The Alfond Inn at Rollins College

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Information about The Alfond Inn at Rollins College

Published on March 5, 2014

Author: dnt323



Philanthropic Case Study - The Alfond Inn at Rollins College published in the January 2014 issue of Planned Giving Today.

A 25th Anniversary Featured Gift: Harold Alfond Foundation and Rollins College BY DAVID N. TORRE posals received attention from local and national investors, market circumstances prevented investments of this size and type. Moreover, real estate investments in Florida in general (and especially in the hospitality industry) during this time were far from booming. Rollins was left to finance and build the hotel itself, an option that did not exactly fit within the college’s core competency. N ot Fo In te r R or nd ev ed ie R ep fo w ro r D On du is ly ct tri io bu n tio n The Board’s Agenda The seed of the project that grew to become the Alfond Inn at Rollins College originated from the board of trustees. During a 2008 retreat, the board identified eight strategic initiatives for Rollins College and ranked them according to a matrix, measuring feasibility on one axis and impact on the other. Construction of a hotel near campus was one of eight strategic initiatives having the highest in potential impact for the college. The thinking was that Rollins already had a beautiful campus with lakefront views, but lacked adequate accommodations for prospective students, parents, alumni, friends, and visitors. However, the hotel idea also measured as one of the most difficult projects to undertake. From 1956 until 2000, the privately owned Langford Hotel was very near to the Rollins campus and was a popular destination for visitors and locals alike. The Langford hosted such high profile guests as Ray Charles, Walt Disney, Bob Dylan, Mamie Eisenhower, and Eleanor Roosevelt. Nancy and Ronald Reagan celebrated their 25th wedding anniversary at the Langford. It hosted scores of Rollins students and their parents before it closed in 2000 and was demolished. The subsequent owners proposed construction of a condominium tower next to a luxury five-star hotel. The City of Winter Park approved the plans and the condominium tower was built. However, the hotel phase of the project met the headwinds of the recession and never materialized. Soon after a board retreat in 2008, news of the property’s availability for purchase reached its members, and the college purchased it the next year for $9.9 million. The 3.3-acre lot is in a prime location and close to numerous shops and restaurants. The campus is essentially landlocked on three sides, with the fourth side fronting Lake Virginia. Thus, available parcels within walking distance of campus were highly desirable for the college. Following the purchase, the process of finding a private investor to finance the development of a hotel on the site was begun. While the college’s request for pro Profit with a Purpose Senior administrators (our president Lewis Duncan, chief financial officer Jeffrey Eisenbarth, and others) began discussions with the Harold Alfond Foundation regarding a large capital gift. Its founder and namesake was a successful entrepreneur whose career culminated in the sale of his company, the Dexter Shoe Company, to Warren Buffett’s Berkshire Hathaway Inc. Alfond had been a generous benefactor to Rollins during his lifetime. A different project had been proposed to the foundation, yet those discussions led to the idea of financing a hotel for the college. In fact, the focus of the foundation more clearly matched a hotel project than any other proposed idea. It was the alignment of the foundation’s focus and the college’s priority that proved to be so impactful. Very shortly after suggesting the idea during a meeting at the foundation’s office in Maine, the trustees of the foundation approved a $12.5 million grant for the construction of a hotel at Rollins. Needless to say, this changed everything. The grant meant the college no longer needed a private investor to develop the hotel. Essentially, the grant allowed Rollins to own the building and retain a much larger percentage of the net revenue. In addition, the entrepreneurial nature of the project created an endowment within an endowment. The hotel serves a noble purpose and will drastically increase the financial strength of Rollins for decades to come. After management fees, taxes, and maintenance costs are paid, the remaining revenue will pour into a student scholarship endowment for a maximum of 25 years. Following that, the college will receive the net revenue with- The en trepreneurial na tu re of t he pro je ct c reat ed a n e ndowment wi thi n an en dowm ent . See 25th ANNIVERSARY: Page 6 P l a n n e d G i v i n g T o d ay u j a n u a ry 2 0 1 4 5

