Conflict of Interest Likely In Sale of Bargain Houses

A list of the 25 houses and their tenants is printed in the box at the left.

Several faculty members currently pay rents significantly below market value for houses owned by the University.

Administration officials admit that as many as 8 of the 25 faculty tenants pay monthly rents lower than those for comparably priced houses, but would not disclose what rents are actually paid.

In an attempt to remedy the situation, the University has decided to embark on a wholesale divestiture plan which will put an end to rent subsidies.

Administration officials said last week that Harvard will offer current faculty tenants first crack at purchasing the houses. According to Cambridge tax assessment records, all the homes are worth over $50,000, and some are worth upwards of $100,000.

After selling the homes, however, Harvard will retain first rights to repurchase the property if the new owner ever decides to sell.

The divestiture plan, first outlined in the Daly Report to the Cambridge Community last year, represents a dramatic turnabout from the mid-sixties, when the Pusey Administration engaged in a residential buying spree.

The Daly Report says that "Harvard wants to divest itself of residential property not essential to its own needs"; however, the buy-back agreement serves notice that the University also wishes to retain control over who lives in the houses, all within walking distance of the Yard.

The 25 single-family homes house faculty and administrators including President Bok, President Horner, and three University vice presidents.

The divestiture plan, scheduled for implementation by June 1974, apparently will not include houses used rent-free by Bok, Horner, or Krister Stendahl, dean of the Divinity School.

The planned property sale gives the appearance of a conflict of interest because Bok and three of his vice presidents--Charles U. Daly, Hale Champion, and Chase N. Peterson '52--all live in University-owned houses.

The only other person with significant input into the sales decision is Stephen S.J. Hall, vice president for Administration. Hall lives in a privately owned house.

At least one administration official admits to the existence of a conflict of interest. Daly, vice president for Government and Community Affairs and author of the October 1972 report to the Cambridge Community, said: "We can't just rely on the extraordinary character and virtue of those deciding."

Daly suggested that the Cambridge Corporation, an independent organization funded jointly by Harvard and MIT, be consulted on the divestiture plan. "This may stir up the troops around here," he said, "but I feel it is a perfectly legitimate role for them to have."

Any mention of conflict of interest strikes a tender chord with other University vice presidents. "Steve Hall is in charge," Champion said. "He makes recommendations to the Corporation and the Corporation will decide policy. Particularly because I am a renter, I am glad to stay out."

According to Champion, the Corporation must interpret the meaning of the words in the Daly Report: "residential property not essential to its own needs." Once that is decided, Champion said, he sees no further conflict of interest.

The 25 houses are in the comfortable tree-lined sections of the Cambridge residential area northeast of the Yard around Francis Ave. and west of the Yard near Mt. Auburn St.

Ostensibly the houses are rented so that faculty have an opportunity to live near the University in an otherwise tight housing market. In some cases, the mere availability of housing meets the needs of incoming professors.

But faculty and administrators admit that the houses, some with low rent, are also used as a recruiting device, providing monetary subsidies to professors or administrators the University is especially anxious to lure to Harvard.

The Administration would not reveal the addresses, names of tenants or rents of the University-owned houses, but a week-long investigation by The Harvard Crimson determined a total of 25 University houses and their tenants.

The Business School Dean's residence outside of Cambridge, and three multi-family units--the Botanical Garden Apts. on Fernald Drive, Faculty Row on Linnaean St., and an apartment building at 83 Brattle St.--bring the total number of properties to 29.

Two Lists

Hall cited a figure of 29 properties involved in the current divestiture study, but would not release the list of the homes involved. Although Administration officials would neither confirm nor deny that The Crimson's list matched Hall's list, Donald C. Moulton, assistant vice president for Government and Community Affairs, said at least 27 of the properties were the same.

The other two properties--16 Hillside Ave. and 14 Scott St.--were classified as houses designated for faculty when Harvard submitted a list of these houses to the Cambridge Rent Control Board.

