Outside City Hall: June 2009 reprinted from regularly appearing column in the South Seattle Beacon and other Pacific Publishing Co. Newspapers

Mayor and City Council try again for Obama stimulus funds for the Mercer Corridor Project – over $50 million!

- If funded Mercer would receive ten times more stimulus funds than any other Seattle project and would be the only transportation project receiving such funding despite a half-billion dollar backlog of neighborhood bridge, street, and sidewalk repairs

- Biotech has tanked in South Lake Union.  Not because of the recent downturn, it is a long term trend only exacerbated by current conditions!

- To top it off, newly released city and county data shows that the number of jobs created in South Lake Union from 1995 to 2002 actually exceeded the number of jobs created there since 2002!  Fewer jobs have been created since the Mayor launched is vaunted biotech SLU agenda and started pouring our tax dollars into that small patch of Seattle land. 

Don't believe us after reading our column then take a look at our documentation that immediately follows

Our Column Begins Here:

Remember the promise of biotechnology?  Remember the Mayor’s plan to turn South Lake Union into a world center of biotech research and innovation?  Remember all the high-paying new jobs and tax revenues this was supposed to bring to our city? 

That was the justification for huge public investments in infrastructure in South Lake Union.  We were told we needed to upgrade the water systems and build another electrical substation to handle the increased demand of all those labs developing new patented life forms.  Height limits were raised so that buildings could have special ventilators on the roofs.  The South Lake Union trolley and the Mercer reroute were originally sold as amenities to help fulfill the Mayor’s biotech dreams for that area.

You don’t hear so much about biotech these days.  The dirty little secret no one at City Hall will acknowledge is that biotech has tanked.  And this isn’t a dip in activity due to the current economic downturn, biotech never got off the ground. 

There has been no real growth in biotech jobs regionally or statewide since 2003.  Further, the number of jobs created in South Lake Union from 1995 to 2002 actually exceeded the number of jobs created there since 2002, when Paul Allen and our Mayor decided South Lake Union was going to be a biotech hub and pledged nearly a billion of our tax dollars towards that goal.

The other dirty little secret - most of the “new” jobs in South Lake Union simply are due to businesses relocating there from other parts of town such as Group Health, Amazon and NBBJ Architects.   

The biggest of the projects planned for South Lake Union —and most egregious— involves the Mercer Corridor.  Billed as a traffic improvement, it’s really a beautification plan designed to deflect traffic away from Paul Allen’s residential developments facing the lake along Valley Street.  Specifically it would turn Valley into a residential street, rerouting traffic onto a newly designed two-way Mercer (now only an eastbound route).  Three city-initiated studies concluded this plan would make traffic worse, especially in the eastbound direction, actually increasing travel times by 8 minutes.

From an initial price tag of about $90 million, the Mercer project mushroomed to over $200 million during the planning phase.  This however has not deterred our Mayor and most of our City Council from making Mercer their number one priority.  Last year our Mayor and Council raided funding from the Bridging the Gap Levy (approved by voters in 2005) for an additional $70 million for the project. No matter these were dollars explicitly earmarked to meet a backlog of neighborhood street and bridge repairs.

Still there was a $50 million shortfall in the budget for this boondoggle.  In April, the State Legislature turned down Seattle's plea for $50 million in federal stimulus funds for the Mercer Project.  To receive the first round of Recovery Act transportation dollars, cities had to obtain state approval.  When interviewed, key state legislators said the Mercer project did not rise to the level of other projects of statewide significance.

Now we’ve learned that our Council and Mayor have gone back to try again for a bite of the apple.  City leaders recently filed for $8 million in stimulus funds through the Puget Sound Regional Council and also will go back directly to the Federal Department of Transportation to request another $50 million for the project.

When Councilmember Licata asked what other backlogged transportation infrastructure projects would be part of the City's application for stimulus money, he was told by the Mayor's representative they would only be requesting funds for Mercer.  They didn't want to "muddy the waters,” by asking for help with roads, sidewalks or bridges in our neighborhoods.

Hundreds of cities are applying for stimulus funds and the federal Department of Transportation will not make final decisions until the end of the year.  Nevertheless, staff from the Mayor's office told Councilmembers that Mercer was so important they would get the DOT to speed-up its decision.  They also spoke confidently about getting the feds to reprioritize stimulus funds from distressed "communities affected by the current economic downturn," to "economically growing areas”. Apparently, our Mayor thinks he’s got the clout to overturn the key criterion for use of these funds --boldly pasted on the front of the Recovery Act itself—so he can better serve Paul Allen's South Lake Union agenda.

Perhaps you could justify this relentless quest by our Mayor and Council to spend millions in precious transportation dollars for the Mercer project if it actually relieved congestion or solved a regional transportation problem.  Perhaps you could justify raiding “Bridging the Gap” funds destined for neighborhood projects if Mercer met a real need.  Perhaps you could justify going back over and over again for Obama’s stimulus funds if Mercer did indeed serve a distressed community rather than the richest man in the world.  This project fails on all counts. 

