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FEASIBILITY STUDY FOR A RESEARCH AND TECHNOLOGY PARK AT THE UNIVERSITY OF CONNECTICUT

Prepared for:

University of Connecticut

Storrs, Connecticut

May 2008

1038 Dead Run Drive - McLean, Virginia 22101 (703) 286-6334 - (703) 734-9148 Fax [email protected] - www.ghgpec.com

UNIVERSITY OF CONNECTICUT, RESEARCH & TECHNOLOGY PARK

FEASIBILITY STUDY FOR A RESEARCH AND TECHNOLOGY PARK

AT THE UNIVERSITY OF CONNECTICUT

Prepared for:

University of Connecticut

Storrs Connecticut

May 2008

Prepared by:

GEORGE HENRY GEORGE PARTNERS

with

D.C. Lyndon and Associates

and

DilksConsulting, Inc.

GEORGE HENRY GEORGE PARTNERS

UNIVERSITY OF CONNECTICUT, RESEARCH & TECHNOLOGY PARK

INTRODUCTION This report describes a very important new opportunity for the University, the community and Connecticut and what is needed to realize the potential. Essential Research and Technology Park Opportunity Quality Jobs. The University of Connecticut and its Main Campus at Storrs play many important roles in the quality of life and wellbeing of the residents and businesses of the State. One of the most important University roles is to strengthen the economy of the State and provide quality jobs for its residents. This is a major priority of universities across the region and the country. Catalytic University Role. Universities have a unique role to play in this process and development of a research and technology park is an important part of that role. Business and other institutions at the start-up, growth and all stages need quality work force and development and refinement of competitive products and service packages. But in many cases they do not have the resources to meet these needs in house; certainly not at the quality level which is demanded in a highly competitive economy. Universities play an essential role in meeting these needs. Essential Importance of Physical Proximity. The success and growth of university research and technology parks across the country is testimony to the importance of this new university role and to the importance of close physical proximity between the university and the benefiting businesses. Even in this electronic age, there is no substitute for the ability of company personnel to consult personally and frequently, often "over the Board," with university faculty and staff, to conveniently use specialized scientific equipment, to participate in technology seminars and to employ faculty and students trained in their product area on an as needed basis. Direct University Benefits. Companies also value the benefits of image association with the university community and the opportunity to work together in the preparation of joint proposals. These proposals and direct contracts with these companies often result in important increased funding for the university research effort. And the student employment opportunities provided by these companies also enriches the student learning experience, a benefit valued particularly by existing and potential graduate students. Over the years, as the development of the research and technology park matures, an important income stream and asset value will be created but that should be a secondary concern relative to the very positive immediate impact park development has on the university research program and the impact on the quality job supply of the community. Report Organization This report is divided into two Phases, reflective of the original scope of services. In Phase I, data was gathered and analyzed on the University and surrounding technology resources and an achievable market projection of leasable space was forecast. . The Phase II work covers sources

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and uses of funds, organization approaches and tenant user needs. The organization of each of the Phases is found below. The Phase I component of the report is divided into five sections. Section 1-The University of Connecticut Resource covers research expenditures, technology transfer achievements and other key research-related resources of the University that are important to research park development. Section 2- Part 1, The Storrs/Greater Hartford Resource, analyzes the technology industry sector and other technology resources in the Greater Hartford region. Resources within an hour drive of the Park will be important in marketing opportunities and potential future partnerships. Part 2, Other Important Activity in the Market, covers the complementary and competitive product in the market as well as general trends in the commercial real estate market. Other initiatives, including the Connecticut Center for Advanced Technology (CCAT) are also discussed. Section 3-Target Industry Assessment compares the analysis of the University resource from Section 1 and the technology resource from Section 2 with previous studies commissioned by the State of Connecticut to identify high probability target industry sectors for the research park. Section 4-Best Practice Research Parks analyzes other research parks around the country that have successfully developed research and technology parks and have important lessons for this University of Connecticut effort. Of these Best Practice Parks, those host universities and/or communities that are most similar to University of Connecticut and Greater Storrs region have been selected for further analysis and use in the research park market forecasts. Section 5-Research Park Performance presents the findings of the Consultant in terms of probable leasing success of the UConn Research Park. This analysis compare three key indicators of research park development at each of the comparables to the actual park achievement, then to the same research park indicators at UConn/Storrs. The Phase II component of the report is divided into three sections. Section 7-Financial Sources and Uses of Funds describes the various funding needs for research and technology park development, the sources of those funds and the recommend funding approach for this project Section 8 ­ Organization and Governance describes the most effective governance approach for managing the park development effort and recommends the optimum approach for UConn based on our experience and what we learned in the Phase I work. Section 9 ­ Tenant User Needs identifies the likely facility, equipment and service needs of the potential tenants based on the target industry cluster recommendations from Phase I.

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Acknowledgements We would like to acknowledge the assistance and support the Consultant Team received through the process of researching and preparing this report. University of Connecticut administration, College Deans, Department Chairs and faculty members alike provided invaluable assistance. We are also appreciative of the input received from Connecticut state agencies, commercial real estate brokers and other key stakeholders interviewed in the process. George, Henry, George Partners

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TABLE OF CONTENTS INTRODUCTION EXECUTIVE SUMMARY SECTION 1. UNIVERSITY OF CONNECTICUT RESEARCH RESOURCES Research Expenditures University Research Centers Center for Science and Technology Commercialization (CSTC) Technology Transfer Technology Incubation Program UConn R&D Corporation UConn Tech-Knowledge Portal UConn-Storrs Research Strength Areas Summary of UConn Technology Resource GREATER STORRS/HARTFORD AND REGIONAL TECHNOLOGY MARKET Part 1. Research and Technology Strengths in the Greater Storrs Region Technology Regions Defined Defining Technology-Related Industries Technology Industry Strength: Primary Market Area Secondary Technology Market Area Location Quotient (LQ) Locational Advantage Industry Sectors Part 2. Other Important Activity In The Market Commercial Real Estate Trends in Greater Hartford Research Oriented Projects in the Region Hartford Market New Haven Market Worcester, Massachusetts Market Connecticut Department of Community and Economic Development Substantial Leverage of a UConn/CCAT Technology Based Economic Development Partnership The Storrs Center Project Conclusion TARGET INDUSTRY ASSESSMENT UConn Strength Targets Locational Advantage Technology Industries Findings of Connecticut Core Competencies Study Findings of the Partnership for Growth II Cluster Study High Priority Targets First Priority Targets Second Priority i iv 1 2 4 5 6 7 8 9 9 10

SECTION 2.

11 11 12 13 14 15 16 17 18 18 18 18 20 22 24 25 26 27 28 28 29 29 30 30 31 32

SECTION 3.

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TABLE OF CONTENTS (CONT'D) Conclusion SECTION 4. BEST PRACTICE COMPARABLE PARKS Selection of the Parks to Profile Lessons From the Best Practice Comparable Parks Iowa State University Research Park Mississippi State University Research Park Penn State Innovation Park Purdue Research Park University of Delaware Research Park Research Park at the University of Illinois University of Kentucky Coldstream Research Campus University of Iowa University of Nebraska Technology Park Virginia Tech Corporate Research Center University of Research Park, University of Wisconsin-Madison Essential Research and Technology Park Role Quality Jobs Catalytic University Role Essential Importance of Physical Proximity Direct University Benefits Best Practice Summary: Critical Park Marketing Success Factors Importance of University Leadership Importance of Building on the University's Image Importance of Faculty/Researcher Participation Importance of Student Participation A Clearly Defined Value-added Program Summary MARKET POTENTIALS FORECAST The Most Instructive Research Parks Methodology Steps in the Approach Research Expenditures Analysis Tech Transfer Based Private Market Forecast Annual Absorption Forecast: Summary Adjusted Forecast Summary: Locational Factors 10-year Adjusted Average Annual Forecast Other Factors Affecting Total Park Tenancy University Anchor Other Major Public/Private Tenancy Summary 32 33 33 34 35 35 36 36 37 37 38 39 39 40 40 41 41 41 41 42 42 43 43 44 45 45 46 47 47 49 50 51 52 53 54 54 55

SECTION 5.

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TABLE OF CONTENTS (CONT'D) SECTION 6. FINANCING SOURCES AND USES AND RECOMMENDATIONS Part 1. PARK FINANCING NEEDS A. Program Planning, Start-up, Marketing, Staffing and Operations B. Costs of General Site Development and Off-Site Infrastructure C. Multi-Tenant Facilities D. Magnet Facilities E. Research Park Tenant Support Part II. Discussion of Sources of Funding A. Operating and Start-up Support B. General Site and Off-Site Infrastructure C. Multi-tenant Facilities D. Incubator Capital & Operating Funds E. Magnet Building Costs Part III. Financing Recommendations A. Program Start-Up B. Site Development & Infrastructure C. Multi-tenant Facilities D. Incubator Capital & Operating Funds E. Magnet Building Costs F. Tenant Support: Operating Subsidies and Growth & Development Capital Conclusion ORGANIZATIONAL OPTIONS Part 1. Common Characteristics of the Best Practice Approaches Part 2. Organizational Options at Best Practice Research Parks Organizational Approach A. University Carries Out the Project Directly Organizational Approach B. University / Developer Organizational Approach C. Special Purpose Entity Organizational Approach D. Master Private Developer Does It All Part 3. Recommended Approach for the University of Connecticut Research Park Board of Directors Management and Staffing Architectural Standards Permitted Uses Finalized Site Planning POTENTIAL USER NEEDS Characteristics of Best Practice University Research Parks Critical Elements of Successful Research Park Buildings Shared Equipment, Services and Amenities Other Important Services Conclusion 56 56 56 56 57 57 58 58 58 59 59 63 64 66 66 66 66 67 68 68

SECTION 7.

69 69 71 71 72 73 75 76 76 77 79 80 80 81 81 83 85 86 89

SECTION 8.

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EXECUTIVE SUMMARY The University of Connecticut is a strong research institution with a number of nationally recognized programs. The potential for a research park is great I. RECOMMENDATIONS, MOVING FORWARD 1. Importance of a University of Connecticut Research Park Quality Jobs. Importance as a Business Attraction Factor. Essential Importance of Physical Proximity. Direct University Benefits in Research Funding, Recruiting and Leadership Support. University Income Stream and Asset Creation 2. Selecting Target Industries. The Park will be most successful if the marketing efforts target those companies/industries that are most compatible and complementary to the existing strengths of both the University of Connecticut research as well as the Greater Hartford and Connecticut technology industry sectors. The First Priority Targets are: Existing Research Relationships (TIP, R&D Corp) ­ Generally the first target in all research park efforts are those relationships that currently exist, but have not yet "landed". Many are small/start-up companies in need of space they otherwise cannot afford to build as well as larger companies with existing relationships that would be attracted to high quality space near the University. Drug Development and Delivery ­ the School of Pharmacy has particularly strength in this area, having recently recruited a number of highly thought of specialists in the area. This is also a growing research area both in the state and nationally. Bioscience and Biomaterials, Including Sensors ­ As with drug development and delivery, as the population continues to age and the Baby Boomer generation reaches retirement age, bio-technologies, bio-sensors and medical device development will become even more important. Stem Cell Research ­ Arguably this is one of the most important medical research areas with the widest potential benefits. The State of Connecticut is one of only a few states with highly funded stem cell research programs and nationally recognized research. Fuel Cells and Related Electronics ­ With the Global Fuel Cell Center already located in Storrs and given the national push for fossil fuel independence, and most looking to hybrid and fuel cell technology as the way to that independence, this industry sector is poised to gain momentum and national importance. Optical Components and Lasers ­ A core strength of both the state and of UConn. Second Priority include: o Advanced Nano-manufacturing, Biomaterials o Polymers and Related Materials o High Performance Computing, Including Grid Transportation o Health/HIV Intervention and Prevention

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3. Market Potential for the UCONN Research Park: 10-year Adjusted Average Annual Forecast. As is typical in university-relater research parks, the leasing pace will begin slow and pick up momentum as the Park marketing effort matures and reputation grows. In the first fiveyears we anticipate the total absorption to be 90,000 SF to 100,000 SF and an additional 107,000 SF to 120,000 SF over the next five year period. Adjusted Private Forecast 16,160 SF/year Public/Univ. Forecast 4,560 SF/year Total First 10-year Forecast 20,720 SF/year In addition to "market demand" absorption, most university research parks land at least one major state/federal location, and one major private location, over the first ten years. The total 10-year build-out absorption would range from 230,000 SF to 280,000 SF. 4. Critical Park Marketing Success Factors. These are: 1. Critical importance of University Leadership. 2. Building off of the University Image. 3. The Importance of Faculty/Research Participation. 4.. Proximity to the University. 5. Clearly Stated Approval from University Administration. 6. The importance of Student Access/Participation. 7. A clearly defined value-added program. 8. Proximity is Critical. 9. Technology Transfer 10. Experienced Research Park Director 11. Broad Based Support 12. Focused But Flexible Tenanting 13. University "Value Added" Program. 14. Support of Local and State Government 5. UCONN/CCAT Regional Research and Technology Strategy Connecticut is moving aggressively to position itself to greatly enhance the job and total economic development generated by proximity to its research and technology institutions through technology park development and marketing adjacent to two major nodes of such activity: the University of Connecticut Research Park here at Storrs and the Connecticut Center for Advanced Technology, located some thirty miles away at East Hartford. Probable achievements include: Leveraging State and Regional Marketing Resources and Efforts Providing a Diversified Range of Quality Locations. Continued Development of Research and Technology Strength Nodes. The result will be that each of these two major research and technology-based economic development initiatives will achieve much more in terms of their own institutional initiatives because both will exist and provide strong support to each other.

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6. Financing Needs. Research park development is a many faceted thing with various financing needs and sources. Each park is different and thus the financing needs specific to the individual park. However, there are several financing needs that most parks need to find sources to match. These financing needs include? Program Planning, Start-up and Marketing Start-up and Early Year Staffing and Operations Costs of General Site Development and Off-Site Infrastructure Multi-Tenant Facilities Magnet Facilities Research Park Tenant Support 7. Sources of Funding. Financial support for each of the Park Financing Needs will come from a variety of sources. However, based on our experience in working with several dozen research parks, as well as the experiences of other university research and technology parks in North America, we believe it is likely to come from some combination of the following sources: Park's Key Stakeholders. Federal Sources. State Sources. Local Sources. Private Developers. Anchors. 8. Organizational Recommendation: Candidate Organizational approaches University Carries Out the Project Directly. University / Developer Joint Approach. Special Purpose Entity. Master Private Developer 9. Recommended Approach Special Purpose Entity : Under this option, the University leads in the formation of a special purpose entity, often a 501(c)(3) non profit corporation, with an original board often comprised of 9-13 members from the University, government and the business community, all with an interest in the success of the park. The university president, or his designee, is often the Chairman. While the newly created Research Park Entity does everything required to place quality research park sites on the market they typically contract with private developers to build the buildings. II. PRINCIPAL FINDINGS SUPPORTING THE RECOMMENDATIONS Total Research Expenditures. Last year (FY2006) research expenditures on the Storrs campus totaled $86.4 million, up $22.3 million from FY2002, a growth of nearly 17%. The table below shows the breakdown of research expenditures in FY2006 by department. Research Expenditures by Department, Funding of $1M or Higher. According to the 2006 Research Report, there were 24 departments with annual expenditures exceeding $1 million. The expenditures range from $8.8M in psychology down to $1.4M in chemical engineering.

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Overall Growth in Research Expenditures in the University of Connecticut System. According to the NSF, research expenditures across all University of Connecticut campuses has grown nearly $48 million over the 2002 to 2005 period. This represents a growth of 28 percent. University Research Centers. The University of Connecticut has established several dozen centers over the years, many of which are highly funded and will have important impacts on the University's research park effort. In addition to providing important research funding and discovery, research centers are an outward sign to prospective corporate partners, and possible future Park tenants. Technology Transfer. Metrics for the technology transfer program for FY2007 show 87 invention disclosures received, a significant increase over the 68 disclosures received in the previous year. Of those 87 disclosures, 54 originated from the Storrs campus, up from the previous year as well. There were 30 new patent applications filed and 67 active licenses and options. Total license income received in 2005 was $1,532,000, double the amount of two years prior. Technology Incubation Program. The Technology Incubation Program (TIP) spans the University of Connecticut system and has four different locations: Storrs, Depot, Farmington and Avery Point. All together, there is over 20,000 SF of incubation space with more available if needed. UConn-Storrs Research Strength Areas Stem Cell Research Fuel Cells Drug Development and Production Secure Transportation and Grid Computing Polymers/Ceramics Sensors

Photonics and Photovoltaic Materials Nano-Bio Materials Biotech/Alternate Fuels & Applications // BioDiesel Kinesiology Center for Health/HIV Intervention and Prevention

Technology Industry Strength: Primary Market Area. The technology industry base in the one-hour drive time area is relatively strong with over 93,300 technology workers employed in 4,600 companies. As seen in the table below, the strongest technology sectors are digital services, aerospace and defense and advanced manufacturing. Each of these plays well into the strengths of the University. Secondary Technology Market Area. The secondary technology market area, while having a lesser impact on the absorption forecasts than the primary area, is still very important to technology company location decision making. A two-hour drive time constitutes a reasonable "day trip" and thus is important for understanding the base of suppliers, complimentary firms and other support services. There are over 545,800 technology workers and 26,300 technology companies in the Secondary Technology Market Area. Location Quotient (LQ). Location quotients are important indicators of a particular industry's relative strength in the local economy vs. the nation as a whole. Industry sectors that score over 1.0 suggest a locational advantage for that industry in the target market. For this analysis,

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location quotients have been calculated for each of the drive-time areas against the Nation and for the Primary Market Area against greater New England. LQ analysis was used to identify those industries with a locational advantage in the Greater Storrs area. Locational Advantage Industry Sectors. The analysis above of both existing technology industry strength and locational quotient analysis have been combined to identify key locational advantage industry sectors for the UConn Research Park. While the permitted uses in a research park should be broad enough to allow for market support, the marketing should focus on those technology sectors with the highest potential for relocation and collaboration with the University and technology companies in the area. Based on the industry analysis, three main industry sectors, and sub-sectors within, have been identified as high probability targets. These industries are as follows: Advanced Manufacturing o Measurement Instrumentation o Optical Instruments and Lenses (Including Lasers) o Plastics, Resins and Advanced Materials o Electronic Coils, Instruments and Power Transmission Equip. Aerospace and Defense o Aircraft Design o Aircraft Engines and Parts o Armaments and Explosives Bioscience / Biotechnology o Medicinals and Botanicals o Surgical and Medical Apparatus o Process Controls Instrumentation

