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story.lead_photo.caption An artist rendering shows the proposed second phase of the Little Rock Technology Park on Main Street. The five-story building in the center of the rendering would go up on a parking lot.

Everything is in place for the $26 million second phase of the Little Rock Technology Park -- everything but the $26 million.

Addressing a room filled with bank executives last week who helped bankroll the tech park's first phase, Brent Birch, the park's executive director, made his first pitch for why the park and the city need the second phase -- a five-story, 85,000-square-foot building on what is now a parking lot on the north side of the existing tech park.

"We sold this [tech park] to taxpayers as a bigger deal than just Phase One," he said at the tech park's monthly meeting. "That's big, but it's also big for Little Rock to keep moving forward.

"You look at our regional competitors. They're a little bit ahead of us. We caught up pretty quick with Phase One. But if we stall here, Little Rock is going to pay the price for that. With technology becoming a bigger and bigger component of our everyday life, that's not something we can afford."

Birch's presentation wasn't just a pitch for the second phase, he also reviewed the success of the first phase of the park, conceived more than a decade ago as a Silicon Valley-like incubator for high-tech startup companies.

It has worked, Birch said.

"The environment we've created has been the game changer," he said. "They are looking for more than money to get going. In this building, it's the environment. You get a lot of like-minded people talking the same talk, walking the same walk. And you've seen those successes come to fruition."

The first phase of the park, a total of 38,000 square feet of space in renovated buildings at 417 Main St., remains consistently 90% full and, at times, 100% full and averages about 50 tenants, Birch said. The space opened in 2017 with 12 tenants.

"You've seen it also transition to where we've gotten with the stability of our tenant base," he said. "We've got a diverse group of startups, early-stage companies and some that have been around a while.

"It's been a good mix that has created the environment that has been so crucial."

Several companies that got their start in the tech park have seen success.

Apptegy, which builds communications/marketing platforms, started in the park's initial temporary space on East Markham Street with one employee, founder Jeston George. It recently hired its 100th employee and works out of the Simmons Tower at Capitol Avenue and Broadway.

Bond.AI, a platform to help people improve their money management, won a best-of-show at a financial innovation conference last year.

MOBX, which specializes in mobile applications, includes ESPN Fantasy Sports among its clients.

Gas POS, which has developed point-of-sale systems for gas stations and truck stops, moved to Argenta in North Little Rock after it outgrew its space in the tech park after a move from Birmingham, Ala.

Other startups, such as Few, which customizes Web and mobile applications for other companies, could outgrow the tech park but prefer to stay, Birch said.

"Few has six or eight people that work out of this space," he said. "They probably have another 20 spread out all over the globe that they can pull in when they need them. Those people probably don't work exclusively for Few. But if they need them on a project, they can pull that talent in."

Another tenant, the Venture Center, is more akin to a partner and is a "big source of the private investment that is funneled through this building, through the accelerators as well," Birch said.

"They fill a key role for us in the success of this project," he added. "They create the ability to mentor, train, accelerate these early-stage companies.

"The purpose of this project was never to just be office space -- you come in, plug in your computer and bang at your keyboard all day. All of these educational opportunities, networking opportunities -- the Venture Center fills that role for us."

All of which brought Birch to the practicalities of the second phase. In short, the tech park needs additional space to meet demand, he said.

"We're running into instances where we are turning people away -- not only people who can fit into the space we have, but people who want more than we can offer," Birch said. "We don't want to be a position where we are turning people away. Plus, I have the feeling that there are long-established companies in the Little Rock area that would like to be around this environment for recruitment. We want to be able to catch some of those companies."

The second phase also will offer additional conference space, which is lacking in the existing tech park.

"We lose out on a lot of opportunities to have people in the building and do more educational things in our space," Birch said. "We have to send it elsewhere. The Venture Center has to hold Demo Day ... somewhere else. That's the cards we were dealt with with hundred-year old buildings. You work with what you've got and that's what we did."

The tech park is on sound financial footing, Birch said.

The city promised the park $22 million of the proceeds from a 2011 sales tax, which will expire in 2021, to help pay for capital costs. The tax hasn't collected as much as estimated, and the amount the park will receive is now estimated at $20.7 million.

The expected tax proceeds enabled the park to borrow money to build the first phase

The tech park paid off a $5.4 million loan earlier this year. The board voted last week to make a $300,000 payment on an outstanding $9.6 million loan.

The park has almost $700,000 left to pay of a $5.4 million loan after the board approved putting a $1.5 million sales-tax payment from the city toward the note. Birch said the balance likely will be paid with the next city payment later this year. Birch said he didn't know what the amount would be.

That leaves $9.6 million in outstanding debt, he said.

Birch said financing the second phase is a work in progress.

"We have some plans to get out there and determine what is going to be the best route to finance this project sooner than later," he said.

The ideas include attracting tenants large enough to occupy an entire floor, adding condominiums, selling naming rights, receiving grants and help from banks.

