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The Pier in St. Petersburg, image via WikipediaBy Bob Andelman Maddux Business Report
December 2009

Over the last two decades, Pinellas County economic development has at times embraced military contractors, medical manufacturers, tourism operators and technology developers. Rolling with the latest twist and turns of the national economy, county leaders are supporting expansion of all four.

The big news is the rapid impact of Stanford University-based SRI Florida and Cambridge-based Draper Laboratory, which have formed partnerships with the University of South Florida and hired locally at an even faster pace than promised.

And the Young-Rainey STAR Center in Largo, the CTC Tampa Bay/STAR Technology Enterprise Center—once intended as a mere incubator for nascent technology-based businesses—has grown new tentacles, adding new programs from businesses at different levels. It also doubled its space and increased staff.

There have been other successes for the EDC in the past year, including: Geographic Solutions, which will increase its employment base by 20 percent; Biopsy Sciences, a company that relocated to Pinellas from Tucson, Arizona; and Plasma-Therm, a St. Petersburg-based company that returned to local control and ownership in 2009.

Geographic Solutions has 110 employees at its Palm Harbor headquarters. “There are some real strategic advantages in our location because we can attract a lot of employeees from North Pinellas and Pasco County,” says CEO Paul Toomey. “Our offices are very close for software developers who live in these bedroom communities; their only other alternative is driving to jobs in downtown Tampa or St Pete.

To accommodate planned expansion, Geographic is starting construction on a new 18,000-square-foot. It already owns or leases 15,000 square feet.

Mike Meidel, director of Pinellas County Economic Development, says his job this coming year is simple.

“Jobs are the focus, period,” he says. “It always has been, always will be, that we’re here to produce more and better jobs for Pinellas County citizens. We do a better job of the retention and existing business programs and even new business startup and entrepreneurship than most counties in Florida because, with the makeup of our county, the industries we already have, and the fact that we are nearing build-out, we are by force of necessity working with our existing employers and helping them to expand here locally.”

• • •

It’s hard to tell who is more excited about the fast start of Draper Laboratory in St. Petersburg—EDC officials or Dr. Len Polizzotto, the R&D facility’s principal director for strategic business development.

“We had all these goals through the end of 2009 and 2010,” he says. “Well, we have met the goals for the end of ’10 now. We’re very pleased.”

Draper promised EDC and state leaders that it would staff up to 30 employees by the end of 2010, a number it reached by fall 2009. “We expect to have 65 people in St. Petersburg after five years and 100 people in Tampa after seven years. These are all innovation economy, good wage jobs,” Polizzotto says.

The lab doesn’t do production a traditional sense, instead producing small lots of multi-chip modules (MCMs) in St. Petersburg for specific government contracts—all of which are protected under a veil of official secrecy. “We’re the only folks who make these things,” according to Polizzotto. “We’ll have a run of 100. It’s a pilot prototype.” This work was previously done in Cambridge but Draper ran out of capacity in Massachusetts. It’s affiliation with SRI and familiarity with the California-based research institute’s plans in St. Petersburg brought Draper here.

“I can’t say enough good things about the community,” Polizzotto says. “The community has been fabulous. The government groups—state, federal or local government—Mayor Rick Baker, Governor Charlie Crist, Rep. Bill Young (R), Rep. Kathy Castor (D)—have been great. The business community—including the Tampa Bay Partnership and the county folks—couldn’t be better. We’ve had no issue hiring the type of people we need. We intentionally sent down a few people from Cambridge for each facility so we could maintain the Draper culture, but the majority of folks are locals who we’ve hired here.”

Another positive and unexpected development in Draper’s landing: instead of renting facilities, it purchased a building from Oerlikon-Buehrle Holding—now Plasma-Therm. “It shows our commitment of staying here for the long term,” Polizzotto says.

Draper had a ribbon cutting for its new facility on October 26.

Speaking of which, Draper has moved so rapidly in St. Petersburg that it actually opened its local headquarters ahead of SRI, which arrived in town first but built from the ground up. At deadline, SRI hoped to open its doors by year’s end.

Larry Langebrake, who left USF’s Department of Marine Sciences to head up SRI’s Florida presence, couldn’t be more proud of what SRI has wrought.

