The end of LCAP
 

This past week the alumni of Gamma Zeta received notice that LCAP, after about 10 years in operation, will be "going out of business" and liquidating all their property.

I received many communications about LCAP over the past two years about several "incidents" similar to what happened to Gamma Zeta, which I will not repeat here but everyone is familiar with.

However, I think we should view this as a learning experience instead of a defeat or a loss.

The first thing we should learn is: stay in the FRATERNITY business, and nothing else.

I've always questioned why a fraternity would go into the real estate business. Sure, the motives were good; help the chapters, provide housing, etc.

But in reality it turned into something much worse. Many chapters experienced the line between brotherhood and business becoming cloudy. When it was convenient to be brothers, LCAP communicated as brothers. When it was time for business, brotherhood did not exist. When it was the chapter that tried to operate as a business, LCAP pulled the "brotherhood" card.

Again, we should stick to the fraternity business. We shouldn't begin marketing t-shirts, we shouldn't begin providing classes, we shouldn't begin managing real estate, we shouldn't operate a LXA travel agency.

I also think this was a case of a good idea, poorly executed. When we hire for a position in the general fraternity, a specific education or life experience isn't always necessary to become an ELC.

But when you're dealing with millions of dollars of property across the nation, you need to have people in charge with real estate and legal experience.

I think there may be a spot at HQ for someone to help and consult chapters about property and real estate. Someone with both legal and real estate experience to help chapters get their finances in shape, form a budget and keep health and safety codes up to date.

Maybe LCAP could tranform into regional boards of volunteers to help with housing issues for chapters that request help.

In the end, we need to live and learn.

I agree that we need to stay with what we know and stay away from what we don't know. We can't develop enough expertise, fast enough, to go 'exploring'. LCAP was a great idea in theory but in practice did not work well at all for various reasons.

I harbor no ill will towards LCAP but I regret that it did divert out attention and energies and perhaps resources away from doing what we do best - and that is supporting undergraduate chapters in programming and membership.

Regional boards? Hmm.... A thought. Some fraternities do have regional boards, of sorts, but they don't appear to be in the property business.

Yeah, I think I agree that it was too much of a diversion and took up too many resources that could have been better spent.

I am a big fan of regional boards. Nothing paid, just volunteers. An organization that is local enough to understand the regional chapters better than IHQ.

Maybe have one person to help with property, one to help for finances, etc. Maybe get a lawyer or two for legal issues. It wouldn't be anything forced onto chapters, just a group of alumni volunteers with experience to help out if needed.

Right now, with Gamma Zeta in hibernation (and hopefully waking up very soon), I have some time to donate to keep involved. I don't have a lot of time to focus on one chapter exclusively, but I'd like to be available if any New England chapters needed help on a smaller issue.

LCAP Termination
 

What has never been clear to anyone is that the Fraternity has been in the property management business for over 60 years. Housing is a core business of the Fraternity. By most measures, many alumni identify the 'house' as their fraternal experience more so than any other thing.

The headquarters has had some role in local housing since the 1940s. The role has included the constitutional requirement that assets of a chapter be turned over to headquarters in the event of suspension of operations (something that hasn't been enforced for the past decade), the issuance of first and second mortgages, and the ownership of properties. Over those 60 or 70 years, the Fraternity frequently benefitted from housing operations, but it remains unclear today how large of a benefit it provided.

What is clear is that when LCAP spun off the housing assets from the balance sheet of the General Fraternity, the false results of the performance of the housing assets became abundantly clear. Part of the problem was a lack of understanding as to how to account for the real estate transactions properly - an issue that wasn't completely cleaned up until a 2004 audit and dated back 20 years or more. Secondly, prior to 1999 the performance of the individual properties were not tracked . When LCAP started we finally were able to understand what properties made money and lost money and by 2004 at least some of the organization was educated as to the accounting and operational issues.

Were there mistakes made along the way? Absolutely. In fact the biggest mistake was being a brother before being a property manager too many times. For example, having faith that chapters would get their acts together when several of the chapters didn't want to get their acts together. It may come as a shock to some of you, but some of our members are part of chapters that don't understand what being a fraternity means. Many times chapters that reach that low point are not able to recover. Sometimes it took an extra year or two to figure out that point had been reached and frequently at a great financial expense.

