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Massachusetts Close to Passing Revised $1B Life Science Bill, With A Few New Earmarks

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Leaders of the Massachusetts House of Representatives predict they are weeks away from approving $1 billion in subsidies over 10 years to the state’s life sciences sector, following their introduction last week of a revised version of the measure introduced over the summer by Gov. Deval Patrick.
 
The revised bill — officially An Act Providing for the Investment in and Expansion of the Life Sciences Industry in the Commonwealth — retains the proportions of spending envisioned by Patrick: $500 million in bonds for capital investments such as facilities and life sciences equipment; $250 million on fellowships, research grants, and workforce training programs; and $250 million on tax credits targeted to life sciences companies that fulfill job-creation promises.
 
But House Speaker Salvatore DiMasi (D-South Boston) and other leaders of the chamber left their stamp on Patrick’s bill by earmarking parts of the bill’s money for a host of projects designed to benefit many of the state’s largest life sciences employers, as well as a set of projects Patrick intended to fund at state-funded University of Massachusetts. UMass will receive more than $200 million, or one-fifth of the bill’s total proceeds, for various projects.
 
The House leaders said their revised bill would better serve the state’s life sciences industry, while still fulfilling the governor’s promise — made last May from the floor of the 2007 Biotechnology Industry Organization Global Convention, held in Boston — that Massachusetts would stem what industry leaders and advocates say has been erosion of the state’s top-tier life sciences cluster.
 
“Massachusetts is a world leader in the life sciences industry, and this investment will help keep us there for years to come,” DiMasi said in a press release announcing the revised legislation.
 
DiMasi joined with Rep. Daniel Bosley (D-North Adams), chairman of the legislature’s Joint Committee on Economic Development and Emerging Technologies, and other House leaders, in announcing the changes at a Feb. 14 press conference. The bill will be sent to the House Ways and Means Committee, typically the last stop for legislation headed to the floor of the House, where DiMasi announced he will schedule debate on the bill the week of Feb. 25.
 
The actual debate may come a few days later, Bosley told BioRegion News, since many lawmakers will be returning from taking vacations with their families during this week, when the state’s public schools are closed for mid-winter recess.
 
Whenever it begins, the debate is expected to produce a House vote in favor, followed by action in the Senate. A spokesman for Senate President Therese Murray did not respond to a BRN request for comment, but gave the Boston Globe a one-line statement: “We're looking forward to taking up the legislation as soon as possible.”
 
DiMasi and Murray committed their houses of the state Legislature to a three-month action timetable agreed to by Patrick, under an accord announced Nov. 7 — almost a week after Bosley told BRN he expected state officials to craft a consensus life sciences bill early this year.
 
In recent weeks Bosley, DiMasi, and Patrick telegraphed their consensus on the life sciences bill through upbeat statements to news outlets from Massachusetts and elsewhere. On Feb. 1, Patrick declared: “It’s on track,” answering a BRN question at a press conference following his address to the Life Sciences Talent Summit.  
 
Earmarks for Genzyme, Wyeth
 
Genzyme would benefit from $12.9 million set aside for the town of Framingham, Mass. The money would fund water and sewer system improvements needed for the biotech giant to carry out a $250 million, two-year expansion of its town facilities, at One Mountain Road. Genzyme would add 300 workers to its Framingham workforce of 1,600 employees as a result of the expansion — which will include new office space and a new cell culture manufacturing facility and purification plant.
 
The life sciences bill marks the state’s second round of aid toward the project this year. Last month, the state Executive Office of Housing and Economic Development committed to giving the town a $250,000 grant for design work and engineering for a temporary fix: Replacing 500 feet of sewer lines with wider pipes capable of handling more water.
 
Wyeth BioPharma’s manufacturing plant in Andover, Mass., some 20 miles north of Boston, would benefit from $12.6 million included in the life science bill toward construction of a new exit off Interstate 93 at Lowell Junction, which straddles portions of Andover, Tewksbury, Mass., and Wilmington, Mass.
 

“We believe the life sciences bill is critical in order to retain, recruit and grow the companies in the commonwealth. And the incentives that we were promised from the state was the reason why we decided to stay.”

