Location:
ECONOMIC DEVELOPMENT; REGIONAL PLANNING; SCIENCE AND TECHNOLOGY;
Scope:
Other States laws/regulations;

OLR Research Report


January 31, 2012

 

2012-R-0040

REGIONAL TECHNOLOGY DEVELOPMENT CENTERS

By: John Rappa, Chief Analyst

You asked us to compare state laws authorizing the establishment of regional technology development centers.

SUMMARY

Laws in at least eight states provide for the establishment of regional technology development centers, places where a region's scientists, entrepreneurs, and venture capitalists can collaborate on developing new technology, establishing businesses to manufacture it, and training people to make or apply the technology. All envision public and private organizations, including colleges and universities, joining to establish and operate the centers, but differ in how they are established and funded.

Taken together, the eight laws contain the following six components that address how centers are established and funded.

Centers' Purposes and Functions. All the laws delineate the centers' purposes and functions, but the range and mix varies from state to state. For example, Indiana's centers may nurture commercially viable high technology ventures, increase venture capital flows, and expand high technology related educational opportunities. New York's centers focus mainly on providing information and technical assistance needed to develop commercially viable high technology products and techniques.

Eligible Operators. Some of the laws specify the types of organizations that may establish a center. Most of these allow only nonprofit organizations to establish centers, but Texas' allows these or for profit organizations to do so in collaboration with a public or private college or university.

Designated Agency. Most of the states' laws designate a state public or quasi-public economic development entity to approve proposed centers.

Center Selection Process and Criteria. Some laws explicitly provide a mechanism and criteria for submitting and approving proposed centers, respectively.

Center Funding. Most of the states' laws authorize grants or loans for operating the centers.

Attachment 1 summarizes each state's statutory provisions.

OVERVIEW

Table 1 compares the types of provisions found in the states' laws. As the table shows, New York's law has the most. It specifies the centers' scope of services, makes the New York State Office of Science and Technology responsible for approving centers, specifies the procedure and criteria for doing so, and authorizes grants to fund them. Massachusetts' law has the fewest provisions. It authorizes the quasi-public Massachusetts Life Sciences Center to designate a life science center in each of five specified regions and delineates the services they must provide.

Table 1: Comparison of Provisions in Selected States' Regional Technology Development Center Laws

State

Delineates Centers' Purpose and Functions

Specifies Eligible Center Operators

Designates Agency to Approve Centers

Specifies Center Approval Process

Specifies

Center Approval Criteria

Specifies Type of Funding

Indiana

Yes

No

Yes

Yes

Yes

Yes

Illinois

Yes

No

Yes

Yes

Yes

Yes

Kentucky

Yes

No

Yes

No

No

Yes

Louisiana

Yes

Yes

No*

No

No

No

Massachusetts

Yes

No

Yes

No

No

No

New York

Yes

Yes

Yes

Yes

Yes

Yes

Pennsylvania

Yes

Yes

Yes

Yes

No

Yes

Texas

Yes

Yes

Yes

No

No

Yes

* Louisiana law allows nonprofits to establish regional research and development parks without obtaining a state agency's approval.

CENTERS' PURPOSES AND FUNCTIONS

As Table 2 shows, the statutory provisions specifying the centers' purposes and functions vary, but share a common goal and method to achieve it. The goal is to create new businesses and jobs by developing new, marketable technology. The method is to provide a place where scientists, entrepreneurs, venture capitalists, and others from different sectors can collaborate on creating new wealth by converting research into new technologies.

Table 2: Comparison of Selected States Regional Technology Development Centers' Statutory Functions

Function

ID

IL

KY

LA

MA

NY

PA

TX

Help scientists, entrepreneurs, venture capitalists, and others find commercial applications for research projects

X

 

X

X

   

X

X

Provide business, technical, and financial assistance to high technology businesses

X

X

     

X

   

Identify and promote local and regional research and development capabilities

     

X

X

 

X

 

Attract private venture capital for research and development projects and plug capital gaps

X

X

   

X

 

X

 

Help existing businesses adopt new technologies

     

X

X

     

Develop or expand high technology workforce

X

 

X

X

   

X

X

Foster collaborative partnerships and networks

X

 

X

X

X

     

Maintain specific databases

       

X

X

   

Publicize state science and technology-related research and development and education

         

X

   

Identify property suitable for expanding life science businesses

       

X

     

Develop business incubators

             

X

Identify, evaluate, and submit proposals for state funding

             

X

Most of the laws authorize the centers to develop and expand the region's high technology workforce. Half explicitly authorize them to attract private venture capital and foster collaborative partnerships and networks between academic and industry researchers, business managers, entrepreneurs, venture capitalists, and others interested in converting research into new products and techniques.

