Reinvestment Act (ARRA) grant funds. The majority of the work was completed in 2011. The lead City department for this project was Engineering. A placeholder of $100,000 for three years has been added in anticipation of Michigan Street Plan implementation but will require formal approval of the LDFA Board once a proposal is submitted.



Michigan Street Bridge over Division Avenue – Phase I The project involved the widening of the Michigan Street bridge to six lanes to match the approach roadways on either side. In addition, Division Avenue was widened from four lanes to six lanes to provide for a left and right turn to the Michigan Street Hill parking facility. The total estimated cost was $4,677,800. The funding for the project consists of a Federal grant of $3,282,500, MDOT participation of $1,198,300 and a local share of $232,000. The local share will be financed by the Street Fund ($202,000) and the Capital Improvement Fund ($30,000). The developer for Michigan Street Hill provided $300,000 towards the local share of the engineering costs for the project. At its September 2008 meeting, the SmartZone approved the use of $26,000, included in the Priority

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Plan, to be used for the balance of the local share of the engineering costs. The lead City department for this project is Engineering. 

Michigan Street Corridor Plan (see College and Michigan Improvements above)



Underground Utilities and Communications Conduit The future relocation and upgrade of underground utilities and communications conduit. (combined with Michigan Street Tele-Communication Infrastructure above)



Infrastructure – To Be Determined Unallocated capital for unanticipated infrastructure costs.

Table 4 – Excess / (Deficit) of Revenue over Expenses Table 4 summarizes the effects of project expenditures, both committed and planned, on available resources.

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CITY OF GRAND RAPIDS, MICHIGAN SMARTZONE LOCAL DEVELOPMENT FINANCE AUTHORITY - DOWNTOWN DEVELOPMENT DISTRICT FY2013 ESTIMATE AND FY2014 - FY2021 PRIORITY PLAN January 15, 2014 FY2013 Revised Budget

FY2012 FINAL Table 1 - Projected Revenue Tax Increment - General District-Wide $ 396,379 Tax Increment - Icon on Bond 146,043 Tax Increment - Michigan Street Development 1,087,487 Prior Year Tax Increment Adjustments (55,505) Rent - Cook-DeVos Incubator / Product Devel Center Interest on Investments 29,674 Other Program Revenue - Spring-Board Other Program Revenue - Business Accelerator Fund Grants - Michigan Strategic Fund 2012 - Incubator Grant Grants - Michigan Strategic Fund 2013 - iStart Miscellaneous Reimbursements Total Revenue 1,604,078

$

FY2013 FINAL

FY2014 Original Budget

FY2014 Adjusted Budget

FY2014 Actual Thru 12/31/13

FY2015 Forecast

FY2016 Forecast

FY2017 Forecast

FY2018 Forecast 1

491,426 $ 411,391 $ 305,294 $ 305,294 $ 465,031 $ 306,820 $ 308,355 $ 309,896 $ 197,336 197,336 197,764 197,764 190,733 198,753 199,747 200,745 1,322,118 1,322,118 1,421,916 1,421,916 1,190,853 857,415 861,702 866,011 (25,000) (5,635) (75,000) (75,000) (83,590) (50,000) (25,000) (25,000) 166,800 68,984 77,030 86,075 86,075 27,912 20,081 18,869 18,869 (6,101) 15,216 10,792 7,639 82,560 110,080 112,171 115,019 20,000 20,000 500,000 150,000 904,000 225,000 120,000 125,000 252,000 168,000 252,000 12 30 30 17 30 30 30 2,513,792 2,095,303 2,939,673 2,517,417 1,876,943 1,828,344 1,805,872 1,560,416

FY2019 Forecast

FY2020 Forecast

FY2021 Forecast

TOTAL

165,378 $ 107,129 462,151 (25,000) 12,934 28,934 30 751,556

166,205 $ 107,664 464,462 (25,000) (2,024) 30 711,336

167,036 $ 108,203 466,784 (25,000) (7,933) 30 709,120

167,871 $ 2,361,885 108,744 1,419,481 469,118 7,060,413 (25,000) (358,590) 318,164 (14,056) 35,336 448,764 40,000 470,000 672,000 30 257 706,707 $ 12,467,710

