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IU, Bloomington disagree over best sites for biz development

June 2, 2008

BLOOMINGTON--Indiana University and the city of Bloomington are at odds over how best to commercialize the university's discoveries--or, more specifically, where to commercialize them.

Indiana University's announcement last month that it plans to build a business incubator in Bloomington was evidence of a common goal between IU and the city. Both want to attract high-tech and life sciences firms to replace the city's shrinking manufacturing sector.

The problem is they want those firms in different locations.

The university sees its property at 10th Street and the State Road 45/46 bypass, on the northeast side, as the center of its high-tech development efforts. It recently approved a site plan for the incubator there, near IU's information technology headquarters and a $32 million disaster-resistant data center that's under construction.

But city leaders are more interested in promoting high-tech industry downtown as a way to balance the bars, restaurants and student housing that have dominated the last decade of downtown growth.

"The city's vision, for as long as I can remember, has been to make it a true 24-hour downtown," Bloomington Planning Director Tom Micuda said. "We don't want our downtown to be known only for bars and restaurants."

City leaders figure that goal would be advanced if IU would develop 12 largely vacant acres it owns just northwest of the courthouse square. The Showers Brothers Furniture Co., at one time one of the largest furniture makers in the nation, formerly occupied the site. Except for a few warehouses and an aging brick building that houses Indiana University Press, it hasn't seen much activity since the furniture factory closed 50 years ago.

The city and IU both recognized the site's potential when they applied with the state to make it and the surrounding area a Certified Technology Park. That designation, granted by the state in 2005, allows the city to capture growth in payroll and sales taxes within the park and devote the money to infrastructure improvements. But IU did not line up developers for its portion of the park, and the surrounding area has seen less growth than anticipated.

"It's partly the market of Bloomington," said Danise Alano, the city's economic development director. "There's a much more sure housing market. That's a steady market and certainly developers want a return on their investment. [Housing] has a return they know they can get back."

State will have its say

By next February, the city must apply with the Indiana Economic Development Corp. to have the Certified Technology Park designation renewed. With IU's help, it will ask to have the 10th Street and bypass site added to the existing park, Alano said, even though the two sites are two miles apart.

"So far, the state has been receptive to the idea and willing to help develop the plan with us," he said.

Bloomington's business incubator, inVenture, sits next door to IU's site in a renovated Showers factory building that also houses City Hall. Alano said the incubator is full and has graduated several companies. Like other incubators, it offers office space and equipment, tech support, and networking and funding assistance, among other services. InVenture's chief limitation, according to IU Vice President for Engagement Bill Stephan, is its lack of "wet lab space."

Wet labs provide water, direct ventilation and specialized piped utilities for the testing of chemicals, drugs and biological matter. Stephan said existing infrastructure at the downtown site makes the cost of installing wet lab space there prohibitively high. That cost and the advantages of having the incubator near IT facilities led IU leaders to build the new incubator at 10th and the bypass, he said.

"Tenth and the bypass becomes a very strategic location, an optimal location, because it allows us to have wet lab space, but also to have it near our IT facilities," he said.

At 40,000 square feet, the planned incubator would be slightly smaller than IU's Indianapolis incubator, the Emerging Technologies Center near West 10th Street along the Central Canal. While the Indianapolis center accepts only companies working in the life sciences, the Bloomington incubator would also be open to IT and advanced technology companies, Stephan said.

Town-gown relations

The university considered selling the downtown Bloomington site last year, but it now plans to retain ownership for future needs, making money in the meantime through long-term leases. It plans to divide the site into nine parcels of more manageable sizes and offer them to developers. Leasing the property, which is currently tax-exempt, would also return it to local property tax rolls.

The city has no zoning control over IU property, but the university won't allow anything at the site that would be in conflict with Bloomington's long-term vision, said Lynn Coyne, IU's assistant vice president for real estate. He plans to begin talking to developers this summer, and he expects to find a mixed-use plan for the site that includes street-front retail space, housing and some office space, he said.

"We're very much in support of the city's vision," he said, noting that he will require developers to comply with the city's Unified Development Ordinance.

Without IU's technology growth downtown, in the near term the city might have to settle for more housing and fewer firms with high-paying tech jobs than it hoped for a few years ago.

"We think the university shares some of the same goals that the city does," Micuda said. "The key aspect of this, in our view, is whether or not the university is going to want to execute the employment part of the vision."

If residential development is a significant part of the final plan, Micuda said, the city hopes it will include some form of senior housing, affordable housing and owner-occupants, who are more likely than students to invest in their neighborhoods.

"We do not want the property to be used for a student housing area," he said. "We would rather see it be an employment center with some residential units that cater to other markets."

Local developer John Burnham Jr. said the city was eager to promote any type of residential growth downtown five years ago. A flurry of student housing projects since then seems to have filled its appetite.

"Now it seems they've reached, if not exceeded, what they wanted to get in terms of housing, and they're trying to get people to slow down a bit," Burnham said.

A new urgency

IU President Michael McRobbie listed economic development as a top priority when he took office last summer. In Bloomington, that vision became even more compelling in January, when GE announced it would close its west-side refrigerator plant in 2009, costing the city more than 800 jobs.

McRobbie created Stephan's position, vice president for engagement, to help researchers create jobs by making it easier for their discoveries to move from laboratory to the marketplace, especially in the life sciences and information technology sectors.

"These sectors have great potential, but they require extensive knowledge, and we can't get there without the participation of our universities," Stephan said. "The universities are being called on to contribute, and we can't ignore that responsibility."

But the responsibility doesn't necessarily extend to helping Bloomington meet all its development goals. And so the downtown site the city once dreamed would become a high-tech hotbed might never regain the prominence it had in the 1920s, when the Showers Brothers factory was the city's largest employer and claimed to be "The World's Largest Furniture Factory."

Burnham, who doesn't expect his development company to be involved in the downtown site, thinks the two sides will adapt.

"I believe they're going to work together to find a plan that benefits everyone. Neither entity is going to benefit if one irritates the other."

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