Progress continues on the $20 million downtown “Mixed Use” facility, which the City of Aiken hopes the Savannah River National Laboratory (SRNL) will eventually occupy as a “workforce development facility.” However, two years after the project was announced with great fanfare, there is still no lease agreement with SRNL’s contractor, Battelle Savannah River Alliance (BSRA); deep federal budget cuts could further threaten the viability of any new leases for federal contractors.
Recently, SRNL/BSRA officials were dissuaded by the Department of Energy (DOE) from attending the facility groundbreaking, and were ordered by DOE to have the SRNL logo removed from project signage. Is the City of Aiken creeping towards a misappropriation of the $20 million by constructing what is essentially a “spec” building on behalf of its nonprofit “partner” organization the Aiken Corporation?
Also, at that time, the primary envisioned use for the property was that of workforce development (2) for the SRNL contractor, Battelle Savannah River Site (BSRA).
The great fanfare during the project introduction left no doubt about that intent. The top two floors were to be office space, and the ground floor was to be primarily a showcase for the lab, a place for public interactions where scientific poster sessions would adorn the halls.
That vision faded sometime in the summer of 2023 when the prospect of a long-term lease grew fainter(3). In September 2023, the Aiken Corporation, with an unofficial acquiescence by Aiken City Council, chose to locate a three-story, 36,000-square-foot facility on its own property on Newberry Street–that property was acquired by ACorp in July 2022 for $650,000. A series of emails from the September to November, 2023, time period also showed city officials discussing a building without any committed tenant; one that could be used for an entity other than SRNL.
With the Newberry Street decision made, the City and Aiken Corporation collaborated on moving forward with the design contract. First, the Aiken Corporation hired the architectural firm of Cheatham, Fletcher, and Scott to conduct design work. Then, the City took over the project and hired Cheatham as the City’s contractor. In other words, the City utilized an unofficial, indirect procurement process to hire an architectural firm for a contract exceeding one million dollars.
Between the time of the award of the design contract and the award of a construction contract to the firm of Allen-Batchelor Construction, the City bought the property for $752,230.23; a sum that included two years of interest on the Aiken Corporation loan and city and county taxes for 2022 and 2023. (Figure 1)
Figure 1: Breakdown of costs for purchase of one-acre of property on Newberry Street NW for the purpose of the SRNL/“Mixed Use” Building.
The Groundbreaking
On January 27, 2025, just over two years to the day of the project announcement, a ceremonial groundbreaking took place.
Missing from the groundbreaking festivities were representatives from SRNL. Also missing from the project sign was the SRNL logo. This was not the original intent of SRNL officials, who accepted an invitation to the function on January 10th, 2025. On January 20th, though, an event occurred which changed everything.
That event– a new Presidential administration came into power, and suddenly, federal leases were being canceled, funds were being frozen, and talk of selling off federal buildings was in the air.
On January 24th, SRNL Assistant Director Sharon Mara wrote to city officials that, per DOE guidance, the lab would not have a presence that day (Figure 2); and per DOE order, the lab logo could not adorn the project sign (Figure 3). However, lease discussions could continue.
Figure 2: Notification from Sharon Marra to City officials regarding SRNL absence from the groundbreaking ceremony. (click to enlarge)Figure 3: Notification from Sharon Marra to have SRNL logo removed from the project sign. (click to enlarge)
This is not the first indication that future SRNL occupation of the facility would range from possible to precarious, or maybe not at all. As reported in One-Year Lease after One-Year Lease, as of January 2024, the SRNL contractor only had DOE permission to negotiate one-year leases, not longer-term five or even ten-year leases. In fact, by the time the facility is finished, BSRA’s first five-year contract is due to expire. Although a five-year renewal is expected, a renegotiated lower contract price is quite possible.
Still, eighteen months has passed since the siting decision was made, and there is still no lease or even a memorandum of understanding between the parties. The likelihood of DOE/SRNL permitting BSRA to enter into any new lease agreement may now possibly be fading away.
Who could occupy the facility if SRNL/BSRA does not, and who would own the building?
On February 26, 2024, Aiken City Council approved a “Framework Agreement” for future agreements with the Aiken Corporation regarding the project. This agreement required ACorp to relinquish ownership if SRNL/BSRA was not a tenant. (Pages 202-204)
The anticipated path forward was that the City of Aiken would purchase the Newberry Street property from Aiken Corporation, use the remainder of the $20 million Plutonium Settlement allocation to construct the facility, and then sell the facility and property to a yet-to-be-identified, for-profit subsidiary of the not-for-profit Aiken Corporation. (4)
When the facility is completed, the City will transfer ownership “pursuant to the terms of a subsequent Purchase Sale Agreement…which will, among other terms, specify a deed restriction providing for the return of the subject property to the City should the (Aiken Corporation) no longer desire to own or lease the building to an appropriate tenant.” (emphasis added).
The intent of this latter clause, which appears to dictate that Aiken Corporation will own the building only if SRNL is a tenant, was indicated in City Manager Bedenbaugh’s supporting memorandum that the Aiken Corporation’s “to-be-formed entity will lease the building to SRNL.” (emphasis added.)
At the February 26th meeting, City Manager Stuart Bedenbaugh was asked to define “appropriate tenant.” He did so in a manner that implied some wiggle room, stating:
“There is kind of a clawback, should that not follow through or the mission changes.”
He noted that he would define an appropriate tenant as “based on a mission that is similar to what is stated in the opening paragraph of the National Lab or its successor agency.”
On January 27, 2025, Aiken City Council approved a new agreement, a Memorandum of Understanding (MOU), with Aiken Corporation and its newly formed, for-profit property management company called Aiken Ventures LLC. Just as ACorp’s for-profit property management company, LED Inc., manages the downtown Amentum Building, Aiken Ventures LLC will manage the “Mixed Use” building on behalf of Aiken Corporation and the City of Aiken.
Missing from the January 27th MOU is the clawback provision and any reference to a deed restriction. Instead of Aiken Corporation ownership being contingent upon SRNL’s contractor being a tenant, the language in this agreement appears to provide a loophole:
“Ventures is expected to enter into a lease with SRNL, whereby SRNL will lease the second and third floors of the property on such terms and conditions as may be agreed between Ventures and SRNL.”
There is no contingency plan in the case of the SRNL contractor being unable to obtain DOE permission to obtain a lease.
The original purpose of the $20 million was not to build a private “mixed-use” office building. It was not to further subsidize the City of Aiken nor its private partner the Aiken Corporation with an annual flow of federal funds that could be better put to better use.
The legislative intent was to construct “off-site infrastructure” for an institution whose operating contractor includes the state’s university system as part of the Battelle Savannah River Alliance. The only justification for awarding plutonium settlement funds for use by one of the defendant’s institutions, SRNL, was that the state is committed to an investment in the Battelle-led alliance from its university system. That commitment specifically included a workforce development facility.
If the City of Aiken truly wants the SRNL contractor to have a downtown presence, it would be wise to begin considering the option of deeding the property to one or all three of the State’s three major universities.
Footnotes
(1) The original choice by SRNL was the City’s parking lot property next to the City of Aiken Municipal Building, where a two-story garage topped by an office building was visualized in September 2022.
(2). As reported in The SRNL Project Was a Component of Project Pascalis, the facility constitutes the first stage in a much larger, $120 million state-funded program to Battelle Savannah River Alliance for SRNL workforce development.
(3) As reported in One-Year Lease After One-Year Lease, the prospect of a long-term lease became bleak by January 2024. To this day, there is still no signed lease or even a Memorandum of Understanding between SRNL, Aiken Corporation, and City of Aiken.
