Anderson Kill Advises New York City Educational Construction Fund in Closing of $4.2 Billion Air Rights Agreement to Build School/Residential/Retail Complex on East 57th Street
6/19/2008
New York, NY (June 19, 2008) – The New York City Educational Construction Fund has closed the first phase of an agreement with the World Wide Group to construct two new schools in conjunction with a 59-story residential/retail tower at 250 East 57th Street. Anderson Kill & Olick, P.C. represented the Fund in the transaction, negotiating the lease and development agreements encompassing all facets of the project, including the financial terms, design and construction, insurance and indemnity.
The project includes a new high school that will replace the existing High School for Art and Design with a state-of-the-art facility designed by Skidmore Owings & Merrill. The project will also include a new elementary school, approximately 200,000 square feet of retail space, and a 488,000 square-foot, 300-unit residential tower containing affordable and market-rate housing.
The High School for Art and Design is a distinguished part of New York City’s public school heritage. Founded in 1936, the school has produced distinguished and very active alumni including Calvin Klein, Tony Bennett and Helmut Kroll. The school will gain 40% more space than it has at present, incorporating an art gallery to display students’ work and significant upgrades to its studios and labs.
Under the innovative development plan, the developer will receive a 75-year lease of the air rights within which the apartment tower and retail space will be constructed. The income from this lease will finance the construction of the new schools, also being undertaken by the developer. Not only will the City receive two new schools at no cost to itself or taxpayers, but the lease will also produce a 75-year stream of income that may be used for similar public school projects. In total, the air rights lease agreement has a capital value in excess of $4.2 billion.
This is the second new development commenced by the Educational Construction Fund in the last 18 months, the first being a similarly structured deal to build a new middle school and apartment/retail complex on East 91st Street. Anderson Kill & Olick, P.C. represented the Fund in both transactions.
The two projects mark the emergence of the Educational Construction Fund from a long dormancy. Established in 1967, the Fund created more than 18,000 school seats before falling into disuse by 1980. The Bloomberg administration has revived the Fund an integral part of its five-year capital program for delivering 63,000 new school seats.
“These air rights leases are a boon to New York City on multiple fronts – educational infrastructure, housing stock and livability,” said James P. Cullen, head of Anderson Kill’s real estate and construction practice. “We are very pleased to have the opportunity to help the City maximize its air rights assets.”
About Anderson Kill & Olick, P.C.
Anderson Kill & Olick, P.C practices law in the areas of Insurance Recovery, Commercial Litigation, Corporate & Securities, Employment & Labor Law, Real Estate, Tax, Trusts & Estates, and Bankruptcy. The firm's senior attorneys maintain national and international practices from offices in New York City, Newark, NJ, Philadelphia, PA and Washington, D.C.
For more information, please contact:
James Cullen
jcullen@andersonkill.com
(212) 278-13565
Carol A. Ueckerman
Communications/Marketing Manager
cueckerman@andersonkill.com
212-278-1339
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