Rentschler Field Project. The entire project is being programmed for approximately 7.5 million square feet of new development to be added to the existing facilities of about 7.0 million square feet occupied by United Technologies, Pratt & Whitney, and related companies. It also contains the new, 40,000 seat Rentschler Field stadium which hosts the University of Connecticut football program and other events. As currently planned, the project will consist of up to about 2.0 million square feet of office space and another 5.0 million square feet of retail, hotel and residential space, and community amenities. It intends to allocate a major portion of its new office space for technology companies. Connecticut Center for Advanced Technology. The Connecticut Center for Advanced Technology (CCAT), located adjacent to the Rentschler Field project, is an important generator of potential future tenancy and of innovations and new companies. According to its website, it is a tax exempt, non-stock corporation founded in 2004 with federal and state funding. Its purpose is to strengthen collaboration between industry, government, and higher education in order to stimulate innovation and enterprise creation. It has a strong focus on military and civilian industrial manufacturing needs, particularly in lasers, nanotechnology, fuel cells, medical devices, and advanced materials and manufacturing techniques. CCAT has a strong orientation and relationship to its neighbors (P&W and UTC) and the industries of interest to these companies and to the US military. The Storrs Center Project. The proposed Storrs Center Project, as is planned now, will change the perception that Storrs does not have the amenity offerings business and Park tenants will

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want. The Storrs Center is a planned mixed-use New Town Center for Storrs, adjacent to the University of Connecticut Campus on existing commercial and vacant other land. The project is expected to include 200-300 market rate rental housing units, 400-500 for sale townhouse and condo units, approximately 150,000 SF ­ 200,000 SF of retail and restaurant space, between 40,000 SF and 75,000 SF of general office space and various community and civic space. Findings of Connecticut Core Competencies Study. The State of Connecticut commissioned the Battelle Memorial Institute to research and report back on the core competencies of the state, primarily focusing on high tech and biotech industries. The study analyzed the resources of the higher education system, both public and private, the key industry sectors, important employers and related technology resources. These results, taken with our work and other studies, have been used to recommend the target industries for the UConn Park effort. The Core Competency Areas indicated in the report are as follows: Advanced Product Development o Advanced Materials o Nanoscale Processing o Fuel Cells & Energy Management Systems o Optoelectronic Systems & Devices Advanced Information Systems o Information Security o Web Services and Grid Computing o Modeling and Predictive Analysis Translational Medicine o Personalized Medicine o Stem Cell Applications o Targeted Drug Development o Clinical Research Consortium Biomedical Engineering o Bioimaging o Neural Engineering o Biomaterials and Tissue Engineering

Findings of the Partnership for Growth II Cluster Study. According to the introduction to the report, "the Partnership for Growth II combines the knowledge and insights of the members of the Governor's Council on Economic Competitiveness and Technology with those of thousands of community, civic and business leaders from across Connecticut." The study also looked at national best practice examples that have come about since the first cluster study conducted five years before. The report identifies those key growth clusters in which Connecticut is well positioned and has location advantage. The growth clusters identified in the report are? Aerospace Components Manufacturing Agriculture Cluster BioScience Cluster Insurance and Financial Services (IFS) Maritime Cluster Metal Manufacturing Cluster Plastics Cluster Software and Information Technology Cluster Tourism Cluster

High Priority Targets. The Park will be most successful if the marketing efforts target those companies/industries that are most compatible and complementary to the existing strengths of both the University of Connecticut research as well as the Greater Hartford and Connecticut technology industry sectors.

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Selection of the Best Practice Parks to Profile. There are three primary criteria for the selection of the university research parks included in this section. Most importantly, they have experience which has critical lessons for this important University of Connecticut research park effort. Secondly, they have taken on the research park development effort in similar non-metro locations. Thirdly, each of the Best Practice comparable parks described below do not have an adjacent medical school. Iowa State University Mississippi State University Penn State University Purdue University University of Delaware University of Illinois, C/U University of Iowa University of Kentucky University of Nebraska University of Wisconsin Virginia Tech

Lessons From the Best Practice Comparable Parks. Each of the universities listed above have successful research parks and provide important lessons for both existing and potential research park efforts around the country. For each park, we have focused on a few lessons that are more relevant to this UConn Research Park effort. Differentiating factors that are consistent among all of the Best Practice Parks 1) Sustained priority from top university leadership; 2) Beginning the park development and marketing process with a park-experienced, senior staff member in place; 3) A clear message to university faculty that participation in start-ups and other park companies is a valued part of their career path; and 4) That the research park is not really "in the market" until it has multi-tenant space to available to market. Other features and lessons are described below. Important Lessons for This Effort Proximity is Key. Importance of a location proximate to the University has helped ensure student and faculty participation in the Park Diversified Board. Very productive role which can be played by a diversified board and special purpose corporation. National Centers. Importance of National Centers in attracting industry partnerships, collaborative funding and major corporate relocations (ERC Center in Mississippi was critical in attracting Nissan to neighboring Canton.) University Anchor Lease. The importance of a university anchor lease in attracting private investment in early multi-tenant buildings early marketing success retarded by substantial distance from research campus Available Multi-tenant Space Critical. Start-ups have been accommodated in both incubation programs and multi-tenant buildings with flexibility in physical space accommodating both start-up and other small companies Incubation Space Important. Development and operation of a new incubator has played a very important role in marketing

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Public/Private Partnerships for Space Creation. The University provided early momentum to the technology commercialization effort through a large, joint university/private company research center. Capitalizing on High Quality of Life. Quality of life is important, especially in small, freestanding communities. Universities Play an Important Development Partner Role. Shows the development leverage of a strong financial commitment from the university foundation and the resulting attraction of important private company partners Faculty Market Demand Critical. Faculty driven market has proved strong in a freestanding small community, this is especially true in Park locations close to the University. Best Practice Summary: Critical Park Marketing Success Factors. In-depth interviews, we inquired of the park directors what they felt were the most critical factors in the success of their parks. While the answers varied based on the individual situations, (location, research, community size, etc), a general consensus began to appear and five key success factor areas were identified. These are: 1. The critical importance of University Leadership. The critical importance of university leadership from the President/Chancellor down through the Deans and Department Chairs should not be underestimated. In all of the Best Practice interviews, the park directors emphasized the importance of their university leadership in making research and the research park a key part of their university's mission. 2. Building off of the University Image. Building off of the University image and reputation Another important early marketing success factor is the park's leveraging of the university's image and reputation to create legitimacy for the park. Often this begins by creating a name for the park that includes the university in the title. While this seems overly obvious, not all parks have done this and their relationship to their host university often seems less clear. 3. The Importance of Faculty/Research Participation. According to the Best Practice park directors, the participation and involvement of the faculty and researchers was one of the most important factors in their marketing success. a. Proximity to the University. All of the research park directors interviewed identified the park's proximity to the University as one of the most important factors in facilitating faculty/researcher participation. b. Clearly Stated Approval from University Administration. Many faculty, especially those that have not yet achieved tenure, are concerned that any activities beyond teaching and university-related research be blessed by the university's administration. 4. The importance of Student Access/Participation. While not as directly critical as faculty/researcher participation in marketing success, prospective tenants in the research park want to be assured that they will have access to the undergraduate and graduate students as an employee resource. Most importantly is the distance from the university to the park. If students are expected to continue a full course load and still have time for a internship or other employment, the "job" must be close enough that they can get there and back quickly.

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5. A clearly defined value-added program. There are two important dimensions to gaining full potential from the value added available. First, is to identify the resources which experience in other parks has found to be most important to marketing success. Second, is put in place a clearly stated and defined program to promote the resources in the most effective way to prospective park tenants. Key Finding: Proximity is Critical. One important finding that came out of both the Comparables work and the Best Practice Park interviews was the importance of proximity in engaging and facilitating faculty and student participation in the park. Market Potentials Forecast Approach. After analyzing research parks nationwide, we have found that the most reliable method of projecting absorption potential in a new research park is through a comparative analysis of the actual experience of other similar university research parks. The Most Instructive Research Parks. Of those Best Practice research parks, six parks were selected as most instructive to this effort and upon which the absorption forecast methodology will be applied. Iowa State University Mississippi State University Purdue University University of Delaware University of Nebraska Virginia Tech

Methodology. When we analyze the actual private space marketing experience of best practice comparable parks, we find that relative research park marketing success can be best predicted based on the relative strength of the actual absorption to the research base and then applied to the research base of the subject university. Research Expenditures Analysis. A critical factor in the success of a university-related research park is the level of research expenditures at the host institution. Tech Transfer Based Private Market Forecast. The analysis of technology transfer achievement is important because it directly reflects the potential to commercialize technologies into the incubator and Park and is a strong outward signal to companies that would like to do business with University that the culture exists for cooperative efforts. Annual Absorption Forecast: Summary. The two forecast methods described above have each yielded an average annual private space forecast. Using the research factor method an annual absorption of 10,880 SF was calculated. The technology transfer factor approach yielded an average annual absorption of 19,970 SF. Combined, the unadjusted average annual forecast of private space for the UConn Research Park is 15,430 SF/year. Adjusted Forecast Summary: Locational Factors. The preliminary forecasts are baseline forecasts and do not include the locational adjustments described in the methodology. Below is the overall rating for UConn vs. the Benchmark Parks on the three location factors.

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Technology Company Activity Interstate and Air Transportation Access Supporting Business Services/Amenities Overall Locational Adjustment

Strong Modest Low Modest

10-year Adjusted Average Annual Forecast. As is typical in university-relater research parks, the leasing pace will begin slow and pick up momentum as the Park marketing effort matures and reputation grows. In the first five-years we anticipate the total absorption to be 90,000 SF to 100,000 SF and an additional 107,000 SF to 120,000 SF over the next five year period. Adjusted Private Forecast Public/Univ. Forecast Total First 10-year Forecast 16,160 SF/year 4,560 SF/year 20,720 SF/year

Other Major Public/Private Tenancy. The absorption forecasts presented above are based on private market forces and typical public participation as seen in research parks around the country. Private absorption ranging from 30,000 SF to 50,000 SF the total 10-year build-out absorption would range from 230,000 SF to 280,000 SF. Financing Needs. Research park development is a many faceted thing with various financing needs and sources. Each park is different and thus the financing needs specific to the individual park. However, there are several financing needs that most parks need to find sources to match. These financing needs include? Program Planning, Start-up and Marketing Start-up and Early Year Staffing and Operations Costs of General Site Development and Off-Site Infrastructure Multi-Tenant Facilities Magnet Facilities Research Park Tenant Support Sources of Funding. Financial support for each of the Park Financing Needs will come from a variety of sources. However, based on our experience in working with several dozen research parks, as well as the experiences of other university research and technology parks in North America, we believe it is likely to come from some combination of the following sources: Park's Key Stakeholders. In many of the Best Practice Parks, the host university has played a key role in supplying funding, supplying the guarantees for funding or providing commitments to private developers to allow them to fund aspects of the park development Federal Sources. There are a number of federal funding sources that have been used in research park development that come in the form or grants or low interest loans. Federal earmarks have been used successfully in other parks for infrastructure improvements and building construction. States can provide funding through economic development, State Sources. transportation or CDGB funds, to name a few, to support the park development. Most often, the funding is used for the initial infrastructure and utilities.

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Local Sources. At the local level, the host community can apply for Section 108 funding under the state's CDBG allocation. In some cases, the host community provides "in kind" contribution through road maintenance, snow removal, etc for the Park. Private Developers. Private developers in recent years have become very effective partners in research park development. Not only will private developers build space in the park, including multi-tenant, single-tenant and university space, but they will also participate in providing necessary park infrastructure. Anchors. Single-tenant anchor facilities, such as the USDA facility going into the Gateway University Park in Greensboro, NC, can be financed by the entity itself, or by a private developer that leases the building, or sells it upon completion. Common Characteristics of the Best Practice Approaches. Research parks have the two primary purposes of 1) supporting the research mission of the university; and 2) bringing technology business to the university community, through attraction and start-up and growth. The governance and organizational strategy which should be put in place for this University of Connecticut Research Park should be the one which will best achieve these objectives. To do this, the governance and organizational strategy should have the following characteristics: University Support. Technology Transfer Experienced Research Park Director Broad Based Support Focused But Flexible Tenanting University "Value Added" Program. Initial University Oversight Role of Local and State Government

Part 2. Organizational Options at Best Practice Research Parks Organizational Approach A. University Carries Out the Project Directly. In this option, the university adds experienced research park marketing and development professionals, prepares use and development standards, prepares a plan, raises the money for infrastructure improvement of lands (it typically already owns) from a combination of local, state and federal government sources and develops and markets the buildings. Marketing is coordinated with existing marketing agencies. Organizational Approach B. University / Developer. This approach is similar to Option A1, but differs in that while the University does everything required to place quality research park sites on the market with full value added support, they contract with private developers and major building tenants to lease the individual building sites and develop non-University buildings. Organizational Approach C. Special Purpose Entity. Under this option, the University leads in the formation of a special purpose entity, often a 501(c)(3) non profit corporation, with an original board often comprised of 9-13 members from the University, government and the business community, all with an interest in the success of the park. The university president, or his designee, is often the Chairman. Similar to Option A2 above, while the newly created Research Park Entity does everything required to place quality research park sites on the market they typically contract with private developers to build the buildings.

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Organizational Approach D: Master Private Developer Does It All. In this approach, the University prepares and approves plans, development standards and regulations and permitted uses for the Park on University land and then negotiates a master land lease and development agreement with an experienced research park developer who raises the financing for the infrastructure and builds and markets the lots and building space. The university retains the responsibility to provide value added support to the developers marketing. The development agreement is clear also on the sharing of the various parts of the project cash flow and on the minimum acceptable pace of park building space development. Recommended Approach for the University of Connecticut Research Park. Our recommendation is to adopt the Special Purpose Entity organizational model. Here, as noted above, a special purpose, non profit board of "key players" is created to carry out the project. This model provided adequate control by the University over the project while incorporating other key stakeholders and sharing the development with the private development community. Conclusion. Development of a research park is an important opportunity for University, the community and the state and will have a major positive impact on the University research program and continuing growth in the supply of quality jobs in the state. The consultants recommendation is to move ahead quickly to capture this opportunity.

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SECTION 1. UNIVERSITY OF CONNECTICUT RESEARCH RESOURCES

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PHASE I. RESOURCE ASSESSMENT, TARGET INDUSTRY ANALYSIS AND MARKET FORECAST

SECTION I. UNIVERSITY OF CONNECTICUT RESEARCH RESOURCES

The University of Connecticut is a strong research institution with a number of nationally recognized programs. Certainly expertise in stem cell research, advance manufacturing through the Institute of Material Sciences (IMS), nanotechnology and bio-fuels research set UConn apart, among other research strengths. As is described in the paragraphs below, the research resource at the University of Connecticut in Storrs is well established, diverse and a solid base upon which to build a research park effort.

This section will cover several aspects of the UConn-Storrs research resource, focusing on those resources most directly relevant to the development of a research and technology park. The section begins with a discussion of the research expenditures in Storrs over the last 3 years. Next, the key research centers that will have the most impact on the research park leasing are discussed. As a large majority of companies that locate in the Park will have some University relationship, technology transfer achievement will be an important indicator of future potential tenancy and corporate partnerships. Hand-in-glove with technology transfer is the incubation program that supports the investigators and start-up companies, and the Technology Incubation Program is thus discussed next. The section concludes with a summary of the University research resources and strength areas.

Expenditures and Awards Important to Research Park Marketing. Present levels and trends in research expenditures are important to research park marketing because they represent the amount of research activity to which prospective park tenant companies would have potential exposure. Relationships of park marketing success to research expenditures is one approach used to project reasonable achievements at this University of Connecticut park. Research awards are important both as one indicator of future expenditures, but also as one indicator of research relationships between UConn and some private companies and others who might consider a location in the park. For the purposes of forecasting probable leasing success for the Park, research expenditures are used.

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Research Expenditures

The Office of the Vice Provost for Research and Graduate Education produces a very detailed annual report on research awards and expenditures for the Storrs campus. Data includes

proposals by school and department, awards by center, school and/or department and expenditures by center, school and department. It is this latter category that is the focus of this section.

Total Research Expenditures. Last year (FY2006) research expenditures on the Storrs campus totaled $86.4 million, up $22.3 million from FY2002, a growth of nearly 17%. The table below shows the breakdown of research expenditures in FY2006 by department.

Table 1. UConn-Storrs Research Expenditures by Department, FY-2006 College/Department College of Liberal Arts and Sciences College of Agriculture and Natural Resources School of Engineering NE School of Education School of Social Work Vice Provost Research & Graduate Education Other Schools School of Pharmacy School of Business School of Allied Health School of Nursing School of Family Studies School of Law School of Fine Arts Grand Total Source: UConn 2006 Report of Sponsored Project Activity 2006 35,319,475 15,464,947 14,649,662 6,698,596 4,298,483 3,049,612 2,301,490 2,063,990 1,421,311 457,156 332,002 148,295 101,117 53,936 86,360,072

Research Expenditures by Department, Funding of $1M or Higher. As an important next step in defining the key research areas for the Research Park targeting, a closer look at the research expenditures is taken. Specifically, we look at the individual departments with at least $1 million in research funding. These departments most often have the more entrepreneurial and productive researchers and investigators. According to the 2006 Research Report, there were 24

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departments with annual expenditures exceeding $1 million. These top funded departments were lead by psychology, chemistry, marine sciences, molecular and cell biology, educational psychology and social work, all with more than $4 million in expenditures. All together, these departments account for nearly $73 million in research expenditures.

What is most important is the diversity of these departments. While the expenditures range from $8.8M in psychology down to $1.4M in chemical engineering, the highly funded departments in the table below span the University with at least half of all the University School's providing at least one department to the table. A broad research base is important to a successful research park effort. The table below lists all 24 departments and their FY2006 research expenditures.

