Business Services Division

Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development

Provided as directed by (SHB 1091), Section 43.330, Chapter 227, Laws of 2007

November 2010

Report to the Legislature Rogers Weed, Director Acknowledgments

Washington State Department of Commerce Business Services Division • Patti Brooke, Assistant Director • Mary Trimarco, Managing Director • Amandine Noel-Crabtree, Business Development Coordinator

The report was researched and written by Commerce Research Services: • David Elliott, Project Lead • Lea Mitchell, Research Assistance • Steve Salmi, Ph.D., Research Services Program Manager

Special thanks to the over 40 zone administrators and partners of the state’s 12 innovation partnership zones who took the time out of their busy schedule to provide data, program background, and suggestions for how to improve the IPZ program.

For further information please contact:

Mary Trimarco, Managing Director (206) 256-6146 State Department of Commerce, 2001 Sixth Ave, Ste 2600, WA, 98125

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 2 Executive Summary

This report presents descriptive research on the state’s 12 innovation In Section 2’s recommendations, the Washington Economic partnership zones (IPZs). Data from annual reports were reviewed and Development Commission (WEDC) argues that IPZs represent a new telephone interviews conducted with more than 40 stakeholders. kind of economic model that can play an important role in the state’s economic recovery. IPZs are not a single program but a framework Research found that the organization, structure, and functions of that shows promise in catalyzing regional innovation through a IPZs vary for each zone. Funding for operations is minimal and comes decentralized, organic, and collaborative initiatives. from local economic development funds or through cooperative arrangements. The IPZs seek capital funding from state, federal, and To further the development of IPZs the state should: local sources. • Offer operational funding to IPZs so they can build their organiza- tional capacity. The focus of each IPZ is as varied as the state’s geography and • Use the IPZ model to better coordinate fragmented federal, state, economy. Most feature one or more institutions of higher education, and local economic development initiatives, e.g., by investigating developing new research efforts, training workers, establishing which federal economic development programs have the greatest new forms of education (new degrees or updated skill sets), and potential to align with IPZs strategies. addressing the economy’s challenges. Most zones focus on forward- looking or sustainable industries intended to create new marketable • Strengthen the IPZ network and research collaboration, such as products and/or patentable ideas. through web-based information sharing, recognition of successful inter-regional collaborations, and innovation “X” prize competi- Annual reporting to the Dept. of Commerce includes various hard tions. metrics such as private investment, patents filed, and jobs created. • Develop new financial tools such as: Most IPZs have little to report on these fronts. Nonetheless, many ‘‘ Testing the feasibility of self-financing innovation clusters of the administrators report that the IPZ designation helps to reach similar to Washington agriculture commissions. local economic goals, allowing new doors to open for collaborative ‘‘ Expanding IPZ access to capital by supporting local economic development. financing tools such as tax increment financing (TIFs). ‘‘ Encourage state agencies to provide more flexibility for IPZs The zone administrators agree that flexibility is the key element to in grant and contract programs. zone success. This has allowed for a variety of approaches and many • Focus performance metrics on outcomes in regions as a whole, disparate outcomes. Stakeholders reported that IPZs provide a useful be relevant to the IPZs’ unique governance structures, and have framework for building industry cluster strengths by, for example, broad utility to stakeholders in the region. supporting nascent businesses through their most difficult early years.

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 3 Table of Contents

Section 1: IPZ Case Studies p. 10

• Aerospace Convergence Zone p. 10 Workforce Development Council Snohomish County • Resource Energy Collaborative p. 14 Economic Development Group of Kittitas County • Discovery Corridor Innovation Zone: Steinmueller Innovation Park p. 17 Economic Development Council • Grays Harbor Sustainable Industries Innovation Partnership Zone p. 18 Port of Grays Harbor • North Innovation Partnership Zone p. 23 Clallam Economic Development Council • Pullman Innovation Partnership Zone p. 26 Port of Whitman • South Lake Union Global Health Innovation Partnership Zone p. 29 City of Seattle • Spokane University District Innovation Partnership Zone p. 32 Greater Spokane Incorporated • Tri‐Cities Research District p. 36 Port of Benton • Walla Walla Innovation Partnership Zone p. 39 City of Walla Walla • Washington State Biomedical Device Innovation Zone p. 45 City of Bothell • Waterfront Innovation Zone p. 49

Section 2: Recommendations from the Washington Economic Development Commission p. 54

Credit PNNL Credit Section 3: Appendix p. 57 Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 4 Introduction

Study Scope and Methodology

The Department of Commerce is This report presents descriptive research partners. Some case studies are more detailed required under 43.330.270 (11) providing a baseline of information on than others. This is due to the age of a zone, RCW to produce a biennial study each of the IPZs. The Washington Economic whether it has received funding, and whether to the Governor and Legislature Development Commission (WEDC) plans to the zone has changed direction. Employment that reports on the performance use the information in this report to conduct and funding data are included where of the state’s innovation follow-up research with a more analytical appropriate, but the research is primarily partnership zones (IPZs). focus. qualitative in nature.

