Research and recrimination on Florida's Treasure Coast
The Treasure Coast's incentive-laden effort to brand itself as the Research Coast hits snags.
VGTI received $60 million from the state, with a similar support coming locally. The company is now seeking more public money.
Like a chemistry experiment gone awry, relations between the city of Port St. Lucie and one of its high-profile biomedical recruits boiled over this year. The city six years ago spent millions to recruit the Vaccine & Gene Therapy Institute of Florida, but the institute has struggled financially and asked for a bailout to stay in the city. In April, the city manager held a news conference at which he said a photo of a moving truck at VGTI’s building proved that VGTI was in the process of bolting for free digs at Florida Atlantic University.
“Patently false,” responded VGTI, in a news release. VGTI said the truck was there to relocate an individual lab for a researcher leaving for another state. The release said that VGTI Florida “is extremely disappointed that the City of Port St. Lucie betrayed our trust, ignored confidentiality requests that the City indicated they would comply with … and abandoned all efforts to continue negotiations in good faith.”
Over several years beginning in 2006, Port St. Lucie, the state, St. Lucie County and private interests contributed more than $300 million in incentives to lure two bioscience outfits and an entertainment company to “Florida’s Research Coast” — the brand adopted by Indian River, Martin, St. Lucie and Okeechobee counties.
Two of those investments have curdled, however. Entertainment industry special effects company Digital Domain went into bankruptcy court in 2012, less than a year after moving into a custom-made, city-funded studio in the Tradition development. Digital Domain had obtained a $20-million state grant and $62 million locally, including $39.9 million in city-issued bonds, to build a studio.
The debacle left the city on the hook for $61 million in principal and interest. The city has since sold the site to a church but still has to repay the loan. The state sued Digital’s leaders and others over the $82 million in state and local incentives provided to the company.
VGTI, a spinoff from Oregon Health & Science University, arrived in 2008, thanks to a $60-million state grant and matching contributions from Port St. Lucie and the county. Port St. Lucie additionally supported a bond offering in 2010 to build VGTI a nearly 100,000-sq.-ft. home.
But the institute loses money each year and can’t afford the annual $4.2 million debt payments on its building. This year, VGTI told the city it wanted to stay in Port St. Lucie but needed a bailout. VGTI said Florida Atlantic University had offered a home on its Jupiter campus that would be rent-free, with free utilities and free maintenance for three years and operational support; staying in Tradition would cost VGTI $6 million annually in rent, debt, maintenance and IT support.
In May, VGTI missed making a required bond payment and the city, which is on the hook if VGTI doesn’t pay, sued it. VGTI didn’t respond to requests for comment.
Meanwhile, it appeared that the third recruit, Torrey Pines Institute for Molecular Studies, which got more than $90 million in state and local incentives, might need additional help from the city as well. Strapped for cash, the institute asked the city to release it from part of its contract so it could borrow against its building.
In April, Moody’s put the city’s $388 million in debt under review for a possible downgrade. Moody’s cited the city’s pledge to cure any deficiency in the reserve for VGTI’s $61 million in debt. It also mentioned the Torrey Pines request as a factor.
Mayor Greg Oravec, who was elected in November 2014, says the city can shoulder the combined $8.4 million a year in debt from the three recruitment deals, but it means money won’t be available for things such as cutting taxes, hiring more police or expanding services. “We can see that buying love doesn’t work. Using boatloads of upfront money to bring in free agents is not the way to build a team. The way to build a team is growing local businesses, businesses more naturally attracted to our area,” he says.
Former Mayor Bob Minsky defended the city’s efforts to woo the biomedical outfits in an opinion article he wrote for a local newspaper. “The biomedical industry was the most tempting trophy on the horizon” at the time, he wrote. But “there is no way to operate completely immune from a fluctuating economy. There is no guarantee that just because you do everything right, nothing will go wrong.”
And in fact, many research institutes have struggled as the federal government has cut research spending. The institutes also have blamed the recession for their financial difficulties.
One positive development: Torrey Pines says it got the financial support it needed elsewhere. “We’re not asking for a bailout from the city. We don’t need one,” says Richard Houghten, Torrey Pines’ founder and CEO. Houghten says it’s been tough but “if you survive, you win.”
Torrey Pines already has received $28 million of $32 million promised by the state. The local incentives to bring Torrey Pines to Port St. Lucie totaled another $71.5 million.
Houghten says he’s very appreciative of the city’s support. He also says the city has gotten a good return on its Torrey Pines incentives through the grants, hiring and spinoffs related to the institute.
And while a local cluster of life science research outfits, spinoffs and employment hasn’t materialized in the way that boosters envisioned, parts of the Research Coast vision remain viable.
In 2013, Stuart-based Martin Health System opened a 90-bed medical center in Tradition. The U.S. Department of Agriculture still operates its longstanding research laboratory in Fort Pierce.
As recently as May, economic developers from Indian River, St. Lucie and Martin counties went to Atlanta — and plan to go to Dallas later this year — to meet with national site selection firms to pitch the “Research Coast.”
Even locally, however, some have grown leery of that brand. “I really prefer the Treasure Coast,” Mayor Oravec says. The name dates to the Spanish treasure fleet sunk in a storm off the coast, a fleet that has yielded its sunken treasure slowly, over many years.
Oravec says “Treasure Coast” works well as an economic recruitment brand. Says Oravec, “Treasure Coast feels right compared to Research Coast. That feels manufactured.”