Bacon's Rebellion

Democracy Thrives in Sunlight

Virginia Beach on Another Wild Goose Chase

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James A. Bacon
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wild_goose_chaseby James A. Bacon

Virginia Beach City Council voted yesterday to give 155 acres to build a biomedical park, reports the Virginian-Pilot. The Virginia Beach Development Authority will oversee the design and promotion of the property.

Virginia Beach Mayor Will Sessoms justified the initiative to lure health care and biotech companies as a way to diversify the city’s economy away from the military and tourism sectors. “You’ve got to look around the country and see what is really growing. As you know, health care numbers continue to increase,” Sessoms said earlier. “We saw that as an opportunity.”

Economic Development Director Warren Harris said the city has identified some prospective tenants, including a regenerative medicine/cancer research firm and a stem cell research firm. MedImmune, a research and development arm of British drugmaker AstraZeneca, met with city officials last month and “left very impressed,” Harris said.

Bacon’s bottom line: This cannot end well. In its pursuit of “economic development” Sessoms seems to be chasing every shiny object that someone dangles in front of him. Last night City Council also voted to sign two agreements with the state that keeps on track plans to extend Norfolk’s light rail system into Virginia Beach on the promise of the most nebulous of benefits. The mayor also supports a mega-convention complex (committing the city more deeply to a tourism-oriented economic development policy). And he supported city subsidies to jump-start redevelopment of the old Cavalier Hotel into a resort complex (another tourism-oriented initiative). As if all these city-backed projects were not enough, now he wants a biotech park.

Well, get in line. Everybody sees high-tech medicine as the next big thing, and everyone wants a piece of it. Bacon’s Rebellion has highlighted the plans of Inova and George Mason University to build a Center for Personalized Health in Fairfax County, and the ambition of Virginia Tech and Carilion Clinic to build a biotech cluster around neuroscience in Roanoke. While both those initiatives face major challenges, they at least have resources that Virginia Beach doesn’t have. The Inova-GMU project is located in the Washington metropolitan area, one of the largest biotech clusters in the country, and Inova has publicly stated its willingess to put $200 million into the project. Meanwhile, Virginia Tech is the largest research university in the state, and it is partnering with western Virginia’s largest health care system.

There is no indication in the Virginian-Pilot reporting that Virginia Beach has forced an alliance with either the Eastern Virginia Medical School (EVMS) or the Sentara Health System. Despite the fact that the Virginia Beach site is not located anywhere near EVMS or Sentara General Hospital, the region’s flagship hospital, Harris sees the park focusing on diabetes, cardiovascular disease, neuroscience and traumatic brain injury. As for supporting assets, Harris cites a branch of Tidewater Community College and the Sentara Princess Anne Hospital, which opened in 2011. Virginia Beach also has donated $1 million to fund the initiative. Really? Is this serious?

The city has many assets. Biotech is not one of them. The chances of building a high-end biomedical cluster are just about nil. For biomedical projects lower down the value-added scale, a run-of-the-mill office park will likely do. If Virginia Beach wants economic development, maybe it should persuade Governor Terry McAuliffe to stop subsidizing the relocation of Virginia Beach businesses to Norfolk. In the meantime, the city should focus on providing core government services of the best possible quality at the lowest possible cost. It’s that simple.

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6 responses to “Virginia Beach on Another Wild Goose Chase”

  1. LarrytheG Avatar
    LarrytheG

    actually – health care is universal these days and it’s become clear that between employer-provided, Tricare for the military, Medicare, MedicAid and ObamaCare that it’s become one of the primary flows of money in the economy and people – will spend money on health care both the govt money and their own to seek a cure to a disease or just to stay alive for a few more years.

    and this is related to the very thing that Steve Case was talking about.

    new treatments, new technology, 3rd wave innovations will deliver far more and better to all regions so why not try to capitalize on it?

    I note that the hospital in Culpeper, Va has affiliated itself with the UVA medical system.