The Washington Economic IPZs are required by statute to submit Development Commission performance data in annual reports to the (WEDC) is also required per Dept. of Commerce. Data include private RCW 43.330.270 to make investment information, job creation recommendations on ways to measures, and measures of innovation. increase the effectiveness of We present highlights of this reported data individual zones and the IPZ with the caveat that it tells only part of the program; those can be found on IPZ story because it focuses on inputs and Page 54. outputs. Of potentially greater policy-making importance may be outcomes data. For example, how many jobs have been created by IPZs? As discussed in the Appendix (see Page X), gaining access to relevant data was not possible within the budget of this study, but a potential methodology for follow-up research is presented.

In the pages that follow, you will find a case study on each IPZ. Information was drawn from annual reports as well as telephone interviews with zone administrators and Credit PNNL

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 5 Introduction Program Background

The IPZ program is the result of Egils Milbergs, executive director of the In 2007, the Dept. of Commerce designated legislation passed in the 2007 WEDC, sees IPZs as “testing geographically 11 IPZs and distributed to them $5 million in session directing the Department based economic development zones that capital grants. Zone designation can occur in of Commerce (formerly the are creating innovation eco-systems.” each odd calendar year. In 2009 Commerce Dept. of Community, Trade, and This is an economic development model designated a twelfth IPZ and distributed Economic Development) to design intended to encourage collaboration to an additional $1.5 million in capital grants. and implement a program to advance innovation. The goal of each IPZ is to Grants were competitive and not all IPZs have encourage and support research stimulate the growth of regional economies received state capital grant funding. institutions, workforce training by strengthening industry clusters organizations, and businesses and intellectual capital. IPZs Designation criteria include: “Our state’s to work cooperatively in small are intended to turbocharge 1) Formation of a partnership geographic areas. The goal the development of new IPZ program and consisting of some or all of the is creation of commercially technologies, marketable following: academia, research viable products and jobs. “Our products, company the collaboration it laboratories, public economic state’s IPZ program and the formation, and job creation. promotes leads to ground- development organization, collaboration it promotes leads local governments, to ground-breaking discoveries The timeframe for zone breaking discoveries chambers, private companies, and innovation,” said Washington development is five to 10 and innovation” and workforce training State Gov. Chris Gregoire in years. IPZs are designed to organizations; signing the legislation into law. develop long-term relationships and projects, working with state and 2) A specific geographic area with an federal processes that could take a number existing or emerging identified industry of years to yield grant money and support. cluster of statewide importance; and Additionally, projects that require permits for 3) A strategic plan for regional cluster construction, or land uses that require zoning development. changes, take time to reach fruition. The IPZ program does not provide operational funding or tax incentives for the zones.

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 6 Introduction Major Characteristics of IPZs

IPZ organization, structure, and The focus of each IPZ is as varied as the Nonetheless, many of the administrators functions vary for each zone, state’s geography and economy. Some areas report that the IPZ designation helps to reach although all have a designated feature alternative energy generation or local economic goals by opening doors to zone administrator for coordination alternative fuel creation. Some industrial greater collaboration. The legislation originally and reporting purposes. The areas focus on worker training and sustainable termed IPZs a type of “technology park,” but zone administrator is usually manufacturing. High-density areas have this does not fully describe the emerging the employee of a government biotechnology elements, agricultural areas nature of many of the zones. entity (city, port, county) or work on water and sustainability, and all are local economic development or engaged in research and development. Most Zone administrators agree that flexibility is workforce training organization. feature one or more institutions of higher the key element to their success to date. This Funding for operations is education, developing new R&D efforts, has allowed for a variety of approaches and minimal, usually provided by local training or re-training workers, establishing many disparate outcomes. Two zones have economic development funds, or new forms of education (new degrees, or new reassessed their direction and refocused on cooperative arrangement or in- topic areas), and addressing the economy’s new topics. All of them feature alliances of kind contribution of the partners. challenges. business, government and academia that are The zones seek capital funding unique, each centered on growing the local from state, federal, and local Many IPZ capital grant projects have been economy. In some cases, a project might have sources. Some zones have buildings completed but progress varies for the IPZs occurred without the zone designation, but associated with their efforts that did not obtain capital funding. IPZ boards the collaborative approach combined with located on partner property (ports and working plans are in place, and many have the opportunity to interface with academia, or institutions of higher education), developed 501(c)3 nonprofit organizations and business, and economic development experts but many do not. Most zones focus partners for fund raising purposes. However, has accelerated the pace of change. on forward-looking or sustainable the economic downturn has significantly industries intended to create slowed the pace of progress. new marketable products and/or patentable ideas. Many also feature Annual reporting to the Dept. of Commerce an educational component offering includes various hard metrics such as private certificate or degree training. investment, patents filed, and jobs created. Most IPZs have little to report on these fronts.