CENTER SELECTION METHOD AND CRITERIA

As Table 3 shows, the states' laws differ in whether they specify (1) the types of organizations that can establish centers, (2) the method and criteria for designating them, and (3) how they fund centers.

Table 3: Comparison of Selected States Provisions for Selecting and Funding Centers

State

Eligible Center Operators

Method for Selecting Operators

Criteria for Selecting Operators

Type of Funding

ID

Unspecified

Application

Specified

Grants

IL

Unspecified

Application

Specified

Grants or cost sharing

KY

Unspecified

Unspecified

Specified

Direct Appropriations

LA

Nonprofits

Not Applicable *

Not Applicable*

Not Applicable

MA

Unspecified

Unspecified **

Unspecified

Unspecified

NY

Nonprofits

Request for Proposals

Specified

Matching Grants

PA

Nonprofits

Application

Unspecified

Matching Grants

TX

Private and nonprofit entities collaborating with colleges and universities

Unspecified**

Unspecified

Loans

* Under Louisiana law, entities may form nonprofit organizations to establish regional research and development parks without state approval

** Texas law authorizes the 15-member gubernatorially appointed Emerging Technology Fund Advisory Committee to recommend funding for Regional Centers of Innovation and Commercialization.

The laws in half the states specify the types of entities eligible to establish a center. Those in Louisiana, New York, and Pennsylvania limit eligibility to nonprofit organizations. Texas' law allows private or nonprofit organizations establish centers as long as they do so in collaboration with a public or private college or university. Indiana's, Illinois', Kentucky's, and Massachusetts' laws are silent on eligible center operators, but the Kentucky's law gives the Department of Commercialization and Innovation (DCI) commissioner broad powers to address this and other issues.

The pattern is more diverse regarding procedures and criteria for designating centers.

● Indiana's, Illinois', and New York's law require organizations proposing centers to apply for state approval and specify the criteria for granting it.

● Pennsylvania's law similarly requires organizations to apply for state approval, but is silent on the selection criteria.

● Kentucky's law, on the other hand, specifies the criteria for approving centers, but not the procedure for doing so.

● Massachusetts' and Texas' laws specify neither procedures or criteria for approving centers.

● Louisiana's law allows nonprofit organizations to be formed specifically to establish regional research and development parks.

All the states' laws except Louisiana's and Massachusetts' provide funds for the regional technology development centers.

● Indiana's law provides grants and New York's and Pennsylvania's matching grants. In these cases, the grants are provided through the state entity authorized to approve proposed centers.

● Illinois' law authorizes grants or cost sharing, which are provided through the Commerce and Economic Opportunity Department.

● Kentucky's law makes the centers eligible for state appropriations.

● Texas' law makes them eligible for loans funded through the state's emerging technology fund.

● Massachusetts' and Louisiana's laws specify no funding source for the centers.

Attachment 1: State Regional Technology Development Programs

Program Characteristic

Illinois: Regional Technology Enterprise Development Centers

(20 ILCS 700/3001)

Indiana: Regional Technology and Entrepreneurship Centers

(Ind. Code 4-12-10-4)

Kentucky: Innovation and Commercialization Center Program

(KY Rev. Stat. Ann. 154.12-278)

Administering Agency

Department of Commerce and Economic Opportunity

Economic Development Corporation (EDC)

Department of Commercialization and Innovation (DCI)

Center Purpose and Functions

Purpose:

Technical and managerial assistance to entrepreneurs, innovators, and start-up firms in high technology sectors

Help new ventures secure financing

Provide product development and marketing support to new ventures

Functions:

General business and technical assistance, including product feasibility studies and market research for businesses developing early-stage, technology-oriented manufacturing

Financial services, including accessing federal funds and venture capital

Gap financing for commercializing new technology

Purpose:

Create high technology companies that help existing businesses access technology

Support workforce development

Functions:

Nurture commercially viable high technology ventures

Increase high technology employment

Stimulate venture capital flows to Indiana high technology businesses

Expand high technology-related education and training

Collaborate with and locate near a public or private secondary education institution

Have a written agreement with Purdue University (for technical and personnel training support)

Establish debt free research and development facilities

Provide business support services

Match state funds for center's facilities

Purpose: create products, new businesses, and value-added jobs

Functions:

Identify and link entrepreneurs, professors, scientists, venture capitalists and other involved in creating and expanding technology-based businesses

Establish procedures for assembling and communicating project concepts and opportunities

Support high quality projects through concept and development phases

Identify potential partners, strategic opportunities, training and education needs, and issues inhibiting growth in state's technology sectors and business clusters