Table 2. Research Expenditures Over $1M by Department, FY2006 PI Department Name Department of Psychology Department of Chemistry Department of Marine Sciences Department of Molecular and Cell Biology Department of Educational Psychology School of Social Work Department of Electrical & Computer Engineering Cooperative Extension System Department of Nutritional Sciences Department of Physiology and Neurobiology Department of Natural Resources Management & Engineering Department of Physics Department of Mechanical Engineering Department of Computer Science & Engineering Department of Public Policy School of Pharmacy Department of Civil & Environmental Engineering Department of Animal Science Department of Pathobiology Department of Ecology and Evolutionary Biology Department of Plant Science National Undersea Research Center Department of Material Science Department of Chemical Engineering Source: UConn 2006 Report of Sponsored Project Activity Expenditures 8,761,784 4,869,187 4,739,587 4,649,278 4,363,225 4,298,483 3,872,286 3,490,733 3,060,782 2,489,296 2,462,392 2,294,288 2,244,059 2,136,251 2,088,878 2,063,990 2,008,283 2,001,622 1,949,367 1,910,084 1,594,192 1,538,491 1,372,923 1,359,577

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Overall Growth in Research Expenditures in the University of Connecticut System. A final pass at research expenditures should include the overall University system, including the medical school in Farmington. As is discussed in Phase II of this report, it is not anticipated that budding research and technologies and start-ups coming out of the Farmington campus would initially locate in Storrs, as proximity to the PI is important in the early years. However, there are many collaborations between researchers at the two campuses and as the start-up companies mature, and the need to be adjacent to the medical school researchers diminishes, our interviews suggest that some may well be interested in considering a Storrs location

According to the NSF, research expenditures across all University of Connecticut campuses has grown nearly $48 million over the 2002 to 2005 period. This represents a growth of 28 percent.

Table 3. Research Expenditures, University of Connecticut All Campuses, 2002-2005 Academic Discipline Engineering Geosciences Interdisciplinary or Other Sciences Life Sciences Math and Computer Sciences Physical Sciences Psychology Social Sciences Total 2002 $16,177 $9,780 $599 $119,232 $1,956 $7,665 $7,375 $9,219 $172,003 2003 $18,926 $8,644 $293 $133,867 $2,638 $7,073 $10,898 $8,002 $190,341 2004 $21,216 $8,412 $684 $150,176 $3,729 $7,247 $12,908 $6,864 $211,236 2005 $18,931 $9,004 $557 $156,803 $4,040 $7,682 $15,152 $7,813 $219,982

Note: Numbers above in thousands ($000's) Source: National Science Foundation

University Research Centers

The University of Connecticut has established several dozen centers over the years, many of which are highly funded and will have important impacts on the University's research park effort. In addition to providing important research funding and discovery, research centers are an outward sign to prospective corporate partners, and possible future Park tenants, of particular areas of research expertise. This is especially true for those research centers that have achieved national recognition and the University has a number of those. Several of these centers are

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located off of the main campus at the Depot Campus or Avery Point campuses, but can still have marketing impact on the Storrs research park.

Table 4. Research Expenditures, UConn Research Centers, FY2006 UConn Center Center of Health/HIV Intervention & Prevention Booth Engineering Center for Advanced Technologies Center for Environmental Sciences and Engineering Institute of Material Sciences Connecticut Transportation Institute National Undersea Research Center Center for Survey Research and Analysis Center for Regenerative Biology Sea Grant College Program Connecticut Global Fuel Cell Center Biotechnology Center CT Center for Economic Analysis Vice Provost Research & Graduate Education Roper Center and Institute for Social Equity Source: UConn 2006 Report of Sponsored Project Activity 2006 Expenditures 6,052,475 4,801,509 4,085,112 3,929,349 1,695,630 1,528,913 1,516,999 1,504,264 1,034,438 848,733 326,080 215,082 200,471 99,689

Center for Science and Technology Commercialization (CSTC) The University of Connecticut's Center for Science and Technology Commercialization (CSTC) manages the intellectual property in the life and physical sciences created at the university, including the UConn Health Center. It does so by actively identifying and evaluating technologies, coordinating all patenting and other forms of intellectual property protection, marketing the technologies and negotiating option and license agreements. The CSTC also distributes the funds received from its agreements and provides general information on intellectual property protection. Each year the CSTC receives and evaluates approximately 70 new invention disclosures, files about 30 new United States patent applications, and signs 10-15 commercial agreements.

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Technology Transfer

The UConn research is supported by a strong technology transfer program that spans the four campuses. Metrics for the technology transfer program for FY2007 show 87 invention

disclosures received, a significant increase over the 68 disclosures received in the previous year. Of those 87 disclosures, 54 originated from the Storrs campus, up from the previous year as well. There were 30 new patent applications filed and 67 active licenses and options. Total license income received in 2005 was $1,532,000, double the amount of two years prior. There is an equivalent staffing of 4 in the technology transfer office. This is basically on par with the national average of 4.2 FTE.

In depth interviews with UConn researchers reveal a level of satisfaction with the technology transfer staff in their assistance to faculty in the disclosure and patenting process; and in marketing the licenses. All of the technology licensing directors are PhD's and came from industry and bring a "real world" approach to licensing and commercialization at UConn.

Table 5. Tech Transfer Achievement, University of Connecticut All Campuses, 1996-2005 Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Licensing Staff 1.25 1.00 1.20 1.50 2.25 3.00 3.00 4.00 4.00 4.00 Invention Disclosures 45 47 45 45 72 64 75 83 70 87 License Income 437,874 432,579 806,155 481,134 425,602 467,064 625,020 724,893 1,790,151 1,532,000 Active Licenses 24 33 38 43 52 52 40 50 58 67 Startups 1 1 1 2 2 1 1 2 2 New Patent Applications 7 10 19 22 26 36 24 41 25 30

Source: AUTM Report, 2005

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Technology Incubation Program

The Technology Incubation Program (TIP) spans the University of Connecticut system and has four different locations: Storrs, Depot, Farmington and Avery Point. Each of these locations are discussed briefly below.

System-wide, TIP's goal is to advance technology development and commercialization of entrepreneurial companies by leveraging university resources (faculty, students and facilities), and cost effective research and lab space to tenants, along with a full compliment of incubator services. Those services include: access to the University library and computer network,

facilitated access to hiring students as part-time employees or interns, use of specialized equipment and instrumentation on pay-per-use basis, basic secretarial/clerical assistance provided by student interns and more experienced support provided with the cost shared by the benefiting TIP companies, and business support services through a network of service providers coordinated by the TIP director. Special pricing and fees with all different types of providers have been negotiated in light of small company financial constraints.

Advanced Technology Laboratory (ATL), Storrs Campus. Known affectionately as the Little Banana, the Advanced Technology Lab houses the incubator on the main campus in Storrs. The ATL facility, immediately adjacent to the main campus, is fully occupied and consists of 3,500 SF of tenant space, conference rooms and administrative offices. The tenant space is broken down into five lab spaces with adjoining offices and other non-lab tenant spaces, holding a total of 11 companies currently.

TIP, Farmington Campus. Currently, TIP operates 3,300 SF of wet and dry lab space in a facility adjacent to UConn Health Center. These labs, ranging in size from 163 SF to 453 SF, can accommodate a variety of start-up companies. Some of the lab spaces are equipped with fume hoods and/or sinks while others are not, with most of the labs having adjoining office areas (approximately 70 SF). In addition to this existing space, the 400 Farmington building is being rehabbed and will have approximately 10,000 SF of TIP tenant space.

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Depot Campus. There are a number of older buildings on the Depot campus that are suitable to provide small company space if needed. This is office/dry lab space only.

Avery Point. TIP has another 3,140 SF of lab space available on the Avery Point Campus, on the Thames River and the Long Island Sound. The labs can accommodate tenants in spaces ranging from 116 SF to 468 SF. In addition, there is a 2,500 square foot area of laboratory facilities with offices across the hall which is available for use by TIP companies.

UConn R&D Corporation

The University of Connecticut Research & Development Corporation's mission is to create new business start-ups based on innovative technologies developed by the faculty and staff. The UConn Foundation, Inc., which manages the endowment assets of the University, is its sole shareholder. The organization has an independent Board of Directors and maintains separate operations from the UConn Foundation. The Corporation evaluates technology at all UConn campuses including Stamford, Avery Point, Farmington (Health Center), and Storrs.

The UConn R & D activities include: identifying University technologies, evaluating markets for potential technologies, creating business plans, soliciting early stage venture capital, and recruiting business management for the start-up companies. The University first determines the most appropriate path to commercialization either through a license to a larger company or the creation of a start-up company. This process is managed by the Center for Science and Technology Commercialization (CSTC), which is the department of the University that handles its intellectual property. When the technology is licensed to an existing firm in a particular industry, the licensee uses its own resources to develop the business and pays a royalty back to the University. Each technology is scrutinized by CSTC and UConn R & D staff to determine the best development path for a particular technology in terms of generating the highest return possible. Thus, UConn R & D looks at all technologies that come through this process and determines if the technology can form the basis of a company.

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Once a decision has been made to create a new company, UConn R & D takes responsibility for the development process. The primary objective in creating a start-up is to maximize the total return to the University; however, because of the unique nature of the University as a public institution, there may be additional considerations that could influence the decision process. The UConn R & D Board may consider other factors in some instances where it is felt that the investment provides additional benefits to the University (although these may be less quantifiable), such as:

· · · · ·

Scientific actualization (converting ideas to practice) University recognition Regional economic development/job creation Creating new channels for University contribution to constituents Recruitment of entrepreneurial faculty

UConn Tech-Knowledge Portal

The University of Connecticut's Tech-Knowledge Portal (TKP) is a U.S. Economic Development Administration funded University Center program that provides an entry-point to UConn for industry. The TKP is part of the university's Office of Technology Commercialization whose mission is to capitalize on Connecticut's investment in UConn by promoting technology based economic development in the state. The Portal is helping to close the gap between discovery and commercialization by supporting companies and/or entrepreneurs interested in accessing UConn technology available for licensing through our tech transfer office and by helping to integrate that technology into their plans. The Portal also works with existing companies that want to access UConn capabilities, build new business units, or launch new techbased products.

UCONN-STORRS RESEARCH STRENGTH AREAS

The success of the research park project will be based in large part on the interaction and research strength on the Storrs Campus. As is discussed throughout this report, companies are attracted to university research parks for specific research activities taking place at the host

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institution. While the research taking place in Farmington is certainly important, activities in Storrs will play a more significant role in tenancy and thus are the focus of this section. The research strengths listed below are those identified through review and analysis of research awards and expenditures, consultation with the client group and interviews with over 3-dozen university researchers and administrators.

Stem Cell Research Fuel Cells Drug Development and Production Secure Transportation and Grid Computing Polymers/Ceramics Sensors Photonics and Photovoltaic Materials Nano-Bio Materials Biotech/Alternate Fuels & Applications // BioDiesel Kinesiology Center for Health/HIV Intervention and Prevention SUMMARY OF UCONN TECHNOLOGY RESOURCE

Based our analysis of the University of Connecticut research strengths, technology transfer and technology incubation program, it is clear that the University has the necessary research resources for a successful research park development. When analyzed against other successful research parks later in this report, UConn compares very well, outpacing in technology transfer a number of the comparables with higher research expenditures.

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SECTION 2. GREATER STORRS/HARTFORD AND REGIONAL TECHNOLOGY MARKET

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SECTION II. GREATER STORRS/HARTFORD AND REGIONAL TECHNOLOGY MARKET

All university-related research and technology parks depend on tenancy support from several sources. These are: (a) the host university itself and activities related to its research programs and collaborative activities (discussed in Section I); (b) other institutions in the area involved in research and its commercial byproducts; (c) by external factors supporting both technology and commercial and quasi-commercial real estate development; and d) existing technology companies and other entities in the region. The interplay of these factors acts to define the nature and operating characteristics of the park.

The following sub-sections of this report outline the various potential and actual contributing factors of support emanating from outside the university's own and direct programs.

PART 1. RESEARCH AND TECHNOLOGY STRENGTHS IN THE GREATER STORRS REGION

Although the attraction potential from the University's value added offering can not be overestimated, nearly all of the successful research parks across the country have attracted tenants to their parks that have a more limited interaction with the host university. In most cases, it should be anticipated that support will be derived from a combination of factors involving collaboration with the university and other Connecticut research centers as well as factors resulting from sources independent of the university, including a high quality park development and proximate location to their peer firms.

This sub-section of the report examines the existing technology industry activity which will be supportive and essential to the successful development and marketing of the university related research and technology park at UConn.

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Technology Regions Defined

For the purposes of this analysis we will focus on two technology regions. We will discuss the immediate technology region surrounding UConn-Storrs within a 60 minute driving radius (see Map 1). This is the Primary Technology Region and is roughly bounded by I-90 to the north, the Connecticut/Rhode Island border to the east, I-95 to the south, and extends nearly to Waterbury and Bristol on the west. The larger Secondary Technology Region consists of a 120-minute driving time from the UConn main campus and encompasses the Primary area as well as the nearly all of Massachusetts, including the entire Boston metropolitan area, southern New Hampshire, as well as the entire state of Connecticut.

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Defining Technology-Related Industries

The starting point for our analysis in assessing technology industry performance is defining what we mean by "technology industries." There is no one precise definition of technology-related industries. Indeed, there are many competing definitions, many of which are focused on the application of specific technologies.

The goal in any definition of technology is to capture those industries that are highly innovative, strongly focused on research and development and apply scientific and technical knowledge to advancing new products and services. Thus, the more comprehensive approach to defining technology-related industries is to consider those industries that rely more on R&D activities and employ a higher share of scientific and engineering workers.

The most well grounded approach to defining technology-related industries is that by the US Bureau of Labor Statistics which considers the share of the workforce in scientific, engineering and computing occupations and the share of employment found in research and development activities. Only those industries with at least twice the average for all industries are considered high tech.

Nevertheless, even the BLS definition has gaps. Given the dynamic nature of the economy, the BLS definition misses many of the innovative Internet and telecom companies in today's Internet world. BLS also misses many more detailed industries, such as optical media, that are classified under more traditional, mature industry groupings. The approach taken builds off of the BLS approach and adds in newly emerging Telecom and Internet related industries.

To help focus on key clusters, we group the technology industries into six major groupings:

Advanced Manufacturing comprising more traditional products that are embedding leading technology and require substantial R&D efforts, such as automobiles, measuring devices and industry equipment.

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Aerospace & Defense includes companies involved in advanced weapons, flight and space vehicles to innovative navigation systems. Bioscience & Biotechnology includes drug makers, medical devices and diagnostics, agricultural chemicals and the fast moving field of biotechnology. Chemicals involving industrial chemicals, plastics and consumer products using new chemical compounds. Digital Infrastructure, spanning chipmakers to computer and telecommunications equipment makers. Digital Services, including traditional software development and computer services, along with emerging Internet and Telecom services.

Technology Industry Strength: Primary Market Area

The technology industry strength in the one-hour drive time is particularly important to potential tenant companies, especially those looking to relocate significant portions of their operations. As noted above, prospective tenant companies will want to be assured that there is a quality and plentiful workforce to draw upon. Technology companies that are not otherwise partnering with the University, may still be interested in a UConn Park location if they feel confident that the combination of the faculty and student resource and existing tech base will be there to meet their hiring needs

The technology industry base in the one-hour drive time area is relatively strong with over 93,300 technology workers employed in 4,600 companies. As seen in the table below, the strongest technology sectors are digital services, aerospace and defense and advanced manufacturing. Each of these plays well into the strengths of the University.

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Table 6. Technology Employment and Companies in the 1-hour Drive Time Area Tech Cluster Advanced Manufacturing Aerospace and Defense Biosciences Chemicals Digital Infrastructure Digital Services Total Employment 15,983 19,181 11,873 5,111 8,245 32,939 93,332 Companies 521 174 270 155 259 3,228 4,607

Source: D&B iMarket and GHGP, December 2007

Secondary Technology Market Area

The secondary technology market area, while having a lesser impact on the absorption forecasts than the primary area, is still very important to technology company location decision making. The importance of technology industry analysis in this case is not based on finding employees, although that does happen, but rather finding collaborations. A two-hour drive time constitutes a reasonable "day trip" and thus is important for understanding the base of suppliers, complimentary firms and other support services.

Table 7. Technology Employment and Companies in the 2-hour Drive Time Area Tech Cluster Advanced Manufacturing Aerospace and Defense Biosciences Chemicals Digital Infrastructure Digital Services Total Employment 80,745 60,799 71,937 23,586 81,854 226,915 545,836 Companies 2,486 425 1,957 890 1,933 18,607 26,298

Source: D&B iMarket and GHGP, December 2007

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Location Quotient (LQ)

Location quotients are important indicators of a particular industry's relative strength in the local economy vs. the nation as a whole. Industry sectors that score over 1.0 suggest a locational advantage for that industry in the target market. For this analysis, location quotients have been calculated for each of the drive-time areas against the Nation and for the Primary Market Area against greater New England.

Table 8. Location Quotient Analysis, 2007 Technology Cluster Advanced Manufacturing Aerospace and Defense Biosciences Chemicals Digital Infrastructure Digital Services Overall Technology LQ Primary Market 1.23 3.23 1.29 0.77 0.69 0.82 1.07 Secondary Market 1.35 2.21 1.69 0.77 1.47 1.21 1.35 Primary v. NE States 2.14 3.47 1.83 2.48 1.05 1.71 1.92

Source: D&B iMarket and GHGP

From the table above it is clear the Primary Market Area has a strong locational advantage in aerospace and defense, biosciences and advanced manufacturing. While digital services has a strong industry/employment base, is does not score as well locationally against the nation as a whole.

Taking a more detailed look into the analysis, location quotients of the Primary Area vs. the New England states were also calculated. This is particularly important because most relocations are regional in nature, with companies considering certain areas of the country, or climates, highly in their decision making criteria. In this analysis, the Primary Market Area scores quite well, having +1 scores in all 6 technology clusters analyzed. In this case the strongest sectors were advanced manufacturing, aerospace and defense and chemicals, with biosciences and digital services close behind. These findings are particularly important to the target industry analysis in discussed later in this report.

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Locational Advantage Industry Sectors

The analysis above of both existing technology industry strength and locational quotient analysis have been combined to identify key locational advantage industry sectors for the UConn Research Park. While the permitted uses in a research park should be broad enough to allow for market support, the marketing should focus on those technology sectors with the highest potential for relocation and collaboration with the University and technology companies in the area. This analysis is then combined, in a subsequent section of this report, with the University resource analysis and other state technology studies to identify the final target niche market.

Based on the industry analysis, three main industry sectors, and sub-sectors within, have been identified as high probability targets. These industries are as follows:

Advanced Manufacturing o Measurement Instrumentation o Optical Instruments and Lenses (Including Lasers) o Plastics, Resins and Advanced Materials o Electronic Coils, Instruments and Power Transmission Equip. Aerospace and Defense o Aircraft Design o Aircraft Engines and Parts o Armaments and Explosives Bioscience / Biotechnology o Medicinals and Botanicals o Surgical and Medical Apparatus o Process Controls Instrumentation

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PART 2. OTHER IMPORTANT ACTIVITY IN THE MARKET

In addition to the technology industry strengths in the region, there a number of other factors that will have an impact on the marketing success of the research park effort. The additional factors are described in the paragraphs below.

