Revised M E M O R A N D U M June 12, 2012 To: Members of the Board of Trustees From: Nancy L. Zimpher, Chancellor Subject: Ground Lease – Buffalo State College Action Requested The proposed resolution authorizes the issuance of a ground lease of approximately 5.32 acres by Buffalo State College 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 Buffalo State College wishes to attract 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 provide for the construction and operation of student housing complex with approximately 400 beds, which would serve the needs of its students; and Whereas the Buffalo State College Alumni Association, Inc., a not-for-profit corporation organized under the laws of the State of New York, as a function of its mission to enter into arrangements with the University for the construction of student housing pursuant to, and in accordance with Education Law §355, is willing to construct such new student housing; and Whereas Education Law §355 authorizes the State University of New York, 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 for the exclusive purpose of developing student housing on the campus of Buffalo State College; 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 Buffalo State College Alumni Association, Inc., for a parcel on campus of Buffalo State College (a legal description of which is attached hereto), with such modifications and revisions as the Chancellor, or designee, may deem advisable, under which the Buffalo State College Alumni Association, Inc. or any duly approved sub-lessee, which shall be a §501(c)(3) supporting organization of Buffalo State College, 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 of New York 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 Trustees to lease to alumni associations of institutions of the State University a portion of campus property for purposes of building student housing. The statute further authorizes the State University Trustees to determine the specific terms of the lease and the type of housing to be built. Buffalo State College has proposed to enter into an arrangement with the Buffalo State College Alumni Association, Inc., a not-for-profit corporation, for the lease of approximately 5.32 acres of land on the campus of Buffalo State College. The legal description of the parcel is attached. On April 10, 2012, the Buffalo State College Council adopted a resolution that Buffalo State College take all necessary steps to proceed with this student housing project. The term of the proposed lease is a total of 42 years with a 7 year option to allow the amortization of the debt for constructing the project. The 42-year term will also avoid any real estate transfer tax obligations. The construction would begin on or about September 2013, with an expected occupancy date of September 2015. The Alumni Association will, under the terms of the Lease, sublease the property to the Buffalo State College Foundation Housing Corporation or an affiliate thereof (“BSCF-HS”), a §501(c)(3) supporting organization of Buffalo State College, which will construct the student housing and receive a revenue stream from the room rental income to cover its debt service. It is anticipated that financing of the project will use tax exempt bonds issued by the Erie County Industrial Local Development Corporation. The Buffalo State College’s Residence Life Office will operate the housing and be responsible for its maintenance, to be covered by room rental income under a Facility Management Agreement between the University and BSCF-HS. The ground lease is patterned generally on the ground lease used for a student housing project on the Buffalo State campus in 2011, on five ground leases currently in place between the University and the Faculty-Student Housing Corporation at the University of Buffalo for development of student housing, and on similar agreements used at the Albany, Stony Brook, Canton, and Purchase campuses for the development of housing facilities. The key provisions include: * The ground lease would provide the Buffalo State College Alumni Association, Inc. with access to approximately 5.32 acres of college land for a period of 42 years (with a 7 year option). * 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. Attachments LEGAL DESCRIPTION ? ALL THAT TRACT OR PARCEL OF LAND situate in the City of Buffalo, County of Erie and State of New York, being part of Lot Nos. 182 & 183, of the Stevens Survey bounded and described as follows: Beginning at the point of intersection of the northerly line of Letchworth Street (60’ wide) and the westerly line of Grant Street (60’ wide) thence northerly along the westerly line of Grant Street 100.00 feet to a point; thence westerly at right angles a distance of 125.00 feet to a point; thence northerly and parallel with the westerly line of Grant Street, 94.50 feet to a point; thence easterly at right angles to the westerly line of Grant Street a distance of 125.00 feet to said westerly line of Grant Street; thence northerly along the westerly line of Grant Street a distance of 375.00 feet to a point; thence westerly at right angles a distance of 30.00 feet to a point; thence northerly and parallel with the westerly line of Grant Street a distance of 40.09 feet to a point; thence westerly and parallel with the northerly line of Letchworth Street a distance of 371.81 feet to a point; thence southerly and parallel with the westerly line of Grant Street a distance of 613.00 feet to a point on the northerly line of Letchworth Street; thence easterly and along said northerly line of Letchworth Street a distance of 402.00 feet to the point or place of beginning, containing 5.32 acres more or less. Board Resolution - 2 - June 12, 2012