Silicon Alley U

Safety School? As Stanford Says ‘See Ya!’ Bloomberg Hops in Bed with Big Red

How New York City got a better deal by going with the less prestigious choice.

The city’s aggressive negotiating stance also created friction. As has been reported, Stanford did not take a shine to Mayor Bloomberg’s assertion during a talk at MIT in late November that “Stanford is desperate to do it,” even if he said the same of Cornell. The bigger stumbling block, according to our sources, seems to have been another remark uttered during that same speech: According to Mr. Bloomberg, the desperation meant that, “We can go back and try to renegotiate with each one.” A university source said Stanford “had no idea that everything was back on the table.” The school “responded in good faith, and everything was changing,” said the source, wryly adding, “But apparently Cornell said yes to everything.”

“Seth [Pinsky] famously negotiates every last penny off the table, and that spooked Stanford,” acknowledged a New York City real estate executive. “They thought they had a partner and were shocked with his hard line. They were told not to worry about the particulars and that it would be fixed in the end, but despite assurances, they ultimately felt uncomfortable partnering with the city.”

A city official pointed out that it was that same aggressive stance that helped Mr. Pinsky close “complicated and thorny” deals on Hudson Yards and Willets Points, which the city had been trying to navigate for years.

In fact, a source with knowledge of the negotiation process said familiarity with the way the city does business helped Cornell, which already employs more than 5,000 New York City residents. “There are things the city is going to ask you to do that [Cornell] was very comfortable with, it’s not clear that the other side was that comfortable,” said the source before dropping a bit of local trivia, “They know what a ULURP is.”

ULURP, or Uniform Land Review Procedure is the city’s notoriously arduous standardized review process. In October, Columbia University president Lee Bollinger told the school’s newspaper, “I’ve been through a ULURP process. Nobody in their right mind should go through a ULURP process more than once in their life.” Of course, Mr. Bollinger was talking about how the ordeal might hold back his competitors for the tech campus RFP, noting that it took Columbia three-and-a-half years from submitting rezoning plans to getting mayoral approval to develop in Manhattanville. It’s something candidates no doubt had in mind considering the penalties for delays.

“It’s binding,” Mr. Bloomberg shot back to a question from the press corps about the contract. “Keep in mind, if we’re gonna invest, commit this land, turn down other people who wanted it, and invest $100 million, you don’t do that unless you have a binding commitment… One of the attractive things about Cornell is that they know how to do business in the city. Just look around,” he added, referring to Weill Cornell Medical College.

But both city officials and Cornell say it was the school’s superior offering that clinched the deal. “The catalyst was that Cornell was beating them in every single category,” said source close to Cornell, citing the speed of construction, the size of the campus, and the amount of students and faculty it will serve.

“Cornell was hungrier, Cornell was more humble in the process—I think it helped them win the proposal,” said Charlie Kim, CEO of Next Jump, a loyalty rewards company, who sits on the advisory committee that helped select winners. Mr. Kim said the committee met a thirty to forty-five days ago and then again last week to go into more detail. “I think probably after reviewing everything, and this is kind of my opinion, I felt Cornell-Technion was the number one recommendation.”

City officials claim the rush to sign the papers was merely a reflection of the way discussions were being structured. The city was simultaneously negotiating with everyone that applied, trying to move each deal as far along as possible. When Stanford dropped out, the deal with Cornell was already near completion.

And what of the mysterious $350 million donation? Though some speculated that the money had come from Mayor Bloomberg himself, The New York Times revealed Monday evening it had been a gift from Cornell alum Charles Feeney, the Duty Shop Group entrepreneur and subject of the book The Billionaire Who Wasn’t: How Chuck Feeney Made and Gave Away a Fortune Without Anyone Knowing.

Which isn’t to say Mr. Bloomberg won’t be opening up his wallet to see that his legacy-defining project remains on track. Although Cornell and Technion have been granted the full $100 million, the city left open the possibility of approving a second smaller-scale project, like  plans from NYU and the Polytechnic Institute to transform the derelict former MTA headquarters into a Center for Urban Science and Progress, or Carnegie Mellon’s proposed partnership with Steiner Studios to build a digital media campus at the Brooklyn Navy Yard, both of which will now likely have to rely on philanthropic donations.

“You assume that when they make phone calls, I’d be on the list,” Mr. Bloomberg said at the press conference, while trying not to crack a smile. “But I also have some commitments to some other educational institutions, as you know.”

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  1. SJ says:

    While Stanford has greater prestige than Cornell, I think it’s foolish not to consider the general incentives at play with a Stanford-NYC partnership. Would Stanford send their best professors to NY? their best students? their best start-up opportunities? Would they allow NYC to eclipse the mothership at Silicon Valley? I find it doubtful, and the attitude of their BOT, students, and community reflected that sentiment. This is Cornell’s crown jewel and they have every incentive to see it succeed and eclipse SV. I think this analysis played a large part in NYC preferring Cornell.

    1. Nitasha Tiku says:

      Thanks, SJ. That jibes with what I heard too. Charlie Kim from Next Jump mentioned wondering if Stanford was conflicted about the Mayor’s plan to eclipse Silicon Valley. But it’s hard to reconcile that with the million or millions they invested to get to the point of applying (on legal, PR, architecture, etc.). Stanford’s has many offers before to build campuses around the world and this time the trustees voted 100 percent to apply. It’s not to say they weren’t wary or didn’t change their minds or listened to rumblings from the student body, but the notion of bettering Silicon Valley is right there in the RFP and they signed up.