Commercial Real Estate Trends in Greater Hartford

Although a university-related research park is a special kind of commercial real estate project, a general understanding of the commercial real estate market in the region is important. Commercial brokers were interviewed for this study, and real estate reports and data gathered from CERC and other sources, to provide this important overview. Vacancy rates in the Greater Hartford area are lowest in the East Hartford area, at 8.9 percent and have been falling. Overall, vacancy rates in the Greater Hartford also decreased from last quarter, down to 14.9 percent.

RESEARCH ORIENTED PROJECTS IN THE REGION

There are a few projects in three market areas within about one hour's drive time that focus to some extent on technology development as part of their theme and mission. These projects could be either collaborators or competitors with a university research and technology park at Storrs.

Hartford Market

The largest project in the area is in East Hartford at the site of Rentschler Field, an airfield of about 1,000 acres used over many years for a variety of aviation and technology related activities by United Technologies and Pratt & Whitney Aircraft Corporation. This new development is being undertaken through a joint venture between a private developer, the Matos Group, and United Technologies Corporation. It is to be a mixed use community development (office, R&D, retail, residential and community amenities) and is in its planning and very early development phases and has yet to attract its first major commercial office or technology tenants.

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In the fall of 2007 it opened a major retail draw, the Cabelas Store, a 200,000 square foot sports and outdoor activities retailer.

The entire project is being programmed for approximately 7.5 million square feet of new development to be added to the existing facilities of about 7.0 million square feet occupied by United Technologies, Pratt & Whitney, and related companies. It also contains the new, 40,000 seat Rentschler Field stadium which hosts the University of Connecticut football program and other events. As currently planned, the project will consist of up to about 2.0 million square feet of office space and another 5.0 million square feet of retail, hotel and residential space, and community amenities. technology companies. It intends to allocate a major portion of its new office space for

Because of the presence of the two Pratt & Whitney plants and corporate headquarters with about 13,000 employees and the United Technologies Research Center with about 800 employees, this project starts out with technology based anchors in place. Companies doing work with either of these major corporations may find reasons to locate some operations within this project.

The Connecticut Center for Advanced Technology (CCAT), located adjacent to the Rentschler Field project, is an important generator of potential future tenancy and of innovations and new companies. According to its website, it is a tax exempt, non-stock corporation founded in 2004 with federal and state funding. Its purpose is to strengthen collaboration between industry, government, and higher education in order to stimulate innovation and enterprise creation. It has a strong focus on military and civilian industrial manufacturing needs, particularly in lasers, nanotechnology, fuel cells, medical devices, and advanced materials and manufacturing techniques. CCAT has a strong orientation and relationship to its neighbors (P&W and UTC) and the industries of interest to these companies and to the US military.

In 2004 CCAT was designated as the state's SBIR/STTR service agency. In that capacity it finds, filters, counsels and assists Connecticut companies that will be eligible to receive federal grants under those programs.

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CCAT's annual operating budget of $9 million comes from federal and state sources (through the DECD budget) and supports a staff of about 50 professionals and 8 consulting firms. It has recently received an additional state grant of $5 million to help promote both new startup companies in various fields and alternative energy and BioDiesel programs and companies. In October of 2007 it opened a new incubator which will supply operating grants as well as space for tech based companies who become residents. In addition it will shortly begin awarding annual DECD subsidies or grants based on production levels to state BioDiesel companies.

Since CCAT is supported in part by the Connecticut DECD, it should be advantageous for CCAT and a research park at Storrs to work together under a plan for common marketing and development through mutual collaboration, not competition. CCAT is a tremendous asset for the state and has a number of important tools at its disposal. CCAT is highly focused on specific industries and on providing services and collaborations to build new industry and capturing spin offs from industry, including its corporate neighbors and the US military. This differs from UConn that oriented toward University research strengths and technologies and appropriately

focused on spins offs from that research and those research relationships.

New Haven Market

Almost all new technology development in this geographic area is related in some way to Yale University. And most of that technology relates to biotechnology and to medical and life sciences, three related areas where Yale has made very noteworthy progress. In fact, according to a CURE report, most of the 40 or so biotech companies in Greater New Haven have been created out of Yale research and the excellent capabilities of the University's Office of Cooperative Research which last year launched 7 new venture capital backed biotech startups.

Yale recently agreed to purchase the 136 acre research campus of Bayer HealthCare in West Haven. It contains some 550,000 square feet of state-of-the-art lab spaces as well as numerous office and support facilities. Yale's announced plan states that it intends to use all of these facilities for its own research needs. It remains to be seen if those plans may eventually evolve to incorporate some type of research park facilities in the future.

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Other than the Bayer complex, there are only 2 projects in the area that support technology company tenancy as a matter of policy. They are 300 George Street and Yale's Science Park, both in New Haven proper.

300 George Street. The 300 George Street building stands adjacent to the Yale New Haven Hospital and the Yale Medical School and is two blocks from Yale's main undergraduate campus. When purchased by Winstanley Enterprises some 8 or 9 years ago, it was a vacant, derelict, 10 story, 560,000 SF former SNET telephone company building in a run down but promising area very close to the University. With some indirect support from Yale, it was renovated for biotech, medical, and other technology companies interested in being near the University and its Medical School and was introduced to the market some 6 or 7 years ago. It has apparently served both Yale and its owners well as it is currently about 95% occupied at rents averaging an attractive $18.00 per gross square foot with additional rent for upgraded tenant improvements.

Yale's Science Park. On the site of the old Winchester Arms and Ammunition factory (started in 1840's) is an 88 acre combination industrial and research park which was initiated as such in the middle 1980's. It has had a long and not very successful history and Yale only 5 years ago agreed to put its name on the park. It is not owned by the University, although Yale is a founding sponsor. From the beginning it was developed and managed by Science Park

Development Corporation (SPDC), a 501(C)(3) special purpose development entity. For a number of reasons it has suffered over the years from a nearly constant lack of capital and experienced management.

Currently SPDC owns and operates 3 buildings (170,000 SF) fully leased and positively cash flowing. A 4th building, Bldg. #25, is a 266,000 SF lab building newly renovated by a private sector developer on land leased from SPDC. That building is now only 15%-20% occupied and has recently been sold to Winstanley Enterprises which will further improve it and seek to lease it up.

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SPDC is now in the process of revising its Master Plan for Science Park. The research park as such is currently seen as not capable of being sustained by market forces in that form alone. Thus it is attempting to change the plan of development for the balance of the property to convert to mixed use residential, retail and office project. The rest of the park encompasses some 55 acres and over a million square feet of 100 year old 5 and 6 story munitions buildings, some land and buildings having serious but not fatal environmental problems.

Worcester, Massachusetts Market

Worcester is an example of a city whose character and economic foundations have been changed by new technologies and new industries, specifically biotechnology, life sciences, and health care related businesses. What began in 1985 as a satellite for similar activity in Boston and Cambridge has now evolved into a major research and business center in its own right almost entirely centered on medical and health sciences. This industry is anchored by three leading health care institutions ­ Massachusetts College of Pharmacy and Heath Sciences, the University of Massachusetts Medical School, and Tufts University School of Veterinary Medicine. The community is also backed up by 15 colleges and universities in the area including Worcester Polytechnic Institute and Holy Cross College. Worcester claims to have more students per capita than any other major US city. In addition to its academic institutions, the city and its Business Development Corporation have created several important research and technology parks and incubators as described below.

The Massachusetts Biotechnology Research Park.

The Massachusetts Biotechnology

Research Park was created in 1985 by Worcester Business Development Corporation (WBDC) and has emerged since then as one of the nation's leading centers for biotech development. The park is situated on 105 acres directly across from the UMass Medical Center, one of the premier research institutions in the northeast with more than $65 million in annual research funding. The park contains approximately 1 million square feet of space and hosts some 25 companies, principally large established tenants in medically related fields, a hotel and conference center, and one of the three incubators set up and operated by Massachusetts Biomedical Initiatives (see below). A few years ago, this research park was acquired from its original developer, Worcester

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Business Development Corporation, by Alexandria Real Estate Investment Trust of Pasadena, California.

CenTech Park. CenTech Park is one of the current developments of WBDC. It is a 121 acre master planned research and manufacturing park located in nearby Grafton, MA. It will

eventually contain some 650,000 square feet of space. It provides fully serviced parcels of 5 to 50 acres available for sale, lease, or build-to-suit. Thus far 7 parcels have been sold to

established companies in the biotech, light manufacturing, and research and development fields. CenTech Park and WBDC have recently acquired an additional 69 acre expansion site on adjacent land which will allow development of another 600,000 square feet on parcels of 4 to 20 acres.

Grafton Science Park. Grafton Science Park is adjacent to CenTech Park and is a development of Tufts University's School of Veterinary Medicine. It is planned for approximately 700,000 square feet of office and light industry use in the biotechnology, medical, pharmaceutical, and environmental sciences industries. It is currently in its initial stages of planning and

development. In 2005 and 2006 it became the recipient of grants from the National Institutes of Health of $19.35 million to be added to $6.4 million from Tufts for the construction of a 38,000 square foot regional biosafety laboratory to support work Tufts has been pursuing in human and animal health and in infectious diseases. If effect this facility will act as a magnet and resource for scientists throughout the region conducting similar research of public health importance.

Gateway Park. Gateway Park in central Worcester is a recently initiated joint venture between WBDC and Worcester Polytechnic Institute. It is situated on 11 acres and includes sites for 4-5 life sciences buildings totaling 500,000 square feet of lab and office space, 241,000 square feet of market rate residential and retail space, and some additional graduate student housing. Gateway Park is part of a larger 55 acre Gateway Redevelopment District which contains numerous businesses, offices, restaurants, and business services as well as a Marriott Courtyard hotel. The first, recently completed elements of Gateway Park are a 124,000 square foot office and lab building and a 683 stall, 6 level parking structure. The WPI Bioengineering Institute will occupy 60% of the first building with 40% reserved for private sector tenants. Three additional

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pads will support buildings of 80,000, 100,000, and 160,000 square feet for future development and another 1.7 acres is available for graduate student or market rate housing.

Massachusetts Biomedical Initiatives (MBI).

Massachusetts Biomedical Initiatives is an

independent NFP created to support regional growth throughout the state and in the Worcester area in the biotech and medical device industries. It finances and operates 3 Incubators in the area. The newest of these is a joint partnership with WPI at the initial Gateway Park life sciences facility. MBI financed, built out and operates the incubator which is designed for about 6 companies and currently houses 4 new tenants. The second incubator is at the Massachusetts Biotechnology Research Park currently housing 5 tenants and the third is a free-standing facility in central Worcester which houses 7 startup companies.

The Worcester Business Development Corporation (WBDC).

The Worcester Business

Development Corporation has been central to the economic development of the area and particularly the focus on biotech and medical technologies and the development of that cluster. In addition to the Massachusetts Biotechnology Research Park, the CenTech Park, and recently the Gateway Park in a joint venture with Worcester Polytechnic Institute, since it founding in 1965 WBDC has developed five traditional industrial parks and has provided financing and site assistance to hundreds of area businesses.

Connecticut Department of Economic and Community Development (DECD) It may be interesting to note that historically the state, through the DECD, has been an effective partner with communities like Mansfield developing industrial parks to support economic development. While the business focus at the already developed DECD supported industrial parks has been broad ( i.e. not technology driven necessarily) the availability of ready to go sites with road and infrastructure in place has proven to be a successful method to promote economic development in both rural and suburban communities in Connecticut. The DECD industrial parks program appears to be a traditional means of support that has been in use for decades, and continues today as an activity under the Manufacturing and Economic Assistance Act. This may be a timely and appropriate resource for the UConn technology park without the necessity of an

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earmark of state funds. Successful parks in Killingly and Plainfield demonstrate that the program works well in Eastern Connecticut. It is likely that with the resources available at the university that can bolster tenant attraction and growth, we will only enhance the success of a program that is already an effective use of state funds.

SUBSTANTIAL LEVERAGE OF

A UCONN/CCAT TECHNOLOGY BASED

ECONOMIC

DEVELOPMENT PARTNERSHIP

National experience clearly establishes that universities and other major research centers provide access to the best research, highly specialized equipment, faculty consulting and student work force and an intellectual environment of formal technical meetings and informal interaction which is very valuable to companies and non profit entities at all stages of size and development. This experience also clearly establishes that this university economic development leverage is very strong when the businesses have the opportunity to locate close by, and this explains the success of the research park movement across the country (see the "best practice" sections of this report for a discussion of such projects.)

Connecticut is moving aggressively to position itself to greatly enhance the job and total economic development generated by proximity to its research and technology institutions through technology park development and marketing adjacent to two major nodes of such activity: the University of Connecticut Research Park here at Storrs and the Connecticut Center for Advanced Technology, located some thirty miles away at East Hartford.

The result will be a much stronger locational opportunity "product" to be marketed to technology companies seeking new locations by state and regional marketing entities; and a stronger total resource base to support new enterprise start-up and growth.

Leveraging State and Regional Marketing Resources and Efforts. Technology companies are clearly the most sought after prize in the regional, national and direct foreign investment market and state and regional economic development agencies must be aggressive in their efforts and to have the strongest possible technology regions in which to market locations. Strong and

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continued development at both Storrs and CCAT will provide a very strong critical mass of technology resources.

Providing a Diversified Range of Quality Locations. National experience clearly establishes that a number of technology companies when seeking locations need most proximity to a large workforce and a large and diversified range of supporting facilities and services. Others, and the many successful freestanding research parks bear this out, seek the strong activity focus and immediate and convenient proximity to priority resources provided in a free standing university community. The UConn/CCAT initiative for the state provides this full range of high quality, fully competitive.

Continued Development of Research and Technology Strength Nodes. The ability of the principle investigators at each of UConn and CCAT to strengthen their applications for federal, foundation and other competitive financing by drawing on contributing scientists at the partner institution will be very important to success in a highly competitive field.

Summary Assessment. The result will be that each of these two major research and technologybased economic development initiatives will achieve much more in terms of their own institutional initiatives because both will exist and provide strong support to each other.

THE STORRS CENTER PROJECT

Through our analysis, dozens of interviews and site visits, very few issues were uncovered that might affect the marketing success of a research park in Storrs. One issue, though, was with respect to the lack of business support services and other locational amenities. While there are certainly quality restaurants, retail and residential offerings in Greater Storrs, these offerings do not fully respond to the size of the University of Connecticut market. The proposed Storrs Center Project, as is planned now, will change that perception.

The Storrs Center is a planned mixed-use New Town Center for Storrs, adjacent to the University of Connecticut Campus on existing commercial and vacant other land. The project is

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expected to include 200-300 market rate rental housing units, 400-500 for sale townhouse and condo units, approximately 150,000 SF ­ 200,000 SF of retail and restaurant space, between 40,000 SF and 75,000 SF of general office space and various community and civic space.

In addition to the numerous retail, restaurant, commercial and residential uses that make up the project, the new mixed-use classification allows for a variety of civic and community spaces such as community meeting spaces, postal services, educational and classroom spaces, and exhibition spaces. A town square will be at its core, mimicking the greens at the center of hundreds of New England villages. Of the 48-acre project, just 17 acres will be developed, a little less than is currently in use. The rest will be preserved for conservation. This project is a public-private partnership including the Town of Mansfield, the University of Connecticut and a master private developer, the Storrs Center Alliance, LLC, an affiliate of LeylandAlliance LLC, Tuxedo, New York.

CONCLUSION

The technology region surrounding the Storrs campus park location is very strong, in fact considerably stronger than all but one of the comparable parks discussed in Section 5. With Hartford 30-minutes to the west and Boston 2-hours to the east, there is sufficient technology industry strength in both the one-hour and two-drive time areas to support the successful development of a research park. The technology employment base alone, with 93,300

employees in the one-hour and over 545,800 in the two-hour, is very impressive and will provide confidence to prospective tenants that there is an ample workforce to draw upon.

In addition to the technology region, there are other important happenings that will positively affect the UConn Research Park potentials. First, the CCAT project will be an important ally in the continuing development of research and technology industries in central Connecticut. Second, the Storrs Center Project will greatly increase the commercial and retail offerings, as well as housing choices, for potential park tenants.

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SECTION 3. TARGET INDUSTRY ASSESSMENT

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SECTION 3. TARGET INDUSTRY ASSESSMENT

University research parks are most often successful when they focus their marketing efforts on technologies and industry sectors that match up well against the strengths of the University research resource and the surrounding technology industry base. The University relationships are important to further foster the commercialization of university technologies and accelerate the discovery, licensing and development of start up companies. The industry focus is to identify those niche markets that are not only a good fit for the Park and for Storrs, but that if locating here, will have the necessary support to be successful.

This section of the report identifies those technology niche industries that we feel will be most successfully attracted and grown in the Park. The final list is a combination of the University resource analysis (Section I), the greater Storrs resource (Section II), and two Connecticut statewide industry and cluster studies completed prior to this report.

UConn Strength Targets

At the conclusion of Section I, key university strength targets were identified. As noted above, the strengths were identified through a combination of analyzing the University's research expenditures, interviews with faculty and administration, and a better understanding of the University's specialized research programs. Those key strengths are listed below: Stem Cell Research Fuel Cells Drug Development and Production Computer Visualization Secure Transportation and Grid Computing Polymers/Ceramics Sensors Photonics and Photovoltaic Materials Nano-Bio Materials, BioChips Biotech/Alternate Fuels & Applications // BioDiesel Center for Health/HIV Intervention and Prevention

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Locational Advantage Technology Industries

The locational advantage technology industries listed below were derived from an analysis of the technology employment and companies in the Primary Market Area as well as a location quotient analysis of the Primary Market to the Nation as a whole, and to the New England states. These industries are those that have a higher share of the areas employment relative to the national average and thus suggest a locational advantage.

Advanced Manufacturing o Measurement Instrumentation o Optical Instruments and Lenses (Including Lasers) o Plastics, Resins, Polymers and Advanced Materials o Electronic Coils, Instruments and Power Transmission Equip. Aerospace and Defense o Aircraft Design o Aircraft Engines and Parts o Armaments and Explosives Bioscience / Biotechnology o Medicinals and Botanicals o Surgical and Medical Apparatus o Process Controls Instrumentation Findings of Connecticut Core Competencies Study

The State of Connecticut commissioned the Battelle Memorial Institute to research and report back on the core competencies of the state, primarily focusing on high tech and biotech industries. The study analyzed the resources of the higher education system, both public and private, the key industry sectors, important employers and related technology resources. These results, taken with our work and other studies, have been used to recommend the target industries for the UConn Park effort. The Core Competency Areas indicated in the report are as follows:

Advanced Product Development o Advanced Materials o Nanoscale Processing o Fuel Cells & Energy Management Systems o Optoelectronic Systems & Devices

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Advanced Information Systems o Information Security o Web Services and Grid Computing o Modeling and Predictive Analysis Translational Medicine o Personalized Medicine o Stem Cell Applications o Targeted Drug Development o Clinical Research Consortium Biomedical Engineering o Bioimaging o Neural Engineering o Biomaterials and Tissue Engineering Findings of the Partnership for Growth II Cluster Study

According to the introduction to the report, "the Partnership for Growth II combines the knowledge and insights of the members of the Governor's Council on Economic Competitiveness and Technology with those of thousands of community, civic and business leaders from across Connecticut." The study also looked at national best practice examples that have come about since the first cluster study conducted five years before. The report identifies those key growth clusters in which Connecticut is well positioned and has location advantage. The growth clusters identified in the report are?

