HJR 248: Joint Subcommittee Studying Biosciences and Biotechnology

November 19, 2008

The joint subcommittee held its fourth and final meeting in Richmond. The meeting was used to consider and vote on the final legislative recommendations of the joint subcommittee.

Legislative Drafts

VEDP expansion of duties
The first legislative draft considered would add in the Code of Virginia a requirement that the Virginia Economic Development Partnership (VEDP) promote the biosciences
and bioscience-related advances in the Commonwealth. The draft would add this requirement to the existing duties of VEDP. The joint subcommittee felt that it was important to target promotion of the biosciences specifically, as many exciting research and commercialization advances take place regularly in the Commonwealth, but there is currently no central effort to promote these achievements statewide. This promotion will help Virginia compete with neighboring states Maryland and North Carolina that have a well-established biotechnology industry and will help demonstrate that Virginia is also highly competitive in this field.

The draft language presented to the joint subcommittee would require VEDP to "formulate, promulgate, and advance programs in the Commonwealth to encourage the development of research and industry in fields related to the biosciences, including marketing and promoting biosciences-related research advances and business developments in the Commonwealth." The joint subcommittee voted to recommend this legislation in concept, with amendments that would clarify that VEDP would be required to undertake initiatives related to the promotion of biosciences, and would not need to create new programs. In addition, the joint subcommittee recommended that language be included that clarifies that marketing may be done through the use of press releases and VEDP's website.

Investment tax credit
The second legislative draft considered by joint subcommittee would amend the existing qualified equity and subordinated debt investment tax credit. Currently, an eligible business for investment purposes is defined broadly, and the Department of Taxation has indicated that it might include businesses other than technology-related companies. Therefore, bills seeks to redefine what is considered an eligible business, and to do so in a narrow way. The proposed definition would be limited to businesses in the fields of advanced computing, advanced materials, agricultural technologies, biotechnology, electronic device technology, energy, environmental technology, medical device technology, nanotechnology, or other similar technology-related field.

The bill, as proposed to the joint subcommittee, would have also required that in order to be considered an eligible business, the company would need to have been created to commercialize proprietary research developed at or in partnership with an institution of higher education. After receiving comment on the draft, the joint subcommittee decided that this element narrowed the credit too far, as very few companies in the Commonwealth would meet this criteria. Instead, it was proposed that the credit be split so that fifty percent of the funds available for the credit be reserved solely for companies that were created to commercialize university research and development, and the remaining fifty percent of the credit would be open to any company that fit the definition of an eligible business, regardless of whether or not it was created to commercialize university research and development. Under current funding mechanisms, this would mean that $1.5 million in credits would be reserved for the university-related businesses. The joint subcommittee voted to recommend this legislation, as amended.

Technology funding
The final bill considered by the joint subcommittee would amend the existing Commonwealth Technology Research Fund (CTRF). The Fund would be renamed the Commonwealth Research Commercialization Fund, as uses of the Fund would be focused on commercialization efforts. The Fund would be limited to research programs and technologies focused in the fields of energy, conservation, environment, microelectronics, lifespan biology and medicine—the fields of research that the Virginia Research and Technology Advisory Commission recommended in 2007 as areas in which the Commonwealth excelled, and where research should be focused. The Funds could be used to support three different programs, the focus of which is to be determined by the Secretary of Technology, the Virginia Economic Development Partnership, and the chairman of the Innovative Technology Authority:

• Matching federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants.
• Assisting qualified institutions in leveraging federal and private funds for the commercialization of qualified research.
• Creating a program for loans of up to $500,000 to finance facilities used for commercializing research.

The third proposal generated substantial discussion. Currently, the CTRF is funded at $1 million per year. Since it's inception, it has been funded at up to $10 million per year, and in some years no funding has been provided. As a result, the joint subcommittee had concerns at balancing the demands on the Fund and the accompanying workload in reviewing applications with the amount of Funds available. For example, Virginia is currently quite successful in obtaining SBIR and STTR grants, and in a given year, the CTRF may not be funded at a high enough level to match all of the grants. However, it is likely that all eligible grant recipients would apply for the matching funds. Therefore, it was suggested that if the CTRF was funded at less than $7 million per year, the only SBIR and STTR grants eligible to apply for matching funds would be those awarded by the National Institute of Health, and the matching grants would be capped at $50,000 for the development of a commercialization plan for the SBIR or STTR technology. There was also discussion as to whether the loan program could be effective, given the current low funding of the CTRF. It was agreed, however, that the language would be left in, as it is a discretionary program that could be instituted when funds allow. The joint subcommittee voted to recommend the bill with amendments to the provisions relating to the SBIR/STTR matching grant program.

Final Remarks by the Chairman

Delegate Sickles, chair of the joint subcommittee, thanked all of the subcommittee members for their hard work and thoughtful discussions over the course of the Interim. The chairman said that his goal for the joint subcommittee was to develop practical legislative recommendations to advance the fields of biosciences and biotechnology in the Commonwealth, and he felt like the joint subcommittee exceeded this goal.

Chairman:
The Hon. Mark Sickles

Vice-Chair:
The Hon. Janet Howell

For information, contact:
Lisa Wallmeyer and Patrick Cushing, DLS Staff

Privacy Statement | Legislative Services | General Assembly