Against the proposed use of Richmond tech park funds

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Cranes In The Sky.A year ago I blogged about the $5 million dollars that Richmond had available to promote high-tech business growth in our city.

An article in Sunday's Palladium-Item reports that the City of Richmond is proposing to use the funds to purchase 14 acres of land and buildings on the city's northwest side, which they will use to create a space for technology entrepreneurs.

For the record, as someone who created a technology business in Richmond, I'm against this use of the Certified Technology Park funds as it's currently described.

There are a lot of things that technology entrepreneurs in our community could benefit from, but a new physical space is generally not one of them. There are myriad available buildings already suitable for businesses of all kinds - retail, office, manufacturing, etc. With the advent of cloud computing, global distribution systems and other niche service providers, few tech start-ups have specialized space needs.

Not the least of the existing structures is the Uptown Innovation Center, originally designed and built to - you guessed it - house technology entrepreneurs looking for space to get their business up and running. I supported that effort and it's a great space with some great possibilities, but as far as I know, that building has not exactly operated at capacity in its lifetime, and when it has come close it's not been with high-tech businesses.

Friend and colleague Ray Ontko commented in the newspaper article's online discussion section:

The computer-related high-tech community has said that it doesn't need a tech park...perhaps there are other high-tech businesses that would be willing to locate to that space. If so, then this is a good idea. If not, the City will be holding the bag for ownership of that property.

I've been a part of various discussions about how to use these funds. I've talked with a lot of people who work in technology in our region. I've never met anyone who has said, "if we just had a newly renovated space on the northwest side of Richmond, we'd be ready to go!" City officials quoted in the article noted strong existing interest in a new technology center; I hope that interest can be shepherded into concrete financial commitments that justify the expense.

I know the tech park funding has limitations for how it is spent, but if this proposal has come about because there weren't enough other ideas, allow me to offer just a few based on what I see working well in other tech-friendly cities:

  1. Deploy infrastructure to have free, reliable Wi-Fi access in Richmond's high-traffic public spaces (Center City, Depot District, etc)
  2. Host a well-produced technology summit that brings tech workers from around the region to Richmond for conversation, networking, project sprints and more.
  3. Create technology training and education programs for Richmond residents who may not have the time or money to participate in a higher education degree. Help people make better use of the technology tools already in their lives so that they might become consumers or even employees of tech business that locate here.
  4. Support subcultures that tend to overlap heavily with technology worker culture - alternative transportation, theater arts, filmmaking, etc. - and know that when the potential quality of life improves for tech workers who might want to locate here, we stand a better chance of that actually happening.
  5. Create a FreeGeek location in Richmond by supporting existing hardware recycling/repurposing efforts that will help make technology tools more accessible to those who might benefit from them

Those are just some starting points. The CTP's definition of "high technology activity" is pretty broad (e.g. you can use it for "product research and development"), so maybe you can come up with one or two more?

Richmond's typical economic developers know a lot about working with brick and mortar infrastructure development. They like having new groundbreakings, new buildings, new things to take pictures of and showcase as a tangible bang for the buck.

There's nothing wrong with that, but in the world of technology start-ups and entrepreneurship, the physical space is secondary. The building is what you find when your garage is finally overflowing with programmers drinking Jolt in close quarters, or when you have some equipment you need to arrange in a particular new configuration. You don't start there, you end up there, and then you change it and adapt it and then move out into another space.

The primary investment a tech start-up makes is in information, ideas and people.

If as an economic development investment, Richmond wants to support technology entrepreneurs in their quest to develop good ideas and attract and retain good people, unoccupied new office space is quite possibly the last thing we should spend money on. In the absence of a plan to satisfy a clearly defined need for (and financial commitment to) this new space, I hope the City reconsiders this proposal.

14 thoughts on “Against the proposed use of Richmond tech park funds

  1. Could they use a portion of that money to great a grant program to annually provide seed money to a tech startup? Put $1M in an interest-bearing account and give out annual awards totalling $50-100k. That's 10+ years of grants for tech startups.

    I like the wi-fi idea -- at a completely arbitrary $1000 / month, the city could supply wifi to the downtown area for 10 years at $120k -- a fraction of the total award.