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 7 Introduction Major Characteristics of IPZs

Administrators and partners reported monetary donations and an all-volunteer that IPZs provide a useful framework for workforce. building industry cluster strengths. This focus crystallizes goals, foments collaboration, and provides a rallying point for partners. One zone administrator summarized the IPZ program this way: “Combine them all, and “Combine they form the Governor’s research park.” The zones also have functioned as small business incubators, providing flexibility them all, and in housing, access to shared research and development laboratories and facilities, access to expert advice, training opportunities, they form the and transportation experts. These elements together can support nascent businesses through their most difficult startup years. The Governor’s direction of each IPZ has been driven primarily by one key person or a small group of people. The key person is often the zone administrator who represents the local economic research park.” development agency, city, or port, but can also be a college leader or someone in private industry. All of the administrators report carving time out of their existing schedules to conduct IPZ work because operating funds have been hard to come by. A variety of different approaches have been used to fund zone operations, including in-kind and

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 8 Introduction IPZ Program Improvement Suggestions by Stakeholders

The IPZs were asked to identify • Cohesive long-term state strategy for • Grant scoring advantages for IPZ the resources needed to advance IPZs – Concerns were expressed that the projects – One zone administrator their agenda. The following is IPZ program may be discontinued. This suggested that preference be given to a summary of the resources has tempered local enthusiasm for IPZs projects located in IPZ areas when they suggested by zone administrators and created skepticism among donors compete for state grant money. and partners. and businesses about the future of • Technical support for pursuing grants – projects. Many zone administrators reported that • Operating funds from the state – A lack they do not have access to grant writers of state operating funds has hampered or in-house experts. the ability of all of the IPZs to grow more • Greater coordination among IPZs – rapidly. Some stakeholders noted that the • Ongoing capital grants – Over the last geographical nature of the program four years, $6.5 million in state capital encourages competition between zones grant funds have been used to leverage for resources. Multiple zones could other funds available from private potentially duplicate projects. sources, local jurisdictions, and the • Promotion of the IPZs by the state – federal government to acquire property Each zone could benefit from a program and embark on construction projects. that promotes the program to businesses Availability of capital funds will help to in other states and countries. continue these efforts. • Creation of tax incentives – Numerous See Page 54 for the WEDC’s stakeholders complained that IPZs were recommendations. at a disadvantage relative other states in not being able to offer tax incentives to businesses.

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 9 Section 1: IPZ Case Studies

Aerospace Convergence Zone Workforce Development Council Snohomish County

Founded: Summary of Activities: 2007 The IPZ exists in order to protect and grow the partners to react nimbly and work on the aerospace economy in Snohomish County. a relationship basis rather than within a Zone Objective: Community leaders, government, education, defined structure. The organization has been Aerospace training and research, industry, workforce development, and other described as “Community Mobilization with technology transfer and IPZ partners have displayed strong support of an economic development focus,” working commercialization, coordination this goal. The IPZ banner provides a place to on projects where each of the organization’s of attraction, retention, and unite and coordinate the various agendas agendas intersect. Conveners include the expansion efforts for aerospace of the organizations involved. The Workforce Development Council, nonprofit Workforce Development the Economic Development Partners: Council acts as the zone “Community Council, the colleges, airport • Future of Flight Aviation administrator, with project management, the county’s Center and Boeing Tour leadership shared organically Mobilization Office of Economic • Economic Development among the partner Development, or the County Council of Snohomish County organizations. Leadership of with an economic Executive’s office, depending • Snohomish County Office of specific projects usually goes on topic area. The IPZ is Economic Development to the partner that is most development conceptually more than • Snohomish County Executive’s expert on the subject. The IPZ just the research park taking Office functions as a part of the larger focus” shape as Washington Aerospace economic development system. Training and Resource Center • Workforce Development Council Snohomish County For example, the deputy development (WATRC), with results and efforts spread director for Paine Field organized the IPZ throughout the county. The Aerospace Futures • partners to support a new CERB application. Alliance of Washington Partners are included in each work group as The first goal of the group was to create • All K-20 education in the each project matures and then the work group a research and training center at Paine county under the Blueprint disbands. Field. The result of that effort is the WATRC Partnership managed by Edmonds Community College. The flexibility of the IPZ designation allows WATRC hosts workforce training, research

