Finance & Legal minutes: 2015-03-23

Agenda:

"Small" CH Assessment Proposals
Proposal regarding Bed and Breakfast (B&B) Rentals and Liability
Insurance
Proposal about whether to credit the units purchased after
foreclosure
Accounts Payable
Next steps in editing the "big" CH Assessment proposal
Any news about Reserve Study?
Guidelines for communicating with F&L via e-mail
2014 Taxes

Minutes:

Finance & Legal Meeting Agenda

3-23-15



Present: Becky G., Keith, Debbi, Amy



MONKEYS:



Debbi

--will look on line to see who the Book of Agreements Updater is and will
send them the documents for the proposals that were consensed upon at the
last community meeting

--will send Amy the information needed to send to Keast to place two liens
on arrears

--will check in with the 11 households that still owe on the CH Assessment
to see who is planning to pay off early.

--(or Becky G.) will model a scenario for crediting the two households
purchased after foreclosures combining a credit using savings and paying
the rest going forward with an operating budget line item, including
interest.



Becky G.

--will edit the B&B Insurance proposal based on feedback received at the
3/16/15 community meeting.

--(or Debbi) will model a scenario for crediting the two households
purchased after foreclosures combining a credit using savings and paying
the rest going forward with an operating budget line item, including
interest.





Amy

--will track the idea of inviting our insurance agent Barb Young to the
4/20 community meeting

--will find out from attorney David Keast how much it would cost for him to
draw up special assessment liens.

--will talk to Elph about documenting an agreement about owner
responsibility for their solar panels.





Keith

--will look into getting a lock for the large file cabinet

--Keith and Mary recently walked around the community on a site visit with
Paul Conahan. Keith will talk with Mary to see if she wants to add anything
to the notes and then will share them.

--will contact Paul to find out what the status of the Reserve Study is.
(He responded immediately saying that he'd get a first draft to us within a
week.)



1. "Small" CH Assessment Proposals

Any further steps needed for the two proposals that passed?

--Proposal to allow households to pay off Common House Assessment in
full (or in varying amounts)

--Proposal to Amend the Late Payment of Dues Policy



A request was made from the floor to amend the wording of the Late Payment
policy to clarify when payment is due.



Debbi will look online to see who the Book of Agreements Updater is and
will send them the documents for the proposals that were consensed upon at
the last community meeting.



2. Proposal regarding Bed and Breakfast (B&B) Rentals and Liability
Insurance



Presented for input at 3/16/15 community meeting, coming back to the
4/20/15 community meeting



Becky G. will edit based on feedback. Say in background information that
we're not trying to prevent this activity, but further discussion and
agreement would be needed before it is permissible. Becky will bring this
to the 4/13 F&L meeting for discussion.



--Obtain and share info about landlord/renter insurance (Amy put this on
F&L's to-do list)



--Ask the community if they would like to have Barb Young come to talk
about insurance in general? Ask for 5 minutes at the 4/20 meeting.



3. Proposal about whether to credit the units purchased after
foreclosure



Two households that were acquired in foreclosure sales should not have been
asked to pay monthly installments for the CH Assessment. Although GO is
not legally obliged to repay them, the F&L Committee feels that this it is
morally right to do so. The two households were asked but declined to
donate the funds to GO.



At the 3/16/15 business meeting, the community was in agreement that we
credit the two households. The group directed F&L to come back with a
proposal on how to pay them back. The grand total is about $8600, including
both past amounts paid and the amount going forward to pay off the two
Assessments. It's not an even split; the units were purchased at
different times.



There are at least four ways to pay for this:

i. Fold the amount into the Reserve as part of the 2015 study

ii. Take a prorated amount from GO's various savings accounts

iii. Create a new special assessment

iv. Create an operating budget line item for all or part of the
shortfall



We could combine more than one way, e.g. one way for paying the households
back, another way for the amount that they would have owed going forward.



We analyzed the pros and cons of each approach:



i. Fold this into the Reserve.



Pros: Least financial impact per month per household. Seamless; people
won't see it or notice it.

Cons: We're taking a known shortfall and spreading out over 25 years.
We're making future members pay for this.



ii. Prorated from savings accounts



Pros: We have the money. If we feel we can spare enough from our savings
accounts, we could pay off the debt in full, thereby saving GOCA from
paying interest on a longer-term payoff.

Cons: May delay community projects. Becky would create a proposed
withdrawal plan that would lessen the impact on smaller savings accounts.



Another idea would be to see how much money we have left from 2014 and use
those balances first before prorating them to the savings accounts. But we
don't know how long it will take for Len to do the 2014 taxes. Becky would
rather take money from savings so we can move forward now. The savings
accounts will be replenished with any 2014 year-end surplus funds that may
be forthcoming according to our existing agreement.



iii. Special assessment



Pros: Approximately $232 per household for the full amount. No one would
be happy about taking the hit, but it might be nice to get over our fear of
special assessments. We have developed a pattern of hoarding funds because
of our fear. Many other condos routinely use special assessments.



