Building Capacity for Minority Social Entrepreneurs in Central City, New Orleans
[The post below has been submitted by Matthew Loftis, former TMG intern, and represents the Executive Summary of the capstone project of seven University of New Orleans Planning and Urban Studies students. All of us at TMG congratulate Matt on his upcoming graduation and wish him all the best in his future endeavors!]
Since Hurricane Katrina, entrepreneurial activity in New Orleans has grown faster than the national average (Plyer, Ortiz, Horwitz, & Hobor, 2013). Nationally, however, there is an overall lack of minority startups that are backed by venture capital (Schmid, 2015). These disparities are evident in New Orleans as well (Walker, 2014). The Foundation for Louisiana (FFL) and Camelback Ventures (Camelback) seek to address this issue through the creation of an empowerment incubator for minority entrepreneurs near the LaSalle St. corridor in Central City, New Orleans.
To this end, FFL and Camelback commissioned the UNO-PLUS Community Development Finance Capstone team to examine the financial feasibility of developing a minority-centered, co-working and incubation space for social entrepreneurs. Over a four-month period, the team: researched the incubator, accelerator, and co-working landscape in New Orleans to assess the need for additional incubator space; identified available sites in Central City best suited for the development of an empowerment incubator; proposed designs for each of those sites; examined the financial feasibility of an empowerment incubator on each of those sites; and explored potential partnership structures for a real estate joint venture between FFL and Camelback.
The findings indicate:
- Demand exists for an empowerment incubator in Central City. Local incubators do not cater specifically to social ventures led by entrepreneurs of color. An empowerment incubator could serve as a hub of entrepreneurial activity, advance minority-driven social ventures, and act as a welcoming community space for Central City residents.
- Several sites exist within Central City that can accommodate the project and community needs. The team identified four sites and developed a unique site design for each. The designs allow for easy accessibility, provide ample space for programming needs, and are in compliance with the draft comprehensive zoning ordinance (CZO) of New Orleans. As such, the designs take into account permitted land uses, height restrictions, and parking requirements specific to each location.
- According to preliminary analyses, the project is financially feasible on all four proposed sites. A review of the project costs, sources of funds, and operating pro forma indicates project operations generate enough revenue to repay capital investment costs and provide financial sustainability for FFL and Camelback.
- A Limited Liability Corporation (LLC) is the most viable joint venture partnership structure to meet the goals of both FFL and Camelback. LLCs allow the most flexibility in ownership and management arrangements and offer the highest degree of protection to the partners from debt and legal liabilities incurred by the project. This type of partnership structure can also incorporate a master lessor arrangement if FFL and Camelback choose to share management of the incubator or appoint a third-party manager.
This project represents a new opportunity and experience for FFL and Camelback. As such, the UNO-PLUS capstone team suggests FFL and Camelback:
- Hire a third-party to conduct a full market analysis to understand the specific demand for an empowerment incubator for minority owned enterprises located in Central City and develop a marketing strategy to reach potential clients.
- Engage the community to ensure the incubator creates a welcoming and inviting atmosphere and serves community Involving the community in the planning stage can serve to educate residents about the project and allow residents to shape programming and design aspects. It will also help mitigate potential negative impacts of the development on the community.
- Develop strategic partnerships with existing stakeholders in Central City and throughout New Orleans to provide and support community programming within the incubator.
Read the full report here.
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