State May Renege on Cornell Land Payments

Written by Briana Warsing. Posted in Volume 37, Issue 6 - November 19, 2016

New York State might not pay their share of a multimillion dollar agreement between the Empire State Development Corporation (EDC) and the Roosevelt Island Operating Corporation (RIOC) made as part of the 2013 Cornell Tech land agreement. RIOC board members Howard Polivy and Margie Smith brought their concerns to the Cornell watchdog group, Roosevelt Island Community Coalition (RICC) on Tuesday.

The deal, announced at a December 2013 RIOC board meeting, formally granted what was then Goldwater Hospital to Cornell Tech. In exchange for the land, among other terms, Cornell Tech agreed to pay RIOC $400,000 a year, and New York State the equivalent of $1 million per year until 2068, all before December 31, 2018.

Howard Polivy is a member of the RIOC board of directors.

Polivy and Smith are concerned because the money has been eliminated from the RIOC budget. Smith said, “The following year [after the deal was made], the State Budget Office said, ‘Take that line out. We don’t have a contract that says you are going to get that money.’ It’s out of the budget again this year. I don’t want to sign off on a budget that doesn’t have that in it because the message that sends is we didn’t think you were going to give it to us anyway.”

Polivy explained, “[RIOC’s] budget is created with the input of the state’s director of budget.

The 2013 letter from Kenneth Adams of Empire State Development memorializing the agreement to pay in full by the end of 2018.

When the initial idea [of having Cornell come to the Island] came across to us, there was no talk of money. [Cornell] just wanted the space. The City has the master lease. When it came time to argue for an amount, the money from Cornell Tech was pretty well settled at $400,000 per year plus escalation. Regarding the other money, we had to argue that they are responsible for infrastructure here on the Island. I said ‘We as RIOC, a State agency, are asking ESD, another State agency, to provide funds for capital needs.’ These capital needs are valuable to the state. In some sense, it is taking money from the left pocket and putting it into the right pocket. We would like that money in our budget for things that, if we didn’t have the money, the state would have to advance us the money anyway to keep this place solvent. They would feel a moral imperative if nothing else.”

Smith agrees. “Nobody says to me, ‘Margie, you don’t need to pay your maintenance this month because we don’t need it.’ All I want is what I thought the deal was – the net present value of $1 million per year up to 2068, plus the escalations, paid by the end of 2018.”

Smith said, “I don’t want to have to go broke before we get this money.” She spoke about how RIOC uses the money from all of our ground rents. “RIOC is a public benefit corporation, the only one the state doesn’t give money to,” said Smith. “The ground rent is what the residents pay and it pays for our services. I don’t want to pay for Qualcomm and Google [potential tenants of Cornell Tech’s co-location building, the Bridge]. I don’t want to pay for hotels. I don’t mind paying part of it, they’re fellow residents. We’re already paying for the landmarks and everything. [New York State] should pay too.”

According to Smith, “When Cornell Tech first said they were coming here, we were very, very happy because we think it’s a great thing for the Island. I took a look at some other places to see if this town-gown relationship is an issue. It turns out a lot of small towns near universities end up providing a whole lot of services to the detriment of their own town because they have very little funding in spite of the endowments that these big organizations have. You still say, bite the bullet because it’s a school. [But in our case] the problem is that it’s mostly non-educational. There are parts of the campus for education. But they’re co-locating with the Googles and Qualcomms and other businesses that won’t have to pay taxes and there will also be a hotel and a residential building that won’t have to pay taxes.

“We said, ‘wait a second.’ We pay ground rent for the use of the land here. Part of the land on campus still belonged to us, to RIOC, so when they came and said, ‘We want you to give us that section of the land,’ we said, ‘We’d be very happy to for a reduced ground rent of $1 million per year but in present value, up front by [the end of] 2018.’ We feel that we are providing services for everybody that [will live] there. We think we deserve some money. It was our December board meeting, bottom of the ninth, everybody on the phone to Albany outside, while we were at a board meeting. Finally we got the word from the Governor’s office, they’ll give us a million dollars a year.”

Smith and Polivy want the community to push. Polivy is hoping to find “projects that are necessary now and in the future.” He thinks identifying “executional projects to demonstrate the money is needed now, the key year being the [fiscal] year beginning April 2018, will help us get the money.” Smith said, “We ought to be projecting this money all the way out, otherwise it shows we weren’t expecting it.” Polivy clarified that, “The city owns this place. The state leased it. The city is the ultimate landholder here. The state is on the hook to operate this place whether or not Cornell is there.”

“It was CB8’s final meeting and we were waiting for someone to arrive to let us know the state agreed to give us this amount of money. Charlene [Indelicato, former RIOC President] walked in with this in hand and then we voted for it.”

–RICC member Ellen Polivy on the community board’s original approval of the Cornell deal

RICC member Ellen Polivy, who also serves on Community Board 8 (CB8), said the money “was the promise CB8 made their vote on. We were the first group to approve the beginning of the ULURP (Uniform Land Use Review Procedure) process. The lease was written by EDC (Economic Development Corporation, a City Agency) and Cornell. The lease was based on the term sheet that RICC gave to (former Council member) Jessica Lappin and Cornell and every other corporation. The deal was made at the very last minute. It was CB8’s final meeting and we were waiting for someone to arrive to let us know the state agreed to give us this amount of money. Charlene (Indelicato, former RIOC President) walked in with this in hand and then we voted for it.”

RICC board member Joyce Short said, “This is property that we allowed Cornell to take on. We should be getting paid without any kind of regulations. We had something they wanted, they should have paid us for it, period.”

Stay tuned. RICC and RIOC are working together to come up with ways the community can speak out using a unified message.

Tags: RIOC Cornell Funding RICC

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