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DHS Taps Kansas for $450M NBAF Site; Officials Cite Incentives, Outreach for Win

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The lowest projected cost, the biggest incentive package, the farthest-flung coalition of allies, and a shrewd strategy that tied the project to an existing academic and commercial base of similar research paid off for Kansas last week, as the Department of Homeland Security chose the Sunflower State over four other states as its preferred site for its planned $451 million National Bio- and Agro-Defense Facility.
 
After deliberating for nearly three years, DHS on Dec. 5 announced its decision to award Kansas the NBAF facility over sites in Georgia, Mississippi, North Carolina, and Texas. Also rejected was a sixth option, retaining the existing Plum Island Animal Disease Center at Plum Island in New York, a 1950s-era facility that the agency considers too old to modernize feasibly; DHS projected that cost at $752.5 million, nearly $200 million above the second-costliest option.
 
In Kansas, the biolab will rise on the Manhattan campus of Kansas State University, immediately adjacent to the Biosecurity Research Institute, a $54 million research/education facility that, like the one planned by NBAF, has BSL-3 and BSL-3 ag-research space and BSL-3 Enhanced space.
 
The DHS announcement was anti-climactic, coming two days after news of the decision had already circulated — first through the leaking of a draft of the decision to the Associated Press, then through a celebratory press release issued hours later by Kansas’ NBAF delegation, the Heartland BioAgro Consortium.
 
The planned Kansas biolab would border the research laboratories and teaching hospital of the Kansas State University College of Veterinary Medicine — proximity that helped elevate Kansas over the other options, DHS said in its final environmental impact statement on the project, available here.
 
“These strengths include its location near Kansas State University (KSU), which provides site proximity to existing research capabilities that can be linked to NBAF mission requirements. Additionally, the site provides proximity to a workforce relevant to the NBAF mission, as it is adjacent to the KSU College of Veterinary Medicine, KSU College of Agriculture, and the Biosecurity Research Institute,” the DHS concluded.
 
DHS also cited the Kansas proposal’s strong local support from business, academic, and government leaders; as well as its lowest cost after incentives were weighed in. The crafting of that incentive, and the drumming up of support for the NBAF project, were key elements in Kansas’ successful attraction strategy for the project, a key player in that effort told BioRegion News last week.
 
Strategy for Success
 
Tom Thornton, president and CEO of the Kansas Bioscience Authority, which led Kansas’ NBAF effort, said that how the state money will be spent was as strategic as the size of the incentive package.
 
Earlier this year, state lawmakers had approved $105 million in bonds for infrastructure improvements typical with new construction projects, while the city of Manhattan, Kans., offered $5 million. But that funding accounted for only about half the incentives offered to DHS in return for siting NBAF in Kansas.
 
In addition to the infrastructure funds, Kansas offered to spend another roughly $100 million toward biological research at the Biosecurity Research Institute, an existing building at KSU with BSL-3 lab space, while NBAF gets built. That research would be shifted to the NBAF biolab upon its completion in 2015.
 
“The idea is to get started now. Why should we as a nation, faced with these animal-borne diseases coming our way, wait until 2015 to initiate that research in a modern facility? Let’s get started now,” Thornton said.
 
The state money was set aside for NBAF earlier this year; Kansas is now grappling with budget shortfalls of $140 million this fiscal year, and up to $1 billion projected for FY 2010.
What Price NBAF?
 
The incentives reduced the cost to the federal government of a project that otherwise would have been the most expensive of the five new-build sites under consideration, according to the final environmental impact statement.
 
The FEIS, prepared by consultants hired by DHS, projected a $563 million construction cost, not counting incentives, for the biolab if built in Kansas, compared with:
  • $525.8 million in Georgia, where the state Board of Regents proposed donating to DHS 67 acres of University of Georgia land in Athens-Clarke County, on the southern end of UGA’s College of Agriculture and Environmental Sciences campus. The site is currently used as a horse pasture located behind UGA’s Livestock Instructional Arena.
  • $523.7 million in North Carolina, where the biolab would rise within 195 undeveloped acres at the Granville County portion of the 4,035-acre North Carolina Department of Agriculture Umstead Research Farm in Butner.
  • $501.7 million in Texas, where NBAF would have been built on 100 acres within the 1,236-acre Texas Research Park, straddling Bexar and Medina Counties. The research park site is about four miles west of the city of San Antonio.
  • Just under $498 million in Mississippi, where the biolab would have been built on a 150-acre site within the Flora Industrial Park in Madison County, a mixed-use commercial park.
Congress has appropriated $46 million for site planning, site selection, facility conceptual design, the environmental impact statement and administrative support for NBAF since the 2006 federal fiscal year — $12 million that year; $23 million, including the cost of the environmental report scoping process, in FY 2007; and $11 million in FY 2008.
 
