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Scripps Digs Florida Money Pit

Scripps Research Institute's overhyped and overblown plans for a Florida biotech research facility could possibly go overboard, particularly since taxpayers suddenly realize they will be hit with more than $1 billion in costs, almost double the projected subsidy nine months ago.

A research park to be located next to the proposed Scripps research institution is named the Biotechnology Research Park, or BRP, and people are calling it "BURP." Columnist Frank Cerabino of the Palm Beach Post suggests other acronyms, such as Florida Affiliated Research Triangle (FART), or Multi-Organizational Neighborhood Enclave Yielding Progress In Technology (MONEY PIT). The whole thing is "Palm Beach County's Iraq," says Cerabino.

State taxpayers, given the old bait-and-switch treatment by Governor Jeb Bush and Scripps chief executive Richard Lerner, put $310 million into the pot last year. Palm Beach County agreed to plunk in more than $200 million for land and buildings for Scripps. But now it looks as if roads and utilities to serve a remote area preferred by Scripps will eat up an additional $200 million. Debt service on bonds will take another $200 million, and there will be a tab of $100 million for widening and adding roads leading to the projected research park.

Most galling is that "it never went to a public referendum," says Rosa Durando, a Palm Beach County activist who says the proposal would be an environmental disaster. "At public meetings, I get two minutes to speak, while the developers and people sent by Jeb Bush get unlimited time." Sound familiar, San Diegans?

The Scripps project suddenly surfaced last year, and in October, Bush pitched the legislature for the fat state subsidy. Scripps claimed it would have 545 employees in 7 years, and Jeb Bush predicted that new biotech companies springing up around the facility would create an astounding 50,000 jobs in 15 years.

As I reported in a column January 15, this is all bunk. Biotech is not about jobs; it is about insiders getting rich on initial public stock offerings. In three decades of biotech, only 100 products have made it to market, and few jobs have been created. The industry has lost $57.7 billion in the past decade -- $5.4 billion last year, according to an Ernst & Young study.

But because biotechs go public and say they won't bear fruit for, say, ten years, insiders who get their shares for a penny or so have lots of time to get filthy rich by dumping their shares, while outside investors get poor when the products don't come out and the stocks tank.

One Palm Beach County commissioner figured that taxpayers would be much better off just putting the money in a bank. Scripps then put out a paper claiming that the project would only cost county taxpayers a bit over $100 million, thanks to revenue from land sales, property taxes, and such. County and state bean-counters are also saying that the multiplier, or ripple effect, will create oodles more jobs and wealth, offsetting the initial costs. "I call it 'beating the data until it confesses,' " snorts Richard Rampell, a respected certified public accountant in the area. "They know the answer they want. They back in the assumptions and get the right answers."

This, of course, is just what the City of San Diego did in projecting that the taxpayer-subsidized facilities for the Chargers and Padres would actually cost nothing. Statisticians start with the desired number and manipulate assumptions until it miraculously pops out of the computer.

Like columnist Cerabino, Rampell has an acronym to describe the method by which the state and Palm Beach County estimate future real estate values and property tax returns: WAG, or "wild-ass guess."

One big problem is that Palm Beach County has been cuckolded before. It subsidized other large companies, "and they moved out," says Durando. Buildings that once housed these companies have vacancies. A nearby industrial park has infrastructure in place. There are 900-acre and 600-acre sites that also would not pose as many problems.

But Lerner "wanted his virgin territory in the wilderness," says Durando. "He picked the spot. He's not paying for it. What does he care?" The county has already spent $5 million on planning for the proposed Mecca Farms site, which is a citrus grove.

The county plans to develop an adjacent 1900-acre site for both residential and commercial/industrial (largely biotech) use. A different organization plans to develop another adjoining 1700-acre site, competing with the county's site. This purportedly nonprofit organization is mainly composed of developers and their friends, says Joanne Davis, administrator for 1000 Friends of Florida, a managed-growth advocacy group fighting urban sprawl. The citrus grove itself is not environmentally sensitive land "but is surrounded by environmentally sensitive land," says Davis.

People who live in the region now have a semi-rural environment. They resent new roads coming in. Environmentalists do, too. "These roads will be a disaster for wildlife," says Durando. "Endangered wading birds are no match for speeding cars. We have a honky-tonk population here; there will be drag racing on the roads." Then when new residents of proposed housing developments find out about the mosquitoes, they will demand spraying, "and deadly insecticides will destroy the food sources for the animals." Water flow will also be disrupted, she says.

