The University of Washington is moving ahead with plans to more than triple the size of its biomedical research presence in South Lake Union.

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The University of Washington is moving ahead with plans to more than triple the size of its biomedical research presence in South Lake Union with two new buildings at a cost of $170 million.

The decision by the UW Board of Regents to sign off on the next phase is a significant step toward transforming the neighborhood into an intensified center of biomedical research.

City and state officials, as well as major property owner Paul Allen, have touted the UW’s potential to energize a neighborhood already housing the Fred Hutchinson Cancer Research Center, ZymoGenetics, the Seattle Biomedical Research Institute and several biotech companies.

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The expansion was not guaranteed, given slower-than-expected progress in private fund raising over the past two years.

“This means we will go ahead. The Regents have said go ahead,” said Weldon Ihrig, executive vice president of the university.

At a meeting last week, the Regents gave UW administrators permission to negotiate final contracts with Paul Allen’s Vulcan development company. Options on the property are due to expire at the end of next month.

The blueprint calls for two buildings to rise just south of the “Blue Flame” building, which Vulcan has already redeveloped as the first segment of the campus.

There will be one new building for administration and one for research labs, situated on the southern two-thirds of the block at 815 Mercer St. The new buildings will have a total 350,000 square feet of space, about three times as much room and more than three times as costly as the first.

The UW hopes to have the buildings finished by December 2007.

Over time, the university hopes to have research teams and support staff filling up a group of six new buildings in the neighborhood with a combined 750,000 square feet.

“This really says the UW is very serious about continuing to improve our biomedical-research program and develop appropriate facilities in a way that can also benefit the community,” said Dr. Paul Ramsey, dean of the UW School of Medicine.

Michael Nank, a spokesman for Vulcan, said, “We’re pleased to hear that news. It shows there is momentum for the life sciences in South Lake Union.”

The financial plan has been retooled to account for the university’s inability to reach its $60 million goal of private support for the expansion. So far, the university has pulled in $9 million from private sources and put $5 million of that toward the first building, said Bruce Ferguson, the chief financial officer of UW Medicine.

The new financial plan depends on several assumptions. Most of the money for construction is slated to come from selling tax-exempt bonds, which will be repaid through the university’s share of grants UW researchers win from the federal government. The university is also counting on collecting $23 million from private, state and other federal sources over the next two years.

The UW also expects $2.4 million a year for the campus from the state, an item included in Gov. Christine Gregoire’s budget proposal, Ferguson said. That money, which the UW expects to keep coming, will go to help maintain and operate the new buildings, he said.

UW researchers also must remain competitive at winning federal grants. In fiscal 2004, the university received $506 million in National Institutes of Health (NIH) grants, a 4 percent increase over 2003. That’s less than the double-digit annual increases it pulled in during the years when the NIH’s overall budget was also growing by double digits.

Last year, the NIH budget increased 2 percent, and many expect it to stay flat for years during a time of federal deficits.

The UW is trying to negotiate for higher payments from the NIH in connection with every research grant it receives.

For every direct research dollar UW researchers receive, the university gets another 52 cents to pay for overhead costs like laboratory rent. That figure is comparable with other state-supported institutions, Ferguson said, but it is less than many private research centers.

At South Lake Union, the university has told NIH, it should get a higher overhead payment to reflect the higher cost of the privately owned lab space.

Private research centers like the Hutch and Seattle Biomedical Research Center typically receive much higher overhead payments than the UW from the federal government.

The university does not yet know how much more the federal government will pay to support its labs in South Lake Union. But if the NIH doesn’t chip in as much overhead costs as expected, it could put more pressure on private donations.

“This is a stretch for the UW, a significant stretch,” Ihrig said. “But without the space, we cannot be competitive in research.”

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com