College of Charleston Mum on Donor Connection to Multimillion-Dollar Lease Proposal

August 7, 2013

Investigative Reports

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College of CharlestonIn 2003, the College of Charleston announced the creation of a $100,000 endowed scholarship in honor of the late John M. Rivers Sr., a “C of C” alumnus who made his name in Charleston as an owner of radio and television stations.

The generosity of the Rivers family to the public liberal arts and science college, which has a campus museum named after the late Rivers, is well documented in annual donor reports. John M. Rivers Jr., for example, and a foundation named after him contributed at least $25,000 to $50,000 last year and $15,000 to $35,000 in 2011 to the school, according to those reports.

“John Rivers Jr., successful businessman, avid golf fan and loyal ‘C of C’ advocate, provided the leadership and the network that enabled the women’s golf team to purchase a new Mercedes Sprinter Van,” reads an entry in the 2011 donor report. “Rivers championed the $100,000 effort in less than six months by securing support from women’s golf fans, both in the Lowcountry and around the United States.”

What college officials don’t want to talk about publicly, however, is the connection of Rivers to a downtown Charleston office building that the school is proposing to lease for seven years at a projected total cost of nearly $9.9 million. The proposal includes an additional seven-year renewal period.

The building’s landlord, R.E.R. Investments, Limited Co., was registered, according to records at the Secretary of State’s Office, in 1999 by John M. Rivers Jr., who is listed in those records as the company’s principal manager. The address of the building is 360 Concord St. – the same address listed for R.E.R. Investments in online business directories.

The College of Charleston is proposing to lease approximately 41,000 square feet of space in the building, located within walking distance of the campus, to use primarily as temporary classrooms with the planned renovations of the Rita Hollings Science Center and Simons Center for the Arts within the next year, records show.

For the second time this year, the proposed lease is on the agenda of the state Joint Bond Review Committee (JBRC), which meets Thursday. The committee, made up of five senators and five House members, is chaired by Sen. Hugh Leatherman, R-Florence.

The committee at its June 5 meeting approved the lease proposal, though at the time, the total estimated cost was $9.1 million – $785,402 less than the current projection. Under the most recent estimate, the “maximum basic annual rent” over the seven years would range from $1.29 million in the first year to $1.54 million in the final year, and would include, in contrast to the the initial projection, utility and janitorial costs, documents show.

The initial proposal hit a snag at the June 18 meeting of the S.C. Budget and Control (BCB), which has the final say. The board voted 3-2 to deny the lease proposal, with Gov. Nikki Haley, who chairs the panel, Comptroller General Richard Eckstrom and Treasurer Curtis Loftis voting no; and Leatherman, who is the Senate Finance Committee chairman, and House Ways and Means Committee Chairman Brian White, R-Anderson, voting yes.

Haley questioned Stephen Osborne, the college’s executive vice president for business affairs, about the absence of an “RFP” – request for proposal – for the lease. A request for proposal is a solicitation by a government agency to potential suppliers of goods or services to submit business proposals.

“How do we assure we got the best rent?” asked Eckstrom, who initially brought up the RFP issue.

Osborne told the board that no RFP was done for the lease proposal, though he added state law didn’t require it, and that college officials worked with the BCB’s General Services Division in identifying a building to lease.

“We’ve been looking for space for 12 months,” Osborne said. “Things we’re looking for (are) proximity to the college and usable academic space without having to do major renovations. We looked at several other spaces as part of the process. … For 40,000 square feet, this was basically the only option that was there over the time period that we looked at.”

Osborne didn’t mention Rivers’ connection to the proposed lease or college. There also is no reference to that connection in BCB, JBRC or college documents that were publicly released for the BCB or JBRC meetings.

In identifying R.E.R. Investments, a summary document from the BCB’s General Services Division said only, “The Landlord is a South Carolina-based LLC.” Lease payments would be “funded from college fees,” though “no fee increase will be associated with the lease,” according to the document.

The same document said that following the BCB’s rejection of the lease proposal at its June 18 meeting, the college obtained three bids for the lease, though the bid by R.E.R. Investments was the “only response which met the College’s requirement to be located within one mile of campus.”

No details were provided about the other two bids or how the bids were solicited. Mike Robertson, the college’s chief spokesman, did not respond to two phone messages and a written message from The Nervethis week. BCB spokeswoman Rebecca Griggs on Tuesday said she would try to obtain an official response to The Nerve’s written questions about the proposed lease, though none was provided by publication of this story.

Rivers did not respond Tuesday to a phone message from The Nerve seeking comment, though a woman who answered the phone at his Charleston office said he planned to be in the office that afternoon.

In an effort to get an outside expert opinion about the College of Charleston’s handling of the proposed lease, The Nerve this week contacted Oregon State University, which has a written “ethical and responsible procurement” policy as part of its Procurement and Contracts Services Manual.

Kelly Kozisek, OSU’s chief procurement officer, questioned why the College of Charleston didn’t initially advertise for bids on the lease.

“Our director would most likely insist on advertising the opportunity because of the fact that it was something that could be perceived as a conflict of interest,” Kozisek said.

Given a similar situation involving a proposed lease, OSU would advertise for bids on the university’s website so that it would have a “broad exposure,” she added.

If the Joint Bond Review Committee at Thursday’s meeting again approves a lease proposal with R.E.R. Investments, the matter would return to the Budget and Control Board for final action.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.