Funding for Jackson Lab Still Unclear; May Be Several Months Away
Published on Wednesday, 29 September 2010 22:49
When plans were announced last March for the Jackson Laboratory biomedical complex near Ave Maria, developers optimistically expressed hope that construction could start by the fall. A series of political issues from Washington to Naples, however, delayed the project. Now, six months later, it is still not clear exactly how or when the $260 million that the Jackson Lab requires will be provided and it appears that many months of paperwork will precede the start of any construction work.
One aspect of the funding is clear: Half the money is to be provided by the state government and the other half locally in Collier County. The state and local governments say they remain committed to the project, but the funding at each level of government faces its own set of challenges. The state's deadline of Feb. 28, 2011 for having all funding plans in place - which seemed like more than enough time when the state budget committee announced the first $50-million commitment last March - looms larger now.
In Tallahassee, the immediate objective is to detail the specifics of how and when the state's promised $130 million will flow to the project. The state legislature earmarked $50 million in the 2011 budget but did not specify how the remaining $80 million would be appropriated. Even the first $50 million was in doubt for much of the year because it assumed the federal government would extend its increased Medicaid reimbursement rates to the states. Although some states required these payments to meet budgetary responsibilities for Medicaid, the State of Florida - since its budget already had fully funded Medicaid - would be able to use the resulting surplus of hundreds of millions of dollars for other projects. Because of the uncertainty of the federal funding, work on the nuts and bolts of the deal for the state's funding commitment was not a priority for most of the summer. Since the U.S. Congress approved the increased Medicaid funding in August, details of the Jackson Laboratory funding now have moved to the front burner, according to people close to the process.
Mike Hyde, the Jackson Lab vice-president who has been handling much of the Lab's governmental process, said in an interview that the organization's applications for funding have been submitted to the two state agencies that need to approve it -- Enterprise Florida and the Florida Office of Tourism, Trade, and Economic Development (OTTED). Approvals by both agencies will be needed before the state can release funds, with Enterprise Florida needing to sign off on the over-all parameters of the state's commitment and OTTED handling specifics that would stipulate the mechanism for disbursing the funds. Those involved say that it might take a month or more before this work is completed and The Jackson Lab and both state agencies would be able to sign off on the details.
One possible model for how the state's funding might be disbursed is the approach used in a similar, more expensive initiative - the construction of The Scripps Research Institute, a biomedical development in Palm Beach County. In that development, a non-profit corporation was established to control more than $300 million in state funds, releasing the money if milestones were reached for various criteria such as physical site construction, number of people hired and number of jobs created.
Collier County Commissioner Jim Coletta said in an interview that the Collier County government is watching to see exactly how the state funding for the Jackson Laboratory is structured, but in the meantime the county is studying the Scripps experience as a possible model for how it will proceed.
For The Scripps Research Institute, Palm Beach County took on about $200 million in debt through what are called non self-supporting revenue bonds. The money was used to build the Scripps facility and make infrastructure improvements necessary for the project. After paying for the construction, the county turned the building over to The Scripps Research Institute.
Bonds of this type rely on revenue sources such as sales taxes, communications fees and revenue sharing to pay interest on the debt and their issuance does not require approval by a voter referendum as would some other bonding options, such as general obligation bonds backed by ad-valorem property taxes.
This manner of funding was one of seven considered by the Collier County Productivity Committee, which said in its report earlier this year that "there is sufficient non-ad valorem revenue capacity available to cover the $130-million bond requirement." The various funding options explored by the committee would cost between $2 and $5 a month per household in Collier County, and people working on this project estimated that using revenue bonds would cost taxpayers about $3 per household.
Because of the uncertainty about the state funding, and other local political issues such as the elections in August that determined the likely composition of the Board of County Commissioners next year, little work was done during the summer on a specific plan for the county's funding.
The county would need to have its own agreement with the Jackson Lab that articulates Collier County's funding schedule and requirements. Mr. Coletta indicated that such an agreement likely would follow the completion arrangements at the state level. Realistically, this would mean that any firm agreement between the county and the Jackson Lab for funding may not be worked out until late this year or early in 2011.
According to the language of the state legislature's budget committee's earmark for the first piece of funding, Collier County would be required to have its funding committed within 120 days of the state formally approving its own funding. The budget committee also set Feb. 28 as the final deadline for having all funding commitments in place.
If the Scripps funding model were followed, Collier County would finance the construction of the Jackson Lab facility and the building would be turned over to the lab, which would own it.
The possibility of raising private funding for all or part of Collier County's share of the funding has also been raised, although no specific plan has been suggested. One possibility would be for a syndicate of private investors to pay for the construction of the building, which would be leased to the county for use by Jackson Labs. Investors would be paid back over several years, essentially in the same way a financial institution is paid back for a mortgage. But Blake Gable, president of the real estate division of Barron Collier, which is donating the land for the development, said that since the county can borrow at lower rates than those desired by private investors as a rate of return, it is unclear what the advantage of such a plan would be. In addition, such a scheme would involve a significant change in the Jackson Lab business plan, which currently shows the Lab owning the structure, not leasing it from the county, and the Jackson Laboratory has not indicated that it would accept such an arrangement.
A further unknown is whether the outcome of the Florida gubernatorial race might have any effect, although neither Republican Rick Scott nor Democrat Alex Sink has shown any inclination to overturn the funding or get involved in decisions by the Collier County commissioners.