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[Senate Hearing 110-1191]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 110-1191
 
                            SCIENCE PARKS: 

                    BOLSTERING U.S. COMPETITIVENESS

=======================================================================

                                HEARING

                               before the

           SUBCOMMITTEE ON SCIENCE, TECHOLOGY, AND INNOVATION

                                 of the

                         COMMITTEE ON COMMERCE,

                      SCIENCE, AND TRANSPORTATION

                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 18, 2007

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                   DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska, Vice Chairman
    Virginia                         JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington           JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey      JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas                 JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware           DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
   Christine D. Kurth, Republican Staff Director and General Counsel
                  Paul Nagle, Republican Chief Counsel
                                 ------                                

           SUBCOMMITTEE ON SCIENCE, TECHOLOGY, AND INNOVATION

JOHN F. KERRY, Massachusetts,        JOHN ENSIGN, Nevada, Ranking
    Chairman                         JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West         KAY BAILEY HUTCHISON, Texas
    Virginia                         GORDON H. SMITH, Oregon
BYRON L. DORGAN, North Dakota        JOHN E. SUNUNU, New Hampshire
BARBARA BOXER, California            JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
MARK PRYOR, Arkansas
CLAIRE McCASKILL, Missouri
AMY KLOBUCHAR, Minnesota

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 18, 2007.................................     1
Statement of Senator Carper......................................     2
Statement of Senator Pryor.......................................     1
    Prepared statement of Hon. Olympia J. Snowe, U.S. Senator 
      from Maine.................................................     5

                               Witnesses

Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     1
Bowman, J. Michael, Chairman and President, Delaware Technology 
  Park Inc.; Incoming President, Association of University 
  Research Parks.................................................     7
    Prepared statement...........................................     9
Kempner, Randall T., Vice President, Regional Innovation, Council 
  on 
  Competitiveness................................................    19
    Prepared statement...........................................    21
Stafford, Phillip S., President, University of Arkansas 
  Technology Development Foundation..............................    14
    Prepared statement...........................................    15

                            SCIENCE PARKS: 
                    BOLSTERING U.S. COMPETITIVENESS

                              ----------                              

                       THURSDAY, OCTOBER 18, 2007

                               U.S. Senate,
       Subcommittee on Science, Technology, and Innovation,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:38 p.m. in 
room SR-253, Russell Senate Office Building, Hon. Mark Pryor, 
presiding.

             OPENING STATEMENT OF HON. MARK PRYOR, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Pryor. I want to thank everybody for coming, and 
I'll go ahead and call the Subcommittee to order.
    Let me say that we are about to have a vote here, any 
minute, in fact it may have just started. And so, what I 
propose to do, if it's OK with my two colleagues who are here, 
is allow Senator Bingaman to go first. He's been working on 
this issue for a long, long time, and deserves a lot of credit 
for getting us where we are today. Then recognize you, because 
I know you have some words to say, and by that time, it'll 
probably be time for us to go vote, and then we'll go from 
there.
    Senator Bingaman?

               STATEMENT OF HON. JEFF BINGAMAN, 
                  U.S. SENATOR FROM NEW MEXICO

    Senator Bingaman. Thank you very much, Mr. Chairman, and 
thanks for having this hearing, and for your leadership on this 
issue.
    I first got interested in the whole issue of science parks, 
I think, in some of the trips that I've taken to Asia. 
Particularly, I've had the chance to visit the Hsinchu Science 
city, there in Taiwan. I visited the Science and Technology 
Parks in Hong Kong, I visited various technology parks and 
science parks in Indian, and I'm persuaded that the legislation 
that you're now promoting, which is very similar to legislation 
I introduced, is well-designed to put a real focus on the 
importance of developing these high technology jobs in a 
sensible way throughout our country.
    We've got a lot of potential in this country to remain the 
world leader in science and technology, but frankly we are 
doing less as a nation to accomplish that then many of the 
countries that we're competing with. And I know you and Senator 
Carper have probably visited some of these same kinds of 
science parks in foreign countries that I have, so I won't go 
into great detail about them.
    Let me just talk about some of the specific issues that I 
think are some of the common features. First, there's a 
government commitment in each of these countries to provide a 
first-class infrastructure for science and technology-based 
companies. That, I think is very important, and of course 
that's part of your legislation, these parks align companies 
that have similar interests, that's very important. You can 
have a critical mass of talent focused on a particular issue, 
and that helps terrifically.
    Third, the government provides, essentially, a one-stop 
shopping opportunity for government approvals for obtaining 
loans for doing a variety of the things that are important to 
these companies.
    Fourth, the government provides tax incentives for 
companies that want to locate in these parks, and pursue these 
high-tech jobs, the creation of these high-tech jobs, and 
finally the government takes the long view of the importance of 
partnering with local governments to develop the workforce 
that's needed. The workforce, ultimately, is absolutely 
essential, and a lot of the science parks that I visited have 
very close working relationships with their local universities 
to train the people that are needed to work in these 
industries.
    The current legislation, S. 1373 is a shortened version of 
legislation we proposed in the previous two Congresses. I think 
it has in it the essential elements of that legislation, and as 
I say, I congratulate you for that. It has grants for science 
park planning. That's very important, and it also makes 
provisions for loan guarantees for construction.
    I think those are very essential components. I think it 
would be a major step forward, and a major signal to U.S. 
industry if we were to pass this legislation, and get the 
Federal Government solidly on the side of promoting more 
development of science and technology parks throughout the 
country, and by use of that mechanism, more creation of high-
tech jobs throughout the country.
    So, again, I congratulate you, and I know you've got a 
distinguished group of witnesses today to talk in more depth 
about these issues. I thank you for letting me come and speak.
    Senator Pryor. Thank you, Senator Bingaman. I'll tell you, 
you've shown a lot of great leadership on this over the last 
several years, and we appreciate it, the Committee does, but 
also the Senate appreciates your leadership on this good policy 
and you're right on the money. So, thank you.
    Senator Carper?

              STATEMENT OF HON. THOMAS R. CARPER, 
                   U.S. SENATOR FROM DELEWARE

    Senator Carper. Thank you, Mr. Chairman.
    Mr. Chairman, it's good to have a look at Senator Bingaman 
from this perspective, and to----
    Senator Bingaman. Which perspective do you usually look at 
me from?
    [Laughter.]
    Senator Carper. I'm usually following you, so----
    Senator Bingaman. I see.
    Senator Carper. Nice to be in this spot.
    I applaud the effort that he's providing. He provides 
leadership in so many areas, he's an inspiration to me, and I'm 
sure to our colleagues as well.
    I'm here today to applaud his leadership and that of yours. 
I always like to talk about my grandfathers. My grandfathers 
were able to get jobs when they were growing up on the strength 
of their backs. My children and our children, going forward in 
the years to come, they'll get fine jobs on the strength of 
their minds. It's just so important that we keep that in mind 
as we go forward if we're going to be successful in this new 
century.
    Part of our being competitive as a nation, includes having 
a workforce that's competitive, where young people coming out 
of our schools can read, can write, can think, use math, use 
technology, and have a good work ethic. Part of it includes 
having the kind of infrastructure that we need to make sure 
that we have trade policies that make sense in the 21st 
century, and also to invest in science parks.
    We have them in our state, and I know we have them in other 
places around the country, certainly, in New Mexico, and not 
far from Fayetteville, Arkansas, we might have one or two down 
there as well.
    But, I'm here today, to introduce, I'm tempted to call him 
my old friend, but he's not old, but a good friend of mine, and 
of our state, Michael Bowman. During the time that I was 
privileged to serve as Delaware's Governor, I made it a 
priority to include the creation and growth of technology-based 
companies.
    Mike is one of those experts that I turned to as Governor 
to help our State find ways to create and grow the DuPont 
companies of the future. Michael worked for many years at the 
DuPont Company of the past. He was a Vice President of DuPont's 
Advanced Materials and Systems. That was about a billion dollar 
business, and with over 2,500 employees.
    While at DuPont, Mike played a key role in helping Delaware 
to develop its strategy for technology-based economic 
development, including the concept for a new technology park 
that's now adjacent to the University of Delaware.
    Upon his retirement from the company in 1998, Mike took 
over as Chairman of the Board and CEO of the Delaware 
Technology Park, and that's a collaboration between the state 
of Delaware, the University of Delaware, and a number of high-
tech companies in our state, including the DuPont Company.
    And thanks to Michael's leadership, the Delaware Technology 
Park has attracted established industries and is providing 
opportunities and support to start-up companies in high-tech 
fields, especially those in biotechnology, information 
technology, and advanced materials.
    Just 2 years ago, in 2005, the Delaware Technology Park was 
recognized as ``Outstanding Research Park of the Year,'' and 
the park was renamed in Michael's honor. No, I'm kidding about 
that.
    [Laughter.]
    Senator Carper. It should have been, it should have been.
    The 40-acre park is home to some 54 companies, it's home to 
the Delaware Biotechnology Institute, and it's home to about 
750 employees. It's graduated some 20 spin-off companies, he's 
proud of that, and I am as well. And fortunately my staff was 
good enough to write a draft of my remarks, that said ``it's 
graduated some 20 spin-out companies'' but they're really spin-
off companies.
    Delaware Technology Park tenants have won approximately 
$200 million of Federal grant awards, and have invested about 
$150 million in our small State, to date.
    The Park and the Delaware Biotech Institute have had a 
direct role in the creation of some 15,000 jobs. That's a lot 
of jobs for my little State, and it might even be a lot for 
Arkansas.
    Earlier this year, Mike Bowman was elected to the job that 
a lot of our colleagues would like to have, and that's 
President. And I was joking earlier that John McCain--it's 
often said in past years when asked if he was running for 
President, he always responded, ``In the U.S. Senate, unless 
you're in detox or under indictment, you're assumed to be 
running for President.''
    [Laughter.]
    Senator Carper. Mike Bowman is not a wanna-be, he is 
President. He's President of the Board of Associations of 
University Research Parks, which includes about 100 U.S. and 
Canadian research parks.
    Currently, Michael serves as a Board Member of five 
technology companies, and is also on the Board of First Aid 
Innovation, the Delaware Science and Technology Council, the 
University of Delaware Technology Corporation, and he's a 
member of the National Council on Competitiveness.
    He holds a Bachelor of Science Degree in Chemical 
Engineering from the University of Cincinnati. He went to 
Cincinnati and later on, added to that, business programs and 
financial programs at Wharton, and Columbia.
    I'm just delighted as a Delawarean and a recovering 
Governor, that Mike Bowman is here today to provide us with 
direction on how to support the creation of high-paying, high 
skill jobs in technology-based companies that will help 
determine our competitiveness in the future.
    Thank you very much for this opportunity.
    Welcome, Michael.
    Senator Pryor. Now, for the audience and for the 
Committee's members, we're going to have to recess. We've got a 
series of four roll call votes, it'll be at least 30 minutes, 
maybe more like 45, before we're able to reconvene. We'll take 
a brief recess, and when we come back, we'll get moving with 
the hearing. So, the Subcommittee stands in recess.
    [Recessed.]
    Senator Pryor. Well, let me reconvene our Subcommittee, and 
thank all of the witnesses and the audience for their patience. 
We had that series of votes and, had a lot of business going on 
down there on the floor. Hopefully some of it will lead to some 
good things.
    Let me also say that, we're going to leave the record open 
so Senators should feel free to submit questions for the 
record. We'll leave it open for 2 weeks. As an example, Senator 
Snowe asked me to put her opening statement in the record, and 
so I'm honored to do that.
    That will be made part of the record and other Senators may 
do the same.
    [The prepared statement of Senator Snowe follows:]

