SSTI Digest

Four recipients selected as best practice models in technology-based economic development were honored during an awards ceremony last week in Cleveland during SSTI's 12th Annual Conference. The awards follow a national competition emphasizing impact and replicability in approaches to building and sustaining tech-based economies.

Technology-focused incubators are an important component to fostering entrepreneurial development in a region by nurturing businesses in the earliest stages of development and helping them grow into larger companies that employ high-wage workers and bring new technologies to the market. The following select announcements provide an overview of new incubators from across the nation, illustrating the vital role of entrepreneurial development in growing high-tech regional economies.

Steve Bazinet has been hired as executive director of the Maine Center for Enterprise Development.

Coming together for a special one-day session last week, the South Carolina Legislature voted to override a line-item veto issued by Gov. Mark Sanford concerning the funding of the state’s Endowed Chairs program, now called the S.C. Centers for Economic Excellence. The override raises the budget allocation for the program from $20 million to $30 million, which surpasses the original multi-year cap of $200 million set for the Endowed Chairs/Centers of Economic Excellence program, when enacted in 2002. The program uses lottery proceeds to fund strategic faculty positions at the state’s three public research universities: Clemson University, the Medical University of South Carolina, and the University of South Carolina.
 
In a message to the General Assembly dated June 11, Gov. Sanford outlined the following reasons for his office’s concern with the legislation:

Legislators in Alabama, South Carolina and Tennessee recently approved spending plans for the upcoming fiscal year. Highlights of appropriations supporting TBED are included below.
 
Alabama
Alabama legislators wrapped up a special session over the weekend resulting in the passage of a $6.4 billion education budget. Lawmakers agreed to a $5 million increase ($40.8 million total) for the Alabama Math, Science, and Technology Initiative. The appropriation is $5 million less than Gov. Bob Riley’s recommendation of $45.8 million. The initiative, which received a substantial boost during the last legislative session (see the June 13, 2007 issue of the Digest), was created in 2002 to improve math and science education throughout the state.
 
South Carolina
Legislators supported the governor’s recommendation to fund the Endowed Chairs program, providing $10 million in FY09. The endowment program was created in 2002 to receive $30 million per year from lottery profits through 2010. A bill to extend the matching endowment program indefinitely by allowing interest earnings from the fund to be used for programmatic support, H. 4494, did not make it out of conference committee, however.
 
Lawmakers did, however, pass S.1252, a bill allowing the interest earnings from the Centers of Excellence Matching Endowment Fund to be used at the Research Centers of Excellence Review Board’s discretion for additional state awards.
 
Gov. Sanford vetoed a major priority of the state’s three research universities -- $4.5 million to implement SC LightRail, a high speed data network connecting the universities and three partner hospitals. The governor reduced funding for the project by $2.1 million from the General Appropriations bill and $2.4 million from the Capital Reserve Fund Appropriations bill. In his veto message, Gov. Sanford stated that the research universities have other ways to complete the project, specifically through their carry-forward and reserve accounts.
 
Hydrogen research grants were cut by $2.5 million for FY09. Gov. Sanford relayed the same veto message as last year when the grants were also cut, stating that while he is supportive of hydrogen research, tangible results are first needed for the investments already made. Additionally, the governor held his position stating, “We don’t believe the role of the government is to lead the private sector.”

New Carolina, South Carolina's Council on Competitiveness, has formed the South Carolina Engineering Cluster. Lee Stogner will lead the cluster and its steering committee, which represents government, economic develoment, academia, engineering companies and professional societies aiming to promote engineering in South Carolina.

Jay Moskowitz was named the first president of Health Sciences South Carolina.

Capturing an overwhelming majority of the votes needed to override Gov. Mark Sanford’s veto, the South Carolina Legislature prevailed last week in its efforts to position the state as a leader in hydrogen technology.
 
The Hydrogen Infrastructure Development Act, S. 243, authorizes the state to offer up to $15 million over the next four years in grants for research related to hydrogen production, storage, distribution and dispensing infrastructure. The bill also offers $300 tax rebates for in-state purchases of flex- and hydrogen-fuel vehicles and up to $500 for conversion equipment purchases. The veto was overridden with a 40-2 vote in the Senate and a 99-1 vote in the House.
                       
In his veto message to the legislature, Gov. Sanford expresses concern regarding an overemphasis on hydrogen technology at the expense of excluding other types of research. The governor provides several examples of the state's previous and ongoing support in hydrogen research, including a commitment of $3.6 million in recurring state funds for hydrogen-related projects in this year’s budget and $1 million for fuel cell research at the University of South Carolina.
 
Gov. Sanford maintains it is not the role of the government to lead the private sector or pick the “winning” industry of tomorrow. In addition, he explains that his administration has significant reservations about this level of public investment without more quantifiable returns to taxpayers.
 
The governor’s skepticism on hydrogen research was not the only reason the bill met his veto pen. According to the veto message, several items unrelated to hydrogen research were attached to the bill, including a sales tax exemption for amusement parks and an economic impact zone credit – both of which are found in S. 91, also vetoed by Gov. Sanford and consequently overridden by the legislature.
 
