The price of housing in Ann Arbor might skyrocket within the next six years, when an estimated 600 to 800 future Pfizer Global Inc. employees flock to Ann Arbor as part of the company"s planned $600 million expansion in the city just one of several contentious issues the pharmaceutical company"s expansion presents.

The expansion is one that was first brought to light after Pfizer agreed to pay the University $27 million for 53 acres of unused land near North Campus, contingent on an agreement by the City Council to give the company a 50 percent tax break.

Councilwoman Jean Carlberg (D-3rd Ward) said the housing and traffic increases associated with the possible expansion concerned many of the council members. Council members were also concerned with Pfizer"s commitment to Ann Arbor because the company refused to sign an agreement that would force them to pay back the money saved by the abatement if the company left the area.

Councilman Robert Johnson (D-1st Ward) said that the company"s refusal to sign such an agreement, called a clawback, was one of the issues addressed during negotiations.

"It was clear that Pfizer would not do that, would not sign that agreement. They absolutely, adamantly refused," Johnson said, adding that the council needed some signs of commitment before rewarding an abatement. "The whole point of giving these abatements is to persuade (a company) to make a major expansion."

During an October City Council meeting, Pfizer Senior Vice President David Cantor, director of the Ann Arbor Laboratories, said if the tax abatement was not approved the company which employs 3,000 people and is the city"s largest private employer might leave Ann Arbor because the land Pfizer currently owns is not large enough for an expansion.

However, negotiations between City Council and Pfizer about the tax abatement have eased some of the concerns from both sides.

To prove its commitment to the area, Pfizer agreed to four major compromises. The company"s taxes, given the abatement, would never drop below the tax amount Pfizer already has to pay. The company also agreed that it would spend at least $100 million on real property investments in the next five years or else the abatement would be canceled. If Pfizer has not spent $200 million in real property investments within the next six years, the abatement would be capped at $300 million. The company also agreed to be responsible for any infrastructural changes and to work with the council to alleviate traffic and housing concerns.

As a result of the negotiations, the council approved, by a vote of nine to two, a 12-year, 50 percent tax abatement on all real property taxes and a six-year, 50 percent abatement on all personal property.

Ann Arbor Mayor John Hieftje said the tax abatement agreement would benefit both the city and Pfizer because it will hopefully contribute to "a very long and profitable relationship."

"It"s not as if we gave anything up, it"s money that we wouldn"t have had in the way of taxes had they not done their expansion here," Hieftje said.

Pfizer agreed to make at least a $600 million investment within the next six years, though council members are uncertain as to whether the company will actually execute its plans.

"It"s hard to know," Johnson said. "We"re talking over six years and they might. But it depends on the economy and it depends on whether or not they get another blockbuster drug. I think they are planning to do it."