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In a New York Minute

December 19, 2011

News reports late Sunday night stated that New York Mayor Michael Bloomberg will announce today that Cornell has won the competition to build a new high-tech campus on a plot of land offered by the city after a series of unexpected events Friday shook up the competition.

First, Stanford University, widely considered the frontrunner, dropped its bid after officials said negotiations with the city broke down. Hours later, Cornell University, which was perceived as Stanford’s main competitor, announced a $350 million gift – the largest in the university's history – to underwrite its development of the campus if it wins. Friday's announcements showed how quickly such competitions can change and how assumptions about frontrunners can easily be upended. 

Research institutions have closely watched the competition, since the prize – one of three plots of land in New York City and $100 million in infrastructure improvements – could provide a reputational and financial windfall for whichever university wins. 

The competition has been developing since the spring, when Bloomberg asked universities if they would be interested in competing to develop an applied sciences campus in the city. Bloomberg said in speeches that he was interested in attracting such a campus to help develop the high-tech industry in New York, which he says does not constitute as large a portion of the city’s economy as it should. While the city has several universities, none have been able to catalyze the type of technology industry that Stanford and the Massachusetts Institute of Technology have created in Northern California and Boston.

When 27 institutions, including several universities with top-flight science and engineering departments, responded the city’s inquiry, the city’s economic development corporation issued a request for proposals, asking for detailed responses.

Those were due on Oct. 28, and seven teams of universities filed proposals. While Cornell established a partnership with Technion – Israel Institute of Technology right before the proposals were due that improved its bid, Stanford was still seen as the frontrunner.

Why Stanford decided to pull out of the competition has not been made clear. University officials were in negotiations with the city up until Thursday night. On Friday morning, the university’s president and board made the decision to pull out, and the university’s negotiation team was still in New York even as the university made its announcement.

Stanford planned to build a $2.5 billion campus on Roosevelt Island. The campus would have been built over 30 years and would eventually have housed 200 professors and 2,000 students. Stanford also had a partnership with the City College of New York, which would have housed the university’s efforts until the campus opened its doors.

Given the mayor’s statements, many felt that Stanford had the edge. It already had a track record of catalyzing industrial development, particularly in a confined geographic space. It has a larger endowment and regularly pulls in more in private giving than almost any university. The City College partnership also gave Stanford a city connection that other outside universities lacked.

The only hint the university gave in the statement it put out Friday was that “the university could not be certain that it could proceed in a way that ensured the success of the campus.” A spokeswoman for the university said the breakdown came during negotiations with the city.

“We were looking forward to an innovative partnership with the city of New York, and we are sorry that together we could not find a way to realize our mutual goals,” the university said in a statement.

But there were also indications that Stanford was having difficulty closing the deal, and that Cornell might have won even with Stanford in the competition. The Wall Street Journal reported that Stanford preferred to withdraw than to lose the competition and saw the "writing on the wall."

Bloomberg Businessweek cited officials who said “Stanford and New York officials failed to reach an agreement on a number of points, including whether the school could withdraw from the project without penalties, said a person familiar with some of the negotiations who wasn’t authorized to speak publicly.”

The New York Times, citing anonymous officials close to the negotiations, said that Stanford, with no experience building in New York, “recoiled at meeting terms laid down by the city after its proposal was submitted.”

Cornell, on the other hand, already had experience running a campus downtown and undertaking a major building project in the city, with all of the regulatory processes entailed. The university's medical school is located in Manhattan, and the university has been eyeing an expansion in New York for years. Cornell officials may have had a better sense of what to expect going into negotiations with the city.

Cornell officials have also made it clear from the beginning that securing the city’s offer was crucial to the university’s success. According to The New York Times, Cornell “simply behaved as if it needed and wanted the prize more. Cornell was more willing to accommodate the city’s demands and got an earlier start raising money.”

The New York Times quoted a city official who said Stanford could not keep up with Cornell’s enthusiasm or fund-raising for the new campus.

Cornell’s plan is to build a 2 million square foot campus for about 2,000 students, also on Roosevelt Island.

Cornell’s $350 million gift, announced about three hours after Stanford’s withdrawal, is a huge windfall for the university that could have put it over the top even without Stanford stepping down from the competition. It is not clear whether Stanford knew about the donation before withdrawing from the competition.

"I am thankful and proud that this extraordinary individual gift will support Cornell's goal to realize Mayor Bloomberg's vision for New York City,” said Cornell president David Skorton in a statement. “He has inspired us all in the higher education sector. At Cornell, our entire community has come together, in a way that happens only so often in an institution's history, with winning ideas, energy and the creativity that the Mayor's challenge deserves.”

Officials in city hall said it was not Bloomberg who made the gift.

In addition to Cornell, three other teams were still in negotiations with the city on Friday: Columbia University, which is planning to expand in West Harlem and not use the city’s land; Carnegie Mellon University, which is looking to use the Brooklyn Navy Yard site; and a consortium led by New York University, which plans to build in downtown Brooklyn on a site the city did not offer up. City officials said Friday that they were still in negotiations with the four finalists and hoped to pick a winner, or potentially multiple winners, in January.

 

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