RIOC To Receive $1.4 Million Annual Payment For 55 Years From NY State And Cornell For Roosevelt Island Tech Campus Land, Maybe - RIOC Board Of Directors Meeting Tomorrow For Vote To Approve Or Not
Image of Goldwater Hospital/Future Cornell NYC Tech Campus From Google Maps
Reported December 10:
The Roosevelt Island Operating Corp (RIOC) Real Estate Advisory Committee is meeting for the second time in less than a week for an update on the negotiations with Cornell for the land controlled by RIOC which is part of the planned Cornell NYC Tech campus....and updated later that evening:
... ... All reports are that the RIOC Directors and staff are battling hard to protect the interests of Roosevelt Island in these negotiations with Cornell...
It looks like an agreement has been reached between Cornell and RIOC subject to approval of the RIOC Board at the December 12 Directors Meeting.
Just received this Amended Agenda for Thursday's RIOC Board Of Directors Meeting which includes this addition:
... 7. Authorization to Enter into an Amendment of the Master Lease with the City of New York and to Take Related Actions in Connection with the Cornell Tech Campus Development, Including Making Environmental Findings and Entering Into a Development Agreement and Other Related Agreements (Board Action Required)...
Credit: Kilograph via Cornell NYC Tech
Yesterday, I sent this inquiry to RIOC President Charlene Indelicato and the RIOC Directors:
I understand that RIOC and Cornell have entered into an Agreement for the land controlled by RIOC that is part of the proposed Cornell NYC Tech Campus on the current site of Goldwater Hospital.It is true. RIOC, Cornell and NY State have agreed upon terms for the transfer of the land controlled by RIOC that is part of the planned Cornell NYC Tech campus subject to approval by the RIOC Board of Directors tomorrow (December 12).
The agreement is subject to approval by the full RIOC Board at the December 12 meeting.
I understand that the proposed agreement between RIOC and Cornell includes annual payments to RIOC of approximately $1.5 million from NY State, NY City and Cornell.
Is the above accurate?
Does RIOC have any statement on this proposed Agreement with Cornell?
Is there a deal term sheet that can be released to the public?...
The terms of the deal are presented in this December 10, 2013 Memorandum (Memo) from the RIOC Staff to the RIOC Directors. According to the Memo (Page 3):
This Memorandum and the transactions described herein have been facilitated by the Empire State Development staff...Here are excerpts from the Memo (Page 6-8):
... TERMS OF THE TRANSFER
A summary of terms set forth below have been agreed upon by RIOC, the State, Cornell, the City in exchange for RIOC surrendering the Parcel back to the City. Many of the non‐financial terms reference Cornell’s commitments made in its letters to David Karnovsky dated March 19, 2013 (the “Karnovsky Letter”) a copy which is attached hereto as Attachment C and Jessica S. Lappin dated May 2, 2013 (the “Lappin Letter”), a copy which is attached hereto as Attachment D:
- Surrender of the 2.6 acre RIOC site surrounding the City Goldwater Site (the “Parcel”) under the Master Lease to the City to be incorporated with the City Goldwater Site to comprise the 12.4 acre Campus. The City will lease the Project Site to New York City Land Corporation for 99 years which will assign the lease to Cornell.
- RIOC commissioned 2 appraisals for the Surrounding Site which valued such site at $24 million (“Haims Appraisal”) and $90 million (“KTR Appraisal). The Haims Appraisal has been assessed as more credible for several reasons.
- (i) $1,000,000 annually for 55 years payable to RIOC (escalating 2.5% every 10 years) in accordance with State budgetary procedure, or
(ii) an equivalent amount to support capital infrastructure improvements on RIOC as determined in accordance with State budgetary procedure.
CITY CONTRIBUTION Via (NYC Economic Development Corporation (“EDC”)
- $400,000 annually for 55 years payable to RIOC (escalating 2% every 10 years).
Execution of a Development Agreement with RIOC evidencing this payment plus the following material commitments to be implemented by or on behalf of Cornell at Cornell’s sole cost:
‐Mitigation under SEQRA identified in RIOC findings statement and other materials2;
‐Mitigation under SHPA;
‐Infrastructure Improvements on, around, and under Loop Road (includes roadway work, sewers, relocation of electrical duct banks, and gas service);
‐Red Bus commitment during construction4;
‐Barging where feasible5;
‐Access to the RIOC premises under permits and License Agreements providing work plans, bonding and insurance, and incorporating construction protocols, all approved by RIOC;
‐Construction and truck trips on and off Roosevelt Island may occur between 7 am to 6 pm to coincide with standard NYC Department of Buildings (“DOB”) hours; variances from such will be approved by RIOC in its reasonable discretion;
‐Air and Noise Pollution Mitigation;
‐Payment for RIOC Engineer and RIOC Consultant to review Work Plans for work to occur on the RIOC Premises and to monitor performance of work by Cornell or its agents pursuant to Work Plans;
‐Ensure Safe Pedestrian and Vehicular Access to areas south of the Cornell Site (RIOC’s request for in‐bound access was not agreed to);
‐Repair of damage on Roosevelt Island caused by Cornell or its agents;
‐General indemnification for work performed by Cornell or its agents;
‐Environmental indemnification for environmental liabilities caused by Cornell or its agents; and
‐Increased security by Cornell at southern end of Roosevelt
- Execution of a Side Letter between RIOC and EDC evidencing the following payment and commitments by the EDC:
‐$70,000 in payment for one‐time legal fees accrued by RIOC for SEQRA related issues in connection with the transaction.
