USC signed an $890,000 settlement agreement Thursday with two developers whom it fired after they failed to add a privately financed building to the school's Innovista research campus.
The money to pay the settlement to developers Kale Roscoe and Tim Heath - to reimburse them for investments they made - is coming from a private USC real estate foundation that owns an estimated $70 million in property statewide.
The foundation said the money was not earmarked for scholarships, professorships or other academic endeavors. USC foundations executive director Jerry Odom said he did not know where else the money could have been used, if not spent on the settlement.
"I think we made a good investment to help the university," he said.
The deal ends a controversial chapter for Innovista, a project meant to generate high-tech business and jobs from research work. About $100 million in state and local tax money has gone into Innovista, paying for two incomplete buildings and a pair of parking decks.
USC said it now can move forward with plans to shift Innovista's focus from development of research on its campus to supporting research throughout the region.
"The Innovista is several things. It's the name of a district and the name of a concept," said Ted Moore, USC's vice president for finance and planning.
To end the deal with Roscoe and Heath, the school needed to find a private source for the settlement money. Any agreement using public money would have required state approval, Moore said.
USC officials reached out to the foundation soon after the university's board of trustees reached a tentative agreement with Roscoe and Heath in September.
"The university administration asked if we would consider helping them out of a jam," Odom said.
The foundation agreed to help because it wanted to protect the $20 million in property it owns around the Vista, Odom said.
"Our sole mission is to help the university in any way," he added.
The foundation spent eight months working with the university to ensure that Roscoe and Heath had paid all the bills associated with their Innovista work, Odom said.
"We wanted to make sure there was nothing to come back to bite us," he said.
The settlement reportedly included $650,000 Roscoe and Heath spent to buy into the deal from its first private developer, and $240,000 for Roscoe and Heath's out-of-pocket expenses, including architectural work and permitting.
Efforts to reach Roscoe and Heath were unsuccessful Thursday.
Roscoe and Heath were the second set of private developers who failed to attract more businesses and construct new buildings at Innovista.
In 2008, the pair were brought in to help Innovista's first private developer, Craig Davis of Raleigh, after he fell two years behind schedule to start work.
Roscoe and Heath were fired by USC in August 2009, having produced little to show for their work in Columbia.
The next month, Innovista executive director John Parks resigned after an internal investigation found he didn't tell his supervisors that Roscoe had served time in prison for tax evasion.
The university brought in former Roche pharmaceuticals executive Don Herriott this year to re-energize Innovista. He has pushed the idea that Innovista's work can been done off USC's campus.
USC is still open to private development on its campus. But, Moore said, in an economic downturn, "it's not a lucrative approach right now."
"We have been dealt a hand by the economy," Moore said. "There's a lot of risk out there, and we have a lot more careful planning in place."
Meanwhile, a pair of research teams studying nanotechnogy and fuel cells are in the process of moving into two floors of one of the two Innovista buildings, Moore said.
The university still needs $20 million to finish the buildings, Moore said.
USC could ask the development foundation to help pay for some of that work, though Moore said the school has no immediate plans to do so.