HomeMy WebLinkAboutAgenda - 03-07-2023; 8-j - Two Proposed Contract Amendments to the Existing Three-Year Interlocal Agreement between Orange County and Chapel Hill Joint Funding for the “LAUNCH, Inc.” Small Business Incubator 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: March 7, 2023
Action Agenda
Item No. 8-j
SUBJECT: Two Proposed Contract Amendments to the Existing Three-Year Interlocal
Agreement between Orange County and the Town of Chapel Hill Joint Funding
for the "LAUNCH, Inc." Small Business Incubator
DEPARTMENT: Economic Development
ATTACHMENT(S): INFORMATION CONTACT:
1) October 21, 2021 Signed Orange Steve Brantley, Director, Economic
County and Chapel Hill LAUNCH, Development, (919) 245-2326
Inc. Interlocal Agreement
2) Proposed Contract Amendment
PURPOSE: To approve two proposed contract amendments to the current three-year Interlocal
Agreement between Orange County and the Town of Chapel Hill that financially supports the
LAUNCH, Inc. entrepreneurial small business incubator. The amendments are based on 1)
LAUNCH, Inc. having physically moved from 306 West Franklin Street, Chapel Hill to 136 East
Rosemary/137 East Franklin Street, Chapel Hill; and 2) LAUNCH, Inc. now using the County's
funds to support operating expenses as opposed to lease payments.
BACKGROUND: The award-winning LAUNCH innovation center, previously located at 306 West
Franklin Street in Chapel Hill, has been promoting the growth of small businesses in Orange
County since its creation in 2012. The County's cost to participate in the 50/50 co-funding
Agreement with the Town of Chapel Hill is paid directly from Orange County's Article 46 sales tax
funds that support core economic development initiatives. LAUNCH also receives financial and
mentoring support from the University of North Carolina.
The attached Interlocal Agreement between the Town and County represents the current three-
year Agreement, approved by the Orange County Board of Commissioners on October 19, 2021,
and expiring on December 31, 2024, continuing the joint economic development sponsorship that
has been shared equally between Orange County and the Town of Chapel Hill since 2012.
Orange County's current $18,375 quarterly financial commitment (or $73,500 annually) under the
three-year Interlocal Agreement has been paid from the County's Article 46 economic
development category specifically designated to nurture entrepreneurial development. This
expenditure has been included in the County Manager's budget as one of the existing economic
development initiatives funded from Article 46. The Town of Chapel Hill contributes the same
level of funding as the County, with UNC Chapel Hill also providing significant financial support.
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Early History
As part of the Board of County Commissioners' strategic planning in 2011 to utilize Article 46
sales tax funding to support key economic development priorities, the importance of growing and
retaining entrepreneurial start-up talent in Orange County was included. The Board sought to
reverse the historic trend where promising, growth-oriented tech start-up companies originating
out of the University of North Carolina and Orange County were eventually relocating to adjacent
counties. Durham's renowned "American Underground" incubator and co-working venture at the
American Tobacco campus has historically been a significant competitor to draw local start-up
talent away from Orange County.
In response, Orange County contracted with UNC Chapel Hill's Department of City & Regional
Planning department head, Dr. Emil Malizia, in 2011 & 2012. Dr. Malizia conducted a regional
real estate assessment of average office lease costs, ideal space needs and working
environments that start-up companies seek throughout their developmental life span. A key
recommendation from the consultant report highlighted a severe shortage of competitively priced
incubator facilities in Orange County, and suggested the development of an innovation center to
better retain entrepreneurial talent coming out of the University and from the local community.
Following passage of the successful Article 46 referendum in November 2011, the County gained
a new revenue source that enabled it to join with the Town of Chapel Hill to establish the "LAUNCH
Chapel Hill" incubator.
A series of interlocal agreements were subsequently approved between Orange County and the
Town of Chapel Hill. On June 25, 2018, Orange County, the Town of Chapel Hill, the Chapel Hill
Downtown Corporation and the University of North Carolina at Chapel Hill agreed to continue all
parties' mutual support of the LAUNCH incubator. Also in 2018, operational efficiencies were
identified by the Town of Chapel Hill and UNC, leading to a recommendation that the LAUNCH
structure among key stakeholders should ideally be shifted into a non-profit agency. This
organizational change was approved by both the County, UNC and the Town, when the Orange
County Board of Commissioners in February 2019 reviewed and approved the proposed
nonprofit's new Bylaws and the County's joint participation as a member on the "LAUNCH, Inc."
executive board. "LAUNCH CHAPEL HILL" was subsequently transitioned into a nonprofit in
November 2019 and renamed "LAUNCH, Inc.
