Appendix I
Cluster Metrics Task Force Members

Coordinators/Chairs
Keith G. Baker, Ph.D. Senior Vice President and Chief Operating Officer, Florida TaxWatch Research Institute
Guy Hagen, Assistant Director, University of South Florida Economic Development

Study Work Team
Mark Anthony, Director, University of South Florida Center for Microelectronics Research
Bea Bare, Tampa-Hillsborough Committee of 100
Andra Cornelius, Enterprise Florida (Appointee for John Anderson, EFI)
Warren May, Governor's Office of Policy and Budget
Crystal Sircy, Enterprise Florida
M.J. Soileau, Vice President of Research, University of Central Florida
Wynelle Wilson, Chief Analyst, Office of Tourism, Trade and Economic Development (OTTED)

Steering Committee (Appraisal Committee)
Randy Berridge, Executive Director, Florida High Tech Corridor Council
Dominic M. Calabro, President and Chief Executive Officer, Florida TaxWatch Research Institute
Tim Campbell, Florida Office of Policy and Budget
Debi Gallay, Assoc. Vice Chancellor, Florida Board of Regents (appointed by Chancellor Herbert)
Don Langston, Governor's Office of Policy and Budget
Antonio Villamil, Director, Office of Tourism, Trade and Economic Development (OTTED) (appointee for Governor Jeb Bush)
Senator Daniel Webster (appointed by Senate President Toni Jennings)
House Speaker John Thrasher

Steering Committee, Ex-Officio
Carol Dickson-Carr, Legislative Analyst (representing Alan Johansen, Staff Director, Committee on Finance and Taxation, Florida House of Representatives)
Larry Fuchs, Executive Director, Florida Department of Revenue
Jim Zingale, Florida Department of Revenue (incoming)
Alan Johansen, Staff Director, House Committee on Finance & Tax
Ed Montanaro, Director, Economic and Demographic Research
Larry Wood, Staff Director, Senate Committee on Fiscal Resource

Staff and Advisory Participants:
Robert Anderson, Dean, University of South Florida College of Business Administration
Donna Arduin, Director, Governor's Office of Policy and Budget
Kathy Betancourt, University of South Florida Government Relations
Sena Black, Enterprise Florida Research
Subhasis Das, Staff Economist, Economic and Demographic Research
Dan Holsenbeck, University of Central Florida Government Relations
Julia Johnson, Chair of Governor's Task Force on Information Technology
Mike Kovac, University of South Florida College of Engineering
Steve Mayberry, Vice President, Enterprise Florida
Phil Porter, University of South Florida Department of Economics
Patrick Riordan, University of South Florida President's Office
Annie Rosier, Florida Office of Policy and Budget
Dick Streeter, University of South Florida Office of Economic Development
Thomas J. Tighe, Provost and Executive Vice President, University of South Florida
John Winn, Governor's Office of Policy and Budget

Additional Contributions:
Dennis Colie, Economist, University of South Florida Center for Economic Development Research
Doug Wagner, New Projects Manager, Lucent Technologies Inc.
John Lewis, Economic Development Administrator, Orange County Planning and Development
Tom Tanner, Regional Economic Models Inc.
Ken Wieand, Director, University of South Florida Center for Economic Development Research

Appendix II
Support Documents and Reference List

Strategic Planning Documents - What Should We Do?

Arizona Strategic Partnership for Economic Development (ASPED)
Creating a 21st Century Economy: Arizona's Strategic Plan for Economic Development. Arizona: ASPED 1992.

California Economic Strategy Panel
Collaborating to Compete in the New Economy. Sacramento, California: California Trade and Commerce Agency, 1996.

Department of Commerce Economic Development Administration
Cluster-Based Economic Development: A Key to Regional Competitiveness. Washington, D.C. : U.S. Department of Commerce (1999).

Industry Assessments - What Do We Have To Work With?

Becker, Karen and Edward Feser
Applying Cluster Analysis to North Carolina's Regions. Chapel Hill, N.C.: North Carolina Alliance for Competitive Technologies, 1997.

Brandow Company
Cluster Profiling Sample. Available at http://www.brandow.com/pdf/Sample99ICPPlus.PDF

University of South Florida Office of Economic Development
Report on Florida's Laser and Optics Cluster. Florida: Florida High Tech Corridor Council, Inc., 1999. Available at http://www.usf.edu/oed/studies.htm.

