City hatches business incubator
Gallup building purchased for $350K to help fledgling entrepreneurs take flight

The Gallup City council voted Tuesday to purchase the old Kachina Packing Co. building on Industry Road for $350,000 to use as an incubator site for small and expanding businesses, allowing them to lease the space for below-market rates. The building is being purchased as a joint effort with the Northwest New Mexico Community Development Corporation. (Photo by Jeff Jones/Independent)

By Zsombor Peter
Staff Writer

GALLUP — To most people who might wander down Industrial Drive on the west end of town, the second building on the left before the muddy road dead-ends wouldn't look like much, just a drab, brown building the color of dried mud with a few darkened windows and some truck ports on one side.

To most of the City Council, however, it might just look like the future of Gallup.

It should at least look like more than the sum of its parts, since the council agreed to buy the building and the land it sits on for $350,000. Some $50,000 is coming from the city, the rest from a grant courtesy of the U.S. Department of Agriculture.

In partnership with the Northwest New Mexico Community Development Corporation, the city plans on turning the building into Gallup's first business incubator, a place start-up and expanding businesses will be able to set up shop while getting a break on their rent and free help on how to run and grow their ventures.

An idea is born
Like the incubators many people will remember from their elementary school days that kept the class's pet chick safe and warm until it hatched, the city's new business incubator should basically do the same for local entrepreneurs, protect them from the invisible hand of the free market until they're ready to strike out on their own.

As Gallup Development Commission Director Mike Enfield put it, "an incubator is a birth of a business."

"A person with a product or service to offer 80 percent of the time doesn't know the business of business," said Enfield.

"The incubator is for the person who knows how to provide a service or product," he said, but not how to turn it into a viable business.

And that's where the Community Development Corporation comes in.

Executive Director Mike Case said the entrepreneurs brought into the incubator will have access to a team of advisors made up in part of established local professionals, the corporation's staff for technical advice in the participant's particular field, and regular workshops. And of course there's the cheap rent, which will range from zero to a fraction of the going market rate depending on the participant's needs and means.

Those interested in participating will first have to make a good impression with the corporation, which will be looking for business plans that show the most growth potential and promise to create the most jobs. It will also be important that the participants create something they can eventually export, said Case, so that they can help bring new dollars to the area instead of merely recycling the dollars that are already here.

Leaving the nest
But all good things, as they say, must come to an end. And just as the baby chick must learn to fend for itself, the incubated business will be shown the door, the one that leads to the real world, after 12 months.

The city councilors all liked the idea of a business incubator, but not all liked the particular incubator city staff picked out.

Councilman Pat Butler likened the building, an old slaughterhouse that now provides storage space for one business and a roof for a trucking company, to a sow's ear, one he couldn't see being turned into a silk purse.

Butler cast the only vote against the deal, believing the city could have found a better facility.

While the building will admittedly take some work, said Enfield, "it was the best facility I could find for the money."

He believes the city got a good deal for $350,000, considering that the property was appraised for $533,000.

Even so, City Manager Eric Honeyfield doesn't believe that the $52,000 the city is spending on renovating the building, on top of the $50,000 it spent buying it, will be enough.

"The building is in very bad condition," he said a few weeks ago, when the council decided to postpone its vote on whether or not to buy to property, hoping staff could find a more attractive alternative. $52,000, he said, "will not begin to accomplish a renovation."

Now that the council has gone ahead and bought the ex-slaughterhouse, Honeyfield won't speculate how much more money it will take.

Whatever it is, Case said his corporation which will be putting in between $50,000 and $100,000 of its own money mostly for the labor it will take to get the building ready will make sure the city won't have to pay more than the $102,000 it's already put up.

'Magic question'
The other looming question the "magic question," as Case put it is how the incubator will be paid for year after year.

In the best-case scenario, the rent the participants would be paying even at below-market rates would be enough to make the incubator pay for itself.

If that doesn't happen, Case and the city will be looking for more grants. They especially have their eyes on H.B. 54, being sponsored by Rep. John Heaton, D- Carlsbad, in the New Mexico Legislature, which would make $700,000 worth of state grants available to start-up incubators like Gallup's. Enfield knows of three incubators in the state running today, in Albuquerque, Las Cruces and Santa Fe.

Whatever happens, Case said, "the city will incur no negative costs, so essentially it's up to the Community Development Corporation to make it sustainable."

Case and the city have yet to write up a contract outlining those sort of details, including how they will split the revenue from the rent.

When the incubator will be ready to begin accepting tenants, meanwhile, is another unknown. Case said everything could be ready as soon as June. Enfield said it could take as long as a year.

Enfield said the city already has some incubator hopefuls lined up, including one person with a plan to package and ship American Indian tea. And once things get rolling, he doesn't see why one of them can't turn into the next Rocky Mountain Chocolate Factory, which started out in 1981 as a small, family-run venture in Durango, Colo., and now boasts over 280 locations across the United States and Canada.

That drab, brown building down Industrial Drive may not be the perfect place for a business incubator, and it's probably not the most attractive. But it's the building the City Council just agreed to buy, and its the building it will now have to make the best of.