Sol S. Shalit
2500 Virginia Avenue, N.W.
Washington, DC 20037-1901
202-338-7468
[email protected]
September 24, 2000
Ms. Sheila Cross-Reid, Chairperson
Board of Zoning Adjustment
441 Fourth Street, NW, Rm. 210
Washington, DC 20001
RE: GWU’s Ten-Year Foggy Bottom Campus Plan
BZA Application No. 16553
Dear Chairperson Reid:
My name is Sol S. Shalit. I am Emeritus Professor of Economics at University of
Wisconsin. A few months ago, my wife and I decided to make Washington our permanent home.
Our address is: 2500 Virginia Avenue, NW, Washington DC 20037.
Having read The George Washington University Foggy Bottom Campus Plan Years 2000
through 2010 [Plan], and Stephen Fuller’s The Economic Impact of George
Washington University on the Washington Metropolitan Area, Interim Report [Report]–
both dated April 2000, and submitted as exhibits to this Board — I would like to offer
the following observations:
1. The Fuller Report provides data on past University spending as a measure of its
economic impact on the Washington area. The Report does not address the University Plan,
or even refer to it in any way whatever. Thus, the Report’s findings cannot be
construed as offering any substantiation for the Plan. The Report is as relevant to the
Board’s current deliberations as would be a Firestone report detailing the
company’s total contribution to the U.S. economy — in the midst of the current tire
recall.2. In deciding what weight or authority to accord the Fuller Report, it is useful to
bear in mind that the Report was commissioned and funded by GWU itself, and did not
undergo the scrutiny of research published in an independent academic or professional
journal.3. Even if the Report had succeeded in measuring perfectly the total economic impact of
GWU on the Washington area, it would be entirely irrelevant for evaluating the merits of
the University Plan. What is needed is not the total economic impact, but the marginal
(incremental) impact of the new proposed expansion. Even if one is prepared to concede
that the total (past) economic impact of the University is positive, one can still
question, and closely scrutinize, the future impact of the proposed changes. In the
world of economics it is not unheard of that while the total contribution (to
revenue, profits, productivity, etc.,) is positive, the marginal contribution may
well be negative.4. But the Fuller Report does not quite measure the University’s economic impact
on the District. It tabulates the benefits to the Washington Metro area (with only rough
interpolated estimates for the District) by detailing the University’s expenditures,
employment, etc., leaving out entirely the costs side of the equation. While the benefits
largely flow to the Washington Metro area and beyond, the costs are imposed on the
District’s taxpayer at large, and specifically on University adjacent neighborhoods:(a) The cost of providing public services (police, fire, traffic, street work and
lights, utilities, etc.).(b) The cost of University-owned properties removed from the District’s tax base.
(c) The costs imposed by changing the character of stable residential neighborhoods
affected by "student life" and their impact on the perceived desirability of
living there, on property values and population shifts, on loss of income tax revenue, and
on preserving a healthy mix of institutional v. residential housing in a city already
dominated by the former.
Indeed, the general disparity between the placement of costs and the distribution of
benefits is at the core of the District’s economic and political predicament: A
classical case of what we call in economics "Concentrated Costs and Diffused
Benefits". Labeling these costs as "fiscal" is merely an exercise in
semantics, without changing their nature. They are all "real" and they all have
real economic (not just fiscal) consequences for the District. Yet the Board has not been
provided with the information necessary to evaluate them and, I believe, is therefore in
no position to pass an informed ruling on the merits of the Plan without access to further
data on the benefits, as well as the costs. Such data need not be costly, nor
take a long time to prepare. Although we are all eager to ‘get things done’, I
think the Board should insist on having this information before it rules.
Allow me to conclude with two, more general, issues:
A. The University and its Neighborhood. The expansion of urban universities
into the surrounding neighborhoods generally falls into one of two very different
categories; one welcome, the other resisted. When located near a blighted neighborhood, a
university expansion is invariably well-received and appreciated. The reasons are obvious:
The acquisition and rehabilitation of properties entail a large investment and
considerable risk. It often succeeds in changing the neighborhood for the better (example:
The University of Chicago’s efforts in Hyde Park). The other category is when a
university is located in the midst of a well-functioning, stable residential neighborhood
— for example Northwestern University in Evanston, Illinois. It is in the latter cases
that, once the university has reached an optimum size, further expansion is invariably —
and rightfully — viewed first with concern, and eventually with alarm. Restrictions are
soon placed on any further encroachments. Here in our District, GWU has certainly not
undertaken a pioneering project in a blighted area, but has been aggressively acquiring
properties in quiet and stable neighborhoods of peaceful, tax-paying families. Is it in
the District’s interest to reduce the tax base and replace these families with
short-term student residents who have no permanent stake in it and generally pay no
District income tax? The character of this neighborhood is already changing, and not for
the better.