“What we’re seeing is the reality of the technology cluster coming together,” Langebrake says. “Candidly, these things are always a challenge. And with the current economic situation, it’s made a challenging job even harder. But the fact is, Draper is here and there are other potential contributors to the cluster.”

He’s referring to the North Carolina-based Research Triangle Institute, which is affiliated with three major research universities in that state and which has publicly expressed interest in joining SRI, Draper and the University of SouthFlorida in St. Petersburg.

“We’re still waiting to see how things progress with the state,” Langebrake says. “It’s in the state’s hands.

“Meanwhile, there is anecdotal evidence of smaller companies with cutting edge technology beginning to look more closely at this region because the cluster is coming together. The momentum has begun,” he continues. “We’re seeing the fruits of the labors of the Tampa Bay Partnership, the Tampa Bay Technology Forum, the St. Petersburg Downtown Partnership, USF and St. Petersburg College, the county and city economic development groups, and Enterprise Florida. All these things have conspired to brand the region, to bring companies in and to sustain the momentum. People are focusing in on how the culture of the region is changing.”

• • •

Tonya Elmore, executive director of the CTC Tampa Bay/STAR Technology Enterprise Center at the Young-Rainey STAR Center in Largo,
says the center has expanded from operating a technology accelerator to offering four distinct programs:

• TEC Launch is a launch pad for inventors, entrepreneurs, and early stage companies developing innovative technology with the ability to change a market. Launch will validate an idea and determine if an invention/product has merit.

• TEC Venture builds springboards from which businesses can launch. Completing the TEC Venture program should place a company in a stronger position to apply for the TEC Accelerator program, raise capital, execute with high-impact, or all of the above.

• TEC Accelerator executes a vetted and feasible business plan with precision and accuracy. Graduating from the TEC Accelerator program should indicate that the firm has beaten the odds and is well on the path to sustainable high-impact growth.

• TEC Transition acts as a resource for early stage technology companies, and entrepreneurs developing technologies for the defense sector by: providing mentoring on commercialization/business plans, sales, marketing, government contracting and dual-use markets; licensing technologies from military and other federal laboratories for commercialization; and determining the technology readiness level (TRL) and manufacturing readiness level (MRL) of emerging technology.

“TEC Venture gets them to an executable business plan,” Elmore says. “TEC Launch started because one of our companies found its product was already out there—and being provided by the government! So we started doing market research strategies with these companies and USF. They needed more comprehensive reports at the beginning, not the nuts and bolts stuff. TEC Venture is more focused on planning; TEC Accelerator is focused on execution.”

CTC Tampa Bay/STAR TEC now has 13 employees and more than 50 mentors and advisors it calls on for guidance. The operation recently doubled in size to 40,000 square feet and is looking to add 10,000 more.

“We’ll lease you space if you need it,” she says, “but you don’t have to be on site. We even work with a company in Canada through our military contacts. One company outsources its manufacturing in Clearwater; they need to understand better how to do business with government clients. “

Sidebar:

Clearwater facing uphill battle after new downtown residences are built but remain empty

There was genuine excitement in downtown Clearwater and Clearwater Beach during recent years as long sought residential and resort hotel development came to fruition. On the beach, the Sandpearl opened on time and to rave reviews in August 2007; this February, the Hyatt Regency Clearwater Beach Resort and Spa will begin accepting reservations.

On the other hand, the completion of Water’s Edge on the downtown waterfront was not the major event that was expected. First it was discovered that the condominium tower was built on a slender piece of land the developer did not own or control. That issue was settled but was quickly followed by the real estate crash and the stunning collapse of developer Opus South, which declared bankruptcy.

“Our two condominiums were completed,” says Geri Campos Lopez, director of economic development and housing for the city, “but unfortunately they hit that market at the wrong time. Opus South (Water’s Edge)is in bankruptcy and the other one—Station Square Companies—returned their building to their lender.”

Campos Lopez says there are fewer than a dozen occupied condominiums at Water’s Edge and just three in Station’s Square.

“One of the key components of downtown is having people live downtown. So it’s going to take a while,” she says.

Instead, the downtown is going to another strength: location. It is emphasizing retail and restaurant recruitment for downtown and with some real success to show for its efforts. La Cachette, a fine dining French restaurant, relocated from Indian Rocks Beach in November. Dunedin-based Bellini’s announced plans to open “Casanova” this spring in downtown Clearwater. A third restaurant, Divino, opened on Ft. Harrison.

“We had a specific strategy,” says Campos Lopez. “All of this has been geared to creating a destination downtown. We know the first step is restaurants. The consultant showed there is a market. But we need to focus on restaurants that already have a clientele that might be interested in relocating or opening a second location.”

• • •

The $30 million, 90,000-square-foot Dunedin Gateway project on the east side of town includes medical, office and retail facilities on Main Street at Dunedin’s southern entry. Phase one includes 20,000 square feet of medical office space and 25,000 square feet of retail space.

Tom Harmer, vice president of Pizzuti Solutions and project manager for Dunedin Gateway, says, “We’ve always liked Dunedin; it’s a unique niche in Pinellas County that has done well. In this economy, some tenants are struggling but the downtown has kept its occupancy high. We’re targeting medical—a sector that has been stronger than others. We’re optimistic that the location and ties to downtown will interest tenants. There is an anchor piece that is about 15,000 square feet. Then we have another 10,000 square feet of inline retail and 20,000 square feet of medical office on the second and third floors.”

The City of Dunedin received a $1.3 million state grant to underground utilities and infrastructure around the project.

On the west side of town is another new development, Sterling Commons. Tarpon Springs-based contractor Joe Kokolakis bought a dormant, two-story building with about 8,000 square feet of existing space. The second floor will be home for artists who once were displaced by a fire and have since moved from place to place in search of permanent studio space.

“It was the old rec center for the city,” says Kokolakis. “It was left in disrepair for the last 10 to 20 years. A group of developers was planning to develop a six-story condo on the site but the bank stepped in and took it. I have some property across the street and wound up buying it from the bank. I renovated it and added 4,000 square feet of retail. It’s retail on the first floor and I have the second leased to the Dunedin Fine Art Center. They have 5,500 square feet for 20 studios for small artists to sublease. There are also two classrooms.”

“It’ll be pretty cool there,” according to Bob Ironsmith, Dunedin’s director of economic development.

Sidebar:

County Manager Bob LaSala on the biggest issues facing Pinellas in 2010

Bob LaSala is in his second tour of duty with Pinellas County Government. The first time around, from1979-89, he served as chief assistant county administrator under Fred Marquis. He spent the next 20 years in a variety of roles around the United States, ultimately returning in 2008 to succeed Marquis as county manager.

The Maddux Business Report asked LaSala what he sees as the biggest issues facing Pinellas in the coming year. This is what he said:

“Number one is learning what the new ‘normal’ will be in this economy. And I don’t think we’ll know at the end of 2010; we’re just seeing the new normal unfold. What’s going to be the role of county government going forward? Our budget is the real story. We did a projection of revenue allocation and we’re not going to be able to sustain current levels of services without an infusion of revenue.

“I think a big issue will be for the community to keep body and soul together in an environment where 50 percent of the property is worth less than what’s owed on it. The level of foreclosures is steep by national—but not Florida—standards. Our projections show assessed values will continue to drop in 2009 and won’t show up till 2010. What does that mean for people?

“Will the commercial real estate market be the other shoe to fall? And if so, what happens then?

“As we look to the future, what does redevelopment mean for a built-out community? Because what it means in St. Petersburg and St. Pete Beach and Oldsmar and Palm Harbor is quite different.

“Preparing for the issue of transit and light rail as Hillsborough County goes forward with its initiative in 2010 is important. What does that foretell for Pinellas County if it passes? And if it doesn’t, that sends a different message.

“Tourism is a bigger piece of the economic engine here than in Hillsborough. Has the industry found its bottom? Is it on the way back? Does it hold flat? And what about the tax that comes from that? We’re also trying to balance quality of life against constraining the cost of government and protecting the viability of our beaches from the offshore drilling issue.

“I don’t think unemployment has peaked yet in Florida. The creation of new jobs is going to be slower here than elsewhere and we’re going to have chronic unemployment for some time. What does that mean for the economic life of Pinellas?

“Pinellas isn’t growing; in fact, it seems to be contracting a bit. It’s not as dramatic as in Rust Belt communities so it’s not high on anybody’s radar screen yet.”

Sidebar: Three Questions for DT Minich

DT Minich took over as executive director of Visit St. Petersburg Clearwater in April 2007. He was previously tourism boss in Lee County.

Q. How concerned are you about talk of offshore drilling near Pinellas beaches?

DT Minich: I’m very concerned. We’re the only county in the state that went through one of these spills—in 1993. If you look at the business drop we went through after 9-11 and these last 12 months, that was nothing compared to what happened to us after that oil spill. The Pinellas County group has been the most vocal in the state against this. Now they say we would be off limits, that the Pinellas Aquatic Preserve would be protected in the bill. But if anything happens north of us, it would still affect our beaches. We’re very opposed to this issue. It’s a shame we have to spend so much time money fighting this.

It’s just too big of a risk. The foundation of the state has always been tourism.

Q. You’ve been hoping to find or develop more meeting space. Any luck?

Minich: The Clearwater Regional Chamber of Commerce hired a consultant firm to do a study on it. They just came out with that and it’s favorable about what we’ve been talking about: a smaller convention center. We don’t want to compete with the Tampa Convention Center.

Florida Huddle will be held in January 2010 and that will be the last event at Harborview Center in downtown Clearwater. It was not built for that; it was converted from a department store. It has columns throughout, no breakout rooms. We rarely used it and there are no hotels.

A big event space opened in Tarpon Springs where they converted the old Louis Pappas Riverside Cafe into The Riverside Venue at Tarpon Springs, a banquet and event space that can accommodate up to 1,000 people. But again, there is no hotel there, either, so it’s used more for social events than meetings.

In December, the Hyatt will open on Clearwater Beach and they’ll have meeting space. They built their space based on the number of rooms they’ve got. But it’s not a big Hyatt and the space was built accordingly.

Q. What is one thing that would help tourism in Pinellas in 2010?

Minich: Probably a little healthier economy and people’s attitudes towards the economy turning. We’re starting to see that. Long term, a more robust meetings market would help. We’ve been fortunate; we’ve seen a drop-off on meetings but not the way destinations that have a Four Seasons have. We felt like stepchildren before because we didn’t have big brands but now it’s working in our favor because people are looking at the Sandpearl, the Hyatt, the Renaissance Vinoy and shying away from the very high-end brands.

We’ll probably attract more limited service hotels in the future. Right now we don’t have anything coming out of the ground. I’m hoping in 2010 for new things to come out of the ground. Our biggest property, Tradewinds, will be doing a major renovation of its guest rooms and that will be like having a new hotel.

Sidebar: Three Questions for Dr. Carl Kuttler

Few people can remember a time when Dr. Carl Kuttler wasn’t the president and guiding light of what was St. Petersburg Junior College, a two-year institution, and is now simply St. Petersburg College and offering four-year college degrees. This past year, Kuttler—who had an influence on global education thanks to his warm, long-standing personal relationship with Russian President Vladimir Putin—decided it was time to move on from the school he built with his own two hands.

Q. Where is St. Petersburg College headed from here?

Dr. Carl Kuttler: We have produced, between our university partner center and our own four-year degrees, 115 degree programs with thousands of graduates. Those have resonated throughout the county. We have 29,000 students online and run the best high school in the county. The nursing school is one of the largest in the South. The College of Education will probably be the biggest in the state in a couple years.

So as the universities ratchet up their tuition with 15 percent compounded increases and continue to raise their standards, it’s making it more difficult to get in. But our future, serving our community, is very bright.

Q. Why did you voluntarily decide it was time to move on?

Kuttler: First of all, I’ve served 43 years. Eight years ago, people asked when I was 62 if I would retire. Now I’m 70. I haven’t said I’ll totally quit. I took SPC through three major phases: two years to four years; then the four-year program this year became state college level. That’s a lot of migration, as well as adding the high school and online education. And it takes a while to pick a president!

