Is Evanston’s Tech Incubator Deserving of Tax Dollars?

The City of Evanston has given $200,000 to a local, nonprofit technology business incubator over the past three years in the hope of spurring economic development but has failed to created meaningful performance measurements to ensure return on its investment, according to some Evanston aldermen.

At Monday night’s City Council meeting, aldermen passed a resolution 7-1 to provide an additional $25,000 in support to the (TIC), 820 Davis St., and debate centered around how the city aimed to keep startup companies that emerged from the incubator in the Evanston community.

“The problem I’m having with reallocating money to TIC, is the purpose of the incubator is to help foster businesses in the community and then have them out of the incubator and into the regular community, renting spaces, hiring more people,” said Ald. Colleen Burrus (8th Ward), who provided the lone dissenting vote.

She continued: “I don’t see that happening here at the level that we need it to. I believe we need to monitor TIC more closely and set benchmarks that are more stringent to make sure that we’re not just giving money to have a landlord give inexpensive space to small businesses.”

Since the beginning of 2009, the City of Evanston has helped TIC to subsidize cheap office space and access to technology for technology startup companies. Some of those businesses have remained in Evanston after leaving the center, including  property management software company 360Facility , online marketing services provider Leapfrog Online and data analytics company Aginity LLC.

However, others, such as online grocery shopping and delivery service Peapod, Inc. and mobile marketing company Vibes Media, have left Evanston after benefiting from city tax dollars.

While Burrus called for the City Council to make certain performance measurements conditional for TIC to continue to receive funding, other aldermen voted to make no such benchmarks mandatory.

“My yes vote…comes with a fervent hope that we will wean the TIC from its need for city support and that we can also follow up, as staff has been doing over the last couple years, with performance metrics and producing the kind of results we expect,” said Ald. Jane Grover (7th Ward).

Ald. Mark Tendam (6th Ward), said he did not want to harm the city’s relationship with TIC by imposing mandatory performance measurements.

“This is a very good way of not breaking this relationship,” Tendam said, “but trying to improve on it and communicate better as to what our needs are.”

But Charles Happ, chairman of TIC’s board of directors, said that keeping incubator businesses in Evanston after they graduate from the center was not the organization’s primary goal.

“It’s not really a major concern of TIC,” Happ said. “We try to keep them in Evanston if we can but it’s certainly not our primary obligation…We’re in the state where we get them from their garage or from their basement, and they are burning through their in-law’s money, and we set them up with the tools and advice and the introductions in order to help their businesses grow and survive…"

Happ continued: "There are companies around the incubator that have graduated from us…and these are companies that have come out of the incubator and have gone on to hire local people.”

However, many of the reasons tech companies choose to leave Evanston might also be beyond the control of either TIC or the city, according to City Manager Wally Bobkiewicz.

Bobkiewicz said that Evanston lacks affordable office space for young companies and that the recession has prevented it from being built, but also that it is the city’s responsibility to attract developers by showing them there is local demand for such spaces.

Bobkiewicz said that these efforts, not mandatory performance measurements, might better serve to keep TIC graduates in Evanston.

The $25,000 provided by the city at Monday’s meeting was allocated to support TIC through the first quarter of 2012. The City Council will vote on whether to provide future funding after city staff meets with TIC to discuss the future of Evanston’s relationship with the organization.

Nancy Radzevich, economic development division manager for the City of Evanston, sits on the TIC board of directors.

TIC was featured in an April 2010 Forbes article titled “In Depth: 10 Technology Incubators That Are Changing the World.”