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Addressing Allston

The wish list for Harvard’s recently acquired 100 acres in Allston is long and growing: graduate-student housing, a museum, conceivably a whole new campus for some of the landlocked professional schools in Cambridge. But before any plans can be drawn, much must be done—cleansing polluted industrial sites, buying out an easement on some of the property, assembling scattered parcels, and creating workable transportation.

In an effort to quicken the pace of redevelopment, President Neil L. Rudenstine proposed allocating a total of $500 million to the project over the next five years. Both the proposed mechanism for doing so, and the uses of the funds, provoked controversy and discussion between the administration and the Faculty of Arts and Sciences (FAS) during the winter and spring.

Under the administration’s formula, one-half percent of endowment funds would be "decapitalized" annually. That is, that portion of endowment assets would be distributed for use on the Allston improvements, consistent with legal guidelines regulating such disbursements. Given an endowment exceeding $19 billion as of June 30, 2000, the formula would generate nearly $100 million per year, with 40 percent coming from FAS.

Introducing the idea to colleagues at a faculty meeting February 13, FAS resources committee member Dale W. Jorgenson, Abbe professor of economics, described the proposed infrastructure fund as a departure from the existing internal "tax" (levied on each school’s operating budget) that pays for Harvard’s administration, management of research grants, and employee benefits, and called it a "very substantial increase" over the existing assessments to pay for University costs. He pointed out that FAS was relatively more dependent on endowment than, say, the Business School, which derives substantial income from its executive education and publishing operations; the effect would be to impose more of the Allston infrastructure costs on FAS.

In the ensuing discussion, FAS dean Jeremy R. Knowles made it clear that he alone among the deans had voted against the proposal—but acknowledged that endowment funds would have to be the source of the money to improve Allston. Rudenstine, who presides over FAS faculty meetings, reviewed alternatives discussed among the deans (including an increase in the tax on each school’s operating budget); pointed out that the Divinity School would be even more disadvantaged than FAS under the plan; noted that FAS was the one faculty that could not reasonably relocate across the Charles, and so stood to benefit from investments that paved the way for other Harvard units to decamp; and invited further discussion.

After several private meetings and exchanges of information, the resources committee reported at the April 10 FAS meeting that agreement had been reached on the scope of projects eligible for infrastructure funding; the governance of the fund; and its duration and review. Committee member Susan J. Pharr, Reischauer professor of Japanese politics, noted "enthusiastic" support for the Allston purchases; acknowledged the "significant expenditures" needed to make it usable; and expressed confidence that FAS would be a major beneficiary of University development there. The committee also came to agree, Pharr said, that the half-percent levy on endowment funds was the only viable mechanism for effecting the needed financing, and was not unduly unfair to FAS. As a result of the discussions with the president, Pharr said, the fund had been firmly capped at five years and $500 million, and its scope limited to the Allston acquisitions and improvements thereon. Future buildings for specific schools would be paid for by their own, separate fundraising.

In response to questions, Rudenstine said that it was far from certain what the ultimate costs of readying Allston for academic use would be. The five-year fund was an attempt to accelerate redevelopment; at the end of that time, he said, if much remained to be done and much expense to be incurred, a decision could be made to slow the infrastructure work to a pace that could be sustained by central administration funds, or to seek other sources of financing. And if endowment returns diminished, or became negative, the proposed five-year spending could be slowed. With that, and the assurance that incoming president Lawrence H. Summers would review the proposal, FAS members seemed satisfied, enabling the Corporation to authorize an infrastructure fund and begin finding out exactly how the land Harvard had acquired in Allston might reshape the campus in decades to come.