In the August 12, 2009 Issue:

• SSTI’s 2009 Conference Website is LIVE – Register Today!
• Hawaii Tightens Restrictions on High-Tech Investment Tax Credit
• Legislative Wrap-up: Massachusetts, New Jersey, Oklahoma, and Rhode Island Pass FY10 Budgets
• Tapping Youth and Older Workers to Maintain a Competitive Workforce
• The Personal History of High-Tech Entrepreneurs
• Research Park RoundUp: An Expanding Role in the Next Economy
• Per Capita Income by U.S. Metro Area 2004-2008

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SSTI’s 2009 Conference Website is LIVE – Register Today!
The circumstances leading to SSTI's 13^th Annual Conference make this year's event critical. We encourage you to join us in Overland Park, Kansas October 21 - 23, 2009 to Seize the Moment. As you scan the conference website, you'll discover we're putting together our most complete and complex conference yet.

This year's conference will bring together distinguished speakers like Josh Lerner of Harvard Business School and Rob Atkinson of the Information Technology and Innovation Foundation who will challenge conventional thinking; experienced practitioners who will share best practices; and, leading individuals who are breaking new ground in their attempts to build tech-based economies. Plus, we'll have four stimulating roundtable discussions examining some of the thorniest issues we're facing - improving metrics that are being used, re-examining equity programs, and engaging universities.

At this moment, every aspect of the U.S. economy is in a period of transformation. And nearly every aspect of getting out of the current mess is related to one or more of the fundamental principles of tech-based economic development, or TBED, for short. That's pretty impressive. The public/private programs, policies and investments being made to support TBED have never been as important or critical as they are at this moment.

Even so, the rules for TBED's fundamentals are in flux - capital access, university engagement, entrepreneurship assistance, research funding priorities, commercialization paths, you name it. To borrow from Ben Franklin, one of the nation's great innovators, "When you're finished changing, you're finished." In short, if your approach to promoting economic growth isn't evolving, you're writing its obituary.

To seize this moment, the visionary leaders of the TBED community need a forum to discuss how to turn the current realities into opportunities for innovation. SSTI's 13^th Annual Conference provides that forum. We will seize the moment.

SSTI's annual conferences are unique events for the economic development field because they attract the top thinkers and doers from every critical element of the TBED community - state, regional, university, nonprofit, private industry, and federal decision makers and practitioners.

Over the coming weeks, we'll be highlighting parts of the conference content in the Digest, but for more details now, go to: http://www.ssticonference.org

Registrations may be made by phone (614.901.1690), fax or online through the conference website at: https://www.ssti.org/Conf09/register.html

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Hawaii Tightens Restrictions on High-Tech Investment Tax Credit
Hawaii Governor Linda Lingle recently allowed a significant revision to the state’s High-Technology Investment Tax Credits program become law without her signature. The program, which has provided a 100 percent credit on high-tech investments since 2001, now will cap its credits at 80 percent. Investors also will no longer be able to transfer their credits to other investors. The revisions will apply through December 2010, when the tax credit program is scheduled to expire.

Hawaii’s investment tax credit has gone through a number of changes since its introduction in 1999. The credit originally allowed investors to receive a tax credit equal to ten percent of their investment in a high-tech firm, up to $500,000 per year. The credit was expanded in 2001 to allow investors to recoup 100 percent of their investment in tax credits, spread out over five years. The maximum single-year credit was raised to $700,000. The 2001 changes also removed a requirement that the company be involved in a minimum amount of research to qualify investors for the credit. In 2004, eligibility for the credit was limited by a requirement that investee firms be certified Qualified High Technology Businesses (QHTBs) by the Department of Taxation.

In 2007, the state legislature introduced additional reporting requirements to measure the effectiveness of the program, including data about investors and QHTBs. The results were published in a series of reports that fueled complaints that credits were not serving their original purpose. The list of QHTBs included media companies, which often created jobs that disappeared once production had ended. Opponents also claimed that the credits were providing generous tax shelters for wealthy investors, who could invest without assuming any risk. Providing this shelter came at a considerable cost to the state, which has paid $657.5 million to investors through the program since 1999.

