In the May 24, 2002 Issue:

Copyright State Science & Technology Institute 2003. 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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NY Makes Record $520M Commitment to TBED
New York's initiatives to support technology-based economic development (TBED) will share more than $520 million in state appropriations during Fiscal Year 2003. The highlight: two originally competing budget proposals to support university-based centers of excellence survived with a combined $470 million in state funds (see the Jan. 5, 2001 issue of the SSTI Weekly Digest for background). Most of New York's other TBED initiatives also fared well in the new budget, running counter to the fiscal environment facing TBED in several other states.

Governor Pataki's Centers of Excellence proposal will receive $250 million to support major upgrades of research facilities and other high-technology and biotechnology capital projects, allowing colleges, universities and research institutions to secure research funding that will lead to new job creation.

To date, Centers of Excellence have been announced in Albany, Buffalo, Long Island and Rochester, with others being planned throughout the state. These centers have already attracted more than $400 million in new private sector and federal investments. In total, these initiatives are expected to leverage a 3-to-1 ratio in new private sector and other investment, for greater than $1 billion in new investment.

The state budget also provides $225 million for the Gen*NY*sis program (Generating Employment through New York State Science), which was proposed by the New York State Senate. The program was created to maximize the research and development potential of the world class life sciences research being conducted at New York State public, non-profit and private academic research institutions. These funds will leverage more than $1 billion in additional funds to support the construction of Gen*NY*sis centers, which will transform this research into economic development throughout the state.

Some locations will benefit from both the Centers of Excellence and Gen*NY*sis programs. The May 16 issue of the Buffalo News reports the Center of Excellence in Bioinformatics at the University of Buffalo, which had been slated to receive $50 million from the Governor's proposal, will receive closer to $100 million in state funds.

The state budget also includes $5 million to launch the "Security Through Advanced Research and Technology" (START) program, which will help colleges and universities secure federal and other research funding for the emerging homeland security industry and other high-tech fields.

In addition, the final budget sustains funding for other TBED programs, including:

More information on most of these initiatives is available from the NY State Office of Science, Technology & Advanced
Research (NYSTAR): http://www.nystar.state.ny.us

The Governor's press release on the budget is available at: http://www.state.ny.us/governor/press/year02/may15_3_02.htm

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New Centers of Excellence Program Funded in Florida
Senate Bill 1844, signed by Governor Jeb Bush this week, provides $30 million to create Centers of Excellence and includes several other key elements of the Florida Technology Development Initiative, proposed by Governor Bush in his State of the State speech this year.

The Centers of Excellence program is intended to foster innovative, cutting-edge technology research at Florida's colleges and universities, develop commercially viable applications for that research, and recruit high-tech industries and thinkers to the state.

Technology sectors highlighted in the announcement include simulation, optics and space technology, biotechnology, nanotechnology, and artificial intelligence. The legislation permits the centers to support new facilities, laboratories and endowed academic chairs.

Other provisions of the bill include:

Expansion of research and development parks financed by the Florida Industrial Development Financing Act to include state universities, community colleges and government agencies, if their projects promote scientific research and development; Transfer of Florida's technology promotion and workforce recruitment website to Workforce Florida, Inc., with coordination between the State Technology Office and the Agency for Workforce Innovation; and Deposit of sales tax holiday funds in the State Board of Education's Major Gifts Trust until distributed to the universities.

More information is available at: http://www.myflorida.com/

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U.S. Entrepreneurship Activity Taxes Hit in 2001, Report Shows
Interest by would-be entrepreneurs to start new businesses declined in 2001 as the economic recession and lingering effects of the dot.com crash dampened enthusiasm for launching new ventures, according to the Global Entrepreneurship Monitor (GEM) 2001 National Entrepreneurship Assessment for the United States of America. The trend is expected to continue for the near term with a strong rebound later in the year.

Conducted by Babson College and the Kauffman Center for Entrepreneurial Leadership, the U.S. GEM study shows entrepreneurial activity in the U.S. last year plunged 30 percent to 11.7 percent of adults from 16.7 percent in 2000. The measurement reflects the percentage of the U.S. adult population involved in the start-up process or in a business less than four years old.

Enthusiasm to take the entrepreneurial plunge fell even sharper, with little more than one out of every three adults (35 percent) believing that good opportunities will develop over the next six months. This compares to one out of every two adults (52 percent) in 2000 and 57 percent in 1999.

Although the United States appears to have temporarily lost some of its entrepreneurial enthusiasm, informal angel investment in the U.S. remained strong, amounting to $129.2 billion in 2001. The U.S. GEM authors/researchers point to several positive findings that bode well for a strong rebound in entrepreneurship activity, including the following strengths:

The U.S. GEM research is an expansion of the inaugural 1999 overall GEM report, which analyzed entrepreneurial activity in 10 countries to determine the complex relationship between entrepreneurship and economic growth. The scope of the project tripled for 2001, with research teams from 29 countries participating.

The 2001 U.S. GEM report is available under Reports and Journal Reprints at the Kauffman Center for Entrepreneurial
Leadership: http://www.entreworld.org/Bookstore/

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Six Industry Groups to Facilitate New Markets Tax Credit Program
Program expected to yield $15B in new capital for underserved communities

Six national, community-based financial services organizations recently announced the formation of New Markets Advisors to help investors identify opportunities using the New Markets Tax Credit.

The largest federal tax credit of its kind in nearly 20 years, the New Markets Tax Credit gives investors such as banks, insurers, investment funds, corporations and individuals a credit against federal income tax for new investments in eligible businesses and commercial projects in low- and moderate- income areas. The tax credit program is expected to stimulate the investment of $15 billion in new capital to accelerate the pace of business development in these areas.

Among them, the New Markets Advisors member organizations have more than 35 years of combined experience leveraging private and public capital to drive economic development in America's untapped urban and rural markets. The organizations represent more than 1,000 community-based financial institutions, including national and local community development venture capital funds, banks, loan pools, credit unions, and intermediaries.

The New Markets Advisors are: Community Development Venture Capital Alliance (CDVCA), The Enterprise Foundation (Enterprise), Local Initiatives Support Corporation (LISC), National Community Capital Association (NCCA), National Community Investment Fund (NCIF) and National Congress for Community Economic Development (NCCED).

The New Markets Tax Credit program was created in late 2000 with strong bipartisan support. After 18 months of development, the U.S. Department of the Treasury's CDFI Fund is preparing to release the application for the first allocations of New Markets Tax Credits.

Almost any type of business, community facility, or commercial real-estate project in eligible census tracts could qualify for financing under the New Markets Tax Credit program. This federal tax credit totals 39 percent of an eligible investment spread over seven years, enhancing the economic yields for those who invest in these untapped markets. To qualify for these tax credits, investors must make equity investments in "community development entities" (CDEs) that have been certified by the CDFI Fund. As of May 6, 258 organizations have been certified as CDEs. To date, the vast majority of certified CDEs are represented by the six industry groups that make up New Markets Advisors.

Nearly 40 percent of all census tracts in the United States containing one-third of the population will qualify for projects financed through the New Markets Tax Credit program, including large portions of urban and rural areas. The CDFI Fund plans to distribute up to the $2.5 billion in tax credit allocations authorized in 2002 and is being told by the industry that the program likely will be oversubscribed in 2002, its first year.

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Do the Times Warrant A Rethink of State VC Policies?
Earlier this month, Kansas passed legislation to encourage $40 million in private equity investment. Alabama passed a $100 million bill for CAPCOs. Similar legislation aimed to increase the amount of venture capital available locally has passed at least one chamber in the South Carolina and Ohio state legislatures. Pennsylvania pension funds, after taking a bath in the dot.com crash and current recession are increasing the percentage of their portfolios placed in venture capital.

States and localities across the country, seeing the quarterly surveys report the continuing decline in venture capital deals (such as the Moneytree survey reported in last week's Digest), are moving to encourage more VC investment. The theory is by increasing the supply of venture capital available, more deals will be made and economic growth will follow.

But is it good public policy?

Not in the current market, suggests Harvard Professor Joshua Lerner in his recent working paper, Short Term America Revisited? Boom and Bust in the Venture Capital Industry and the Impact on Innovation. Lerner contends that increased public capital investments in times of excess venture capital availability — that which the market has demonstrated over the past two years — may actually add "fuel to the fire," particularly in hot sectors.

After presenting a very accessible economics primer on the cyclical nature of VC, Lerner explains possible reasons for the market's current behavior. Plenty of venture capital exists, Lerner argues, but it is not being invested because the anticipated or projected return is lower than investors desire (due to the recession, dot.com crash, hostile IPO market, etc.). As a result, VC firms can afford to be more selective in their placements.

Increasing capital availability, through CAPCO legislation, relaxed restrictions on public pension fund placement, investment tax credits and other programs, actually permits VC companies to be even more selective, the model suggests. The problem is exacerbated by targeting public policies toward "hot industrial sectors," such as biotech and information and communications technologies.

Given the current VC market, Lerner suggests more appropriate — and productive — public policies are to focus on the
following:

"[T]he most effective programs and policies seem to be those which lay the foundations for effective private investment...Given the extraordinary rate of growth (and now retrenchment) experienced by venture capital over the past decade, the most effective policies are likely those that focus on increasing the efficiency of private markets over the long term, rather than providing a short-term funding boost during the current period of transition."

Short Term America Revisited? was presented at the "Innovation Policy and the Economy" conference of the National Bureau of Economic Research. Lerner's presentation and a PDF version of the working paper is available at:
http://www.nber.org/~confer/2002/ipes02/ipeprg.html

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The Economic Impact of Research Parks: An Arizona Example
Generating $48.7 million in tax revenues to local and state governments and 5,949 direct jobs, the 31 tenants of the University of Arizona Science & Technology Park had an estimated direct impact in excess of $1 billion in FY 2000-01, according to a new report from the university's Office of Economic Development.

Impact of the University of Arizona Science and Technology Park on The Economy of Tucson and Pima County: An Economic and Revenue Impact Analysis for FY 2000-2001 lays out the local and regional direct and indirect impact of the sixth largest university research park in the U.S. In addition to tenant businesses, the park includes a high-tech incubator and high school.

In comparison with the 1999 study of the park's impact, the researchers found:

The University of Arizona Science & Technology Park was established in 1995 and consists of 1,345 acres, of which 345 are developed with 12 buildings.

The full 29-page report is available online at: http://oed.arizona.edu/updates.htm

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People

Lewis Attardo is the first director of the new Sacramento Regional Technology Alliance. Attardo formerly was a Florida-based private business and economic development consultant.

Joseph Hornett has been selected to serve as senior vice president and treasurer of the nonprofit Purdue Research Foundation (PRF). Hornett currently is COO for Sport Service, Inc. in Indianapolis. PRF holds more than 130 properties and 10,000 acres of Indiana farmland near Purdue University, including the Purdue Research Park.

Matthew McClorey is the new president and COO for Kansas Innovation Corp., beginning June 3. McClorey currently serves as the vice president of business development and portfolio management for the Kansas Technology Enterprise Corp (KTEC).

Marilyn Carlson Nelson, the chairman and chief executive officer of Carlson Cos. Inc., has been appointed by President Bush to chair the National Women's Business Council. The council serves as an independent source of advice and counsel to the president, Congress and the U.S. Small Business Administration.

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U. of Florida seeks Coordinator of Research Programs
The University of Florida is seeking a creative and versatile individual to assist in partnership development and commercialization of technologies for UF and its sponsoring agencies. The primary responsibility for this position will be to serve as Deputy Director for the Environmental Systems Commercial Space Technology Center (ES CSTC), a NASA sponsored environmental research center. Additional responsibilities include assisting in new proposal development for UF, particularly those opportunities requiring cooperative multi-discipline research with commercial application. Applications are due before June 20, 2002. More information is available on SSTI's website at: http://www.ssti.org/posting.htm

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Funding Supplement
The federal funding cycle has moved into its summer phase, during which time fewer research solicitation announcements are made. As a result, the need for SSTI to publish separate funding supplements each week is greatly diminished, including this week. Please note some are contingent on the agency securing FY 2003 appropriations from Congress.

Federal Funding Opportunities

Department of Health and Human Services
The Health Resources and Services Administration (HRSA) is accepting applications for FY 2002 competitive cooperative agreements for health workforce research. The purpose of these Cooperative Agreements is to conduct research that will contribute to: (1) The development of information describing the current status of the health professions workforce and (2) the analysis of fundamental health workforce related issues. Awards ranging from $50,000 to $275,000 are available. Eligible are state or local governments, health professions schools, schools of nursing, academic health centers, community-based health facilities, and other appropriate public or private non-profit entities, including faith-based organizations. Applications are due June 19, 2002. More information is available here.

The National Institute of Allergy and Infectious Diseases has issued a notice to inform the research community of the many research needs and opportunities in biodefense and emerging infectious diseases. The budget request for FY 2003 includes more than $1 billion for research leading to the prevention, detection, diagnosis, and treatment of diseases caused by agents with the potential to be used for the purpose of bioterrorism. The notice, which provides links to all of the relevant programs, offices and contacts, and current NIAID initiatives, is available at:
http://grants1.nih.gov/grants/guide/notice-files/NOT-AI-02-023.html

NIAID, the National Institute of Diabetes and Digestive and Kidney Diseases, and the Office of Research on Women's Health seek applications to create up to five Autoimmunity Centers of Excellence. Each center will include: 1) a clinical component, incorporating multiple clinical specialists to conduct trials and clinical studies of new immunotherapies for autoimmune diseases in cooperation with other Center clinical components; and 2) two or more multidisciplinary, interactive basic and/or pre-clinical research components focused on elucidation of the basic mechanisms of autoimmunity, self tolerance and/or immune modulation. The estimated total funds available in FY 2003 for the first year of support are $6.25 million; first year budget requests may not exceed $800,000. Eligible are for-profit or non-profit organizations; public or private institutions, such as universities, colleges, hospitals and laboratories; units of state and local governments; and eligible agencies of the federal government. Letters of intent should be submitted by September 17, 2002; full proposals are due October 16, 2002. More information is available at: http://grants1.nih.gov/grants/guide/rfa-files/RFA-AI-02-006.html

The NIAID seeks applications for research, including high risk and high payoff studies in nontraditional fields to enhance the understanding of the factors affecting the development of resistant pathogens and spread of resistance genes, in order to direct actions to diagnose, control and treat antimicrobial resistance. The agency intends to commit approximately $3 million in FY 2003 to fund 12-25 new grants. Eligible are for-profit or non-profit organizations; public or private institutions, such as universities, colleges, hospitals and laboratories; units of state and local governments; eligible agencies of the federal government; domestic or foreign. Letters of intent should be submitted by September 10, 2002; full proposals are due October 10, 2002. More information is available at: http://grants2.nih.gov/grants/guide/rfa-files/RFA-AI-02-009.html

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National Science Foundation (NSF)
NSF's Division of Mathematical Sciences (DMS) in the Directorate for Mathematical and Physical Sciences and NIH's National Institute of General Medical Sciences (NIGMS) plan to support research in mathematics and statistics related to mathematical biology research. This competition is designed to encourage new collaborations at this interface, as well as to support existing ones. DMS and NIGMS anticipate making 20-25 awards totaling about $6 million, in each of fiscal years 2003-2005. The projected range is from $100,000 to $400,000 per award per year, with durations of 4-5 years. No organization limit applies. Proposals are due August 11, 2002. More information is available at:
http://www.nsf.gov/pubsys/ods/getpub.cfm?nsf02125

NSF's Geospace Environment Modeling program supports basic research into the dynamical and structural properties of geospace for the construction of a global Geospace General Circulation Model with predictive capability. Approximately $750,000 is anticipated to be available for 8-12 new FY 2003 awards. The typical award size is approximately $80,000 per year with a duration of three years, with the maximum award size being $150,000 per year. Applicants may request 1-5 years of funding. Post-doctoral research awards, which provide a stipend of $40,000 per year, are two-year awards. No organization limit applies. Proposals other than post-doctoral proposals are due October 15 annually; post-doctoral proposals are due May 1 annually. More information is available at: http://www.nsf.gov/pubsys/ods/getpub.cfm?nsf02122

NSF's Focused Research Groups in the Mathematical Sciences (FRG) activity allows groups of researchers to respond to recognized scientific needs of pressing importance, to take advantage of current scientific opportunities, or to prepare the ground for anticipated significant scientific developments in the mathematical sciences. Approximately $12 million is awarded annually for this program via approximately 15 awards. Proposals may be submitted for any funding amount between $150,000 to $350,000 per year for up to three years. The categories of proposers identified in the NSF Grant Proposal Guide are eligible to submit proposals. Required letters of intent are due August 20, 2002; proposals are due September 20, 2002. More information is available at: http://www.nsf.gov/pubsys/ods/getpub.cfm?nsf02129

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Foundation Funding Opportunities

Charlotte Geyer Foundation
The Charlotte Geyer Foundation supports research into the cause, prevention and treatment of cancer. The Foundation reviews proposals three times per year and awards grants up to $100,000 each. Interim funding is provided to researchers whose proposals, having been reviewed by the National Cancer Institute (NCI), were ranked within 10 percentage points of the NCI payline. Proposals are due February 1, June 1, and October 1 annually. More information is available at: http://www.charlottegeyer.org/

Juvenile Diabetes Research Foundation
The Juvenile Diabetes Research Foundation (JDRF) International is providing up to $100 million in FY 2002 to support research aimed at finding a cure for Type 1 diabetes and its complications. Research should be geared toward the restoration and maintenance of normal blood glucose in people with Type 1 diabetes, particularly focusing on the use of cell-based therapies; the prevention and treatment of complications of diabetes; and the prevention of the disease. No organization limit applies. Applications for the next review cycle are due September 1, 2002, with the first two pages due by August 15, 2002. More information is available at: http://www.jdf.org/research/appreqst.php

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