ITHACA — “TCAD (Tompkins County Area Development) doesn’t spend a lot of time trying to attract new businesses to the area,” avers Michael Stamm, president of the economic-development agency. “Our focus is primarily on developing homegrown businesses. We have a very large base of entrepreneurs and tech businesses supported by a strong higher-education community. [It’s […]
ITHACA — “TCAD (Tompkins County Area Development) doesn’t spend a lot of time trying to attract new businesses to the area,” avers Michael Stamm, president of the economic-development agency. “Our focus is primarily on developing homegrown businesses. We have a very large base of entrepreneurs and tech businesses supported by a strong higher-education community. [It’s fair to say] … that Tompkins County is a full-fledged, startup hub with 100 companies forming a vibrant business ecosystem. That makes us unique [in this region].”
The Tompkins County startups represent a wide range of industries. The Ithaca Beer Co. is adding a new bottling line, a new packaging line, a barrel-aging room, and a larger cooler. BinOptics, a technology company that manufactures lasers for data and telecommunications, is renovating and expanding its space. The company was sold last year for $230 million and elected to stay in Ithaca. Incodema 3D, an industrial 3D printing company, opened a 60,000-square-foot manufacturing site this year to produce metal and plastic products primarily for the aeronautical and health-care industries. The business plan anticipates that Incodema 3D will, within a few years, be the largest industrial firm of its type in the country. Kionix, Inc., which manufactures accelerometers, now employs more than 200 people. The founder of Kionix, Greg Galvin, has gone on to found other startups, including Rheonix, Inc.
Other area startups include Ursa Space Systems, a space-systems integration company that provides spacecraft and space-based intelligence data; Rosie Applications, a leading SaaS provider of predictive, online- and mobile-shopping applications; GiveGab, a social network for volunteers; and South Hill Cider, a producer of small-batch, hard cider from the Finger Lakes.
The college scene
“The area is home to Cornell University, Ithaca College, and Tompkins Cortland Community College (TC3),” notes Stamm, “which are all invested in fostering entrepreneurship. The schools encourage students to launch startups and help to turn their technology designs into commercial products. (Most of the startups have a connection to Cornell through research partnerships or facility use.) Last year, Cornell, Ithaca College, and TC3, with funding help from New York State, opened a new downtown incubator called Rev Ithaca Startup Works, which provides both co-working space and resources like networking, mentoring, programs, and events. Rev provides support for all entrepreneurs. In keeping with the community’s goals, anyone can apply to Rev; you don’t have to be affiliated with a school.”
Developing entrepreneurs is not limited to incubators. Ithaca’s mayor, Svante Myrick, wants to build an entrepreneurial environment that is welcoming to all startups. That’s why the mayor promoted a downtown location for Rev. His goal was to attract more local residents. He has also rezoned the city to allow for larger commercial buildings and more mixed-use space to attract entrepreneurs to the city’s downtown district, reduced license fees, and worked to eliminate bureaucratic red tape.
Mission
TCAD was founded in 1964 as a 501(c)(6) corporation to act as the county’s development engine. The mission was to create jobs, strengthen the tax base, and stimulate private-sector investment. “Since 1963, TCAD incentives have stimulated 5 million square feet of new construction and renovation, $800 million of capital investment, and created more than 5,200 jobs,” says Stamm. “TCAD also manages as the county’s industrial-development agency (IDA) where we act as a conduit to the tax-exempt bonds market for not-for-profit projects and act to abate certain local and state taxes. The IDA also offers the City of Ithaca Community Investment Incentive Tax-Abate Program and the Lansing Town Center Incentive Program. Examples of our IDA investments include Harold’s Square, the Carey Building, Advanced Design Consulting, the Downtown Marriott, Dairy One, the Ithaca Beer Co., and BinOptics.
“We also administer a revolving-loan fund of $1.7 million,” continues Stamm, “designed to fill gap-financing for capital projects. Our goal is to add another $300,000 to this fund next year. In 2009, we expanded the program to include loans to high-tech, pre-revenue, startup companies. TCAD typically takes back warrants, [giving us the right to purchase a company’s stock at a specified price within a certain time frame]. Recognizing the inherent risk, the agency has a solid vetting process for each applicant. There has to be a strategic reason for the company to remain in the county, for example, proximity to cutting-edge technology; management must exhibit a strong, personal commitment to staying here; and the company must have the ability to attract and retain a workforce. The agency is also assuming a long-term horizon for these investments, because we need to be patient to increase the [investment] pipeline.”
TCAD works closely with the Tompkins County Workforce Development Board, which is co-located in the same downtown Ithaca office. “We are engaged in a joint venture to study the regional demand for entry-level positions in advanced-manufacturing settings,” notes Stamm. “The goal is to identify and help to train these workers. The private-sector companies teach the technical skills associated with the job, while we focus on soft skills, such as math, teamwork, and how to work independently. Our office is currently conducting a study to create a workforce center for ages 18-45. I expect the study to be completed in the first quarter of 2016.The goal is to ensure that the county has a trained workforce to fill all of the new positions being created. The workforce center would be led and funded by the private sector; our role would be to act as the facilitator.” The office also houses a representative of the Small Business Development Center.
