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Tuesday, June 18, 2013

NYU Provides Sweetheart Loans to Faculty, Administrators to Buy Vacation Homes

NYUniversity LogoNew York Times:  NYU Gives Its Stars Loans for Summer Homes:

NYU has already attracted attention for the multimillion-dollar loans it extends to some top executives and professors buying homes in New York City, a practice it has defended as necessary to attract talent to one of the most expensive cities on earth. Mortgage loans to Jacob Lew, a former N.Y.U. executive vice president, part of which was eventually forgiven, became an issue during Mr. Lew’s confirmation hearings as treasury secretary this year.

Universities in similar circumstances, like Columbia and Stanford, also have helped professors and executives with home loans. Aid for vacation properties, however, is all but unheard-of in higher education, several experts in university pay packages say.

“That’s getting to be a little too sexy even for me, and I have a good sense of humor about these things,” said Stephen Joel Trachtenberg, a former president of George Washington University who has publicly defended high salaries for professors and university executives. “That is entertaining, actually. I don’t think that’s prudent. I don’t mind paying someone a robust salary, but I think you have to be able to pass a red-face test.” ...

Since the late 1990s, at least five medical or law school faculty members at N.Y.U. have received loans on properties in the Hamptons or Fire Island, in addition to Dr. Sexton. ... Dr. Sexton declined to comment for this article, but in a March interview he said: “Faculty housing loans on which interest is paid and appreciation is enjoyed by the university actually produce additional revenue. They’re probably the best-performing parts of our portfolio, so as to reduce the amount of tuition that we require.” ...

[T]he compensation committee of NYU’s board of trustees approves such loans, with the exception of law school loans, which in the past were approved by the law dean and the board of the law school’s foundation. The law school’s current policy “is to participate fully in the university’s process for evaluation and approval of loans and loan programs.” ....

Senator Charles E. Grassley, Republican of Iowa, raised the issue of Mr. Lew’s loans during hearings over his confirmation, which was approved; since then, the senator, who is a member of the Finance Committee, has asked NYU for more records of compensation and loans to executives and employees. He noted NYU’s nonprofit status, which generally exempts it from income and property taxes.

“Universities are tax-exempt to educate students, not help their executives purchase vacation homes,” he said in a statement on Monday. “It’s hard to see how the student with a lifetime of debt benefits from his university leaders’ weekend homes in the Hamptons.”

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Comments

Maybe the IRS should look into this instead of The Tea Party.

Posted by: michael livingston | Jun 18, 2013 4:23:31 PM

I'd be happy with both.

Posted by: Mike Livingston | Jun 18, 2013 5:51:55 PM

The top hedge fund and private equity managers in the country make hundreds of millions of dollars a year and pay 15 percent capital gains taxes on their labor income.
http://dealbook.nytimes.com/2013/04/15/pay-stretching-to-10-figures/

The president of NYU makes a million and change and pays 35 percent, plus payroll taxes. But the populist outrage is supposed to be directed at the president of NYU, because the hedge fund and private equity managers own the newspapers and fund all of the political campaigns of both parties.

Posted by: Anon | Jun 18, 2013 9:22:50 PM

Anon issues another red-herring. The carried interest loopholes is an outrage that has nothing to do with the shameful, greedy practices of NYU.

NYU escapes federal taxation, receive an income stream backstopped by the federal government, saddle their students (those in the student body whose parents aren't the hedge fund managers that Anon rightfully decries) with the greatest debt burden of any institution in the country. The school also is exempt from property taxes in Manhattan. Yet let's ignore all that and change the subject to shield Greenwich Village limousine liberals from any criticism.

Posted by: RentSeekingHypocrites | Jun 19, 2013 11:12:25 AM