“We anticipate beginning specific site design in [calendar year] 2009, construction beginning in FY ’10, with the facility operational in 2014 and 2015,” DHS spokeswoman Amy Kudwa told BRN.
 
Kansas’ incentive package reduced the cost of the biolab to the least expensive of the five states under consideration, DHS said in its final EIS.
 
The state with the next-largest incentive package, Texas, scrambled in October to more than double its initial $44 million offering, to $100 million, which would have lowered Washington’s cost for the project to $401.7 million. More than half that package, $56 million, was funding that Gov. Rick Perry and other state officials had promised to obtain through the state Legislature next year, during its upcoming session.
 
The $56 million would fund most of the $70 million cost of a utility plant to serve the biolab. Texas officials sought to justify the increase by noting their state’s Legislature did not convene in 2008, making it impossible for Texas to meet a March deadline for states to add to incentive packages; Kansas Gov. Kathleen Sebelius criticized the action as seeking to change the rules in mid-stream.
 
In the leaked memorandum, Preferred Alternative Selection Memorandum for the National Bio and Agro-Defense Facility, Jay Cohen, DHS undersecretary for science and technology, noted the conditional nature of much of Texas’ incentive package, which he called “very good.” Cohen said Texas was rejected less for incentives than for “lack of proximity” to a veterinary school or college of agriculture. The closest vet and ag schools to the city is Texas A&M’s College of Veterinary Medicine and College of Agriculture and Life Sciences, both in College Station, Tex., about 200 miles northeast of San Antonio.
 
In August, the University of the Incarnate Word, a Catholic institution, promised to build a new veterinary school in San Antonio if DHS selected Texas as the biolab site.
 
A leader of the Texas Bio and Agro-Defense Consortium — York Duncan, president of the Texas Research Park Foundation — responded within hours of the leak by declaring to the San Antonio Express on Dec. 3 that the consortium would challenge DHS’ decision: “We’re going to be right up in their face. We have decided to pull all the stops out and we're going to exploit every opportunity to steer this to San Antonio.”
 
Reached via e-mail two days later by BRN, however, Duncan backed away from the challenge threat, using more cautious language.
 
“As soon as we can access the document we will analyze it very carefully and weigh our options,” Duncan told BRN, adding: “It is amazing to me that the press has received all the information before the sites have.”
 
States seeking to challenge DHS can do so within 30 days of the agency issuing its “record of decision” formalizing its decision on a project. The record of decision for the NBAF project is set to come out Jan. 12, Kudwa said.
 
Kansas and Texas outspent three other rivals for the NBAF where incentives were concerned:
  • Mississippi lawmakers approved a package of $88 million, lowering the federal government’s cost of that project to about $410 million.
  • Georgia offered about $30 million, bringing Washington’s cost to under $500 million.
  • North Carolina was unable to offer an incentive package for the biolab because state law forbids officials from granting economic incentives to recipient employers that have yet to commit to bringing their projects to the state. Even if it could do so, the state faces a budget shortfall that has grown to $320 million.
Green acknowledged one factor working against North Carolina was the presence of organized opposition to NBAF, spearheaded by the Granville Nonviolent Action Team, also known as GNAT, which reactivated itself in September 2007 to lead the opposition to NBAF’s North Carolina proposal.
 
“It’s a combination of the opposition, and the amount of additional funding Kansas was able to have as part of their inducement. That was a very important consideration for the department, to determine where the most efficient, economical place to build would be. And because of the additional money that [Gov.] Kathleen Sebelius in Kansas was able to include in their proposal, that definitely helped their chances as well,” Dave Green, a spokesman for the North Carolina Consortium for the National Bio and Agro-Defense Facility, told BRN last week.
 
GNAT-led opposition prompted North Carolina’s consortium to suspend advocacy of the biolab, after several local governments either declared themselves against the project or backtracked on earlier support [BRN, Aug. 18].
 

“The idea is to get started now. Why should we as a nation, faced with these animal-borne diseases coming our way, wait until 2015 to initiate that research in a modern facility? Let’s get started now.”

Organized opposition also helped undermine the Georgia Consortium for Health and Agro-Security’s effort to promote NBAF in Georgia, where Athens FAQ, also known as “For Athens Quality-of-Life,” persuaded hundreds of local residents to attend public hearings where dozens spoke out against the project [BRN, Sept. 2].
 
David Lee, UGA’s vice president for research, told BRN that while opposition was a factor, “there were no fatal flaws in Georgia, nothing that sank the boat, so to speak.” And the state’s incentive package, which smaller than most of the competing states, included benefits comparable to the Kansas proposal, he said.
 