B. The University’s Optimum Size. What is the optimum size of GWU? What
are the limits to its expansion? Who should decide?
It is tempting to think that university officials are in the best position to settle
these issues, much as General Motors’ own management decides what’s good for GM.
Yet one must recognize that, unlike the case of a business corporation — where the
optimum is determined in the market place (the consumer, the capital market) — there are
no limits or constraints on the size of a university, so long as it is free to attract
students. Most of what the so-called "urban universities" do is teach, launch
appealing programs, and — capitalizing on their advantageous urban location — get the
students. Top universities can resist these entrepreneurial growth pressures by a set of
self-imposed quality constraints of research and scholarship, but most others need
constraints imposed on them.
It is a common misconception to view a university’s growth plan as a
"project" akin to a military campaign, one which ends when the objective has
been reached. In contrast, the growth of a university is an unremitting, endless process,
a way of life, with "growth" itself as a goal. From its own point of view, there
is literally no upper limit to the size of such a university. Unlike a business, for which
growth is often a "Do or Die" proposition, the growth of a university is highly
optional, with many opting not to grow, but consolidate instead. However, university
officials generally love size, they love expansion; the bigger the better (salary, media
impact, prestige, etc.) In GWU’s particular case, the University has justified its
"must grow" campaign before this body (Hearing of 4-26-00) by professing a small
endowment and claiming that it must, therefore, increase student enrollment. This argument
is both interesting and revealing for two reasons:
(a) It justifies the quest for enrollment growth not by programmatic need, educational
philosophy, or institutional mission, but bluntly as fiscal expediency.(b) It assumes that a university endowment is an exogenous "given" — just
happened to be so. But we all know that the well-endowed college or university attracts
money in direct proportion to its national reputation and alumni appreciation of the
degrees it grants. If officials wish to increase the University’s endowment fund,
they could raise the money from private foundations, as well as from its large body of
alumni. Why have they opted, instead, for the "easy way" of increasing
enrollment? Are we to conclude that, after all these years, there isn’t out there any
residual goodwill or recognition of GWU’s national contribution? If true, this would
be a sad admission for one of the oldest universities in the country, and may even suggest
that its chief attraction has not been the University itself, but the city of Washington.
Ordinarily, it isn’t the District’s business to concern itself with
university finances. However, the District cannot be indifferent to GWU’s choice:
Fund-raising imposes costs on the University, while enrollment-raising imposes the
costs on the District and the community, while the university is run as an
enterprise — not as an educational institution. Even if one accepts the University’s
position that it faces fiscal problems, is it sound policy to allow it to solve them by
exporting its problems to the District?
In the University Plan submitted to this Board, its stated first goal was to elevate
GWU to the ranks of the first-tier universities (Pages ii, and 15). It is pertinent to
point out that enrollment-raising as a substitute for fund-raising
clearly contradicts this goal. The road to first-tier status is one of raising
standards and lowering enrollment, not the other way around. If GWU is
indeed serious about its stated goal of attaining first-tier status (not necessarily
limited to US News & World Report’s popular ranking), it must know that
it would need to change its priorities and redirect its resources: Invest in research
& development, library and laboratory facilities — not in real estate, raise
admission standards, reduce student enrollment and class size — not increase them. In
short, growth in stature rather than in physical size, quality rather than quantity,
consolidation rather than sprawl. I believe the University owes the Board an explanation
of this contradiction.
Anyone looking at GWU’s spectacular growth, whether measured by square footage or
enrollment, cannot escape the conclusion that this community has been very attentive,
indeed quite generous, in responding to the University’s requests. While it is true
that both the University and the city have benefited from each other’s presence, it
is also true that GWU’s growth fortunes and high student appeal would have been very
different had it been located, say, in Peoria, Illinois instead of in a peaceful and
stable neighborhood of an exciting city, at the heart of the nation’s capital, with a
Metro station right in the middle of campus. While the University’s contribution to
Washington’s economy has been widely publicized, the city’s benevolence and its
pivotal impact on the University’s economic well-being have not been similarly
recognized or acknowledged. It is an open question whether, on balance, GWU has done more
for the District than the District has done for GWU. Nevertheless, while justifying it as
necessity and, at the same time, as of benefit to the local economy, GWU has embarked on a
systematic acquisitive and expansionist campaign, both inside and outside its prescribed
Campus Plan, and in violation of stipulations and commitments of prior planning documents.