    I fully expect to see more hospitals across the state – become part of these networks…

    I recently got a colonoscopy at UVA and the results including the procedure were available immediately on the UVA network so the gastroenterology had access and within the day – the same work products were sent to my primary care in Fredericksburg.

    so -yeah – why not? name other things in the economy that are expanding and developing more and better than health care?

    further these are GOOD jobs to replace manufacturing jobs for people who get occupational certificates at community colleges as Medical Techs – as we as nurse practitioners and physician assistants.

    I see this as economic opportunity available to most regional areas that should be exploited for jobs…

  2. Cville Resident Avatar
    Cville Resident

    I’d like to know how much, if any, coordination Virginia Beach had with Norfolk and Chesapeake on this idea. For something this ambitious to work, I would think the entire region would need to be on board.

    I don’t know which one is worse: Roanoke or Virginia Beach. Both are going to fail, it’s just a question of how soon.

    As you state, this seems to be an idea being pitched around the nation (as well as the globe). Only a few will succeed. And those few are going to “win the war” by having the lifestyle/amenities that are going to attract the high dollar entrepreneurs and scientists/doctors.

    Maybe…if Virginia Beach coordinates with Chesapeake and Norfolk, they could possibly have some success selling the water/sailing lifestyle. But “success” is a decades long task.

    I’m surprised you haven’t mentioned the Virginia Biotech Research Park. There has been a lot of effort put into that project. It takes a lot of time, a lot of money, and…it certainly doesn’t hurt that Richmond kind of became a “cool” city in the past decade where people want to live….

    1. James A. Bacon Avatar
      James A. Bacon

      I thought of mentioning the Virginia Biotech Research Park but decided to omit it for reasons of length. The park, opened in 1995, houses more than 60 “public and private bioscience companies, research institutes affiliated with VCU, and prominent state and national medical laboratories.”

      A couple of points worth noting: The park is situated in close proximity to VCU’s Medical College of Virginia and hospital complex, as well as an Interstate highway. While the park has been successful in landing tenants, making it successful as an office park, the level of biotech innovation and commercialization has been modest. Remember, VCU is Virginia’s third-largest research university, and MCV is (I believe) Virginia’s largest tertiary care hospital, and it still is hard-pressed to generate entrepreneurial spin-offs.

      When it comes to biomedical-related economic development, the odds are stacked in favor of facilities that have deep institutional ties to research universities, venture capital, and other businesses in the biomedical field. Richmond is a third-tier competitor in this space. Virginia Beach won’t be able to compete at all, unless it is willing to settle for the lowest end of the biomedical value chain.

      1. Cville Resident Avatar
        Cville Resident

        Very good points. If Richmond and VCU, with all of their advantages, still struggle in the commercialization of products/services, it’s silly to believe that Roanoke or Virginia Beach will succeed.

        GMU/Inova is a much better investment of resources of the 3 (NoVa, Roanoke, VaBeach). At least Virginia Beach is spending purely local dollars. Whereas state taxpayers are funding a 40 million dollar startup in Roanoke. Time will tell….

        1. Reed Fawell 3rd Avatar
          Reed Fawell 3rd

          No, I think the facts will show it is likely quite the reverse.

          For instant the GMU/Inova deal is sweetened up front (apparently) by an an out right state grant of $16 million. When is that grant funded? What is its purpose? Is it at risk, in a highly speculative transactions? These are important questions. Also it is important to know how much of the cost of roads improvements and the taxation of citizens using very high dynamic tolls, was triggered to convince potential investors in the project that the traffic problems now isolate the Exxon Site would be solved, and how those monies will otherwise will benefit nearby private property investments at public expense.

          As to Roanoke, I understand the 40 million is in the form of bonds which undergo stringent underwriting requirements. That is a far different scenario.

          The Virginia beach Goose chase is likely triggered by the Federal funding mechanism recently set up by the O’Bama administration to promote these deals. More Crony capitalism in my view. And note how it gives more power to governors to hand out favors. And twists markets out of shape, putting ever more public dollars at risk.

          1. Cville Resident Avatar
            Cville Resident

            Mr. Fawell:

            Are those revenue bonds or general obligation bonds? I would think that GO bonds are only analyzed by underwriters to determine the creditworthiness of the issuer (Virginia), not the individual projects. I could be wrong.

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