Finance & Legal minutes: 2004-03-01

Minutes:

F&L meeting, March 1st, 2004
=============================

Attendance: Elph, Becky, Adi, Sarah, Dave G, Kathy B., Willie, Kelly, Dale, Patti, Jim G, Judith.

Guest presenters:

* Hear from Elph re: keeping accounts at Sunrise vs. Republic
----------------------------------------------------------------

Elph talks about a background with credit unions. He sits on the board, sets values, direction, and vision, not accounting. He joined the board about 4 years ago. Their integrity is how they relate to people around them. He has had an incredible experience. By people, for people to allow people to collect money and save together.

The banking industry suffered during the depression, whereas credit unions did not. In fact, many were started. Credit unions have members, banks have share-holders. Credit Unions are a co-op. They're service-based, and they offer all the same products. Their fees are much lower, since they're not meant to pay others. 1 out of every 3 people in the US belong to one.

Rates: tend to be competitive to banks, CUs exceed banks on loans, CDs, etc.

Who is Republic, third largest bank in Michigan. Top priority is to increase shareholder value... this comes from the fees charged to the customers.

Convenience: Sunrise is out of state, Republic is across from Busch's. They both have ATMs, phones, and offices. Republic has a website, and Sunrise is working on that, probably by July. CUs are slower growing, but in last few years, their convenience has surpassed banks since they've now got newer systems. The CU on the corner is part of the same CU network, and they don't charge fees.

When they create their budgets, the money they have to deal with comes from the members. Financial institutions make money on loans, and pay money on deposits, generally the spread is about 4%, though CUs spreads are lower.

As a check depositor, Elph would prefer sending his checks in the mail as opposed to standing in line during his working hours. An association probably shouldn't deal with cash, but if really needed, the ATM could faclitate this. You can't do deposits across state lines (i.e. in the ATM).

Sunrise is rooted in cooperative values.

What is the big advantage of using Sunrise over a local credit unions? E - high level of personal service. Elph had some documents lying around, faxed them in and this morning, they took care of changing check signers.

They started taking Elph's in-house transfers over email. When we changed over from the club to the association, they called us when we were improperly billed by the insurance company.

Sarah has talked with Rich at Republic. One of the requirements is that we have an account at Republic. He said that we have a small loan, and that just having an acount at the bank is a good thing. Financial institutions don't make money off of checking accounts, they try to get 3 products into everyone's hands.

Republic would like to see an automatic funds transfer to pay for the monthly loan. They're working with co-housing communities to collect a pool of money in order to be able to loan out money to other co-housing communities.

Sunrise is intended for intentional communities. Elph compares Huron Valley as a comparison. He said that the teller couldn't tell him any information about their credit union. Judith claims they lose money. Elph has never had any checks lost.

Elph may not always be our treasurer. How will they know our future treasurers. People have approached him and thanked him for introducing them. Becky has had a very nice time doing business with them as well. She also has a local account, just because she feels that she needs it. Out of state bank checks don't have any problems being cashed locally since the account holders' name is on the check.

There is a $5 minimum balance per member-share. Dave G feels that Republic will most likely be bought out in the near future.

We need to have a checking & a savings account. We currently have a $250 balance, and we'll need a $2500 balance for the other account with Republic.

We probably shouldn't use that as the meal account, because we don't have that much money to use in that regard. We'll want to find out what the absolute minimum balance is, and just stick with that at Republic.

Dave suggests we throw everything at Sunrise aside from minimum accounts necessary, perhaps LTCRF. We'll be sucking money out of Republic from interest, so perhaps we should put more of our interest-bearing accounts with them.

MONKEY: Elph will call Rich at Republic, and will find out what our absolute minimum balances should be.


* Hear from ad-hoc budget committee rep - What's up? How are things going? - Becky
----------------------------------------------------------------
They are dying a slow, painful death. This formed with the original goal of developing the operating budget for the first 6 months. We kept hearing from the community that we cut too many items from the budget, and it has been suggested that they look into taking from the construction contingency.

Some things were left off, such as childcare. There were things we didn't know we needed when we did the original contingency allocation such as gutters & lights. They had talked about cutting contingency line-items in order to better fund the operating budget, and re-create the operating contingency.

A new proposal might be to add a new package to the construction contingency. If we do this, it will mean that we will not fund the workshop. Does this mean that the budget committee has completed it's job, or do they need to keep working in order to fund the workshop, and everything else on the list?

We've made a lot of cuts to a lot of important things. We would be making further cuts just to fund the workshop.

Sarah feels that this would be working backwards. Perhaps now wouldn't be the best time to do a workshop, but later in the future (3-5 years) when we have a neighboring community that we could work with, we might be able to pull it off better.

Trees take a long time to grow, however a workshop can be assembled in a day. There are also a *lot* of liability issues that we'll need to examine before we even step into the workshop. TS may not come to pass, we should probably pass on this for a while.

F&L doesn't need to make a decision here, but is responsible for overseeing the budget committee. Dave is volunteering to go up and present with Becky.

We're having the 6-month review of the budget in the near future.

There was a proposal at the parent's meeting, that we take care of childcare ourselves instead of paying for it. However, there weren't many people who were interested in doing work for this. Adi reports that those work hours have been slated for.

Perhaps Becky can cut this out of the proposal.

We want to support parents being at meeting and not applicable to construction contingency.

#!#

We could just fund the gutters and extra lighting. She would like to know if they should add another $1k for operating contingency.

Is this sustainable? Will we need to do this again in the future? In general, starting up fees will be more expensive than running costs over time.

The club does have some extra money... it has been transferred over. Dale is not aware of any line item for childcare.

