An Economic Development Incentive for the Knowledge Economy

Former Exxon-Mobil headquarters, planned location of Inova's Center for Personalized Health. A world-class research center needs more than world-class real estate, it needs world-class researchers.
Former Exxon-Mobil headquarters, planned location of Inova’s Center for Personalized Health. A world-class research center needs more than world-class real estate, it needs world-class researchers.

As a follow-up to the Inova-driven Center for Personalized Health initiative I wrote about yesterday

The final 2017-2018 budget approved by the General Assembly includes $28 million to help get Inova’s proposed biotech research initiative get off the ground. According to a Senate Finance Committee document, state goodies include $8 million in General Fund monies and $20 million in bond proceeds for the Global Genomics and Bioinformatics Research institute “to support a public-private partnership with six Virginia research institutes and Inova.”

  • Funding is dedicated for incentive packages for high-performing researchers and laboratory renovations.
  • Funds require a $3 to $1 match from outside fund sources for receipt of any funding and partnerships with institutions of higher education.

Bacon’s bottom line:

There are a couple of interesting things here. First, the McAuliffe administration is making good on its promise to support the biotech initiative to which Inova has pledged the purchase of the former Exxon-Mobil headquarters complex near Tysons Corner as well as $100 million for venture capital.

Second point: Traditionally, Virginia has offered incentives to recruit corporate investment such as manufacturing, call centers and corporate offices and headquarters. This is the first time of which I am aware in which the Commonwealth has dipped into the General Fund for funds to support the recruitment of star faculty. The money reflects a recognition that we need new tools to address the relative dearth of big-name scientists who bring in big research grants that lies behind Virginia’s modest R&D prowess.

If Virginia wants to be a player in the genomics/personalized health space, we’ll have to recruit big-league players from outside the state, and that probably means supplementing private dollars and university dollars with public dollars.

This could be either a brilliant move or a slippery slope to hell, depending on your perspective. The idea of spending tax dollars to make rich scientists even richer may not appeal to everyone. Regardless, it is a big step for Virginia.


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25 responses to “An Economic Development Incentive for the Knowledge Economy”

  1. “That probably means supplementing private dollars and university dollars with public dollars . . . .” What’s wrong with that? You can bet there were public dollars mixed in with those “university dollars” already, and there’s the implicit public dollars underwriting the NoVa Tech Corridor in the form of past government efforts to organize it and promote it and built roads and Metro to it, not to mention, to build Dulles Airport in the first place. Academe has long ago got in bed with the federal funding monster and the State’s little sidekick also. If that’s the “hell” we’re slippery-sloping down to, we already reached bottom long ago!

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      “That probably means supplementing private dollars and university dollars with public dollars (to fund venture) . . . .” What’s wrong with that?”

      The answer depends on:

      What can go wrong with venture? What are the chances of its failure? What are the chances of its success? What is being done to maximize the chances of its success? And to minimizes the chance of its failure? What are the consequences of success, good and bad? And what are the consequences of failure?
      These questions and their answers are critical because most speculative ventures (and this personalized Medicine venture is highly speculative) fail.

      And most fail completely, even in the best of times and circumstances; so great and unrelenting care must be taken by those responsible to try to maximize chances for the Venture’s success, and to protect as best one can every investor against the consequence of failure, particularly those who do not control the venture. A greater duty is owned to those who are nothing more than innocent bystanders who happen to live in the neighborhood, and whose money has been taken from them to help fund the venture.

      Hence the political leaders of the neighborhood wherein such a Venture is located have a fiduciary duty to protect their innocent by-standing constituents, those who live in the neighborhood, from any loss that might arise from the adverse consequences should the venture succeed or fail. — This duty is especially heavy when the speculative venture is funded with public monies, most particularly monies taken from the pockets of their citizens.

      So what are typical risks here? How do those risk grow exponentially?

