Legislative Panel Ignores Conflict-of-Interest Questions about College Lease

August 9, 2013

Investigative Reports

Print Friendly, PDF & Email

College MoneyA state legislative committee Thursday approved – for the second time in as many months – a proposal by the College of Charleston to pay more than $9 million to lease a downtown Charleston building with ties to a businessman who has been a large donor to the school.

None of the six lawmakers present during the Joint Bond Review Committee (JBRC) meeting raised any conflict-of-interest questions about the lease proposal. After a quick comment by Sen. Paul Campbell, R-Berkeley, and a relatively minor question by Sen. Harvey Peeler, R-Cherokee, the committee chairman, Sen. Hugh Leatherman, R-Florence, declared, “As usual, it stands as approved,” noting there was no opposition to the proposal.

The Nerve on Wednesday revealed that the landlord of the building that the college wants to lease – R.E.R. Investments, Limited Co. – is registered with the state under the name of John M. Rivers Jr. College of Charleston donor records reviewed by The Nerve show that Rivers and a foundation named after him have contributed tens of thousands of dollars in recent years to the public liberal arts and science school, which has a campus museum named after the late John M. Rivers Sr., who was a local radio and television station owner.

The college’s chief spokesman, Mike Robertson, did not respond to several messages from The Nerveseeking comment for its initial story. Stephen Osborne, the college’s executive vice president for business affairs, was present at Thursday’s meeting but did not make any presentation to the committee.

Immediately after the meeting, a Nerve reporter approached Osborne and asked him whether the college recommended the lease from R.E.R. Investments because of Rivers’ connections to the school.

“That was not a deciding factor at all in that decision,” Osborne replied. “If someone else had 40,000 square feet, we would have been happy to have them compete against this space (from R.E.R. Investments).”

At the June 18 meeting of the S.C. Budget and Control Board (BCB), which has final say on the proposed lease, Osborne said the college did not seek a “request for proposal,” or formal bids, on the lease. He said then the school had been searching for a year to lease a large building with the planned renovations of the Rita Hollings Science Center and Simons Center for the Arts.

The college has proposed leasing approximately 41,000 square feet from R.E.R. Investments in a downtown office building at 360 Concord St., located near the South Carolina Aquarium and within walking distance of the campus, for seven years at a total projected cost of nearly $9.9 million, with an option to renew the lease for seven more years. The building’s address is the same one listed for R.E.R. Investments, according to online business directories.

Lease payments would come from college fees, though fees would not be raised with the project, officials said.

The BCB is made up of Gov. Nikki Haley, who chairs the panel; Comptroller General Richard Eckstrom; Treasurer Curtis Loftis; Leatherman, who is the Senate Finance Committee chairman; and House Ways and Means Committee Chairman Brian White, R-Anderson and the JBRC’s vice-chairman. The board voted 3-2 at the June meeting to deny the lease proposal after concerns were raised by Haley and Eckstrom that no bids were sought; Loftis joined Haley and Eckstrom in voting against the proposal.

The JBRC approved the initial lease proposal at its June 5 meeting. The total projected cost then was listed at $9.1 million, $785,402 less than the current estimate because, according to officials, it didn’t include utility and janitorial costs.

The college brought the matter back to the committee Thursday after it said it had obtained three bids, including a revised proposal by R.E.R. Investments, though according to a BCB document provided for the meeting, the other two bids were rejected because those locations were “not within the required one mile radius of the campus and would not allow students using campus facilities to change classes within an adequate time frame.”

One of the two rejected sites was 15 miles away from the campus, and the other was two miles away, though no other details of those bids were revealed during Thursday’s meeting. Osborne afterward couldn’t provide The Nerve with specifics on the rejected bids, including whether they were lower than the proposal by R.E.R. Investments.

The Nerve on Thursday submitted a request to the college under the S.C. Freedom of Information Act seeking details on the bids and other related documents.

For The Nerve’s initial story on Wednesday, Kelly Kozisek, the chief procurement officer at Oregon State University, questioned why the College of Charleston didn’t initially seek bids on the lease, noting her school would “most likely insist on advertising that opportunity because of the fact that it was something that could be perceived as a conflict of interest.”

Asked after Thursday’s meeting why the college didn’t initially seek formal bids, Osborne told The Nerve, “We had done a 12-month effort to find adequate space on the peninsula close to the campus, and the space that was identified (R.E.R. Investments) had adequate space in terms of square footage that was available.”

“We probably talked to at least five or six different land owners,” he added.

Osborne said after the Budget and Control Board at its June meeting rejected the proposed lease with R.E.R. Investments, “we put out a request for proposals, and it was administered through General Services (a BCB division), and the facility that was selected turned out to be the only responsive (bid).”

Before joining the College of Charleston, Osborne worked for the BCB for nearly 27 years, ultimately serving as its chief of staff, according to a biography posted on the college’s website.

The Nerve on Thursday submitted a Freedom of Information Act request to the BCB for records related to the lease bids.

Given Thursday’s approval of the lease proposal by the Joint Bond Review Committee, the request will return to the Budget and Control Board for final action. Osborne said he expects the BCB to take it up at its Sept. 3 meeting.

Asked if he expected BCB to approve it, Osborne replied, “We would hope so in that we have satisfied the requirements of doing an RFP (request for proposals).”

Besides Leatherman, Peeler and Campbell, other JBRC members present at Thursday’s meeting included White and Sens. Thomas Alexander, R-Oconee, and Billy O’Dell, R-Abbeville. Rep. Gilda Cobb-Hunter, D-Orangeburg, came in after the vote; Reps. Liston Barfield, R-Horry; Kenny Bingham, R-Lexington; and Chip Limehouse, R-Charleston, were absent.

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