Productivity Minutes 07/12/2010
July 12, 2010
MINUTES OF THE COLLIER COUNTY
PRODUCTIVITY COMMITTEE
Naples, Florida, July 12, 2010
LET IT BE REMEMBERED, that the Collier County Productivity
Committee in and for the County of Collier, having conducted
business herein, met on this date at 2:00 PM in REGULAR SESSION in
Building "F" of the Government Complex, in the County Manager's
Conference room, Naples, Florida with the following members present:
Chairman: Steve Harrison
Vice Chaimlan: James Gibson, Jr.
Janet Vasey
Bradley Boaz (Excused)
Joseph Swaja
Douglas Fee
James Hoppensteadt
Vlad Ryziew
ALSO PRESENT:
Mike Sheffield, Assistant to the County Manager
Crystal Kinzel, Clerk's Finance Department
Tammie Nemecek, Economic Development Council
July 12, 2010
1. Call to Order-Steve Harrison, Chairman
Chairman Harrison called the meeting to order at 2:00 P.M.
2. Approval of meeting minutes from June 16, 2010.
Mr. Hoppensteadt moved to approve the minutes from the June 16, 2010 meeting.
Second by Mr. Gibson. Carried unanimously 7-0.
3. Continue to assess the potential economic impacts and sources of revenue for the
Jackson Labs project.
The Committee determined to take up item 3.D first
D. Update from the Jackson Finance Subcommittee (Janet Vasey/Jim Gibson)
The Committee reviewed the latest draft document "Jackson Laboratories (Jax-
Florida) Financing - How would we finance the $130 million to bring Jax-
Florida to Collier County? What are the financing alternatives?" The Finance
Subcommittee had reviewed the document at their last meeting and added a
couple of additional alternatives and raised some additional issues. Ms. Vasey
noted:
. Page 2 indicates other areas within Florida that developed research
complexes of this nature had local matches comprised by a variety of
other funding sources (private donations, land, hospital, Walt Disney,
etc.) than that required for the Collier County proposal.
. When Jackson Laboratories was approached on the feasibility on the
concept of utilizing the $1 OM donation proposed by Barron Collier
Companies as a portion of the local match, she was informed this was not
allowed undcr the proposed business plan.
Discussion occurred on the reasoning for not allowing private donations within
the County to be counted toward the County match.
Tammie Nemecek noted the business plans were different for the other areas.
The business plan proposed by Jackson Laboratories indicates $125M of Collier
County's funding rcquirement must be in "cash."
Ms. Vasey continued providing an overview of the revenue alternatives outlined
in the draft which include the advantagcs and disadvantages:
a) Franchise Fee of 2.4% - requires bonding in two tranches - $80M in FY 11
and $50M in FY13.
b) Property Taxes - "pay as you go" - requires varying annual millage
increases from FY11 - FY20 ranging from .45 to .04.
c) Property taxes - (option #2) "pay as you go" - requiring State funds paid
as soon as available in first 3 years and then utilize the local County match
- would require a range of annual millage increases from FY11 - FY20 of
.26 to .07. Concept necds to bc negotiated with the Office of Tourism,
Trade and Economic Development (OTTED).
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July 12, 2010
d) Property taxes - (option #3) used as a pledge for a general revenue bond
requires approval by voter rcfcrendum.
e) Non-ad valorem revenue - used as a pledge for bonding.
f) Combination offranchise and property taxes - 2.5% Franchise fee and. 1
increase in the annual millage rate. Requires bonding.
g) Sales tax increase - County Attorney expressed concern on the concept
due to:
a) The Statute contains requircments for use of the funds which do
not include "economic development purposes" and litigation is
likely to occur on the conccpt;
b) Inter-local agreements between the Cities of Naples/Marco
Island and Collier County for transfer of the funds collected in the
city jurisdictions to the county would need to be implemented.
It was noted that the document should include sources considered (positive or
negative) by the Committee to assist Board of County Commissioners in their
decision.
The Committee recommended the following revisions to the options outlined in
the document:
a) Revise "home" to ''property'' where cited for the impacts on a landowner.
b) Revise "home" to ''property'' where cited for the impacts on a landowner;
Advantages - indicate no bonding is required and the proposed annual millage
increases could be halted if the project does not proceed beyond a certain time
frame.
c) Advantages - indicate no bonding is required and the proposed annual millage
increases could be haltcd if the project does not proceed bcyond a certain timc
frame.
