Austen BioInnovation Institute of Akron was supposed to be the bridge that led from the Rust Belt to the brain belt, catapulting the region into the knowledge economy.
It launched in 2008 with about $70 million in funding, but the economic metamorphosis it promised never occurred and now ABIA is nearly broke.
Monday one of its first and only steadfast leaders — Bill Considine, president and CEO of Akron Children’s Hospital and chairman of ABIA’s board — will appear before the Summit County Council to answer questions about why taxpayers should help keep the biomedical center afloat.
At the same time, ABIA’s board of directors is scheduled to meet by telephone so it can vote to disband and regroup, still led by Considine, but with different faces at the table of a nonprofit desperate to reinvent itself.
Considine was traveling last week and unavailable for comment. But Joseph Randazzo, interim director of ABIA, and its spokesman, Scott Rainone, discussed the organization, its reorganization and the plan to become self-sustaining.
“Our mission hasn’t changed, our financial situation has,” said Randazzo, who will also be at the council meeting.
What ABIA wants — and what Summit County Executive Russ Pry supports — is a loan deferment and about $500,000 in grants over five years that would help offset one of the organization’s biggest costs: debt on its North Main Street headquarters.
ABIA received about $14 million through loans and tax-free bonds to buy and renovate what was long known as the Ohio Edison building with the utility’s mascot, Reddy Kilowatt, atop the roof.
The money to purchase the building — $2.49 million — came from county loan revenue bonds.
Renovation funds were split: $7 million came from tax-exempt bonds issued by the Development Finance Authority of Summit County and $2.5 million came from a state loan.
The county guaranteed all the money, essentially acting as a co-signer for ABIA.
At the time, Summit County Council President Jerry Feeman said it was a worthwhile risk because of the potential economic benefit ABIA could bring to the community. Leaders of the biomedical institute forecast it would create 2,400 jobs and attract at least $50 million worth of investments annually within a decade.
Those gains never materialized. And while ABIA has not missed any payments and is in no immediate risk of defaulting, its future is uncertain.
Pivotal time for ABIA
A recent $1 million cash infusion from the John S. and James L. Knight Foundation will keep ABIA functioning deep into next year as it tries to make itself sustainable, Randazzo said.
But if ABIA fails, the county could be on the hook for more than a decade of $700,000 annual payments, offset only by taking ownership of ABIA headquarters, a six-story structure where the basement and three bottom floors have been renovated.
The county is considering stepping up at a pivotal time for ABIA. The nonprofit venture — with its staff slashed from about 38 employees in 2011 to four full-time and two part-time now — is trying to figure out how to survive after most of its founding partners pulled out all or much of their support.
ABIA faces an additional challenge it always knew was coming: Summit County Job and Family Services quit renting the top three floors of the building and moved out, ending its lease payments in March.
That money, $86,739 annually, had until now completely covered what was essentially ABIA’s mortgage, the $2.49 million county loan revenue bonds.
At the time ABIA officials accepted the deal, they knew the county planned to vacate the space, but believed the institute would have grown sufficiently to fill the three floors with its own enterprise or with that of a partner’s.
That has not happened.
Support needed
The county is considering helping ABIA in two ways:
• Deferring what amounts to ABIA’s mortgage payments for five years
• Footing half of what ABIA pays the state for it $2.5 million renovation loan, about $102,000, for each of the next five years. The council would vote to approve or deny the grant each year.
Last week, county Council President Ilene Shapiro said she supports the plan.
From the beginning, ABIA was both a community and economic development project, she said.
“I think that philosophy still stands,” she said, pointing out that ABIA had survived big changes in health care and local leadership.
“I have confidence in Bill Considine, in the vision he has,” she said.
In 2007, Considine was among a couple dozen leaders from Greater Akron who came up with the concept for ABIA.
It had no name at the time, but the idea was to build a powerhouse medical research and development center here that would be a springboard for innovation, transforming Akron into a global player in biomedicine and unlocking a future rich with high-paying jobs.
The John S. and James L. Knight Foundation kicked in $20 million. The founding members — Akron Children’s Hospital, Akron General Health System, Summa Health System, Northeast Ohio Medical University and the University of Akron — combined to put in $20 million more.
FirstEnergy ponied up $10 million, and the state of Ohio and federal government pitched in millions more.
Since then, Cleveland Clinic has absorbed Akron General. Mercy Health has acquired a minority ownership stake in Summa. And both the medical school and University of Akron hired new presidents.
Those changes meant most ABIA partners fell away, along with the money and support they brought with them.
The board of directors hasn’t met in more than a year.
Akron Children’s is the only founding member to remain fully committed. It leases the 22,000-square-foot mock hospital and high-tech simulation equipment from ABIA for more than $460,000 a year and markets the facility to other hospitals, universities and first responders for training.
Cleveland Clinic Akron General rents a small amount of lab space, too, and could take over almost an entire renovated floor, Randazzo said, but it hasn’t been a full ABIA partner.
Randazzo said much of 2015 was spent developing an ABIA survival strategy. He declined to say who might join the new board of directors since the vote to disband hadn’t yet occurred.
Plans for future
ABIA is still working on innovation — there are 10 to 12 devices in the product pipeline — but its short-term plans to make money are less about invention and more about sure things, said Randazzo, who has been the organization’s chief financial officer since October 2010.
This summer, ABIA will host three bioinnovation camps instead of one, hoping to grow this existing program for students across the region. During the camp, students work in ABIA’s simulated hospital with triage, nursing, surgical, intensive care and emergency and operating rooms and then move to real-world experiences in health care and life science programs by partnering with researchers and hospital staff.
The cost of the camp is $750 and ABIA is working to land funding for scholarships so more students can attend. Ultimately, Randazzo said, he hopes the program can operate year-round and expand, perhaps online.
“We’re not going to get rich on this,” Randazzo said. “It’s more like something to help pay the light bill.”
The bigger money-maker for ABIA will come from renting out the vacant space in its building, he said.
Within three years, Randazzo said, he hopes that rent payments will make up most of ABIA’s budget.
“It’s about cash flow. We’ve forecasted full occupancy by 2018,” Randazzo said. “But we can’t afford to make some of the same mistakes that were made in the past.”
Amanda Garrett can be reached at 330-996-3725 or agarrett@thebeaconjournal.com.