Regional Report: Mid-Atlantic Region Drawing High-Tech Investment
Some new and creative incentive programs are being provided in the Mid-Atlantic States to help drive the region’s high-tech and other industries.
In October, New York launched START-UP NY, an initiative that creates tax-free zones to attract and grow new businesses. Its purpose is to accelerate entrepreneurialism and job creation on a large scale. While the program targets all of New York State, it particularly focuses on Upstate New York.
New York has long had a history of entrepreneurialism. This is the state that gave rise to George Eastman, inventor of the Kodak Camera, and George Westinghouse Jr., a prolific inventor who promoted the use of electricity for power and transportation. Today the state is seeing growth in industries that span from biotech, information tech, financial services, software and media services, to film and digital entertainment.
The START-UP NY program leverages the resources of the State University of New York (SUNY) campus system, along with other colleges, to attract high-tech and other start-ups, venture capital, new business, and investments from around the world. Under the program, eligible businesses can operate completely tax-free for 10 years on eligible campuses and spaces. Companies can partner with institutions in the SUNY system, as well as other universities, and access industry experts and advanced research laboratories. In return, a business must be aligned with or further the academic mission of the campus, college, or university sponsoring the tax-free community. It also must generate positive community and economic benefits, as well as create and maintain net new jobs.
Announced in October, six leading global technology companies are also investing $1.5 billion to create “Nano Utica,” New York’s second major hub of nanotechnology research and development. The public-private partnership is being spearheaded by the SUNY College of Nanoscale Science and Engineering (SUNY CNSE) and the SUNY Institute of Technology (SUNYIT). It will create 1,000 new high-tech jobs.
“My advanced nano colleagues and I are working to create breakthrough technology,” commented Hector Ruiz, chairman of Advanced Nanotechnology Solutions, Inc. “We looked across this country, and around the world, and this is where we found the talent, the mindset, and the leadership to help us revolutionize nanoscale technology, through semiconductors and everything they power.”
Both New York and New Jersey benefit from enormous trade and commerce that come through the Port of New York/New Jersey. Both are also home to thriving activities in life sciences, IT, logistics, and financial services. New Jersey boasts the highest tech job growth rate in the nation, according to recent data from the Bureau of Labor Statistics, and benefits from activities along the Pennsylvania/New Jersey pharma corridor. In fact, the HealthCare Institute of New Jersey called its home state the “cure corridor.”
To boost jobs and encourage growth, New Jersey recently introduced its New Jersey Economic Opportunity Act. The act is considered the state’s biggest business incentive overhaul ever. It streamlines New Jersey’s five existing economic development incentive programs into two: the Grow New Jersey Assistance Program (Grow NJ) and the Economic Redevelopment and Growth (ERG) Program. Both programs have been extended until July 1, 2019.
The Opportunity Act essentially makes Grow NJ the state’s main job-creation and retention incentive program and the ERG program its key developer incentive program. ERG brings projects with high employment and capital investment to urban areas by providing incentive grants to developers who prioritize development and job creation in smart growth locations with infrastructure in place. New Jersey also recently launched the Angel Investor Tax Credit Program to spur job creation and growth in New Jersey’s current and next-generation of high-skill, high-wage emerging technology industries.
In order to attract cybersecurity companies to start-up or move to Maryland and grow, create jobs, and retain intellectual property, the state is offering a new tax credit to Qualified Maryland Cybersecurity Companies (QMCC). The program ends on July 1, 2019.
Cybersecurity is big business in Maryland, particularly given its proximity to Washington, D.C., and federal agencies. In fact, the University of Maryland, Baltimore County, is currently overseeing a 3,500-square-foot, $300,000 expansion of its CyberHive incubator. The 10,000-square-foot CyberHive currently has 26 companies that lease dedicated space.
Investment in Life Sciences
Maryland also offers the InvestMaryland Challenge, a national seed and early-stage business competition. It awards $400,000 in grants and a host of business services to companies in the life sciences and high-tech industries. Grants are provided through the Maryland Venture Fund and the BioMaryland Center. Companies also have the opportunity to receive direct investments from venture capital firms and angel investors.
To support biotech companies, the state also offers the Maryland Biotechnology Investment Incentive Tax Credit (BIITC) program, which provides tax credits to promote private investment to qualified companies. BIITC is a key part of BioMaryland 2020, a10-year, $1.3 billion strategy to foster the state’s life sciences industry.
The Mid-Atlantic region is particularly known for its stronghold in pharma and bioscience. Maryland is home to one of the largest bioscience clusters in the United States. This location means two-hour proximity to 80 percent of the U.S. pharmaceutical industry and over 2,000 bioscience companies.
Pennsylvania’s Innovate in PA initiative, launched in October, aims to increase investment capital and accelerate high-wage job growth by supporting small, emerging companies. The initiative offers $100 million in deferred tax credits to insurance companies in Pennsylvania to raise funds over multiple years. Funds raised will be directed to the highly successful Ben Franklin Technology Partners (BFTP), three life sciences greenhouses, and the Venture Capital Investment Program.
The Ben Franklin Technology Development Authority (BFTDA) is set up to support programs and investments of Pennsylvania’s technology companies and universities and creates a continuum of financial and technical services to advance their creation, growth, success, and global competitiveness. Programs supported by BFTDA include Ben Franklin Technology Partners (BFTP), the University Research Commercialization Grant program, and the Keystone Innovation Zone Network (KIN), along with the KIZ Tax Credit program.
As an indication of how an investment from the Ben Franklin Technology Partners is like a Good Housekeeping Seal of Approval for early-stage technology firms, four biotechnology clients of the Ben Franklin Technology Partners of Northeastern Pennsylvania — Azevan Pharmaceuticals; Hager Bioscience, LLC; Third Eye Diagnostics, Inc; and VaxForm LLC — received over $11.5 million in follow-up funding in federal science-based grants in September. All four are residents of Ben Franklin TechVentures ®, a high-tech workspace and community for early-stage companies on the campus of Lehigh University in Bethlehem.
Two other tech initiatives are expanding wireless and broadband connectivity in New York City: WiredNYC and the Wireless Corridor Challenge. WiredNYC is a rating platform that evaluates the broadband connectivity and infrastructure of office buildings to encourage and accelerate deployment of leading broadband technologies. The Wireless Corridor Challenge awards grants to five organizations to expand free, public wireless access across the city’s five boroughs to provide local visitors, tourists, and businesses with free connectivity in key commercial districts. All of the corridors were expected to be launched in December 2013.
Benefiting from its location halfway between New York City and Washington, D.C., Delaware has attracted clusters of businesses in aerospace and aviation; green and material sciences; healthcare and life sciences; insurance and financial services; and tourism. Delaware’s primary funding source is the Delaware Strategic Fund, which provides customized financial assistance to businesses considering locating in the state. If qualified, companies receive financial assistance through low-interest loans, grants, or other creative instruments.
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