The great philosophers Mick Jagger and Keith Richards once wrote an obscure song that went like this: “Once in a while, let’s get our act together.” The Rolling Stones never recorded it but Ronnie Woods did on one of his solo albums and, beware, the rest of the song is NSFW, as they say.
Regardless, that’s our theme song for today — at least that particular line.
I’ve been writing for more than a year now about the opportunities presented by the regional tech hub concept, which last year’s CHIPS and Science Act authorized. The short version goes like this: The nation’s technology sector is driving the technology but is concentrated in just a handful of places. “Almost 80% of American venture capital is invested in just three regions: the San Francisco Bay area, the Northeast Corridor and Southern California,” says U.S. Secretary of Commerce Gina Raimondo. Over the past decade, 90% of technology jobs have gone to just five metro areas: the San Francisco-Silicon Valley area, Seattle, New York, Boston and Los Angeles.
One of the goals of the CHIPS Act is to spread that economic growth around by designating at least 20 “regional technology hubs” that the federal government would shower with funds. By law, at least three must be in each Economic Development Administration region, which, for our purposes, means at least three between Virginia and Maine. It further specifies that no fewer than one-third significantly benefit a “small or rural community,” which it defines as “a noncore area, a micropolitan area, or a small metropolitan statistical area with a population of not more than 250,000.” I’ve written more times than I can count why some part of Virginia west of Charlottesville would seem to stand a good chance of winning one of these designations.
I’m obviously not alone in thinking this. Virginia Tech had been leading an effort to put together a bid based on transportation technologies. However, last month U.S. Sen. Mark Warner, D-Virginia and one of the authors of the enabling legislation, made it clear that he didn’t think the New River Valley would be the best candidate for a tech hub bid — that a proposal rooted in a less affluent part of the state would be looked upon more favorably by the Commerce Department. That would seem to tilt things toward a potentially rival bid led by the Bristol-based InvestSWVA economic development group that’s focused on energy. Warner also made it painfully clear that the region, broadly defined, would be better off if there were a single bid and not multiple ones.
That has left some economic development groups in a quandary. At the recent meeting of the GO Virginia Region 2 board, which covers the New River Valley to Lynchburg, there were questions about whether anyone in that region would put together a bid and who would lead it. However, there are divisions within that geographic area. Some in the New River Valley appear to remain interested in a bid focused on transportation, despite Warner’s admonition; Volvo in Pulaski County is now producing electric trucks and Virginia Tech has a large transportation research institute, all part of a regional transportation cluster. Meanwhile, InvestSWVA has been talking with Lynchburg officials, hoping to bring them into their proposal on the theory that Lynchburg’s nuclear industries fit naturally with an energy bid.
(The working theory behind this possible Southwest-Lynchburg marriage is that the Energy DELTA Lab project in Southwest Virginia is assembling large tracts of land — often former coal mines — for energy research. That research could well include the small modular nuclear reactors that Gov. Glenn Youngkin is pushing — and that might conceivably get built in Lynchburg. For more on the Energy DELTA Lab, see the column I wrote last fall. For more on those small nuclear reactors, see our FAQs and our previous coverage.)
In any case, there’s the potential for multiple bids from this part of the state, which is not the unity that Warner had sought, although the momentum seems to be with that Southwest Virginia energy bid just based on the amount of work that group has put in already. Blacksburg attorney Jeff Mitchell, a former Warner aide, has been working to line up regional support behind that proposal. I’m certainly not privy to all the conversations that are taking place, but from what I’ve been able to determine, there is a keen desire on the part of the InvestSWVA folks to show how a bid centered on the Energy DELTA Lab has implications far beyond coal country, from startups at the Virginia Tech Corporate Research Center to the big nuclear firms in Lynchburg (and potentially beyond). From my outside perspective as a political observer, it seems that the energy bid is in the better position right now to put together a bigger coalition.
Meanwhile, the application clock has started.
On Friday, the U.S. Commerce Department issues its formal “Notice of Funding Opportunity” and begins taking formal applications. The deadline is Aug. 15.
In anticipation of this, Raimondo and other Commerce Department officials held a virtual news briefing Thursday to go over the program. Four news organizations showed up to ask questions: ABC News, CBS News, Politico … and Cardinal News. (If you like this kind of reporting, please remember that we exist only by virtue of donations, so here’s your opportunity to support more journalism for Southwest and Southside Virginia.)
Here are the main takeaways from that briefing:
1. There will be winners — and then there will be some big winners.
Sometime this fall, the department will announce the “at least 20” sites called for in the legislation. Each will get a planning grant of approximately $500,000. After that the Commerce Department will invite those sites to apply for implementation funding. Out of those “at least 20” initial winners, the department expects to award $50 million to $75 million across “five to 10” sites. It’s unclear what happens to the sites that make the “at least 20” list but aren’t in that final “five to 10.” Maybe they can qualify for funding later, if Congress appropriates it. Not every winner in this first round, though, wins the grand prize. That would seem to turn up the pressure to come up with a strong bid — because not only does a region need to get into that “at least 20” group, it needs to make it to a final “five to 10” round.