Cluster Growth Evaluations - How Well Have We Done?

Arizona Optics Industry Association
Cluster Metrics Document: http://www.usf.edu/oed/metrics/docs/ClusterEconomicMetrics.ppt

Nexus Associates, Inc.
A Record of Achievement: The Economic Impact of the Ben Franklin Partnership. Belmont, MA: Nexus Associates Inc, 1999. Available at http://www.benfranklin.org/SS_pdf/EI_execsum.pdf

Methodology Documents

NIST Applied Technology Project
Business Reporting System: A Tool for Economic Evaluation. Washington, D.C. : U.S. Department of Commerce, 1999. Available at http://www.atp.nist.gov/eao/helsinki.htm

NIST Office of Applied Economics
Estimating Economic Impacts of Government Technology Programs: Manufacturing Studies Using the REMI Model. Washington, D.C.: U.S. Department of Commerce, 1999. Available at http://www.bfrl.nist.gov/oae/publications/nistirs/6107.pdf.

Olson, Douglas C., Minnesota Implan Group Inc.
Using Social Accounts to estimate Tax Impacts. Minneapolis, Minnesota, June 1999. Available at http://www.implan.com

Slough, Roger and Peter Arena
Review and Comparison of Competing Methodological Approaches (to Cluster Analysis). Washington, D.C: George Mason University, 1999. Available at http://policy.gmu.edu/cra/cra.html

Other Documents

Florida High Tech Corridor Council, Inc.
1999-2000 Annual Report. Florida: Florida High Tech Corridor Council Inc., 1999. Available at http://www.FloridaHighTech.com

Florida Senate Committee on Fiscal Resource
Interim Project Report on Economic and Tax Incentives. Tallahassee, Florida, 1999. Available at http://www.leg.state.fl.us/session/2000/Senate/workprogram/pdf/00-45fr.pdf

Florida TaxWatch
Florida's Investment in High Technology Should Produce Significant Benefits. Tallahassee, Florida: TaxWatch, 1998. Available at http://www.floridataxwatch.org/hightech.htm

MILKEN Institute
Report on High-Tech Economies. Available at http://www.usf.edu/oed/metrics/docs/High_Tech_Economy.pdf

Porter, Michael
On Competition. Harvard, Connecticut: Harvard Business School Press, 1999.

SRI International Public Policy Center
The Higher Education - Economic Development Connection: Emerging Roles for Public Colleges and Universities in a Changing Economy. Washington, D.C.: U.S. Department of Commerce (1986).

Relevant Internet Sites

Texas research investment: Advanced Research Program / Advanced Technology Program (ARP/ATP). http://www.thecb.state.tx.us/divisions/research/arpatp/arpatp.htm

The Texas Higher Education Coordinating Board has relevant Progress Reports on the ARP/ATP program. http://www.thecb.state.tx.us/divisions/research/arpatp/arpatp.htm

The NIST Advanced Technology Program (ATP) Strategic Planning and Economic Analysis site. http://www.nist.gov/director/planning/strategicplanning.htm

Appendix III
Glossery of Terms

Cluster: "...a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalties and complementarities. ...Clusters also often include firms in downstream industries; producers of complementary products; specialized infrastructure providers; government and other institutions providing specialized training, education, information, research and technical support; and standards-setting agencies." (Porter 1998). Clusters are commonly recognized as the most appropriate conceptual framework for explaining the growth of high-technology regions such as Silicon Valley.

Cluster Development: Efforts by industry, educational, economic development and governmental organizations to explicitly nurture a region as a cluster of a particular industry or industries.

Econometric: Regarding the measurement of economic change.

Economic Impact: The reaction within a region's economy to a given economic change (such as a government investment). Economic impacts are usually explained in terms of increased employment or sales activity (output), or a multiplier of impact-to-investment (e.g., for every dollar of state investment, "x" dollars are put into the state's economy).

HIPI: High Impact Business Performance Grant -- Created in 1997 by CS/CS/SB 1754. Office of Tourism, Trade, and Economic Development (OTTED) must designate that business' industrial sector as a high impact sector. Section 288.108(3)(b), Fl Statutes, provides guidelines on amount of grant. For example, a cumulative investment of $100 million, creating 100 jobs, may be eligible for a $1 million to $2 million grant; $800 million investment creating 800 jobs eligible for $10 million to $12 million. Businesses engaged in Research and Development investing $75 million and creating 75 jobs eligible for $2 million to $3 million; $150 million investment creating 150 jobs eligible for $3.5 million to $4.5 million. Award: 50% awarded when OTTED and Enterprise Florida certify business and that operations have started; balance, when full employment and capital investment goals are met (definition from Florida TaxWatch).

