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BIOTECHNOLOGY IN PORTLAND

FIELD HEARING

BEFORE THE

SUBCOMMITTEE ON SCIENCE, TECHNOLOGY,

AND SPACE

OF THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

APRIL 5, 2002

Printed for the use of the Committee on Commerce, Science, and Transportation

(

(II)

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

ERNEST F. HOLLINGS, South Carolina, Chairman 

DANIEL K. INOUYE, Hawaii 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

JOHN B. BREAUX, Louisiana 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

MAX CLELAND, Georgia 

BARBARA BOXER, California 

JOHN EDWARDS, North Carolina 

JEAN CARNAHAN, Missouri 

BILL NELSON, Florida 

JOHN MCCAIN, Arizona 

TED STEVENS, Alaska 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

SAM BROWNBACK, Kansas 

GORDON SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

KEVIN D. KAYES, Democratic Staff Director 

MOSES BOYD, Democratic Chief Counsel 

JEANNE BUMPUS, Republican Staff Director and General Counsel 

SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, AND SPACE 

RON WYDEN, Oregon, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

BYRON L. DORGAN, North Dakota 

MAX CLELAND, Georgia 

JOHN EDWARDS, North Carolina 

JEAN CARNAHAN, Missouri 

BILL NELSON, Florida 

GEORGE ALLEN, Virginia 

TED STEVENS, Alaska 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

SAM BROWNBACK, Kansas 

PETER G. FITZGERALD, Illinois 

(III)

C O N T E N T S 

Page 

Hearing held on April 5, 2002 ................................................................................ 1

Statement of Senator Wyden .................................................................................. 1

WITNESSES

Burger, Denis, Ph.D., Chairman and Chief Executive Officer, AVI Biopharma 25

Grinstein, Bill, Associate Director, Public Affairs, Pacific Northwest National 

Laboratories .......................................................................................................... 23

Katz, Hon. Vera, Mayor, City of Portland, OR ...................................................... 4

Prepared statement .......................................................................................... 5

Kelley, Gil, Director, Bureau of Planning, Portland, OR ..................................... 6

Prepared statement .......................................................................................... 9

Kohler, Peter O., M.D., President, Oregon Health and Science University ....... 29

Prepared statement .......................................................................................... 31

Mazziotti, Donald F., Executive Director, Portland Development Commission . 40

Prepared statement .......................................................................................... 41

Pernsteiner, George, Vice President for Finance and Administration, Portland 

State University ................................................................................................... 34

Prepared statement .......................................................................................... 36

APPENDIX

Rodgers, Joanna, Eugene, Oregon, prepared statement ...................................... 55

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BIOTECHNOLOGY IN PORTLAND 

FRIDAY, APRIL 5, 2002

U.S. SENATE, SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, AND SPACE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Portland, OR. 

The Subcommittee met, pursuant to notice, at 9:30 a.m., in the 

Council Chambers of the Metro Regional Center, Hon. Ron Wyden, 

Chairman of the Subcommittee, presiding. 

Staff members assigned to this hearing: Jean Toal Eisen, Democratic Senior Professional Staff; and Floyd DesChamps, Republican 

Senior Professional Staff. 

OPENING STATEMENT OF HON. RON WYDEN,

U.S. SENATOR FROM OREGON 

Senator WYDEN. The Subcommittee on Science, Technology, and 

Space will come to order. I am very pleased to have a chance to 

be home and listen to the people of Oregon on this issue of special 

importance to the Oregon economy. And as Chairman of the 

Science, Technology, and Space Subcommittee, I am pleased to 

have a chance to convene this session this morning. 

Next month, Portlanders and other Oregonians will mail in their 

ballots and make a major decision about the future of technology 

and biosciences, specifically, for our state. Ballot Measure 10, 

which I strongly support, will allow our universities and research 

institutions to reap dividends from products derived from the bioscience successes that they help to develop. 

This measure is just one example of how Oregon can incentivize 

research and stay at the forefront of the technology revolution. 

This morning, the United States Senate’s Subcommittee on 

Science, Technology, and Space convenes a field hearing to explore 

the appropriate role for the federal government in our city’s development of its biotechnology industry cluster and how this critical 

Portland initiative can serve as a model for our whole country. 

Biotechnology is already revolutionizing both health care and agriculture, a sector that is marshaling its forces to help protect 

Americans from bioterror attacks, and we are going to examine a 

number of these issues this morning. 

I am particularly excited about the health care possibilities that 

stem from biotechnology innovation and research. 

The fact is, right in our community, there is an opportunity to 

revisit and be part of a revolution in fighting disease with research 

in the biosciences. As part of this research, Oregonians can systematically review and research major diseases that plague our citizens 

2

and wreak havoc with their lives and then use that research to 

help change the world for so many people for the better. 

Just for a moment, take the issue of monoclonal antibodies. With 

these new antibodies, this country and our state will have a new 

tool to fight cancer cells and just about any malignancy. I think 

back to my days as co-director of the Oregon Gray Panthers when 

I got started with our good mayor sitting in her living room in 

Portland talking about these diseases that are such a scourge for 

older people. I remember many seniors with rheumatoid arthritis 

and similar inflammatory diseases, horrendous diseases. Often, 

their hands curl. You think about the horrible physical consequences of these diseases, and a lot of them can be relieved dramatically by pharmaceutical products that are the products of the 

new biotechnology revolution, products that revolve around 

monoclonal antibodies. 

I want to make it very clear this morning, as Chairman of this 

Senate Subcommittee, I am not going to sit around and let Oregon 

pass up the opportunity to take people with crippling diseases from 

their beds to the tennis court. The fact of the matter is, that is possible with important innovations in research in biotechnology. 

The American public fully expects our country to continue as an 

acknowledged world leader in biomedical research. It’s the expectation that the biotechnology industry will deliver, and Portland already has a foothold in this critical field. We have got experts here 

right now who are developing ways to administer drugs without 

needles, to deliver actual cells and proteins to target areas in fighting liver and heart disease, and also to promote improvements in 

agriculture and animal health. 

So, today the Subcommittee is going to examine what Portland 

has to offer in the biosciences field to learn why some biotechnology 

entrepreneurs have already set up shop here. We also are going to 

examine the challenges that lie ahead. This Subcommittee has put 

considerable effort in looking at biotechnology issues, from the fight 

against bioterrorism to the potential of technology in healthcare, as 

I mentioned with respect to monoclonal antibodies and a variety of 

related illnesses. 

Recently, we heard from biotechnology experts from across the 

country. They related difficulties they faced in offering new technology to the government in a number of areas, such as fighting 

the war against terrorism. In response, I have already written legislation to provide a portal for the private sector, including the biotechnology industry, to offer new anti-terrorism technology to our 

government. 

This country has a Strategic Petroleum Reserve. It is, in effect, 

an insurance policy we have when we are dealing with problems 

that stem from a shortage in the oil field. I think it is time that 

we set up a Strategic Technology Reserve, that we have an opportunity to call on experts and companies to help, and for example, 

in most communities in this country, there is not even a data base 

of physicians and experts who you would call if the community was 

hit with a bio-terrorism agent. It seems to me that is something 

that we can set up all across this country. That is what I am proposing the government to do in legislation I have already introVerDate Apr 24 2002 13:50 Oct 03, 2002 Jkt 081257 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 S:\WPSHR\GPO\DOCS\81257.TXT SCOM1 PsN: CAROLT
3

duced, the Science and Technology Emergency Mobilization Act, 

that is already before the Subcommittee and the Congress. 

For Portland and other communities to build on that portal and 

to be a portal for the biosciences, it is essential to provide academic 

facilities, research facilities, attractive communities, and economic 

assistance incentives to harness the industry’s potential. 

This morning, we are going to look at how the federal government can assist in each of those areas, particularly with the high 

unemployment rate we have got in Oregon, in Portland. And with 

too many Oregonians hurting, biotechnology is an opportunity that 

can be an economic anchor for our state. 

Nobody disputes the opportunities in this field for biotechnology 

growth. Economic development follows that growth in a variety of 

areas, from accommodating educated professionals and families 

and numerous economic spin-offs that pay family wages for folks 

that are out of work. 

I have announced my intention to make job creation my top priority in examining requests for federal funds for projects in Oregon. 

Paychecks are the primary need of thousands of our families, so 

they are going to be the primary focus that I have as we examine 

the request for appropriations. 

Oregon communities, agencies, and organizations requesting 

funds are now being asked, not just how many jobs their program 

or project will create, but are those jobs going to create good wages 

and opportunities for our families? I think the biotechnology sector 

offers the kind of jobs Oregonians want and need, jobs that pay the 

good wages that are compatible with the spirit of Oregon. For a 

city dedicated to sustainable growth, social consciousness, and civic 

pride, biotechnology offers in Portland the chance to make significant contributions to the health and safety of our country and the 

world. 

Our Governor has established a working group to study the access and capital needs of four industries in our state, including biotechnology. I commend the Governor’s efforts. And I also want to 

note at this point the special efforts of our mayor, Mayor Katz, who 

is working hard to make the federal government a better partner 

in promoting biotechnology for our State and this community. 

In closing, we are going to hear from today’s panels how the federal government can help to develop the potential around us and 

the potential to make a Portland thriving biotechnology center for 

our country. The witnesses today include public leaders, biotechnology entrepreneurs, and academic experts who share that 

goal. 

Today, we are going to hear from the Honorable Vera Katz, Portland’s Mayor; Mr. Gil Kelley from the Portland Bureau of Planning; 

Mr. Bill Grinstein of Pacific Northwest National Laboratories; Dr. 

Denis Burger of AVI BioPharma——

Voice: How about some opponents of biotechnology? 

Senator WYDEN. Let there be order in the room. 

Voice: Opponents with a different perspective. 

Senator WYDEN. I would like to make clear that today is a Senate field hearing. I would like to state for the record that I am 

doing something nobody has ever done in this state, and that is 

4

holding open community meetings in every county in Oregon to 

hear from people, all sides. But today is a Senate——

Voice: Opposing voices today. The experts that are——

Senator WYDEN. The Subcommittee will come to order, and I am 

going to direct the staff to take those steps to ensure that the hearing can go forward. 

Dr. Peter Kohler of the Oregon Health and Science University; 

Mr. George Pernsteiner of Portland State University; and Mr. Donald Mazziotti of the Portland Development Commission are here, as 

well. 

Let us begin first by welcoming the Honorable Vera Katz, and 

she is accompanied by Mr. Gil Kelley of the Portland Bureau of 

Planning. We welcome both of you, and we look forward to your remarks. 

STATEMENT OF HON. VERA KATZ, MAYOR,

CITY OF PORTLAND, OR 

Mayor KATZ. Senator Wyden, for the record, I am Vera Katz, 

Mayor of the City of Portland. Thank you for arranging this field 

hearing, and I want to welcome all of your staff and congressional 

staff to the City of Portland. 

As you know, Portland is one of the most livable cities in this 

country. We worked hard to achieve, and we worked very hard to 

earn that recognition. At the same time, Oregon, as well as this 

city and this region, has one of the highest unemployment rates, 

as you said, in the country. Livability means nothing if people can’t 

support families and find jobs. 

Portland’s strong economy during the last 10 years was due to 

our ability to respond to economic opportunities without losing our 

vision of the importance of a quality of life and a skilled work force. 

As we diversify our economy, we kept a strong manufacturing base 

that includes the growth in this region and in the State in high 

technology. We need to continue our economic diversification, build 

on our strength, but without sacrificing the quality of life that we 

so cherish here. 

One of the largest employers located in the City of Portland is 

the Oregon Health Science University, and Dr. Kohler will describe 

the range of opportunities possible for their future and for ours. 

OHSU has the potential for spawning products and services that 

can be developed right here and in this region. With the Health 

Sciences Center and Portland State University, the Oregon Graduate Institute that has merged with OHSU and the OSU, Oregon 

State University, the synergies for application for biosciences are 

limitless. Our goal is to have this emerging industry as a force in 

the state’s economy. We have a plan. You will hear about it in 

great detail from Gil Kelley and Don Mazziotti. 

We are preparing this city to position itself on the cutting edge 

of the biosciences movement. What this means for us is an infusion 

of high wage jobs, a knowledge-based industry that works and supports our institutions of higher education, and the opportunity to 

reclaim the banks of the Willamette River, the fish habitat and our 

citizens. The area that you will hear about is the 130-acre site in 

North Macadam. We call it the ‘‘Science and Technology Corridor.’’

5

It also includes the Health Sciences’ main campus that employs 

10,000 people and Portland State University’s expansion of their 

engineering school. This site has a potential to grow and to take 

advantage of the intellectual resources of our universities and others in the community involved in the biosciences. That fits well 

with other new economy industries of high tech, creative services, 

and the fact that today—and we have branded ourselves as the 

urban center for a sustainable economy. 

But this vision can only happen with focus and commitment, 

commitment of time, commitment of money. And it can only happen if we, as a local community, a region, State and the federal 

government, work together. 

To accomplish this vision, we need your help. Funding for infrastructure, from streets to high-speed communication links, funding 

for transportation to continue our national leadership provided by 

this city and this region with your help and the help of your colleagues in development of public transportation, including the first 

modern streetcar ever built in 50 years in this country. 

The geographic limitations you are going to hear about today require us to develop very efficient public transportation. We also 

need your help in the cleanup of contaminated soils in North Macadam as well as river restoration and development of the greenway 

along the Willamette River. 

Making the biosciences part of our economic strategy is critical 

to the vitality and livability of Portland. The city, our private and 

public partners, are ready to work together to make this a reality. 

But Portland and the State of Oregon need your help. 

Gil Kelley, the Director of the Bureau of Planning, and Don 

Mazziotti, the Executive Director of the Portland Development 

Commission, will provide you great detail on these opportunities 

and the needs of this community. 

Thank you very much. 

[The prepared statement of Mayor Katz follows:]

PREPARED STATEMENT OF HON. VERA KATZ, MAYOR, CITY OF PORTLAND, OR 

Portland is the most livable city in the country. Something we have all worked 

hard to achieve and of which we are immensely proud. At the same time it currently 

has one of the highest unemployment rates of any region in the state, and Oregon 

has the highest unemployment rate in the nation. Livability ultimately means nothing if talented hard-working people cannot find quality jobs. 

Portland’s enormous positive growth of this last quarter century has been because 

of its ability to respond to economic opportunities without losing its vision of being 

a clean city with clean industry and a highly educated workforce. We have proven 

our ability to perform well in supporting a wide industrial base, including the huge 

growth of high tech industry. 

But if our region is one of the hardest hit in the nation by this recent recession, 

then we need to intensify economic diversification, building on our strengths while 

not sacrificing our commitment to quality of life. 

Nothing fits this vision of our future better that building on our strengths in biosciences, and on the nation’s and world’s need for the type of goods and services that 

can come from the critical work being done in the fields of health research and biotechnology in Portland. 

As Dr. Kohler can tell you himself, the Oregon Health and Science University is 

a center of a wide range of research that can, if continued and successfully transferred to the private sector, have significant impact on the health of our nation and 

the world. It also has the potential for spawning an unlimited number of biomedical 

products and services that can and should be developed right here in Portland and 

its surrounding communities. With the talent of OHSU and our other universities 

6

such as Portland State University and Oregon State University, the synergies for 

practical applications of biosciences research are limitless. 

And we have a plan: 

The plan involves focussed development in what we have identified as the Science 

and Technology Quarter in the city. Included in this area is OHSU’s main campus, 

where it employs 10,000 people. Efforts are moving quickly to significantly expand 

OHSU’s facilities on Marquam Hill. 

Also included is the Portland State University campus, where expanded facilities 

for its Engineering school are critically important. 

Sites exist for biomedical commercialization in several areas on the east side of 

the Willamette, where economic development is critical and a workforce stands 

ready. 

The crown jewel of our plan, is the area we call North Macadam. This 130-acre 

site has the potential to one day be the place where businesses come and grow to 

take advantage of the intellectual resources of OHSU, PSU, OSU and others involved in the biosciences. It is an ideal location, both because of its proximity to the 

existing and growing OHSU campus, and also because of its proximity to downtown 

Portland and to major transportation arteries throughout the region. 

But such a visionary plan takes enormous focus and commitment, commitment of 

time and money. It is only going to happen if we all pull together: at the federal, 

state and city levels. We are talking about building a biosciences community, not 

just a technology park.

• OHSU and our other research institutions need federal dollars to aid both basic 

research and the resources necessary to achieve technology transfer to the private sector.

• We need resources for infrastructure required by such highly advanced industrial development: not just streets, sidewalks, water and sewers, but the best 

in high-speed communication links.

• We need transportation resources to continue the national leadership provided 

by Portland in development of clean rapid transit. Because of its geographic realities, without efficient public transit, the North Macadam area cannot succeed.

• And we need funds for protecting the environment of this beautifully situated 

location which has suffered from less well-informed development in the past.

Don Mazziotti, Executive Director of the Portland Development Commission will 

speak in greater detail about the specific needs of developing North Macadam, and 

of the partnerships the city is developing with the private sector to help make our 

vision a reality. 

Making biosciences a key part of Portland’s economic future is critical to the continued vitality and livability of Portland. All of the City’s institutions, private and 

public stand ready to work together to make this a reality, but Portland and Oregon 

need your help. 

Thank you.

Senator WYDEN. Thank you, Mayor. We will have some questions 

in a minute. 

Mr. Kelley? 

STATEMENT OF GIL KELLEY, DIRECTOR,

BUREAU OF PLANNING, PORTLAND, OR 

Mr. KELLEY. Thank you. Good morning, Senator Wyden. You 

have alluded already to the importance of many of the important 

social benefits of bioscience. I have been asked to describe whether 

a bioscience industry might take root in Portland, and why, and 

what we are doing about it, and how the federal government might 

help. 

I must say at the outset that I am optimistic about the potential 

for bioscience industry developing in Portland and it becoming an 

integral part of the region’s economy over the next 30 years. I also 

believe that that industry can take root in Portland’s central city 

and that the window of opportunity to seize that potential is now. 

