Stem Cell HQ Won’t Be in L.A.

Los Angeles failed to make the short list of cities vying to land California’s $3-billion stem cell institute Tuesday, after state officials said the city did not complete the proper paperwork.

A month ago, Mayor James K. Hahn unveiled the city’s bid with a flourish outside a downtown skyscraper, where 17,000 square feet of free office space was being offered.

The California Institute of Regenerative Medicine, he said, should be in the city because “no other city embodies the future quite like Los Angeles.”

But Tuesday, state officials recommended that Los Angeles be dropped from the competition. While the city’s bid included extras such as access to a private jet and $1 million in foundation grants, Hahn’s proposal did not satisfy basic requirements, the state officials said. The missing items they cited were an irrevocable lease offer and proof that the office space being offered was on no more than two floors.

Hahn said Tuesday that he was “disappointed” that the city was not on the short list but believed that the bid did meet state requirements. “In terms of value, we think our package matched up with the others,” Hahn said.

Shannon Murphy, Hahn’s spokeswoman, said city officials had been in contact with the state’s Department of Governmental Services, which oversaw the bids, and had tried unsuccessfully to clear up the points in contention.

In particular, she said city officials had complied with the requirement for an irrevocable lease offer. A City Council resolution that was passed prior to the bid should have been enough, she said.

“We provided clarifying information to the state, and it’s unfortunate that the state doesn’t see it our way,” she said.

Matt Bender, spokesman for the Department of Governmental Services, said in response: “The staff report speaks for itself.”

The cities on the short list of finalists, ranked on a point system, are San Francisco, Sacramento, San Diego and Emeryville. Representatives from those cities said Tuesday that complying with all minimum requirements had been a high concern.

Hahn’s opposition in the race for mayor was quick to provide its own interpretation of the city’s failure to make the cut: “For goodness sake, Los Angeles got beat by Emeryville,” said Ace Smith, campaign manager for Councilman Antonio Villaraigosa.

“This is the second largest city in the country,” Smith said. “You don’t fill out an application wrong.”

Villaraigosa had previously criticized Hahn’s effort as “playing catch-up,” noting in a statement when the mayor announced terms of the bid that other cities had worked aggressively for months on plans.

Los Angeles was one of six bidders that submitted incomplete applications.

The bids were sealed under state policy after the March 16 deadline. Still, state and agency officials said it was possible that members of the stem cell agency board could revive a bid that had been dropped from the list, but only if an application could be proven complete as submitted.

Other cities went to considerable lengths to avoid technical problems with their bids. San Diego, for example, hired an outside consulting firm to try to ensure there were no mistakes.

Bob Burris, deputy director of the Sacramento Area Commerce and Trade Organization, said local officials there had been “very much aware of the technical nature of the proposal process with the state, and we went out of our way to really dot every ‘i.’ ”

A site search subcommittee made up of eight members of the stem cell agency board will meet today to discuss the recommendations. The full 29-member board is scheduled to vote on a permanent headquarters early next month.

The effort to lure the agency has proved highly competitive. Cities that submitted proposals worked with local business leaders and politicians to draw up attractive offers, several of which went way beyond the ambitious hopes of agency officials for a decade of free rent.

San Diego has offered a building across from the ocean and just off the greens of Torrey Pines. San Francisco offered office space near Mission Bay and the promise of a museum exhibit dedicated to stem cell research.

In addition, thousands of free or discounted hotel rooms have been promised in the priciest tourist towns.

The bids reflect both the desire for civic bragging rights and a belief that attracting the stem cell agency would be a magnet for biotech companies.

The heavy competition has been a bright spot for the new state agency, which still faces many hurdles -- including several pending lawsuits -- before bonds can be sold and grants distributed.

Bob Klein, chairman of the stem cell agency board, on Tuesday called the proposals “unparalleled” in “the level of creativity, cooperation and ingenuity.”

For cities firmly in the running, Tuesday brought renewed determination to come out as the winner.

Burris cast Sacramento as the finalist with the most affordable cost of living -- which he said over the long term would allow the agency to dedicate as much money as possible to science and help with recruiting staff. Locating in the state Capitol, he said, makes sense for a publicly funded initiative.

In San Francisco, Peter Ragone, a spokesman for Mayor Gavin Newsom, said he thought the city had an edge because it was the only one to offer laboratory space as an incentive.

“That means scientists would be able to perform research at those state-of-the-art laboratories without fear of the Bush administration cutting off research dollars to their institution,” Ragone said, referring to a White House policy that restricts federal money for embryonic stem cell research.

Joe Panetta, who heads Biocom, San Diego’s biotechnology trade group, said the city’s offer would emerge as a stronger contender once board members make site visits.

San Diego boosters had put together a proposal with an eye toward standing out, he said, noting that Northern California locations have been viewed as heavy favorites because the agency’s chairman, vice-chairman and interim president all live in the Bay Area.

“It’s like the NCAA,” said Panetta. “Once you get to the Final Four it’s a fresh start.”

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Times staff writer Jessica Garrison contributed to this report.