Notable Achievements & Positive Economic Impact on the Local Economy:
Tim Flood, Communication Professor at UNC Kenan-Flagler Business School and Executive
Director of LAUNCH, provided the following statistics to illustrate the incubator's notable economic
contribution to the local community for the period 2012 to July 2022:
• 177 companies have been accelerated since 2012
• 119 of those companies are still active
o Startups Incorporated FY18 - FY21: 83
o Startups Incorporated FY13 — FY17: 75
• Total Funding Raised All Years: $79.2M
o $39.4 Million in FY22
■ FY22 Private Investment: $39,054,274
■ FY22 Grants/Awards: $262,500
■ FY22 M&A (Mergers and Acquisitions), IPO (Initial Public Offering),
Corporate Partnerships: $35,000
• 1,239 total employees in 2022
• 578 jobs based in Orange County
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• $108 million revenues in 2022, $105 million in total revenues in 2021, $69 million in 2020,
and $43 million in 2019
• Founders' UNC status at time of founding: *Founder data will not sum to total number of
startups due to some startups having multiple founders
o 9 Staff
o 11 Faculty
o 22 Graduate Alum
0 29 Graduate Students
0 31 Undergraduate Alumni
0 51 No Affiliation
0 53 Undergraduate Students
Additional metrics reported in October 2021 include:
• 94% of businesses remained in business after 1 year; 64% remained in business after 2
years
• $714,000 in total venture funding was raised in 2020, compared to $940,000 raised in 2019
• 35 start-up firms participated in the accelerator program in 2020
o (47% minority-owned, 53% women-owned)
• 12,150 square feet of total leased office space
• $184,500 paid in rent
• $99,000 in annual spending in downtown Chapel Hill
• 88 engaged mentors in 2020
• 177 Zoom calls and 15 events completed in 2020
• LAUNCH directly contributed to the University of North Carolina at Chapel Hill being
recognized on November 4, 2015 as ranking among the top five best performing university
business accelerators in North America, based on a 2015 benchmark study by the
incubator consultant firm UBI Global, which is a renowned leader in performance analysis
of business incubators around the world.
History of interlocal agreements between Orange County and the Town of Chapel Hill to
jointly support LAUNCH
Orange County and Town of Chapel Hill have provided joint financial support of the LAUNCH
small business innovation center for the past 10 years via previous Interlocal Agreements, as
follows:
(1) First Interlocal Agreement between the Town and County (31/2 year initial term of
50/50 co-sharing of lease payments for 4,000 square feet, for the period July 1, 2012
to December 31, 2015)
• The initial 3'/2 year (42 month) Interlocal Agreement between the County & Town to co-
fund LAUNCH was split 50/50 in a mutual cost sharing. The County paid its portion from
Article 46 funds (1/4 cent sales tax proceeds for economic benefit) dedicated to providing
entrepreneurial support, at a level of $10,000 per quarter for 42 months, or a total cost
to the County of $140,000 over the full 3'/2 year initial term. The Town of Chapel Hill
provided an equal amount of financial support. This first Interlocal Agreement expired
on December 31, 2015.
(2) Second Interlocal Agreement between the Town and County (a 3-year renewal of
financial support, at the same annual cost that was set during the first Interlocal
Agreement)
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• On November 17, 2015, the BOCC approved a new three-year (36-month) Interlocal
Agreement starting on January 1, 2016 and expiring on December 31, 2018. The
County's financial contribution remained the same at $10,000 per quarter, or a total
cost of $120,000 to the County over the initial three-year term. The County's payment
was funded from Article 46. The Town also provided an equal level of financial support.
(3) Amendment made to the Second Interlocal Agreement to permit LAUNCH to add
3,700 square feet for additional co-working space in the incubator's existing facility.
• The second Interlocal Agreement was amended in June 2016 to permit an on-site
expansion of the LAUNCH office, which required Orange County and the Town to
contribute an additional $8,375 per quarter ($33,500 annual increase) for up to three
(3) years. The amended annual cost to the County then increased to $18,375 per
quarter, or a total of $73,500 per year. The Town also provided an equal level of
financial support. The amended Interlocal Agreement expired on December 31, 2018.
