- Associated Press - Monday, December 7, 2015

SIOUX FALLS, S.D. (AP) - The first Craig Lloyd development was built with scrap lumber more than 60 years ago in the dirt of western North Dakota.

The contractor was 4 or 5 years old.

“We’d go around to wherever we could find used lumber, and we’d build huts,” said Lloyd, whose family was in the lumber business.

His grandfather became his first “investor,” sending him $2 through Western Union and a note: “Craig, here’s a little bit of equity for your latest development project.”

From those roots would grow a major player in Sioux Falls development. Lloyd Cos. has a portfolio that includes 1.6 million square feet of commercial space and more than 4,000 apartments.

At age 67, Lloyd now finds himself looking to a new generation.

He plans to retire at the end of the year, and while he will remain chairman of the board, his nephew, Chris Thorkelson, will become CEO.

Lloyd picked the date of his departure seven years ago. Since then, the family and the company carefully have coordinated a transition.

“It was some of the most difficult stuff we’ve done over the last 10 years,” Thorkelson told the Argus Leader (http://argusne.ws/1IGZVW6 ). “There were a lot of tough discussions that had to take place.”

But Lloyd’s commitment was firm, and strengthened in 2013 by the passing of his friend, fellow developer Don Dunham Jr.

“This really does happen,” he remembers telling his staff. “You will wake up some morning, and I won’t be here.”

The next few weeks, however, will be a celebration of a legendary career.

Lloyd Cos. has enjoyed record years recently and has grown to 170 employees, with projects in 13 South Dakota communities and in Iowa, Minnesota and North Dakota.

“I have such a strong admiration for them,” said Evan Nolte, president of the Sioux Falls Area Chamber of Commerce and a longtime family friend. “It’s a success story, but it’s beyond that. They are one of the reasons why the community, the city and the Sioux Falls area has developed the way it is.”

A young Craig Lloyd didn’t stay in one place long.

The time in Tioga, North Dakota - the center of a 1950s oil boom - might have been memorable, but it didn’t last long. Born in Mankato, Minnesota, Lloyd and his family moved 22 times in 23 years.

His father, Dick, would build a house, move the family in, and then someone would make an offer for it.

“I’d come home, and Mom would be packing and say, ‘We’re moving again.’ And we’d move into the next house,” Lloyd said. “I was constantly making new friends.”

He spent time in Iowa and then Florida, graduating from high school in Coral Gables.

School wasn’t easy. Diagnosed with dyslexia and severely impaired vision, he learned to read and write with the help of his mother. He was tutored all through school. One day, a high school counselor gave him a message that would become a motivation.

“This counselor told me, ‘Lloyd, I don’t know if you’ll ever make it through high school. And if you do, I don’t know if you’ll ever make it through college. And if you never make it out of college, you’ll never amount to anything.’”

The words would echo in his mind a few years later as he struggled through college in the Miami area. His father stopped paying his tuition, and Lloyd, who had always enjoyed spending time with cousins in Minnesota, returned to his home state.

About that time, he met his future wife, Pat, who turned him down several times before agreeing to have dinner. They married in 1971.

He went to college for five hours a day and then worked in his uncle’s lumberyard. He graduated in 1972.

“My wife told me that’s probably the best thing that counselor ever did, knowing my personality. Most people understand you can tell me no, but it’s not a good thing to tell me because I don’t listen very well.”

The young couple moved to Sioux Falls in 1972 to manage a low-income housing project on the west side for Lloyd’s uncle.

“I was cleaning halls, mowing lawns, shoveling snow, and Pat took care of the paperwork because in a government project you’ve got a ton of paperwork.”

Lloyd grew impatient to do more, and although he had never built a house, he decided to try it.

“I pounded the nails. I poured the concrete,” he said. “I was shingling when I sold it. A guy came along and bought it.”

He figured out he would make $9,000 on the sale. At the time, his annual income was $8,200.

“So I thought, I’ll go do two more.”

Then, his uncle found out about it. He wasn’t happy, and gave his nephew five minutes to make a decision: Become a partner in the business, or get fired.

“So I decided to become partners,” he said.

They were in business together until the early 1980s.

The recession at that time convinced Lloyd to diversify.

“We started building commercial because one thing I learned was I never wanted to do one thing ever again because when it crashes, it’s ugly,” he said.

Lloyd looked to fellow developer Pete Hegg as a mentor in those early years.

“I just basically shared with him how we raise capital, and he’s kind of followed in the same footsteps and has really excelled at it,” Hegg said. “He does a good job raising capital. He seems to have grown the business a great deal using that avenue.”

About the same time, Lloyd met Steve Metli, who became director of the city’s planning and building services department in 1974 and worked with Lloyd Cos. through a multitude of projects.

“I think his initial 20, 25 years were very stressful and strenuous,” Metli said. “Every time the economy went up, he’d go up with it, and every time it went down, he’d go down. So he learned through the school of hard knocks to manage his business with that in mind.”

Preparing for the unexpected has been part of Lloyd Cos.’ transition strategy. The company occasionally holds “fire drills” where key staff meet and go over what they would do if something happened to Lloyd.

“What’s our communications plan, what’s our message,” explained Christie Ernst, the Lloyds’ daughter. “We update this plan every six months to make sure it’s still relevant, to make sure operations don’t fail and our employees are taken care of.”

