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Unused Land is Reclaimed
How much good can come from a piece of unused land polluted by asbestos, industrial chemicals or leaky fuel tanks? A great deal thanks to a new partnership between UNC Kenan-Flagler and the non-profit Cherokee Property Foundation, which will work to clean up the land, return it to use and raise money for charity in the process.
The Cherokee Property Foundation specializes in accepting donations of environmentally damaged property, often referred to as "brownfields," and returning the sites to productive, tax-producing community assets. It is closely tied to the private equity fund Cherokee Investment Partners, the world's largest firm specializing in the acquisition, remediation and sustainable redevelopment of brownfields.
This partnership is a strong match with UNC Kenan-Flagler's strengths in real estate and sustainable enterprise ventures.
"It's exciting for us to have the resources of Kenan-Flagler to work toward the foundation's goals," said Lauren Stump (BSBA '98), Cherokee Property Foundation director.
Students will gain invaluable, real-world experience structuring complicated real estate deals. They will help the foundation negotiate donations of brownfields, contract to clean up the land and then resell the parcels. Profits will support future deals, with excess proceeds donated to community human service and economic development efforts, among other charitable causes.
"The donated property might be an old gas station, an industrial site, or a former shopping center with a dry cleaner," said Dave Hartzell, North Carolina Real Estate Educational Foundation Professor and director of the Center for Real Estate Development at UNC Kenan-Flagler.
Owners of small brownfield parcels might not know how to clean them up in a cost-effective way, Hartzell explains. And they rightly fear ongoing liability if they sell. So many such properties sit idle across the nation as dangerous, useless eyesores. But the foundation plans to indemnify owners against liability in exchange for the donation.
Donating the property lets owners turn a problem into a powerful community service, Stump added.
"They can have a positive impact on the environment and on the community by reducing blight and returning an asset to productive use - and, over the longer term, provide resources to charitable organizations in the communities we work in," she said.
Kyndel Bennett (MBA '01)--vice president of Cherokee Investment Partners and one of Hartzell's former students-- approached Hartzell with the idea for the practicum, which has up to six MBA students working with the foundation each year.
"Last year was our startup year," Hartzell said. "Hopefully, we'll close on several deals this year. Students get exposure to developers, different markets, due diligence and a good feel for how contaminated and fallow properties can be remediated and brought back into economic use. It's also pretty neat how Cherokee has opened their operations to the students, so they see how a private equity firm puts together deals."
Those who know of a corporation, family or individual that might donate property, please contact Hartzell at david_hartzell@kenan-flagler.unc.edu.
How do angel investors decide which entrepreneurs to trust with millions of their dollars?
Triangle Entrepreneur-Angel Match-Up (TEAM-UP) events let students strap on a mock set of wings and find out firsthand.
The UNC Kenan-Flagler-led events bring together MBA students from UNC, Duke and N.C. State with graduate students in engineering, the sciences, mathematics, public policy and medicine. Two entrepreneurs provide their business plans to each team in advance. On the day of the event, entrepreneurs pitch their enterprises in person.
By the end of the day, each team must decide which of the two operations they would invest in, and why, says Patrick Vernon, associate director of the Center for Entrepreneurial Studies and TEAM-UP's founder.
"The big lessons are: One, you need a team; you don't have all the skills," he says. "Two, the numbers matter and the ideas matter, but it's about meeting the entrepreneurs and deciding whether they can pull it off. And that shows the students they'll eventually need to be able to show someone they're able to pull it off as entrepreneurs."
UNC Kenan-Flagler's award-winning Venture Capital Investment Competition inspired TEAM-UP. Vernon wanted a shorter, cross-university version of the competition that would attract entrepreneurial students from all academic disciplines. He decided it should take place in a single day and include a round of negotiations.
"Once teams pick a business to fund, they sit down for 15 minutes with the entrepreneur and try to hammer through and come to an agreement," Vernon says. As a result, both students and the entrepreneurs get practice structuring business deals.
This academic year's first TEAM-UP is scheduled for Sept. 10 at UNC. It's the third so far, and Vernon hopes to hold three per year, one at each Triangle-area university.
For more information or to register, visit www.team-up.info online.
MAC alum brings passion to his career as U.S. Managing Partner of Corporate Governance at Grant Thornton
It was 2002. Corporate scandal had destroyed Enron. Arthur Andersen, Enron's accounting firm, collapsed under the weight of a criminal prosecution, leaving Trent Gazzaway (MAC '91) without a job - and ready to quit public accounting altogether.
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But two big things happened: The Grant Thornton firm expanded into the Carolinas, acquiring the four Carolinas offices of Arthur Andersen, and President Bush signed the Sarbanes-Oxley Act into law. The first development kept Gazzaway in the profession. The second gave him the opportunity to use some of the unique internal control skills he had developed while at Andersen. In the end he went on to earn such prominence that in June Treasury & Risk Management magazine named him one of the 100 Most Influential People in Finance.
"Gazzaway was ahead of the crowd in understanding the challenges posed by Sarbanes-Oxley and the need to broaden compliance efforts," the magazine proclaimed.
A native of Morehead City, N.C., Gazzaway came to UNC as an undergraduate, where David E. Hoffman, the late UNC Kenan-Flagler accounting professor, inspired him to earn a master's degree and make his career in the field.
"He made accounting exciting and understandable," Gazzaway recalls.
The chance to become Grant Thornton's U.S. managing partner of corporate governance re-energized Gazzaway, who worked at Andersen for 12 years. He had seen first-hand some of the weak internal controls and questionable financial reporting that lead to financial statement restatements at many large corporations, even before Enron and Andersen's demise.
"I think a lot of people felt like the auditors had the primary responsibility for getting the financial statements right," he says. "But the auditors are responsible for making sure the company gets the financial statements right. The best audit process in the world cannot compensate for a poor financial reporting process. What's more, it is nearly always better, cheaper and easier to prevent a problem than to fix a problem after it's occurred."
In short, Gazzaway saw before many that good financial controls are no mere technicality.
"I've seen the harm that's wrought not just on shareholders but on employees who want to work for companies they believe in," he said. "I developed a passion to help companies make sure they do have good controls in place related first to financial reporting and then to go beyond financial reporting, to make sure they have good corporate governance procedures in place."
Sarbanes-Oxley requires senior management to take public responsibility for internal financial controls and to certify their companies' financial results. While acknowledging that there are still efficiencies to be gained, Gazzaway believes that the new reporting requirements have improved the transparency of U.S. corporations - and top executives' understanding of the numbers that underpin their businesses.
He tells Grant Thornton's public clients that though they have no choice but to follow Sarbanes-Oxley, with the right approach and attitude it can be good for them.
"I tell them there are mechanics of the discipline, or, what they need to do. And there is the heart of the discipline, or, why do they need to do it," he says. "When you have a greater appreciation for the 'why' then the 'how' becomes self-evident. My job is to help companies understand the whys and the hows of good corporate governance."
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