Table 2 - Committed and Ongoing Expenditures Annual Audit Contractual Services - Legal Fees and Notices Contractual Services - Miscellaneous Developer Reimbursements - Icon on Bond Developer Reimbursements - Michigan Street Facilities - City Hall Office Space and Maintenance Insurance - General Liability Professional Development Staff Support Services Allocation - A-87 Technology and VOIP Services Telephone - Cellular Total Committed & Ongoing Expenditures

4,600 22,351 1,705 146,141 552,880 1,409 1,410 1,095 73,401 7,784 12,289 261 825,326

4,600 20,000 3,000 197,336 149,077 5,652 1,743 2,200 100,470 9,217 11,351 300 504,946

4,600 33,506 1,017 197,337 149,078 6,187 1,743 2,769 62,491 9,217 11,351 206 479,502

4,700 30,000 3,000 197,764 6,859 4,035 2,200 100,470 10,781 12,526 200 372,535

4,700 30,000 3,000 197,764 6,859 4,035 2,200 100,470 10,781 12,526 200 372,535

Table 3 - Project Expenditures: Committed and Planned Science and Technology Initiatives Accelerator Contractual Services Accelerator Contractual Services - MEDC Grant 2012 Accelerator Contractual Services - MEDC Grant 2013 Virtual Incubator Support Tradeshows / WMMDC / Regional Innovation Cook-DeVos Incubator / Product Devel Center Incubator Needs Assessment Consultant Sub-total - Science and Technology

66,148 290,000 4,740 360,888

334,462 125,000 50,000 170,000 121,438 800,900

276,760 125,000 160,000 120,613 682,373

1,639,353 260,000 170,000 2,069,353

832,536 225,000 252,000 50,000 170,000 186,830 1,716,366

Infrastructure Improvements Bostwick Avenue Reconstruction - Crescent to Michigan 16,061 College & Michigan Improvs - Michigan Corridor Plan Michigan Street Tele-Communication Infrastructure Michigan Street Streetscape Improvements Streetscape - Coit/Lafayette/College Bridges over I-196 15,834 Michigan Street Bridge - Debt Service 25,000 Michigan Street Corridor Plan 35,000 Infrastructure Projects - Miscellaneous Sub-total - Infrastructure Improvements 91,895 Total Expenditures $ 1,278,109

25,000 100,000 125,000 $ 1,430,846

4,479 25,000 29,479 $ 1,191,354

55,000 75,000 100,000 25,000 100,000 355,000 $ 2,796,888

55,000 75,000 100,000 25,000 100,000 355,000 $ 2,443,901

Table 4 - Excess / (Deficit) of Revenues Over Expenditures Fund Balance, Beginning of Year $ 2,323,611 Plus: Projected Revenue 1,604,078 Less: Committed & Ongoing Expenditures (825,326) Less: Project Expenditures (452,783) Fund Balance, End of Year $ 2,649,580

$ 2,649,580 $ 2,649,580 $ 3,553,529 $ 3,553,529 $ 3,553,529 $ 3,627,045 $ 2,772,489 $ 1,919,337 $ 1,258,976 $ 175,792 $ (987,597) $ (2,193,416) $ 3,553,529 2,513,792 2,095,303 2,939,673 2,517,417 1,876,943 1,828,344 1,805,872 1,560,416 751,556 711,336 709,120 706,707 12,467,710 (504,946) (479,502) (372,535) (372,535) (249,928) (376,270) (380,943) (385,846) (296,560) (302,250) (307,140) (312,032) (2,983,503) (925,900) (711,852) (2,424,353) (2,071,366) (13,374) (2,306,630) (2,278,081) (1,834,931) (1,538,180) (1,572,475) (1,607,800) (1,644,184) (14,867,021) $ 3,732,526 $ 3,553,529 $ 3,696,314 $ 3,627,045 $ 5,167,170 $ 2,772,489 $ 1,919,337 $ 1,258,976 $ 175,792 $ (987,597) $ (2,193,416) $ (3,442,925) $ (1,829,284)

