Article by H. Keith Hellems, M.D. ’62
This seems like the time to look back and recall how it all started and what it took to get it built.
The Michigan Chapter of Delta Chi honored its ‘60s alumni at its 2009 reunion. Prior to the reunion Frank Morrey ’64 and David Falconer ’62 played Michigan’s famous Blue Course, followed by a beer and dinner—and autopsies of their respective golf games—at the Jolly Pumpkin Café and Brewery on Main Street in downtown Ann Arbor. Eventually, the two alums got talking about the disgraceful state of the chapter’s 100-year-old fraternity house, how embarrassed they were to bring their wives into it, and how guilty they felt about asking the actives to live in it. More seriously, Frank and David were convinced that the current house was unsalvageable and that a new house was necessary for the active chapter to survive and for its alums to remain involved.
David and Frank knew that the project would require a competent leader. And their thinking settled immediately upon Howard Gandelot ‘64, because he had earlier expressed interest in the new-house project, was a former ‘A’, and had been a great manager while working for Procter & Gamble. So, Frank and David contacted Howard in the fall of 2012 about spearheading the fundraising effort. And, not surprisingly, he was fascinated, supportive, and interested in doing the project. This addition completed the alumni association’s “fundraising triad”. Meanwhile, Keith Hellems ‘62, also a former ‘A’, had been assembling and distributing pictures and documents about the Michigan chapter, generating much alumni interest, enthusiasm, and communication. In October 2013 Keith joined the fundraising team. That brought the team to four members, which in time became known as the “fundraising quartet”.
On May 31, 2013, the fundraising team, together with the chapter’s building corporation, launched a $1M campaign for the construction of a new fraternity house at 1705 Hill Street. To support the new initiative, the building corporation agreed to provide $60K in upfront money for the fundraising campaign, as well as to retain Affinity Connection for back-office support. At the advice of Affinity and other professionals, the quartet divided the fundraising campaign into two distinct phases. The first phase dealt with the so-called High Value Donors (HVDs) and the second the more traditional ones. Somewhat arbitrarily, a HVD was defined as alum that might pledge $10,000 or more to the new-house campaign. We identified the HVDs mostly through our personal knowledge of the brother’s professional success and/or apparent financial status. We also used Internet searches to estimate a brother’s financial strength. Our goal for the HVD phase of the campaign was to obtain pledges for 50% of the required $1M.
The team’s next—and perhaps most challenging—step was getting the contact list for the chapter’s alums expanded and updated. Fortunately, Frank Morrey, had remained in direct contact with the active fraternity and personally knew nearly every pledge from 1960 through 1995! So, his contact list provided an important starting point for the fundraising effort. A copy of National’s contact list was obtained and merged with Frank’s list. In addition, numerous Internet searches for “lost alums” using the Intelius website were conducted. And, in time, eventually the fundraising quartet secured phone numbers, street addresses, and e-mail addresses for approximately 90% of the chapter’s living alumni.
To kick off the HVD campaign, the fundraising team assembled an 8-page color brochure describing our plans for a new chapter house, its anticipated architecture, its estimated cost, and our timeline for financing and building it. This brochure was used both as an “opening salvo” for the HDV campaign and as a “follow-up” to a telephone contacts with the HVDs. By February of 2014, the fundraising team had written pledges for 50% of the necessary $1M from the HVDs. So, the quartet moved to the second phase of the fundraising campaign.
In second phase, the team switched to mass mailings, both postal and electronic. It also upgraded the 8-page color brochure to a 12-page one. And these brochures were mailed to the traditional donors. With the help of Affinity, the fundraising quartet prepared quarterly Michigan Delts, occasional postcards, and bimonthly e-blasts. The Delts carried information about the fundraising campaign, alumni activities, and the active chapter. The e-mails usually focused on a particular topic, but also included personal bios prepared by selected alums. The team members systematically telephoned the traditional donors, asking if they had received the mailings and also asking them for their pledges. This portion of the campaign continued until May 6, 2016, when the $1M mark in confirmed pledges was reached.
We observed, especially in working the HVDs, that tax deductions were an important consideration for potential donors. Dan Maher ‘76, tax manager for the Deloitte’s Chrysler account, explored our options as regards making alumni donations tax deductible. He concluded that working with through Delta Chi Educational Foundation (DCEF) was the best approach, even though a pass-through fee was required by DCEF. Enough of the new chapter house is considered “educational” in the eyes of the IRS to more than cover the $1M in needed donations. Nevertheless, to get potential donors to the desired $10K level, we set the minimum donation for the tax break at $10K. In the end, about 80% of the raised monies qualified for this tax break.
The quartet also established a suite of memorial funds in honor of deceased brothers. The memorial funds were dedicated to those brothers who had played especially important roles in the chapter’s history, as well as its long-term (1970-1982) cook, John (“JR”) Russell. For each memorial, we designated a close friend of the deceased brother as leader of the memorial effort. Likewise, we priced and sold naming rights to specific elements of the new chapter house. These rights were made available for as low as $5K for a stairwell and as high as $100K for the house’s gigantic (~1450 sq.ft.) Flex Room. Additionally, each right included an engraved plaque permanently attached to the purchased element.
