VGTI lease deal: Cleveland set to take over Oct. 1

Cleveland Clinic Florida is to assume control of the former Vaccine & Gene Therapy Institute Florida laboratory Oct. 1 under a 15-year deal the Port St. Lucie City Council expects to finalize Sept. 16.

Cleveland Clinic will pay $1 annually in rent for 15 years for the 107,000-square-foot building at 9801 SW Discovery Way in the Tradition Center for Innovation.

The terms of the lease with an option to purchase allow Cleveland Clinic to buy the high-tech lab after five years for $14.5 million.

Cleveland Clinic and Vaxine Ltd., an Australian bio-tech researcher that’s to set up its North American headquarters in the building, will be required to hire at least 100 new high-wage workers as part of the deal.

The purchase price will be discounted by as much as $9 million if Cleveland Clinic and Vaxine hire more than 150 new high-wage workers in the first three years and maintain those staffing levels.

Cleveland Clinic has until Jan. 1, 2020, to terminate the lease if it deems the building conditions to be unacceptable. Cleveland Clinic can also terminate the lease by giving the city 12 months’ notice.

If Cleveland Clinic winds up selling the building for a profit, the city would share in the profits.

The City Council voted unanimously Monday to authorize City Manager Russ Blackburn and City Attorney Jim Stokes to prepare a lease agreement with those terms and bring it back for a vote on Sept. 16.

As a backup, the council also voted unanimously to direct city officials to start talks with Straub For Clean Water Everywhere Trust, of Lake Worth, which made a last-minute $15 million offer for the lab.

Cleveland Clinic will assume more than $1.5 million per year in operating costs, fees and assessments on the building, records show. But the city will continue to pay $3.9 million per year on the bonds used to finance the laboratory’s construction in 2012, Blackburn said. The city still owes $53.8 million in principal on the loan.

VGTI defaulted on the bonds and closed in 2015 in part because of the loss of funding from the National Institutes for Health.

The city, which had backed the bonds, took over the building in August 2017 and ramped up marketing efforts.

RER Ventures of Coral Gables, a distressed real estate firm, agreed to buy the lab for $14.5 million in September but backed out of the deal in November because of difficulty finding tenants.

Cleveland Clinic first established its presence in Port St. Lucie on Jan. 1 when it completed its takeover of Martin Health System and Tradition Medical Center.

The rebranded Cleveland Clinic Tradition Hospital is about a quarter-mile walk from the former VGTI lab, which is now known as the Florida Center for Bio-Sciences.

Cleveland Clinic had not initially been interested in buying the lab, but researchers seemed impressed by what they saw on a tour of the building, Blackburn said.

“Some of the doctors who came through the facility were mesmerized,” Blackburn said. “It was very interesting to see how excited they were about the research space.”

Cleveland Clinic’s large hospital combined with the nearby laboratory will help attract other researchers and medical-related businesses to Tradition, Blackburn said.

“Cleveland Clinic’s reputation both internationally as a health care provider and as a researcher will have benefits to Port St. Lucie,” Blackburn predicted. “Port St. Lucie would be established as a major hub for Cleveland Clinic in Florida.”

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