(4) The February 2024 “Framework Agreements” states that to pay for the facility, the City “will provide financing to Corporation, which it anticipates providing on an interest-free basis.” Thus, much of the rent proceeds will be used to pay for a building that was already paid for with the plutonium funds.
This provision is absent in the January 2025 MOU, which states that the City will deed the property to Aiken Corporation’s for profit Aiken Ventures LLC; and that if the property is put on the market the City has the right to buy it back for $1.
The Pascalis Project Overlap; Legislative Intent, and South Carolina’s $100 million subsidy for the Federal Government.
by Don Moniak February 26, 2024
The $20 million “Mixed-Use Building Project” is intended for use by the U.S. Department of Energy’s (DOE) Savannah River National Laboratory (SRNL) management and operations contractor, Battelle Savannah River Alliance (BSRA).*
The project was pursued behind closed doors for nearly a year, and then publicly presented January 23, 2023, as a three-story, 45,000-square-foot “SRNL Workforce Development Center” to be located on city-owned property along Richland Avenue and Newberry Street.
During the next eight months, the three-story project had devolved to a 36,000-square-foot facility that was rebranded as the Aiken Corporation’s “Mixed-Use Building Project,” with a new location on Aiken Corporation property on Newberry Street, NW. In both scenarios, the SRNL contractor would occupy the top two floors—24,000 to 30,000 square feet of space.
In response to questions and concerns, additional project information has recently been provided by South Carolina State Senator and Aiken County Legislative Delegation Chairman Tom Young* (R-Aiken). In a five-page letter that includes seven reference documents, he presented the legislative basis for, and defense of, the project. The highlights of the package include:
A June 22, 2022, site selection letter from SRNL Director Dr. Vahid Majidi stating a preference for a downtown Aiken location within the Project Pascalis footprint; and citing the Pascalis project as a motivating factor for the preferred location.
A more complete legislative timeline for the $20 million allocation of SRS/plutonium settlement funds for “SRS/National Lab Offsite Infrastructure—Aiken Innovation District.” The letter makes the case that the existing project still meets the broad, overall legislative intent of the Aiken delegation and the General Assembly—with the obvious caveat being that the funding is for the SRNL”s Battelle Savannah River Alliance. (Proposed contractual language between the City of Aiken and the future owner could insure that this intent is met.)
A larger plan by the State of South Carolina’s three major universities to subsidize the SRNL contract workforce with additional state funding of up to $100 million. Last year the SC Legislature allocated $40 million for this workforce development program. Nearly $20 million was later dedicated by Clemson, USC, and SC State “professional development of of SRNL employees;” while less than $4 million was dedicated to undergraduate scholarships.
(*Savannah River National Laboratory (SRNL) is owned by the United States Department of Energy (DOE). SRNL is managed and operated under a contract between DOE and Battelle Savannah River Alliance (BSRA). BSRA is owned by the Battelle Memorial Institute. The alliance consists of five subcontractors: Clemson University, South Carolina State University (SCSU), University of South Carolina (USC), Georgia Tech, and University of Georgia. The latter two are not subjects in this particular story.)
Figure 1: Portion of June 22, 2022, letter from SRNL Director Dr. Vihad Majidi to Aiken Chamber of Commerce President David Jameson. The full letter can be viewed here, on Page 14.
The SRNL Site Selection Letter and Project Pascalis
On June 22, 2022, SRNL Director Dr. Vihad Majidi sent a letter to Aiken Chamber of Commerce President David Jameson (1) regarding the $20 million project (Figure 1). In the letter, the Director expressed a preference for downtown Aiken, the reasoning behind that preference, and identified three candidates for facility ownership—The City of Aiken, the AMDC, or the Aiken Corporation.(2)
The Pascalis project itself was a motivating factor for the downtown Aiken location; one within the Project Pascalis demolition and redevelopment zone (3). Dr. Majidi wrote, in part, that:
“SRNL’s preference is the downtown site valued at $3.6 million that will be contributed by the City of Aiken. This is very attractive because of the walking distance proximity to many restaurants and retail stores, as well as planned new hotel, conference center, parking garage, and apartments that would be completed about the same time as this facility would come on-line.” (emphasis added)
One reason the lab space could have fit within the Pascalis project footprint is that, two months earlier, new location was proposed for a conference center. Instead of being in the Pascalis project footprint, it was to be moved to the soon-to-be vacated Aiken Municipal building at 214 Park Avenue, SW. The conference center size was at least 25,000 square feet—about the same amount of space sought by SRNL.
Thus, at the height of the Project Pascalis, the SRNL Director proposed becoming a part of that troubled and soon-to-fail project; taking the same approach that greatly contributed the Project Pascalis failure—make official decisions first, then solicit citizen input and buy-in.
Legislative Intent of the Downtown SRNL Project
For nearly six months, inquiries have been made to members of Aiken County’s State Legislative Delegation regarding the $20 million SRNL project.
The inquiries included the following questions:
a. How can a private non-governmental organization, the Aiken Corporation, be the developer and owner of a $20 million, publicly funded building, especially without a competitive bidding process?
b. If the Aiken Corporation owned the building, the SRNL contractor did not renew its lease, and Aiken Corporation found a new tenant, how could this not be a misappropriation of funds? This question became more pertinent as long-term lease arrangements with DOE/SRNL’s operating contractor failed to materialize; as DOE/SRNL tentatively has agreed only to one-year, renewable leases.
This past Wednesday, February 21st, State Senator Tom Young provided some answers to these questions. In summary, his letter outlined the overall legislative intent behind the SRS/National Lab Offsite Infrastructure” project; which is related to a much larger State of South Carolina commitment to DOE/SRNL’s management and operating contract with BSRA. In short, the history behind this legislative process (4) and subsequent funding accountability process follows this timeline:
Summer, 2020. BSRA lobbied Governor Henry McMaster for $120 million of State funding in support of the BSRA contract. Governor McMaster then committed, in August 2020 and just prior to the plutonium settlement, $100 million on behalf of the state’s three major universities for their role in the Battelle-led alliance.
December 2020: Governor McMaster submitted his plutonium settlement allocation proposal to the legislature, asking that only the three counties contiguous to SRS receive funds. The proposal included $120 million for the BSRA contract with SRNL.
2021 to 2022. Legislative negotiations ensued, during which “legislative leadership made it clear that any settlement funds allocated within the region would have to be for infrastructure projects related to workforce development, education, and/or economic development infrastructure.”
June 2022. The South Carolina legislature gave final approval of $20 million for the initial stage of investment, titled “SRS/National Lab Offsite Infrastructure—Aiken Innovation District.” The funding was for Aiken County; but the unwritten intent of the local delegation was for SRNL to choose a site at USC-Aiken, the City of Aiken, or the City of North Augusta.
June 22, 2022. SRNL Director Majidi wrote to the Chamber of Commerce to express a site preference for a downtown Aiken that was going to be transformed by Project Pascalis, and facility ownership by the City of Aiken, AMDC, or Aiken Corporation.
January 2023 to June 2023. The City of Aiken first submitted its funding request to Aiken County, who forwarded it to the legislature’s Joint Bond Review Committee (JBRC), which then approved the request.
It is evident that, in the big picture, the SRNL/“Mixed-Use” project as currently structured fits the broadest intent of the $20 million dollar legislative funding decision. The State of South Carolina committed to SRNL workplace development by the three major universities, and the SRNL leadership selected Aiken Corporation as a facility ownership candidate.
The caveat is that the facility must still meet its originally stated purpose of SRNL offsite infrastructure. As recently reported, this was almost not the case. When leasing negotiations between DOE/SRNL, Battelle, Aiken Corporation, and City of Aiken faltered, consideration was given to Aiken Corporation ownership even in the absence of a DOE/SRNL approved leasing agreement with Battelle.
