The college paid $7 million in cash up front and is borrowing $10 million more from other sources. The college assumed approximately $28 million of existing debt on the property. With the acquisition of the complex, the college expects to ultimately save millions of dollars in years to come, in addition to having full control over the property for expansion.
Integrated Acquisition and Development, the prior owner of the complex, who had been leasing the property to the college since 2001, approached the college with an offer of selling the apartments earlier this year. The college made the purchase in mid-July after preliminary plans for an expansion of the complex were submitted to the Town of Ithaca Planning Board in April.
“[IAD was] doing some individual estate planning and decided that this might be an opportune time for them to consider selling the apartments,” Carl Sgrecci, vice president of finance and administration, said.
Sgrecci said the key factor in making the purchase was the money the college would save. The college expects to save more than $180 million — money they would have spent to fulfill the 72-year lease. After this period, the developers or their heirs were to give the land to the college.
“As we began to look at the possibility of purchasing it, and what the college would save, it made an awful lot of sense to consider buying it,” Sgrecci said. “But this gives us greater flexibility in terms of how we might use it in terms of expanding the apartments. We don’t have to deal through the third party of a developer in any of our management of the property.”
Herman Sieverding, vice president of IAD, said when the apartments were under lease, a provision had always stipulated that the college could purchase the apartments outright at any time. He also said IAD is still actively involved in the proposed expansion of the apartments.
“It was always a part of the agreement, and the school finally decided to exercise that option,” Sieverding said. “[When IAD] owned the property, we were basically making improvements to our own land. In this circumstance, we’re working on behalf of the college in seeking the approval and implementing the proposed expansion. It’s a terrific opportunity for the college.”
Rick Couture, associate vice president of facilities, said this move will give the college more flexibility in accommodating the lack of student housing.
“It’s been absolutely fantastic working with the good folks at IAD for the past number of years they’ve owned it,” Couture said. “It’s also a great thing for the students and the college in general. Students tend to prefer apartment-style housing, so it’s great that we finally purchased it.”
Any changes in the day-to-day operation of the apartments will be minimal, Bonnie Prunty, director of residential life and judicial affairs, said. She said the college had already exercised a great amount of control over the property while it was still under lease.
“From a student perspective, there’ll be no change,” Prunty said. “We have always run them like we owned them, and they have always been part of our on-campus housing system.”
Senior Vincent Whitney, a resident of the Circle Apartments for more than a year, said he viewed the purchase as a way for the college to save money.
“It was a good business move, but it seems purely for the college’s profit,” he said.
Preliminary plans for the property expansion have been approved, Sieverding said. He said final approval plans are partway through the approval process with the Town of Ithaca. The 280-room expansion would require zoning variances from the board and a final site plan approval.
“They’ve concluded their environmental review and have determined that there are no significant effects on the environment due to the proposed expansion of the Circle Apartments,” Sieverding said.
Couture said he is uncertain whether the purchase will have an impact on final approval for the expansion plan.
“Whether we owned it or whether it’s owned by IAD, we still have to go through all the appropriate procedures with the Town of Ithaca to get the expansion projects through,” Couture said.
Final approval is still needed from the Town of Ithaca and the college’s board of trustees.
“It was an incredible opportunity for the college to be able to provide future generations of management with greater budget flexibility as a result of this transaction,” Sgrecci said.