Under the previous arrangement, it also was possible for out-of-state investors without a Hawaii state tax liability to transfer their credits to an in-state investor. This enabled out-of-state investors to trade their credits for additional equity in Hawaiian companies by making a deal with in-state investors.

By instituting new changes, the state estimates that it will save $150 million in losses through the tax credits.

Opponents to the changes, including the lieutenant governor, argued that many investors identified the credits as one of the key reasons they chose to invest in the state, the bill sent the wrong message to potential investors and could undermine the state's efforts to diversify.

More information, including the text of the new bill, is available at: http://www.capitol.hawaii.gov/session2009/lists/measure_indiv.aspx?billtype=SB&billnumber=199

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Legislative Wrap-up: Massachusetts, New Jersey, Oklahoma, and Rhode Island Pass FY10 Budgets
Over the past few months, several states have enacted spending plans for the upcoming fiscal year and passed legislation to support renewable energy initiatives and tax credits for R&D. While some TBED programs will face dramatic cuts in FY10, others are slated for slight decreases or will receive level funding. The following synopsis provides an overview of the 2009 legislative sessions across the following states:

Massachusetts
Lawmakers rejected Gov. Deval Patrick's amendment to the state budget aimed at securing funding for the Massachusetts Life Sciences Center (MLSC) in the upcoming year.

Although the enacted budget includes $10 million for grants, loans and investments through the MLSC, the appropriation is contingent on a consolidated net surplus for FY09, which currently reflects a zero balance, according to the state's projected financial statement released on June 29. Shortly after the budget was passed, Gov. Patrick asked the legislature to provide $20 million for MLSC outside of the surplus. The legislature rejected the Governor's proposal, and as a result, the original language in the budget was signed into law, meaning MLSC is unlikely to receive any funding for FY10.

When signed into law last year, the life sciences bill was structured so that the MLSC would receive $25 million each year from the state's consolidated net surplus (see the June 18, 2008 issue of the Digest). Because of the state's financial situation, however, the FY09 appropriation was reduced to $15 million and the FY10 appropriation was reduced to $10 million contingent on a consolidated net surplus for FY09. The additional capital components and $25 million in tax credits associated with the legislation are still in place.

The FY10 enacted budget is available at: http://www.mass.gov/bb/gaa/fy2010/.

New Jersey
The $29 billion FY10 spending plan signed into law in June cuts spending, increases taxes, and relies on $2 billion in federal stimulus funds. It was referred to by Gov. Jon Corzine as a "bare-bones appropriations act." Shortly after the budget was signed, the Office of Legislative Services released a report indicating that New Jersey faces a projected budget deficit of $8 billion in its next fiscal year and a shortfall of $2 billion in its unemployment compensation fund, reports the Courier Post.

Funding for New Jersey Commission on Science and Technology grants was reduced to $10 million in FY10, down $10.3 million from FY09 adjusted. The Commission administers grant programs focused on commercializing new technologies, developing early-stage growth companies and business incubators, and enhancing New Jersey's stem cell research capability.

The enacted budget fully funds Invest NJ in FY10, providing $25 million for job credits and $8.2 million for capital credits. Gov. Corzine signed legislation last December establishing the program within the New Jersey Economic Development Authority (EDA) and authorizing $120 million in grants over a two-year period. The program consists of two components, including grants to New Jersey businesses for new job creation and grants to businesses for qualifying capital investments.

Gov. Corzine also signed legislation establishing an Economic Redevelopment and Growth program (S-2299/A-4048). The New Jersey EDA will provide incentive grants to developers who will reimburse a portion of taxes generated through the project, according to the governor's office. In addition, the measure revises the Technology Business Tax Certificate Program, increasing the transferability and amounts of the new or expanding emerging technology and biotechnology companies' R&D tax credits and net operating losses. These changes include an increase in the maximum lifetime benefit per business from $10 million to $15 million.