“We could have offered them some of the same capability, and we pointed that out more than once, along the way,” Lee said. “Part of our incentive package was to build a laboratory-office building that would ultimately house UGA infectious disease research, as an NBAF-interface building. We proposed it could house NBAF staff who arrived early before their facility is ready.”

NBAF could have also been given access to UGA’s interdisciplinary infectious disease research center, and its Animal Health Research Center, a BSL-3 ag facility focused on studying infectious diseases in large livestock animals. The building has been constructed, with parts of it now operational; the large animal section is in a testing phase, working with low-impact pathogens: “Certainly some NBAF work might have gotten started here earlier than the actual facility would have been available.

 
“Kansas has had a long-term strategy to capture as much as possible of the high-tech animal healthcare industry. It seems logical that capturing NBAF is just another piece in that strategy,” Lee said. “If it were up to me, it would have been between Georgia and Kansas,” with the Peachtree State winning out, he half-joked.
 
NBAF is the third life-sci employer in the past three years to spurn the Athens, Ga., region. The other two were Novartis, which in 2006 chose Holly Springs, NC, over Georgia and Maryland as the site of a new $600 million manufacturing plant for cell culture-derived influenza vaccines, set to employ 350 people when completed in 2011; and Solvay, which considered sites in Alabama and Georgia before deciding not to build a new influenza vaccine manufacturing plant.
 
“We’re a little frustrated,” Lee acknowledged. “Part of it is just getting over that hump. Sometimes you just have to get that first one, and when you do, other companies say, ‘Such-and-such company has moved there. Let’s take a good, hard look at Athens.’”
 
As important as local support and incentives were to DHS, Thornton said, the Kansas consortium viewed its best hope for attracting the biolab in persuading Washington that opportunities for partnering existed if the Sunflower State were selected as the site of the project, because it could draw on numerous existing regional resources and initiatives focused on animal biological research.
 
“What Kansas offered was a partnership, a state-federal partnership that’s truly unique. The state of Kansas is doing more than just putting money up. We’re allowing [the federal government] to use the Biosecurity Research Institute, a state building,” Thornton said. “We have made, and will continue to make, substantial investment into this industry.”
 
Thornton said the state’s successful attraction campaign for the biolab was less the typical economic development campaign, and more like the successful earlier efforts he led to bring facilities such as the Advanced Photon Source to the US Department of Energy’s Argonne National Laboratory, and other facilities there and to Fermi National Accelerator Laboratory, before taking up the Kansas NBAF effort.
 
“One thing I learned there is that you have to engage other states. We had several states sign on to support the NBAF bid in Kansas,” Thornton said. “This is a national priority, and we knew we had to go national in order to be successful, so we engaged national partners.”
 
The Kansas consortium persuaded governors from more than a dozen states to support locating NBAF in Manhattan, Kans. — Colorado Gov. Bill Ritter; Connecticut Gov. Jodi Rell; Illinois Gov. Rod Blagojevich; Indiana Gov. Mitch Daniels; Iowa Gov. Chet Culver; Michigan Gov. Jennifer Granholm; Minnesota Gov. Tim Pawlenty; outgoing Missouri Gov. Matt Blunt; Nebraska Gov. Dave Heineman; New Mexico Gov. Bill Richardson; North Dakota Gov. John Hoeven; Ohio Gov. Ted Strickland; South Dakota Gov. Michael Rounds; and Wisconsin Gov. Jim Doyle.
 
In addition, 22 research institutions located outside Kansas signed onto that state’s NBAF effort.
 
Kansas wasn’t the only state to seek out-of-state support for its NBAF bid. Mississippi, for example, attracted the Battelle Memorial Foundation as its consultant, and drew as partners to its consortium Tulane University of New Orleans, which houses the National Primate Research Center; and Iowa State University and its College of Veterinary Medicine. The two schools drew on existing academic collaborations with Mississippi universities.
 
Green of the North Carolina consortium said a key member of the group has given support to Kansas officials in the days since word of the announcement emerged, and has discussed how researchers in the Tar Heel State could collaborate with NBAF.
 
“Barrett Slenning [an associate professor of ruminant production medicine, economics, and epidemiology at North Carolina State University] has been in contact with people out there saying he’d be glad to assist them in any way. And [the Kansas consortium] wrote back a nice letter saying they probably would call on him as time moved on to support them,” Green said. “If it wasn’t going to be built in North Carolina, he wanted it built somewhere where it would prosper and do the job it needs to do.”
 
Slenning’s contact is in keeping with the NC consortium’s statement on its web site declaring its intent to team up with its Kansas peers: “From the outset we maintained that our goal was to have the NBAF program be successful, and that has not changed. If the recommendation in the final EIS is followed, we will work with our peers in Kansas in the upcoming years to help them make the NBAF a success.”
 