      Typically we get into problems of increased risk when those who control those private dollars and University (non-profit) dollars grab control of public monies and also control of the decision making process over how and in what amounts those public monies are spent on the project. When those decisions of made by Venture sponsors will have the consequence of removing risk from and adding benefit to their own privately invested funds and/or the payments for their services, and/or will enhance the wealth of their assets elsewhere or of their friends, so favors can be easily exchanged for mutual gain, in such cases the risk to public monies is often increased, and the potential for public return and gain is further jeopardized.
      Thus there is substantial risk inherent in spending very large sums of other peoples’ money that also will directly serve the private self-interests of the venture’s sponsors. This is particularly so when the monies are public monies. Here the problem and its risks easily compound. Today, the rigorous safeguards against wastage of public monies formerly in place are now scandalously lacking. Thus private interests and investors increasingly will take much higher risks and impose much less protective control over how they spend public monies, in stark contrast to how much risk they accept in the investment of their own money and how much control they demand over the spending of their own monies.
      Indeed, today the game played with public monies is too often two fold. Namely, 1/ to put as little private money at risk as possible, and 2/ to find and use as much public money as possible to replace their own funds, so as to leverage as high as possible the return and profit made by the private investors and Venture sponsors off public monies. And, the corollary here today is to shift a disproportional share of Venture’s risk onto the public’s money, so as to remove all or as much risk and responsibility as possible off the backs of individual private sponsors or their money. A “Home Run” in the game today is when the public’s money takes all the risk, and the private sponsors money and/or profit takes none, while the sponsors get a disproportionate share the Profit, plus a guaranteed share of profits or fees for services of all sorts, both real and imaginary. And, of course, if third party friends invest in the neighborhood or related products, they too might get benefits off the spending of public monies. So there can be lot to spread around.

      So today, in our times and places, there are ever growing potential risks to the chances of the public gaining benefit from the wise investment of their public dollars taken from them by way of an ever increasing array of Federal, state, and local taxes, fees, tolls, and now today even high insurance premiums, deductibles, and health care costs, etc. All dreamed up to hit the citizen up four ways to Sunday in these times of exploding crony capitalism.

      So today in these sorry times we live in –

      The risk of loss of public monies is further compounded when the cost – benefit ratio of spending other peoples’ money (public dollars) on public / private ventures goes disproportionately to the benefit the private interests. Typically, those sponsoring and controlling the venture for the benefit or themselves and their friends. And more and more of it is done at the sole expense and risk of lost of other peoples’ money (the public’s). Indeed far too often now the public’s money is simply wasted, after the sponsor, and those few people in power who facilitate the deal, steal their share.
      This third risk is the most dishonest of all. It happens when the public money spent to build something goes directly into the pockets of those controlling the expenditure of that public money, and/or those building or pushing the project, and/or into the pockets of their mutual friends, often in exchange of favors. Here we have entered the world of simply ripping off the taxpayer or toll payer. Quite likely this is how we managed to spend most all of the $trillion dollars we spent on “shovel ready projects” that did not exist, but called it a stimulus package. That’s how deep the corruption. And that deeply corrupt and most cynical act sent us as a nation headlong into where we find ourselves today, although the problems and bad habits have been growing for decades. For example:

      The history of these sorts of things is rampant in Northern Virginia. And they have come in all sorts of iterations and extremes.

      For example, this is how we end up spending a Million Dollars for one bus stop. And agree to spend some roughly $20 million dollars for another 23 or so more. Here Arlington County and its friends were in on one Fat Deal, feeding off the public’s money, innocent bystanders in the neighborhood.
      This is how we end up spending $5 Billion to double the size of Dulles Airport to serve an additional 23 million passengers who never show up, not even 16 years later.

      This is how we select projects and get public work done far too often in the most risky, expensive, and mindlessly stupid way imaginable. Ways that simply waste huge amounts of public money. For example, harm the people’s public airport at Dulles and all the communities along the Dulles Toll Road built and paid for the wrong way, both projects doing far more harm than good to the citizens who are now forced to pay for these debacles for decades into their future.

      In the meanwhile, the leaders pulling off these horrors that leaves thousand of people in gridlock daily and now pay every day out the nose for it daily, the leaders walk away Scott Free, and too often far richer than before, having taken utmost care to protect their own private interests.

