Seldom do I receive the opportunity to directly fuse Georgism with law school rent-collecting. That it’s going on at the law school closest to Henry George’s grave adds to the absurdity. I revel.
Freestanding Brooklyn Law School is selling six of its student dormitories due to declining enrollment. According to the Brooklyn Daily Eagle it’s unclear if the sale has reached agreement yet, though Brooklyn Law School (BLS) dean Nick Allard says it has. The purchase price is $36.5 million, and amusingly the city just assessed the properties’ combined market value at less than a third of that.
See for yourself:
|Property||July 1, 2013 – June 30, 2014, Assessment||July 1, 2014 – June 30, 2015, Assessment|
|89 Hicks St.||$3,894,000||$3,868,000|
|18 Sidney Pl.||$1,200,000||$1,402,000|
|144 Willow St.||$2,325,000||$2,395,000|
|100 Pierrepont St.||$1,695,000||$1,746,000|
|27 Monroe Pl.||$925,000||$988,000|
|38 Monroe Pl.||$1,552,000||$1,598,000|
None of these numbers really matter since BLS availed itself of a student dormitory property tax exemption. The six properties could have been worth hundreds of millions and nary a dime would’ve been collected by the public—unless it got sick of subsidizing housing for law students whose odds of working in full-time, long-term, bar-passage-required jobs nine months after graduation were about even. In the last two years, one in five BLS grads was “unemployed-seeking.”
Although credit is due to BLS for defying the Law of Rent by keeping its lease charges fairly even over the last few years while its properties swelled in value—at least, that’s what my superficial research shows—it’s certain that with the advent of the Grad PLUS Loan Program, BLS was able to recycle some of its students’ debts via its property holdings. We also don’t know if BLS charged above-market rates all along.
Indeed, combining Education Department and Official Guide data, we find that since the 2006-07 academic year on average half of all BLS students took out Grad PLUS loans, the average recipient taking out about $30,500 (2013 $). In 2012-13, full-time tuition at BLS exceeded the annual Stafford Loan limit by $29,500, but don’t worry, last year BLS budgeted $25,500 in living expenses for on- and off-campus students. In fact, it appears that with the advent of Grad PLUS loans, BLS’s estimated living expenses grew steadily.
(Source: Official Guide)
It could just be a coincidence, but between 2006-07 and 2012-13, $158.7 million in Grad PLUS loan dollars went to BLS students, much of that for tuition and much to live in its own dorms.
The point, though, isn’t simply that Grad PLUS loans can be the gift that keeps on giving to landowning law schools; rather, it’s that (a) nonprofit tax status allows unproductive landowners to waste locations, and (b) NYC’s property assessment are fictitious. Think about that the next time you pay city sales or income taxes.
Appendix: Assessments for Brooklyn Law School Properties: