In the May 12, 2000 Issue:

Copyright State Science & Technology Institute 2002. Information in this issue of the SSTI Weekly Digest was prepared under a cooperative agreement with the U.S. Department of Commerce, Economic Development Administration. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected. Any opinions expressed in the Digest do not necessarily reflect the official position of the U.S. Department of Commerce.

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Tech Bills Pass on Last Days of Hawaii Legislative Session
A number of bills to strengthen Hawaii's science and technology standing were passed during the final days of the legislative session.

The High Technology Development Corporation has been empowered to issue $100 million in special purpose revenue bonds for the development of high-technology facilities and office space under an act Governor Ben Cayetano signed during the last week of April. Effective immediately, the act allows bond monies to be used as incentive or inducement financing to attract technology companies to the state as the interest rates on the bonds are lower than current bank loan rates. A copy of the act is available at: http://www.capitol.hawaii.gov/sessioncurrent/bills/hb2443_hd2_.htm

Last Tuesday, the last day of the regular session for the Hawaii legislature, several additional technology bills passed. According to the Honolulu Star-Bulletin, Governor Cayetano is expected to sign these bills as well. 

Among the bills are:

The New Economy Technology Scholarship Act (S.B. 2420 CD 1), a five-year pilot scholarship program for Hawaii students to pursue higher education and training in science and technology fields. The program, which will be administered by the Department of Business, Economic Development and Tourism, received $200,000 in FY 2000-2001 for operating costs and scholarship grants. S.B. 2779 CD1 expands the state’s enterprise zone (EZ) law to include businesses engaged in research, development, biotechnology, and companies involved in the repair of assistive technology equipment as eligible for the EZ tax credits and benefits.

The Honolulu Star-Bulletin also reported that language permitting the consolidation of the state’s technology programs was contained in one of the several bills passed at the end of the session. The original consolidation bill languished in the Senate earlier this year. (See the July 9, 1999 issue of the Digest for background on the proposal. -- http://www.ssti.org/Digest/1999/070999.htm) Programs affected by the merger include the High Technology Development Corporation and the Natural Energy Lab.

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New Community Technology Centers, Study Funded; RFP Open
President Clinton announced the award of $44 million in grants to establish 214 more Community Technology Centers in economically distressed, high-poverty communities. The centers -- to be housed in libraries, schools, community centers, community colleges, public housing facilities, & other organizations -- will make computers & the Internet available to low-income residents in urban & rural communities. Business & community partners will provide matching funds. For more information, including a list of recipients by state, see: http://www.ed.gov/PressReleases/04-2000/0418.html

The work of the Community Technology Centers will soon be strengthened by the creation of a new America Connects Consortium. The Consortium shall bring together stakeholders whose services are critical to the success of projects funded under the Community Technology Centers. The effort will launch a focused, coordinated, and comprehensive national effort to promote, support, and sustain Community Technology Centers. The Consortium will consider the needs of the field in terms of technical assistance and research and provide services to meet them. The Department is currently inviting abstracts for proposals to establish the consortium. The deadline is May 24, 2000. Base funding for the Consortium will be $2 million per year. The announcement is available at: http://ocfo.ed.gov/CONINFO/2CBD.HTM

The centers & consortium are part of the President's Digital Opportunity Initiative challenging corporations & non-profit organizations to provide 21st century learning tools for every child in every school & to create digital opportunity for every American family & community.

Last week, Commerce Secretary William M. Daley announced the award of a $100,450 contract to the Virginia Polytechnic Institute in Blacksburg, Va., for a survey of 100 Community Technology Centers (CTCs). The survey will focus on the CTCs' information technology resources, factors impeding the creation of new technology centers, the integration of CTCs into economically distressed neighborhoods, methods for increasing access to the CTCs, and ways for improving their effectiveness. The Contract was awarded by the Commerce Department's National Telecommunications and Information Administration (NTIA) under its Technology Opportunities Program (TOP).

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DOEd Technology Plan Being Revised
The Department of Education Office of Educational Technology (OET) is reviewing and revising the national educational technology plan. The revision will be completed by Fall 2000 and will include new national goals for the effective use of technology in education. The public is invited to offer opinions and recommendations through the office's web site: http://www.ed.gov/Technology

From May 8-19, the discussion topic is research & development and e-learning and education. Comments on other topics related to educational technology are invited any time through May 19. The website also offers white papers on the future of technology in K-12 education and other relevant information.