      How to protect the public against these chronic problems? Some ideas:

      Never take promises at face value. Demand the Truth. Demand Transparency. Demand a full assessment of all the risks. Demand an honest accounting of where all the money (public and private) is coming from. Get lists of everyone who is putting money in. Who is not putting money in, but is getting benefit. And who is taking risk, and who not, but will gain great benefit directly and indirectly. Demand a full accounting of who will, or is well situated to, make money or avoid losses by reason of this public money spent. When and how they will make it, and what they have to lose (monies now at risk, or profits lost) if the public money is not spent.

      Take personalized medicine gambit at the Exxon Site, for example. How do we know the science will work? Who else is trying to do the same thing? How long have these other interests been trying to do the same thing? How many have failed trying to do the same thing. How many are more likely to succeed or have already succeeded to the point where the chances at Exxon Site will fail? How many Capital Raising Ventures for similar speculative venture have already been tried and failed? Have any been tried before in Northern Virginia and failed? Did INOVA or George Mason try similar ventures before and fail. If so, why did they fail, and what is different now. And how is this venture going to succeed in what some reasonably consider an obsolete, gridlock bound location and building that no one can get too?

      Why should public money be given to this group over other groups without any competitive process and no transparency? Why should commuters going to work to earn a living pay to fund this speculative venture? Who are the real estate speculators and landowners up and down I-66 and in Merrifield who will lose a lot of money if this gambit does not go forward.

      How much will they make (and/or not lose) if the venture goes forward but fails. How can the venture succeed if it increases and deepens existing gridlock in the region, forcing more and more people off public roads and into taking buses. And why this venture if it drives large numbers of people out of the county while at the same time it depresses the value of their homes, if not ruining their lives, lifestyles and families, because of the ensuing gridlock and increasing cost of simply getting around to feed, be with, and care for one’s family.

      In short, what costs and risk does this venture impose on each and every person, family, and commuter living in and driving around the region? What might they lose? What might they gain? And why should they believe this will work when the Dulles air cargo hub didn’t, and so many other projects built on the promises of public leaders and fed on the public’s money, have failed so miserably before?

  2. LarrytheG Avatar

    well.. how does this compare to the tobacco fund money for economic development and the tax credit for coal jobs?

    and not just this alone:

    RICHMOND — Gov. Terry McAuliffe announced a series of legislative proposals Tuesday that he said would enable high schools and colleges to better prepare students for in-demand jobs after graduation.
    Among the proposals, announced one day before the start of the 2016 legislative session, is a requirement that the Virginia Board of Education establish new standards for high-school students that would emphasize early college courses, occupational credentials and hands-on experiences.
    “Everybody should have a shot at a great job here in the commonwealth,” McAuliffe said in an announcement at the Capitol. “At the end of the day, we want all of our students to stay here in Virginia.”
    The governor proposed making it easier for schools to hire industry professionals, current or retired, to teach career and technical education classes. At the college level McAuliffe also wants to allow students to get academic credit for prior industry certifications while pursuing a community college degree, and change financial aid programs to reward students for taking on full course loads and enrolling in summer classes.
    “Finishing on time is the best way to keep someone’s debt manageable,” McAuliffe said.
    Some of the legislative proposals released Tuesday overlap with policy goals the governor has already announced. McAuliffe, who has said education is a major focus of the two-year budget he has delivered to the General Assembly, has also called for a pilot program to link military veterans, particularly former medics, with careers in health care and $24.6 million to increase to increase the amount of credentials awarded for jobs in high demand.

    and this:

    ” Businesses training their workers can get up to $10,000 from the state through a new incentive program announced Thursday by Gov. Terry McAuliffe.

    The funding is available to businesses training state-registered apprentices in fields that typically haven’t had an apprentice program before, including cybersecurity, information technology and professional services.

    Virginia’s Department of Labor and Industry will have $400,000 a year to dole out to eligible businesses on a first-come, first-served basis, according to information on the agency’s website.

    The money is intended to reimburse businesses up to $1,000 annually per apprentice for the cost of coursework. The incentive is capped at 10 apprentices per year, per business. Businesses wouldn’t be eligible for reimbursement for individual apprentices who don’t pass a course the first time or who aren’t employees in good standing, working 37 to 40 hours a week.”

    and more….

    but here’s the question that I put to the folks here who talk about “liberals”.

    is what McAuliffe doing “liberal”?

