Untold Billions Will Build Allston from Scratch

When Lawrence H. Summers became president of the University last summer, he left behind a career in shaping economic policy and issuing our nation’s currency.

But as the University begins to develop its 271 acres of land across the river in Allston, Summers now faces the familiar task of determining the cost of this venture and figuring out where this money will come from.

The development of an entirely new campus built on a mix of railroad yards and preexisting roads and commercial buildings will cost the University billions of dollars—money that will come from a mix of donors, individual schools and the central administration.

“This will definitely be a multi-billion dollar venture by the time it’s done,” says David Dixon, principal consultant for Goody, Clancy and Associates, the firm working with Harvard to plan the development of its Allston campus.

Because the planning of Allston is just beginning, planners and University officials say it is difficult to speculate on the costs.

And until that number becomes clearer, finding sources for the required money presents a significant challenge.

“This is sort of like a freshman thinking about the first house they’ll live in. They’re not thinking about how much they’re going to spend on it quite yet,” says Vice President for Finance Elizabeth C. “Beppie” Huidekoper.

Cost estimates will largely depend on which facilities and school—or schools—end up moving to Allston, Huidekoper says.

“Imagine building a hospital versus a hotel,” she says.

“There’s hugely different costs,” she adds, “different health and safety requirements that we won’t know until we know what we want to [move].”

Pieces of the Pie

University administrators and urban planners say that many factors contribute to the cost of creating an entire campus from scratch—which is exactly what Harvard intends to do.

Creating a campus, Dixon says, involves a lot more than constructing a few new buildings.

He explains that the University will have to build new streets and that the city will have to increase access to mass transit in the Allston area.

These street and transportation costs could total more than $10 million, Dixon says.

Dixon adds that the University will want to build parks on its new campus, parks which can cost between $50 and $100 per square foot of land. An acre of park, he says, could end up costing anywhere from $2.5 to $5 million.

Hal Goyette, a partner in the Cambridge architectural firm Cole and Goyette which specializes in large building projects, says the University will also have to pay heavy costs for the analysis and evaluation of its new property—and factor in the unexpected costs that crop up once a project is underway.

Although Goyette does not offer exact figures for these costs, he says that, for example, the discovery of toxic waste on the site could double or triple development costs. Considering that the University’s land in Allston contains old railroad property, some sort of contamination is almost ensured.

Adding It Up

Harvard has already expressed interest in relocating graduate schools, constructing graduate student dorms and building a new museum in Allston. Officials have hypothesized that some of the professional schools—including the Law School, the Kennedy School of Government and Graduate School of Education—are leading candidates for the new campus.

Dixon explains that a classroom or administrative building “could easily cost” $200 to $300 per square foot.

A research building like a science lab could cost as much as $1,000 per square foot, he adds.

Buildings at the Law School currently comprise 820,000 square feet of space, according to University documents.

Using Dixon’s figures, this means it could cost roughly $200 million to rebuild the Law School in Allston at its present size. However, much of the reason for the move to Allston is a need for growth and more space—how much space is still up in the air.

And with every additional school that moves, the cost would rise. For example, the Graduate School of Education, with its 215,000 square feet, could add another $50 million.

Those figures do not include the cost of just physically moving the schools, their offices, administration and libraries a mile across the Charles River.

While the estimates do account for the costs of land preparation and the services of lawyers and architects, Dixon says construction of parking areas, landscaping and other extras would increase the costs even more.

Like classroom buildings, museums are also expensive.

Dixon says “a good museum” can cost between $500 and $1,000 per square foot, for a total of $40 to $100 million depending on the size and speciality of the museum.

Housing, he says, can cost between $150,000 and $250,000 per unit—meaning tens of millions of dollars for new dorms.

Still, Dixon and Harvard administrators stress that they may incur unanticipated costs.

“Sometimes we encounter unforeseen circumstances, like soil conditions, building conditions in renovations or mitigation costs,” writes Kathy A. Spiegelman, Harvard’s associate vice president for planning and real estate, in an e-mail.

Learning by Example

The sheer size and scope of the University’s dreams of expansion are all but unprecedented. Few schools have built new campuses from scratch recently.

