San Francisco Wins Stem Cell Institute

FRESNO —  San Francisco won the hotly contested race to house the headquarters of California’s new $3-billion stem cell institute Friday, a decision that Bay Area officials hope will cement a leading role for their region in cutting-edge biomedical research.

To woo the new California Institute of Regenerative Medicine, San Francisco officials had offered a lavish bidding package: $17 million in perks, including $500,000 in free furniture, 43,000 square feet of free lab space for research and about $900,000 in discounts on convention hotel rooms.

San Francisco beat two other finalists, Sacramento and San Diego, both of which had offered similarly plush packages. San Diego’s, for example, touted prime laboratory and office space at a coastal site in the La Jolla area, adjacent to the Torrey Pines Golf Course.

Los Angeles had been dropped from the competition earlier this spring after state officials determined that the city had failed to meet state requirements.

San Francisco Mayor Gavin Newsom was elated by the victory, which capped four months of civic competition that some had called a “biomedical soap opera.”

“We’re humbled by the process; this was a long road and a challenging one,” Newsom said. “This secures our future as a point of destination for discovery.”

The stem cell agency was established by Proposition 71, approved by California voters in November to provide $300 million in research grants for 10 years to pay for work using embryonic stem cells. The cells have the potential to develop into any type of human tissue, and researchers hope they can eventually use them to find cures for many illnesses.

The proposition was designed to put California in position to supplant the federal government’s usual role as the chief source of money for scientific research.

Federal support for stem cell research is tightly restricted by policies adopted by President Bush. The research is controversial because harvesting embryonic stem cells requires killing human embryos.

Most researchers agree that actual cures are probably years away, and the agency’s headquarters is limited by law to no more than 50 employees. Nonetheless, municipal leaders have viewed the headquarters competition as the best way to get in on a major new industry at the beginning.

“This is important for California,” said Robert Paarlberg, professor of political science at Wellesley College in Massachusetts and author of a recent article in Foreign Policy magazine titled “The Great Stem Cell Race.”

“Nodes of innovation tend to spring up in specific areas,” he said. “And this is a science that could have spectacular growth prospects in the future.”

Not all Bay Area leaders were convinced that the privilege of having the headquarters was worth the giveaways.

“It doesn’t appear that the industry -- if it takes a hold in San Francisco -- is really going to be delivering economic opportunity for those who need it most,” said San Francisco Supervisor Chris Daly. “The area that would do that is more blue-collar type of industry.”

But in a city where the economy is still recovering from the effects of the dot-com crash, many business leaders are banking on the stem cell agency to spin off high-paying jobs, political prestige and biotech firms.

The city will house the stem cell agency in a building near the research laboratories of UC San Francisco, across the street from the Giant baseball stadium in the neighborhood known as Mission Bay.

Since taking office a little more than a year ago, Newsom has been trying to create a biotech hub in Mission Bay, a 6-year-old redevelopment project that was hard hit by the dot-com bust and is only now starting to attract such firms.

“This may be the psychological turnaround point for the Bay Area,” said Jim Wunderman, president and chief executive officer of the Bay Area Council, “a historical marker of when the economic recovery began in earnest.”

The competition for the headquarters brought with it charges of favoritism. Bob Klein, the head of the stem cell agency and the principal backer of Proposition 71, lives in the Bay Area, and some civic leaders in San Diego had questioned the fairness of the decision process, particularly when a selection committee earlier this week listed San Diego’s bid in third place.

Originally, the process called for the stem cell institute’s board to consider only a leading candidate and a runner-up, based on a point system. After objections from San Diego, the final pool was broadened to three, which brought complaints from some Bay Area leaders.

As advocates from each city lobbied hard behind the scenes, members of the board debated whether their agency would work better in the urban ambience of San Francisco or the more campus-like setting offered by San Diego.

The final vote followed impassioned 10-minute pitches by Newsom, Sacramento Mayor Heather Fargo and representatives from San Diego in an exhibit hall at the Fresno Convention and Entertainment Center.

Fargo reminded the panel of the benefits of working within walking distance of the Legislature and her city’s relatively affordable housing, a nearby airport and short commutes.

San Diego leaders pushed the benefits of being amid one of the country’s densest clusters of biotech firms, which has grown up around UC San Diego and the Salk Research Institute.

But they were no match for San Francisco’s gift package and cachet.

Despite the intense competition, after the final vote -- San Francisco, 16; San Diego, 11 -- advocates for both sides pronounced themselves satisfied. Said Guy Iannuzzi, one of the leaders of San Diego’s bid: “It was a fair vote.”

Times staff writer Lee Romney in San Francisco contributed to this report.