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University Asks for 5-Year Plans

Each school will submit a construction plan to facilitate central review

In an effort to streamline the University’s capital planning, Harvard Executive Vice President Katie N. Lapp has implemented a more rigorous and centralized process for reviewing each school’s building plans.

Every school will submit a five-year capital plan, which Lapp will review with University President Drew G. Faust. The plans will then receive official approval by the Harvard Corporation, the University’s highest governing body.

Lapp said that the change was spurred in part by the financial crisis and its severe effects on the University—including the indefinite halt in construction on Harvard’s Allston Science Complex announced in December 2009.

According to Faust, the University had plans to invest up to $10 billion over a 10- to 15-year period when it was actively pursuing development in Allston before the downturn.

“We were going to build very rapidly and on a larger scale, so when you have fewer resources and less access to debt, then you have to be more scrutinous,” Faust said. “What we’ve been focusing now is what we can get accomplished.”

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Lapp said the University will encourage schools to fund projects through philanthropy wherever possible and appropriate.

“We want to be much more strategic than we may have been in the past, much more targeted about where we are going to put our capital dollars,” she said.

In the past decade, many University projects have been funded through debt sales and the University’s own funds. Such debts, which require monthly payments to bondholders, became less desirable after the University’s endowment plummeted by 22 percent in fiscal year 2008.

Lapp said that Harvard will concentrate more on financing projects in “conservative ways,” pointing to Harvard Business School’s recent announcement of two construction projects in Allston.

The Business School plans to build a new executive education building that will cost between $90 and $100 million, according to Dean Nitin Nohria. The building will be financed by a $50-million gift from Tata Trusts and Companies—philanthropic entities of India’s Tata Group, which is one of India’s largest companies.

In addition, the Business School will renovate the old WGBH building on Western Avenue to open a lab for innovation and entrepreneurship, which will cost between $15 and $20 million.

“As we’re much more rigorous about our resources, we’re going to be more explicit about tying funding to the inauguration of projects and making sure that projects we feel can have a significant philanthropic dimension have that in place as we go forward,” Faust said.

The WGBH building project uses an existing property holding for a new purpose—a goal of the revamped review process—according to Lapp.

—Staff writer Sofia E. Groopman can be reached at segroopm@fas.harvard.edu. —Staff writer William N. White can be reached at wwhite@fas.harvard.edu.

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