Discussion occurred on the concept of other sources of revenue contributions such
as Lee County, Seminole Tribe, Hospitals, Collier Building Industry Association
(CBIA), Barron Collier Companies, etc.
The following documents were introduced to the Committee:
. "Collier County Productivity Committee - Proposed Jackson Laboratory
Institute of Personalized Medicine (700 Acre Research and Development
Village, Ava Maria, Florida)- Conceptual and Preliminary Community
Economic Benefits Associated with Construction" - Second Draft dated
July 12, 2010 prcpared by Vlad Ryziew.
. A Brief Economic Impacts and Return on Investment to Collier County,
Florida From the Jackson Laboratory - Florida dated July 9, 2010
prepared by Washington Economic Group, Inc. (WEG Report)
Discussion occurred on thc findings outlined in the WEG Report, as well as the
parameters and assumptions uti lized for its preparation. It was determined to
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July 12, 2010
address the issues under Item #3.A when the consultants were available via
teleconference.
Discussion occurred on the following topics:
. The parameters utilized and conclusions in Mr. Ryziew's document.
. Consideration should be given to an introduction in Ms. Vasey's final
document on the reasons an additional funding source is required to
finance the proposal (due to the lack offunds available in the existing
County budget)
The Committee determined to hear Item #3.C before Item #3.A.
C. Dr. Chuck Hewett (arriving about 3-3:30pm)
Dr. Chuck Hewett, Jackson Laboratories was available to answer questions
posed by the Committee: The following was highlighted:
. The funds provided by the County, State, etc. will be placed in a "Trust
Fund" and drawn on by the recipient as certain milestones are met.
. At any point the project does not move forward, any monies remaining in
the 'Trust Fund" would be returned to the fund provider.
. The funds provided by the County would be utilized as follows: First,
construct the facility; second, purchase, maintain and replace equipment
and third, fund operating deficits.
. The Committee may want to outline the risk factors associated with a
$130M cash layout.
. Any National Institute of Health (NIH) Grants received allow the
recipient to maintain the benefits ofIntellectual Property Rights. Mr.
Hewett is aware the County would like to discuss the ramifications of the
possible revenue stream.
. Jackson Laboratory's concept of other facilities developing around the
cluster are prioritized as follows:
. A small specialized hospital (approximately 50 beds) within one
year (2014/15) after completion of the lab facilities.
. A general hospital serving Eastern Collier County.
. A Medical School Department established within the specialized
hospital.
. Teaching facilities in combination with the two hospitals.
. Establishment of"Bio-tech Park" as the cluster develops.
. Jackson Laboratory has two other facilities - Bar Harbor, Maine and
Sacramcnto, California. These areas have not developed into "clustcrs"
due to the following reasons:
. Bar Harbor is 75 acres bordered on 3 sides by National Park
Lands and residential development on the 4th side. There are
satellite businesscs that have established within the region, but not
directly adjacent to the Lab's property. Also, it was not the
primary purpose of the facility whcn it was developed.
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July 12, 2010
. The California facility has only been open a year and half and
developed under the auspices of different purposes - supplying
laboratory animals to other West Coast facilities and to conduct
contract research.
. Jackson Laboratories is confidcnt they can attract the necessary
employees to make the endeavor successful. Potential employees would
be drawn to the area due to Jackson Laboratories shift to clinical research;
an opportunity to participate in, and build all institution that conducts
personalized medical research from the ground up; the quality life in
Collier County and the affordable housing in Eastern Collier County.
. Availability of professional "spousal employment" in the region will be
one of the most critical challenges in attracting employees to the research
park.
. Facilities such as Naples Community Hospital, Physicians Regional, Lee
Memorial Hospital and the newly created Bio-tech Park in Fort Myers
will assist in providing spousal employment opportunities.
Mr. Hewett left the meeting.
Break: 4: I5pm
Reconvened 4:21pm
A. Washington Economic Group (WEG) Report Update (teleconference with
WEG representatives)
Russ Meyer of Fishkind Assoc. was present and Mary Snow, Rich Harper and
Michael Schiebe of Washington Economic Group were available via
teleconference to answer questions on the report they prepared.
Discussion occurred on the details of the report with the consultants answering
technical questions posed by the Committee. Following the discussion, the
Committee requested the following information be provided:
I. Employment estimates for - permanent full time village employment within
the boundary of the proposed village; Construction Employment - Direct,
Indirect and Induced.
