Stanford University has ended an 86-year land lease on its campus with Alpha Omega Housing Corporation (AOHC), the alumni company that provides housing for the Sigma Chi fraternity. This would have resulted in the university seizing his property worth $32 million without fair compensation.
The company invested $32 million in private funds to build and maintain the 14,000 square foot townhouse, located at 550 Lasuen Mall. To move, the company would need to raise $35 million, they said.
The university reportedly made the announcement days before the end of the lease – Aug. 31 – after making 41 annual lease extensions, the company said.
The termination of the lease comes after a long struggle, between the company and the university, for the property. In 2019, the company filed a lawsuit against Stanford when the university first sought to expel the Sigma Chi chapter.
The lawsuit alleged that Stanford, which lacked undergraduate housing, sought to repossess the property and breached its tenancy agreement with the company. A judge in 2020 found the company did not unlawfully retain the property, which Stanford had claimed in a countersuit.
The Sigma Chi House is the last private fraternity house on campus, which once had about two dozen such properties, according to the society.
Sigma Chi came to Stanford in 1891 and was one of two or three fraternal organizations originally chartered by the university, the society said in its 2019 lawsuit.
The university’s regulation of land leases and fraternities to build on-campus housing dates back to Jane Lathrop Stanford and changes to founding documents in 1897 and 1899, the society said. The society raised funds to build the existing townhouse in 1939.
As with other land leases, Stanford owns the property below the structures. It grants long-term leases of the land to entities, companies (like Stanford Research Park) or individuals (like professors and their families). But in general, these entities and owners have the right to sell their structures, even if they don’t own the land beneath the buildings, the company noted.
A long association comes to an end
Stanford’s potential acquisition of the house came after the 1989 Loma Prieta earthquake. The university asked the company to retrofit the building to withstand earthquakes, which would cost $600,000. Stanford said that if the company could not afford the improvements, Stanford would be required to use its funds, but it would also expect ownership to transfer to the university if it forked out the money. The company instead raised $4 million in private funding, according to its 2019 court brief.
The company entered into a new ground lease agreement with Stanford in 1976, which they said stated: “Stanford declares its intention to permit the agreement to be renewed indefinitely so long as the (House Corporation) and the House remain active at Stanford.” University.”
“Active” would become the key word in future Sigma Chi issues.
In May 2018, the Sigma Chi chapter was suspended after an investigation into the alleged drugging of seven rowing team members by a non-Stanford affiliate at a house party.
Stanford withdrew academic recognition from the Sigma Chi chapter for at least three years after it found its members violated college party planning and alcohol and controlled substance policies while on probation due to prior violations, according to the university.
The suspension meant that members were not allowed to act as a chapter, recruit members, hold meetings or take other actions as a group, and 550 Lasuen was no longer operated as a venue. capitular, Stanford said in an Aug. 23 statement explaining its decision. not to renew the lease. From the university’s perspective, the suspension has resulted in Sigma Chi no longer being validly engaged as an active group.
“At the time Stanford announced that the lease would not be renewed, there was no Sigma Chi chapter at Stanford and 550 Lasuen was no longer used as a residence primarily for active Sigma Chi members. After the suspension, 550 Lasuen was operated as a coeducational residence outside of Stanford’s housing allocation process, with an operating agreement between Stanford and AOHC governing each academic year, including the 2022-23 academic year,” the statement said. university in its press release of August 23.
Alumni, however, also said the decision to use Sigma Chi’s current suspension as an excuse to no longer lease the property to the organization was a sleight of hand. In 1965 and 1966, the national organization Sigma Chi suspended the Stanford chapter for a year after hiring its first black member (Kenneth Washington). The Stanford chapter has also been suspended by Sigma Chi International, the fraternity’s parent organization.
Stanford did not terminate the lease then, or for the next nine years, when the local voluntarily remained outside the national organization as it struggled to address issues of racism. Stanford supported the chapter’s position at the time.
Plenty of chases and a bit of history
The company sued; the university later filed an unlawful detention complaint in Santa Clara County Superior Court. A judge, however, ruled that the company did not illegally hold the residence, according to 2020 court documents.
The two sides signed a settlement agreement in March 2021, Stanford said, although details are not publicly available on the court’s website.
Stanford says the settlement agreement allows the university to end the lease effective Aug. 31 without compensating the company.
“That settlement agreement, negotiated by the ACSO, provided that the lease would end on August 31, 2023. The agreement allowed the ACSO to seek renewal, but nothing in the agreement required Stanford to authorize such renewal. in this settlement agreement will obligate the landlord to accept any request for an extension, renewal, new lease or any other agreement of any kind,” Stanford said in its statement.
Stanford said the settlement agreement signed by the company also did not require Stanford to provide another home. The agreement states that unless the Ground Lease is extended, the Company agrees that it “will unconditionally vacate the Premises and return it to the Landlord in its entirety, undamaged and free of any Tenant’s personal property, upon on or before the Termination Date,” the university said.
“The settlement agreement, which Alpha Omega Housing Corporation agreed to and signed, expressly provided that the premises would be returned to Stanford on the termination date ‘without any payment due to the tenant from the landlord,’ a spokeswoman said. from Stanford.
The company also agreed not to challenge the termination date or the requirement to vacate before that date “for any reason or in any forum if the ground lease has not been extended in writing. by the owner,” the university said.
The university said it provides housing for 10 fraternities and sororities. Recognized Greek organizations can apply for on-campus accommodation on a four-year cycle.
“Stanford seeks to ensure fairness and justice in the allocation of Greek housing, so that all Greek organizations can apply for the chance to be housed. The 550 Lasuen House is Stanford’s only supervised undergraduate residence by a non-academic entity. Stanford currently has 24 recognized Greek organizations on campus, many of which are interested in housing. The process that Stanford has developed in recent years for the allocation of Greek housing aims to improve equity and fairness, allowing other deserving fraternities and sororities to apply for the opportunity to be housed on campus,” the university said.
The undergraduate housing system is much larger, more complex and more diverse than it was when Sigma Chi originally occupied the 550 Lasuen house, Stanford said.
“Serving the needs and interests of our students today requires flexibility in the use and allocation of physical facilities on campus. A permanent lease with a non-academic entity limits this flexibility in meeting the needs and interests of our student body,” the university said.
The Sigma Chi chapter could potentially have a chance at having on-campus housing in the future, the university said. The chapter is expected to regain its status in November and would be reinstated at Stanford. Sigma Chi might apply for on-campus housing, but it’s not guaranteed.
There was another factor that could have weighed in on Stanford’s decision, the company claims.
In early August 2023, the society requested that the Stanford Sigma Chi House be added to the United States National Register of Historic Places for its role in the civil rights movement and contributions to the fight for racial equity.
The California Historic Resources Commission voted 5 to 0 on August 4, over Stanford’s opposition, to forward the bid to the federal government. Three weeks later, the outgoing provost, Persis Drell, informed the company that the ground lease would not be renewed, they said.
Until August 3, only the Stanford barn, built by university founders Leland and Jane Stanford, and the university’s president’s house, built by and for former US president Herbert Hoover, had been proposed. for registration in the national register, according to the company.
Stanford acknowledged that the fraternity’s contribution to the civil rights movement was significant, but did not believe it deserved to designate the house as historic.