Economic Development

BIO Report – Bioscience Economic Development Best Practices

The Biotechnology Industry Organization (BIO) has released a comprehensive report that serves as a best practices guide on bioscience economic development and provides data on state-by-state legislative initiatives and regulatory reforms introduced to support economic growth in biosciences.

BIO report on bioscience economic development

BIO report on bioscience economic development (photo – bio.org)

The report, titled “Bioscience Economic Development: Legislative Priorities, Best Practices, and Return On Investment,” was unveiled during the 2013 BIO International Convention underway at the McCormick Place Convention Center in Chicago, Illinois.

BIO undertook a review of initiatives in support of bioscience companies in all 50 states. Highlights from the report:-

- 15 states offer Small Business Innovation Research (SBIR) matching grants;

- 39 states offer R&D tax credits, many of which are higher if it is an in-state university doing the research. Seven states have made these R&D tax credits refundable, while three have made them transferable;

- 35 states offer sales tax exemptions for R&D equipment, while 33 states offer sales tax exemptions for biomanufacturing equipment. Seven states are even more specific, and have a sales tax exemption offered exclusively to bioscience companies;

- Seven states have a tax credit program for angel investors who invest in bioscience companies; and

- 14 states have made direct investments in bioscience companies.

Jim Greenwood, president and CEO of BIO, said that industry growth and bioscience economic development required wide-ranging collaboration between policymakers, the private industry and universities.

The report also includes a section on ROI success stories (scroll down to pg 11) which includes five case studies of stellar biosciences initiatives and investments made by California, Massachusetts, Kansas, Pennsylvania and Texas.

One of these case studies is the California Institute for Regenerative Medicine (CIRM), created in 2004 to further stem cell research and funded with $3 million in bond sales over a 10-year period. CRIM provides research funding, training and facility setup.

As of July 2012, CIRM had committed $1.1 billion in grants, which added to another $884.3 million in matching funds put up by grant recipients and other supporting organizations. This investment has created 24,654 new and full-time jobs, and generated $201 million in local and state tax revenues.

California’s biomedical industry has received $1.98 billion in venture capital funding and $3.33 billion in NIH grants over the last decade, which has provided the following returns:-

- 2,321 biomedical companies that generate a combined $69.2 billion in annual revenues;

- Together, these companies employ 152,806 employees at average annual wages of $101,658;

- Biomedical exports from California are worth $20 billion per year.

The U.S. bioscience industry supports 1.6 million jobs that pay 79 percent higher wages as compared to an average worker in the private industry.

Read the full bioscience economic development report from BIO – Download (pf)

GM Property in Pontiac, MI Acquired by Ultimate Soccer Arenas

The RACER Trust in charge of clean-up and sale of properties owned by the former General Motors Corp. announced that it has agreed on the terms for sale of 14.6 acres of GM land in Pontiac, Michigan to GTS Holdings and Ultimate Soccer Arenas.

Ultimate Soccer Arenas field

Ultimate Soccer Arenas field (photo – ultimatesoccerarenas.com)

The land being sold is adjacent to the current sporting complex of Ultimate Soccer Arenas, and will allow the company to double its space from 16 to 32 acres.

Ultimate Soccer Arenas will be spending around $8 million on the expansion project and will create 20 new full-time jobs and another 100 construction jobs. They already have more than 100 full-time and contract employees.

The expansion on the new land will include setting up two astro-turf fields and an indoor soccer field, along with additional parking space for 650 vehicles. The existing complex covers 267,000 square feet, and the expansion will take it to more than 335,000 square feet.

The company claims that this makes Ultimate Soccer Arenas the largest indoor and non-professional sports complex in the world.

Elliott P. Laws, Trustee of the RACER Trust, said that the opportunity was literally next door, and they are happy to help Ultimate Soccer Arenas increase their community presence, adding that the growth of the sports complex would benefit businesses offering services and the community as a whole.

George Derderian, co-owner of Ultimate Soccer Arenas, said they intend to create the world’s best campus for soccer and lacrosse, and the construction would be using green building technologies and lighting provided and built by local companies based in Michigan.