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 10 Section 1: IPZ Case Studies

Aerospace Convergence Zone Workforce Development Council Snohomish County

Zone Administrator: and entrepreneurship training focused on training. This hybrid model is available for use Mary Jane Brell Vujovic, aerospace and composite manufacturing. by other colleges in the state. The program Workforce Development Council Strengthening the research component by was designed to be scalable so that a round- Snohomish County featuring one or more four-year institutions the-clock and weekend schedule is possible. is a goal. Communication and negotiation Recently retired aerospace machinists are Contact Information: with several in-state institutions continues. recruited as instructors for the hands-on (425) 921-3405 WATRC opened within a year of conception portion of the training. in an existing building donated by Snohomish Facilities: County. Remodeling using Federal Aviation IPZ Part of Larger Partnership Administration (FAA) and state IPZ grant Washington Aerospace Training The IPZ dovetails with the Snohomish County and Resource Center (WATRC) funds included asbestos abatement. Boeing Blueprint. The Blueprint is a broad partnership Paine Field, a combination of provided materials and machine tools for whose mission is to develop an integrated office, classroom, and production training. approach to education, workforce, and space. economic development in Snohomish County. WATRC began its first class in June 2010. Economic vitality is fostered by retaining and Tenants: Students learn a variety of aircraft and attracting jobs in nine industry clusters. The composite milling and manufacturing skills Edmonds Community College partnership creates many reports related manages WATRC for the IPZ as part of 18.5 credit hour certification. to IPZ topic areas and serves as a starting WATRC also offers an 11-week entry-level point for discussing most new initiatives and State Capital Funding: program that can prepare a person with little knowledge for entry-level jobs at Boeing or $250,000 in 2009 a supplier, or entry into the full certification program. The center expects to offer training in aircraft electrical, hydraulics, quality assurance, and functional testing in the near future. These courses will vary in length and each will lead to a certification required to upgrade to a new position. On-line course curriculum is integrated with hands-on

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 11 Section 1: IPZ Case Studies

Aerospace Convergence Zone Workforce Development Council Snohomish County

industry recruitment and retention efforts. new education program and expanded the The Workforce Development Council, the student exchange program, which trains same organization that acts as the IPZ zone apprentices in aerospace maintenance and administrator, manages the Blueprint. The restoration. Both projects address the need Blueprint’s 2003 launch was prior to IPZ to foster careers and technical education designation. programs in advanced manufacturing/ machining for K-12 schools, as well as help The zone administrator estimates that $40 to develop the local knowledge base in these million in training funds have come to the fields. The new education program, Flights of A Washington Aerospace Training and Research Snohomish County vicinity because of the Innovation, served 300 middle school students Center student listens as facilitator Alex McEwen efforts of various IPZ partners. The Economic and 10 teachers from four school districts shows how he drilled plate aluminum. (Snohomish County Business Journal) Development Council of Snohomish County is during the pilot. The program will expand in happy with the success of the training center. 2011 to increase middle school participation The EDC would like to use the IPZ to conduct and expand into high schools. area marketing and establish a business incubator. Funding and Red Tape Pose Challenges Challenges facing the IPZ include finding Another IPZ focus is green energy training funds, and the ongoing work to bring with Cascadia, Edmonds, and Everett additional research capacity to the IPZ and Community colleges. Both the Workforce WATRC. Several partners found the state’s IPZ Development Council and the various colleges application and grant process onerous and involved say they strive to maximize the time consuming. Staff expressed concern that Washington Aerospace Training and Research Center efficiency of training funds and help students as budget cuts reduce partner organization students get a lesson in aluminum drilling technique complete the program, attain certification, staffing levels, and reduce staff capacity, that from facilitator Alex McEwen on the center’s first day complete programs, and find jobs. Seminars of classes on June 9. (Snohomish County Business the time consuming nature of the process Journal) on developing a career plan are part of the will discourage future participation. The overall training program. zone administrator said that funding for IPZ operations would be helpful in conjunction The Future of Flight Foundation launched a with the IPZ designation to attract businesses.

