Bayer, city agree on $33M community benefits package tied to big expansion

The benefits are part of a broader 30-year development agreement for a major expansion at Bayer’s West Berkeley campus.

Bayer Biopharmaceutical in Berkeley. Credit: John Metcalfe

Negotiators from Bayer and the city have struck a deal on a community benefits package that could see the pharmaceutical giant give $33.1 million to local causes over the next three decades amid a development boom on its West Berkeley campus.

The terms of the proposed agreement, which were released Friday afternoon following months of negotiations, call for Bayer to make annual payments toward educational programs, the city’s affordable housing fund, community grants and other recipients. Payments would start at $800,000 in 2022, then increase by 2% annually, to $1.46 million in the agreement’s final year, 2052.

The benefits package is a key piece of a 30-year extension of Bayer’s development agreement with the city, which clears the way for the company to add about a dozen new buildings — some rising as high as 80 feet tall — within the existing footprint of its campus next to Aquatic Park. The expansion would allow Bayer to add nearly 1 million square feet of new work space, which could accommodate a broader array of pharmaceutical manufacturing and lead to the hiring of 1,000 new employees, doubling the size of a workforce that already makes the company Berkeley’s largest private-sector employer.

A rendering of how Bayer’s 30-year development plan could change its West Berkeley campus. Courtesy: Bayer

“The community benefits package represents a hard-fought victory for our city,” said Mayor Jesse Arreguín, who led negotiations with Bayer. “This has not been easy, but Bayer has been a really great partner and has been working earnestly with the city to try to reach an agreement.”

The development agreement and benefits package will be presented to the Berkeley Planning Commission at a special meeting Wednesday. The agreement is expected to go before the Berkeley City Council for a first reading on Nov. 30 and final approval Dec. 14.

The proposed payments that were announced Friday are about 10% higher than those in Bayer’s first offer to the city earlier this year. Arreguín called that offer “a good start” over the summer, but said he would push the company to provide more generous benefits because of the time and effort the development agreement would save Bayer in gaining approval for its expansion.

“We, as negotiations went on, significantly increased the numbers compared to our initial offer — which we felt was fair to begin with,” said Jens Vogel, Bayer’s global head of biotech and a senior vice president at the Berkeley campus. “I still think that we ended up with a win-win.”

In an interview, Arreguín declined to say what level of payments he proposed as a counter to Bayer’s offer.

“We pushed as hard as we could, I can tell you that,” Arreguín said. “People think that there’s an unlimited amount that private developers or corporations can do, but at the end of the day there is a bottom line. It’s a question of, how much can you push without the other party walking away?”

In public meetings and interviews about the development agreement, Bayer officials have not shied away from noting that the company’s other campuses across the country or overseas could take on their planned expansion if a deal with Berkeley fell through.

“There was also a limit to what we can do, because as you can imagine we are a global player,” Vogel said. “This is really the best offer we could possibly make.”

The terms announced Friday also spell out how the community benefits funding would be distributed if the new development agreement is approved.

About half of the money would go toward grants for educational programs, including internships and career technical education initiatives that help prepare high school and community college students for careers in biotech. A new West Berkeley Community Resilience Fund would get another 20%, to provide grants focused on the areas of “climate action,” “health equity” and “local economic resiliency,” Bayer officials wrote in materials for the Planning Commission’s meeting.

The agreement calls for creating two new committees, each made up of appointees chosen by Bayer and the city, to award grants from the package’s education and community resilience funds. Those committees represent a new method for distributing money from Bayer’s community benefits package, which has been in place since 1992.

Councilmember Terry Taplin, who negotiated the package along with Arreguín, wrote in a statement Friday that the new grant model will allow “for flexibility, transparency, and accountability to support meaningful community initiatives and competitive, emerging (science, technology, engineering and math) education providers.”

Because the agreement does not commit to funding specific education or community resiliency programs, though, the change means organizations that have long relied on the Bayer agreement for funding won’t be guaranteed money under the new deal.

“Existing programs that have been successful (and) have an established track record are going to be in a very good position to keep getting funding,” Arreguín said.

The city’s Affordable Housing Trust Fund would receive another 20% of Bayer’s annual contributions under the agreement, while a city fund for public art would get 7.5% and another fund for affordable childcare would get the remaining 4%.

Nico Savidge is Berkeleyside's senior reporter covering city hall. Email: nico@berkeleyside.org. Twitter: NSavidge.