Over the past two years, Wyeth has discussed hiring at least 100 new workers for its Andover Biotech Campus. One of the largest biopharmaceutical operations in the United States, the campus houses seven manufacturing sites and 21 bioreactors where the pharma giant develops and manufactures recombinant protein biopharmaceuticals. Wyeth said it would create 150 jobs when it announced the expansion in 2006, but shrunk the number by last fall.
 
Wyeth has been constant, however, in saying it would be able to carry out the expansion if the new workers could get to the plant faster. Cars exiting I-93 now cannot get to Wyeth or other area employers without first winding through residential streets in the village of Ballardvale, Mass.
 
Bosley said the state’s long pipeline of road projects — $19 billion worth of unfunded needs, he said — makes it all but impossible to predict when the I-93 exit would be funded through the traditional transportation budget. “The sooner we can get money to [Wyeth’s campus], the more we can open up that particular park,” he said.
 
In addition to helping Wyeth expand, the new exit is also expected to facilitate development of some 700 nearby acres of unbuilt land.
 
“Since most of this vacant land is zoned for industrial and commercial uses, it is estimated that this in-fill development could support as many as 11,575 new jobs if fully developed,” wrote Bob Halpin, president and CEO of the Merrimack Valley Economic Development Council, in a “white paper” report arguing the need for the new exit. The report’s title summed up the council’s argument: “Our Opportunity for Smart Growth and Regional Economic Development in the Merrimack Valley and Northeast Massachusetts.”
 
The revised life sciences bill would mark the second time in the past six months that state officials have committed money for the I-93 exit. In September 2007, Patrick announced a $2.4 million grant toward construction of the interchange — $1.4 million from the Massachusetts Opportunity Relocation and Expansion program, known as MORE; the rest in Public Works Economic Development money.
 
That grant represented a quick about-face for the state. Last July, Andover and Wyeth were not on the list when the state announced the list of communities receiving a total $76.2 million in MORE funds — provoking anger from the Merrimack Valley’s delegation of state representatives. Andover and Wyeth had sought $15 million toward the first phase of the exit, a ramp from northbound I-93 to Lowell Junction; the project has been projected to cost between $50 million and $60 million.
 
Bosley defended state spending on the Wyeth and Genzyme projects: “That’s the kind of public infrastructure we should be doing anyway, and it opens up a tremendous opportunity.”
 
Wyeth, Bosley said, was supposed to have received funding in the state’s 2006 economic stimulus bill signed by Patrick’s predecessor, Mitt Romney, but didn’t.
 
“These are kind of no-brainers that we should be doing. Remove the two companies from the equation, it still is good public policy,” Bosley said. “I don’t look at them as just (assisting) Genzyme and Wyeth. I look at it as the potential for them to attract like businesses nearby. Those are two areas that are ready to go now. We know there’s an upside to developing those now. So we put those in and earmarked those.”
 
Shire Moves Ahead
 
The prospect of imminent enactment of a life sciences bill also explains why one of the state’s largest pharmaceutical employers announced — just hours before Bosley released details of the revised bill — that it would proceed with a long-planned $394 million expansion in the Bay State.
 
Shire Human Genetic Therapies, a unit of British-based Shire PLC, said it would more than double its Massachusetts workforce over the next eight years by adding 680 people to the 675 people it now bases in the state. Shire plans to fill more than a half-million square feet of in the Lexington (Mass.) Technology Park by renovating the 125,000-square-foot 300 Patriot Way, and building two additional structures on development pads — the 200,000-square-foot 400 Patriot Way, and the 170,000-square-foot 200 Patriot Way.
 
“We want to have everything finished by 2012,” Shire spokeswoman Jessica Cotrone told BRN,adding that the 680 would be all new hires.
 
The tech campus had once been filled by Raytheon, until it moved its headquarters in 2004 from Lexington, Mass., to Waltham, Mass., about five miles south.
 
