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Bountiful Harvest or Boondoggle?

Is the North Carolina Research Campus at Kannapolis a good way to spend taxpayer money?

By Duke Cheston

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January 06, 2013

Tomatoes that don’t rot for more than a year, fish with glow-in-the-dark blood vessels, sunscreen made from watermelons, and super-cancer-fighting broccoli: those are but a few of the wonders created at the North Carolina Research Campus (NCRC) in Kannapolis, North Carolina.

The campus is dazzling, both architecturally and technologically. It consists of several grand, neoclassical buildings, built with marble imported from India, furniture made from a gigantic Hawaiian koa tree, and a majestic foyer topped by a muraled dome. It even features a restaurant called “46” (after the number of chromosomes in human DNA) that emphasizes foods like pumpkin ravioli and pomegranate tea.

Scientists from universities and private companies around the country have come here to study medicine, nutrition, and agriculture. Phyllis Beaver, marketing director for the campus, says that the reaction of visiting researchers “reminds me of my 16-year-old son at GameStop,” referring to their kid-in-a-candy-store amazement.

NCRC’s promoters speak of the institution as a godsend for the local community. Kannapolis was devastated when about 4,000 people were laid off from the Pillowtex textile plant in 2003. According to Beaver, a long-time resident of Kannapolis herself, the town looked to the Cannon family, which used to own Pillowtex, as a “benevolent benefactor.” With the construction of the NCRC, largely as a result of billionaire David Murdock’s money and initiative, “We feel blessed to have another benevolent benefactor,” she says.

But Murdock isn’t the only one funding the NCRC. The UNC system pays over $23 million annually to fund its activities at the campus.

Whether or not the investment is worth taxpayer money is a tricky question to answer.

Other attempts to use taxpayer money to resuscitate economically hurting areas—such as the Global Transpark in Kinston or the Randy Parton Theater in Roanoke Rapids, to mention just two in North Carolina—have become notorious boondoggles. They gobble up tax dollars, do little for the local economy, and have no positive impact for the state.

But Kannapolis has a lot going for it, including a major investor and the faith and credit of the University of North Carolina. Opened in 2008, the campus was spearheaded by David H. Murdock, CEO of Dole Foods and Castle & Cooke, Inc., a company that owns real estate and businesses from New Jersey to Hawaii.

Murdock, an 89-year-old entrepreneur currently ranked 190th in the “Forbes 400” list, owned the Cannon Mills plant (the one that became Pillowtex) from 1982 to 1997. He sold it when he determined it was headed for decline. In 2005, two years after the closure of Pillowtex, Murdock and state leaders announced plans to build the North Carolina Research Campus.

Murdock provided the initial funding (over $600 million so far) and the UNC system began a 20-year lease-to-own agreement under which it would eventually own the two buildings that its scientists use. The UNC system currently pays $6.5 million annually to lease the space (the $23 million figure quoted earlier includes other expenses such as salaries), and will own the buildings outright in 2027.

Several years ago, Cabarrus County and the city of Kannapolis attempted to issue $168 million in bonds to help fund infrastructure projects to support the NCRC. Following the economic slowdown of 2008-9, however, they issued only $35 million in tax increment financed (TIF) bonds in December 2010. The bonds have helped pay for roads, a parking deck, a tunnel, and a health department building, among other things.

According to Eric Davis, finance director for the town of Kannapolis, the bonds will be paid back by taxes charged to tenants of the NCRC, so local taxpayers won’t get stuck with the bill.

However, TIF bonds aren’t really “free” to taxpayers. As former John Locke Foundation finance expert Joseph Coletti has explained, they appear to be free because the revenue collected never enters the general fund, but is devoted to specific purposes benefiting a small number of taxpayers. It’s also more expensive than other forms of borrowing because “there is no explicit guarantee of the government's full faith and credit,” Coletti said.

Construction on the campus is ongoing. Duke University—the only private university with a presence on campus, and the only university being paid by Murdock rather than the other way around—planned to build its own building on campus, but according to Phyllis Beaver, the economic downturn has stalled those plans. Duke researchers currently work in other buildings on campus.

