Plans for the city to turn the Herald building into a tech accelerator have been dealt a setback, as an application for programming funds has been denied.

At a Growth Fund Committee meeting on Monday, Sept. 28, Grand Forks City Administrator Todd Feland told committee members a $600,000 application for a U.S. Economic Development Administration Build to Scale grant has been denied. The grant would have been used to fund programming to mentor start-up companies that someday could be housed in the Herald building, located across the street from City Hall. The denial of the grant means the city may need to seek funding elsewhere.

“We probably have to do more of an incremental approach or ask other private sector partners to participate,” Feland said about moving the project forward.

The EDA grant was part of a $1.2 million plan put together to provide mentoring funds for start-up companies, as well as to provide for a program manager to help develop the center and coordinate within it. The grant was contingent upon a 50% local match. The Jobs Development Authority of Grand Forks already has approved $300,000 over three years for the tech accelerator. UND is providing $100,000, and private donors are putting up the remaining $200,000.

Feland told the committee that most of the private donors are still onboard with the plan, though a few have yet to officially decide. So far, the donors include Midco, Choice Financial, Edgewood, Ideal Aerosmith, True North Equipment and AE2S, along with the Grand Forks Region Economic Development Corporation, which already occupies space in the Herald building.

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Feland told the committee one possibility would be to make a broader request to other companies that may be interested in becoming partners in the tech accelerator.

The grant application was submitted by Amy Whitney, director of UND's Center for Innovation, which is slated to provide the mentoring program. Whitney said she won't know why the EDA denied the grant until after a de-briefing session she expects to happen in the near future.

Whitney also said she is unsure how the loss of 50% of the accelerator's operating funds will effect mentorship programming, but some possibilities could include reduced staffing, using different -- presumable cheaper -- software tools or paying mentors less in honorariums. Those details, she said, would be discussed at a late Tuesday meeting with city officials.

The Build to Scale grant, for which the Center for Innovation applied in June, is one of two grants concerning the tech accelerator. The city is set to apply for another EDA grant, called a Fit-up grant, for construction costs later this week. The cost to refit the building is estimated by city staff to be around $3 million. If approved, the Fit-up grant would cover about half of those expenses, with the remainder to be made up locally.

The city bought the Herald building from Forum Communications, which owns the Grand Forks Herald, for $2.75 million in April 2019. The newspaper rents space on the building's second floor and its reporting, advertising, circulation and administration staff still work there.