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."