Here's information on the City's application to the PSRC and where you can go to complain:
http://psrc.org/projects/tip/selection/2009/STP_CMAQ_Applications/28_Seattle_MercerWest.pdf . And/r contact Peter Heffernan at peter.heffernan@kingcounty.gov.  To complain about the DOT application for TIGER funds mailto:TIGERGrants@dot.gov


Biotech has tanked....but it's not due to the recent downturn. It's a long term trend only exacerbated by current conditions!

There has been no growth in biotech in the region in the last 10 years. In fact, Seattle and the NW's ranking nationally probably looked better a decade ago".  

Zero growth in employment among major northwest biotech non-profit's and public traded for-profits over last five years

* This has occurred despite the continuing allocation of millions annually by state and local government in direct and indirect taxpayer subsidies to promote biotech development in Washington State

In 2004, Governor Gary Locke signed a bill authorizing a continuation of millions of dollars worth of annual tax breaks (B & O and Sales Tax breaks) to biotech companies involved in "research and development".  He signed that bill in the brand new offices of what he called a "growing company", Targeted Genetics.  Since then tens of millions in state revenues effectively were diverted to stimulate biotech development in Washington State.  These tax breaks were recently extended again to this industry through 2015.  During the 2009-2010 biennium, it is estimated that 160 million dollars in tax revenue (B & O and Sales Tax breaks) will be diverted (meaning pulled from the state's general fund) to pay for these "incentives".  source: http://www.eoionline.org/tax_reform/fact_sheets/ClosingTaxBreaksIncreaseBOCredit.pdf

In 2005, on top of these tax breaks, Gov Gregoire sought and obtained the legislature's approval for creation of a $350 million "Discovery Fund" drawn from tobacco settlement receipts and to be given out annually in the form of grants to biotech firms over 10 years. This year $39 million from that fund will be doled out (In 2008, the state doled out over 60 million in grants from this fund).  Gregoire boldly proclaimed in 2005, this fund would lead to creation of 20,000 new biotech jobs "over the next 10-15 years"  source:http://community.seattletimes.nwsource.com/archive/?date=20050202&slug=lifesciences02

In five years since Gregoire praised the role of biotech in generating thousands of new jobs, there has been "0" job growth in the State attributed to the biotech sector

The following are highlights from articles written by Luke Zimmerman, biotech journalist for his national blog Xconomy.com and drawing from research and data from both local and national studies of the local biotech scene.  We've provide links to his articles and studies he refers to contained below. Zimmerman also writes occasionally for the Seattle Times: 

Zimmerman points out that:

* Seattle and the NW's ranking as a location for biotech development has fallen. New England has 25 times the cash on hand as Seattle biotech companies according to a recent (2009) report by Ernst and Young.  San Diego has raised 10 times the amount of revenue annually than Seattle.

* This fall-off in biotech is not the result of the current downturn but represents a steady erosion in the Northwest's share of the biotech business nationally over the last decade (see links and info below for details and sources)

See entire article by clicking this link http://www.xconomy.com/seattle/2009/04/24/why-should-you-care-about-biotech-business-government-allies-say-jobs-high-wage-jobs/

See also:http://www.xconomy.com/national/2009/05/05/biotech-business-model-unsustainable-in-financial-crisis-ey-says/2/

For a copy of the full Archstone 2006 report to confirm Zimerman's information, click on this link to view it http://www.washingtonlifescience.com/industry/annrpt/WA_WorkforceTrainingReport2006.pdf

And parenthetically, the company offices of Targeted Genetics where Gary Locke in 2004 signed the bill extending tax breaks to biotech is in the process of being sold off. The cash strapped company just slashed their staff by 2/3rds and is on the verge of possible bankruptcy. http://www.bizjournals.com/seattle/stories/2009/06/22/daily2.html

Here are specific quotes from the Zimmerman articles contained in the April and May issues of Xconomy:

Archstone Consulting was hired by “We Work for Health" an effort to unite business, academic, and community partners with company employees, vendors, suppliers, and the public around a common goal: To communicate to policymakers and key opinion leaders the important role the life sciences sector plays in Washington’s economy, to analyze the economic impact, with financial support from the Pharmaceutical Research and Manufacturers of America. This study revealed nothing surprising or groundbreaking. But here are a few bullet points.

—There were 19,291 people directly employed in biopharmaceuticals in Washington state in 2006, the year the most recent data was available.

- if this study had been done 10 years ago, Washington probably would have ranked higher as a biotech center than it does now. In fact, when I examined biotech job growth for The Seattle Times in 2004, I found there were 19,300 people employed in the sector in the state the previous year, citing data from the WBBA (Washington Biotechnology and Biomedical Association). That suggests there was zero job growth in Washington biotech from 2003 to 2006—years during which the rest of the economy grew.

