STEM CELL BID BUNGLED L.A.'S LAST-MINUTE OFFER TO HOST INSTITUTE RULED INCOMPLETE.

Byline: Harrison Sheppard and Brent Hopkins Staff Writers

SACRAMENTO - In a blow to the city's prestige and economy, Los Angeles' last-minute bid to become home to the state's new $3 billion stem cell research agency failed to meet two minimum requirements Tuesday as four other cities made the short list of finalists.

San Francisco, San Diego, Emeryville and Sacramento were selected by the staff of the site-search committee for the location of the new California Institute for Regenerative Medicine, which will award grants and oversee the state's unique stem cell research program approved by voters last year. The committee will take up the recommendation today.

Bid evaluators said Los Angeles failed to meet at least two minimum requirements: Failing to propose a site with office space on a maximum of two floors with an internal stairway connecting them and full handicapped-access compliance, and failing to submit an irrevocable offer with the bid.

``The bid was supposed to be complete when it was turned in,'' said Walter Barnes, acting chief administrative officer of the institute. ``The fact they did not provide anything on these minimum requirements is all (the chance) they get.''

Mayor James Hahn put together Los Angeles' bid with his political ally, billionaire Eli Broad, and submitted it just hours before the deadline last month. The bid included the free use of 17,000 square feet of office space at City National Plaza - formerly Arco Plaza - as well as occasional free use of a corporate jet, $1 million in foundation grant funds and free access to the Los Angeles Convention Center.

In addition to Los Angeles, the institute disqualified Long Beach and four other bidders for failure to meet minimum requirements.

The city's failure to even make the list of finalists for a project that could bring prestige and expanded investment in biotechnology to Los Angeles prompted sharp criticism from the business community and from Hahn's challenger in the May 17 mayoral runoff election, Councilman Antonio Villaraigosa.

Jack Kyser, chief economist of the Los Angeles County Economic Development Corp., called the failure a blow to Los Angeles' efforts to promote itself as a biomedicine rival to the Bay Area.

``There would have been a tremendous amount of prestige, but also it would have made people recognize that L.A. is a player in biomedicine,'' Kyser said. ``We have a huge base, but we don't have the recognition. It's the Bay Area, it's Orange County, it's San Diego that are the players in biomed. Yet you have so much research being done around the (L.A.) area.''

Late planning

While some other cities also submitted bids on the last day, March 16, Kyser said Los Angeles started planning late and needed to have worked more quickly to put together its package.

``They probably should have gotten it in sooner,'' Kyser said. ``You can't just make a last-minute pursuit. Sense the opportunity, determine who the competition might be and what they might be offering and then make your bid.''

Villaraigosa accused the mayor of botching the city's bid.

``This is yet another failure by Jim Hahn and his administration,'' Villaraigosa's campaign manager, Ace Smith, said in a written statement. ``Because of Hahn's blunder, Los Angeles is now out of the running for this very important award and lost an opportunity to be a leader in stem cell research.''

Hahn spokeswoman Shannon Murphy said the mayor was disappointed in the decision but believes it revolved around costs as much as any other factor - a statement that was challenged by Barnes, head of the institute.

``The value of real estate and a four-year lease in Los Angeles is probably worth what a 10-year lease in Sacramento would be,'' Murphy said. ``And the fact is, Los Angeles will not be left out of the work on this. Los Angeles has produced more than 150 spinoff companies in the area of biotechnology. Los Angeles is the incubator for this industry in the country. We believe Los Angeles will not be left behind in this research.''

In fact, the top-ranking bidder was San Francisco, where the cost of living is at least as high as Los Angeles. That city received 158 out of a possible 200 points, followed by Sacramento with 133 points, San Diego with 116 points and Emeryville, where the CIRM's temporary headquarters are now located, at 113 points.

The direct economic blow is minimal, as the headquarters will only have about 50 administrative employees, plus provide ancillary economic benefits to firms that would service the agency, such as accountants, lawyers and public affairs companies.

But cities from throughout the state were eager to claim the new center as their home, hoping to boost their biomedical industries. Several cities put together aggressive incentive packages with free office space and other perks. The center itself will be an administrative agency, not a research facility. It will issue grants to companies throughout the state to conduct stem cell research.

The bulk of the economic benefit from the stem cell bond will come in the form of grants awarded by the agency, Kyser said, and Los Angeles companies should still have good opportunities to apply for those funds.

But having the agency in Southern California might have given those companies a hometown edge, he said, as well as attracting more companies to the region and making the general public aware that there is a significant biomed presence in Southern California.

Firms and research institutions in the biomedical field employ about 25,000 people in Los Angeles County and 185,000 statewide, Kyser said. By comparison, similar employment in San Francisco County is only 5,300 and 14,800 in neighboring San Mateo County.

Eager to cash in on stem cell bond funds, local universities have been beefing up their facilities to handle the research.

USC, UCLA projects

In February, the University of Southern California announced plans to anchor a 100-acre biotech park surrounded by a 1,207-acre redevelopment zone under city and county authority.

A month later, UCLA announced the creation of the Institute of Stem Cell Biology and Medicine. Judith Gasson, the institute's co-director, said the city's failure to win the headquarters bid would not hamper UCLA's research efforts.

``It would have been great for Los Angeles, but I think the impact will be very minor,'' Gasson said. ``I think the most important thing will be the actual research. That'll be conducted throughout California at academic institutions, including UCLA, regardless of where the headquarters is.''

Business groups and the Mayor's Office began collaborating on the proposal six weeks ago, banging out the offer in 30 days.

Bruce Ackerman, president and chief executive officer of the Economic Alliance of the San Fernando Valley, who helped craft the offer, said the group knew it was a long shot but still believes it was competitive.

``That's not good news - left out and left behind once again,'' he sighed. ``We had a really decent proposal, complete with a landlord willing to throw in some space.''

He dismissed accusations that the group had bungled the offer, saying Los Angeles lacked the tight business-university cluster found in San Diego and the Bay Area.

``As one of the people involved in it, I don't think we screwed up.''

Staff Writers Rick Orlov and Gregory J. Wilcox contributed to this report.

Harrison Sheppard, [phone]

harrison.sheppard(at)dailynews.com