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Development Agreement i Environmental Protection and Emergency Response Pro- grams DEVELOPMENT AGreeMENT The City of Berkeley Bayer Corporation Annual Report 2008 ii Environmental Protection and Emergency Response Pro- grams TO OUR COMMUNI T Y On behalf of all our employees at Bayer HealthCare’s Berkeley site, I am pleased to present the 16th annual report on our 30-year Development Agreement (“DA”) with the City of Berkeley. Bayer is an inventor company, with a hundred-year history of major discoveries and innovations. Perhaps it is no surprise, then, that we entered into this rare public/ private partnership. The DA gives the City a clean manufacturing facility, producing the most advanced protein-based medicines and operated by a company making a long-term investment in the community as well. Bayer receives the streamlined site development processes that enable such major investments. Both sides can be very proud of the results. Since 1992, Bayer has become the largest for-profit employer in Berkeley, and the Bay Area’s second-largest in biotech. The city has benefited through the nearly $14 million Bayer has contributed through the DA— but it doesn’t stop there. In 2008, Bayer paid over $2.6 million in property taxes alone. Our employee volun- ii teers served as after-school tutors, repainted homeless shelters, and participated in walks, bike rides, and wine tastings to support our patients. Local grants — over $435,000 in 2008 — have continued our leadership with Biotech Partners at Berkeley High School and helped build the YMCA’s downtown Teen Center. A major grant to the Math, Engineering, and Science Achievement (MESA) center at Cal State East Bay helps recruit women and minorities into the sciences. In December, Bayer hosted its first West Coast Science, Technology, Engineering, and Math (STEM) Forum in San Francisco. Our stringent environmental programs won recognition including the coveted ISO 14001 rating for eight straight years. We recycled 4.8 million pounds of waste in 2008 — an 86% reduction rate! Bayer’s three East Bay facilities are at the center of our company’s worldwide biotech research and manufacture, and the medicines we make are an important part of our global portfolio. Our product diversity — ranging from Bayer aspirin to the contra- ceptive Yasmin to advanced medicines for renal cancer and other diseases — brings us confidence and cautious optimism even in these times of economic turmoil. The medicine we make here at 800 Dwight Way is Kogenate, a clotting factor that allows people with hemophilia to lead near-normal lives. Our Emeryville plant makes Betaseron, another protein-based drug which works by interfering with the destruc- tive autoimmune response that is multiple sclerosis. Complex protein therapeutics hold immense promise for treating or curing some of our most dreaded diseases. We are proud to be an inventor company, and we are proud to play a central role in the innovative city where we do business. This DA is one local way in which the people of Bayer remain dedicated to “Science for a Better Life,” both for our patients and for our The employees of Bayer communities. HealthCare at Berkeley proudly display a year’s production of Kogenate, Joerg Heidrich Bayer’s biotech treatment Senior Vice President and Global Head, for hemophilia A. Product Supply-Biotech Berkeley Site Head Bayer HealthCare, LLC iv Environmental Protection and Emergency Response Pro- grams CONTENTS 1 INTRODUCTION 3 Site Development 2008 11 Site-Based Mitigations and Programs iv 25 Community Support Programs and Payments 53 Beyond the Development Agreement “The Berkeley Model” of Community Support 61 APPENDIX: EXHIBIT H 83 INDEX 84 ACKNOWLEDGMENTS vi 1 Environmental Protection and Emergency Response Pro- grams IN T RODU ct ION “[Bayer] is engaged in the business“[Bayer] of developing, is engaged manufacturing in the business and of distributingdeveloping, manufacturinghuman health and distributing human care products and has been conductinghealth this care business products for and more has than been 70 conducting years . withinthis business the City. for more than 70 years . within . Typically, this requires a developmentthe City. process. Typically, with an this average requires time a development frame of 10–12 process years with an average time frame of and an average investment of in 10–12excess ofyears $200 and million. an average As a consequence,investment of long in excess range of planning $200 million. is As a consequence, long mandatory for business, financial,range and planning competitive is mandatory reasons.” for business, financial, and competitive reasons.” —De v e l o p m e n t Ag r e e m —D e n te, v 1992, e l o p m p eA ng te A4 g r e e m e n t , 