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Harvard's highest paid employee is now overseer of 'acres of blight'
By adamg on Mon, 02/23/2009 - 8:58am
Harvard spends years secretly buying up Allston, clears land and now has a bunch of empty land and storefronts just sitting there. Harry Mattison reports on the salary of the guy in charge of it all.
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Comments
now that the heyday is over...
we're going to have all these construction sites just sitting there?!?! That photo makes the Filene's hole-in-the-city look like an unfinished sandbox by comparison. This is terrible. If Harvard just sits on this pile of nothing, then shame on it.
I understand they have money
I understand they have money issues, but they have so much money in that bank account and they made so many promises to the local residents it would be horrible if they just let the whole thing linger for longer then they have to. It looks like so far the local community has had a decrease in jobs and commercial prospects and that will continue into the next few years. It would have been nice if Harvard thought ahead before they kicked out all of their tenants...
you don't even begin to understand the money issues
I understand they have money issues, but they have so much money in that bank account and they made so many promises to the local residents it would be horrible if they just let the whole thing linger for longer then they have to.
Look, dumbass: it's not "money in the bank." Read really closely, now: the profits off that big wad of investments go towards paying for one third of the total University budget.
"They have 30 billion!", you cry. Right. But that is an estimated valuation, because just like you can look up "blue book" value on your car, if nobody will buy it...you've got to go lower. Ie, nobody really knows the value until you try to sell it.
Second part of the problem: since the endowment is an investment portfolio, let's simplify and say it is $30 and 30 shares in a good market. You get $3 in profits/year (10%, roughly) and you withdraw $2 a year to pay for stuff. That's two shares.
The market crashes and takes 2 years to recover. Your portfolio is $20, but still 30 shares. You need to sell 3 shares now to pay for everything.
The economy recovers 2 years after the crash and your shares go back to their original value. The total value of your portfolio, at 24 shares, is $24. So, the bottom line: to pay for $4 of stuff, the immediate cost was $6.
The impact goes further. You now have $2.4/year in profits from your investments. That's $.6/year less than before. The math of the difference in profit (ie opportunity cost) over, say, ten years is left as an exercise to (other) readers, but if you want to keep withdrawing the same relative amount of money to pay for the annual budget, that means instead of $2/year, you only get about $1.60; 40 cents less.
Now you have the choice of either aggressively cutting the budget to grow the endowment at a higher rate to get back on track, or cutting the budget less immediately, with a longer-term impact on the budget.
So, now, ask yourself: if the university budget has to be cut (and it does), which is smarter? Cut really tightly for a few years to boost the endowment and thus the yearly profits, leaving you with an ugly hole but be able to afford to staff and maintain the building when it is built? Or keep building, then have to let it sit and crumble unused and unmaintained and thus waste all the construction money?
Now recognize that the budget cutbacks affect EVERYONE. Not just an "eyesore" in your little college drunkfest (seriously, people in Allston are complaining about something "ugly"?) All the schools have been told to cut budgets. While the press likes to talk about that meaning "no free food" because it resonates with blue collar simpleton readership who crack jokes like "aww, those poor profs, they'll starve!", the cuts in the food budget pale in comparison to the salary of just a few low-level employees.
That means that real, existing, long-term professional jobs in your community and nearby (not imaginary, trickle-down pie-in-the-sky service jobs like "another 3 pizza guys") will be lost.
So, please, you and everyone else in Allston, sit down and shut up, and don't speak until you have the most basic understanding of economics. Your neighbors across the river, thankfully, do.
Consider lowering your caffeine intake, please
You make some valid points, but when you start an argument with "look, dumbass," you're going to lose a lot of readers right up front. Does insulting somebody really help buttress your case? Nope.
lick my endowment
Like Harvard didn't raise a giant phallus to its financial planning every year of the bull market, now all of a sudden they demand pity and understanding.
Yeah um Im not responding to
Yeah um Im not responding to your pile of info that starts off with a personal insult. Kinda rude...
Secondly I do not live in Allston, I just drive by this hole in the ground every day. I have empathy (I know you can not imagine what this possible means, look it up) for people who are promised the world and end up with a hole in the ground, and with less options then when they started the process. I do also find it hilarious your telling people who live there to sit down and shut up and just take it up the #%$ because you know whats better for them because you took Economics 101, and they did not.
