Texas is well known as a prime location for business, but it also is an emerging hot spot for technological innovation driven by state, local, and industry partnerships.
In a struggling global economy, Texas is making made great strides to stand apart from the crowd. If Texas were a nation, its economy would rank as the 12th largest in the world by GDP, according to the Texas Comptroller’s 2008 estimates. A leader in the global marketplace, the Lone Star state was ranked as the number one state by export revenues for the eighth year in a row, totaling $163.4 billion in 2009. It is also home to more Fortune 500 companies than any other state in the nation.
Texas continues to garner national attention, including top economic rankings by the Milken Institute, CNNMoney, and Forbes, which ranked the Lone Star State number 1 for Economic Climate in its “Best States for Business” report.
One of the most successful industries in Texas is its innovative energy and technology development sector. Pushing Texas into the high tech frontier is the Texas Emerging Technology Fund (TETF). In January, Gov. Rick Perry reauthorized $203.5 million for this initiative, which is helping to attract new investments in the state’s emerging technology centers.
UT-Pan American is receiving $3.4 million through the TETF for the creation of its Rapid Response Manufacturing Center, geared to reduce the lead time in a product’s life cycle between inception and delivery to the customer. The center will provide greater commercialization opportunities in South Texas by centralizing all product development, design, testing and distribution in one location, in Edinburg, TX, driving new products into the market faster.
Photon8 Inc., a startup company leading the development of algae bio-fuel technology in partnership with The University of Texas at Brownsville and Texas Southmost College, received a $1 million grant from TETF. The company will use the award to genetically enhance the performance of the algae and advance its extraction technology.
“Texas is a leader in the energy sector and a leader in research and use in alternative energy,” Gov. Perry said, announcing the grant. “Through the help of Photon8 we hope to spur innovation in biofuels that does not interfere with our food supply.”
The partnership between Photon8 and UTB/TSC is leading research in algae-based biodiesel fuel. Photon 8 is housed at the ITEC Center.
“Photon8 and UTB/TSC are charting new pathways and together making unanticipated breakthroughs,” said Brad Bartilson, president and CEO of Photon8. “We are committed to making Texas the leader in sustainable energy.”
Since August, Photon8 Inc. moved its headquarters from New Jersey to the UTB/TSC campus and has begun working with professors and students in the chemistry, environmental science, molecular biology, MEMS and electro-magnetics departments.
ScanTech Sciences Inc. is receiving $2 million from TETF for the development and commercialization of food sterilization technology that uses electronic pasteurization to ensure the safety and freshness of food. The technology will allow for safer food imports by removing more insects, bacteria and toxins without using chemicals.
In addition to these TETF projects, National Instruments has announced a new NI Texas Emerging Technology Grant Program, which provides software and training services to companies that receive TETF investments. NI’s LabView software helps young companies make the transition from the lab to the market.
To date, TETF has allocated more than $126 million in funds to 98 early-stage companies, and $153 million in grant matching and research superiority funds to Texas universities. For more information on the TETF, visit http://www.emergingtechfund.com.
INNOVATE TEXAS FOUNDATION POWERS NEW ENERGY SECTOR
The Innovate Texas Foundation was formed in April 2009 to help attract tech businesses to the state in order to continue its shift beyond an oil-, gas-, and agriculture-based economy.
Texas has long been an innovative leader in energy development, not only in traditional sources but also in renewables that will drive the economy in the future. The state now ranks first in both wind and biofuels production to match its standing in oil production. And the state’s third-place showing in solar energy is on the rise. According to the Innovate Texas Foundation Web site, Texas is poised to get more than 10 percent of all new jobs and investments in solar technologies by 2015, including an estimated 5,000-plus manufacturing jobs to the tune of $4.5 billion.
These projects are among the Innovate Texas investments:
• Austin Energy, a municipal utility, plans to create 300 new jobs and $1 billion in regional economic investment based on the construction of a 100 MW solar manufacturing plant in the Austin by 2020.
• HelioVolt, an Austin-based startup, developed a low-cost manufacturing process for applying a thin-film coating to building materials and earned a $1 million grant from the state’s Texas Enterprise
Fund for the construction of a development and manufacturing facility. The project is expected to create about 160 jobs and $62 million in capital investment.
• An emerging technology company in Keller, TX, Entech Solar, provides high- efficiency solar cells for NASA spacecraft and has invented a new lighting system to illuminate office buildings, schools and stores.