Aerospace Components Manufacturing Agriculture Cluster BioScience Cluster Insurance and Financial Services (IFS) Maritime Cluster Metal Manufacturing Cluster Plastics Cluster Software and Information Technology Cluster Tourism Cluster HIGH PRIORITY TARGETS

The Park will be most successful if the marketing efforts target those companies/industries that are most compatible and complementary to the existing strengths of both the University of

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Connecticut research as well as the Greater Hartford and Connecticut technology industry sectors. Companies will want to locate in an area that has proven successful for both competitive and complementary companies, has a plentiful and qualified workforce and has strong research related to the work they are doing. In short, to locate in an area that gives them the best chance to thrive and grow.

By analyzing the targets from four different perspectives, we have identified those with the highest probability of success not only in Connecticut, but in Storrs and the UConn Research Park. We have broken the target list into first and second priority targets based on the relative rank of each when all four lists were combined. The target industry sectors are briefly described below.

First Priority Targets o Existing Research Relationships (TIP, R&D Corp) ­ Generally the first target in all research park efforts are those relationships that currently exist, but have not yet "landed". Many are small/start-up companies in need of space they otherwise cannot afford to build as well as larger companies with existing relationships that would be attracted to high quality space near the University. o Drug Development and Delivery ­ the School of Pharmacy has particularly strength in this area, having recently recruited a number of highly thought of specialists in the area. This is also a growing research area both in the state and nationally. o Bioscience and Biomaterials, Including Sensors ­ As with drug development and delivery, as the population continues to age and the Baby Boomer generation reaches retirement age, bio-technologies, bio-sensors and medical device development will become even more important. o Stem Cell Research ­ Arguably this is one of the most important medical research areas with the widest potential benefits. The State of Connecticut is one of only a few states with highly funded stem cell research programs and nationally recognized research. o Fuel Cells and Related Electronics ­ With the Global Fuel Cell Center already located in Storrs and given the national push for fossil fuel independence, and most looking to hybrid and fuel cell technology as the way to that independence, this industry sector is poised to gain momentum and national importance. o Optical Components and Lasers ­ A core strength of both the state and of UConn.

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Second Priority o o o o Advanced Nano-manufacturing, Biomaterials Polymers and Related Materials High Performance Computing, Including Grid Transportation Health/HIV Intervention and Prevention CONCLUSION

The combination of research strength, technology industry strength and existing clusters in the greater Hartford Region and across Connecticut provides numerous target opportunities for the UConn Research Park in Storrs. As noted above, companies looking to relocate or expand are most interested in making sure there will be a quality workforce from which they can draw employees and also that other industries within their cluster, both suppliers and clients, are located within a day trip area. The analysis conducted for this study, along with those done for the State clearly show a strong and competitive technology region in Connecticut.

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SECTION 4. BEST PRACTICE COMPARABLE PARKS

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SECTION 4. BEST PRACTICE COMPARABLE PARKS

Research parks have been growing in importance as a part of the total research strategy of universities and the total economic development strategies of their communities and states. Over the years, important lessons have been learned as to the strategies these other universities have used to build on their research, technology and technology region strengths to achieve success with their parks.

The path that the various parks have taken over the years varies considerably. Some started many years ago, often very slowly, but then, with changes in leadership and maturing in management, have sustained steady growth. Others started with strong early anchor activity, but then moved into a period of other University priorities and largely stalled, only to take off impressively again when new leadership arrived committed to the park as a major university mission.

In more recent years, benefiting from the experience of these earlier efforts, universities starting parks have begun with a more rigorous examination of what other earlier parks have achieved, and even more importantly, the strategies they have used and which of those strategies have been most productive. This has made the start-up process just as challenging, but somewhat more predictable.

Achieving marketing and development success in today's competitive economy is, in effect a search for unique marketing leverage points. This best practice analysis is aimed at being one important source of this kind of creative thinking.

Selection of the Parks to Profile

There are three primary criteria for the selection of the university research parks included in this section. Most importantly, they have experience which has critical lessons for this important University of Connecticut research park effort. Secondly, they have taken on the research park

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development effort in similar non-metro locations.

Thirdly, each of the Best Practice

comparable parks described below do not have an adjacent medical school.

The presentation of each of the university parks considered in this analysis is organized in two parts. For each park, first an overview of the university and the research park effort is provided briefly, and this followed with a discussion of the important lessons learned and the importance they may have for optimum development and marketing of the park here at The University of Connecticut. All of the parks listed below will be treated in this best practice analysis.

Iowa State University Mississippi State University Penn State University Purdue University University of Delaware University of Illinois, C/U University of Iowa University of Kentucky University of Nebraska University of Wisconsin Virginia Tech

LESSONS FROM THE BEST PRACTICE COMPARABLE PARKS

Each of the universities listed above have successful research parks and provide important lessons for both existing and potential research park efforts around the country. For each park, we have focused on a few lessons that are more relevant to this UConn Research Park effort.

Several differentiating factors that are consistent among all of the parks below, and likely most of the successful parks throughout North America. These are: 1) sustained priority from top university leadership; 2) beginning the park development and marketing process with a parkexperienced, senior staff member in place; 3) a clear message to university faculty that

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participation in start-ups and other park companies is a valued part of their career path; and 4) that the research park is not really "in the market" until it has multi-tenant space to available to market. Other features and lessons are described below.

Iowa State University Research Park

The Iowa State University Research Park was incorporated in 1987 and its' first building constructed the following year. Since that time, a total of 330,000 SF has been constructed in seven buildings on the 120 acre park. Unlike the University of Iowa Research Park discussed below, this park is adjacent to the main campus and has not had to deal with proximity issues. The community of Ames, Iowa is located in central Iowa with a population of 50,000, 30 miles north of Des Moines.

Best Practice Lessons for this UConn Park effort include: Importance of a location proximate to the University has helped ensure student and faculty participation in the Park The Iowa State Innovation System (ISIS), working in conjunction with the ISU Research Park and its technology incubator, are the center of a comprehensive technology transfer network that supports commercialization and Park tenancy.

Mississippi State University Research Park

The Thad Cochran Research, Technology and Economic Development Park is located in Starkville, Mississippi, a community of approximately 43,000 in central Mississippi. While the park has relatively good highway and interstate access, the nearest major airports are 2 ½ to 3 hours away in Jackson, MS and Memphis, TN. The first building in the park was completed in 1988 and since then six more buildings for a total of 330,000 SF have been developed. Phase I of the park, consisting of 220 acres, is nearly built-out and the Phase II expansion (100 acres) is underway.

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Best Practice Lessons for this UConn Park effort include: Importance of a location proximate to the research activities of the University. The proximate location allowed the University to locate an incubator facility, their Energy Research Center and other University facilities in the park Very productive role which can be played by a diversified board and special purpose corporation. Importance of National Centers in attracting industry partnerships (the NSF funded the ERC Center) with was critical in attracting Nissan to neighboring Canton.

Penn State Innovation Park

Innovation Park at Penn State University is located adjacent to the Pennsylvania State University with easy access to the research and technology resources of the University and access to a welltrained and skilled workforce. The campus environment encourages University and business collaboration. The Park also has direct access to I-99, a major north/south link to Pennsylvania's two major east-west highways, the Pennsylvania Turnpike and Interstate 80. The park is situated on 118 acres and has eight buildings totaling 750,000 SF, with the first building completion in 1994.

Best Practice Lessons for this UConn Park effort include: The early development of this park demonstrated the strong positive impact of the location of university facilities in park The importance of a university anchor lease in attracting private investment in early multi-tenant buildings early marketing success retarded by substantial distance from research campus

Purdue Research Park

The Purdue Research Park, associated with Purdue University in West Lafayette, Indiana is the oldest park in this Best Practice analysis and one of the most successful university research parks in the county. West Lafayette/Lafayette is a community of approximately 85,000, located 60-

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miles northeast of Indianapolis and roughly 110 miles southeast of Chicago, very similar to UConn's relationship to Hartford and Boston. The Purdue Research Park is located on 725 acres just north of the main campus and houses over 140 companies in 40 buildings totaling 1.13 million square feet of space.

Best Practice Lessons for this UConn Park effort include:

Demonstrates the potential for generating a strong tenant flow from the university research faculty to a park not located in a large urban area. Start-ups have been accommodated in both incubation programs and multi-tenant buildings. University of Delaware Research Park

Delaware Technology Park at the University of Delaware is located in the largest technology region of the Best Practice Parks discussed in this report being an hour from both Philadelphia and Baltimore and within two-hours of Washington and New York. The Park is situated on a 40acre site adjacent to the University of Delaware and offers accommodations for everything from start-ups to established businesses with needs that range from wet labs to traditional office space. The Park has been in operation since 1993 and now has 5 buildings totally 250,000 SF.

Best Practice Lessons for this UConn Park effort include:

Early marketing efforts benefited from a state investment in a major biomedical effort and center Flexibility in physical space accommodation of start-up and other small companies.

Research Park at the University of Illinois

The Research Park at the University of Illinois is located a few minutes away from the main campus and since it's inception in 2000, has experienced rapid growth. Since the first building

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was completed in 2001, over 400,000 SF of office and laboratory space has been developed on their 200 acre Park site. There are currently over 50 companies employing some 1,000 workers. Champaign-Urbana is home to roughly 210,000 and is located two-hours south of Chicago. The University is home to one of the most powerful supercomputers in the country and has leveraged this asset in attracting tenants to the park.

Best Practice Lessons for this UConn Park effort include:

Development and operation of a new incubator has played a very important role in marketing Location directly adjacent to the campus has been very important Important tenancy has come from relocation and expansion of existing technology companies in the region; but faculty companies dominate the marketing success. University of Kentucky Coldstream Research Campus

The Coldstream Research Campus is located in Lexington, Kentucky and approximately 10minutes from the main campus of the University of Kentucky. The Park is well located at the intersection of I-64 and I-75 and covers 735 acres. There is approximately 627,500 SF built in the Park now and several buildings under construction, including the first of two 160,000 SF buildings for Lexhold International.

Best Practice Lessons for this UConn Park effort include:

The University provided early momentum to the technology commercialization effort through a large, joint university/private company research center. Recently, a private developer has made a substantial development commitment to the park.

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University of Iowa

The Oakdale Research Park at the University Iowa is located on 189 acres approximately 10-15 minutes from the main campus and has had to overcome this distance issue. There are 12 buildings in the park with a total of 325,000 SF. The community of Iowa City it 63,000 strong, approximately 25-miles from Cedar Rapids and two-hours from Des Moines.

Best Practice Lessons for this UConn Park effort include:

Reinvigorated recently with a state commitment to incubator construction which attracted a major bioscience company to co-anchor the building. Quality of life is important in this small, freestanding community. Large and small, faculty driven companies make up the tenant group Early marketing success retarded by distance to campus

University of Nebraska Technology Park

The 150 acre University of Nebraska Technology Park, located in Lincoln, is approximately 5 minutes from the main campus of the University and located along I-80 and I-380. The Park opened in 1993 and has four buildings with 147,000 SF. The City of Lincoln has a population of 241,000 and is home to the state government, although otherwise is relatively isolated from other major metros or technology clusters.

Best Practice Lessons for this UConn Park effort include:

Shows the development leverage of a strong financial commitment from the university foundation and the resulting attraction of important private company partners Faculty driven market has proved strong in a free-standing small community.

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Virginia Tech Corporate Research Center

The Virginia Tech Corporate Research Center, located adjacent to the Virginia Tech campus in Blacksburg, Virginia, was formed in 1985 and the initial building completed in 1988. The Park now has 24 completed buildings on 120 acres with a total of 750,000 SF developed. Blacksburg is a small community of only 40,000 in the Shenandoah Mountains of Virginia, approximately two-hours from Lynchburg, VA and Winston-Salem, NC. This stand-alone location has been successful due to the proximity to the University research.

Best Practice Lessons for this UConn Park effort include:

A very successful foundation-developed park in a free-standing, small community at a university with a strong, diversified research program. The faculty has been the dominant generator of market demand Early marketing success retarded by distance from research campus

University of Research Park, University of Wisconsin-Madison

Along with the Purdue park described above, University Research Park in Madison is one of the most successful research parks in the country with 30 buildings, over 1.5 million SF, and 565 acres. The first phase of the research park is approximately 3 miles from the main campus and is now nearly built out and they are in the planning stages for the Phase II development. Madison is located in the south-central part of the state and has a population of 224,000.

This very successful park had a rapid start through the active financial role of the University Foundation Playing the development entity role financing buildings Partnering with utility companies & others to build the incubator/multi-tenant space The strategy to bring needed venture funding to the project included contracting with a successful local VC to provide technical assistance to incubator companies. Faculty-related companies dominate.

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ESSENTIAL RESEARCH AND TECHNOLOGY PARK ROLE

When considering a research park project, each of the Best Practice university parks above, and likely every university park in the country, have asked the question of "why do a park?". From our work on over 50 parks and benchmarking other Best Practice parks, we have found there are many answers to the question, but that a number of those answers are consistent across the Best Practice parks and research parks nationwide.

Quality Jobs

The University of Connecticut and its Main Campus at Storrs play many important roles in the quality of life and wellbeing of the residents and businesses of the State. One of the most important University roles is to strengthen the economy of the State and provide quality jobs for its residents. This is a major priority of universities across the region and the country. The key to being able to provide quality job is to have high quality space for the companies to locate in. A research park, by leveraging university, public and private investments, is often the best solution to providing space in a market that is not yet providing space on it's own.

Catalytic University Role

Universities have a unique role to play in this process and development of a research and technology park is an important part of that role. Business and other institutions at the start-up, growth and all stages need quality work force and development and refinement of competitive products and service packages. But in many cases they do not have the resources to meet these needs in house; certainly not at the quality level which is demanded in a highly competitive economy. Universities play an essential role in meeting these needs.

Essential Importance of Physical Proximity

The success and growth of university research and technology parks across the country is testimony to the importance of this new university role and to the importance of close physical

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proximity between the university and the benefiting businesses. Even in this electronic age, there is no substitute for the ability of company personnel to consult personally and frequently, often "over the Board," with university faculty and staff, to conveniently use specialized scientific equipment, to participate in technology seminars and to employ faculty and students trained in their product area on an as needed basis. Companies that locate in proximate

university research parks very often work directly with researchers at the university, hire students and in some cases, sponsor research at the university.

Direct University Benefits

Companies also value the benefits of image association with the university community and the opportunity to work together in the preparation of joint proposals. These proposals and direct contracts with these companies often result in important increased funding for the university research effort. And the student employment opportunities provided by these companies also enriches the student learning experience, a benefit valued particularly by existing and potential graduate students.

Over the years, as the development of the research and technology park matures, an important income stream and asset value will be created but that should be a secondary concern relative to the very positive immediate impact park development has on the university research program and the impact on the quality job supply of the community.

BEST PRACTICE SUMMARY: CRITICAL PARK MARKETING SUCCESS FACTORS

For each of the Best Practice parks above, individual key lessons learned were identified, particularly those most relevant to this University of Connecticut project. As an extension of the that analysis, the conclusion of this section of the report draws upon the Best Practice discussion above, our experience in research park development and personal interviews with Best Practice Park directors to identify the most important park marketing success factors. A key component, as noted, was direct interviews with the directors of the 10 successful research parks cited above.

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In the in-depth interviews, we inquired of the park directors what they felt were the most critical factors in the success of their parks. While the answers varied based on the individual situations, (location, research, community size, etc), a general consensus began to appear and five key success factor areas were identified. These are: 1. The critical importance of University leadership 2. Building off of the University image and reputation 3. The importance of faculty/research participation 4. The importance of student participation 5. A clearly defined value-added program Each of these success factors are described in greater detail below, incorporating the comments and advise of the Best Practice Park Directors.

Importance of University Leadership

The critical importance of university leadership from the President/Chancellor down through the Deans and Department Chairs should not be underestimated. In all of the Best Practice

interviews, the park directors emphasized the importance of their university leadership in making research and the research park a key part of their university's mission. As the list of five factors suggests, university commitment at all levels from administration to faculty to students has been important in the marketing success of the Best Practice parks.

Importance of Building on the University's Image

Another important early marketing success factor is the park's leveraging of the university's image and reputation to create legitimacy for the park. Often this begins by creating a name for the park that includes the university in the title. While this seems overly obvious, not all parks have done this and their relationship to their host university often seems less clear. Another way to build off of the university image, according to the Directors interviewed, is to have the park featured prominently in university publications and on the university web site. This further shows the direct link between the park effort and the university.

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Importance of Faculty/Researcher Participation

According to the Best Practice park directors, the participation and involvement of the faculty and researchers was one of the most important factors in their marketing success. This is for two reasons. First, in order to "grow your own" companies and take technologies from the lab to the Park, you must have active and enthusiastic faculty and researcher participation. From our interviews, the following are key factors in ensuring that participation:

Proximity to the University. All of the research park directors interviewed identified the park's proximity to the University as one of the most important factors in facilitating faculty/researcher participation. This is due to a number of factors that are consistent at universities nationwide: 1) On campus parking ­ as simple as is sounds, the time and frustration spent searching for parking can be a significant annoyance to faculty and students alike. A research park location that requires the researcher to drive is a negative in encouraging participation. 2) Minimal travel time ­ nearly all faculty and researchers we have interviewed describe very busy schedules and suggest that additional commitments on their time should be taken under serious consideration. A location that requires a significant travel time commitment would in turn be met with significant hesitation. 3) Factor in tenure/salary performance considerations ­ another important concern of researchers considering taking on the added time responsibility of commercializing their technology is fulfilling existing university commitments, or having those commitments reduced. When faced with adding to their already busy schedules, a project that will not be will not positively impact salary or tenure decisions will often give way to projects that will, for example, publishing an academic article.

Clearly Stated Approval from University Administration. Many faculty, especially those that have not yet achieved tenure, are concerned that any activities beyond teaching and university-related research be blessed by the university's administration. In general, this means that the University leadership has conveyed to the Deans, Chairs and researchers that research, licensing and commercialization are an important part of the university's mission.