There are just as many who
There are just as many who want Harvard to bring them the world as there are those who were promised the world. It goes both ways with this one.
as Brett has noted (a bit
as Brett has noted (a bit too angrily though), an endowment isn't some kind of huge checking account you can dip into. He doesn't even touch on the legalities of trying to payout on under water endowments (you can't) and the nature of restricted endowments (again, not a bit checking account).
Confusion about endowments aside, the problem is that of credit. Credit markets world wide are frozen. Any large construction project is usually financed through Debt Offerings, regardless of how much money an institution has in endowment or has secured through donations. If you can't borrow to build--you can't build.
When Harvard was planning to
When Harvard was planning to build, people were upset with their plans. Now that they're putting it on hold since they're losing a lot of money, the same people are upset that nothing is being built. You cannot please all the people all the time.
Well the problem seems to be
Well the problem seems to be that they came into town, took down some buildings, kicked out the tenants, and are now sitting back and waiting for things to settle down. They are not selling the land so if they do not do something then nothing gets done. Its a little dubious to say that the NO people should be happy because they "got what they wanted." They did not want an empty hole, and empty store fronts, they wanted a vibrant community that was not dictated by Harvard. Now they have a desolate community dominated by Harvard. Seems to me that in both cases the course of their concern remains Harvards grip on the land. Now they have to deal with Harvards grip and ugly properties.
Its a little dubious to say
Its a little dubious to say that the NO people should be happy because they "got what they wanted."
I didn't say that. I just think it's somewhat ironic and fitting that the NO people now are the ones upset that nothing is being built, when they had problems with the plans to build in the first place.
two different subjects
Yes, I have "problems" with the plans for the Science Complex. What Harvard designed is a biosphere that would fit well in a suburban office park and is ill-suited for an urban location that should be lively and active. While I thought the project should be a lot better, I never wanted to stop Harvard from building it.
I don't understand why you suggest that wanting the Science Complex to be a better urban building (actually 4 buildings) means that I don't want Harvard to build. I DO want Harvard to build - great buildings that bring people and jobs and research and teaching and culture and all the other great things that Harvard has always said it would build in Allston. In the meantime, I think Harvard can do better than warehousing acres of vacant or semi-vacant property in the middle of a community.
There is a substantial
There is a substantial portion of the "Allston community" that does not like Harvard or want them there. Like it or not, you're a representative of them through your blog that often represents the community as sniping and poo-pooing any and all plans Harvard presents. If you do not want to be associated with those people, then don't hang out with them. Take a look at Eva Webster. She was a thorn in the side of BC for a long time until she finally realized it made more sense for her to actually work with them and maybe give a little to get a little. Like it or not, Harvard owns the land, not the A-B collective. Seems to me it's better to get 50% of what you want by relenting on the 50% you care the least about. This "death by a thousand cuts" strategy that some people are trying through any means of slowdown possible is exactly what will result in empty buildings.
Do you think that area would
Do you think that area would be able to be a vibrant community without Harvard, particularly given current economic conditions?
I totally understand for the desire for self-determination for a community, but it seems that Harvard (before the slowdown) would be bring a lot to the table as far as making that area blossom.
What do students buy
That's a nice idea, but I really wonder exactly how much students buy. The area Harvard owns now in Allston -- the warehouse and service grid, a few grad schools, athletic fields -- there aren't really stores or anything else there, and they haven't created a blossoming around them.
periphery vs. hub
I think the idea is that if Allston developed and was a second hub for Harvard, instead of an outlying area, it might bring more shops. Right now, the Allston portion of Harvard is still a satellite orbiting Harvard Square.
I would hope that with a real development of all the Harvard Allston properties, you'd get a second center of activity, with shops, etc.
One thing is for sure, if they don't build, this will never happen.
Allston & Harvard
The Harvard accommodationists will tell you that's a fantasy, that we should be happy with Harvard building the shovel-ready projects, so some of those construction jobs land in the neighborhood.
To me there is more evidence that Harvard would buffer any hub with outlying warehouses, they don't really want residents near them, they don't want a face on something they can't control. It's very hard to expect a change in this attitude, however the people in Allston are not as poor as Harvard expected I think.
Ideally, graduates from Harvard might stay in Allston, and develop businesses there, not just servicing the campus but the area and the world. Allston sits on two main east/west transportation links, and borders very nice riverfront (although the path there is blocked by one of those transportation links, Soldier's Field Road.)
