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Hamilton injects $4 million into biomedical institute

 By Kevin Werner, News Staff

 Hamilton is prepared to give McMaster University a parcel of land plus almost $1 million for a total of $4 million to help entice a German company set up a $20-million non-profit biomedical institute onLongwood Road that could mean a $70-million economic impact to the city.

The complicated land deal, devised by the city’s economic development staff, involves transferring about 17 acres of former Canadian Pacific land Hamilton purchased for $2.1 million in the West Hamilton Innovative District to McMaster University, said Neil Everson, executive director of economic development. The land, now valued at about $3.2 million would allow the creation of the McMaster-Fraunhofer Project Centre for Biomedical Engineering and Advanced Manufacturing

 The city will need to also contribute about $800,000 to meet its $4 million contribution to the project.

“This is image changing,” said Mountain councillor Tom Jackson. “It’s very creative what you came up with.”

McMaster University is obligated to receive $4 million each from the municipality and the provincial government in order to receive $8 million from the federal government for the project. McMaster University is providing a 40,000-square-foot building valued at about $4 million.

Everson acknowledged the cash-strapped city couldn’t provide $4 million in money because it would wipe out its reserve fund.

“We do not have plans to develop (the property),” he said.

If councillors had rejected the deal, it would have jeopardized the entire project, acknowledge Dr. Mo Elbestawi, vice-president, research and international affairs for McMaster University.

The land being transfer is part of a project to extend Frid Street to Charlton. The city will retain an easement on the property for the project, he said.

The German company will also be conducting its own environmental assessment on the land to determine how it should be cleaned up. The city has stated the property will need to be rehabilitated, and it will have to apply for a grant under Hamilton’s ERASE program, said Everson.

Under a five-year budgeting timeline, an economic forecast by Deloitte estimates the centre will generate $30-million in financial impact to the area, while also contributing about $10-million to the city’s economy. The city will receive about $1 million over five years in new taxes. Over 70 jobs will be created, with another 30 indirect employment opportunities generated.

Elbestawi told politicians, who were worried about the five-year initial term, the project is not an educational opportunity, but it’s an opportunity to partner with a leading cell researcher for an extended time. Growing cell therapies is an industry that is expected to generate about $10 billion in revenue annually by 2021, says Ontario officials.

“This is key for us,” he said. “It doesn’t make sense to get out of it.”

Dr. Johannes Boltze, a physician, and head of the company’s department of cell therapy, also assured politicians the Fraunhofer Institute is a non-profit organization that promotes biomedical research that can be sold in the private sector.

“We want to establish a centre,” he said. “We are not a company seeking profit.”

The Fraunhofer Institute, founded in 2005, is located about 150 km south of Berlin.

He said the Fraunhofer Institute, which has partnerships in Asia, U.S. and South America, will also provide up to $5 million as part of the project, along with in-kind contributions. The company will be providing about $13 million in operating costs over the five years for the centre.

Yet despite what seemed to be positive economic alliance, Stoney Creek councillor Brad Clark wanted to wait on approving the land transfer until a memorandum of understanding had been signed between McMaster University and the city. Boltze confirmed the Fraunhofer board of directors would eventually want an MOU. But before such a document was agreed upon, the directors needed to be reassured there was interest from the city and province to make the deal happen. He said a business case for the centre will be presented to company’s board next week.

Politicians will vote on the recommendation at their May 14 council meeting.

McMaster officials have said they would like to begin construction later this year.

 

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