Killeen to legislators: Discovery Partners Institute still work in progress

Killeen to legislators: Discovery Partners Institute still work in progress

SPRINGFIELD — The University of Illinois could receive $50 million to $100 million from the state for the proposed Discovery Partners Institute during fiscal 2019, the governor's budget director says.

The rest of the $500 million appropriation for DPI, the anchor of a statewide "innovation network," would then be allocated over several years, Hans Zigmund told legislators Tuesday at a hearing of the Senate Higher Education committee.

Lawmakers hungry for concrete details on the proposed DPI — and how it will use a half-billion dollars in state money — also asked the University of Illinois for monthly progress reports going forward.

Committee Chairman Pat McGuire, D-Crest Hill, complained that he heard a list of six "not yets" about the project Tuesday, which UI President Tim Killeen says could exceed the original $1.2 billion estimate once private funding is secured.

Among the "not yets": whether the UI has submitted a grant proposal, including a budget, for the $500 million in Build Illinois money; secured firm donations or written agreements with any private companies or donors for the project; figured out how the UI-led governing board will be structured or how taxpayers will be represented on it; or reached any firm agreements with Chicago developer Related Midwest, which has offered to donate 20 acres for DPI in its "78th" development in Chicago's South Loop.

"Given the profound need to revive our state economy, and given the work you and others are putting into this, you don't want to be building a house of sand," McGuire said. "There is no document from which we can judge your progress."

Killeen agreed to provide monthly reports, adding that the startup process is complex.

"These are honest 'not yets.' We want to do this right for the sake of Illinois," he said.

Killeen promised more news this fall, including the announcement of new international partners, corporate partners and private funding for the project. UI officials also said they hope to have a timetable for the ground-breaking of DPI "in a matter of weeks or months."

New 'hubs'

On Tuesday, officials announced the first major "hub" for the innovation network at the UI Springfield. Under a new agreement, it will take over Innovate Springfield, a downtown Springfield innovation and business incubator. Founded in 2014, the incubator will receive $1.5 million in funding from the UI and community partners in Springfield over three years to expand programs supporting start-up businesses, entrepreneurs and innovation.

Northern Illinois University in DeKalb will also be a hub, President Lisa Freeman said, focusing on two of DPI's research areas: food/agriculture and environment/water. Northern plans to collaborate with the UI College of Agricultural, Consumer and Environmental Sciences to help farmers think about innovation.

Sen. Scott Bennett, D-Champaign, and McGuire noted that DPI was first billed last fall as a public-private partnership.

"When are we going to be able to talk about the private part of this partnership?" he asked.

Killeen said the UI has had "many conversations with potential donors" involving "many hundreds of millions of dollars."

"Nothing in hand?" McGuire asked.

Killeen said the UI wasn't ready to announce a number but said the state's $500 million had piqued significantly more interest from major companies.

Killeen said Northwestern, the University of Chicago, Tel Aviv University and other academic partners won't contribute money to the project but will provide "in kind" support. They could build their own buildings or rent space at DPI, and possibly generate their own private funding, officials said.

Job concerns

Killeen emphasized that the state's $500 million investment will have a "huge" economic impact. McGuire noted that a document provided to legislators touted the million jobs the project could create "globally."

"That doesn't help my constituent who recently complained bitterly to me that the only work he can find in Will County is a part-time job driving a school bus," said McGuire, who represents the Joliet area.

Killeen said the UI is doing two economic impact studies related to DPI, which will include projections for how many jobs the initiative could create — or keep — in the state.

"We can point to companies today that are worth $75 billion that started in the University of Illinois system and left," Killeen said.

Bennett raised concerns voiced by constituents in Champaign-Urbana and others about DPI becoming a "fourth campus" of the UI, as Rauner once said, that would drain resources from the three existing campuses. He also cited comments by Chicago Mayor Rahm Emanuel, who said at one point that the UI is bringing "computer science and engineering to the 78th."