While groundbreaking for the expansion will take place later this year, Shire already has a presence in Lexington. Last year it leased 55,000 square feet at the tech park’s 125 Spring St. Earlier this year, Shire shifted there some employees from its current US headquarters in Cambridge, Mass., creating a Lexington workforce of 180 employees. They include SHGT’s entire research operation, plus some human resources and some administrative functions.
 
A Shire press release cited as a key factor in its decision the promise of $48.1 million in economic subsidies — $40.6 million from the state, $7.6 million from the town of Lexington. Cotrone said some of the state money will come from the life sciences bill, while the remainder will come from existing programs; she could not confirm a more precise breakdown.
 
“We believe the life sciences bill is critical in order to retain, recruit and grow the companies in the commonwealth. And the incentives that we were promised from the state was the reason why we decided to stay,” Cotrone said.
 
In choosing Massachusetts, Shire turned down higher economic-incentive packages from North Carolina ($42 million) — the company’s other serious option, Cotrone said — and South Carolina ($50 million).
 
“It was always apparent that other states could offer us more, but we recognized the significance of staying in Massachusetts,” Cotrone said. “We have an excellent place to recruit and retain employees of an incredible caliber. We have a good employee pool in Massachusetts. We have good relations with the state and the local government. All of these things were reason why we decided to stay.”
 
So, too, was Massachusetts’ sweetening of its initial incentive package, which at $24 million lagged behind a $40 million proposal from neighboring Rhode Island. “Once the state was able to bridge the gap, in that sense, then we decided to stay.”
 
Cotrone said the Lexington campus will allow Shire to consolidate operations by locating a manufacturing facility next to its research lab — at a lower cost than possible in pricey Cambridge, Mass., where the company now maintains its headquarters and operates two manufacturing plants in the city’s Alewife section.
 
Shire has said since last year that its expansion in Massachusetts would hinge on the state demonstrating a commitment to the life science industry through the bill. When the measure appeared to stall over the summer following concerns raised by legislative leaders, Shire took the unusual step of complaining publicly that the state had been slow to show support for the life sciences industry.
 
Shire’s complaint about the pace of reviews on the bill had been echoed by Patrick. In testimony during an Oct. 30 hearing on the bill before Bosley’s committee, the governor faulted what he termed “inaction” by the legislature with a decision by Novartis to choose Singapore over Massachusetts, as well as Ireland and Switzerland, as the site for a new 700,000-square-foot manufacturing plant set to employ 400 people. DiMasi and Bosley have denied any foot-dragging, arguing in interviews with BRN and other news outlets that they were proceeding as quickly as they could given the complexity of the legislation.
 
Lexington officials have approved for Shire a tax increment financing plan under which the town will generate $67.7 million in tax revenue from Lexington Technology Park over 20 years. Officials have defended the TIF by noting it would generate $20 million more for the town than anticipated when the technology campus was rezoned in 2004 by the Town Meeting.
 
According to a frequently-asked-questions posting about the TIF plan on Lexington’s town government web site, Shire’s expansion will bring to the town:
  • $4 million — $400,000 over 10 years — in “community support” payments toward town services;
  • $2.6 million from the state and/or Shire for infrastructure improvements;
  • $890,000 in permitting fees;
  • $100,000 from the technology park’s owner-developer, Patriot Partners.
Thinking Smaller
 
Bosley said smaller companies, as well as large ones, will benefit from much of the revised bill. But to be eligible for benefits, companies must be “certified life science companies” that maintain a “US corporate headquarters” in Massachusetts.
 
That was one change to the bill made by the House. Another change expands eligibility for two workforce training grant programs to businesses whose products provide support to life science companies, such as software developers, in addition to those companies.
 
The support businesses would be eligible for grants under the $30 million Intersection Workforce Grants program, intended to boost overall technology skills among workers statewide; and the $25 million Biology Workforce Training Grants program, intended to provide students with industry-specific training.
 
The grant programs are two of several spelled out in the revised bill. Another $40 million is earmarked for small life sciences businesses under the program named for Nobel Prize laureate Craig Mello. The program will award $250,000 in seed money designed to stimulate private investment and cover gaps in federal research funding. In return for the money, the state agency formed two years ago to support the life sciences industry, the Massachusetts Life Sciences Center, would take an equity position in grant recipients.
 