    I sort of ask because I do not remember much of this kind of thing at all under McDonnell and from Conservative members of the Richmond General Assembly either.

    so .. is all this “stuff” ..typical of “liberal” thinking and that’s the slippery slope part?


  3. LarrytheG Avatar


    Gov. McAuliffe signs workforce training bill

    Associated Press |
    RICHMOND—Gov. Terry McAuliffe has signed legislation that he says will make Virginia the first state in the country to create a pay-for-performance workforce training program.
    Under the new law, the state will provide grants to cover two-thirds of the tuition for programs that train workers for in-demand jobs. Students have to cover the remainder of the cost.
    The state will only pay the first third of the cost once the student finishes the workforce training program. The remaining grant will be provided when the student earns his or her certificate or license.”

    meanwhile other dunderheads in the General Assembly are more worried about “bad books”, civil war monuments, state “rocks” that poisoned Va rivers, knee-capping charity care hospitals and other ignorant stuff under the guise of the “free market” and other stupid stuff in general.

  4. Les Schreiber Avatar
    Les Schreiber

    This is a small amount of money to fund science. In s tech/science economy this is a small step in the right direction.

  5. Cville Resident Avatar
    Cville Resident

    This is the new economy. I’ve been posting a while about a 10/90 economy. It’s now even penetrated to “economic developers.” The 21st century is a fight for the absolute best minds rather than companies. This is a step in the right direction for Virginia.

    1. Well stated and correct. I’ve been struggling to put my finger on this for some time now. Focusing economic development on attracting companies (almost always with tax breaks) is inefficient at best and futile at worst. Real, sustainable economic development comes from …

      1. Creating the best educated workforce
      2. Establishing a lifestyle that retains the educated people you created and attracts other educated people from elsewhere

      Our politicians need to look at Austin, Seattle, Portland, the East Village in Manhattan and Dumbo area of Brooklyn. These places focus on developing and attracting talent, not attracting companies. Venture money and established companies will come to talent without government incentives.

      Here is a stunningly simple idea – street parties. There are a lot of localities that allow for mini – Bourbon Streets on weekends. They close the streets to automobiles in an area of the city with a lot of bars and restaurants. They allow people to walk down those streets with open containers of alcohol. They allow live music until later than usual (2 am). They also enforce the law strictly starting with a very visible show of uniformed police.

      Twenty-somethings seem to love these events. Truth be told – I am pretty fond of those events too and I haven’t been a twenty – something in quite some time.

      Doing this costs a locality virtually nothing. The increased need for police is more than offset by the increase in taxes collected. Meanwhile, the young people who frequent these events start to see the locality as “hip” or a cool place. The live music scene benefits and local bands pop up and become popular.

      1. Cville Resident Avatar
        Cville Resident


        You are 100% correct about street parties. It’s amazing to see Austin’s reaction to such events. I’d add that Jim is correct in pointing out that 20-somethings are very embracing of “the great inversion” in terms of land use/real estate patterns.

        If we want the blog to really be about 21st century public policy, it needs to focus on “talent acquisition” for polities. That’s going to drive so much in the next few decades. Attracting computer sci, engineering, biology, etc. PhDs and some MBAs from top 10-15ish schools (who have the networks to get VC) is so much more important in the 21st century for the prosperity of an area. Mixed use urban areas with amenities, elite brainpower, and access to capital are the ingredients for 21st century prosperity IMO.

      2. TooManyTaxes Avatar

        According to Dr. Jerry Gordon, head of Fairfax County’s Economic Development Authority, at a public meeting last fall, Fairfax County is not attracting any significant number of high-paying jobs. Growth in that area is flat at best. Rather, there is a continuing trend of growth in low-paying service jobs. So if we are getting 20-somethings, we are probably getting more maids, grocery baggers, short-order cooks, and retail clerks. This is the same message given by Fairfax County Executive Ed Long in 2014.

        What we lack, according to an number of business people I’ve talked to is “risk takers.” If we attract risk takers, won’t talented people, good-paying jobs and good companies follow?

        1. LarrytheG Avatar

          re: service jobs –

          I guess I don’t think they are “created” by govt polices – good or bad – they just exist wherever there is an economy and in a number and type driven by demand.

          the better, more robust the economy – the more diverse and rich the service level jobs that the economy will want.

