Finance & Legal minutes: 2012-08-13

Minutes:

Minutes of F&L Meeting

8-13-12



Present: Kathy, Mary, Eric, Amy, Adi





1. Finops check-in (taxes, A/R, matters arising)



*Accounts Receivable*:

MONKEY: Amy will ask Becky when she returns if she had a chance to talk
with a unit that has passed the $1000 threshold, putting them in the range
when we place a lien.



Otherwise, things are in good shape.



*Taxes*: Still in progress.



Kathy asked our CPA to clarify on several points. The choice of whether to
file IRS Form 1120 or 1120-H is made every year. We can change this as we
wish. In past years we filed the 1120-H.



He recommends that we file the Form 1120 for 2011 – we’d be filing as a
corporation rather than an association. This will save us at least $1000,
maybe more when depreciation is taken into account. The tax savings will
probably apply to the past years we need to rectify as well since the tax
rate for 1120-H is 30% but the first $50,000 of profits for a business that
files as an 1120 is only 15%. We know our past returns are wrong because
not all of our taxable income was reported.



The only thing we can do to further reduce our tax burden apart from
getting rid of our CH office renters and other items that generate revenue
would be to keep very good track of the expense that are specifically for
the office rentals.



MONKEY: Kathy will ask if we can deduct the expenses associated with the
guest room as well. She will also ask if we can consider the donations
from Family Farms and Zingerman’s as rent and attribute some of the costs
(by day) of providing that space deducted.



At Len’s request, Kathy asked our previous tax preparer, Jan, for the
spreadsheet she used to prepare our 2010 taxes to try to resolve a
discrepancy he has noticed. No reply yet; Kathy will resend the message to
her.



*Rebates for 2011*: We won’t know whether there will be rebates for 2011
until the tax questions are resolved and we know how much we owe. In
addition, 2011 rollover accumulations need to be transferred into their
respective accounts. Kathy gave Len & Susan a spreadsheet with
instructions but they haven’t done the work yet.



2. Garden sprinkler financing



The $2710 bill was paid out of the Reserve. We have $430 in the 2012
budget allocated for the sprinkler system. We should go ahead and pay the
Reserve this amount, leaving a balance of $2280 owed.



Adi proposed to Steering that we spend the $2000 Critical Needs fund on
this so that we don’t have to pay taxes on the interest on a loan from the
Reserve Fund, and use unspent funds from the 2012 operating budget to pay
for the $280 balance. Resolve this at the end of the year. If a “critical
need” arises between now and Dec. 31, we could set up a loan from the
Reserve.



3. 2013 Budget Process


Adi prepared a spreadsheet that shows GOCA operating budget line items by
committee over the past 3 years (2010-proposed 2013). He made some changes
to the proposed 2013 budget based on facts he’s collected over time, such
as the new tax structure in which all income is taxed, and a sprinkler
maintenance item for the Garden. He will highlight these changes in the
document.



MONKEY: Adi will send the spreadsheet to committees. He and Mary will try
to go to a meeting of every committee to go over their budget lines and
provide support in working with the spreadsheet.



Timeline:



August/September: Working budget spreadsheet sent to committees; Adi &
Mary meet with committees.



September business meeting: Overall presentation of budget, with Q&A. If
people have concerns, they should talk to the committees after this meeting.



October meetings: We go through the budget proposal section by section for
approval.



We discussed the status and balances in the rollover funds and will review
these with their respective committees.



We will remind people of the planned increase to their monthly Reserve
contributions so that as we finalize the operating budget, they’ll know
what their total monthly payments will be in 2013.



We talked about Adi’s vision of stabilizing operating budget increases, but
will probably propose to do this in a future year when things are already
fairly stable. For 2013 we will have an unexpected increase because of the
taxes we now know we have to pay.



4. Final check-in re: Late Payment of Association Dues policy - coming
back to comty for decision on 8/20



Mary will present this proposal on 8/20. Becky made the changes we
discussed at the last meeting and sent it to us for review. We discussed
and agreed on some additional small tweaks.



MONKEY: Mary will send this out to the community for advance review on
Thursday.



5. Reserve spending question re: CH Tables


F&L is in agreement that CH should go ahead and buy the tables. But we
need to keep track of over- and underspending of planned Reserve
expenditures. We want to be able to give that information to Paul Conahan
when we do the next review study in 2015.



In addition, F&L needs to keep an eye on the big picture. If committees
are going to go over on their spending, they need to check in with F&L re:
the availability and liquidity of funds. Committees need some
guidelines. Let’s
look at what we’ve done in the past to help inform our policy on Reserve
spending. Let’s move this up on our list of things to do.



We agreed that we want to present an annual report on the Reserve Fund to
the community, showing expenditures and where our balances are in relation
to our plan. Should we do this as part of the operating budget process? No,
because the Reserve is not the same thing as the operating budget and might
cause information overload.





6. Check-in re: ongoing tasks:



· Legally-binding written agreements for CH Loans to households: At
Amy’s request, Aaron has asked Keast about for advice on this

· Skills & Thrills planning: Amy is playing phone tag with Kathryn
Greiner at UMCU. Mary suggested that we have her meet with us for a
planning meeting. Invite Process to that meeting as well. Skills &
Thrills budget: $1800. Amy will ask Jillian for a breakdown so we can see
if there’s money for planning.



Next meeting: August 27
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