The center’s board would be expanded from the current five to seven members. One seat would be set aside for a researcher involved in commercializing biotech, pharma, or medical diagnostic products. The other seat would be reserved for a venture capitalist with “significant” experience in the life sciences sector. The bill would create two new advisory boards — a capital board focused on the center’s equity investments, and an advisory committee focused on regional issues.
 
Another $30 million would fund awards of between $5,000 and $15,000 to post-doctoral and graduate life sciences students. That program is named for Judah Folkman, the pioneer cancer researcher who died Jan. 14 at age 74. Folkman was a professor of cell biology at Harvard Medical School and director of the vascular biology department at Children’s Hospital in Boston.
 
The revised bill would offer life science companies another 2 percent tax credit if they locate within distressed or “Economic Opportunity” areas; and exempt from state sales tax any utility support system costs associated with a project from a certified company. Those projects would also be considered “research and development” entities, subjecting them in many cases to the exemptions from sales and personal property taxes enjoyed by manufacturers.
 
In addition, the measure sets aside $45 million to fund bridge loans by life sciences companies seeking to expand their R&D, manufacturing and commercialization efforts; the state would also match what companies receive under the US Small Business Innovation Research and Small Business Technology Transfer programs.
 
Also in the bill are $2.5 million toward development of a “comprehensive,” Internet-based life sciences industry database; $25 million in grants for training in pediatric stem cell research; and $30 million for “Requipment” capital grants to vocational and technical schools to buy lab equipment that life sciences companies no longer need. The Requipment program — its unusual name was the result of a typo by Bosley that he opted not to correct — is intended mostly for high schools, Bosley said, though some community colleges could qualify as well.
 
The costliest new single program is the $120 million set aside for establishing the Massachusetts Life Sciences Opportunity Relocation and Expansion Jobs Capital Program Trust Fund. The program would aid local governments by funding infrastructure improvements for life sciences companies creating large numbers of jobs as they move to or expand within the Bay State.
 
Bosley said the trust fund is similar to the state’s two-year-old MORE program, which assists larger projects in a variety of industries. They include the life sciences: Two years ago, the state used $34 million in program funding to persuade Bristol-Myers Squibb to build a $750 million, 400,000-square-foot plant now under construction in Devens, Mass. And back in June, the state awarded $4 million from MORE to Chelsea, Mass., for infrastructure needed by Alkermes toward a $60 million facility expansion projected to double the company’s workforce to 200 from 50 by 2010.
 
While adding many new programs, the legislation also retains many programs conceived by Patrick’s administration. The bill retains the governor’s plan to establish five regional “Technology and Innovation Centers,” outposts to be staffed by a total dozen employees. The outposts would have at their disposal a total $30 million toward lab space build-out projects they identify as being needed.
 
Later this year the state will solicit bids by public-private groups seeking to run centers — one per district in the state’s North, West, Central, South and greater Boston regions.
 
The central district center “would probably be in Worcester,” Bosley said, given the former industrial city’s budding life science cluster; its anchors include UMass Medical School, the South Worcester Industrial Park, and Worcester Polytechnic Institute.
 
“Life science just isn’t in Cambridge and Boston any more. It’s everywhere,” Bosley said.
 
The tech-innovation centers are intended to help scientists commercialize their technologies, link startups with angel and venture capital, as well as coordinate state and regional programs in business management, public-private financing, and workforce training.
 
The difficulty of navigating the broad array of worker training programs was a factor cited by industry, academic, and government leaders for Massachusetts’ dearth of life science workers, even as employment growth in the life sciences exceeds the pace of the state’s overall economy. Preliminary results of a study in progress by UMass’ Donahue Institute have projected an average annual employment growth rate of 1.3 percent for the life sciences sector through 2014, compared with 0.7 percent for the state as a whole.
 
