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Productivity Backup 06/07/2010 SProductivity Committee June 7, 2010 (BACKUP DOCUMENTS) Collier County Government Productivity Committee Special Meeting Agenda County Manager's Conference Room June 7, 2010 1. Call to Order -Steve Harrison 2. Continue to assess the potential economic impacts and sources of revenue for the Jackson Labs project 3. Next steps in the process 4. Public Comment S. Adjourn JACKSON LABORATORY — KEEP EXPECTATIONS IN CHECK Governor Crist just signed a state budget that allocated $50 million to the Innovation Incentive Fund, the first step toward bringing Jackson Laboratory to Collier County. What a coup that would be. Biomedical research — a feel -good, high -tech operation with big upside. Southwest Florida, the epicenter for "personalized medicine." Ph.D.s everywhere and a brand new tax base. What could possibly be better? But keep those expectations in check. There is a long way to go and many hurdles. The due diligence promised by Commissioner Fred Coyle is critical at this early stage. We need a realistic accounting of money required and an unvarnished estimate of return in terms of tax revenues. No rose - colored glasses. Just the hard facts in the form of a cold business plan based on conservative estimates. Ask the average taxpayer about Jackson Laboratory, and he will say, "Great, but don't raise my taxes." An on -line poll showed that some 75% of respondents did not favor a franchise fee on their power bill as a means of raising some of the money needed to lure Jackson Lab. Not surprising. Any public dole is going to be a tough sell these days. The project is unquestionably exciting, but there are a lot of concerns. Here are some of them. • There will be fierce opposition to use of taxpayer money. The numbers are impressive. We are told that some $250 million will be needed to bring Jackson Lab here and to develop the infrastructure to support it. Half of the money is to come from the state and half from Collier County over a three -year period. In these recessionary times — with county programs being cut or going unfunded — that seems like a lot of money for what many consider to be a risky project. Lavigne Kirkpatrick, a candidate for the District 4 County Commissioner seat, has openly opposed using public funds to attract Jackson Lab. She may draw a lot of votes. • Growth projections are unrealistic. The notion that an Institute for Personalized Medicine will attract satellite labs, hospitals, university outposts and generate 7,500 new jobs over a ten -year period is pie -in- the -sky. It is not happening with the seven other biotech facilities brought in by the state, and there is no good reason to think it will happen with Jackson Lab in Collier County. Over - promising will bring the skeptics out of the woodwork. To be credible, the project must be justified on institutions that have explicitly expressed interest in locating here. Right now that is Jackson Laboratory. Everything else is sheer speculation. • There is no coherent state policy. Seven biotech operations have been brought to Florida and spread all over the state — Scripps Florida to Palm Beach County, Burnham Institute to Orlando, Max Planck Institute to Juniper, the Institute for Human Genomics to Miami, the Vaccine & Gene Therapy Institute and the Torrey Pines Institute to Port St. Lucie, SRI International and the Charles Stark Laboratory to St. Petersburg. Jackson Lab would be number eight. Some say that's like throwing money out of an airplane. A concentration of this brainpower in one location could lead to something big — perhaps the biomedical equivalent of North Carolina's Research Triangle. Of course, that's not going to happen. State money has been and will continue to be spread around. The location for Jackson Lab is too remote. Recruiting will be difficult. Ph.D. scientists will demand good schools for their children, top restaurants and shopping, proximity to museums and theaters. The Oil Well Road area to the east, where the Barron Collier Co. is offering land for Jackson Lab, has none of those perks. It does have Ave Maria University, and the amenities will probably come if a market really develops there. If not, the commute to or from Naples isn't all that bad. Note that the government has no problem attracting scientists to Los Alamos, a full hour's drive from culture -rich Santa Fe. • There are no top -flight universities near -by. The Research Triangle has Duke, Univ. of North Carolina and NC State. Cambridge has Harvard and MIT. Collier County has nothing of the sort. But if the scientific draw is strong enough, the National Institute of Health and some top biomedical schools might provide funding or even establish graduate programs there. And don't overlook big pharma. The likes of Roche and Novartis, with their strong commitment to genetic -based medicine, might be convinced to establish a presence. Over time, a research park may be possible. But at this point, it's all speculation. The first step is to show that Jackson Lab — alone or with other entities that have expressed interest — have the firepower to deliver growth, real job creation, and a meaningful broadening of the tax base. Commissioner Coyle's due diligence must provide this assurance and do so without straining credibility. No blue sky assumptions. This isn't the time to ask the taxpayer to take it on faith. Faith is in short supply these days. _, WHAT OTHERS ARE SAYING ABOUT JACKSON Charles Hewett, Jackson's chief operating officer, "This is not risk free. You are going to take setbacks." Keith McKeown, Spokesman for Scrips Florida, "It takes time. It took 30 years in San Diego, California." Julius I Pericola, Retired President of Bristol Laboratories, Retired Executive Vice President, Bristol -Myers Co. "I have built pharmaceutical factories and research facilities in the United States, Canada and overseas. Bringing Jackson Laboratory to Naples using taxpayer money is a bad proposal. The chances of success is extremely poor and the chance of wasting taxpayer money extremely high." Alan E Strack, Retired International Division Director, Smith, Kline & French Labs [GlaxoSmithKline]: "One of my principal responsibilities was to evaluate and assist fledgling research projects; This included many biotechnology /genetic engineering projects. Pericola is right in recognizing the airy -fairy promises made for this company. I find it reprehensible that part of the funding involves the diversion of Medicaid stimulus money; Shame on them." Frank W Plimi, "Florida has spent $976 Million to bring biomedical institutes to our state ... the anticipated growth of tech clusters has not occurred. It could take decades. The real winner is whoever owns the land surrounding the hoped -for research park." Alan Buchholz, "I can see why Collier Dev., that has a mostly empty town, would like to see the government [taxpayer] pony -up cash to bring [in] residents... Ave Maria was pitched as bringing 5,000 residents... Fool me once, shame on you, fool me twice, shame on me. Let's stop this craziness now! Jackson Laboratories — Productivity Committee Review Commissioner Fred Coyle has done the right thing by having the Productivity Committee review the viability of spending public money to have Jackson Labs locate near Ave Maria. "You calculate these things and tell me what you think is the proper way to proceed, if we proceed at all," he said. How has this project first suggested in 2006/07 gotten this far without first being properly vetted? Coyle hoped to provide the productivity committee with a business plan from Jackson, but it wasn't ready. It may be ready this week. How can the people from Jackson and its supporters be making these great pie -in- the -sky predictions without having something so necessary and fundamental to running a business as a plan? Was their previous plan just to spend our tax dollars? Jackson's chief operating officer, Charles Hewett said, "Collier won't be the only risk taker if the project moves forward... there will be setbacks ". Why are our State and County representatives so anxious to put our money at risk? The State Legislature's initial $50 million depends on our Federal Congress approving a Medicaid stimulus package. The legislature will need to come up with the remaining, $80 million required in the future. That is; if they can and if they will. Jackson does not qualify for Federal Medicaid dollars. The State "laundering" of the Medicaid money may not survive a legal challenge. Jackson is welcome to locate here. They can pay their way like everyone else.