For more information on Innovate Texas, visit: http://www.innovatetexas.org/.
OPPORTUNITY AUSTIN AIMS FOR SUSTAINABLE GROWTH
Opportunity Austin was created in 2004 by the Austin Chamber of Commerce to help foster sustainable growth through the creation of new jobs and increased payroll in the Central Texas region. Since its inception, Opportunity Austin has registered solid success, including the addition of an estimated 123,400 new jobs to Austin’s regional economy and an increase in regional payroll by $5.6 billion.
Through this initiative, the Austin Chamber collaborates with regional industry leaders on strategic initiatives that will not only help to attract the most innovative, high tech, and sustainable companies to Austin, but also foster growth of existing business and encourage diversification of the Central Texas economy.
Last month, Gov. Perry announced that the state will invest $1.4 million through the Texas Enterprise Fund (TEF) in Facebook, the popular online social networking service, to create a sales and operations office in Austin. This investment will create 200 jobs and more than $3.1 million in capital investment. The TEF funding is conditioned upon the finalization of a local incentive agreement with the City of Austin.
“The TEF continues to be a critical, deal closing tool for Texas, helping to attract jobs and businesses and grow our state’s diverse economy,” Gov. Perry said. “Facebook’s expansion in Austin will enhance the area’s robust technology industry, create 200 jobs for Texans, and strengthen the economy in Central Texas.”
As Texas’ innovative, deal-closing fund, TEF provides incentives to businesses looking to expand or relocate to Texas, creating jobs and strengthening the economy. To date TEF has awarded more than $388 million and has announced the creation of nearly 54,000 new jobs in the state, generating more than $14 billion in capital investments.
Facebook’s potential location in Austin will represent its first major U.S. expansion outside of Palo Alto, CA, where the company is headquartered. A final decision is expected in March.
“We’ve been exploring various options around the U.S. to establish an additional online sales and operations office, and we’re grateful to the assistance we’ve received from the Governor’s office and the state’s leadership in discussing the possibilities in Austin,” Facebook Chief Operating Officer Sheryl Sandberg said. “Facebook continues to grow and Austin, with its deep talent pool, would allow us to hire the high-caliber employees we need to properly serve the people, advertisers and developers that rely on our service.”
Opportunity Austin also has been working to attract a Chinese solar energy company to Austin. Yingli Green Energy is proposing to build a solar-panel plant in the city, investing $20.7 million and creating more than 300 jobs. The jobs would pay an average of about $35,000, ranging from $13.50 an hour for manufacturing workers to $50,000 for 55 staff workers and $125,000 for two top executives. In return, the city of Austin is proposing to give the company an 80 percent break on property taxes on the plant and equipment. The company also is negotiating with the City of Phoenix and a final decision is expected in March.
Last month, the Austin City Council approved an economic development package of $200,000 over 10 years for LegalZoom, a Los Angeles company that prepares online legal documents, resulting in the creation of 600 jobs for Central Texas residents and an investment by LegalZoom of $1.75 million.
LegalZoom also received a $1 million award from the TEF based on its decision to locate its regional headquarters in Austin. The city incentive agreement is part of a package developed in partnership with the state. This marks the seventh time the city and the state have joined forces to create jobs in Central Texas since TEF’s inception in 2003.
“The efforts of Governor Perry, the Austin City Council and Chamber of Commerce in crafting a very attractive incentive package for LegalZoom was instrumental in our selecting Austin as our second home,” said Frank Monestere, LegalZoom president and chief operating officer. “Austin’s talented workforce and culture will be a great fit for us.”
Medical device company Pioneer Surgical also announced in February that it will be locating its new facility in Austin. Pioneer Surgical, based in Michigan, has leased an 11,000-square-foot building in Northwest Austin, which will house marketing and sales and portions of its product development group. The facility also will enable the company to further grow its spine division. It plans to open the office in the second quarter 2010.
“We are thrilled to become a part of Austin’s growing medical device community,” said Jeff Millin, Pioneer president/CEO. “Having a strategic base of operations here in addition to our Marquette, MI headquarters allows us to take advantage of Austin’s proximity to talent and technology, while still maintaining a strong connection to our successful heritage. This is a critical component of Pioneer’s future growth plans.”
The new 11,000 square-foot facility will create approximately 30 Central Texas jobs in 2010, with opportunities to expand in coming years.
