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Arundel acts to bolster security tech incubator

The Baltimore Sun

Anne Arundel County officials have taken steps to shore up the struggling Chesapeake Innovation Center, the nation's first homeland security incubator, slashing its quarters and securing some funding.

The CIC will shrink to 5,400 square feet, one-fifth of its current space at its Admiral Cochrane Drive location in Annapolis, under terms of a new lease signed by the Anne Arundel Economic Development Corp. It also secured $75,000 in funding from sponsor ARINC Inc. and renewed a technology-sharing agreement with the National Security Agency, a highly valued partner.

It signed new rental agreements with eight member companies and graduated two others, PharmAthene Inc. and Inclinix Inc., which plan to stay in Anne Arundel County. Two companies, Mobile Digital Systems Inc. and Hybrid Knowledge LLC, opted not to renew their leases.

The incubator is still expected to post a loss for this fiscal year, which ends June 30, but county economic development chief Robert L. Hannon said yesterday that the incubator is back on track.

"The steps we've taken are going to reduce our expenditures significantly," Hannon said.

The incubator, which opened in 2003 to take advantage of the growing post-9/11 security industry, receives $480,000 from the county each year. The rest of its $1.4 million annual budget is supposed to come from sponsorships and member fees. But it has incurred three consecutive years of losses, which officials blamed on expensive real estate rentals and reduced funding from members and sponsors. The incubator also has gone through a series of directors.

For fiscal 2006, which ended June 30, the incubator lost $457,000, compared with a loss of $60,000 the previous year. Hannon declined to say how much the incubator will lose this year, but he previously said it could be $150,000 to $200,000.

For fiscal 2008, which starts July 1, Hannon said he is asking the County Council for a budget that the incubator can operate within. He declined to say how much he is asking for.

County Executive John R. Leopold said he is pleased with the changes and stands behind CIC's model. He would not address whether the incubator is in danger of being closed.

"The CIC fulfills an important niche in homeland security and other technology products," he said.

Member Mark Vasudevan, who previously had been critical of the situation, said his company, Vsi Corp., is staying. "There are changes afoot, and we're happy with the changes," he said.

Raymond Buettner opted not to sign another lease with CIC. His company, Hybrid Knowledge LLC, has an office in Monterey Bay, Calif., and Buettner decided he would move his East Coast office to a less expensive location in Herndon, Va.

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