7

We Portlanders take great pride in the city we’ve built. Many of 

the features that distinguish our city from others result from 

thoughtful planning and implementation efforts that are effective. 

Our successes are attributable to taking the long view on difficult 

issues, looking for the best opportunities and then assembling the 

tools and partnerships necessary to bring about dramatic changes. 

This attitude was the hallmark of Portland’s success 30 years ago 

in stemming the tide of suburbanization and sprawl, in reinvesting 

and revitalizing the core of our city as an economically viable and 

highly livable place. 

When she hired me two years ago, Mayor Katz asked that I encourage the City of Portland once again to think boldly about future development in the city. And we believe that we can build on 

our past efforts in Portland and actually take them to the next 

level by exploring the potential synergies between a healthy environment, a vital and participatory economy, a compelling urban 

form and rich cultural attributes. I believe that bioscience and related knowledge-based industries can serve these goals well and 

build upon the strengths and investments that are already here in 

Portland in the Portland region. In fact, the city is currently actively engaged in the pre-planning efforts that have been known to 

draw on this potential, and these are located within Portland’s central city. These include a framework plan for a science and technology corridor adjacent to the south part of downtown as reflected 

on the drawing to my left. The Marquam Hill Plan, which encompasses the site where OHSU now resides, and the South Waterfront/North Macadam Plan, which comprises largely vacant land 

and the previously industrial site adjacent to the river. 

Before getting into the detail of those, let me set the context for 

bioscience in Portland. Oregon and Portland, including the southern Washington area, Portland Metro region, have been 

transitioning away from a natural resource-dependent economy 

over the last 30 years. The first major step in this, of course, was 

the development of an information-based technology in Tualatin 

Valley. Although this industry largely began with scientific equipment, then with a computer chip manufacturer, it has not only 

blossomed and has expanded, but it has spawned a research sector 

there that will sustain that information technology as that industry 

grows and changes over time. 

I believe that in the case of bioscience, this will occur in reverse 

order. That is to say, while the science and technology with regard 

to information technology grew out of corporate research, in the 

case of bioscience, I believe it will grow out of the research conducted at Oregon Health Sciences University, and in fact, the 

merger of these two technologies, information and biomedicine, will 

give Portland a relative advantage over other parts of the country. 

Finally, Portland State’s aggressive efforts to promote and develop engineering expertise in health technology and biomechanics 

furthers the ability for the Portland region to develop applications 

in biosciences. 

While the bioscience industry at the moment in Portland and in 

Oregon is very modest in size, I believe that it can grow dramatically over the next two or three decades. I believe this can be 

8

achieved if OHSU continues its current dramatic trajectory of attracting research grants. 

You will hear later from Dr. Kohler about that trajectory. But it 

is indeed dramatic. Their aspirations of reaching the top 20 standards for NIH funding seems to be easily within grasp. Their 

strength for Portland relies on initiatives that they have already 

developed and that continue to attract top flight talent. 

Rather than proceed with our planning efforts simply on a 

hunch, we commissioned a study by the Battelle Memorial Institute of Technology Partnership Practice, and that study is appended to my testimony in the record. 

Let me just say briefly that that study found that while Portland 

is already a leader in the digital revolution of electronics, computers, communications and informatics, Portland and Oregon possess the potential to become leaders in important niches of the bio 

revolution. 

Their findings relate primarily to the existence of that research 

function at Oregon Health Sciences University, as well as the 

merger with Oregon Graduate Institute, and those other technologies. They have also found the livability of Portland is indeed 

a factor as well. 

I’m running out of time here. Let me just conclude by saying that 

we are actively engaged in the efforts to ensure that the southern 

end of the downtown and what we’re calling the Science and Technology Corridor develops to capacity over the next 30 years to hold 

as many as 20,000 to 30,000 jobs potentially filled with this industry and its related work. In North Macadam and on Marquam Hill, 

we are actively engaged in planning. Those plans are now before 

the Planning Commission and will soon go to the City Council for 

approval. 

The areas in which the city needs particular help from our federal partners involve some the Mayor has already mentioned, and 

Don Mazziotti will talk about in more detail, but those involve the 

transportation infrastructure within that order, particularly connections to rapid transit—rapid transit systems within the district, 

as well as connections to the regional system that is right at the 

doorstep; brownfields redevelopment, including innovative bank 

treatments along the Willamette River and rehabilitation of industrial sites; basic utilities, particularly within the south waterfront 

North Macadam district; creation of incubator space for research in 

emerging technologies; and assistance with capital facilities and institutions located or expanding within the corridor. 

I would just say that this corridor possesses a unique opportunity 

to accommodate an industry because it has already six academic 

institutions present in the district. Those all intend to stay and expand. We know of at least two others who are interested in joining 

in this area of the central city. It can become the incubator for 

spawning many private applications which we hope will also take 

root in the center part of the Portland area. Thank you. 

[The prepared statement of Mr. Kelley follows:]

9

PREPARED STATEMENT OF GIL KELLEY, DIRECTOR, BUREAU OF PLANNING,

PORTLAND, OR 

Thank you for providing me this opportunity to share with you some thoughts 

about the potential for development of a bioscience industry in Portland. I am optimistic that this and related knowledge-based industries will become an integral part 

of the region’s economy over the next 30 years. I also believe the bioscience industry 

can take root in Portland’s central city, and that the critical window of opportunity 

to seize this potential is now. 

We Portlanders take great pride in the city we’ve built. Many of the features that 

distinguish our city from others result from thoughtful planning and effective implementation. Our successes are attributable to taking the long view on difficult issues, 

looking for the best opportunities, and then assembling the tools and partnerships 

to bring about dramatic changes. This attitude was the hallmark of Portland’s success 30 years ago in reversing the trend of suburbanization and revitalizing the core 

of our city as an economically viable and highly ‘‘livable’’ place. 

When she hired me two years ago, Mayor Vera Katz asked that I encourage the 

City of Portland to once again think boldly in terms of our future development. The 

Mayor and I believe that we should not only build upon successful past efforts but 

reach new levels of success. This should be done by maximizing the potential 

synergies between a healthy environment, a vital and participatory economy, a compelling urban form, and rich cultural attributes. Since my hire, I have believed that 

growing the bioscience and related knowledge-based industries serve these goals 

well and build upon strengths and investments already present in Portland and the 

region. 

In fact, the City is actively engaged in three planning efforts that draw upon the 

potential for these industries to grow in the central city. These include a framework 

plan for a Science and Technology Quarter adjacent to and overlapping south downtown Portland and two specific subdistrict plans within this quarter. The Marquam 

Hill Plan encompasses OHSU’s present campus. The South Waterfront/North Macadam Plan comprises a large, mostly vacant tract of land on the Willamette River 

where an OHSU campus expansion is being planned along with space for other public and private research activities, hotels, housing and parks. Before discussing 

these efforts in more detail, I would like to set the context with regard to the potential for bioscience development in Portland.

Oregon and the Portland area, including southern Washington, have been 

transitioning away from a natural resource-dependent economy over the past 30 

years. The first major step in this evolution was the creation of an information technology-based industry, centered in the Tualatin Valley. Initially created by producing scientific equipment and later by manufacturing computer chips, this industry has blossomed and diversified into many areas of information technology. Perhaps more importantly, it has spawned an important research sector that will enable us to sustain our information-based industries into the future as this area of 

the economy continues to evolve over time. Although this research function has primarily existed in corporate venues, it has in recent years led to the creation of a 

more public research entity, the Oregon Graduate Institute (OGI), whose activity 

will serve the entirety of the local industry and beyond. 

In the case of growing a bioscience industry here, I believe this process will operate in reverse: it will stem from research already underway at Oregon Health & 


405kell1.eps
10

Science University (OHSU), and with the right set of actions will spin off private 

applications, many of which can be developed locally. The recent merger of OGI with 

OHSU signals an institutional and corporate awareness of an important emerging 

industry trend—a ‘‘mega-trend’’ if you will—the convergence of information and bioscience technologies. This trend may put Portland at a relative advantage over some 

other areas of the country if both kinds of research activities can reach a critical 

mass here. In addition, Portland State University’s engineering program with a 

focus on nanotechnology and biomechanics will also contribute to Portland’s potential to be at the center of revolutionary discoveries and new applications in biotechnology. 

While the Portland area’s present bioscience industry is very modest in size, about 

2,300 employees in the year 2000, its potential growth in the next decade or two 

may be very high. I believe this can be achieved if OHSU continues its dramatic 

trajectory in attracting critical research grants ($41 million in 1989 to over $200 

million in 2002), and reaches its goal of being one of the top 20 NIH funding status 

within the next few years (from 87th in 1986 to 29th in 2000). OHSU already has 

developed highly respected research niches and continues to build upon its strengths 

in pediatrics, heart, cancer, neurosciences, diabetes, bioinformatics/health 

informatics, proteomics, genomics, and biomedical engineering. 

To test the validity of our hunch, the Planning Bureau recently commissioned a 

study by Battelle Memorial Institute’s Technology Partnership Practice entitled 

‘‘Building Bioscience in Portland: An Assessment of Oregon Health & Science University’s Research Prospects and Portland’s Bioscience Economic Potential,’’ February 2002. Battelle, a non-profit research group, is the nation’s leading consultant 

on building effective higher education-business partnerships for technology-based 

economic development. The purpose of this study was to assess the potential for establishing a substantial bioscience industry in Portland and to examine the relationship of OHSU’s current and planned activities to that potential. Their report is appended to this testimony, along with two other reports that examined questions 

about land availability and transportation needs. 

The Battelle Report offers a key finding regarding the economic potential for continued scientific innovation in the Portland area: ‘‘Already a leader in the digital 

revolution of electronics, computers, communications, and informatics, Portland and 

Oregon possess the potential to become leaders in important ‘niches’ of the ‘bio revolution’ as well.’’ Additional findings include:

• Of the factors needed for developing a successful bioscience center, having a 

critical mass of research is most important.

• OHSU’s research function is approaching critical mass and its goal of achieving 

top 20 NIH funding status is achievable if OHSU can move forward quickly 

with adding research and support facilities.

• OHSU has a realistic and comprehensive understanding of how to achieve this 

goal by building upon its core multi-disciplinary strengths and by recruiting 

‘‘star’’ faculty in emerging areas.

• OHSU’s ability to attract further research grants is constrained by their currently limited laboratory space.

• The OHSU/OGI merger and the $500 million combined Oregon Opportunity 

Fund bolsters the ability to both accelerate and expand research and development opportunities.

• The quality of life in Portland is an important asset in attracting top research 

talent.

• Bioscience research and many forms of production can locate in a central city 

location where good transit and other urban amenities exist, even if that means 

going into mid-rise (5–15 story) buildings, particularly where they are proximate to clinical and teaching facilities.

The Battelle study also concluded that Portland needs to move quickly to fill critical gaps:

• Plans and infrastructure to make expansion lands available.

• Wet lab incubator and multi-tenant space.

• Rapid, reliable transportation between Marquam Hill and other parts of the 

Science and Technology Quarter as well as links to the regional transportation 

network.

11

• Stronger networks between researchers, service providers, industries and other 

groups.

• Increased access to capital at all stages of program development.

• Sustained commitment to education funding.

I believe the first three gaps can be addressed and Portland’s advantages captured 

through the development of a Science and Technology Quarter at the southern edge 

of the central city, based on some key factors:

• OHSU is reaching the developable limits of its Marquam Hill campus, and 

strongly prefers expansion nearby rather than in a more distant part of the region.

• Portland State University (PSU), the university with the highest enrollment in 

the state, forms a significant anchor to the Quarter. PSU’s vision is of an urban 

university not dissimilar from the University of Washington in Seattle or the 

University of California in Berkeley. The University District Plan sets forth an 

ambitious agenda for PSU improvements, including a new building for the 

School of Engineering.

• Oregon State University and OGI have expressed some level of interest in creating a presence within the Quarter. Several specialized medical schools affiliated with OHSU, including the School of Pharmacy and School of Dentistry, 

have also expressed interest in expanding and have the potential to develop applied technologies.


405kell2.eps
12

• Portland has committed itself to increasing jobs in the central city. A very preliminary analysis of Science and Technology Quarter jobs production indicates 

the capacity to accommodate between 20,000 and 30,000 new jobs.

• Much of the land at the southern edge of the central city is ripe for redevelopment. An analysis of property values shows that as many as 170 net acres could 

be redeveloped over the next three decades.

• Creation of new jobs in the central city makes use of the substantial investment 

in the existing regional transportation system.

• The Quarter’s proximity to the heart of the central city has the potential to 

build upon Portland’s biggest success: a very livable and exciting 24-hour, 

mixed-use urban district.

• Bioscience can be accommodated in a vertical format (taller buildings) rather 

than a land-intensive industrial park format.

Our approach has been to sketch out this framework of the Science and Technology Quarter and to focus initial planning efforts in the two subdistricts where 

activity would begin and where detailed land use policy, infrastructure financing, 

land assembly and environmental improvements are critical. These are Marquam 

Hill and South Waterfront (North Macadam).

Marquam Hill is located just south of downtown Portland, approximately one-half 

mile west of the Willamette River. The area has very limited road access, but is 

home to over 4 million square feet of institutional development, including OHSU, 

the Veterans Affairs Medical Center, and Shriners Hospital for Children. Surrounding this intensive urban scale development are hundreds of acres of environmentally sensitive open space; some is publicly owned park land and some is privately owned undeveloped land. Nestled between these two extremes are pockets of 

single family housing. 

The proposed Marquam Hill Plan presents new policies and regulations to allow 

but limit institutional expansion, protect valuable open space and natural resources, 

and enhance neighborhood livability. A controversial but key provision in the plan 

proposes to allow the development of a suspended cable transportation system (aerial tram or gondola) linking Marquam Hill with a proposed OHSU expansion site 

in the North Macadam district.


405kell3.eps
13

The proposed Marquam Hill Plan is currently being reviewed by the Planning 

Commission and their recommendation is expected to be before City Council early 

this summer. 

The South Waterfront (North Macadam) district is a 130-acre, previously industrial area on the west bank of the Willamette River just south of downtown. Current 

plans would accommodate at least 10,000 jobs and 5,000 housing units. Buildings 

could be as tall as 20 stories and the district would include a reclaimed riverbank 

with a broad, undulating ‘‘greenway’’ as its front yard. Policies call for interior parks 

and plazas, extension of the Central City Streetcar into the district, connections to 

other locations by regional transit, creation of hotels, restaurants and conference facilities, and innovative, environmentally sound building practices. 

The detailed plan for the district will be before the City’s Planning Commission 

for hearings next month and is expected to be before the City Council by fall. A 

group of private investors, North Macadam Investors Inc. (NMI), are making plans 

with OHSU to create an OHSU campus, several hundred housing units and a hotelconference facility in the center of the district within the next 3 years.


405kell4.eps
14

The City of Portland and private parties face immediate challenges in bringing 

these plans to fruition. Infrastructure costs are very substantial, even for the initial 

NMI/OHSU development and cannot be borne by local sources alone. I believe federal partners will be needed to assist with urgent capital needs, including:

• Transportation infrastructure—particularly for rapid transit systems within the 

Quarter and links to the regional system and Marquam Hill.

• Brownfield redevelopment and innovative riverbank/greenway treatments, particularly in the South Waterfront (North Macadam) district.

• Basic utilities, particularly in the South Waterfront (North Macadam) district.

• Creation of incubator space for research in emerging technologies.


405kell5.eps
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* Attachments have been retained in the Subcommittee files. 

• Assistance with capital facilities for institutions locating or expanding within 

the Quarter.

Don Mazziotti, the Executive Director of the Portland Development Commission, 

will provide detailed testimony regarding these needs. 

In summary, I believe the development of a biotechnology hub in Portland’s central city is an enticing and very real opportunity. The transformative economic development potential, when coupled with the opportunity to induce dramatic urban 

redevelopment, represents the kind of threshold opportunity that comes along perhaps only once each generation. Fully realizing the potential will be a collaborative 

effort that includes local, regional, state, and federal commitments to hard work, 

good plans, and excellent implementation. I am sure it can be done. 

Thank you again for the opportunity to share these thoughts.

Attachments: * 

Building Bioscience in Portland (the ‘‘Battelle Report’’) 

http://www.planning.ci.portland.or.us/pdf/mhlbiosclptld020802.pdf 

Marquam Hill Plan Alternative Location Analysis 

http://www.planning.ci.portland.or.us/pdf/mhlaltllocation020802.pdf 

Transportation Peer Review Panel Report 

http://www.planning.ci.portland.or.us/pdf/mhltranslpeer010402.pdf

Voice: Again, Senator Wyden, as a citizen of the United States, 

I would like to offer a diversity of opinions, sir. Are we engaged in 

a Dick Cheney energy task force where we only listen to the business people? Where is the dialog? Where is the diversity of opinion? 

Voice: Right on. 

Voice: I’m leaving because this is just a charade. It’s all about 

the people who agree. Where is the debate? Dick Cheney is doing 

the same thing with the energy policy. 

Senator WYDEN. Let me just state for the record, I very much respect the right of all persons to petition the government, and I 

know people have different views on these issues and——

Voice: And they are not represented here. 

Senator WYDEN. I would only state again that on my watch, as 

United States Senator, I have done something nobody has ever 


405kell6.eps
16

done in our state’s history, and that is to have open meetings in 

every county every year. Nobody has any problem at all in our 

state being heard on issues that are important under public meetings open to all. 

Today, however, is a Senate field hearing. We are going to have 

a Senate field hearing. Ma’am, with all due suspect, again, we welcome your attendance here, but we are going to have to go forward 

and have this hearing in an orderly way. I am going to direct the 

staff again to take the steps that will ensure that the hearing—— Voice: To ensure our silence. 

Senator WYDEN. Mayor, let us begin talking about the job creation possibilities in terms of Oregon. In fact, I think what I would 

like to do, perhaps, Mayor, you and Mr. Kelley can decide between 

yourselves how you want to handle the questions. These involve 

the plans that you all have worked on jointly. Let’s start by talking 

about the job creation potential for Oregon and Portland on these 

issues. 

As both of you know, there is so much economic hurt out there. 

