RD364 - Virginia Biotechnology Research Park Authority Report On Audit for the Year Ended June 30, 2005


Executive Summary:
The Authority is a political subdivision of the Commonwealth of Virginia, established in 1993 by an act of the Virginia General Assembly. The Authority provides a mechanism for financing construction of the Virginia BioTechnology Research Park (Research Park) through bonds and other authorized means. The Virginia BioTechnology Research Park Corporation (Corporation) is an IRS Code Section 501(c)(3) corporation and is organized and operated exclusively for scientific, educational, and charitable purposes.

The results of operations of the Corporation are presented in blended format in the financial statements of the Authority. Corporation revenues and expenses each totaled $80,699 for fiscal year 2005.

The Board and staff of the Authority manage daily operations of the Research Park. The Research Park is a life sciences community adjacent to Virginia Commonwealth University (VCU) that houses laboratories for companies, research institutes, non-profits and the state government on a 34-acre campus in downtown Richmond, Virginia. The mission of the Authority is to advance life sciences by promoting and commercializing scientific research, thereby creating investment and jobs.

The Authority does not have taxing power. Operations are funded from lease and ancillary service revenues. Bond issuances, long-term notes payable, and appropriations from the Commonwealth of Virginia and contract support payments from VCU fund the acquisition and construction of capital assets. The Authority also received funding in previous years through bonds issued by the City of Richmond. As of June 30, 2005, the Research Park was occupied by 38 private and non-profit companies, four state laboratories, and five research institutes/administrative functions of VCU, filled approximately 565,000 square feet of laboratory and office space in eight buildings and employed more than 1,200 individuals.

Philip Morris USA is developing a new research and technology center on land within the Authority, which was assembled and sold to Philip Morris USA. The project is slated for occupancy in mid-2007. The construction is expected to be a capital cost of $300 million for the Philip Morris Research and Technology Center, which will be 450,000 square feet and house between 600 to 700 employees.

Highlights

Financial Highlights for Fiscal Year 2005
• Cash and cash equivalents increased nearly $800,000 as a result of activities for the Philip Morris project, further explanation following.
• Net assets of the Authority decreased $1.6 million of which $1.4 million was due to the recognized loss on Biotech Two transfer and prior accounting period adjustments.
• Operating revenues decreased $64,000.
• Operating expenses decreased $609,000.

Authority Highlights
• Biotech One and Center, the Research Park’s two multi-tenant buildings, had 34 tenant companies. Biotech One was 100 percent occupied and Biotech Center was 95 percent occupied at June 30, 2005.