BRADENTON, Fla. - For the second time, Port St. Lucie, Fla., may be on the hook for bonds issued as an economic incentive to lure an employer to the city.
The Vaccine & Gene Therapy Institute of Florida announced Friday that it will lay off its remaining 34 employees in the next six weeks and wind down operations by Oct. 1.
"This is a sadly disappointing outcome," VGTI Florida president Richard Jove said in a release. "We worked so hard over the last two years to attract a key strategic partner to invest in our research mission to continue in Port St. Lucie, but we were unsuccessful."
Jove attributed the nonprofit VGTI Florida's failing to multiple factors, including budget cuts by the National Institutes of Health and the "large debt burden" associated with building its 100,000 square-foot, state-of-the-art research facility in Port St. Lucie.
In May, the institute defaulted on a mortgage payment resulting in an
The city covenanted to budget and appropriate revenue to guarantee the debt, and was expected to replenish the reserve. Earlier this year, the city amended its debt management policy to ban such guarantees in the future.
City officials did not immediately respond to a request for comment concerning the VGTI closing.
In May, Port St. Lucie filed a lawsuit in circuit court in an attempt to enforce VGTI's loan and mortgage commitments. Because of the litigation, the institute would not comment further, Jove said in Friday's release .
VGTI's failure potentially leaves the city responsible for remaining payments on the bonds.
Port St. Lucie, about 50 miles north of West Palm Beach, also supported the defunct Digital Domain special effects studio that filed for bankruptcy in 2012.
The city issued $39.9 million in recovery zone facility bonds to build and furnish a state-of-the-art building for Digital Domain. Last month, Christ Fellowship bought the building for $13 million in cash.
The city also gave VGTI $10 million for hiring incentives, while the state gave the institute a $60 million start-up grant from an incentive program.
In November, VGTI's auditors issued a going concern opinion in conjunction with its fiscal 2014 audit. The audit was
In June, Moody's Investors Service cut the city's general obligation bond rating to A1 from Aa3 citing impacts on the general fund from economic development project guarantees and debt-related pressures.
Moody's also downgraded to A2 from A1 the ratings on $136.3 million of certificates of participation and non-ad valorem backed conduit, lease and special assessment debt. It assigned a negative outlook to all securities.
"Debt service in fiscal 2014 comprised a very large 45% of the city's operating budget," said Moody's analyst Valentina Gomez. "Due to the failure of some economic development projects to generate the expected revenues, either assessments or building impact fees, the general fund has had to support the related debt service, in one case since 2009."