In January, Hanger Orthopedic Group (Hanger), a provider of orthotic and prosthetic (O&P) services and products, also announced plans to relocate its corporate headquarters from Bethesda, MD to Austin, resulting in the creation of up to 250 jobs. Owning and operating hundreds of O&P patient care centers nationwide, Hanger’s business also includes distribution centers and the largest O&P network management company in the U.S. The City of Austin, working with the state, offered an incentive package that included a $1.5 million TEF award to spur the relocation decision.
In July 2009, Absolute Software Corporation, a leading provider of firmware-based computer theft recovery data protection and secure IT asset management solutions, announced plans to open its new U.S. headquarters in Austin, which will be home to its U.S.-based sales team and consumer business. The company was the first major playing in the computer theft recovery market and is the maker of the popular Computrace® and Computrace® LoJack® for Laptops product lines.
“Austin is known for its well-educated, talented professionals with expertise in technology and business,” said John Livingston, chairman and CEO of Absolute. “The city is home to the University of Texas and the caliber of people coupled with the area’s reputation as a great place to live and work makes it an ideal location for our U.S. headquarters.”
In April, CyrusOne, a leader in high-availability, high-density data center services, announced plans to open a new data center in Austin. The 50,000 square-foot facility is located in Austin’s data center business park, the MetCenter, which encompasses two on-site electric substations each with the capacity to reach 400 megawatts fed from separate power sources, an underground electrical infrastructure and redundant telecom and water infrastructure.
“We have always been drawn to Austin because of the city’s vibrant culture and expanding technology industry, as well as its proximity to Houston and Dallas,” said David Ferdman, president and chief executive officer, CyrusOne. “Now that we’ve created a strong and differentiated data center colocation platform that has great momentum in the Dallas and Houston markets, we are ready to finally bring a best-in-class data center option to the Austin marketplace.”
Unlike any provider in Austin, CyrusOne will provide its typical high power densities, and fully redundant colocation services that are engineered in a 2N configuration for power and cooling.
“The addition of CyrusOne’s uniquely designed facility is a great fit for Opportunity Austin’s strategy to develop a high tech environment for existing local business as well as those entering the Austin market,” said Gary Farmer, Opportunity Austin chairman and Heritage Title Co. president. The company was recently acquired by ABRY Partners, a Boston-based private equity investment firm.
ALLIANCETEXAS: THE NATION’S TOP FOREIGN TRADE ZONE
AllianceTexas, developed by Hillwood (a Perot Company), is a 17,000-acre, master-planned, mixed-use community located in north Fort Worth. AllianceTexas offers a variety of commercial real estate options, including new industrial, office and retail. Anchored by the inland port known as the Alliance Global Logistics Hub, AllianceTexas is home to 230 companies, 28,000 employees and 7,100 single-family homes.
In February, the Alliance Global Logistics Hub was named the nation’s top foreign trade zone by the U.S. Foreign-Trade Zone (FTZ) Board for the third consecutive year. About $5.4 billion worth of foreign-made products passed through the local, general-purpose zone last year, according to the board’s annual report to Congress. That surpasses the $4 billion admitted through the second-place Port Authority of New York and New Jersey.
“With Alliance, you have an airport, two rail lines and a highway [Interstate 35W], which is huge in distribution circles,” said David Pelletier, a spokesman with Hillwood, the developer behind the 17,000-acre AllianceTexas development.
The foreign trade zone helps lure companies to AllianceTexas, Pelletier said. The designation allows companies to import products before U.S. customs inspections are made and pay no duty until the products leave the foreign-trade zone. “It’s just one more cost-savings measure that helps attract companies into the development,” Pelletier noted.
Hillwood officials expect the value of products passing through the zone to grow as ATC Logistics & Electronics continues to operate after setting up shop in 2009. The company provides repair and assembly services for GPS and cell phone manufacturers and providers. Other companies with operations in the FTZ include Motorola, Lego and Hyundai.
Since opening Fort Worth Alliance Airport—considered the centerpiece of AllianceTexas—Hillwood has watched companies flock to the development. Proximity to the world’s first industrial airport, which opened in 1989, and major freeways and rail lines, has made AllianceTexas a major player not only for attracting corporate tenants, but for enriching the local economy.
AllianceTexas now houses more than 230 companies, including 65 from either the Fortune 500, Global 500 or Forbes list of Top Private Firms. These companies have built more than 3,129 million square feet and created more than 29,000 jobs. For more information, visit http://www.alliancetexas.com/.