The Franklin W. Olin College of Engineering, located in Needham, Mass., opened its doors this year to 30 “partners”—students who will enter the 100-person Class of 2006 after evaluating the school for a trial year.

Joe Hunter, director of communications at Olin, says the campus’ first phase of construction, to be completed this summer, will cost a total of $120 million.

This cost includes the construction of four buildings—a residence hall, a student center, an academic center and a classroom building—that together will total almost 300,000 square feet—roughly a third of the size of the Law School.

But because nobody knows what types of buildings the Allston campus will include, the Olin comparison only provides a starting point for projecting Allston costs.

Recently constructed Harvard buildings might provide a better estimate of Allston costs.

Completed in 1999, the 980,000-square-foot Maxwell Dworkin building, home to the Division of Engineering and Applied Sciences and the computer science department, cost $26 million.

Finding Funds

Figuring out the requirements for the new campus and the subsequent costs is only the beginning of the process, however. Once the figures have been nailed down, the University must begin discussing where that money will come from.

Last spring, the University voted to set aside central administration money in a special five-year infrastructure fund that will pay off debt on the land acquisitions in Allston and cover the costs of preparing the land for eventual construction.

Although Harvard has not yet begun any actual land preparation, Huidekoper says she expects that the University will use up the infrastructure fund quickly.

“We’ll see how far it’ll go,” she says. “It’s very expensive to buy and prepare land.”

At the same time last spring, in anticipation of increased costs, the University decided to require additional payments from the individual schools in the form of a yearly assessment totalling one-half-of-one-percent of each school’s endowment.

That five-year assessment will become part of the central administration’s general funds and will not contribute directly to the infrastructure fund, Huidekoper says.

“There is an existing assessment that’s always been there, and it still doesn’t cover the full costs [of central administration activities],” she says. “The full cost has been supported by managing the capital of the University.”

While acquisition and preparation funds are coming solely from central funds, eventual building costs will be covered by the University and the schools together, Huidekoper says.

Although the University has a long-standing policy of requiring its 11 schools, or “tubs,” to finance themselves independently, the Allston project may require a move away from that principle.

The as-yet-undetermined schools that eventually move to Allston will not be able to fund the creation of entirely new campuses on their own. And since one school’s move would increase the space available for expansion for another school in Cambridge, the costs will require participation from the entire University.

“The fact that we are so tub-centric is not going to be effective,” Huidekoper says.

A Brave New Campus

As the University does not expect the infrastructure fund to last long enough to offset any building costs, schools will have to cover building construction through a combination of fund-raising and borrowing.

The University will ensure that schools that take out debt can individually fund its repayment.

Because the schools remaining in Cambridge will likely expand into newly-vacated Harvard-owned space, Huidekoper says an additional funding source for construction will be the sale of old buildings to those schools that are left behind.

In most cases, however, those proceeds would not entirely offset the more expensive construction of a new building.

The details of compensation between Harvard schools have not yet been worked out, according to Spiegelman.

Although alumni donations will play a major role in funding the eventual costs, the University Development Office, which handles Harvard fundraising, has not begun approaching potential Allston donors, spokesperson Andy Tiedemann says. For now, with hard numbers and figures so far off, the University has more pressing needs.

“We still have to keep the things going for the next ten years,” Huidekoper says. “There’s plenty of things we need from alumni for today rather than ten years from now.”

The University expects the recent economic downturn to cause financial difficulty in coming years because of decreased donations and federal funding, and Huidekoper says that the “next few years are going to be tough on this campus.”

But even though paying for Allston is very much an unanswered question right now, Huidekoper says the University has always found a way to fund major initiatives in the past.

“I don’t know if people were sitting around in 1860 thinking about how we’re going to fund the Business School,” she says. “This will probably take 50-plus years to build out the Allston campus.”

Those involved, though, think the results will more than justify the long-term and expensive project.

Dixon says the project would create “the first great urban campus of the 21st century.”

“There will be lots of sources to fund this and it will be a very expensive undertaking,” he says, “but very much worth it in the end.”

—Staff writer Jenifer L. Steinhardt can be reached at steinhar@fas.harvard.edu.

—Staff writer Elisabeth S. Theodore can be reached at theodore@fas.harvard.edu.