  Prepared Statement of Hon. Olympia J. Snowe, U.S. Senator from Maine
    Thank you, Mr. Chairman, for holding this pivotal hearing today on 
the crucial issue of strengthening America's competitiveness by 
enhancing U.S.-based science, research, and technology parks. Your 
invaluable and longstanding leadership on behalf of advancing 
innovative technology in our economy is confirmed by convening this 
timely hearing.
    We are gathered here today to explore and recognize the value of 
``science parks''--which are concentrated high-tech, science, and 
research-related businesses--in strengthening America's global 
competitiveness. Through the development of new innovative 
technologies, competing and complementary companies working within 
close quarters are able to build on each others' ideas when entering 
the national and global marketplace. Unlike well known industrial 
parks, science parks focus primarily on innovation and product 
advancement. These parks are a vital part of the Nation's economy, 
creating 2.57 jobs for each core job in a science park.
    As a cosponsor of S. 1373, the ``Building a Stronger America Act,'' 
I adamantly encourage increased investment in new and existing science, 
research, and technology parks throughout the U.S. This legislation 
would drive innovation and regional entrepreneurship by enabling 
existing science parks to make needed renovations while also 
encouraging rural and urban states to undertake studies on developing 
their own successful regional science clusters.
    Congress recently passed, and the President signed into law, the 
``America COMPETES Act,'' legislation authorizing $43 billion of new 
funding over the next three fiscal years which will boost Federal 
investment in math and science education programs. Continuing the 
efforts of the ``America COMPETES Act'' by increasing research funding 
and education for our innovative workforce is vital, and S. 1373 will 
ensure that this workforce is provided with a place in which to 
operate.
    In my home state of Maine, we simply do not have the population 
density in any given area to support traditional science parks. 
However, Maine has been a national lender in providing business 
``incubation'' services. Incubators are critical to the success of new 
companies. To help start-up entrepreneurial companies in Maine, centers 
around the state provide business support tailored to companies in 
their region. The benefit of business incubators in Maine has been 
nothing short of monumental, with 87 percent of all businesses that 
graduate from incubators remaining in business. The seven technology 
centers located throughout Maine have played a pivotal role in 
promoting technology-led economic development by advancing their own 
regional competitive advantages. Under the ``Building a Stronger 
America Act,'' not only science parks, but also business incubators 
will be eligible for its vital assistance.
    Residency in science parks provides businesses numerous advantages 
such as access to a range of management, marketing, and financial 
services. At its heart, a science park provides an organized link to 
local research centers or universities, providing resident companies 
with the constant access to the expertise, knowledge, and technology 
they need to grow. These innovation centers are specifically geared 
toward the needs of new and small companies, providing a controlled 
environment for the incubation of firms and the achievement of high 
growth.
    It is also vital to point out that the jobs science parks create 
reflect the needs of a high-tech, innovative, and global marketplace. 
Science parks have helped lead the technological revolution and have 
created more than 300,000 high-paying science and technology jobs, with 
another 450,000 indirect jobs for a total of 750,000 jobs in North 
America.
    Our Nation's capacity to innovate is a key reason why our economy 
continues to grow and remains the envy of the world. Through America's 
investments in science and technology, we continually change our 
country for the better. Ideas by innovative Americans in the private 
and public sector have paid enormous dividends, improving the lives of 
millions throughout the world. We must continue to encourage all 
avenues for advancing this vital sector if America is to compete at the 
forefront of innovation.
    Thank you, Mr. Chairman.

    Senator Pryor. And for the witnesses, if you have materials 
or studies that you want to submit to make it part of the 
permanent record, we'd be delighted to accept that, as well.
    I need to and I want to thank, Senator Kerry for agreeing 
to hold this hearing, and I'd like to especially thank him for 
allowing me to chair it. We have a great panel here, I know 
Senator Bingaman is very passionate about this, as well as a 
number of other Senators, we have several co-sponsors on our 
legislation that we'll be trying to push through the Senate 
some time in the near future.
    In the last several years, the United States has undergone 
a dramatic transformation as the Nation moves to an economy 
driven by knowledge and technology. States and regions need an 
economic base composed of businesses that constantly innovate 
and maximize their use of technology in order to compete in 
this global economy.
    It's generally acknowledged that several elements are 
required for a technology-based economy, such as an 
intellectual infrastructure, mechanisms for technology 
transfer, physical infrastructure, including high-quality 
Internet and telecommunications systems, and a skilled 
workforce.
    Science parks are often recognized as the gold standard of 
technology-led economic development. Science parks are believed 
to enhance the synergy between universities and companies, and 
to promote the economic development and competitiveness of 
cities, states and regions, by providing a location in which 
researchers and companies can operate in close proximity.
    Science parks can create an environment that fosters 
collaboration and innovation, leading to the commercialization 
of new ideas, products and technologies.
    There's really no uniform definition for a science park. 
They're sometimes known as research parks or technology 
incubators. Regardless of what we call a science park, their 
principle goal is to facilitate the growth of innovation-based 
companies, by stimulating the flow of knowledge and technology 
among universities, research and development institutions, and 
businesses and markets.
    Science parks accomplish this goal by providing 
infrastructure and support services, collaborative links with 
economic development agencies, academic institutions and 
research establishments, and essential business and technical 
support services needed by small and medium-sized companies.
    Nearly half of science parks are university-affiliated, 
non-profit entities. Most of these parks were built in the 
1980s and 1990s and have outgrown their original facilities.
    Seventy-eight percent of science parks have expanded their 
physical presence after their creation. In the first decade of 
the 21st century, there has been a resurgence of interest in 
the development of science parks as an engine of innovation.
    Earlier this year, I, along with others, introduced S. 
1373, the Building a Stronger America Act, Senators Bingaman, 
Snowe and Smith were three of the co-sponsors.
    The purpose of this bill is to promote investment in new 
and existing science parks throughout the United States. This 
bill would strengthen America's competitiveness by enhancing 
the science infrastructure that fosters new, innovative 
technologies, and speeds their entry into the global 
marketplace.
    I look forward to hearing your testimony on how science 
parks contribute to U.S. competitiveness, and your suggestions 
for improving this important legislation.
    Let me introduce the panel. What I'd like to do is ask each 
of you to do a five-minute opening statement. The order in 
which we'll do these would be Mike Bowman, Chairman and 
President, Delaware Technology Park, and incoming president, 
Association of University Research Parks, Phillip Stafford, who 
happens to be from Arkansas, University of Arkansas Technology 
Development Foundation, I want to give a special welcome to 
you, Phillip, and Randall Kempner, Vice President for Regional 
Innovation, Council on Competitiveness.
    So, let's let everybody have 5 minutes to open. Again, I 
apologize, given the votes, we had to delay your openings for 
so long.
    Mr. Bowman, why don't you lead off.

          STATEMENT OF J. MICHAEL BOWMAN, CHAIRMAN AND

      PRESIDENT, DELAWARE TECHNOLOGY PARK, INC.; INCOMING

      PRESIDENT, ASSOCIATION OF UNIVERSITY RESEARCH PARKS

    Mr. Bowman. Thank you, Senator Pryor.
    I really deeply appreciate the opportunity to speak today 
on behalf of the Association of University Research Parks, 
which I assume you know.
    What we do is foster the development of science and 
research parks, and enable innovation, commercialization and 
economic competitiveness.
    AURP strongly supports S. 1373, and I'd like to explain 
why. The principal components of this are two-fold, as we 
understand it. The first being, it supports planning grants for 
new science parks, or expansions of existing ones. And second, 
it guarantees loans for credible, new, expanded or retrofitted 
building projects.
    So, my message is really in three components, what are 
science parks today, what have they accomplished, and what is 
essential to keep the United States globally competitive.
    As the bill states, science parks are really quite 
different than conventional business parks. Science parks are 
really focused on building communities and innovation. 
University, government and private sector come together within 
these parks as knowledge partners, and the purpose is really to 
connect ideas, talent and funding.
    Science parks are usually recognized as the hub of an 
entrepreneurial ecosystem, and for its cutting-edge research. 
The characteristics of the occupants are, they're very 
interdisciplinary in their skill base, they're inter-
institutional in the way they work together, and they also have 
cultures of both collaboration and competitiveness.
    Science parks don't pick winners and losers--neither the 
technology, nor the business themselves. In fact, the best 
survive and thrive. The size and shape of research parks vary 
dramatically. You could have a 2, 3-acre postage stamp kind of 
facility in New York City with a million square feet going 
vertically, you could go to Research Triangle Park and find 
7,000 acres in a campus-like environment, which is kind of a 
work, live, play community.
    The common requirement of science parks is simply they be 
near the talent, and have rich intellectual property. And this 
would include faculty, grad students, interns, both academic 
and corporate spin-outs and global partnerships.
    We're finding the growth of science parks accelerating. 
It's about 30 percent a year now, and many of the older parks 
are undergoing renewal. And that's because the rush of new 
technology. We're looking at translational biomedical research, 
nanotechnology, renewable energy--this is driving 
infrastructure change.
    Today, we can count about 200 parks in North America, about 
400 parks elsewhere in the world. The Battelle Technology 
Partnership Practice, in cooperation with AURP is about to 
release a comprehensive report on the characteristics and 
trends of research parks. But the early news on that is that we 
find that about 30,000 direct high-paying science and 
technology jobs associated with research parks, and another 
450,000 indirect jobs. So, that's 750,000 new jobs in North 
America connected to this work. There are a lot of examples in 
the written testimony I've given about research parks.
    My last point is simply this. While science parks differ in 
many ways, there is a unifying need for capital to build 
infrastructure, if the United States is to maintain a global 
economic leadership. Most other nations either subsidize, if 
not totally fund, infrastructure investments. And Senator 
Bingaman, earlier, related some of his trips to Asia. China 
considers science parks central to its university-based system, 
all the way through to commercialization. They have 50 parks up 
already, they have another 30 planned by 2010.
    India, they've had a program since 1984 that's called the 
Science and Technology Entrepreneurs Park Program. That's 
generated a flurry of parks, particularly around information 
technology. And more recently, you've read about Singapore, 
focused on an entire city, a biomedical city called Biopolis 
that's already attracted over $1 billion of investment.
    So, most science parks in the U.S. are designed to be non-
profit--they break even, at best, from operations. And what 
that means, they have no investment capability. They embrace 
higher risk innovation, they have earlier stage companies, and 
they take on non-profit research organizations. And, frankly, 
that's a tenant mix that has not been attractive for 
conventional funding without guarantees.
    Furthermore, construction borrowing costs have increased 
dramatically over the last few years. Authorization of this 
bill, and appropriation of the requested funds would enable 
science parks to sustain our innovation edge, which is so 
critical to the U.S. economy. And, I think in many ways, this 
bill is a logical companion to the America COMPETES Act, which 
is really the stimulation of research and science education.
    So, S. 1373 offers a solution to the where for science and 
technology, in order to move toward the market.
    Thank you very much.
    [The prepared statement of Mr. Bowman follows:]

