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l -I ] FINCH. /\LG'.,"J<2rn, Q;\R~4:S, ROTHSCHiLD & Pf';~ClnL ATL,-\;~ i·A, G~iJ:-?2iA �·.= - - . =·~-·=-1 ..J ·- !~ t . -· i~~!

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~~c, =. ~~ r ~.; ::,-:_ i~ i7 rr Brown G uenther B a ttaA lfo Galv in, Architcds P.S. 126 AND HlGHBRIDGE HOUSE - This facility, the first in the Fund's program, combines an elemen tary school for 1,4 11 children with 400 apartments for micldlc-incorne families in the Bronx. �-1 I The Fune! is the ·first agcn~y of its kind 111 the country authorizecl to fin ance public schools in combinecl-occu1:iancy structures. Although its purpose is new, it is a traditio nal form of governm ~nt institution establishecl to fin a nce public and quasi-public facilities. •· The rapid increase in the number of public benefi t corporations in urban ized sta tes like New York. during the past twenty years has parall eled the n eecl for increased capital construction ::;.t costs exceecling liniitations ·on public debt. Simila rly, New York City.'s fi scal lim itations, toge ther with its need for school constru ction, generatecl th e crea tion of_the Educational Construction Fund. The concept was clevelopecl by Lloyd K. Garrison while h e was President of the Boarc.!_ of Education. H e saw the public benefit corporation as an appropriate vehicle to serve both the City a nd th e school system. " ' ith a gra nt from the Tacon ic Foundation to underwrite- research and bill dra fting, he initiated th e action that subsequentl y " ·on the endorsement· of Governor R ockefeller a nd . J\fayor Lindsay and th e support of the L egislature during the 1966 session. The Fune! is h eadecl by the President of th<.: Board of Edu cation wl10 is designa ted by hJ\v :ts Chairman. Four additio nal m embers of th e Boarcl of Educaticn, appointed by the Presidcn, , serve th e Fund during their terms o[ office on the Boa rd. Fonr tru stees, appoin ted by the i\fayo r, serve term s se t in itia ll y at two, three, four or five yea rs. T h eir su ccessors will all ~erve for fi ve years. The present trustees bring to the d irecti on of the Fund's development and fin ance operillions a combi ned background in a ll areas essenti al to th e success of this n ew venture -education, housing, labor, commerce an d finance. 2 �l The ·Fund is expected to proYid e a substantial portion of the City's school .construction program from now on. . Combined-occupa ncy stru ctures I.milt und er thi s program ,rill ~e o\\·ned j3__i_1!_tlY. - --by .the Fune! and the deYclop er. Th e Fund will finance ancl own the land ancl . - - ---- ---- ---------- -- - ·-· the school. The d eYcl op er " ·ill fin ance and mrn th e faciliti es aboYe the school. The two portions of the combinecl-occupancy building will be d es ig ned and constructed as a singl e proj ect. The Fund's acti viti es generally start with a site designated by th e Board of Education for a ne\\· school. Th ey inclucle dcYeloping appropri a te con cepts for combined me of these sites, promoting deYeloper interest in undertaking construction, ancl coordinating with th e Board of Education durin g the desig n and cons~ruction of the school. Local School Boards will b e consul tccl, and all combined-occupancy structures will be appro\'ed b)' th e Board of Education as well as by th e Funcl, thu s assuring th a t the program directly serves the school system. The Fund hopes to a tt ra ct as spo nsors qu alifi ed person s and orga niza tion s interested in participa tin g m th e program , including community and other non-profit g roups. School sites already mrn ecl or b eing acquired by the City will be publicly adverti sed by the Fund if suitable for th e developm ent of combin ed-o ccupancy structures. Proposal s for th ese sites will b e invited from potenti a l sponsors and devel op ers. In addition to info'rm a ti o n describing th e site, th e Board of Education's r equirem ents for each sch ool will be made availabl e for the preparation of a proposal. Evalu a ti o n of the p ro p os al s will b e b ased on several criteri a, including th e comp a tibility of th e non-sch oo l use, th r in come t 0 h e derived th erefro m, and th e finan cial ability and experi ence of th e appli ca nts. P !."_op_os_a_l~ _fro_~ _J~O ten tial dc,·elop ers " ·ho eith er own or h ave a lega l interes t

- - -- -in a site m ay b e 'consid ered o n a n ego ti a ted b as is. Th ese p ro posa ls would h ave

