by Kate Knable
Posted 11/26/2012 12:00 am
More than six years after the Hendrix College board of trustees approved plans to build The Village at Hendrix, the Conway college is seeing progress in its commitment both to “new urbanism” and a nonprofit/for-profit approach to real estate development.
The Village at Hendrix LLC, a Hendrix College-owned and supervised LLC, is busily partnering with the nonprofit college at a variety of levels to populate with houses, apartments and commercial businesses a 92-acre tract adjacent to the college. College athletic facilities and student housing are included in the mix.
The Village at Hendrix, a “new traditionalist” or new urbanist development, sits east of the main part of Hendrix College’s campus.
For examples of the nonprofit/for-profit partnerships: The LLC oversaw the demolition of Hendrix College’s indoor tennis courts on Steel Avenue within The Village last week to make way for a new $6 million building, Market Square South. The LLC is selling the lower portion of Market Square South, and a Delta Trust & Bank branch and a Purple Cow restaurant will eventually be located there. Hendrix College is assuming ownership of the new building’s two upper stories to use as student housing.
Also last week, a crew from Chenal Heating & Air of Little Rock installed HVAC pipe inside the ceiling of a new house under construction on Sanders Street. The LLC has sold the house, according to a sign on the front lawn.
The LLC has so far built about 40 houses, ranging from 1,200 to 3,200 SF in size. They sell for between $170,000 and $450,000 apiece.
Additionally, the LLC built Hendrix Creek Preserve, which is part park and part eco-friendly drainage system. The endeavor was “twice as expensive as traditional storm water management,” said Ward Davis, the LLC’s chief executive officer. “That would be very, very challenging for a for-profit to pull off.”
However, the business works for a nonprofit, Davis said, and has to balance joint obligations of making money and serving the college’s mission. And the college wanted the ecological benefits of the preserve, as well as a site for its science students to study groundwater or do water acidity testing.
‘Non-Income Producing Asset’
Hendrix College has owned the land where The Village at Hendrix now sits since 1931. For decades, the land wasn’t used for much more than practice fields for athletic teams and growing timber.
In 2002, then-Acxiom CEO Charles Morgan and other business leaders serving on the college’s board of trustees supported using the land for income.
Hendrix College President Timothy Cloyd quoted Morgan as saying, “There’s a non-income producing asset across the street.”
The school considered selling the acreage to developers for about $18 million, Cloyd said, but concluded that would only provide short-term financial gain.
“If we’d done that, a developer may have bought it and there might’ve been big box stores over here,” college spokesman Frank Cox said. The leadership preferred a longer term view, with 50 to 100 years in mind, he said.
Consultants helping Hendrix with a long-term growth plan told the school that its student recruitment potential was limited because of the college’s lack of connection to Conway’s downtown.
“Students wanted a feel of urbanism and a feel of a vibrant, active social life,” Cloyd said.
The college opted to create its own community, similar to Princeton University’s development of Princeton, N.J., Cloyd said.
The plan developed in 2006 called for a 10-year, $85 million development with up to 700 total residences, including apartment units.
That plan has changed somewhat. Southwestern Energy of Houston built a $25 million, 120,000-SF facility in The Village. And the Hendrix Creek Preserve has taken up 18 of the 92 acres.
The LLC now expects to build about 400 residential units total, Finn said.
The land plan “has flexibility built in,” Cloyd said. The city of Conway passed an ordinance providing zoning leeway that allows for market sensitivity. As a result, when the LLC couldn’t pre-sell townhomes very well, it chose to build high-end apartments instead, the LLC’s COO, Lawrence Finn, said.
And the college, which is investing in student housing in The Village, could choose to sell the student apartments back to the LLC down the road and repurpose them, Finn said.
Davis, the LLC’s CEO, said the college’s goals for The Village include enhancing college life for students, faculty and staff; integrating the college more into the city; and earning a financial return for the school’s endowment.
But Hendrix College’s leaders didn’t want directly to manage a development project.
“All along, we thought, ‘We don’t want to become real estate tycoons,’” Cloyd said. “The president of the college doesn’t need to spend his or her time to run a for-profit.”
Hence, the college created its wholly owned LLC to run the real estate business. The for-profit LLC’s income adds cash to an endowment that supports Hendrix College.
CEO Davis and COO Finn report to a five-member board that comprises Hendrix College’s president, executive vice president and three members of the school’s board of trustees. The LLC has six employees.
The LLC broke ground on The Village’s first homes in 2008. About 80 percent of the homes sell prior to construction.
“It’s making money,” Finn said.
To design The Village at Hendrix, the college hired Duany Plater-Zyberk & Co. of Miami, a company known for designing new urbanist communities that focus on environmental sustainability and connecting people with their neighbors through walkability and other design features.
“We really get to place-make in a really meaningful way,” Finn said.
The design is related to the college’s education mission, President Cloyd said. It introduces students to sustainability efforts, as well as to political and sociological study of how a community built for relational connectivity develops, he said.
And despite the real estate crash, homes within The Village “have already been consistently selling for premiums at 50 percent higher than traditional homes in Conway,” Conway Mayor Tab Townsell said.
New urbanist neighborhoods “tend to be the portions of town whose property values rise or hold better than anywhere else in town,” Townsell said. “When we want to show Conway off, Hendrix Village is always on the tour.”