President Bush delivered a gift from Washington to New York in the form of Governor's Island, a former military base that will be sold to the state for a nominal fee.

"I looked at the law, looked at the circumstances, and decided this morning this is the right thing for the U.S. government and it's the right thing for the people of New York," Bush said in an Oval Office announcement, with New York Gov. George Pataki and Mayor Michael Bloomberg at his side.

"I think it's going to make the life of the city that has been tragically affected by killers and murderers better. And I think it will enhance the quality of education," Bush added.

"You could not make a bigger impact on America going forward than by this gesture," Bloomberg said during the announcement.

Governor's Island sits just a half a mile off the southern tip of Manhattan. It has 172 acres and for 200 years served as a multi-purpose military base.

The island was purchased by the Dutch in 1637, then used by the British as a colonial governor's residence. It housed George Washington's troops during the revolution. It was a recruitment stop for soldiers in WWII. In 1988, the site served as the location of an arms reduction meeting between President Reagan and Soviet leader Mikhail Gorbachev.

More recently, it has been surrounded by controversy.

Former President Clinton offered to sell the island to the state for $1 if it were made available for public access, but city and state planners couldn't agree what to do with it.

With his wife newly elected as New York's junior senator, Clinton took one last stab at determining the island's fate when he granted two forts on it national monument status just before leaving office. Clinton said the forts played important roles in U.S. military history from the War of 1812.

Some wanted casinos to be built on the island after it was abandoned by the Coast Guard in 1997. Last year, the Bush administration was instructed by the General Services Administration to sell the property on the open market according to existing law, which the Justice Department said overruled Clinton's monument designation. It could have fetched an asking price between $300 million and $500 million.

Bush said congressional approval would not be needed for the sale.

Democratic Rep. Jerry Nadler, who represents the district that encompasses Governor's Island, supports the plan, but sees politics at the root of the president's change of heart.

"Clearly, selling it would have looked very bad for Pataki in this election year. Pataki got him to do it," Nadler said.

Either way, the sale is a clear win for New York's Republican political elite, who say they plan to turn the site into an educational clearinghouse for teacher training, allowing them to cast another stroke as the new party of education.

"We need more trained teachers. We need more classrooms. We need to improve our university system. This will allow us to do all three by putting part of City University, one of the flagships of New York, over on Governor's Island," Bloomberg said.

The Associated Press contributed to this report.