   Prepared Statement of J. Michael Bowman, Chairman and President, 
   Delaware Technology Park Inc.; Incoming President, Association of 
                       University Research Parks
    Senator Pryor, Senator Carper, and Members of the Committee, thank 
you for the opportunity to testify here today in support of Senate Bill 
1373, the ``Building a Stronger America Act''.
    My name is Michael Bowman. I am the Chairman and President of 
Delaware Technology Park, and the Incoming President of the Association 
of University Research Parks (AURP). I would like to provide my 
perspective to help you better understand science parks, and how they 
create economic development.
    I also would like to thank you for the passage of the recent 
``America COMPETES'' legislation. As you know, this important 
legislation calls for $43 billion of new funding over the next three 
fiscal years to boost Federal investment in basic research in the 
physical sciences, expand math and science education programs at the K-
12 and university levels, and revitalize policies that encourage 
innovation. It truly is an important element in maintaining America's 
future competitiveness.
    Today I'd like to discuss another important element. As the 
``America COMPETES'' legislation provides research funding and 
education for our innovative knowledge workforce, that workforce will 
need places in which to work.
    Science parks are those places.
Introduction
    The Association of University Research Parks (AURP) exists to 
foster the development of research and science parks. Science parks 
create innovation, commercialization and economic competitiveness 
through collaboration among universities, industry and government.
    With membership consisting of planned and operating science parks 
in North America and across the globe, AURP's mission is to educate the 
world about science parks, create networks to support them, and to 
promote their best practices.
    AURP whole-heartedly supports Senate Bill 1373, otherwise known as 
the ``Building a Stronger America Act''. As a means of fostering 
innovation and competitiveness, this act, if passed, would authorize 
the United States Department of Commerce to establish a $7.5 million 
competitive grant planning program to enable winning localities to fund 
feasibility studies for developing regional science parks, or to expand 
and retrofit existing parks.
    The legislation would also create a loan guarantee program to be 
applied to the development of new science parks, or to upgrade existing 
science park infrastructure. The bill calls for a loan guarantee for 80 
percent of the face value of qualified construction loans, thereby 
increasing the ability of university science parks to make necessary 
investments in their infrastructure.
Science Parks as Economic Development Hubs
    The world's first science park started in the early 1950s and 
foreshadowed the community known today as Silicon Valley. Another early 
science park set out to stop the ``brain drain'' from a rural, 
agricultural region, which was then dependent on the tobacco industry. 
Today Research Triangle Park, and the area around Raleigh and Durham, 
N.C., is home to many of the world's most advanced high technology 
businesses. These businesses employ over 40,000 people.
    Science parks provide the launch pad that startup companies need 
when they are ``spun out'' from a university or company. Park-provided 
training in such areas as intellectual property law and business 
planning help the fledgling businesses to succeed. Universities, in 
turn, benefit by exposure to the business world, and the connection to 
the cutting-edge research being conducted outside their walls in 
industry. What all science parks have in common is that they are, at 
heart, knowledge partnerships that foster innovation.
    As science parks harness the combined power of education, research 
and private investment, the result is new jobs, new industries and 
solutions to age-old problems of mankind. They connect the innovative 
thinkers of our time and harness the most powerful resource of the 21st 
century: mind power.
    Science parks are sources of entrepreneurship, talent, and economic 
competitiveness for our nation, and are key elements of the 
infrastructure supporting the growth of today's global knowledge 
economy. By providing a location in which government, universities and 
private companies cooperate and collaborate, science parks create 
environments that foster collaboration and innovation. They enhance the 
development, transfer, and commercialization of technology.
    More than 300,000 workers in North America work in university 
science parks. And according to the soon-to-be released AURP-Battelle 
Technology Practice report,\1\ every job in a science park generates an 
average of an additional 2.57 jobs in the economy. Science parks are 
strong sources of entrepreneurship, talent, and economic 
competitiveness for our states and our Nation.
---------------------------------------------------------------------------
    \1\ Characteristics and Trends in North American Research Parks: 
21st Century Directions, prepared by the Battelle Technology 
Partnership Practice in cooperation with the Association of University 
Research Parks, October 2007.
---------------------------------------------------------------------------
    While parks vary widely in size and shape, from urban high-rises to 
suburban or rural locations, a typical American science park is located 
in a suburban community with a population of less than 500,000 and is 
operated by a university or a university-affiliated non-profit 
organization.
    The companies in this typical science park are primarily private 
sector, but the science park is also home to university and government 
facilities. It is the combination of these three interacting elements: 
government, the university, and private sector companies--that gives 
parks their dynamism.
    The typical park provides a range of business startup assistance to 
its client companies, which are often small startups based on 
innovative new ideas from university or private sector researchers. The 
park has an operating budget of less than $1 million a year, and of 
course, since it is designed as a non-profit entity, the park itself 
does not generate significant net revenue. 750 people work at jobs 
there, primarily at information technology companies, pharmaceutical 
firms, or scientific and engineering service providers. These sorts of 
companies provide 45 percent of all science park jobs.
    A new model--strategically planned mixed-use campus expansions--is 
emerging that involves shared space in which industry and academic 
researchers can work side by side. These university-affiliated mixed-
use campus developments are not simply real-estate ventures. They 
embody a commitment by universities to partake in broader activities, 
offering companies high-value sites for accessing researchers, 
specialized facilities, and students, and promoting live-work-play 
environments. Key features of these mixed-use developments include 
space for significant future research growth; multi-tenant facilities 
to house researchers and companies; and housing, along with other 
amenities which are attractive to young faculty, post-doctoral and 
graduate students.
    Centennial Campus at North Carolina State University is a case in 
point. In the 1980s, pressure for space at the main North Carolina 
State University (NCSU) campus in Raleigh led to exploration of nearby 
options, including substantial holdings by the state mental-health 
system and the Diocese of Raleigh on 1,000 acres surrounding the old 
Lake Raleigh Reservoir. Starting in the 1980s, the land was conveyed to 
NCSU in stages, and serious planning began with the appointment of a 
former dean of the university's School of Design to the position of 
campus coordinator.
    At the outset, Centennial was conceived as a ``smart growth'' 
community that would incorporate a live-work environment and minimize 
the need for driving, through a connection to the main campus. The plan 
for Centennial evolved into a unique combination of institutional and 
commercial space side-by-side in a dual use ``campus of the future.'' 
The campus is divided into ``neighborhoods'' serving diverse high-tech 
sectors, each focusing on programmatic strengths of the university.
    First to move was the College of Textiles, followed by the research 
components of the College of Engineering and units of other colleges. 
Then in 2002, some 200 additional acres already owned by the University 
and home to its College of Veterinary Medicine were renamed 
``Centennial Biomedical Campus'' and will be developed using the 
Centennial Campus model, one that is being emulated throughout the 
world in new science park design.
    Science parks are also being developed to leverage the assets of 
non-university research and development organizations such as Federal 
laboratories. In addition to universities, major medical research 
centers and other research organizations can be key drivers of 
technology-based economic development. It is becoming increasingly 
common for communities in which a Federal laboratory is located to 
create a science park to leverage laboratory resources to realize 
economic development.
    Federal laboratories attract companies that wish to leverage the 
expertise of the laboratory researchers and to gain access to highly 
specialized, and often unique, facilities and equipment. Science parks 
can also provide a location for start-up companies created to 
commercialize technology developed in the labs.
    Sandia Science and Technology Park, the National Aeronautics and 
Space Administration (NASA) Research Park at Ames, and the Tri-Cities 
Science and Technology Park located close to the Pacific Northwest 
National Laboratory are examples of research parks that have been 
developed by or adjacent to Federal laboratories. Another example is 
the East Tennessee Technology Park at Oak Ridge National Laboratory.
    Other outstanding examples of U.S. science parks are the Cummings 
Research Park in Huntsville, Alabama, and the Purdue Research Park in 
West Lafayette, Indiana. Begun in 1962, Cummings today is home to 285 
companies which employ over 25,000 employees, and Purdue, founded in 
the late 1950s, is today home to over 90 companies.
    Science parks are succeeding in incubating and growing companies. 
According to the Battelle report, nearly 800 firms graduated from park 
incubators in the past 5 years, while only thirteen percent failed. 
About one-quarter of these graduates remain in their park. Fewer than 
10 percent of the graduates left the region.
    And since science park jobs generate an additional 2.57 jobs, 
according to Battelle, the total employment impact of all science parks 
in the U.S. and Canada is more than 750,000 jobs.
    Science parks are truly the hubs of our Nation's entrepreneurial 
ecosystem.
The Importance of Science Parks to America's Competitiveness
    All around the world, governments are turning to science park 
creation as a major economic development strategy. The vital role of 
maintaining the United State's economic competitiveness is particularly 
urgent as companies outsource jobs, manufacturing--and now, ever-
increasingly, research and development--abroad. It is crucial to the 
U.S. economy that we also support our science parks if we are to 
continue to lead the world in scientific and technology development and 
maintain high-wage job growth.
    Last year, the Chinese government announced plans to vastly 
increase annual funding of research and development, and determined 
that 60 percent of China's economic growth would be based on this 
sector by 2020.\2\ At the same time, the government announced plans to 
build 30 new science and technology parks throughout the country, to be 
completed by 2010.\3\ According to news bulletins, the parks are to be 
designed as incubators for small and medium-sized high-tech companies, 
many of which will be set up by universities or students.
---------------------------------------------------------------------------
    \2\ http://www.scidev.net/News/
index.cfm?fuseaction=readnews&itemid=2654&language=1, accessed October 
14, 2007.
    \3\ http://www.scidev.net/News/
index.cfm?fuseaction=readNews&itemid=2789&language=1, accessed October 
14, 2007.
---------------------------------------------------------------------------
    Another threat to U.S. competitiveness comes from multinational 
corporations, which are increasingly shipping research and development 
abroad. A recent study by Jerry Thursby of Emory University and Marie 
Thursby of Georgia Institute of Technology,\4\ which examined the 
future plans of top global corporations, found that over one-third of 
the companies interviewed anticipate a substantial change in the 
distribution of their research and development over the next 3 years. 
Nearly three-quarters of the companies that do anticipate a substantial 
change expect most of their technical employment growth during the next 
few years to be in China, while expecting U.S. technology staff to 
decline by nearly 4 percent during the same period.
---------------------------------------------------------------------------
    \4\ Report to the Government-University-Industry Research 
Roundtable: Here or There? A Survey of Factors in Multinational R&D 
Location by Jerry Thursby, Emory University and Marie Thursby, Georgia 
Institute of Technology and National Bureau of Economic Research, 
National Academy of Sciences, National Academy of Engineering, and 
Institute of Medicine of the National Academies Press Washington, D.C., 
www.nap.edu.
---------------------------------------------------------------------------
    Even more important to note is that the percentage of research 
conducted within corporations has dropped dramatically, shifting toward 
universities, which are often connected to science parks. Corporations 
commonly turn to science parks to spin out a product, which they then 
develop. Without the pathway of the science park, there is increasing 
danger that global corporations will turn to foreign science parks at 
this crucial stage.
    Given the emphasis on intellectual property protection in the U.S., 
as well as the emphasis on collaboration between scientists, faculty 
and the private sector embodied in our own science parks, the United 
States can utilize its science parks to staunch the flow of the 
research and development off-shore, along with the ensuing brain drain, 
with proper funding and support.
    Across North America, where capital funding has been provided for 
science park construction, dramatic results have been achieved. 
Canadian examples include University of Victoria's Vancouver Island 
Technology Park (VITP), which recently released an economic impact 
study showing that over $280 million annually is generated from a 
capital investment of $20 million. Other Canadian examples include 
Innovation Place in Saskatoon, Saskatchewan, where capital investments 
of $160 million over the last 27 years generate an annual impact on the 
local economy exceeding $248 million per year, and Technoparc St-
Laurent, Metropolitan Montreal, where capital investments over the last 
10 years of $100 million have generated additional new investments in 
excess of $1.5 billion, with an impact on the Montreal economy 
exceeding $250 million dollars annually.
    Finally, it is well recognized that the U.S. has been lagging in 
science, math and technology education. As mentioned above, the 
``America COMPETES Act'' addresses the urgent need to boost teaching of 
the sciences and technology for students starting in kindergarten and 
moving through high school into their college and post-graduate 
education.
    The ``Building a Strong America Act'' is a logical companion to 
``America COMPETES Act'' because science parks provide locations for 
university students and entrepreneurs, alike, to cross-fertilize ideas 
and conduct research that can be translated into new technologies. 
Thanks to science parks, ideas can become companies that grow, attract 
other companies, and eventually boost the economies of their states and 
the U.S. economy at large.
The Need for Funding and Loan Guarantees
    Senate Bill 1373 will foster U.S. competitiveness by supporting the 
development of new science parks throughout the country, both in rural 
and urban areas. It also establishes a mechanism for needed loan 
guarantees that will allow existing science parks to upgrade and 
retrofit their facilities.
    Nascent science parks are urgently in need of both funding and 
government-backed loan guarantees. The same is true for more mature, 
existing science parks. Many date from the 1980s and 1990s and have 
out-grown their original facilities. Battelle indicates that three out 
of every four science parks have expansion plans that will require 
financing. However, securing financing is not a given for most parks, 
with their three elements--university, local government, and private 
sector interests.
    The varying nature of specific scientific research dictates 
laboratory design and space requirements, so science parks can't be 
created in a cookie-cutter fashion or replicated over and over. Each 
science park must be designed in a way specific to its own environment.
    Add to this the fact that construction of science labs is an 
expensive endeavor, with flexibility needed so that laboratories can be 
changed frequently to meet the demands of cutting-edge research. For 
example, a lab built for chemistry may need to be retrofitted in the 
future for the study of nanotechnology. This upgrading of facilities to 
meet the needs of new technologies needs to be accomplished quickly, so 
that new industries and new jobs can be created here rather than 
abroad.
    Since the companies in parks are usually startups with promising 
but uncertain futures, park facility construction is very difficult to 
fund in conventional ways. Private sector banks, which need collateral 
to back their loans, shy away from funding these sorts of facilities, 
due to their uncertainty.
    The Delaware Technology Park is a case in point. Of the five 
buildings that comprise this very typical park, two were funded through 
bond issues that were backed by a long-term lease from an anchor tenant 
or the university. The three remaining buildings were privately 
financed through conventional bank loans.
    Working with conventional banks proved to be a very difficult 
process at Delaware Technology Park. Despite a backlog of perspective 
companies and research entities, the guarantee of construction loans 
for new buildings was a major obstacle. It took 5 years to find an 
interim solution, but the issue persists today, impeding growth.
    In fast-paced fields where new discoveries are taking place and 
entire new industries are being created--not to mention fierce market 
competition worldwide--it is clear the U.S. cannot rely on conventional 
means to back the growth and development of its science parks and 
innovation infrastructure.
    Senate Bill 1373 creates a guarantee mechanism and dramatically 
unleashes the support these parks need. This bill would provide the 
U.S. with an enormous competitive boost at this critical juncture. 
Without the provisions noted in this bill, the United States stands to 
lose competitive positioning and will witness an increasing flight of 
its top scientists, technology experts and high-paying jobs overseas.
Conclusion
    As an important element of growing our Nation's economy in today's 
globally-competitive environment, science parks are where smart minds 
go to work. In these environments of innovation, startup businesses are 
provided the resources they need to flourish, forming new jobs and 
industries. More mature companies partner with universities on projects 
and find easy access to an educated workforce and suppliers. As a means 
of creating sustainable prosperity for our country, science parks play 
a key role in maintaining America's competitiveness.
    Science parks, however, face challenges. In today's uncertain 
financial climate, they must identify sources of support for both the 
development of new parks and the upgrading of existing parks if they 
are to help the U.S. remain competitive.
    Science parks have the potential to translate discovery into 
application; develop talent; commercialize technology; and align 
government, higher-education, and private industry interests. They have 
the potential to be key elements in maintaining America's 
competitiveness.
    Achieving this potential, however, will require enlisting 
leadership and support, accessing sufficient capital for park 
development, and recognizing the long-term nature of this endeavor. We 
ask for your support for S. 1373. Authorization of this bill and 
appropriation of the requested funds would enable science parks to help 
sustain the innovation edge so critical to the U.S. economy.
    Thank you for taking the time to hold this hearing, for inviting me 
here today to participate, and for your continued interest and 
leadership on this crucial issue.
    I am pleased to answer any questions that you may have.
                               Attachment
Facts about Science Parks and S. 1373--October 2007
    On Thursday, October 18, Senator Mark Pryor will conduct a Senate 
Commerce, Science, and Transportation Committee hearing to hear 
testimony regarding the ``Building a Stronger America Act'', S. 1373, 
supporting the development and infrastructure of science parks in the 
United States.
    Science and research parks are located in nearly every state, with 
a sampling as follows:

