HISTORY
[The] Fraternity Housing Corporation was set up to conduct the business of real estate ownership and property management. It is a stock corporation, all the stock of which is owned by the Order. Its directors are elected by the Executive Council, but its Board of Directors conducts the Corporation’s business independently. All its directors are KA professional and business men who serve voluntarily. Its Board has [the] power to borrow money and it has, in the exercise of that power, borrowed Journal Publication Reserve funds from the Order for investment in chapter housing. That collaboration makes that Reserve serve a double purpose: one in housing and the other in the publication of The Kappa Alpha Journal.
– Howard Locke, “History of the Order”
Even with the help of alumni and family members, individual chapters struggled to hold on to or even care for their houses during the Depression and World War II, during which many chapters closed altogether. With the end of the war and the introduction of the G.I. Bill, the demand for housing became extremely acute. On many campuses, the students had to resort to disparate measures to find shelter—dwelling in garages, tents, abandoned buildings, and even cars. The Executive Council foresaw in the closing days of the Second World War that housing would be the primary and most-immediate concern for returning and new students. To this purpose a radical amendment was added to the Kappa Alpha Constitution to allow the Executive Council to take the necessary measures to remedy the situation. The foundations of the Fraternity Housing Corporation were conceived in 1945 by the reactivation plans for the Order.
Although the creation of the Fraternity Housing Corporation was new, the concept was not. Almost from the beginning of Kappa Alpha, Samuel Ammen had advocated for the establishment of residential lodges and considered chapter houses essential to fraternal association. In 1905, the alumni of Alpha Gamma organized the Kappa Alpha Chapter House Company “with the purpose of building a new chapter house at Louisiana State University … in order to perfect and to strengthen the ties of affection and esteem formed during college days … and erect … a suitable home for the fraternity.” In the same year, the Alpha Pi Chapter at Stanford University organized the Kappa Alpha House Association to issue $10,000 worth of stock to construct a three-story house in the half-timbered architecture of
Tudor England.
Both active members and alumni in the early years of the twentieth century had devoted their collective energy and funds to enable local chapters to rent or build their own facilities. This concept was resurrected to meet the exigencies of the postwar housing shortage. The FHC allowed Kappa Alpha to be a resource for the returning members who had spent the war years fighting abroad, but it also provided a strong incentive for those entering college for the first time to join the swelling ranks of the Order.
The implementation of the program was a work in progress—first it was necessary to formulate a logical plan and decide which factors were most important, how the specifics of the plan could be most pragmatically and economically discharged, and, most important, where the funding could be obtained and the best methods of dispersal. Therefore, it was not until May 19, 1948, that the incorporation of the Fraternity Housing Corporation took place and a Board of Directors was formed. The first formal meeting of the corporation took place on June 17, 1948, where Howard P. Locke was elected temporary Chairman and Frank Myers temporary Secretary; the purpose of the gathering was to “elect officers, authorize the issue of the capital stock, complete the organization of the said corporation, and to transact such other business as may be necessary or advisable.”
After the FHC was formed in 1948, its officers took a survey to determine which chapters most-urgently needed assistance—there were eleven chapters urgently needing assistance, thirteen chapters that were not allowed by their schools to own houses, nineteen that were renting adequate houses, and thirty chapters that either owned or were able to purchase their own houses. Using this rationale, they were able to decide the best way to allocate funds to accomplish the greatest good and this was done “in the practical manner” by having a plan to reconcile the need with the best financial means to achieve their goals. In some cases, the FHC enabled chapters to build new homes, in others “to acquire better houses at reduced monthly outlays,” and in still other instances the FHC “provided funds for improving or refurnishing properties already owned by chapters.”
The FHC had a three-pronged strategy: it pooled the ownership of as many Kappa Alpha properties as possible into a single corporate entity administered by the Washington brain trust—men who were recognized as being among the most-capable administrators in the nation; the Washington Cabal leveraged the assembled funds in such a way “as to assist the maximum number of chapters by obtaining the maximum loans through conventional financing and utilizing the minimum amount of Fraternity Housing Corporation’s funds in each case”; and they conducted the process at a minimum cost to the Order.