4,700 6,516 338 190,765 2,286 2,019 780 30,744 5,390 6,263 127 249,928

(5,626) 19,000 13,374

$

263,302

4,800 30,000 3,000 198,753 7,238 4,156 2,200 102,479 11,104 12,340 200 376,270

4,900 30,600 3,000 199,747 7,616 4,322 2,200 104,529 11,438 12,291 300 380,943

5,000 31,212 3,000 200,745 8,005 4,495 2,200 106,620 11,781 12,473 315 385,846

5,100 31,836 3,000 107,129 8,277 4,720 2,300 108,752 12,134 12,981 331 296,560

5,200 32,473 4,000 107,664 8,608 4,862 2,300 110,927 12,498 13,370 347 302,250

5,300 33,122 4,000 108,203 8,952 5,007 2,400 113,146 12,873 13,772 365 307,140

5,400 33,785 4,000 108,744 9,310 5,158 2,400 115,408 13,259 14,185 383 312,032

45,100 259,545 27,338 1,419,513 67,152 38,774 18,980 893,075 101,258 110,201 2,568 2,983,503

1,151,800 125,000 168,000 50,000 170,000 186,830 1,851,630

1,124,251 252,000 50,000 220,000 186,830 1,833,081

1,198,101 50,000 220,000 186,830 1,654,931

1,143,180 50,000 220,000 1,413,180

1,177,475 50,000 220,000 1,447,475

1,212,800 50,000 220,000 1,482,800

1,249,184 50,000 220,000 1,519,184

9,083,701 350,000 672,000 400,000 1,679,000 747,320 12,932,021

55,000 175,000 100,000 25,000 100,000 455,000 $ 2,682,900

55,000 165,000 100,000 25,000 100,000 445,000 $ 2,659,024

55,000 25,000 100,000 180,000 $ 2,220,777

25,000 100,000 125,000 $ 1,834,740

25,000 100,000 125,000 $ 1,874,725

25,000 100,000 125,000 $ 1,914,939

25,000 100,000 125,000 $ 1,956,216

220,000 415,000 300,000 200,000 800,000 1,935,000 $ 17,850,523

Note 1: The SmartZone's capture of school related millages ends beginning with FY2018. Note 2: Michigan Street Development LLC sold the majority of the real property associated with this project to Spectrum Health in late 2013 thus removing this real property from the ad valorem roll. Revenues for FY2015 and beyond have been reduced by 40% to reflect this change. For Table 3 expenditures for FY2014-2021, the boxed in expenditures indicate there are contractual agreements. Non-boxed in expenditures are included here for planning purposes.

FY2014 forecast plus 0.5% growth annually Ren Zone expired in FY2013. Later, 0.5% growth annually. 2

THIS REV WILL DECREASE SIGNIFICANTLY BEG'G FY2015 -Rental revenues per contract; adjusted by J Griffin 12/26/13

Staff estimates - interest rates estimated 1.0 to 1.5% Contributions from other partners for 2/3 of program costs Program support Total grant is $500,000 Total grant is $840,000 Personal use of cellular phone - proposed City Comm Policy

FY2014 per contract. Remaining years, staff estimates. Staff estimates Staff estimates 100% of project-related revenue plus interest Contractual reimbursement completed in FY2013 Per City of Grand Rapids Budget Instructions, Exhibit H Per City of Grand Rapids Budget Instructions, Exhibit E Staff estimates Staff estimates Per City of Grand Rapids Budget Instructions, Exhibit G Per City of Grand Rapids Budget Instructions, Exhibit D Share of Executive Director cellular telephone

Contract with GVSU - CEI

Lease subs ($210k build out; $50k virtual incubator support) Contract with The Right Place Inc.

Approved May 14, 2010. Estimated cash cost for project, subject to bid. Estimated cash cost for project, subject to bid. Estimated cash cost for project, subject to bid. $484,000 approved July 18, 2008 Approved July 18, 2008. CIB 2007 debt share until 9/1/2027. Approved 1/21/2011 Staff estimate

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