Oklahoma
The Oklahoma Center for the Advancement of Science and Technology will receive $22 million in FY10, slightly less than last year's appropriation of $22.45 million. Most agencies, including the House, Senate and governor's office received a 7 percent cut in the enacted budget. Higher education will see about a 2 percent increase compared to last fiscal year, which should prevent the need for increased tuition, according to the governor's office.

The Oklahoma Space Industry Development Authority is slated to receive $493,215 in the upcoming year, down from $530,340 last year.

No funding was included for the BioEnergy Center, which was established in 2007 to advance the development of a commercial biofuels industry in Oklahoma (see the June 6, 2007 issue of the Digest). Gov. Henry recommended $3.5 million for the Center in FY10.

Legislation to earmark various state interest and investment earnings, including a portion of the oil and gas gross production taxes as a permanent funding source for the Economic Development Generating Excellence (EDGE) initiative, failed to pass in the legislature. The endowment, which was created in 2003 to help boost research projects in the state, currently contains $150 million, which is far short of the $1 billion goal. This is the second year Gov. Henry submitted a proposal to create a permanent funding source for the endowment (see the April 30, 2008 issue of the Digest).

Rhode Island
Lawmakers will consider a measure to overhaul the Rhode Island Economic Development Corporation (RIEDC) when they return in September. SB 945 would expand the agency's board from 8 members to 13 and allow Gov. Carcieri to dismiss current members beginning in February, reports the Providence Journal. The legislation also would grant a three-year contract to the agency's executive director and make the executive director position part of the governor's cabinet.

The FY10 budget signed by the governor in June provides $7.8 billion for FY10 operating expenses and fills a $590 million deficit. The Department of Administration's budget is $602 million for FY10, down $22.6 million from the FY09 revised appropriation. This includes $4.6 million for RIEDC, $650,000 less than last year. The Slater Technology Fund will receive $2 million in FY10, down $1 million from FY09. The Slater Fund invests at the inception stage in the development of a new venture, often based upon ideas and technologies originating in academic institutions, government research laboratories or commercial enterprises located within the region.

Gov. Carcieri also signed legislation requiring the state's largest electricity utility to enter into long-term contracts to purchase power from renewable energy producers in the state. The long-term contracting bill is expected to help large-scale renewable energy projects in Rhode Island attract the private financing they need by guaranteeing there will be a market for the energy they produce, according to a news release.

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Tapping Youth and Older Workers to Maintain a Competitive Workforce
The growing need for a skilled workforce in the U.S. has prompted policymakers, educators and industry leaders alike to explore a wide range of options for ensuring a pipeline of qualified workers with specialized skills to fill both new economy jobs and those that will be vacated by the aging population. Two recent examples include grants awarded to states to help re-train older generation workers for jobs in high-growth industries and legislation introduced in the U.S. Senate to provide resources for high-school students to secure high-wage careers in their regions.

While much attention is focused on recruiting youth to build a skilled workforce, perhaps overlooked are older workers, who play a key role in maintaining a competitive workforce, contributing skills and experience that younger workers do not yet possess.

Currently, 22.6 percent of the U.S. population is over the age of 55 and by 2016, the number of workers 55 and over is projected to increase by 36.5 percent, according to the U.S. Department of Labor (DOL). Often underutilized, older workers are a valuable labor pool that can help meet the workforce needs of regional economies, according to DOL. To help connect older workers with careers in growing industries, the agency recently awarded $10 million to organizations in ten states (Indiana, Louisiana, Maine, Maryland, Michigan, Pennsylvania, Texas, Vermont, Washington and Wisconsin) that specifically target older workers who have been laid off and are seeking re-employment. Another $3.6 million for the effort was invested by Atlantic Philanthropies.

The grants also will be used to help increase skills of older workers in fields including health care, advanced manufacturing, information technology, energy, green construction, and transportation.

A press release outlining the Department of Labor grants is available at: http://www.dol.gov/opa/media/press/eta/eta20090890.htm.