Ernst took on planning the company’s transition as a full-time job several years ago. She met with her parents weekly, with the family monthly and kept the process moving along.

“It really took some focused energy,” she said. “A lot of entrepreneurs are resistant to having these conversations, and while I’m sure some were hard for Craig, he kept it in front of him that he wanted this to go on for generations, and he had concern for the employees that they have jobs beyond his lifetime.”

The family worked with the Prairie Family Business Association and a team of attorneys and consultants on different aspects of succession planning.

“In the beginning, Craig didn’t understand why we wanted a transition plan,” Pat Lloyd said.

“So one of the little exercises we did was all the management team wrote down what would concern them if something happened to Craig tomorrow. What would they feel they needed help with? I really felt that opened his eyes to get a picture of how he needed to work toward mentoring these people.”

At a family meeting several years ago, the question of who would lead the organization after Lloyd came up.

The Lloyds’ daughters also grew up helping with the business. Their oldest, Liz, was a natural on the phone as a child and acted as a receptionist. Now, she leads a residential real estate team as part of Lloyd Cos.

Ernst and sibling Mary Huber grew up helping mow lawns, paint and pick up trash at properties.

“I think it was a scary thing for my parents to choose a successor,” Ernst said. “It’s like choosing between your children, and I think my dad thought we all would want the job.”

A facilitator asked anyone interested to raise a hand.

“Chris was the only one who raised his hand,” Ernst said. “It was a huge relief.”

Chris Thorkelson, who is the son of Pat Lloyd’s sister, grew up in Minnesota but spent about a month each summer helping the Lloyds in Sioux Falls.

He cleaned apartments, swept floors and brought college friends home one summer to help build a retaining wall at an apartment project. He returned after college in 2003 and worked in framing, concrete construction and finish carpentry, in spite of having a degree in engineering.

“I wanted him to learn the business from framing to concrete work, all the trades, so he understood,” Lloyd said. “Then, he got to build his own house like I did, and he learned a lot. He had some good people skills and good common sense.”

Pat Lloyd describes her nephew as “very kind and thoughtful” and “a deep thinker.” He has similarities and differences to her husband, she said.

“Both of them, I think, really have a bit of a charm with people. I think people are drawn to both of them.”

In recent years, Thorkelson focused on affordable housing, working to understand the options and bring solutions to nonprofits including DakotAbilities, Southeastern Behavioral Health, Sioux Falls Ministry Center, Volunteers of America and Sioux Falls Family YMCA.

“Craig showcased that dreams can become reality,” he said. “You just have to dream. You have to think differently and think creatively and figure out how to overcome adversity.”

Thorkelson has led many divisions of the company and became chief operating officer in 2012.

“I would say he’s ready, and our whole team is,” Lloyd said. “And I’m kind of ready. Because the cool thing about this is hopefully I can live long enough and I’m going to be able to help when they have questions. What I didn’t want to have happen is that the next generation had to be just sitting around waiting for me to die or come to the realization that enough is enough.”

He jokingly calls it a “rewirement” instead of a retirement and said he plans to go part time, as in “40 hours a week.” He also envisions spending more time in the summer in the Lake Okoboji area, more time in the winter in Florida and more time with a family that enjoys scores of traditions, from an annual fishing trip to local fundraisers.

“I hope to stay away, which is going to be a challenge for me, but at least I hope they make mistakes,” he said. “I hope they recover from mistakes. And I hope they take advice, but the unknown is the worst thing you can do to the next generation.”

The next generation of Lloyd Cos. is inheriting a legacy of tackling tough projects and building relationships with everyone from lenders to investors.

It started in 1989, when Lloyd and business partners pioneered commercial development in the area that would become Meadows on the River north of The Empire Mall.

“Everybody thought it would happen overnight. It took us almost 10 years,” he said.

It continued in the 1990s when he bought his first downtown properties, including River Tower Apartments and the historic Van Brunt building. And it expanded in the 2000s, when Lloyd took on the first large-scale east-side retail development, Dawley Farm Village. He also tackled downtown properties, including the Uptown area and the former site of Schoeneman’s Building Materials Center, which became the Hilton Garden Inn Downtown and the office building anchored by CNA Surety.

“He had that building filled up faster than it almost got built,” said Al Schoeneman, who has known the Lloyd family from the lumber business for years. “He’s a mover and a shaker that never lets any project go (without) being looked into. They’re just fabulous builders of the city.”

For decades, Lloyd also worked with multiple nonprofits to secure financing and build affordable housing - projects that often required relationships and creativity to accomplish, Metli said.

“I think he’s probably done more to help people stay off the streets in Sioux Falls than any person I can think of, and that’s a side to Craig Lloyd a lot of people don’t know.”

There are other sides, too. The side that can’t walk by a piece of trash without picking it up - whether he owns the property or not. The side that gets to work at 6 a.m. and walks through the office individually greeting employees. The one who, as he steps down, still calls on his company to do better.

“People say you must have planned doing what you’re doing today,” he said. “Never in my wildest dreams - and I’m a good dreamer - I never would have thought we’d be where we are today or doing the things we do today. And I still don’t think we’re successful. We’ll figure that out in another 10 or 11 years.”

___

Information from: Argus Leader, http://www.argusleader.com

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