    How about using the money to fund an award for using technology to improve government transparency -- open to all comers?

    I like the grant money for tech education as well. Would $1M fund a solid years worth of free tech classes + supplies, open to the public?

    I completely agree with you that a "tech park" is an inappropriate avenue to take this -- people see big numbers and think big ticket items. But instead, if we constrain the timeframe (I like "10 years", but that's just me) and focus on diversifying the investment of the money, it is far more likely that some of the endeavors will succeed and help build momentum necessary to move upwards. Richmond has plenty of buildings -- it doesn't need yet-another-one.

  2. So, apparently, 100% of technology entrepreneurs in Richmond think this project is an ill-advised give-away to real estate developers. Is there a realistic chance of stopping it? Would the Pal-Item print a joint Op-Ed?

  3. To the chagrin of those who want a return of the old brick and mortar manufacturing environment we once had, it won't happen. As you, Chris, have stated, the tech businesses doesn't want or need the up front burden of overhead and tax committments to be in business. I have commented to others that someone with technology skills and an plan to utilize them for a business can make a 6 figure income in a spare bedroom with a computer. Their property tax burden barely exists. For someone to start a manufacturing business or even a restaurant, the hoops of meeting all the codes and other business constraints and oversight and when property tax is added the bright idea of creating something dims accordingly.

    I don't pretend to know much about high tech but what I do know is the industry has grown quickly and huge, in large part, because it has been unencumbered by rules, regulations, oversight and taxes.

    However, since you do know much more than I about this field, and we have four schools of advanced learning and much of it involves computer sciences, why is Wayne County not more marketable? You have listed 5 points to help but where would the future be from there?

    1. I suspect that the education level, or rather, lack thereof of many in the community is a big reason that Richmond and Wayne County are not marketable. I know it is hard for some people to believe, but Richmond had a good school system at one time, lots of middle class families, and thriving community organizations. However, Richmond, like many similar communities was caught off-guard as changes happened and was unwilling or unable to adapt to its changing circumstances. Now, while people recognize that there are problems, the leaders are still stuck in the old ways of doing things, as evidenced by the usage of the grant money to purchase property in hopes that technolgy entrepreneurs will come. The entrepreneurs who are already here were not listened to, apparently.

      People are fed up, and I agree with them partially, but they are obsessing about government and taking things back and whatnot. I don't think it is government per se that is the problem, but the people we have in our local government and the things they do—or don't do. They are stuck in the past when it comes to solving problems. Some seem hellbent on trying to make "the other side" look bad. A faction of the City Council seems to be opposed to anything and everything that Sally Hutton does. I am in no way a fan of how Sally Hutton has performed as Mayor, but we now have elected officials claiming that maintaining roads is not part of economic development. That is a claim they would never make if a Republican were serving as mayor. Frankly, I think some of our elected officials are simply trying to tap into the anger that is out there rather than work on viable solutions.

  4. Could be some self-dealing regarding the sale of the property in this instance. I hope the newspaper does some investigating on that.

    From the comments here and at the newspaper's website, I take it that people with actual knowledge of the technology industry were not included in the discussion or decisions about how to use the $5 million.

  5. I agree wholeheartedly with both Chris and Ray's comments. Tech in Richmond is going to be more dependent upon building the culture and vibrancy of Main Street and the Depot District than it is on providing additional "rust belt" square footage. Why redevelop at the fringes of the city? That particular area is lost. Concentrate on your core. I drive all over Indiana and I can't tell you the number of "tech parks" I see growing nothing more than weeds (and we know how the Mayor feels about weeds). Vacant tumbleweed tech parks are emblematic of failed communities. They're like having a giant FAIL billboard at the edge of your community. Don't do it. My brother expressed similar concerns over the proposed student housing at IU East. It will cost about half what a dorm normally costs. That means it's going to be very cheaply constructed with no eye on long-term maintenance costs (they always forget the long-term maintenance costs). As long as the student loan bubble holds, the operators will probably break even and keep up with minimal maintenance. After that, the company will unload it, and Richmond will have another rapidly deteriorating property at one of it's most prominent gateways. That's a bad look. This stuff is risky. Put in ordinances for quality all masonry/brick construction to protect the I-70/27 interchange and concentrate your redevelopment efforts on your assets, Main Street and the Depot District. If those areas succeed, the rest will take care of itself. If those fail, tech park or no tech park, Richmond will soon look more like Detroit than anywhere else. Richmond's best assets are its people who actually do things. Listen to them a little more and real estate developers a little less and you'll be well on your way to making the pivot from surviving to thriving. Thanks Chris and Ray for speaking up.