IMPLAN: A commonly used econometric impact model, licensed as individual software by the Minnesota Implan Group (MIG).

QTI: Florida Qualified Target Industry Tax Refund program (s. 288.106, Florida Statutes). Provides tax refunds to approved businesses in designated target industries of $3,000 per new job created, $6,000 in enterprise Zones or Rural Counties. Jobs must pay a minimum of 115 percent of the average wage in the area. An additional $1,000 per job is paid if the average wage is over 150 percent of the area average and $2,000 if it is over 200 percent. Refunds payments are capped at $5 million per business, are contingent on performance, and no more than 25 percent of the total refund may be paid in any single year. Businesses must apply before making a decision to locate or expand in Florida. (Note, when the original Cirent QTI award was approved in 1995 the statue allowed a per job award of up to $5,000 per job. The subsequent Bell Labs location and Cirent expansion awards were based on the current statute.)

REMI Policy Insight: A commonly used econometric impact model. Because the REMI model simulates dynamic feedback within an economy, it often projects a greater impact than Implan. Nonetheless, REMI is generally acknowledged as a more complex model. REMI is licensed as individual software by REMI Inc.

RIMS II: A commonly used input-output economic impact model. In the mid-1970's, the U.S. Department of Commerce, Bureau of Economic Analysis developed a model for estimating regional I-O multipliers known as RIMS (Regional Industrial Multiplier System). Updated in the mid-1980's (RIMS II) and 1997, the "...I-O multipliers from RIMS II can be used to estimate the impacts of project and program expenditures by industry on regional output (gross receipts or sales), earnings, (the sum of wages and salaries, proprietors' income, and other labor income, less employer contributions to private pensions and welfare funds), and employment (number of jobs)" (definition from Florida TaxWatch).

Silicon Sales Tax Program: Sales and Use Tax Exemption: Silicon Technology -- Created in 1997 by CS/CS/SB 1754, this tax exemption is paid for research and development on all microelectronic mediums on transactions involving manufacturing or research equipment. Due to the heavy capital investment required annually for business in this sector to remain competitive, taxing such goods adds significant tax liability to these businesses that are present in very few other states. Eligible business may direct up to 100% of the exempted taxes to a university or community college. If the school agrees to the contribution, it must match the funds and come to agreement with the business on providing research or educational services that directly benefit the donor business. Agreement is negotiated by Enterprise Florida and monitored by OTTED.

State University Infrastructure Funding: Annually, the State of Florida funds USF and UCF at approximately $7.1 million (divided approximately equally) for infrastructure support of the Florida High Tech Corridor. In 1998, this was identified in the University Section of the state General Appropriations Act with the title "Unique lump sum Item 179: I-4 Corridor - High Tech Research", under the specific proviso "continuing funding for the State University System Consortium: High Tech Corridor." These funds are generally allocated by USF and UCF to increase applied research, training, graduate education, economic development and industrial partnership capabilities.

Appendix IV
Detailed Impact Input Data

State University System Infrastructure Investments

The following data were compiled from the 1999 Florida High Tech Corridor Annual Report and administrative documents provided by USF and UCF for the 1998-1999 fiscal year. The compiled data is listed in terms of compatible REMI/Implan variables, which were tabulated from university expenditure categories and programs. The best possible "fit" between technology sectors (e.g., "optics") and standard industry categories (e.g., "instruments, measuring and controlling") were attempted for each project. The "reduction in government spending" category was the reported sum total state investment in the university programs, and also serves as the sole input for calculating the Impact of Taxes Assessed figures as a change in the Consumer Expenditure Price Index. All figures are in 1999 U.S. dollars.

