VIII. Financial Regulations

§1. Fiscal Year.

The fiscal year of the Corporation shall be the calendar year.

§2. Assessments.

The corporation shall not have the authority to assess its members, but this shall not preclude provisions in leases or contracts with members relating to payments to the Corporation for the operation and business of the Corporation.

§3. Disposition of Savings.

If during any fiscal year the income from operations of the Corporation shall exceed its expenses, the net income (frequently called savings or net savings) shall be used first to remedy any deficit from previous operations, and second to create such reserves as the Board of Directors may deem necessary to protect the Corporation. Insofar as is practicable, all such reserves (appropriations of surplus) shall be funded reserves. Any excess then shall be used in such manner as the membership may determine provided that these provisions are subject to the obligation of the Corporation to fulfill its contractual obligations, including compliance with the terms of any financing or conditions of purchase of property of the Corporation.

§4. Bonding.

The treasurer shall be covered by an adequate bond as shall all persons authorized to sign checks or handle Corporation funds and securities amounting to $1,000 or more in any one year, and the cost of such bonds shall be borne by the Corporation.

§5. Auditing.

The books of the Corporation shall be audited by a certified public accountant at least once each fiscal year. One full and complete audit shall be performed at the end of the Corporation's fiscal year and a second audit of special or limited scope may be performed at some other time during the year. The scope of the special audit shall be determined by the Board after consultation with the Audit Committee. A copy of all audit reports shall be available to all members of the Corporation at all reasonable times and under reasonable regulations established by the Board of Directors.

§6. Open Books.

The books of the Corporation and all matters relating to fees, contracts, costs, and other transactions involving the Corporation shall be open to inspection by any governmental body or any institution extending financial assistance to the Corporation, as well as by the Audit Committee elected by the membership and by all the members of the Corporation at all reasonable times and under reasonable regulations established by the Board of Directors.

§7. Control Over Speculation.

The Corporation shall include in its leases or contracts such provisions as are necessary to control and protect against speculation by the members on the housing and other properties involved.

§8. Purposes for Which Funds of the Corporation May Be Used.

No funds of the Corporation shall be used for any purpose other than expenses incident to taxes, insurance, financing charges, operations, management, maintenance and repairs, necessary additions to and replacements of property, and the repurchase of the equity of withdrawing members; nor shall any obligation or contract be entered into for any other purpose without the prior affirmative approval of the membership given (a) at a meeting of the membership at which a quorum is present at the time the item or items are voted upon, and (b) after full details of the proposed expenditure(s), including the initial and estimated subsequent annual costs to the Corporation and increased monthly charges to each member, shall have been given to each member in writing at least thirty (30) days prior to such membership meeting. Notwithstanding the foregoing, the Board of Directors may use funds up to $2,500 for planning each new transaction, not-to-exceed a total of $15,000 per year and not-to-exceed $2,000 a year for civic and community purposes without prior membership approval.

§9. Loans and Investments.

The Board of Directors shall have the authority to invest the funds of the Corporation, exercising sound judgment and consulting with independent professionals as appropriate. An investment policy and guidelines shall be established and reviewed periodically by the Board. A two thirds vote of the entire Board shall be necessary to change the investment policy. The Board shall ensure that the funds of the Corporation are invested in keeping with the requirements of the investment policy and that the performance of these investments is carefully monitored. The Board shall report to the members annually on the status and performance of all investments. As part of the annual financial audit, the auditor will review investments for compliance with the current investment policy.

§10. Repurchase of Rights of Perpetual Use.

The Board of Directors may authorize disbursements for the repurchase of Rights of Perpetual Use.

§11. Expenditure of Funds and Contracts.

