Universities and some construction firms have lined up behind a US Senate bill that would give the federal government a greater role in subsidizing the planning and building of research parks.
The “Building a Stronger America Act,” introduced by Sen. Mark Pryor, Democrat of Arkansas, would allow Washington to guarantee up to $50 million in loans toward the construction of new research parks and improvements to the infrastructure of existing parks. The measure would also enable non-profit university research parks to receive up to $750,000 toward feasibility studies.
“It is in the best interests of the nation to encourage the formation of science parks to promote the clustering of innovation through high technology activities,” according to the text of the bill, S. 1373.
For universities, the bill, which has been referred to the Senate Committee on Commerce, Science and Transportation, would have Washington set aside $500 million in loan guarantees over five fiscal years beginning Sept. 30, 2007. It will also set aside $37.5 million for the grants, or $7.5 million for each of the years,
University research park developers, meantime, could receive up to $10 million in guarantees, and up to 80 percent of the amount for loans exceeding $10 million up to a maximum of $50 million, according to the legislation.
‘Positive Feedback Loop’
The bill, introduced on May 11, has won support from the Association of University Research Parks, a 350-member industry association based in Reston, Va.
“University research parks or science parks are connected to universities and pretty much provide the infrastructure for innovation,” Eileen Walker, program development director with AURP, told BioRegion News sister publication Biotech Transfer Week. “It becomes a way to grow a cluster of companies. It usually starts off slowly – you get one and then another. At a certain point, everything starts to get into a positive feedback loop. They’re a really positive way to increase innovation in a specific region.”
AURP has begun mobilizing its members to support the bill, Walker said.
At deadline, the legislation had a single co-sponsor, Senator Olympia Snowe, Republican of Maine, though Pryor hopes to include Sen. John Kerry, Democrat of Massachusetts, as a co-sponsor. The US Commerce Department would oversee the proposed financing.
Pryor initially hoped to unveil the measure a few days sooner as an amendment to the “America Competes Act,” introduced April 30 by Majority Leader Harry Reid, Democrat of Nevada, but did not finalize bill wording in time.
“Building a Stronger America” is similar to the Science Park Administration Act of 2005 introduced by Sen. Jeff Bingaman, Democrat of New Mexico. Bingaman and co-sponsor Sen. Jim Bunning, Republican of Kentucky, included the same $750,000 maximum subsidy for feasibility studies, as well as the 80-percent loan guarantees.
But their bill also would have given research-park developers direct loans — not loan guarantees — of up to $3 million for infrastructure. It also required that companies formed by science-park operators to finance smaller startup tenants ensure that they maintain at least $5 million in working capital, or at least $10 million if the companies had or sought authority to issue securities. The measure died in the Senate Finance Committee.
Even though Pryor’s bill would offer only guarantees rather than loans, it should still help build new research parks nationwide because its greater amounts would better reflect rising construction costs, said Michael Donovan, a senior associate vice president at Boston University.
“Any of these loan guarantees that are coming up from between $10 [million] and $50 million would be awesome and would help certain regions of the country,” said Donovan, who oversees development at Boston University’s BioSquare research campus. “Even in the Boston area, we could take advantage of that as well. If you look at some of the more mature clusters in Boston and San Francisco, you probably have some deferred maintenance and some items that need upgrading.”
Donovan said Pryor’s bill could help the BioSquare research campus because BU has rights to build two additional buildings: a 230,000-square-foot space and a 200,000-square foot facility.
For-Profits Need Not Apply
“We’ve got this need for first-class facilities for housing first-class ideas and first-class people, and that’s what this act is trying to do.”
Like Bingaman and Bunning’s legislation, Pryor’s bill would make for-profit biotechs and industrial parks ineligible for funding. The bill defines these as “primarily for-profit real estate venture of businesses or industries which do not necessarily reinforce each other through supply chain or technology transfer mechanisms.”
Instead, the legislation is intended to fund research parks being developed by “a group of interrelated companies and institutions, including suppliers, service providers, institutions of higher education, start-up incubators, and trade associations.”
Donovan acknowledged that Pryor’s bill would reshape how university research parks are funded, which till now has traditionally been left up to state and local governments.
Indeed, in recent years several states have stepped up their support for research parks as part of larger biotech-centered economic-development efforts. One of the latest such efforts has taken place in Maryland, where Gov. Martin O’Malley on May 17 signed into law a bill granting local property-tax credits for sites that house publicly sponsored business incubators — namely those owned or controlled by the state, a county or municipality, a public college or university, or any of their agencies or entities.
The closest the federal government now comes to funding research parks is the US Commerce Department’s Economic Development Authority program, which includes “industrial and business parks” among the facilities it supports. Grants under this program come from the agency’s Public Works and Economic Development Program – but only in “distressed communities and regions.”
Pryor’s bill envisions grants being distributed nationwide, but says only that the secretary of commerce “is encouraged to divide the grants awarded under this subsection among low, medium, and high population density states.” That provision was vetted by the Commerce Department, a Pryor aide told BioRegion News on the condition of anonymity because he was not typically allowed to speak to the press.
Also supporting Pryor’s bill is Delaware Technology Park, which operates a namesake 40-acre research park in Newark. The state, the University of Delaware, and private businesses joined to create the research park, with the goal of building Delaware’s biotechnology, information technology, and advanced-materials industries.
Since opening in 1993, the research park has grown to five buildings totaling 250,000 square feet. Life sciences companies account for about half the park’s 64 tenants.
Michael Bowman, chairman and president of the park, said it would pursue a loan guarantee under the Building a Stronger America Act to help it erect a new $30 million, 100,000-square-foot life-science building to satisfy demand for more space.
Bowman said the bill is an obvious way to get funding because the University of Delaware can’t do it “given its debt service, the state can’t and wouldn’t and doesn’t guarantee loans like that, and the banks won’t accept the kind of multi-tenant or combination academic and multi-tenant [use] that we would want to put in it. That would be huge to us,” Bowman said.
According to Bowman, Pryor’s bill would be a boon to many research parks because banks, in the absence of guarantees, often see these loans as too risky because they include nonprofits like colleges and governments; it costs more to build labs than traditional office space; the presence of early-stage — and typically unprofitable — tenant businesses.
“We’ve got this need for first-class facilities for housing first-class ideas and first-class people, and that’s what this act is trying to do,” Bowman said. “The Catch-22 is that innovation at the early stages, the really creative fertile stuff, often doesn’t have enough money behind even the science or the people, let alone the ability to pay rent or build complicated infrastructure for increasingly specialized needs.”