All along, the Palm Beach Post has editorialized that the Mecca Farms location is wrong. "We're not Donald Trump, and this is not Atlantic City," declared U.S. Representative Mark Foley (R-West Palm Beach) last week in beginning discussions with Scripps about changing the site. County commissioners voted Monday to continue Mecca Farms planning but investigate new sites. Keith McKeown, vice president of Scripps in La Jolla, says, "We are still focused on the Mecca Farms site," but the institution is willing to discuss other possibilities.

Lerner has indicated that he is getting impatient. But Bevin Beaudet, the county's point man on the project, says, "This is the typical public process. I spent five years in California. It's a lot uglier than Florida. You couldn't build an outhouse in San Francisco without years of work. We are actually on schedule."

Meanwhile, the press is making problems for Scripps. The Palm Beach Post noted that, from 1992 to 2002, Lerner and another Scripps scientist served as paid consultants to Philip Morris. This is sensitive in Palm Beach County, in which one of the largest tobacco-industry lawsuit settlements took place in 1997. The tobacco associations "ended several years ago," says Scripps's McKeown.

The Ft. Lauderdale Sun-Sentinel pointed out that all the money being spent on Scripps means that Palm Beach County residents won't get a tax cut in this election year.

The Palm Beach Post noted that the woman initially named to chair the audit committee overseeing state expenditures for Scripps "has left a trail of federal and state tax liens, contested debts, and litigation in her rise from real estate agent to self-proclaimed nursing home mogul." Also, the woman, Elizabeth Fago, a big Republican donor, keeps forgetting about her marriage in 1985 to a drug dealer. (It was one of several marriages.) "Fago is the wrong choice to oversee Scripps money," editorialized the Post. Late last week, she resigned the position.

So what will happen? "The tide is turning," says Rampell. "County commissioners are looking at the deal more carefully with a sharp pencil. But nobody talks about Scripps except the people who will benefit economically."

Like many, he questions that the county will ever become a science center or attract biotech companies. "The educational system in south Florida is really poor -- poor public schools, universities. We don't have the educational infrastructure" of Boston or Silicon Valley. But companies may like the fact that there is no personal income tax, and "If you have a good accountant, corporate taxes are easily avoidable." All things considered, he thinks the deal will go forward in some form.

"It's a beggarman's bet whether it will actually go through," says Davis, saying that the county, Scripps, or lawsuits could abort it. But Beaudet says it's only a "slim possibility" that the deal will fail. And Scripps isn't even considering dropping out, says McKeown.

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Scripps Research Institute's overhyped and overblown plans for a Florida biotech research facility could possibly go overboard, particularly since taxpayers suddenly realize they will be hit with more than $1 billion in costs, almost double the projected subsidy nine months ago.

A research park to be located next to the proposed Scripps research institution is named the Biotechnology Research Park, or BRP, and people are calling it "BURP." Columnist Frank Cerabino of the Palm Beach Post suggests other acronyms, such as Florida Affiliated Research Triangle (FART), or Multi-Organizational Neighborhood Enclave Yielding Progress In Technology (MONEY PIT). The whole thing is "Palm Beach County's Iraq," says Cerabino.

State taxpayers, given the old bait-and-switch treatment by Governor Jeb Bush and Scripps chief executive Richard Lerner, put $310 million into the pot last year. Palm Beach County agreed to plunk in more than $200 million for land and buildings for Scripps. But now it looks as if roads and utilities to serve a remote area preferred by Scripps will eat up an additional $200 million. Debt service on bonds will take another $200 million, and there will be a tab of $100 million for widening and adding roads leading to the projected research park.

Most galling is that "it never went to a public referendum," says Rosa Durando, a Palm Beach County activist who says the proposal would be an environmental disaster. "At public meetings, I get two minutes to speak, while the developers and people sent by Jeb Bush get unlimited time." Sound familiar, San Diegans?

The Scripps project suddenly surfaced last year, and in October, Bush pitched the legislature for the fat state subsidy. Scripps claimed it would have 545 employees in 7 years, and Jeb Bush predicted that new biotech companies springing up around the facility would create an astounding 50,000 jobs in 15 years.

As I reported in a column January 15, this is all bunk. Biotech is not about jobs; it is about insiders getting rich on initial public stock offerings. In three decades of biotech, only 100 products have made it to market, and few jobs have been created. The industry has lost $57.7 billion in the past decade -- $5.4 billion last year, according to an Ernst & Young study.

But because biotechs go public and say they won't bear fruit for, say, ten years, insiders who get their shares for a penny or so have lots of time to get filthy rich by dumping their shares, while outside investors get poor when the products don't come out and the stocks tank.

