USTAR Governing Authority Board Meeting
Conference Room: Canyonlands Conference Room
60 E. South Temple, 3rd floor
Salt Lake City, Utah 84111
Conference Line: 1.877.820.7831
Passcode: 746095#
Thursday, June 7th, 2017
3:00 PM – 5:00 PM
AGENDA
TIME / ITEM / ACTION / PRESENTER3:00 p.m. / Welcome & Introductions / Susan Opp
3:10 p.m. / Meeting Minutes
· Vote on May 4th Meeting Minutes / Vote / Ivy Estabrooke
3:15 p.m. / Policy Approvals
· Identifying Emerging Technology Sectors
· Funding of Legal Fees/IP protection
· USTAR intern policy
· Identifying Targeted Industry Sectors
· Milestone review and contract termination change authorities for competitive grant programs / Information/Vote / Ivy Estabrooke
3:40 p.m. / Budget Requests
· FY18 Proposed Budget for USTAR / Information/Vote / Budget Sub-Committee/Ivy Estabrooke
3:45 p.m. / Technical Presentations:
TAP: Stream Dx
UTAG: Automation & Robotics / Information / Brian Holt
Brian Mazzeo
4:15 p.m. / Admin Rules:
· Use of USTAR services and facilities
· Revisions to TAP, UTAG, ERT-P, ERT-S / Information/Vote / USTAR Staff
4:40 p.m. / USTAR UofU Recruitment – Biological Chemistry – Keriann Backus / Information/Vote / Ivy Estabrooke
4:50 p.m. / USTAR Events / Information / Linda Cabrales
4:55 p.m. / Adjourn / Susan Opp
Board Meeting of the USTAR Governing Authority
06-07-2017 Meeting Minutes
GA Members: Val Hale, Rich Kendell, Rich Lunsford, Susan Opp, Jennifer Hwu, Derek Miller, Heather Zynczak
Excused: Dave Damschen
USTAR: Barbara Araneo, April Young Bennett, Justin Berry, Linda Cabrales, Mary Cardon, Ivy Estabrooke, Elenor Gomberg, Jillian Hunt, Ashley King, Teresa McKnight, Donna Milakovic, Brian Somers, Andrew Sweeney, and Shirlayne Quayle
Other: Noelle Cockett(USU), Allison Locatelli (UofU), Chris Pieper (AG’s Office)
Mr. Hale welcomed everyone and opened the meeting. Mr. Hale requested a motion to approve the May 4th minutes.
Ms. Opp motioned to approve the May 4th meeting minutes. Dr. Hwu seconded the motion. Mr. Hale called for a vote and the vote passed unanimously.
Dr. Estabrooke discussed the policies that were prepared for consideration by the GA.
Under the current administrative rules and policies USTAR’s staff was only allowed to change one milestone by one month and no more. We have found that this has been fairly laborious for the GA as it needs to be done in closed session. Also, research and development is often milestone flexed either faster or slower. Also, staff did not have the authority to tell a provider or a recipient of a grant contract to stop work when they failed a milestone. There is often time between the time a milestone is failed and the GA being able to review to actually cancel the contract. The recommendation is to change the administrative rules to allow USTAR staff to approve milestone changes as long as they don’t extend the total scope of work or total program and also to be able to issue a stop work order until the GA can meet to determine whether their contract should be cancelled or not. If this change is approved it would be an administrative rules change to all competitive grant programs.
Dr. Kendell motioned to adopt the new administrative rules as recommended. Ms. Zynczak seconded the motion. Mr. Hale called for a vote and the vote passed unanimously.
Dr. Estabrooke stated that the next item is regarding protecting intellectual property. Currently we don’t have a specific policy on what our maximum or minimum would be that we would fund for IP related fees. This only applies to our TAP program. The argument is that protecting IP is critically important to our companies to be able to have a strong valuation. This funding is not necessarily available through other mechanisms. Staff is recommending that we should be covering these costs to some level. We propose that USTAR would reimburse the first $15 thousand per technology for legal protection around intellectual property and then anything that goes beyond that $15 thousand we would pay 50% up to a maximum of $30 thousand. We feel that this would encourage the companies to use legal services judiciously but also giving they support in protecting their IP which is critical in the commercialization process.
Mr. Hale asked if this would be over and beyond the TAP. Dr. Estabrooke advised that it was not but, it would have to be requested within the TAP grant but we are putting restrictions on the amount we will pay as legal fees can quickly add up but, we do want to support our companies in getting their initial IP protection.
Mr. Kendell would like to add the words “up to $15 thousand” as it shouldn’t be just an absolute amount as it may cost less. Dr. Estabrooke agreed that this was a good addition to the policy recommendation.
Dr. Kendell moved to adopt the IP protection policy as recommended with the amendment of “up to $15 thousand” as suggested. Mr. Lunsford seconded the motion. Mr. Hale called for a vote and the vote passed unanimously.
Dr. Estabrooke advised the next policy issue is to clarify the Industry Partnership Program substantial presence in Utah language. The language within the current administrative rules does not include a minimum number of employees that have to be in the state. We recommend changing the language so that a company has to have a minimum number of employees in the state to be considered having a substantial presence. We expect this to be more applicable to larger companies. We want to be able to work with companies that are not headquartered in Utah but have a large footprint here. At the same time, we don’t want to end up with 2 people here and 12 people somewhere else.
Ms. Opp moved to accept the recommended change to the language regarding the requirements for substantial presence in Utah. Ms. Zynczak seconded the motion. Mr. Hale called for a vote and the vote passed unanimously.