Were there successes? Yes, lots of them, and that is something that continues to be overlooked. Rhode Island, North Texas, Butler, South Carolina, Oklahoma State, and Shippensburg are all examples of chapters that grew by 100% or more after LCAP stepped in to assist with recruitment, improve the living conditions, and solicit alumni support (note that two of those three things have nothing to do property management, but any house corp officer knows they are critical success factors for any chapter and chapter house). LCAP chapters grew substantially faster and more consistently from 2003 through 2007 than any other measured subsection of chapters in Lambda Chi Alpha.

Your Grand High Zeta has chosen to take the easy way out. Instead of looking to our largest, successful peers and figuring out how to be successful ourselves, they instead decided to wipe out the existing LCAP board and bring in a new board that consisted of members who openly stated they objected to the entire concept of LCAP - they were brought in as a liquidation team and they are executing that plan. The reasons for this were simply the result of not having an understanding of the options.

The Sig Eps, Pikes, and Sigma Chis are on the list of groups that have figured out how to run a national house corporation (along with nearly all of the women's groups). Instead of doing its homework, the leadership of Lambda Chi Alpha has simply chosen to run the other way.

LCAP was never about making a profit which was probably a misunderstanding on the part of the GHZ as well. LCAP was about protecting and preserving the assets of the Fraternity. If LCAP was empowered as it should have been to seize assets of defunct chapters, rescue houses that are being foreclosed or seized by tax leins, and was subsidized by undergraduate dues to cover some of the overhead, then LCAP would have been successful and would have had sufficent assets to make a significant impact on the entire housing stock of Lambda Chi Alpha.

The sub-prime mortgage crisis and raises in commercial real estate interest rates that the country is facing are going to have an impact on the Lambda Chi housing assets as well. As loans come due in the coming months and years LCAP would have been able to be called on to rescue and preserve many of our chapters. Instead, many houses will be lost. By dissolving LCAP the Fraternity will have no mechanism to assist these chapters.

Some of the collegiate members of the client chapters of LCAP had negative feedback regarding the operation of LCAP. However, priorities were established and in place for work that got done and investments that were being made in the chapter houses. What was never clear unfortunately was that cash was always tight for LCAP. Like many house corporations, it takes about 6-10 years to make significant rent or occupancy adjustments to offset operating expenses and to become cash flow positive. LCAP is 8 years old this year and is very near the point where operations would have become cash flow positive. If LCAP had been extended for another couple of years, it would have overcome that curve and would have become the tool of the Fraternity that it was always intended to be.

The decision to fold up LCAP is a bad one and it will have lasting negative impacts on Lambda Chi Alpha. One of the greatest loses is that some of the most knowledgable housing volunteers of the fraternity have been shunned and may not be willing to share their expertise going forward. I am fortunate to be a member of a chapter that has a strong house corporation of its own since clearly our general fraternity is not willing to be a leader in the housing business going forward.

Joe Klimek

Joe you made many good points. Many fraternal groups do a great job managing properties. My girlfriends sorority, Zeta Tau Alpha, has a great, probably the best property management group all greek orgs. You would think that we would share and ask for ideas with our neighbors down the street, to be better at our endeavor into the housing market.

Interesting...not one word about this on the HQ web site.

Of course, the content there is older than dirt, so I shouldn't be surprised.

When I was at Butler, HQ held the mortgage for our chapter house. The move by LCAP to come in, make long-overdue repairs (even if they did screw up the two rooms in the house--formal LR and library--that were dedicated to deceased brethren), and the like helped the chapter grow and strengthen.

Again, like the killing off of the printed C&C, an action taken to both create and kill something without conversations, at least, with a broader group of brothers.

This is sad.

Art Hebbeler

Brother Joe, LCAP was a good idea and as many know it was not at times properly instituted. I too know of some of the many pluses, but I also have heard of some of the negatives.

Two of the negatives that I have heard from Alumni of course are UMass and Mo.Un.

One of the pluses not mentioned was Un. Ark which is a big house.

I never totaly agreed with turning over chapter assets from chapter housing corporations to IHQ no matter what.

While LCAP was a nice idea in princiable, it was as you say under funded and with out that it became a quagmire and got lost in the shuffle.