Pontiac Emergency Manager Louis Schimmel said Ultimate Soccer Arenas was an outstanding facility that regularly brings tens of thousands each year to Pontiac. Since its opening in 2007, the facility has now become popular enough that it attracts a million people each year, including competitors and fans who come to watch.

The Revitalizing Auto Communities Environmental Response (RACER) Trust started off with 89 properties spread across 14 states after GM’s bankruptcy in 2009. RACER was put in charge of the environmental cleanup and reuse of GM properties in a way that would be beneficial to the communities in question and create new jobs.

So far, RACER has managed to complete sale transactions for 30 of the properties and have collected $25 million from the sale proceeds, with additional properties currently being used under contracts.

U.S. Launches Investing in Manufacturing Communities Partnership

During a visit to the Able Engineering plant in Mesa, Arizona, Deputy Secretary of Commerce Rebecca Blank unveiled a new manufacturing initiative – the Investing in Manufacturing Communities (IMCP).

Deputy Secretary Blank at Able Eng. plant in Mesa, AZ

Deputy Secretary Blank at Able Eng. plant in Mesa, AZ (photo – commerce.gov)

IMCP is a manufacturing assistance program for communities to make long-term investment for building up infrastructure that will attract manufacturing jobs.

The program will be a multi-agency partnership to leverage the entire federal government’s economic development resources.

U.S. Deputy Secretary of Commerce Rebecca Blank said in a statement that IMCP is designed to “improve the way we use federal resources for economic development initiatives, in order to bring more investment to American communities and make them an attractive place to do business.”

Federal agencies will be working in partnership with the industry and universities, and will select five or six communities where IMCP will be tested as a pilot program.

Each pilot will get $25 million in funding from the U.S. Economic Development Administration (EDA) in 2014, and more funding as required from other federal agencies. The FY 2014 federal budget request includes a total of $113 million for the Investing in Manufacturing Communities Fund.

The pilots will be awarded in a competitive process which will require participating communities to come up with economic development plans that aim to create an environment that attracts investments. The Dept. of Commerce provided guidelines of what they are looking for in such plans:-

- Business incubators and university research centers targeting specific tech sectors;

- Training programs that prepare workers for targeted industry sectors;

- Public spending on energy efficiency and infrastructure upgrades; and

- Viable plans for export growth.

In advance of the 2014 grants for the pilot programs, Commerce will be providing 25 communities smaller grants of around $200,000 later this year for communities that follow the same model described above. Solicitations for these grants will be issued next month, and the awards will be issued in September.

Inter-agency cooperation for IMCP begins right away, with six to eight “listening sessions” to be scheduled in 2013 to raise awareness of the aforementioned grant opportunities and get input from communities about the 2014 pilot competition.

The Dept. of Commerce will be leading the coordination effort to focus and combine the impact of all federal agency programs dealing with energy efficiency, research and commercialization centers, workforce training, etc.

San Francisco, Sarasota Receive APA ED Planning Awards

The City of San Francisco, California and Sarasota County, Florida were jointly awarded the Donald E. Hunter Excellence in Economic Development Planning Award yesterday evening during the American Planning Association (APA) 2013 National Planning Conference currently underway in Chicago.

SF OEWD

Photo – SF OEWD

The award is named after the late Donald E. Hunter, who was a member of the APA and served on the boards of the International Downtown Association (IDA) and the International Economic Development Council (IEDC).

Members of the APA Economic Development Division were part of the awards committee that chose San Francisco and Sarasota as co-winners for this year’s award.

The San Francisco Office of Economic and Workforce Development (OEWD) was chosen for its Central Market Economic Strategy to revitalize San Francisco’s Central Market District.

This is supposed to be an artsy neighborhood with galleries, retail outlets and entertainment options, but suffered from blight, low occupancy levels and difficulty in attracting private capital. Not to mention social illnesses including homelessness and proliferation of drug addicts.

The Central Market Economic Strategy was developed after nearly a year of research, community outreach and collaboration with stakeholders to develop a unified plan. As a result of this unified plan involving a dozen entities, the district has gained nine tech companies and a venture capital firm as new tenants in the past year, occupying a million square feet of space.

Eight new small businesses have set up shop and two existing ones have expanded, and nine new performance and gallery venues have opened or are in the process of doing so. There are 3,300 residential housing units now under construction in the Central Market District.