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Importance of Student Participation

While not as directly critical as faculty/researcher participation in marketing success, prospective tenants in the research park want to be assured that they will have access to the undergraduate and graduate students as an employee resource. Quite often these positions begin as internships and end as permanent positions and are very important to the companies in ensuring continuity in their staff. In other cases, the researcher chooses to employee graduate students in his/her private research venture. In any case, the major factors to successfully leveraging the student resource are similar to leveraging the faculty resource. Most importantly is the distance from the university to the park. If students are expected to continue a full course load and still have time for a internship or other employment, the "job" must be close enough that they can get there and back quickly. Also, if the university is considering a shuttle system, or other transportation assistance, a park a greater distance away will make the potential transportation solutions too costly to implement.

A Clearly Defined Value-added Program

There are two important dimensions to gaining full potential from the value added available. First, is to identify the resources which experience in other parks has found to be most important to marketing success. Second, is put in place a clearly stated and defined program to promote the resources in the most effective way to prospective park tenants. It is this second point that a majority of the research park directors interviewed specifically identified. Their experience has shown that it is not on the provision of "value added" services that further distinguish a university park from a typical business park, but more importantly the details and definition of that program/policy. As is described in greater detail in Section 8, in order for the value added program to be both useful to tenant companies and an effective tool in marketing the park, the policy that governs access to this resource must be clear and there needs to be a known person/department to contact for inquires and to facilitate the process.

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SUMMARY

The analysis of successful research parks is an important step in both market and forecasting work as well as the organization and implementation steps to follow. Most issues that will come up in this Park effort have come up in other parks and for which best practice solutions exist. Among the most important issues that need to be addressed at this early stage are: 1) the importance of University leadership from Day One; 2) a university policy that encourages both faculty and student participation; 3) a location proximate to the research campus that will further break down the barriers to the all important faculty and student participation.

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SECTION 5. MARKET POTENTIALS FORECAST

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SECTION 5. MARKET POTENTIALS FORECAST

After analyzing research parks nationwide, we have found that the most reliable method of projecting absorption potential in a new research park is through a comparative analysis of the actual experience of other similar university research parks. The section above presented an analysis of Best Practice University Research Parks and further detailed analysis on the most instructive parks, called the Benchmark Parks.

The forecast below will focus on the Benchmark Parks, a subset of the Best Practices. While the Best Practice Parks provide important lessons for this effort with respect to marketing strategy, organization and governance, many of those parks are associated with universities with significantly more research and research resources.

The Most Instructive Research Parks

Eleven actively marketing research parks were identified above for the best practice analysis and the most important lessons for this UConn Research Park effort were identified. Of those Best Practice research parks, six parks were selected as most instructive to this effort and upon which the absorption forecast methodology will be applied.

Criteria. The Best Practice parks above were then considered for inclusion in the marketing forecasts analysis. While all of the parks have valuable lessons about successful research park development, some are more directly relevant to the UConn situation and thus will provide a more accurate forecast. In order to best apply the forecast methodology, we selected parks that are most similar to UConn in terms of location, relative research size and that were land grant institutions. It is important to note that while some of the forecast comparable parks have research expenditures well above UConn, when these parks began their efforts years ago, their research expenditures were very much in line with where UConn is now.

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Methodology

When we analyze the actual private space marketing experience of best practice comparable parks, we find that relative research park marketing success can be best predicted based on the relative strength of the actual absorption to the research base and then applied to the research base of the subject university.

The ratios of the actual research park absorption to each of the research factors for the Benchmark parks were used to make a series of preliminary absorption forecasts. In particular, we use the factors of research expenditures and technology transfer achievement in the forecast methodology below. This family of forecasts forms the basis for the preliminary absorption forecasts. This preliminary forecast is then adjusted for locational characteristics such as

technology industry strength, access to transportation networks, proximity to other major metro areas and other factors, which are presented at the end of this section. Each of these factors is described below.

Research Expenditures. Research expenditures, as opposed to awards, are a true measure of the research activity taking place at the University. Especially for outside companies looking for potential research partners, the level of research in their field is very important to their relocation or expansion decision.

Technology Transfer Achievement.

Like research expenditures, technology transfer

achievement is an important indicator of a university's technology acumen. And specifically to potential company partners, it shows the depth of the entrepreneurial culture at the university. Having strong research is certainly important, but if that research is seldom commercialized, it suggests that either the research is more basic vs. applied, or that the university community does not participate in commercialization efforts very often. Locational Adjustment. The third factor in the market forecast is a locational adjustment. Although the Benchmark Parks have been selected due to having similarities with UConn, every situation is different and access and proximity to a strong technology workforce, access to

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transportation and access to existing business support services and amenities must be considered. This step levels the playing field by removing the locational advantage of a given park and refocusing the forecast more clearly on research and technology acumen.

Steps in the Approach

Step 1. Select Benchmark Parks. As noted above, we find that the most reliable method of forecasting future private marketing success in a university research park is to select the most comparable actively marketing university research parks and use their experience to guide the forecasts.

Step 2. Analyze Research Expenditures. Total research expenditures for each Benchmark Park were gathered from the National Science Foundation. For the University of Connecticut we used data provided by the Vice Provost for Research because NSF does not break down research data between the Storrs campus and the medical school in Farmington.

Step 3. Analyze Technology Transfer Achievement. Technology transfer achievements were determined from the Association of University Technology Managers (AUTM). The factors considered include: Licenses, Disclosures, Patents and Start-ups.

Step 4. Calculate Preliminary Private Floor Space Absorption. The resulting research park private floor space absorption was estimated in total and on an annual average basis for each comparable park using data in the GHGP Research Park Database and through direct contact with the individual park directors.

Step 5. Calculate Forecast Ratios. The ratio of research park absorption to research activity and to tech transfer activity was calculated for each Benchmark Park.

Step 6. Apply the Research Ratios to the Benchmark Parks. The group of ratios of each type for each of the research and tech transfer indicators are applied to the resource estimates for the

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UConn park and absorption estimates made. These are averaged to achieve the basic forecast estimate.

Step 7. Apply the Locational Factor. The basic estimate is then adjusted to account for other identified important variables, such as proximity to the technology industry resource, transportation system support, other major research activity in the region and quality of supporting services. The result is the final floor space absorption forecasts.

Research Expenditures Analysis

A critical factor in the success of a university-related research park is the level of research expenditures at the host institution. In the first step of the forecast methodology, we analyze the research funding at the comparable universities and compare it to that at UConn-Storrs. A research ratio of research expenditures to average annual private space leasing is then calculated for use in the forecast methodology. The table on the following page shows each of the comparable universities FY 2005 research expenditures along with the ratio calculated. For comparison purposes, National Science Foundation data is used for all institutions. Because NSF does not distinguish between the UConn Storrs campus and Hartford medical campus, we are using research expenditures data provided by the University.

The table below show the research ratio of actual leasing of private space, when space was on the market, to million dollars of research expenditures. We use data on the space successfully marketed "when there was space available to market" because a number of actively marketing parks have gone through substantial periods where there was no available building space to lease.

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Table 8. Research/SF Ratios at the Benchmark Parks Actual Absorption n/a 23,100 15,700 35,000 18,125 34,000 30,000 25,990 SF 2005 Research 91,221 196,394 174,147 344,554 110,339 252,575 278,793 SF/$M 117.62 90.15 101.58 164.27 134.61 107.61 Forecast (SF/Year) 10,730 8,220 9,270 14,980 12,280 9,820 10,880

University of Connecticut, Storrs Iowa State University Mississippi State University Purdue University University of Delaware University of Nebraska Virginia Tech University Average

Note: Research figures above in thousands ($000's) Source: GHGP and Park Directors as listed above

The analysis of the table above shows actual annual absorption for the Benchmark Parks ranges from 15,700 SF to 34,000 SF with and average of 25,990 SF. The annual absorption/$m in research ranges from 90/SF/$M at Mississippi State to 164/SF/$m at the University of Delaware. Based on this forecast factor, the UConn annual average forecast ranges from 8,220 SF to 14,980 SF, with an average of 10,880 SF. Note that this in only one of three forecast indicators.

Tech Transfer Based Private Market Forecast

The analysis of technology transfer achievement is important because it directly reflects the potential to commercialize technologies into the incubator and Park and is a strong outward signal to companies that would like to do business with University that the culture exists for cooperative efforts. While many universities have strong research programs, not all have the necessary culture or mission to get the research and technologies from the lab to the street.

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Table 9. Technology Transfer Achievement Forecast Invention Disclosures Received 85 142 237 62 63 84 111 Licenses and Options Executed 10 218 79 10 5 19 28 New Patent Applications Filed 30 47 170 22 76 64 58 Average Ratio for all Factors n/a 0.42 0.25 1.06 1.10 1.01 0.49

Comparable Parks University of Connecticut Iowa State University Mississippi State Univ. Purdue University University of Delaware University of Nebraska Virginia Tech University Average

Startups 2 5 6 4 3 1 6

Forecast n/a 9,720 3,910 37,050 19,990 34,340 14,800 19,970

Source: AUTM, UConn and GHGP

What is immediately clear from the table above is the difference in forecast absorption from the two factors. This is because of UConn's strong tech transfer achievements across all factors. Even though all of these Benchmark universities have higher research expenditures, their technology transfer achievement, for the most part, is comparable to UConn. The method of forecasting space based on tech transfer uses multiple factors and creates an averaged overall ratio. This more effectively considers the overall tech transfer system as opposed to a single factor. This analysis yields an annual private absorption range of 4,880 SF to 37,050 SF with an average annual private absorption forecast is 19,970 SF/year.

Annual Absorption Forecast: Summary

The two forecast methods described above have each yielded an average annual private space forecast. Using the research factor method an annual absorption of 10,880 SF was calculated. The technology transfer factor approach yielded an average annual absorption of 19,970 SF. Combined, the unadjusted average annual forecast of private space for the UConn Research Park is 15,430 SF/year.

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Public Absorption. Up until this point all the forecasts have been projecting private space leasing. However, we know from the experience of the university parks across the nation that a share of their tenancy is from public agencies and institutional uses, including the host university itself. The average private absorption in these parks is 78 percent of the total. Therefore, based on private annual absorption of 15,430 SF, the public/institutional absorption would be 4,350 SF for a total annual average absorption of 19,780 SF/year over the first 10-year marketing period.

Phased In Absorption. Another important notation on the forecasts, is that this is an average annual forecast over the first 10-year development period. In the early years, when the Park reputation is growing and building product is coming on line, the average annual absorption will likely be lower. Likewise, in the latter part of the first 10-year phase the absorption is expected to exceed the average of 15,430 SF/year.

Adjusted Forecast Summary: Locational Factors

The forecasts presented above are baseline forecasts and do not include the locational adjustments described in the methodology. The locational factors considered are those that are not only important to technology companies when considering a location, but also venture capital investors and private developers, who both play a key role in research park development. The factors are: technology company activity in the Primary Trade Area, transportation access including interstate and air service and supporting business services and commercial amenities. Below is the overall rating for UConn vs. the Benchmark Parks on the three location factors.

Technology Company Activity Interstate and Air Transportation Access Supporting Business Services/Amenities Overall Locational Adjustment

Strong Modest Low Modest

Based on this analysis, we feel the UConn Research Park should receive an adjustment upwards off of the base forecast. The proximity to Hartford and the day-trip proximity to the greater

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Boston market are significant factors not only because of the bio- and total-technology workforce, but the access to capital in both of those markets.

10-year Adjusted Average Annual Forecast Adjusted Private Forecast Public/Univ. Forecast Total First 10-year Forecast 16,160 SF/year 4,560 SF/year 20,720 SF/year

As noted above, the leasing pace will begin slow and pick up momentum as the Park marketing effort matures and reputation grows. In the first five-years we anticipate the absorption to be 90,000 SF to 100,000 SF and an additional 107,000 SF to 120,000 SF over the next five year period.

OTHER FACTORS AFFECTING TOTAL PARK TENANCY

In addition to the public and private absorption forecast above, there are several other factors affecting both the quantity and pace of research park development. Two of the these factors discussed below are 1) the role of the University anchor, and 2) Other major public/private tenancy.

University Anchor

Quite often the initial public absorption comes in the form of the host university anchoring space in the park. This can either be in a single tenant university building, or, to fully leverage the university commitment, as an anchor tenant in a larger multi-tenant building providing space to private companies. Generally the commitment is 20%-40% of the rentable space. This would be important in the UConn Research Park.

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Other Major Public/Private Tenancy

The absorption forecasts presented above are based on private market forces and typical public participation as seen in research parks around the country. What the forecasts do not include, however, are major public government funded facilities or major single-tenant private tenancy. The reason for this omission is that major government, public institution or university facility locations are not governed by market forces but by political forces. Because these are political decisions, often tied to state or federal earmarks, they are difficult to predict. The same can be said for major corporate locations. Although not tied directly to the political process, incentives play an important role in these locations, and the delivery of incentives is a public function.

In addition to "market demand" absorption, most university research parks land at least one major state/federal location, and one major private location, over the first ten years. That would increase the total absorption in the park considerably, with private absorption in the 200,000 SF to 230,000 SF range and major public/ private absorption ranging from 30,000 SF to 50,000 SF the total 10-year build-out absorption would range from 230,000 SF to 280,000 SF.

USDA Animal Vaccine Lab. A potential anchor discovered in the Phase I interviews is a USDA lab. The College of Agriculture is working with the USDA on relocating an outdated lab now located on Plum Island. This type of project, if properly leverage, can give immediate presence to the Park, facilitate infrastructure improvements and give the marketing campaign an immediate and important "success story." SUMMARY Based on the impressive research and technology transfer, the interest from the administration and faculty and the high quality location in a major technology region, the University of Connecticut Research Park will be an important addition to the University, the region and the state economic development efforts overall. The next two sections of this report lay out the financing sources and uses of funds and the recommended organizational approach.

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SECTION 6.

FINANCING SOURCES AND USES AND RECOMMENDATIONS

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SECTION 6. FINANCING SOURCES AND USES AND RECOMMENDATIONS

Part 1. PARK FINANCING NEEDS

This section of the report focuses on defining financing needs and identifying sources for meeting those needs. Launching a successful University of Connecticut Research and

Technology Park at the Storrs campus will require initial public investments for site improvement and start-up and to prepare to attract the private investment in multi-tenant and single tenant buildings which will make up the dominant part of total investment in the park. National park experience indicates that private developers are an enthusiastic part of the total development team when there is a clearly demonstrated commitment from the University and the State to carry the project through.

Public sector investments but will generally be focused on the following six (6) categories of funding requirements.

A. Program Planning, Start-up, Marketing, Staffing and Operations

The Park Entity will likely need staffing and operations support for a period of time until there is sufficient occupancy in the park to generate full operating funds through land lease proceeds and other development related revenue. A small staff, marketing and other operating funds and effective use of specialized consultants (attorneys, designers/planners, financial experts, etc) will be required. UConn Storrs has a core technology commercialization staff which will be able to provide much of the needed supporting expertise, but a skilled and experienced research park manager will be an important addition.

B. Costs of General Site Development and Off-Site Infrastructure

In addition to the on-site development and infrastructure costs required on each development parcel when the building is to be built, there is the need to connect the research park property to existing road and utility systems. University staff estimates that approximately $12 million is

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expected to be required to design, obtain approvals, and install collector roads and utilities to serve the research park and to provide a second connection between Route 44 to the north and North Eagleville Road on the University campus. This planned connector road extends well beyond the initial boundaries of the research park meeting broader University as well as research park access needs.

C. Multi-Tenant Facilities

As Best Practices have shown, a successful University park will become the home for a series of multi-tenant and single tenant buildings. Such buildings are often constructed and financed primarily by private sector interests and capital. In the case of the University of Connecticut, there is already a successful and fully occupied incubator on the University campus. If

additional incubator capacity if desired, such space could be set aside in one of the early multitenant buildings.

D. Magnet Facilities

The University, state or federal agency may elect to construct and operate certain stand-alone facilities. These are called "magnet" facilities because they help attract other companies that wish to partner with them, or simply show activity in the Park. Examples of such publicly sponsored facilities might include a moderately sized bio-diesel pilot plant, a specialized materials science or nanotech development facility, a drug development or clinical trials facility, a state government agency forensic or health department lab / research facility, or some other similar university facility in support of its education and research missions. In a number of research parks around the country, the tenant in these magnet facilities prefers to lease instead of building and owning themselves. Private developers, or the Park Entity itself, may create and own the building as an ongoing revenue source for park operations. In addition, having such a facility gives the University additional leverage in attracting federal research grants, particularly where such grants are oriented toward collaboration with the private sector.

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E. Research Park Tenant Support

The final level of support for new and established tenants in a research park requires not so much capital as the provision of assistance and expertise in the commercialization of new products and services and in enhancing the ability of the new companies to connect with outside sources of venture capital, angel fund investors, and other sources of investment capital. In any case, such tenant capital funding would not be likely to come from actual research park sponsors.

PART II. DISCUSSION OF SOURCES OF FUNDING

Financial support for each of the preceding funding categories may come from a variety of sources. However, based on our experience in working with several dozen research parks, as well as the experiences of other university research and technology parks in North America, we believe it is likely to come from some combination of the following sources:

A. Operating and Start-up Support

As previously noted, the park will require a small staff. In its early phases it will also need, consulting assistance and marketing funds, as it proceeds through plan approval, financing and other related activities. Additional costs for physical planning and design will depend on what facilities are selected for early development. Those costs may be allocated to the particular use or project involved, but they will also be front-loaded into the first 2 or more years. Sources for these funds are expected to include:

Park's Key Stakeholders. It is likely that a majority of the Operating and Start-up funding will come from the operating budgets of active sponsors of the park -- the University and the state through the DECD and other agencies. That startup help could also be obtained in the form of targeted state legislative grants or other assistance to support the effort to build high technology elements into the state's economy. Staffing support can be provided by "loaning" University staff to the Park effort, instead of the cash payment to hire additional staff.

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Other Federal Programs.

Assistance might also come in part from certain HUD

programs such as Economic Development Initiatives or Community Development Block Grants.

It will be necessary to secure such start-up funding for a period of at least 2 to 3 years, and possibly up to 5 years, in order to make commitments to appropriately talented professionals.