One Palm Beach County commissioner figured that taxpayers would be much better off just putting the money in a bank. Scripps then put out a paper claiming that the project would only cost county taxpayers a bit over $100 million, thanks to revenue from land sales, property taxes, and such. County and state bean-counters are also saying that the multiplier, or ripple effect, will create oodles more jobs and wealth, offsetting the initial costs. "I call it 'beating the data until it confesses,' " snorts Richard Rampell, a respected certified public accountant in the area. "They know the answer they want. They back in the assumptions and get the right answers."

This, of course, is just what the City of San Diego did in projecting that the taxpayer-subsidized facilities for the Chargers and Padres would actually cost nothing. Statisticians start with the desired number and manipulate assumptions until it miraculously pops out of the computer.

Like columnist Cerabino, Rampell has an acronym to describe the method by which the state and Palm Beach County estimate future real estate values and property tax returns: WAG, or "wild-ass guess."

One big problem is that Palm Beach County has been cuckolded before. It subsidized other large companies, "and they moved out," says Durando. Buildings that once housed these companies have vacancies. A nearby industrial park has infrastructure in place. There are 900-acre and 600-acre sites that also would not pose as many problems.

But Lerner "wanted his virgin territory in the wilderness," says Durando. "He picked the spot. He's not paying for it. What does he care?" The county has already spent $5 million on planning for the proposed Mecca Farms site, which is a citrus grove.

The county plans to develop an adjacent 1900-acre site for both residential and commercial/industrial (largely biotech) use. A different organization plans to develop another adjoining 1700-acre site, competing with the county's site. This purportedly nonprofit organization is mainly composed of developers and their friends, says Joanne Davis, administrator for 1000 Friends of Florida, a managed-growth advocacy group fighting urban sprawl. The citrus grove itself is not environmentally sensitive land "but is surrounded by environmentally sensitive land," says Davis.

People who live in the region now have a semi-rural environment. They resent new roads coming in. Environmentalists do, too. "These roads will be a disaster for wildlife," says Durando. "Endangered wading birds are no match for speeding cars. We have a honky-tonk population here; there will be drag racing on the roads." Then when new residents of proposed housing developments find out about the mosquitoes, they will demand spraying, "and deadly insecticides will destroy the food sources for the animals." Water flow will also be disrupted, she says.

All along, the Palm Beach Post has editorialized that the Mecca Farms location is wrong. "We're not Donald Trump, and this is not Atlantic City," declared U.S. Representative Mark Foley (R-West Palm Beach) last week in beginning discussions with Scripps about changing the site. County commissioners voted Monday to continue Mecca Farms planning but investigate new sites. Keith McKeown, vice president of Scripps in La Jolla, says, "We are still focused on the Mecca Farms site," but the institution is willing to discuss other possibilities.

Lerner has indicated that he is getting impatient. But Bevin Beaudet, the county's point man on the project, says, "This is the typical public process. I spent five years in California. It's a lot uglier than Florida. You couldn't build an outhouse in San Francisco without years of work. We are actually on schedule."

Meanwhile, the press is making problems for Scripps. The Palm Beach Post noted that, from 1992 to 2002, Lerner and another Scripps scientist served as paid consultants to Philip Morris. This is sensitive in Palm Beach County, in which one of the largest tobacco-industry lawsuit settlements took place in 1997. The tobacco associations "ended several years ago," says Scripps's McKeown.

The Ft. Lauderdale Sun-Sentinel pointed out that all the money being spent on Scripps means that Palm Beach County residents won't get a tax cut in this election year.

The Palm Beach Post noted that the woman initially named to chair the audit committee overseeing state expenditures for Scripps "has left a trail of federal and state tax liens, contested debts, and litigation in her rise from real estate agent to self-proclaimed nursing home mogul." Also, the woman, Elizabeth Fago, a big Republican donor, keeps forgetting about her marriage in 1985 to a drug dealer. (It was one of several marriages.) "Fago is the wrong choice to oversee Scripps money," editorialized the Post. Late last week, she resigned the position.

So what will happen? "The tide is turning," says Rampell. "County commissioners are looking at the deal more carefully with a sharp pencil. But nobody talks about Scripps except the people who will benefit economically."

Like many, he questions that the county will ever become a science center or attract biotech companies. "The educational system in south Florida is really poor -- poor public schools, universities. We don't have the educational infrastructure" of Boston or Silicon Valley. But companies may like the fact that there is no personal income tax, and "If you have a good accountant, corporate taxes are easily avoidable." All things considered, he thinks the deal will go forward in some form.

"It's a beggarman's bet whether it will actually go through," says Davis, saying that the county, Scripps, or lawsuits could abort it. But Beaudet says it's only a "slim possibility" that the deal will fail. And Scripps isn't even considering dropping out, says McKeown.

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