Outgoing University of Massachusetts president Robert L. Caret, who drew on his taxpayer-funded housing stipend to pay the taxes, fees, and monthly costs of a jumbo mortgage, made a six-figure profit from his sale of a Boston Harbor-front condominium.
Caret, who officially stepped down July 1 to become the University of Maryland chancellor, collected $1.345 million for the sale last month of the condo that he bought four years earlier for $880,000.
The transaction was all aboveboard. His contract provided him with a $60,000-a-year housing stipend, an amount that helped cover the payments on his $704,000 mortgage, city property taxes, and condo fees.
But Caret’s profit provided embarrassing optics for the university and its trustees who voted the day before the condo sale was recorded to raise student fees and tuition.
And it raises questions as to whether the university should instead purchase a Boston residence for use by its president, a widely used practice at public universities around the country.
Gregory Sullivan, the state’s former inspector general, said that while Caret was within his rights to take the profit from the condo sale, it doesn’t make great sense that taxpayers are not getting the return on the investment. He said the trustees should consider using the funds it pays in housing allowance to purchase an official residence.
“Ultimately, all you are paying for vaporizes, and you are not getting a return on it,’’ Sullivan said. “To me, it probably makes sense to use the $60,000 to pay for a property. The trustees should think about that.”
Caret has declined to comment on the issue.
Philip W. Johnston, the Dukakis administration’s human services secretary who is a trustee and 1968 UMass graduate, defended Caret’s financial gain, saying the outgoing president had every right to claim the real estate profit, even if it was in part gained through taxpayer funding.
“He bought low and sold high,” Johnson said. “And it was not an extraordinary profit for the Boston market.”
He said, however, it drives home a point he has made before: The university should buy a residence for its president.
“If there is any lesson to be learned, the president of the university should have a university-owned home in which to fund-raise and entertain,” Johnston said, noting that most similar higher education institutions provide residences for their presidents.
“It would pay for itself in time,” he said.
UMass trustee chairman Victor Woolridge said he is not bothered by Caret making a profit in the private real estate transaction and said his financial gain should not be put into the context of the board voting to raise student fees.
“I don’t think it is appropriate to correlate the acquisition of a personal residence and the gain or loss on that residence with financial matters directly related to the university,” Woolridge said. “It is a personal residence.”
The day before Caret’s sale of his property was filed at the Suffolk County Registry of Deeds, the UMass board of trustees voted to raise tuition and student fees by up to 5 percent. It also approved a new $250 student fee for technology infrastructure costs.
The university, which received about $523 million in state funds for its operations this year, has kept a close watch on budget negotiations on Beacon Hill.
The size of the fee and tuition hikes will depend on the final appropriation for UMass; lawmakers are expected to vote on a budget Wednesday.
Caret was the first president, under the modern system, to use the housing stipend to buy a residence. His successor, Martin T. Meehan, who recently left his post as chancellor of the university’s Lowell campus, is renting an apartment in Boston in a newly renovated 19th-century building. He is paying $3,900 a month, which will come out of his $60,000-a-year housing allowance.
His total salary, including benefits, is $769,500 in his first year. He has been living at a family home in Andover, and he and his wife recently built an oceanfront vacation home in Seabrook, N.H.
In his new job, Caret will move into a huge university-owned residence in College Park, Md., where he is required to live.
The university demolished its president’s house three years ago and replaced it with a 14,000-square-foot mansion that cost about $7.2 million.
But the decision to spend so much on a residence came under attack from critics who noted that the university, at the time, was asking donors to financially help students who were unable to pay increased tuitions.
At the same time, its president was cutting eight varsity sports to save nearly $30 million over eight years.
Frank Phillips can be reached at firstname.lastname@example.org.