          I do volunteer taxes for folks – and as a result I get some insight into various aspects of the “economy”

          For instance, we’re seeing Uber folks which provides insight into how that part of the service economy is evolving.

          These folks do not get W2 wages , nor do they get employer-provided health insurance.

          that has implications at tax time because the employer is not contributing FICA taxes and they come due to the worker at tax time and it’s a significant amount of money over and above the Federal and State taxes due – as well as a health insurance penalty if they did not get health insurance.

          It’s a losing proposition with the only way to break even is to claim capital and operating expenses on their car.

          The only ones who will find it “worth it” to continue are the one who will learn how to properly use the tax code to recover their expenses.

          Unless Uber provides that expertise to it’s drivers, I predict it will end up a problematic business model for most folks.

          And for that matter , ANY job where the employer is not paying FICA taxes and the worker ends up with that tax burden – unprepared – is going to end up at tax time – in the hole.

          so we’re seeing folks like that – not only Uber but other similar work including many home health care folks who go to folks homes to care for someone and get paid not with W2 wages but as independent contractors responsible for their own FICA and own health insurance.

          there’s a huge irony with these folks.

          many would not file their taxes at all, they’d be in the shadow economy – because once they realize they will owe the FICA taxes – they just would not file – except for one thing. If they have Obamacare – they can’t get it and keep it unless they file their taxes so we are now staring to see greater and greater numbers of people coming in to file – that did not file in prior years.

          The other big group? retired Federal employees ….whose pensions often put them in the 25% tax rate bracket. These folks are the ones who help anchor the local economy – the ones who pay a good part of the property taxes that, in turn, fund the local schools and public safety.. not so much the Uber folks…

          Uber folks and other service economy are not going to be the same kind of retirees in their respective local economies.

        2. LarrytheG Avatar

          curious about the comment “risk takers”.

          what are the opportunities that risk takers should be pursuing but are not – ?

      3. Excellent point about the street parties — bring them on. As for attracting “risk takers”: I suppose, TMT, that anyone coming to the Washington area for a job in the Trump Administration would have to be a risk taker. Whether “talented people, good-paying jobs and good companies follow” the Trump-bound immigration remains to be seen.

        1. LarrytheG Avatar

          same question Acbar – what are the “opportunities” that risk takers are not pursuing ?

        2. TooManyTaxes Avatar

          Acbar – the Trump Administration comment is a hoot!

          While my perspective is somewhat limited, because I haven’t represented many local companies since I left a big corporation and entered the private practice of law in the late 1990s, my experience has been most of the risk-taking companies I’ve helped were not located in the Greater Washington Area. I’ve observed a greater willingness to take on business risk by the outlanders.

          Real Washington law is focused on getting some type of government approval or avoidance of some type of sanction and the effort is to reduce the odds of failure to near zero. That is a good strategy in dealing with the federal government, especially when one needs some regulatory approval. But it doesn’t seem consistent with investing a lot of one’s own money in a new technology or business model.

          For example, if undergrounding the Silver Line through Tysons would have created a much better platform for urbanizing the area, one would think risk takers would have gambled some of their money to fund the undergrounding. But in the many years I worked on rail and Tysons issues, I never saw any movement by the business community, much less the real estate investors and developers, to raise the money to fund most of the tunnel’s costs. Yet, if they had been willing to cover most of the tunnel’s costs, I truly believe we’d have a big tunnel in Tysons given the politics of it all.

          Rather, the effort was made to obtain other people’s money to fund the tunnel – something that failed. I understand the desire to avoid costs, including capital expenditures, but if an underground Silver Line through Tysons was as important as the developers, landowners and business community said it would be – why didn’t they risk some of their own capital on the tunnel’s costs? It wasn’t in their nature.

          1. LarrytheG Avatar

            re: Washington business risk vs any area business risk…

            for instance, the Innova deal – or even the Metro thing look to be not a Washington / Federal law thing – as much as something separate from Federal Govt regs.. no?

            wouldn’t we see something like Innova or even Metro in many urban areas?

            so in that vein – what affects (or not) business “risk” takers?