(4) Third Interlocal Agreement between the Town and County (a 3-year renewal of
financial support, at the same annual cost that was set during the second Interlocal
Agreement)
• The third Interlocal Agreement was amended on February 25, 2019 to set a new three-
year term. The County and Town continued to provide an equal 50/50 co-share of
financial support (each local government paying $18,375 per quarter, or a total of
$73,500 per year). The amended Interlocal Agreement expired on December 31, 2021.
(5) Fourth Interlocal Agreement between the Town and County (a 3-year renewal of
financial support, at the same annual cost that was set during the third Interlocal
Agreement)
• On October 21, 2021, the BOCC approved a new three-year (36-month) Interlocal
Agreement starting on January 1, 2022 and expiring on December 31, 2024. The County
and Town continued to provide an equal 50/50 co-share of financial support (each local
government paying $18,375 per quarter, or a total of $73,500 per year).
FINANCIAL IMPACT: The proposed changes to the existing Interlocal Agreement do not adjust
the County's $18,375 per quarter (or $73,500 annually) contribution as outlined in the original
agreement. County funding is provided exclusively by Article 46's annual retail sales tax
collections that support a variety of economic development activities to include the LAUNCH small
business incubator. Therefore, there is no new financial impact.
SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to
this item:
• GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY
The creation and preservation of infrastructure, policies, programs and funding necessary
for residents to provide shelter, food, clothing and medical care for themselves and their
dependents.
ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal
impact associated with the proposed renewal of the LAUNCH incubator and new interlocal
agreement.
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RECOMMENDATION(S): The Manager recommends that the Board:
1) Receive and review the County's original Interlocal Agreement with the Town of Chapel
Hill regarding the joint funding arrangement of the "LAUNCH, Inc." small business
incubator; and
2) Approve and authorize the Manager to sign the contract amendment (Attachment 2).
This action will align the physical address with the new location of Launch, Inc. within UNC's
Innovation Hub and allow the funding to be utilized for accelerator operations, programing, and
recruiting.
DocuSign Envelope ID:3E20E318-A840-4661-8EF2-4F272AB386D8
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STATE OF NORTH CAROLINA
COUNTY OF ORANGE
INTERLOCAL AGREEMENT
This INTERLOCAL AGREEMENT ("Agreement") is hereby made and entered into this the
21St day of October, 2021, by and between ORANGE COUNTY, hereinafter referred to as
("County"), and the TOWN OF CHAPEL HILL, hereinafter referred to as ("Town")pursuant to
N.C. Gen. Statute 160A-460 et seq., 160A-17.1 and other applicable laws.
WITNESSETH:
WHEREAS, County and Town desire to continue with a partnership originally initiated through
a 2012 interlocal agreement, and renewed in new 2016 and 2019 agreements between the Parties,
whereby local startup businesses in the "LAUNCH, Inc." incubator have more opportunities to
remain in Orange County and Chapel Hill.
NOW, THEREFORE, in consideration of the mutual covenants,promises and agreements
contained herein, the parties hereto agree as follows:
1. County Grant. County shall grant to the Town a sum of two hundred twenty thousand five
hundred dollars ($220,500.00). This grant shall be payable in twelve (12) quarterly installments
of eighteen thousand three hundred seventy-five dollars ($18,375.00). Town acknowledges and
agrees the full amount, which shall not exceed two hundred twenty thousand five hundred
($220,500.00), shall be expended by the Town for the sole purpose of establishing and
maintaining a small business incubator space located at 306 W. Franklin Street, Chapel Hill,
North Carolina 27516 (the nonprofit LAUNCH, Inc.). County and Town agree this grant is the
full extent of the County's contribution. Town shall be responsible for conducting any
statutorily required public hearing prior to the expenditure of any grant funds.
DocuSign Envelope ID:3E20E318-A840-4661-8EF2-4F272AB386D8
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2. Town Obligation. Town shall be responsible for receiving the grant from Orange County,
and together with matched Town resources, remit them to Launch, Inc. for operation and rent to
support a Small Business Accelerator to assist in the growth of businesses in Orange County.
