VGTI – When gambles don’t pay off…

Around 2009, Port St. Lucie was bleeding jobs and losing skilled workers as it entered double-digit unemployment. As home foreclosures kept coming, eventually hitting above 10,000, the City Council rolled big economic-development dice in Tradition and elsewhere.

One venture was Tradition Studios, a 115,700-square-foot building for which the city took out bonds to foot the $40 million construction costs. That was done to attract Digital Domain, a computerized special-effects business. It was promising Port St. Lucie high-tech, high-paying jobs that would start the city toward economic recovery and a glorious future in the entertainment business. That business venture flopped in 2012, leaving the city with a pricey, specialized building to sell in a depressed real estate market. Christ Fellowship purchased the building at 10250 SW Village Parkway for $13 million in 2015. That was way less than the city hoped it would get.

But the City Council had little time to fret the opportunity loss. About the time it was selling Tradition Studios to the church, it was lining up to file suit to gain ownership of another building it took out bonds to build in hopes of getting high-paying jobs in town.

That, too, would become a years-long quest to recoup what the city could from failed economic-development gambles.

On Wednesday, June 27, the Port St. Lucie City Council had a special meeting at which it gave a unanimous nod to moving forward with the proposed sale of 9801 SW Discovery Way. If RER Ventures, which filed a letter of intent to buy the building, and the city can come to an agreement, the sale will arguably be the close of a sore chapter of local history.

In a best-case scenario, the city will sell RER Ventures the building for $14.5 million in about two months and, by 2020, long-ago-promised bio-tech jobs could belatedly arrive in town.

Last August the city held a press conference to announce that it was rebranding that building as the Florida Center for Bio-Sciences and hiring Colliers International to sell it. Before then, the building was commonly called VGTI – the Vaccine & Gene Institute of Florida. About nine years ago, those four letters were spoken with hopefulness that Port St. Lucie had found its way out of the Great Recession triggered by the housing crash that started in 2007. By 2015 those letters were more so spat than said at City Council meetings.

The city guaranteed about $64 million in bonds for the nonprofit medical researcher to construct and furnish the building in 2010. That made the City of Port St Lucie VGTI’s largest creditor. Nothing went right after that. Despite help from the state’s Innovation Incentive Program and city, VGTI never delivered a large number of bio-tech jobs. It started defaulting on loans. The Florida Legislature stepped in to help the cash-strapped not-for-profit stay afloat.

That was good news for the city.

The good news died under the governor’s line-item veto power.

In 2015 Gov. Rick Scott vetoed a grant the legislature approved for the medical researcher and it filed bankruptcy shortly after. The city sued VGTI in May that year. St. Lucie Circuit Judge Janet Croom appointed Michael Imber of Alvarez & Marsal as receiver over VGTI’s old facility.

The bad news kept coming.

Not only had the economic-development dice roll lost a multi-million dollar bet, but the city couldn’t walk away from the table. The receiver – who was responsible for building maintenance – was charging the city about $125,000 a month. The city got control of the building last summer after an almost two-year wait. VGTI cleared the building in October 2015.

If the proposed sale to RER Ventures goes through, that leaves only one more name in a trifecta of economic-development disappointment left to fully resolve.

Back during the housing boon, the city had also taken out $25 million in bonds to build infrastructure for the 40-acre City Center, on U.S. 1 and Walton Road.

The owner of about half of the City Center properties went bankrupt, leaving the city without anyone to pay special assessments for the bonds.

In 2013 New Zealand developer Lily Zhong purchased the land for $500,000 with promises to pay back the special assessments. She told a story about building a $380 million mixed-use facility by the Port St. Lucie Civic Center – exactly what the city wanted to hear. A couple years later, the Securities and Exchange Commission accused Zhong of selling a scam to get foreign investors paying for her to have a lavish lifestyle. That investigation put the brakes on any efforts to sell the land. Late last year the SEC had reached a settlement with Zhong and it gave the green light to the court-appointed receiver to sell the land.

In 2015 the City Council raised property taxes about 15 percent to 20 percent, depending on how the calculation is made, to offset expenses related to the botched economic-development efforts. It also enacted rules to prevent the city from investing millions to benefit single users again.

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