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Fluor, IBM likely tenants for USC Innovista research campus

Staff Report
Published March 6, 2014

The state Budget and Control Board approved Wednesday a request by the University of South Carolina to be exempted from the state’s procurement process so it can negotiate a lease directly with a Fortune 100 company for space in an office building planned for the Innovista research campus.

The likely occupants would be Armonk, N.Y.-based IBM, ranked No. 20 on Fortune’s list of largest companies, and Irving, Texas-based Fluor Corp., a global provider of construction and engineering services. Fluor, ranked 110 on Fortune’s list, employs around 2,300 people in Greenville.

Assuming leasing agreements are finalized, the two companies would be housed in a five-story office building to be constructed at the corner of Blossom and Assembly streets in downtown Columbia.

USC Innovista office. (Rendering provided)
USC Innovista office. (Rendering provided)
In documents provided to the state board, the university said it would “negotiate directly with the company as part of the economic development package.”

In its proposal, the university said it and the prospective tenant “desire to enter into a contractual arrangement whereby the company would do research and development work while providing services to the university as part of its overall business strategy for the location.”

The companies’ move to the Innovista campus is expected to create as many 500 jobs over the next few years.

Gov. Nikki Haley was joined by Sen. Hugh Leatherman, chairman of the Senate Finance Committee, and Comptroller Richard Eckstrom in approving the university’s request to bypass the procurement rules, said Budget and Control Board spokesman Delbert Singleton. Treasurer Curtis Loftis and state Rep. Brian White, R-Anderson, chairman of the House Ways and Means Committee, voted against the USC request.

State law allows the board to approve exemptions for a number of governmental bodies. Exemptions from the procurement process include specific supplies, services, technology and information technology.

Examples of agencies covered by the law include the state Department of Corrections, S.C. State Ports Authority, the S.C. Public Service Authority and S.C. Research Authority.

The university’s proposal contains safeguards aimed at making sure the rent the companies would pay is “fair, reasonable and tied to the economic development efforts associated with this building.”

In addition, the university said the exemption only would be used after the Department of Commerce submits a written certification to the board on how the proposed contract “will assist the department with the Project Sunset economic development opportunity.”

Also, the university would have to submit certification to the board that it is “paying a reasonable price, comparable to that which would be obtained with competition” for items acquired in the contract.

The contracts shall not exceed 10 years, the university said in its proposal.

IBM, which reported revenues of $104.5 billion in 2012, has launched partnerships with other universities over the past few years.

For example, at Michigan State University in East Lansing, Mich., IBM in 2009 opened a center for application services, taking over a vacant building that once housed the local credit union. The company currently employs about 350 workers on the university campus and expected to reach 500 workers when the center is fully built out in the next few years.

IBM also has ties to BlueCross BlueShield of South Carolina, headquartered in Columbia. The insurance company has built an information systems center largely using IBM’s “System z” mainframes. BlueCross’ data center, one of the largest processors of health care claims in the country, is rated among the top 2.5% worldwide by IBM.

Fluor’s connections to Columbia and the university are more personal.

Aiken native David Seaton, chairman and CEO of Fluor, which reported sales of $27.7 billion, is a 1984 graduate of USC. He also is chairman of the university’s $1 billion fund drive.

The university board of trustees recently voted to enter into an agreement with Holder Properties of Atlanta to build the academic office building and two student housing projects in the Innovista research campus.

It’s estimated the three buildings will cost almost $120 million.

The office building would have parking spaces allocated in the Horizon garage on Assembly Street.

Expectations are for the 110,000- to 130,000-square-foot building to be located on the undeveloped site beside the Horizon garage.

The estimated construction cost for the academic office building is $25 million, and the time frame calls for it to be completed by July 31, 2017.

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