We are proud to be leading the country in a lot of areas. We don’t 

much like leading the country in unemployment. Consistently, we 

find ourselves in just that boat. So, I think the first thing we ought 

to be examining as you all look at your initiative is what kind of 

job creation potential is there for good family wage employment as 

part of your plans? I know you have got 18 months in this exercise 

in terms of making the case for Portland and biotechnology. 

Let us start with the thing that I think is first on the minds of 

the citizens and that is what is the job creation potential here? And 

Mayor, however you and Mr. Kelley want to do it. 

Mr. KELLEY. Yes, I think there are two critical aspects to that. 

One is the number of new jobs that might be created, and the second is the quality of those jobs and how Oregonians might get access to them, and the second is more difficult. 

This is a collective, well-educated hunch that we are asserting, 

that bioscience will take off from the research that is currently primarily at OHSU and OGI. We believe—excuse me—OHSU now 

employs 10,000 people in the city and is the city’s largest employer. 

A substantial number of those people are involved in the three disciplines that really feed the potential private sector spinoff from 

this. And those are research and clinical work and teaching. In 

many cases, the highest level of research that may be attracted 

here on grant status will actually engage in all three of those activities. Attracting that grant money brings with it the possibility 

of additional research staff, which may or may not come from the 

Portland region. 

The real power, I think, is as applications develop from that research. If the right steps are taken with patenting, with raising 

capital for space in the city, the possibility to locate the applied research and even predevelopment or development activities in Portland is really the prize here, and that is why we have taken great 

efforts to make land available, to plan the infrastructure, and to 

struggle to find ways to finance the infrastructure so we have that 

capacity. 

The job spectrum within these institutions is quite broad, and 

there are entry level and semitechnical and highly technical posiVerDate Apr 24 2002 13:50 Oct 03, 2002 Jkt 081257 PO 00000 Frm 00020 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\81257.TXT SCOM1 PsN: CAROLT
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tions. So, I think there is a range of salaries and incomes involved. 

Overall, the average wage in the industry is high and would be a 

good thing for Oregonians if it can expand. 

We expect that on a very conservative basis that the amount of 

space that OHSU builds for its own reasons might be multiplied 

two or three times over the 30-year span for private industry. I 

think that is a very achievable number. If we do the right things 

and do them soon enough to make the investments, it could go beyond that number. I think there is a substantial private spinoff 

that may be involved here. It is not only the biomedical but also 

other related medical schools, the School of Dentistry, the School 

of Pharmacy, which are, in fact, spinning off new technologies for 

delivering therapies and so forth. Those are very important in related fields as well. 

Mayor KATZ. Let me just add, Senator, that in addition to employment opportunities and the expansion of jobs, this is also an 

opportunity to build another community within our urban growth 

boundary. It is over 100 acres where we not only expect the expansion of the research and development and hopefully spin-offs by the 

private sector, but also a place for people to live and to recreate 

and to provide opportunities for the communities around Marquam 

Hill to reach the river, which is, right now they are completely prevented from doing that. So, it has a multifaceted approach. 

Today, we are specifically talking about the employment in the 

future of biosciences, but we are also looking at the whole community and the opportunities there. 

Senator WYDEN. Let me push you a little bit, Mr. Kelley. Give 

me a number, even a conservative number because I think that is 

what citizens want. I think we all know that due to the good work 

of the Mayor as well as many others that Portland had a good win 

this week in terms of the wind firm. This is a chance to build a 

very exciting trend in Oregon for renewable energy and the like. 

Be conservative for a moment but push a little bit so people can 

walk out of here with a sense—even conservatively—of what might 

be the number in terms of jobs created. 

Mr. KELLEY. Well, I think the lines are blurry between bioscience 

and biomedical and some of the other information technology. 

Let me just answer it this way, and I would also ask you to ask 

the same question of Don Mazziotti because—— Senator WYDEN. Fair enough. 

Mr. KELLEY.—he is also doing a study at the moment of different 

industry sectors and clusters. 

I would say that we are planning on a capacity basis to hold at 

least 20,000 to 30,000 new jobs in the Science and Technology Corridor. How many of those are directly attributable to bioscience is 

difficult to say. 

The South Waterfront or North Macadam District alone intends 

to hold 10,000 jobs over the next 20 years, and I think that that 

number is probably achievable in that timeframe with spin-offs 

from the various educational institutions that I mentioned. 

Senator WYDEN. We will let you off the hook and get Mr. 

Mazziotti. Mr. Mazziotti is on notice that he gets more questions. 

Mayor, I think you made a good point in terms of livability. 

Please amplify a little bit. When you are making the case for 

18

biotech companies both coming and staying as you try to promote 

this, what do you think are the two or three things that are our 

best selling points in terms of making Oregon attractive and viable 

for biotech? 

Mayor KATZ. It’s an easy question to answer because it is the 

same with almost every industry and company looking to expand 

or coming into this region, and that’s the quality of life, because 

the bottom line is it is their families that are going to move and 

their children that are going to go to the schools. It’s our educational opportunities, from elementary through to university opportunities. 

But if I had—if I had to point to the most critical issue, that’s 

a skilled work force. It isn’t the taxes. Sure, they want us to put 

packages together of available tools that we have at the local level 

and at the State level, but what they want most of all is the availability of a work force that has the skills to meet their needs and 

to meet their needs quickly. And one of the things that we are able 

to offer here is we have three community colleges within this region, as well as a university system that is ready and prepared, because I warned them that if we’re going to be successful, they are 

going to have to be ready immediately and prepared to provide 

those skills and to retrain and train people who are either underemployed or unemployed or people that want to develop new careers. 

Senator WYDEN. Why, Mayor, did you all choose biosciences? I 

mean, in effect, when you are talking about your economic development strategy, you have got a whole host of things that you can 

look at in areas that strike you as promising and the like. Why 

Portland and the biosciences? 

Mayor KATZ. Well, because we have—we still maintain one of the 

few cities in this country that has still maintained a strong manufacturing base. We look at clusters of industries. We identified the 

creative services as a cluster several years ago. That’s grown very 

successfully. But the obvious answer to the question is we have the 

Health Sciences University up on the hill growing, expanding there 

and ready to expand somewhere else in this region. And with them, 

we have our partners at Portland State University. The obvious 

place for them to expand is close to where their medical research 

and their medical services are provided, and that’s up on the hill. 

To come down to North Macadam and to provide a transportation 

system for them that works for them in the community is really 

critical. That’s one of the reasons that we picked biosciences, because we have the foundation here in this community of major research accomplishments, a bright future, a growth opportunity for 

this city and for the state because it has tentacles that move all 

the way out to other parts of Oregon. 

Senator WYDEN. What, in your view, are the barriers to Portland’s tapping its full potential as a biotechnology hub? 

Mr. KELLEY. That’s a very important question, and we asked the 

Battelle folks to look at that question. Let me just summarize their 

six findings in that area. While they said we have many strengths 

and advantages, they did point to six weaknesses. 

First is we lack plans and infrastructure to make expansion 

lands available. You’ve heard today that we’re actively engaged in 

19

remedying that situation. We need your help in that regard, particularly on the infrastructure side. There is lack of wet lab and incubator space and multi-tenant space in Portland at the moment. 

Effectively they said that OHSU’s ability to attract new grants is 

only limited by the available space to them, not by their own plan 

or their own research abilities or abilities to attract that grant 

money. 

The third thing was rapid and reliable transportation between 

Marquam Hill and the expansion area, particularly for the South 

Waterfront and North Macadam area and better links to the regional transportation system, directed at the center of the region 

but not extremely well linked. 

The other three are more difficult and take, really, the industry 

and the state legislature playing a major role: Stronger networks 

between researcher service providers, industries and other groups 

relative to other regions who are more mobilized in this area; the 

networks are not yet in place. Increased access to capital is very 

critical, and that will need to grow over time. But really, all stages 

of the program development from predevelopment to feed capital in 

the various stages of developing therapies and applications, Portland is remote from the major capital markets. And finally, a sustained commitment to education in the state. That has changed 

somewhat with the Oregon Opportunity Fund, but it needs to exist 

at all levels of education so that Oregonians do find their way into 

these good, high paying jobs. 

Senator WYDEN. I would like to next get you to respond to critics 

of biotechnology. We have had folks here already this morning who 

share those views, who see biotechnology as undesirable from an 

environmental standpoint. They have concerns in a whole host of 

areas from genetically altered foods, to animal rights, to pollution, 

to manufacturing plants. How would you respond to those concerns, 

and why have you characterized biotechnology as an industry that 

would be clean for Oregon? That is of enormous importance to the 

people of our state. We have consistently been first, as you both 

know, in terms of clean industry that we can be proud of. So, what 

do you mean when you describe biotech in your plans as being part 

of that clean tradition that is so important to the people of Portland and the people of Oregon? 

Mr. KELLEY. Well, I think philosophically, like any scientific or 

technological endeavor, there are possibilities for misuse, as well as 

for accomplishing wonderful social goods. That really depends on 

the individuals involved, the credibility and the integrity of the institutions involved, and frankly, regulatory oversight. This is a 

highly regulated sector of the economy. There are safeguards and 

checks there. 

We feel that the particular endeavors of Oregon Health Sciences 

University are really geared to the kinds of things that you were 

articulating earlier, that is to say, to curing some of the most difficult and plaguing diseases and medical conditions that exist now 

in our population. I think that is really their focus, and Dr. Kohler 

can explain that in more detail. 

We’re very encouraged by the kinds of research and the activity 

that goes on here. And I think there is a possibility of developing 

20

Portland niches that are perhaps the most socially responsible in 

the industry. 

Mayor KATZ. Let me respond this way. One of the reporters 

asked me how are you going to compete with the Bostons and the 

San Franciscos of the world? And there is no way that we can compete with major medical research centers broadly, but we can find 

niches, and we do look for centers of excellence, and those are the 

ones that we are very interested in developing. And Dr. Kohler can 

certainly respond more to those questions. 

And Senator, I need to meet with one of the potential candidates 

for the Superintendent’s job in about 10 minutes. So, I’m going to 

have to excuse myself. 

Senator WYDEN. We will let you get out the door. We are going 

to keep Mr. Kelley for another two or 3 hours. 

No—I have a few additional questions, but I am going to let you 

get out the door. I think it is worth noting, particularly for those 

of us who are elected officials, we are going to have to be able to 

show at community meetings and other kinds of sessions that we 

deliver in making sure that biotechnology is in the tradition of this 

state, that it is a clean industry, that we can address concerns with 

respect to environmental questions and public health questions and 

human rights questions, animal rights questions. And I know you 

share that view, and Godspeed. 

Mayor KATZ. Thank you again for bringing the Subcommittee 

here. 

Senator WYDEN. Mr. Kelley, let us talk a little bit, if we could, 

about the question of attracting companies versus retaining the 

companies. We are trying to attract entrepreneurial businesses, 

biotechnology businesses. We have had some folks leave the state. 

People have gone to the San Diego area. People who have gone to 

Pennsylvania. People who startup in California based on discoveries from OHSU. 

Once you attract these promising firms, what do you have in 

mind in terms of making sure we can keep them? 

Mr. KELLEY. Well, I think there are a couple of aspects of that 

that are critical. One is achieving the critical mass here of both the 

applied research within the institutions, and the Battelle study 

concluded that OHSU is very close to achieving that critical mass. 

The second thing is to achieve a critical mass of industries surrounding and locating in proximity to the institutions. That is why 

we have taken such great pains to do the work that we are doing 

now in the South Waterfront–North Macadam area and other parts 

of the central city to make that available. 

Clearly, there has to be a lot of work behind the scenes, if you 

will, in terms of patent-sharing entrepreneurialism on the part of 

OHSU and others. I think there is an important bill in the legislature later this year to allow some participation in the private benefits on the part of the educational institutions. A series of things 

that have to be done to lay the groundwork. 

It is then important for Don Mazziotti’s agency to work very hard 

with the—both the institutions and the particular private businesses to give them all the encouragement that they can to stay 

and expand here. 

21

I will have to say that I think there is a third area, which is not 

only to retain and to attract, but to grow our own. And I think 

that’s primarily what we’re focused on here is out of the research 

that’s developed locally, we want to grow companies locally from 

that. 

Senator WYDEN. In terms of creating a biosciences community, 

the history of Federal involvement with local technology is sort of 

strewn with all kinds of examples of empty incubators that graduate few companies, do not become self-supporting and basically 

get put on that sort of long list of boondoggles and failures that 

sort of involve the combination of inept government with pork-barreling and the like. 

I know you are very concerned about this. Mayor Katz, in her 

written testimony, referenced making sure that what we are going 

to do is build a bioscience community, not just the technology part. 

I would like you to sort of explain the difference, in particular, sort 

of tell the Subcommittee what you have learned from other communities so that we can make sure that we are going to have an incubator that makes a difference, an incubator that really does allow 

us to graduate self-supporting companies. We want to make a difference and use these dollars being creative and innovative. 

Mr. KELLEY. Very, very important question because I think there 

are as many as 40 states—maybe more now—that have some kind 

of biotechnology development strategy. We are not using the method that ‘‘if we build it, they shall come.’’ That might be a recipe for 

success or failure. What we are trying to do is ensure a higher degree of success by looking at the activity that’s already here and 

the pressing needs that the institutions that are here now have for 

that kind of space. We know that space could be used immediately. 

And so, our plans to build that in proximity to the other critical 

teaching and clinical functions is really, I think, our solution to 

that. So that we will start and build over time as the demand occurs, but we think that demand is actually going to be highly accelerated over the next few years in Portland. We are going to have 

trouble keeping pace with it. Even with federal partners, we don’t 

think we will have those kinds of resources to achieve that kind of 

model, and nor should we. 

The other thing that Mayor Katz alluded to, which is very important, is that we are not building a sort of sterile campus here. We 

are really envisioning the Science and Technology Corridor as a 

very mixed use district, as an organic part of central Portland that 

will include housing, hotels, conference centers, parks, retail, restaurants and a wonderful riverfront. So, in many ways, Portland’s 

diversity of its uses in the center is its best insurance that it survives over time. And I think all we’re trying to do is provide capacity within that framework for bioscience and other high technology 

or knowledge-based industries to flourish. 

Senator WYDEN. Walk us through, if you would, those areas 

where you thought that the federal government could play a useful 

and constructive role for you. Start with the transportation piece, 

then go to the brownfields efforts. There probably were a couple of 

others that were important, but start with the transportation and 

the environmental pieces. 

22

Give us a sense of what the timetable would be, the cost, and 

again, how you would address those in line with the commitment 

that you and the Mayor are making to ensure that this focuses on 

the clean tradition of industry in Oregon? 

Mr. KELLEY. The two areas where we feel the activity will initiate in bioscience and related private technologies are on 

Marquam Hill and in the South Waterfront, North Macadam district. Those are both highly challenged in terms of the topography 

on the hill and sort of isolated or landlocked nature at the base because of the current infrastructure. 

What that means is that access to both those districts by car is 

difficult. So, we are forced into a situation to rely on our tradition 

in Portland of providing a high level of transit and non-single occupant-vehicle means of travel. So, within that framework, I think 

there are several critical needs. I know Don Mazziotti will speak 

to these as well. The extension of the Portland streetcar, which 

connects the downtown directly to the North Macadam District, is 

of critical importance. That, in turn, connects people to the regional 

transportation system, both with Tri–Met buses and with Max. So, 

that connection is absolutely imperative. Over time, we would like 

to see that extended to Lake Oswego because a lot of the workers 

coming into this corridor will be coming from south and southwest 

parts of the region. And an extension of that to the Lake Oswego 

area is another critical piece. 

We look forward to the south extension of the light rail going toward Milwaukie to come either directly into or very close to the 

North Macadam District, and that is a critically important project, 

once again drawing a huge population of workers right into the 

heart of the Science and Technology Corridor as well as to the 

downtown. Those are the top two. 

I would say, in addition to that, there is a possibility of participation in some kind of transportation forum between—directly between the hill and North Macadam. You may be aware of a controversial, but, I think, important proposal to provide some kind of 

aerial connection system between the hill and North Macadam. I 

think those are very critical infrastructure improvements on the 

transportation side. 

We need to see the streetcar occurring within the next 3 years, 

the rapid transportation between the hill and the base of North 

Macadam in about the same timeframe. The south light rail extensions may take a bit longer, but those are in planning stages now 

at Tri–Met. 

So, I think on the transportation side, those are the most critical. 

We obviously have other problems to solve in terms of just street 

infrastructure, which doesn’t exist now in the South Waterfront 

area. 

With regard to the riverbank restoration of brownfields, that, 

again, is an immediate need. A number of properties there are contaminated as was a formerly industrial site. The whole landscape 

of North Macadam has been manipulated over time and needs to 

be reworked so that it helps us meet our collective mandates in the 

city to restore natural health for fish and wildlife. 

We have a very ambitious program in the city under the city’s 

River Renaissance Program to restore riverbanks for natural valVerDate Apr 24 2002 13:50 Oct 03, 2002 Jkt 081257 PO 00000 Frm 00026 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\81257.TXT SCOM1 PsN: CAROLT
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ues and also to get public access there. So, the greenway along 

North Macadam is really an extension of the Tom McCall Waterfront Park metaphorically, but done in a way that is more environmentally sensitive and would be given the additional challenge of 

having to deal with those contaminants. That’s a future tremendous amenity for this district when we were looking for kind of a 

defining feature of the North Macadam District, but we will need 

major investments to pull that one off. 

Senator WYDEN. Let me begin by way of describing the challenge. 

I have to urge you to take out a sharp pencil, as my mother used 

to say whenever I was asking for various sums of money for various and sundry things that I had in mind. It is going to be tough 

to get the dollars needed for the transportation, and then environmental remediation work is at the top of my priority list. One of 

the reasons that I wanted to chair this Subcommittee, in particular, is to promote our opportunities for biotechnology within the 

kind of clean future that Oregonians want. So, we are going to 

need those numbers. 

Mr. KELLEY. We will be doing that—the Portland Development 

Commission. We’ll be doing that right away. 

