The deal is dead.

Deciphera Pharmaceuticals has nixed plans to expand at the East Hills Business Park following community outcry over how the city approved a package of economic development incentives for the startup company.

“We screwed up,” County Commissioner Charles Jones said. “I think this should tell us that we have a lot to learn and a lot to do better.”

In a letter to Lawrence, Douglas County and Chamber of Commerce leaders, Deciphera executives said the controversy surrounding the deal had caused the company to reconsider its Lawrence plans.

“In light of recent community discussion regarding the appropriate use and timing of public incentives, we feel it is in the best interest of both Deciphera and the Lawrence community to postpone any investment in public incentives in Deciphera at this time,” Deciphera attorney Mark Andersen wrote.

City and chamber leaders said the company’s decision was a disappointment. The company – which is working to develop drugs to fight cancer – had aspirations to add about 150 employees over the next 10 years, with many of the positions being paid $70,000 or more per year.

“These are the kind of jobs that every community is going after,” chamber President Lavern Squier said.

Yet in the end, Lawrence leaders weren’t able to seal the deal. The project began to fall apart after criticism grew about a unique tax rebate program that had been offered to the company but was never publicly discussed by the City Commission. Instead, commissioners were briefed about it in a closed-door executive session, which was later determined to have violated the state’s open meetings law.

One city commissioner said Thursday that the deal’s collapse should serve as a call to action for the community to get its economic development house in order.

“We need to lead the community out of the situation we’re in,” City Commissioner Rob Chestnut said. “We have a political climate that is not conducive to economic development. It presents an unfavorable image to people outside the community as well.”

Chestnut and other commissioners have said the City Commission erred in the process it used for approving the deal. But Chestnut said that the outcry surrounding this project cuts deeper than process issues. The city has lost previous economic development deals – most notably a warehouse for American Eagle Outfitters in the 1990s – after public controversy arose over tax abatements.

“I don’t think there has been a true consensus about how we use economic development incentives in this town for a long, long time,” Chestnut said. “There’s enough blame to spread around to a lot of different areas on this deal, but I don’t think you can say it was all about process.”

County Commissioner Jones said any future discussion needs to involve ways to measure the cost and benefit of economic development incentives, and also work to ensure the public that commissioners are working in the best interest of the community, which he thinks has happened but hasn’t always been clear.

“I’m afraid the real losers in this whole process has been the public who wants to believe in government, and people who need a good job,” Jones said.

City commissioners have scheduled a study session for Jan. 14 to discuss the future use of economic development incentives.

Holding out hope

Several community leaders still were holding out hope that Deciphera would still choose to expand in Lawrence. The company said it renewed its lease for laboratory space near Bob Billings Parkway and Wakarusa Drive. But people familiar with the deal said the lease is only for the next 18 months.

Company officials declined to comment for this story. But in the letter to community leaders, Deciphera said it was not ruling out seeking a future deal from the community.

“It is our sincere hope that the decision by Deciphera to not accept public incentives at this time will not foreclose the possibility of renewed discussions,” Andersen wrote.

But it is known that the company had received offers from multiple Johnson County communities to move the company from Lawrence. Some of the company’s larger investors also are from the Kansas City area.

City leaders, though, said they’ll keep the lines of communication open with the company.

“I think we need to stay ready,” City Commissioner Mike Amyx said. “I wholeheartedly support working with Deciphera in the future.”

Deciphera was able to pull out of the deal without suffering any penalties because the deal had never been finalized, despite the votes of approval by the City Commission and County Commission. The agreement that the city and county approved required Deciphera to take certain steps before the deal would be finalized. One step was applying for a building permit to remodel the vacant building at East Hills Business Park. That never happened. The real estate deal between Deciphera and Douglas County Development Inc. also was never consummated, and Deciphera had not received any of the public money that was part of the incentive package.

But Deciphera’s announcement doesn’t put an end to the controversy surrounding the deal. The Kansas Attorney General’s office is still investigating allegations that Mayor Sue Hack and County Commissioner Bob Johnson improperly participated in the making of the Deciphera deal. Both Johnson and Hack have ownership interests in the company exceeding $5,000.

Hack declined to comment for this story, and attempts to reach Johnson were not successful.