Eligible Center Operators

Unspecified

Unspecified

Unspecified

Selection Process

Application

Application—five centers per biennium

Unspecified, but, unless explicitly prohibited, the law gives DCI commissioner power and authority to do what is necessary to create centers

Selection Criteria

Compliance with previous loan and grant awards

Relation of project to state's economic growth

Organization's capacity and high technology-related expertise

EDC-defined criteria, that may include

Location near and partnership with post secondary education institution

Proposed local contributions

Minimum standards for center facility

Minimum support services

Guidelines for selecting center participants

Unspecified, but law allows DCI commissioner to contract with science and technology organization to administer program

Funding

Cost sharing reimbursements or grants for subsidizing department-approved expenses, revolving funds, capital improvements and equipment purchases, and other specified costs

Grants

Appropriations

Program Characteristic

Louisiana: Regional Research and Development Parks (LA Rev. Stat. 3397.5)

Massachusetts: Regional Technology and Innovation Centers (Mass. Gen. Laws Ch 23I 11)

New York: Regional High Technology Development Organizations (Pub. Auth. 5901.1)

Administering Agency

Law allows nonprofit organizations to establish parks; nine-member, gubernatorially-appointed Louisiana Research and Development Council promotes parks, but does not oversee them

Quasi-public Massachusetts Life Science Center

New York State Office of Science and Technology

Center Purpose and Functions

Nonprofit organizations can create parks to do any or all of the following:

Encourage existing businesses to adopt high technology and develop high technology businesses

Increase high technology-related employment opportunities

Promote research and development and its results

Encourage public and private sectors organizations to collaborate in research and development

Promote and assist counties and municipalities to increase research and development, increase job opportunities, encourage businesses to adopt technology, and attract high technology businesses

Attract nationally prominent scientists and researchers

Maximize research capabilities

Promote economic diversification to include technology and knowledge-based businesses

Encourage and facilitate collaboration between a region's life sciences related entities

Maintain life science industry database

Organize, facilitate, and implement regional workforce development initiatives

Provide business management and resource training

Facilitate public and private investment

Review and provide recommendations to center proposals

Identify property conducive to life science expansion

Investigate specific municipalities and regions that can be developed into life science clusters

Facilitate regional development

Sponsor and conduct conferences and studies, disseminate information, and issue periodic reports on in-state science and technology related research, development and education

Maintain registry of science and technology facilities

Provide technical assistance and information to small and emerging science and technology-related businesses

Provide information on inventions important to inventors

Eligible Center Operators

Nonprofit organizations

Life science entity identified by Massachusetts Life Science Center—one per region (five)

Nonprofit economic development organizations or corporations formed to promote, attract, stimulate, develop, or expand science and technology oriented economic activity in a specific region or one or more counties and cities

Selection Process

Not applicable.

Center identifies entity in consultation with its advisory board

Request for proposals describing:

organization's history, structure, mission, and governing body

center's economic outcomes

matching fund sources

short- and long-range plans, including marketing strategy

region's high technology sector, educational resources, and capacity to support high technology economic development

challenges confronting high technology economic development

Selection Criteria

Not applicable

Unspecified

Nature, relevance, and importance of center's proposed activities to region

Anticipated economic benefits

Representation from region's high technology sector

Organization's readiness to run the center

Organization's prior experience and track record

Funding

Not applicable

Unspecified

Matching grants

Program Characteristic

Pennsylvania: Regional Biotechnology Research Centers

(35 PA. Cons. Stat. 5701.1703)

Texas: Regional Centers of Innovation and Commercialization

(Tex. Gov't Code 490.152)

Administering Agency

Department of Economic and Community Development

Texas Emerging Technology Fund

Center Purpose and Functions

Create or enhance research and related industries

Develop high quality and commercially useful projects and intellectual property

Attract venture capital investments

Encourage training and educational programs

Develop regional research specialties

Implement commercial development of new research discoveries

Research and development, including initiatives intended to prove an idea's feasibility

Commercialize results for research and development

Incubators for new or expanding businesses engaged in research and development

Workforce training for businesses resulting from research and development

Eligible Center Operators

Nonprofit organizations formed to own and operate center

Seven- to 15-member board that includes state officials and private sector representatives

DECD commissioner appoints initial chairperson

Private and nonprofit entities collaborating with colleges and universites

Selection Process

Application to DECD specifying:

member organizations

board members' names and affiliations

programs, activities, and research projects

center's local and marketing plan

proposed first year budget

anticipated health, scientific, commercial, and economic development outcomes

each member's contribution to center

Unspecified. Committee must propose and initiate establishment of centers in specified regions.

Selection Criteria

No criteria, but total number of centers capped at three

Gubernatorially appointed 16-member committee recommends proposed center for governor's approval

Funding

Matching funds

Appropriations

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