From: Evan Prostovich [email@example.com]
Sent: Tuesday, April 26, 2011 4:06 PM
Subject: RE: the demise of the PSK property at Western Michigan U
In regard to your questions surrounding Droopy Corporation/ Chi Tetarton Housing Corporation I cannot speak for what was done prior to PSK Properties’ involvement or provide any specifics regarding how the loan funds were spent. In general, my understanding is that Chi Tetarton Housing Corporation became Droopy Corporation. I do not know why they needed to create a new corporation, but Droopy Corporation was the local chapter’s non-profit alumni housing corporation just like the old one. There were no beneficiaries or stockholders. It is my understanding that the funds from the loan were used for a new roof, new siding, new windows, new HVAC, and completely renovated 1st floor. I also think landscaping was done, parking lot paved, new fence put up, etc. Beyond that I do not have further details on prior operation of the property by the Chi Tetarton alumni. I would recommend that you contact your fellow alumni should you seek further information on the history of the property prior to PSKP’s involvement.
When we took over the property, we assumed control of Droopy Corporation and assumed payments on the mortgage, the balance of which was over $89,000. The capital that PSKP lost was from operation of the property over the course of the 3 years that we operated it and included debt service, renovations, repairs, local management, insurance, taxes, etc. PSKP did not charge any sort of fee whatsoever for our general oversight and operation of the property, the losses were all from outside expenses and money put into the facility. The rent and parlor fees collected did not cover our operating expenses and thus the losses were accrued. The additional funds came from our operations at other properties.
Sent: Thursday, March 03, 2011 7:40 PM
Subject: RE: 446 Stanwood, Kalamazoo
The property was sold and following the sale it was announced to Chi Tetarton Alumni President Mark Caldwell to be disseminated to the alumni. I’m sorry this information was not passed on.
The house was sold on September 15 [ed.: actually 16], 2010.
The sale price was $109,900.
The buyer was Main Street Properties[II,] LLC.
The remaining cash to seller [Ed.: Droopy] after mortgage, taxes, closing costs, etc., were paid off was $6,757.76.
During PSK Properties’ operation of the property, beginning in the fall of 2007 and running through up until the sale in September 2010, we took a net income loss of $15,172.93. So the final result after the proceeds of the sale was a total loss to my organization of $8,415.17.
A $90,000 mortgage was taken out by the local alumni association in November of 2005, two years before PSK Properties was in any way involved with the property. My understanding is that these funds were used to renovate the downstairs and installing a new roof, siding, windows and kitchen at the property. Again, we were in no way involved in obtaining this loan or making these renovations so I cannot provide the exact details, I’m simply going by what I was told and what I observed when visiting the property.
I recently spoke with Evan, the PSK properties manager. Basically the outstanding debt on the property is approximately $87K. My idea is for us to raise the money needed to pay off the debt, continue allowing PSK properties to manage our asset, and have them invest the money needed for us to attract renters back into our house. Although the amount of money sounds like a lot, if one breaks it down and we get 200 people to donate a tax deductible contribution of $435.00($36.25/month for 12 months) the debt is paid. For your recognition, I would like to propose we have a plaque with a list of all the patrons assembled and presented at our 50th anniversary. This is a unique way of preserving our heritage and keeping our traditions as the longest standing chapter house at Western Michigan University.
March 26, 2010
c/o Chi Tetarton Alumni Association
2431 Edsel Dr.
Trenton, MI 48183
Alumni Brothers of the Chi Tetarton Chapter of Phi Sigma Kappa:
This letter is being sent as a courtesy to make you aware of the course of action that the board of directors of Phi Sigma Kappa Properties, Inc. (PSKP) is taking with the property at 446 Stanwood, Kalamazoo, Michigan, as well as our collective efforts (PSKP and Grand Chapter) to assist the chapter in overall chapter management.
Last month, the PSKP board was given notice by the executive board of the Chi Tetarton Chapter that it will not be renewing its lease on the Stanwood property. The executive board stated the following reasons for their difficult decision:
- The Stanwood house is a financial burden to the undergraduate chapter as a result of the reduced income stream created when the lower bedrooms were removed;
- Western Michigan University no longer follows a formal recruitment system — freshmen have to find fraternities on their own which takes them exclusively to Fraternity Village Drive, putting Phi Sigma Kappa at a distinct disadvantage;
- The Stanwood house has a number of deferred maintenance issues which makes it an unattractive housing option for the members.
As a result of the chapter’s decision, the Stanwood house is currently without a tenant for the upcoming school year. Accordingly, a real estate broker has been engaged to offer the property both for sale and for lease as a way for PSKP to attempt to mitigate the financial
damage to the organization. The property is currently being operated at a deficit, and in the event of a sale it is unlikely that PSKP will receive funds in excess of its basis in the property.
While the decisions made by the undergraduate members have led to this decision, the PSKP board of directors does not hold a critical view of their decision. The current Chi Tetarton executive board has made a conscious effort to improve the chapter, along with our assistance and the assistance of the Grand Chapter. One example of this was taking the step of expelling problematic members.
Accordingly, PSKP and the Grand Chapter will continue to support the chapter by working with the executive board to secure a lease on a new property on or near Fraternity Village. In the true spirit of fraternity, PSKP wants to be a trusted advisor in the chapter’s quest to realize growth and success.
The PSKP board of directors understands that 446 Stanwood holds many fond memories for the Chi Tetarton alumni, but the chapter has spoken with a loud and unified voice, leaving little choice but to look for alternative scenarios with the property. PSKP thanks you for your support and any support you can provide the chapter during this challenging but hope-filled transition. Should you have any questions or concerns, please feel free to contact either one of us.
Evan Prostovich Michael Carey
Director of Operations Executive Director
PSK Properties Phi Sigma Kappa Fraternity
PSKP has completed its second year of ownership of a property at Western Michigan University, since assuming management for the Chi Tetarton alumni housing corporation. We continue to work toward improving the financial operation of the property. While there have been some hurdles along the way, we continue to push toward making this a viable chapter home and we have a positive outlook on the future. PSKP extends its
thanks to Brothers John Bowker (Detroit ’59) and Mark Caldwell (Western Michigan ’98) for their continued support
PSKP exists to serve and support local PSK chapter housing initiatives, and therefore carefully considers all requests for housing assistance. To aid chapter leaders in their understanding of PSKP’s involvement criteria, PSKP has adopted the ‘CLEP’ standard of application assessment. When considering an application, PSKP carefully considers the Chapter, Location, Economics and Physical Attributes of the request:
Subject property should be within 0.25 mile of any ‘Greek row’ or ‘Greek village.’
Mailing address of registered office is Bowker’s.