Brooklyn school used old appraisal for NYU merger

New York /
Jun.June 09, 2008 02:43 PM

Brooklyn engineering school Polytechnic University failed to re-evaluate its real estate holdings during merger negotiations with New York University, according to a critical state Senate report that slammed the controversial merger. 

State Senator Kenneth LaValle, a Long Island Republican, chaired the Senate committee that produced the report, which called Polytechnic’s actions “inconsistent with the duty of care that the Board owed to Polytech.”  

Polytechnic and NYU have been in merger negotiations for over three years. Both schools’ Trustee boards approved the merger this spring and it now awaits government approval. The state education department’s Board of Regents is set to discuss the merger late this month.

The deal would make NYU the effective owner of Polytechnic and its considerable real estate holdings in Downtown Brooklyn.

Opponents at Polytechnic have said NYU was more interested in a land grab than carrying on the historic school’s academic mission. The Alumni Association was especially vocal in its opposition to the deal and approached several government offices in search of someone who could intervene, leading to the report by the state Senate Committee on Higher Education. 

The university used a real estate appraisal from 2005, which valued Polytechnic’s real estate holdings at $213 million dollars, the report said. 

Chris Thomas, Brown Harris Steven’s managing director for Brooklyn sales, said that the years since 2005 to were “definitely a period where there has been a substantial increase in value,” Thomas said. “It’s been particularly evident in the area where Polytechnic has its holdings.”

Thomas said that most banks won’t accept a real estate appraisal that is more than a year old. Since the credit crunch, however, banks are looking for appraisals within the last six months, he said. 

The report, which the Brooklyn Paper first reported on, faulted Polytechnic on three accounts: the use of an old real estate appraisal, the delay in notifying the Board of Trustees of merger negotiations, and the exclusion of trustees who opposed the deal from merger discussions.

But NYU and Polytechnic deny any wrongdoings. 

Craig Matthews, chairman of Polytechnic’s Board of Trustees, said that the merger was “was not viewed as a real estate transaction,” and did not need an updated real estate appraisal. NYU spokesman John Beckman agreed and said that the appraisal was not necessary.

The Alumni Association, however, disagreed. 

“Any prudent member of the board of trustees would have realized that an updated appraisal would have been necessary,” said Ed Sawchuk, executive Vice President of the Alumni Association. 

Sawchuk said that the Senator’s findings “speak for themselves.” He added: “The deal from the start has not been presented with any transparency. I can only speculate as to why they chose to [negotiate] in secrecy.”  

The highly contentious Polytechnic-NYU merger negotiations have long been shrouded from the public. In February, members of the Alumni Association said that Polytechnic issued a gag order to the Board of Trustees.

LaValle requested that the Polytechnic trustees delay their final vote until they could look into the negotiations. The board postponed the final vote for one month, though LaValle’s investigation lasted for four months.  

The New York Times reported that New York Attorney General Andrew Cuomo was also investigating the merger. Cuomo’s office did not return phone calls from The Real Deal.

LaValle could not be reached for comment. 


Related Articles

arrow_forward_ios
(Image by Wolfgang & Hite via Dezeen)
Hudson Yards megadevelopment inspires a new line of sex toys
Hudson Yards megadevelopment inspires a new line of sex toys
Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)
Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Wendy Silverstein (Credit: Getty Images)
Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
Michael Gianaris, Julia Salazar and Jabari Brisport support the bill to abolish 421a. (Getty, Jabari Brisport via Twitter, 544 Union)
Lawmakers vow to end 421a as tenants sue landlords getting tax break
Lawmakers vow to end 421a as tenants sue landlords getting tax break
Photo Illustration of Gov. Andrew Cuomo (Getty; iStock/Illustration by Kevin Rebong for The Real Deal)
Cuomo reverses course, says indoor dining will return to NYC soon
Cuomo reverses course, says indoor dining will return to NYC soon
A photo illustration of the Belnord at 225 West 86th Street and HFZ CEO Ziel Feldman (Getty; iStock/Illustration by Kevin Rebong for The Real Deal)
Westbrook takes over HFZ’s Belnord conversion
Westbrook takes over HFZ’s Belnord conversion
From left: 11 Madison Avenue, Beam Suntory CEO Albert Baladi and SL Green CEO Marc Holliday (Photos via Beam Suntory; SL Green)
Beam Suntory will move HQ to 11 Madison Ave from Chicago
Beam Suntory will move HQ to 11 Madison Ave from Chicago
New York Senators James Skoufis, Kevin Thomas, and Brian Kavanagh. (Facebook via Skoufis, Thomas, and Kavanagh respectfully)
Lawmakers call for stiff penalties, reform after housing discrimination probe
Lawmakers call for stiff penalties, reform after housing discrimination probe
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...