July 15, 2008

Business Incubator Plan Gets Panel OK

David Slade  /  The Post and Courier

City-owned building would be leased to state agency for conversion into space for research

A $5 million plan to transform a vacant factory into research and laboratory space for start-up medical companies was recommended for approval by Charleston City Council's Real Estate Committee on Monday, despite some reservations.

The plan calls for the city to lease the building at 645 Meeting St. to the state-chartered South Carolina Research Authority for up to 50 years, for a dollar a year.

The authority would spend up to $5 million renovating the building and would operate it as a business "incubator" to help Medical University of South Carolina researchers develop new biotech and medical equipment businesses. Councilman Gary White, a bank executive, thought the 50-year lease term was too long, but Mayor Joe Riley said the authority's board had refused to accept a 30-year term.

White said that, by his calculations, the city would be essentially leasing the 36,000-square-foot building to the authority for less than $3 per square foot, assuming the SCRA spends $5 million on improvements.

The city would continue to own the building, a former mattress factory that Riley and other city officials described as derelict, inhabited during the past decade only by squatters.

John Gregg, SCRA executive vice president of property and asset management, said the authority would provide valuable support services to start-up companies using the site, and would lease space there for up to 20 companies at low rates.

He said the authority expects to break even, or slightly better, on its investment. The money would come from authority operations, not from taxpayers.

Riley and Michael Maher, director of the Charleston Civic Design Center, defended the terms of the deal.

They said it shouldn't be evaluated as a real estate deal but as an initiative to attract high-paying jobs in biotechnology and medical equipment.

"This is an economic development driver," Maher said. "It will certainly reinforce the city's efforts to grow this sector of the economy."

White said he would like to see a "more digestible" lease term for the property but voted with the rest of the committee to recommend the deal to City Council, which meets tonight in City Hall.