Cottage Grove is shutting down a business incubator that didn’t hatch enough businesses.
The city council voted Wednesday to end a four-year experiment, designed to nurture young businesses in the former City Hall. The business incubator lost money every year, and is currently only half full.
The measure passed on a 4-1 vote, with council member Dave Thiede dissenting.
Most of the 10 businesses in the building will be allowed to stay until their leases expire. Officials expect to be able to shut down the building Dec. 31.
After that, the building will be mothballed, its future uncertain.
“We gave it a try,” said city engineer Jennifer Levitt.
The idea for the Business Enterprise Center arose in 2012. At that time, the city government was moving out of the 48-year-old City Hall and into a new $16 million government center.
The vacated building was rundown, and finding a tenant looked difficult.
It was built for city government, with a council chambers and small offices. The basement level housed the police department and jail — difficult to remodel into modern office space.
The location on 80th Street included the 25,000-square-foot City Hall and a 6,000-square-foot heated garage.
Additions had been built twice, and the roof leaked in several places. Pipes had frozen in the winter because of the patchwork of four furnace systems.
Instead of trying to find a single large tenant, officials decided to appeal to many small ones.
The idea, said engineer Levitt, was to let fledgling businesses grow until they got big enough to leave — and relocate elsewhere in Cottage Grove.
To attract such businesses, the city slashed the rent by about half.
“We are covering our utility fees and maintenance costs,” said then-city administrator Ryan Schroeder at the time. “Effectively, there is no rent.”
The city patched the leaky roof and spent $200,000 on remodeling — preening the nest for baby businesses.
But the idea never really took hold.
“The vacancy rate was always a problem,” said Levitt. Less than half of the space is now occupied, she said.
The incubator has been losing money every year — more than $166,000 annually in 2013, 2014 and 2015.
No improvements were made in the glitch-prone heating systems. Cellphone reception in the basement was poor.
The businesses that outgrew the incubator left — and landed in cities other than Cottage Grove. “It was not coming to fruition,” Levitt said.
Levitt said three city employees are involved in managing the incubator.
“They manage leases and contracts, repairs and tenant needs,” said Levitt. “There are better uses of their time than fixing leaky faucets and paper-towel dispensers.”
Economic development director Christine Costello has no regrets.
“It gave people the opportunity to try out ideas, and some were able to do that,” she said.
Engineer Levitt agreed.
“Given where the economy was and the solutions before us,” she said, “it was a good choice to utilize that space.”