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By Yin Y. Nawaday, Crimson Staff Writer

Few would have predicted a year ago that Mayor Kenneth E. Reeves '72 would become the leader of a new pro-business city council.

But when one of Cambridge's leading biotech firms, Genzyme Corp., spurned the city in December and opted to build its $75 million headquarters in Allston instead, financial realities forced the city council to act.

Genzyme's announcement, along with the loss of several established Cambridge businesses to the recession, prompted Reeves to steer the council in a new direction. In his inaugural address, Reeves vowed to bury Cambridge's reputation as an anti-business town.

Local pro-business advocates applaud the council's move and say the new attitude is essential to keeping businesses in the city during the recession.

"Since Genzyme was wooed across the river and since the new leadership in the City Council, the attitude of the elected city officials [toward business] has markedly improved," says Robert D. Lewis, executive director of the Chamber of Commerce.

Cambridge officials are also quick to pitch the government's new paradigm. "The city recognizes that the needs of business cannot be ignored," says James P. Maloney, finance director.

The new stance is a pointed reversal for a city with a history of favoring environmental and residential concerns over those of businesses. Indeed, few expected such a shift from a city council that retained its 5-4 Cambridge Civic Association-backed majority in November.

Liberal councillors were often accused of being "anti-business" in their efforts to control growth. Local corporations charged that the council made life difficult for them with their efforts to achieve environmental growths.

Today, Maloney emphasizes that the city takes care to avoid "overly onerous restrictions," He says city government wants the business sector to know that it is listening.

The attentiveness isn't accidental. Cambridge will need approximately $125 million during the next five years to build a new hospital and new schools, Maloney says.

"We can't do it if we don't have a strong thriving economy," he says. "There's only one way to pay for all that: a strong tax base."

And the Chamber of Commerce says the bulk of that money must come from business.

According to Lewis, more than half of the city's land is tax exempt. That means Cambridge gets twothirds of its tax income from the business community.

With key biotech firms threatening to leave and the amount of office space in Central Square climbing toward 150,000 sq. feet, Lewis says the city recognizes the pressing need to retain both big and small businesses.

The pressure to cushion the impact of the recession was highlighted as some of the city's oldest businesses went under. Harvard square's J.F. Olsson's, which survived the Great Depression, closed its doors this February after 107 years.

Reeves and the council decided not to stand by idly. The city launched several measures designed to keep small businesses afloat and prevent large corporations from moving out:

. The council unanimously passed a new zoning package for Cambridgeport that encourages development of light industry.

. The City created the Cambridge Business Development Center (CBDC) to help individuals start new businesses.

. The city council launched the Cambridge Industrial Financial Authority (CIDFA) to provide bond financing and credit enhancement for growing corporations.

. The council adopted the "Cambridge Employment Plan" to encourage businesses to hire local residents, particularly women and minorities.

. Cambridge is discussing a joint program with MIT to provide free technical training for residents and help create a labor pool for biotech firms.

. City officials are actively considering offering tax exemptions to some key companies.

. The city manager's office is in the process of rewriting Cambridge's parking freeze, which limits the amount of parking spaces--and hence the amount of development that can be created in the city.

The city's two new agencies, CBDC and CIDFA, are intended to help both "Mom and Pop" businesses and growing corporations.

The CBDC offers guidance for individuals interested in starting and running new businesses. The federally funded agency employs full time director and hopes to revitalize the depressed Central Square business district.

The CIDFA works with banks to provide bond financing and loan pools for young businesses that the city considers promising.

But city officials are paying the closest attention to the biotech firms, Cambridge's primary growth industry.

"We are talking to them about their needs," says Michael H. Rosenberg, assistant city manager for community development. "There have been direct communication improvements."

Cambridge recently submitted a proposal to MIT that would allow residents to take free technical courses designed to prepare them for biotech industries.

"If we want to keep [biotech industries] in Cambridge, then it's to our advantage to create the labor pool," says Rosenberg.

City officials have considered going a step further to help key biotech companies. According to news reports, Cambridge offered Genzyme a tax exemption if it built its headquarters in the city.

The real estate exemption is allowed under state law to help light industrial businesses in "blighted areas." Those businesses pay a state excise instead of local property taxes.

Both Cambridge and Boston reportedly offered this option to Genzyme last December to win the $75 million project. But Boston proposed the better package.

Genzyme's president, Henri Termeer, said at the time that the lack of a definitive pro-business stance in Cambridge made the company uneasy.

Genzyme spokesperson Donna L. Lavoie says the company decided to build its corporate headquarters in Allston because Cambridge did not present the best real estate option.

"The main reason for the move is that the Allston site offered us room for expansion along the Charles River," Lavoie says. Boston promised the company new access roads through Allston.

The failed bid for Genzyme shocked city officials and raised eyebrows at other local biotech firms.

The city is now trying to lure the Lotus Development Corp., the computer software giant that is Cambridge's fourth largest employer. Lotus has already moved some of its operations to the suburbs, and is threatening to expand into North Reading unless the city offers tax breaks and lower rents.

City Manager Robert W. Healy reportedly responded by proposing a property tax freeze. And the city council is considering offering tax exemptions in other cases to encourage industrial growth.

The business community reacted positively to the council's efforts, and even sponsored a few anti-recession measures of their own, such as "Buy Cambridge" days.

But some local activists look on the "reforms" with skepticism. Gladys P. Gifford, president of the Harvard Square Defense Fund, says tax exemptions for businesses could shift the fiscal burden to residents.

"It does not make sense to have manufacturing in Cambridge," Gifford says. "The land just cannot afford it."

Gifford insists she is not "antibusiness," but says the city shouldn't encourage manufacturing industries.

"Once you give a tax break on a large piece of land for manufacturing, somebody is going to have to absorb the burden," she says.

City officials disagree. Sally Powers, of the city assessor's office, argues that the tax exemptions probably won't raise residential taxes because so few businesses qualify for it.

And City Councillor William H. Walsh, a longtime pro-business advocate, says none of the new initiatives will hurt the residents.

"There is more and more of a realization that without business thriving in Cambridge, we won't have any city left," he says. "Anything we do in the '90s is well-intentioned and won't hurt recovery."

But Cambridge residents who are used to the city council's more liberal positions are nervous.

Debra M. McManus, co-chair of Cambridge Citizens for Liveable Neighborhoods, says the city may be selling its future for short-term gain. McManus says Cambridge must consider what it wants to look like ten or 15 years later, long after the current recession passes.

"We have had enormous industrial growth in our community within the past ten years," she says. "The problem is that we're going to run out of space so we need to plan exactly how we're going to give it away."

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