U.S. Senator Patty Murray (D-WA) introduced last month the Promoting Innovations to 21^st Century Careers Act to help high school students prepare for careers in high-skill, high-demand fields. The legislation calls for $912 million in federal competitive grants ranging from one-year planning grants to five-year implementation grants, which would be available for state and regional partnerships. Partnerships would need to include representatives from high schools, post-secondary education, business, labor, workforce, and economic development. These collaborative partnerships would use the grants to create career pathways, including curriculum and coursework development, academic and guidance counseling strategies tied to career pathways, and to develop registered apprenticeship programs.

The bill also would establish a National Academic and Career Innovation Center under the U.S. Departments of Education, Labor and Commerce to manage the grant program and implement research and evaluation programs to document and disseminate best practices.

The goal is to build local coalitions, find out what jobs are needed and how students can be trained for them, said Sen. Murray in a Tri-City Herald news article. For example, in her home state of Washington, the program could train workers in the aerospace and healthcare industries and prepare a next generation workforce of scientists and researchers for Pacific Northwest National Laboratory.

The text of S.1532 is available at: http://thomas.loc.gov/cgi-bin/query/z?c111:S.1532:.

Want to learn more about successful programs that are Enhancing the Science & Technology Workforce?

SSTI's 2007 Excellence in TBED Award Winner, the Virginia Council on Advanced Technology Skills (VCATS), is an alliance of employers and economic development partners created to address the challenge of ensuring a quality workforce for Virginia's technology-based industries. Through its competency-based training program designed by ten major employers in science- and technology-intensive advanced manufacturing, the initiative is creating skilled manufacturing technicians to meet local industry needs. Download SSTI's exclusive interview with Sheryl Bryan, VCATS project director: http://www.ssti.org/media/bryan.html.

Join us in Overland Park, Oct. 21-23, for the unveiling of SSTI's 2009 Excellence in TBED recipients!

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The Personal History of High-Tech Entrepreneurs
As the U.S. has experienced rising unemployment rates during the recent economic downturn, larger numbers of individuals with technology-based skills are finding themselves out of work. One policy option to seize the moment is to engage the unemployed, assisting them on a path to starting their own business. But what are the characteristics and family backgrounds of the general population who have become successful tech-based entrepreneurs?

In a recent report, "The Anatomy of an Entrepreneur," Vivek Wadhwa, Raj Aggarwal, Krisztina Holly and Alex Salkever examine the socioeconomic, educational, and familial backgrounds of 549 high-tech entrepreneurs, and the factors that motivated them to start a business. The authors find the entrepreneurs started their business at the average age of 40 years old, 70 percent were married at the time of launch, and 60 percent already had at least one child when they started their business. These findings may contradict existing stereotypes of tech entrepreneurs as primarily young people coming straight out of college without existing commitments to family.

The authors' analysis also found a full 95 percent of the entrepreneurs had bachelor degrees, with 47 percent having advanced degrees. Only 3 percent of their sample had a high school degree or less. From a socioeconomic perspective, 72 percent of respondents reported themselves as coming from a variety of middle-class backgrounds, as opposed to 6 percent from lower-class backgrounds. The authors contend, as a whole, entrepreneurs come from "stable, comfortable family existences" and poverty seems to be a significant barrier to entrepreneurship.

So, is being out of work what drives people to start companies? Not so much, according to the study, with 5 percent stating the inability to find work was an important factor in starting their own businesses. What really drives entrepreneurship, they found, is the desire to build wealth — indicated as an important motivation by three-fourths of respondents. Looking at industry experience, three-fourths of the entrepreneurs worked as employees at other companies for more than six years before starting out on their own.

As the survey examined entrepreneurs in high-growth industries such as the aerospace, semiconductor, biotechnology, software and engineering fields, the authors contend their research cannot be generalized for the entire population of U.S. entrepreneurs. And with many types of studies in this field, a certain "survivor bias" exists, such that the researchers interviewed are only the entrepreneurs who are still running companies, as opposed to those whose companies are no longer in existence.