This option should be negated by a provision in the proposed City of Aiken “Framework Agreement with the Aiken Corporation for the Savannah River National Laboratory Multi-Use Building.”(5)
The proposed agreement involves a complicated and complicated arrangement whereby the City of Aiken:
Purchases property currently owned by the Aiken Corporation property, and then constructs the facility on the property for SRNL’s use.
Sells the property and the building to a “to-be-formed” entity controlled by the Aiken Corporation. The total sale price will be based on the final construction costs and the original property price.
The yet-to-be-formed Aiken Corporation-controlled real estate entity will make the purchase from the City of Aiken through a loan from the City of Aiken.
The yet-to-be-formed real estate entity will lease the facility to the SRNL operating contractor, BSRA, or any future contractor.
A deed restriction is proposed that could prevent the Aiken Corporation’s new real estate entity from leasing to a party other than an SRNL contractor:
“City and Corporation anticipate that when the Certificate of Occupancy has been issued by the City of Aiken Building Inspector, the SPE will purchase, and the City will transfer ownership of, the multi-use building and the Property pursuant to the terms of a subsequent Purchase Sale Agreement [“PSA JI] to be negotiated between the parties, which will, among other terms, specify a deed restriction providing for return of the subject property to the City should the SPE no longer desire to own or lease the building to an appropriate client.” (emphasis added).
South Carolina Subsidizing the Federal Government.
The $20 million SRNL/“Mixed Use” Building Project is only twenty percent of taxpayer funds the State of South Carolina is investing in the BSRA contract. The SC legislature is conducting an installment plan of sorts for Governor Henry McMaster’s $100 million commitment to the Battelle contract—first made in 2020. (In contrast, subcontractors Georgia Tech and UGA committed $5.0 million and $3.2 million to workforce development, respectively.)
The second installment is a $40 million allocation that was approved for the 2023-2024 state budget during the last legislative session.
Following the funding approval, Clemson University, SC State, and USC developed a three-year funding implementation plan titled “Research Partnershps and Workforce Training Programs: In support of the Battelle Savannah River Alliance Savannah River National Laboratory.” (Attachment E)
Writing on behalf of both SRNL and BSRA, SRNL Director Majidi endorsed the “Collaborative Workforce Development Plant” on October 28, 2023, writing that the three universities will “educate and train the future workforce of the Lab and enable workforce development for South Carolina.” The plan was subsequently approved by the SC Committee on Higher Education on December 7, 2023, and is now in effect.
The workforce development plan itself states the primary goal is to “provide SRNL with a pipeline for new talent acquisition by recruiting and educating the state’s residents while also bringing in additional talent from around the region. This initiative will also further the careers of the existing employee base at SRNL.” (emphasis original)
The funding is heavily tilted towards the latter, as $19.5 million from the $40 million program involves “Professional Development of SRNL Employees.” In contrast, less than $8 million is dedicated to undergraduate and graduate programs combined.
In short, the State of South Carolina has already allocated $60 million for workforce development for a U.S. Department of Energy institution—Savannah River National Laboratory—and intends to spend another $40 million.
The first $20 million is for a facility in the high-rent district of downtown Aiken to be operated by a private organization. The second round of $40 million involves the three main universities spending 2.5 times more on furthering the careers of federal government contract employees than on undergraduate and graduate programs combined.
The Battelle Savannah River Alliance contract essentially is subcontracting the three Universities to provide an apprenticeship program for a federal facility, and use state taxpayer dollars to fund career advancement for federal contract employees.
Footnotes
(1) While Mr. Jameson was a member of the AMDC at the time, the letter was addressed to him in his official capacity as Chamber of Commerce President—instead of being addressed to AMDC Chairman Keith Wood and/or Aiken Mayor Rick Osbon.
(2) The reasoning behind the ownership options is suggested by Dr. Majidi’s prefaced the ownership options by writing, “based on the source of the funds.”
The plutonium funds derived from a settlement between South Carolina and the federal government regarding South Carolina’s lawsuits against the U.S. Department of Energy (DOE) due to plutonium storage issues at Savannah River Site.
The reasoning was that USC-Aiken, as of the Battelle-led alliance which included USC, could not own a facility paid for with plutonium settlement funds—-which would create the image of the Plaintiff returning settlement money to the Defendant. It could also create difficulties during future SRNL contract bidding, since BSRA could claim the building as an asset in any future bid.
(3) In early 2023, the originally proposed properties for the SRNL office space included:
a. The vacant Holley House motel adjacent to the Hotel Aiken, which was purchased by the AMDC in November 2021 for $2.125 million.
b. Portions of the properties between the Holley House and Newberry Hall that were collectively purchased for $2.0 million by the AMDC.
* The author would like to acknowledge the efforts of Senator Tom Young. Senator Young, who led the very difficult and challenging plutonium settlement disbursement negotiations, has proven very open to addressing questions about the process, the results, and any ongoing issues. He tasked the Senate Staff with researching this issue, and in the midst of the 2024 legislative session, he responded to this author’s questions and concerns with a 5-page letter with seven supporting documents that illustrate his attention to details in the legislative process, from start to end to implementation.
The City of Aiken has issued an Request for Proposals for construction of the proposed $20 million “Mixed-Use” Office Building in downtown Aiken; and announced a Public Project Review Hearing for March 12th.
Prior to this action, the Aiken Corporation was acting as the City’s sole-source contractor managing the project, and charged with negotiating a lease with the Department of Energy’s (DOE) Savannah River National Laboratory (SRNL) and its operating contractor, Battelle Savannah River Alliance (BSRA). This setup created a high degree of fiscal and logistical inefficiencies, and required approval of actions by an unelected, unappointed, inexperienced, and marginally accountable third party.
Just as the project changed in early 2023 from the “Savannah River National Laboratory Workforce Development Center” to a “Mixed-Use Office Building” that might have the SRNL contractor as a tenant, the project has now changed from the “The Aiken Corporation New Mixed-Use Building Project,” to the “City of Aiken New Mixed-Use Building Project.”
The change in project responsibilities is a sensible move. Aiken has the experience and know-how, and city staff was already performing much of the work on behalf of the Aiken Corporation.
However, the architectural firm being utilized by the City was selected through a procurement process conducted by the Aiken Corporation, and not by the City of Aiken; and the future facility ownership by the Aiken Corporation remains questionable. While project advocates hope that Battelle Savannah River Alliance will be the tenant, negotiations remain ongoing and the DOE/SRNL long-term commitment remains underwhelming.
By Don Moniak
Feburary 20, 2024 Update
The City of Aiken’s contract with the architectural firm of Cheatham, Fletcher and Scott is available; buried in the City’s document repository in a newly created “Downtown Redevelopment” folder. The contract provides the data shown in the table below.
The project involves a three-story, 36,000-square-foot office building to be constructed on one acre of vacant property on Newberry St, NW. The land is currently owned by the city’s nonprofit property management business partner, the Aiken Corporation. The organization purchased the land in July 2022 for $650,000, and in the midst of Project Pascalis, and claimed its future would be parking lot.
The stated plan for nearly a year is to construct the building, and transfer ownership to the Aiken Corporation (ACorp). According to a February 17th Aiken Standard article, that remains the plan. An additional step will require the City to first purchase the the Aiken Corporation property.
Thus the City will buy the property, construct the facility, and then transfer it to Aiken Corporation to own and manage. This confusing arrangement means that $20 million of state funds allocated to “SRS/National Laboratory Offsite Infrastructure” will actually become Aiken Corporation infrastructure that may house the DOE/SRNL contractor.
Up to this point, ACorp has been managing the predevelopment process as a sole-source City of Aiken contractor. That contractual process went so far as an Aiken Corporation-issued RFP for architectural services in late November 2023. According to the Aiken Standard story, last week ACorp officially awarded the design contract to the architectural firm of Cheatham Fletcher and Scott.