Also in the bill are Patrick proposals to:
  • Extend from five to 15 years the net operating loss exemption for life sciences companies.
  • Create a Life Sciences Project User Credit Fee, a 100-percent refundable credit against fees paid by a project for submitting to the FDA applications for human drugs or supplements that were “primarily” researched and developed in Massachusetts.
  • Create a 10-percent, refundable Life Sciences Investment Incentive Tax Credit, which would fund for 10 percent of property costs, including land purchases, associated with a project.
  • Award $25 million each year in tax credits to life sciences companies, subject to criteria developed by the Executive Office of Housing and Economic Development.
UMass Millions
 
As with Patrick’s version of the bill, the biggest beneficiary of the revised life sciences measure is the University of Massachusetts. The measure includes $95 million toward a life sciences center to be built at the UMass campus in Amherst, as well as $90 million toward a new $265 million “Advanced Therapeutics Cluster” to rise on the campus of UMass Medical School in Worcester, Mass. The cluster would be home to a center for research in RNA interference, intended to continue the work of Mello, winner of the 2006 Nobel Prize in medicine, as well as a Stem Cell Bank and Registry, for which the bill will set aside $5.7 million.
 
UMass would also receive $11.4 million to acquire the Advanced Technology Manufacturing Center in Fall River, Mass., near the university’s Dartmouth campus. The ATMC, which opened its 60,000-square-foot building in November 2001, is an R&D facility with incubator space, owned by the quasi-public Massachusetts Development Finance Agency, also called MassDevelopment.
 
Bosley said UMass can use the incubator space and help ATMC forge ties with the nearby healthcare informatics software developer Meditech, which opened a 120,000-square-foot Fall River facility in 2005.
 
The stem cell bank-registry, which Patrick cited in announcing the legislation last year, would make available for public and private research stem cell lines held by eight institutions: Boston University, Brigham & Women's Hospital, Children's Hospital, Harvard University, Massachusetts General Hospital, Massachusetts Institute of Technology, Partners HealthCare, and the University of Massachusetts. The cells would be available for use by researchers in and outside the state.
 
Last week, Patrick issued a statement through a spokeswoman saying he was “delighted at the progress made,” following months of talks between legislative leaders and representatives of the governor.
 
“The bill released by the committee is consistent with my vision for supporting the continued growth of the life science sector in Massachusetts,” Patrick said. “This is an example of what’s possible when we all work together, and I look forward to continuing our collaboration with the House and the Senate on this and other important issues.”
 
The revised biotech bill reflects a thaw in what has been an intermittent, but persistent, power tug-of-war between Patrick and the state’s top lawmakers, all Democrats. The governor and legislative leaders have sparred on a variety of economic development issues, notably Patrick’s plan to create three new casinos, in hopes of generating between $400 million and $450 million of new revenue annually.
 
Patrick is counting on revenue from the casinos and other sources to pay for the life sciences bill and balance the state budget for the year starting July 1. Yet DiMasi and Bosley have opposed the casinos, arguing the state should use its resources toward creating higher-wage jobs, as with the life sciences.
 
DiMasi came around, however, to support another revenue-raising plan by Patrick — a series of corporate tax hikes designed to generate $297 million annually. To soften the blow for businesses, legislators have packaged the tax hikes with a three-year, 13-percent cut in the state’s corporate tax rate. Corporate taxes would fall from the current 9.5 percent at the start of fiscal 2009 to 8.3 percent in the fiscal year ending June 30, 2012. The cut is projected to return $200 million to business taxpayers. DiMasi, however, has said publicly he favors a faster tax cut, so it remains uncertain what sort of tax reduction will ultimately emerge from the House.
 
The political power of DiMasi and Murray was enhanced earlier this month, according to one blog focused on the state political scene, when their candidate for the Democratic presidential nomination, US Sen. Hillary Clinton, defeated Patrick’s choice, Sen. Barack Obama, during the party’s state primary on “Super Tuesday” Feb. 5.
 
Yet Bosley said House leaders weren’t seeking to seize on that or one-up the governor, but wanted to carry out their own review given how much money the life sciences bill would spend.
 
“Politically, it wasn’t to advantage the house or disadvantage anyone,” Bosley said. “We’ve had a long vetting process here, and the governor thinks it has taken a long time, but, you know, it’s a billion dollars. We should be very serious about it.”

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