Week of October 13, 2003
  Blockbuster Deal
   from Site Selection's exclusive New Plant database

downtown Palm Beach, Fla.
Scripps will create some 2,800 direct jobs in West Palm Beach County over 15 years. But its presence will create 40,000 more new spin-off jobs, state officials are projecting. (Pictured: downtown Palm Beach.)

Scripps' New Florida Center Will Likely Spur Thousands of Spin-Off Jobs

by JACK LYNE, Site Selection Executive Editor
of Interactive Publishing

TALLAHASSEE, Fla.Spin-off effect. That phrase is one sometimes relentlessly overused by public officials basking in the cozy afterglow of a major expansion announcement.
        And the familiar refrain sounded once again last week, when the Scripps Research Institute (www.scripps.edu) announced that it had chosen Palm Beach County Fla., for a new research center. Florida officials predicted a doozy of a 15-year spin-off effect from Scripps' decision: 6,500 jobs; $1.6 billion in additional income; a $3.2 billion boost in the state's gross domestic product, and 40,000 additional jobs from industry clustering.
        And this spin-off effect could just be that dramatic. Scripps' center is that rare project that has its own highly potent spin-off effect as part of its genetic code.
Gov. Jeb Bush
A unilateral overture by Gov. Jeb Bush (pictured) spurred Scripps officials to consider expanding.

        "Scripps is the brand name in biomedical research, and its decision to build a sister research facility in Florida is a seminal moment in our state's history," Gov. Jeb Bush (R) said in announcing the project at the state capitol in Tallahassee.
        Bush, in fact, even compared Scripps' transforming effect with Walt Disney's arrival on some then-unremarkable Orlando swampland. "This expansion will bring Florida to the forefront in this lifesaving research and advance our current biomedical economy," he said.

San Diego harbor
Scripps' home city of San Diego (pictured) attracted $3.5 billion in venture capital in 2000-01, compared to $3 billion for all of Florida.

Scripps Transformed San Diego
Scripps direct-job creation will be considerable.
        The institute will start its first year of operations with 31 employees, housed in temporary space while a permanent $140-million, 364,000-sq.-ft. (32,760-sq.-m.) center is being built on a 100-acre (40-hectare) site. That facility will open in 2006. By Scripps' seventh year in Florida, it will employ 545 workers, growing to 2,800 after 15 years, state officials projected.
        But those 2,800 jobs pale compared to the far more dramatic projections. In Scripps' case, though, a persuasive spin-off model is already in place.
        As Bush noted, "One only need look to Southern California to understand the impact this facility will have on attracting academia, federal research grants, biotech startups, pharmaceutical companies, venture capitalists and other investments."
        The Florida project is notable in that it's Scripps' first-ever research venture outside its birthplace, the San Diego-metro city of La Jolla. And in San Diego, the institute has clearly transformed the economy.
Scripps' immunology research facility, La Jolla, Calif.
Scripps has 2,900 employees in more than 1 million sq. ft. (90,000 sq. m.) of space in its 12-building La Jolla complex, including the immunology research facility pictured above.

        Scripps has 2,900 employees in more than 1 million sq. ft. (90,000 sq. m.) of space in its 12-building La Jolla complex.
        The institute's far greater impact, however, has been in spin-off jobs. Scripps' presence is credited with attracting 499 biomedical and pharmaceutical companies to the San Diego area; 80 percent of those firms, in fact, are located within a three-mile (4.8-kilometer) radius of Scripps' La Jolla complex. The 499-company cluster employs 35,000 workers with average salaries of $54,000.
        If a similar scenario plays out in West Palm Beach, it would almost double the state's biomedical industry, which now numbers some 37,000 workers.
        Scripps' California operation has also been a venture-capital magnet. During 2000-01 (the latest period for which figures are available), San Diego attracted $3.5 billion in venture capital - compared to all of Florida's $3 billion over that same period. In addition, Scripps has been responsible for creating 40 biotech spin-off companies in Southern California.
        Significantly, the West Palm Beach center will replicate a number of the California-based operation's economy-boosting features as well, Scripps' officials said. The Florida facility, for example, will collaborate with local businesses and school districts and will establish joint degree programs with all state universities. The institute will work particularly closely with Florida Atlantic University (FAU), with which Scripps will partner to build the research center. Based in West Palm Beach County in Boca Raton, FAU is home to the Florida Center of Excellence in Biomedical and Marine Biotechnology.
        As in California, Scripps new West Palm center will also be able to award doctoral degrees and license the technology it develops to private firms. (Licensed technology now provides half of Scripps $280-million annual budget.)

Bush Got Ball Rolling
With Bold Unilateral Bid
Scripps, however, wasn't actually looking to expand. At least not before Florida's governor decided to make a unilateral overture.
        Bush's bold move stirred some strategic rethinking. "What Gov. Bush presented was a unique opportunity to expand our research," Scripps President Richard A. Lerner explained at the project announcement in Tallahassee.
        Scripps' opportunity lay in setting up a Florida center focused on biomedicine, officials decided. That, they reasoned, would create strengths complementing the California operation, which has gained international renown for groundbreaking work in leukemia, ovarian cancer, Lou Gehrig's disease, Alzheimer's disease and AIDS. The new Florida center, said Lerner, will focus on biomedical research and drug development for diseases like Alzheimer's and AIDS.
        He cautioned, however, that the West Palm Beach project doesn't signal the end of Scripps' San Diego-area expansions. Instead, the bicoastal operations will augment one another.
        "Based on our history and experience in La Jolla, the extension of Scripps activities will increase the scope and depth of significant research in biomedical science," Lerner explained. "The synergy between Scripps biomedical research in California and Florida is expected to lead to major new developments to improve human health."
        Bush's offer, he added, was only the latest the institute has received over the years from other states and foreign nations. "We've never felt comfortable going anywhere else," Lerner said. But Florida's bid, he explained, hit a warm nerve among Scripps' core of key scientists.

Comfort Food: $450 Million in Incentives
Scripps' comfort level relates to another very large number: Florida's $450 million in incentives.
        Of that total, the state will pony up $310 million - at least if lawmakers approve the funds in the Oct. 20 special session that Bush has called.
        That money, however, won't come from the general fund. State incentives will come instead from the $900-million economic-stimulus package that Florida received from the federal government this spring.
        "There is no better way to spend the one-time federal economic stimulus money than by investing in a project that spurs targeted economic growth," Bush said. "This investment will return more growth and revenues down the road." The incentive package, the governor said, will pay off with a 44.8 percent return on investment.
        "Florida is proud that our budget and economy continue to grow, and we will not reverse this trend by making the mistake of using one-time money to pay for recurring costs," Bush continued. "It's clear that strategy serves only to stagnate the economy and grow budget deficits."
        Florida's $310 million is one-shot seed funding, state officials emphasized. Funding thereafter will come from grants from the National Institutes of Health (NIH) and other organizations. Scripps already ranks No. 1 in NIH funding, and has partnerships as well with all major pharmaceutical firms.
        The incentives mark a departure for Florida, which has historically attained robust growth without resorting to hefty subsidies. The state's $310-million offer comes as Florida's job-creation rate has slowed.
        Local authorities are providing $140 million in incentives by donating Scripps' new facility and temporary space. Bush lauded the Business Development Board (BDB) of Palm Beach (www.bdb.org) and the Palm Beach County Commission (www.co.palm-beach.fl.us) for their work on the project. "The focus of the world will be directed to Palm Beach County as this biotechnology and life sciences partnership is announced," said BDB Chairman Greg Fagan.

Special Session: Bush Will Ask
For $190 Million More in Incentives
The special session authorizing Scripps' subsidies, however, is sure to see debate.
        State governments are grappling with the biggest deficits since the Great Depression, and Florida hasn't been immune. State cutbacks in this year's budget included a $40-million reduction in university funding and a halt in enrollment in the Healthy Kids children's insurance program.
        The $900-million federal stimulus came after those cuts were authorized. Some state political leaders have since pushed to use the money to ease education cuts.
        But Bush has maintained that economic development is the funds' best use. The governor, in fact, plans to ask lawmakers for another $190 million for a "mega-fund" to recruit other major location projects already under way.
        That mega-fund, if approved, may be used to pursue the Delta 4 project, which would construct NASA's next-generation Orbital Space Planes to carry crews to and from the International Space Station. Alabama is also making an aggressive pitch to land that project, which has an estimated $14-billion price tag. Yellowhammer State incentives in 1996 helped Huntsville wrest the work for the Delta 4 launch rocket away from Florida's Space Coast.
        Scripps, though, currently commands the state's attention. And it may be significant that the institute hasn't yet named a specific Florida site, perhaps waiting for the special session incentives vote.

Editor's Note: For an update on Scripps, see the November 2003 Incentives article.  For more on recent location action in the Sunshine State, see the Florida Spotlight section, "Bush to Business: Here's $400 Million," in the September 2003 issue of Site Selection.

bd1013bbd1013b ©2003 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.