That firm is now identified in the City’s RFQ/RFP as being retained by the City of Aiken, not the Aiken Corporation:
“The City of Aiken has retained the services of a design consultant team led by Cheatham Fletcher Scott Architects (CFS) to develop the design and to prepare construction documents for the Project.The Project is currently in the early Concept Drawing Design phase.” (1)
In addition to the February 15th RFQ/RFP issuance, this past Friday the City also published in The Aiken Standard its notice of a March 12th Planning Commission Public Hearing that includes a “Project Review for Savannah River National Laboratory.” (Figure 1) The City of Aiken, not the Aiken Corporation, is the applicant. The application has yet to be publicly disclosed.
Final Design Due Date
May 20, 2024
Construction Start Date
December 16, 2024
Construction Completion Date
~February 2026
Design Contract Award
Not provided
Construction Budget
$14.4 million
Furniture, Furnishings, and Equipment Budget
$1.3 million
Figure 1. February 16, 2024 Public Notice of Public Project Review, published in the Aiken Standard.
The Name Changes:From “SRNL Workforce Development Center” to “Mixed-Use Building” to “Aiken Corporation Mixed-Used Building” to “City of Aiken Mixed-Used Building.”
The downtown office building project is publicly funded with $20 million from the State of South Carolina’s plutonium settlement. Originally titled as Offsite Infrastructure SRS/National Lab, the stated intent in the City’s funding request was to build a 45,000 square foot “Workforce Development Center” on behalf of the Department of Energy’s (DOE) Savannah River National Laboratory (SRNL). The facility would be occupied by SRNL’s operation and management contractor, Battelle Savannah River Alliance (BSRA, or Battelle).
Since November 2022, the Aiken Corporation has functioned as the City’s sole-source project contractor. It was informally tasked by City officials with managing the project, its involvement was kept a secret for more than two months, and no formal public announcement of this project leadership arrangement was ever made prior to March 2023—perhaps due to trepidation over the Aiken Corporation’s controversial history.
With informal City approval, the Aiken Corporation hired a subcontractor, the architectural firm of McMillan Pazdan and Smith (MPS) to perform early tasks. The stated scope of work could be summarized as goal setting and needs assessment derived from a series of “stakeholder meetings” to be held with “minimal disruptions.” The word “public” was absent from the contract.
A month later, the City formally requested the $20 million of project funding from the State’s plutonium settlement fund. The settlement request form was unequivocally clear that the facility was to be built on behalf of SRNL.
On January 23, 2023, the project was announced with great fanfare at the State of the City Address—but the announcement omitted any mention of Aiken Corporation involvement. A public meeting was promised, and the City subsequently announced a public forum. That meeting was held two weeks later on February 6th and facilitated by MPS. An announcement of a “feasibility study” with a target date of May 1st was made by MPS representative K.J. Jacobs.
On March 13, 2023, Aiken City Council approved a no-bid, $250,000 contract for Aiken Corporation to conduct “pre-development work” and negotiate a lease for the 45,000-square-foot office complex. The contract specified the facility would be located on Richland and Newberry Streets on city-owned commercial properties purchased in November 2021, by the now-defunct Aiken Municipal Development Commission (AMDC), as part of its pursuit of the downtown redevelopment effort known as Project Pascalis.
The formal contract, approved three months after work began, officially named MPS as subcontractor for predevelopment services. The three-page scope of work assigned to MPS involved cultural and historic assessments, and “goal setting and programming” that had a heavy dose of public relations management. The scope did not include a site-selection analysis, facility design, or a feasibility study—although both were later completed and published within a single report.
The contract’s scope of work specifically cited SRNL as the only future tenant, and expressed a desire for what could be described as a party venue:
”The facility will house permanent employees as well as a rotating group of university faculty, students, and researchers who will work on critical projects for SRNL as part of a university consortium….There is also a desire for the building to have a rooftop gathering and event space.”
The Aiken Corporation was also contractually tasked with hiring an attorney to assist with lease negotiations. The Aiken law firm of Austin and Pethick had already been retained in early March, and eventually billed ACorp for more than a thousand dollars for preliminary work completed prior to the contract. Subsequent legal fees over the next six months would total more than $10,000.
For the next few months, lease negotiations slowly proceeded, but with no announcements of an agreement. The difficulty of negotiating with a federal contractor bound by complex procurement regulations became increasingly evident. In fact, by June 2023 the negotiating parties had signed a Nondisclosure Agreement, not a Memorandum of Understanding.
The “Mixed Use” Building
Somewhere along the way Aiken Corporation and City officials decided to stop referring to the project as the “SRNL Workforce Development Center.” In May 2023, the project was quietly rebranded as a new “Mixed-Use Building.” A series of guest columns in the Aiken Standard by Mayor Rick Osbon and three Aiken Corporation Board members followed, all praising the future benefits of a “Mixed-Use” facility that might house the SRNL contractor.
A few months later DOE/SRNL officially distanced itself from the site selection and project development process, saying it was only interested in office space if it became available. Unofficially, negotiations continued, and a Memorandum of Understanding (MOU) and Letter of Intent (LOI) was drafted for review by the ACorp Board.
Then, in September 2023, MPS finally released its well overdue “feasibility report.” Even though no amendments had been made to the ACorp-City of Aiken contract, MPS had considered four additional sites and completed a conceptual design that is still in use—one with the coveted rooftop gathering place in the form of a “covered terrace.”
MPS then made a recommendation to site the facility on the Aiken Corporation-owned Newberry Street, NW, property (Figure 2), and the ACorp Board then unanimously approved locating the $20 million office building constructed on its property. At its September 25th meeting, Aiken City Council gave a warm reception to the site recommendation during an ACorp presentation (2), but never went so far as approving the final site selection.
Figure 2: McMillan Pazdan and Smith’s site conceptual plan for the location of the proposed 3-story, 36,000 square foot “Mixed-Use” office building, with a covered terrace event space on the rooftop.
The Aiken Corporation’s New Mixed-Use Building.
Once the recommendation was made to build on Aiken Corporation property, it became an ACorp project. After months of costly negotations (4), the lack of a lease agreement remained a major hitch in the project. Negotiations between all parties—City, ACorp, DOE/SRNL, and BSRA—had stalled to the point that discussion emerged of an Aiken Corporation-owned building that might not even house lab employees.
The latter scenario was described in one City to Aiken Corporation email (5) as the “you build it and we will consider leasing it” option.
An SRNL official described the conundrum as a typical “chicken and egg” situation—the project could not proceed without a lease, and there could be no lease without the project; or at least some concrete progress to show to DOE’s authorizing officials.
With the uncertainty of the project’s future rising, the solution to provide evidence of progress was for Aiken Corporation to independently move forward with informal City approval. The process is more evidence that the partnership operates under a different set of rules—ones that are unwritten and allow for improvisation.
The Aiken Corporation RFQ bore a strong resemblance to City of Aiken procurement documents, and for good reason—city staff did most of the work. According to City of Aiken emails (6), the Aiken Corporation had no experience with RFQs or RFPs. To accommodate the organization, the city’s Economic Development and Procurement departments coordinated to retain a highly experienced and successful project oversight manager to compile project specifications, turned a rough draft into a finished RFQ, and wrote the RFQ legal notice and then arranged for its publication in the Aiken Standard.