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 12 Section 1: IPZ Case Studies Aerospace Convergence Zone Workforce Development Council Snohomish County

Boeing Supplier Moves to Snohomish it to the local Esterline subsidiary. Capstone Esterline Corporation, and its Korry avionics Partners will pay Snohomish County $289,000 products, is an important Boeing supplier. a year for 55 years, demonstrating the The company needed a new larger facility significant investment of the property and for its expanding operations. The company permanence of the Esterline relocation. also sought lower costs, and considered moving out of state. Esterline contacted the The Esterline decision to move to Snohomish EDC of Snohomish County in early 2008 to County was of significant value to the identify candidate sites. Snohomish County community: it kept an aerospace company Airport responded with an attractive land-use that considered moving out of state here in opportunity at Paine Field costing $.047 per Washington. square foot, as compared to $2.50 per square foot to remain near its current location in Seattle. The site also provided close proximity to the Boeing aircraft facility and other aerospace companies, a fast permitting process, a skilled local workforce, and a large amount of enthusiasm for the project from the community.

Esterline announced in March 2008 its Governor Gregoire speaking at Ribbon Cutting ceremony for decision to move operations and workers the new Esterline facility to Snohomish County. Construction of the Sources: Mary Jane Brell Vujovic, Zone Administrator, new facility began in August 2008 and it Workforce Development Council Snohomish County; Larry opened September 2009. Snohomish County Cluphf, Edmonds Community College; Bill Lewallen, Paine Field leased a 14-acre parcel on airport property Deputy Director of Development; Donna Ambrose, Snohomish County Office of Economic Development; Deborah Knutson, to developer Capstone Partners, which built Economic Development Council of Snohomish County; a 216,000-square-foot building and leased Snohomish County Business Journal July 2010 Ribbon Cutting Esterline Ribbon Cutting

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 13 Section 1: IPZ Case Studies Central Washington Resource Energy Collaborative Economic Development Group of Kittitas County

Founded: Summary of Activities: 2009 The energy collaborative is the newest IPZ, in the future. The process of formalizing the receiving designation in October 2009. The relationships between partners is ongoing. Zone Objective: group’s mission is to advance low-carbon Once that process is complete, the partners Alternative energy resources— technology by leveraging alternative energy will engage in planning to determine the wind and solar resources in Kittitas County. The IPZ conducts criteria for the research facility and financing operations through collaboration between the plan. The IPZ expects to apply for capital Partners: private partners: Puget Sound Energy is the grants at some future time for the research • ED Group of Kittitas County largest private utility in Washington and enXco facility. • Central Washington University is the largest U.S. developer of wind and solar • enXco Development power. Governmental entities that assist in Corporation funding or operating the IPZ include Central • Puget Sound Energy Washington University, the local economic • Kittitas County development office, and Kittitas County.

Zone Administrator: Central Washington has abundant wind and Doug Sutherland, Economic solar energy available for conversion into Development Group of Kittitas electricity. There are already functioning The Renewable Energy Center allows visitors to explore the County generation facilities at Wild Horse. Elsewhere latest technologies in wind and solar power, and learn about in the county there are more permitted and the Kitittas Valley. Contact Information: under construction. The zone administrator (509) 962-7244 estimates that within the next decade, there may be five projects of similar size to Wild Facilities: Horse constructed in the area. None The IPZ has adequate operating funds for the next three to four years. The IPZ partners are working on a plan to create a research facility

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 14 Section 1: IPZ Case Studies Central Washington Resource Energy Collaborative Economic Development Group of Kittitas County

