Speaking on behalf of the average college student, most of us loath to hear when a guest speaker is coming to talk. Most of us would try to find an excuse to not attend class that day if it were not for the inevitable test questions that will show up on the next exam. Save from Joe Stallard from Sewell Automotive Companies (a company I chose to work for after hearing Mr. Stallard speak), and former CIA member Joe Olsen, I have never enjoyed a guest speaker in class. Our recent guest speakers in FINC 371, Mike Gentry and Dr. Samuel Harrison, are the new exceptions to my previous disdain for guest speakers. Both Mr. Gentry and Dr. Harrison managed to grab my attention, which is not necessarily an easy task.
Both men came to speak to our class about a land development project they began to work on 18 months ago. Dr. Harrison is the owner and developer of the land; Mr. Gentry is Dr. Harrison's real estate attorney on the deal. Most of the two men's presentation detailed the project, specifically many of the legal hoops that need to be jumped through to complete a project.
Dr. Harrison's family inherited the land through a poker match that one of his great grandfather's won. The land is a large plot that is located near Highway 6 and Briarcrest Drive, where the former town of Booneville, Texas was located. Dr. Harrison and his family finally decided to develop the land when several suitors came to him with an offer price he simply could not refuse. Future businesses that will be located on the land is a hotel that is currently being constructed and a mega gas station that is a direct competitor to Aggie owned and operated Buc-ees.
Several steps have been taken in an effort to develop the land for commercial use. The land used to house an oil pipeline that was used for transport into the Houston area. Upon its removal, some oil was spilt. This small oil spill was a concern, as it could cause foundation issues. The two men decided the land that was affected by the oil needed to be replaced with clean soil to remedy the situation. This setback cost $250,000, and precious development time. The project also required a search for historical artifacts on the land. Because the land is located near the historic former town of Booneville, the project would have been stalled further if any historical artifacts from the old town were found on the land. Thankfully for the projects sake, there were no artifacts found on the grounds.
The two men also discussed real estate contracts with us. Typically, a suitor looking to build on land will put money into an escrow account with the developer. This is different from a down payment. The escrow account reserves the land for a purchaser while feasibility tests are being conducted on the land. The purchaser can choose to go through, or not to go through with the contract after all of the testing is completed. The two also told us that it is customary to not go through with the zoning process until you have buyers reserved. By waiting to lock in buyers before deciding what to zone land for, you can open your land up to a wider variety of businesses willing to purchase your land. It also makes the buyer responsible for acquiring zoning rights during feasibility testing. Other things the men discussed with us were Tirz maps, the platting process, the begging and pleading associated with TxDOT, and the trend of moving away from "big box development."
There were several features of this guest lecture that made it particularly interesting to me. I enjoyed how candidly the two men were discussing their real development project. It is rare to hear about real examples in class, aside from case studies. What separated this from most case studies, is that it is not finished. Both Mr. Gentry and Dr. Harrison are still very much in the thick of the development process. I also enjoyed the legal aspect of this lecture. I personally will be attending law school next fall after graduating later this spring. I have not made a decision as to which variety of law I plan on studying, but I know I would like to stay in a field that allows me to utilize my finance degree. This lecture made me realize that I have an interest in real estate, and that a career in real estate law is feasible. I hope that any other guest speakers I hear in this class, or any other class, for the rest of my last semester can clear the high bar Mr. Gentry and Dr. Harrison have personally set for me.
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