Rejected College Lease Proposals Millions Less than Winning Donor’s Bid

September 11, 2013

Investigative Reports

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College of CharlestonAt last week’s S.C. Budget and Control Board meeting, Gov. Nikki Haley seemed pleased with plans by the College of Charleston to pay millions to lease a downtown office building with ties to a large school donor.

“It looks like we got a lower price because of it,” Haley said, noting that bids were solicited for the lease. “Which again, it goes to show that options matter.”

But documents obtained last week by The Nerve from the college under the state Freedom of Information Act show that the two losing bids were more than $3.5 million and nearly $2 million lower than the winning proposal by R.E.R. Investments, Limited Co., of Charleston. The lower bids had not been previously revealed publicly by state officials.

The Nerve last month reported that R.E.R. Investments was registered with the state by College of Charleston donor John M. Rivers Jr., who is listed in records obtained last week as president of Charleston-based Rivers Enterprises Inc.

Rivers 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 college, according to donor reports reviewed by The Nerve. A campus museum is named after the late John M. Rivers Sr., who was a local radio and television station owner.

The five-member Budget and Control Board (BCB) at its Sept. 3 meeting unanimously approved the college’s proposal to lease 41,000 square feet of space from R.E.R. Investments at Fountain Walk, a downtown Charleston office building located at 360 Concord St. near the South Carolina Aquarium and within one mile of the school’s campus.

Rental space for classrooms, laboratories and offices is needed with the planned renovations of the Rita Hollings Science Center and Simons Center for the Arts on campus, college officials said.

The lease with R.E.R. Investments is for seven years beginning on Jan. 1, with the option for a seven-year renewal period. In documents provided for last week’s BCB meeting, the total lease cost for the initial seven-year period was listed at $9.89 million, though BCB documents provided to The Nerve by the college list the total rental cost at $10.18 million, a difference of $285,191.

The same BCB documents list total rental costs under the two losing bids, based on the same amount of office square footage for seven years, at $6.62 million and $8.18 million. The lowest bid by SFI Ltd. Partnership 18, a division of The Slosburg Companies in Omaha, Neb., represented by Charleston-based CBRE Carmody LLC, was $3.55 million, or nearly 35 percent, lower than R.E.R.’s $10.18 million proposal. The other losing bid by Charleston-based Lee & Associates on behalf of JFRONE LLC was $1.99 million, or 19.5 percent, lower.

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

Besides Haley, the BCB is made up of S.C. Comptroller General Richard Eckstrom; state Treasurer Curtis Loftis; Senate Finance Committee Chairman Hugh Leatherman, R-Florence; and House Ways and Means Committee Chairman Brian White, R-Anderson.

The lower bids were not revealed publicly at either the Sept. 3 BCB meeting or the Aug. 8 meeting of the state Joint Bond Review Committee (JBRC), chaired by Leatherman, who made the motion at last week’s BCB meeting to approve the proposal by R.E.R. Investments.

Interviewed immediately after the Aug. 8 JBRC meeting, Stephen Osborne, the College of Charleston’s executive vice president for business affairs, couldn’t provide The Nerve with specifics on the rejected bids, including whether they were lower than R.E.R.’s proposal.

Osborne at the time said Rivers’ connection to the school was “not a deciding factor at all” in the college’s bid recommendation, noting, “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).”

Asked why the college recommended R.E.R. Investments despite receiving substantially lower bids, Osborne in a written response Tuesday said only, “The other two bids were deemed non-responsive because they were too far from campus.”

The property in the lowest bid is located at 2155 Eagle Drive off Interstate 26 in North Charleston, 12.3 miles from the Charleston campus. The other property is located at 960 Morrison Drive in Charleston, 2.1 miles from campus.

Osborne did not respond to follow-up questions from The Nerve, including whether the college could have saved money compared to R.E.R.’s proposal by accepting either of the lower bids while providing off-campus transportation to students, and why the lower bids were not publicly revealed at earlier meetings.

It also is unclear why a seven-year lease is needed, given that the proposed renovations to the existing campus buildings likely will be finished in less time.

Mike White, vice president of CBRE Carmody, declined comment when contacted this week by The Nerve. A representative of Lee & Associates did not respond to a phone message this week.

Haley spokesman Doug Mayer did not respond to written questions from The Nerve about the governor’s statements at last week’s BCB meeting, and why the lower bids were not publicly revealed then.

Eric Ward, spokesman for Eckstrom, said Tuesday when contacted by The Nerve that Eckstrom was not aware of specifics of the lower bids, though he pointed out that the comptroller general initially questioned at the June 18 BCB meeting why no bids were sought for the lease.

Osborne at that meeting said state law didn’t require a “request for proposal,” or RFP, for the lease, and that college officials had worked with the BCB’s General Services Division in identifying a building to rent.

Haley and Loftis joined Eckstrom then in rejecting R.E.R.’s proposal. The college afterward obtained the other two bids per the BCB’s instructions.

Ward noted that after the bids were sought, R.E.R. Investments revised its initial proposal, which officials say is projected to save approximately $250,000 over the lease period.

Asked if Eckstrom’s vote last week would have been different had he known then that the other two bids were substantially lower, Ward replied, “His paramount concern is always taxpayer savings, but it’s difficult to know a college’s needs.”

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