Input:

		All	Tampa Bay	Orlando Metro
Construction	Construction Sales (local)	194785	194785	0
Wage Bill (payroll)	Education Services Electronic Components and Accessories / Electronic Equipment Instruments: Measuring and Controlling Instruments: Medical Equipment... Communication equipment / Electronic Equipment Electrical Equipment, NEC	3963128 65000 85000 20000 150000 89000	2423377 65000 85000 20000 150000 25000	1539751 0 0 0 0 64000
Detailed Industry Output (expenses)	Education Services Semiconductors and Related Devices Instruments: Measuring and Controlling Instruments: Medical Equipment... Communication equipment Electrical Equipment, NEC Special Industry Machinery Computer and Office Equipment / Electronic Computing Equipment Aerospace Equipment / Guided Missile and Space Services: Business Services, NEC / Misc. Professional Services, Management	6092203 56000 1857000 703500 6912 30380 192400 878600 318000 172400	1015828 56000 30000 670000 6912 30380 10000 0 0 0	5076375 0 1827000 33500 0 0 182400 878600 318000 172400
Detailed Industry Equipment Expenditures / Equipment (demand)	Electronic Components and Accessories / Electronic Equipment Instruments: Measuring and Controlling Instruments (General - from University) Instruments: Medical Equipment ... Communication equipment Electrical Equipment, NEC Special Industry Machinery	202402 55000 963695 69600 50000 25000 265000	202402 55000 414355 69600 50000 25000 265000	0 0 549340 0 0 0 0
	Reduction of Government Spending (Tax investment)	-6843756	-3337002	-3506754

Cirent Semiconductor/Bell Laboratories Investments

The Florida Office of Tourism, Trade, and Economic Development (OTTED), Orange County, the City of Orlando, the Metro-Orlando Economic Development Commission, Cirent Semiconductors, the University of South Florida and the University of Central Florida provided the following data. The data are combined investments for three separate facility expansions: the 1996-1997 Cirent Semiconductor expansion, the 1999 Cirent Semiconductor expansion and the 1999 Bell Laboratories facility establishment. Projection data was available beyond that listed, but the impact study was limited to 2003 (five years after last expansion in 1999) as recommended by the Task Force. Further, the REMI model did not allow simultaneous retrospective and forecasting input (in other words, it did not allow new data to be input before 1998), so 1996 to 1998 data were combined into year 1998.

Input:

	1996	1997	1998	1999	2000	2001	2002	2003
STATE INVESTMENTS
QTI	144,000	392,000	513,000	747,500	711,000	508,000	412,000	177,500
HIPI	0	0	0	0	4,250,000	3,250,000	7,500,000	0
Sales Tax State Match (Universities)	0	0	3,600,000	17,600,000	17,600,000	17,600,000	3,600,000	0
ORANGE COUNTY INVESTMENTS
Local QTI Match	36,000	98,000	128,250	183,750	171,500	120,750	96,750	41,250
Economic Devpt. Grant	880,000	862,262	636,071	574,663	1,269,277	1,884,394	2,138,441	2,218,798
CITY INVESTMENTS
1999 Cirent Incentive	0	0	250,000	250,000	250,000	250,000	0	0
Total Combined Government Investment in Millions (for assessing Tax Impact)	1,060,000	1,352,262	5,127,321	19,355,913	24,251,777	23,613,144	13,747,191	2,437,548

Total combined government investment between 1996 and 2003 is $90,945,157.

LUCENT INVESTMENTS	1996	1997	1998	1999	2000	2001	2002	2003
Construction Investment	30,000,000	0	0	40,000,000	10,000,000	0	0	0
Equipment Investment	630,000,000	0	0	257,000,000	272,000,000	225,500,000	195,500,000	0
Sales Tax Private Match (Universities)	0	0	3,600,000	17,600,000	17,600,000	17,600,000	3,600,000	0

The following table represents each individual government program as a percentage of the total government investment per year.

	1996	1997	1998	1999	2000	2001	2002	2003
QTI (state and local)	17.0%	36.3%	12.5%	4.8%	3.6%	2.6%	3.6%	8.7%
HIPI (state only)	0.0%	0.0%	0.0%	0.0%	17.5%	13.8%	54.6%	0.0%
Orange County Econ. Devpt. Grant	83.0%	63.7%	12.3%	2.9%	5.2%	8.0%	15.5%	91.3%
Orlando City Incentive	0.0%	0.0%	4.9%	1.3%	1.0%	1.1%	0.0%	0.0%
State Sales Tax Match	0.0%	0.0%	70.3%	91.0%	72.6%	74.6%	26.2%	0.0%

The following data were also available. These numbers were not included in the impact study, although they are valid impact input data if used appropriately to modify the standard underlying assumptions in REMI/Implan for the semiconductor industry sector.

