A $75 million Jupiter medical complex sits empty. Why?

Aug. 31--The Institute for Healthy Living in Jupiter is a curiosity to residents who drive by and wonder why the cheerful, pastel-painted buildings along Central Boulevard is a ghost town.

Here's why the Institute is empty: The owner of the $75 million senior housing, rehabilitation and research complex says it doesn't have research agreements required by the town of Jupiter for it to open.

That's because both the Scripps Research Institute andJupiter Medical Center have cut ties to the Institute, said the Institute's owner, ARHC NVJUPFL01 LLC, an affiliate of AR-Global of New York.

Will the Institute become a biotech boondoggle?

ARHC hopes not.

It's asked the town of Jupiter to help it out of its troubles by allowing it to kill the research requirement so it can open, even though research was a key condition of approval when the Institute was proposed eight years ago.

In a June 11 filing with the town, ARHC blamed the Institute's developer, Palm Health Partners, for the Institute's construction delays, cost overruns and failure to secure agreements with research and medical partners. Palm Health is owned by former nursing home magnate Elizabeth Fago, her son, Paul Walczak and Dean Tendrich, son of the late Steven Tendrich, a real estate developer.

"The agreements mandated ... do not currently exist and there is no way to guarantee they ever will be obtained," ARHC wrote in its June filing.

ARHC's request to eliminate Institute research might not sail through Jupiter town hall.

"Unacceptable," said Jim Kuretski, a longtime Jupiter council member.

The land on which the Institute was built was set aside for the life sciences, said Kuretski, who voted on the Institute's 2010 approval: "That project never would have been approved if it were not for the research element."

The Institute, on the east side of Central Boulevard just north of Donald Ross Road, is across from Scripps, whose silver spire can be seen from inside the Institute.

Back in 2010, Kuretski said council members were intent on creating a public benefit from the fruits of the Institute's research. With no research requirement, the public benefit is gutted, he said.

Jupiter Mayor Todd Wodraska was more circumspect. "I'm looking forward to hearing what the new plan is," he said.

According to the town's 2010 requirements, the Institute is required to submit agreements with clinical research groups that would use 5,000 square feet of research space; medical providers that would use 17,000 square feet of space; plus a collaboration agreement with at least one college or university.

The agreements are supposed to stretch for 20 years, at least.

In a June 11 submission to the town of Jupiter, ARHC asked to be excused from the research and medical agreements, plus all the space designated for research. It also asked to strike requirements for medical equipment for a dialysis center, metabolic clinic and hyperbaric chamber.

ARHC said it's not sure the medical equipment is needed by the community anymore.

As for ditching the research space, ARHC said there's no difference between medical space and a research center.

Todd Jensen, chief investment officer of AR-Global, said he's hopeful something can be worked out. "We're in discussions with the town about the best way to move forward," Jensen said.

For instance, Jensen said there have been talks with Jupiter Medical. But Jensen acknowledged no medical or research affiliations have been nailed down yet.

A Jupiter Medical Center spokeswoman said the center would not comment.

The Institute is the brainchild of Palm Beach Gardens-based NuVista Living, led by Fago, a former nursing-home magnate, her son, Walczak, and investors.

They also operate NuVista Living in WellingtonGreen, an assisted living and rehab center. The Wellington facility was the subject of a May 26 article by the Palm Beach Post that detailed frequent late, bounced or held paychecks to employees, problems confirmed in a daylong interview with Fago and Walczak.

A payroll company owned by Fago and Walczak also owes more than $10 million in unpaid payroll taxes to the Internal Revenue Service going back to 2014, according to IRS liens filed with the Palm Beach County clerk's office.

In April, Walczak said a refinance was in the works that would provide NuVista with more than $200 million in fresh capital and eliminate its cash flow problems. Walczak could not be reached for comment.

Fago was an early backer of La Jolla, California-based Scripps' expansion to Palm Beach County, a blockbuster deal revealed in 2003.

The state and Palm Beach County gave Scripps a combined $579 million in taxpayer money to build and finance the Jupiter research center.

The Scripps facility in Jupiter was completed in February 2009. That same year, the Institute for Healthy Living was proposed on land next to Scripps.

Then-Gov. Jeb Bush had wanted land near Scripps reserved for spinoffs and other biotech companies, in a bid to create critical mass for medical advances and economic growth.

Although a senior living home and rehab center doesn't fit the biotech bill, Jupiter town officials were wowed with promises of collaboration with Scripps Research.

Scripps' officials were among the Institute's cheerleaders: Former Scripps vice president Harry Orf attended a 2010 council meeting and said the Institute fit into the development of a biotech cluster.

And a 2010 White Paper authored by Scripps scientist Roy Smith extolled the Institute's close proximity to Scripps, "which will help us to recruit physician scientists" who want to have access to patients for research.

The Jupiter town council approved the Institute in 2010.

Four years later, the council reapproved the project when the Institute failed to start construction on time.

The council added a couple of extra conditions: Agreements with medical and research partners, and benefits promised by the Scripps White Paper, had to be delivered to the town before the Institute could receive its certificate of occupancy to open.

In 2015, the Institute's development company sold the property to ARHC for $10 million, according to the Palm Beach County Property Appraiser. But Palm Health Partners agreed to oversee completion of the 235,445-square-foot facility.

Although years behind schedule, the Institute is nearly complete.

It features a 129-bed skilled nursing rehab center, a 62-bed assisted living facility and a 30-bed center for people with brain disorders. It also has unbuilt space set aside for clinical research.

As recently as April, both Fago and Walczak assured that the Institute would open, probably by July, and employ 500 people.

But the next month, ARHC, a successor company to American Capital, and Palm Health Partners had a falling out.

In a May 4 letter, Palm Health and NuVista lawyer Carmin Grandinetti informed ARHC it was stopping its work to complete the Institute.

Around that time, relations between the Institute and Scripps and Jupiter Medical worsened, too.

On May 3, Jupiter Medical Center's associate general counsel Liz Lorie sent NuVista a cease-and-desist letter, reminding NuVista that Jupiter Medical had cut ties with the Institute back in February.

Lorie warned NuVista to stop referring to Jupiter Medical either orally or in writing, and to remove a website that featured Jupiter Medical's logos. "We want to be sure that NuVista is not misleading the public to believe that JMC is in any way involved with NuVista or any of the NuVista projects," Lorie wrote.

Scripps, too, privately had taken a hard line against the Institute.

On May 8, Demetri Andrikos, an attorney at Scripps' La Jolla campus, notified Walczak in a letter that the Institute had failed to comply with an agreement that required a certificate of occupancy. Scripps demanded the CO within 30 days of the letter or it would terminate its affiliation.

Publicly, Scripps still is trying to put on a happy face.

"Scripps Research will support any outcome of the process, and we hope it will be one that improves health care options for the community and results in opportunities for our scientists," said Douglas Bingham, executive vice president of Scripps Research.

ARHC included the Scripps and Jupiter letters in its filing with the town of Jupiter as evidence it needs to wiggle out of the research requirement.

The matter is expected to come before the Jupiter town council in October.

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