The 6 month review will be happening in April. Do we need to do this before then? The last few units haven't been sold, and so we can't put our grubby fingers on the cash. Buildings will want to install gutters sometime soon. They'd like to be able to spend the money on them, but we need to know where the money will come from.

Dale proposes that Becky bring the 2 item item, but no $1k transfer from the construction contingency.

Sarah would like to look into using some construction contingency fund to help cushion our operating budget. It is brought up that LTCRF and other things pad the cash-flow, and make our monthly expenses easier to hit.

Becky would like ASAP what the estimate for adding the lights. The buildings cmty is looking into the gutters cost.


Book-keeper's report, and late-payments:
------------------------------------------
Kathy is reporting that there are a few households that are over $900 in debt, and has not heard from them. Dale said that he had contacted them, and they claimed that they could come up to date, and that there is no hardship case here.

Perhaps Kathy should confirm that we didn't miss their check. Who is appropriate to contact these households? Is it the caring committee?

We shouldn't treat these households as a hardship until they let someone know.

Perhaps the book-keeper should contact households that have missed a payment, and notify them that they'll get the late fee with a letter appended to the next statment.

At the two month time, they should get a visit from 2 people in the community who they can connect with, and find out if they're just late, or having a hardship.

This is our interim late payment policy. These three households have been contacted, so we decide that we should move on to the next step.

MONKEY: Dale volunteered to be one of those people. Judith will join Dale to visit these households.

Adi is also a possibility.


How & when to report financial status to the community:
---------------------------------------------------------

- how are we doing wrt to our budget?
- has not yet been entered in to quickbooks, but should be easy to do.
- monthly summarized report at the meetings
- quarterly graphical reports (on the bulletin boards?)
- start with the 6-mo review

- how is our cash flow?
- checking acct balance, which will tell us that there is cash "on-hand", this should be combined with the book-keeper's general knowledge of any pending bills, etc.
- monthly report at the meetings

What is the purpose of reporting this to the community? To reduce the chance of surprises. It's also reassurances that we're making it through the transitions. We want to make sure that people are on top of things, and that bills are being paid, and everyone's competent, etc. There is no reason not to do it, and in fact, it's our obligation.

Perhaps we can print that out in detail every month, and post it on the bulletin board...

Patti is fine doing the monthly report at the meetings, or shipping the numbers off to go-finance.


* Childcare in the NO Money Age - finance is finding $...We are? Anyone
know about this? This is from recent membership minutes
-------------------------------------------------------------
There is potential for this to be handled in-house. If there is some money left over from the club dues, then it should be used for childcare, as many times it wasn't used in the past, even though people paid for it.

If the parents want money, then they should write up a proposal to add childcare to the operating budget (anyone can propose & change anything at any time).

Either this should be proposed right now, or it should be added to the 6-mo review process. Membership was aked until the parent's meeting was over, right now the ball is in the parent's court, and the type of childcare was highly debated.

The parents need to tell us if we should ask for money for this or not. As a reminder, there are people who have signed up for doing this in deference for having some childcare at the meetings.

Membership & parents need to decide where to go with this. Money can be found for this, but it's not necessarily allocated.


Open Books Policy:
---------------------------
In this community, how do I know that we're on-budget, or where is the money going? Is that distinct from looking at accounts-receivable, and other houshold's special arrangements.

Perhaps we should keep them separate. Would the book-keeper have office hours? The books are totally open, aside from accounts-receivable membership details. If it's specific to a member, it should be left out.

MONKEY: Dale will write up a statement about just how open our books will be, and what is privately held.


Scio Twnshp tax policy:
--------------------------------
Adi talked with Nick about acreage and taxing with each unit, and that CDC should take care of it. Nick said that he would take care of it, though he hasn't gotten back to Adi yet.

Update on the CH loan:
--------------------------
Sarah dropped off copy of the materials last friday, and is hoping that we can wrapping things up this friday.

LTCRF calculations is stalled:
--------------------------------
Buildings is swamped with other stuff, and isn't being pressed hard enough to make this a priority


Next meeting, will be on the 21st in Sarah's basement at 4pm. Patti will convene
-------------------------------------
Dave G will talk about discretionary
More fleshed-out Late fee policy





For discussion:

* Go over project budget report to community
* Fine tune amount of time assigned tasks should take per work
committee request - committee discussion
* Who should be the GO treasurer? - committee discussion
* Open books - committee discussion
- who can look, under what circumstances, etc. etc.
- privacy policy for bookkeepers
* How should we report on finances to the community? Frequency?
Content? Medium ? Committee discussion
* 6-month review - info about on-line survey - Adi / committee
discussion

In progress check-in:
* Update on bookkeeper and the check writer positions - have they been
filled? Patti Cardia is ready & willing
* Update on special projects funding process - Dave G.
* Update on workers comp/ truck insurance - Kelly
* Update on Scio property tax issues - Adi
* Update on check logging transition to Judith, including relocation of
drop box - Judith/Dale
* Update on Common House loan - survey status; did Rich get a copy of
the C of O? Dale/Sarah
* Update on Hardship proposal - Jim
* Update on master deed conflict - Dale
* Update on LTCRF progress - Sarah


Cooler check-in
-----------------------
1. Review/audit CDC books
2. Review/audit our books
3. LTCRF investing policy
4. When we get a financial consultant, ask them about "partitioning"
bank accounts, for budgeting purposes.
5. Revisit insurance boundary information when we have a common house
6. Billing CDC for units for which they collect rent
7. Other misc budget/financial policies (see 11/3/03 agenda)
8. Secure location for financial records (filing cabinet?)