Cooper Union’s Tradition of Free Tuition May Be Near End - NYTimes.com.
The university, which offers world-class instruction in art, architecture and engineering, but no expensive athletic programs, no tricked-out student centers, no plush lawns to sprawl on between classes, is currently losing $12 million a year, about a fifth of its overall budget. So 153 years after the inventor and industrialist Peter Cooper founded a school long rhapsodized as “free as air and water,” it is considering whether to end its most famous tradition, and start making undergraduates pay to attend.
Many students and alumni, shocked at the possible loss of their school’s defining trait, have criticized the decision to erect the $177 million building, which was designed by Thom Mayne of the firm Morphosis. But Cooper Union’s president, Jamshed Bharucha, who arrived after construction was completed, said that the discussion about the building was a red herring, and that the real problems date to at least the 1970s.
That is because, he said, its costs started rising faster than revenues — most notably those from the school’s biggest asset, the land under the Chrysler Building, which now generates $27 million a year.The article goes on to say
And because the school spends so much to subsidize everyone’s classroom instruction, regardless of income level, it has almost nothing left over to subsidize the high cost of living in New York, which hits needy students hardest.The school’s financial crisis is expected to be most acute over the next five years; in 2018, the revenues on the land under the Chrysler Building go up by $25 million a year, enough to cover the deficit, although only for a while.
So the rent for the land will soon be $52 million per year. Capitalized at 5% (also known as "20 years' purchase"), that $52 million represents a purchase value of $1.04 billion.
(It appears that a 75% interest in the building was sold in 2008 for $800 million, by Prudential to the Abu Dhabi Investment Council; Tishman Speyer Properties owns the remaining 25%.)
Urban land is valuable. Who deserves the rent money? The community? Its colleges? Or whatever private entity happens to have title to it? The "conventional" "traditional" answer is not necessarily the best answer, when one stops to think about it.
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