In a startling announcement, President John Hennessy has said that Stanford University and the city “could not find a way to realize our mutual goals,” after announcing that the school has dropped its ambitious plans to build a New York City campus, writes Lisa M. Krieger at Mercury News.

The university seemed set to establish a graduate school in applied sciences and engineering, boosted by the support of New York City Mayor Michael Bloomberg, who has been looking to bolster the region’s tech talent and invigorate “a second Silicon Valley”.

Some have speculated that Stanford was frustrated by the city’s attempts to negotiate new terms, while others have said the city’s recent push for more money might have stretched Stanford beyond its comfort zone.

There are also claims that the other top competitor, Cornell-Technion, are so close to getting the contract that Stanford wants to “save face”.  Stanford’s announcement comes as Cornell University celebrates a $350 million anonymous gift to support its New York City campus bid with the Technion Israel Institute of Technology.

Stanford’s proposal, which consisted of more than 600 pages and cost about $1 million, outlined a $2.5 billion campus, built on Roosevelt Island over three decades, that would have housed more than 200 faculty members and 2,000 students.

“The university could not be certain that it could proceed in a way that ensured the success of the campus,” a university statement said.

Julie Wood, city deputy press secretary, issued a statement:

“This competition is about changing the future of the city’s economy, and we are thrilled that we have a number of proposals that we believe will do exactly that. We are in serious negotiations with several of the other applicants, each of whom has a game-changing project queued up.”

Along with the Cornell-Technion plan, three other universities are also in the running: Columbia, Carnegie Mellon and New York University.

Recent history shows this move should not be considered surprising. Back in the fall Hennessy warned that unless Stanford could get satisfactory guarantees, plans would be abandoned.

“If we can’t get the entitlement,” assuring free-and-clear permission to build, “we are not going to be trapped into doing something,” he said.

Students also had reservations, as indicated by a student poll by the Stanford Daily – 50 percent opposed and 39 percent favored the New York City entry.

“Stanford put forward an ambitious and serious proposal and worked hard to see that vision fulfilled,” Hennessy said in a statement.

“Great universities need to continue to take risks, to innovate and to explore new opportunities where we can make contributions to supporting economic growth and expanding knowledge.

“Stanford will continue to follow this path.”