The big battles are over. I’m leaving with millions in reserves, good endowments, and healthy scholarship programs. We’re also one of the best-run financial institutions in Florida.

Q. What are you proudest of from your many years at the school’s helm?

Kuttler: I think, certainly, the two- to four-year jump would be one of the big ones. We were not getting, on this peninsula, the degrees we wanted. If you could read the letters from graduates, it’s pretty exciting.

And the University Partnership Center—according to Harvard University, it’s one of the best in the world.

Every time (Putin) comes to this country, we find a way to see each other. That was a unique relationship. When I first went to the old Soviet Union, he was in charge of my visit. We traveled together each day. He later said, in a national address on the 300^thanniversary of his country, that St. Petersburg College helped make him president of Russia. It’s a good argument why international education on college campuses is important; when you travel somewhere, you never know when the person hosting you may become president, so treat him kindly.

Sidebar: Three Questions for Noah Lagos

Noah Lagos may have the toughest job in Pinellas County Government because, as director of St. Petersburg Clearwater International Airport, his success or failure is always in the hands of regional airline executive. Going all the way back to PEOPLExpress, their companies have a habit of rising fast at the local airport and suddenly crashing back to earth.

Q. It’s been a tough year. What gives you hope that the airport will thrive again?

Noah Lagos: Our traffic has been steady for the third year in a row. Allegiant has made us a focus city and continues to grow here. Our numbers are impressive when you consider that USA 3000 left a year ago. But we lost that airline and our traffic is only flat because Allegiant has increased its capacity.

Our numbers through August showed us down three percent year-to-date. I think that’s quite an achievement when you look at other airports seeing double-digit reductions in flight activity.

People like using our airport based on size and convenience and they like Allegiant because of its low cost and that it flies point-to-point.

Q. St. Petersburg Clearwater International has been burned a few times over the last two decades by becoming too reliant on a single air carrier. But what choice do you have?

Lagos: The fact of the matter is that we fish in a small pond. The major carriers are at Tampa International Airport. Small airports struggle with smaller airlines and ride the coattails of those that succeed and suffer with those that come and go. We don’t control the product. In some ways, we operate as a shopping mall: we lease space, but we don’t control the pricing, the destinations and we don’t control the airlines.

Allegiant is very stable. Their stock trades at a higher per share value than any other airline that’s being traded.

In 2004, we did 1.33 million air passengers. ATA went bankrupt and pulled out. They were 65 percent of our traffic; people loved flying on ATA. Southeast went belly-up. As a result, we saw our traffic go as low as 400,000.

Q. Why is St. Petersburg Clearwater International important to the Pinellas economy?

Lagos: There are a couple reasons. We’re a pretty large employer as a whole—there are 1,600 jobs in or through the airport. We have an economy impact of $750 million per year.

We also provide the quickest entrance into Pinellas County for tourism. The cities that Allegiant serves are not duplicated at Tampa International. We bring in tourists that normally wouldn’t come here. And we provide outgoing service to Pinellas residents to cities they want to go.

We also serve counties other than Pinellas. We get a significant number of riders from Hillsborough County and 19 percent from Sarasota and Bradenton. Our driving distance to Disney is about as far to Disney as Orlando-Sanford International Airport—where Allegiant also has a major presence.

Sidebar: College Updates

Eckerd College in St. Petersburg has raised $70 million of its $80 million campaign goal, which includes $30 million for a new molecular and life sciences center and several million more for a new campus arts center.

In late September, the private, liberal arts school—now in its 51^st year—announced the highest fall enrollment numbers in its history with 1,842 full-time equivalent students. These students come from 45 states, 35 countries, the District of Columbia, Puerto Rico, and the Virgin Islands.

• • •

Maling Ebrahimpour is the new dean for the College of Business at USF St. Petersburg. He hails from Rhode Island, where he served as dean of the Gabelli School of Business at Roger Williams University and led the school through a three-year process to achieve its initial accreditation by AACSB International. Ebrahimpour joined the school on August 1.

Construction on the 35,000-square-foot Science and Technology Building at USF St. Petersburg will be complete soon and the university expects to dedicate the, $12 million, 6,500-square-foot building in January.