M E M O R A N D U M. Ground Lease State University of New York at Stony Brook

Transcription

1 Board Resolution -1- November 15, 2018 M E M O R A N D U M November 15, 2018 TO: FROM: SUBJECT: Members of the Board of Trustees Kristina M. Johnson, Chancellor Ground Lease State University of New York at Stony Brook Action Requested The proposed resolution authorizes the issuance of a ground lease of approximately 20 acres by Stony Brook University to its alumni association for purposes of constructing student residence halls and related amenities. Resolution I recommend that the Board of Trustees adopt the following resolution: Whereas the State University of New York at Stony Brook (the Campus ) currently has a shortage of beds for its undergraduate and graduate students; and Whereas the Campus wishes to continue to attract and retain student candidates for all academic levels and areas of study, and in support of this objective, has established a business plan to develop alternative, attractive housing and to provide for the construction and operation of a suite style student residence complex with related amenities; and Whereas the Stony Brook University Council has indicated support for the plan for the construction of the proposed student residence complex with related amenities; and Whereas The Alumni Association of the State University of New York at Stony Brook, Incorporated ( Alumni Association ), a not for profit corporation organized under the

2 Board Resolution -2- November 15, 2018 laws of the State of New York, is dedicated to assisting and promoting the interests of the Campus and maintaining and promoting the loyalty of its alumni; and Whereas in accordance with NYS Education Law 355, the Alumni Association is authorized to enter into arrangements with the Campus for the development and operation of student residences and related amenities and is willing to do so, upon mutual agreement as to reasonable underlying terms to be negotiated by the parties; and Whereas Section 355 authorizes the Campus, subject to the approval of the Attorney General, and on terms and conditions determined by the Board of Trustees, to enter into a ground lease with the Alumni Association for the purposes of developing student residences and related amenities on the grounds of the Campus; now, therefore, be it authorized in accordance with the provisions of Section 355 to enter into a ground lease agreement with the Alumni Association for a parcel of land on the Campus grounds (the approximate location of which is indicated on the map attached hereto) and any documents related thereto or necessary in connection therewith, upon such terms as the Chancellor, or designee, may deem advisable, subject to the key provisions set forth herein as agreed upon by the Alumni Association, under which the Alumni Association, or any duly approved sublessee, will develop student residences and related amenities; and, be it further authorized in accordance with the provisions of Section 355 to approve any amendments, modifications, or waivers of any provisions in the ground lease and documents related thereto or necessary in connection therewith, including any sublease, which confer on the Campus or any of its officers or employees any rights of approval in regard to the student residences and related amenities; and, be it further authorized in accordance with Section 355 to provide all other approvals, notices, assurances or instruments or to take such other actions in connection with the student residences and

3 Board Resolution -3- November 15, 2018 Background related amenities as may be necessary from time to time, under the ground lease and documents related thereto or necessary in connection therewith, including any sublease; and, be it further Resolved, that the authority granted by this Resolution shall be contingent upon final and formal approval of the proposed transaction by the Stony Brook University Council and Alumni Association. N.Y. Education Law 355(2)(i) authorizes the Board of Trustees to authorize the leasing to alumni associations of institutions of the State University a portion of campus property for purposes of building student residences and related amenities. The proposed resolution authorizes the State University of New York at Stony Brook (the Campus ) to enter into a ground lease with its alumni association for such purpose. The Campus has proposed to enter into an arrangement with The Alumni Association of the State University of New York at Stony Brook, Incorporated (the Alumni Association ), the alumni association for the Campus, for the lease of approximately 20 acres of land on the Campus grounds. A map showing the parcel is attached hereto. The term of the proposed ground lease is a total of 49 years to allow the amortization of the debt for constructing the project over a period of 40 years. The 49 year term will also avoid any real estate transfer tax obligations. The construction would begin in or about Summer 2019 with an expected occupancy date of Fall It is currently contemplated that the Alumni Association will, under the terms of the lease, sublease the property to, or otherwise engage an entity controlled by Provident Resources Group, a nonprofit corporation, which, through Gilbane Development Company, will develop and manage the student residences and related amenities. Phase I of the project is estimated to cost one hundred eighty-six million dollars ($186,000,000.00). The ground lease will be patterned generally on a ground lease currently in place between Purchase College and Purchase College Alumni Association, Inc. for the development of student housing at Purchase College and on similar agreements used at the University campus for the development of student and faculty facilities. The key provisions will include:

4 Board Resolution -4- November 15, 2018 The ground lease would provide the Alumni Association with access to approximately 20 acres of the University s land for a period of 49 years. The rent will be $1.00 per year. The ground lease will require that the property be used exclusively for the construction, development and operation of student residences and related amenities. The property s legal description will be attached as Schedule A to the ground lease. Any sublessee must assure that performance bonds are provided and that all construction is performed in compliance with applicable building codes. The Campus agrees to use noncombustible materials for the structural frame, bearing walls, floor and roof assemblies in lieu of combustible or other materials that may be permitted by building codes. The Campus reserves the right to approve any curing of any default or any foreclosure by any mortgagee. Upon expiration or termination of the ground lease, the property and improvements will automatically revert to the University. The State s fee simple interest in the property will not be affected by the lease. Any sublease or any mortgage on the property. Prevailing wages must be paid for all on-site construction work on the project. The lessee and any sublessee must comply with affirmative action requirements under Article 15-A of the Executive Law. All work involving construction, excavation, repair, renovation, alteration or improvement of the student residences and related

5 Board Resolution -5- November 15, 2018 amenities shall be deemed public work and shall be subject to and performed in accordance with Article 8 of the Labor Law. The lessee and any sublessee must indemnify and hold the University harmless. Stony Brook University Location of Proposed Residential Hall Facilities