Senator WYDEN. Unless you have anything further, we will let 

you go. Thank you very much. 

Mr. KELLEY. Thank you. 

Senator WYDEN. Next panel, Mr. Bill Grinstein, Associate Director of Public Affairs with Pacific Northwest National Laboratories, 

and Dr. Denis Burger, Chief Executive Officer of AVI BioPharma. 

Gentlemen, we welcome you, Mr. Grinstein, for your good work 

in Seattle, and Dr. Denis Burger is well recognized as an innovator 

in the field. Gentlemen, welcome. 

We will make your prepared remarks, anything you have, formally a part of the hearing record. If you want to talk a bit, I 

might have some questions, and make sure that you get a chance 

to address what is important. 

Mr. Grinstein?

STATEMENT OF BILL GRINSTEIN, ASSOCIATE DIRECTOR,

PUBLIC AFFAIRS, PACIFIC NORTHWEST NATIONAL LABORATORIES 

Mr. GRINSTEIN. Thank you, Senator Wyden. Thanks very much 

for inviting me to participate. 

I’m Bill Grinstein, Associate Director of Public Affairs for Pacific 

Northwest National Laboratories, which is operated by Battelle, 

which you’ve heard about earlier today because of the study on 

Portland, for the United States Department of Energy. 

Our laboratory has major initiatives in biosciences, molecular 

and systems biology, and we have a lot of strategic relationships 

and collaborations with major research universities in the Northwest, both in the State of Oregon and the State of Washington. We 

are also actively involved in the bio-organizations nationally and in 

Washington: The Biotech Biomedical Association in the State of 

Washington (WBBA), which I serve on the board of. Also, Dr. Adrian Roberts, my colleague here, has been very involved in the Portland area activities, is very active with the Bioscience and Medical 

Technology Alliance. So, we are, even as a national laboratory at 

24

the Department of Energy, very involved in health and the biologic 

sciences in the Northwest. 

In addition, we have been involved through Battelle in doing a 

study for the BIO organization which looked at bioscience and biotechnology activities across the country at the state level. I have 

been asked today to talk a bit about what is going on across the 

country. We recognize that there is an enormous amount of opportunity. It varies from state to state, but we thought that might be 

instructive for you, your staff and for the audience today. 

The study that BIO did, which was released in September, I 

brought along. I actually downloaded it so that the staff could have 

a copy. And I know how they like to—— Senator WYDEN. All this free time for reading. 

Mr. GRINSTEIN. Well, there will be a significant test after this, 

but it does include an assessment of initiatives and needs of 

biotech companies and the initiatives states are providing. It was 

mentioned earlier that 41 states have programs that are described 

in the study. So we thought that would be of some interest to you. 

As I mentioned, this study is available through BIO, and people 

who want to access it can get it from their web site, which is 

www.bio.org. The needs have already been described to a certain 

extent in previous presentations, but let me reiterate. Strong academic research institutions focusing on basic research in biosciences. Access to early stage capital. Successful tech transfer. We 

talk a lot of tech transfer, but unless the company successfully 

commercializes that technology and makes a profit, we don’t consider it successful. Specialized facilities; we talked about incubators 

and science parks already. Highly skilled work force and stable 

supportive policy structure. And, as I mentioned, there are several 

states that have significant efforts as well as states that have lesser efforts. Let me quickly describe a little of that so we get a flavor 

of that. 

Fourteen states have done bioscience strategies. Some of the significant ones are Arkansas, Hawaii and Michigan—States with 

very different engagement in bioscience. Interestingly enough, 

Michigan’s strategy resulted in a $50 million a year, 20-year program that appropriated funds from the tobacco settlement creating 

a life sciences corridor in the State of Washington—excuse me; I 

need not to be such a geographic chauvinist—in the State of Michigan. 

We have seen a lot of increases in state funding for academic research. Let me just cite some examples for this. These are all State 

appropriations: California, $100 million for the life sciences out of 

$400 million program to be matched by $200 million of private dollars including three institutions in the U.C. system; Delaware 

Biotech Institute, $85 million; Illinois, three programs including 

the Genome Institute, Biomedical Research Institute and the Imaging Center. Three different universities, all part of a $2 billion venture tech initiative for the State of Illinois. In New York, the four 

Bioscience Star Centers, $15 million each. Georgia, $300 million, 

which includes endowments for faculty support, research budgets 

and facilities. 

In addition, we have seen several states who are actually directly 

financing bioscience activities on the venture and investment bankVerDate Apr 24 2002 13:50 Oct 03, 2002 Jkt 081257 PO 00000 Frm 00028 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\81257.TXT SCOM1 PsN: CAROLT
25

ing side. Some have small funds, some have large funds, but California, out of their CALPERS Retirement Fund now has earmarked 

a portion of that for a venture in the biosciences. 

Five states have established funds, including Massachusetts, 

North Carolina and several other states including Ohio are under 

development. In facilities, nine states fund directly incubators in 

science parks, and the concerns that you raised earlier about their 

success is relevant. What are we getting out of them? Twenty-six 

states have research parks with some public involvement that have 

bioscience participation. 

We have active trade associations. Of course, the Oregon Bioscience Association is a great example of that. We have them in 35 

states, many states having more than one trade association. The 

existence stresses importance of networking and communication, 

and hopefully, you are hearing from some of these associations. 

Many states are now funding state level commercialization centers to facilitate technology transfer. California, Oklahoma, Maryland and Virginia are great examples of this. We are just beginning 

to start this in the State of Washington. In the workforce arena 14 

states now have A.A. degrees in the biosciences, and that does include Oregon. We are seeing very active partnerships with 4-year 

schools in many states, and the research institutes outside of the 

universities, such as the Fred Hutchinson Cancer and Research 

Center in Seattle and industry—we are seeing very active collaborations in that arena. 

Obviously, there are concerns from the biotech community, and 

the venture side and investment banking side, about the predictability of investment, and a lot of it is related to regulatory issues. 

So, there are strong interests in genetic privacy laws and the impacts of cloning legislation—— Senator WYDEN. We’re just going to have to move on summarizing, Bill. 

Mr. GRINSTEIN. I’m actually finished with my formal discussion. 

Just as I said, to give you a flavor that there is a lot of activity 

around the country, and it is a very competitive environment. 

Senator WYDEN. Well said. We are glad you are here. 

Dr. Burger?

STATEMENT OF DENIS BURGER, PH.D., CHAIRMAN AND CHIEF 

EXECUTIVE OFFICER, AVI BIOPHARMA 

Dr. BURGER. Senator, thank you for the opportunity to testify 

today. I am Denis Burger, and I am the Chairman and CEO of AVI 

BioPharma. I am really representing today the private biotech sector. After 18 years at OHSU, I have been involved the last 15 years 

in the private biotech sector, been involved in cofounding a couple 

of biotech companies. I sit on the board of two publicly traded 

biotech companies in the San Francisco Bay Area, cofounder of a 

company that is currently public in Dublin, Ireland which employs 

about 500 people and is a financial success. 

Here in Oregon, I run AVI BioPharma. We are a publicly-traded 

NASDAQ company. We have a market capitalization of about $250 

million. Over the last 10 years, we have raised about $125 million 

to fund the company. We currently employ about 85 people. We 

have our own manufacturing facility. We expect our employment to 

26

increase. We have doubled over the last year and a half and will 

double again over the next year and a half. We currently have six 

drugs in late stage clinical development, ranging from phase one to 

phase three clinical trials, and one of the principal reasons that 

Portland works for us today is the availability of clinical sites in 

the region from the private hospitals to OHSU where we, at four 

different institutions, currently have ongoing clinical trials. 

The key issue that I am often asked as a representative from the 

private sector is what is it that is attractive about Portland and 

Oregon. And when we are out trying to fund our Oregon company 

nationally, we are always asked, ‘‘Can you recruit to Oregon? You 

are not Seattle. You are not San Francisco. You are not San Diego. 

How do you recruit? Wouldn’t you be better off in one of those 

other centers?’’ So, I look at it in a little different perspective because I have to explain this to the financial folks. And we have a 

proximity here right between a very high cost of living and a high 

cost of doing business in Seattle and San Francisco. And Oregon 

has a huge, huge cost of living advantage. The answer to that question is we can recruit from San Francisco, or from San Diego, or 

from Seattle any time we want for the principal reason that these 

are high paying jobs. And in San Francisco and Seattle, even those 

in high paid jobs can’t afford housing. Here, our scientists can own 

their own homes. So, it is a huge advantage here. 

And in the last several years, I have been asked again and again 

in San Francisco, what’s the climate like? What if we moved our 

biotech firm to Oregon? So, I think you are going to see that in the 

future; firms not only originating here but moving here to take advantage of those costs and considerations. As capital becomes more 

restricted, more difficult, it becomes more important to manage 

every dollar. To run our program in San Francisco would cost us 

approximately twice what it does to do that here. 

So, on a positive side for us, there are the clinical centers that 

are going to reach stages of monoclonal development, the access of 

public capital which is here, although the private sector may be 

more difficult. The city infrastructure, all of that is terrific. No 

complaints whatsoever. 

On the negative side, we see always the lack of graduate education. Despite OHSU, despite PSU, Portland doesn’t have the big 

graduate level educational facility. Also, the lack of funds that go 

to tech transfer I.P. at the university settings. With better funding 

of those offices, tech transfer could be achieved much better for the 

private sector. 

Senator WYDEN. OK. Gentlemen, thank you. That is very helpful. 

And let me start with you, if I could, Dr. Burger. 

You talked about the advantages, and clearly we have lots to 

work with. What I want to do is talk about areas where certainly 

some have suggested we need some shoring up. Let us start by 

having your assessment of why we lost out on a few of those key 

examples. 

I think you heard me go through several of them. The Northwest 

Neurologic moved to San Diego. The Bioject moved. The firm went 

to Laguna Niguel in California. Why do you think, without getting 

into any of the specifics, why do you think we have lost out in some 

of those areas? 

27

Dr. BURGER. I think a certain amount of loss is going to be expected, and I think if we were having this discussion in California, 

you would see just as many firms moving elsewhere. And the San 

Francisco Bay Area now is concerned about Biotech moving to Redding; if we can’t compete with Redding, something is wrong. 

So, I think there is a lot of shifts and movement. This is a very 

small community. We don’t yet have here, in Oregon, a big private 

biotech sector success. We hope we are going to be one of them. But 

right now, there is not the Amgen, Genentech, or Immunex here 

yet. A company that is not only providing the core but also is spinning off other small biotech interests. So, I am not so concerned 

about the couple of examples we have of moving. At early stages, 

sometimes companies move because they think the capital setting 

is better elsewhere. I have often heard the criticism that there is 

not enough venture capital or early stage capital in Oregon, and 

that may be true. I basically take the feeling that good projects are 

going to get funded, and capital—there are a few exceptions, certainly. But capital, I don’t think, cares that much about where you 

locate as long as you have accessibility. 

Senator WYDEN. That was really my second question, the private 

capital question because I do hear again and again that private 

firms question whether there are places they can go to get capital. 

They have shared their ideas, their views over the years that good 

ideas find their way where people are interested. That is the way 

the market supports, the way the free enterprise system works. It 

does seem that we do have some difficulties in getting access to private capital. What efforts are underway to try to change that? 

Dr. BURGER. Well, I think if you look at how to raise capital, we 

have to go out of state. At the private sector, we raised some capital in-state, but most of our money before we were public came 

from out of state. So—— Senator WYDEN. As the bio associations network private companies, have you all had some kind of meeting with the various venture firms to discuss what it is going to take? 

Dr. BURGER. There is a plethora of meetings with the venture 

capital firms and organizations from various levels. So, I don’t 

think there is a lack. 

Senator WYDEN. No shortage of meetings? I urge you to take that 

back. That is an area I would like to help with. We do not need 

any conventions or the like, but we do need to get risk-takers to 

put dollars into this community rather than looking so often elsewhere. I think more can be done in that area. I would like to help 

with it. 

A question for you, Dr. Grinstein. One of the incentives that the 

new entrepreneurial businesses adopted was the New Venture Capital Bank. Do you all think that that kind of incentive, a state venture capital bank, can make a meaningful difference? 

Mr. GRINSTEIN. Well, we have some issues in the State of Washington related to lending of the full faith credit with the state and 

constitutional restrictions, which limits some of the opportunities 

that can be done, but certainly, there is some attention paid to this. 

There are banks which characterize themselves as venture banks 

coming out of other parts of the country, Silicon Valley Bank is one 

example of this. We know there is a strong interest. This is someVerDate Apr 24 2002 13:50 Oct 03, 2002 Jkt 081257 PO 00000 Frm 00031 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\81257.TXT SCOM1 PsN: CAROLT
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thing we have explored in the state other than folks who have 

come into the state. 

Senator WYDEN. One other question for you two, some who look 

at the field, examine the possibilities for biotechnology argue that 

having a critical mass of biotechnology firms makes everybody 

more competitive and serves as a magnet for others. Do you share 

that view, Dr. Burger? And if so, how are we doing in terms of becoming that critical mass, and what can we do to accelerate? 

Dr. BURGER. Sure. A critical mass is crucial, and we consider 

ourselves part of the Pacific Northwest biotech critical mass. So, I 

don’t try to distinguish myself as Oregon biotech, but Pacific Northwest biotech. And with today’s technology, I’m as close to companies in Seattle and San Francisco as I am to those in Beaverton 

or Tigard. 

So, I think it’s how you position yourself and how well you can 

communicate. Critical mass for us is OHSU. And the more we have 

access to OHSU, the better they’re funded, the better tech transfer, 

the better I.P. and those offices are funded, the better it is for us. 

Senator WYDEN. What would be your suggestions on tech transfer? 

Dr. BURGER. Those offices have to be well funded. If you look at 

where biotech sprung up: San Francisco, Seattle, San Diego, Boston 

research triangle and where it didn’t: New York, Los Angeles, Chicago. The reason was good tech transfer. And good tech transfer 

happened because the tech transfer offices were really well funded. 

They didn’t have to extract up front money. They didn’t have to ask 

small companies to pay for I.P. They could back end load it. Therefore, transfer of technology got to the community. And where the 

tech transfer offices are poorly funded, they have to ask the small 

startups to pay for the I.P., give them up front funds, and the small 

companies can’t do it, and tech transfer bogs down. 

Senator WYDEN. Do you want to add to that? 

Mr. GRINSTEIN. Certainly. Dr. Burger suggests where there are 

strong tech transfer offices and universities, you see the results in 

terms of licensing royalty income. You also see foundations established at universities which allow them foundations to take equity 

interest in technologies that innovations that come out of that university. 

What we’re seeing in very different ways across the states how 

we fund that, sometimes it’s a decision by regents and trustees. 

Other times it’s a direct appropriation from the legislature. And 

where we’ve seen some real problems, of course, we are really seeing it now in funding higher education with the budget crisis across 

the states, that there are certain things that are considered elective, and the tech transfer, in some cases, is considered that way, 

and the regents are more concerned about faculty retention, as well 

it should be in some instances. So, it depends on where the decision 

is made. 

I think states can play an active role. We certainly facilitate, 

through the Department of Energy, technology transfer because as 

a national laboratory we have a tech transfer office. We work closely with the universities, and we actually fund technical assistance 

to small companies trying to commercialize the technology; it 

doesn’t do any good sitting in somebody’s laboratory. 

29

Senator WYDEN. I could go on some length on this tech transfer 

issue. Many in the biosciences know I have got strong views on it. 

One of the reasons I am really excited about Ballot Measure 10 

is it gives us a chance to set up a model that could really work—

a homegrown model to connect companies, universities, and research facilities together in a fashion that would make sense. I 

happen to think that the tech transfer statutes in this country have 

not served us very well. They have not served the companies well, 

and have not served the universities well, have not served the taxpayers well. I just think it really is just that explicit. 

I share your view that certainly, you have to properly fund the 

offices that do exist, but we will make that the subject of another 

hearing focused on making Portland the hub that we have talked 

about today, a model for the country. 

Gentlemen, is there anything else that you would like to add? 

Thank you. Our next panel is Dr. Peter Kohler, President of Oregon Health and Science University; Dr. George Pernsteiner, Portland State University; and Mr. Donald Mazziotti, Executive Director, Portland Development Commission. 

Dr. KOHLER. Do you have an order of preference here? 

Senator WYDEN. No. Why don’t we begin with you, Dr. Kohler? 

You seem ready, and we welcome you. We know the great work you 

are doing at Oregon Health Sciences University. We speak with 

great pride to people from all over the country talk about the innovative work and pioneering research that you are doing. You proceed as you like.

STATEMENT OF PETER O. KOHLER, M.D., PRESIDENT,

OREGON HEALTH AND SCIENCE UNIVERSITY 

Dr. KOHLER. Thank you, Chairman Wyden. I want to thank you 

for holding these hearings. I think this is a very important topic, 

and we need to have public attention directed to it because of the 

potential for the state. 

Several of the speakers have actually covered OHSU fairly well. 

So, I can abbreviate my remarks somewhat, but I do think that one 

point has been made over and over that is a correct one. To really 

launch something like biotechnology, perhaps in converse to high 

tech, you need a very strong scientifically-based university to lead 

that. 

And I would say that we are very close to being there. We are, 

in my mind, not quite in the very top echelon yet. We are moving 

upward, and we are very close. One of the things that we look at, 

for example, is NIH grant awards. We are in the top 30. We are 

headed, we believe, to the top 20. So, we hope to be a world class 

institution. 

Our current research support is related to some of the other 

questions you have had. We currently bring in in terms of awards 

$220 million a year. And you can look at a grant of approximately 

$100,000 almost like a small business. If you go back to our becoming a public corporation in 1995, since that time, we have added 

4,500 people. 4,500 people. A large amount of that was related to 

the research growth that we have enjoyed. We have expanded tremendously, as you have heard, on the research side. 

30

Each small grant employs generally two to three people. So, you can do some calculations there. If you expand by $150 million, how 

many additional employees might you expect to have as a result of 

that? And that does not include those who spin-off as small businesses, which we think is a very important aspect of that as well. 