A few weeks after the ACorp RFQ was released, the Department of Energy authorized its SRNL operating contractor to negotiate a one-year lease for the facility, with renewable one-year leases for up to ten years—contrasting sharply with the ten-year office space leases in Aiken County’s Carrol H. Warner Savannah River Research Campus between the County and the DOE/SRNL contractor. In fact, on September 25, 2023, ACorp Board member Pat Cunning told Aiken City Council that,
“The lease will probably be a 10-year lease, with two ten year options. He said a concern is what happens if the Lab does not extend the lease after 10 years. He said he did not think that would happen, but in real estate you have to plan for such things.”
Meanwhile, the City of Aiken released a Request for Qualifications for Real Estate Services to procure a real estate firm to market the Hotel Aiken and the Pascalis properties; properties that eight months earlier had been presented as a sure bet for the SRNL project.
With some leasing commitment—though still no signed papers—in place, Aiken City Council moved forward on January 8, 2024 with an ordinance to incorporate the $20 million of plutonium settlement funds into the City budget. The staff’s supporting memorandum for the budget amendment stated that,
“City staff is working with Aiken Corporation on an agreement that will be before Council at a future meeting in February. “
The budget amendment ordinance was approved unanimously following the first public hearing, and Council granted final unanimous approval following the second public hearing on January 22, 2024.
From that point, it was assumed the Aiken Corporation would continue to formally run the show— if only for appearance sake. The ACorp’s January 10th meeting minutes described Chairman Buzz Rich stating that, “The next step is to hire an architect and start the design work…He plans to meet next with the City Manager to discuss further details.”
The City of Aiken’s New Mixed-Use Building
The next step, as it turned out, was the City of Aiken taking over project management and hiring the architectural firm; one that was selected through the ACorp’s procurement process. Mark Chostner’s Capstone Services—which has overseen project management of the new Public Safety Headquarters and the new Municipal Building—is now listed as being in charge of the City’s, and not Aiken Corporation’s, “owner project management services.”
The City of Aiken routinely procures and manages expensive professional service contracts and multimillion dollar public works projects. Its Procurement department follows standard procedures and avoids legal challenges to its bid awards. In contrast, the Aiken Corporation stumbled through its $250,000 predevelopment contract, and needed city staff and Capstone Services to complete its first and only RFQ this century.
It only makes sense to avoid the use of any third-party surrogate administrator and avoid the kind of increased logistical and fiscal inefficiencies that accompanied the Aiken Corporation’s “predevelopment” contract.
Lingering Questions and Issues
Even though the City’s assumption of project management can be viewed as a welcome development, several lingering, related questions remain.
First, how did the City manage to retain Cheatham Fletcher and Scott as its architectural design firm without going through its own required procurement process? The answer is probably that the city’s Procurement department ensured that the ACorp’s improvised process adhered to standard procedures—but if so the fact remains the City conducted the process through a surrogate that did not have the fiscal or contractual authority to proceed.
Second, who is the future owner of the building? The City of Aiken is now the “owner,” at least during the design and construction contract phases. Aiken Corporation is still the likely final owner and landlord.
The agenda for the Aiken Corporation’s February meeting included “Deliberations, discussions and any motions or resolutions about next steps in the development of the Newberry Street property, including but not limited to a Framework Agreement and a Purchase and Sales Agreement with the city of Aiken.”
According to the Aiken Standard’s Feburary 17th story, that framework is what has been marketed by the City-ACorp partnership since June 2023. The concept is referred to the “Amentum Model,” even though the Amentum Corporation was nonexistent when the property management model was conceived in the early 2000s. It is better titled “The Aiken Corporation Model. “
The Aiken Corporation model means the City would purchase the property from ACorp, construct the facility, transfer the facility back to ACorp, and rent the property itself to ACorp under a long-term ground lease.
That leads to the third question: If the Battelle Savannah River Alliance does sign a one-year lease, but does not renew it in the next several years, will that constitute a misappropriation of the $20 million legislative allocation for “SRS/National Lab Offsite Infrastructure?”
The last two questions could be resolved through the simpler rent-free alternative of the City constructing the facility and then gifting it to the State’s major universities.
Creating a “Workplace Development Center” was one example of the “substantial investment” promised by the State of South Carolina for USC, Clemson, and South Carolina State University to be part of the Battelle alliance. Since the state chose to honor this commitment by allocating $20 million of plutonium settlement funds, our higher education system should be granted ownership, and retain that ownership if and when the SRNL operating contractor ceases to occupy the “City of Aiken’s New Mixed-Use Building.”
Next: “We Need the Space.” and “Aiken Corporation Accomplishments: Mostly Pre-2015”
Footnotes and References
(1) How the City of Aiken retained a design firm without its own official RFP is unknown, and City officials did not respond to questions posed late Friday afternoon about the issue.
The Aiken Corporation RFP and associated legal notice was largely prepared by city staff; and did bear all the markings of the city’s procurement process. However, the ACorp architectural design services RFQ was not authorized by any City Council-approved contract.
(2) As reported in $148,000 For What…., an historic assessment was actually conducted under separate, unannounced contracts between the City of Aiken and McMillan Pazdan and Smith.
(3) With the City’s assistance, Aiken Corporation pursued public support for the project. A September 13, 2023 email from a City official urged dissemination of the ACorp’s new FB page:
“The Aiken Corporation Facebook page is now live and promoting the meetings. Please share with all Aiken Corp and Chamber fiends and contacts and ask that they follow the (Facebook) page and post supportive comments as appropriate.”
“Fiends” was an original typo. Neither the Facebook page nor the Aiken Corporation website devoted to the project have been updated since late September.
A strong showing was also urged for City Council’s September 25, 2024, public meeting, during which the MPS and Aiken Corporation recommendation was presented.
In fact, the Aiken Corporation has accomplished very little since around 2015, after its longtime Chairman Wade Brodie left the organization. Mr. Brodie was a tireless worker, and nearly every accomplishment touted by the current Board was completed under his tenure.
Since 2015, the Board has struggled with finding its way. It was finally forced to demolish its “spec building” on Beaufort Street after more than a decade of unsuccessfully trying to attract a tenant. The positive news is that the property is now the location for the new Children’s Place facility.
(4) As part of its contract with the City of Aiken, by October 2023, the Aiken Corporation had accumulated more than $10,000 in legal fees related to the lease negotiations. The costs of other involved parties—-city staff, DOE attorneys, SRNL officials, BSRA representatives, etc—is unknown. This information is known due to the Aiken Corporation’s prompt response to a Freedom of Information Act request for invoices submitted by McMillan Pazdan and Smith and Austin and Pethick.
(5) Emails related to the fall 2023 negotiations are available for viewing at this page.
(6) Example of emails related to City staff preparation of the RFQ are available for viewing at this page.
Related Aiken Chronicles articles and editorials, in descending order of publication:
The Rent Free Alternative is a review of the option of the City of Aiken taking over the SRNL/Mixed-Use project, constructing the facility, and then gifting the facility to the state’s Universities.
The Aiken Corporation Buildingwas published in conjunction with this article to illustrate the changes in corporate tenancy in the Aiken Corporation Building.
148,000 For What….reviews the payments and progress made in the Aiken Corporation contract.
Aiken’s Cousin Problem… covers the recommendation of the Aiken Corporation’s Newberry Street, NW property for the SRNL/“Mixed-Use” project; and the history of the acquisition of that property.
The three-part series The Amentum Model… chronicles the history of the development of the Aiken Corporation’s Newberry Street office building and the Aiken Performing Arts Center.
Letter to Battelle is a letter of concern regarding the project process and status to the Battelle Company’s chief liaison for the DOE/SRNL operating contract.
45,000 Square Feet Without a Tenant provides information about the DOE/SRNL disassociation with the project and the details of the DOE/SRNL operating contract.
A Question on Security is an unanswered letter to ACorp contractor McMillan Pazdan and Smith regarding Department of Homeland Security guidelines and rules for threat assessments at federal facilities.
