Earlier this year, the state of Kentucky allocated $15 million for a 10,000 square foot life sciences lab in Covington.
The discussion that inspired the line item in Kentucky’s recently approved biennial budget began over a year ago.
Covington leaders, scientists, medical researchers, and technical experts gathered together to discuss future opportunities. The group included an industry physician from North Carolina’s Research Triangle, a health innovator from Northern Kentucky University, and top leaders of three Covington-based biotech companies.
The goal was to take advantage of a positive set of conditions that have presented a once-in-a-lifetime opportunity for the region’s economy, Covington Economic Development Director Tom West said.
“It caught some people by surprise when Gov. Andy Beshear first put $10 million in his proposed budget for this lab, and they were further surprised, I think, when the Kentucky Senate added $5 million to that proposal,” West said. “But Kentucky leaders both recognize the strength of this vision and appreciate the strategic steps that we have been taking behind the scenes for a while now to determine everything from the lab’s purpose to its look and location.”
As Covington and its partners work over the next few years to implement that vision, understanding the history of the proposal and the gravitas of the parties involved is critical to its success.
West said the need for the lab, and the urgency of the effort, emerged from the convergence of several inflection points.
- Development opportunities created by the City’s purchase of 23 acres downtown where the IRS operated a sprawling data-processing facility until 2½ years ago.
- The recommendations in the City’s 2019 Garner Report, a 157-page economic development strategy and market report that identified life sciences & biosciences in Covington as “a business target” – a core sector where existing competitive advantages could lead to astronomical growth in jobs and investment.
- The growing renown of Covington-based life sciences companies like CTI Clinical Trial and Consulting Services (a world leader that recently announced a $100 million joint venture with Cincinnati Children’s Hospital in the realm of cell and gene therapy) … Bexion Pharmaceuticals (currently in late-stage clinical trials of a potential cure for cancer) … and Gravity Diagnostics (a certified and accredited laboratory that has tested nearly 4 million COVID-19 samples during the pandemic).
- The engagement of experts like Kari Brown, the senior medical director of clinical development at Aimmune Therapeutics in the famed Raleigh-Durham-Chapel Hill area of North Carolina. Covington caught the attention of Brown through her husband, Ernie Brown, who is the founder of EB Capital Partners, one of the developers behind the $38 million mixed-use development in Covington centered on the John R. Green Lofts.
At Covington’s request, Kari Brown facilitated a discussion on June 30, 2021, in the city. The discussion was attended by Covington officials, including Covington Mayor Joe Meyer and City Manager Ken Smith, leaders of the three companies, the John R. Green developers, and Valerie Hardcastle, executive director of the Institute for Health Innovation at NKU.
The main question on the agenda: What was needed to build upon the growing energy of the life sciences sector in Covington and the broader region?
The discussion centered around the need for equipped lab space that new and emerging companies could rent, space that is currently lacking, it became clear that the right people were in the room, Brown said.
“The City had the foresight to leverage experts from the existing critical mass of life sciences companies in addition to bringing outside expertise from a city thriving in the biotechnology space,” Brown said. “The dedication and passion to shape a vibrant life science center in Covington was clear in my discussions with the city and leaders of successful local companies already in the space.”
In the months following that meeting, company officials continued to share their vision.
“People like the leaders at CTI, Bexion and Gravity, they’re the experts. They’re the ones pushing the envelope, and they’re the ones who know what is needed to attract new, like-minded companies,” West said. “We’re here to help make it happen.”
A meeting between Kentucky Gov. Beshear and Tim Schroeder, chairman and CEO of CTI, intrigued the Governor and elicited a pledge of support.
Gov. Beshear told Covington officials for the purposes of this release that he saw the state’s participation as an investment in both jobs and medical progress.
“For Kentucky to remain competitive for the jobs and industries of the future, we need a new research facility in Northern Kentucky that can support the many life sciences and biotech companies already in the region,” Gov. Beshear said. “It would also draw new innovators and startup companies, creating more high-wage jobs and cutting-edge treatments right here in the Commonwealth.”
Gov. Beshear asked for a formal budget request. So the City called more meetings with the technical experts to create a proposed framework for the lab and put it in writing.
The proposal sent to the Governor added some partners, including Northern Kentucky Tri-ED, the NKU Collaborative for Economic Engagement, and the Covington Motor Vehicle Parking Authority.
Covington Mayor Joe Meyer roughly estimated the value of those contributions at $7 million to $10 million, depending on the eventual location and construction costs.
“Covington is fully vested in this project. This is one of those catalytic investments that could significantly accelerate the development of the city by nurturing its growing life sciences sector,” Meyer said.
Covington wants to make sure the lab is built on a site that is accessible and has room for the companies renting space to spin off and build their own physical space..
“The location will be based on the merits of the lab and what will help it and the companies who locate there succeed,” Meyer said.
Covington leaders are considering several sites that would satisfy the need for accessibility and growth, including the former IRS site, which is being prepared for development right now. O’Rourke Wrecking will be finished demolishing the buildings and parking lots on the site this fall. Covington expects to hire a design/engineering firm to design the restored street grid, utilities, and parking.
Meyer praised Gov. Beshear for signing on to the project early and inserting the $10 million in his recommended budget. Following the Governor’s announcement, Covington hired a lobbyist and joined the three companies and other partners in an intense advocacy effort of the General Assembly’s 138 members. In the end, the Senate not only restored the $10 million (which had been missing from the House’s budget) but also increased the allocation by $5 million. In the conference committee, the House was persuaded to approve the funding as well.
In the months ahead, Covington officials will work with CTI, Bexion, Gravity Diagnostics, and other partners to solidify the plan for turning the vision into reality, Meyer said.
“There’s a lot to do, but we’re excited about the mission,” Meyer said.
The lab will include 10,000 square feet of space. Global real estate experts say that’s enough to accommodate lab space for about 15 startup companies, as well as meeting rooms and shared amenities.
A non-profit corporation would be established to oversee the facility’s construction and operations, with a board that represents both life science experts and public sector partners. To manage the facility day to day, that board would hire an outside firm with experience managing such facilities.
The budgeted $15 million does not include the cost of land acquisition, parking, or operations. Once stabilized, operations would be funded by rent, foundational support, and contributions from local companies. After the lab opens, the partnership would leverage state and local incentives to encourage startups to remain and grow in Kentucky.
Meyer said interest in the lab is high, and leaders of major companies in the region have talked to him about getting involved.