ESDC Approves Controversial Columbia Expansion as Residents Voice Complaints

The Empire State Development Corp. yesterday approved the general project plan for a controversial $6.28 billion expansion of Columbia University that could use tax-exempt bond financing issued through the Dormitory Authority of the State of New York.

The approval came after about an hour of public comment led by angry residents and a local business owner from Manhattanville, a section of New York City in West Harlem where the expansion would take place. Some spoke out against the potential use of eminent domain to seize property on behalf of the university, and others criticized the process the ESDC had followed as being opaque.

The ESDC will hold at least two public hearings on the project beginning in September. After a public comment period, the board will vote on a final plan. If approved, the project would then go to the public authority control board, a state oversight board.

The plan assumes that about 45% of the project would be financed through debt and 55% would be funded through gifts and operating balances. ESDC said that it will not issue bonds on behalf of the project and that Columbia will fund the project on its own.

In a letter obtained by The Bond Buyer dated June 29, 2007, from Columbia treasurer Gail Hoffman to former DASNY executive director David Brown 4th, Hoffman implies that the university could turn to the authority for financing.

"Columbia's approximate $1 billion of debt outstanding issued through DASNY demonstrates our successful historical partnership in financing the University's capital needs," Hoffman wrote. "This partnership will continue to be even more vital as the University begins to build a new campus in Manhattanville in West Harlem."

DASNY has issued $1.07 billion of bonds on behalf of Columbia in the past ten years, according to Thomson Reuters data.

The university stated in the official statement for a $282.7 million DASNY tax-exempt bond issuance in April that those bond proceeds would not be used for the Manhattanville expansion but that "it is anticipated that the University will continue to access the capital markets to help finance a portion of its future capital costs."

Columbia spokeswoman La-Verna Fountain said in a statement that the university makes decisions about where to borrow "in light of the circumstances as the desire for debt financing arises."

"We have been pleased with our relationship with the Dormitory Authority over time," Fountain said. "As a triple-A credit, we have also used other ways to access debt markets."

DASNY spokesman Marc Violette said that the authority and university spoke frequently because of their long-standing relationship but that they had not had any formal discussions about financing the Manhattanville expansion.

Earlier this year DASNY modified its debt issuance rules to ease oversight and other requirements for highly rated universities like Columbia. The project would add 6.8 million square feet of new facilities in up to 16 new buildings on a 17-acre site that is about one mile north of the university's Morningside Heights campus. Columbia controls most of the property in the project area but if approved, the plan would likely face lawsuits over the potential use of eminent domain.

Rev. Earl Kooperkamp, who preaches at a church in the area, called the potential use of eminent domain a violation of the 8th Commandment not to steal, and "the theft of a neighborhood."

ESDC downstate president Avi Schick said the corporation was trying to walk a fine line to do what was appropriate. "Eminent domain is an important and necessary economic development tool that must be used carefully," he said.

The meeting was the first for newly appointed ESDC chairman Robert Wilmers,who said he had only been on the job for four days and wasn't in a position to comment on either Columbia or eminent domain.

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