Sarasota won the award for its master plan to develop the 600-acre Nathan Benderson Park as an aquatic and nature center. The core part of the plan involved creation of a rowing venue that would provide health benefits, improve quality of life and enable Sarasota and Florida to pitch it as a venue for international competitive aquatic events.

The project to convert the borrow pit lake into a sports tourism magnet involved a diverse set of interested parties including the local economic development corporation, state and county officials, a property developer, rowing clubs, recreation experts, schools and local residents.

Sarasota estimates the project will generate $13 million in direct spending by attendees and participants who come for events, and the total economic impact on the region will be about $25 million.

Last year’s winner of the APA Excellence in Economic Development Award was Innovation Square in Gainesville, Florida. The Pyramid Lake Paiute Tribe in Nevada received a honorable mention for finally coming up with an economic development plan that was accepted and adopted. They had previously tried and failed seven times over 22 years to come up with an economic development plan for the reservation.

Texas Launches Ad Campaign Targeting Chicago Companies

Texas Gov. Rick Perry announced that the state has launched a week-long mixed media ad campaign in Chicago tailored to encourage Illinois-based companies to relocate to Texas.

Texas ad campaign in Chicago

Texas ad campaign in Chicago (photo – texaswideopenforbusiness.com)

The $38,450 ad buy is paid for by the TexasOne public-private partnership which markets the state as a business destination.

It will include week-long print and web ads on Crain’s Chicago Business Journal and their website chicagobusiness.com.

Specifically, Texas is getting a two-day takeover of the website, ads through email marketing, and a full page ad in the Monday print edition of Crain’s Chicago Business Journal.

If anything, these Chicago ads are even more scathing than the similar California ad campaign a couple of months ago.

You can see the ad graphics if you visit chicagobusiness.com. One says “Get Out while There’s Still Time and Come to Texas.” The other one says “The Escape Route to Economic Freedom Leads to Texas.”

The detailed text in the print ad (pdf) expands on the “escape from Illinois” theme and compares companies in Illinois to people stuck in a burning building about to collapse.

“With rising taxes and government interference on the upswing, your situation is not unlike a burning building on the verge of collapse. if you’re thinking of “just riding it out” you might want to reconsider. There is an escape route to economic freedom… a route to Texas.”

This exit/escape theme is further hammered home if you click on the ad link and visit the page created for Illinois on texaswideopenforbusiness.com, where it says “To start your escape to Texas, contact us at 512-655-EXIT (3948) or exit@texaswideopenforbusiness.com.”

It’s just a $38,450 ad buy and it will be history in a week, but as California found out the hard way, the free media coverage of these Texas ads goes a long way. Gov. Perry told Site Selection magazine last month that the $24,000 ad buy in California and criticism of the ads by state officials had earned Texas $4 million worth of free media.

If Illinois wants to escape this kind of free media heat, state officials need to entirely ignore the campaign, or at the very least downplay its impact without being overly critical of Texas.

Montana Relaunches Innovate Portal as Entrepreneur Resource

The Innovate Montana Project was launched in Sept 2010 as a public-private partnership to market the state to entrepreneurs and out of state startups as a good place to work and live and grow their businesses.

Innovate Montana

Innovate Montana (photo – innovatemontana.com)

The huge semi-trailers wrapped with Innovate Montana ads rolling around in Seattle, Washington last year were an interesting part of the $150,000 marketing campaign.

But the core of the project was the website (InnovateMontana.com), which has a lot of useful information and tools, including a step-by-step process guide for companies looking to relocate or start a business in Montana.

It also has a GIS-based site selection tool with a searchable database of suitable properties. This statewide tool is linked to similar site selection tools used by many communities in the state, so that users can switch over to the community-specific tool for more detailed information about properties in that community.

This site selection tool was developed for the campaign by Missoula-based GCS Research and the Montana Economic Developers Association (MEDA).

This information and the community profiles are not just available on the website, but also have been distributed in flash drives by the Governor’s Office of Economic Development at trade shows and events.

The campaign also had other innovative elements, including 60-second television ads featuring business leaders in Montana talking about the advantages businesses have in Big Sky Country. The ad was used at Montana airports and in online publications in targeted markets.

