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Old Posted Dec 18, 2008, 8:06 PM
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University of Michigan expected to purchase Pfizer site in Ann Arbor
by The Ann Arbor News Staff
Thursday December 18, 2008, 11:46 AM

The University of Michigan is on the brink of striking a deal to buy the Pfizer facilities and bring 2,000 new jobs to its vast north Ann Arbor research campus, sources confirmed this morning.

U-M officials confirm they'll be making an announcement at the Board of Regents meeting this afternoon, with a planned press conference afterward. But they did not disclose the contents of that announcement.

One source who has knowledge of the preliminary discussions said U-M agreed to pay Pfizer $108 million for the site, which will include life sciences, medical and research facilities. U-M expects it will bring 2,000 new jobs over the next decade, the source said.

The facility, which spans 177 acres and includes 2 million square feet of research space, once held 3,600 employees and has been a major employer - and taxpayer - in town for five decades.

Chris Easthope, a former Ann Arbor City Council member who left the council last month, confirmed that U-M is making an announcement that the university is buying the site.

Easthope said the discussions never included the city.

"It will be great jobs are added to the site," Easthope said. "Those jobs will probably not make up for the loss in tax base."

Another source told The News that the university has some limited responsibility for environmental clean-up of the site, expected to cost $12 million. That source also said there will be a thorough due diligence period before anything is concluded.

Ann Arbor City Council member Stephen Rapundalo said city elected officials have been informed that regents will be asked to approve the purchase of the entire 177-acre Pfizer campus.

Rapundalo, executive director of the biosciences industry trade association, MichBio, said there's been talk that the university will use it for the expansion of its medical center. He said he's not sure whether the expansion of anything else - such as U-M's engineering college on nearby North Campus - was being contemplated at this point.

The purchase of the property by the university rather than a private company might have been a disappointment a year ago, but the economic downturn may mean any activity on the property is welcome news.

"The university does provide stability," Rapundalo said. "It's a positive in the near term. But we have also to be concerned about lost property tax revenue. While I applaud the university for its commitment to the community, I wish they had thought about talking to us and the implications before moving toward a decision."

As a public entity, the university will not pay real estate taxes. U-M currently employs about 37,000 people and is the county's largest employer.

The site has emptied over the past two years after the company announced in January 2007 that it would pull up its stakes here.

At the time, 2,100 people worked there. Of those, 851 accepted transfers to other Pfizer sites in Connecticut, California and New York, among others. Another 35 people are working for Pfizer remotely from their local homes, including several who had already been doing that before the closure announcement was made.

• In 2008 Pfizer's total tax bill was $12.5 million. That money went to the City of Ann Arbor, local schools, county government and other jurisdictions.

• In 2009, that amount is expected to fall to $9.2 million, reflecting the removal of equipment that is subject to property taxes. Mayor John Hieftje said today he expected that those taxes would be paid in full, regardless of the pending sale to U-M.

• In 2010, tax revenue from the 77 acres will disappear, assuming the deal to sell the property to the tax-exempt university goes through. It will leave a $3 million hole in the city's budget.

Pfizer has been in a tax assessment dispute with the city over its property. Pfizer argues that its research facility is only worth half as much as city assessors say, and that it was overvalued by about $119 million for the 2008 tax year.

The difference meant a $2 million loss in property tax revenue. The assessed value, which is supposed equal 50 percent of market value, was $238.4 million.

Pfizer is Ann Arbor's largest taxpayer. Pfizer paid $14.1 million in taxes last year, just under $4 million of which went to the city of Ann Arbor.

Pfizer spokesman Rick Chambers said he can't comment on any announcement U-M may or may not make.

Reported by Tom Gantert, Judy McGovern, Tracy Davis, Dave Gershman, Stefanie Murray and Susan Oppat.

This story is being updated.
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