   Arkansas: Arkansas Research and Technology Park, ASU 
        (Planned).

   Arizona: ASU Research Park, University of Arizona Science 
        and Tech Park.

   California: NASA Ames Research Park and numerous others.

   Hawaii: University of Hawaii at Hilo Research Park.

   Massachusetts: University Park at M.I.T. and numerous 
        others.

   Missouri: Missouri Research Park; UMSL Business, Technology, 
        Research Park.

   Nevada: Harry Reid UNLV Tech Park (planned).

   North Dakota: NDSU Research Tech Park and UND Tech Park.

   Oregon: Oregon State University at Corvallis (planned); 
        Riverfront Research Park.

   South Carolina: Clemson ICAR, Innovista Research Campus 
        (planned).

   South Dakota: SDSU Brookings Bioscience Park (planned).

   Texas: Texas Research Park at West San Antonio and numerous 
        others.

   Washington: Tri-Cities Research Park; Research Park at WSU.

   West Virginia: University of West Virginia Research Park.

    S. 1373 establishes a $7.5 million competitive grant program for 
feasibility studies for science parks.
    S. 1373 creates a loan guarantee program for development of new 
science parks, or retrofitting of existing science park infrastructure.
    Science parks are the hubs of the United States entrepreneurial 
ecosystem.
    According to the soon-to-be released Battelle Technology 
Partnership-AURP report, 21st Century Directions, more than 300,000 
workers in North America work in university research and science parks 
across North America.
    Each core job in a science park generates an additional 2.57 jobs, 
according to the Battelle report.
    Battelle estimates the total employment impact of all science parks 
across North America to be over 750,000 jobs.
    The recent ``America COMPETES Act'' is the first part of the 
solution to the problem of maintaining U.S. competitiveness. It 
mandates research and education, and will create knowledge workers.
    American knowledge workers need to have places in which to work. 
Science parks provide those places.
    Across the world, governments in developing countries are utilizing 
a science park development policy to jump-start their economies. China 
recently announced plans for development of dozens of new science 
parks, in addition to the more than 50 they have already begun. India 
has had a science park program since 1984, and they continue to 
construct new parks. Singapore is focused on a biomedical city called 
Biopolis, which has already attracted over $1 billion in U.S. 
investment.
    AURP, the Association of University Research Parks, strongly 
supports S. 1373.

    Senator Pryor. Thank you.
    Next we'll have Mr. Stafford.