B. General Site and Off-Site Infrastructure

Financing is likely to be obtained from the following sources: There is an existing US Congressional set-aside of approximately $ 6.2 million State grants administered by the DECD under the Industrial Parks Program / Manufacturing Assistance Act The state may appropriate targeted legislative grants or general obligation bonds (GO bonds) for research park infrastructure under the Urban Act Programs administered for the DECD by the Office of Municipal Development (OMD). In many of the Best Practice parks, the State has provided important funding for off site road and infrastructure improvements. The role of the Connecticut Department of

Transportation in funding a portion of the access road where it intersects with State Route 44 should be investigated. In some research parks the local town or city has played a key role in the provision of infrastructure and road improvements as well as maintenance of such roads since the private buildings in the park are expected to contribute property taxes for the benefit of the community. In this instance the University and the Town of Mansfield might

consider the allocation of state economic development program funds from the Small Town Economic Assistance Program (STEAP) which would be funneled through the town and targeted for certain uses in support of the research park.

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Another local source of funds is the Section 108 loan program where the Town would be the applicant. Section 108 is the loan guarantee provision of the CDBG that allows holders to transform a small portion of their funds into federally guaranteed loans large enough to pursue substantial physical and economic revitalization projects. The CDGB funded entity must pledge future CDBG funds which serve as backup security to project assets. Of all the uses of these loans, the most common is for economic development activities, which involve the expansion, retention or creation of for-profit business or industry. CDBG non-entitlement communities may also apply, provided their State agrees to pledge the CDBG funds necessary to secure the loan. In a number of university research parks some of the infrastructure (telephone, electric power, gas, fiber optic or high capacity, broad band cable, etc.) which is supplied by private sector entities is either supplied or subsidized by those companies that expect to profit from the extension of services. When more is known about these service

requirements, this source of capital funding should be explored. Multi-tenant Facilities

These facilities become the principal components of successful university research and technology parks because they provide places for young companies to develop their products and businesses once they have reached a level of financing and financial support.

However, because many of the tenants can be expected to be early stage companies without established credit, obtaining financing for the buildings can be difficult. A number of universities have responded to this need by choosing to meet some of their own space needs by leasing a substantial part (often 30 to 50 percent of the total space) in one or more of the early park buildings. In other parks, this anchor tenant role is taken by a governmental agency or an established private technology or technology related company.

As an example, in the Gateway Research Park in Greensboro, North Carolina (UNC Greensboro and NC A&T), the anchor tenant, taking half of the building, is the US Department of Agriculture. At the University of Waterloo Research Park in Ontario, Canada, the anchor tenant

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is a local law firm wishing to support this important community project and to facilitate expansion of their intellectual property practice. Once the leasing success of the park has been established, this anchor tenant financing concept should no longer be needed.

Another private sector approach is to attract a "fee developer" to provide financing and development management of certain park facilities. This means that the developer works for a fee, usually a percentage of total development costs. However, in this setup 100 percent of the occupancy and financial risk is assumed by the university or its research park entity. In most cases this is approach is unnecessary. Alternatively, there are several regional or national specialist developers who have had success in sharing the financial and market risks with the park sponsors in the early buildings.

When the University decides to consider an anchor role in the early multi-tenant buildings to assist the developer in securing project financing, there are a variety of approaches which have met specific university needs. Various forms of university support have been used including: Master lease of all or a portion of a building. This has been done successfully at the Virginia Biotechnology Park (VCU/MCV). In this case the university has taken varying amounts of the space and the project can be financed because of the security of the master lease. The building is developed and financed as a condominium (generally by floor). For example, in the case of the University of Maryland-Baltimore project, the university agreed to buy one or more units and it retains options to buy more space or sell back space or units in the future on a formula basis as the situation warrants. The university leases a portion of the building for its own use. Penn State University is one of several examples of this approach. In some cases, the University moves out of this space to make room for private tenants; in other cases, the University is a permanent tenant. The university supplies a standby commitment to lease a portion of the building if it cannot be leased up by a date certain.

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The university, or its development entity, enters into a limited partnership venture with the developer. In such a relationship it can share the upside as well as the financial burdens rather than providing the backstop support without the potential for financial reward. An often neglected aspect to development of multi-tenant facilities is the challenge of providing high cost tenant improvements such as wet labs to a significant number of such tenants. These are tenant improvements that cannot be financed conventionally and are difficult to amortize over the term of a normal lease. Thus certain unconventional mechanisms have been utilized in the industry, including: State grants funded through the university for wet labs or comparable spaces. The University of Maryland Baltimore park is a good example of this approach. Connecticut Innovations, Inc (CII) maintains a successful tenant improvement loan fund (the Bioscience Facilities Fund) for young bioscience tenants in qualified buildings within the state. Loan rates and terms are generally more favorable than what can be obtained in the conventional lending market for these types of companies. Loans

generally have a term of from 5 to 10 years. Interest rates are set at 4 to 5 points over the 5 year T-bill rate. CII is authorized to obtain and often negotiates stock warrants from such client companies as additional collateral and future risk compensation. If the tenant fails, there are protections for both the landlord and CII in resolving the situation. And since the locations where this program can be used are qualified (as part of the loan due diligence process) for potential re-use for similar tenants, the lender is partially protected. For technical reasons such loans are made to the tenants, not to the landlord. The use of private sector developers for these types of buildings brings other opportunities for limitation of risk and more efficient management of the major non-institutional park facilities. Under certain circumstances developers can take advantage of tax incentive programs not available to university and Not for Profit entities. These include the use of depreciation to shelter earnings, several tax credit programs (e.g. New Market Tax Credits, etc.), and certain

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state tax incentives. If qualification can be established, these might include the DECD Urban or Industrial Sites Tax Credits Program. However, the major benefits derived from the use of private sector developers are: Reduction and sharing of risk in the early stages of the project (e.g. the developer assumes more or less 50% of the risk in the first building) More efficient management of the building and marketing process Once a viable market is established and can be demonstrated, it is likely that the private sector will be able to finance and support the expansion of the park as it matures, indefinitely and without subsidies. This will allow the university and the state to focus on other priorities without the need to continuously provide and obtain approvals for new capital for each new stage of expansion. This is one of the hallmarks of a successful university research park. The park management must have a well constructed business plan which provides a roadmap for achieving this state of financial independence within a period of about 5 years.

New Markets Tax Credits. The New Markets Tax Credit Program can be used to leverage capital from investors to encourage economic development in urban and rural communities that meet the income standards. The credits are claimed by investors over a seven year period and typically result in substantially lower interest rates for building projects and this feature results in attracting private capital and the ability to achieve lower rental rates to building occupants. The Storrs community is judged to meet the basic income standards for project eligibility although priority is given to projects in "highly distressed" communities and Storrs understandably does not meet this further criteria.

D. Incubator Capital & Operating Funds

UConn can look to its own experience in creating a successful technology incubator with the TIP. And while not all university research parks have incubators, those that are most successful

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in translating academic research into new products and services for the community find that it is advantageous to create places where new companies working on that translation can develop their products, their business skills, and their capital base.

Since incubators set rents at levels affordable by start-up companies, there is not adequate earned revenue to cover both operating and capital costs. Needed support can come from a number of sources, including the following: EDA Public Works grants Congressional earmarks targeted for the incubator State grants similarly targeted University capital grants and/or operating subsidies Private foundation grants of operating assistance Corporate private donations In kind facility and tenant management assistance from venture capital firms and entities Purdue and a number of other research parks have chosen to meet expansion needs for their statup company support programs by leasing the companies space in a number of multi-tenant buildings. They then provide the management, university access and financing services so important to these companies on a "virtual incubator" basis, where the assisting professionals and shared facilities are "housed" at a central incubation location. The tenant improvements (including wet lab fit-up) and the operating expenses are often contributed to the incubator by one or more of the public sector sponsors mentioned above.

E. Magnet Building Costs

Much like anchor stores in enclosed retail shopping malls, these facilities do not necessarily make a direct financial contribution to the venture, but do contribute very substantially to its overall image and attraction and thus indirectly to is financial success.

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facilities to be used for special purposes by the university or by a state agency that establishes residency for one of its operations in the park will normally come from a variety of sources, for example: In some cases a federal research lab has been put in place as an anchor facility. An example is the USDA's Agricultural Research Service (ARS) construction of the National Grape Genetics Lab in Geneva, NY at Cornell's Agriculture & Food Technology Park. Such facilities are funded from targeted US Congress appropriations ("earmarks") and become a center of gravity or attraction for new parks. Given the political resources of the state of Connecticut, this is a potential opportunity that deserves some investigation. The state would fund any stand-alone agency facilities such as state forensic or health labs from agency appropriations or GO bonds. An alternative funding source used by some states would authorize the agency or the university to participate in lease-backed, taxable or tax exempt, Certificates of Participation (COP's) or revenue bond financing produced by the private sector to fund the private sector development and construction of such a facility. This approach has a number of advantages and has been used once in Connecticut and more often in New York and other states. F. Tenant Support: Operating Subsidies and Growth & Development Capital Fledgling company tenants require a variety of types of support and assistance at various stages of their development. Some mentoring, introduction to sound business practices, assistance in developing staff, marketing, communications, technical support and services shared with fellow tenants are made available at the typical research park incubator. Assistance in financing working capital for ongoing operations and for future growth of these new companies at various stages of their development may come from a variety of sources: SBC / SBIR / STTR programs and funding for developing enterprises CDA loans for established, credit worthy companies UCONN R & D Corporation for its portfolio companies Connecticut Venture Group and its members

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Venture Capital and Angel Investor Groups

PART III. FINANCING RECOMMENDATIONS

Although there may be many options to be explored for funding the project, GHG recommends the following initial approach for the various categories involved:

A. Program Start-Up

Investigate the possibility of accessing additional EDA funds under the University Centers Program for use in the planning, programming, and startup stages of the research park. Principal sponsor partners (UConn and DECD) annual commitments from their respective budgets or special legislative grants. Seek additional funding from HUD programs, private sector donations, etc. Integrate park start-up staffing into the existing technology commercialization staffing and budget. This integration is a typical start-up approach.

B. Site Development & Infrastructure

EDA Public Works / Economic Development Facilities program: Apply for a 50/50 match of EDA Public Works and DECD grants through the state legislature. Investigate utility company funding for infrastructure to be serviced by private companies (telephone, fiber optic cable, gas, and electric power)

C. Multi-tenant Facilities

These are best developed by experienced, financially strong and skilled private developers. Typically this, is most effectively done on a building by building basis (see following section on organizational options). There are a number of developers successfully active in the research

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park field who would respond to a well thought out RFP, particularly if the university or other anchor tenancy were identified in advance.

The private developer would be expected to fund and develop the building and related building site infrastructure costs. As a competitive factor for selection, developers can be asked to participate in funding off site infrastructure as well.

With an adequate anchor tenant commitment, subsidy should not be required for the private developer to move ahead with the first building and subsequent buildings.

Some public financial participation will be required if the goal of a particular building is to include accommodation of small wet-lab tenants at rents they can afford.

The research park development entity would maintain overall control of the park and would engage private sector participation through a series of long term (50 years or greater), non-subordinated, participating land leases with one or more of said developers. As discussed in the next section, as a first step the University would approve the physical plan, permitted uses, regulations, and site and architectural development standards for the park.

D. Incubator Capital & Operating Funds

An incubation program which fully accommodates and encourages faculty and other start-ups is very important to the initial and continuing successful lease up of the park. UConn has strong achievement and momentum in its incubation program. Nevertheless, the total amount of space available is small and it may need to be expanded as the park effort brings more activity into the market. Such additional incubator space can be accomodated either a free standing building or as a systematic component of the leasing agreement for the various multi-tenant parcels. Funding for the expansion of this incubator function will have to come largely from the public sector through a variety of sources and methods. It should be managed as part of the Technology Incubation Program.

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E. Magnet Building Costs

Federal EDA or Congressional target appropriations State Grants State agency facilities resident in the park would be funded from agency capital budgets Investigate and consider federal agency lab prospects (DOE, DOD, USDA, etc.) Consider private sector building, leased backed financing as permitted under state law

F. Tenant Support: Operating Subsidies and Growth & Development Capital

Growth and development assistance for research park tenants is expected to be funded and to originate from a number of sources, including: Office of Technology Commercialization and its component parts. These are the Technology Knowledge Portal, the Center for Science and Technology Commercialization, UConn R&D Corporation, and the Technology Incubation Program. Department of Economic & Community Development (DECD) Connecticut Innovations, Inc. CDA loans for established, credit worthy companies Other state and federal sources

CONCLUSION

Successful research park development requires important financial participation from government, university and the private development community. The resources are available for a similar strategy to be put together for the University of Connecticut research park.

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SECTION 7. ORGANIZATIONAL OPTIONS

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SECTION 7. ORGANIZATIONAL OPTIONS

There are many successful research parks throughout North America associated with universities of all sizes and research profiles, size of community public or private governance. All of these parks have initiated an organizational approach that best matches their university, the community and the state. Not every organizational approach is right for every park, but there are several best practice approaches that have been used most often, and most successfully, in these parks.

This section of the report is divided into four parts. Part 1 describes common characteristics of all the Best Practice approaches and elements that will be important in this effort as well. Part 12 lays out the three most often implemented, and most successful, organizational options at Best Practice parks. Part 3 recommends an approach for this University of Connecticut Research Park. Part 4 presents the important steps in establishing the organizational entity.

PART 1. COMMON CHARACTERISTICS OF THE BEST PRACTICE APPROACHES

Research parks have the two primary purposes of 1) supporting the research mission of the university; and 2) bringing technology business to the university community, through attraction and start-up and growth. The governance and organizational strategy which should be put in place for this University of Connecticut Research Park should be the one which will best achieve these objectives. To do this, the governance and organizational strategy should have the

following characteristics:

1) University Support. Strong governance participation by the University at the highest levels, from the President's office down.

2) Technology Transfer.

Active participation by University technology transfer and

research administration officials and by the department heads in the engineering, science, agriculture and other appropriate units

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3) Experienced Research Park Director. Senior staff with successful experience marketing a research park to private technology companies at parks at comparable institutions.

4) Broad Based Support. Active governance participation by local government and quasigovernmental officials engaged in economic development in the community.

5) Focused But Flexible Tenanting. A governance group committed to limiting the park tenancy to companies and entities supportive of both of its two purposes of bringing technology companies to the community and supporting the university mission, while at the same time being flexible enough to allow for related support industries.

6) University "Value Added" Program. Companies come to research parks when they feel such a location will give them convenient access to faculty, equipment and facilities, libraries, students for part-time and permanent employment, research results, technical seminars, management seminars, focused consulting and other university characteristics. Because of this fact, a clearly defined value added policy is essential in demonstrating the added benefit of a Park location. The organizational approach will be successful if it is effective in diagnosing, defining and delivering the value added package which will bring each identified prospective private technology company tenant.

7) Initial University Oversight. The University, in order to agree to be the anchor player (as land owner) in all cases below, would approve the overall site plan, development standards and regulations and permitted uses for the Park.

8) Role of Local and State Government. In a number of cases, and in each option below, local and/or state government has played a significant role in providing important early park infrastructure improvements.

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PART 2. ORGANIZATIONAL OPTIONS AT BEST PRACTICE RESEARCH PARKS

In the paragraphs which follow, four approaches to university research park development are described and assessed. An understanding of this other park organizational experience is

important to assessing the recommendations for this University of Connecticut park. The four approaches are:

University Carries Out the Project Directly University /Private Developer Special Purpose Entity Master Private Developer

Each alternative has advantages and disadvantages and these are presented below.

Organizational Approach A. University Carries Out the Project Directly

In this option, the university adds experienced research park marketing and development professionals, prepares use and development standards, prepares a plan, raises the money for infrastructure improvement of lands (it typically already owns) from a combination of local, state and federal government sources and develops and markets the buildings. coordinated with existing marketing agencies. Marketing is

Advantages. A very important advantage is that there is no doubt that the Park is a top priority in the University mission. Other advantages include: Priority in defining and packaging university value added for prospective tenants; Makes park success a major measure of university success; Greater return to the university.

Disadvantages. An important disadvantage is that the university is taking on full responsibility for a competitive business, a research park development, in which it has no experience. Other disadvantages include:

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University has primary financial responsibility; Possible entanglement in faculty politics; Entity without community participation could erode community support; May make integration with the community's total economic development marketing more difficult; May make raising local match for state and federal park funding more difficult; University may have difficulty recruiting/retaining top park development staff.

Bottom Line. This approach has worked effectively at the NC State Centennial Campus Park and provides the greatest level of control by the host university. However, it also requires the greatest financial commitment and entails the highest development risk of the approaches discussed here.

Organizational Approach B. University / Developer

This approach is similar to Option A1, but differs in that while the University does everything required to place quality research park sites on the market with full value added support, they contract with private developers and major building tenants to lease the individual building sites and develop non-University buildings. Thus the University: Sets up the management structure of the Park; Plans and determines development restrictions; Improves and markets the sites; Achieves the governmental infrastructure financing; Selects private developers and users to develop buildings.

Advantages. The primary advantage is that this option retains strong university control and mission identification, but brings private, established expertise to building the buildings. Other important considerations include: Clearly, remains a primary part of the university mission; Insures priority in defining and packaging university value added for prospective tenants;

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building relationships and building the image of the park through an initial web site, earned media and related activities.

Once building space construction in underway, his/her focus must shift to spending a major share of their time on working with the technology transfer staff to put a system in place which will begin to harvest the faculty and related tenant potential and working with DECD, brokers and others marketing building space product to begin effectively putting the UConn strengths and the coming park locational opportunity before the tenant group considering a Hartford region location.

Recruitment.

Economic developers, corporate real estate brokers and technology transfer

professionals all have relevant skills, but the preference should be to require a minimum of five to seven years experience in research park development and marketing. Frequent consultation with and advertising in the publications of AURP, IEDC, AUTM and ULI should be an important part of the recruitment process; as should networking with the directors of comparable parks (who will not likely want to expose their own skilled number twos, but will have views on those at other parks with whom they are impressed).

Architectural Standards

Establishing architectural standards at the beginning of the Park project is very important to the marketing effort, especially where the strategy includes attracting private developer interest. While it might seem that these standards might deter a developer, the opposite is the case. Particularly when Park buildings are developed on an individual basis, developers are comforted by the knowledge that the same architectural quality that goes into their project will also go into neighboring properties. Relating park standards to those on the main campus in a cost effective manner will be an important part of the process.

Architectural standards should include building heights, building materials, required set backs, parking buffers among other development standards. With the guidance and assistance of the

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Brings private development skill to the project; Retains park success as a major measure of university success.

Disadvantages. The primary disadvantage is that University is dependent on attracting the developers to raise the financing and build and market the buildings: University retains primary infrastructure responsibility; Possible entanglement in faculty politics; May make integration with total regional economic development marketing more difficult.

