Universities Fuel Local Economy, Report Says

In an effort to dispel the idea that tax-exempt, land-eating universities rob towns of their rightful revenue, Harvard and seven other area schools will release a report today declaring that Boston-area research universities pump more than 7.4 billion dollars into the regional economy each year.

The 102-page report, the first-ever to detail the collective, cumulative impact of educational institutions on the Boston region, says that the universities benefit the region both by directly employing area residents and by attracting the nation’s top minds, who often start successful companies locally.

“Originally, each institution wanted to present their own story, but this report is much more comprehensive—it is the collective story of eight unique institutions as a phenomenon in the Boston area,” said Mary H. Power, Harvard’s senior director of community relations.

“This is a story about these eight institutions—as purchasers, employers, and incubators—that’s never been told before,” she added. “Their collective economic strength is unmatched by any other group of universities within the nation.”

Paul S. Grogan, the author of Comeback Cities: A Blueprint for Urban Neighborhood Revival and Harvard’s former vice president for government, community and public affairs who oversaw the beginning of the report, praised the results yesterday.

“These universities have a staggering impact on the greater Boston area, and this report is an attempt to show that influence,” said Grogan, who is currently the president of the Boston Foundation, a charity group.

The study, entitled “Engines of Economic Growth,” reports that these eight research universities—Harvard, Boston College, Boston University, MIT, University of Massachusetts at Boston, Brandeis, Northeastern and Tufts—are particularly vital in helping the region’s economy recover from the recession.

“The report is an emphasis that in a world where knowledge is power, not only the huge businesses are generating huge revenues,” Grogan said.

Historically, Harvard has had a strife-filled relationship with the City of Cambridge. One major source of tension is Harvard’s payment in lieu of taxes (PILOT)—which currently amounts to about $1.5 million annually.

But the University maintains its tax-exempt status on land holdings that would otherwise generate $35 million in tax revenues per year.

State representative and city councillor Timothy P. Toomey Jr. calls Harvard’s PILOT payments “woefully inadequate” and hopes that the recently-released report will provide some explanations.

“I understand that Harvard provides the city with other economic benefits besides this tax money, but they could clearly contribute more than they have in the past,” he said.

Toomey added that he and other Cambridge City Council members hope the report is as comprehensive as many have promised.

“We are very interested in who is directly involved with the report and how exactly the data was collected and where from,” he said.

Grogan says this report will lend some credence to the notion that Harvard and other area universities have positive effects on the region.

“The Cambridge City Council sees Harvard as a parasitic enemy that sucks the money out of cities—when in fact, it is the opposite and this report shows that,” Grogan said.

He added that he thought the eight universities compiled the report to “gently foster understanding of their integral role within the region.”“Harvard [and other schools] need to attract research dollars and civic leaders to be their allies,” he said.

The report also focuses on the positive aspects of the universities’ impact on the region—particularly with growing local industries such as computing, biotechnology and genetics.

According to the report, many international science companies—including Amgen, Cisco, Merck, Pfizer and Novartis—are starting up new businesses in the area because of the appeal of the wealth of top scientists already working in the area for research universities and hospitals.

Cambridge Mayor Michael A. Sullivan said that while Harvard and the city have a rocky past, he appreciates the University’s economic impact, particularly in high-tech fields.

“While we have had our fair share of problems with Harvard in the past,” Sullivan said, “I can fully appreciate the impact of the biotech industry that Harvard and MIT bring us.”

“We are fortunate that the initial seeds for a new and better type of economy in Boston and Cambridge are based at these universities,” he added.

Sullivan said that Cambridge is in the midst of re-drafting its own economic policy.

“Harvard has had good and bad effects on the city, but in the long-run Harvard’s been good for us.”

Although Power said that the report was not custom-tailored to any specific political group, she said that the report directly addresses questions of Harvard’s and MIT’s economic impact on Cambridge—something the city council has examined in the past.

“I think the report sends a good message in the way of town-gown relations,” she said.

But Grogan was not optimistic about the report’s power in convincing the city council.

“I expect the city council to point out that Harvard still does nothing for the city of Cambridge, but we all know that’s baloney,” he added.

The study was conducted by Appleseed, a New York economic research firm, and is the culmination of over two years of research.

“The timing of the report couldn’t be better,” Grogan said, referring to the recent economic downturn. “It shows that unlike businesses, universities have a permanent value and this value is significantly helping the region recover from the recession.”

Besides attracting high-tech industries to the area, the report says the eight universities also constitute one of the region’s largest employers—providing jobs for 50,750 people in 2002.

According to the report, the universities have also drawn in over $1.5 billion a year for research contracts and grants.

And, according to the report, the universities have also poured money straight into the local economy—and they are predicted to spend roughly $850 million a year on construction for the next four years.

Harvard’s own construction will primarily be in Boston over the next decade, as the University slowly crosses the river into Allston—according to Grogan.

“Unlike Cambridge, Boston has historically endorsed the University’s expansion,” Grogan said. “The Cambridge city council torments Harvard with projects on their own campus—but Boston has much looser policies.”

Grogan added that as all eight universities grow in the next decades, they need community support to remain competitive with other institutions across the country.

“Their relationship to the region will become increasingly important, especially because the good relationships and alliances they build with the region will help make them stand out from other universities.”

The 12-page summary that accompanied the report was signed by University President Lawrence H. Summers, as well as MIT President Charles M. Vest, among other university presidents and chancellors.

University officials will distribute the report this morning at a Greater Boston Chamber of Commerce breakfast meeting downtown.

—Staff writer Lauren A.E. Schuker can be reached at schuker@fas.harvard.edu.