          STATEMENT OF PHILLIP S. STAFFORD, PRESIDENT,

    UNIVERSITY OF ARKANSAS TECHNOLOGY DEVELOPMENT FOUNDATION

    Mr. Stafford. Mr. Chairman, I am Phillip Stafford, 
President of the University of Arkansas Technology Development 
Foundation, a university-affiliated foundation charged with 
managing the Arkansas Research and Technology Park.
    Thank you for allowing me to provide my remarks before the 
Subcommittee regarding the impact of research parks, and the 
recently introduced legislation, S. 1373, that you are 
sponsoring.
    Thank you, Senator Pryor, for your steadfast support of the 
Arkansas Research and Technology Park, and University of 
Arkansas research programs, in general. We are extremely 
grateful.
    The Arkansas Research and Technology Park is located in the 
City of Fayetteville, only 5 minutes from the main campus of 
the University. The collective research and development 
capacity of the ARTP assets currently stands at approximately 
220,000 square feet, and is projected to grow to over 700,000 
square feet at build-out.
    A primary goal of the ARTP is to stimulate the formation of 
a collaborative community of companies linked interdependently 
with the University of Arkansas in research and development. 
Clustering innovative activities within broad areas of research 
will afford companies the benefits derived from collaboration, 
labor source pooling, and supplier networks.
    Science, technology and innovation have taken center stage 
in efforts to boost economic growth, particularly in research 
parks throughout the Nation. Through the development of the 
ARTP, the University of Arkansas Technology Development 
Foundation, the City of Fayetteville, the state of Arkansas and 
the region are building an economic development engine focus on 
innovation and entrepreneurial strength that is able to attract 
and retain knowledge-based workers, and induce technology-based 
business cluster formation.
    Because research parks provide the physical infrastructure 
and environment to encourage research and development, the ARTP 
is viewed as a cornerstone toward developing building blocks 
essential to growing and sustaining a knowledge-based economy 
in Arkansas, including access to capital, to promote new 
product development, spillovers of knowledge, capable of being 
translated into commercial innovation, intellectual property 
support to power the innovation cycle and sustain 
competitiveness, entrepreneurial culture, to spawn and nurture 
new company formation, and a technologically skilled workforce 
to support corporate growth.
    It is clear that university-industry research collaboration 
is evolving into a highly sophisticated platform for 
innovation. At the ARTP, we are doing our part to lay a 
foundation that leads to sustained prosperity in Arkansas. More 
importantly, we are providing our graduates high-paying 
professional career opportunities to enable them to build our 
future, our common future in Arkansas.
    Assuring continued success of the ARTP and its affiliates, 
will require further development of multi-tenant research 
facilities and associated primary and secondary infrastructure 
to support growth and expansion to meet the research and 
development requirements of our emerging technology companies.
    I am, therefore, encouraged that the legislation, S. 1373, 
that you are sponsoring, Senator Pryor, will provide grants and 
loan guarantees for the development and construction of science 
parks, to promote the clustering of innovation through high-
technology activities.
    Because university-related research parks typically involve 
small, emerging technology companies, credit enhancements are 
often necessary to achieve financing of project facilities. 
Consequently, this legislation addresses a problem that is 
universal to many research parks.
    Moreover, I fully support the objectives of this 
legislation, because of the enormous value it will provide to 
our universities, our national economy and our Nation.
    I would only add that the Committee may want to give 
consideration that a portion of these grants be directed to 
benefit areas and regions experiencing or threatened with 
substantial economic distress, as defined by the Economic 
Development Administration at the Department of Commerce, 
distress may exist in a variety of forms, including, but not 
limited to, high levels of unemployment, low income levels, or 
significant declines in per capita income.
    Mr. Chairman, the Arkansas Research and Technology Park is 
already having a positive impact on the economy of Arkansas, 
and is contributing significantly to the development of the 
building blocks essential to grow and sustain a knowledge-based 
economy. I can only hope that more of these research parks will 
continue to play a significant role in the pace of innovation 
in our nation, accompanied by growth and expansion.
    Sustaining this momentum is essential to nurture areas of 
collaborative activity, and to clusters of companies working in 
common areas of interest. Doing so will result in providing 
tangible benefits to the Nation, by attracting high-paying 
jobs, providing professional opportunities for high-technology 
workers, and forming clusters of expertise that are important 
to attracting additional high-technology firms.
    Mr. Chairman, I thank you for allowing me to testify before 
your Committee today, it has been an honor to participate in 
this hearing.
    And I'd be happy to answer any questions.
    [The prepared statement of Mr. Stafford follows:]

  Prepared Statement of Phillip S. Stafford, President, University of 
               Arkansas Technology Development Foundation
Introduction
    Mr. Chairman and Members of the Committee, I am Phillip Stafford. I 
am the President of the University of Arkansas Technology Development 
Foundation, a university-affiliated foundation charged with the duty of 
managing the Arkansas Research and Technology Park at the University of 
Arkansas in Fayetteville. Thank you for allowing me to provide my 
remarks before the Subcommittee on Science, Technology, and Innovation 
regarding the impact of research parks and the recently introduced 
legislation, S. 1373, sponsored by Senator Mark Pryor of Arkansas. 
Thank you, Senator Pryor, for your steadfast support for the Arkansas 
Research and Technology Park and the University of Arkansas research 
programs in general. We are extremely grateful.
Background
    Mr. Chairman, the Arkansas Research and Technology Park, is located 
in the City of Fayetteville, only 5 minutes from the heart of campus of 
the University of Arkansas. The Arkansas Research and Technology Park, 
also known as the ARTP, is currently home to the GENESIS Technology 
Incubator, the Innovation Center, the Engineering Research Center, the 
High Density Electronic Center and the National Center for Reliable 
Electric Power Transmission. The collective research and development 
capacity of the ARTP assets stands at approximately 220,000 square 
feet.
    Since its inception, GENESIS has assisted a number of technology-
based entrepreneurs in growing their firms to the point of economic 
viability. The incubator has an important role as the entry point to 
the ARTP for start-up companies that are working to develop emerging 
technologies in a variety of fields. Providing support to these young 
firms enables GENESIS to serve as a catalyst for increasing the number 
of knowledge-based jobs in northwest Arkansas and for improving the 
economic base of the region and the state.
    The University of Arkansas Innovation Center, also located in the 
Arkansas Research and Technology Park south of the UA main campus, is 
adjacent to the award-winning GENESIS Technology Incubator and the 
Engineering Research Center, which houses 173,000 square feet of 
multidisciplinary laboratories and equipment, including the High 
Density Electronics Center. The Innovation Center provides office and 
laboratory space for technology-intensive private companies that want 
to locate at the ARTP in order to partner with the University in 
collaborative research, which drives innovation and enhances their 
competitive position. The Innovation Center has received a design award 
from the Arkansas Chapter of the American Institute of Architects and 
is recognized as the first LEED Certified building in the state of 
Arkansas, as designated by the U.S. Green Building Council.
    Since assuming management in November of 2004, the UATDF has 
overseen a rapid transformation of the ARTP, signifying that the 
research park is playing an important role in catalyzing technology-
based economic development. Over this period, public/private affiliates 
of the park have grown from 13 to 27 organizations paying an average 
annual salary of $80,000. Presently, the Technology Development 
Foundation has approximately 40,000 square feet under lease to its 27 
public/private affiliates. At full build out, the total R&D capacity of 
the ARTP is expected to grow to approximately 700,000 square feet.
    A primary goal of the ARTP is to stimulate the formation of a 
collaborative community of companies linked interdependently with the 
University of Arkansas in research and development. Accordingly, the 
University has already identified several areas of innovation as the 
primary focus for partnerships, including:

   next-generation electronic and photonic devices,

   biotechnology and related chemical, biological and food 
        sciences,

   materials and advanced manufacturing,

   database, software and telecommunications,

   environmental and ecosystem analysis,

   transportation and logistics.

    Clustering innovative activities within these broad areas of 
research will afford companies the benefits derived from collaboration, 
labor-source pooling and supplier networks.
The Synergy Between University and City Entities
    Mr. Chairman, science, technology and innovation have taken center 
stage in efforts to boost economic growth, particularly at places like 
research parks throughout the Nation. According to new data compiled by 
the Association of University Research Parks (AURP), research parks in 
the United States, like the Arkansas Research and Technology Park, and 
in Canada directly employ more than 350,000 people and contribute more 
than $31 billion annually to the economy in the United States and 
Canada.
    Through the development of the Arkansas Research and Technology 
Park, the University of Arkansas Technology Development Foundation, the 
City of Fayetteville, the state of Arkansas, and region are building an 
economic development engine focused on innovation and northwest 
Arkansas entrepreneurial strength that is able to attract and retain 
knowledge-based workers and induce technology-based business cluster 
formation. Because research parks provide the physical infrastructure 
and environment to encourage research and development, the ARTP is 
viewed as the cornerstone toward developing the building blocks 
essential to growing and sustaining a knowledge-based economy in 
Arkansas.
    The City of Fayetteville, Arkansas has been an extraordinary 
partner in the development of the ARTP by providing the necessary 
resources to assist the Technology Development Foundation. Not only has 
the city provided financial support for the planning and conceptual 
engineering for the ARTP, but it is currently designing the 
reconstruction of Cato Springs Road to serve as the Technology Corridor 
linking the ARTP and other privately held R&D companies to the 
University of Arkansas main campus.
Why Companies Locate to Science Parks
    True progress toward a knowledge-based economy in Arkansas and 
throughout the Nation will require that select individuals and 
organizations commit to early-stage investment in emerging technology 
companies to enable these companies to bridge the gap between product 
development and commercialization. The Technology Development 
Foundation has been active at the Arkansas Research and Technology Park 
in establishing and cultivating ties to organizations like the Arkansas 
Venture Forum, Accelerate Arkansas, Innovation to Return on Investment 
and the Fund for Arkansas' Future to facilitate access to financial 
capital for its corporate partners.
    Aside from the physical infrastructure supporting research and 
development, the Technology Development Foundation is leveraging 
spillovers of knowledge from the University and translating this 
knowledge into industrial innovation in the form of new companies 
concentrating in the areas of nanoscience, food safety, cell biology 
and detection and diagnosis of various diseases. Moreover, to assure 
that promising innovations find their way into the commercial 
mainstream, the University of Arkansas Technology Development 
Foundation has implemented an intellectual property support system to 
assess, package and license new technologies to power the innovation 
cycle and sustain the competitiveness of its corporate partners.
    The ARTP continues to spawn and nurture a growing entrepreneurial 
culture through the GENESIS Technology Incubator and the Innovation 
Center. Since January 2005, affiliates of GENESIS and the Innovation 
Center have accounted for approximately $36 million in Small Business 
Innovation Research grants and contracts. Not only does this Federal 
program provide critical seed funding to ARTP companies, it serves to 
validate that the technologies under development are commercially 
important.
    Through its corporate partners, ARTP is also contributing to the 
development of a technologically skilled workforce. The ARTP now 
provides direct employment for 215 highly trained knowledge-based 
workers, many of whom are graduates of the University of Arkansas. It 
is further estimated that another 107 jobs have been created within the 
region in indirect support of ARTP research and development. Moreover, 
it is projected that the ARTP will contribute to the creation of 2,000 
jobs at build out.
    In addition, the Technology Development Foundation is developing a 
vital network of contacts in the entrepreneurial, finance, and 
professional service communities to sustain the growth of its corporate 
partners. In Fiscal Year 2008, the Technology Development Foundation 
will work closely with the organization selected to implement the new 
Innovate Arkansas initiative, designed to provide high-growth companies 
services to enhance their business plans and provide access to 
potential early stage investors. Innovate Arkansas will also provide 
other valuable services that can enhance the growth and development of 
emerging technology companies.
    It is clear that university/industry research collaboration is 
evolving into a highly sophisticated platform for innovation. Why is 
this important? First, it makes good economic sense. Through 
collaboration that leads to innovation, we can start and grow new firms 
that augment the economic ecosystem, giving rise to new technology 
clusters that build on the base of technological expertise in place in 
northwest Arkansas. Second, it's good policy because university/
industry research provides opportunities for students to make the 
connection between knowledge gained in the classroom and its 
application in business and industry. At the ARTP, we are doing our 
part to lay a foundation that leads to sustained prosperity in 
Arkansas. More importantly, we are providing our graduates high-paying 
professional career opportunities to enable them to build their 
future--our common future--in Arkansas.
S. 1373--Science Parks Legislation
    As a result of the success of the ARTP affiliate companies, both 
the Innovation Center and the GENESIS Technology Incubator are 
operating at full capacity. Assuring continued success of the Tech Park 
and its affiliates will require further development of multi-tenant 
research facilities and associated primary and secondary infrastructure 
to support growth and expansion of the ARTP to meet the research and 
development requirements of our emerging technology companies.
    I am, therefore, encouraged that the legislation, S. 1373, 
sponsored by Senator Mark Pryor will provide grants and loan guarantees 
for the development and construction of science parks to promote the 
clustering of innovation through high technology activities. Because 
university-related research parks typically involve small emerging 
technology companies, credit enhancements are often necessary to 
achieve financing of project facilities. Consequently, this legislation 
addresses a problem that is universal to many research parks.
    The purposes outlined in S. 1373 are essential to support existing 
research parks in their activities to acquire more space and 
infrastructure to accommodate technology activities and encourage the 
inclusion of more companies to promote further economic growth. 
Moreover, it is also essential to provide planning support to those 
areas with major research universities to conduct feasibility studies 
for science parks among various geographic areas.
    As one who has watched on the front lines the development of the 
Arkansas Research and Technology Park, I fully support the objectives 
of this legislation because of the enormous value it will provide to 
our universities, our national economy and our Nation.
    I would only add that the Committee may want to give consideration 
that a portion of these grants be directed to benefit areas and regions 
experiencing or threatened with substantial economic distress. As 
defined by the Economic Development Administration at the Department of 
Commerce, distress may exist in a variety of forms, including, but not 
limited to, the following:

