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From the Ground Up

7/1/2013

Thomas V. Chema

Facing a challenging balance sheet, one liberal-arts president is set to transform unusable land into a renewable revenue source.

Our little college sits on rolling hills covered with trees, 35 miles southeast of Cleveland. Located in a charming village of just 1,200 people, Hiram College looks like a small liberal arts school should: It’s a historic and picturesque campus nestled into the bucolic countryside.

But operating in the black is a daily challenge, as it is for most tuition-driven colleges and universities in this difficult economy. I learned that quickly when I was named president in 2003. On the days that I wasn’t focused on how to recruit more students, I kept asking myself the same questions: How could we generate income in new ways? What was I missing here?

From my office window, all I could see were those rolling hills covered with trees, and that old farmer’s refrain about being land rich and cash poor was frequently in my mind. How could we generate income for Hiram College from all that unused property? In today’s business terms, we were underutilizing one of our biggest assets.

Our dilemma:

It came down to this: What could we do with 140 acres adjacent to campus that the college will never need for expansion? Selling the land was never a consideration, nor did I think we could find a buyer; it’s not suitable for agriculture. Moreover, any development would have to enhance the institution’s mission, not detract from it.

The idea:

Build a retirement village where residents could integrate with college life while enjoying our academic, cultural, and natural resources. According to The Wall Street Journal, the number of university-based retirement communities has grown from almost none 15 years ago to about 50 today. My brainstorm surfaced seven years ago, when the concept was not as popular. As a non-traditional college president with a background as a business developer, the idea was incredibly exciting. I was absolutely convinced it would work.

Our challenge:

Sell the idea. In both business and academia, persuading people is never easy. This time, however, I had no inkling how difficult, complex, and ultimately expensive the process would be. Moving this terrific idea to reality became a years-long struggle. Of course, we started with market research. In fact, multiple iterations of marketing studies found both a need and a desire for this kind of retirement option, particularly among our Hiram alumni. Our board of trustees weighed in positively from the beginning. Many others took a wait-and-see attitude.

The hurdles:

Town-and-gown concerns raised their ugly heads very quickly. Basically, the locals—used to life in the aforementioned bucolic countryside—did not like the idea of any kind of building project. Our private acreage was regarded as public green space suitable for dog walking—and many said we should keep it that way! We were derailed by zoning, annexation, and other regulatory roadblocks. At one point, in order to stop development, township trustees filed a lawsuit to take the property by eminent domain. Legal bills added up, and then the 2008 recession and lousy housing market brought us almost to a halt.

No college or university has the same context or set of assets, of course, but I believe the challenges we faced are a good example of what typically happens when people hear an out-of-the-box idea. This is particularly true when a project is not considered central to a college’s accepted objective of educating young people. If we were building more dormitories rather than a retirement village, the township officials might have been a bit more supportive. However, in my experience, one had better be prepared for negativity. In this case, we believed the benefits far outweighed the opposition. But ultimately I was the one pushing and prodding— and taking the heat.

Next steps:

As I reflect on the frustratingly slow pace of this project, I see that some good things came from waiting. We used the interval to tweak the concept and incorporate new ideas. The passing of time has only made me more convinced it will be successful when the facility begins welcoming its first residents next year. Retirees—particularly younger ones—are eager to maintain an intellectual vibrancy. People want to live in a college community. Our developer, Fairmont Properties, brings decades of collective experience in university-based mixed-use projects, as well as in the healthcare and senior living industries. And we were very pleased with the student townhomes that Fairmont developed for the college in 2009.

As the details evolved, Fairmont Properties proposed that they build and manage the housing, which we have named The Reserves. Hiram College will lease the land to The Reserves, LLC, and get a percentage of the rent, so to speak. The Reserves is not a rental community, however. Nor do residents buy their homes: The Reserves is a membership community for people age 55 or older. Residents pay an entrance fee and ongoing monthly fee for services and amenities based on square footage. The community will offer refundable membership plans and a number of other options.

We expect to find our new residents having occasional meals in our dining hall because part of their monthly fee is set aside in a flexible dining account. That is just one of the ways we want to help residents integrate into the fabric of Hiram College: The Reserves residents will have the same access to campus facilities, events, and programs as our students do. We will also encourage them to audit classes, serve as mentors, and participate in a variety of volunteer opportunities. I expect to see our new “seniors” at our recreation center and library, as well as at plays and concerts.

A simple announcement rolled out recently in our alumni magazine, and the response has been both overwhelming and absolutely positive. Our executive director of alumni relations has heard from a number of interested people not on our current donor lists and who have no close connections to the college. In fact, one alumna phoned from her home in Hawaii and said she’s interested in returning to northeast Ohio. Go figure.

Lessons learned:

First, partnerships are the key to success in a project like this. As a small institution, we cannot be all things to all people. Nor can we do everything by ourselves. We need outside partners to engage, participate, and help carry some of the burden. After all, we do have a core educational mission to concentrate on.

Second, no matter how good the idea is or how sound it appears to the board of trustees, be ready for opposition. There are so many constituencies out there today that someone will always object. When doing a land deal in a rural area, definitely expect problems.

Finally, remember that any project worth doing requires an investment of time, energy, and money. We can’t expect these ideas to automatically—or quickly—translate into cash. It’s easy to fold the tent and give up, but when an opportunity surfaces, one has to be persistent.

I wasn’t the only one eager to get moving on this project. Not willing to postpone their plans, our first “real” residents moved into a college-owned house on campus a year ago. Anthony and Nina Caimi wanted to make Hiram their summer home after enjoying a winter retirement community associated with the University of Florida in Gainesville. They tell us they love interacting with students, supporting our athletic teams, and eating lunch in the on-campus Hiram Bistro, just as we predicted. With 225 free-standing units on the drawing board and groundbreaking planned for this year, our idea is finally becoming a reality—and that vacant land is being transformed into a real asset.

 

Thomas V. Chema is president of Hiram College (OH).
 


 

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