The Real Deal New York

School Construction Authority pays $76.4 million for New York by Gehry school building

December 19, 2012 03:30PM
By Hiten Samtani

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[UPDATED, 4:30 p.m., Dec. 19:] The New York City School Construction Authority has purchased the first five stories of New York by Gehry for a shade over $76 million, according to public records filed yesterday. The 100,000-square-foot space will continue to house PS 397 Spruce Street School, an early childhood and elementary school that has leased the site since the 76-story tower opened in 2011.

The SCA’s purchase comes just over a week after developer Forest City Ratner sold a 49 percent stake in the tower for roughly $250 million to mammoth financial services company TIAA-CREF. The seller was listed in public records as FC Beekman Associates LLC, an entity affiliated with Forest City Ratner.

Upon the tower’s inception, Forest City Ratner and New York City education officials had agreed to integrate a school into the project. Forest City Ratner constructed the shell of the school, while the SCA paid $65 million for the build-out, and it was understood that the city would eventually purchase the school building. The developer received $190 million in tax-exempt Liberty bonds to help finance the project as part of the deal.

“It was a fabulous way to get needed seats in a crowded downtown district by partnering with a developer,” said David Pena, a spokesman for the Department of Education. “This was one of the few spots that made it possible to have a school in a residential building.”  He added that the sale price that the city negotiated with Forest City Ratner included the core and the shell.

Forest City Ratner is one of a number of private developers that have incorporated public schools into their projects to take advantage of perks such as tax breaks and more generous construction permits.

Spruce Street School, which opened in the fall of 2009, was temporarily hosted on the ground floor of the Tweed Courthouse until it moved into New York by Gehry, at 8 Spruce Street. The school, housed in a tan brick wing of the tower, currently has 253 students but plans to increase enrollment to 600 and add grades four through eight.

Representatives for Forest City Ratner referred a request for comment to the Department of Education.

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