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UPDATED: Group’s plan to attract businesses to region awaiting state support

By Lee Howard

Publication: The Day

Published December 09. 2012 4:00AM   Updated December 10. 2012 12:09PM

Groton - While the state works to find a use for several empty buildings at Pfizer Inc.'s sprawling campus off Eastern Point Road, a local group with an eye toward saving laboratory space from the wrecking ball has been gathering its own ideas.

But the group, which calls itself Catalyze, so far has gained little momentum for what its principals see as an urgent need to preserve a potential economic driver in eastern Connecticut.

Formed by Old Lyme attorney Eric Foster, Groton investor George Mathanool and Town Councilor Robert Frink, Catalyze is conceived as a for-profit organization that focuses on mature science, technology and defense-related companies. The purpose is to bring jobs to the region and leave it less reliant on employment heavyweights such as the Naval Submarine Base, Electric Boat and Pfizer.

Its members have been meeting for months with local and state officials in an effort to find a solution to the local brain drain that seemed imminent after Pfizer announced last year its intention to lay off 1,100 people and move drug-discovery work to Massachusetts. A movement to save at least four Pfizer structures, including the massive former R&D headquarters known as Building 118, became more urgent in recent weeks after Pfizer announced its intention to take out a demolition permit and perhaps make a final decision this month on whether to start the demolition process.

"We really need to be marketing this space to foreign multinational or pharmaceutical or other companies that are looking to expand or are looking for opportunities in the United States," said Foster, an attorney who regularly advises businesses seeking help from the state Department of Economic and Community Development.

While the state has been focusing on start-up and mid-stage companies at the University of Connecticut's business incubation facilities at Avery Point, Catalyze is hoping to attract established firms to the Pfizer campus from overseas and out of state that are looking for a presence in the lucrative market between New York and Boston.

Catalyze leader George Mathanool, a member of the city Economic Development Commission who is managing partner of Vumont Ventures, said he is looking for money from the state so his group could buy one or more of the Pfizer buildings and begin negotiating with international firms to locate here. The state's backing is critical to Catalyze having the "gravitas" to attract the attention of both Pfizer and firms that would be housed on the pharmaceutical giant's research-and-development campus, he said.

Catherine Smith, commissioner of the DECD, said in a phone interview that she welcomes ideas from the community and has met with Catalyze organizers. But she said the state can get involved in financing projects only after likely users of the Pfizer space are found.

"It's Pfizer's deal, not ours," Smith said.

Several insiders, including Tony Sheridan, president of the Chamber of Commerce of Eastern Connecticut, said the Catalyze program consists of some interesting pieces but no overarching plan for how to put them together.

"It's possibly a good idea, but I don't think it looked like a business plan," added Jean Schaefer, a former Pfizer scientist who consults startup companies and has been involved in local economic-development issues as head of the Southeastern Connecticut Entrepreneurs and Supporters.

Enough skin in the game?

Some officials also have questioned whether Catalyze members need to raise money or invest some of their own funds to demonstrate they have enough "skin in the game" to follow through on their ideas.

State Sen. Andrew Maynard, D-Stonington, added that he is not convinced the Pfizer buildings are terribly attractive to international and out-of-state firms. The buildings are not state-of-the-art laboratories, he pointed out, and could be easily replicated in a variety of locations throughout the United States, since many large pharmaceutical companies have been cutting back on their operations.

Jim O'Malley, a former Pfizer scientist who now runs the biotech firm Myometrics in New London, took Maynard's idea a step further, saying the best thing to do would be to let the company tear down the buildings and use the land for high-end residential lots. He insisted New London is a better site for biotech firms in any case.

Mathanool, a former international banking representative and information-security executive, said Catalyze's concept is similar to one implemented successfully in Ann Arbor, Mich., after Pfizer announced the closure of a massive former Warner Lambert research facility and relocated many of the scientists to southeastern Connecticut.

The idea would be to repurpose Pfizer buildings in Groton, just as the University of Michigan ended up reusing the company's Ann Arbor campus for research needs, he said.

