RD366 - Virginia Biotechnology Research Partnership Authority Report On Audit for the Year Ended June 30, 2007


Executive Summary:
The Authority is a political subdivision of the Commonwealth of Virginia (Commonwealth) created pursuant to Chapter 946, Virginia Acts of Assembly of 1993, as amended by Chapter 731, Virginia Acts of Assembly of 2000, and Chapter 788, Virginia Acts of Assembly of 2005. The Authority provides a mechanism for financing construction of the Virginia Biotechnology Research Park (Research Park) through bonds and other authorized means. The 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 $46,360 for fiscal year 2007.

On March 26, 2005, the 2005 Session of the Virginia General Assembly passed House Bill [HB] 1801 amending the original legislation that created the Authority. HB1801 clarifies certain powers of the Authority that can be used throughout the Commonwealth and expands the Board of Directors of the Authority in the event of such initiatives that may be funded by the Commonwealth of Virginia. Effective July 1, 2005, these changes renamed the Authority to the Virginia Biotechnology Research Partnership Authority.

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 that houses companies, research institutes, non-profits, and government laboratories on a 34-acre campus in downtown Richmond, Virginia. The mission of the Authority is to advance life sciences by promoting scientific research and economic development through the attraction and creation of new jobs and companies.

The Authority does not have taxing powers. Operations are funded from lease and ancillary service revenues. Bond issuances, long-term notes payable, and appropriations from the Commonwealth and contract support payments from Virginia Commonwealth University have funded the acquisition and construction of capital assets. The Authority has also received funding in previous years through bonds issued by the City of Richmond. The Research Park, as of June 30, 2007, was occupied by 32 private and non-profit companies, four state laboratories, and five research institutes/administrative functions of Virginia Commonwealth University, filling approximately 1,000,000 square feet of laboratory and office space in eight buildings and employing more than 2,000 researchers, scientists, engineers, and support personnel.

In 2005, the Research Park assembled and sold land within the Research Park to Philip Morris USA for the development of a new global Center for Research and Technology. The Center’s capital cost was $350 million and will ultimately employ approximately 600 individuals. This is the largest single investment in the history of the Research Park and the largest single private sector investment in the City of Richmond.
With completion of the Philip Morris USA Center for Technology, the Research Park will be two-thirds developed.

Biotech Eight is a new multi-tenant building in the Research Park. It will be located on 5th Street in the current location of the former Biotech Four. Biotech Eight will be three floors with 76,000 square feet of space and will have an adjacent 299-space parking structure. The project is owned by the Biotech Eight, LLC. Construction began in the Fall of 2006 and is due to be completed in the first quarter of 2008.

When fully developed, the Research Park will contain approximately 1.5 million square feet of research, office and laboratory space in 13-15 buildings and employ 3,000 scientists, researchers, engineers and technicians, working in fields that include drug development, medical diagnostics and devices, biomedical engineering, environmental biosciences, forensics, and laboratory services.

The Research Park is not limited to its 34-acre downtown campus. Recognizing the growth of this dynamic industry, the Research Park has developed partnerships with neighboring Henrico and Chesterfield counties extending the reach of the Research Park to future satellite parks that can accommodate larger companies on suburban campuses in the Greater Richmond area.

Authority Highlights

• The Research Park purchased two parcels of property from Virginia Commonwealth University during the 2006 fiscal year. These properties are important in that they are the remaining parcels needed to give the Research Park the entire ownership of land in the block bounded by East Leigh, North 7th, North Jackson and North 8th Streets. This will enable the Research Park to hold this property for a future build-to-suit building site.

• Philip Morris USA began to occupy Biotech Nine, a 450,000 square foot facility in the Research Park in June 2007. The $350 million dollar complex will be home to approximately 600 employees. The facility opened in the spring of 2007.

• Virginia Biotechnology Research Partnership Authority has entered into a partnership called Biotech Eight LLC. The Biotech Eight LLC is a for-profit development entity that the Virginia Biotechnology Research Park will have approximately a 40 percent equity interest in. The Research Park contributed land and cash and will also enter into a management agreement for property management and leasing. The private sector partners arranged for construction and permanent funding of the project, on the strength of their equity contributions and personal guarantees. The total cost of the project is expected to be approximately $22 million and the first tenants are scheduled to move in during the first quarter of 2008.