Lambda Chi Alpha - University of Illinois

Spring 2020 Newsletter

Chi Zeta of Lambda Chi Alpha at the University of Illinois

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Lambda Chi Alpha - University of Illinois - Champaign, Illinois • Spring 2020 Chi Zetagram CHANGES ABOUND FOR CHI ZETA Alumni Board Sells Chapter House, Focuses on Next Step for Chapter Dear Brothers of Chi Zeta Lambda Chi Alpha, It has been a year since the last issue of Chi Zetagram was sent. Since then, you have received months of urgent updates and reports on the difficult news of the loss of the chapter charter at the University of Illinois, followed by the financial distress leading to the sale of the now three-year-old chapter house. IN THIS ISSUE With so much having occurred in 2019, this issue of the newsletter will focus primarily on the alumni board reviewing the what, how, and why of the past several months—how the university discipline process resulted in our financial difficulties, which required resolution through the chapter house sale, and how does that prepare the chapter for recolonization. THANKFUL FOR ALUMNI EFFORTS These issues will be presented with information from the various alumni board members most involved in those matters. One blessing has been the long hours of volunteer efforts by board members with valuable expertise and background in legal (Kim Kardas '74 X997 and Matt Murphy '74 X1028), finance and accounting (Dave Dutton '89 X1288, Jim Conlin '79 X1095, and Terry Sears '75 X1015), real estate (Chris Gary '85 X1225, Steve Lipe '86 X1261, and Rich Knitter '78 X1078) and the Lambda Chi International administration of chapter affairs (Chapter Advisor Steve Parsons, ΦB341). Their input forms this report to you. FINANCIAL CRISIS RECAP With the termination of the charter by the University of Illinois, the active members of the chapter chose to seek other housing options for the school year. This left the Alumni Corporation with no rental revenue to service the bank mortgage. Based on the timing of the university's decision to revoke the charter, it was extremely challenging to find a group to rent the chapter house. Although alumni board members Dave Dutton, Rich Knitter, Steve Lipe, and Chris Gary worked diligently to track down leads, showing the house throughout the summer of 2019 to any and all groups to lease the chapter house, none of the contracts with potential renters came to fruition. Evans Scholars could not commit in a timely fashion. Alpha Xi Delta wanted to execute a long-term lease with purchase option but was unable to sublease their existing housing rental. At its alumni board meeting June 30, 2019, the House Corporation reported FYE revenue of $504,000 and total operating expenses of $635,272 resulting in a net loss of $120,729. Also, at the fiscal period ending June 30, 2019, the House Corporation had a total of $257,083 in cash on hand. Annual debt service for the Busey Bank mortgage is $318,000, resulting in a $60,917 shortfall to service the debt. The cash reserve allows us to service the debt through March 2020. PUTTING THE CHAPTER HOUSE ON THE MARKET Based on these facts, it became clear the sale of the house was the most appropriate approach. After initial purchase leads pursued by alumni board members were not successful, multiple local real estate brokerage firms were interviewed. The choice was Coldwell Banker, Champaign's largest commercial real estate firm, mainly because one of their brokers, Josh Markiewicz, has extensive experience selling Greek housing. They were confident in their ability to successfully market and sell the chapter house. The realtor brought a potential buyer to the table and a contract to sell was successfully negotiated for $5,550,000 on December 18, 2019. The purchaser is Chabad, a campus religious non-profit organization. Assuming no due diligence problems the sale should be complete by May 1, 2020, at the latest. FUTURE OF OUR FINANCES We are in consistent contact with Busey Bank, which has allowed us to remain in control of the sales process. The sale of the house allows the Alumni Association to continue acting in a fiduciary manner to repay the Busey Bank mortgage along with the several private loans payable to our alumni. It also provides for a cash balance (yet to be determined) for any future recolonization when we exercise this option. LOOKING AHEAD For a complete picture of this situation, please review the other articles in this issue regarding the university discipline legal process we experienced, how Lambda Chi Alpha International proceeds with recolonization, and the thoughts of some alumni board members about the chapter's future. Then, consider how you, with your alumni perspective and experience, can participate in a best long-term outcome for Chi Zeta. We appreciate alumni support during this time and will provide additional updates once the chapter house sale is finalized. Please keep an eye on your mailbox for future correspondence. Yours in ZAX, Chi Zeta Alumni Board

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