The Montana Governor’s Office of Economic Development announced that this website has now been relaunched, and will continue to be a resource for entrepreneurs and innovative businesses.

The website also includes a job board and section which showcases success stories and business profiles. One of these profiles features Billings, Montana native Jeremy Kessler, who founded the online photography showcase and portfolio building platform Gallery Cloud when he was 26.

The website includes social components, and has an active and engaged community of around 3,000 members.

Governor Steve Bullock said that he was looking forward to the collaboration and growth opportunities that Innovate Montana will generate.

Commerce Department FY 2014 Budget Seeks $320M for EDA

The U.S. Department of Commerce unveiled its $8.6 billion FY 2014 budget request. This is a billion dollar increase on its FY 2012 funding level (2013 funding was maintained through a continuing resolution).

Dept. of Commerce budget

Dept. of Commerce budget (photo – commerce.gov)

U.S. Deputy Secretary of Commerce Rebecca M. Blank said in a statement that the FY 2014 budget reflects a commitment to core priorities such as driving growth in exports, supporting innovation through research investments, and revitalizing the manufacturing sector.

Relevant highlights from the Commerce budget:-

- $113 million for creating the Investing in Manufacturing Communities Partnership within the Economic Development Administration (EDA), in partnership with other federal agencies.

- $1 billion for establishing the National Network for Manufacturing Innovation (NNMI), a project for which funding was initially sought in the FY 2013 budget.

- $25 million for launching Manufacturing Extension Partnership Manufacturing Technology Acceleration Centers (M-TACs) to help support smaller manufacturers with tools and expertise.

- $21 million for the Advanced Manufacturing Technology Consortia (AMTech), a public-private partnership to support manufacturing research and early-stage technology development.

- $12 million for the EDA to create a Regional Export Challenge to help communities develop export growth plans.

The FY 2014 Commerce budget seeks a total of $320.91 million for the EDA, including $38.91 million in salaries and expenses, and the remaining $282 million for economic development assistance programs (EDAP).

This is $62 million more than the $220 million for EDAP in the FY 2012 budget, with the salaries and expenses going up by around $1.18 million from last year.

For the last year or so, the EDA has also been able to dip into the additional $200 million in disaster relief assistance and economic recovery funds that were appropriated to the agency in 2012. Some of that is still available and will add to the regular funding and assistance programs.

You can see the full U.S. Dept. of Commerce FY 2014 budget request here (pdf file). The EDA budget begins on page 31.

NY Kicks Off IT Consolidation With New SUNY Data Center

New York State will be housing a new data center at SUNY’s College of Nanoscale Science and Engineering (CNSE) in Albany. The project will be a partnership between CNSE and several state agencies.

CNSE Data Center event

CNSE Data Center event (photo – cnse.albany.edu)

For the last decade or so, New York has been trying to find a feasible solution for consolidating more than 50 data centers operated by state agencies in separate locations.

The cost for building a new data center from scratch which would be capable of consolidating all this was estimated to be around $250 million. This spending will now not be required since the state has signed a 15 year lease for use of the facilities at CNSE.

In addition to that, consolidation of the state’s IT infrastructure is expected to result in another $100 million in annual savings on reduced rental space. The new CNSE data center alone will be responsible for half of these savings.

The total estimated savings over the next two decades from this consolidation process is expected to be around $500 million. CNSE additionally estimates that private contractors and companies setting up shop to support state employees working in the data center will create between 500 to 1,000 jobs over the next five years.

CNSE is setting aside 10,000 square feet in the NanoFab Xtension Building for the state. Another 30,000 square feet will be available in an adjacent building currently under construction, in addition to 10,000 square feet of collaborative space in a third location.

For all this, CNSE will be working with the New York State Office of Information Technology Services. ITS was created in 2012 with the aim of concentrating the state’s IT expertise and resources into a single agency. One of its mandates is data center consolidation.

Governor Cuomo said this partnership with CNSE and the data center would usher in a new era of IT efficiency and security, as well as “maximizing economic development and innovation opportunities.”

He added that the data center project was an example of how New York State is leveraging technology for improving government operations.