Tenants: IPZ partners have pledged $1.2 million of Puget Sound Energy owns and operates None seed money and in-kind support for the first the Wild Horse facility, which has 149 wind four years of operation. The IPZ plans a three- turbines producing 273Mw of power and a Regional Assets: phase approach: 500Kw solar array. The site has dependable winds and enough elevation to be above the • CWU’s Renewable Energy and • Phase 1 – Governance and organization winter overcast on most days. The solar array Sustainable Technology Degree powers the operations infrastructure for the Program (2010 launch) ‘‘ Board formation ‘‘ Hire an executive director wind farm during daylight hours. Puget Sound • Wild Horse Wind and Solar ‘‘Develop strategic relationships for Energy received a $50,000 training grant from Facility – 9,000+ acres of wind research opportunities and with the Workforce Development Council acquired and solar production owned by private sector partners through the IPZ. PSE in Kittitas County ‘‘ Identify students with industry • enXco, subsidiary to EDF relevant experience for CWU’s Energies Nouvelle (France), training program an integrated renewal energy ‘‘ Market the program operator developing Desert Claim Wind farm (EFSEC • Phase 2 – Construction of a facility approved) ‘‘ Determine needs (solar, wind, • Two additional wind and solar other) facilities in various stages of ‘‘ House the zone administrator, office production, construction or and/or lab facilities for admin and project review in the county potential business partners • Strong community will to develop the IPZ • Phase 3 – Commercialization of renew- able energy technologies generated from the IPZ State Capital Funding: At 500Kw, the Wild Horse solar array is the Northwest’s largest demonstration project of photovoltaic technology, which None turns sunlight into electricity.

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 15 Section 1: IPZ Case Studies

Central Washington Resource Energy Collaborative Economic Development Group of Kittitas County

The grant funds incumbent worker training University Links R&D to Degree Program for turbine employees and rescue personnel Central Washington University through its on turbine safety and rescue procedures. research foundation fulfills the educational Funds are also used for outreach to high element of the IPZ. The foundation will schools on green energy topics, with an serve as an intellectual resource enabling emphasis on the importance of science, collaboration, development of technologies math, and writing skills. Students also learn and commercialization. The university which higher education facilities in the state plans to focus the R & D training as a new meet these educational requirements. Puget undergraduate program in the Industrial Sound Energy also participates in a community and Engineering Technology Department. energy collaborative group with 22 members, This bachelor’s degree program is for mid- fostering community awareness and helping management wind farm managers directing small producers to interact with the grid. operations and technicians. The school has submitted federal grant applications to enXco received state permitting approval for establish the program. The program should the Desert Claim project in February of 2010 be open in one to two years after funding is and plans construction for spring 2011. Desert secured. Claim will feature 95 wind turbines with a total capacity of 190Mw. Power delivery is expected beginning in late 2011 or 2012. Desert Claim is located eight miles northwest of Ellensburg. The project will operate as a regional power plant providing power to a variety of customers.

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 16 Section 1: IPZ Case Studies

Central Washington Resource Energy Collaborative Economic Development Group of Kittitas County

The university’s IPZ labs could be included in combined with the intellectual resources of “This is a very a science building expansion plan if the IPZ the university provide a unique opportunity. partners choose that direction. Once the by-laws are in place, the IPZ will good idea, have a foundation and be ready to react to Central Washington is the first of the regional opportunities. The IPZ intends on pulling the combining the universities to receive “Safe Harbor” status community together around a cooperative from the state. This allows the free exchange agenda, benefiting students, faculty, workers, of ideas with private business while providing and private companies. strengths of each legal protection of intellectual property for professors and graduate students. Previously The private partners expressed enthusiasm partner, and only the research institutions obtained this about the IPZ. Noted one participant, “This status. The university feels that IPZ meetings is a very good idea combining the strengths offer an excellent forum for conversation of each partner, and resources. The IPZ has resources, the between government, academia, and business a unique opportunity to grow a clean energy to understand each other’s organizations resource.” However, concerns were raised IPZ has a unique processes and timing. about growing pains related to finalizing agreements between the partners – and opportunity County Invests Sales Tax Dollars the timeframes required to interact with Kittitas County is a significant partner in the government and academic bureaucracies. IPZ. They have designated $100,000 a year to grow a for five years for capital projects related to the zone. The funding is from economic clean energy development funds collected from sales tax in the county. The county would like to resource.” establish the IPZ as the center of alternative energy production for Washington state, including wind, solar and biomass sources in Sources: Doug Sutherland, Zone Administrator; Roger Fouts, Dean of Graduate Studies CWU; David Steeb, enXco; Paul both large and small-scale projects. The wind, Jewel, Kittitas County Commissioner; Brian Lenz, Puget Sound solar, and agricultural resources of the county Energy

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 17 Section 1: IPZ Case Studies

Discovery Corridor Innovation Zone; Steinmueller Innovation Park Columbia River Economic Development Council