The Future of Warneke Cleaners is an unanswered letter to Aiken Corporation contractor McMillan Pazdan and Smith regarding the zoning status of downtown dry cleaner.
Three Missing Pages covers the Aiken Corporation contract with the City of Aiken and provides extensive footnotes about the project timeline through April 2023.
Who Bought this Property chronicles how an Aiken Corporation loan from the City of Aiken was forgiven in exchange for ACorp purchasing a small property that facilitated the annexation of the new Steeplechase property.
The Agenda Setting Aiken Corporation describes how decisions are often made at Aiken Corporation Board meetings before being presented to City Council.
Project Labscalis Annual Operating Costs covers the total estimated costs for demolition and site prep, construction, and annual maintenance costs for the proposed SRNL building.
I wanted to share an update on the Aiken Corporation board meeting that took place yesterday. The board has agreed to proceed with issuing an RFQ for design services, which will include all preconstruction activities and the preparation of a bid package for a GC. The RFQ should be issued in the next 30 days, and firms will have 30 days to respond.
As reported in One-Year Lease After One-Year Lease, the U.S. Department of Energy’s Savannah River Site (DOE/SRS) has only authorized its Savannah River National Laboratory’s (SRNL) management and operating contractor to negotiate one-year, renewable leases for space in the proposed $20 million, publicly-funded “Mixed-Use” office building in downtown Aiken now under development by the Aiken Corporation.
A more suitable option for the $20 million effort is to have the City of Aiken complete the project, and then gift the building to the the State of South Carolina’s University system—which is a party in the management and operating contract. This option would satisfy the state’s contractual commitment for its major Universities to invest in the SRNL contract, which was the primary justification for the $20 million allocation from the state’s plutonium settlement allocation to pay for the project.
The Rent-Free Alternative
Monday evening’s regular Aiken City Council meeting agenda includes a Public Hearing of the “First Reading of an Ordinance to Amend the 2023-24 Budget to Include $20 Million from the Plutonium Funds for the Mixed-Use Building in the Downtown.”
The supporting memorandum for the ordinance states, in part:
“The Department of Energy [DOE] gave the Savannah River National Lab (SRNL) conditional approval to begin discussion with Aiken Corporation on a lease to occupy a portion of a mixed-use building in Aiken to be built on a currently vacant lot on the 100 block of Newberry Street NW.”
The Newberry Steet, NW, property is currently owned (1) by the Aiken Corporation (ACorp), which hopes to develop and own the “mixed-use” office building that will require at least $20 million of public funds obtained by the City of Aiken (COA) from the State of South Carolina’s plutonium settlement.
The current managing and operating contractor for the DOE-owned SRNL, the Battelle Savannah River Alliance (Battelle), has a five-year, multibillion dollar contract with DOE/SRS; with an option for a five-year extension. The Alliance includes the state’s major Universities: Clemson, South Carolina State, and the University of South Carolina.
As reported in 45,000 Square Feet Without a Tenant, the future of the $20 million plus “mixed-use” facility is entirely dependent upon ACorp reaching an agreement with Battelle for a long-term lease for use of a “portion of the building;” with subsequent approval by the Department of Energy’s Savannah River Site (DOE/SRS).
In fact, the COA’s Economic Development department warned twice in its most recent monthly reports that the ACorp Board “has made it clear that no further steps can or will take place until DOE/SRNL has offered an unambiguous, albeit contingent, commitment to lease the proposed facility….At this point, an MOU, LOI, draft lease, or some other instrument, even one with significant contingencies and hard outs for each party, is essential. Without one by year’s end, the chances of the project moving forward become less likely.”
Yet, ACorp is moving forward on a Request for Proposals for architectural design services with an estimated cost of up to $2 million; all without any contract with Aiken City Council to do so.
In actuality, the $20 million allocated by the South Carolina legislature was not for a “Mixed-Use Building in the Downtown” that would be owned by a private organization. The state legislature in 2023 specifically allocated $20 million for “Off-site infrastructure improvements for SRS/National Lab, including the Aiken Technology/Innovation Corridor.” This line item in the plutonium settlement disbursement contained no provision for rent payments from the federal budget to any public body or private organization.
The allocation, if implemented as written, actually satisfies the state’s required investment commitment for the Universities to participate in the SRNL management and operating contract. As reported in Offsite Infrastructure, the Universities are contractually obligated to invest in the contract and the only specified deliverable in that contract provision is a “workforce development” facility. (2)
The City of Aiken’s “Savannah River Litigation Settlement Fund Request Form” (Figure 1), submitted one year ago, contained no mention of a “Mixed-Use Facility.” The proposal was for a building devoted to a “Workforce Development facility” for SRNL; to be built on city-owned property. The funding request, which also contained no mention of the Aiken Corporation, defined the purpose as:
“Construction of workforce development center, shared event/exhibition space and office space for the Savannah River National Lab to be located within the incorporated limits of the City of Aiken on property under the control of the City of Aiken.”
Figure 1: City of Aiken request for $20 million SRNL project funds. (Click to enlarge)
The allocation granted by the SC legislature in response to this funding request was for off-site infrastructure, with no strings attached in terms of future leases or revenues. The funding did not specifically allow for a commercial building to be constructed on behalf of any private organization that would subsequently earn rental revenues from a federal government contractor. Given these facts, could the City of Aiken be involved in a misappropriation of state funds by allowing Aiken Corporation to own the building on its own property?
There is an alternative to avoiding any real or perceived appearance of a misappropriation, and the current pathway that has already involved arduous and costly long-term lease negotiations between Battelle and ACorp—which so far have yielded only a commitment to negotiate for a series of one-year leases. Should such an agreement ever emerge between the two, it would still have to be approved by the DOE/SRS contract administrator.
The alternative, which has been presented to State Senators Tom Young and Shane Massey (3), is as follows:
1. Since the justification for the $20 million in state funding resulted from South Carolina’s commitment for the Universities’ participation in the Battelle contract, the facility should be built for the Universities; not for any private, rent-seeking organization. Since the City of Aiken controls the funds, its procurement department could be tasked with the design and construction process.
2. After completion of the facility, the property and/or building could be donated to a state Universities member, such as the University of South Carolina at Aiken (USCA); which would then provide the office space to the current SRNL contractor at no cost—as originally intended. The contractor would only be responsible for the utility and maintenance costs.
If a new contractor emerges in five to ten years that chooses to forego its use, the office facility could remain in the hands of the Universities and continue to provide the long-sought connectivity between USCA and downtown Aiken. Or it could revert back to the City for its use or sale.
One caveat would have to be that any Battelle-led consortium could not claim the workforce development facility as an asset in future contract bids; the option to continue to occupy the building on a rent-free basis would have to be made available to any future bidder.
This option not only removes the costly and difficult process of DOE and SRNL representatives negotiating a long-term lease with a publicly funded, private entity, it also removes the necessity of relying upon annual federal funding to pay the lease. The building would still be occupied by some SRNL employees and the intended “rotating group of university faculty, students and researchers.” There would just be no rent expected from a federal contractor whose budget is subject to the whims of Congress and DOE.
As for the Aiken Corporation’s Newberry Street, NW, property, part of the $20 million could be used by COA to buy that property. The City could still select another property, such as a portion of the nine acres of the County-owned “old hospital” property (Figure 3) currently under contract to the Turner Development company. After all, City Council has yet to approve the ACorp’s Newberry Street location as the location for the $20 million project.
(Note: For further background on the plutonium settlement disbursement process and the rent-free alternative, see Footnote 2)
Figure 3: The “Old Hospital” property at 828 Richland Avenue, West, was the most popular choice for a future SRNL Workforce Development office building.
A Project Gone Awry.
