Getting a cut from Scripps
With a half-billion dollars being spent to bring the institute to Florida, some familiar names are among those benefiting.
By SYDNEY P. FREEDBERG
Published December 4, 2006
State and local governments tout it as a chance to discover medical cures for humankind and create thousands of high-wage jobs for Floridians.But the $510-million deal to bring a branch of California's prestigious Scripps Research Institute to Palm Beach County is turning out pretty well for some politically influential lawyers, builders and consultants, too.
A law firm led by a top GOP fundraiser and friend of Gov. Jeb Bush has gotten about $289,000. A construction giant that donates heavily to Republican candidates and causes has made more than $1-million. And an investment banking firm founded by the late mayor of Atlanta has received $480,000.
State and county officials say Scripps-related contracts are awarded strictly on merit, not on the basis of political clout or campaign contributions.
But there are skeptics.
"Businesses aren't in the business of promoting good government," said Ben Wilcox, executive director of Common Cause Florida, a public affairs lobby organization. "They see campaign contributions as an investment that they're hoping for a return on."
Scripps, a tax-exempt organization with more than $380-million in revenue last year, got the most expensive incentive package ever given to a private company in Florida. Three years ago, the state promised $310-million, plus an estimated $59-million in investment income; the county promised $200-million.
To get the incentives from the Legislature and the Palm Beach County Commission, Bush, county business leaders and Scripps itself promised that Florida would get a biotech Eden.
Their goal was twofold: create a cluster around the new Scripps branch over the next 15 years with hundreds of companies and thousands of high-wage jobs for Floridians, and help the world by subsidizing a new industry focused on medical cures and biological breakthroughs for afflictions ranging from Alzheimer's to cancer.
So far, records show, state and local governments have spent more than $250-million on Scripps, and the price tag could eventuallyclimb to $700-million. Money has gone to hire more than 180 employees and has bought land, high-tech equipment and scientific operations.
From the beginning, the deal also has benefited some well-connected law firms, which have gotten at least $3.3-million for Scripps-related work (some of it in California). Consider:
- Orlando-based Broad and Cassel and its chairman, C. David Brown II, have billed for about $289,000.
Brown, a friend of the governor's, raised more than $100,000 for President Bush's 2000 campaign and made $17,000 in cash and in-kind donations to state candidates and Florida's Republican Party. He helped lure Scripps to the state. His firm now represents Scripps Florida Funding Corp., a nine-member oversight board created by the Legislature to monitor, invest and disburse the state's contribution.
Brown didn't respond to requests for an interview. But in 2004 he said he and his firm got the Scripps work based on their "background of putting big transactions together," not political connections.
- Hogan & Hartson of Washington, D.C., earned more than $1.6-million over a two-year period ending Sept. 30, 2005, according to Scripps' tax returns.
Carol Licko, who served as Gov. Bush's general counsel in 1999 and 2000, joined the firm in September 2001. Two years later, the firm helped Scripps get the incentives through the Legislature, and Licko now represents the institute.
She says Hogan & Hartson represented Scripps in California long before she became a partner. "I had nothing to do with (Scripps) hiring this firm," she said in an e-mail, adding that some of its Scripps fees were for work outside Florida.
- Hopping Green & Sams, a powerful firm with a well-known Tallahassee lobbying arm, made more than $945,000.
It defended Palm Beach County in legal actions brought by environmentalists who opposed the original Scripps site. That site won state approval, but a federal judge ruled that the U.S. Army Corps of Engineers did not do a sufficient environmental analysis. Eventually, Palm Beach decided to move Scripps to another location.
"Nobody hired us for our connections," said Gary P. Sams, adding that the firm discounted its rates (normally ranging between about $140 and $300 an hour) by 15 percent. "We were hired because of the quality of our work."
Florida and Palm Beach County have paid outside consultants at least $4-million for Scripps-related work - from land appraisals and public relations to real estate and engineering.
Like legal firms, many of these "professional services" providers are exempted from competitive bidding requirements, and each profession is often a big source of campaign contributions or political clout in its own right.