   high levels of unemployment,

   low income levels,

   large concentrations of low-income families,

   significant declines in per capita income,

   substantial loss of population because of the lack of 
        employment opportunities,

   large numbers (or high rates) of business failures,

   sudden major layoffs or plant closures,

   trade impacts,

   military base closures,

   natural or other major disasters,

   depletion of natural resources,

   or reduced tax bases.
Conclusion
    Mr. Chairman, the Arkansas Research and Technology Park is already 
having a positive impact on the economy of Arkansas and is contributing 
significantly to the development of the building blocks essential to 
growing and sustaining a knowledge-based economy. I can only hope that 
more of these research parks will continue to play a significant role 
in the pace of innovation in our nation, accompanied by growth and 
expansion.
    Sustaining this momentum is essential to nurture areas of 
collaborative activity into clusters of companies working in a common 
area of interest. Doing so will result in providing tangible benefits 
to the Nation by attracting high paying jobs, providing professional 
opportunities for high technology workers, and forming clusters of 
expertise that are important for attracting additional high technology 
firms.
    Mr. Chairman, thank you for allowing me to testify before your 
Committee today. It has been an honor to participate in this hearing. I 
am happy to answer any questions that you may have. Thank you.

    Senator Pryor. Thank you.
    Mr. Kempner?

   STATEMENT OF RANDALL T. KEMPNER, VICE PRESIDENT, REGIONAL 
             INNOVATION, COUNCIL ON COMPETITIVENESS

    Mr. Kempner. Thank you, Mr. Chairman. It is a pleasure for 
me to be here today, thank you for the opportunity to present 
to you and to the Committee. I am the Vice President of 
Regional Innovation at the Council on Competitiveness, a non-
partisan, non-governmental policy organization that's based 
here in Washington.
    As an organization, we are committed to ensuring the future 
prosperity of all Americans for enhanced competitiveness in 
global markets.
    The theme of my testimony this afternoon on regional 
competitiveness and the role of science parks within that, has 
been a major focus of the Council for nearly a decade. Starting 
in the 1990s with our pioneering work with Professor Michael 
Porter at Harvard on regional clusters of innovation, the 
Council has been focused on understanding what elements drive 
national and regional prosperity.
    We've worked closely with the Economic Development 
Administration, the Employment and Training Administration, and 
dozens of economic and workforce development organizations 
across the country to implement policies and programs that 
support regional innovation-based development.
    We're also pleased to have been one of the groups through 
our National Innovation Initiative that shaped and supported 
the America COMPETES Act, and we congratulate you and your 
fellow Senators on its passage.
    Let me begin my remarks on the science parks with my 
conclusion: science parks can be a very important asset in 
promoting regional competitiveness, but parks by themselves are 
no guarantee of regional success. For science parks to succeed 
in promoting regional economic growth, they must be fully 
integrated into the overall regional economic development 
strategy, and we believe that any Federal program to support 
parks, should incorporate criteria that promote alignment with 
other regional assets and development efforts.
    Allow me to briefly discuss key elements of regional 
prosperity, and where science parks fit in. Today, in the 
United States, regional prosperity, and indeed, the prosperity 
of our country, depends upon our people, and--the ability of 
our people and our institutions to innovate. We can no longer 
compete, based on simple manufactured products, or on 
commodities, indeed, today we compete most successfully on the 
commercialization of high-value products and services that 
command a premium on the world market. To do this, we need to 
innovate, and we need to do it well, and we need to do it 
quickly.
    To meet this challenge, regional leaders, then, need to 
create an environment that supports innovative workers, and 
innovative firms. To do this, there are really three high-level 
factors that are critical for any regional developer to think 
about. The three are innovation assets, innovation networks and 
the underlying business culture.
    So, assets in this model include the human, intellectual, 
financial, physical, and institutional capital located in the 
region. These get at many of the sorts of things that site 
selection consultants and corporate expansion makers think 
about typically, like the availability of skilled labor, the 
quality of transportation infrastructure, cost of doing 
business, rather, tax and regulatory environment, and science 
parks and business incubators are an example of this kind of 
economic asset. However, like all assets, their value depends 
on how well they're utilized.
    This brings us to the second factor, which is networks. 
Assets must be linked to support regional innovation. 
Unfortunately, all too often, we see that innovative ideas and 
people remain unconnected, because formal and informal networks 
don't exist within regions. As we found in our Regional 
Innovation: National Prosperity report, many ideas generated by 
university researchers, while valuable from a purely 
intellectual standpoint, don't reach their full economic 
potential, because they're not translated into new products or 
services.
    On the other hand, when you find regions that do support a 
web of linked idea generators, managers and capital, they're 
much more likely to become what we call innovation hotspots.
    The third of the issues that can stop a region from 
becoming a hotspot is the business culture. It's critical in 
business culture to have one which supports business leaders 
who are willing and interested in cooperating and sharing 
information, even when they compete in some circumstances.
    In addition, regional attitudes toward risk-taking comprise 
a critical issue, or critical area for thinking about the 
business culture. If innovation and entrepreneurship is to take 
hold, risk-taking must be appreciated and celebrated, even if 
it often leads to failures. Failure for the right reasons 
should be embraced, and people who fail for right reasons 
should not be ridden out of town, but should be celebrated.
    A final cultural characteristic of note is appreciation of 
people who have diverse experiences and backgrounds. Since 
innovators, by their very nature, often act and think outside 
of the norm, regions where residents respect and can handle 
distinct backgrounds and distinct viewpoints have an easier 
time in cultivating innovators.
    So, supporting regional innovation is a dynamic and complex 
endeavor, and science parks can play a very important role. 
Parks can offer specialized infrastructure that is critical for 
the work of targeting industry clusters, they can provide low-
cost space that supports creative interaction and offers 
training and mentorship programs to help entrepreneurs launch 
businesses, they can serve the critical function of linking 
science to entrepreneurs, capital providers and managers. But 
they can also be islands.
    It's critical that they try to actually not be islands, 
they need to not, like underused bridges or poorly-constructed 
water mains, become costly infrastructure projects. The key is 
science parks de-linked from other regional innovation assets 
will be destined to under perform.
    So, the success is to ensure that they are developed in the 
context of an overall regional economic development strategy, 
and connected to other regional assets. They should be active 
nodes in a highly networked environment, not isolated islands.
    As you mentioned, Senator Pryor, science parks are 
frequently recognized as the gold-standard of technology-led 
economic development, and they often are. But, they have to be 
deeply connected with all of the other elements that are 
required for regional prosperity.
    Thanks very much for the opportunity to present, and I look 
forward to your questions.
    [The prepared statement of Mr. Kempner follows:]

