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The Student News Site of Stony Brook University

The Statesman

The Student News Site of Stony Brook University

The Statesman

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Help for Constructing NYC Schools Could Fall Through the Cracks

A recently revived New York City agency that teams up with private developers to create new public schools at no cost to the city may once again fall into disuse.

The Educational Construction Fund, although dormant for more than two decades before Mayor Michael Bloomberg revived it, has helped create 18,000 new school seats since 1966.

The fund forms partnerships with private developers who construct new schools alongside their own projects in exchange for the opportunity to lease air rights over city-owned land. The model creates much-needed public schools and costs the city nothing.

The city’s historically overcrowded and under-funded public school system, which serves 1.1 million students, prepares thousands of graduates who continue into the SUNY system. Nearly one-third of Stony Brook undergraduates hail from New York City.

But in addition to the state budget cuts that are also sweeping through the SUNY system, the fund’s success is threatened by the city’s ailing real estate market.

“No project, public or private, is immune from the problems in the financial market,” said James P. Cullen, chair of Anderson, Kill ‘ Olick’s real estate and construction practice, which represented the Educational Construction Fund in its two most recent projects.

Cullen said that the fund would not be taking on new projects, explaining that in addition to the difficulty of selling the bonds needed to cover the initial cost of construction, developers want to avoid building apartments that will go unsold and offices that will not be rented.

Unlike many real estate markets across the nation, Manhattan’s had been doing relatively well until September, according to some analysts. But market reports for the first quarter of 2009, released this month, confirm the sharp decline in Manhattan real estate sales first seen last fall. Total sales are down 48 percent compared to the same time last year.

The recent blows to the economy and growing city and state deficits have led to mounting difficulties for the public school system, which is the largest in the country.

Despite the Department of Education’s goal to create 63,000 new classroom seats between 2005 and 2009, 26 percent of all city public school buildings operated above their capacity during the school year that ended last June.

“The administration is failing our students,” said Leonie Haimson, director of Class Size Matters, an organization that advocates for smaller class sizes.

“Eighty percent of principals say they’re unable to provide a quality education,” she said, referring to a 2008 Class Size Matters report that surveyed 550 city principals.

But last year’s statistics were a marked improvement over the 45 percent of schools that exceeded their capacity in 2002, the year Mayor Bloomberg took office.

Mayor Bloomberg, who took control of the public school system by convincing the state legislature to replace the independent Board of Education with a Department of Education that reports to the mayor, aspired to create more seats in the system than ever before. To work toward the goal of 63,000 new seats under the department’s first five-year capital plan, Mayor Bloomberg dusted off the Educational Construction Fund.

The fund normally sells tax-free bonds to pay for the construction of the school portion of a project and uses the developer’s lease payments to repay them. The payments, usually on a 75-year land lease, not only cover the cost of constructing the school but also provide profits that can be used toward capital improvements in schools across the city.

One of the fund’s current projects, a building on East 91st Street set to house M.S. 114, is the first privately-funded project since. The school, being built along with a 34-story apartment building, was scheduled for completion last year but a fatal crane accident last spring set the project back. It is now scheduled to open for the 2010 school year.

The fund’s other current project, which is to be completed in 2012, includes new buildings for P.S. 59 and the High School of Art and Design, along with a 59-story residential/retail tower, all on East 57th Street.

The projects will create 2,700 school seats, according to Jamie Smarr, executive director of the fund.

Since the new seats will not be ready before 2010, they will count toward the goal of new seats set forth in the Department of Education’s 2010-2014 capital plan. The plan calls for 25,000 new seats — 60 percent fewer new seats than were sought in its previous five-year plan. The new capital plan proposes a 13 percent decrease in the department’s overall budget.

In addition to citywide funding cuts, the department will have to wait years to collect billions of dollars awarded to it by a New York State Supreme Court order. When the court found that the state had not been providing the city with adequate educational funding, former Gov. Eliot Spitzer agreed to allocate billions to the city over four years. But Gov. David Paterson said recently that the money would have to be distributed over seven years.

“Everything is slowing down because of the economy,” said Juanita Rosillo, director of finance for the Educational Construction Fund. But she said that the fund is trying to move forward as usual.

Although the fund does not foresee any new deals, Cullen said he is confident that the market will stabilize over the next two years.

“And we’re still looking at some sites,” he added. “But you’re always looking.”

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