We intend to keep growing our research programs by a rate of 

about 15 percent per year, which is what we have done historically 

over the last 7 years or so, which would put us in the $300 million 

per year range by the year 2005. That would help generate approximately 6,000 additional employees over the next decade. So, 

a lot of our growth is going to be related to our research. 

You have asked about the key ingredients. Our take on it is that 

capital is very important early on. I will say that we can be blamed 

also for not funding tech transfer adequately in the early stages. 

Our first director of tech transfer is in this room. As I recall, we 

asked her to earn all of her own money. It is the venturing spoon 

approach that I think universities have tended to take when they 

are trying to make it on their own. 

Management experience is very important. I think that is a key 

ingredient. The biggest one for us right now is space, space for our 

research programs, space for the companies that might be spun off 

to be housed. We need more Denis Burgers in Oregon. I think we 

need a culture of biotechnology in this state, not just the Northwest, but in the state, centered in the metropolitan Portland area. 

I think as more companies are created, then become successful, 

that, in fact, will occur. 

The merger with OGI makes us a unique institution. To have 

graduate engineering and computer science added to the bioscience 

base is a very powerful combination. In addition, we collaborate extensively with other institutions such as Mr. Pernsteiner’s Portland 

State University. There is a metropolitan collaborative model. We 

expect that to continue to grow. He will talk more about that later. 

The Oregon Opportunity is a very important piece; the funding 

from the state can be expanded if Measure 11 passes. Using the 

State tobacco settlement money to expand that to approximately 

$200 million, rather than 165 million that we would get from a 

Revenue Bond. So that is important. We are raising gift money to 

supplement that so that we will have about half a billion dollars 

with which to work when it is all said and done. 

We need new space. The plans for expanding to the riverfront are 

very exciting. We clearly need to eliminate bottlenecks by building 

additional research space and adding some capacity, such as imaging, to what we currently do. 

We believe there are a few places where new leadership can be 

recruited in as we build programs, but I think that all of these are 

coming together in a way that can be very important to the state. 

If you take a look at where biotechnology is in this country today, 

it is somewhere in the range of a $50 billion dollar a year industry. 

That is perhaps old data. It may be larger than that, and I would 

defer to Don Mazziotti in terms of what it is. 

Oregon’s percent of the population is about 1 percent. If biotechnology grows to what we predict it will be in about four or five 

years, it will be in the range of a three-fold expansion. If we capture one percent just based on our population, that should make 

31

the enterprise in Oregon a billion dollar-plus a year industry. We 

think with the scientific expertise we have, we can do far better 

than that. 

I would like to see biotechnology become a 1 to 3 billion dollar 

part of the Oregon economy in the next 5 years and increase from 

there. We believe that discoveries like those of Brian Druker are 

phenomenal. The commercial value of that will be probably about 

$500 million a year but will not be realized in Oregon in any important way. We think when the next Druker-like discovery comes 

along, we want to be able to commercialize it right here and retain 

that as a very important part of Oregon’s economy. 

[The prepared statement of Dr. Kohler follows:]

PREPARED STATEMENT OF PETER O. KOHLER, M.D., PRESIDENT, OREGON HEALTH AND SCIENCE UNIVERSITY

Chairman Wyden, thank you for coming to Portland to hold this hearing on a subject of great importance to Oregon’s future. For the record, my name is Peter 

Kohler, and I’m the President of Oregon Health & Science University (OHSU). The 

question of what factors are needed to make Portland a biotechnology hub has been 

very much on my mind and those of my colleagues for the past several years, and 

I appreciate the opportunity to testify here today. 

The short answer is that industry development is in some ways analogous to the 

scientific process itself. Science is an uncertain endeavor, involving experimentation, 

trial and error. Similarly, there is no single recipe for regional biotech success. On 

one ingredient, however, experts are unanimous: the presence of a world-class research institution is an absolute must. At OHSU, we are working diligently to become just that: a world-class institution with respect to medical research and biotechnology. 

The second primary factor that will determine our state’s success in this area is 

the ability to cultivate a culture of biotechnology. By that, I mean the presence of 

venture capital funds, management and technology transfer expertise, incubator 

space, and so on—a biotechnology infrastructure, if you will. I believe this is the bigger challenge for Oregon. 

In my remarks today, I would like to start with some of the efforts being made 

at OHSU to achieve a major leap forward in our research programs. I will then return to the need to develop a culture of biotechnology here in Oregon. 

OHSU as a research institution 

Let me begin with the importance of OHSU continuing to grow as a research institution. A recent study by the Milken Institute of Santa Monica concluded that 

‘‘research centers and institutions are undisputedly the most important factor’’ in 

incubating high-tech and biotech companies. 

The relationship between the thriving Seattle biotech industry and the University 

of Washington is a case in point. The chart that I’ve attached to my testimony 

shows the correlation between research dollars and company development. I think 

it is particularly interesting to note that the rate of company growth has increased 

over time, as UW’s total research grew. In other words, it is important for a research institution to reach a certain size, sometimes referred to as critical mass, at 

which point returns on investment become even higher. For instance, the UW experience shows that company development really began to take off after 1991, as UW 

crossed the $300 million threshold in federal research dollars. 

At OHSU, we are beginning to approach critical mass. We have increased our research tenfold over the last two decades, to nearly $220 million today. During that 

time, we have surpassed a number of other academic health centers, moving from 

#87 in 1986 to #29 in 2001. We expect to surpass $300 million by FY 2005 (based 

on 15% annual growth in total research grants). We have also improved the quality 

of our research, as evidenced most notably by Dr. Brian Druker’s internationally 

recognized work targeting the molecular basis of a specific type of leukemia that has 

implications for the treatment of all cancers. 

To further our drive for research excellence, OHSU has in the past year merged 

with the Oregon Graduate Institute of Science and Technology (OGI). The faculty 

at the new OGI School of Science and Engineering at OHSU are very strong and 

enjoy a high level of research funding productivity, comparable to national research 

leaders on a per faculty basis. The strengths of OGI—computer science, engineering, 

32

environmental science, biochemistry, molecular biology, electrical and computer engineering, and management in science and technology—complement those already 

in place at OHSU. 

OHSU and OGI are well ahead of most academic institutions in recognizing and 

acting on the growing synergy between medicine, computer science and engineering. 

We believe the merger will create significant competitive advantages in the commercially important fields of functional genomics, proteomics, and bioinformatics. Oregon is ahead of the trend in this area. 

The merger has also allowed us to begin developing a program in biomedical engineering, many of the component parts of which existed prior to the merger and can 

now be brought together with a concerted effort on program development. As we 

move forward, we expect to do so in coordination with Portland State University, 

through their College of Engineering and Computer Science. OGI and PSU have 

long been partners in expanding engineering education opportunities in the Portland area—for example, they jointly list their class offerings to better serve the high 

technology community. This is just one area of our overall partnership with PSU— known as the Metropolitan Collaborative Model—that we expect will continue to 

grow over time. You’ll be hearing more about this productive collaboration with PSU 

from their Vice President for Finance and Administration, George Pernsteiner. 

OHSU is poised to achieve critical mass, but the missing ingredient is space. We 

are above the ninetieth percentile nationally in research awards per square foot. 

That puts us in a good position to continue our dramatic climb up the NIH 

rankings, but we must build state-of-the-art laboratory space to enable this future 

growth. 

To address this situation, OHSU developed an initiative called the Oregon Opportunity. The Oregon Opportunity is a $500 million public-private partnership to support major investments in OHSU’s research infrastructure and thereby achieve a 

major leap forward in our research program. It is important to note that we intend 

to raise the bulk of the Oregon Opportunity investment—$300 million—through a 

private campaign run by our foundation. I should add that we have already reached 

the $100 million milestone, well ahead of schedule. 

In addition, we asked the state for a $200 million bond. During the past legislative session, the Legislature and the Governor committed to OHSU a fixed revenue 

stream from the tobacco settlement. This revenue stream will allow OHSU to secure 

a bond of up to $200 million dollars. I should also note that the state referred a 

measure—Measure 11—to the May 2002 ballot that would authorize the use of general obligation bonds for the Oregon Opportunity. If passed, this measure would 

mean the full $200 million rather than the $165 million that would result from selling revenue-backed bonds. A committee has been formed to run the campaign, with 

Senator Hatfield and Governor Kitzhaber as co-chairs. 

To fully realize the goals of the Oregon Opportunity, OHSU will build at least 

179,000 square feet of new research space as well as purchase and remodel existing 

space for research laboratories, offices and support space. OHSU will build a new 

Biomedical Research Building—currently in the planning and design stage—on the 

Marquam Hill campus, at a cost of approximately $98 million. The new building will 

provide highly efficient wet bench space and associated lab support and conference 

areas, expanded facilities for animal research and a core research imaging center. 

This building is vitally important to help us clear out what might be best described 

as bottlenecks in our current research infrastructure. 

We also plan to recruit leading scientific investigators and their teams—a total 

of approximately 350 new researchers—to Oregon. In our recruitment efforts, OHSU 

will prioritize areas of study that mirror and enhance clinical excellence. We will 

focus our investments in medical research in areas such as advanced imaging, cancer, genomics, bioinformatics, heart disease, neuroscience, women and children’s 

health, hearing research and aging. 

The proposed North Macadam development is also integral to the growth of 

OHSU. We are rapidly running out of space up on Marquam Hill, and to preserve 

the synergy between research, education and patient care, it’s vitally important that 

we are allowed to grow within Portland’s central city area. Connecting North Macadam to Marquam Hill with an aerial tram will help us maintain and enhance that 

synergy. And of course with OHSU on the waterfront, we believe the North Macadam area will naturally be attractive to biotech companies looking to partner with 

OHSU and to spin off OHSU discoveries. But you will hear much more about North 

Macadam from others here today. 

Cultivating a Culture of Biotechnology 

That brings me to the state of the industry. Today, Oregon’s biotech sector is best 

described as emerging. But we believe it could eventually be the third leg of OrVerDate Apr 24 2002 13:50 Oct 03, 2002 Jkt 081257 PO 00000 Frm 00036 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\81257.TXT SCOM1 PsN: CAROLT
33

egon’s economic stool—if we can develop a culture that nurtures and supports new 

biotech companies. 

Presently, Oregon’s biotech industry pales compared to those of San Diego, San 

Francisco or Seattle. But we need not—nor can we afford to—think of biotech as 

the exclusive province of our larger neighbors to the north and south. San Diego, 

a community of similar size to Portland, has more than 250 biotech companies. San 

Diego succeeds where Portland lags because the community as a whole strongly supports the local academic institutions such as Salk, Scripps and UC-San Diego. Here 

in Oregon, things are moving in a very positive direction. State passage of the Oregon Opportunity bond authority and private philanthropic support in excess of 

$100 million suggests that our community understands the importance of medical 

research and biotechnology. 

That’s the good news. The bad news is that Oregon currently lacks the necessary 

infrastructure to retain and utilize the intellectual property created at OHSU and 

elsewhere. We have often been forced to sell or lease the intellectual property before 

it can develop real value for Oregon. One example of this is the research of Dr. 

Brian Druker. 

Fortunately, there are a number of potential breakthroughs in the OHSU pipeline. Dr. Gail Clinton is in the early stages of developing a breast cancer treatment 

called herstatin. Based on preliminary results, we think herstatin could generate a 

billion dollars a year in economic activity. When Dr. Clinton is ready to commercialize her discovery, I want Oregon to be ready to run with the results. This will 

require elements of a biotech infrastructure not currently in place in Oregon. If we 

cannot put these elements in place, we will effectively be sending yet another economic windfall to another country like Switzerland, or another state, like California. 

To address this situation, OHSU has intensified its search for partners in venture 

capital, technology transfer, and project management—to enhance our ability to 

commercialize scientific breakthroughs. The process of commercializing a discovery 

involves a few discrete steps: select well from among competing discoveries, fund the 

most promising, and manage the transition from research to production and marketing. As accomplished as OHSU scientists are, they are not trained as managers 

or entrepreneurs. 

Given the large number of recent discoveries on campus and a wealth of existing 

research in the pipeline, the lack of venture capital and tech transfer capacity could 

have serious economic consequences for the state. Up until now, discoveries in Oregon usually run out of venture capital funding after the first round. The rights are 

then sold for a few million dollars and victory is declared. But that’s short sighted. 

Where would Oregon be if Jack Murdock and Howard Vollum had sold Tektronix 

to investors in California after the first wave of venture capital dried up? 

On one of my trips around the state, someone said that selling or licensing our 

intellectual property is like selling raw logs instead of processing them to add value. 

In the case of medical research and biotechnology, I would have to say that the economic loss would be far, far greater. 

Conclusion 

In closing, I’d like to say that it’s a real pleasure to testify in a forum that begins 

with the assumption that Oregon should work to develop a robust biotechnology industry. The question that we debate today is not whether to have an industry, but 

how to do it. I can assure you that this has not always been the case. 

And, at the risk of preaching to the choir, I’d like to share a small piece of our 

vision for what biotech can mean to the Oregon economy. As reported by Ernst & 

Young, the biotech industry created more than 437,000 new American jobs in 1999, 

generating revenues approaching $47 billion. And that’s just the tip of the iceberg: 

genomic results are only now beginning to pour in. Financial analysts project the 

biotech industry to grow at a 35 percent annual rate for the foreseeable future. 

Based on conservative economic estimates, we believe Oregon could have a $1 billion 

annual industry by 2006. 

Let me talk a little bit more about that number. If OHSU captures just one percent of new biotech growth between now and 2006, excluding the industry as it 

stands today, that represents $1 billion. The one percent figure is roughly parallel 

to Oregon’s percentage of the overall U.S. population, so we consider that a fairly 

conservative estimate. It assumes that the quality of research is the same in every 

state, which is far from true. OHSU is a growing national leader in medical research. With the high quality of intellectual property coming out of OHSU, we believe that $1 billion figure could eventually be significantly higher. But, as I’ve said, 

we still have a ways to go in building a culture of biotechnology. 

Once again, I thank you for the opportunity to testify and applaud your willingness to come to Portland to study such an important issue. We think biotechnology 

34

can be part of a very bright economic future for Oregon, and we appreciate your 

help in making this future a reality. 

Thank you.

Senator WYDEN. Very well said, Dr. Kohler. We will have some 

questions in a moment. 

Mr. Pernsteiner, we welcome you. Let me also just make very 

clear that I think Dr. Bernstine, the President of Portland State, 

has made a very significant commitment to technology and biosciences. He has spoken to me personally on several occasions. We 

know the significance Portland State has in this area. We welcome 

you, and please proceed with your comments. 

STATEMENT OF GEORGE PERNSTEINER, VICE PRESIDENT 

FOR FINANCE AND ADMINISTRATION, PORTLAND STATE 

UNIVERSITY 

Mr. PERNSTEINER. Thank you, Chairman Wyden. I appreciate 

very much the opportunity to be here. President Bernstine would 

have been here, but he is at the moment officiating the 

groundbreaking of our Native American Student and Community 

Center in downtown Portland. I want to thank you, Senator, and 

the other Members of Congress for your support for that project 

and for the Institute of Tribal Governments, which is so intertwined with it. So, thank you very much, and I am sure he will be 

thinking of you as he turns that shovel. 

I am here today to talk a little bit about this from the point of 

view of Portland State University, which is Oregon’s urban univerVerDate Apr 24 2002 13:50 Oct 03, 2002 Jkt 081257 PO 00000 Frm 00038 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\81257.TXT SCOM1 PsN: CAROLT

405kohl1.eps
35

sity. Dr. Kohler mentioned a little bit of the story. Let me add a 

little of our perspective. 

In 1995, Portland State had about 14,000 students. Since that 

time, we have grown to 22,000 students. We have doubled our 

funded research in a very short period of time. Part of that is due 

to this state, and part of that is due to the faculty we have hired 

and part of it is due to the cooperation and collaboration which we 

have enjoyed with Oregon Health Sciences University. We have a 

strong commitment to helping to serve the economic needs of the 

region. We are focusing, as you have said, in areas of bioscience 

and biotechnology among some of the others. We view this as a 

long-term investment. This is not something that’s going to happen 

in a short period of time, and then be gone. 

And what I want to talk about a little then is what we are doing 

that is really long term. The first is to look at what is happening 

with the enrollment because that really is generating the educated 

work force which will serve this industry and serve the research 

that will go on. 

I mentioned our enrollment was up some 81⁄2 percent this year 

over last, which in higher ed is phenomenal, but more importantly 

than that for the purposes here, engineering, computer science is 

up almost 21 percent with more than 30 percent at the graduate 

level. The enrollment in biology is up 16 percent and that of the 

sciences is up overall 13 percent in 1 year. That follows the year 

of double digit growth in each of those the prior year. 

We are beginning to build the kind of capacity that some of the 

prior speakers said that we lacked in the Portland metropolitan 

area. We also view this as long term in that it will take the cooperation of the community colleges and the cooperation of the 

grade and high schools in this region to make this a sustainable 

long-term educated work force in this arena. 

So, we are working with OHSU in the Saturday Academy. We 

are focusing our MESA Program on junior high and high school 

students. We have created new cohorts to train teachers in math, 

to teach in math and science. And in part, that’s funded by NSF 

grants to those students to be able to study, to be able to learn how 

to teach in the high schools and middle schools. 

We are building our research capacity largely with the funding 

from private businesses in this area, from the federal government, 

foundations and from our own resources. They are in various areas 

that relate to this in biology and chemistry and in things as esoteric, if you will, as life in extreme environments where we try to 

learn what it is that allows life to sustain itself in thermal vents 

at 30,000 feet below the ocean’s surface and in the Yellowstone geysers. 

We are looking at those things because that really is the basic 

research that some of the prior speakers had talked about that can 

lead to the improvements in this arena that we all are seeking. We 

also find the confluence of mechanical engineering, physics, biology 

and medicine coming together in developing the kinds of both research and products which will lead to the improvements that will 

sustain this kind of industry and this kind of research. We are 

doing that in collaboration with mostly OGI and OHSU. 

