22, 2007, when pharmaceutical giant Pfizer, Inc., suddenly announced it was closing its research and development facility near North Campus.

The city lost 2,100 jobs that day.

“Nobody expected that to happen,” said Bernstein, adding that construction crews were in the middle of remodeling the facility on the day of the announcement.

Not only was Pfizer the city’s largest employer outside of the University, but it was also the city’s largest taxpayer (accounting for about five percent of its tax base) and one of the city’s largest charitable contributors.

At the time, Ann Arbor mayor John Hieftje was frank about the shock the plant’s closing gave the city.

“This is certainly a blow to the city, but it is not one from which we cannot recover,” he said at the press conference the day of the announcement.

Bernstein said that the bright side of Pfizer’s closing was that it mobilized the city to find a buyer for the property and new sources of tax revenue to fill the void.

For nearly two years, who would take over the 174-acre research complex was a topic of nervous speculation around the city until the University announced last December that it would purchase the Pfizer campus..

After the president of the Bill & Melinda Gates Foundation’s Global Health Program,

Tadataka Yamada, casually referenced the Pfizer labs in a presentation on global health last April, the buzz was that the Bill and Melinda Gates Foundation was eyeing the site. A local magazine, the Ann Arbor Observer, even reported that Bill Gates had been seen dining at a nearby greasy spoon.

But in the end, it was the University that shelled out $108 million and reinforced the school’s role as Ann Arbor’s economic security blanket.

The University plans to use the labs to expand life science research and create 2,000 new jobs over the next decade.

The deal is a trade-off for the city between the promise of new jobs and tax revenue.

The property is probably in more stable hands being owned by the University than if a private company had purchased the site, Bernstein said. But because the University doesn’t pay property taxes, the city won’t gain any tax revenue in the deal.

Bernstein said he is hopeful the city will eventually regain the lost opportunity for tax revenue through the new jobs and spin-off projects that life science research will bring to the city.

SHORING UP THE FUTURE

Ann Arbor seems to have all the right ingredients for building a knowledge economy based in science and technology research, but the catch is getting the hyper-educated young professionals the University turns out to stay in the state and in the city.

The “brain drain” question is one that Michigan researchers and policy makers have struggled with for years.

How important to the city’s economic future is it that this year, Ann Arbor was named the third-best “Walking City” by Prevention Magazine? Or the top “College Sports Town” by Forbes Magazine? Or the “Best Place to Raise Your Kids” by BusinessWeek Magazine?

More important than you might think.

According to the report released March 3 by the Land Policy Institute about attracting “knowledge workers” — highly educated professionals between 24 and 35 — urban environments and cultural attractions are crucial to new economic growth.

Bernstein agreed, saying that research increasingly shows that the “knowledge workers” demographic first chooses where to live based on quality of life and then finds a job in that city.

Quality of life factors could include everything from a city’s parks, schools, nightlife, art scene or even the number of gyms per capita.

Glazer cautioned that improving quality of life as an economic strategy is a relatively new approach to city planning, so more research needs to be done to understand which factors weigh heaviest on the minds of the coveted young professional demographic.

To him, though, one thing is clear..

“It sure ain’t the weather,” he said.

The current top destination for graduates from Michigan’s public universities is Chicago.

And it is large urban centers like Chicago that city planners now turn to for a model in cultivating an appealing environment for the 24-35 demographic.

In recent years, Ann Arbor officials have begun to warm to the idea of high-density development and developing the city’s urban core in hopes of luring in new businesses and investors.

Phrases like “walkability,” “sustainable growth” and “high-density development” are buzzwords at recent City Council and Downtown Development Authority meetings.

But Glazer said there is room for improvement on the city’s part.

“It’s still not at the right scale,” he said.

Ann Arbor is uniquely positioned to become an example for other cities on how to successfully transfer to a knowledge economy, said Hailu with the Land Policy Institute.

“The only thing that might be missing is the right investment,” he said.