1992, p A g e 4 In 1992, the City of Berkeley and Bayer (then Miles, Inc.) signed an historic 30-year Development Agreement (DA) that provided the company consistent and streamlined site development permit processes in return for a broad array of mitigations for the b enefit of the city. The DA was the culmination of over a year of negotiations, with the City recognizing vi the value Bayer could bring as employer, economic engine, scientific innovator, and community leader—and understanding that this international company could contem- plate such a major investment only if it could secure the reliable “long range planning mandatory for business, financial, and competitive reasons.” The Bayer facility has been core to Berkeley’s economy for over a century. The Develop- ment Agreement was instrumental in making Bayer core to the community as well. In the sixteenth year of the 30-year agreement, we can appreciate the mutual benefits the DA has brought: • Today’s 45-acre site exemplifies the clean, streamlined look of high tech industry in the 21st century. In 1992, the original site comprised 30 acres with the former Cutter Laboratories at the center of a collection of antiquated factories. • Bayer today is the largest for-profit employer in Berkeley, with 1,354 permanent employees including eminent scientists as well as nearly 500 members of the Inter- national Longshore and Warehouse Union, Local 6. Our employees come from sixty countries, speaking 35 languages. On a typical day the Berkeley site also employs an average of about 100 short-term contractors. • With the acquisition in 2007 of research and manufacturing facilities in Emeryville and Richmond, Bayer has become the second-largest biotechnology employer in the Bay Area, and stands at the center of biotech research and development for Bayer worldwide. Bayer’s biotech protein drug portfolio is currently the world’s the sixth largest. • “Mitigation payments” that began with the DA have evolved into a vibrant program of local Corporate Social Responsibility which includes philanthropy, employee volunteerism, and environmental stewardship. Bayer has emerged as a good neighbor and local leader on issues of shared importance including economic and workforce development, environmental protection, and public education (see “Beyond the Development Agreement, page 53). 2 3 Environmental Protection and Emergency Response Pro- grams We are proud of the role Bayer plays in Berkeley’s economic and civic life. Our continuing development as the leader of Bayer’s global biotech research and product supply relies on the streamlined site development guarantees of the DA. Truly, the DA stands as one of California’s most creative and successful public/private partnerships. Site Development 2008 About this Report This annual report is required by Government Code Section 65865.1, Article 4 of the Development Agreement, and Sections 7 and 8 of the City Development Agreement Procedures. It presents a summary of DA requirements and an update on Bayer’s compliance for the calendar year 2008. In 1999, Bayer and the City signed a First Amendment to the original Development Agreement; implementation details for 2008 are also presented in this annual report. 2 Previous annual reports, a copy of the 1999 First Amendment, and the report to the City Council summarizing the first ten years of the Development Agreement can be found in the City Clerk’s office or by contacting the City Manager’s office. Development Agreement Payments Made (without CPI adjustment) Year ToTal PaYmenTs 2008 $ 832,978.75 2007 $ 692,222.00 2006 $ 619,648.62 2005 $ 499,071.71 2004 $ 551,635.78 2003 $ 1,032,157.00 2002 $ 815,040.00 2001 $ 1,170,591.00 2000 $ 1,204,052.00 1999 $ 928,004.00 1998 $ 577,484.00 1997 $ 612,048.00 1996 $ 1,058,399.00 1995 $ 630,358.00 1994 $ 991,975.00 1993 $ 977,270.00 1992 $ 728,186.00 ToTal $ 13,921,120.86 4 5 Environmental Protection and Emergency Response Pro- grams Site Development 2008 D e v e l o p m e n t A g r e e m e n t A r t i c l e 3 A n D e x h i b i t s c, D, A n D e A n D 1999 f i r s t A m e n D m e n t “The broad scope of the long-range site development program contemplated by [Bayer], combined with the long-term planning horizon needed for the development of new pharmaceutical products, necessitates a reciprocal long-term commitment by City to provide a sufficient degree of certainty in the land use regulatory process to justify the massive financial investment associated with the Project.” —De v e l o p m e n t Ag r e e m e n t , p A g e 5 Bayer has made a major investment in its Berkeley site since 1992. Site development to date has earned Bayer a national Urban Design Award of Excellence from the American Institute of Architects.
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