UCM innovation campus leaves Exergonix behind

rpulley@lsjournal.comDecember 6, 2013 

Another year has passed with Exergonix showing no job growth and no discernable progress on a Lee’s Summit manufacturing plant.

And in another disappointment for the company, the touted Missouri Innovation Campus apparently has chosen a different site and partner.

The Lee’s Summit R-7 School District and the University of Central Missouri have selected Townsend Capital during a (request for proposal) process as the developer it will work with for the potential campus, said Stan Elliott, the projects facilitator for UCM. Until UCM reaches a final agreement with Townsend, there are no other details to report, he said in an email.

Townsend Capital owns property along the north of Chipman Road, east of the Summit Technology Campus.

Exergonix President and CEO Don Nissanka said he had heard through a third party that the university had decided on another partner. He said he’s trying to get more information

“This is a disappointment for us, as we were the group that originated this idea and worked on it for months, but as I mentioned we have had challenges to finding an investment partner that can finance the buildings,” Nissanka said in an email.

Nissanka and educators had envisioned Missouri Innovation Campus located adjacent to Exergonix and other high-tech businesses.

There the students would have paid internships, as they finish college degrees in two years instead of four, in cooperation with Lee’s Summit R-7 School District and the Metropolitan Community Colleges.

Nissanka said in an interview Dec. 3 that although the company has not been able to secure financing for building a Lee’s Summit plant, the company met its initial goals.

He’s hopeful it can turn around in 2014, and said he intends to begin talks with Lee’s Summit city officials to allow a broader range of industries to build on the site. The city’s development agreement with Exergonix restricts it to a list of “green” industries.

Nissanka said that startup green energy firms like Exergonix face a double-whammy.

The economy’s crash dried up investment money in general. Notorious, high-profile bankruptcies by Solyndra, which made solar panels and Beacon Power, which produced flywheels, have further dampened enthusiasm for investments in green energy, Nissanka said.

“We have to evolve as the economic environment has changed,” he said.

Nissanka said that several weeks ago he hired a new broker, Colliers International, to work on finding other businesses to locate on the site. He said that if the city is successful in improving the U.S. 50 and Missouri 291 South interchange that would also make the property more marketable, because access is a concern.

This year he’s also been working on an acquisition/merger with a firm based outside the U.S. that works in renewable power generation, which would be complementary to Exergonix. He said that that planned acquisition has encountered regulatory hurdles that also made financing difficult.

Nissanka chose to emphasize the positive.

Exergonix was successful in getting capital from Show Me Angel Investors to launch production and marketing of its electricity storage units.

He said the company has produced more than 100 of the units in various sizes to from $1.5 million custom-built unit to smaller “off the shelf” applications costing $5,000 to $100,000.

Its primary market is utilities that need units to store power for use at peak times, or for telecom, data centers, hospitals and other industries, which can use the units for backup to insure uninterrupted power.

He said he’s been traveling a lot during 2013 to meet with potential investors.

“I’ve been searching and searching the globe looking for financing,” Nissanka said.

He lined up interest from private equity and venture capital firms that want to back Exergonix, but those firms weren’t able to pull together a group of investors to provide about $30 million needed.

He said he doesn’t let critics or skeptics discourage him.

“If I have failed, would President Obama come to University of Central Missouri to talk about an idea originated by a guy from Lee’s Summit?” Nissanka said.

President Barack Obama in July visited the university in Warrensburg to recognize the contributions to UMC by Nissanka and Worldwide Technologies CEO Dave Steward. They are both graduates.

City Councilmember Rob Binney a few weeks ago raised the question of Exergonix jobs during council roundtable.

“Not seeing a report has one questioning the viability of that agreement with the city, are we going to get follow through or not?” Binney said. He said he thinks the city took appropriate steps trying to create growth in that area, because that plan includes stipulations to protect the city.

“I think the city has looked out in the right direction on this one,” Binney said.

City Manager Steve Arbo said Exergonix has been timely about filing its twice-a-year reports, but it has not added any new jobs in the last year.

In September 2012 there were five employees, in March of 2013 four employees were listed and on Sept. 2, 2013 the company had four employees.

“No real growth,” Arbo said. “No active development applications for the property.”

Exergonix has until Sept. 1, 2016 to invest $50 million at the site and create 150 jobs, in its agreement with the city.

If the company falls short, the city can purchase the property for $100. The city has paid Exergonix slightly more than $1.4 million to allow the company to buy the land.

Arbo said the city allowed the five-year window because of the challenge expected for raising funds and starting operation.

Delays have caused doubts that Exergonix will be able to begin production in Lee’s Summit.

The company seemed to be rolling as Nissanka negotiated a deal with the city signed in May 2011.

He was working to receive $100 million funding from the Department of Energy, but that fell through. QuikTrip Corporation was considering a new “green” convenience store on the site. (The agreement campus allows five percent of the development to be retail shops, intended to serve the large number of employees the city hopes will be working there.)

Nissanka said he is still focusing building a plant in Lee’s Summit, instead resigning himself to relying on subcontractors, because he wants to provide opportunities for his daughter and other youths in Lee’s Summit.

“I came to this community and made a life here,” Nissanka said. “Unless I build a business here, it won’t leave anything here for my community.”

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