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UNC-Chapel Hill Next Year Hopes to Start Building 8.5M-Sq.-Ft. Life Science Campus

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WINSTON-SALEM, NC – The University of North Carolina at Chapel Hill next year hopes to start constructing the first piece of an 8.5-million-square-foot technology research campus conceived in part to house young life sciences spinouts, an administrator said last week at a workforce development conference here.
 
How quickly that happens will hinge on how fast UNC-Chapel Hill and Chapel Hill town officials agree on a framework for municipal reviews that was to be the subject of Town Council discussions starting Feb. 11.
 
At the Town Council meeting, the council’s eight members and Mayor Kevin Foy will decide whether to hash out parameters for developing the campus through talks, which they hope will lead to a development agreement between the town and UNC-Chapel Hill.
 
University representatives have expressed support for such dialogue before the council begins formally reviewing the plan for the campus — the former property of Horace Williams, the school’s popular philosophy department chairman and professor— which the university has dubbed Carolina North.
 
According to Chapel Hill Town Manager Roger Stancil, the development agreement process would allow the town to complete two studies in progress whose results could affect what Chapel Hill will allow the university to do.
 
The projects include a long-range transit study detailing how the development could minimize new cars clogging town streets by encouraging more mass transit use, and, a fiscal impact study comparing what Carolina North would generate in town taxes with how much it would cost in new town services, Stancil told BioRegion News last week.
 
Because the university has only presented to the town a conceptual development plan, Stancil said, “the review of that project has really not begun at all.”
 
“The discussion by the council would actually begin to give some form to how they want to consider the proposals for Carolina North,” Stancil said. “The development agreement would really set out their expectations, all of the development standards they would like to see met.”
 
If the council chooses, the agreement could offer specifics about the mix of uses permissible, down to “what percentage of square feet ought to be housing,” Stancil added.
 
Early ’09 Groundbreaking Planned
 
UNC-Chapel Hill’s plan calls for it over 50 years to develop 250 acres of the 1,000-acre campus, located 71 miles southeast of Winston-Salem. The campus’ first phase would include what is now university-owned Horace Williams Airport, a small-plane airfield UNC wants to shut down as part of its development plan.
 
“The schedule we’re on says we’ll break ground this time next year. That suggests that we need to have the special use permit from the town by the fall, September or October,” W. Mark Crowell, associate vice chancellor for economic development and technology transfer, told BioRegionNews.
 
Speaking to BRN after his presentation at the Wired Bioscience Institute conference held last week in a Winston-Salem hotel, Crowell said Carolina North would allow the university for the first time to satisfy in one place life sciences startups’ growing need for space. These firms account for most of the 41 companies spun out of UNC-Chapel Hill since 2000.
 
“We spin them out wherever we can,” Crowell said in an interview. “We help them find a garage, an incubator facility in [Research Triangle Park], we help them find an office, whatever it is. We don’t have any place ourselves to put them right now.”
 
“We have no incubator right now, so we have to work double time to help (startups) deal with that. Interestingly, three of the 41 that we’ve done since 2000 have stayed in Chapel Hill. From a regional perspective, that’s not as strong as we’d like to see it,” Crowell said. “They go to Durham. They go to RTP. They go to Raleigh. We’re all about North Carolina, but we actually think we should be concerned with Chapel Hill, too.”
 
‘Incubator on Steroids’
 
Crowell said the need for space explains why the first component of Carolina North would be an 85,000-square-foot facility for incubator- and post incubator-stage companies, both in the life sciences and other tech specialties. The facility would be built by Alexandria Real Estate Equities, the nation’s largest developer of life sciences sites.
 
He estimated the facility would cost $20 million to $22 million to build. Representatives of Alexandria and the university have discussed plans for the project since 2004.
 
UNC-Chapel Hill will contribute land to the venture, which Alexandria would lease at $1 a year for 40 years. Alexandria would export to the campus an “Innovation Center” similar to the centers Alexandria operates in Seattle and has begun planning for the University of Florida’s Gainesville campus [BioRegion News, Dec. 10, 2007].
 
