Scott Van Voorhis
It’s poised to be a fateful winter for Boston-area colleges and universities.
A key driver for the local economy akin to what the mills and factories were a century ago, a bevy of local colleges and universities are weighing whether or not to push ahead early next year with hundreds of millions in new projects.
While no decisions have been made yet, caution appears to be the watchword amid a deepening global recession.
That’s the word from Robert Culver, who, as chief executive of MassDevelopment, has one of the best windows around onto the local economy, especially the crucial area of university expansion.
The low-key but critical state authority plays a significant role, helping finance everything from new college dorms to small business expansions to development projects.
“It is the 21st century equivalent of what the manufacturing industry meant to us a hundred years ago,” Culver said of the higher-education sector. “It’s huge.”
Culver, in a recent interview, was anything but a prophet of doom, with some encouraging news to share on redevelopment of former industrial sites and continued demand for small business loans.
Yet there clearly are some concerns emerging as colleges and universities mull cutbacks in spending amid the economic downturn.
Culver and MassDevelopment, in turn, are on the front lines of this decision making process. The authority is working with more than a dozen colleges and universities who are actively considering new projects, from dorms to labs.
And as the university sector goes, so goes our local economy, which so far has escaped some of the worst ravages of the current downturn, but which is coming under increasing stress.
Hub universities alone contributed $4.4 billion to the city’s economy, or about 11 percent of the total pie, according to one tally a few years ago by Boston officials. The statewide impact ranged well past $7 billion.
Culver won’t name names, but the authority works with both the kingfishes and the minnows of the local higher ed scene, from Harvard University to small private colleges.
Even as they plan new dorms and classrooms, local universities and colleges are getting squeezed on two fronts. For starters, the stock market meltdown has hammered the value of the endowments they rely on, Culver notes. Now a rising tide of layoffs is taking a toll as well, with some students having to drop out or switch to less expensive schools after a parent loses a job.
So college officials are taking a wait-and-see approach. They will be watching closely to see how many students return for the spring semester, while calculating how much money can be drawn from endowments and federal research grants.
Last but not least, college officials, like everyone else, will be watching closely the state of the nation’s economy.
At the least, this prudent but more cautious approach may delay the financing of some building projects past the traditional spring launch period, if not cancel some altogether, Culver observers.
“That could very well,” he said. “It would be reasonable to assume that colleges and universities will reconsider whether or not to be in the debt market next year.”
“There has been a lot of discussion and a lot of concern about the wisdom of going out (to the bond market),” Culver added.
Yet there are more than a few bright spots amid the gloom.
A brownfields initiative launched a decade ago by MassDevelopment has shown significant results. The aim of the effort was to spur the cleanup and redevelopment of old factory and industrial sites. With about half of the original $60 million spent, nearly 20,000 sites have been cleaned up in 225 towns and cities across the state, Culver said.
The authority has also helped with redevelopment plans for more than 1,300 of these sites, creating nearly 5,000 housing units and more than 5,800 jobs.
The redevelopment of the old Fort Devens, MassDevelopment’s centerpiece project, also continues apace. There are plans for a new hotel to accommodate expected demand from the giant new Bristol-Myers Squibb manufacturing complex taking shape there. There’s steady interest from an array of companies in the former base’s remaining 400 acres as well.
Maybe in the most encouraging sign, there’s been no letup in MassDevelopment’s lending to small businesses, with continued demand for loans.
With the big companies laying off thousands, that’s where the jobs are now.
“My worry at this point is not so much with our lending, it’s much more with the colleges and universities,” Culver said.
