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December 5, 2004Proposal not 'Cool' after allState grant was to be used for Chamber facilityByRecord-Eagle staff writer TRAVERSE CITY - State officials said a $100,000 "Cool Cities" grant can't be used as planned for rent and other overhead expenses at the chamber of commerce building in Traverse City. The state's decision apparently spoils local officials' attempt to route the bulk of the Cool Cities grant to the Traverse City Area Chamber of Commerce for rent, furnishings, utilities and other costs. It likely will force local officials to overhaul the project's budget. "Paying for operating expense is not what the grant is for - period," said Bob Johnson, acting executive assistant director of the state Department of Labor and Economic Growth, which oversees Cool Cities funding. Johnson said he contacted local project organizers with his concerns on Friday. Local officials in August touted the receipt of the $100,000 grant, and planned to transform the chamber's vacant second floor into the "Institute for creative entrenprenuership." The project is supposed to assist artists, authors, farmers and other small-business types obtain help with items such as marketing, financing and tax advice. The project's preliminary business plan called for a full 75 percent of the grant to be used for chamber expenses such as rent, utilities, furnishings and remodeling of the 4,000-square-foot space. But on Friday, those plans got a cold reception from state Cool Cities overseers. "The point of the funding was to deal with bricks and mortar activities. ... Paying for space in terms of rent is not an acceptable activity," Johnson said, adding the state has yet to release any taxpayer dollars for the local project. Rent and utility expenses that were proposed for the state grant - totaling around $3,300 a month - would've covered more than a third of the chamber's $9,000 monthly mortgage payment on the $2.4 million headquarters that opened two years ago. The $20 per square foot leasing rate proposed for the institute - half of it would have been underwritten by the chamber - is comparable with other office sites in the downtown area, chamber executive director Doug Luciani said, also calling the chamber "an ideal place" for the Cool Cities project. "It's not just a windfall of money to the chamber," he said. Project partners, including the chamber, the Traverse Area Arts Council, Northwestern Michigan College and the Michigan Land Use Institute were to have contributed "in-kind" services like staffing and administrative support worth $145,000, according to preliminary plans. In-kind contributions combined with the state money totaled an estimated first-year operating budget of $244,500 for the institute. Almost a third of that total - $80,000 - was proposed as rent and utility costs for the project. State officials say they're confident they'll be able to come up with a Cool Cities effort that meets their requirements. "We're really excited about this project," Johnson said. "It really is something we hope to see being developed in other cities." But skepticism lingers, with questions about why the cash-strapped state agreed to the project. "We're creating a place to pour public money," city commissioner Anne Melichar said. "If anyone would've had some time to think about it and get some public input, we could've come up with a better plan. ... (The city) could've found a lot more appropriate use for this money." Other partners acknowledged questions about overhead costs were "legitimate," but said the chamber is a logical site to launch the program. "I'm not sure other organizations are better flagships for this type of activity than the chamber is," said Marguerite Cotto, a vice president at NMC. "We did not begin by saying 'we have vacant space and we need to fill it.' " NMC officials expressed interest in taking on the project long-term, she said - but not with the same overhead costs. "Certainly from the college's perspective, that spreadsheet would need to change considerably," Cotto said. City manager Richard Lewis said the project "followed the intent of what the (Cool Cities) program is all about." "This is not a bricks-and-mortar type of grant," Lewis said. "We have stepped outside the box to create something totally different." Lewis said the city doesn't have public space to offer the project - although the city-owned Heritage Center on Sixth Street wasn't discussed as a possible location. No opening date for the Cool Cities program has been determined, although officials targeted a February start-up with some preliminary functions starting next month. The project was among 20 initiatives around Michigan awarded "Cool Cities" grants last summer from the Michigan Economic Development Corp.
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