1. No expenditure in excess of $15,000 shall be made, nor shall any obligation for the expenditure of more than said amount be incurred, except in pursuance of a motion adopted by the Board of Directors. All motions authorizing said expenditures of money or the incurring of an obligation for said expenditures of money shall state specifically the amounts of expenditures authorized and the specific purpose for which authorized. Sums thus authorized shall be applied solely to the specific objects for which they are made and for no others, except pursuant to a motion subsequently adopted by the Board of Directors. No motion authorizing the expenditure of money in excess of $100,000 or the incurring of any obligation for the expenditure of money of more than said amount shall be adopted until the same shall have been approved by the Board of Directors at two separate Board meetings on two different days except in emergencies, in which event the approval of two-thirds of the entire Board shall be necessary for adoption.
2. Prior to the beginning of each fiscal year, the Board of Directors shall, after having considered the budget proposed by the manager, adopt a budget and authorize expenditures to be made in the following fiscal year in accordance with the foregoing paragraph, except that the Board may authorize a contingent fund in such amount as it may deem necessary, without designation as to object, to be used only in extreme emergencies (a) when funds otherwise authorized are not available or sufficient to cover the necessary expenditures, and (b) when the obligation for expenditures must be incurred prior to the time in which a meeting of the Board could be held as provided for in these Bylaws. If at any time a decrease in the Corporation's income or an increase in expenditure would involve an increase of ten percent or more of the members' monthly "Operating Payments" as defined in the members' Mutual Ownership Contracts, no final action shall be taken thereon by the Board until after the members of the Corporation at a membership meeting shall have authorized such increase for a specified amount in the members' monthly "Operating Payments". The Board, on its own motion, may not approve an amount or percentage in excess of that voted by the membership.
3. All expenditures for supplies, materials, equipment, or contractual services (other than as employees of the Corporation) involving more than $5,000 shall be pursuant to written contract. It shall be the policy of the Corporation, insofar as is practicable, to award contracts on the basis of sealed competitive bids on approved standards and specifications, and to the bidder who offers the lowest or best bid, the quality of goods, materials, workmanship, time of delivery or performance, and responsibility of the bidder being considered, provided that all bids may be rejected if rejection thereof would be in the best interest of the Corporation and its members. Awarded contracts may be inspected by members and unsuccessful bidders during the regular office hours of the Corporation.
4. The total aggregate costs of the following multiyear contracts shall not exceed $400,000 at any one time: (i) every outstanding multiyear contract costing more than $40,000 per year, without regard to the total duration of the contract, and (ii) every outstanding multiyear contract costing $40,000 or less per year, if such contract runs for a period of more than five years.
   
   The $400,000 aggregate limit shall not apply to the following contracts:

   • Contracts for which the purpose and amount shall be approved at a membership meeting by a two-thirds vote;
   • Contracts with respect to borrowing money, motgages, and mortgage notes;
   • Contracts relating to insurance with a one-year cancellation clause;
   • Contracts relating to assignments now or hereafter made by members of their Mutual Ownership Contracts; or
   • Contracts relating to matters connected with loans to members.

5. The Board of Directors shall establish the compensation of the general manager and the compensation scale for all employees of the Corporation. Subject to such scale, the general manager shall fix the compensation of each employee on the basis of job proficiency and performance measurements.
6. The Board of Directors shall adopt from time to time such regulations, not inconsistent with these Bylaws, as in its judgment may be needful or useful in the conduct of the business and financial affairs of the Corporation. No check or other instrument authorizing the payment of the funds of the Corporation shall be signed by any person on behalf of the Corporation until after the date, payee, amount thereof, and object for which drawn shall have been entered thereon.

§12. Accounting System, Financial Records and Internal Controls.

The Board of Directors shall direct the general manager to submit to the Board for approval or it may prescribe the principles, standards, and related requirements and procedures, not inconsistent with the members' Mutual Ownership Contracts and these Bylaws (a) for effective internal and external controls over income, expenditures, funds, property, and other assets of the Corporation, (b) for accounting and the keeping of financial and related records to provide full disclosure of the financial transaction, the results of financial transactions, and other financial information necessary in the management and operation of the affairs of the Corporation and necessary or helpful to enable the general manager, the treasurer, the Audit Committee, independent auditors, and the Board of Directors to discharge their respective duties and responsibilities, and to enable the Corporation and its officers and employees to comply with all requirements of law and of contractual or other obligations to financial institutions, creditors, and to the members of the Corporation, with respect to accounts, records, financial statements, reports, taxes, and related matters, and (c) for the budget and statement of estimated income and expenditures for current and future periods of operation.

§13. Financing Sales and Improvements of Homes.

Notwithstanding any other provisions of these Bylaws, the Board of Directors may lend such funds as are available for the purpose of financing improvements or additions to homes covered by, and the sale and resale of, Rights of Perpetual Use either directly or through a subsidiary corporation.