What I believe is sorely needed, and long-overdue, is a definitive and independent
study of what GWU’s optimum size ought to be, given all the costs and
benefits. This optimum should be not from University’s viewpoint, but from the
District’s — the host. A determination would then follow, stipulating maximum
student enrollment. This enrollment figure would then serve as the basic parameter of
a Master-Plan, Zero-Base approach, and would guide all planning and zoning decisions.
It is rather inefficient, and ultimately futile, to regulate incrementally, in
piecemeal fashion, the conduct of an institution by focusing on its behavior
(community service, student noise, etc.) A far better approach is to regulate its structure
(campus boundaries, enrollments, square footage, etc.), monitor compliance, and
enforce it by a system of rewards and punishments. The City’s planning authorities,
including this Board, will ultimately have no choice but to confront the long-overdue and
hard question of GWU’s proper size. With a new and highly competent City
administration well in place, they have now an exceptional opportunity, and I believe a
responsibility, to make a clear break with the past. The time has never been better.
The main point is: Constraints on growth and expansion are never going to originate
from within the University, but must only come from the regulatory bodies set up for that
very purpose. Growth is surely not a university right; it is a privilege. Zoning boards
and planning commissions evince no hostility to higher education — and need not feel
guilty — when they curb the appetite of urban universities and impose strict limits on
their expansion. They are just doing their job.
Thank you for giving me an opportunity to register my views.
I hope they are helpful in your deliberations.
Sincerely yours,
Sol S. Shalit
Emeritus Professor of Economics
October 9, 2000
Mr. Andrew Altman, Director
Office of Planning
District of Columbia
801 North Capitol Street, NW
Fourth Floor
Washington, DC 20002
RE: GWU’s Ten-Year Foggy Bottom Campus Plan
BZA Application No. 16553
Dear Mr. Altman:
Further to my testimony at the hearing of September 26th, I would like to address in
detail GWU’s revised commitments as given in Mr. Barber’s crucial letter
(9-29-00) to you. Since GWU has requested to enter it as part of the record, I have,
separately, requested that my present comment be similarly entered into the record.
A. GWU’s Commitments:
A careful reading of Mr. Barber’s letter shows that his proposals, labeled
"commitments", do not address the concerns raised by your office, let alone
those raised by the Foggy Bottom community. Furthermore, these are no commitments, just
toothless conditional goals and hypothetical conjectures. It is the kind of phraseology
that helped turn GWU’s previous Plan into a fifteen-year term "hunting
license" for virtually unregulated expansion, and is responsible for the present
predicament.
It is evident that GWU is not giving anything; it is asking for help
and cooperation to secure the necessary permits and approvals for further construction.
There are no provision for non-performance; indeed, there is no conceivable set of
circumstances under which GWU can be found in default of these amorphous goals. In short,
the University commits itself to nothing beyond that which it would do in any event. By
his own admission, Mr. Barber is apparently more concerned with "unduly restrict[ing] GWU’s financial and operational needs" than addressing the critical concerns
raised during the hearings.
I shall explicate the nature of these "financial and operational needs" in
Section C below , but first let me put the University Plan in a context relevant to your
Office’s mission. OP’s basic ground rule is, correctly, to weigh the need for
neighborhood protection against the benefit of economic development. The fundamental
question is: Does GWU’s Plan constitute "economic development"? This has
always been implicitly assumed, but never addressed, until my written
testimony of September 26th. The answer is a clear NO. I ask for your indulgence in
following the reasoning developed below.
B. GWU’s Growth as Economic Development:
Without quibbling about a precise definition of economic development, the latter
usually connotes a synergistic sustained growth of multiple lines of enterprises out of a
seminal investment in a firm or industry. In its narrowest sense, economic development is
an undertaking that leaves the economy (neighborhood, city) better off because the
project’s long-run benefits exceed its costs. Now, the only document submitted for
the record in support of GWU’s presumed economic development is the Fuller Report.
This report has been entirely debunked in a document entitled GWU’s Ten-Year
Foggy Bottom Campus Plan — Comment submitted for the record during my Sept. 26th
testimony (Pages 1-4). You’ll find an excerpt in Appendix A below. This is such a
clear-cut case that I honestly, perhaps immodestly, doubt whether any one of the top fifty
economists in the nation would disagree with my conclusions. The University itself carries
the burden of showing that its growth is economic development, but so far, it has failed
to make its case.