2. Page 5 - Table 3 - "Research & Education Village - Collier County Return 0/1
Investment" be amended to a 23 year schedule.
3. The source for the categories developed in estimating the potential types of
development in the research village comprising the 3,000,000 sq. ft. of
building area as indicated on page 2 of the report.
Discussion occurred on the feasibility of the Committee identifying opportunity
costs associated with the $130M proposed to be expended on the proposal.
Some Committee members noted they were charged with providing
determinations on the specific proposal, not developing findings on opportunity
costs or a cost benefit analysis for a series of proposed projects.
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July 12, 2010
B. Review responses to Productivity Committee Questions
A memorandum from Tammie Nemecek to Michael Sheffield, dated July 12,
2010 - "Re: Answers to Questions from Productivity Committee" was provided
for informational purposes. The questions were submitted by individual
Committee members to Mr. Sheffield following the June 16,2010 meeting.
4. Next steps in process
Discussion occurred on how to proceed to the final product requested by the BCC. It
was noted the funding options have been identified and the report may be finalized
for review at the next meeting.
In regard to the economic viability, there is a great deal of uncertainty in the data
(assumptions, parameters, findings, etc.) provided to develop specific findings. The
Committee could identify economic pros and cons and provide gcnera1 information
on the viability of the proposal.
Discussion occurred on identifying alternative sources of funds to assist in offsetting
any responsibilitics for Collier County taxpayers (surcharges on construction,
payments in lieu of property taxes for non-profits locating within the village, etc.)
Mr. Swaja moved to direct the Chairman and Ms. Vasey to draft separate
documents to be reviewed and merged by the Committee regarding the "economic
viability" of the Medical Research Village. Second by Mr. Gibson.
Mr. Fee requested clarification if one of the documents will determine that the
proposal "is not economically viable" and the other determine "it is economically
viable."
Chairman Harrison stated the documents will outline broad viewpoints on the
economic viability of the proposal and be reviewed by the Committee at the July 19,
2010 meeting.
Motion carried 6 'yes -1 "no." Mr. Fee voted "no."
5. Public Comment
Speakers
Georgia Hiller requested clarification if there is a specific strategy to induce the
related facilities to locate to the research village. Is there an "innovatioll zone"
involved in the project or any tax incremental financing under consideration? She
expressed concern the WEG Report as submitted provides findings on the internal
rate of return which is negative. What should have been provided was a "net present
value" analysis which would possibly show a greater negative rate of return for the
County.
Tammie Nemecek noted the incentives for future organizations to locate to the
research village have yet to be determined. The State of Florida does have an
incentive program. There is a general concept in place that is used in all types of
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July 12, 2010
these endeavors. Tax incremental financing could be used and may want to be
considered.
Harold Hill noted the Committee should not only consider the direct return on
investment but also the socio-economic benefits to the residents of Collier County
created by the proposed project. He expressed concern on the cost of the project and
felt it is too expensive at this time.
Bob St. Cyr disagrees with the assumption Jackson Laboratory will be the catalyst
for attracting all the related facilities intended to locate in the village. He presented
the document "A Resource Guide for Technology Based Economic Development
Positioning Universities as Drivers, Fostering Entrepreneurship and Increasing
Access to Capital" prepared by the State Science and Technology Institute. He
recommended all members of the Committee read the document. As outlined in the
document, the catalyst to develop research villages in all other areas in the US has
been a Research University as the driver, with related facilities to follow. If Jackson
Laboratory concept, as currently proposed, is successful, it will be the first in the US
employing this concept.
Discussion occurred noting the Committee acknowledges developing a research
cluster is critical to the success of the project. If there were signed commitments
from a number of entities in addition to Jackson Laboratory indicating their intent to
develop facilities within the research village, it would rcduce the risk in the County
investment.
Tammie Nemecek noted negotiations are currently on-going for commitments from a
variety of organizations to locate to the research village.
The next meeting is scheduled for July 19, 2010 at 2 P.M. in the County
Manager's Conference Room.
There being no further business for the good of the County, the meeting was
adjourned by order of the chair at 6:45 P.M.
COLLIER COUNTY PRODUCTIVITY
COMMITTEE
Steve Harrison, Chairman
These minutes approved by the Board/Committee on
as presented or as amended
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