The SRNL/“Mixed-Use” project to date has mimicked the practices that ultimately contributed strongly to the failure of Project Pascalis: secret proceedings leading to a decision, with public input of any kind allowed only after the decisions were made. The project also evolved into an unrecognizable version from the original publicly presented proposal, during which Aiken City Council oversight was lacking.
As described in Three Missing Pages, following the cancellation of Project Pascalis, city staff surreptitiously recruited the Aiken Corporation to pursue the project by using property owned by the Aiken Municipal Development Commission (AMDC). On December 9, 2022, ACorp President Buzz Rich signed a city staff-approved contract with the architectural firm of McMillan Pazdan and Smith (MPS) to begin work on the project. The AMDC had no involvement in the decision to utilize its properties in this manner.
Aiken City Council then met in two closed-door Executive Sessions to discuss the project, and subsequently withheld its very existence and its proposed location on disputed Project Pascalis properties during two public meetings in January 2023. Council finally choose to inform the public of their decisions at then-Mayor Rick Osbon’s January 23, 2023 “State of the City” address. The SRNL downtown project announcement came one week after Council made promises to pursue a “reset” and fresh start on a path forward for the Pascalis project properties during a special-called meeting.
The role of the Aiken Corporation was not even hinted at during the “State of the City” address (Figure 2) despite its existing contract with MPS. Its role as the probable developer and building owner was not revealed until March 13, 2023–four full months after being silently recruited to tackle the task.
Aiken City Council’s unofficial delegation of the project to the third-party Aiken Corporation was made months before deliberation and approval of the $250,000, no-bid contract. Council’s decisions caused a one-year delay in pursuing a final path for the Hotel Aiken and other Pascalis properties.
In the end, the contract eventually led to a recommendation by Aiken Corporation to use state-obtained funds legislatively allocated to Aiken County and passed on to the COA to locate the project on ACorp property for the benefit of ACorp. Aiken City Council has yet to officially validate this self-serving recommendation beyond unofficially failing to object to it.
Figure 2: SRNL’s Director Dr. Vajid Mahiji addressing the crowd during the State of the City address, January 23, 2023. At the time, the word “Mixed-Use” was absent from the discussion.
Summary
The original purpose of the $20 million was not to build a private “mixed-use” office building. It was not to further subsidize the City of Aiken nor its private partner the Aiken Corporation with an annual flow of federal financing that could be better put to other purposes.
The legislative intent was to construct “off-site infrastructure” for an institution whose operating contractor includes the state’s university system. The only justification for awarding plutonium settlement funds for use by one of the Defendant’s institutions, SRNL, was that the state had committed to an investment in the Battelle-led alliance with state Universities. That commitment specifically included a workforce development facility from the Universities and for the alliance.
The Universities, in their role as alliance members, should be the ultimate recipient of this funding
Aiken City Council should recognize that its decisions, coupled with a lack of adequate oversight, in downtown redevelopment efforts have only caused delays in the redevelopment of the Hotel Aiken as well as an updated Aiken County judicial system infrastructure, divided the Aiken area community, and disrupted the lives of numerous small downtown business owners.
Council could take an entirely different path of in-house management of any developments on city property by ceasing to farm out vital tasks to third-party intermediaries. It could also do the right thing by eventually gifting the $20 million workforce development office building to its intended owner, the state’s University System, and stop describing it as a generic “mixed-use” building.
Twenty million dollars of federal treasury funds is at stake in this process. Beyond maybe selling property for project use, should any private organization whose by-laws fail to identify the COA or Aiken County as “shareholders” be allowed to profit from this publicly-funded project? Should $20 million be spent without any future restrictions on the use of the building should SRNL stop renting space? Or should the money be spent for the common good, in support of higher education? “ The County legislative delegation and the City of Aiken still has time to reverse their support for the current private, rent-seeking alternative and choose to make the facility a true public asset.
Footnotes:
(1) Details of the Aiken Corporation’s purchase of its Newberry Street, NW property is contained in Aiken’s Cousin Problem.
Not reported in that story was the probable collateral for the Newberry Street property; a 25-acre parcel of land between North York Street and Kershaw Street, NE, that is now owned by Aiken Corporation. According to Aiken Corporation meeting minutes from November 2021, the original owner of that property wished to donate it to the City of Aiken, but instead city staff opted to allow Aiken Corporation to accept the land donation.
According to a City of Aiken Economic Development Department monthly reports, at the time of the Aiken Corporation’s $650,000 Newberry Street property purchase, the 25-acre parcel was under contract for $625,000; enough to pay off the entire loan.
By the end of 2022, that contract with the Auben Company was cancelled. In June of 2023, the ACorp Board voted to accept an offer of $437,500, which closely corresponded to the appraisal conducted to quantify the size of the donation for IRS reporting purposes.
The property is currently proposed for single family housing and commercial use by High Brass Development, LLC. The Aiken Corporation sale will be executed after City Council approval of the High Brass concept plan. ACorp would then be able to pay off two-thirds of its $650,000 loan.
(2) The following is an updated summary of information first reported in Offsite Infastructure.
Further Background on the Plutonium Settlement Disbursement Process and the Rent-Free SRNL Project Alternative.
On August 30, 2020, the State of South Carolina reached its landmark, $600 million settlement with the U.S. Department of Justice.
Now commonly referred to as “The Plutonium Settlement,” the action was the result of the Department of Energy (DOE) failing to meet the terms of Amendments made to Defense Authorization Acts that mandated the removal of one ton of plutonium per year from SRS if a planned Plutonium/Mixed Oxide Fuel Fabrication Facility (MFFF) was not operational by 2016. Failure to remove the plutonium triggered upwards of $160 million per year in fines to be paid by the federal government to the State of South Carolina.
DOE now has until 2037 to remove surplus plutonium brought to SRS from other nuclear weapons complex sites, a process that complied with DOE’s 1997 legal decision to consolidate all “non-pit” surplus plutonium at SRS.
Following the settlement, SC Attorney General Alan Wilson immediately granted $75 million of the funds to three law firms (later reduced to two) managing the litigation leading up to the settlement. A legal challenge to that decision currently remains in state courts, but the first decision was favorable to the AG’s office.
As described in Off-Site Infrastructure, intense competition for the remaining $525 million in funds followed the settlement, with a final ldecision not reached until the end of the 2023 legislative session.
The competition included one of the Defendant’s institutions, the Savannah River National Laboratory (SRNL), lobbying for a lion’s share of the funds. The justification for that lobbying effort was the SRNL operating contract between DOE and Battelle Savannah River Alliance (Battelle).
On December 20, 2020, DOE awarded the Battelle-led alliance the $1.9 billion, five year contract to manage and operate SRNL, with an option to extend the contract to ten years. The alliance is comprised of the Battelle corporation, which operates, or assists in operations at, numerous other national laboratories; and five regional universities: the University of South Carolina, Clemson University, South Carolina State University, Georgia Institute of Technology, and the University of Georgia.
One contract provision involved investments by the various BSRA partners. The State of South Carolina, on behalf of its University system, committed to making “a substantial investment to support DOE and SRNL,” that included a “possible infrastructure investment colocated with SRNL to support workforce development.” (Section J-14 of the contract).
One year later, Governor Henry McMaster was happy to oblige that wish. In a December 9, 2021, letter, to House speaker Jay Lucas and Senate President Thomas Alexander, Governor McMaster presented his proposal for ensuring “the communities surrounding SRS be the prime beneficiaries of these settlement funds.”
Governor McMaster proposed spending twenty percent of the total plutonium settlement on SRNL, writing:
“The one-time investment of $120 million will be used over the next five years by the alliance to hire scientists, grant scholarships, and upgrade equipment at SRNL, as well as for the construction of a new facility to house the alliance at SRNL.”