LUCENT INVESTMENTS	1996	1997	1998	1999	2000	2001	2002	2003
Sales / Revenue (if known)	0	0	0	12,329,068	18,856,222	25,383,376	29,009,573	29,009,573
Direct Jobs	300	600	600	715	800	875	900	900
Payroll	10,260,000	20,520,000	20,520,000	26,653,750	30,817,500	34,601,250	36,070,000	36,070,000
Payroll + 35% benefits	13,851,000	27,702,000	27,702,000	35,982,563	41,603,625	46,711,688	48,694,500	48,694,500

As of the date of this report, Lucent has negotiated an investment schedule with the State of Florida (primarily regarding equipment and construction) that is expected to result in a smaller per-year investment over a longer period than is listed above. The revised schedule was not able to be incorporated into this study's calculations, but the overall impact is not expected to vary greatly from original projections.

Multiple Silicon Manufacturing Facilities

Input

Baseline Data

12 Year Combined - Baseline Input	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	TOTAL
Education sales amount, colleges and universities	7.2	35.2	35.2	35.2	7.2	0	0	0	0	0	0	0	0	120
Demand Amount, Construction	30	40	10	0	0	0	0	0	0	0	0	0	0	80
Equipment Spending Amount, Electrical Equipment NEC	630	257	272	225.5	195.5	0	0	0	0	0	0	0	0	1580
Combined Government Investment	7.53	19.35	24.24	23.6	13.73	2.42	0	0	0	0	0	0	0	90.87
Reduction of Government Budget	-7.53	-19.35	-24.24	-23.6	-13.73	-2.42	0	0	0	0	0	0	0	-90.87

For each additional $700 million silicon facility expansion:

5 year single expansion (1999 Cirent example)	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	TOTAL
Education sales amount, colleges and universities	28	28	28	0	0	0	0	0	0	84
Demand Amount, Construction	10	0	0	0	0	0	0	0	0	10
Equipment Spending Amount, Electrical Equipment NEC	140	220	180	150	0	0	0	0	0	690
Reduction of Government Budget	-14.325	-14.900	-18.703	-5.015	-1.613	0.000	0.000	0.000	0.000	-55
Combined Government Investment	14.325	14.900	18.703	5.015	1.613	0.000	0.000	0.000	0.000	55

Method 1: New $700 million facility every two years beginning in 2003

12 Year Combined	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	TOTAL
Education sales amount, colleges and universities	7.2	35.2	35.2	63.2	35.2	56	28	28	0	0	0	0	0	288
Demand Amount, Construction	30	40	10	10	0	10	0	0	0	0	0	0	0	100
Equipment Spending Amount, Electrical Equipment NEC	630	257	272	365.5	415.5	320	370	180	150	0	0	0	0	2960
Reduction of Government Budget	-7.53	-19.4	-24.2	-37.925	-28.63	-35.448	-19.915	-20.316	-5.01	-1.61	0	0	0	-200

Method 2: New $700 million facility every three years beginning in 2002

12 Year Combined	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	TOTAL
Education sales amount, colleges and universities	7.2	35.2	35.2	35.2	35.2	28	28	28	28	28	0	0	0	288
Demand Amount, Construction	30	40	10	0	10	0	0	10	0	0	0	0	0	100
Equipment Spending Amount, Electrical Equipment NEC	630	257	272	225.5	335.5	220	180	290	220	180	150	0	0	2960
Reduction of Government Budget	-7.53	-19.4	-24.2	-23.6	-28.06	-17.32	-18.7	-19.34	-16.51	-18.7	-5.01	-1.61	0	-200

Method 3 : New $700 million facility every four years beginning in 2001

12 Year Combined	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	TOTAL
Education sales amount, colleges and universities	7.2	35.2	35.2	35.2	7.2	28	28	28	0	28	28	28	0	288
Demand Amount, Construction	30	40	10	0	0	10	0	0	0	10	0	0	0	100
Equipment Spending Amount, Electrical Equipment NEC	630	257	272	225.5	195.5	140	220	180	150	140	220	180	150	2960
Reduction of Government Budget	-7.53	-19.35	-24.24	-23.6	-13.73	-16.75	-14.9	-18.7	-5.015	-15.94	-10.84	-15.83	-2.925	-189.35