Surplus From Running Canaday Will Help Offset Cost Overrun

The cost overrun on the construction of Canaday Hall will absorb the $70,000 estimated surplus from the operation of the dormitory this school year, administration officials said yesterday.

Last spring the $70,000 figure had been projected as an asset for the Houses and College Dormitories account of the University.

Bruce Collier, assistant dean of the College for Houses, said yesterday that the loss of the Canaday Hall income was reflected in the projected $400,000 to $600,000 deficit in the housing account for 1974-75 that he reported last month.

Mounting Losts

Dean Whitlock said yesterday that the administration learned that it would lose the Canaday revenues when cost overruns on the construction of the building mounted in late summer.

The fast-track design of the dormitory, in which building began before plans were complete, resulted in a $300,000 overrun on the construction beyond the $3 million projected expense.

The $70,000 surplus estimate was based on lower operation costs than income from rooming contracts and also the suitability of the air-conditioned hall for paid use during the summer, Hale Champion, vice president for financial affairs, said yesterday.

However, Collier declined to predict how many years it will be before the loan drawn from the Harvard treasury to pay for the cost overrun will be repaid.

"It is very hard to say," Collier said, "because the operating costs of the hall are not clear yet."

Champion said that revenues from the freshman dormitory may also be required to pay for interest on an earlier loan totalling about $1.5 million for construction of the building.

Dr. Chase N. Peterson '52, vice president for alumni affairs and development, explained yesterday that when Ward M. Canaday '07 agreed a year and a half ago to pay for the dormitory, only about half of the gift was delivered then in liquid assets and property.

Peterson said that Canaday also signed what was in essence a contract to yield the rest of the gift upon his death. Canaday is now 89 years old.

On the strength of that contract, the Corporation itself assumed some of the payments to contractors for the Canaday construction, Collier said last night.

Interest Until Death

Collier said that when the administration determines which department is responsible for this "loan" against Canaday's contract, that department must pay interest on the loan to the Harvard treasury until Canaday's death, when the actual gift will arrive and the loan can be repaid.

Both Champion and Collier said that the burden of this loan will "quite possibly" rest on the housing account. In that case, revenues from the dormitory would also have to pay for the interest on this loan.

However, a decision on the responsibility for the loan has not been made yet, Collier said.

Robert E. Kaufmann '62, assistant dean of the Faculty for financial affairs, said yesterday that the loss of the Canaday revenues to pay for the overrun is a "disappointment and not a jolt" to the housing account.

He said that the estimated $70,000 sum involved is only about 10 per cent of the projected cumulative deficit in the housing account of between $600,000 and $800,000 for the two years 1973-74 and 1974-75