Governor McDonnell Unveils Bi-Partisan Biotech Plan
- Jobs package includes nearly $30 million for biotechnology development in Virginia -
Virginia Governor Robert F. McDonnell today announced his “Jobs and Opportunity Agenda,” a legislative package that consists of 20 pieces of legislation, as well as previously announced budget amendments, all focused on spurring job creation, promoting economic development and creating more opportunities for Virginians. The plan includes nearly $30 million for the development of the bioscience industry in Virginia over the next two years. Lieutenant Governor Bill Bolling, Secretary of Commerce and Trade Jim Cheng, Senior Economic Advisor Bob Sledd, and almost 30 Delegates and Senators from both parties all participated in the morning event.
The biotechnology initiative consists of the following items:
Access to Capital for Biotechnology Firms
• Remove the $3 million cap on the Qualified Equity and Subordinated Debt Investment Tax Credit and raise it to $5 million in FY 2011 (Angel Investor Tax Credit);
• Provide income tax exemption for qualified investments in technology and science startup companies in FY 2012 (cost $500,000) Grants an income tax exemption for any gain taxed as a capital gain for federal income tax purposes, on or after January 1, 2010, that is related to a qualified investment in a technology and science start-up business made in the first three years in which the business was founded.
Access to Facilities for Biotechnology Firms
• Invest $3 million in bioscience “wet lab” facilities over the biennium;
• Utilize $2 million to re-establish funding for the Business Incubator Program in FY 2011; and
Specialized Biotechnology Research Performance Grant Program
Establishes the Specialized Biotechnology Research Performance Grant Program for the Ignite Institute for Individualized Health to engage in research, development, and production related to molecular diagnostics and drug development. Ignite will make a new capital investment of at least $200 million and is expected to create at least 415 new full-time jobs. Grants from the program to shall not exceed $22 million in the aggregate.
“Leaders from Virginia’s bioscience industry have been advocating for a comprehensive package like this for many years,” said Virginia Biotechnology Association Executive Director Mark A. Herzog. “These proposals target our biggest challenges– access to capital and affordable wet lab space for commercialization of research.”
In addition to today’s announcement, Governor McDonnell noted the importance of the biotechnology industry in his first “State of the Commonwealth” address to the Virginia General Assembly, January 18. The Governor specifically noted legislation (HB 523 and SB 428) by Delegate Sam Nixon (R-Chesterfield) and Senator Mark Herring (D-Loudoun) to create a capital gains tax exclusion for investment in advanced technology firms, such as biotechnology and medical device start-ups. These bills are the top legislative objectives of the Virginia Biotechnology Association.
“We will also target new Opportunity Fund dollars to the biotech industry. This is an industry of high-paying jobs in a fast-growing career field. Smart states look at this sector for future economic development. We will as well,” said Governor McDonnell to applause from the 140 members of the Virginia General Assembly gathered in the House of Delegates chamber to hear his remarks. “Delegate Sam Nixon of Chesterfield is teaming up with Senator Mark Herring from Loudoun County to push my commitment to grant an income tax exemption for qualified investments by technology and science start-up businesses,” said Governor McDonnell.
“Even before the credit crisis the major challenge facing life science company start-ups and young companies has been access to capital. Without it, bioscience companies cannot create new jobs and are even struggling to hold on to the staff they have,” said Mr. Herzog. “Investors are skittish and banks are slow to lend due to the global economic crisis. Therefore, we recommend an innovative approach to help this industry which has even fewer options in today’s climate.”
VaBIO’s proposal, the “Virginia Innovation Investment Act,” is a capital gains exclusion on income earned from a qualified investment in an advanced technology company in Virginia. It is also strongly supported by the Northern Virginia Technology Council.