But what seemed wrong with the whole idea was taking control of property and not having the availability to run the program.

GammaZeta, as far as regional Boards as you are refering to will not toataly work. There has to be a central authority and we have that in place.

You will find that having a volunteer group soon runs into problems with people getting burned out and quicking. While good in theory it over the long haul will not work. I have been working with my Zeta for 42 years and am getting burnt out as many will do.

The demise of LCAP may make some happy, but, if run in the proper way would be very good in protecting the property for the future. Trying to build a new house today is very costly. I know as we just had a new house built and we as the house corporation owned the property. 3 3/4 million just doesn't get you much like it used to especially in college towns.

The shut down of LCAP is a relatively new (last month or so) development. I suspect that the next issue of the C&C should have a notice regarding the closure.

A word of advice for people in authority;

Never complain, never explain.

Oh and never say anything?

Remember, we as LXA Brothers are the voice in most cases!:)

GammaZeta, have you ever been to a Regional or National meeting?

Many of us have been there and see how it is supposed to work!

I don't know if the decision to close LCAP is a good decision or not. I would like to say that there should be more transparecy regarding these types of significant decision. Joe was also correct that good (and generous) alumni were shunned by this process. I just hope all the numbers work out in the end (read between the lines)!

I'm sad to see LCAP go as I thought it was a good idea which had a number of successes. I was hoping that UF would be able to get some help funding upgrades to our house through them.

Yes Tom, I have been to many LXA meetings.

What Brother Klimek says is a clear signal of what one of LCAP's problems were.

"that don't understand what being a fraternity means"

THAT is one of the problems. From what I understand, it was never in LCAP's authority to place judgment on what being a fraternity means. Why was LCAP suddenly in charge of what chapters to close, what chapters should recolonize, what chapters violated risk management, what chapters didn't meet their recruitment goals, what chapters should do for ritual, etc.

From what I have heard from other chapters and witnessed, LCAP seemed to exceed their powers. They didn't just focus on real estate, but started to overstep what they were set up to do by getting involved in recruitment, ritual, starting new chapters, setting house policy, etc. The line between General Fraternity and LCAP started to blur. After a while, it wasn't just IHQ making the calls on risk management, recruitment.

However, I don't blame LCAP for doing so. It was inevitable for the position they were in. For example, recruitment. How could LCAP NOT usurp power from IHQ in recruiting to make sure that a house they owned and rented to a chapter would meet full occupancy.

Maybe the lines between the two organizations became too blurred and distorted.

LCAP involvement in chapter ops
 

I've not heard of LCAP being involved in these portions of chapter operations. Given the physical distance between LCAP in Indy and the chapters under LCAP 'care', I would really wonder if LCAP was really involved in all these things.

I've been wrong before but in this case I haven't heard what others apparently have heard.

For cryin out loud would somebody in my chapter please hit the powerball and build us a house? I've been active for 4 years already...and no 20-room house to enjoy, remember, and grow in...

Do your part PLZ...buy a ticket!

Don't just whine about it. Start making a plan for how to raise funding to aquire land and build a house. In the mean time look at renting out a large house in town or an entire building in an apartment complex. If you have 10 or 20 brothers who want to make that kind of commitment you can have a temporary housing solution.

So, just how will this affect those Zetas who were covered by LCAP?

How many could and will lose their houses?

EM1843, it may be a little harder than you profess.

Yes, it will be interesting to see if anything is said on the next C and C!

Those houses are on the market and the local alumni get the first chance to buy them. If alumni don't step up to the plate then these chapters could find themselves without a building.

Fraternity houses are illegal in St. Louis City now.

Some have been grandfathered in (wash u, slu) but they
are on the campus and/or owned by the school.

So regardless of how bad we want it - it's out of our hands
unless we want to drive more than 20-30 minutes both ways
to get to our house way out in st louis county...

Our campus operates a Greek Village, it sounds fun/cool until you realize your paying more to live there then someone in offcampus apartments and you have to share a room. Not to mention campus can throw "GDI's" in your house without your approval, and you have to move out during the summer. You cannot drink in or around the house or your rooms. Campus has cameras at the entrance's to all the doors going in an out of the house. No parties. No parking. No privacy and campus police "checking" on whats going on...