But to your point about this never happening without Harvard: part of the problem is the major hurdles the City of Boston places in front of business development, which disadvantage the small startup and marginal business in favor of the large institution. Harvard has as much to do with this as anybody by advising city state and federal leaders to have high business taxes. Harvard is able to make a deal with the city to ease zoning or avoid taxes whereas the small owner cannot.
Do your homework, please
More knee-jerk assumption and complete ignorance ... Students? Really? Do you realize how far off you are on this yet again? You can hate Harvard and still do enough homework to sound like you know what you are talking about, you know. I'll leave it to you to actually look up what the plans are ... I won't do your work for you.
Don't forget the money managers
Harvard's highest-paid employee may be the head of the Allston Development Group, but only when you ignore the money managers in the Harvard Management Company. Bloomberg made that point in reporting their story:
They bring in hefty salaries even in down years like the past year.
Don't you work for Harvard
Don't you work for Harvard too, Michael?
We are teetering on the edge
We are teetering on the edge of a great depression here, folks. Have a little patience.
Vibrant community?
Other than the shopping center with Shaw's and the pet store in it, tell me one thing Harvard bought that was helping to forward the "vibrant community" of Western Ave/Harvard St.
The Neighbors Seemed to Like...
The Pepsi bottling plant a lot.
Right...
...and the decreased property values that came with it?
Allston Blowback
One of the reasons Harvard wanted the Allston site in the first place is that the Medical school and School of Public Health could not expand. Seems Boston wanted them to take over vacant store fronts and condos all the way to Roxbury Crossing rather than buy and build enough space for the expanding medical institution.
So thank Boston if you are sad about some warehouses and a rail yard being removed from the community.
Longwood
The thing about Longwood is, it is a ghost town even though Harvard has been there for years. Harvard's presence has not improved the place, in fact drained it of life.
I don't blame the people there for opposing the bulldozer. If Harvard wanted to expand so badly, they could do it in Cambridge, except the people there are too rich and litigious. Why do you think they came to Allston?
Longwood you learn something about it
Harvard has not drained the area of life. Because Harvard is there, there are businesses and jobs and transportation that would have taken off with the rest of white flight in the 70s.
But I don't suppose you were around when Chuckie Steward got tired of wife and baby and blamed a generic black man ... you might not know how little else kept that area from Dudley Square style collapse ...
The medical campus and HSPH have been there for nearly a century. Taking them to cambridge is not an option - not for training medical students in the ADJACENT hospitals (note medical schools and hospitals - you got that - medical school and medical area - understand?), not for space reasons.
Boston listened far too much to little local peeves and people who like their shithole the way it is - crumbling and dying - as usual, and shot itself in the arse as usual. Had they let Harvard expand like it needed to, they would have more jobs than the isolated, segregated, disseminated "store front" approach. Fine then - a wasted landscape plus a rail yard it is (oh horrors ... A RAIL YARD ... vapors ... horrors ... we could have made paradise there if it weren't for that evile institution that wants jobs and transit there!).
Yes new jobs get created,
Yes new jobs get created, and new housing. There is a problem though, those will be different people then those people who live there already. I dont see what those people have to gain by being quiet. Its either keep your shithole, or move to a new one.
You've lived here too long
There is a third way - maybe you don't know about this. It is called comprehensive land use PLANNING.
That doesn't mean "obstruct and demand tribute" or "fight every thing always and ever and ever and ever because change is toooooooo scaaaarrry", which seems to be the local approach that ends in dead end neighborhoods and the stagnation that has cost Boston any importance it ever had. It means actually thinking about what will work, what won't, what the benefits will be, and then designing your area ahead of time, with all the attendent zoning and land use planning changes.
Had the locals thought about it realistically, they may have realized that having a university tie up storefronts benefits nobody save a few local landlords - and leaves a giant hole when said university gets tired of having an entire school spread out in tiny units in ways that don't work in places where laboratories can't go.
Of course, that means understanding that change will happen, and you can lead, follow, or get out of the way.
With all due respect, it
With all due respect, it sounds like YOU have lived here too long.
been to Longwood
A rant, full of self-contradictions. Harvard was there for Stuart too -- better? worse? point?????
It comes down to this: at one time, Allston was full of people who could be pushed around, sad old Irish men who said "you can't fight em". That's how the crap buildings got there in the first place.
Now Harvard thought they could buy the residents off with a piano in the church hall or just bulldoze them. That's not the people who live in Allston anymore, because they're buying the houses for a half a mil, and it's a big painful surprise to you and the money manager. You better get used to it though.