Saturday, February 21, 2009

NYU's Real Estate Investments: Worth $1 Billion In 1990s?

For a “nonprofit” tax-exempt institution, NYU sure owned a lot of Downtown Manhattan real estate during the 1990s. As Skyscraper Dreams: The Great Real Estate Dynasties Of New York by Tom Shactman observed in 1991:

“By the late 1960s, New York University’s endowment had dwindled and its student base had declined to the point where the possibility existed that the school would have to declare bankruptcy…On the real estaters’ advice, the university aggressively began to buy property, especially in the vicinity of the campus…By the late 1980s, New York University had become…(like Columbia University) the owner of more than a billion dollars worth of Manhattan real estate.”

NYU was barely in need of charity in the early 1990s. After the 1970s, NYU expanded rapidly into the neighborhoods that surrounded its Washington Square campus. And in 1990, NYU’s annual budget exceeded $1 billion per year and NYU then owned $522 million worth of U.S. corporate stock—despite being characterized as a “nonprofit” institution. In the late 1980s and early 1990s, NYU also raised more money from Big Business than it had in any previous period in its pre-1990 history.

In 1990 the offices of the NYU administration were located on the 12th floor of its Bobst Library at 70 Washington Square South and NYU’s president at that time was John Brademas, a former congressional representative from South Bend, Indiana. In October 1976, according to Current Biography, former NYU President Brademas “acknowledged that he had accepted about $5,000 in campaign funds in 1970, 1972 and 1974 from Park Tong Sun, the Washington party fixture under federal investigation for influence peddling” in the “Koreagate Affair.” But in 1981, Brademas was still named NYU President.

During the 1980s, former NYU President Brademas was chairman of the Federal Reserve Board of New York and a director of the Rockefeller Foundation, the New York Stock Exchange, Scholastic Inc., Loew’s Corp. and RCA/NBC. In 1990 Brademas finally announced his intention to retire as NYU President by March, 1992; and the current NYU President is a guy named John Sexton, whose annual compensation during the 2006-2007 academic year was nearly $1.3 million.

In the early 1990s, the chairman of NYU Board of Trustees was the former board chairman of CBS who sold CBS Records to SONY—Laurence Tisch.

In 1990, security guards on the Bobst Library’s main floor were under orders to question reporters before allowing them to go up to the 12th floor NYU administration offices.

According to NYU’s press officer in 1990, Bill Osborne, in 1990 NYU had “no plans for further expansion” in the East Village and did not plan to construct or purchase any new buildings there in the 1990s. Osborne added, however, that this didn’t “mean that 20 years from now” NYU would not decide to expand its campus deeper into the Lower East Side.

A late 1980s pamphlet that was still being distributed at NYU’s Information Center in Shimkin Hall at 50 West Fourth Street in 1990 stated in an “Architect’s Description” of NYU’s 33 Third Avenue dormitory:

“New York University has embraced an extraordinary opportunity to expand its building program at its main campus in New York City’s Washington Square area. The acquisition of two major building sites on Third Avenue continues the eastward growth of the University, with its urban campus extending from Sixth Avenue to the East River.

“Prior to the acquisition of these properties, the `gateway’ to New York University’s campus had been Washington Square and the famed Washington Arch. The major building program proposed for Third Avenue will introduce a new gateway marking the eastern entrance to the main New York University community. The site at Third Avenue and Stuyvesant (Ninth) Street marks an entry to both the East Village and Greenwich Village…”

Much of NYU’s 1980s campus expansion was financed by an NYU trustee in the 1990s and a former owner of the Village Voice named Leonard Stern. Between 1980 and 1985, Stern, a billionaire, funneled millions of dollars to NYU, including a $3 million donation to renovate an NYU dormitory at 79-80 Washington Square East that was renamed “Leonard Stern Hall.” In September, 1988, Stern also announced his plan to funnel more than $25 million to NYU to strengthen its schools of business. Coincidentally, NYU’s under-graduate and graduate business schools were both named after Billionaire Leonard Stern in 1990; and the New York Times noted in its April 2, 1989 issue that $30 million of NYU’s drive to raise $100 million in the late 1980s for the upgrading of its business schools had come from former Village Voice owner Stern.

As an NYU trustee in the 1980s, Stern played more than a passive role on NYU’s Board of Trustees. In its July 15, 1985 issue, Business Week reported that Stern “regularly” spent “one day a week on his work as a trustee” of NYU. It also observed that Stern “became intensely involved” in the designing of Leonard Stern Hall, “particularly that of the dining room.” According to former NYU President Brademas, Stern took the architect to cafes all over town to say, “What do you think about this, what about that?”

If you walked around the Village and the Lower East Side in 1990, you might have noticed that the number of dormitories, apartment buildings and hotel buildings with big NYU flags sticking out over the street increased dramatically in the 1980s at the same time the number of homeless single men in the neighborhood increased. Although former New York City Mayor Ed Koch—an NYU Law School graduate—used to claim that no money existed to construct apartments for homeless people in New York City, NYU boasted in its “33 Third Avenue” pamphlet that:

“New York University has made an extraordinary commitment to the creation of an expanded residential campus at Washington Square. The centerpiece of this effort has been the construction of four new residence halls housing more than 2,000 undergraduates and graduate students. With the opening of these new facilities, the number of students able to live on campus has increased by 48 percent to over 6,400.”

The Spring 1990 issue of NYU Alumni News also reported that between 1981 and 1990, undergraduate housing at NYU increased by 150 percent.

Some builders of luxury apartment buildings in Manhattan agreed in the 1980s to reserve some housing space in their newly constructed buildings for low-income tenants. Yet in the 1980s, “nonprofit” NYU, ironically, apparently wasn’t willing to let any homeless men share any of its newly-constructed residential campus space.

(Downtown/Aquarian Weekly 9/12/90 and 1/29/97)