Seattle's ranking as a location for biotech development has fallen. New England has 25 times the cash on hand as Seattle biotech companies according to a 2009 report by Ernst and Young.  San Diego has raised 10 times the amount of revenue annually than Seattle. 

more quotes from Zimmerman's articles

Pacific Northwest. This life sciences cluster, where yours truly (Zimmerman) calls home, has some things going for it with the Bill & Melinda Gates Foundation financing global health research and some strong basic research institutions, but it also had some pretty dismal biotech industry numbers to report to Ernst & Young (click here for link to their full report).http://www.ey.com/CA/en/Newsroom/News-releases/Media-2008-Global-Biotech-Survey  (copies of report may be ordered from them free thru this link)

The Pacific Northwest ranks No. 9 in the U.S. in number of public biotech companies with 15, which puts it in a tie with Pennsylvania and the Delaware Valley. (By contrast Boston has 59 publicly traded companies, and San Diego has 40).

The Pacific Northwest’s biotech companies had a relatively puny market valuation of $1.5 billion—nowhere near hailing distance of Boston or San Diego—and that figure represented a 45 percent drop from a year earlier. Spending on R&D was about $481 million combined, a 19 percent drop from a year earlier.

And even while they’re cutting back, Northwest companies haven’t been able to build up much of a financial cushion to ride out the recession. Only about $241 million combined showed up on the balance sheets of Northwest companies, a 28 percent drop from a year earlier.  company-by-company cash analysis here.

This forced me to do a double-take about the $241 million. It’s not a misprint. It means New England biotech companies have about 25 times as much cash on hand, and San Diego companies have 10 times as much as the companies here in the Northwest. Something to consider next time an elected official tells the public about how competitive the local cluster is with the big boys around the country.

(quotes italicized from Luke Zimmerman - links to specific sources included above)



Our Update of Archstone 2006 Biotech Report shows drop in biotech jobs since 2006 within major IPO's and Non-Profits doing business in Seattle and the NW.

Here's job information taken from a chart contained in the Archstone 2006 report. Figures below for employment thru 2005 were taken from that report.  I updated the figures to 2009 by going to each companies current websites and tallying what they said their current employment levels happen to be. 



Has the Mayor's $800,000,000 South Lake Union Agenda produced jobs commensurate with the investment in our tax dollars - No!

About 7000 jobs were created in South Lake Union from 1995-2000 (see figures below).    Since 2003 - about the time the Mayor launched his vaunted South Lake Union agenda and committed tens of millions of our tax dollars, 2461 jobs have been created.

* South Lake Union ranks 15th among neighborhood/commercial areas experiencing a percentage gain in jobs since 2003 behind areas like Pioneer Square, Pike/Pine, Uptown, Columbia City, and Ballard

* South Lake Union ranks 3rd in areas/commercial districts experiencing net increase in total jobs since 2003. Pioneer Square and the Duwamish generated more jobs than South Lake Union over the same period

* South Lake Union makes up less than 1.2 percent of our city's land area and contributes to about 4% of the City's employment base yet receives the lion share of city revenues (see immediately below)

Charts below only include areas of the city that have experienced gains in employment. Does not include areas of the City (including downtown) that experience a drop in total jobs since 2003 thru 2007  - most current data sources - more details below

* South Lake Union makes up less than 1.2 percent of our city's land area and contributes to about 4% of the City's employment base yet receives the lion share of city revenues (see immediately below)

For more details on amounts we are spending in the city's budget and CIP for South Lake Union click here: http://www.zipcon.net/~jvf4119/SLU09cost.htm#Citys%2009%20Budget%20contains%20$129%20million%20for%20Paul%20Allens%20South%20Lake%20Union%20Plan;%205-Year%20CIP%20top%20$862%20million!

Additional Development added to South Lake Union (SLU) since 2002 has NOT lived up to expectations:

* About half of Vulcan developments are vacant

* About 42 percent of all new development remains vacant

* Only a small percentage of the new development is biotech in SLU.

* A large percentage of new developments are occupied simply by businesses relocating from other parts of town so it's no real net gain in jobs for Seattle

* Of the 1.8 million sq. feet added (significantly less than the Mayor's prognostications - which he estimated at one point would reach over 4 million added sq feet by now - about 1.1 million sq. feet are occupied. Assuming an employee takes up 275 sq ft. of space that means that amount of new space produces 4000 jobs. However many of these were jobs simply relocated from somewhere else in Seattle into South Lake Union. The City's 2007 jobs report taken from State and Regional data sources shows a net gain since 2003 of 2400 jobs in South Lake Union

To compile above chart we surveyed existing new developments and went to websites for the existing properties for listings and then calculated available space from those listings - what was vacant, what was occupied