“The Anatomy of an Entrepreneur” was released by the Kauffman Foundation and can be accessed at:

http://www.kauffman.org/uploadedFiles/ResearchAndPolicy/TheStudyOfEntrepreneurship/Anatomy%20of%20Entre%20071309_FINAL.pdf

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Research Park RoundUp: An Expanding Role in the Next Economy
Historically viewed as an important contributor to job creation in emerging fields and a revenue generator for cities and states, science and technology parks serve an essential role in driving high-tech economies. A recent article in BusinessWeek predicts that as nations emerge from the global recession, science parks are likely to play an even larger role in the process of ensuring that local economies remain competitive. And with increasing international competition, many established parks are undergoing transformations, adding square footage and distinct features in order to stand out among the crowd.

The article also provides several examples of "high-tech meccas" being constructed across the world with the goal of creating a new type of community. With an investment of €180 million ($256 million USD), Spain's 22@Barcelona project aims to transform 115 blocks of old industrial areas into an innovation district catering to knowledge-based companies, universities and research institutes. The project is viewed by developers as a compact city where innovative companies co-exist with research, training and tech transfer centers. Facilities also include housing and green spaces. Another example is Singapore's $10 billion mega-development project called One North, which integrates new research complexes and living laboratories for biotechnology, advanced materials, and medical services, according to the article.

On a much smaller scale than the above-mentioned examples, the following overview is a synopsis of select announcements from research parks across the world, including groundbreakings and development plans to support vibrant regional economies based on science, technology and innovation.

University of Tennessee Board of Trustees approved last month the master plan for a 77-acre state-of-the-art research park called Cherokee Farm. The site will house technology and research-oriented centers focusing on renewable energy, supercomputing, materials science, biomedical science, and climate and environmental challenges. Construction is expected to begin in August to accommodate the Joint Institute for Advanced Materials, which will house the Tennessee Solar Institute. Approved last month by the legislature, the Institute is part of the $62 million Volunteer State Solar Initiative (see the July 1, 2009 issue of the Digest).

Planning is underway for a new Virginia Nanotechnology Park following initial approval by Virginia's First Regional Industrial Facility Authority, reports The Roanoke Times. The Authority earmarked $20,000 toward the $20 million facility envisioned as a multi-tenant building for lease to energy, environmental and medical companies using nanotechnology, the article states. The project hinges on funding from state and federal government grants and private institutions.

Additional development space totaling 140,000 sq m recently was approved for technology businesses located at Ansty Park, a 100-acre R&D park in the Coventry and Warwickshire region of England slated to open later this year. Telecommunications leader Ericsson will be the first occupant in the park, housing its new R&D center with up to 850 staff. When complete, the project is expected to create up to 7,000 high-tech jobs.

The City of Whitewater, WI, and the Whitewater Community Development Authority reached a location agreement for the new 125-acre Whitewater University Technology Park and agreed to house a planned University of Wisconsin (UW) Innovation Center and acquire additional land for the project. The Technology Park Board is applying for a $3.4 million federal Economic Development Administration grant toward the $10 million technology park, according to a press release. With an estimated cost of $5 million, the UW Innovation Center is designed to foster the development of new businesses based on UW-Whitewater research.

The U.S. Economic Development Administration announced in May a $2 million grant for a proposed technology park in downtown Pensacola, FL, reports the Pensacola News Journal. The money will be used to fund the public infrastructure portion of the project that when complete, will house between 300,000 and 500,000 sq. ft. of technology office space, according to the article. Construction is expected to begin later this year.

A partnership was announced earlier this year to develop an Alternative Energy Industrial Park in Osceola County, Florida to include an R&D campus housing a technology incubator, distribution center, and an academic village and training center. Construction on the 500-acre park is expected to begin in 2012. The Alternative Energy Industrial Park at Destiny is designed to attract companies that are seeking to develop and manufacture new, clean technologies. The park creates a sustainable business model with a self-funding R&D platform for emerging technologies, according to developers.

