Range of sources provides finances for campus construction

Seldom has there been so much discussion about campus construction. The University Board of Trustees on April 13 selected Porphyrios Associates — run by architecture school alumnus Demetri Porphyrios GS '80 — and Einhorn Yaffee Prescott to design Whitman College.

Shortly after, undergraduates and graduates were making presentations of their designs for the University's sixth residential college at the Prospects2 competition held in the architecture school.

Aside from these brief spurs of excitement, campus construction — building new structures and renovating old ones — is an on-going process. And regardless of what the particular project is, one theme does unify all campus construction: it needs to be funded.

The University currently has several construction projects "that will enable [it] to enhance its academic programs and student facilities, improve the landscape" and have other beneficial effects for campus life, Vice President for Campus Facilities Kathleen Mulligan said.

Both residential and non-residential structures are receiving attention.

Dod Hall, an upperclassman housing facility in the center of campus, is currently undergoing renovation.

The University is also planning "renewals" of Hamilton Hall in Mathey College and Holder Hall in Rockefeller College, Mulligan said.

While improving the individual rooms with new decors and better materials, the University also hopes to bring the halls up to date by putting bathrooms on each floor and accommodating handicapped students.

Many different academic disciplines are sharing in the wealth of new facilities.

A new humanities center is being built at East Pyne, while a structure being erected near Scully Hall will house an institute for integrative genomics.

One of the most notorious renovations on campus — Robertson Hall of the Wilson School — should be finished by fall 2003, according to Mulligan.

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The buildings that house the politics and science of the real world are not the only ones being improved. Where the real world is represented in art also will receive construction benefits. 185 Nassau — the creative arts building — is getting new rehearsal halls and a 350-seat auditorium.

Yet the most anticipated construction project, Whitman College, is scheduled to be built on the sloping block of land down campus, near the tennis courts. With this new college, — funded partly by a $30 million donation by Ebay chief executive Meg Whitman — the University abandoned the contemporary models it used over the past half century in constructing Butler and Wilson Colleges.

Like Mathey and Rockefeller Colleges, Whitman College will be built in collegiate gothic style, reflecting Princeton's affinity to mirror its British sister schools Oxford and Cambridge Universities.

Students have expressed some concern over the logic of building Whitman College and increasing the size of the student body while ignoring the aesthetic and comfort problems of Butler and Wilson colleges. The University has anticipated this concern, Mulligan said, and has responded to it.

When the University begins to increase the size of the freshman class, it will happen at a rate of 125 students per year. At the same time, current students will also be able to move into Whitman College, which will have vacancies. At that time the University can begin to conduct some renovations on parts of Wilson.

To build the soaring gothic towers of Whitman College — indeed, to build or renovate any University structure — requires a large amount of time and a large amount of money.

Depending on the project and the source of funding, the University has a number of options for the schedule and pattern for payment, said University treasurer Christopher McCrudden.

One option is paying for construction projects out of the University endowment, which is about $8.5 billion. The endowment has been growing steadily in recent years, with its return averaging about a 19-percent increase each year during the past five years.

But the U.S. economy was very good for three of those years, and financial contributions to the University were high. Last year, when the economy — or at least the stock market — slumped, the University had a return of about two percent on the endowment.

The University resorts to paying for projects out of the endowment when no contributor has been secured or when timely conditions require it to do construction.

One example was the building of the new Princeton Stadium, which cost the University about $45 million, McCrudden said. The old stadium's structure was insecure, McCrudden said, and the University was compelled to build a new one. It was done especially quickly, he said, with only one football season without a stadium.

The $8.5 billion figure is somewhat misleading. Though the University has investments, cash and other saved assets totaling this amount, it cannot simply extract money from the bank at will.

When alumni and others contribute money to the University, they sometimes assert that only the interest earned from the contribution — and not the principal itself — can be spent on University projects. The University is then legally prohibited from spending the principal. This strategy ensures a continued financial contribution to the University. Alternatively, some contributors say they prefer that their donations pay for a certain project, but the University is not bound to spend the monies on that project.

Thus the University sometimes borrows funds to pay for University construction projects, McCrudden said. When the University expects to make more on endowment investments than it expects to pay in loan interest, this method has benefits, he said. Parts of most buildings are financed by loans, he added.

McCrudden explained that the state of New Jersey has set up a special program so that qualified educational institutions can borrow at lower interest rates than other corporations or organizations could.

For projects that involve commercial or religious activities — like the Garden Theatre or Center for Religious Life — the University cannot tap this low interest rate opportunity. But when building dormitories or academic buildings, the University can borrow at lower rates than normal.

In the 1980s the state created the New Jersey Higher Education Finance Authority to enable colleges and universities to borrow at a tax-exempt rate. This program does not allow the University to borrow at a zero interest rate; it still has to pay back what it borrows, plus more. However, it does enable the University to have to pay back less than it otherwise would have.

Were it not for this agency, the University would have to issue bonds by itself. Whoever would buy these bonds — corporations, investment firms, individuals — would have to pay taxes on whatever income they earn.

But when the University takes on debt under this authority, whoever is earning interest on its debt does not have to pay any taxes. Thus, the debtor can charge a lower interest to the University, and the University can save money.

This strategy does not create additional money for the University, McCrudden said, but it enables it to spend less money on projects than it otherwise would.

Another option — and often the most publicized — is large donations by prominent alumni. Frist, Wu, Lewis and now Whitman are some of the most famous of these names.

The fundraising and development office, in conjunction with the treasurer and the president, is usually responsible for determining what percentage of the total cost of the structure must be contributed to have a facility named after a contributor.

Princeton Stadium, for example, is nameless, still in search of a major donor.

Campus construction is always happening, and though sometimes projects are delayed, they are also often completed on time, Mc-Crudden said.

Recently-renovated Blair and Little Halls were "very large, expensive projects managed on time," he said.

Problems do come up, however. When building the brand-new Friend Center beside the Engineering Quad, construction workers found that there was more rock than the University had projected. This slightly delayed the project. When building Scully Hall, constructions workers found a less solid foundation.

Though it can sometimes be noisy, cumbersome and frustrating, all the construction on campus is "for the long term good of the University," Mulligan said.

Many of the benefits of the projects currently being worked on will not be felt by members classes of 2003 and 2004. And some will not be felt by any student currently here.

But, when the children of members of these classes receive their "Yes!" letters in 10 or 20 years, they will arrive at a Princeton campus that will look very much different and very much the same. A complex process of architecture, construction and financing will surely have taken place.