Bottom Line. Like approach A above, the university takes the lead responsibility and risk over the park effort. However, in this approach, the host university has the option of partnering with private developers to build buildings if they choose. This spreads the risks and allows for the university to leverage private dollars and public dollars, often to develop buildings that otherwise could not be funded through public means alone.

Organizational Approach C. Special Purpose Entity

Under this option, the University leads in the formation of a special purpose entity, often a 501(c)(3) non profit corporation, with an original board often comprised of 9-13 members from the University, government and the business community, all with an interest in the success of the park. The university president, or his designee, is often the Chairman. Similar to Option A2 above, while the newly created Research Park Entity does everything required to place quality research park sites on the market they typically contract with private developers to build the buildings. The Board of the Entity and its staff then:

Plans and determines development restrictions; Achieves formal university approval; Achieves the governmental infrastructure financing; Improves and markets the sites; Selects private developers and users to develop buildings.

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Advantages. The primary advantage is that it works to achieve full and continuing commitment to the success of the project by all the entities who need to play important roles. Other important considerations include: University does not have sole responsibility for the park project; University remains actively involved in management and project image; Still encourages strong university interest in defining and packaging university value added for prospective tenants; Focused potential decision process without separate faculty role; Brings private development skill to the project; Allows flexibility to so Park Entity can develop buildings as well; Retains park success as a major measure of university success.

Disadvantages. The primary disadvantage is that the University does not have direct control of the project: The continuity and focus of the Board is subject changes in the decision-makers at the various board member entities; Faculty and staff may feel this is less of a university project; Likely to have lesser financial priority to each of the partners. More limited long term university financial benefits; Success may appear to be less of a university administration achievement.

Bottom Line. The Special Purpose Entity approach removes the major financial burden and risk to the university associated with the two options above. A special purpose entity can often access funding sources not available to the university by itself. Being governed by a separate Board of Directors, the Special Purpose Entity can often move faster in development deals and decision making. Finally, interaction with private developers is easily accomplished and is very important in getting early building product into the park.

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Organizational Approach D. Master Private Developer Does It All

In this approach, the University prepares and approves plans, development standards and regulations and permitted uses for the Park on University land and then negotiates a master land lease and development agreement with an experienced research park developer who raises the financing for the infrastructure and builds and markets the lots and building space. The

university retains the responsibility to provide value added support to the developers marketing. The development agreement is clear also on the sharing of the various parts of the project cash flow and on the minimum acceptable pace of park building space development.

Advantages. The primary advantage is that the university role is limited to monitoring the developer for compliance with their approved site plan, use and development standards and other features of the land lease and development agreement. advantages include: Easier for Master Developer to quickly make decisions to meet prospective tenant needs; Existing university staff can handle university's role; Limited university financial risk and exposure; Less university image exposure; Longer term profit participation without exposure. Other

Disadvantages. The primary disadvantage is that this is clearly the "developer's park" from a faculty perspective and faculty are much less likely to participate. disadvantages are: Difficult to attract high quality developer to modest paced project, particularly if the up-front infrastructure investment will be great; Much harder to integrate effective deployment of the university value added into the marketing; University has much less control of pace and quality; Developer run Park could erode community support for project; Much more difficult to achieve state and federal financing support. Other

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University should anticipate a smaller long term financial return because their risk and financial obligations are much less

Bottom Line. This approach has both the lowest risk, and lowest gain, for the host university and the least amount of university control. As noted above, the university will set the basic

development standards and acceptable tenant types.

PART 3. RECOMMENDED APPROACH FOR THE UNIVERSITY OF CONNECTICUT RESEARCH PARK

Over a two-day series of meetings, the organizational approaches in Part 1 above were presented to key stakeholders in the University of Connecticut administration. The discussions that

followed those meetings helped inform the consultant team and allow us to recommend an approach that has not only been proved effective, but that matches well with the University of Connecticut situation.

Our recommendation is to adopt the Special Purpose Entity organizational model. Here, as noted above, a special purpose, non profit entity, a diversified board of "key players" is created to carry out the project. This model provided adequate control by the University over the project while incorporating other key stakeholders and sharing the development with the private development community. Features of this model are described below:

Board of Directors

The importance of this group is often overlooked and the purpose misunderstood. A research park board is, ideally, a "working board," with members who play an active role in the development of the park. The members should be committed to the success of the park and able to provide the time and input needed. In addition to governance, selecting and managing park staff, approving budgets and major financial commitments and making other important operating decisions, the Board members, individually and collectively, are the most important part of the

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information and influence interface between the park effort the community and its decision makers.

The Board should be large enough to include the key stakeholders needed to build support and keep the momentum going, but not so large as to become unmanageable. As noted above, the Board is a working group, which actively participates in the Park effort. A Board of 9-11 is recommended, all supportive of the University and supportive of the Park concept, with the following make-up:

Board Chair ­ University President University ­ 2-3 members (excluding the Chair) State of Connecticut ­ 1-2 members (DCED Marketing and Industrial Park) Town of Mansfield ­ 1 member Business Community ­ 3 members

This gives the Board and even distribution with 2-3 University, 2-3 public and 2-3 private, but with the University holding the Chair position. Of the total board membership, a good share should be locally based..

There should be an executive committee of the board (3-5 members), which can meet physically together frequently to make/appeal deal decisions. This will likely be difficult for the some of the others on the Board because some of the members may live a distance away.

Management and Staffing

The Special Purpose Entity's successful carrying out of the development and marketing of a research park at the University of Connecticut will require a small, experienced staff, working closely with the technology transfer and research, facilities, legal and financial and administration of the University.

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As soon as the needed financial resources can be committed, a senior park staff member, Executive Director, should be recruited to take over the primary responsibility from University administrators with other major duties. This individual should have substantial experience in the development, marketing and operations of research parks.

In the early months, this individual might well look to the University for clerical and specialized skill support ( like legal, facilities etc). By the time multi-tenant space is under construction, an administrative assistant, focusing fulltime on supporting the marketing and development efforts of the Executive Director will be required.

As noted, the marketing effort is largely image building and strategic alliance building until there is multi-tenant space to market; and if the University anchor approach is used to bring this multitenant space construction about early in the process, the marketing team for this space will be coordinated by the park Executive Director. The marketing team will mature into one which includes as important members the building developers, the University technology transfer director and the Connecticut DECD marketing staff (the latter being at the point at outreach marketing), and local/national brokers.

Park-development generated revenues will build slowly as tenants and building developers are attracted and land lese revenues build, but in the early years the operating budget for the park will need to be raised from the University and governmental partners and/or integrated into the University budget. The budget for the two person (Executive Director and Administrative Assistant) initial park staff operation should be anticipated to be in the $175,000 to $225,000 range, plus fringe benefits. The Executive Director, with park experience, will command a salary in the $95,000 to $125,000 range or above. When the level of park development activity, building space to market and available funding reaches adequate levels, a second senior professional, often a marketing vice president should be added.

Duties. The early park director duties will be roughly evenly divided between putting park documents and organization in place, selecting and negotiating with the initial developer,

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University's senior administration, and staff, one of the first responsibilities of the Board should be determining these Standards.

Permitted Uses

Hand in glove with the architectural standards document is the Permitted Uses document. The target industry analysis provided in the Phase I report above should be used as the basis for this document. A Permitted Use Statement with broadly defined uses will increase the pace at which building space is absorbed and the attractiveness to private developers. However, if the

definition becomes too broad the Park ceases to be a University-related research park and becomes a typical business park, so the decision is not easy, but it is important. As noted above, it is important to look at comparable parks, especially those you seek to emulate, and review their policy statements when drafting your own.

Finalized Site Planning

The initial site plan for the research park has been completed and submitted to the State for environmental review and approval. The road network has been designed and is a part of the submitted site plan. Different developers and/or single tenant users will want different site sizes depending on the size of the building they require. A site plan that allows for sites lines to be moved to accommodate larger, or smaller, building product will be more attractive to outside developers and easier to manage.

Before aggressive marketing to potential anchor tenants, (other than the University), or marketing to private developers can begin, a finalized site plan will be needed. Much like the architectural standards described above, most private developers will want to see the overall vision of the Park before making a final go/no-go decision. Having a finalized site plan will also help in marketing the Park to the state and federal legislatures. Three-dimensional drawings are particularly effective at presenting the Park vision to key stakeholders and potential funding partners.

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SECTION 8. POTENTIAL USER NEEDS

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SECTION 8. POTENTIAL USER NEEDS

Companies considering a research park among their locational and facility options have definite requirements which the UConn research park must meet to achieve an aggressive occupancy pace. The characteristics of these tenants and their requirements are described in the paragraphs which follow.

CHARACTERISTICS OF BEST PRACTICE UNIVERSITY RESEARCH PARKS

During the best practice benchmarking work in which a number of successful research parks were analyzed and interviews carried out, guidance on the types of building space, equipment and tenant improvements which are required/and/or most important to achieving marketing success with each technology company type was gathered. The results of these park assessments confirmed the experience of the Consultant team in working with many other research parks over the last three decades indicates that likely tenants will have some or all of the following characteristics.

Relationship or Affiliation with the Sponsoring Research Park Institution. Most tenants that are attracted to research parks usually have an existing or potential relationship with the university which is sponsoring the park. In many cases, it may be a university group itself that needs expansion space and was recruited into the institution from the outside. Or it might be a "spin-out" company from the university capitalizing on intellectual property licensed from the institution. It could be an independent non-profit research institute which was either founded by or affiliated with principals of the university. Finally, tenants are likely to be companies or nonprofit research institutes which want to locate near the university either to engage in cooperative research, recruitment of "smart employees", and/or gain access to university facilities and equipment.

Entrepreneurial Individuals and Organizations.

People and organizations attracted to

research parks want to be in an innovative and entrepreneurial environment. They want to be

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part of a community of creative people with whom they wish to interact both professionally and/or socially.

Access to Facilities and Services. Many research park tenants locate in parks to take advantage of various services, facilities and amenities they could not obtain from other building locations. Some of these value-added amenities need to be provided by the research park or by accessing the university itself with proper introduction.

Quality Product. Research park facilities are not usually the low cost provider in terms of rent and services. Tenants expect a higher degree of service, quality of building design, and building management than would be available in normal office buildings.

Competitive Costs. However, many research park tenants are very cost sensitive, particularly those which are in the early stages of formation. Therefore, price points for rents must be competitive and the offering, including the building and services, must have a high value content.

Specialized Needs. Many research park tenants are actively engaged in sophisticated research projects and, therefore, need specialized facilities and equipment. These would include: wet and dry laboratories, clean rooms and related expensive equipment, (more on this topic follows below). However, many of the prospective tenants are start up firms with limited financial ability to pay for the cost of these infrastructure needs. Therefore, they look to research parks to provide not only the core and shell that can meet these needs, but also financing mechanisms to build out the spaces and rent them at a "reasonable" cost.

Small Size. Although some research parks are able to recruit large, single user occupants, most research parks, particularly those in urban and rural settings, attract tenants that are in the early stages of their growth. Many are spin outs from the university and/or are incubator and look to the research park to provide small amounts of space initially, but also be able to provide space quickly for expansion.

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These characteristics and requirements need to guide the provision of the building space and operating environment which will serve as the platform for the successful marketing of the park.

CRITICAL ELEMENTS OF SUCCESSFUL RESEARCH PARK BUILDINGS

In addition to factors affecting the overall park success, there are a number of critical elements that characterize successful research park buildings in which the likely tenants mentioned above can be attracted and accommodated.

Multi-tenant Occupancy. Although there are some opportunities for major companies and institutional users to occupy build-to-suit buildings, most typical research park tenants tend to be small and have short lease terms. Accordingly, successful research park buildings need to be easily sub-divided, not just on a floor-by-floor basis, but more importantly, within individual floors. Individual spaces might be as small as 500 SF - 1,000 SF and require fire separation between units as well as fire corridor and exits. Providing for such small sub-divisions often results in significant common areas which can make the building extremely inefficient. However, with proper planning, an efficiency factor of between 80% and 90% is possible and thus eliminate a lot of unproductive space. Usually this means that floor plates should not be too small or too large - preferably in the range of 20,000 ­ 25,000 square feet, rectangular in shape and have a central core.

Smart Core and Shell. To accommodate these various uses, it is recommended that a "smart core and shell" building be designed. Experience throughout North America has indicated that with proper design knowledge, a smart core and shell building can be designed which will accommodate 80 % ­ 90% of most life science companies uses. However, such design, if carefully planned, will not result in substantially increased construction costs which would result in significant higher rental rates even if it is only leased for simple office space. Some of the characteristics to be designed in the core and shell include:

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1. Ceiling Heights should be elevated to accommodate larger than normal duct work for distribution of HVAC systems, and higher equipment, such as a "clean room", cold room, incubator, etc.

2. Floor Loads should be increased so as to accommodate heavier than normal loads for laboratory equipment and to ensure less vibration that could disrupt scientific equipment. Floor loads in the range of 100 to 120 pounds per square foot are recommended.

3. Chases - open vertical chases should be designed in the building so that at least 50% of the building could accommodate wet labs. Chases would not only be used to duct exhaust from fumes to the roof, but also to allow installation of plumbing from labs to the sewer system below.

4. HVAC Capacity ­ initially, HVAC capacity could be designed primarily for office use. However, additional room in the core should be designed for the installation of an additional air handling unit in case labs are installed on the floor. The additional

equipment should be able to be installed after the building is completed either through removable panels in the outside wall or through properly sized interior corridors.

5. Electrical and Telecom Redundancy ­ Vertical chases for telecom and electricity lines should be large enough to accommodate the extra wiring expected for potential laboratory use. Moreover, dual chases should be considered for security purposes.

6. Electrical Service ­ If possible, dual electric service should be provided to the building and an automatic transfer switch should be installed in case one line should go down.

7. Emergency Power ­ Additional emergency power capacity should be provided beyond normal life safety requirements. Laboratories will require additional capacity for

maintenance of certain functions, such as refrigerators, incubators, and freezers, which need to continue to operate to preserve experiments even during a building power black

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out. If such capacity cannot be built in the core and shell, outside pad space should be provided so that, if necessary, emergency generators can be added later.

8. Immediately Available Space.

Most research park tenants need space almost

immediately. They are often operating under a very tight schedule imposed by their investors who expect successful completion of various benchmarks in order for their funding to continue. Long lead times to design and construct a building, or to build out internal improvements, will cause potentially very attractive tenants to look elsewhere for occupancy. In many cases, if they need wet lab space or other specialized space and it is not available in a region, the company may move out of the region to find the appropriate accommodations.

9. Affordable Space. Since many research park tenants are in early stages of financing, they cannot afford rents often associated with the higher construction costs of a smart core and shell building, particularly with their requirements for expensive wet laboratory or clean room fit out. A developer of such facilities and their tenants are not looking for financial handouts, but they are governed by the reality of what these tenants can afford to pay and how much they can invest to build out the space. Accordingly, some form of subsidy is often required to bring down the cost of the space to the tenant.

Shared Equipment, Services and Amenities

1. Common Facilities and Equipment: There is great advantage in marketing to provide access to park tenants to specialized equipment located in various labs at the university or in the university incubator; and for this equipment to be available on a "24-7" basis. Such facilities and equipment might include the following:

Autoclave: this equipment is required if cell culture work at Biosafety Level 2 are conducted in the labs. Centrifuge, low speed (up to plus or minutes 5,000 rpm) refrigerated Centrifuge, high speed (up to 25,000 rpm) refrigerated Cold room Freezer ­ 80 degrees Centigrade

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Glassware washer Ice machine Spectrophotometer Water purification system Additional common laboratory equipment may also be acquired and made available in an equipment room. 2. Services and Programs: All incubators and many research parks are distinguished by the fact that they provide extensive services to their tenants. Some are provided by the staff, such as business advice, mentoring, receptionist services, purchasing, etc. Other services, however, are provided by independent vendors located within the incubator or elsewhere in the building that would be made available on a preferred basis. The TIP program at UConn has much of this set up and running well now. For example, IT technical support is an essential need in any facility. However, it is not likely that this skill will be on the staff. An IT service vendor could be recruited as a tenant within the facility and made available to the tenants on an as-needed, fee for service basis. Other similar services could be provided, such as accounting services, conference planning services, secretarial services, etc.

Other Important Services

All of these services have marketing value and each has implications for university policies and budgets. They should explored for their potential to be an important part of the marketing tool kit.

University Identity. Tenants may use the University's identity in their individual marketing and communications materials. University Security. University security will coverage in the lobby and adjacent parking area Participation in Health and Liability Insurance. University employees At same favorable rates as

Purchasing Programs. Access to University purchasing agent expertise which results in lower costs due to bulk purchases

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Grant Management. Contract grants administration available to tenants Library. Same accessibility and cost as faculty for hardcopy, electronic journal and other resources Parking for Tenants and Visitors. Building tenants and their visitors accorded parity in parking privileges with faculty Connection to Broadband Fiber Backbone of University. connection at favorable rates Tenants receive

Access to Specialized Facilities and Equipment With and Without Faculty Participant. Tenants receive authorized, unsupervised access Conference and Meeting Facilities. Rental availability at favorable rates. It is an important asset to tenants if they can use, particularly the larger facilities, on a user charge basis, with sufficient lead time for scheduling Adjunct Professorships. Encourage senior tenant personnel to take on teaching and advising responsibilities Student Labor. students Assistance in locating and recruiting part time and permanent

Professional and Academic Functions. Invitations and access to scientific functions Receptiveness to Participating in Joint Research Projects. Federal agencies favor joint university-corporate projects Ability to Audit or Take Courses Outside of Degree Sequence. Continual skills development is a very high priority in the technology field. Access to classes offered by the university sponsor would be of particular interest to tenants. All of these features have marketing value and the requests of specific potential tenants, as well as standing university policies, go a long way in determining which would be cost effective in the UConn research park.

Finally, research parks should also provide useful information to its tenants through conferences, educational sessions, and training programs. Such sessions have often been called, "brown bag" lunches, "Smart Talk", "Lunch for Hungry Minds" in which experts present topical information of interest and concern to tenants, prospective tenants as well as incubator graduates and make the incubator facility a center of activity within the building.

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Responsive, Flexible Management.

Research park tenants are a very dynamic group,

consumed by their passion of work, meeting aggressive time schedules, working incredibly long hours, and stressed by competition. The responsibility of the research park manager is to make the facility needs of tenants so attractive and efficient that the principals can spend their time worrying about their research and development priorities and those of their investors.

CONCLUSION

A research park location for a company needs to set itself apart from a location in a standard business park. So in addition to providing quality facilities, the University Research Park location should integrate the tenant company as full a "member" in the university community as possible. A research park developed within the guidelines set in this section will provide high quality space with important University value added, setting the Park apart and contributing to the overall marketing success.

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