Thus, there is no factual basis for deeming GWU’s expansion as economic
development, if one takes it to mean economic development for the District, not for the
University. To be sure, this is not to say that the entire existence of GWU’s has
been devoid of any economic development, which is a separate issue altogether. The
question before the Board, and your Office, is not whether GWU should continue to exist,
or be eliminated ("Total") — obviously, it is here to stay — but whether it
has already reached a stage where growth ("marginal") is to be condoned or
scaled back. In other words, the central issue is the University’s optimum size.
Again, optimal not for the University, but for the District. There is strong evidence that
the University has surpassed its optimal size some time ago, and that the damage of its
unrestrained, and largely unregulated, expansion far from generating economic development,
has actually contributed to the decline of specific city neighborhoods. Thus far, economic
development and prosperity have been confined to the University itself.
Therefore, GWU’s Ten Year Campus Plan is very unlike the traditional zoning case,
where an indignant neighborhood is stubbornly fighting against the forces of change and
progress. This is no shopping center, or a condo development — just a displacement of
permanent residents, who pay taxes, by new transitory ones who pay little or none. On the
one hand there is clear and demonstrable evidence of damage, and on the other hand there
is no economic development to balance against. This is the fundamental rationale
for rejecting, not just amending, the Plan. One can only hope that GWU’s attempt,
during the last hearing, to manipulate OP’s grounds for rejection into conditions
for acceptance — are not successful.
C. GWU Financial and Operational Needs:
Let’s return to University’s "financial and operational needs".
The "must grow" campaign of expansion and increased enrollment was
represented to the Board (BZA hearing of 4-26-00) as driven by the University’s
professed modest endowment. The serious implications of this rationale, and their
consequences for the District, have been analyzed in great detail in my written testimony
(4-26-00) for the record, an excerpt of which you’ll find in Appendix B below.
Briefly:
1. GWU’s "must grow" philosophy isn’t an imperative. Like
other Urban Universities, it loves to grow (if permitted) because of an inherent,
built-in, administration bias for "growth".2. Unlike a business, this growth bias has no boundaries and knows no limits, unless
stopped by external constraints imposed from without.3. GWU’s enrollment growth is defended not by programmatic need, educational
philosophy, or institutional mission, but bluntly as fiscal expediency. Ordinarily,
university financing is left as an internal matter and does not come under external
scrutiny. However, in GWU’s case the university is asking for the District’s
cooperation and assistance to allow growth for its own financial reasons. But growth has
an impact on the District. Thus, the University financing becomes a matter of interest to
the District.4. GWU owes some explanations: (i) Does it, in fact, have a small endowment and why?
(ii) Why does it want now a large endowment? (iii) Why does it not raise funds from
foundations and alumni, as other universities do? and (iv) Why it has relied, and
continues to rely, instead, on increased enrollment? Part of the answer is already in the
record: While the currently enrolled students GWU had presented have uniformly extolled
its virtues, the graduated alumni apparently remember mainly the overcrowded classes and
living conditions. They endow the University with all the pride and loyalty a tourist
shows for his hotel, and may, indeed, be forlorn prospects for fund-raising. This
obviously should be of some concern to the University.5. The other part of the answer is of obvious concern to the District: Fund-raising
imposes costs on the University, while enrollment-raising imposes the costs on the District
and the community. The university is then run as an enterprise — not as an
educational institution. Even if one accepts the University’s position that it faces
fiscal problems, is it sound policy to allow it to solve them by exporting its problems to
the District?6. The first stated goal of GWU’s Plan was to elevate it to the ranks of the
first-tier universities (Pages ii, and 15). But enrollment-raising as a
substitute for fund-raising clearly contradicts this goal. The road to first-tier
status is one of raising standards and lowering enrollment, not the
other way around. To achieve this goal, GWU needs to change its priorities and redirect
its resources: Invest to provide on-campus student housing, faculty research &
development, library and laboratory facilities, — not real estate; raise admission
standards, reduce student enrollment, class size, and student/faculty ratios — not
increase them. In short, growth in stature rather than in physical size, quality rather
than quantity, consolidation rather than sprawl. As the hearings have amply documented,
such a policy change would be most welcome by everyone: Students, faculty, the community,
and the District. The University never explained this contradiction.7. The District has been very attentive, indeed quite generous, in responding to the
University’s expansion requests. While the University’s contribution to
Washington’s economy has been widely publicized, the city’s benevolence — at
considerable opportunity cost to itself — and its pivotal impact on the University’s
economic well-being have not been similarly recognized or acknowledged.Is GWU’s attractiveness to students based largely on its own national reputation,
or is it chiefly due to the appeal of Washington as a city? Perhaps a clue is provided in
the University’s Web Home Page, which as its icon features not a campus building, but
the Capitol Dome. Or, as one of its alumni testified, less delicately, the two reasons why
students go to GWU are, first, their desire to be in Washington, DC and, second, having
been rejected by Georgetown. [BZA Hearings 9-13-00, PP. 352-353]. It is an open question
whether, on balance, the District has done more for GWU than GWU has done for the
District.During the past fifteen years the University has shown little gratitude, or
sensitivity, when it relentlessly pursued a systematic acquisitive and expansionist drive,
both inside and outside the prescribed Campus Plan. Its violations of stipulations and
commitments of the BZA’s generous order governing the 1985-2000 Campus Plan are a
matter of record. Also in conflict are the mandate of DC’s Comprehensive Plan and its
zoning regulations.