  6. Building a technology company or technology business sector follows the same time-tested rule of thumb - "infrastructure follows value, and never the other way way around."

    I suggest using these precious monies as matching seed investment rounds (loans or otherwise), to assist entrepreneurs getting new companies off the ground. Experience suggests that as these companies grow and prosper, the value created will result in growth, and associated economic benefits.

    Experience suggests that nice space, while assistive, does not have any direct relationship to value creation in new companies.

    I grew up in Richmond (graduated RHS 1973), and now live in Sacramento, CA, and work to build new technology companies.

  7. The city is shutting down Highland Elementary. That building could be used for tech education using this grant. The building is ready made for teaching so no capital from the grant would be required for renovation. This would also help to keep an existing building from decaying. Adjunct faculty could be hired to minimize costs. It could fill in the gaps in techie education that IU-East and Ivy Tech don't fill. This is just one of many ideas that makes more sense than spending millions renovating an empty building just to have it become a liability to tax payers.

  8. We often hear the uptown/main-street/innovation center referred to as a “business incubator”.
    Instead of spending nearly a million dollars purchasing a property, on the hopes we will attract some outside organization to fill it, why don't we use the money to encourage the growth of new local business.

    I would imagine that virtually everyone at some point (if not right now) has had an idea for a new product and/or service which they want to bring to market. I'm sure everyone has heard the phrase “all it takes is one good idea...”
    Unfortunately for most of us, myself included, converting that “good idea” into a marketable product or service is about as easy as reaching the summit of Mt. Everest, without a Sherpa....

    Between patents, business plans, loans, manufactures, permits, regulations, marketing etc. many great ideas are born and die having never left the space between their creators ears...

    What I propose is this; a true small business incubator.
    A place where citizens with marketable ideas can receive help creating business plans, obtaining patents, and assistance wading through all the red tape that goes along with forming a new business.

    Ideas which make it through this initial vetting process, could be matched up with local manufactures willing to make small batches, for prototyping and market testing.
    Local marketing experts, distributors, attorneys etc. could all contribute and benefit.
    Worst case scenario we end up with several cottage industries each employing a handful of employees.
    Best case scenario, someone from Wayne county comes up with a better mouse trap...
    Either way, what we would have would be authentic business rooted in Wayne county.
    Our current model is based upon luring in businesses, with “free” buildings, ground and tax abatement’s. I am a life long resident of Wayne County and I can say without doubt, we will never steal Apple, Cisco or IBM from Santa Clara regardless of the “freebies” we offer.
    The kind of businesses that choose a location based upon the “freebies” offered are not the kind of businesses we want to attract. One needs look no further than Connersville, Cambridge city or Springwood for examples of businesses enticed to the area...

    If we want to spur growth long term it will have to start with locally founded, locally flavored and locally influenced entrepreneurs. It's these kind of people, with a sincere desire to reside here which will stay for the long haul.

  9. UPDATE: After the original post, the City went ahead with the purchase using the Tech Park funds, spending $840,000 on the sale.

    According to an article posted on the Palladium-Item website today, the automobile parts manufacturer that was apparently looking at using the building and that was likely driving the urgent expenditure of CTP funds has decided to locate its new production facility in Anderson, Indiana instead of Richmond, citing Anderson's ability to provide property without requiring the company to negotiate for it.

    As I understand it, that leaves the City of Richmond as the new owner of 14 acres of land and mostly empty buildings, its most promising tenant definitely not coming, no firm occupancy commitments from anyone else, and the funds available to grow technology-related businesses in Richmond spent down by about $840,000.


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