Council approves agreement with UC Merced to spark business

UC Merced and the city of Merced are on their way to incubating new businesses and aiding entrepreneurs after a unanimous approval Monday night from the Merced City Council.

UC Merced and city staff will turn 5,951 square feet of offices into a center for entrepreneurs that provides small-business development services in the Ralph Shannon Parcade, 626 W. 18th St. The city will lease it to UC Merced for five years with an option for an additional five years at $1 per year.

“This is an exciting opportunity to grow our community,” said Frank Quintero, director of economic development for the city.

The business accelerator is meant to provide new businesses with office space and shared facilities. Along with offering relatively low rent, the building could aid new businesses with professional advice, mentoring and networking opportunities.

The downtown site would include the Merced Small Business Development Center, which offers free advice and assistance to business owners.

The partnership among the three entities could help the city and the university to bond, Quintero said.

Sam Traina, UC Merced chancellor for research and economic development, said it is common for accelerators in university towns to take place in a building away from campus to avoid any conflicts related to the use of publicly funded buildings.

Entrepreneurial students have already been involved with a similar accelerator program, Traina said, but had to travel to UC Davis. “There’s a higher probability of keeping them in (Merced) or regionally if we can stimulate the business (here),” he said.

When UC Merced opened in 2005, it came with the promise of economic growth in the city. Leaders have since looked at ways to prevent a “brain drain,” which happens when the best and brightest leave the community once they’ve earned their degrees.

Councilman Noah Lor said he believes the incubator is what the city needs to cure that brain drain.

The contract was not immediately accepted by all members of council without scrutiny. Councilman Michael Belluomini said the contract needed to better define what is expected from the university.

Using the rent paid by a different tenant in the Parcade, Belluomini estimated that the city is forgoing $60,000 a year in rent for the space that the accelerator will use. “The terms to me seem very general, very skimpy,” he said.

According to the contract, the university is essentially required to create the accelerator. There is no description of how many businesses or jobs must come from the accelerator.

Still, Bellomini voted for the contract.

Councilman Tony Dossetti said the partnership between the three entities could lead to the growth that many have been waiting for in town – and changes that will come with the growth of UC Merced. “I think that we should support this with everything we’ve got,” he said.