BROOKS CITY-BASE: UNIQUE R&D CENTER IN SAN ANTONIO
Owned and operated by the Brooks Development Authority (BDA), Brooks City-Base in San Antonio is quickly evolving into one of the nation’s premier locations for science, research, technology and business. This thriving, master-planned research and technology center is a collection of approximately two million square feet of office, medical and technical laboratory, light industrial, retail and recreational properties set on over 1,300 acres.
For the past four years, BDA, working in collaboration with city, state, and federal entities, has worked to redevelop the former Brooks Air Force Base into an innovative center that offers an ideal location for companies to lease space and work among some of the most successful organizations in the bioscience, academic, environmental or technical fields.
In October 2009, BDA announced a partnership with Transwestern, one of the largest privately held commercial real estate and development firms in the U.S, to market real estate opportunities at Brooks City-Base. Transwestern will provide leasing services of existing buildings, as well as seeking developers and tenants for ground leases, land sales and build-to-suit opportunities.
“Brooks City-Base is unique in San Antonio,” said Kevin Roberts, president of Transwestern’s Central Texas region. “No other development offers a stronger combination of economic incentives, location, access, research and technology synergy, educated and skilled work force, and the array of retail amenities and housing options for a diverse employee base within a master-planned, campus-style setting.”
Among the features that set Brooks City-Base apart is the campus facility infrastructure with lab space, including two Level 3 bio labs, as well as accessible land for build-to-suit development. These prove to be major assets for the types of businesses Brooks City-Base has targeted, both nationally and internationally from industries such as bioscience, engineering, telecommunications, information technology, and aerospace. Transwestern currently is marketing contiguous blocks of office space of 5,000 square feet to 75,000 square feet in first class environments.
To help accommodate new growth, BDA has undertaken several infrastructure and renovation projects, including completion of a four-lane boulevard road extension with landscape medians that will serve as a transportation and pedestrian facility and will eventually extend South New Braunfels Avenue from SE Military Road to Interstate Loop 410. Landscape, irrigation, and design of the new Gateway Entry were an integral part of the project design and will serve as a signature piece to the Brooks City-Base campus. BDA completed Phase I and has now initiated Phase II of the South New Braunfels Avenue extension, which is expected to be completed later this year.
BDA also successfully renewed a 26,000 square feet lease with Earth Tech to maintain their presence at Brooks City-Base for five-year term. In addition, BDA amended a lease for Holt Cat to increase its leased square feet by 6,800 and extend the terms for additional two years.
Companies who wish to locate at Brooks City-Base will find a variety of unique incentives and financing alternatives available to them, including the City/County Joint Tax Phase-In Program, Freeport Tax Exemption Incentive Program, Texas Enterprise Zone Designation, Federal Empowerment Zone (EZ), Workforce Training Assistance, design build, lease-back options and specialized financing options. For more information, visit: http://www.brookscity-base.com/.
ODESSA, TEXAS: THE ENERGY EPICENTER
The last decade has proven to be one of growth and economic diversification for the city of Odessa, located in West Texas. Still the largest single source of oil and gas deposits in the U.S., Odessa has a thriving oil economy; it currently is home to the PSEG Texas Plant and the Quail Run Energy Center, and the region boasts the largest wind farm in the world.
Odessa is attracting new businesses to help in its transformation as one of the top energy epicenters in Texas and the U.S. In addition to the oil and gas that the region is so well known for, electrical power generation has become a mainstay in Odessa. The Odessa Development Corporation (ODC) recently announced a new project that will bring Summit Power Group, Inc. to Odessa. This private endeavor, with the help of the legislature, will be the first venture of its kind in the nation. Summit will design, build and operate an energy facility that produces electricity and hydrogen from coal, with near zero emissions.
This type of project will greatly reduce mercury and sulfur emissions, as well as water usage, and will capture a high percentage of its carbon dioxide, resulting in lower greenhouse gas emissions. The captured carbon dioxide will be used for climate-monitored enhanced oil recovery and other geological carbon sequestration.
Summit excels in the innovative development of large electricity generation projects. Led by a group of highly experienced energy industry professionals with an extensive network of relationships and deep knowledge of the energy industry in the U.S. and abroad, Summit has established a remarkable track record of successfully leading the development of large electricity generation projects with nearly 4500 megawatts (MW) of electric power plants already in operations. For more information on Odessa, visit: http://www.odessatex.com/.
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