The nation's first macro green eco-technology park housing University of Iowa graduates will be constructed in Iowa City, according to developer ECO-4 Partners, reports the Des Moines Register. Moss Green Technology Park will be marketed as using cutting-edge green technology, including porous pavement that absorbs rainfall, green sewers made from fiberglass, buildings with green roofs, solar panels, energy efficient lighting and systems for reusing gray-water runoff, according to the article. Construction on the 170-acre park is expected to begin this fall.

Buffalo Township in Butler County, PA, will house a new 50-acre business park for technology-based companies, reports the Pittsburgh Post-Gazette. A Carnegie Mellon University business incubator will accompany the business park, providing additional support for entrepreneurs starting high-tech companies. Funding for the $5 million business park is provided through a federal grant and tax-increment financing, the article states.

Expansion to the University Corporate Research Park at Michigan State University (MSU) is underway following a $1.8 million grant from the U.S. Economic Development Administration, reports the Lansing State Journal. The expansion will open the vacant south end of the 115-acre park, which will likely target startup companies based on MSU research as well as new tech companies. Additionally, the new construction will link the park with MBI International, a nonprofit business incubator with lab space for startup companies, according to the article.

Building plans for a new technology park near West Notts College in Mansfield, UK were unveiled earlier this year. When complete, the technology park will house up to 630 workers with an incubation centre providing 34 office units of various sizes, a "hot desking" area, and eight studio/workshops, reports the Nottingham Evening Post. The nine-acre scheme is driven by Sherwood Growth Zone Partnership and is expected to cost $30 million.

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Useful Stats
Per Capita Income by U.S. Metro Area 2004-2008
Over the five-year period from 2004 to 2008, 124 of the 366 U.S. metropolitan statistical areas experienced a change in per capita income at a greater rate than the U.S. as a whole, according to statistics released last week by the Bureau of Economic Analysis (BEA). In 2008, per capita personal income in the U.S. was $39,582, a 19.4 percent increase since 2004. To further examine all 366 metro areas in the U.S., SSTI has prepared a table showing the amount and change in per capita income for each MSA from 2004 to 2008.

The metro area situated around Midland, Texas experienced the largest increase in per capita income, growing by 51.1 percent over the five years. The Midland MSA was also in the top ten of MSAs in its projected 2008 per capita income.

Rounding out the top 10 in terms of five-year percent increases were the metro areas centered around:

• Houma, LA
• Odessa, TX
• Casper, WY
• Jacksonville, NC
• New Orleans, LA
• Lake Charles, LA
• Manhattan, KS
• Lafayette, LA
• Farmington, NM

In the press release announcing the data, the BEA states income tax rebates included in the 2008 Economic Stimulus Act had a measurable impact on the 2008 per capita income projections, but the size of the impact varied inversely with the per capita incomes of the MSAs. The reason: the stimulus act tax rebates were targeted towards lower-income families. For example, the rebate contributed 1.7 percentage points to the per capita personal income growth over the past year of the McAllen TX MSA (the metro with the lowest per capita income in the U.S.), compared to a 0.1 percentage point contribution to the Bridgeport, CT MSA (the metro with the largest per capita income).

Of the 10 metro areas with the smallest increases in per capita income from 2004 to 2008 (ranging from 5.0 percent to 9.3 percent growth over five years), three were located in Michigan, two were in Indiana, and one each was in California, Georgia, Oregon, Ohio, and South Carolina. It should be noted that BEA estimates on per capita income for metro areas are aligned with that year's definition of each metropolitan statistical area, whose geographic area may change over time, as defined every year by the Office of Management and Budget (OMB).

Personal income is defined as the sum of net earnings by place of residence, rental income, personal dividends, personal interest income, and current transfer receipts. The BEA calculates per capita personal income by dividing the total personal income of a given geographical area by the Census Bureau's mid-year annual population estimates.

SSTI's table is available at: http://www.ssti.org/Digest/Tables/081209t.htm.

The BEA press release is available at: http://www.bea.gov/newsreleases/regional/mpi/mpi_newsrelease.htm

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