Similarly, Thornton said, Kansas will reach out to other states to use the biolab. One possibility, he said, was extending the bioscience authority’s Collaborative Biosecurity Research Initiative, which set aside $5 million toward research collaborations between the state’s two largest universities, KU and KSU, and researchers from out of state.
 
Building coalitions across state lines, as Kansas did, posed a more challenging approach to facility attraction than the traditional economic development attraction campaign employed by Kansas’ rivals.
 
“This wasn’t about the cheapest workforce. It wasn’t about the best tax environment. This wasn’t about whatever economic factors a company may have,” Thornton said. “This was about, who was good at this research? Who’s got the existing facilities where we can actually get started? Who’s committed to this — who has got money on the table to do this? And of course, more importantly, where can we put this where the NBAF would ultimately succeed?”
 
NBAF’s work, he said, would be carried out within a two-hour drive of the Kansas City region, where a cluster of businesses, research institutes and academic institutions focused on animal biology played a key role in attracting NBAF to Kansas.
 
Given the presence of that cluster, which stretches from Manhattan, Kans., east to Columbia, Mo., and is called the Kansas City Animal Health Corridor, Thornton said, “If all NBAF does is research, I think it would be very disappointing. We need to commercialize the product of that research. All the companies that the NBAF researchers would want to collaborate with are all here.”
 
Those companies range from corporate giants like Boehringer Ingelheim Vetmedica, Bayer HealthCare’s animal health division, and Intervet/Schering-Plough Animal Health; to milking equipment maker DeLaval, and veterinary pharmaceuticals maker Sparhawk Laboratories.
 
A list of the corridor’s employers is available here. They are among more than 120 animal health companies employing more than 13,000 people within the corridor, where global animal health companies generating more than 34 percent of the industry’s $16.8 billion in revenue are located.
 
Lynn Parman, vice president for science and technology with the Kansas City Area Development Council, told BRN that NBAF is the 11th employer recruited by the corridor — for a combined 904 jobs — since its formation two years ago.
 
State lawmakers joined the NBAF effort after seeing how much support animal corridor companies mustered for it earlier this year, Thornton said.
 
“A real reason why there was such an extraordinary amount of support for the NBAF in Kansas is the animal health companies. They and their employees embraced this as no other state did,” he told BRN. “Seventy-five CEOs of this animal health corridor showed up in [the state capital of] Topeka this year to sit down with our legislature and say, ‘This is our top priority. There [are] a lot of things we could ask for — tax breaks, and lots of other things. But the top priority for us is, let’s go get NBAF.
 
“A lot of the notion to go after this project, to pursue it so aggressively, really did come from industry,” Thornton added — as well as from the state-created authority, which oversees a $581 million fund intended to be invested in facilities and employers showing the greatest promise for growing Kansas’ life sciences industry into a national or global animal health powerhouse.
 
“We pursued [NBAF] because we have unique strengths, but we also pursued it because it fit in very well with our existing capabilities in the animal health corridor,” Thornton said.
 
The Kansas effort to attract NBAF was not without opposition, both from farmers living near the project site and others. They argued that the biolab would pose insurmountable risks to public health and public safety, and that its economic benefits have been overstated by DHS.
 
“We believe that the local media and the proponents of this plan have not given the public enough information to make an informed judgment. When the residents of this state understand the risks and uncertainties of this facility they will also say No,” the group “No NBAF in Kansas” wrote on its web site, which as of early afternoon Dec. 8 had not even been updated to reflect DHS’ selection of Kansas.
 
DHS has projected the Kansas biolab would generate the highest number of temporary construction jobs at 1,641 — 679 direct jobs and 962 indirect or “associated” jobs — resulting in $138.2 million in labor income, the lowest of the five states seeking the biolab; followed by 250 to 350 permanent jobs yielding $26.8 million in annual salaries, the lowest of the five states; and $1.5 million in new state and local taxes, the lowest figure of the five.
 
DHS hinted that the biolab is most likely to create 326 permanent jobs, since that was the figure used as the basis of economic forecasts, in the draft environmental impact statement.
 
Thornton said he agreed with an econometric study carried out for Georgia’s consortium by the University of Georgia’s Carl Vinson Institute of Government, which pegged the economic impact of the biolab as being between $1.5 billion and $2.5 billion: “Certainly, the development of one vaccine that prevents an FMD [foot in mouth disease] outbreak would far exceed that,” he said.
 
“We pursued this not for the economic impact, which is substantial, we understand that, It was a matter of protecting agriculture. That’s why we did this,” Thornton said.
 
“Here we would be developing vaccines that protect American agriculture,” Thornton said. “So the economic question you have to come up with is, ‘What would the devastation be without that vaccine? That would be an extremely big number.’”

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