St. Albert is pausing financial support for the Northern Alberta Business Incubator (NABI), a not-for-profit that currently supports more than 100 businesses.
Mike Erickson, the city's acting director, drew attention to what he described as concerns with NABI's finances at a May 17 council meeting. In addition to suggesting the city halt funds for the organization, Erickson proposed that council put forward a motion to have administration explore options for the divestment and redevelopment of NABI's city-subsidized downtown location at 13 Mission Ave. NABI currently owns one other location at 200 Carnegie Dr.
"In providing subsidized rent to NABI, the city has foregone the opportunity to earn a fair market rent," Erickson said.
The city looked at the current average market rent range for office products, and the rent NABI charged to tenants. Based on those two sets of data, St. Albert believes it could have generated anywhere from $1.4 million to $2.2 million gross rent from 2011 to 2020.
Ericsson said the nearly-80-year-old building is "nearing the end of its life," and that in addition to subsidizing NABI's rent, the city also spent $85,676 to maintain the space. He said the building would either require substantial investment to bring it up to current standards, or it should be demolished and sold.
Because the area the building occupies is currently under direct-control zoning, Erickson said future uses for the site could include anything from commercial office space to residential buildings, or a combination of the two.
City halts NABI funding
Erickson said NABI's funding requests to the city were a reason for concern, citing almost $3 million in city-given funds NABI has received from 2008 to 2020.
During the same council meeting, Rajesh Jaiswal, NABI's executive director, gave a presentation to council asking for a one-time grant of $175,000 to rehabilitate the companies at Mission Avenue. NABI had also requested $120,000 to match provincial government funding after successfully applying to the Community and Regional Economics Support (CARES) grant. Without the city as an additional backer, NABI will have to forgo the grant.
Erickson also highlighted what he said was a gap between the organization's claim that a significant portion of their efforts are dedicated to supporting technology companies, and the 15-per-cent portion of technology companies NABI currently supports.
Additionally, he said that while businesses will typically spend one to two years in an incubator before graduating, while NABI introduced a graduation program back in 2019, he argued that transition to this program has been slow.
"If businesses don't graduate, this means the incubator is providing support and leasable space to the same companies year after year," Erickson said. "This puts the city in a position where we're indirectly providing subsidy through NABI to longstanding, well-established businesses who may no longer be in need of incubation services."
Councillors express concerns for committing to pause funds
While all councillors agreed to explore options for the redevelopment of the 13 Mission Ave. building, Coun. Ray Watkins and Coun. Sheena Hughes were both opposed to the motion that ultimately paused financial support to NABI.
Hughes said she was worried committing to a pause might bar council from being open to further discussions with NABI about its finances.
"I'm really grasping with this one, because I almost feel like it's slamming the door in NABI's face," Hughes said. "I do want to make sure that line of communication is open."
Watkins said it was clear some issues would have to be worked out with NABI's business model, but ultimately seconded Hughes.
"The question is how much value there is, and with NABI I think there is value there," Watkins said. "From what I've heard from the people there now, they're really trying to turn the ship on and operate differently than in the past."
Coun. Natalie Joly mentioned Startup Edmonton, saying she sees potential in this type of not-for-profit, but that the city needs to "take a step back."
"We really need to look at NABI's plan and be collaborative so that we can move forward and really see some exciting innovation happening in St. Albert," Joly said.
NABI responds to council's decision
Currently, all businesses formerly at the 13 Mission Ave. have been successfully relocated, either within the Carnegie location, or elsewhere in the city. Without the $175,000 from council, NABI rehabilitated the Mission businesses out of pocket.
Jaiswal emphasized that it is "good news" that all Mission companies will stay in St. Albert, and said he "very much understands" council's decision, agreeing that the Mission building was at the end of its economic life.
He added that the city's pause on NABI's funding demonstrates that work needs to be done to address what he called "misperceptions."
"This is an important moment to rebuild the lines of communication between NABI and the city," Jaiswal said. "In the last few years, we've had some staff turnover that might have led to a disconnect, but this is a time to move forward and rebuild effective communication and relationships."
In response to council's concern about the 15 per cent of technology companies currently with NABI, Jaiswal said incubators "reflect the ecosystem" of the community they reside in.
"There are a lot of opportunities for non-tech companies in St. Albert, and we can help them in technology-related ways, such as digitizing their business processes, creating their online presence, and innovating their business model," Jaiswal said.
He added that NABI has had "ups and downs" in its lifecycle, but argued the organization's benefits to St. Albert are substantial. He said that in 2021, NABI had five new businesses graduate to occupy large commercial space in St. Albert, and that NABI's ability to foster entrepreneurship, business growth, and job creation should not be overlooked.
He said NABI supported companies have contributed over $100 million to St. Albert's economy and are continuing their contributions.
"You can see the impact that NABI has made on the city," Jaiswal said. "That impact is enhanced with the city's support."