  Prepared Statement of Randall T. Kempner, Vice President, Regional 
                 Innovation, Council on Competitiveness
    Chairman Kerry, Ranking Member Ensign, Senator Pryor and Members of 
the Subcommittee, thank you for the opportunity to testify on science 
parks and their impact on U.S. competitiveness.
    As the Vice President for Regional Innovation, I am here on behalf 
of the Council on Competitiveness' 150 corporate CEOs, university 
presidents and labor leaders committed to ensuring the future 
prosperity of all Americans through enhanced competitiveness in the 
global economy. The Council is a non-partisan, non-governmental 
organization based in Washington, D.C. that fervently believes that the 
best way to drive prosperity is for America to have the world's most 
productive workers and competitive firms so that we can succeed in the 
global marketplace.
    This hearing comes at an opportune time as science parks are 
becoming increasingly important to our knowledge-based economy. As the 
Council's Competitiveness Index report found, American job growth will 
come primarily from small and medium sized businesses, science parks 
will play a critical role in accelerating entrepreneurship and 
innovation. The Congress, through the America COMPETES ACT, has already 
taken an important step in ensuring America's long term 
competitiveness. The Council's private sector, university, and labor 
leadership was actively involved in shaping and supporting the 
legislation through our National Innovation Initiative and we 
congratulate this committee and the Senate on its passage.
    The theme of my testimony this afternoon--regional competitiveness, 
and the role of science parks in supporting regional growth--has been a 
major focus of the Council for nearly a decade. Starting in the late 
1990s with our pioneering work with former Council Chair and Bell South 
CEO Duane Ackerman and Professor Michael Porter on regional clusters of 
innovation and extending through our recent National Innovation 
Initiative effort, the Council has focused on understanding what 
elements contribute to U.S. regional success in a the global knowledge 
economy. Our president, Deborah Wince-Smith, served as the Chair of 
Commerce Secretary Gutierrez's Strengthening America's Communities 
Initiative (SACI) Advisory Committee, In addition, we have worked 
closely with the Economic Development Administration at the Department 
of Commerce, the Employment and Training Administration at the 
Department of Labor, and dozens of economic and workforce development 
organizations across the country to catalyze and help implement 
programs that support, regional, innovation-based development.
    As the work of the SACI Committee and the Council's National 
Innovation Initiative found, science and research parks can be a highly 
valuable asset in promoting national and regional competitiveness. 
However, parks by themselves are no guarantee of regional success. For 
science parks to succeed in promoting regional economic growth, they 
must be fully integrated into the overall regional economic development 
strategy. We believe that any Federal program to support parks should 
incorporate criteria that promote alignment with other regional assets 
and development efforts.
    Allow me to briefly discuss the key elements of regional 
innovation-based development and the role of science parks therein. 
Today, in the United States, regional prosperity depends upon the 
ability of its people and institutions to innovate and the development 
of regional ecosystems that support high value economic activity. In 
this country, it is increasingly difficult to compete based on low-cost 
commodity products or the production of standardized manufactured 
goods. Instead, we compete most successfully on the commercialization 
of high-value products and services that command a premium on the world 
market. This requires fast and effective innovation and deployment in 
global markets. To meet this challenge, regional leaders must work to 
create an environment that supports innovative workers and firms.
    Regional innovation capacity rests on more than just scientific 
discovery or idea generation--it is the output of a dynamic interplay 
of a variety of regional factors. There are three high-level factors 
that are at play within every region: Innovation Assets, Networks, and 
Culture.
    Assets in the innovation-based economic development model include 
the human, intellectual, financial, physical, and institutional capital 
located in a region. The asset base incorporates many common criteria 
for corporate expansion decisions, such as: availability of skilled 
labor, the quality of transportation infrastructure, cost of doing 
business, proximity to customers, the tax and regulatory environment 
and quality of life. Assets also include many other factors that are 
not as widely considered but are equally important to innovation, such 
as: research and development investment, risk capital firms, technology 
commercialization, and programs that catalyze entrepreneurship and 
small business growth. Science parks and business incubators are an 
example of an economic asset that can support regional innovation. 
However, like all assets, their value depends on how they are used. 
This brings us to the second key factor: networks.
    Assets must be linked to support regional innovation. All too 
often, however, innovative ideas and people remain unconnected because 
formal and informal networks do not exist. As we found in the Council's 
Regional Innovation: National Prosperity report, many ideas generated 
by university researchers, while valuable from a purely intellectual 
standpoint, do not reach their full economic potential because they are 
not translated into new products or services. Similarly, many promising 
entrepreneurs never get the chance to succeed because local capital 
providers are unaware of the investment opportunity. On the other hand, 
regions that do support a web of linked idea generators, managers, and 
capital, are more likely to become, what the Council calls innovation 
``hot spots.''
    However, we find that many U.S. regions lack a business culture 
that supports collaboration and other pro-innovation attitudes. One key 
aspect of a regional business culture is the degree to which business 
leaders are willing to cooperate and share ideas even when they compete 
in some circumstances. The whole concept of cluster-based economic 
development is that firms will thrive if they operate in an environment 
in which they leverage shared knowledge, while developing their own 
unique strategies.
    Regional attitudes toward risk-taking comprise another key area. If 
innovation and entrepreneurship is to take hold, risk-taking must be 
appreciated and celebrated, even if it often leads to failure. Failure 
must be understood as a component of the creative process. And those 
who fail for the right reasons should be embraced, not ridden out of 
town.
    A final cultural characteristic of note is appreciation of people 
who have diverse experiences and backgrounds. An increasing body of 
scholarly work suggests that regions which are inclusive and embrace 
people of all sorts may be better suited for supporting innovation than 
those that do not. Regions which support a wide variety of artistic 
expression, in music, physical arts, and the humanities are more 
attractive to the creative class. Since innovators, by their very 
nature, often act and think outside the norm, regions where residents 
respect and embrace diversity may have an easier time cultivating 
innovators.
    Supporting regional innovation is a dynamic and complex endeavor. 
And science parks can play a very important role in mix. Parks can 
offer general support services and specialized infrastructure that is 
critical to the work of targeted industry clusters--like wet labs for 
life sciences companies or clean rooms for work in optics research. 
They can provide low cost space that supports creative interaction and 
offer training and mentorship programs to help entrepreneurs launch 
their businesses. They can serve the critical function of linking 
scientists, entrepreneurs, capital providers, and managers--and become 
a network of networks for the region. Through awards, public events, 
and successful incubation of firms, they can help build an 
entrepreneurial culture that values risk-taking and collaboration.
    Successful research parks like the Delaware Technology Park that my 
colleague and fellow panelist Michael Bowman runs, and parks associated 
with our national labs at Sandia and Los Alamos, offer most of these 
services and have become truly integrated into the regional economies.
    But parks can also be islands. Sometimes science parks become 
hermetically sealed locations that operate with an inward-focus and 
have little relevance to the local economy. Like underused bridges or 
poorly constructed water mains, they can become a costly infrastructure 
project with a poor return on investment. Science parks de-linked from 
other regional innovation assets are destined to underperform.
    The key to success for parks is to ensure they are developed in the 
context of an overall regional economic development strategy and 
connected to other regional assets. They should be active nodes in a 
highly networked environment, not isolated islands. As a recent report 
by the State Science and Technology Institute argues, ``An incubator 
should be created only if a clear need, a sufficient market, and 
adequate resources to support the incubator have first been 
identified.''
    Therefore, if Congress were to offer special financial support for 
sciences parks, it should ensure that every successful recipient has 
demonstrated their clear relevance to existing regional development 
strategies, their specific plans for linking to regional institutions--
not just the university to which the park may be affiliated, and their 
strategy for obtaining funding that would sustain park growth after 
Federal support is exhausted. Rather than measuring solely the number 
of jobs created or firms incubated, the park should be judged on the 
quality, or wage levels the new jobs provide, and the actual 
operational success of firms that graduate from the park.
    As you mentioned Mr. Chairman, ``science parks are often recognized 
as the gold standard of technology-led economic development.'' And they 
can be--but not without making sure they are deeply connected with all 
the other elements that are required for regional prosperity.
    Thank you again for the opportunity to present to this hearing. I 
look forward to your questions.

