MANHATTAN — When it came to building a tech campus in New York City, the risks turned out to be greater than the potential reward, Stanford University officials have revealed.
The California-based school, which had been considered the front runner and spent $3 million on its $2.5 billion proposal before it dropped out of the race Dec. 16, revealed in a statement that it pulled out because of the city's extensive last-minute conditions for construction.
According to a Stanford statement released last month, the city introduced a host of "critical new matters" into the negotiation process in November, a month after Stanford submitted its bid.
"Beyond the academic part of the proposal, the project involved numerous land use, real estate, zoning, construction timetables with significant penalties and other details," the university said in a statement originally reported by the Stanford Daily, the university newspaper.
"In a project of this nature, involving a significant investment by both the city and a much larger investment by the university, both sides need to be willing to accept a certain level of risk," the Stanford team said. "Ultimately, we decided we could not accept the level of risk that the city wanted us to accept."
Cornell University ultimately won the Bloomberg administration's bid to build its $2 billion, 2.1 million square foot tech campus on Roosevelt Island, after accepting the conditions from the city to stay on a strict construction schedule or face hefty penalties.
Cornell — which is getting $100 million in city funding for infrastructure improvements and is getting the land essentially free — has to pay the city $10 million by Jan. 17 in security and pre-development deposits, according to the city's lease agreement released this week.
If the school doesn't submit its land use application by Nov. 10, fines kick in at $1,000 a day, rising to $6,000 a day after 10 months. If Cornell is late submitting its environmental impact study, it will be slapped with a $1 million penalty. It faces similar penalties if other documents are not submitted in a timely manner, the agreement states. The campus is set to be completed by 2015.
"We are confident we will meet all of the deadlines laid out in the agreements," a Cornell spokesman said.
Cornell and its partner, Technion-Israel Institute of Technology, plan to start teaching at an off-site location in 2012, with the first phase, 300,000 square feet of its new eco-friendly campus for applied science and engineering to open on Roosevelt Island no later than June 30, 2017. The second phase, which will include an additional 1 million square feet, is slated to be completed 10 years later. The final build, with another 1.8 million square feet, will be finished by 2037.
The campus for nearly 2,000 grad students and 250 faculty will include residences, labs, libraries, lecture halls and incubators — along with the promise of a $150 million revolving fund from Cornell for startups. The school is also planning "hubs" for "connective media," "healthier life" and the "built environment," according to the agreement.
Cornell already has a $350 million donation from alum and Duty Free Shoppers co-founder Charles Feeney, a gift that was announced hours after Stanford dropped out.
Stanford said in the statement that Cornell's gift played no role in its decision to withdraw the bid, adding that school officials were not even aware of the donation.
"There was no suggestion on the city's part that Stanford’s bid was not the front-runner in the competition," the Stanford team said. "In fact, all evidence available to us indicated the contrary."
Cornell's Roosevelt Island campus is one of the top three developments that will transform New York's real estate market, said Fred Smith, an executive vice president at the Cushman & Wakefield real estate firm. Along with Conde Nast's decision to move to 1 World Trade Center and Google's 2.9 million square foot building at 111 Eighth Ave., the campus will "have a very positive effect" on the city, he said.