Bulletin editorial: Hatching a plan to help businesses

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The city of Cottage Grove has been trying to lure new and established businesses to set up shop here in existing private commercial property. Those efforts have been met with varying levels of success. Businesses have opened or expressed interest in opening, while other prospects haven’t panned out.

But what if Cottage Grove sharpened its focus and targeted fledgling business owners with operations too big for the garage or basement workshop but without pockets deep enough to afford market-rate commercial property?

That’s the idea behind the city’s planned business accelerator. It’s also called a “business incubator,” which may be more apt to describe the intent: Give a small business owner room and resources to hatch a viable business.

The city plans later this year to convert the soon-to-be vacant city hall building on 80th Street into discounted-rate rental property for small startups. It’s an idea worth pursuing for several reasons:

-- It does not appear to be in direct competition with existing commercial property owners. The city would open its incubator to businesses that cannot yet foot the bill for larger, traditional office or lab space. Rent would be about half the commercial market rate. It’s not taking away potential renters from a private building owner looking to boost occupancy because its tenants presumably cannot afford to lease commercial space.

Also, the city doesn’t expect to have long-term tenants. When you’ve grown, it’s time to move out, hopefully to a privately owned space in Cottage Grove.

-- It would make use of a building that otherwise will sit vacant for the time being, after city administrative and police staff move to the new city hall building this fall.

-- There is no intention of turning to city taxpayers to pay for the project – or to provide a bailout if it’s not successful. This is important. The project may be funded with economic development trust fund dollars or other revenue sources. The city is right to approach this economic development experiment without turning to property tax revenue.

-- There is no similar business incubator in the immediate area.

-- If it doesn’t work, the city could put the property on the market, presumably after commercial and business real estate has gained value.

-- The city isn’t playing entrepreneur. It does not intend to make a profit on the venture, only to cover costs while helping to grow local businesses and jobs.

-- If the city instead sold the property after the upcoming city hall move, it likely would generate property tax revenue. By launching the business incubator, the city is keeping the building off the property tax rolls for the foreseeable future. That’s not a great selling point of the business incubator plan for a city hoping to expand its property tax base. However, in exchange for that loss of potential property tax revenue in the short term, city officials hope successful business incubator tenants move on to grow on their own in Cottage Grove and boost commercial property tax revenue over time. It’s a bit of a gamble, but the city, school district and county are not budgeting for any immediate property tax collections from a sale of the city hall building.

In a still-struggling economy, it’s clearly a challenge to fill empty commercial real estate and lure job creators in a competitive environment. We hope the city is hatching a plan that yields short- and long-term benefits for Cottage Grove, its residents and its business.

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