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April 25, 2005
San Jose officials say state had signed off on bid problems
Creative approach, lack of 2 documents doomed city's plan
San Jose city officials say that they knew their proposal for hosting the headquarters of the California Institute for Regenerative Medicine bent the rules a little when they turned it in before the March 16 deadline.
They say that they knew they had not included a required letter that says there is no conflict of interest between the owner of the office building that would house the institute and any potential grant applicant. And they knew that they had left out a letter stating that the building would be available within 30 to 90 days.
They say they had spoken to the staff real estate officer in the California Department of General Services, which would make the preliminary evaluation of the bids, and she had told them that San Jose's plans were fine.
On April 13, the Site Search Committee of the California Institute for Regenerative Medicine officially realized San Jose's worst fears when it voted 6-1 to leave San Jose off the short list. That was the recommendation of the Department of General Services.
The hopes of San Jose and five other cities were dashed, mostly for technical failures. Long Beach and Richmond each left out one of the same letters that San Jose had omitted. Los Angeles lost out because it didn't show that its site could meet the requirements of the Americans with Disabilities Act.
The cities still in the running are Sacramento, Emeryville, San Francisco and San Diego.
All these cities have been competing for the headquarters for the $3 billion program to stimulate research using stem cells that might lead to cures for diseases like Parkinson's and diabetes. The headquarters is expected to draw a lot of attention to the city finally chosen, along with visiting officials and Ph.D.s from around the world.
And San Jose thought it had made the best case of all.
It was offering about 16,963 square feet of space at the Concourse, owned by Equity Office Properties, at 1731 Technology Drive in the First Street tech corridor rent free for 10 years. It also offered as an alternative 19,853 square feet in the Fairmont Plaza, also known as the Knight-Ridder building, at 50 W. San Fernando St., space now held by the San Jose Redevelopment Agency. That, too, came rent free for 10 years.
"We had an excellent, excellent proposal," says Vice Mayor Cindy Chavez, who went to San Francisco April 13 to plead the city's case. "I think the staff [of the DGS] chose to take a creative solution and put it in the box of can't be done, and that's very disappointing."
Ultimately the directors of the institute will make the final selection of the site for their headquarters. But the first stop was the Department of General Services, which handles bidding and real estate and similar services for the state. The DGS issued the Requests for Proposals, which included the requirements for the conflict of interest letter and the statement of when the property would be available.
The conflict of interest statement was required because of the complicated way that the DGS wants to structure the deal. According to the request for proposals, the institute would have a contract with the host city, and the DGS would have a separate contract with the building owner. In this way, a building owner could invest in a biotech company that would come to the Institute seeking a grant for stem cell research and avoid a conflict of interest.
San Jose had a different, simpler idea: have just one contract with the city, which would then lease the office space and ensure that it met all standards. The city could not invest in a biotech company and create a possible conflict of interest.
But would this pass muster in the state bureaucracy?
Yes, according to Michael Schuppenhauer, vice president of Fleischman-Hilliard and a consultant for the city. He says he talked with DGS staff real estate officer Rebecca Donnachie about the structure of the San Jose's proposed deal. He says she signed off on it during two phone calls that took place March 8 and March 9, a week before the deadline for the proposals to be submitted.
Cheryl Gates, Ms. Donnachie's supervisor, attended the meeting of the search committee on Wednesday. She declined to answer questions. "I can't talk with the press," she said. She referred a reporter to the DGS press office, where spokesman Matt Bender confirmed there had been a discussion of the lease arrangement. However, he said, "The letter never came up."
There is no written record of the contact between the city and the DGS before the March 16 filing deadline, although Rebecca Dishotsky, the mayor's chief of staff, says she responded to some questions from the DGS about details of the proposed contract after the filing deadline. She replied by e-mail, she says.
Vice Mayor Ms. Chavez gave the search committee copies of the e-mails at the April 13 meeting.
Asked about the city's claim that it had approval for its proposal from the very state agency that later rejected it, CIRM chairman Robert Klein says: "Without the benefit of having heard the conversations, we need to rely on the Department of General Services."
Had the San Jose proposal been accepted, how would it have stacked up against the others?
It would have come in first, says Fleischman-Hilliard's Mr. Schuppenhauer.
The DGS scored the proposals, giving points for things like having residents employed already in biotechnology, an international airport within a 45-minute drive and the presence of conference and hotel facilities.
Using the ratings for the final four cities as a guide, Mr. Schuppenhauer added up San Jose's numbers. His total was 174. The official tally: San Francisco: 158; Sacramento: 133; San Diego: 116; and Emeryville: 113.Posted by Coalition Webbies at April 25, 2005 05:30 PM