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By City Councilmember Nick Licata.
Urban Politics (UP) blends my insights and information on current public policy developments and personal experiences with the intent of helping citizens shape Seattle’s future.
- The Lure Of Biotech Industry Jobs
- SLU & The Biotech Industry
- SLU Biotech Industry Code Amendments
The Lure Of Biotech Industry Jobs
The City, under the Mayor’s guidance, has set upon a course of attracting biotech industries to Seattle and to the South Lake Union neighborhood in particular. With Seattle’s unemployment rate being one of the highest in the nation for a major urban area, pursuing this industry appears to be a “no-brainer”.
It’s an idea that a number of other cities are also pursuing, including others in our state. More than 80% of those states and municipalities that responded to a 2001 survey prepared for a Dept. of Commerce conference listed biotech as one of their top two targets for development. In other words, there are a lot of other cities competing for these industries.
The Mayor sees making Seattle more competitive by investing significant amounts of public money in SLU’s utility and road infrastructure to encourage more bio-tech companies to lease or build out office space and join the handful that are already there. Before these investments are made, the building codes could be adjusted to accommodate some of the unique physical requirements that buildings must have to house this industry. Consequently the Mayor has sent legislation down to the Council to make these changes. These are explained below.
Before addressing these changes, I review the nature of the biotech industry and its relation to SLU in order to acquire a better appreciation of the risks and benefits in pursuing a public investment strategy to attract this industry.
SLU & The Biotech Industry
In July our Office of Economic Development briefed the City Council about the biotech industry and noted that local companies focused their work on human therapeutics and diagnostics leading to medical innovations. It costs an average of just under $1 billion and between 10 to 15 years to develop one new drug.
In the past 50 years, 170 new companies have emerged from the research of the University of Washington. Seattle is now the sixth largest biotech center in the nation with over 65 firms; however they still only provide 7,300 jobs. About a third of them are found at just one company, the Fred Hutchinson Cancer Research Center located in SLU.
Fifty of the remaining firms have less than a hundred employees. Although few in number, biotech jobs are good jobs, with an average salary of $68,000 and each one indirectly accounts for creating another 3.23 jobs outside the industry. And they are a growth industry; state tax collections have increased on average 6% per year from 1994 to 2001.
But size does matter. The San Francisco Chronicle (June 10, 2002) wrote of a Brookings Institute study, “More fundamentally, Brookings questions whether biotechnology yields as many jobs and other economic benefits as boosters expect. Even in Boston and San Francisco, no biotech firm is among either area’s 25 largest private employers.”
Their small size calls into question their ability to be in a position to buy or build a facility given the high-risk nature of their business. Joseph Cortright, co-author of the Brookings report and an economist in Portland, Oregon, wrote in the Wall Street Journal (June 11, 2002) “I don’t think many places have carefully evaluated their odds of success. It’s unlikely many of these biotech companies will grow into full-fledged manufacturing firms that produce lots of jobs.”
Even with these limitations the strong research centers at U.W. and Fred Hutch provide Seattle with some advantage in attracting an industry that in 10 to 20 years could contribute to our economy. Each of these institutions ranks near the top in receiving Federal NIH grants. Unfortunately having a pool of talented researchers is not sufficient. The biotech industry, as our OED noted, is one of the most capital intensive industries.
The key problem facing Seattle’s biotech industry is the dearth of venture capital. For instance, Seattle receives nearly the same amount of grant funding as San Francisco, but has only generated 15% as many companies. And when compared to Boston, the other major biotech city in the US, Seattle receives almost half of the amount of grant funding as Boston, but it receives more than four times the amount of venture funding as does Seattle.
Will making SLU more compatible for biotech buildings attract more biotech companies? I hope so. And as long as the public cost is reasonable then we should pursue it. But I would not stake our city’s recovery on turning SLU into a new biotech center anytime soon. Consequently we need to pay attention to how we distribute our public investments so we do not shortchange our other industrial and retail centers where there are needs for improvements. It seems that I would have the support of those who actually make the biotech industry grow: the venture capitalists.
On April 4th of this year, Donald Elmer, the managing general partner of Pacific Horizons Ventures, a venture-capital firm focused exclusively on the life sciences, wrote in the Seattle Times, “Despite Nickel’s laudable intentions, the South Lake Union action agenda is simply a city-sponsored real-estate play. Unless there is an unusual and unexpected flow of private investment for early-stage bioscience, the mayor would be wise to pause and focus the city’s money and his energy elsewhere.”
My approach to the proposed changes in SLU, like the Code Amendments described below, is to weigh their benefits to the city against any costs that may occur. These costs would include any unintended consequences that could negatively impact the city’s environment. But I recognize that concentrating biotech industry or other high-tech industries into one neighborhood could contribute to commuter trip reduction if it is accompanied by new housing. If sufficient concentration occurs there could even be spin-off retail development to support a sizeable residential neighborhood.
At this point in the proposed development of SLU there are many questions and many opportunities. I look forward to reviewing the public testimony and the city sponsored cost-benefit study that is currently underway on SLU’s future development.
SLU Biotech Industry Code Amendments
The Department of Design, Construction, and Land Use (DCLU) is proposing amendments to the Land Use Code (Title 23) to the zoning in South Lake Union to address the unique needs or features of biotech uses. These features include tall floor to floor heights and specialized mechanical equipment. The amendments include the following:
– Allow up to 10 to 20 feet of additional height for biotech development, depending on the zone;
– Apply a height measurement technique similar to that used downtown, using the street frontage of the property to determine building height;
– Exempt from FAR limits up to 15 percent of overall floor area for mechanical equipment;
– Increase the allowable roof top coverage area to sixty-five (65) percent if equipment is screened;
– Revise the minimum amount of parking required for research and development laboratory from the current requirement of 1 space for each 1,000 square feet of floor area to 1 space for each 1,500 square feet (generally, more parking may be provided than the code required minimum amount);
– Reduce the number of loading berths required when centralized facilities are provided to serve multiple buildings; and
– Clarify the definition of “research and development laboratory (this amendment would apply citywide).
The currently zoned height and design restrictions would remain for buildings within SLU that do not house biotech industries.
This coming Tuesday, September 23, there will be a Public Hearing and a Public Meeting on these code changes.
The Land Use Committee will meet jointly with the Finance, Budget, Business and Labor Committee to take public testimony on proposed amendments to the Land Use Code. The meeting begins at 4:00 p.m. in City Hall, 600 Fourth Avenue, 2nd Floor. Entrance to the building is on Fifth Avenue between James & Cherry Streets.
The DCLU will hold a public meeting to provide information about the proposal at the Naval Reserve Building at South Lake Union Park, located at 860 Terry Ave. North. The meeting begins at 6:00 p.m.
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Posted: September 17th, 2003 under Budget and Economic Development, Human Services and Health, Planning and Land Use, Technology, UP
Tags: biotech industries, Budget and Economic Development, Construction and Land Use (DCLU), Department of Design, Finance, Fred Hutchinson Cancer Research Center, Labor Committee, Land Use Code, Land Use Committee, South Lake Union, unemployment rate, UP