BY RANDY DOCKENDORF
randy.dockendorf@yankton.net

VERMILLION -- A major economic blow has instead turned into new opportunities, thanks to the opening of a start-up center in Vermillion for new businesses.

U.S. Sen. Tim Johnson (D-S.D.), a Vermillion native, presided over Thursday's ribbon-cutting ceremony for the new entrepreneurship center in downtown Vermillion. Johnson helped secure $400,000 in federal funds for the incubator building.

The Market Street Professional Building offers shared services and facilities for new businesses. The tenants grow and eventually move into their own sites.

"This has been successful in Brookings, Sioux Falls and Rapid City. It is doubly satisfying to do so in my hometown," Johnson said. "We have received federal dollars, but it has taken real vision and energy at the local level."

The incubator is the joint effort of the city, the University of South Dakota and the Vermillion Chamber and Development Company (VCDC). The incubator -- and a determination to grow local businesses -- emerged from a financial blow to Vermillion, a community of 10,000 residents.

In 2001, Gateway, based in North Sioux City, closed its Vermillion call center as part of a world-wide cost-cutting measure. The closure meant the loss of about 350 jobs held by University of South Dakota students and area residents.

"There was a dark, ominous cloud over us," said Roger Kozak, the mayor at the time.

But Vermillion received a huge break when Phase 2, an Arizona-based call center, located operations -- and 250 jobs -- in the former Gateway plant, Kozak said.

"If you can't be good, then just be lucky. With Phase 2, we were just lucky," he said. "We dodged not just a bullet, but a bomb. That dark cloud had a silver lining with two or three rainbows."

Johnson, a member of the Senate Appropriations Committee, helped secure the $400,000 in funding for economic development.

In recent years, Vermillion officials have tried to build upon the economic impact of USD and its 8,000 students. Local officials have sought a mix involving retail, tourism, manufacturing and services.

"We need more young people to stay in South Dakota. To do that, we must diversify Vermillion," Johnson said.

The incubator, which had been under discussion, took shape when a realtor offered property for the relocation of City Hall, Kozak said. While Vermillion officials didn't think the property fit City Hall, they did see the potential for an incubator center.

"This is the cornerstone of the future for economic development not only in Vermillion but for the entire region," said Kozak, who helped develop the incubator.

Now, the challenge becomes finding new tenants for the building, said Mike Keller, dean of the USD Business School.

"You are out in the community and hear ideas," he told the audience. "Don't just hear it. Tell us, or you will sit with an empty building."

Sen. Johnson agreed. "A successful incubator is not just a matter of putting a roof over rooms and hoping people show up," he said.

Discussion is already under way with interested businesses, Mayor Dan Christopherson said. "We do have some leads, but most of that is going through the Chamber," he said.

The incubator provides a strong boost for new ventures, the mayor said. The building includes a large conference room, about a half-dozen offices, storage and restrooms.

"With a joint facility, we hope they share common things like copy machines, the phone system and on-line services," he said. "This is a way for a start-up business to function in its early days, from a few months on up to a couple of years."

A state Social Services office occupies about half the building, and the Small Business Development Center may move from its USD location to the incubator, the mayor said. The building, constructed about 25 years ago, began as the Vermillion Plain Talk and has housed a number of ventures, he said.

Vermillion's incubator can find great success with its USD resources and a highly-educated population, Johnson said. However, South Dakota lags behind other states in partnerships between its universities and the private sector, he said.

"South Dakota is not doing all it should," he said. "The new incubator building offers an excellent opportunity to partner city and university resources."

USD faculty and students, particularly those in the Business School, can gain valuable experience while serving tenants in the incubator center, said Mel Ustad, USD interim vice president for research.

"We need to enhance the education of students with work in the field. The students themselves may become tenants," he said.

While federal funding provided a valuable boost, local efforts are needed to keep the momentum going, Johnson said. "The government does not create jobs, the private sector does. There are times when the best thing government can do is get out of the way."

Cyberspace allows businesses to locate anywhere, which makes local development efforts even more attractive, Christopherson said.

"You can have businesses anywhere in the world, as long as you have the expertise or technology," he said. "Our cost of living is less, and our quality of life is advantageous."

Johnson predicted the incubator's success will benefit the entire region.

"Everyone in South Dakota benefits when Vermillion does well," he said. "There is more economic dynamism that lifts all the boats in South Dakota."