Auburn Universitys Research Program and the Auburn Research

Auburn University’s Research Program and the Auburn Research Park October 26, 2006

Program Moderators Karol Mason, J. D. Michael Moriarty, Ph. D. Jon Waggoner, J. D. Partner Alston & Bird, LLC. Vice President for Research Auburn University Special Counsel to the President Auburn University 2

Auburn Research Funding Dollars In Millions 3

Auburn Research Growth • Auburn’s research program has achieved a 17% average annual growth rate over the past decade • 53 Intellectual Property license agreements • 11 start-up companies 4

Aetos: An Auburn Success Story The “Auburn Model” • Aetos has licensed a suite of high-value Auburn technologies • AU holds 45% equity in Aetos (undilutable) • AU can realize up to 60% of Aetos earnings 5

The Auburn Model IP Traditional AU License New Company Joint Ownership up to 45% AU revenue up to 60% of earnings 6

Next Steps How can AU continue its research growth? 1. By adding faculty 2. By creating new revenue sources as a means to enhance research and to support University needs 3. By developing a research park to provide new facilities for expanded faculty research and commercial research 7

Auburn Research Park Vision • Support the mission of Auburn University and establish Auburn University as a widely recognized research force • Broaden and strengthen the research industry in Alabama • Produce an economic development engine for the state and region 8

The Concept - A New Research Park “There are very few top universities without a research park. . . The development and operation of a research and technology park is the next logical step. . . (for) Auburn. ” Vernon George, Hammer-Siler-George-Associates HSG conducted a feasibility study regarding the establishment of a research park at Auburn University in February 2003. 9

Location Criteria Sasaki & Associates Began Master Plan Development in Feb 2003 • Land use consistent with AU Master Plan • Proximity to: – Interstate 85 (3 miles) – Campus (5 minutes) • Sufficient size and room to expand • Site capable of development which would enhance AU’s image and reputation 10

Site Photo Courtesy, Joe Mazzone www. aceaerialphoto. us, 334 -332 -1951, Auburn 11

Site Location Auburn Main Campus Auburn Research Park North To Atlanta Interstate 85 12

Donahue Drive Tuscan Village Concept ay arkw Distinct Zones dan P g Jor Bike/Pedestrian Paths So ut h. C oll e ge S tre et Shu Lakes, Wetlands & Wooded Areas Master Plan Sasaki Associates 13

Development Strategy Establish the Auburn Research and Technology Foundation (An Alabama Non-Profit Foundation) • Uses common model From University Research Parks • Legally separates activities of University from those of the Park • Provides required flexibility to develop and manage the park 14

Search for Development Partners • University provides the land • City of Auburn invests $5 million for infrastructure development • State of Alabama invests $10 million for construction • Lee County Commission – services in-kind Note: City, State, County ROI based on job creation and new sources of tax revenue 15

Research Park Employment Projections Sources: Hammer Silar George Associates and Dr. Keivan Deravi, Chief Economist University Outreach, AUM Zone Direct & Indirect Employment 1, 589 Spin-Off Employment 2, 500 Area-Wide Employment 4, 089 West A 609 958 1, 568 West B 1, 151 1, 810 2, 961 Central A 338 532 871 Central B 981 1, 544 2, 525 4, 669 7, 345 12, 014 East 16

Financing Issues • Rental rates in local market • Foundation’s ability to obtain financing independently • Ability to issue tax exempt / taxable bonds / Cost of credit enhancement • Funds can be costly if obtained from private partners • Engage an independent financial consultant 17

Initial Development Strategy Long Term Land Lease UNIVERSITY Ground Rent PARK FOUNDATION (ARTF) DEVELOPER 18

Construction of the Auburn Research Park infrastructure is underway. This photo shows installation of the main entryway bridge that is part of the City of Auburn’s $5 million investment in developing the park infrastructure that is now 85% complete. 19

Building #1 and Beyond • Pre-lease commitments obtained for about 80% of Building #1 • Incubator will provide wet and dry laboratory space and other amenities • Construction of second building will begin when Bldg. #1 is full – funded by revenue from Bldg. #1 leases or one stand-alone partner. 20

Research Park Tenants Park tenants • Must have a close link with Auburn University, its researchers, its research activities, or its academic programs • May produce products but will not engage in heavy manufacturing (e. g. , no smokestack industry) 21

Research Park Tenants Covenants • Goal is to maintain University feel of the park without imposing upon the business of its tenants • Ground Lease will contain covenants to maintain “image and character”, ensure appropriate research, and ensure University oversight over future construction 22

Covenants and Marketing • Promote to companies whose R&D activities can be supported and enhanced by Auburn’s research programs • Promote to Auburn alumni and to companies with existing ties to AU 23

Projected Future Milestones • Infrastructure Complete December 2006 • Fourth Quarter, 2007 Building #1 - 50, 000 to 60, 000 square feet ready for occupancy • Future Expansion New buildings will be constructed when pre-leased space is sufficient for financing (anticipated at every 18 months) 24

Hurdles • Adding for-profit participants into a government environment • Understanding financial development, leasing and management pitfalls in a world of people who know those areas better than you • Obtaining accurate cost estimates, prior to corporate approval, for programming, construction and financing • Keeping the schedule moving with so many levels of approval 25

Collaboration • University • Foundation • City Government • State Government • Local Government 26

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