25th anniversary continued from Page 5 million for the land purchased outright by Rollins u $12.5 million grant from the Harold Alfond Foundation u $20 million internal loan from the college’s reserves The loan from the college reserves was set at 4.5 percent for up to 25 years, which equals the maximum allowable spending rate from the college’s endowment. Loan payments are made from the hotel revenue, generating a return for the endowment. The 112-room hotel — built in the Spanish Mediterranean Revival style consistent with the Rollins College campus and other community structures — was designed by noted 20th century architect James Gamble Rogers II. Its construction remains the largest project in Rollins’ history at $32.5 million. Fo In te r R or nd ev ed ie R ep fo w ro r D On du is ly ct tri io bu n tio n out restriction. Furthermore, the endowed fund will disburse millions of dollars of scholarship funds, thereby relieving the college of a substantial fiscal burden. The grant from the foundation is conditioned on the creation of the Alfond Scholars Program. Designed to be the premier scholarship at Rollins, net revenue from the hotel pours into the scholarship for 25 years or $50 million, whichever comes later. Rollins projects net operating revenue in the range of $2.5 to $3.0 million annually, so the Alfond Scholars endowment could grow to $65 million or $70 million during the 25-year term. Recipients of the award will receive full scholarships covering tuition, room, and board. Additionally, they are encouraged to pursue recognition such as Rhodes, Goldwater, and Truman scholarships during their undergraduate years. It is this idea of profit with a purpose that squared perfectly with the philanthropic and entrepreneurial spirit of Harold Alfond and the foundation he left behind. It is truly a gift that will keep on giving. u $9.9 Th e i d e a o f p rof i t w it h a pu r pos e sq u are d wit h t h e s pi r i t o f Al f o n d an d t he N ot fou n d ati o n . David N. Torre, J.D. serves as associate director of gift-planning at Rollins College. He is a graduate of Rollins and the University of Florida Levin College of Law. 6 Town and Gown Harmony At the time the Alfond Inn project was announced, the City of Winter Park had only two hotels. The only one within walking distance of the campus had just 27 rooms and no meeting space. The Alfond Inn filled a great need in the community, having 112 guest rooms and 10,000 square feet of conference space. The city, years before, had approved a hotel project that never came to fruition, depriving the city of a source of property tax revenue. While Rollins College is a nonprofit, it structured the Alfond Inn project as a for-profit entity that will generate approximately $260,000 per year in property taxes for the community. In fact, the college’s portfolio of real estate holdings in the community is composed of 38 properties with an estimated value of $100 million. Of the 38 properties Rollins owns, 33 are taxable and pay approximately $800,000 in property taxes annually. Alfond Inn Facts The total financing package for the Alfond Inn project was approximately $42.5 million. Rollins College Background Founded in 1885, Rollins College is Florida’s oldest recognized college, and is consistently ranked one of “America’s Best Colleges” by U.S. News & World Report. The College of Arts & Sciences and the College of Professional Studies offer full-time undergraduate programs in the liberal arts. Rollins’ Hamilton Holt School serves the Central Florida community by offering undergraduate and graduate degree programs during evenings and weekends to students diverse in age, experience, and professional development. The Crummer Graduate School of Business is ranked a top MBA program by Forbes and Bloomberg Businessweek. Alfond Family Legacies Among other projects, Harold Alfond supported the construction of the 75,000square-foot Harold and Ted Alfond Sports Center on campus, completed in 2000, which serves a variety of purposes and is the college’s largest indoor venue. Two of his children graduated from Rollins, and his son Ted would meet his classmate and future wife at Rollins. Ted and Barbara Alfond extend their own philanthropy to many areas of their alma mater. The $3 million Alfond Collection of Contemporary Art for Rollins College is a 2013 gift from Ted and Barbara Alfond and features more than 100 works, including paintings, sculptures, and photographs by more than 50 artists from 15 countries. P l a n n e d G i v i n g T o d ay u j a n u a ry 2 0 1 4

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