Malloy deal with Jackson Lab includes
forgivable loans, share of royalties
By Ed Jacovino Journal Inquirer
Published: Friday, January 6, 2012 11:51 AM
EST
State officials have finalized their deal with
a Maine-based genetics research group, Gov. Dannel P.
Malloy announced Thursday during an event at the University
of Connecticut Health Center in Farmington, which will be
the site of the group’s new research lab.
The contract between the state and the nonprofit Jackson Laboratory was
approved by the University of Connecticut and by
Connecticut Innovations Inc., a state economic development agency. Lawmakers in
October approved $291 million in state borrowing to finance the deal. Much of
that is in forgivable loans to help Jackson Lab build and outfit the facility,
where its researchers will work with UConn faculty
and students to study genomics, the use of a patient’s genetic information in
treating disease.
“There is no reason that we could not be the leader of genomic, personalized
medicine for all of the country,” if not all of the world, Malloy said.
Edison Liu, president and CEO of Jackson Lab, said the research done at the Farmington facility would
contribute to medical progress. “Our grand vision is for personalized, precise
and advanced medical care,” he said.
The new contract includes terms that give the state more
authority to reclaim its money if Jackson Lab fails to meet job creation
targets or leaves the state — issues that Republican
lawmakers contended the state hadn’t done enough to include in early
negotiations. The contract also would allow the state to collect royalties on
discoveries and inventions that lead to moneymaking patents for Jackson Lab.
Malloy, a Democrat, said Jackson Lab quickly is moving into the design phase
for the facility, adding that he expects the group to start construction within
one year.
The project has moved quickly. Malloy and Jackson announced their tentative
agreement in late September. The General Assembly then approved the borrowing
during a special legislative session in October, leaving it up to Malloy to
negotiate the details of the contract.
The two sides inked the deal on Thursday, according to Malloy, who quipped,
“The deal has been closed. The check is in the mail.”
The state inducements include:
• $192 million in forgivable loans to design, construct, and equip the
building. But as long as Jackson Lab meets certain job and research criteria,
it’s all forgiven and the building becomes Jackson’s after 10 years.
• Up to $99 million in grants over those first 10 years, during which Jackson must file annual
business plans and annual reports and audits with the state.
• A 98-year lease of the land to Jackson
for $1 per year on the land. If it meets certain job criteria after 20 years,
it can purchase the land outright for $1.
But the contract includes hooks for the state to reclaim its money and property
than were in an early proposal.
To keep the $192 million in loans over 10 years, Jackson must get an
intellectual property license and use it to conduct research, hire at least 300
workers — including 90 senior scientists — and keep the employees for six
months earning an average wage equal to 125 percent of the state’s average
wage.
And if Jackson
leaves the state within four years of meeting its 10-year employment goals, the
state can buy back the building and equipment inside it a discounted rate.
The agreement also includes a provision that would give the state rights to
some royalties from ideas produced through the lab’s research. Under the agreement,
Jackson will
get all of its profits for patents that make less that $3 million. For those
netting more than $3 million, the state would get 50 percent. After 10 years,
the state would get 10 percent of all royalty profits and 50 percent for
patents earning more than $3 million.
Jackson also agreed to give preference to Connecticut residents
when hiring for jobs other than as scientists, and when hiring vendors.
Catherine Smith, Malloy’s economic developer commissioner, negotiated the deal.
The loans are adequately secured in the event that Jackson doesn’t meet its jobs targets, she
said.
“The state has, I think, the right level of protections on,” Smith said.
She also supported the idea of the state getting some of the money if Jackson cashes in on a
big discovery or invention — especially for those earning more than $3 million.
“If there is a great windfall we will certainly get a piece of that,” Smith
said.
Legislative Republicans had railed against the deal in October, saying it gave
away money too easily and questioning why the state didn’t get a share in any
profits — Jackson came to Connecticut
after a similar deal fell through in Florida.
The Florida
agreement included royalties for the state, they said.
Sen. Leonard Suzio, R-Meriden, led the opposition. “I
feel vindicated,” Suzio said Thursday. “They at least
listed to some of what I said.”
But Suzio said he still wasn’t satisfied with the new
contract, mostly because of the expensive price tag.
“It’s basically a million dollars a job,” he said.
While the deal is for 600 jobs over 20 years, the state’s $291 million in
borrowing is for only the first 10 years, when Jackson is required to create 300 jobs.
Suzio said he hopes the royalty sharing will be
lucrative. “If they don’t develop the technology, it’s going to be worthless,”
he said. “If you’re going to roll the dice, then there ought to be a big payoff
at the end of the line.”
But at the Health
Center on Thursday, the
mood was celebratory. Malloy teased reporters when asked whether it was
intentional that the announcement came on the anniversary of his taking office.
“Purely, purely coincidental,” he said.
Timothy Bannon of Manchester, Malloy’s former chief
of staff, a;sp was on hand.
The state first pursued Jackson Lab after Bannon’s
wife read a story in the local newspaper while they were vacationing in Bar Harbor, Maine, where Jackson has itss headquarters. The story described the group’s fallout
in Florida