It isn't appealing, and as we are still in the colony phase at WCU we have decided against moving into the village or looking into a house until we get our charter. We had a beautiful house but during our removal from WCU it was lost. The problem is finding a place to lease in such a rural town like Cullowhee. Not having a house makes it hard to recruit and hold functions. Thankfully some brothers live close to campus and we can do things there, but it is kinda cramped.

-- BZ-686

Thank you and that is just what I ment!:mad:

Those Zetas may be lost forever!:rolleyes:

I hate to say it, but GammaZeta is right in SOME respects; however, I would characterize it differently. LCAP has/had loans from the Fraternity so it was in the Fraternity's best interest for LCAP to do well. Chapters being open and having bodies in those houses helped LCAP. IHQ and LCAP often coordinated efforts to help chapters succeed. These efforts were usually carried out by LCAP's property manager who had previously been an ELC. There were times when decisions that were inconsistent with standard practice when dealing with LCAP chapters. As mentioned before, the Fraternity had an interest in having chapters open and bodies to fill the houses. To clarify, LCAP was NOT in charge of which chapters to close, open, discipline, etc. That being said, the coordinated efforts makes it understandable why it appeared that LCAP was making the decisions.

This posting is NOT passing any judgment regarding the relationship between LCAP and the Fraternity but rather clarifying that relationship from my experience over the 5 years I was on staff. If people want to know how things happened (with this or any other topic), feel free to ask.

Shane

Oh come on Shane, I'm right 99% of the time. ;)

Funny thing is, most people on this forum agree with me and send me PM's all the time. The only difference is I'm not afraid to say what everyone is thinking.

LCAP has properties at Ball State, Butler, Colorado, Michigan State, Rhode Island, Oklahoma State, North Texas, South Carolina and others. This could be absolutely devastating!! LCAP has given alumni groups no time to prepare to buy chapter houses back.

Remember, many of the chapter houses were simply transferred to LCAP in good faith for stewardship at little to no cost. We shall see if the Grand High Zeta puts profits before the brotherhood.

"We shall see if the Grand High Zeta puts profits before the brotherhood."

Do you REALLY have to wait to get an answer to that question?

To All;

The Shippensburg alumni will be unable to buy their house, and it will be sold on the open market. It's a blow to all of us, but that's life, the best thing we can do is do our best to adapt to it, learn from it and move on. LCAP did it's best to help Phi Tau Zeta, and for that I will always appreciate the effort & faith that they gave us. It just didnt work out in the long term despite our best efforts locally, and the best intentions nationally. For us LCAP was the only option available to us, so there is no bitterness or regret for trying to make it work- at least we tried to do something as opposed to quitting back in 2003-2004.

In a few years we'll take another look at the situation and regroup and see if there is another opportunity for a good sustainable real estate situation for the undergraduate chapter that the alumni can get involved in.

I hope that the other LCAP chapters will have a better situation in place than we did at Shippensburg so that they can save some of their properties from being sold - best of luck to all of you!

Lenoxxx

In stead of losing the ones listed above which are major Schools and Zetas, there must be some way to be able to keep these houses intact for the Zetas.

As lenoxxx mentioned at Shippensburg, those Brothers did a tremendous amount of work on preparing the house. Is this and others to be lost and the Zetas maybe off of campus?

If it is set up a different way, maybe a property management will work as while a land lord, the repairs would be done by the Zeta and not a steweardship. Payments would go to the management and payments made by them.

I was not fully aware or most of us on how LCAP worked and maybe Joe or Shane could give and insight.

I would also like to hear from Brother Lynn on the Grand High Zeta take on this.

ok this might be dumb but i'm not sure how all the real estate transaction really work. But why would HQ sell them back to the alumni? if in most cases they were holding mortgages, wouldn't it just resort back to them. And can't they get a third party mortgage management firm to look over collecting money and paying the bank until whatever the next iteration of LCAP comes along?

Tom I would love to help educate the public on how LCAP worked and could work in the future. However, I have been advised that my former employer (the Fraternity and LCAP) is already frustrated over my prior post to this forum. I now work for a service provider to the Fraternity and creating tension puts my new profession in jeopardy. I am therefore forced to return to being a quiet lurker.