36

The metropolitan collaborative model which Dr. Kohler mentioned basically combines Oregon’s largest university, PSU with its 

most successful research university, OHSU. We are working together in curriculum, research, planning. They will now do our tech 

transfer which has been mentioned before, but we are planning not 

just the programs, but also the facilities, because as with OHSU, 

we are in dire need of facilities. 

And we thank you for your support in the last session for Northwest Center for Science, Engineering and Technology. We look forward to further support in that arena. But we also are looking and 

planning at what amounts to a research triangle. Portland State 

University, Oregon State University at Marquam Hill, and North 

Macadam region where OHSU and PCC and PSU are now trying 

to plan a future are only about a mile apart, and they are very 

close geographically. We are trying to link them with the organizations which we will build. 

If we were to ask—if you were to ask me what I would like from 

you, it would be three things. The first is a federal commitment 

that this is an important long-term investment for the future of 

America and the future of Oregon. 

The second would be a federal participation in the infrastructure 

and development, both the research facilities for the academy and 

the transportation links that the Mayor and Gil Kelley talked 

about that would make that triangle a reality. 

And finally, sustained increased support for programatic research in areas, you know, that follow the new NIH model in various agencies of government. We would hope that those would be 

the kinds of things over a long period of time that would really 

help us build this industry in Oregon. 

Thank you. 

[The prepared statement of Mr. Pernsteiner follows:]

PREPARED STATEMENT OF GEORGE PERNSTEINER, VICE PRESIDENT FOR FINANCE AND

ADMINISTRATION, PORTLAND STATE UNIVERSITY

Chairman Wyden, thank you for the opportunity to talk with you about bioscience 

and biotechnology in Oregon and Portland State University’s work in this field. I 

appreciate the opportunity to be here today and your commitment to this vitally important industry. President Bernstine sends his regrets. He is unable to attend this 

hearing because the campus is engaged in another very exciting activity—we are breaking ground this morning on construction of a Native American Student and 

Community Center. 

Portland State University is Oregon’s urban university. We are the state’s largest—serving nearly 22,000 students—and most diverse campus. PSU is located in 

the center of the state’s key economic region. Several of our colleges and schools 

have direct roles in meeting the needs of the region’s businesses, particularly those 

engaged in bioscience and biotechnology. Today I want to focus my comments on 

three areas: 1) PSU’s program efforts in bioscience and biotechnology; 2) An exciting 

approach to collaboration we have developed with the Oregon Health and Science 

University; and 3) Recommendations for ways in which our work in bioscience and 

biotechnology can be enhanced and supported through Federal action. 

Portland State University and Bioscience/Biotechnology 

Meeting the workforce needs of industry 

Portland State University is now the principal education site for knowledge workers in the bioscience and biotechnology industries in Oregon. Enrollment at the campus is growing at unprecedented rates—in the neighborhood of 8 percent a year—

and at this rate we estimate a total enrollment of more than 35,000 students in the 

next ten years. Portland State University also has the largest graduate enrollment 

in Oregon. Enrollment this year in the College of Engineering and Computer 

37

Science has grown by more than 20.7 percent and enrollment in our science programs is up about 13 percent. 

We believe responding to the workforce needs of the high technology and bioscience industries begins with enrollments in these two critical program areas and 

have worked hard to not only feed the pipeline of students, but also to recruit and 

retain outstanding math and science oriented students. As part of our commitment 

to helping high school students prepare for study in this area, we sponsor two important feeder programs: The Math, Engineering, Science Achievement (MESA) program, and Saturday Academy. In addition we have co-admission agreements with 

the region’s community colleges and National Science Foundation funding to help 

students complete their engineering education—to help students in the last two 

years of their educational program, to work with Portland Community College to 

help transfer students in engineering, and to support nontraditional students study 

engineering. Finally, Portland State University’s Graduate School of Education prepares the most teachers in Oregon and is directly focusing on math and science 

teachers. The faculty in the College of Liberal Arts and Sciences works with students interested in teaching math and science to make sure that they are well prepared in their content areas. In addition, PSU is a partner in two important initiatives: the Oregon Collaborative for Excellence in the Preparation of Teachers 

(OCEPT) and the Center for Learning and Teaching (CLT). Both of these programs 

involve collaborating institutions—in Oregon, Montana, and Colorado—and focus on 

preparing highly effective teachers in math and science and in supporting them in 

continuing development programs. These initiatives receive substantial funding 

from the National Science Foundation. 

In summary, while higher education is key to the workforce needs of this industry, we believe that true investment in this important economic development priority begins with K–12 education and also involves community colleges. 

Supporting industry through research 

The bioscience and biotechnology industries require support from highly talented 

and productive faculty who can work in tandem with companies on new discoveries 

and innovation. The University is increasing its faculty research base at more than 

12 percent a year and we have every expectation that this growth will continue in 

the future. The administration at Portland State University has made investment 

in the program areas of engineering, science, technology, and business a priority. 

Let me highlight some of the progress we have made with regard to bioscience and 

bioengineering.

• Bioinformatics and information technology. PSU faculty have expertise in computer privacy and security issues. This is an important aspect of working in the 

field of bioinformatics and medical technology because of the sensitive nature 

of the data. In addition, PSU faculty are also working with OHSU on the use 

of the high speed Internet2 and its application in research and producing medical quality videoconferencing to support research and health care delivery.

• Fundamental biological processes. Faculty at PSU are involved in research related to the regulation of fluid volume and the impact of alcohol on biological 

processes. Much of the funding for this research is from the National Science 

Foundation. We also have a faculty member in chemistry doing grant-funded research on chemical detection technology to sense airborne chemicals associated 

with particular diseases or medical conditions. Additionally, faculty are studying, with NIH support, the neurobiology of hearing and sensory processing to 

determine how the brain functions, and in particular how the brain assembles 

sensory information into an accurate picture of the world.

• Viral infectious diseases. PSU is building research capacity in this area. The 

University has a new faculty member in biology who was formerly with the 

Centers for Disease Control and does research in the area of disease mechanisms and control, particularly the hanta virus. Another new faculty member 

specializes in viral infections of archae bacteria and the use of virus mechanisms to moderate the genetic composition of the archae. His research on these 

mechanisms provides some considerable promise in being able to both isolate 

and identify the expression of genetic characteristics and to modify genetic characteristics to create new organisms with commercially desirable characteristics.

• Nanoscience and nanotechnology. PSU faculty members are working on developing a better understanding of the properties of materials. Morphology, crystal 

structure, chemical composition, interface structure, surfaces and defects all 

have a strong influence on the properties and behavior of materials. PSU has 

recently acquired a high resolution Scanning Transmission Electron Microscope 

38

(STEM), an indispensable tool to materials research and related disciplines, including geology, mechanical engineering, chemistry, and life-science areas. The 

STEM will be used in collaborative projects with local industries, including LSI 

Logic, Intel, Fujitsu, Novellus, Planar System, Wafertech, SEH America, 

TriQuint Semiconductor, Industrial Design Corporation, and KLA-Tencor. Users 

of the new STEM work in a variety of basic and applied scientific disciplines 

spanning the physical and life sciences, both at PSU and in local research institutions including Oregon Graduate Institute, Oregon Health Science University, 

Oregon State Public Health Laboratory, Department of Veterans Affairs Medical Research Center, University of Oregon, and University of Washington. 

There is only one other instrument of this type on the West Coast, and because 

of its uniqueness, PSU will be a central international training site for users of 

this technology. The University also plans to make the instrument available to 

others through the use of Internet2.

• Life in extreme environments. Faculty from disciplines such as biology, geology, 

and chemistry are involved in interdisciplinary research in an important and 

emerging field: the study of life in nature’s most inhospitable places such as the 

boiling pots of Yellowstone, deep-sea thermal vents, and glaciers. Our faculty 

members and their work in this area have been featured on CNN, and in 

Science, Nature, Time magazine, The Christian Science Monitor and The Oregonian. Recently the Keck Foundation affirmed our work in this area by awarding 

a $750,000 grant to support the development of a field-based research instrument to study microbial communities in their natural environment and to continue building Portland State’s genomics capabilities. The field instrument will 

enable researchers to perform in-depth analysis in real time and under true-life 

conditions, rather than attempting to simulate these extreme conditions in the 

laboratory. Keck gives grants to ‘‘exemplary institutions where outstanding people are doing bold and important work.’’

• Intelligent robotics. Portland State University’s Intelligent Robotics Laboratory, 

part of the Electrical and Computer Engineering Department, applies machine 

learning and data analysis algorithms to solving practical problems in the areas 

of data mining, robotics, and human-machine interaction. This research has obvious implications for the field of biotechnology.

• Biomedical signal processing. Portland State University has a programmatic 

focus in biomedical signal processing. The mission of this program is to advance 

the art and science of extracting clinically significant information from physiologic signals. The objectives are to develop new methods of signal processing 

that extract useful information from physiologic signals, to provide students 

with a solid foundation in statistical data analysis and signal processing, to 

teach undergraduate and graduate students about the process of knowledge discovery and research, and to serve the needs of the Portland metropolitan area.

• Materials science. Faculty are involved in research related to biomedical materials. This research is in partnership with Legacy Hospital, and OHSU’s dental 

and pediatrics programs. They are currently engaged in a discussion about establishing a graduate program in biomedical engineering that would include 

coursework in biomaterials, biomechanical engineering, and biomedical instrumentation. 

The Metropolitan Collaborative Model 

The region’s economic vitality depends on a strong higher education infrastructure 

to support workforce development and research. Increasingly, business and civic 

leaders are saying that a great city like Portland needs to have a great, nationally 

recognized university. These same leaders have decried the lack of a top research 

university in the Portland Metropolitan area, citing studies linking the sustained 

economic development of urban regions and the states they serve with the presence 

of such institutions. Further, many in the business community have called for Oregon higher education to double the number of graduates in certain high technology 

and science-affiliated fields. 

Portland State University and the Oregon Health and Science University (and its 

OGI School of Science and Engineering) have responded with a plan called the Metropolitan Collaborative Model (MCM). Working together, PSU and OHSU, along 

with the region’s community colleges and other higher education institutions, have 

the breadth of programs, quality of faculty, numbers of students, and strength of 

research activities to not only support the high technology sector, but also the developing bioscience and biotechnology industries. In addition, this collaboration has the 

elements of a nationally recognized research and teaching comprehensive university. 

39

The goal is to provide the region with research and teaching capacity that competes 

effectively with the top-tier engineering and science schools in the nation. 

The challenge to achieving the educational programs the region’s leaders are calling for requires more than a strong commitment by PSU and OHSU to work together. It will require new facilities, new resources, and a willingness by the region’s leaders to accept a model of educational services that is different from that 

traditionally associated with top-tier schools. OHSU is working with the City of 

Portland on its master plan for development of Marquam Hill and the North Macadam area. That plan must be supported and funding allocated to make those 

dreams possible. PSU has developed its master plan with the City of Portland called 

the University District. The next step in the implementation of this plan is construction of the NW Center for Engineering, Science, and Technology. This research complex will serve as a magnet for bioengineering, biotechnology, and other high technology businesses needing close access to high quality faculty and students. Senator 

Wyden, we are grateful to you and your colleagues in the Oregon delegation for your 

support of this initiative and hope that Congress will be able to assist us in meeting 

match requirements for $26.5 million in bonds authorized by the 2001 Oregon Legislature. The master plans of both OHSU and PSU complement each other by forming 

what some people are calling a science and engineering triangle in the south end 

of downtown. In accordance, while both OHSU and PSU need additional resources, 

we believe it is time for us to co-locate some of our mutually compatible and joint 

research endeavors. That is why PSU has pledged to both the City and OHSU an 

interest in a collaborative research facility at North Macadam. 

Recommendations for Federal Action 

In the past, Congress has played a key role in assisting higher education institutions in their development of research facilities. Funding for these types of projects 

is, as you know, very limited and difficult to secure. In Oregon, we have often been 

able to secure at least 50 percent of the funding for construction through state 

bonds. The institutions have been responsible for raising the rest of the funding. 

Federal funds may be used as part of the match and help institutions such as Portland State University make new construction projects work. We know finding funds 

for construction is difficult, and we appreciate the work you and others in the delegation do on our behalf, but if construction and facilities programs are not authorized it is very difficult to secure appropriations for these projects. 

1. Recommendation: Evaluate opportunities within Commerce and other agencies 

for authorizing support for the development of research facilities and then secure appropriations to make the programs a reality. We would recommend that 

these programs be targeted, at least initially, to those areas of the country hit 

the hardest by the recent recession. 

Much of the research done at PSU has been possible through grants supported 

by the Federal government through agencies such as the National Science Foundation, National Institutes of Health, National Aeronautics and Space Administration, 

Defense, Energy, and others. We are especially appreciative of the significant funding increases for NIH and hope that this year’s appropriations process supports 

growth in research funded by other agencies. As you know, research funding spurs 

innovation and discoveries, which often lead to commercialization of new products, 

health cures, and more. 

2. Recommendation: Support increased funding for research in federal agency 

budgets, particularly in the areas of science and technology. 

In closing, as the region builds its biotechnology and bioscience initiatives, we do 

face opportunities and challenges. The opportunities are many and I know that the 

higher education institutions in the region are ready to meet them; the challenges 

are formidable, but with the help of local, state, and federal partnerships we will 

be successful. 

Thank you again for the opportunity to be a part of this important discussion. 

Thank you also for your leadership in this area. Portland State University intends 

to be a full partner in the region’s plans for expansion of bioscience and biotechnology business development.

Senator WYDEN. Very good. Mr. Mazziotti, welcome. And you 

may begin your testimony knowing that you were forewarned a little bit that you would be pushed on the number of jobs and the economic potential. Knowing your good work all these years, I know 

you are up to that grilling. 

40

STATEMENT OF DONALD F. MAZZIOTTI, EXECUTIVE 

DIRECTOR, PORTLAND DEVELOPMENT COMMISSION 

Mr. MAZZIOTTI. Thank you, Senator. Can you hear me OK? 

Thank you, Senator. 

For the record, my name is Don Mazziotti. I am Executive Director of the Portland Development Commission. I had the opportunity to work with your colleague, Senator Specter, when I was 

Secretary of Commerce in Pennsylvania, and we developed the Biotechnology Center at Penn State, and then later, the Bioscience 

Technology Park in West Philadelphia. 

I know what these things can do in terms of jobs and research 

and educational opportunity, as well as building on the resources 

that that state and our state have. 

I really want to—I don’t want to repeat the excellent comments 

made by the Mayor or Gil Kelley, Dr. Kohler, and George 

Pernsteiner. They said things much better than I can. I guess I 

would like to summarize on the funding side of this issue and talk 

about the challenges that we have, try to explain them a little bit 

to you. 

I think we have a tremendous opportunity to create a center for 

this industry’s growth right near in the downtown of Portland in 

the North Macadam area. I think that North Macadam represents 

the last significant redevelopment area in the central City of Portland, and one of Oregon’s most important economic development 

opportunities on a state-wide basis. 

Despite North Macadam’s fantastic waterfront location, the site 

has remained blighted, vacant and underutilized for many years. 

This reflects many challenges faced by North Macadam, including 

environmental contamination, the absence of infrastructure and 

limited transportation access, which you’ve heard a bit about today, 

but the opportunities far outweigh the challenges. 

I want to talk about the challenges and how you and the committee might assist us. I think there are three major funding challenges which we would like to ask for your help. 

The first is, to launch the OHSU development or any other significant development in the district will require approximately 60 

to 73 million dollars of infrastructure in the central district of 

North Macadam’s area. In the written testimony that I have provided to you are not only maps, but also a detailed budget of what 

those costs add up to and the kind of infrastructure that would be 

supported by that number. 

Second, the funding challenges for environmental cleanup costs, 

which I recognize, Senator, is one of, if not, your top priorities. The 

district’s former industrial uses have left a legacy of contamination 

throughout the area. Much of the area is considered brownfield. 

And although most of the contamination is concentrated in the 

northern part of North Macadam, there are hotspots of contamination sporadically throughout the district. And it really does require 

substantial assistance on the federal side to give us what we need 

to clean up the contamination. Recent passage of federal legislation 

and appropriations for that purpose could be very helpful. 

For many of the property owners, it will be necessary for the 

public sector to offer assistance on their cleanup through loans and 

grant programs or to invest public dollars to accomplish that. 

41

The third obstacle is really the other piece of the money challenge overall, which is to find the private dollars necessary to invest in the private organizations and companies that will generate 

the taxes necessary in the long run to provide the investment capital to get the whole development job done. For that purpose, as 

you know, we have visited with your staff in Washington and in 

Portland to discuss the new Market Tax Credit Program, which we 

believe offers an enormous opportunity for us to focus private sector resources on investment in North Macadam in all of the bioscience-related categories that the Battelle Institute folks have 

talked about, Dr. Kohler has discussed briefly with you. 

It seems likely over time that every major Oregon medical research organization or bioscience-related institution will be located 

at North Macadam with headquarter or satellite facilities at that 

location. Given the magnet force that North Macadam appears to 

represent, based on discussions that we have held with all of those 

institutions, it seems to me that the critical mass that Gil Kelley 

mentioned is, in fact, building in the abstract. Now, we have got 

to make it real by identifying funding sources and strategies which 

will help North Macadam kick off and be successful, not unlike the 

effort done 30 years ago when we recruited Bob’s Electronics to an 

old industrial site, or when we took out Harbor Drive and put in 

a park, or when we took out a parking lot to make way for Pioneer 

Courthouse Square. These are all redevelopment opportunities that 

lie before us. I know, Mr. Senator, that you can help us in that regard. 

[The prepared statement of Mr. Mazziotti follows:]

PREPARED STATEMENT OF DONALD F. MAZZIOTTI, EXECUTIVE DIRECTOR,

PORTLAND DEVELOPMENT COMMISSION

Introduction 

Mr. Chairman and members of the Subcommittee, I am Don Mazziotti, Executive 

Director of the Portland Development Commission, the City of Portland’s economic 

development, housing and redevelopment agency. I would like to express my deep 

appreciation to you, Senator Wyden, and to members of your Subcommittee for inviting us to address one of the most critical jobs and redevelopment opportunities 

the City of Portland has seen in nearly three decades. 