3. Term. The term of this Agreement shall commence the 1 st day of January 2022 and shall
continue for a period of thirty-six (36)months, expiring on 12/31/24. Any such renewal, or any
other modification, shall be accomplished through a mutually agreed upon written amendment to
this Agreement and may be approved and executed by the managers of the County and Town.
4. Reporting. Town shall on or before July I annually during the term of this Agreement
provide a report to the Orange County Manager detailing the expenditure of the grant funds
described in Section I above. Upon request by County, Town shall provide County with any
audit or underlying documents necessary to verify the contents of the annual report. In the event
such report or documents are not provided County may suspend grant installments until such
time as the report or documents are provided.
5. Force Mai eure/E mergency Non-Appropriation. In the event Town or County should be
delayed in, or prevented from,performing or carrying out any of the agreements, covenants, or
obligations made by, and imposed upon, said Party by this Agreement,by reason of or through
any cause reasonably beyond its control and not attributable to its neglect, including but not
limited to condemnation, order of any court granted in any bona fide adverse legal proceeding or
action, explosion, fire or other act of God or public enemies, and/or emergency non-
appropriation, then, in each such case or cases, the affected Party shall be relieved of
performance under this Agreement.
6. Termination. The County and Town may terminate this Agreement upon mutual written
agreement approved by the County's and Town's managers. Either County or Town may
terminate this Agreement upon a material breach by the other. Material breach includes but is
not limited to the failure by Town to expend grant funds as required by this Agreement.
Effective the date of termination any termination of this Agreement relieves County of any
further responsibilities or obligations established by this Agreement.
DocuSign Envelope ID:3E20E318-A840-4661-8EF2-4F272AB386D8
IN WITNESS WHEREOF, the parties have caused this Interlocal Agreement to be executed as
of the day and year first above recorded.
FOR ORANGE COUNTY FOR TOWN OF CHAPEL HILL
. ... ... 11/22/2021
11/10/2021
[LRNL3—
By: C4". By
Bonnie Hammersley Maurice Jones
Orange County Manager Chapel Hill Town Manager
This instrument has been pre-audited in the manner required by the Local Government Budget
and Fiscal Control Act.
Orange County Chief Financial Officer
11/21/2021
This instrument has been pre-audited in the manner required by the Local Government Budget
and Fiscal Control Act.
Town of Chapel Hill Finance Director
"" 11/3/2021
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Attachment 2
NORTH CAROLINA
CONTRACT AMENDMENT
ORANGE COUNTY
THIS CONTRACT AMENDMENT ("Amendment") is made and entered into this_day of 120 by
and between ORANGE COUNTY (hereinafter referred to as "County") and TOWN OF CHAPEL HILL (hereinafter
referred to as"Provider").
WITNESSETH:
THAT WHEREAS, the County and Provider entered into a contract dated October 21, 2021, (hereinafter the "Original
Agreement"),for the provision of services for LAUNCH,Inc.; and
WHEREAS, the County and Provider desire to amend the Original Agreement while keeping in effect all terms and
conditions of the Original Agreement not inconsistent with the terms and conditions set forth below.
NOW THEREFORE, for and in consideration of the mutual covenants and agreements made herein, the parties agree to
amend the Original Agreement as follows:
1. Section 1. County Grant, in the Original Agreement is amended by changing the physical location from"306
W. Franklin Street, Chapel Hill,North Carolina 27516"to "136 East Rosemary/137 East Franklin St., Chapel
Hill,North Carolina 27514".
2. Section 2. Town Obligation, in the Original Agreement is amended by changing "operation and rent" to
"accelerator operations,programming, and recruiting".
3. Except for the changes made herein, the Original Agreement shall remain in full force and effect to the extent
it is not inconsistent with this Amendment. In the event there is a conflict between the terms of the Original
Agreement and the terms of this Amendment,this Amendment shall control.
IN TESTIMONY WHEREOF, this Amendment has been executed by the parties hereto, as of the date first above
written.
ORANGE COUNTY PROVIDER
Bonnie Hammersley Chris Blue
County Manager Interim Chapel Hill Town Manager
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This instrument has been pre-audited in the manner required by the Local Government Budget and Fiscal Control Act.
Orange County Chief Financial Officer
This instrument has been pre-audited in the manner required by the Local Government Budget and Fiscal Control Act.
Town of Chapel Hill Finance Director
Revised 06/21