Founded: Summary of Activities: 2007 The Vancouver IPZ has reported no state funding have stalled IPZ progress. The Zone Objective: outcomes or activity to date but fulfills its zone administrator and partners expressed Semiconductor and micro- reporting requirement to the state. The IPZ disappointment with the lack of further IPZ device design, Integrated Chip plans to develop a research park on land manufacturing and processing, adjacent to the WSU Vancouver campus. A display technology and multimedia parcel is available for donation subject to development criteria. The EDC, which acts as Partners: the zone administrator, has had interest from • WSU Vancouver organizations to lease space in the research • Washington Tech Center park once that property is developed. • Clark College There are approximately $500,000 in pre- • Clark County High Tech Council development costs that need funding for site • Columbia River Economic planning and permit work prior to any land Development Council transfer. Completion of the pre-development Zone Administrator: work would remove uncertainty about the funding from the state, and funding flexibility. Bart Phillips, President, Columbia future of the property. The education partner, WSU Vancouver, River Economic Development reports that the zone designation is helpful Council The IPZ designation is beneficial to the for the school and efforts to expand technical WSU Electrical Engineering program and programs. The IPZ allows for focused Contact Information: its connection to the high-technology discussions within the framework outlined (360) 567-1060 community. The IPZ has also been effective by the IPZ. The zone serves as an asset in the Private Sector Participation: as a planning vehicle for the Discovery long-term development process for campus • Sharp Labs Corridor. For example, the zone has secured facilities. This planning has helped prepare for • Sharp Microelectronics a pledge of $1 million from Clark County growth opportunities that may come after the • nLight Photonics for future infrastructure projects related current economic downturn. State Capital Funding: to a research park once the project moves Sources: Bart Phillips, Zone Administrator; Jennifer Crooks, None forward. The economic downturn and lack of WSU-Vancouver Foundation; Lynn Valenter, WSU-Vancouver Finance and Operations

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 18 Section 1: IPZ Case Studies

Grays Harbor Sustainable Industries Innovation Partnership Zone Port of Grays Harbor

Founded: Summary of Activities: 2007 The first project undertaken by the IPZ is to of a 20,000-square-foot building on port create the Sustainable Industries Research property. The lab space is under construction Zone Objective: & Development Center and a small business in the building, which is located next to port Green and sustainable industries incubating facility at the Port of Grays Harbor. offices. The IPZ received $1 million at the time of Partners: designation in 2007 to build the lab and The first small business in the incubator, a • Port of Grays Harbor incubation space. That funding, leveraged with craft distillery, will occupy 2,500 square feet in • Grays Harbor Public a 2010 federal Small Business Administration November 2010, with the lab space opening in Development Authority: (SBA) grant ($427,500), allowed acquisition April of 2011. Satsop Development Park • Grays Harbor College • Grays Harbor EDC • Pacific Mountain Workforce Development Council • Imperium Renewables • Paneltech International • Wishkah River Distillery

Washington State Governor Christine Gregoire with Paneltech owners, managers and Grays Harbor port officials on her visit to the Paneltech plant in Hoquiam in the Grays Harbor IPZ

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 19 Section 1: IPZ Case Studies

Grays Harbor Sustainable Industries Innovation Partnership Zone Port of Grays Harbor

Zone Administrator: The director of the local small business manufacturing of their products. Glycerol is Mary Nelson, Port of Grays development center attends all IPZ meetings. a byproduct of the Imperium Renewables Harbor The WSU-funded program expects to be biofuel manufacturing process. Paneltech is involved in mentoring small businesses researching uses for glycerol as an input in Contact Information: located in the incubator. their manufacturing process. In addition, a (360) 533-9504 byproduct of the Paneltech manufacturing The IPZ is establishing a regional partnership process is ethanol – a raw material used by Facilities: to capture industrial byproducts as resources Imperium. The close proximity for sourcing and share research and development resources and materials can create operating R&D Incubator efforts among a group of companies. The efficiencies, and reduce transportation costs, Port Industrial Park IPZ encourages local industry to recycle and creating a sustainable local industrial cycle. Tenants: utilize byproduct materials in their production processes. For example, Grays Harbor Both Imperium and Paneltech want a local • Wishkah River Distillery Paper generates green paper byproducts R&D facility for developing sustainable • Paneltech International that have been used by Paneltech in the manufacturing solutions. Imperium has a • Imperium Renewables

State Capital Funding: $1,000,000 in 2007

Imperium Renewables biodiesel production facility in the Grays Harbor IPZ

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 20 Section 1: IPZ Case Studies

Grays Harbor Sustainable Industries Innovation Partnership Zone Port of Grays Harbor

three-to-five year timeline for creation of a weeks a month in order to fill orders. There new biomass-based fuel production process. is demand for their glycerol byproduct but This will require research on application of the future of the global biodiesel market existing technology to the biofuel process. is uncertain. Canadian and Oregon biofuel Their sustainable products require continual content laws are important to maintaining research in order to lead in global markets. demand for Imperium biodiesel. Due to their rural location, they recognize the value of creating a collaborative research Imperium had to lay off the company’s facility and incorporating educational entire research team during the economic institutions and public resources. Both downturn. However, Imperium is committed Imperium and Paneltech are tenants of the to continuing its work with the IPZ. The Port of Grays Harbor in the port industrial company argues that making the current area, which shares boundaries with the IPZ. technology work is important before moving on to the next step of developing Biofuels Company Experiences Growing Pains biomass feedstocks to augment or replace Imperium constructed a 100 million gallon vegetable oils. Their plan is to work within (annual) biodiesel production facility in the IPZ to develop a pilot production plant 2007. The company produces biodiesel from (under 1 million gallons, expand that to a ethanol- and vegetable-based feedstocks. demonstration size (more than 1 million Imperium closed operations during 2008 gallons) and then determine the most efficient and re-opened in early 2009. The shutdown way to scale production for larger market was due to the rise in the costs of vegetable demands. Through R&D they hope to validate oils and European tariffs that damaged the technology and process, seek USDA or Imperium revenues and ability to produce other federal financing, develop biomass biofuels cost-effectively. Imperium (which streams from timber industry waste products, was Seattle Bio-Diesel) now operates as a and produce fuel and chemicals. Imperium is “contract manufacturer” of biofuels through working with the national laboratory and both a partnership with a Canadian company. The research universities on this project. plant operates at full capacity one to two Roy Nott of Paneltech International and the Grays Harbor IPZ Harbor Grays and the International Paneltech Nott of Roy

Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 21 Section 1: IPZ Case Studies Grays Harbor Sustainable Industries Innovation Partnership Zone Port of Grays Harbor

Paneltech International makes eco-friendly some point to larger facilities. building materials. These include countertops (“PaperStone”), siding, and flooring for College Hosts Training Opportunities industrial, commercial, and residential Grays Harbor College expects to provide construction; composite armor; and plywood interested chemistry students to the lab overlays for the construction industry. and companies for internship and work Paneltech strongly supports the IPZ concept experience. The college will host training and the R&D facility. The company is a opportunities for the small businesses in leader in the development and production the incubator, and expects the zone to of petroleum-free resins into strong, rigid, provide opportunities for college instructors composites and bio-composites made to collaborate with local business. Another from resins and recycled paper, Kevlar, and benefit of the IPZ is an increase in student glass fiber. It produces a green-certified interest in chemistry and engineering courses. bio-composite used in a wide range of construction applications. Their composite The IPZ administrator continues to seek armor protects against explosively formed collaborative opportunities with other projectiles (shrapnel from IEDs and bombs) by research entities, additional private-sector absorbing the projectile’s energy and stopping partners (possibly Westway Terminals and it. Grays Harbor Paper), and potentially create partnerships throughout the state to further Wishkah River Distillery is a start-up craft enhance the utilization of resources. The IPZ is distiller that will lease 2,500 square feet in also interested in expanding its boundaries to the IPZ facility. They will produce 500-gallon include the former Satsop energy site at some batches of vodka, whiskey, and gin using time in the future. a minimum of 51 percent Washington-

grown agricultural products. Besides the Sources: Mary Nelson, Zone Administrator; Todd Ellis, proprietor, they expect to hire one person in Imperium Renewables; Sid Watts, Imperium Renewables; Roy approximately six months and grow to a staff Nott, Paneltech; Tim Gibbs, Grays Harbor EDC; Mark Reisman, Dean of Institutional Research GHC; Sue Watts, Wishkah River of three to five people over time. If successful, Distillery; Eric Stewart, WSU Small Business Development they hope to move from the IPZ incubator at Center Washington State Department of Commerce Innovation Partnership Zones: First Steps toward a More Collaborative Approach to Economic Development 22 Section 1: IPZ Case Studies North Olympic Peninsula Innovation Partnership Zone Clallam Economic Development Council

Founded: Summary of Activities: 2007 The North Olympic Peninsula IPZ plans campus into the city limits. Annexation has include a business incubator, identified allowed the process of providing city sewer Zone Objective: industry clusters, instruction at Peninsula and water services to begin. Having city Marine Biotechnology – College, the Olympic Workforce Development services will allow PNNL to collaborate with specifically, tidal wind and Council, and Pacific Northwest National the city, the Port of Port Angeles, and privat