D. The Problem:
As OP’s Report to the BZA so aptly asserted, the only viable solution is not to
deal with "behavior", but to address the "structure". And this means
enrollment, not in ratios, but in absolute numbers. In this regards, the University has
not been exactly forthcoming in providing clear and meaningful data in a timely fashion,
and ample confusion remains. But as nearly as I can tell (based on GWU’s April
figures and Ms. Dwyer’s latest
9-29 submission), the combined student impact on the neighborhood can be gauged by the
number of full-time undergraduates:
(a)living in University housing within Campus boundaries (3,519), (b) living in Foggy
Bottom/West End in University-purchased housing, outside Campus boundaries (947), and (c)
living in Foggy Bottom, not in University housing, (1103).
This gives a total of 5,569. To which one must add the 4,619 full-time graduate
students, the majority of whom live in Foggy Bottom/West End, but let’s
conservatively assume just a third of them, 1540, which brings the total to 7,109
full-time students.
Given the small geographical area under consideration, and its population base of about
12,000 (including students; 1990 census), one is immediately struck by the
enormity of the impact. 60% is a huge number! Even if every full-time undergraduate would
be living in University housing within campus boundaries, it will still be a huge number.
There will never be relief unless and until the damage already done is not only stopped,
but reversed. And the only way to do that is by an appropriate cap on enrollment.
E. The Remedy:
Many believe, myself included, that GWU has already achieved all of its rosy expansion
objectives by having staked out the territory, and is fully aware that times have changed.
Its present Plan is merely an end-run attempt to legitimize the fruit of its aggressive
and improper grab and to negotiate the best deal for its future consolidation. Any OP
recommendation which calls for freezing the status quo ("to stop the damage") —
even with severe constraints — while "providing the University with
flexibility" is not a remedy, but a total victory for the University (its
protestations notwithstanding). Such a recommendation would not only reward the university
for its past transgressions and legitimize them, but would also permanently sentence the
community to live with the damage already done, day in and day out, with no hope of ever
reclaiming the neighborhood. While the District is trying so hard to preserve and
revitalize residential communities, the University is gradually, but systematically,
destroying a most desirable and historic residential neighborhood of this city. This is
certainly not their intent, but this is the effect.
The University’s violations have given the OP and the BZA the opportunity, the
responsibility, and the grounds for fully exercising their statutory authority to regulate
GWU’s enrollments and, over a reasonable period of time, to reverse the damage. The
Plan should be rejected, not tinkered with. Instead, GWU should be asked to submit a new
Ten Year Plan containing not just promises of good behavior, but a meaningful roll-back to
its strict prescribed boundaries, coupled with a set of gradually decreasing enrollment
caps to restore Foggy Bottom and welcome GWU back as a good neighbor.
As the community’s ultimate protector, the OP and the BZA must do the right thing
and not be unduly concerned about hampering GWU’s operations. Do not underestimate
its resiliency; the University will just pick itself up and, for once, do the right thing
too.
Thank you for your consideration.
Sincerely yours,
Sol S. Shalit
Emeritus Professor of Economics
University of Wisconsin-Milwaukee
School of Business
Enclosures: 2
CC: Mayor Anthony A. Williams
Sheila Cross Reid, Chair, Board of Zoning Adjustment
Anthony J. Hood, Chair, Zoning Commission
Barbara Spillinger, Chair, ANC 2A
Michael Thomas, President, Foggy Bottom Association