When the state oversight board needed an economic analyst, it turned to Washington Economics Group, a consulting firm led by a former Bush political appointee. When it needed insurance advice, it asked Brown & Brown, an agency run by J. Hyatt Brown, the former speaker of the Florida House.
(A spokeswoman for the governor's trade office says the firms were "uniquely qualified" so there was no need or legal requirement for competitive bidding.)
Then there are the bond advisers. To date, Palm Beach County has paid bond counsel, underwriters and a variety of financial consultants and experts about $1.7-million for their work on almost $200-million in Scripps-related bond issues.
The county selects bond counsel and underwriters through a rotation of firms that are on a short list because of their experience and strong qualifications - not through competitive bidding.
The staff then sets payments based on a fee schedule, said John Long, the county's debt manager. "I go out and check with other organizations to make sure our fees are in line, and they are."
Five investment banking firms shared more than $1-million in underwriting fees, records show. Of that, more than $480,000, or 47 percent, went to Jackson Securities, a 20-year-old investment bank founded by the late Atlanta Mayor Maynard Jackson.
Jackson Securities was selected through the regular rotation process because of "our excellent credentials and extensive experience," said W. Bruce Gow, chief operating officer.
In the old days, Florida almost always awarded construction contracts to the lowest bidder, a system designed to prevent favoritism and collusion.
Increasingly, however, government agencies have allowed public contracts, including some Scripps deals, to be awarded for reasons other than price alone.
The low bidder might be a marginally qualified firm that bids low just to get the contract and then hits the government agency with extra costs later, Palm Beach County administrator Robert Weisman says.
In the case of Centex Construction, Florida Atlantic University awarded deals without full and open competitive bidding because of "extremely tight time constraints."
Centex oversaw more than $20-million in construction of Scripps' two temporary buildings at the university. The company's fees totaled more than $1-million.
"The university was told by Palm Beach County and Scripps that the building needed to be delivered in such a short time period so that Scripps could meet its obligations and not default on its state funding agreement, which was tied in part to its hiring pattern," Florida Atlantic spokeswoman Kristine McGrath said.
In hiring subcontractors, Centex advertised and sought competitive bids, McGrath said.
Since 2000, the Dallas-based construction giant and its affiliates have donated about $172,000 to Florida politicians, parties and political action committees. Centex and its affiliates have gotten more than $150-million in state work during that time.
Its top executive, Timothy R. Eller, has contributed about $200,000, mostly to GOP national political causes and candidates, since 2000.
Spokesman Ken Smalling says Centex does not expect contracts in return for political donations. "We choose to contribute to specific candidates or parties because of their positions on business issues that our company and employees care about," he said.
Catalfumo Construction and Development, a homegrown powerhouse, got its contract through competitive bidding.
There was only one other bidder, though. That firm, A2 Group of Miami, was disqualified because the county deemed it too small to do the job.
Catalfumo is owned by Dan Catalfumo, a politically influential developer and landowner whose firm has won some large South Florida construction jobs. Palm Beach County paid his firm more than $3-million to manage the building of access roads, lake excavation and ditch clearing at the original Scripps site, now abandoned.
Following the money
The county has spent more than $137-million on Scripps-related work, much of it for land and infrastructure work (utility lines, roads) at the original site. Palm Beach County taxpayers are now expected to pay $340-million, 70 percent more than the county originally envisioned.
Weisman says the county hopes to get back much of that money by selling the unused site to home developers.
In addition to the county spending, Florida has disbursed about $115-million to Scripps for items ranging from salaries and equipment to marketing and administration.
While the institute gets more than 70 percent of its annual revenue from state and federal agencies, the Legislature does not require a detailed, vendor-by-vendor accounting of how Scripps uses state money.
"Nobody is looking over their shoulder," said state Rep. Dan Gelber, D-Miami Beach, the incoming House minority leader.
Gov. Bush's office and members of Scripps' oversight board say they rely on audits and annual reports. "We don't dictate who their vendors are," said outgoing oversight board chairman Marshall Criser Jr., a former president of the University of Florida. "I think (the oversight board) has worked quite well."
[Last modified December 3, 2006, 21:44:00]
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