By Sarah Shaw & Kelsey Ryan/The Bulletin
The Emporia State Foundation currently holds mortgages for five Greek houses totaling $1.2 million, according to a report delivered to the Kansas Board of Regents last month.
The report, a management review of ESU, also said that one of the Greek houses is behind on payments and another only pays interest on the mortgage. Of the five mortgages, the largest – $826,000 – is to Chi Omega.
“We’re not in the loan business,” said Judith Heasley, president of the ESU foundation. “So the board of trustees voted to no longer extend loans and all of the five houses were told that there would be no more (mortgage loans). Then we informed the entire Greek community that we were no longer doing any mortgage loans, so if anybody wanted to build a new house or anything like that, they could go down the street to one of the banks or find a mortgage company.”
The other houses that hold mortgages with the foundation are Phi Delta Theta, Alpha Sigma Alpha, Sigma Phi Epsilon and Kappa Sigma. There are 106 students living in the five houses, according to information provided by the organizations.
Another issue regarding Greek organization that was addressed concerned donations to the organizations. This was outlined in the review as follows:
“In the past, the foundation accepted donations to specific Greek organizations to fund operating expenses… the foundation sought a legal opinion regarding this procedure in 2008, and it was determined that the donations to the Greek organizations would not be tax-deductible to the donor because the donations would be viewed by the (Internal Revenue Service) as being for non-educational purposes. At the September 12, 2008, meeting of the Executive Committee of the Foundation, the decision was made to stop accepting non-educational donations. It is recommended that the foundation consider seeking a written tax opinion regarding any possible tax liability on the part of the foundation for this past activity.”
The mortgages were recorded from 2001 to 2008, according to the Lyon County
Register of Deeds.
“If there are Greek houses in arrears, right now it is a private foundation issue that’s being addressed by the trustees,” Heasley said. “Our finance committee and our foundation executive committee are going to be discussing what to do.”
According to documents gathered at the Lyon County Court House, The Bulletin found the following:
- Chi Omega contracted its mortgage in 2001. The current mortgage amount is the highest of the Greek houses at $826,500 and has an appraised value by the county of $798,900.
- The mortgage value for Phi Delta Theta is currently $135,000 and was contracted in 2008 as the most recent mortgage of the Foundation, signed by Heasley. The county’s appraised value for tax of this property is $384,080.
- Alpha Sigma Alpha, which contracted a mortgage from the Foundation in 2002 holds a current balance of $88,000, and has an appraised value by the county of $287,300.
- Sigma Phi Epsilon contracted a mortgage in 2005 and has a current balance of $80,000 and has been appraised by the county for $143,920.
- Contracted in 2004, Kappa Sigma holds the least amount of mortgage at $40,000. Its property appraisal value by the county is $384,080.
Heasley said the foundation monitors the current mortgages and has sold others as opportunities have arisen.
“We work with each house and we watch the mortgages regularly,” Heasley said. “We try to work with them as much as possible and try and be transparent with them. We do let them know if they’re late.”
Michael Lane, ESU president, told the regents at the Nov. 19 meeting that he viewed the problem as a housing issue.
“That’s student housing,” Lane said at the KB0R meeting on Nov. 19. “So the foundation would foreclose on that and dump a bunch of students on the street and I think our foundation has been very appropriate and will be gentle in handling that.”
BKD, formerly Baird, and Kurtz & Dobson, an accounting and advisory firm with headquarters in Springfield, Mo. performed the management review. In addition to the mortgages, the review also evaluated financial transactions, their documentation and relationships between ESU and affiliated corporations. They found that overall, Lane’s leadership has the university “poised for growth.”