    Senator Pryor. Well, thank all of you, again, for being 
here.
    Let me go ahead and start, if I may, with you, Mr. Kempner, 
just general big-picture questions to start with. All of the 
witnesses have talked about science parks contributing to 
economic development, and helping cities, states, regions, but 
have we been able to measure that? Are there studies out there? 
Can you see the statistics being able to measure what's going 
on out there?
    Mr. Kempner. There are statistics, and there are studies 
that have been done, although I think in our opinion they're 
still inconclusive.
    What's clear is that there are many science parks that have 
incredibly positive economic impacts in terms of the jobs that 
they create, as well as the money that they generate for the 
various regional entities in which they operate.
    At the same time there are also examples of science parks 
that have not been successful, and that are operating as 
islands, that don't create the level of support, and the level 
of business activity that we would hope to see. And that's why 
we think it's so important, that as you think about how you 
support the parks, you make sure that there are criteria in the 
selection process that make sure you're getting a park which 
isn't going to be an island, but is one that is going to 
network very well with the region around it.
    Senator Pryor. OK. Also, big picture. You, generally, and I 
understand what you're saying, that it depends on the nature of 
the park, and the nature of the area they're in, et cetera, but 
generally are science parks accomplishing the stated goal of 
bringing entrepreneurs and investors together to start-up 
companies?
    Mr. Kempner. Yes, I think that they are. And certainly the 
ones that are successful, recognize that their efforts need to 
take place as much outside of the park as inside of the park. 
And I think you would find in the parks of my colleagues at the 
table, that they recognize fully that it's all about making 
those connections. It's not just about doing the research, it's 
about making sure that research becomes linked to financiers, 
to managers, so that the great ideas that come from 
universities and researchers actually get commercialized.
    Senator Pryor. My perception is that most, not all, but 
most of the jobs in a science park are high-tech jobs. Am I 
right on that?
    Mr. Kempner. That tends to be the case, yes sir.
    Senator Pryor. And you mentioned this concept of 
integration into the regional economy. If the science park is 
not integrated into its environment, so to speak, then it may 
not succeed or it may not be as successful as it otherwise 
would be. What are the other cautions you would have, things 
that we need to look for, be careful of? You've given some in 
your testimony. Would you like to add anything to that?
    Mr. Kempner. Well, one thing I would say, is that it's 
important when you think about evaluating the science park, 
that from an economic development perspective, there are some 
evaluation metrics, which may not be the same as those you 
would look at from a technology perspective. And so, you 
should, as the bill suggests, care about the number of jobs 
that are created. But it's equally important to look at the 
quality of those jobs, to make sure they're high-paying, high-
tech jobs.
    Another thing that's important, is actually to look at the 
economic activity that's being generated by those firms and how 
many, not just get started, but how many succeed, and how many 
jobs those firms create, and what kind of economic activity 
that they have. I think there's a risk sometimes that science 
parks, again as I said before, think about them as sort of 
their own hermetically sealed unit. And I just would suggest 
that it's important to make sure, as again, I think my 
colleagues understand, that any park that gets funded is one 
that's clearly looking and is trying to do a lot of external 
relations with the regional assets that exist.
    Senator Pryor. And the last question I had, at least for 
the moment for you is, your two co-panelists are both on 
university campuses or near university campuses and closely 
tied with universities. How important of a factor is it to be 
either tied with or at least be near a university or some sort 
of Federal laboratory?
    Mr. Kempner. Well, what's critical is that you need to have 
access to really smart people. And Federal labs and 
universities are really good sources of really smart people. 
There are other sources out there, but I can't think of any 
that are better than universities or Federal labs. And so, if 
you have that linkage, it makes the process easier, because you 
have access both to the Ph.D. researchers, as well as the grad 
students or technicians that are so critical in the research 
endeavor. And then hopefully, you also have access to the 
people with the business expertise that will be necessary to 
take those ideas and turn them into real products and services.
    Senator Pryor. Great.
    Let me ask you, Mr. Bowman, with regard to S. 1373?
    Mr. Bowman. Yes.
    Senator Pryor. In your existing facilities now in 
Delaware----
    Mr. Bowman. Yes.
    Senator Pryor.--will that bill, in your view, help your 
park or potentially help your park, or do you see this bill as 
more for start-ups?
    Mr. Bowman. Oh, it would absolutely help our park.
    Senator Pryor. In what ways?
    Mr. Bowman. Let me explain. We have five buildings in our 
park. We've done two of them with bond issues. In order to get 
a bond issue, essentially you have to have a very long-term 
lease commitment of somebody, an anchor. That's not a start-up 
situation.
    The other three buildings we did, it took us 5 years to 
find very complicated financing in order to handle a very large 
growing backlog of start-up companies and non-profit research 
institutes. The net result of that was, we were kind of in slow 
gear until we finally figured that out. We had to find an 
equity partner, which was difficult. Guaranteed financing, 
which could go behind a bond, would be a very big deal and that 
would be a wonderful thing for us to do for our next building.
    Senator Pryor. Actually, I was going to ask Mr. Stafford 
the same type of question on financing. Both Delaware and 
Arkansas have, at least for Arkansas, large parts of the State 
that are very rural, several areas not as rural as they used to 
be. It's grown quite a bit. Mr. Stafford, at your facility in 
Arkansas, how did you piece together the financing. I've been 
there several times, but I don't remember exactly when it 
started. And, I know it's, what, 10 years old. I'm not quite 
sure. But, how did you piece together the financing there?
    Mr. Stafford. Well, it was largely with the cooperation of 
the University of Arkansas. In its earliest stages the, what we 
recognize today as the Arkansas Research and Technology Park, 
was something referred to as the Engineering Research Center. 
And they put a Genesis Technology Incubator in the Engineering 
Research Center and that incubator reported up through the 
College of Engineering, just like other departments would.
    The University of Arkansas bought an old pantyhose factory, 
quite frankly, and has, over the years, renovated that facility 
to incredible multi-disciplinary laboratories that serve as 
important research infrastructure to our tenants and the 
research park.
    Beyond the Engineering Research Center, the High Density 
Electronic Center, the National Center for Reliable Electric 
Power Transmission, those research resources are in the 
research park. The University of Arkansas also did the taxable 
bond issue to build the Innovation Center, where we could 
continue to move beyond nurturing true startup companies, but 
have a place for the more mature companies to locate and 
continue to benefit from the relationship, the partnership, if 
you will, that they have formed with the University of 
Arkansas.
    So, most recently, we were fortunate enough to have 
support, and you played a large role in that, to help us with 
appropriations to do some infrastructure development and 
continue to build those essential ports of access, if you will, 
to the research park. But it's, bootstrapping was the primary 
way that we were able to create the necessary facilities that 
you see in the research park today.
    Senator Pryor. If you can, give the Committee a sense of 
the diversity of types of companies that have started there and 
how they're progressing.
    Mr. Stafford. We have chosen to focus on what we feel are 
the core research strengths of the University of Arkansas. So 
we have companies working in the area of next generation of 
electronic photonic devices. We have companies that we have 
started in the area of biotechnology, as it relates to the 
chemical, biological, and food sciences. The medical campus is 
in Little Rock, and so our, we don't concentrate in the life 
sciences so much, but do have a robust group of biotechnology 
companies in the park now.
    Transportation and logistics is another important area of 
concentration at the University, and as a logical consequence, 
we've seen companies growing out of that. Advanced materials 
and manufacturing, we've got three truly world-class 
nanotechnology companies in the research park. And with the new 
initiative that is being inspired by Wal-Mart, we think that 
environmental sciences or clean technologies are soon to become 
another area of intense focus for the University and we look 
forward to leveraging that as well.
    Senator Pryor. You know, one of the things that has 
impressed me at your facility was, for example, in 
nanotechnology, the people in the park are not just committed 
to the research and the development, but they're actually 
committed to manufacturing to get products out in the 
marketplace, whatever they are.
    When I've been there, I've heard positive feedback on the 
collaborative nature of the science park or technology park. 
Because, you have a lot of disciplines around and just given 
the environment there, how beneficial is it to have everybody 
together with so many different specialties going on at the 
same time?
    Mr. Stafford. Well, I believe it's critical. We have, the 
Technology Development Foundation has a partnership developer 
that works with each of the affiliates in the park to make sure 
that, first of all, they're vertically integrated with the 
University of Arkansas, so that they are receiving, depending 
on what their needs are, we facilitate access to people, to 
faculty, to students, but more importantly, we facilitate 
access to facilities and equipment. So, making sure that 
they're vertically integrated with the University is how we add 
value to their business proposition. But then we also work to 
assure that they are horizontally integrated with one another. 
And as a result of that, we are trying to drive this whole 
concept of cluster development.
    And we are seeing, right now, an emerging cluster, if you 
will, in the area of high-temperature, high-voltage 
electronics, and the new National Center for Reliable Electric 
Power Transmission is only going to add to that. It's--it's 
going to be a world-class, soon to become an international 
asset toward electric reliability, but it is a user facility 
that our young startup companies in the area of high-
temperature, high-voltage electronics can utilize to further 
advance their technologies as well.
    Senator Pryor. And give the Committee a sense of about how 
many companies you have out there and about how many employees 
there are?
    Mr. Stafford. We have 27 public/private affiliates in the 
research park. We have another three startup companies that we 
have housed on our main campus, only because we lack facilities 
to house them at the research and technology park. So a total 
of 30 public/private affiliates of the research park. And the 
direct employment stands at 215. Anecdotally, you would expect 
that there's another 107 indirect jobs, in support of the 
research and development activities at the research park.
    Senator Pryor. Mr. Kempner, let me ask, there has been a 
national story that's been unfolding over the last several 
weeks, about the sub-prime mortgage markets and the problems 
that's causing in the credit world. But, do you have any 
concern that science parks would be at risk of defaulting on 
these guaranteed loans?
    Mr. Kempner. Senator, I am not a financial expert, but 
based on what I know of science parks, they would be less 
likely to default under these sorts of circumstances.
    Senator Pryor. Why do you say that?
    Mr. Kempner. Because typically, they are related to 
universities, who hopefully have bonding capacity and the 
assets in order to support this. That said, I would suggest 
that there may be other experts who could give you--and I'm 
happy to get the information for you on that question.
    Senator Pryor. Mr. Bowman, I think it was in your 
statement. You talked about a success story in China?
    Mr. Bowman. I talked about how China is certainly all over 
research parks and have 50 on the ground and 30 more coming, 
yes.
    Senator Pryor. What we do in this country, is it different 
than what they do in Asia?
    Mr. Bowman. It is. I think what Mr. Kempner said earlier is 
very appropriate. And that is, it's not who can spend the most 
that's going to win. We can spend a lot, but they're going 
ahead, they are spending a lot. They're building cities.
    Their model today has a lot of import talent connected to 
it. If you go back to the day of Mao driving everybody out, 
they're in the second generation of trying to bring them back. 
If we're not careful about the visa issues and some other 
things, which have allowed us to educate and retain enormous 
talent from around the world, including China. That's one of 
our edges. I think the other edge we have is a natural 
innovative, creative history. It's in the fabric of our 
country, our people. It's not so much the case in China.
    And so, you know, I was actually recruited to consider 
going to Hong Kong and taking over their operation. And I'm 
thinking, ``Why would they want someone from the U.S. to do 
that?'' And basically, the answer was, they have difficulty 
trying to connect the leadership of the various points of the 
economy, that is the university, the government, and the 
private sector, in a way that actually moves things forward 
beyond just the walls. It's Randall's point about reaching in 
to the community and creating something. It's not in their 
history to have done that. It's more speculation driven.
    And I think the U.S. success in innovation is because of 
that collaborative leadership, the right kind of leadership 
stepping up and the access to the talent. And it starts with 
great science, great scientists. If we don't have that, these 
parks don't mean a lot. They are just real estate places.
    Senator Pryor. Let me ask everybody about venture capital 
and how successful these parks are in accessing venture 
capital, how that works, and why venture capitalists might be 
attracted to these science parks? Who wants to take that first?
    Mr. Stafford. I'd be happy to.
    There's--there are two parts, probably, to that story. And 
in our case, the University of Arkansas, at the Arkansas 
Research and Technology Park, we're at a very young developing 
stage and we have a number of young developing companies. And 
it's particularly difficult to attract venture capital at the 
very earliest stages, only because they want to see a robust 
revenue picture on those companies before they will entertain 
or engage with the company to provide the equity capital.
    On the other hand, the research parks can be a driver. One 
of the other demands, if you will, that venture capitalists 
have, is that there needs to be deal flow. And so, a research 
park can be extremely important in assuring that the deal flow 
is there, which provides the impetus, quite frankly, for the 
venture capital to follow on. So, we're--we're working very 
diligently to create that venture capital at all stages and 
levels, at the seed level, angel level. There is an 
institutional fund now, a fund of funds, in Arkansas, that is 
giving rise to a growing venture capital community.
    But it's essential to growing those companies and assuring 
that those products do make it to market. It's what takes them 
over that, gets them to that next level.
    Mr. Bowman. If I could add to that. I think, you know, it's 
a layered kind of thing. So, you start with the seed angel 
stuff. And so, you've got to have a fairly interested, high 
net-worth group of people to do that round. As you go further 
up the ladder, at the actual venture company, venture 
capitalists, they do tend to be near where their companies are. 
And that's why you find so many in Silicon Valley and Boston. 
They've done a fantastic job. It's a critical mass, it's a 
patience kind of thing.
    But as you move along, I think the parks responsibility is 
to try to foster that. And we've done a couple things. We've 
recently formed an organization called First State Innovation. 
It's all about the angel innovation money. And we've done a 
number of deals recently, bootstrapped them from individuals, 
which then takes you to the venture capital market. We've taken 
it to the next level, we put on two events, one called Bio-Life 
Tech coming up, and one called Early Stage East. These are 
venture capital fairs. The Mid-Atlantic is able to draw several 
hundred investors into that climate and we vet 20, 30 companies 
to present at the A round, if you will. Once it gets beyond 
that, I think the venture community will take care of itself.
    The sad thing today is, the bar for venture capital is very 
high. There's plenty of money out there, it's just the bar to 
get it is very high. And so, as Mr. Stafford says, you've got 
to have real proof of, more than just proof of concept. You've 
got to have real proof of a business with clients and customers 
for them to get involved.
    Senator Pryor. Did you want to add?
    Mr. Kempner. I'd just add briefly that, if you look at 
venture capital funding across the country, about two-thirds of 
it is in four regions; LA/San Diego, Silicon Valley, Boston 
area, and New York area. If you're not in one of those four, 
having a science park, which is connected to the local 
financial community and connected to the national financial 
community, is one of your best options if you want to try to 
bring venture capitalists. It becomes a target-rich environment 
and they need that if they're going to move out of their basic 
hubs.
    Senator Pryor. Yes, I suspect that's Delaware's thinking. 
And I know that Arkansas went through that process as well. As 
you know, up here in Washington, a lot times when we're trying 
to get R&D dollars out into the country, they just tend to 
collect in some of those areas that you're talking about. There 
are others too, it depends on what you're talking about, but it 
tends to collect in areas with high-powered traditional 
research institutions. It's hard, oftentimes, for smaller 
states, sort of newer players in the research field to have 
access to that.
    So, part of what we're trying to do with this legislation 
is to make sure that other people get a bite of the apple, if 
they can put it together there in their communities and their 
states.
    I'm about done with my questions and I know that some of my 
colleagues want to submit some in writing. And I want to thank 
you all. But before I close, is there any last word that any or 
all of you all would like to say. I really appreciate you all 
coming and I appreciate you all looking at our legislation. 
We're going to continue to try to move this forward. We're glad 
you're doing what you do. Does anybody have anything that, 
either we missed or something that just needs to be said?
    Mr. Bowman. We stand ready to do whatever it takes, Senator 
Pryor, to help you get this thing through. It's very important 
to us.
    Senator Pryor. Well, thank you.
    Mr. Stafford. We appreciate your leadership on this, 
Senator Pryor. We are presently looking at another building in 
our research park and we are struggling with that whole 
financing picture. And this legislation would make our effort 
ever so much more possible. So, we look forward to its passage.
    Thank you so much.
    Mr. Kempner. I just commend you on looking in general 
issues that relate to innovation-based economic development and 
am happy to be helpful going forward to you and your staff as 
you actually put this bill together. Thanks for the chance to 
be here.
    Senator Pryor. You bet. Thank you for being here.
    Thank you for your time, and again, I'm sorry for the big 
hole in the schedule. But, I want to, again, let everybody know 
that we're going to leave the record open for 2 weeks. So, if 
anybody wants to submit more questions, that's great. And if 
you all have exhibits, studies, background material, whatever 
it may be, we'd be glad to include that as well.
    Well with that, I want to thank the panel for being here. I 
appreciate the discussions. It's helpful, it's insightful, and 
hopefully it will help us do some good things here in 
Washington to help this country spur some economic development 
all around the country. So, with that, we'll adjourn the 
meeting and thank you very much.
    [Whereupon, at 4:42 p.m., the hearing was adjourned.]

                                  
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