With the nation’s highest unemployment rate, we in Oregon must work to build 

and further diversify our economy—and we must do it in a manner that maintains 

and builds upon this region’s unparalleled livability. Like the role high technology 

played in building our strength in the last two decades, biotechnology, health research and biosciences can and should be our focus now and in the decades to come. 

We have a tremendous opportunity to create a center for this industry’s growth 

right near the heart of downtown Portland—in our North Macadam area. My goal 

today is to explain that opportunity, its challenges and what is needed to turn this 

opportunity into reality. 

Background 

North Macadam represents the last significant redevelopment area in the Central 

City of Portland. This 130-acre district lies south of downtown, extending about 1.2 

miles along the West Bank of the Willamette River to John’s Landing. Oregon 

Health Sciences University (OHSU), one of the City’s largest employers, (with more 

than 10,000 direct employees) as well as established neighborhoods lie to the west. 

Nearby, Ross Island provides natural habitat and is home to Bald Eagles and many 

other species. In the next few years, Ross Island Sand and Gravel will donate it to 

the City for reclamation into extensive habitat. 

The North Macadam district consists largely of vacant and underdeveloped land 

although some light industrial uses still exist. Currently the entire area is privately 

42

* The ownership map has been retained in the Subcommittee files. 

** The framework plan map has been retained in the Subcommittee files. 

owned by twenty-two individual owners including seven riverfront owners. (See the 

attached ownership map.*) 

Despite North Macadam’s fabulous waterfront location, the site has remained 

blighted, vacant, and underutilized industrial land for years. This reflects the many 

challenges faced by North Macadam, including environmental contamination, absence of infrastructure, and limited transportation access. Beginning in 1997, an extensive public involvement process involving hundreds of citizens addressed transportation, open space, greenway, jobs, housing, and land use needs. This culminated 

in approval of the North Macadam District Framework Plan and the North Macadam Urban Renewal Plan in August 1999. These plans call for the creation of an 

exemplary, mixed-use neighborhood that will provide jobs for 10,000 employees and 

housing for 3,000 residents over the next 20 years contributing to the region’s focus 

on compact growth. The vision for the area is a state-of-the-art biotechnology and 

science center with OHSU as its founding healthcare and science research entity. 

(See the attached Framework Plan map.**) 

The Opportunity 

OHSU presents opportunities to develop biotechnology and bioscience business development in North Macadam with City-wide benefits. OHSU’s central campus 

growth plans combine Marquam Hill and North Macadam. In the plans are 1.2 million square feet in new campus development for administrative, research and development activities in North Macadam. The North Macadam facilities are proposed to 

be integrated with current facilities on Marquam Hill with an innovative Aerial 

Transportation linkage, a proven technology, but the first of its kind in an urban 

area on the West Coast. 

North Macadam Investors, LLC (NMI) and Oregon Health Sciences University 

(OHSU) have agreed to jointly engage in a major redevelopment of over 30 acres 

translating into 28 blocks of redeveloped property in the heart of the North Macadam district. OHSU, coupled with NMI, is expected to be the genesis of the new 

North Macadam neighborhood, forming a new commercial, bioscience and residential district. Over the next several years, a ‘‘core’’ concentration of residential and 

office development (phase I) will be developed followed by additional future development including a hotel/conference center and a bioscience facility. 

NMI/OHSU is proposing an innovative approach to developing the riverfront 

Greenway by re-grading the currently steep bank to a gradual slope for a 100-foot 

wide Greenway. Construction on this project is expected to begin this year and be 

completed in 2009.

From 2002–2005 OHSU/NMI intend to complete the following:

300,000 sf for an OHSU Administrative Building and other 

150,000 sf for Bioscience Office space 

175 units of Market-Rate Condominiums 

200 units of Mixed-Income Apartments 30,000 sf 

30,000 sf for a Possible Biotechnology Incubator Center 

25,000 sf of Retail 

East/West streets and pedestrian accessways within the 28 block area 

Regrading of the riverbank for a 100-foot wide Greenway 

Environmental remediation of contaminated soils

The Funding Challenge

To launch the OHSU/NMI development, or any other significant development in 

the district a minimum of approximately $60 to $73 million of infrastructure are critical to complete the following key projects for the NMI/OHSU development, beginning immediately:

1. Bond Street construction from Gibbs to Bancroft ($6 million)

2. Bancroft Street improvements ($600,000)

3. Curry Street improvements ($500,000)

4. Harrison Street construction ($3.2 million)

5. Streetcar to Gibbs Street, or RiverPlace at a minimum ($13 to $23 million)

6. Aerial Transportation Linkage to OHSU Campus on Marquam Hill (partial 

funding—$16 to $20 million)

7. Public Parking Facilities ($4 million)

43

8. Greenway Phase I Improvements & Master Plan Work for NMI site ($2 million)

9. Bioscience Incubator ($9 million)

10. River Parkway—Phase I ($.5 million)

TOTAL $59.3 to $73.3 million

Current obstacles limiting public resources for these investments include the recent Oregon Supreme Court decision in Shilo v. Multnomah County et al, limited 

early tax increment funds and significant infrastructure cost burdens, and a lack 

of new development which will generate new tax increment, as well as the state of 

the local and regional economy. In addition, PDC’s tax increment resources in North 

Macadam are anticipated to be only $50 million over the next 10 years, far less than 

the infrastructure needs of the district. 

The City of Portland has many other important goals for the area that we may 

not be able to address for several years, including affordable housing, parks, 

stormwater management and jobs programs. We are actively pursuing alternative 

funding. Three recent examples of these efforts involve applications to EPA and 

EDI. 

PDC staff has submitted two grant funding requests to the Environmental Protection Agency and is awaiting a decision. The first request of $200,000 was made 

through the Supplemental Assistance program for level II assessments and development of planning-level concepts for remediation. We are very appreciative of the assistance the Oregon delegation has provided with these efforts. The second request 

of $65,000 was made for discretionary funds for restoration of a portion of the riverbank in the Greenway with native plantings that will provide habitat for wildlife 

and aquatic species. 

PDC staff has sought up to $2 million in federal assistance in the past and were 

successful in acquiring $50,000 for Greenway pre-development activities from the 

U.S. Department of Housing and Urban Development Economic Development Initiative account. These funds will be used to develop a Planting Plan to restore habitat 

along a portion of the riverbank as well as development of a greenway design concept for a recreation trail intended for local and regional use. 

Environmental Obstacles 

The district’s former industrial uses have left a legacy of contamination throughout the area. Much of the area is considered brownfields and although most contamination is concentrated in the north of the district, hot spots of contamination 

occur sporadically throughout the district. Of the two heavily contaminated properties in the north, one is development ready and the other is participating in the 

DEQ voluntary clean-up program. The property owner currently participating in the 

DEQ program is addressing 35 years of Navy ship building and dismantling and the 

hazardous substances that came along with this task. To date, the property owner 

has spent roughly $1.5 million to determine the extent of the pollution and clean-up 

costs could be as high as $20 million, although no hard numbers will be available 

until the investigation is deemed complete. The threat of environmental contamination has made developers wary of investment in the district. 

Site contamination issues are not easily resolved since clean-up is the responsibility of private property owners who must bear the financial burdens of remediation before moving forward with redevelopment. For many property owners, it will 

be necessary for the city to offer public assistance with clean-up through loans and/

or grant programs or to invest public funds in infrastructure to reduce the overall 

costs of development and ultimately spur private development.

Summary 

Like the City’s vision for downtown Portland, the North Macadam District’s vision 

comprises important ideas that create a vital biosciences center for Portland right 

in the heart of a lively, urban neighborhood with a diverse population, integrated 

jobs and housing, accessible and well-crafted open spaces, active streets, pedestrian 

scale, convenient transit and quality urban design. 

Federal assistance is necessary and makes good financial sense in terms of public 

and environmental benefit.

The North Macadam biosciences center vision embraces the Willamette River and 

redefines how a dense, vibrant urban environment can peacefully coexist with natural habitat in a riverside setting. The vision includes the genesis of a world renowned health and biosciences research facility coupled with new housing, retail, a 

restored riverbank, increased habitat for wildlife and aquatic species including the 

44

threatened salmon and steelhead species, and a pedestrian/bicycle trail that will 

provide the missing link in a 140-mile recreational trail system through the city. 

In short, there is tremendous opportunity to create something with a significance 

unsurpassed by anything this City has done for the past 30 years. Like taking out 

Harbor Drive and putting in a park, or taking out a parking lot to make way for 

Pioneer Courthouse Square, the vision of the North Macadam District has the potential to put Portland on the map for innovative thinking, biosciences job creation, 

and environmental reclamation. 

We are currently working to bring the New Markets Tax Credit Program benefits 

to Portland and are looking at several other government-sponsored programs. We 

sincerely urge you to work with us in identifying and securing federal funds to help 

us achieve the vision for biosciences in Portland. 

Thank you.

Senator WYDEN. Well said. Excellent panel, and a good one to 

wrap up with. Let us begin with you, if we could, Dr. Kohler. 

The first panel, I think, put a special focus on Portland finding 

a niche or maybe a couple of niches in the biosciences field. 

In your view, what are the most promising niches that Oregon 

Health Sciences University and Portland should go after? This is 

a chance for you to sort of frame your kind of vision. I thought it 

was interesting, I think it was Mr. Burger talking about some of 

the differences between Seattle and San Francisco. Obviously with 

that economic development, Mazziotti is ready to grow on the number of jobs and the like. Finding that niche is going to be key. 

Take a minute and give us a sense of what you think the best 

niches are for Portland and Oregon in the biosciences field. 

Dr. KOHLER. I really think there are two major categorical niches 

that I can describe. Of course, any time I mention one thing, I’m 

leaving out some of the others where we have strength as well, but 

maybe not of the same magnitude. 

The first is in the area of cancer, oncology. I think we have great 

strength in a number of places there addressing cancer-related 

issues. We have opportunities, not only at the basic molecular level, 

but then to apply these to clinical research, to do the testing that 

needs to be done as well. 

Second is the broad area of the neurosciences. One of the problems with neuroscience is it is so broad, but we have very great 

strength in areas of Alzheimer’s disease, Multiple Sclerosis, 

Parkinsonism and so forth, areas where we are tantalizingly close 

to treatments for the future. 

At our own institution, we have tremendous strength in neuroscience, but it is not coalesced. Our sister institutions in Portland 

and around the State also have strength in neuroscience. So, I 

think that is another one where great strides can be made. 

Finally, the area of molecular medicine. You take some of our research programs and the complementary ones that exist at the 

other institutions, in molecular medicine at the genetic level. We 

can use the information we have from the clinical activity that we 

do, and it gives us a chance to address a number of diseases and 

conditions at the molecular level. That sort of research crosses over 

many boundaries from one discipline to another. 

Those, to me, are our best possibilities for future growth. I will 

agree we can’t do everything. We are not going to try to do everything. But those are areas in which we either already have or can 

easily achieve excellence. 

45

Senator WYDEN. I am really pleased to see you single those out. 

It is along the lines of what I was talking about earlier in terms 

of what I saw back in the days of the Gray Panthers which made 

a difference with people. 

You mentioned cancer. Just this morning, someone talked to me 

about the benefits. The last time I had a gavel in my hand, I was 

in the House. I chaired the Small Business Subcommittee. It was 

probably the most important thing we did there was made sure the 

Taxol got on the market. When our Subcommittee began, the federal government was basically treating the source of taxol as a 

trash tree. They were burning it up and wasting it and basically 

acting as if they did not understand what they had on their hands. 

We basically, through the congressional Subcommittee, drained 

the swamp and got the federal agencies, Bureau of Land Management, the Forest Service to treat it as an extraordinary treasure. 

It was the initial source for taxol. Just this morning somebody 

talked to me about the benefits the taxol offers for her in the areas 

you have singled out: cancer, molecular science. I think these are 

tremendously important and make a lot of sense to me. 

Pick up on that and talk to me, maybe playing off a question of 

what the promising niches are, what are the areas you would really 

like to see funding from the federal agencies in the next few years 

and clearly with NIH work, NCI work. You work with a variety of 

federal funders. What are the really key areas that you hope to tap 

for federally funded research? 

Dr. KOHLER. First of all, let me say, I appreciate your support 

for the NIH budget. I mean, this is the best time; we are going to 

look back and say, ‘‘These were the best days for biomedical research ever.’’

Senator WYDEN. We finally got a nominee to head NIH. The 

longest running ballot since the Trojan War. 

Dr. KOHLER. Congratulations, and he is not confirmed yet. That’s 

pretty good. The NIH budget overall is very important. 

One of the areas that has lacked, I think, funding at the NIH 

level is the infrastructure. What is happening at our place is a perfect example. We have brilliant scientists. We have lots of opportunities. We are very competitive. We recruit people very easily here, 

people who can get their money through the individual grants and 

incentive grants. We don’t have so much support for the infrastructure, for the expensive equipment, which I know comes through the 

National Center for Research Resources, or for important areas 

that are developing right now like imaging. The ability to do imaging studies goes very much in parallel with the biological approach 

to disease treatment. For example, being able to take a mouse that 

you are trying a drug that might treat Parkinson’s or Alzheimer’s; 

keeping that mouse alive and seeing what goes on in the brain requires imaging techniques that aren’t widely available. So, that is 

an area that I hope will continue to get attention. I know it has 

more recently. I have actually been on the council for that center. 

I think that’s a very important direction for funding. Thank you. 

Senator WYDEN. The grants and imaging are important for NCI, 

NIH and others. Are there other areas besides imaging that you 

would like to do? 

46

Dr. KOHLER. I think heavy equipment in general is a very important area. We’re getting to the point now with this whole bioinformatics area that correlating the clinical information with the 

genetic is going to become increasingly important. That will require 

a combination of hardware and software which is not fully yet developed. 

Senator WYDEN. I am very interested in working with you. You 

probably saw the announcement just a couple of days ago about the 

Mayo Clinic where they are going to take essentially the genetic information they have on thousands and thousands of people and 

pull it into their files. I think we are seeing in the private sector 

exactly the kind of efforts you are talking about to provide these 

links involving genetics. 

Dr. KOHLER. If I could add something that you can do that 

doesn’t cost money but is a big issue. As we’re looking at the 

HIPAA implementation and the privacy steps that need to go with 

that, we, of course, want to protect individual data as much as we 

can, but we want to make sure we can use it to advance cures and 

prevention. So, it’s important that the Privacy Act not impede research. And trying to make sure we have policies that make that 

logical are very important to us. 

Senator WYDEN. I will work with you on those HIPAA issues. As 

you know, those are matters that people feel very strongly about. 

I want to get with Senator Allen. His capable staff is here. As you 

know, the changes that the President made in HIPAA that were 

announced recently are very controversial and are matters with respect to individual’s information that can now be made available 

without their consent. It is going to be very contentious. 

The point that you are making about how to address these 

HIPAA issues in a way so as to ensure research and at the same 

time protect the rights of individuals is very important. I want to 

get with Senator Allen. This is an area we are going to spend some 

time talking about and looking at. 

On another front, you all have made lots of headway in terms of 

biotechnology in healthcare issues. What we also know is that 

these kinds of advances rely on discoveries in other disciplines: engineering and computer sciences, in particular. 

I would be interested if we can get you into this also, Mr. 

Pernsteiner. What is underway at Oregon Health Sciences University and at Portland State to try to ensure that we are enhancing 

our capability in these other scientific fields as well so as to ensure 

our best prospects of being successful? 

Dr. KOHLER. I will just make a comment and turn it over to Mr. 

Pernsteiner. 

The interface between scientific disciplines is often the area 

where the greatest discoveries occur. Applying techniques from one 

to another is a way where we can make advances that would not 

occur otherwise. 

This is the reason that the collaboration with PSU, OSU and the 

other components of higher ed and the Oregon Graduate Institute 

are extremely important in terms of advancing bioscience. Data 

base management is an area of bio-informatics which requires prodigious storage capacity. If the genome has three billion pieces of 

information, you have to go into some computer storage area to 

47

compare normal to abnormal. This is quite a feat technologically. 

It’s the engineering, the computer science applications that are 

going to allow bioscience to move forward. 

The other thing is that so much of what we are going to be doing 

in the future in terms of diagnostics, as well as therapeutics, is 

going to rely on chip technology. OGI, for example, has a chip making capacity that could be used for biologicals that our genetics people said, ‘‘Gee, we didn’t know you could approach it that way.’’ The 

people in high tech have been using it all along. It doesn’t matter 

whether it’s silicon or whether it’s biological. 

So, I think, again, this interface and the mergers and collaborations we can achieve are going to advance the field much more rapidly. 

Mr. PERNSTEINER. Thank you. A couple of notes here. This state 

has made an investment in doubling the number of engineers and 

improving the engineering education throughout the state. And 

part of the reason that we have seen this major increase in the 

number of students majoring in engineering, and computer science 

has been because of the investment of the state. 

What that has meant is we have been able to hire significant 

numbers of additional faculty. We have been able then to use those 

faculty; they have been using their time also to do research since 

many of the areas that Dr. Kohler talked about, some of them focus 

on bio-informatics, computer security, and biological information. 

We have between us—between OHSU and PSU, our Internet link 

to the world is a joint one. Our computer science departments at 

Portland State and at the OGI work closely together and basically 

have a common curriculum and a common approach to dealing with 

both students and research. 

I think one thing that we found at PSU over the years is that 

we have focused for 30 some years on the interdisciplinary aspects 

of science, both in environmental science, physical sciences, and biological science. We are beginning to see also the bringing in of engineering into all those same areas. We are facilitating that in 

every way that we can, both ourselves and in conjunction with 

OHSU, but the state’s investment in engineering education has 

helped us have money to make that happen. 

Senator WYDEN. Mr. Pernsteiner, you talked about increased federal funding for scientific R&D. This is something that our Subcommittee, Senator Allen, myself, our Subcommittee had made a 

special focus of our work and certainly will support the development of federal research facilities as well as other matters that you 

touched on. I think it would be helpful to understand where Portland State would like to go. Are you all looking to have a federal 

laboratory in Portland? Is this your judgment about where a new 

Federal effort ought to be? 