2. A region has to have something to build on.
Put another way, you can’t put in a bid to build something from scratch. Well, you can, but it won’t get very far. “Let’s say your region has a fairly strong presence in the medical device areas,” Raimodo said, with companies making and selling them and a local research institution doing research into the field. “Your application would have to bring together the companies, the research institution and stakeholders and together you’d apply for a tech hub grant.” The goal, she said, is “to take your region from being a player to being a global leader. So we are aiming to supercharge an existing innovation foundation and make big investments.” The question, then, for anyone in our part of the state considering a bid is this: Does that application build on “an existing innovation foundation”?
3. You don’t necessarily need to have a metro area as part of a bid.
This information comes from the question I asked, and here’s why it’s important. A fact sheet the Commerce Department issued recently referred to hubs being built around Metropolitan Statistical Areas, which is a formal designation. In the western part of the state, the Lynchburg area, the Roanoke Valley, the New River Valley and Bristol (joined with Kingsport on the Tennessee side) are MSAs. If tech hubs are restricted to MSAs, that would make it more difficult for the InvestSWVA bid because the land for the Energy DELTA Lab isn’t in any MSA.
Assistant Secretary Alejandra Castillo answered my question by saying the department would accept an MSA “or a similar area including micropolitan areas.” That’s much better news for the Southwest Virginia bid, because Dickenson County, Wise County and Norton are part of the Big Stone Gap Micropolitan Area (think of that as a smaller version of an MSA). The first two sites picked to be part of the Energy DELTA Lab are both in Wise County. If the Southwest Virginia proposal includes Lynchburg, that brings in an actual MSA. “We’re asking applicants to define their regions — to tell us what their region looks like,” Castillo said. The key thing she said that department officials will be looking for: “We’re looking for a concentration of those assets.”
4. Winning regions should emphasize “equity.”
Castillo said that “our No. 1 priority is equity with those underrepresented in technology and innovation” and that the department wants to make sure that tomorrow’s technology “is built by today’s ever-growing diverse population.” That’s not a particularly helpful formulation for Southwest Virginia, which doesn’t have a lot of racial diversity. (The Census Bureau lists Dickenson County as 98.1% white. By contrast, Wise County at 91.9% white is a veritable melting pot.) That means a Southwest bid will have to frame equity in a different way — that here’s a rural area that’s been left behind by a changing economy but nonetheless has the assets necessary for a new economy based on innovative energy technologies that would turn a carbon energy capital into a decarbonized energy capital.
So where do we stand? Kevin Byrd, executive director of the New River Valley Regional Commission, says “as for the NRV proposal, it is premature to discuss publicly at this point. The economic developers in the region met last Friday and have another meeting scheduled for this Friday. So, we’re continuing to discuss and will know more about our direction once we are able to review the guidelines from EDA.”
Meanwhile, Will Payne of InvestSWVA says this: “We took Senator Warner’s guidance seriously and are finalizing a draft concept that builds on four years of the Energy DELTA Lab’s work. The Lab relies on the more efficient private sector to lead innovation, which allows for more private investment. That lean model eliminates unproductive spending including administrative overhead.”
One of the subtexts at Warner’s recent meeting with regional officials to talk about tech hubs is that many were unhappy with Virginia Tech being the lead partner because they think Tech takes too much of the money. However, the enabling legislation for tech hubs requires affiliation of some sort with higher education. No doubt with that in mind, Payne goes on to say: “Universities and community colleges will be critical to our project’s success. We just want to be the best stewards of public dollars, which will result in more innovation. We are already executing on our concept of leveraging former mines lands and assets for clean energy projects, so the hub funding would only accelerate our efforts. The Lab’s work will continue regardless. And, if I heard Senator Warner correctly, the point of the hub is to scale what is already working. The DELTA Lab and its public and private partners are working a large portfolio of clean energy projects across the spectrum of power generation and related industrial co-location opportunities. Clean energy workforce training, supply chain development and deployment are critical to transforming Southwest Virginia’s economy. We have the tools and the talent, and now we can build a broad coalition including communities across the Commonwealth with established energy industries like Lynchburg and Newport News.”
I wouldn’t normally use such a long quote but I suspect there are some coded messages in there to someone, so in the spirit of being the messenger, I will pass on the full message for whoever wants or needs to hear it.
So, bottom line, here’s what we know: The Commerce Department starts taking applications Friday. The New River group is meeting Friday. A group interested in the Southwest proposal is meeting Monday. How many applications will we wind up with and how strong will they be? We’ll know the answers to that come fall.