M E M O R A N D U M


								June 15, 2011


To:		Members of the Board of Trustees

From:		Nancy L. Zimpher, Chancellor 

Subject:	Authorization to Lease Lands for the Development of
Student Housing -- State University College of Agriculture and Technology at Cobleskill 


Action Requested

      The proposed resolution authorizes the issuance of a ground lease of approximately 30 acres by SUNY Cobleskill to its Alumni Association for purposes of constructing an apartment style residence hall pursuant to Education Law  §355.

Resolution

      I recommend that the Board of Trustees adopt the following resolution:

Whereas the State University of New York College of Agriculture and Technology at Cobleskill wishes 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  for upper division students and provide for the construction and operation of an apartment style housing complex with four person apartments divided between double and single occupancy bedrooms for a total of 156 beds; and

Whereas at its meeting on April 13, 2011, the SUNY Cobleskill College Council approved the plan for the construction of a new residence hall facility contingent upon receipt by the College of all the necessary approvals and financing for the project; and


Whereas The Alumni of the State University of New York College of Agriculture and Technology at Cobleskill, Inc. (“Alumni Association”), a not-for-profit corporation organized under the laws of the State of New York, is dedicated to assisting and promoting the interests of SUNY Cobleskill and maintaining and promoting the loyalty of its alumni; and

 Whereas in accordance with Education Law §355, the Alumni Association is authorized to enter into arrangements with the University for the development and operation of student housing and is willing to do so, upon mutual agreement as to reasonably underlying terms to be negotiated by the parties, as evidenced by the adoption of an authorizing resolution by the Alumni Association’s Board of Directors on May 24, 2011; and

Whereas Education Law §355 authorizes the State University, subject to the approval of the Attorney General and the State Comptroller, and on terms and conditions determined by the Board of Trustees, to enter into a ground lease with the Alumni Association for the exclusive purpose of developing student housing on the campus of SUNY Cobleskill; now, therefore, be it

Resolved that the Chancellor, or designee, be, and hereby is, authorized in accordance with the provisions of Education Law §355 to enter into a ground lease agreement with the Alumni Association substantially in the form and of the content of the draft ground lease agreement on file in the Office of the Secretary of the University, for a parcel on SUNY Cobleskill’s campus (the approximate location of which is indicated on the map attached hereto),  with such modifications and revisions as the Chancellor, or designee, may deem advisable, as agreed upon by the Alumni Association, under  which the Alumni Association, or any duly approved sub-lessee, will develop student housing; and, be it further

Resolved that the Chancellor, or designee, be, and hereby is, authorized in accordance with the provisions of Education Law §355 to approve any amendments, modifications, or waivers of any provisions in the ground lease and related documents, including any sublease, which confer on the State University or any of its officers or employees any rights of approval in regard to the student housing facility; and, be it further

Resolved that the Chancellor, or designee, be, and hereby is, authorized in accordance with the provisions of Education Law §355 to provide all other approvals, notices, assurances  or instruments or take such other actions in connection with the student housing facility as may be necessary from time to time, under the ground lease and related documents, including any sublease.

Background

      Section 355(2)(i) of the Education law authorizes the State University to lease to alumni associations of institutions of the State University a portion of campus property for purposes of building student housing.  

      SUNY Cobleskill has proposed to enter into an arrangement with The Alumni of the State University of New York College of Agriculture and Technology at Cobleskill, Inc., the alumni association for the college, for the lease of approximately 30 acres of land on SUNY Cobleskill’s campus.  While the exact parameters of the land to be leased have not yet been determined, it will combine portions of property commonly referred to as the “Ski Lodge” property, which is being donated to the University by the SUNY Cobleskill Auxiliary Services, Inc., and portions of property currently owned by the State of New York.  A map showing these parcels 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 30 to 35 years.  The 49-year term will also avoid any real estate transfer tax obligations.  The construction would begin in or about March 2012, with an expected student occupancy date of August 2013.
      
      The Alumni of the State University of New York College of Agriculture and Technology at Cobleskill, Inc. will, under the terms of the Lease, either construct the student housing itself or sublease the property to a to-be-formed tax-exempt, nonprofit subsidiary corporation which will construct the student housing (collectively referred to herein as “Alumni Association”).  
      
      The project is estimated to cost eleven million, three hundred fifty four thousand dollars ($11,354,000) to be funded as follows:  SUNY Cobleskill will advance two million dollars ($2,000,000) from its dormitory reserve account for preparation of the land and necessary infrastructure with an agreement that that one million, five hundred thousand dollars ($1,500,000) of such advance shall be repaid to it by the Alumni Association.   The Alumni Association shall secure the remaining financing necessary for the project, including an estimated nine million, three hundred and fifty-four thousand dollars ($9,354,000), via the issuance of tax-exempt bonds, by a to-be-formed subsidiary corporation, or another analogous affiliated entity, of Schoharie County Industrial Development Agency.  The Alumni Association will receive a revenue stream from the room rental income to cover its debt service.   
      The project will feature apartment style housing with four person apartments divided between double and single occupancy bedrooms for a total of 156 beds for upper division students.  The SUNY Cobleskill Residence Life Office will operate the housing and be responsible for its maintenance, to be covered by room rental income.  SUNY Cobleskill and the Alumni Association will enter into a Facility Management Agreement for purposes of operation and maintenance of the project.

      The ground lease is patterned generally on ground leases currently in place between the University and the UBF Faculty-Student Housing Corporation for development of student housing at the University at Buffalo and on similar agreements used at the Albany and Stony Brook campuses for the development of housing and incubator facilities.  The key provisions include:

* The ground lease would provide the Alumni Association with access to approximately 30 aces of college land for a period of 49 years.

* The rent will be $1.00 per year.

* The ground lease requires that the property be used exclusively for the construction, development, and operation of student housing.

* The property’s legal description is to be attached as Schedule A to the ground lease.

* The sublessee must assure that performance bonds are provided and that all construction is performed in compliance with applicable building codes.

* State University reserves the right to approve any curing of any default or any foreclosure by any mortgagee.

* Upon expiration or termination of the lease, the property and improvements will automatically revert to State University.
      
* The State fee simple interest in the property will not be affected by the lease or any mortgage on the property.

* Prevailing wages must be paid for any construction work on the project.

* The lessee must comply with affirmative action requirements under Article 15-A of the Executive Law.

* The lessee must indemnify and hold the University harmless.


Attachment

Board Resolution	-5- 	June 15, 2011