S. 91, the Research and Development Tax Credit Reform Act, creates an Economic Impact Zone tax Credit to companies that employ 5,000 or more full-time workers and have a total capital investment of at least $2 billion. According to the governor, the legislation does not target actual job creation but, instead, requires companies to invest money and employ workers.
 
The bill also includes tax credits for retail facilities, small businesses and installation of solar energy heating or cooling systems. Gov. Sanford referred to the bill as another example of a fragmented approach to economic development that does not serve the taxpayer well or fit with the coordination essential to competing effectively in today’s economy. The veto was overridden with a 42-0 vote in the Senate and 102-0 vote in the House.
 
The legislature also approved the fiscal year 2007-08 budget last week, excluding the governor’s $2 million proposal for a Rural Broadband Fund (see the Jan. 8, 2007 issue of the Digest). However, lawmakers did adopt a resolution to set up a 17-member Broadband Technology and Communications Study Committee to evaluate the state’s broadband communications infrastructure and assess the ability of the need for broadband services in rural areas.

South Carolina Gov. Mark Sanford announced that his budget for fiscal year 2007-08 will include a request for $2 million to bring high-speed Internet access to rural parts of the state. This allocation from the state’s Capital Reserve Fund would be used to create a Rural Broadband fund to increase broadband penetration in underserved communities and is designed to boost economic development by providing Internet access to students, businesses and entrepreneurs.

 

High-speed broadband connections are only available in 73 percent of the areas receiving phone service in South Carolina, according to recent data from the state’s Office of Regulatory Staff. The governor’s budget cites a study by the Freedom Works Foundation, which estimates that widespread broadband deployment in the state would add nearly 13,000 jobs and increase gross state product by $4.55 billion. The new fund would support efforts to provide rural counties and other local government entities with high-speed broadband, which could be used to assist local businesses, entrepreneurs and schools.

 

A new, nine-member South Carolina Broadband Advisory Committee would be created at the Department of Commerce to manage, oversee and monitor use of the fund. The committee, chaired by the state’s Secretary of Commerce, would prioritize funding to areas of the state that have been underserved by the existing telecommunications infrastructure.

 

The South Carolina FY 2007-08 Executive budget is available at: http://www.scgovernor.com/interior.asp?SiteContentId=6&pressid=290&NavId=54&ParentId=0

Details of the Rural Broadband fund are available in the “Improve the Conditions for Economic Growth” section starting on page 161.



Need more information on broadband?

No problem, we’re here to help. There are 65 reports found by searching for the topic "broadband/telecommunications" at the TBED Resource Center. We think the following are quite interesting:

Marketing tech-based economic development (TBED) programs can be challenging, particularly with the diverse nature of its target audiences of entrepreneurs, existing companies, financial sources, university researchers and, oftentimes, legislators. Sometimes, even the name of the program can cause misconceptions, particularly when a new initiative is outside the traditional services or roles offered by the TBED organization. A recent example of this comes from South Carolina.



Striving to change the public's perception of a program designed to invest in and support start-up companies, the South Carolina Research Alliance (SCRA) renamed its Innovation Centers program to SC Launch! last winter.



The concept of Innovation Centers give the impression of bricks and mortar, said Jim Stritzinger, executive vice president and general manager of SCRA's Public Interest Research department. "The intent of the program is not to build buildings, but to make companies successful," Stritzinger said. "The buildings will come later."



The legislature passed the South Carolina Innovation and Research Centers Act last year, mandating that SCRA invest $12 million in operating costs and direct investments through innovation centers at the state's three research universities. According to Stritzinger, SCRA is trying to take the legislative intent and wrap it around the best resources the state can provide in order to make start-up companies in the state successful.



For example, SCRA is utilizing intellectual property attorneys, financial institutions, and building partner networks to align with Launch! clients. SCRA currently has 42 existing and potential Launch! clients in the areas of advanced energy, automotive, advanced materials and nanotechnology, and health sciences and biotechnology. They also are in the process of collecting new proposals, Stritzinger said.



The mandate has enabled SCRA to do something they were not able to in the past - make direct equity investments in companies. To help start-up companies bridge between "friends and family" investments to angel and venture capital, the program provides investments of up to $200,000 in each company as loans or equity investments.



The state is divided into three zones, with each zone housing one of the state's three research universities. The upper zone houses Clemson University, the midlands zone houses the University of South Carolina, and the coastal zone houses the Medical University of South Carolina.



According to an article in the Post and Courier, the South Carolina Innovation and Research Centers Act is one of several efforts underway to create better jobs and expand the tax base by matching publicly funded research with private-sector needs. Other related measures include the creation of endowed professorships. More information on SC Launch! is available through SCRA at: http://launch.scra.org/

South Carolina Gov. Mark Sanford named Joe Taylor to serve as the new Secretary for the S.C. Department of Commerce. Taylor succeeds Bob Faith, who is taking Taylor's position as chairman of the S.C. Jobs-Economic Development Authority.

Thomas Persons Sr., president and CEO of the South Carolina Technology Alliance, was appointed to the newly created South Carolina Venture Capital Authority.