Wednesday, Aug. 05, 2009

USC fires Innovista developer

His inability to finance project is latest blow dealt to research campus

The University of South Carolina on Tuesday fired the Michigan developer tapped to build the private portion of Innovista, the university’s downtown Columbia research campus.

USC pulled the plug on a deal with Kale Roscoe because he couldn’t land a loan to build the campus’ first private building — nine months after his deadline for starting construction.

Roscoe said he told USC officials on Monday that he had secured financing for the building at Blossom and Main streets.

“I’m upset,” he told The State newspaper on Tuesday. “We hung in there and were in town last week by university request confirming that we were ready to go forward.”

However, university officials said the loan commitment from BB&T contained several contingencies and requirements that Roscoe had not yet met.

“We have been working through this week after week,” said John Parks, Innovista’s executive director. “And we’re at a point where we have to move in another direction.”

Efforts to reach the BB&T official working on the deal were unsuccessful Tuesday.

The dismissal comes as Innovista is stalled. Two public research buildings are up but empty. And two planned private buildings have yet to be built.

Roscoe is the second developer to leave the project; both were from outside the state. USC president Harris Pastides on Tuesday told The State that the university will look closer to home for its next development partner.

Parks said he doesn’t regret recommending Roscoe after they worked on the University of Kentucky’s Coldstream research park in Lexington. The two were credited with turning that stalled campus around.

“He’s a very good developer,” Parks said. “But with the economy and the circumstances today we need to go another way.”

Pastides said he is still optimistic about Innovista’s future as a job creator for Columbia and the Midlands, but couldn’t reveal what he called “the path forward” until he has consulted with the USC Board of Trustees.

That path probably will involve more local participation by private developers through the university’s foundations, he said.

“Innovista is going to be brought even more closely into the university family,” Pastides said, adding that an announcement will be made “in weeks rather than months.”

Pastides said USC’s recent announcement that a new $90 million Moore School of Business building will go into Innovista is evidence that the research campus is moving forward.

Roscoe is the second developer to tackle the yet-to-be-built, five-story Horizon II, as the building is called.

Overall, the building is now three years overdue.

Roscoe replaced Raleigh developer Craig Davis last year, after Davis failed to build the building or deliver major tenants.

Roscoe said Tuesday he spent $650,000 buying into the deal and another $350,000 on top of that.

Roscoe, a Detroit developer who made his money in the rough-and-tumble body shop business, is not bashful about filing lawsuits if he feels he has been wronged and did not rule out a suit in this case.

Roscoe had compiled a long list of suits and countersuits in the 1980s through his Detroit-based chain of Kale’s Collision “bump shops,” as body shops are called in and around the Motor City. Roscoe has called the dozens of suits “the cost of doing business.”

Despite his litigious past, Parks said he was well-vetted by the university and was qualified to do the job.

“But we didn’t go into depth with all of the Kale’s Collision issues,” he said. “I did significant due diligence in Kentucky and he had a well-documented track record. He is one of the most tenacious developer I know. Kale performed very well in Kentucky.”

The USC trustees required he begin construction of Horizon II by last November, and Roscoe agreed that he would.

Then the economy — particularly the credit market — crashed.

Roscoe hired a builder, Michigan- and Charlotte-based Kirco construction, moved in a construction trailer and piled up dirt.

But nothing else happened.

Then in January, two Columbia-based companies — TM Floyd & Co. and VC3 — announced they would move most of their operations and about 120 employees into Horizon II.

They would partner with IBM and BlueCross BlueShield of South Carolina in a unique computer-training program to be based in the building.

Called the Consortium for Enterprise Systems Management, the program focuses on high-volume, mainframe computing technology.

The program is a public/private partnership of 11 businesses, colleges and academic agencies headed by IBM and BlueCross BlueShield and aimed at training and placing new professionals in the field.

All three potential tenants have previously said they have other options if Horizon II is not built or delayed further.

Roscoe said he will be working to “unwind” those lease deals today. He didn’t want to talk about any potential litigation that might spin out of his departure.

“I’m just tweaked off, that’s it,” Roscoe said.

A lawsuit “would be an absolute last resort. I’m not looking to get even with the university. But what everybody forgets, is I was asked down here to clean up this mess. And that’s what I tried to do.”

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