I do wish the best to those brothers on this forum that I had the opportunity to work with during my time with the Fraternity - particularly those LCAP clients including Mike Raymond, the Jasons and others at Shippensburg, and even GammaZeta.

Yours in ZAX,

Joe

Thank You!

I can understand!

Please PM and we can discuss it if it is better!

In ZAX,

"If it is set up a different way, maybe a property management will work as while a land lord, the repairs would be done by the Zeta and not a steweardship. Payments would go to the management and payments made by them.'

THANK YOU! I've only been saying that is the best model for over 2 years now.

LCAP should have been a board of directors, and left the actual management to a property management company.

And Joe, we never blamed you personally for what happened with LCAP/Gamma Zeta. 99.9% of what happened was because of a *ahem* prior *ahem* official of LCAP and his lack of judgment, responsibility and professionalism.

Billy unfortunatily it does not work that way!

The LCAP owns the Paper, - Deed. When it comes time of LCAP demise the deed is paper = money! So since there is no avenue to keep it intact, sell the paper. So then as I see it, the Zetas=Chapters are SOL! "Shit Out Of Luck"!


So, what to do then, sell it! So then what does it do? Hurts Zetas! For those that do not remember, Zetas=Chapters.

gammazeta brings up good points as many do!

So, where in the Hell does it put us as Zetas?:rolleyes:

Do We as a International Fraternity back our Members or do they/we not?

Should they be left hanging in the wind? If that is done then why are We Members if We do not cover Our Brothers when we can?

Is it our part as individual who worry about Our Zeta and not others?

We are a total, and I want to see something positive from :Our: IHQ!

Why not for the next year or two, simply bring in a nationwide property management firm to run LCAP properties and just give them the profits?

This is unfortunate! It is not only unfortunate that Joe is not able to share what he knows but also unfortunate that a brother is not able to express himself because the company that he works for has a relationship with Lambda Chi Alpha. Again, I revert back to a previous comment that I made...we need more transparency!

I will not even pretent that I know much about the details of the relationships the LCAP board/management had with chapters. I do know that LCAP put a lot of money into making many of the houses habitable. Joe was on the LCAP board prior to being it CEO and probably knows more about LCAP (the good and bad) that any member of the GHZ or current LCAP board. This statement is not a knock on any of them but rather demonstrates the level of knowledge Joe has. If there are any questions I can answer, I will try.

Shane

Rest assured that members of the Grand High Zeta read this forum (at least I know they are reading this topic). I must say that GreekChat is probably not the most productive forum in which to discuss issues (real issues) but there does not appear to be a solid forum in which that could occur.

Reverting back to my ELC days...use the power that you have! The GENERAL ASSEMBLY and not the GHZ is the ultimate authority in Lambda Chi Alpha. If you want something to happen or a policy to change, write legislation. If you just want to make a statement regarding how things should happen, write a resolution. Let me use an extreme example, if a mandatory resolution was passed that said GreekChat is the official forum for LCA and a staff member must respond to every posting...it would be a requirement (not that all requirements are currently followed). For the record, I think this would be a silly resolution and the staff would find a way to erase my name from the scrolls if it ever passed.

Shane is now done with his rant.

Shane

"we need more transparency!"

AMEN BROTHER!!!

Have we really exhausted our opinions or ideas on this subject already?

Wow, I guess this board really is slowing down.

No we've just all heard your opinion about 20 times already.

You're LUCKY to have heard my opinion at all.

I have been correct 99% of the times I have posted. Considering I have almost 1,000 posts, my wisdom has guided LXA's throughout this land in the right direction for the last 4 years.

LXA has become a world class organization because of me, and the brothers that follow my word.

You may have HEARD my opinion, but you haven't LISTENED to my opinion. If you had, LXA would be one brother closer to becoming the best organization in the world. Listen to my message, and you will be a better brother, ready to lead.

While I believe you have every right to your opinion, Lambda Chi Alpha has become a world class organization inspite of brothers like you. I certainly don't feel that you have contributed more than brothers like George Spasik, Doc Dirghalli, Tozier Brown, Jack Mason, Warren Cole, etc.

Additionally I have heard and listened to your opinion, but I don't feel that you have done the same for the rest of the brothers who post here. Everytime I read one of your posts it has something to do with who you and your chapter were screwed. You seem to have little else to contribute.