  6. LarrytheG Avatar

    and – as important – is the realization and acceptance by those who want work – that companies, and unions, nor the govt no longer “take care” of people in the traditional ways and that people now need to take responsibility for their own skills and capabilities – that is in demand in the market.

    Govt is willing to provision the education in various and different – and flawed and inefficient ways – but the opportunity is there for those who want to access it and there is no hard requirement that they go in debt in the dimensions that some are….

    and – ALL THE MORE reason for people to have – not only portable pensions – but portable – not employer-provided – health insurance.

    parents should be telling kids these realities.

    govt needs to be telling kids without parents or without “good” parents – this reality also.

    The kids now in elementary school are going to graduate as “unemployable” if they do not get on the 21st century education track.

    1. TooManyTaxes Avatar

      Larry, there are lots of opportunities for kids and young adults without a college education or vocational training to get the latter. For example, Fairfax County Public Schools Adult and Community Education offers many courses, at reasonable cost to students, that providing training in a variety of trade, automobile care and repair, health care, administrative support, barbering/cosmetology, computers, etc. Many of these courses also provide a pathway to licensure when needed. I cannot believe Fairfax County stands alone.

      At some point, people need to take some personal responsibility and, perhaps, cut back on their expenses, to obtain the training they need to survive in the hard reality of today’s global economy.

      1. LarrytheG Avatar

        TMT – I think Fairfax stands out for education opportunities compared to many places in Va outside of the urban areas – except for the Community College systems but keep in mind also that kids who do not get GOOD K-3 reading and math skills can be stunted later even for basic vocational and licensure programs that today utilize technology and require an ability to read and understand how to use that technology.

        and higher level stuff like how to program, operate a drone for say inspecting powerlines or pipeline rights of ways ,etc.. again require people to be able to understand modern technological Concepts that are involved in that technology.

        take simple codes now coming out of the computers in cars… those codes indicate the status of the technological systems that operate within the car. Ditto with so many things now days including just setting up TVs and computer, entertainment systems.. knowing how to install and utilize apps on cell phones, etc…

        virtually anything more than basic and simple labor jobs..

  7. Re: INOVA growth, I wonder if we know past growth of medical related jobs in the INOVA Fairfax and surrounding medical complexes, and future projections with new Center.

  8. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    What all these insightful comments are telling me is that:







    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd





      1. Reed Fawell 3rd Avatar
        Reed Fawell 3rd



      2. Reed- Are you Ffx Co. resident like me? I would say ExxonMobil presence per se was an anomaly… most of the oil patch headed for TX, whereas Mobil decided on a pit stop in NoVA/DC. Here in Burke/Springfield we are a bit South of the Arlington bottleneck, with slugging, VRE and Metro as commute options.

  9. LarrytheG Avatar

    ah.. ALL CAPs…. not good… ;-(

    how is Fairfax fundamentally different that most every other urban area in the country -that has horrible traffic, tolls, suburban “rings”, etc?

    I’be been to most of the country’s big urban areas and while each has it’s own unique flavor – they all share the traffic, beltway, suburban rings.. dying and revitalizing areas, and yes, tolls..

    come on Reed.. get a grip guy.

  10. TooManyTaxes Avatar

    Fairfax County, as well as interested parties, spent considerable time developing a reasonable Transit Oriented Development policy. In sum, it limits high density to one-quarter mile of Metrorail stations. That policy was followed in Tysons.

    Now, however, the staff, some supervisors and, of course, affected landowners want to toss that policy out the window and allow high density, not just at rail stations, but also in any “activity center” even when far away from rail. Close our eyes; click our heals; and magic happens.

    Having walkable areas in neighborhoods and commercial districts is a good idea. But that alone will not reduce traffic congestion. Having mixed use districts in commercial areas can be a good idea. But that alone will not reduce traffic congestion. Unless we are dealing with renters ready to move regularly, it is very unlikely, given the turnover in jobs and 1099 work, that few people can live where they work on a long-term basis. Dual spouse/partner households exacerbates this situation.

    We need options like Tysons and Reston. But creating pretend Tysons and pretend Restons will not work. We got heavy rail because studies show many people will not ride the bus. Now we want to pretend that people will ride the bus to justify urban density by bus stops. It’s insane.

    Fairfax County is traveling down a path that ends in a waterfall.

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