US legislators this month introduced a bill that aims to authorize federal grants and guaranteed loans to help establish and support research and science parks in the country — especially those associated with universities and non-profit research institutions.
The bill, submitted to the US Senate, is intended to “promote the clustering of innovation through high-technology activities,” and its proponents feel that it may speed the rate of technology transfer from universities, stimulate the US economy, and increase the country’s global competitiveness.
Some critics, however, feel that such funding may be misplaced and would only be effective if it helped establish and grow technology parks affiliated with resource-poor institutions or regions.
The short title of the bill, S. 1373, is the “Building a Stronger America Act,” and was introduced in the Senate on May 11 by Senator Mark Pryor (D-Ark).
Key components of the bill include a call for the federal government to appropriate $7.5 million in funding for each fiscal year from 2008 to 2012. These funds would be made available each year as individual awards worth no more than $750,000 to support feasibility studies and plans to construct new science parks and expand existing ones.
The legislation would also guarantee loans of between $10 million and $50 million to support the construction of new technology parks and upgrade the infrastructure of existing parks.
The full text of the bill can be seen here.
Last week, the Association of University Research Parks, an international trade association representing roughly 350 members of the university research park industry, called the bill “important” and said it would “enhance US competitiveness by improving the support for research parks, which are a vital component of the innovation process.”
In the statement, AURP President Austin Beggs said the bill “will allow communities to create and expand places where technology commercialization can thrive, creating new businesses and new industries.”
According to Eileen Walker, program development director for AURP, research parks serve as a bridge between academia and industry and are crucial components of the technology-transfer process.
“University research parks or science parks are connected to universities and pretty much provide the infrastructure for innovation,” Walker told BTW last week.
She said that science and technology parks can take multiple forms. Typically they are funded by universities or university research foundations in cooperation with regional governments.
The parks are intended to provide space for entrepreneurs to move outside of the walls of the university and form spinout companies to commercialize university research. In addition, established companies often lease space at the parks to foster collaboration with area universities or non-profit research institutes and oftentimes help commercialize their IP.
“It becomes a way to grow a cluster of companies,” Walker said. “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.”
However, getting a science and technology park off the ground is no easy task, Walker said, which is why the funding outlined in S.1373 would be welcome.
“For many universities this would be a very positive thing because they could actually have a mechanism to get the information they need and present a concept to regional government or partners, so they can then create their own funding,” she said. Because technology parks often involve collaboration between a university and a city, town, or county, plans for the parks need to be put together “very strongly,” Walker added.
And while the maximum award of $750,000 may seem relatively small to support such an endeavor, Walker said that it’s better than nothing.
“Research parks are very serious endeavors that a lot of thought goes into,” she said. “Of course we always welcome any funding, but with that amount – there could be several [parks] per year that could use that funding. I’m not saying it’s adequate, but it would certainly be very helpful.”
For the loans, the government would guarantee up to 80 percent of a loan amount for loans exceeding $10 million for projects for the construction of science park infrastructure, the bill states.
The maximum amount of loan principal guaranteed would not exceed $50 million for any single project and would not exceed $500 million for all projects, according to the bill. In addition, it states, entities receiving a feasibility grant are not eligible for a loan guarantee during the period of the grant.
The assumption of debt from the loans would differ depending on the ownership of the technology park, which Walker again said can differ depending on the situation.
“One of the ways is that a university will form a non-profit organization, and it will be closely held and would be the entity responsible for funding the infrastructure,” she said.
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Some experts say that the legislation may authorize misplaced funding.
“It’s a nice idea,” Phyl Speser, co-founder and CEO of global tech-transfer services firm Foresight Science and Technologies, told BTW. “The problem is that if we’re going to put subsidies into things, let’s give subsidies to things where we really need them.
“We know what makes a research park feasible. The question is now, ‘Is it feasible in my particular community?’ And if you can’t raise the money to make a pencil, it’s not going to be feasible.”
“Research parks have been around for a long time now, and we know what makes a research park feasible. The question is now, ‘Is it feasible in my particular community?’ And if you can’t raise the money to make a pencil, it’s not going to be feasible.”
Speser also criticized the guaranteed loans. “I think that low-interest loans are attractive, and those make sense,” Speser said. “I have trouble giving guaranteed loans to people engaged in money-making ventures that should be self-financing. If the goal is to establish an economic base next to a university that doesn’t currently have it, then let’s give them some money and do it in [the form of] direct funding.”
Speser argues that larger amounts of direct funding would be more worthwhile to resource-poor universities or regions because “if someone is in a position where they can justify a loan, they should be in a position where they can justify carrying the loan, or they shouldn’t be doing it. So what do you need the loan guarantee for?”
In addition, he said, the success of the bill would depend greatly on which entities are awarded funding and where the technology parks are going to be located. If funding is awarded in areas of the country already rich in venture capital, infrastructure, universities, and skilled workers – in other words, the East and West coasts of the US – then it would be misplaced, Speser said.
The bill does specify several criteria for selecting recipients of the feasibility grants. Some of these criteria include the number of jobs expected to be created at the park during its first five years; the funding that will be required to construct or expand the park in its first five years; the amount and type of cost matching by the applicant; the types of businesses and research entities expected to inhabit the park and surrounding community; and letters of intent by businesses and research entities to move to the park.
Other criteria include the park’s expansion capacity, employee quality of life, the capability to attract skilled workers, management, risk mitigation, transportation and logistics, and the ability to collaborate with other science parks worldwide.
For the guaranteed loans, recipients would be selected based upon the “ability of the recipient to collateralize the loan amount through bonds, equity, property, and other such criteria,” the bill states. Such a program, then, may not be accessible to entities that do not have much collateral to begin with.
“As people who are concerned with technology, we need to go to the taxpayers and be honest with them about some things, the first being that there are priorities and we cannot have everything,” Speser said. “I am a firm believer in spending lots of federal money, but I want to spend it on [reducing] global warming and preventive health care, and accelerating the movement of those technologies. We need to focus on where we get the biggest bang for the buck.”
Still, AURP claims that any funding in this area is bound to increase the US’s global competitiveness and stimulate the economy.
“This could be a really important component of the US maintaining its competitiveness and continuing to have good jobs available,” Walker said. “This will really help build the infrastructure that will enable us to be at the top in technology transfer and innovation.”