HomeMy WebLinkAboutMO #2326MUNICIPAL ORDER NO. 2326
A MUNICIPAL ORDER AUTHORIZING THE MAYOR TO EXECUTE
A MEMORANDUM OF UNDERSTANDING BETWEEN SPROCKET, INC. AND
THE CITY OF PADUCAH FOR THE CONSTRUCTION OF A CO -WORKING AND
BUSINESS START-UP INCUBATOR
WHEREAS, in late 2018, Sprocket Inc. received notice they were eligible
to receive up to a $600,000 capital grant from the Regional Innovation for Startups and
Entrepreneurs (RISE) program; and
WHEREAS, on May 14, 2019, the City of Paducah adopted Municipal
Order No. 2238 authorizing the City Manager to make a monetary contribution for
economic development to Sprocket, Inc. in the amount of $150,000 to be used as local
matching funds for the Kentucky Cabinet for Economic Development's RISE CapX
Grant; and
WHEREAS, on August 13, 2019, the City of Paducah adopted Municipal
Order No. 2271 authorizing the City Manager to make an additional monetary
contribution to Sprocket, Inc. in the amount of $50,000 for matching funds for the RISE
CapX program; and
WHEREAS, the City of Paducah now wishes to enter into a Memorandum
of Understanding with Sprocket, Inc. to set forth the respective responsibilities of
Sprocket and the City for the completion of the approximately 8,800 square feet to
15,000 square feet of co -working and business startup -incubator space in the Coke Plant
located at 3121 Broadway.
BE IT ORDERED BY THE CITY OF PADUCAH, KENTUCKY
SECTION 1. That the City of Paducah hereby authorizes the Mayor to
execute a Memorandum of Understanding, in substantially the form attached hereto and
made part hereof, between the City of Paducah and Sprocket, Inc. for the construction of
a Co -working and Business Start-up Incubator.
SECTION 2. This Order shall be in full force and effect from and after
the date of its adoption.
Mayor
ATT T:
mdsay Pans , C410 Clerk
Adopted by the Board of Commissioners, February 25, 2020
Recorded by Lindsay Parish, City Clerk, February 25, 2020
\mo\MOU-Sprocket Co -Working and Business Start-up Incubator
Memorandum of Understanding
This Memorandum of Understanding (MOU) sets forth the terms and understanding
between SPROCKET INC., ("Sprocket") a Kentucky non-profit corporation and the
City of Paducah ("City") to construct a Co -Working and Business Start-up Incubator
within Paducah, Kentucky.
Background
In late 2018, Sprocket Inc. received notice they were eligible to receive up to a $600,000
capital grant from the Regional Innovation for Startups and Entrepreneurs (RISE)
program. The Kentucky Cabinet for Economic Development's Innovation Office began
the RISE program so that regional partners could create spaces that service, attract and
cultivate innovative entrepreneurs.
Sprocket's RISE application is to build out approximately 8,800 square feet — 15,000
square feet of undeveloped warehouse space in the Coke Plant for a co -working and
business start-up incubator. Co -working is an emerging business model that attracts
individuals to specially designed spaces to work independently, or collaboratively, in a
shared office environment. The typical user is entrepreneurial and self-employed. There
are currently no such spaces in the local market. Sprocket needs financial assistance
from the City and other partners to complete the construction and furnishings as generally
depicted in Appendix "A". The total buildout is expected to cost approximately
$1,200,000. It is expected that the owners of the Coke Plant will offer Sprocket a lease
with the initial term being at a nominal cost.
To operate the facility to its maximum potential, Sprocket is partnering with Codefi, a
Cape Girardeau, Missouri company. Codefi effectively manages a similar space in
downtown Cape Girardeau. Codefi will have 100% responsibility of the management,
marketing and operations of the co -working center. Codefi will use its considerable
experience and expertise to assist with the design, build -out and furnishing of the facility;
hire and manage all staff, create and disseminate all marketing communications; recruit
members and sponsors; and organize and oversee all programing and operations. For
these services, Codefi will be paid management fees by Sprocket. The force multiplier is
Codefi's experience and access to capital. Codefi is expected to identify and assist
certain technical entrepreneurs with its own funding to create small businesses in the
Paducah and McCracken County Kentucky area.
In early 2020, Sprocket Inc. requested a modification to this Memorandum of
Understanding. This modification is related to a potential increase in the size of the
permitted build -out space.
Purpose
This MOU sets forth the respective responsibilities of Sprocket and the City for the
completion of the approximately 8,800 square feet to 15,000 square feet of co -working
and business startup -incubator space in the Coke Plant located at 3121 Broadway. The
final size shall be based upon the best engineered optimized feet per the budget that
results from the design build process.
The above stated goals will be accomplished by undertaking the following activities:
(A) Sprocket will be the fiscal agent for this collaboration. It will have financial
responsibility for the capital costs and operation of the coworking center, in
addition to its current make -space operations.
(B) Sprocket will secure grant agreements with the Kentucky Cabinet for Economic
Development.
(C) Sprocket will design the space in accordance with all City of Paducah
development policies and ordinances including zoning and building/electrical
permits.
(D) Sprocket will seek proposals and contract for the construction of the space and
furnishings.
(E) Sprocket will secure an acceptable lease from Edward and Meghan Musselman
for the use of the space.
(F) Sprocket will contract with Codefi for the operations, marketing and
programming of the space as described above.
(G) Sprocket will identify and secure all the sources of funding needed to minimally
build out the space and operate the project; and
(H)Upon submission of documents demonstrating completion of activities (A thru G)
by Sprocket, the City will contribute up to $200,000.00 to Sprocket for the
construction and furnishings of the space.
Reporting
Sprocket will make regular reports on the progress of the project to the Paducah Board of
Commissioners.
Funding
The funding for the project is expected as follows:
Sources
Commitment
RISE (Cabinet for Economic Development)
$
600,000
City of Paducah
$
200,000
McCracken County Library
$
200,000
McCracken County
$
200,000
TOTAL
$
1,200,000
Duration
This MOU is at -will and may be modified by mutual consent of the parties. This MOU
shall become effective upon signature by the authorized officials from Sprocket and the
Mayor and will remain in effect until the completion of the build -out process as agreed
with the Kentucky Economic Development Finance Authority (KEDFA).
Assurances
Each member of the group hereby assures and represents that it:
(A) Agrees to be bound to every statement and assurance described in this MOU;
(B) Has all requisite power and authority to execute this MOU;
(C) Is familiar with the co -working buildout and is committed to working collaboratively
to meet the responsibilities specified in this MOU in order to ensure the project's
success;
(D) Will comply with all the terms of the Grant, all applicable State laws, local
ordinances and regulations.
Contact Information
SPROCKET INC.
Monica Bilak
Board Chair
3121 Broadway, Suite
270-556-8240
monica@sprocketpaducah.com
CITY OF PADUCAH
Brandi Harless, Mayor
300 South 5t' Street, Paducah Kentucky, 42002
270-444-8503
bharless Apaducahky. gov
Date:
Brandi Harless
Mayor, City of Paducah
Date:
Monica Bilak
Sprocket Board Chair
APPENDIX "A"
Upper Floor