Among the faculty members living in the 25 single-unit houses are John K. Fairbank '29, Higginson Professor of History; James D. Watson, professor of Molecular Biology; Morton W. Bloomfield, Porter Professor of English; and Daniel J. Robbins, director of the Fogg.

Also renting houses from Harvard are Daniel Bell, professor of Sociology; Jerome A. Cohen, professor of Law; Alfred W. Crompton, professor of Biology; and Daniel P. Moynihan, professor of Education and Urban Politics. Moynihan, on leave as U.S. Ambassador to India, will return to 57 Francis Ave., which is temporarily occupied by Moulton.

The decision to sell residential properties stems from two distinct interests of the Bok Administration: the desire to tighten up financial dealings and the wish to get out of the real estate business.

Hall said he did not object to the continuation of rent subsidies as long as someone other than the central Administration was bearing the burden. "If a particular faculty wants to pay part of the rent, that should be their option," he said.

Hall said inequities in the rent exist, due to deals negotiated with Harvard many years ago. He said most leases were signed eight to ten years ago in private agreements with the University.

But The Crimson has found by comparing Cambridge city records that 15 of the properties, not including the official residences of the presidents and deans, changed hands within the last five years.

By renting the houses at market value, Harvard could tighten its finances just as it could by selling the houses at market value. Disposing of the properties, however, would solve the real estate problem. "I suppose it is a bother for the University to be a landlord," Peterson said.

Conversations with Peterson and others revealed how important they believe nearby housing is to the future of the University.

"Ten times as many students came to my house as to an equivalent professor living in Belmont," said Kenneth O. Dike, professor of History, a former tenant of 138 Irving St.

"It will be a tragedy for this place in 20 years if everyone [professors and administrators] lives in Weston," Peterson said. "I want the University to work as hard as possible to keep places for faculty near the University, even if it means a fight with City Hall on occasion."

In a letter to the Rent Control Board last November, Henry H. Cutler, the University's director of Real Estate, listed 23 single-family houses and one apartment complex used by faculty and administrative officers.

The houses in his list are not subject to rent control under city regulations, which exempt rental units in a "public institution or college or school dormitory operated exclusively for charitable or educational purposes.

Daniel Steiner '54, general counsel to the University, said last week that he interprets the regulations as exempting "housing reserved for the use of University personnel."

He said that the leases signed with faculty tenants stipulate that they may remain in their houses only as long as they are affiliated with the University.

Low Rents

Since the houses are exempt, the Rent Control Board has no information on rent levels. But Steiner, assessing the rents paid by faculty tenants to the University, said he has the impression "a lot are below what one could get under rent control."

William A. Burnham Jr., property manager for the Cambridge office of Hunneman and Company, Inc., real estate agents for the University, made a more emphatic, though possibly exaggerated, statement about Harvard rents. "In 99 per cent of the faculty houses, Harvard does not make enough in their rent even to pay real estate taxes," Burnham said. "I know that for a fact."

Administration officials said the low rents have attracted many faculty and administrators to Harvard, particularly in recent years. Peterson said that one house, located at 65 Francis Ave., was used by the University as a "roosting spot" for new faculty members until they became familiar with Cambridge.

Peterson lived in the house for one year, and John Munro, former dean of the College, occupied the house during his term. The home became a "roosting spot," Peterson said, after Fred L. Glimp '50, Munro's successor, decided not to live in Cambridge.

Lee Rainwater, professor of Sociology, rented the house for one year after Peterson moved out, and was followed by the present tenant, Daniel Bell. Bell has lived at 65 Francis Ave. for the last three years.

Peterson said that the availability of housing close to the Harvard campus influenced his decision to come to the University. He said that the scale "may have been tipped toward inertia" had no house been available, and that he might have continued teaching in Utah.

Morton Bloomfield, a faculty tenant at 13 Kirkland Place, said that he considered the renting arrangement a "perquisite of the job."