Dr. Estabrooke explained the next policy change recommendation is regarding the definition of substantial presence in Utah. The prior administrative rule was relatively generous in that the majority of the company did not have to be in the state. We think that given the economic development rule that we have as well as most of these are prerevenue companies and the tax benefit to the state will be through personal income taxes we recommend that 90% of employees have to be Utah based or by approval by the GA.
Mr. Miller asked Dr. Estabrooke if she meant by that last statement that the GA could make exceptions to the 90% rule. Dr. Estabrooke’s response was yes. Mr. Miller further asked if there would be any base minimum that we could not accept. Dr. Estabrooke responded that the way it was written was not to have a floor for the GA. The reason for writing this is that it will be a part of the administrative rule and it is not that easy to change administrative rules very frequently and we wanted to leave room for the GA to make an exception if there is a compelling reason to do so. Mr. Miller can see the wisdom in having this rule so that the staff has something to point to while dealing with these companies. But, with the same virtue we should consider having at least a base amount that even the GA couldn’t make an exception to. Mr. Hale asked what that basement should be. Mr. Miller responded by saying that he felt it should be at least 50% of the personnel would be Utah based as once you get under 50% the company would have a hard time saying it is a Utah based company.
Mr. Hale asked if we were to reword the policy to “must have 90% of the employees in the state of Utah or may be approved by the USTAR GA if more than 50% of a company’s employees are in the state of Utah. If less than 50% of the employees are in Utah would not be considered a substantial presence. The exact wording is to be determined but these are the points that are recommended for this policy. Dr. Estabrooke felt that this was a very reasonable recommendation.
Dr. Kendell would like the words “exceptions may be made by the GA” as part of this policy to tighten it up.
Mr. Hale asked Mr. Pieper to ensure that those words were also included.
Mr. Miller moved to accept this policy regarding the definition for a substantial presence in the state of Utah as amended by the board. (The exact wording will be worked out by legal.) Ms. Opp seconded the motion. Mr. Hale called for a vote and the vote passed unanimously.
Dr. Estabrooke advised that the next policy item is in regards to the fact that we have had a very strong response to both of our TAP cycles, however, in the last cycle we funded less than 10% of the proposals that we received. When TAP was originally set up we weren’t sure who would apply or what quality the proposals would be that we would receive. But given that the competition is tight and our understanding of the intent of the GA was for us to support new start-up companies that are taking those early risks we are recommending that we put some limits on the size of the companies and the maturity and profitability of the company when they apply to TAP. Using the SBA definition of a small company and the constraints that GOED TCIP program has; we recommend that the policy be the company has fewer than 50 employees, less than $1 million in annual revenue for the company, and have not raised more than $5 million in private funding. Any government or non-diluted funding that has been raised would not be included in that $5 million private funding. This will ensure that we are supporting small to early stage companies that are focused on their technology development and don’t have other funding to put toward that development.
Mr. Lunsford Moved to accept the recommended policy change to the TAP program policy which is the company has fewer than 50 employees, less than $1 million in annual revenue for the company, and have not raised more than $5 million in private funding. Ms. Zynczak seconded the motion. Mr. Hale called for a vote and the vote passed unanimously.
Mr. Kendell asked Dr. Estabrooke about the number of proposals they have received and whether or not they are rated and reported to the legislature and what has been the response. Dr. Estabrooke responded by stating that this program has only been going on for a year so the numbers have not been taken to the legislature. The proposals are rated on a scale of 1 to 5 and if the proposal receives a score of 3 or less it is deemed not worthy of funding at this time but, that doesn’t mean they won’t be worthy with more maturity.
Dr. Estabrooke introduced the next policy change recommendation as dealing with the UTAG program. Currently the applications for UTAG will accept anything with a technology between a technology level of 2 and 5. Two is early application of hypothesis or finding, it’s immature. Five is prototyping, proof of concept, and use in an operational environment the recommendation is to limit applications to a minimum TRL 3 and a maximum of TRL 4. The reason for lowering the TRL 5 to TRL 4 is that we want to motivate researchers to either spin out a company or license their technology to an existing company. In other words, we want the researchers to become more business minded by TRL 5.
Mr. Miller motioned to accept the recommendation to change the UTAG policy to accept applications with a minimum of TRL 3 and a maximum of TRL 4. Seconded the motion. Mr. Hale called for the vote and the vote passed unanimously.
Budget Requests: Dr. Estabrooke offered a review of the budget process stating that USTAR received requests from universities and established their budget requirements internally. The draft budget was then presented to the budget subcommittee a couple of weeks ago. The recommendations that are given here are from the budget subcommittee and are provided to the GA for approval.
Dr. Estabrooke explained slide 12. This slide provides the top line appropriation line budget for FY18. It highlights some of the differences between the FY17 and FY18 budget. The FY18 numbers do include an estimated carry over from FY17. She asked that the GA Please keep in mind that it is only an estimate as the FY17 books have not been closed yet. A good portion of that carry over is the competitive grant program which people had an invoice or delayed milestone and that money will just carry over but, the money is already committed.
Dr. Estabrooke continued by discussing some highlights from slide 13. She explained that it has USTAR’s FY17 original budget for the competitive grant programs, amendments that were made, and what they committed during FY17. The slide also shows how USTAR recommends spreading their budget decrease of $530 thousand through the budget for FY18. The proposed budget for FY18 with the estimated carry over and what has already been committed for FY18 and what will be uncommitted is also shown.
Dr. Kendell asked how the reductions occurred. Dr. Estabrooke responded by explaining that there was an anticipated 2% cut across everyone. Although most were able to get their 2% back, USTAR was unsuccessful in getting their funding reinstated and were unable to get an explanation of why they received the cut. The only push back USTAR received was that they did not have any data to show that their competitive grant programs were affective which was due to the programs just starting.