Scripps Florida, recipient of the richest economic development prize ever awarded in the state, could reap $170 million by acting as landlord for a county-owned site slated for a research hospital.
Scripps pays Palm Beach County $1 a year to lease vacant land at the southeast corner of Interstate 95 and Donald Ross Road in Palm Beach Gardens. Tenet Healthcare, which hopes to build a hospital on the property, would pay Scripps $5 million a year for 34 years to sublease 30 acres, according to a letter of intent between Scripps and Tenet.
The 2011 letter was confidential but recently became public as part of Jupiter Medical Center’s challenge to Tenet’s proposal. Jupiter Medical Center Chief Executive John Couris criticized the arrangement as too generous for Scripps, which already has received $310 million from the state and $269 million from Palm Beach County.
“It’s public land,” Couris said. “Shouldn’t the money go back to the people of Palm Beach County?”
Assistant County Administrator Shannon LaRocque said the lease payments are exactly the sort of deal county officials wanted when they paid $16 million for land across the street from Scripps Florida’s Jupiter labs.
“We bought it for their purposes, for them to enter into a collaborative partnership, so this is not unexpected,” LaRocque said.
County officials envisioned a teaching hospital as a crucial piece of the county’s biotech hub. Any revenue Scripps pulls in from Dallas-based Tenet Healthcare (NYSE: THC) represents private-sector support of the public investment in medical research, LaRocque said.
“The big challenge was keeping the doors open after the state money ran out,” LaRocque said.
That challenge has grown more pressing in recent years. Research funding from the National Institutes of Health has flat-lined and now could dwindle as a result of federal budget cuts.
Despite the squeeze, Scripps Florida has proven adept at landing federal money. Its NIH grants climbed to $21 million last year from $18 million in 2011.
Scripps and Tenet in 2011 asked the Florida Agency for Health Care Administration for permission to open an 80-bed hospital. Jupiter Medical Center is fighting the plan.
Couris argues that the county doesn’t need another hospital. He calls the proposal to open a new hospital in an affluent area a “market share grab” by Tenet. LaRocque dismisses Couris’ concerns.
“If Scripps and Tenet work out a deal, don’t you think that’s great as a taxpayer?” LaRocque asked. “How is that bad? It’s just great.”
The county would have to approve a sublease of the Palm Beach Gardens land by Scripps, she said. Scripps and Tenet won’t execute their contract until the state approves the research hospital, according to the letter of intent.
“All proceeds would be used to support our mission as a non-profit organization — to conduct scientific research to improve human health and to train the next generation of biomedical researchers,” Scripps spokeswoman Mika Ono said.
The Scripps Research Institute agreed to expand to Florida in 2004, after then-Gov. Jeb Bush offered the California institute $310 million to open a lab here. Bush’s offer was sweetened by $269 million from Palm Beach County.
A biotech bidding war ensued, with state and county officials promising nearly $1 billion to seven other research institutes from Miami to Orlando, including Max Planck Florida in Jupiter and the Vaccine & Gene Therapy Institute Florida and the Torrey Pines Institute for Molecular Studies in Port St. Lucie.
The goal of the massive investment? Turn Florida into a high-tech, high-wage state, a place with a bustling biotech sector that employs tens of thousands of workers.
The biotech vision remains a work in progress. Only a few private biotech companies have sprung up in Jupiter. Palm Beach County wages remain below the national average, according to federal statistics.
And the Milken Institute last week ranked Florida 38th on its annual State Technology and Science Index. Tech powerhouses Massachusetts, Maryland and California took the top three spots, but Florida trailed such lesser lights as Tennessee, Hawaii and Montana, which placed 35th, 36th and 37th.
“Florida has clearly tried to step up its game,” said Kevin Klowden, senior economist at the Milken Institute. “Biotech takes a while to build up.”