Prior Lake’s plan to develop a “technology village,” a small-business incubator, is up and running with plans to expand in the coming year.

The venture was launched late last year by the Economic Development Authority as part of a broader plan by the city to stimulate and diversify its economy.

Early this year, the city finished work on a home office for the program — a work space in City Hall large enough for offices for small-business tenants as well as computers, printers, phones and other equipment. An advisory board made up of residents with experience in technology and business formation was assembled.

The program has exceeded its first-year goal of three small-business tenants. The City Hall space currently is filled with 10 people representing six businesses focused on software development, graphic design, e-commerce and digital community news.

Building out and furnishing the space used most of the $50,000 in city funds that had been allocated to get the venture started, according to Dan Rogness, community and economic development director. Tenants are signed to three-year leases, with rent starting at $5 per square foot the first year and increasing to $10 and $15 per square foot in the second and third years.

Developing more high-tech businesses could increase the city’s labor force, which had begun to shrink even before the recession. A city report says almost two-thirds of Prior Lake’s labor force works in the arts, entertainment and hospitality sectors, mostly at Mystic Lake Casino and Hotel.

“It’s been a great experience,” said Gerry Hughes, a former manager and executive at Lawson Software, Oracle and Healthland, who is serving as technology village board chairman. “We overachieved on our goal this year, and now as we look forward, we want to continue to provide direct assistance to these businesses.”

Hughes said the board is hoping to sign up new participants working on emerging technologies aimed at solving specific business problems with the potential to be commercialized.

Rogness, who serves as director of the technology village, said new tenants will need to be housed in offices outside City Hall, which now is fully occupied. A search for new space will begin soon. Some of the $26,500 in expected funding for the program in 2014 could go toward rent subsidies if the private market space is more expensive than the space in City Hall, he said.

Most of the current business tenants were working out of their homes before moving into the technology village, Rogness said. “They come and go at various times, but there are opportunities for them to interact and learn from each other,” he said. That collaboration supplements guidance they receive from board members who serve as mentors.

Synergy, collaboration

James Vande Castle said he found out about the technology village when organizers contacted him about having his graphic-design firm develop a logo and website for the new venture. He had been running his business, called design a tivity, out of his Minneapolis home, but he moved into the offices in City Hall last January.

“It’s given my business a presence that it did not have before,” said Vande Castle, noting that it’s nice to no longer have to meet clients in coffee shops. Board members have helped him devise a mechanism for his website that enables prospective clients to get price quotes on job orders. “Inevitably, the first question you get from a client is, ‘How much is it going to cost?’ The next question is, ‘How long is it going to take?’ But you don’t get the second question until they hear or see the price,” he said.

Vande Castle said he also appreciates the collaboration among tenant businesses. “Sometimes you just need somebody to give you feedback,” he said. Some tenants have tapped his expertise for designing websites for their businesses.

Another tenant, Innovative Computer Professionals (ICP), has found its technology village office helpful with “clean-sheet thinking,” according to Mark Friesen, director of development for the custom software development firm.

ICP already has an office in Burnsville for its business centered on software for ATMs and nongaming machines in casinos. But the firm wanted a separate spot for working on products and services for new markets.

“It has given us the opportunity to physically and mentally separate the two parts of our business, to use it a place where we could think about how we want to position ourselves in the future,” Friesen said. Technology board members have helped with the process, assisting the company in breaking down its core strengths, he said.