‐NYCEDC, in its role as lease administrator, agrees to meet with the Roosevelt Island Operating Corporation (“RIOC”) on a quarterly basis, beginning on or about February 14, 2014 until completion of the Full Build as defined in the Cornell Lease, in order for RIOC to have the opportunity to brief NYCEDC on Cornell’s compliance (or lack thereof) in connection the commitments set forth in the Lappin Letter in Paragraph A (Construction Practices), Paragraph B (Security), Paragraph C (Parking), Paragraph G (Barging), Paragraph H (Red Bus Service), Exhibit A (Construction Noise Control and Air Quality), the “Construction Measures” portion of Exhibit B, and the “Parking” portion of Exhibit B.
‐Pursuant to such briefings, if RIOC disagrees with NYCEDC’s enforcement of a commitment that Cornell has made through the Lappin Letter, RIOC, in its sole discretion, has the right to commence mediation with the Governor’s Office and the Mayor’s Office to reach a resolution, which mediation shall promptly commence within five (5) business days from the receipt of the written request from RIOC.
‐If RIOC disagrees with NYCEDC’s enforcement of a commitment in the interim period between quarterly meetings with NYCEDC, RIOC, in its sole discretion, has the right to mediation with the Governor’s Office and the Mayor’s Office, which mediation shall promptly commence within five (5) business days from the receipt of the written request from RIOC.
ESD is waiving its fees in connection with facilitating the transaction....
...In accordance with the Public Authorities Accountability Act, as most recently amended (“PAAA”), two appraisals of the Parcel have been prepared. Jerome Haims Realty, Inc., an independent appraiser, appraised the fair market “as is” value at $24,000,000 as of March 8, 2013. KTR Real Estate Advisors LLC, an independent appraiser, appraised the fair market “as is” value at $90,000,000 as of May 22, 2013. The Haims appraisal has been assessed more credible than the KTR appraisal because the Haims’ appraisal is based on residential development that would have been allowed by zoning prior to the creation of the special zoning district for the Project. Moreover, the Haims appraisal discounted for the irregular shape of the Parcel, whereas the KTR appraisal did not.A footnote adds (Page 5):
... Both appraisers use a Sales Comp approach, and although they use different comps, both conclude at a value of $125 per SF of developable area (“DA”). They also agree on total lot size at 113,912 SF. Therefore, the vast value difference is based on (1) Haims’ use of a residential zoning FAR, which is more credible given the prevailing development character of the Island and (2) Haims’ finding that the “highly irregular in shape [of the parcel, which] could not be developed to maximize all of its development potential independently”, and therefore, by analogy to TDRs, makes the 50% discount...One area that may be of concern to RIOC is that the NY State contribution of $1 million over 55 years or equivalent contributions for capital infrastructure improvements appears conditioned upon being:
... in accordance with State budgetary procedure...What does that mean? Can NY State decline to make payments to RIOC or are such payments guaranteed? That provision needs to be better understood.
Also, shouldn't NY State be making capital infrastructure improvements on Roosevelt Island as needed whether or not Cornell builds its campus here? Why should Roosevelt Island capital improvement paid for by NY State be included as payment for the land to be used by Cornell NYC Tech?
There's much more in the Memo including issues related to construction, barging, trucking, air quality etc. Click here to read the whole Memo.
The RIOC Board of Directors will be voting on this proposed Agreement tomorrow during their scheduled December 12 meeting to be held at the Manhattan Park Community Center, 8 River Road starting at 5:30.
Should be a very interesting meeting.
UPDATE 12/12, 7:50 PM - The RIOC Board of Directors unanimously approved the Cornell NYC Tech project about an hour ago.
However, that approval was made contingent upon NY State signing a memorandum agreeing that the net present value of NY State's 55 annual $1 million payments to RIOC, as outlined in the December 10 Deal Sheet Memo, will instead by fully paid by December 31, 2018. The Memorandum is anticipated to be signed within the next few days.
More to follow.
UPDATE 12/18 -The funding memorandum was signed by both NY State (ESDC) and RIOC on December 16. More here.