Financing: Specifics not clear

It will cost 2 1/2 times as much as Sansom Common, six times as much as the first phase of the Institute for Advanced Science and Technology and 600 times what University President Judith Rodin made in fiscal 1997. But Penn officials are not sure exactly how they will pay for it, although several potential sources have been named. "It" is the recently unveiled "master plan" for renovating all campus residential and dining facilities and constructing some new ones at a projected cost of about $300 million, according to estimates provided by the University. In April, University officials estimated that the renovations -- expected to take 10 years, starting this summer -- would cost about $200 million. But Executive Vice President John Fry said Friday that the real costs would be in the "upper end" of the $200 million to $300 million range. Although it is impossible to predict future construction costs, a University official, speaking on condition of anonymity, confirmed that the cost of the undertaking will "no doubt approach" $300 million and could possibly exceed that sum. Fry, for his part, said that Penn was "in the thick of making estimates on the new construction." He indicated that the funding would come from a mix of different sources: income from current housing and dining operations, proceeds from the University's conference services, profits from the Penn-owned Sheraton University City hotel and money being paid to the University by Trammell Crow Co., to whom Penn outsourced management of University facilities last April. While Fry could not pinpoint how much of the $300 million would come from each source, he did say that net income from college house operations and from the Sheraton would finance the plurality of the project. Fry was unable to say how much income was derived from the college houses, but did indicate that the Sheraton -- purchased by the University in 1996 -- has "exceeded our wildest expectations in terms of finances." University officials had considered using the Sheraton as residential "swing space" during the campus-wide renovations, but decided against doing so, among other reasons, because of the hotel's profitability. In addition, Vice President for Finance Kathy Engebretson said that some of the proceeds from the University's sale of $200 million in bonds in January will be used to finance the renovations. The bonds, scooped up by Merrill Lynch, will come due in 2038. Engebretson noted that the bonds the University issued in 1968 to finance construction of the high rises will be coming due in 2008 -- just as the current slate of renovations and new construction is finished. Fry added that he hoped to finance the project "responsibly," so as not to interfere with the University's other objectives. "We want to make sure that we're not sacrificing any of the academic investments we need to make," he said. "We want very much to do this within the context of the residential? budget."