to- m ee t th-;;-s -ii111e--st;-~c1 ~·;:.cls- of fc ii.s ibility -;l~;cf de,-cloper qualifi ca tio ns as th ose received throu gh publi c im·ita ti on. In additi o n, th e Fund m ay consid er, in r are in sta nces, n ego ti a ted p ro posals fro m developers who ha\' e in curred consid era ble cos ts in. developin g imagina ti ve des ig n or no vel m e co ncepts for a 3 �,. comoin ecl-ocrnp:111ey building. In accep tin g either type of proposal, the Fund will be governccl by th e public interest. Eventually, om1ership of the site and the school portion of the combinedoccupancy structure reverts to the qity. Air ri ghts to the non-school portion will be leased or sold to the developer. . The developer will h ave full responsibility for th e construction of th e school as well as th e non-school_ portion of th e building. Although the three ma3or subcontrac tors (plumbing; heating, ventilating an cl a ir conditioning; electric work) will be selec ted by p ubli c bidding, as required by law, instead of by the inform al negot iation usual in priv':.t~ ,rnrk, th e winning bidders will be made responsible to th e genera l contractor or d eveloper. The major ach·antage of a single construction contract has thu s been preserved by establishing a, singl e responsibility for the timely and satisfactory comple tion of th e w'ork. 4 �--- The . F1..: ncl will sell tax-exem pt boncls an d bone! anticipation notes to finance ' -- --- -·----- --------------- -····- -- site and construction costs of school s built under its program. Th e developer ·-- -·------ ~----- - ------- . ------ ------ - -----------~ ,#. ---- -~-. will independentl y ((r:i__a1:~ __l~i~_p_o_1~~i_on of~ ~ co1'.1~j_£1~~l-occupa ncy structure,__ using eith er convention al or government so'.:!-ccs of ~ortgagc•.:_~~1:.':X·~ The Fund's bonds are expec ted to be hi ghly m a rk etabl e at a fav orable rate becau se of an unu sual security feature I~ additi o n to a capital reserve fund cover _debt service for any succeeding year on all outsta nding bonds, as is customary for public ben efit corporatio ns, th e law authorizes a first li en on to State aid to New York City for th e support of th e public school system. A call on State aid would be mad e only in th e improbable event th at the capi tal reserve fund shoul d at some time be insuflicicn t to meet debt service and the · City did not rcpl enisl1 it to the amount requi red. H owever, th e provis:on assures at all tim es th e so lvency _o f the Fund and th e security of its bonds. D ebt service on the Fund's notes and bonds will be paid from income. There w ill b e three sources: I. Paymen ts for th e sale or lease of air rights The Fund will rece iYc fro m t!1e devel oper an annu al payment, based on fair m arke t value, for th e sale or lease of ~he ai r rights over the s::hool. 2. Pay m ents in lieu of taxes Instead of paying real estate taxes to th e City, th e developer will m ak e equivalent payments to th e Fund for a p eri od_ of time not less th an th e p eriod of th e serial bonds issued to fin ance site a nd construction costs of th e school. 3. R en(a ls for th e sch oo ls This paym ent is expected to be nominal for th e majori ty of schools bui lt 111 combined-occupancy stru ct ures. vVhcnever th e income from th e di sposition o f air rights an cl payincnts equi valent to real es tate taxes are sufficien t to coyer d eb t service an d the Fund·s admin istra tive costs, th ere will be no need for additional incom e. School renta ls will be req uired onl y for th ose structu res tha t cannot mate suffi cient p aym ents to cover debt servi ce, such as tax-exempt public faci li ti es and certa in kinds of non-profit housing. · The bonds to be issu ed by the Fund arc lim ited to 40-ycar maturities, and the notes to 5-ycar m a tu riti es. Th ey a re lega l investm ents for all organi za ti o ns authorized to buy th e Sta te's bond s or other obliga tions, such as public bodies, trust and msura n c;e compan ie., , b a nks and fiduciari es. 5 �.l..- ... i· The major ponion of the program. is expected to provide new schools at liule or no cost to the City. i\Jost residential and commercial structures are SI a year. Some . will even yield a surplus, which can be used for the construction of additional expected to yield enough income to p ermit_ a school rental of schools or turn ::"cl over to the City. Some combined-occupa ncy structures ,rill probably be built to meet the City's social needs clc'spite their inab ility to produce enoi.1gh income to pay all 0£ the debt service - those providing rnodcrat;-rent housing, for example. In these instances, school rentals will be no high er than the annual cost of a comparable new school. The Fund h as been designed for considerable fl exibility in its operations. Because a wide variety 0£ commel-cial, public, social and residential uses can be accommod a ted in combined-occupancy buildings, many sections of the City offer appropria te si tes. Combined use is adaptable to small structures thc1.t can blend into existing, cohesive communities. Jt is also applicable on a la rge scale to major redevelopm ent areas, including urban renewal and l\Iodel Cities projects. It can b ecome on e of tne City's imponant plann ing tools during the n ext d ecade to create econom ic, social :rnd pl:ys:ca l renewd while carrying out its prime pu rpose of creating additional sch ools. 6 �Alfred A. Giardino Chairm an Aaron Brmrn Fergus Reid, III Lloyd K. Garrison Philip A. Roth Morris Iushewitz Clarence Senior Jason R. Nathan Howard Stein Daniel z. Nelson Exe cu live Director Grace Bliss Assistant Director Sol A. Liebman G eneral Coullscl Andrea \\Tilson Consultan t on E1hlcation .. ' YECM N~tt:Al COMZUi\.TI\MYS 1, Nixon l\Iuclge Rose Guthrie Alexander &: l'l'I itchcll Bond Cou nsel Finan cial Advisor Erns.t & Ernst John H . i\fuller / Auditors R eal Esta te A c/·uiso'- 7_ Eastman Dillon, Unio n Securit ies&: Co. �