William Patrick
Ten years to create 303 jobs.
That straight-forward commitment was a core aspect of an agreement that allowed a California-based biotech nonprofit to secure $350 million in state and Orlando-area taxpayer support.
It didn’t happen.
Penned in 2006, time has now run out on Sanford Burnham Prebys Medical Discovery Institute’s deal with the state. It’s 66 jobs short, according to state records.
But rather than pay back some of the money, the research institute is doubling down on its refusal to comply with the state’s accountability efforts – even goading state officials “to help preserve and create more jobs.”
In a letter to the Department of Economic Opportunity dated Nov. 23, the day before Thanksgiving, Sanford Burnham’s senior legal counsel said he was “surprised” that the state had sent the organization a notice of default requesting returned incentive funds.
“Sanford Burnham is not in material default of any obligation in the agreement,” he said. “Please regard this letter as Sanford Burnham’s rejection of all the allegations, claims, and demands contained in your Oct. 28 (Notice of Default) letter.”
It was the second such correspondence in a month.
In addition to the lack of jobs created, DEO officials contend that representatives of the organization verbally indicated to the department that it intends to cease its Florida operations in the coming months and leave the state so it can consolidate operations at its California campus.
Since the incentive deal spans 20 years, DEO is seeking 50 percent of the $155 million contribution state taxpayers afforded the Orlando venture, as well as the return of equipment purchased with state funds.
Sanford Burnham’s Nov. 23 letter denied it would cease operations, calling DEO’s assertion an “erroneous belief.”
But Sanford Burnham management tried for months to hand over its troubled East Coast spin-off to the University of Florida, a taxpayer-funded public institution.
After a period of negotiations that initially left Gov. Rick Scott out of the loop, the university backed-out on Oct. 25. Three days later, Sanford Burnham received the notice of default.
Last week’s letter disputed that the institute’s commitment to create 303 jobs constituted a legal obligation, and added that the incentive contract only allows the state to withhold additional funding and recover unspent or unused funds, minus wind-down costs.
According to a DEO project summary, 99 percent of the $155 million has been paid out. Sanford Burnham says it spent the money “many years ago.”
“There is no additional remedy or obligation to refund monies that have already been spent in accordance with the terms of the agreement,” the letter stated.
If true, state taxpayers could take a total loss.
The institute blames its financial woes on a lack of federal research funding and philanthropic donations, and the Great Recession.
Records show about 240 jobs were created with the funding. The rate of return for the project was supposed to yield $1.63 for every $1 the state committed. The actual rate of return is left blank on the project summary.
The controversy couldn’t come at a worse time for Scott, who is engaged in an intra-party battle to replenish funding for Enterprise Florida, the state’s chief taxpayer-funded incentive organization.
House Speaker Richard Corcoran, R-Land O’Lakes, led a successful effort to block a $250 million Enterprise Florida appropriation last year, and stands opposed to Scott’s $85 million funding request for 2017.
Sanford Burnham says it is committed to remaining in Florida for the next year, assuming its current circumstances remain unchanged. It’s also exploring other long-term sustainability plans, according to its recent letter.
A spokesperson for the Department of Economic Opportunity told Watchdog in an email that DEO “remains committed to holding Sanford Burnham accountable for all taxpayer monies received and will continue to investigate our options for any repayment necessary of incentive funds that were provided to Sanford Burnham.”