The state legislature was clearly reluctant to invest one-fifth of the settlement on the Defendant, but eventually settled on an allocation of $20 million for “SRS/National Laboratory Off-Site Infrastructure and Innovation District.” This allocation more than met the state’s commitment in the BSRA contract.
The allocation was for off-site infrastructure, with no strings attached in terms of future leases or revenues. The funding did not specifically allow for a commercial building constructed on behalf of any private organization that required a lease arrangement with a federal government contractor. The only justification for the allocation was to meet obligations made by the state on behalf of its major universities.
(3) On September 15, 2023, I emailed a letter to Senators Tom Young and Shane Massey, asking them, in part, the following:
“It is increasingly evident that the $20 million allocation from SRS/plutonium settlement funds that was awarded to the City of Aiken is no longer specifically for an SRNL facility. How is this not a misappropriation of funds?”
There was no formal response to the letter.
A subsequent, October 3, 2023 letter outlined a case against the Aiken Corporation being tasked with the project, arguing, in part, that an organization mostly involved in six-figure projects should not be suddenly tasked with an eight-figure project.
The Department of Energy’s Savannah River Site (DOE/SRS) has only authorized the Savannah River National Laboratory’s (SRNL) management and operations contractor to pursue a series of one-year leases for space in the proposed $20 million “Mixed Use” office building that is currently under predevelopment by the Aiken Corporation.
While the publicly-funded downtown project keeps shrinking in size while costing the same, Aiken City Council is allowing Aiken Corporation to pursue further development before city staff has even prepared another no-bid contract for Council approval.
By Don Moniak January 7, 2024
Aiken City Council is scheduled twice to discuss the proposed $20 million “Mixed Use” office building, also known as the “SRNL project,” during its January 8th regular meeting, The first, and more important, discussion is scheduled to occur behind closed doors during an Executive Session. The second discussion is a public hearing much later in the meeting. Both agenda items involve the relationship between the City of Aiken (COA) and the Aiken Corporation (ACorp) as it pertains to the SRNL project.
In March 2023, Aiken City Council signed a no-bid, $250,000 contract with the Aiken Corporation for predevelopment work on a proposed Savannah River National Laboratory (SRNL) “workforce development” office building. The scope of work for that contract was reportedly completed with the issuance of a “feasibility report” and a site location recommendation by Aiken Corporation.
The contract also authorized ACorp to negotiate lease agreements with “third parties.” The only known third party at this time is SRNL, which is fully owned by the U.S. Department of Energy, but managed and operated through a contract with the Battelle Savannah River Alliance (Battelle). Both DOE/SRS and Battelle must reach a mutual agreement for any facility leases.
Between the March 2023 COA/Acorp contract agreement and the September 25th site location recommendation, the proposed facility size shrunk from 45,000 square feet to 36,000 square feet, the project was rebranded as a generic “Mixed Use” spec building, while the estimated cost remained at $20 million. Now, ten months later, ACorp has only managed to obtain a commitment to negotiate a series of one-year leases; but has yet to report the signing of any Memorandum of Understanding.
Aiken City Council is presently allowing ACorp to move forward on the next stages of the $20 million project that is being funded with South Carolina’s plutonium settlement funds. Yet, Council has not approved the recommended facility location, nor does it have have a contract with ACorp to continue further development work.
The Closed Door Session
The first discussion is scheduled as a closed-door Executive Session to “to discuss a proposed contractual arrangement with the Aiken Corporation regarding the Savannah River National Laboratory (SRNL) downtown building project.” The justification for closing the doors is that the discussion involves “negotiations incident to a proposed contractual arrangement.”
South Carolina’s Freedom of Information Act allows for this vague exemption, but also allows public bodies the freedom to discuss these issues openly and in full public view. If City Council chooses to close the doors Monday evening, it will be opting to privately discuss the expenditure of millions of public monies on a publicly funded, private organization (ACorp) that, in turn, will seek to extract hundreds of thousands of dollars of rental revenue from a federal contractor subject to the vagaries federal budget shaving.
According to two letters in the meeting agenda documentation, there is no proposed contract, only a commitment to negotiate a contract. Battelle is only authorized by DOE/SRS to pursue a base one-year lease with options for up to nine one-year renewals with ACorp. The lease renewals are obviously dependent upon the availability of funds in DOE/SRS/SRNL annual budget.
In a December 14, 2023 letter, DOE/SRS granted Battelle “preliminary approval to move forward with the procurement action in support of real property leased space from the Aiken Corporation.”
The DOE/SRS approval letter was in response to a December 11, 2023, letter (Figure 1) from Battelle requesting:
“Programmatic Approval to move forward with a procurement action in support of real property leased space from the Aiken Corporation for a one (1) year base period lease estimated at $375,000 (to) $425,000 per year, with nine (9) additional (1) year option periods. The request is for approximately 25,000 square feet of office/collaborative space located in a future building in downtown Aiken with a projected cost of $15-$17 (per square foot). “ “
By comparison, the Amentum Company presently has a three-year lease at $20,500 per month ($246,000/year) for 20,000 square feet of office space in the ACorp’s Newberry Street building adjacent to the Aiken Performing Arts Center. Amentum’s square foot rate per year is $12.30, nearly one-third less than the upper rental rate under consideration by Battelle.
Battelle’s December 14th letter also contained the company’s first public reference, since the project was announced last year, that it is contractually obligated to provide an office building focused on workforce development (1):
“This future building was identified in BSRA’s proposal to manage and operate SRNL.”
Figure 1: Letter from Battelle Savannah River Alliance to DOE/SRS
The Public Hearing
The second discussion towards the end of the meeting will be a public hearing on the “First Reading of an Ordinance to Amend the FY-2023-24 Budget to Include $20 million of SRS Settlement Funds.”
The supporting memorandum (Figure 2) for the ordinance describes DOE’s, “conditional approval (for Battelle) to begin discussion with Aiken Corporation on a lease to occupy a portion of a ‘mixed use’ building in Aiken to be built on a currently vacant lot on the 100 block of Newberry Street, NW.”
The memorandum goes on to state that, “City Staff is working with Aiken Corporation on an agreement that will be before Council at a future meeting in February.”
By that time, Aiken Corporation is expected to have chosen a firm for the million dollar plus job of designing this proposed $20 million “Mixed Use” facility; for which it only has one potential tenant that is unwilling to commit to more than a one-year lease.
Figure 2: Supporting Memorandum for the $20 million budget amendment ordinance
Aiken City Council’s Cycle of Private Permission and Public Forgiveness
The existing situation is strikingly similar to the early stages of the project in December of 2022, when Aiken City Council met behind closed doors with ACorp and SRNL representatives. That meeting occurred after the ACorp had already signed its contract with the architectural firm of McMillan Pazdan and Smith to begin project work.
Council then withheld the existence of the updated project for more than a month.It’s contract with ACorp was not approved until three months after it secretly sanctioned the ACorp/MPS contract; that approval also allowed for reimbursement of project work during the three months preceding the COA/ACorp contract.
Today, Aiken Corporation is moving forward on a Request for Proposals for Architectural Design Services, even though the organization has no contract with the City of Aiken to pursue such services which are expected to easily exceed a million dollars.
Within a span of thirteen months, Aiken City Council has twice allowed ACorp to race ahead of Council’s official decision-making process; the latest example of this public body granting permission to a “partner” before seeking public approval, or forgiveness, of its decisions.
When it comes to downtown, Aiken Corporation continues to set the agenda, while Aiken City Council keeps following. The difference today is that instead of hundreds of thousands of dollars being involved, $20 million is at stake.
Footnote:
(1) Details of this contractual provision and the subsequent lobbying of plutonium settlement funds can be found in Offsite Infrastructure .
