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Business Day|Smart Land Deals as a Cornerstone of Free Tuition


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Smart Land Deals as a Cornerstone of Free Tuition


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Most colleges sometimes get involved in the thorny world of real estate, but for the Cooper Union for the Advancement of Science and Art, owning property in Manhattan and managing it wisely are an integral part of its success as a college.

A tiny but competitive private institution built around Cooper Square on the edge of the East Village, Cooper Union provides free tuition to its approximately 1,000 students. To accomplish this, the college has been unusually active in promoting the use of some of its property — which has been exempt from real estate taxes since its founding — for private development.

This is exemplified in its latest deal: it is leasing a 36,000-square-foot parcel with a college building at 51 Astor Place to a private developer for redevelopment.

After considering about two dozen developers, Cooper Union chose Edward J. Minskoff Equities Inc., which plans to build a 13-story commercial tower on the land. Work on the building will not start until next year.


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The developer took a 99-year ground lease on 51 Astor Place for $97 million. This deal is part of a campus overhaul that Cooper Union’s trustees hope will sustain its educational mission, said George Campbell Jr., the president of the college, which specializes in art, architecture and engineering.

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“We have this extraordinary mission of providing every student admitted with a full-tuition scholarship,” he said. “That’s been a challenge throughout the school’s 150 years.”

This year, the school has its first balanced budget in 25 years, he said.

Cooper Union’s budget deficit reached $15 million annually in the late 1990s.

“We basically were eating the endowment through those years, and that clearly was not a sustainable situation,” Dr. Campbell said.

In the 2002 fiscal year, the endowment was down to about $138 million, but has since surged to more than $600 million with some smart real estate deals, Dr. Campbell said. A growing endowment is important, he said, as the college gives out about $35 million in scholarships each year.

In addition to the deal at 51 Astor Place, the college leases out the Chrysler Building and its site in Midtown Manhattan and, more recently, the land and a residential tower called the Sculpture for Living at 26 Astor Place, developed by the Related Companies opposite the college’s main building.

“The building and land are owned by us,” Dr. Campbell said. “The leaseholder controls the building.”

Photo George Campbell Jr., Cooper Union’s president, in front of construction for an academic building at 41 Cooper Square. Credit G. Paul Burnett/The New York Times

The college’s unusually active involvement in real estate was spurred by an exemption from paying real estate taxes to the city when its charter was approved by the state, he said. In 1969, the State Legislature approved tax exemptions only on properties bought before that year, he said.


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“They said, Cooper Union has this special exemption, and we have to worry about Cooper Union going out and gobbling up all kinds of property and taking it off the tax rolls, so we’re going to put an end to that,” Dr. Campbell said.

In the case of the Chrysler Building, the land was originally owned in part and donated to the college by descendants of Peter Cooper, a 19th-century inventor and industrialist who founded Cooper Union. The Chrysler Building was completed in 1930.

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The architecturally daring Sculpture for Living, designed by Gwathmey Siegel & Associates Architects, was completed in 2004 on a former parking lot at 26 Astor Place.

In the most recent deal, Edward J. Minskoff Equities plans to raze the existing building at 51 Astor Place, which is Cooper Union’s engineering building, and create the 410,000-square-foot tower, primarily for offices. There also will be some retailers, and about 70,000 square feet will be dedicated to academic uses, though the space may be leased by other institutions.

On its own, the college is constructing an academic building at 41 Cooper Square, to be designed by the architect Thom Mayne. Until that building is completed in mid-2009, the college will lease the existing building at 51 Astor Place back from Edward J. Minskoff & Associates. When that lease expires, the redevelopment project can begin.

The tower at 51 Astor Place, which will sit on a square block, is being designed by the architect Fumihiko Maki, along with Adamson Associates Architects of Toronto. The developer, Edward J. Minskoff, said he hoped it would complement a neighborhood that has begun to undergo transformation. Once the scene of early-20th-century tenements and warehouses, Astor Place is now dotted with condominiums serving well-heeled buyers.

Mr. Minskoff said he had been drawn by the area’s evolving architectural sophistication.

“The fact that the school’s new building at 41 Cooper Square is going to be wonderful architecturally, because Thom Mayne is a great architect, gave me confidence,” he said, even though 51 Astor Place will not offer him as much rentable space as, say, an office tower in Midtown.

Yet prominent new tenants have been moving to the neighborhood, like AOL, which recently took 200,000 square feet at 770 Broadway.

“The 51 Astor Place lease is profitable for the college,” said Woody Heller, executive managing director at Studley, a commercial real estate services company, which handled the bidding process for 51 Astor Place. Although the developer does not pay property taxes, it will pay fees to the college, he said.


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The trustees of Cooper Union, who also oversee a number of small properties in the area, some of them leased to retail operations, are banking on the fact that their real estate will continue to provide a bountiful income.

“Our whole campus development involves almost 800,000 square feet of academic, retail, commercial and residential space,” Dr. Campbell said.

“A good part of that will be revenue-generating to support our academic mission, with about 250,000 square feet of that being academic space.”

Correction: March 10, 2008

An article on the Square Feet pages of Business Day on Feb. 13 about the development of property owned by Cooper Union misstated the name of a Toronto architecture firm that is designing a tower at 51 Astor Place, Manhattan. It is Adamson Associates Architects, not Adams & Associates.

A version of this article appears in print on , on Page C8 of the New York edition with the headline: Smart Land Deals as a Cornerstone of Free Tuition. Order Reprints| Today's Paper|Subscribe

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