With the million-dollar goal met, it was time for John Levinson ’74 to take over. John has been the most actively involved alumnus in Michigan Delta Chi history since the time he was elected to the Alumni Board of Directors in 1976 and initially appointed to handle the property insurance. He played a major role in the design, building and financing of the new four-million-dollar house. I asked John to tell us his story which I have included. It is a story that must be told:
“The design that was created by Allan Lutes and myself, based upon a combined 75+ years of experience with repairs and maintenance of a fraternity house.
From the standpoint of exterior design, we needed to have it remind people as much as possible of the old house exterior design – basic style, colors, etc. We also needed to get approval from the Ann Arbor Planning Commission and the full City Council of Ann Arbor. Therefore, the design needed to blend into the surrounding neighborhood styles, as well as not enrage the NON-Student neighbors. There were considerations for filling the chapter house, so size was critical, but we also had to fit in on our lot and meet all of the Ann Arbor rules. To help assure that we would fill the chapter house, we engaged the Chapter Members over several years on how many brothers they felt they could support in the house and how should we set the living spaces. This was all done before we began the fund raising. The major input from the chapter was how the “suite” system was chosen. We used a lot of their input on the chapter size as well as estimating how much rent was going to be needed to pay for the operating and mortgage costs. Based upon some Alumni and Chapter Member input, we also tried to add variety in the rooms as much as possible. Many alumni liked and remembered the variety from the old house. The current Members indicated that the students wanted was less “shared” spaces for bathroom/sleeping/study (yeah sure we believed that last part) and more private space than the “old” fraternity house or dorm style with sleeping dorms and gang bathrooms. This choice of the suite system has been met with great appreciation by the current brothers that have lived in the house.
Timing is everything in life – when we finally got the entire city approval process completed (the City Council approved unanimously), we then had to go back and engineer a new process into the budget/plans for handling stormwater. From the time we started in early 2014, the City passed zoning requirements to “clean and hold” the stormwater that was generated on our lot. This involved extensive architectural & engineering calculations to meet the requirement. Essentially, we had to add storage tanks under the parking lot/driveway that would hold and clean storm water coming from the parking lot drains as well as all of the storm drains from the water running off the roof. This change in the rules led to a cost of $250,000 to comply with this new rule. That was one of many setbacks financially. When we estimated our costs, the building processes in Ann Arbor were quite slow and contractors were quite hungry for work. When we went out for bids, we came back well beyond our contingency of 5% factor for a $2.3 plan. The final numbers when we completed the project (not including mortgage costs) was approximately $3.5M or ONE MILLION TWO HUNDRED THOUSAND DOLLARS over our budget and financing commitment from the Bank of Ann Arbor.
The story on the financing continues to prove that timing is everything – long story short, going back to the bank for an increase of 50%+ over their commitment took more than a little “finesse”. It took A LOT OF FINESSE and some luck. When things were getting very dicey with the bank as the costs mounted and our needs increased, we realized that what we had to sell was a very good equity to value ratio (our skin in the game was still going to be roughly 33%). The other thing to sell was the design and the fact that rents were continuing to escalate for the dorms and apartments. The final move was to get the Top Loan Officer out to visit the building site (we were in the framing of the 3rd floor at the time) with Allan Lutes and myself. This worked for two reasons – first, we had a very good commercial concept and design. Second – the bank and the Loan Officer were very familiar with and respected Allan Lutes and Alpha Management. They had done many successful projects with Allan and Alpha/ They felt very comfortable with him being the general contractor and future manager for the property. Finally, the timing/luck part.
When it came decision time, I went to the Bank of Ann Arbor headquarters in downtown Ann Arbor to meet with the Loan Officer and his boss – the decision maker. This Boss or Manager was that mysterious person that you never get to meet or see in the auto dealership. The decision maker wanted to know if I had played Lacrosse for Michigan in the early 70’s? I asked the Loan Officer how he knew that. It turns out that the decision maker was the second-string goalie for the Lacrosse team that I had played on for four years at Michigan. His memory of me convinced him that if I was also involved in the future management of the project that the bank would increase the load commitment for the full amount that we needed to finish the house.
I had not talked with or seen Charley Krone (the BOSS/Decision Maker) the goalie since my last Michigan Lacrosse game in 1974. I also found out that they had investigated my business career at RheTech (including that I was local in Whitmore Lake) and determined that I was the person that they were comfortable with as the Alumni boots on the ground for this project. I had to promise to stay on the Delta Chi Board for the length of the loan (5 years) and they would make the deal as requested.
Both the Loan Officer and Charley Krone have now retired, and we have since renewed the loan with Bank of Ann Arbor for another seven years. As fate would have it, they were replaced by my old JP Morgan Chase Loan Manager for our RheTech business, so I guess I will have to stay around when our current loan expires in another five years and make sure we renew again.”
The alumni association dedicated the new chapter house on October 1, 2016. It was by far the largest and most successful reunion in the chapter’s history, with 160 alumni and 31 actives and associates (pledges) in attendance.
David Falconer ’62, Howard Gandelot ’64, Frank Morrey ’64, Keith Hellems’62 preparing the ground for the new DX fraternity house at the groundbreaking ceremony held May 9, 2015.
Alan Lutes, Dean Warner and John Levinson keeps tabs on the builders.
