Extends the aggregate term of a lease between SUNY Stony Brook and a not-for-profit corporation from 60 years to 83 years

BILL NUMBER:S5614

Title of bill

An act to amend chapter 830 of the laws of 1986, authorizing the state university of New York to contract or lease for hotel/conference center facilities at the state university of New York at Stony Brook, in relation to extending the aggregate term of said contract or lease from sixty to eighty-three years

Purpose of legislation

To authorize the State University of New York at Stony Brook to amend the term of an existing ground lease between the State University of New York and the Stony Brook Foundation Realty, Inc. and the sublease between the Stony Brook Foundation Realty and Harbor Financial Management, the operator of the Hilton Garden Inn on the campus of Stony Brook University.

Summary of specific provisions

This proposal would authorize SUNY to amend the term of a 1989 ground lease with the Stony Brook Foundation Realty (SBFR) and the 2009 sublease with Harbor Financial Management, thereby fulfilling the original intent of Chapter 830 which is to provide a private developer with a sixty year ground lease.

Justification

In 1986, the state Legislature authorized the SUNY Board of Trustees to enter a contract with a non-profit corporation to lease designated land at SUNY Stony Brook for the construction and operation of a hotel on the campus, for a term not to exceed sixty years. The hotel is located on thirteen acres of land bounded on the north by Fine Arts Drive and Entry Drive, on the east by Nicolls Road, on the south by HSC Service Drive and on the west by South Loop Road.

In 1989, SUNY negotiated a ground lease with the Stony Brook Foundation Realty, Inc. ("SBFR"), as tenant. SBFR is an affiliate of the Stony Brook Foundation, whose sole corporate purpose is to engage in a broad variety of real estate-related transactions for the University. The ground lease was approved by the State Director of Budget, the Attorney General and the Comptroller, and was assigned State Comptroller's Contract No. L000592.

After the approval, the University faced unexpected difficulties in securing a developer willing to construct and operate the hotel. Shortly after the original ground lease legislation passed, the nation plunged into an economic downturn that made it difficult for private developers to obtain the financing necessary for the project. When the economy did improve, a coalition of the project's opponents initiated a lawsuit which further delayed development on the site. The University was finally able to secure a developer in 2009 and, in 2011, broke ground on the project. The hotel, operating as a Hilton Garden Inn, finally opened in 2013.

The University is making this request to fulfill the original intent of Chapter 830 which is to provide a private developer with a sixty year ground lease. As a result, the new expiration date will provide

the assurance of a long-term business relationship that will encourage the operator's long-term business decisions. It will also protect the University from negotiating a new lease with a new business owner at the end of the existing lease term who, at that time, would be investing in a building that is more than thirty-years old - an age when the building may require increased maintenance and renovations.

Prior legislative history

Chapter 830 Laws of New York 1986 and Chapter 200 Laws of New York 1989.

Fiscal implications

None.

Effective date

This act shall take effect immediately.