Scientists from eight universities—UNC-Chapel Hill, Appalachian State, NC A&T State, NC State, NC Central, UNC-Charlotte, UNC-Greensboro, and Duke—work at the research campus. The scientists whom I spoke to all told me they were teaching one or two classes per semester via the Internet so that they wouldn’t have to leave Kannapolis.

Hundreds of millions of dollars can buy a lot of fancy equipment. Some of the big-ticket items at NCRC include:

  • The Western hemisphere’s largest nuclear magnetic resonance machine, a device used to deduce the chemical structure of unknown compounds
  • A series of “Smart Tables” that reduce vibrations in order to allow for precise measurements
  • A metabolic chamber with sensors on the walls that “measure every calorie exerted” by the subject inside.

A number of scientists told me that the main draw to the NCRC for them is the ability to interact with other researchers working on similar problems. The buildings were intentionally designed to encourage informal meetings between scientists.

According to Beaver, several of Murdock’s life experiences shaped NCRC’s scientific focus. Both his mother and third wife died from cancer at relatively early ages, leading him to invest much of his time and money in nutrition and cancer research.

The campus has produced some remarkable (if not directly life-saving) findings so far. Among them:

  • Duke researchers found a way to use X-rays and MRIs to predict the progression of arthritis in the knees.
  • Two NC A&T scientists found that ginger is a potential treatment for the anemia caused by chemotherapy or renal disease.
  • NC State researchers have developed a watermelon-based sunscreen that would help your skin repair itself in addition to shielding it. That product could hit store shelves in two years.

So UNC researchers are making some potentially important discoveries, but are taxpayers getting their money’s worth? Couldn’t the scientists have made those discoveries at their home universities?

Mike Todd, the executive director of the NCRC (the UNC general administration’s employee overseeing campus operations), told me “UNC gets a tremendous bang for their buck.” According to Todd, two factors at the NCRC work to speed up the research process. The first is the proximity of the researchers to one another, facilitating the sharing of ideas. The second factor is the abundance of high-tech equipment.

Todd also claimed that NCRC has created between 300 and 400 jobs for local citizens. Employers at the campus include the universities, Rowan-Cabarrus Community College (which has a satellite campus on NCRC grounds), the private companies, Murdock’s institute, and others.

While NCRC sounds good to this point, it is difficult to start a biotechnology hub from scratch. (Biotechnology refers to the use of living organisms or biological systems in the development of drugs or other products or services).

Shreveport, Louisiana, for example, built the InterTech Science Park, an institution that cost tens of millions of dollars but has had trouble finding tenants since its construction in the early 2000s. Gary P. Pisano, a professor at Harvard Business School, told the New York Times that a huge barrier to the success of such projects is achieving a “critical mass” of expertise.

The founders of NCRC are consciously trying to replicate the success of the Research Triangle Park, if perhaps on a smaller scale. But many communities have tried to do so with little success. “The Triangle is the creation of a particularly promising place at a particular point in time,” wrote Jay Schalin in a 2010 report for the Pope Center. “Today, the landscape seems to be less ripe for Triangle-style development, partly due to the intense competition—every state is attempting to do the same thing.”

Moreover, the biotech industry has long found profits elusive. The industry has been around for about forty years, but didn’t collectively turn a profit a single year until 2008, experts say. North Carolina’s government has been pumping grants and loans into the biotechnology industry since the 1980s through the North Carolina Biotechnology Center.

NCRC, moreover, is working on a very particular kind of biotech, called “nutraceuticals,” which is still unproven. In fact, the nutraceuticals industry, which attempts to make medicines from food, has seen so many scams that the independent regulatory group FINRA issued a warning to potential investors in nutraceutical companies.

Although there doesn’t appear to be anything fraudulent about the research going on at the NCRC, neither is it clear that the research has contributed much to the economy. So far, there are no spinoff businesses and no royalties being collected on any research done on campus.

Some area citizens have found jobs due to NCRC and others have been the subjects of experiments, for which they are compensated. For example, some people were paid $140 per day to stay in a metabolic chamber for several days.

The campus has generated some benefits for Kannapolis and it has launched some impressive technical projects. But the proof of the pudding is in the eating, and while there may be some nutritious things to eat at the research campus, morsels of economic returns are difficult to pinpoint so far, if they are there at all. 

 


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