"After all, Harvard pays its top professors somewhat lower salaries than other good universities," Bloomfield said. "The houses are something Harvard offers instead."

Jerome A. Cohen, a faculty tenant at 21 Bryant St., sold his $35,000 home near the University of California at Berkeley when he decided to come to Harvard. Cohen said he could not find a comparable home in Cambridge for the same price.

He said that when he sold the Berkeley home and moved to Cambridge, he told his friends it seemed like he was "selling a house and getting a bicycle."

The high price of real estate in Cambridge has hampered the recruiting efforts of some Harvard departments, administrators said, and neither Administration officials nor faculty members deny that Harvard uses the houses to recruit sought-after personnel. Peterson said that University-owned housing provides hiring flexibility in its search for faculty members.

One disadvantage in renting from the University, many tenants said, is the poor maintenance done on the houses. Repair work for most of the faculty homes is performed by Hunneman Realtors.

Burnham, Hunneman's property manager for Cambridge, said there is no written policy regarding what maintenance should be done by the realtor and what left to the tenants.

"In general," he said, "all exterior maintenance [grounds keeping] is to be performed by the individual tenant."

Burnham said normal wear and tear on the houses is repaired by Hunneman, which in turn bills the University for the work. He said many problems, such as exterior painting and tree trimming, are in a nebulous area with neither the tenant nor the realtor clearly responsible for the maintenance.

Trim the Trees

John Karefa-Smart, visiting professor of International Health, lived until recently at 14 Scott St., renting the three-bedroom, two-bathroom home for $450 a month. He estimated the house's value at over $80,000.

"We were grateful the University had a house when we needed it," Karefa-Smart said, but "the maintenance was so-so. The trees were never trimmed, leaving the living room so dark we could not use it without lights except in the winter."

"The realtor came right away for little things, but never came to fix problems with the stove," Karefa-Smart said.

One of the most impressive-looking houses--with a sloping lawn and well-trimmed hedges--is used by Richard Zeckhauser, professor of Political Economy, who lives at 138 Irving St.

Although he declined to discuss the rent or value of the house, Zeckhauser said he thinks the rent is equitable. "I do a fair amount of work such as painting to maintain the house," he said. Hunneman does the major repair jobs, Zeckhauser said.

While little work is done to the houses while they are occupied, Harvard did a great deal of modernization at 11 Kirkland Place before James D. Watson moved in, a previous tenant said.

The wife of William Doering, Mallinckrodt Professor of Chemistry, said Doering paid about $350 a month for the 11 Kirkland Place home between 1968 and 1970, when the family moved to a larger house.

"As far as upkeep is concerned, ownership is generally a great stimulant," said Hale Champion, a former director of the Boston Redevelopment Authority.

Ownership also provides significant tax savings. When reporting his Federal income tax, a homeowner may deduct interest payments made on his mortgage.

Some of the faculty tenants said they would purchase their houses if the University decides to sell, while others said they preferred to rent. All the tenants reached by The Crimson declined to make definite decisions until they knew the details of the upcoming divestiture.

Should Harvard offer to sell the houses to their current tenants, a University mortgage plan would aid them in financing the purchase.

The mortgage plan, part of the benefit package open to all tenured professors, provides some financial advantages to faculty who are buying a home.

The plan provides a second mortgage at 4 per cent interest on up to 15 per cent of the housing cost, but not more than $10,000.

Under the plan, a professor buying a $50,000 home would borrow 70 per cent of the money from a commercial bank at regular interest rates, now between 8 and 9 per cent. The purchaser would provide 15 per cent of the money himself, and the University would provide the other 15 per cent at 4 per cent interest.

The savings to professors who use Harvard financing is the difference between 4 per cent interest and the market rate--8 to 9 per cent, or as high as 12 to 15 per cent for second mortgages--although the savings depend on the exact terms.

In effect, therefore, Harvard would become bankers instead of landlords.