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Plethora of Papers Published on Public Program
Several papers and report have been released recently on the Advanced Technology Program (ATP); five were published on line last week alone. Below are descriptions of selected papers and links to download full copies. Additional titles are available on the ATP web site: http://www.atp.nist.gov/atp/pubs.htm

Capital Formation and Investment in Venture Markets: Implications for the Advanced Technology Program
The Advanced Technology Program (ATP) of the National Institutes of Standards and Technology commissioned a report by Paul Gompers and Josh Lerner of the Harvard Business School to look at the special problems of entrepreneurial firms that are highly dependent on external sources of funding R&D. The authors focused on venture capital, an important source of equity financing for small technology firms. Utilizing two large-sample research studies, they identified strengths and weakness of venture capital as a financing mechanism. Gompers and Lerner found that while regulatory changes by the government affect the overall supply of venture capital, government’s real impact was more noticeable through changes in public policy that significantly increased the demand for venture capital. Most important were decreases in the capital gains tax rate, which expanded the pool of individuals willing to pursue entrepreneurial careers. The authors then raise the question as to the effectiveness of public efforts to directly supply capital to small firms.

The authors also found that venture capital is most often concentrated or limited geographically and technologically (biomedical or information technology). A recommendation is made for ATP to focus its direct investments in those industries with potentially high social return that have received less attention from private venture capital investors.

The second part of the report presents case studies of seven ATP-funded projects and the authors insights and recommendations for ATP based on analysis of the experiences and results of those seven projects.

After consideration of the research conducted on U.S. venture capital, the authors make five recommendations for the ATP program to consider. The report closes with ATP comments on the recommendations.

A copy of the report can be downloaded from: http://www.atp.nist.gov/atp/pubs.htm

Reinforcing Interactions Between the Advanced Technology Program and State Technology Programs
Written by Marsha Schachtel and Maryann Feldman of Johns Hopkins University, the report is subtitled: Volume 1: A Guide to State Business Assistance Programs for New Technology Creation and Commercialization. The 86-page guide is designed primarily for ATP applicants and award recipients, but also may be of benefit for state and federal technology program officials and policymakers. Sorting state technology-based economic development programs along a specific classification scheme is always challenging. The authors categorize state programs along a matrix model of product commercialization. Three separate chapters are dedicated to characterizing the types of state assistance offered to address the technical, market and business challenges of the three phases of technological innovation: concept, development, and commercialization. Examples are provided of state assistance that address each phase's challenges. The authors also discuss briefly how the various technical, market, and business challenges affect or influence ATP applicants and recipients.

Of particular interest to the state and federal S&T community will be the 21 page appendix listing website and telephone contact information for selected state business assistance programs. Current as of September 1999, the appendix also provides information concerning the program name or function, administering office or agency, and the type of assistance offered (within the report's classification scheme).

Copies can be downloaded from: http://www.atp.nist.gov/atp/pubs.htm

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Research, Tech Tax Incentives Proposed in Alabama
Technology-based businesses and investors in Alabama may be eligible for several new tax credits if legislation recently introduced passes the state legislature. The Incentives for Targeted Growth Act of 2000, Senate Bill 571, was introduced April 19 to encourage the growth and expansion of Alabama’s technology community. The bill was developed after the Alabama Commerce Commission, while developing a new economic development strategy for Alabama, found the state’s current capital investment tax credit program was not particularly attractive for research firms, start-ups, and technology-based businesses.

If passed, S.B. 571 would:

The bill requires the Department of Revenue to report annually on the effectiveness and utilization of the incentives created under the Act.

Traditionally in Alabama, few bills introduced in the last half of the legislature’s regular legislative session pass due to time constraints. To address this problem, an identical companion bill, H.B. 944, was simultaneously introduced in the Alabama House of Representatives. According to local newspapers, Governor Seigelman is supportive of the bills as introduced.

The regular legislative session ends May 15; the Governor may call a special session to deal with these and several other priority bills.

S.B. 571 can be viewed at: http://www.legislature.state.al.us/SearchableInstruments/2000RS/Bills/SB571.htm

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Second NGA New Economy Paper Released
The National Governors' Association has released the second paper in the New Economy Series. Growing New Businesses with Seed and Venture Capital: State Experiences and Options identifies four basic strategies states pursue to increase venture investing and makes eight observations regarding best practices among state seed and venture capital financing efforts. The paper also includes several benchmarks in program design, management practices, and program results to use in analyzing a public program’s effectiveness. Three appendices complete the paper. The first appendix presents PricewaterhouseCoopers capital investment statistics by state and industry sector and the second describes four case studies of successful capital access programs. The final appendix is a matrix of the types and ranges of capital access programs offered in each state. The paper was prepared by Robert Heard, president of the National Association of Seed and Venture Funds, and John Sibert, CEO of the Global Finance Group, LLC. For more information, see: http://www.nga.gov/center/

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People in S&T
During the National SBIR Conference this past weekend, it was announced Jon Baron will be leaving his position as SBIR/STTR Program Manager for the Department of Defense on June 1.

Washington Governor Gary Locke has named Fred Morris as his new advisor for science and technology. Mr. Morris has been working for Battelle Memorial Institute's Northwest Research Center where he has worked at the Science and Government Center

Rosalie Ruegg has retired from her position as the Director of the Economic Assessment Office for the Advanced Technology Program in the National Institute of Standards and Technology.

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