"There's a lot of concern that we've taken our focus off of a campus that has served us for 150 years," Bennett said.

DPI's new interim director, Bill Sanders, head of the Department of Electrical and Computer Engineering at Urbana, promised that "the college of Engineering at the University of Illinois at Urbana-Champaign is not moving to Chicago," Sanders said. "And we're not creating a fourth campus. We're creating something very new."

The goal is to create a "collaboration place" bringing together people from all three campuses, along with entrepreneurs and industry to "allow things to happen that can't at any individual hub."

"By creating a bigger community we're going to bring innovation to the entire state," he said, building on the advantages of each region. "And we're going to be able to recruit faculty to the state of Illinois that we couldn't recruit before."

Rose said he was encouraged when Killeen said 60 percent of the 100 or so new faculty hires associated with DPI will likely be based at the Urbana campus.

Competing for funds

Zigmund, director of Rauner's Office of Management and Budget, said the $500 million for the project will be appropriated from the Build Illinois bond fund "over a number of years."

The money can be used for planning and design of the institute and related buildings, and both he and Killeen said it's possible some could be used for operating expenses.

The bond fund has a $146.9 million balance and authority to borrow $634.8 million more through a bond issue, repaid with state sales tax revenue. The state plans to issue about $250 million in bonds in October, which would be used for other Build Illinois projects as well, he said.

Most projects receive 10 or 20 percent of the appropriation in the first year, which is possible with DPI, he said.

Pressed by McGuire, Killeen wouldn't eliminate the possibility of seeking state funding in the future for some aspects of the project, including faculty hiring or deferred maintenance, but said there are no plans to request more capital funding or a "line-item" for DPI.

McGuire and Rose wondered whether DPI was competing with other higher education priorities, noting the $3 billion backlog of deferred maintenance at public universities statewide.

Zigmund said deferred maintenance funding comes from a separate source, the Capital Development Fund. However, Rose noted, Build Illinois money could also be used for other UI capital projects and deferred maintenance — if legislators chose.

The huge appropriation to DPI could mean the UI will move down the list for other capital appropriations in coming years, behind other state universities with pressing needs, Rose said. Eastern Illinois and Illinois State universities might "look at this and say, 'Where's my capital funds?'" he said.

Killeen said the UI has been pushing the state to fund capital projects for all of higher education for years and supports the requests by its sister universities.

"I think it's a wise investment for you. We want to see all of higher education thrive in the state of Illinois," he said.

Senators were generally supportive of the project, noting the success of similar efforts in North Carolina, Boston and northern California.

"We haven't done very well in Illinois, and we've lost economic development and the jobs that come along with it as a result," said Sen. Bill Cunningham, D-Chicago. "I think this is a really important step in the right direction. The devil is in the details, and that's why we're here."

Some DPI details revealed

UI officials plan to announce more details of what the new Discovery Partners Institute/Illinois Innovation Network will mean for the Urbana-Champaign campus at a hearing today. A few facts emerged Tuesday:

— Urbana's Illinois Innovation Network "hub" will focus on digital/computer research, among other areas, and could double the size of the UI Research Park, according to President Tim Killeen.

— Other hubs are planned in DeKalb, Springfield, Carbondale and Edwardsville.

— Now based in an office on Wacker Drive, a 1 million-square-foot DPI in Chicago could open in three years.

— The UI has a draft agreement with Related Midwest for a donation of land for DPI in its "78th" development, but it's not final. The original plan was 20 acres,  Killeen said.

— The UI has received assurances from Chicago Mayor Rahm Emanuel and others about "expediting" city approval.

— It's unclear what the governance structure for DPI/IIN will look like, with multiple universities, corporate/industry partners and taxpayer interests involved.

— With Tel Aviv University already signed up, the UI is courting other partners in Germany, Jordan, Ireland, China and Mexico. Announcements are expected in the next few weeks.

Editor's note: The story has been updated to correct the value of companies created through the UI that have left the state.