Friday, August 1, 2008
Past promises haunt project
Lawmakers may be wary to fund proposed Schnitzer campus
Portland Business Journal - by Aliza Earnshaw Business Journal staff writer
The life-sciences collaborative research building planned by Oregon University System and Oregon Health and Science university is an innovative bid to boost the state's bioscience industry.
But university planners will face some challenging questions when they go to the Legislature next year for $175 million in state bonds to finance the project, proposed for Portland's South Waterfront as part of a planned "science quarter" development.
"There will be much more scrutiny placed on these types of investments, based on the recent history that they don't always pan out," said Sen. Rick Metsger, a Democrat who represents east Clackamas County and Hood River County.
Metsger, who chairs the Senate transportation, business and economic development committee, was referring to the $200 million in state bonds that he and other legislators approved in 2001 to help OHSU boost research in specific areas.
The idea was to help grow Oregon's small bioscience industry by hiring research faculty in particular areas, developing new research institutes and turning promising research into new businesses.
But some say now that OHSU's then-president, Peter Kohler, oversold the Oregon Opportunity, promising a $1 billion bioscience industry by 2006. Numbers are difficult to come by -- a 2001 study pegged the size of the industry at $350 million. It's grown since then, but experts say it's still well short of Kohler's prediction.
Legislators are likely to demand "proof of performance markers" if they approve funding, said Metsger.
"They'll have to realize that between that proposal and any taxpayer liability, others -- not taxpayers -- will be on the hook," Metsger said.
In a similar situation, legislators told University of Oregon officials that it would approve $200 million in bonds for a new basketball arena only if the university and its foundation would step in to pay those bonds, should revenue from the stadium fail to meet expectations.
OHSU officials, mindful of recent history, are backing away from making big promises about the proposed Life Sciences Collaborative Building, to be sited on riverfront land donated to OHSU by the Schnitzer family.
But it's clear they believe that housing compatible departments of several state universities in close proximity will boost the creation and growth of local bioscience companies, while attracting other, bigger companies to establish a Portland presence.
"If we create something excellent, companies may want to locate here -- potentially," said Dan Dorsa, vice president of research at OHSU. "I didn't say definitely that by a certain date Pfizer will move here. I want to be clear on that. But the possibility of something like that increases."
The concept for the South Waterfront collaborative building is quite different from previously proposed biotech incubators, and even from the Oregon Nanoscience and Microtechnologies Institute, the undisputedly successful nanotechnology collaboration between Oregon's three research universities and a national laboratory located in Washington.
Where ONAMI is a "virtual" institute, with researchers collaborating via teleconferencing or driving back and forth, the South Waterfront building will gather together all the players in a single location.
Any researchers in the building who are working with others at OHSU or Portland State will be able to reach their colleagues quickly by bus or aerial tram.
Even if researchers have to drive back up and down Marquam Hill to collaborate with researchers at OHSU clinics and hospitals, that's still much easier than the long commutes that are common in large bioscience centers like Boston, San Francisco and San Diego.
But Oregon is still missing one big magnet for large companies, said Portland economist Joe Cortright: a deep bench of bioscience business talent.
That's true, admitted Bob Lanier, executive director of the Oregon Bioscience Association. But he doesn't think that will stop Oregon's bioscience industry from growing and attracting outsiders.
"We've been growing our own," he said. "I do know that when there are openings in middle and upper management (at Oregon companies), there's no trouble attracting great talent from around the country. I'm constantly being contacted by high-level executives who want to move here."
Unfortunately for advocates of the collaborative bioscience building, recent events undercut the "build it and they will come" argument.
OHSU used Oregon Opportunity money to hire researchers for its Vaccine and Gene Therapy Institute, founded in 2001. But when it came time to expand, the institute took an offer in January of $113 million in publicly funded inducements to expand in Florida. That means 200 new jobs at the institute will be created in Florida, not Oregon.
Cortright pointed out that other Oregon researchers have left the state in recent years. Several Oregon biotech firms have been purchased by other companies and moved, while others have relocated after receiving venture capital.
However, OHSU has a number of successful startups that are now bursting out of their current cramped quarters in existing OHSU buildings. These need the kind of lab-and-office space the new building will provide.
Rentable space amid all that research activity will attract companies, said Lanier. He pointed to Kentucky, which has succeeded in attracting bioscience companies by using public money to match small federal research grants.
"Collaborative life sciences is a comparable magnet," said Lanier. "If Kentucky can do it, we can do it."
Building would house many organizations
The $250 million Life Science Collaborative Building planned by Oregon Health and Science University and the Oregon University System will house labs, classrooms and offices for programs run by OHSU and all of Oregon's other major universities.
These include medical school programs; Oregon Institute of Technology health care professional programs; part of Portland State University's chemistry department; a portion of Oregon State University's pharmacy school, and others.
The 300,000-square-foot building will also have office and lab space for bioscience companies, ranging from very early stage companies with no revenue up to established companies.
Several organizations will also be located there to help move research from lab to commercial viability. These include a facility that would compound new drugs in small quantities for clinical trials; an office to assist with running clinical trials and human investigations in compliance with federal regulations; an imaging center; and the newly established Oregon Translational Research and Drug Discovery Institute.
The $250 million needed for the building would be comprised of $75 million in general-obligation bonds; $50 million in state lottery bonds; $75 million in private gifts, grants and other funds; and $50 million in revenue bonds. The revenue bonds will be repaid with fees from three levels of parking under the building and rents from retail businesses that will occupy part of the ground floor.
The private funds include a $40 million anonymous gift to OHSU for expanding its medical school and $20 million from Tri-Met to develop a light-rail station at the site.
aearnshaw@bizjournals.com | 503-219-3433
http://portland.bizjournals.com/port...ml?t=printable
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