Massachusetts Tops Milken State Technology Index

The non-profit Milken Institute released its 2012 State Technology and Science Index, which showed that Massachusetts is still the best destination for hi-tech companies, jobs and careers.

Milken Institute State Technology and Science Index

Milken Institute State Technology and Science Index (photo – milkeninstitute.org)

This index evaluates each state’s capabilities in the science and tech sectors based on 79 unique indicators, including the state’s ability to leverage these assets for attracting companies and high-paying jobs.    

Milken has published this index every two years for the past decade, and Massachusetts has been on top every single time. In fact, Massachusetts with a score of 86.40 has actually widened the lead this year over Maryland which scored 79.41 and retained its second place showing.

Kevin Klowden, senior economist at Milken and co-author of the report, called Massachusetts the “indomitable state” with a critical mass of research centers, hi-tech firms and universities.

California (75.70), which had been in fourth place in the 2010 index, jumped up one place to push Colorado (75.07 ) down to fourth place. Here’s the list of the top ten states in the Milken State Technology and Science Index.

1. Massachusetts

2. Maryland

3. California

4. Colorado

5. Washington

6. Virginia

7. Utah

8. Delaware

9. Connecticut

10. New Hampshire

The 79 indicators the index is based on are categorized into five groupings under technology and science work force, technology concentration and dynamism, human capital investment, risk capital and entrepreneurial infrastructure, and research and development inputs.

The state which surged the most in the rankings this year was Tennessee, which jumped from its 41st spot in 2010 to 35th in 2012, thanks to huge gains in the risk capital and entrepreneurial infrastructure category, which means the state saw a lot of growth in companies getting venture capital or cashing in with public offerings.

Virginia likewise jumped two spots to a 6th place ranking based on a stellar performance in the risk capital category. Rhode Island cracked into the top 20 with a 17th place ranking due to its gains in the technology and science work force category.

Klowden says the index shows how important innovation is for state economies. States such as California with a traditionally strong science and technology sector have been able to claw their way back out of the recession by riding on the backs of a comeback in the tech sector.

Read the full Milken Institute 2012 State Technology and Science Index – Download (pdf) 

Illinois Initiates Social Impact Bond Program

The State of Illinois is launching a Social Impact Bond (SIB) program with help from the Rockefeller Foundation, Dunham Fund, and the Harvard Kennedy School’s Social Impact Bond Technical Assistance Lab (SIB Lab).

Social Impact Bonds

Social Impact Bonds (photo – public domain/wikimedia)

The Social Impact Bond concept was first tried out in the U.K. in 2010, and then by New York City and Massachusetts in 2012.

These “pay for success contracts” involve investments made by a private investor or foundation through the state.

This private entity assumes the risk of the upfront costs of tackling pressing social issues such as recidivism or homelessness, which if solved would actually create savings for the government.

The investor gets returns only if the program works, and the state can then safely reinvest the extra savings on expanding the tested and successful programs.

The Kennedy School’s SIB Lab was established with support from the Rockefeller Foundation, which has been at the forefront of bringing SIBs to the U.S.

One of the important functions of the SIT Lab is to provide pro bono technical assistance to local and state governments that want to implement pay-for-success contracts.

They will be helping Illinois now, with an initial $275,000 assist from the Dunham Fund, which is one of the biggest private foundations in the Greater Aurora area.

The SIB Lab will be putting out an RFI (Request for Information) in the coming weeks, seeking potential projects that could be ideal for a social impact bond-based solution. Targeted policy areas include reducing recidivism rates among ex-offenders, improving school graduation rates, reducing hospital readmission rates, and bettering outcomes for at-risk youth.

Judith Rodin, president of The Rockefeller Foundation, said that it was win-win-win proposition – no tax dollars required by the government for a proven intervention, programs initiated by local organizations can be brought up to scale, and investors can get social as well as financial returns.

New York City tried this last year on a program called ABLE (adolescent behavioral learning experience) which had an aim of reducing chances of incarceration. It was managed by the non-profit MDRC, with funding from Goldman Sachs and a grant from Bloomberg Philanthropies.

At a time when Illinois is facing unprecedented financial challenges, Gov. Quinn said that the social innovation model was unique in that it would generate investments for community priorities “without dipping into the pockets of Illinois residents.”

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