Person to Person

Most of the tenants said they are satisfied with Harvard as their landlord. Bloomfield said he would be disappointed if the University asked him to purchase the house he is renting at 13 Kirkland Place. Bloomfield has lived in the house since February 1962, when the negotiated his rent with the University.

Hall said that the rent agreements were made through personal negotiation and that any plans for sale would also be done on an individual basis. Daly, concurring with Hall's view, said he hopes there are no mechanized rules when Harvard sells the houses.

Because the agreements and tax assessments have been made at different times, by different people, and in different circumstances, "you can seldom find total rationality in the system," Steiner said.

The Radcliffe-owned apartment building at 83 Brattle St. is a prime example of such an uncertain situation.

The building is recorded in Harvard's list of properties under the restricted faculty classification, meaning that only faculty members can live in the apartments. 83 Brattle St. is a tax-exempt property, listed on the assessor's rolls as a dormitory.

Moulton said 83 Brattle is restricted housing for married students. But a check of the 1973 City of Cambridge Street Listing Guide shows that 18 women and 2 men reside in the building, and a review of the Harvard directory of faculty and students shows most of the residents are unmarried teaching fellows.

Moulton said the apartment building is in a "transition state," but had no explanation for its listing as restricted to faculty.

The Crimson investigation uncovered several other inconsistencies between Cambridge and Harvard records. Harvard owns property at either 8 or 10 Traill St., for example, but the city has no record that Harvard paid taxes on that property.

Richard E. Neustadt, professor of Government, lives in the Harvard-owned Traill St. house, and three other people, who have no connection with the University, live at the adjoining property. A check by Moulton of the Harvard tax bill for 1972 showed that the University paid taxes on the Traill St. property.

According to the directory of faculty and students, Neustadt lives at 10 Traill St. 8 and 10 Traill St. formerly were one piece of property which covered 26,000 square feet.

A similar address inconsistency exists at 5 Hubbard Park Road. Harvard lists a property at 7 Hubbard Park; Moulton said only one property exists on the site and that the numbers are interchangeable.

John M. McGuire, professor of Law emeritus, lives in the house. It is listed as a restricted faculty residence.

Mixed Use

Another house, 14 Scott St., is listed two different ways by the University. In the list compiled by Daly's office, 14 Scott St. is recorded as "mixed use" housing, not restricted to either faculty or students. But in the list presented to the Rent Control Board, the same address is under the faculty housing classification, thus qualifying for a rent control exemption.

Moulton again had no explanation for the discrepancy, but acknowledged that there could be errors in the lists.

One of the University's new acquisitions fits into a category all its own. The penthouse atop 29 Garden St., the building which was formerly the Hotel Continental, is now occupied by Walter J. Leonard, special assistant to President Bok.

Leonard is another example of the University philosophy that faculty and administrators should live close to the Harvard-Radcliffe area. According to Hall, however, Leonard pays equitable rent for his penthouse. "If they asked me if I wanted to live there, I wouldn't pay the rent," Hall said.

A few faculty members and administrators said they would not live in Harvard-owned houses because they would feel uncomfortable with the University playing the dual role of employer and landlord.

Harvard, in fact, has come to a crossroads in its expansion program. The Bok Administration must decide whether to continue its role as one of Cambridge's biggest residential landlords or to sell its properties. Both Hall and Daly admit that Harvard intends to sell the houses at market value, which will mean substantially more revenue for Harvard than under the present arrangement.

The University could increase its revenue and maintain ownership by raising the rents. But it appears Harvard will retain firm control over the properties whatever choice it makes, because the divestiture plan includes a re-purchase agreement.

Despite the public appearance of returning properties to the Cambridge community, therefore, the University's divestiture plan places Harvard in the role of puppet landlord--pulling the strings behind the private owners.CrimsonMartin KalishThis house, located at 21 Bryant St., is currently rented to Jerome A. Cohen, professor of Law.