Having ascertained the needs of the individual chapters, the Corporation employed several different plans best to utilize available resources. If the chapter already had some funds or equity in a house and wished either to purchase another house or to refinance the building that they were already in, the FHC would lend the chapter “sufficient money, on a second or third mortgage or trust, to make up the difference between the sum that could be obtained on a conventional loan and the amount the chapter” already possessed. In a second scenario, the FHC would buy the house outright and hold the titles in the name of the Corporation; with Fraternity Housing Corporation’s substantial assets and permanent corporate structure, it had been able to place loans on these houses on better terms and in larger amounts than the local group could have done, and thereby tie up as little money as possible in each chapter house.” Customarily under this arrangement, the corporation would buy “a house for an active chapter, hold the title for the chapter’s exclusive use, and rent it back to the chapter at the lowest rental possible, sufficient to cover financing costs.”
More specifically, the FHC made loans to the chapters at 4.5 percent interest, “which is, of course, greatly below the prevailing second trust interest rates anywhere in the country, and lower than many first trusts. In turn, it is paying the Order 3 per cent interest, and pays what expenses it has out of the difference.”
In the first three years of FHC’s operations twenty loans were made to chapters and “some of them [had] been paid off in full [within four years]. In addition, the Corporation had bought houses for ten chapters.” By 1953, after five years of operation, the Fraternity Housing Corporation had assisted twenty-seven chapters financially, and five chapters had built their own new lodgings.
By the tenth anniversary of the founding of the FHC, the institution had “assisted or bettered the living facilities of 35 chapters of the Kappa Alpha Order. This is an incredible accomplishment when one realizes that this number amounts to nearly 50 of the Kappa Alpha chapters.”
The Fraternity Housing Corporation continued in its capacity of buying and maintaining chapter houses in like fashion until 1983, when it was determined that the institution would no longer act as an owner-manager agency but would continue as a lending institution for the Order’s housing needs. The FHC Committee issued an advisory that “by June 30, 1983, all existing houses owned by FHC will be transferred to local housing corporations. Locally owned houses have stronger alumni groups because it provides a central point of interest, involvement and need for alumni help and this benefits the local chapter.”
The reason for the change in operating procedures was ostensibly given that “existing chapters will be better served” by local housing authorities, which would be better able to “exert proper control of the house operations and assure preventive maintenance.” But the real reason may have been more closely aligned to the insurance issues of risk-management and the collateral legal entanglements. Having sloughed off the skin of an owner, the FHC explained that it could better serve more undergraduate chapters and that it would continue to offer reasonable terms for the attendant purposes of housing, but offered the caveat that “it was not the FHC’s purpose to become a primary source of funding for large projects.”
Despite its change of direction initiated in 1972 and completed in 1983, the FHC continued to operate in its revised capacity and with the same board members until 1991 when a motion to dissolve FHC was considered by the Executive Council. While there was agreement to change course, dissolving the entity would provide troublesome as it remained engaged in various loans and leases as guarantor and had commitments outstanding. Ultimately at the April 1992 Executive Council meeting, the Council voted to retain FHC as a legal entity. The board members would be discharged, and the members of the Council would be properly elected as the FHC Board of Directors in separate meetings. This practice has continued till the present, typically with the Senior Councilor, acting as Vice President and sole shareholder, casting votes for corporate business. Today, FHC is focused on purchasing and renovating certain properties, executing mutually advantageous buy-back agreements with local housing corporations, and exploring new and innovative ways to provide safe, affordable, and competitive housing for Active Chapters—much like their initial charge in 1947. Another interesting note is that Billie Feller, wife of Richard T. Feller, served FHC as a secretary from 1952 to 1977.
