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As Center for Applied Genomics Faces Eviction, Vendors May Be Left Unpaid

NEW YORK, Jan. 7 (GenomeWeb News) - New Jersey's Public Health Research Institute, which operates the Center for Applied Genomics, owes the University of Medicine and Dentistry of New Jersey $1.3 million in back rent, and is in jeopardy of being evicted, according to the PHRI.

 

As a defense, the PHRI is suing the university for allegedly reneging on contractually binding promises it made since 2002 to help the institute secure funding to pay for its rent and other items, the PHRI said.

 

The development could lead to the dissolution of the PHRI, putting in limbo the work of the 21 scientists that comprise the CAG, as well as their $1 million annual NIH grant dowry. It has also caused PHRI, and by extension the CAG, to default on some of its payments to tool and technology vendors.

 

Lewis Weinstein, president of the PHRI, would not disclose the names of his institute's vendors, but stressed that although the PHRI is "substantially behind, we've been making payments."

 

The CAG "is clearly in jeopardy" of being evicted," Weinstein told GenomeWeb News today. The university "has decided that their intent is to squash [the PHRI], destroy us --- this is a quote; you can quote this --- put us out of existence as an entity, steal the building --- which the state of New Jersey built to lure us --- and you can use that word as well --- and [the university] will pick up whatever pieces are left after the carnage is over.

 

"That, I think, is their current strategy," Weinstein added. "This is crazy. We still have the opportunity for a good, strong, powerful partnership of some kind with the university; the pieces are there if somebody can sit down and try to work this out."

 

Weinstein said the PHRI has already laid off around 12 researchers and administrators who had no NIH funding, and others would likely be released, too. "A lot of our investigators have grants; they can go wherever they want," he said. "Would they choose to go to the medical school and stay here? Some of them might. Others would go other places.

 

"That's probably what [the school] was hoping, that, in the end, people are here and it's complicated to move," Weinstein said. "Maybe they'll stay. I don't think our faculty wants to do that, but I don't think in the long term many of them would do that. But they might."

 

A judge is scheduled to hear the case on Tuesday. Officials for the Universityof Medicineand Dentistry of New Jersey did not return a telephone call seeking comment.

 

Two-Year Row

 

The row began in 2002 when the university invited the PHRI to join the Center for Public Health in Newark, where it would work with local hospitals, drug makers, insurance companies, and the state health department to study antibiotic-resistant nosocomial infections. The center cost $64 million to build, $18 million of which came from state and local taxes.

 

When considering the move to Newark from New York City, where the PHRI had been based since it was founded more than 60 years ago, the institute told the university that it "needed significant working capital" to pay for the move, the rent, add staff, and buy equipment, Weinstein said. The school, he said, agreed in its lease to help PHRI raise the money, which Weinstein said was $20 million spread over 10 years.

 

As part of this agreement, PHRI negotiated to buy for $13 million the rights to its share of the Newarkfacility, which is based in the University HeightsSciencePark. Weinstein said the actual value of the share is $38 million, which he negotiated down. The institute occupies around half of the building, or 105,000 square feet, and employs 138 scientists and administers. The CAG, by comparison, occupies around 1,500 square feet.

 

To pay for the share, PHRI needed to apply for a loan against its true value. But the school "refused" to "execute condominium rights," which would have enabled PHRI to secure the loan --- also a contractual condition set in PHRI's lease agreement, Weinstein said.

 

For the next two years, the PHRI and the university tried to settle the deal, but last month, Weinstein threatened to sue the university for breach of contract. At that time, Weinstein said, he suggested to the university another solution: to sell to the school PHRI's rights to buy its own share of the building, which would give the institute the working capital it needed to pay the back rent.

 

The university turned down the offer, but said that it would instead pay the PHRI between $10 million and $12 million in exchange for processing its grants through the school, which would improve its NIH grant ranking, Weinstein said. The PHRI agreed to this, but, according to Weinstein, the university dragged its feet and eventually said it was no longer interested in the grants.

 

"Six or seven months of delay, all the while [the university knew] ... that we're using up our money, and we're really running out of money," said Weinstein. "We're not paying vendors; it's awful."

 

Soon after, the school told Weinstein that it is ready to pay the PHRI $5 million for its share of the building, and threatened to evict the institute if it doesn't accept the offer, Weinstein said. "After we accepted it, [the university] reneged," leading the PHRI to file the lawsuit, he said. Around that time, the school sent the PHRI its default notice.

 

Weinstein said the PHRI continues to pay most of its bills because it gets revenue from the NIH and "other sources."

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