Mr. PERNSTEINER. Mr. Chairman, actually, I have not thought of 

that myself. It’s actually a wonderful idea. What we had been looking at is assistance in building the capacity, both in terms of facilities and equipment and ongoing faculty grants, but this is news to 

me. It sounds intriguing. 

Senator WYDEN. Well, I was a little bit unclear where you all 

were hoping to head. We can have more discussions about that. I 

think what we would like to know is where you think the new fedVerDate Apr 24 2002 13:50 Oct 03, 2002 Jkt 081257 PO 00000 Frm 00051 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\81257.TXT SCOM1 PsN: CAROLT
48

eral effort can best be focused, and we can certainly have other discussions on that. 

Another question for OHSU and Portland State as well. We obviously know that the lack of a large base of well trained biotechnology workers from lab technicians to Ph.Ds to post-docs is a 

factor in our ability to grow and to build the biotechnology industry 

that we want. Tell us a little bit about what your institutions are 

doing to build that biotechnology work force that is going to be so 

important. 

Dr. KOHLER. May I make one comment about your last question 

before we move to that? 

Senator WYDEN. Sure. 

Dr. KOHLER. We have been talking to our friends at Pacific 

Northwest National Laboratories about collaboration with them. 

They have equipment there that is very attractive for some of the 

things we want to do. We would love some of it to be closer geographically to us in the Portland metropolitan area. I know Andrew 

Roberts is in the room, or was, and he might want to comment on 

that later on as well. But I think, again, access to this very important equipment is a key ingredient in making sure that we can 

move forward. 

With regard to the work force issue, we are working with a variety of educational institutions to try and make sure we create the 

right kind of work force. That includes community colleges, the system at large. As we have expanded our work force so substantially 

over the last seven years, we have had to either recruit or retrain 

people who are qualified laboratory workers. It is something of 

great interest to educational institutions in the area, and this includes community colleges around the State as well as in the Portland metropolitan area, providing a training program that would 

qualify people to go into the laboratory and take these jobs which 

are relatively well paying. So, there is a great deal of interest 

there. 

There are curriculums that have been created. George can comment on Portland State, but I know Portland Community College, 

for example, has a program to train people. 

Mr. PERNSTEINER. Thank you, Senator. As has been mentioned, 

PCC does indeed have an Associate’s Degree that I think pertains 

directly to this. We try to, as I mentioned before, focus on the areas 

of middle school, high school teacher training, and then baccalaureate and graduate degrees. We think that the work force involved in this, as with the work force we have seen in high tech, 

covers a whole variety of types of jobs that requires different levels 

of training and education in different disciplines. 

But what our focus has been is to try to increase the number of 

people who have the Baccalaureate and Master’s level education in 

engineering and science. And we have had, I think, pretty good 

success in the last several years in building that enrollment. And 

then we want to keep that up, which is why we’re having programs 

in the middle schools and high schools as well. 

Senator WYDEN. Mr. Mazziotti, with a full two hours to prepare 

for what you were told would be the question, talk to me about the 

number of jobs that we can tell our constituents, the people of Oregon, at a time when there is so much concern about the economy 

49

where we are headed, where the jobs are going to come from. Give 

us your best estimate at this point in terms of where the jobs are, 

how many, what fields. Paint the economic picture in just as detailed a way as you can. 

Mr. MAZZIOTTI. Senator, I appreciate the license that you have 

given me. My estimates are based on some assumptions, and the 

assumptions are critical. So, I would like to just review those 

quickly. 

One of the assumptions is that we are, in fact, successful in securing the funding necessary to build the infrastructure which is 

essential for the development itself to occur. 

So, for example, I am assuming that we will be able to identify 

within the Service Transportation Act reauthorization of ISTEA, a 

significant amount of federal assistance for transportation improvements that qualify on North Macadam. 

I am assuming that we will be successful in securing several 

hundred million dollars in federal tax credit allocation to fuel the 

private sector investment necessary to generate the tax increment 

dollars which are essential for the long run to build the district out. 

Third, I’m assuming that the institutional configuration that has 

been mentioned here by Dr. Kohler, anticipated by George 

Pernsteiner, described a bit by Gil Kelley, comes together, that in 

fact, we have the opportunity to bring first to OHSU as the anchor 

tenant, if you will to that district, followed by OGI and Portland 

State and Oregon State and certainly other institutions. 

Now, if all of those easy things are done, then I think that in the 

first 3 years of this development—and let’s start with right now, 

from 2002 to 2005. It is possible to consider that there would be 

somewhere around 6,000 jobs created in that timeframe—permanent, full-time jobs in a whole number of sectors, which I will talk 

to in a moment, excluding the construction work which, of course, 

would be necessary. And there, we are probably talking about 800 

to 1,200 construction jobs during that first initial phase of construction of a middle district, if you will, of North Macadam. 

Senator WYDEN. What kind of positions are they? 

Mr. MAZZIOTTI. Well, Peter probably can speak to that better 

than I can certainly for OHSU, but we would estimate that at their 

build out—at least build out of their first phase, which is a 300,000 

square foot administrative and related dry research activity, that 

somewhere between 2,200 and 3,200 jobs could be accommodated 

at that location once buildout occurs. I would have to refer to Dr. 

Kohler because he’s got to sign each one of those checks, which is 

a prodigious task. Then there is 150,000—— Senator WYDEN. I will help him sign the checks. 

Mr. MAZZIOTTI. There you go. 

Senator WYDEN. If Oregonians are going to get family wage employment, we can get a good bipartisan effort toward signing the 

checks. 

Mr. MAZZIOTTI. And these are good family wage jobs that will av- erage somewhere around $55,000 a year as an average for this 

area. 

Then, there will be 150,000 square foot—this is in the first 3 

years of bioscience—office space, public and private space to accommodate both spin outs from the patent and technology transfer proVerDate Apr 24 2002 13:50 Oct 03, 2002 Jkt 081257 PO 00000 Frm 00053 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\81257.TXT SCOM1 PsN: CAROLT
50

gram that OHSU has generated, but also some in-house office 

space will be necessary for special grant project programs. That 

would be as many as 1,500 jobs. 

Third, there would be 175 units of market rate condominiums 

which would accommodate about 50 jobs, 200 units of mixed income apartments, which is about 30,000 square feet which would 

require another 50 full-time positions to support that facility. There 

would be 30,000 square feet for a biotechnology incubator center 

that would be all private, assuming that we can get the private 

capital necessary to generate it, and there we are talking around 

3 to 400 private sector permanent jobs. 25,000 square feet, at least, 

of retail for supporting services in the surrounding area for another 

150 jobs. 

So, we’re talking about a variety of jobs, an average of about 50 

to $55,000 a year in terms of income, which is considerably above 

the national average for a total of about 6,000 jobs in the first 3 

years of this development. 

Now, when you look at the long term, the estimates that we have 

gotten from Metro, for example, on the assumptions they have 

made in the 20/40 plan will be an office for 10,000 full-time jobs 

in this area in the next 10 years. They are also looking at somewhere between 3,000 and 4,000 new residents—permanent residents in the area. We think that may be a bit modest depending 

on how the housing market responds. We are talking about the development of 28 square blocks—square city blocks of space in that 

10-year period. 

This is the largest development project that Portland will have 

ever undertaken in any period of time, and it is going to require 

that we orchestrate all of this very effectively. If you would like to 

assume leadership of that, that would be wonderful. 

Senator WYDEN. That is, in effect, why we are here. I didn’t want 

to come and bring the Subcommittee to exercise my larynx. I wanted to do it because this seems to me to be an opportunity that goes 

into the history books. This is a time when a lot of Oregon is really 

hurting, a lot of Oregon; everywhere I go. I made mention earlier 

about the community meetings, the open meetings. That is what 

people are looking for, some new economic lifelines. Clearly, the 

strategies are different in different communities. But I think that 

the idea of really lasering in on the opportunities for biotechnology 

that was the answer that I hoped to get from you. And I think it 

is fair to say it is based on a hunch and assumptions, and I wrote 

those down. 

As you know, I served on the Environment and Public Works 

Committee. We are already beginning our efforts to look at what 

the surface transportation reauthorization ought to look like. I will 

be working very closely with you and the Mayor and Mr. Kelley, 

in particular, so that we wring out of that Surface Transportation 

Act every single dollar and every opportunity we have in order to 

promote biotechnology and the types of projects that you are talking about. So, that was very helpful. 

Take a minute, if you would, Mr. Mazziotti, to talk about the environmental cleanup questions for the private property owners. 

What are we looking at in terms of cost here? And again, to the 

51

extent you can be as specific as you can, given the information you 

have, the assumptions that have to be made, that would be helpful. 

Mr. MAZZIOTTI. I appreciate that opportunity, Senator. As you 

may know, there are 21 major property owners in this area, some 

of them holding large parcels 20, 30 acres which is, of course, very 

unusual for, in effect, a central city location of contiguous owners. 

But you have there Schnitzer Investment, ZRC Realty, U.S. Bank 

Trust, North Macadam Investors. They are occupying together 

about 60 acres of land which is in the northern part of North Macadam, which at one time or another was either the host to a variety of industrial uses that used caustic materials and processes, or 

they were part of the Liberty Shipbuilding process in World War 

II that ZRC Realty have already settled with the Navy and EPA 

on cleanup issues related to that part of their history. 

But we’re looking at a very big number in terms of the environmental cleanup in the first 10-year process. We would guess that 

there is $50 million of cleanup that’s necessary. That $50 million 

figure is frankly, both a public and private number because obviously, the owners are primarily responsible if the proximate cause 

can be demonstrated. Most of them have acted very responsibly, 

but they are going to need, frankly, assistance to bring their land 

up to standard. And so, we are working to get supplemental assistance for tier two or stage two environmental assessments completed on the properties as we work through the development plan. 

But the number is big. It’s not impossible. The recent legislation 

for brownfields could be of great help to us, and we intend to pursue that in tandem with the property owners so that we can capture enough to begin the cleanup process, and I trust that you will 

help us there. 

Senator WYDEN. There are several brownfields initiatives that 

are moving through the Congress. We examined the Jeffords Bill 

recently in the Environment and Public Works Committee. Let me 

say again this is an area where I plan to work with you on an ongoing basis. This effort is central to the issue that was talked about 

earlier, and that is keeping this effort to promote biotechnology in 

sync with the clean Oregon tradition. We are not going to compromise in terms of environmental protection or quality of life 

issues. I know that is your view as well. 

Just one last question, Dr. Kohler. There has been at length 

some discussion of the question of wet lab space. And I think most 

of America probably would not be aware of wet labs even are, but 

apparently, it has been cited as a challenge for you. I understand 

that the Oregon Opportunity Fund is going to possibly be making 

dollars available to remove that obstacle. I want to know if that actually is the case, and where do we stand on that? 

Dr. KOHLER. Well, again, this relates to the vote that’s coming 

before the public in May, Measure 11. The wet lab space, for purposes of definition, is laboratory space that includes running water, 

a few of those things that you would need to handle hazardous 

chemicals, the traditional laboratory, whereas dry lab might have 

computer activity going in there, but there is no need for the various utilities to be added to it. 

The wet lab space is what we’re critically short of right now. It 

keeps us from actually hiring and recruiting people. We have 

52

talked about the need even to find some temporary housing right 

away before building can be started. But what will happen with the 

bond vote is that we will actually launch construction of a building, 

if it’s approved by the City, on the hill to accommodate these various laboratory needs that we have. That would start almost immediately as we are working on what can occur on North Macadam. 

Senator WYDEN. That is, in your view, and again, I was asking 

because I am not completely clear on that, will be best boosted by 

the other Ballot Measure that is—— Dr. KOHLER. 11. 

Senator WYDEN.—Ballot Measure 11, with 10 being the question 

of promoting research. 

All right. Anything you gentlemen want to add further? 

Dr. KOHLER. Can I say something that’s a little bit off the point 

here? 

Senator WYDEN. You can, and I will have some concluding remarks as well. 

Dr. KOHLER. I want to make this very brief. In addition to what 

else can go on in North Macadam, I think there are exciting educational opportunities down there that will complement the others. 

Again, the advantages of having the education in proximity to 

the research is substantial. That’s the reason rapid transportation 

back and forth is important. We see that as a place for something 

like a regional dental school in the future, for example, as well as 

what we currently have on the hill. 

Senator WYDEN. Well, you all have made an excellent contribution, and it leaves me with great pride to have a chance to reflect 

for a minute or two on what you have said. Dr. Kohler, people from 

around the country talk to me about some of the pioneering research that goes on at the Oregon Health Sciences University, 

building on a tradition, by the way, that Senator Hatfield did so 

much to promote. Now, we are going to take it to another level 

with biotechnology, with the focus on cancer and neurosciences and 

the areas that you have touched on. 

I think that is very helpful, and particularly to see you teaming 

up with Portland State in the way that you have described and Dr. 

Bernstine’s interest makes a huge difference as well, as you both 

know. 

In a decent chunk of the country, it can be pretty hard to get the 

universities to get to the same table to work together on substantive matters. The fact that the two of you are so interested and 

Dr. Bernstine has a great interest in this field is, I think, is a very 

big plus and leaves me feeling very good about what we have heard 

at that side of the table. 

Mr. Mazziotti, the fact that you have walked us through the economic possibilities here, and what this can mean for Oregon when 

we are hit so hard economically, is an important way to wrap up. 

Once again, we are showing up on the list of the top 10 places 

in the country to live. I think there a couple of the national publications that have us right up there on issues that are on the newsstand now. What you have laid out is essentially a game plan that 

the city wants to follow to ensure that we can bring thousands of 

good family wage jobs to Portland, to the State of Oregon, and do 

it in line with the priorities that we have had in the State, priorVerDate Apr 24 2002 13:50 Oct 03, 2002 Jkt 081257 PO 00000 Frm 00056 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\81257.TXT SCOM1 PsN: CAROLT
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ities we have certainly had since I have been here—I came to Oregon 30 years ago—that were laid out by the Republican Governor 

Tom McCall, who said that we can have the quality of life that people in this state want and do it in line with the tradition of economic opportunity as well. 

We are going to pull out all the stops to make this work and to 

bring together the various industries, universities, and governmental bodies to do it in line where we can show the taxpayers 

that we are being very tough-minded in terms of the way their dollars are being used, that we are being cost effective. 

I know the Mayor and Gil Kelley answered that question I asked 

in a thoughtful way. We do not want this project to go down as one 

where people fritter away a lot of money. We want it to go down 

as one where people say this was a model for using taxpayer’s dollars effectively to make a great difference. 

There is a lot of work to be done here, but it is work. It is high 

stakes work at a high stakes time. I thank you for the excellent 

presentations you have given this Subcommittee, which I am proud 

to be chair of, a sense of what it is going to take to make a program 

like this work for Portland, but also to be a national kind of model. 

Thank you very much for your contributions. We will be working 

with you in the days ahead. We will excuse you at this time. The 

Subcommittee is adjourned. 

[Whereupon, at 11:37 a.m., the hearing was adjourned.] 

(55)

A P P E N D I X

PREPARED STATEMENT OF JOANNA RODGERS, EUGENE, OREGON

I am writing in response to the testimony that Senator Ron Wyden gave on

April 5, 2002 regarding the future of biotechnology in Oregon. Unlike Senator 

Wyden, I strongly oppose any legislation or measure which will encourage such development. There are many reasons for this and I will outline a few below. 

Not too long ago, I was like most people when it comes to biotechnology: indifferent or, if anything, hopeful. But I have had a quick education in this area that 

led me to first understand on an intellectual level the hazards of biotechnology and 

then to feel the fear of this growing danger on a gut-level. It is being touted as a 

cure to many of the problems we face today such as disease, starvation, and scarce 

resources. While these benefits sound unarguable, the dangers (real and projected) 

are large enough to merit much caution. 

Basically, we simply do not know what exactly genetically engineered products 

may do. Many experiments have predicted outcomes which do indeed come true—

except for one or two individuals. These ‘‘exceptions to the rule’’ are all that it takes 

to have things get beyond our control and wreak irreversible damage. This is true 

for genetically-engineered food as well as other products such as trees. 

Genetically-altered foods are already being consumed at an enormous rate—in 

fact, more than half the food found on grocery shelves contain genetically modified 

ingredients. Study after study, experiment after experiment, and product after product have demonstrated that when it comes to biotechnology, one needs to expect the 

unexpected. However, many of the ill effects are already known. For example, several toxins have been found in foods containing G.E. foods, an increased resistance 

to antibiotics is possible due to the ‘marker genes’ utilized in G.E. foods, new diseases can be created by the new strains of viruses and bacteria used, and an increased rate of cancer is also developing (particularly due to the genetically modified 

growth hormone used in cows). 

Biotechnology is a fast-growing field which threatens much more than is commonly recognized. The potential benefits of this development are touted while the 

serious potential impacts are hardly acknowledged. In my opinion, this is the ultimate sell-out of our humanity in the name of progress and economic gain. While 

biotech corporations and related industries have everything to gain, society and indeed life on Earth as we know it has everything to lose. The fact of the matter is 

that we do not know what, exactly, our bio-engineered products will do. While some 

would say that this is all the more reason to try it out and see how it works, in 

my opinion, we need to err on the side of caution. We are literally talking about 

rearranging the building blocks of life which have taken eons to form. We are not 

operating on the time scale that nature has for our trial and errors. While the immediate impacts may seem inconsequential (e.g., some cell mutation in a tomato 

that has pig cells spliced in), the long-term or more insidious results may not be 

knowable now. 

Senator Wyden said in his testimony that, ‘‘No one disputes that biotechnology 

is an industry with a bright future.’’ I dispute this. In fact, I would say that it could 

be a very dark future for us if the biotechnology industry is allowed to grow. We 

cannot continue to make a healthy economy the bottom-line when the trade-off is 

an unhealthy people and environment. 

Thank you for your time and consideration of my thoughts. I truly hope that this 

letter will count for something to counter the many other voices that are voicing just 

the economic and one-sided positive potentials of biotechnology.

Æ