Stamm points out another area of concern for TCAD. “The agency is very concerned that our infrastructure matches or exceeds the demand put on it,” observes Stamm. “The county has to be sure our water and sewer capacities are adequate to accommodate our growth. In the area of transportation, the airport is critical to expedite travel. Fortunately, we currently have all three major air carriers — American, United, and Delta — serving the airport. But we need to be cognizant that the industry is moving to 75-seat jets for its regional travel. That means we have to be proactive and help the airlines fill their seats by promoting their service. The challenge of adequate broadband is critical in our high-tech setting, and fortunately the county is in good shape. We do have the proverbial last-mile challenge, but it’s not a major hurdle. Then there is the question of energy. We have established a task force to be sure we can support our growth, with particular attention paid to the shortage of natural gas distributed within the county. And finally, the county is focused on ensuring adequate housing suited to a diverse workforce.”
Revenue model
From its inception, TCAD created an unusual revenue model supported equally by a grant from the county, fee-based income, and investment from local employers. In recent years, the agency came to depend, in large measure, on fees. Judging the funding model to be unsustainable, TCAD, at the direction of the board of directors, turned to the Tompkins County Legislature for a five-year commitment to underwrite one-third of the operational budget. The legislature approved the measure unanimously. The agency then turned to the business community to commit $1.4 million over the same five-year period. The campaign, called Transform Tompkins, was launched in February 2014. The goal was exceeded by $300,000. TCAD’s long-term, revenue projections from fee income is adequate to cover one-third of TCAD’s annual operating budget, which is projected at $782,000 in 2016. The 2014 annual report posted the agency’s total net assets at just under $3 million.
To expand its development efforts, TCAD established a foundation in 2014 as a 501(c)(3) corporation. “We have identified a number of national foundations interested in supporting economic development and workforce training,” states Stamm. “We are ramping up slowly in this area, but have already secured a [$56,638] grant from the U.S. Department of Agriculture, which will partially fund the study. The feasibility study, which covers a three-county region, will determine whether the [defined] market warrants setting up a business incubator center serving the food-processing sector. We have already identified two consultants: a food-manufacturing industry expert and a business-incubator expert. The study should be completed by the first quarter of 2016. Our foundation’s study is directed at just one of six, key sectors essential to diversifying the county’s economic development: higher education, manufacturing, technology, food/beverage, tourism, and agriculture. That’s where we see the maximum return on our investments.”
The expanding startup scene is helping to drive a revitalization of Ithaca. In just the past three years, the city has benefitted from $300 million in real-estate development funding, compared to just $150 million over the past decade. According to PricewaterhouseCoopers (PWC), last year the city enjoyed about $22 million in venture funding. “We need to attract more venture capital (VC),” acknowledges Stamm. “The Cayuga Venture Fund, for example, which invests from the seed to the growth stage [and focuses on businesses in Upstate and those with a significant Cornell–technology connection], does a great job. Cayuga Venture has supported a number of successful area startups, among them Advion, BinOptics, e2e, Ecovation, Kionix, Mezmeriz, and Rheonix. Recently, DFJ (the venture capital firm Draper Fisher Jurvetson) made two local investments, which is an indication that Tompkins County is gaining national recognition.” (DFJ, started in 1985 by the three eponymous founders and headquartered in Menlo Park, California, has raised more than $4 billion and invested in more than 300 companies, including foursquare, twitter, tumblr., Tesla, and Netzero.) “While these investments … [highlight] our growing economy here, I recognize that we need to increase our efforts to attract more VC dollars.” (According to PWC, San Francisco and Berkeley raised $5.3 billion last year.)
For an agency with only five employees, TCAD has an ambitious agenda. “We are charged with developing a thriving regional (county) economy that is diverse, attracting local investing, creating an international reputation, all while protecting our natural resources, supporting a vibrant cultural … [scene], and attracting and retaining quality employment opportunities,” exclaims Stamm. “With limited resources, we have to be very careful about how we allocate our investments and monitor the ROI for each project.”
After three decades at the helm of TCAD, Stamm has no illusions about the magnitude of the task. As the county’s chief economic gardener, he is encouraged by the community’s commitment and by the county’s substantial economic growth. His agency’s cultivation efforts are recognized not only locally, but also by numerous accolades from Kiplinger’s, CNN Money, Forbes, Smart Money, and the Huffington Post, among others, as “a great place to live,” the “smartest city,” “best small places for business and careers,” “Top-10 best places for Millennials,” and “prime workforce growth.” Stamm credits his staff and a dynamic board of directors for TCAD’s success, but recognition for the success of the county’s homegrown-business strategy rests largely with the chief gardener.