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USC Seeks Another $13.3 Million for Innovista

Plans by the University of South Carolina to move forward on a $26.8 million “upfit” for a building in USC’s star-crossed Innovista research campus have been delayed.

The state Joint Bond Review Committee last week carried over a request by the university to approve the issuance of $13.4 million in general obligation bonds to build out the first and fourth floors of the Horizon I structure, at the corner of Columbia’s Blossom and Main streets.

A private matching gift and a federal grant are listed in state records as sources for the other $13.4 million.

Had the request been OK’d by the committee, it would have moved on to the Budget and Control Board, the last step needed before the school could move forward on the project, according to an official with the Joint Bond Review Committee.

During the April 26 meeting, committee Chairman Sen. Hugh Leatherman, R-Florence, said he was going to carry over the request because some House members had concerns with the proposal.

He then asked fellow committee member Rep. Brian White, R-Anderson, if that was so and White agreed.

Neither White nor Leatherman, who chair the Legislature’s two appropriations committees, returned calls from The Nerve for this story.

Officials with USC also could not be reached. The Nerve attempted to reach Innovista Director Don Herriott, but was referred to Helen Zeigler, a USC vice president. Efforts to reach Zeigler this week were unsuccessful.

George Dorn, director of research for the Joint Bond Review Committee, said it was his understanding that the issue centered on a matching grant from IBM.

“I believe there were some individuals who wanted further clarification on the matching grant, as there was a lack of understanding as to what all the ramifications would be,” he said.

USC is seeking $13.3 million in state funds for Horizon I, money which would be matched by a gift from IBM of nearly $12.8 million in the form of computer software and other equipment, and a $657,704 Air Force grant.

Rep. Gilda Cobb-Hunter, D-Orangeburg and a member of the Joint Bond Review Committee, said it was her understanding that the original plans called for the Horizon I building to be completed in February 2008. It’s now-scheduled completion date of June 2014 has given some lawmakers heartburn, she said.

“This project has been around for a long time, and I think the issue was that we just wanted to make sure that this was it as far as the project was concerned,” she said.

Under the proposal, about 47,000 square feet of space in the Horizon I building would be upfitted to provide laboratory space, support areas and offices to house various operations, according to Joint Bond Review Committee documents.

These would include a USC aerospace program, along with the Hydrogen Economy SmartState Center of Economic Excellence, the Renewable Fuel Cells SmartState Center of Economic Excellence, and two nuclear science SmartState Centers of Economic Excellence.

The SmartState program, which already occupies a sizable portion of the Horizon I building, certified the latest upfit project in late February, with SmartState Review Board Chairman Regan Voit signing off on it, according to committee documents.

The SmartState program was established in 2002 and is funded through state lottery proceeds.

The SmartState Centers of Excellence, also known as the endowed chairs program, uses state lottery money and non-state matches to pay for high-priced professors and research centers at the state’s three public research universities – USC, Clemson University and the Medical University of South Carolina.

SmartState provides grants of $2 million to $5 million to each qualifying center, with the idea of attracting new businesses to South Carolina through research in such fields as science and medicine, according to program literature.

More than $110 Million in Tax Dollars

A quick jaunt through Horizon I shows that while the fourth floor of the structure is essentially an unfinished shell, the ground floor is nearly complete, with several offices occupied, including one by Jochen Lauterbach, who heads the Endowed Chair for Strategic Environmental Approaches to Electricity Production from Coal.

As such, it would seem that the lion’s share of the $26.8 million for the project would go targeted toward fitting out the fourth floor of Horizon I.

The second and third floors are completed and occupied.

Innovista has generated its share of controversy over the past few years. More than $110 million in tax dollars has been spent on three buildings: Horizon I, Discovery I and the Arnold School of Public Health – and two parking garages, plus upgrade an energy plant supporting those buildings, according to USC documents. Yet work remains to be done.

The original Innovista plan also included two privately funded buildings, which were to be called Horizon II and Discovery II, to house high-tech firms that would market products tied to work done by USC researchers.

But neither financing nor tenants have panned out for the privately financed structures.

In addition, John Parks, its former director, resigned in 2010 after the (Columbia) Free Times reported that the second private developer, Kale Roscoe, who worked with Parks at the University of Kentucky, had served about a year in prison for federal tax evasion and was a defendant in dozens of lawsuits.

Original estimates projected that Innovista’s buildings would result in the creation or support of more than 6,500 jobs and an annual financial impact of $232 million.

In addition, it was touted that Innovista eventually would encompass 5 million square feet of research labs, office space, mixed-use retail and housing.

Yet, despite the difficulties, officials have continued to heave tax dollars at the project.

Last year, USC’s board of trustees approved $15.5 million to complete the Discovery I building, with the money being skimmed off the top of federal research grants.

At that point, much of Discovery I had been empty since exterior construction was completed in 2008 because USC lacked funds to complete the job.

Also last year, the Joint Bond Review Committee approved $4.1 million to upfit the first floor of Horizon I.

That project included building a “wet-lab incubation facility” with 4,500 square feet of space, 1,700 square feet of office space and 1,200 square feet of conference space, according to university documents.

Quest for More Public Money

Other funding sources are being pondered for further construction, as well.

In 2010, Columbia City Council created special tax districts for Innovista and North Columbia.

Called tax increment financing, a TIF captures property tax revenue within a specified area. Local governments then take that money and put it back into infrastructure and public projects in that area.

At that time, the Innovista TIF was projected to collect $154 million over 25 years. The money would be used to fund several specific projects in the Innovista campus, including a $51 million waterfront park along the Congaree River.

The TIFs have not generated money for either Innovista or North Columbia because Richland County and Richland School District 1 immediately rejected them. The TIFs won’t work without buy-in from the county and the school district.

Currently, an attempt is being made to rework the TIFs to make them more palatable to county and school officials.

Another potential problem is that Columbia City Council might have to raise water and sewer rates to guarantee infrastructure construction bonds for the two TIFs.

The council is already looking at a rate increase to pay for upgrades to the city’s deteriorating water and sewer system, which the U.S. Environmental Protection Agency has threatened to take over if the city fails to improve.

Reach Dietrich at (803) 779-5022 ext. 110, or kevin@thenerve.org.

Accountability Economic Development Higher Education Innovista Transparency

University of South Carolina Joint Bond Review Committee Innovista Sen. Hugh Leatherman Rep. Gilda Cobb Hunter Rep. Brian White tax increment financing