Before handing over a $6.1 million office building to the private business incubator in it, Akron City Councilwoman At-Large Veronica Sims thought about the last time she visited Bounce Innovation Hub on South Main Street in the old B.F. Goodrich complex.

In its eight floors of subsidized rental space for tech startups, Sims said she felt “challenged” by the absence of black entrepreneurs. At-Large Councilwoman Linda Omobien observed the same glaring lack of diversity on her tour of Bounce last week.

The black leaders raised that concern Monday as Mayor Dan Horrigan's economic development staff explained that, in private hands, the building could be used by Bounce as collateral to get more loans for startups and finish renovating the first floor to improve community outreach.

Sims and Omobien didn't disagree. Private ownership of the building would let Bounce continue its impressive job creation record, Omobien said. Formerly the Akron Global Business Accelerator, the hub has created 961 jobs, $180 million in private payroll and two patents since 2009.

But the councilwomen held firm on ensuring racial equity before letting go of the $6.1 million public asset.

This deal could be the first opportunity, they noted, for City Council to make good on the Elevate Akron report embraced last fall by the city, county and Greater Akron Chamber. The economic development report called for more inclusion, acknowledging that blacks have been excluded from jobs and economic opportunity in Akron for generations.

“It would be almost a tragedy" not to talk about how the Bounce deal could be written to boost black entrepreneurship, said Sims, who pitched a clause requiring 15 percent of Bounce's clients to be black-owned businesses in exchange for the building.

Deal emerges

City spokeswoman and attorney Ellen Lander Nischt raised constitutional concerns about setting racial quotas for private organizations. So, council spent 25 minutes behind closed doors talking to legal counsel in a rare executive session.

They emerged with no clear plan as At-Large Councilman Jeff Fusco asked for the afternoon to craft a solution.

The deal the council ultimately and unanimously approved Monday evening requires Bounce executives to give annual updates "related to racial, ethnic and gender diversity of Bounce's clients and outreach efforts so that the city of Akron can hold Bounce accountable." It's the first city legislation to directly reference the Elevate Akron report or, specifically, the economic exclusion of black residents.

"Legally, we can't say you have to give us numbers," Fusco explained of proposals to set diversity quotas. But the amended deal "would allow council to bring them in and hold their feet to the fire, publicly."

Bounce will now receive the deed to the property as a 10-year, forgivable loan. Each year for the next decade, one-tenth of the value of the $6.1 million loan will be erased. If Bounce goes out of business in that time, for whatever reason, the city can either pursue the remaining balance of the loan or take back the building.

The city will hold a second lien on the Bounce property, meaning that banks or lenders that lend money to Bounce for the renovation of the first floor or other projects would be first in line should the organization face foreclosure or bankruptcy.

Raising diversity

None of Bounce’s 17 staff and five governing board members, including one appointed by the mayor, is black, according to photos posted on the organization’s website.

And only “one or two” of its 47 client business are owned by African-Americans, Chief Operating Officer Jessica Sublett said.

The Brookings Institute, which provided research used in the Elevate Akron report, reported that in 2016 blacks held 7.9 percent of math and computer occupations (or tech jobs) in America. Bounce’s rate of black entrepreneurship is no more than 4 percent.

The organization's diversity index does not capture black entrepreneurship. Bounce reported only that 29 percent of its 47 clients are “female/minority owned.” And the organization’s board of directors is demanding more diversity based on that minority figure, which is mostly women who are generally underrepresented in the tech industry.

Still, annual job performance reviews for Sublett and Executive Director Doug Weintraub call for the 29 percent to increase to 30.9 percent this year.

Bounce is also anticipating more diverse clients when the first-floor “generator” is finished in six weeks. Unlike the second through ninth floors, this space will be open to any entrepreneur and not limited by state grants that only support tech startups. Sublett said she'll take the council's suggestion to connect with leaders in the black community to drive diversity.

"We are actually going to be looking out to our partners in the community so that we can make sure that everyone in the community is aware of us and that we have workshops and training and programs that are available to everyone," she said.

Reach Doug Livingston at dlivingston@thebeaconjournal.com or 330-996-3792.