Mathanool said Catalyze's plans are somewhat loose precisely because he doesn't yet have the backing of the state. Once his group gets the green light to begin negotiating with Pfizer and other groups, he said, the plan will come into clearer focus. "Pfizer can't hear from 10 to 15 people, which is what has been happening lately," he added.

Mathanool said he believes Pfizer might be willing to sell the buildings for the cost of demolition, or it might donate the structures to help create good will. While the state is investing well over $1 billion to create new labs at Storrs and Farmington, he said, the facilities in Groton could be had for much less, perhaps for free.

"If we don't do anything to cut the bleeding at Pfizer soon, it will cost us $400 million a year in taxes," Mathanool said, estimating how much the state would lose if Pfizer left Groton entirely, as it did in Ann Arbor and elsewhere.

Among Mathanool's ideas is to leverage EB's presence in southeastern Connecticut and try to boost defense-related businesses employing former veterans. Mathanool said he already has called up several large U.S. companies, and none was aware that the Pfizer buildings were available at a key location halfway between Boston and New York.

"The governor has to give us the mandate," Mathanool said. "Without getting the mandate, we can't even get behind the back channels of Pfizer to say we have a deal."

'You have to have a vision'

Mathanool predicted it would take two to three years to fill the property with tenants and said he would raise funds to back the project if he got the state's approval to move forward. He expected that Pfizer, along with various state agencies, would be stakeholders in the process.

"It's a very big idea," Mathanool said. "As entrepreneurs, you have to have a vision."

Some officials said the expense of taking on 1 million square feet of office and laboratory space might be too much during a time when the state faces a budget deficit of at least $350 million. But Smith, the DECD commissioner, said Gov. Dannel P. Malloy is willing to spend money "if the right taker" can be found for the Pfizer buildings - one that, like Jackson Laboratories in Farmington, would "move the needle" in jump-starting the Connecticut economy.

Smith said the state is working hard to help Pfizer find a tenant or buyer for the buildings. She said there has been a lot of activity swirling around the site, though she would not discuss some of the possible uses of the buildings, which include an idea to create a contract research organization "mall" that would allow R&D-based companies such as Pfizer to utilize the services of a variety of smaller firms to conduct research.

"I absolutely believe there's a possibility we can see some of those buildings put to use over time," Smith said.

Most of the interest has revolved around the smaller buildings, Chamber president Sheridan said. Others were doubtful Building 118 could be saved from demolition.

Pfizer said last week that it still hasn't made a final decision on the fate of 118 and it has no particular timeline for marketing or demolishing the other buildings, including 114, 286 and 288.

Boosting economic development

Smith said the DECD is very interested in boosting economic development in southeastern Connecticut, which is why the Storrs-based Eastern Connecticut Innovation Corridor, one of the state's four newly branded economic hubs, has a presence at the University of Connecticut at Avery Point.

While she admitted that all of Malloy's "First Five" initiatives to boost statewide employment have been scattered in the Stamford-New Haven-Farmington triangle, Smith said companies make their own decisions on a location. The state is more interested in attracting clusters of companies revolving around life sciences, advanced manufacturing, finance, insurance, green technologies and digital advances than in developing a geographic mix, she said.

"We are not trying to exclude or write off any particular area," she added.

Smith noted that a variety of businesses in eastern Connecticut have benefited from the governor's Small Business Express loan and grant program, as well as other initiatives.

Smith said DECD has been working side by side with UConn to try to get economic development moving in southeastern Connecticut. Storrs won a competition to become the fulcrum of eastern Connecticut's development efforts because no one had arisen as a natural leader to coordinate economic plans in the region, she added.

The local Chamber at one point did a survey of business leaders to determine whether enough local firms were interested in the Pfizer property to populate the buildings. But Catalyze co-founder Foster said there simply isn't enough demand locally to fill the space.

"Our idea is to create companies from overseas to penetrate the Northeast - make this as the landing point for the Northeast," Mathanool, the Catalyze leader, said. "Is the state backing this up? ... None of these things can crystalize without the governor's green light."

l.howard@theday.com

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