“It’s an accelerator. Some people want to call it an incubator. I call it an incubator on steroids,” Crowell quipped. “This is a facility that also has management and money.”
 
The money refers to a business-acceleration fund that Alexandria would establish to co-invest with venture capitalists in Innovation Center companies ready to spin out of UNC-Chapel Hill. The fund is along the lines of the Accelerator Corporation, which debuted in 2003 with $15 million from Alexandria and a group of VC firms in Seattle, and a $25 million fund Alexandria and UF-Gainesville agreed to create toward that project. In both cases, the funds were intended to nurture early-stage entrepreneurs in markets where fewer VCs did business.
 

“Carolina North will be a catalyst for the economic transformation of our state, generating jobs and tax revenues.”

“In all likelihood, Alexandria would be the lead investor, and probably have four to five (limited partnerships) investing in a $20 million to $25 million fund,” Crowell said.
 
The innovation center would be part of the 8.5 million square feet of laboratory and office space envisioned for Carolina North. Most of that space, 6 million square feet, would consist of offices and laboratories. Another 2 million square feet would be residential space, though the number and types of housing units has yet to be determined. And “another half-million to a million” square feet of retail space would be built, Crowell said.
 
UNC-Chapel Hill has committed to leasing 25 percent of the facility, including new offices for a new technology transfer office now located next to the campus’ History and English departments.
 
“You’d really have sort of a science and research community over a long period of time,” Crowell told BRN in an interview.
 
Crowell said there had been no talk about Alexandria developing additional buildings within Carolina North. That possibility was hinted at by Alexandria CEO Joel Marcus in a Nov. 28, 2007, article in the campus’ student newspaper, the Daily Tar Heel, which quoted Marcus as saying: “We hope to make it one of many buildings to make a high-tech campus.”
 
Alexandria CEO Joel Marcus did not return a BRN telephone message seeking comment on the Chapel Hill project.
 
Headquartered in Pasadena, Calif., Alexandria is a publicly traded real estate investment trust that said funds from operations during the third quarter of 2007 increased 21 percent to $42.7 million year over year, and that total revenues rose 23 percent to $104.1 million. The REIT was to have announced its fourth-quarter 2007 results after the market closed on Feb. 11.
 
Growing Tech Transfer
 
During his talk, Crowell said the innovation center was the latest of several projects by which UNC-Chapel Hill has sought to accelerate a tech-transfer effort that has spawned 42 companies since 2000 based on university technologies.
 
During the year ending June 30, 2006, UNC-Chapel Hill spent about $584 million on academic research, up 30 percent from $344.1 million the previous year, according to the annual US Licensing Survey reports by the Association of University Technology Managers.
 
Startups increased from two in FY ’05 to five in FY ’06. Patent activity rose to 67 new patent applications in ’06 from 58 a year earlier. The number of licenses executed inched up to 49 from 47, while cumulative invention disclosures rose to 330 from 319.
 
But AUTM’s figures also reveal some likely reasons for the university’s interest in improving its tech-transfer efforts. UNC-Chapel Hill generated $2.4 million in licensing income in FY 2006, up from $1.9 million the previous year and by far the biggest amount among UNC campuses.
 
But for the three fiscal years ending 2006, UNC-Chapel Hill’s cumulative adjusted gross income fell 15 percent, to $8.1 million for 2004-06, from about $9.6 million for 2003-05. In addition, the number of cumulative active licenses dropped during that period to 238 from 274.
 
To spur research and development of small-molecule medicines, the university recently established the Center for Integrative Chemical Biology and Drug Discovery. CICBDD is headed by Stephen Frye, who joined UNC-Chapel Hill from GlaxoSmithKline, where he was worldwide vice president for discovery medicinal chemistry after serving as co-inventor and research project leader for the prostate enlargement treatment Avodart. During 2007, GSK reported, Avodart sales rose 38 percent over the previous year, to £285 million ($554.5 million).
 
CICBDD this year plans to develop research on two or three chemical series with potential use in treating disease. By 2010, the center plans include licensing out at least one project, creating at least one spinout company, and delivering one or more pre-clinical candidates per year for testing.
 