Cons: We have some households that simply don't have the money right now
and would not be able to pay, so this would not help.



iv. Create an operating budget line item for all or part of the
shortfall



Pros: This would be planned for 2016. This only really works if we
credit the households now using savings. Note that the money we collect
for the reserve only gets transferred quarterly, not monthly.



Cons: It's a lot of money for one year. But we could model the operating
budget payments to be the same as households who are still paying, over
several years. We would pay more interest depending on how long we spread
it out.



How much are we talking about? Estimates: $3100 is back amount owed to
the two households, $5600 is the amount going forward, so $8700 is the
grand total owed.



MONKEY: Amy will ask how much it will cost for Keast to draw up the
special assessment liens and for us to file them. Since there's nothing
in our Bylaws about special assessments, we don't know who will be required
to pay for them.



Becky (or Debbi) will model a scenario in which we combine crediting the
households with savings and paying the rest going forward with an operating
budget line item, including interest.



4. Accounts Payable

-- Document what happened with the CH Office in arrears



Matthew Cooke responded to our communications. He was doing some consulting
work while starting up his own business. A firm he was doing work for said
they would pay for his office, but they reneged. His start-up is now off
the ground. He promised that his first payments would be to GO. He has
never been behind on anything before, etc. It's good news that he is
buying a unit at TS, so he has a good reason not to be a deadbeat. Elph,
Debbi, and Becky discussed this via e-mail and decided to cut him some
slack. He is supposed to make a payment on April 1. He understands that he
must communicate regularly with us or we will take legal action.



We are ready to place the two liens on arrears. Debbi will send Amy the
break-out of what is owed, and then Amy will communicate with Keast.



5. Next steps in editing the "big" CH Assessment proposal, which is
coming forward at the 4/20/16 community meeting



We would like to continue to allow the units who still have CH Assessments
to pay over time.



Because our Bylaws are "silent" regarding special assessments, per attorney
David Keast, we first need to pass a proposal that says the community is
allowed to do special assessments. Debbi got language for this from other
cohousing communities. Let's try to do this one in one meeting on April
20.



Then we write a proposal saying that the households are allowed to pay over
time at a certain rate of interest. Special assessment liens will be
recorded, and the cost of the special assessment liens will be passed on to
the households. The 2010 Reserve study was modeled to earn 3% interest, so
we recommend this amount. We debated whether it should be higher. We're not
interested in having the interest rate so high that it makes it difficult
for people who are already struggling to pay it off. These are not loans,
and they will be secured by special assessment liens.



Right now people pay approximately $36/mo. We would like to continue with
this amount as a minimum, but at 3% interest instead of 8%, so they are
paying it off faster. The households must continue to make a minimum
monthly amount of $36, but they can pay off faster if they choose.



Setting aside the issue with the foreclosed units, this proposal will feel
seamless to the households who still owe on the CH Assessment. The only
things that will be different will be that they will be paying less
interest, and therefor paying down their balances faster, and they can pay
it off all or in part in advance.



Becky G. & Becky H. are still planning to talk to the household with the
short sale to let them know that our attorney confirmed that they still owe
on the assessment.



Debbi will check in with the 11 households who still owe on the CH
Assessment to see who is planning to pay off early.



The group revisited Adi's proposal for how to handle crediting the
foreclosed households. The minute-taker at the community meeting, Patti,
presented Adi's proposal to the community on 3/16/15, and there was no
support for it. F&L is not comfortable taking out a large sum from the
Reserve. There are notes regarding our previous discussions of this topic
in minutes from both January meetings. Given the lack of support, we do
not plan to go forward with this idea.



6. Any news about Reserve Study?



Keith and Mary recently walked around the community on a site visit with
Paul Conahan. Keith will talk with Mary to see if she wants to add
anything to the notes and then will share them.



We talked about the question of saving $ for removing solar panels. Based
on the definition of what belongs in the Reserve, this does not fit. Amy
will talk to Elph about documenting an agreement about this.



Keith will contact Paul to find out what the status of the Reserve Study
is.



7. Guidelines for communicating with F&L via e-mail



We discussed a draft list of guidelines for communicating with F&L via
e-mail.



8. 2014 Taxes



Becky plans to send all the materials to Len next week.



There was no specific line item for Work Skills in the 2014 budget and no
one contacted the bookkeeper to ask for this, so no donation was made to
them in 2014 as was done in 2013. Committees need to specifically ask the
bookkeeper to write checks.



9. Update F&L's to-do list: tabled



10. Next Meetings & Next Steps



The next F&L meeting is April 13.



We reviewed the number of business meetings before June 30, 2015, when the
current CH Assessment agreement expires. We revisited the topic of using
the May alternative meeting for F&L business and decided we should do so.



We have 4 proposals in the works:



--General agreement on special assessments: do this in a single meeting,
Keith will present

--Paying back the foreclosed households: Becky G. or Debbi will prepare,
presenter TBD

-- "Big" proposal: Debbi will write, presenter TBD

-- B&B proposal: Becky will work on this, presenter TBD



Amy will present one of the TBDs.