George Washington University, unlike many other universities in this country, has economic stability partially because of its extensive real estate dealings.
With an endowment of only $21 million, GW has had to rely on income from its holdings in the booming Foggy Bottom area. The university owns most of 16 city blocks and has aggressively developed its property over the past two decades, wiping out much of the character of the once largely residential neighborhood.
GW administrators say this program of development is necessary for the university's existence. But some people who still live and work in the neighborhood regard GW as a large, obtrusive real estate company.
"We're trying to build a great university," says GW President Lloyd H. Elliott. He is speaking not of buildings, but of faculty and students. To attract them, the school must pay competitive salaries and offer attractive facilities, he said.
At the same time, the cost of tuition must be kept low enough that middle-and lower-income students can afford to attend, Elliott said.
To fill the gap between costs and income, many universities rely on their endowments. But GW officials like to say the Northwest Washington school's land is its endowment.
"I hope the policy of the university has been clear and unmistakable since 1963," Elliott said. "Our aim is to acquire all the property within our boundaries. If the university has the opportunity to buy property within its boundaries, it is our policy to do so."
In 1970, GW filed a master plan for campus development with the city government. It calls for an "academic core" in the center of the campus surrounded by auxiliary services such as dormitories and revenue-producing buildings.
Real estate income is not the major component in GW's budget, university officials say, but is an important buffer against deficits.
For instance, the university has a $92.3 million budget for 1980-81, exclusive of its medical center. Students fees, the largest source of income, is expected to bring in $54.6 million. Projected income from gifts and bequests is a little over $1 million. The endowment should bring in $1.1 million. The net income from investment properties is projected at $75,000.
Even though the 1980-81 budget is balanced now, the university's administrators say there is no way they can foresee how rising energy costs will affect them. Those unpredictable costs accounted for a $778,405 deficit in the 1978-79 budget. The deficit for the recently ended 1979-80 academic year is expected to total more than $200,000.
Before the energy crunch, GW was in much better financial shape. In 1977-78, the university excluding the medical center had a $1 million surplus.
But in recent years, GW has instituted an "energy surcharge" that is added to student fees. It is determined as close to the time students must pay their tuition as possible.
The board of trustees will not set it for 1980-81 until later this month, but administrators have predicted a charge of between $25 and $50 per student would close the deficit caused by rising energy costs.
As it has developed the neighborhood west of the White House and south of Pennsylvania Avenue NW, GW has come under attack from neighborhood and historic preservation groups for the architecture of its buildings, particularly the revenue-producing Henry and Edison buildings on Pennsylvania Avenue. Even its own urban planning department has criticized the university's master plan for what it said were outmoded concepts and insufficient attention to restricting traffic.
Dorn C. McGrath, chairman of the department, said he feels that times have changed since the plan was adopted in 1969. The guidelines are now not adequate for the needs of a "vigorous institution in a dynamic national capital," he said.
"I am especially disappointed that the planners didn't suggest more restrictions of traffic, which is a detriment to the quality of life on campus," McGrath said.
Elliott said he recognized the validity of some of the criticisms, but did not think they were realistic.
"The urban planning department should be teaching ideal positions," he contended, "not the compromises reality requires. The university does not ask its (academic) experts in finance to manage its endowments. It does not ask its professors of law to practice in its defense."
Elliott said, "The university has to proceed on practical compromise. It has to take into account what can be done at that time under the circumstances. hAn urban planner has to look at ideal situations. That is not the way the university or other institutions move."
Randy Hecht, who is actice in the student government, describes the university as "an unresponsive concrete slab. It is perceived as a real estate corporation by many of the students and Foggy Bottom residents, not so much because of its land holdings as because of its attitudes towards those holdings."
Charles E. Diehl, the university's vice president and treasurer, directs most of its real estate operations. He said the investment policy "to a large degree is dictated by the location.
"If we had, like Georgetown University and Catholic University, 100 acres in the middle of town that no one could buy . . . we probably wouldn't be buying real estate, he said.
One recent victim of GW progress was Fung Dak Lee, 62, a dry cleaner who had to vacate his store at 2145 St. NW when it was sold to GW. Diehl said Lee was paying about $400 a month, rent. After GW did not renew the lease, Diehl said he tried to place Lee in a university job, but Lee who had worked in a laundry his entire life, did not want it.
Elliott said that while the development policy may appear heartless to people like Lee, it is necessary for the university's future. Compared with many other institutions of its size, GW is already heavily dependent on tuition, Elliott said.
As the post-baby boom generations turn 18, the ranks of potential college freshmen will decrease substantially in the 1980s and the 1990s. Colleges are already worried about how to keep tuition low enough to compete for these students and at the same time pay increasing operating costs.
GW officials say they hope the school's land investments will enable it to do so without sacrificing educational quality.
Elliott maintains GW is trying to build an adequate physical plant for the future. He counters complaints that small businesses -- and the quality of the neighborhood -- are being wiped out in the process.
"Do you think its too much to ask a student or a faculty member -- or a university president -- to walk to Roy Rogers?" he said.
". . . . Is the university to have a Smith (athletic) Center or not?"
Some of its land has been bought from the "stereotyped little old lady -- who held out for the last dollar she could get," Elliott said.
"I guess what I'm pointing out is the obvious: These things can't be done without conflict over the best interests of the university. Either we have a university with these kinds of facilities or we don't."