“It is essentially a drug-discovery and toxicology service within the university so that we can look to develop compounds against specific targets and try to move our technologies much further through that development pipeline before we start teeing them up for licensing or business development,” Crowell told attendees at the Winston-Salem conference.
 
Crowell said the center’s goals include licensing new treatment technologies to pharma and biotech companies and to nonprofit organizations like the Bill and Melinda Gates Foundation and the International AIDS Vaccine Initiative.
 
“We’ll make no money if that’s successful, but what a great tech-transfer outcome and how important to our efforts to license those same technologies in commercial markets, in markets that will take a long, long time to achieve success,” Crowell said.
 
A Tough Sell
 
Speaking with BRN after his presentation, Crowell acknowledged that Carolina North may prove a tough sell with some officials and residents: “There’s a lot of excitement, but potentially there’s also a lot of concern over that much development.”
 
UNC-Chapel Hill has sought to develop Carolina North on and off over the past decade, with a technology campus discussed as a potential use of the Horace Williams property and nearby Mason Farms property during a 1998 study the university carried out through JJR and Parsons Brinkerhoff.
 
The study, available here, noted that UNC had begun studying development of the sites in 1994 after starting to run out of expansion room within its current Central campus. Unlike the later studies, it noted that 550 acres of land were developable at the Horace Williams Property. Among recommendations in the 1998 report: “Encourage a mix of land uses on the Horace Williams property, with an emphasis on research including academic, housing, support services and limited commercial uses.”
 
In 2006 the university completed a conceptual development master plan in which it detailed a mix of new academic buildings, parking structures and other facilities for the campus. The plan was updated last year to include a 330,000-square-foot new Biomedical Research Imaging Center building, a 226,000-square-foot dental science building addition, a new 73,800-square-foot science library, and a 24,000-square-foot pharmacy.
 
“The university’s research enterprise already fuels economic activity for the state, and the university strives to build upon that at Carolina North, attracting private companies to partner with university faculty and transforming research into products and services to improve quality of life,” UNC trustees stated in a 2005 resolution supporting development of Carolina North. “Carolina North will be a catalyst for the economic transformation of our state, generating jobs and tax revenues.”
 
That concept goes beyond the series of principles recommended for the campus by a group of residents appointed by the town in November 2005. The Horace Williams Citizens Committee in May 2006 issued a report  recommended that the center:
  • Develop no more than 25 percent, or 250 acres, of the campus;
  • Clean up an onsite landfill based on a remediation plan to be developed;
  • Include UNC-Chapel Hill trustees in the planning process to avoid a repeat of their rejection of a mixed-use zone for the campus a few years back; and
  • Perform additional environmental, traffic, air, water, noise, and land studies.
The citizen committee’s recommendations and public comments by many residents in the ensuing year and a half reflect lingering concerns that Carolina North may overdevelop Chapel Hill.
 
“I understand why UNC feels compelled to push forward its plans for the Carolina North Innovation Center but I still want to see a master plan that incorporates this project, its supplementary infrastructure and the results of the on-going transit, fiscal equity and environmental studies before one concrete block is laid,” Will Raymond, a civic activist who has been outspoken on Carolina North and other development issues, wrote in a Nov. 18 post on his website, Citizen Will.
 
Raymond raised that and other issues about Carolina North earlier last year when he was one of eight candidates seeking four council seats. Raymond lost. In an election questionnaire published last year by the Independent Weekly, Raymond expressed concerns about the eventual size and scale of Carolina North, as well as the process created by officials to review the campus concept.
 
To build better relations with the community and nearby towns, UNC Chancellor James Moeser formed his own Leadership Advisory Committee, chaired by former law dean and Chapel Hill Mayor Ken Broun with representatives of Chapel Hill, Carrboro, and neighborhoods near Carolina North.
 
In its final report in January 2007, a consensus of committee members agreed to a set of principles promising that Carolina North “will create a campus for living and learning that is a model of ecological, social and economic sustainability,” with ample recreation land, a development plan that will generate at least as much revenue as costs to Chapel Hill, and housing for residents of mixed incomes.

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