Agenda 8-e - New Three-Year Interlocal Agreement between Orange County and the Town of Chapel Hill to Continue Joint Funding for the “LAUNCH, Inc.” Small Business Incubator

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2 of Chapel Hill since 2012 to fund the lease cost of the "LAUNCH Chapel Hill" innovation center, located at 321 West Rosemary Street. Orange County's proposed $18,375 quarterly financial commitment (or $73,500 annually) under the Interlocal Agreement extends for 36 months from January 1, 2019 to December 31, 2022, and would continue to be paid from the County's Article 46 economic development category designated to nurture entrepreneurial development. This expenditure was included in the approved FY 2018-19 budget as one of the pre-existing economic development initiatives funded from Article 46. The proposed annual payment of $73,500 by the County is unchanged from the same annual payment level the County had been making in the previous Agreement. As outlined in the attached Memorandum of Understanding (Attachment 2), dated 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 in principal to continue all parties' mutual support of the LAUNCH incubator. In 2018, operational efficiencies were identified by the Town of Chapel Hill and UNC, being the other main financial contributors, if the LAUNCH structure among key stakeholders could be shifted into a non-profit agency. This organizational change has since been approved by both UNC and the Town, and now requires the Orange County Board of Commissioners to review and approve the new Bylaws (Attachment 4), which include authorizing the County Manager to serve as an executive board member of the new non-profit (or to designate another County representative to serve in that capacity). With respect to the three key board member positions for the Launch, Inc., the Town has nominated UNC Chapel Hill's Judith Cone (Special Assistant to the Chancellor for Innovation, Entrepreneurship & Economic Development) to serve as Chair, and nominated Chapel Hill Economic Developer Dwight Bassett to serve as Treasurer. Both have agreed to serve in that capacity. The Town and UNC have nominated Orange County Economic Development Director Steve Brantley (or another designated County representative) to serve as Vice-Chair/Secretary, which requires the Orange County Board of Commissioners' approval of the Bylaws and designation by the County Manager. Early History As part of the Board of County Commissioners' strategic planning in 2011 to utilize Article 46 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 County would eventually relocate to adjacent counties over time. Durham's "American Underground" incubator and co-working venture at the American Tobacco campus has been a significant draw of Orange County's local start-up talent. In response, Orange County contracted with UNC Chapel Hill's Department of City & Regional Planning department head, Dr. Emil Malizia, in 2011 & 2012, who conducted a regional real estate assessment of average lease costs, ideal space needs and working environments that start-up companies seek throughout their developmental life span. A key recommendation from that consultant report highlighted a severe shortage of competitively priced incubator facilities here in the 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 the successful referendum in November 2011 to approve Article 46, the County gained a new revenue source that enabled it to join with the Town of Chapel Hill in establishing the "LAUNCH Chapel Hill" incubator.