Wednesday, December 15, 2004

Vacaville to waive costs for Genentech

By Matthew Bunk

VACAVILLE - The city has agreed to pay or forego a plethora of costs associated with the construction of Genentech's $500 million expansion at its manufacturing plant in the Vaca Valley Business Park.

The terms of the agreement were outlined in a non-binding contract signed by both the city and Genentech at a City Council meeting Tuesday.

The agreement, based on good faith, states the city will give the biotechnology company certain water, sewage output and roadway rights. It also includes monetary incentives, including stipulations the city will forego all sales and use taxes associated with the expansion - a provision worth millions to Genentech - as well as excluding the company from development fees.

Under the terms of the deal, Genentech would not have to pay monthly water and sewer charges up to $200,000 a month. If the bills went over $200,000, Genentech would pay the difference.

Vacaville officials offered the deal informally last year when Genentech began looking for a site for the 550,000-square-foot expansion. The incentives package sweetened the deal for Genentech, which the city had continued to court after the company built a manufacturing facility on 98 acres west of Interstate 80 in 1995.

City officials said earlier this year Genentech's decision to add to its existing 400,000-square-foot facility would more than make up for the incentives. Among other benefits, Genentech expects to add another 500 employees to its existing workforce of nearly 600.

In its economic development strategy, the city identified the biotechnology and pharmaceutical industries as a high priority for business recruitment. Genentech, once the expansion reaches completion in 2009, could become the city's largest private employer, topping life science giant Alza Corp., food distributor Albertsons and medical provider Kaiser Permanente.

Kaiser recently announced plans for an expansion of its medical facility that would provide jobs for as many as 1,900 additional workers. Kaiser expects its expansion, which is planned next to the Genentech property, to be complete in 2009 as well.

The deal with Genentech also states the city will support Genentech in negotiations to lower its property tax obligation payable to other government entities, as well as in negotiations with Pacific Gas and Electricity Co. for the company's energy needs.

The deal will be effective until the city and Genentech draft a development agreement amendment, which would be due sometime before construction is complete.

Reach Matthew Bunk at 425-4646 Ext. 267 or

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