'The ask from us to you is to continue to support the project the way you have," Birch told the bankers. "You believed in us enough to get this off the ground. It's been crucial to our success. Our hope is that the relationship continues to be strong as it is and then you're ready for what we need for the space, too. We don't know what it is today."

Jeff Hildebrand, executive vice president and chief lending officer for Centennial Bank, which led the bank consortium, said he liked what he heard but wanted to know more before committing.

"We're certainly thrilled with what you've done so far and we want to continue to participate," Hildebrand said. "We don't know how many banks will be involved but we're certainly interested to see what you come up with and look at it at that time."

John Burgess, president and co-founder of Mainstream Technologies Inc. and chairman of the Little Rock Technology Authority Board, said last week's presentation was just the beginning of a process that could take up to three years.

"This was a first test run to take out to stakeholders and potential investors," he said. "We're ready to start the fundraising phase for Phase Two."

Brent Birch

SundayMonday Business on 07/14/2019

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Comments

  • NoUserName
    July 14, 2019 at 10:57 a.m.

    How about reporting some facts about the TP? Like:
    .
    Total number of tenants since opening. Average employee per tenant. Average rent paid per tenant. Average subsidy per tenant. Number of tenants that moved OUT of Little Rock. Number of tenants that moved out of the TP but stayed in LR. Number of tentants that folded. Total TP revenue and from what sources.
    .
    I've yet to see a detailed analysis. And I couldn't find it online after a cursory search.

  • eaglescout
    July 14, 2019 at 12:24 p.m.

    Smoke and mirrors, nothing but smoke and mirrors...

  • drs01
    July 14, 2019 at 1:52 p.m.

    Birch reported to the CENT committee overseeing how the sale tax revenue is being spent. It was the same info as reported here - no real financial data. The TP has outstanding debt that can't be eliminated by tenant's rent. An entire floor in the TP building is occupied by the Venture Center which existed long before there was a tech park. The city's commitment to the TP expires in a couple of years and I hope the voters will not renew funding. All I see is a real estate development downtown (as expected)funded with tax dollars, managed by a $140,000 a year landlord. It was pie in the sky from the start. If the same bankers who hold $9 million in TP debt want to finance phase two, then go for it.
    What I fear happening is the TP will end up in heavy debt and come to the city to bail them out; or the bankers/developers will take over the property and the city will be out $20 Million financing another failed downtown development-boondoggle.
    If the TP and Dickson Flake and company come asking for more funds using the same tactics as reported here (no financial data), then I hope we taxpayers will say NO. Is there any private business that gets a $20 million startup and fails to have a positive cash flow after 5 years and stays in business. Only with government welfare.

  • RBBrittain
    July 14, 2019 at 2:39 p.m.

    NUN & DRS01 are the "smoke and mirrors" here; they ignore and twist the facts shown in the article to fit their preconceived notions about the Tech Park. (My guess is you both call it "TP" more as an acronym for "toilet paper" than Tech Park.) The only REAL waste here was the demolition of the Capitol Theatre that once occupied the site of the proposed Phase II building; if not for that the Tech Park coulda renovated the theater for Phase II (if not Phase I).

  • drs01
    July 14, 2019 at 2:56 p.m.

    RB - here are the smoke and mirror facts: There has not been a single private investor dollar in this Tech Park project. The seed money is tax revenue from the sales tax increase. The $22million commitment was included in the sales tax increase instead being voted on separately. This was to satisfy the developers and chamber of commerce who supported the increase. Had this TP $ been a separate ballot issue, IT WOULD HAVE FAILED.
    I've heard Birch speak and it's always nothing about the financials. Just as stated in the article. The bankers loaned money knowing that us taxpayers would cover the debt (see $22million committment). Now we are in phase two. No guarantee of public funding beyond 2021. If you are so hot to trot on this TP, then show us the results in financial terms. I doubt if you are Birch can. He's a high priced landlord working for a bunch of downtown developers who laugh at how stupid we voters are. Look at this article again, and tell us how condos fit into a tech park? That should tell you how bogus this project is and will continue being.

  • NoUserName
    July 14, 2019 at 3:26 p.m.

    Please point out specifically which facts I twisted and ignored from this article in asking my questions. As for TP abbreviation, it is not unlike my use of LR. Though I suppose one could assume that must be short for LatRine. What, if any, affiliation do you, RB, have with the TP? What contact have you had with anyone associated with the Park?

  • MBAIV
    July 14, 2019 at 6:43 p.m.

    There were at least a couple of better sites for the Tech Park (not the ones that destroyed neighborhoods). The site selection committee was pushed to use the tax dollars for yet another attempt to save downtown from itself. MetroCenter Mall II.
    .
    The current site is not near UALR or UAMS and is not any closer, time wise, to ACH than the other sites. But money was needed to dump into downtown. Just another bait-and-switch by city hall.

  • NoUserName
    July 15, 2019 at 6:06 p.m.

    RB just hit and run? Like a rat fleeing a sinking ship.

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