CIRA Newsletter
February 2013

MayerMeinberg Q&A

Q: Why does our association pay sales tax and income tax?

 

A: The main reason is because the association is not classified as a not-for-profit organization pursuant to the rules of the Internal Revenue Code. For example, charitable organizations, formed under IRC 501(c)(3) are tax exempt; some examples are the Red Cross, Salvation Army, and American Cancer Society. However, there is often confusion, especially in the case of homeowner associations (HOAs). By their nature, HOAs are non-stock corporations incorporated under the not-for-profit corporation law of the State of New York. The bottom line is that this portion of state law does not exempt HOAs from sales and income taxes.

 

Q: How much money should the association put into its capital reserve fund?

 

A: There is no hard and fast rule that applies to all associations. The amount that any association may contribute to its capital reserve fund depends on several factors, which may include some or all of the following: (1) organization's offering plan, (2) association's annual budget, and/or (3) the results of a formal or informal capital reserve study. We do recommend that all associations consider the need to provide for future major repairs and replacements to their common property and also develop a plan for funding those needs.

 

Q: How much money should the association keep available to pay its bills?

 

A: As a rule of thumb, 3 to 6 months of expenses is a good benchmark. Those funds should be kept in readily accessible accounts (e.g. checking, money market accounts, and savings accounts). 
Community in the Spotlight: Capital Projects

Recently, one of our CIRA clients sought to improve the amenities and infrastructure that was provided by its developer, as well as replace funds into its reserve accounts which were depleted somewhat by the need to remediate various construction deficiencies.

 

Prior to making its final decisions regarding replacements, modifications and additions to the common property, the Board implemented the following procedures:

  • Delegated various work to Association committees (i.e., Architectural Review, Finance & Budget, Landscape Beautification and Special Projects)
  • Engaged the services of the Association's management company
  • Enlisted the assistance of homeowners who were architects and engineers
  • Enlisted the assistance of homeowners who were CPAs
  • Interviewed and surveyed local real estate agents
  • Conducted a comprehensive review of the common properties

The survey and interviews with real estate agents, informed the Board about what types of amenities and other features were sought by potential purchasers when they viewed the community. This information was shared with all of the advisory committees, as well as with the Association's property manager.

 

Continue reading 

Multiemployer Pension Plans:
New Financial Disclosure Requirements


Boards of Directors for associations that contribute to a multiemployer pension plan on behalf of their employees should be aware of significant changes to financial statement reporting requirements that resulted from an amendment to Accounting Standards Codification (ASC) section 715-80, Compensation-Retirement Benefits-Multiemployer Plans.

 

The amendment issued in September 2011 by the Financial Accounting Standards Board (FASB) as Accounting Standards Update (ASU) 2011-09 increases the qualitative and quantitative disclosures required by an employer participating in significant multiemployer plans that offer pension and other postretirement benefits. A multiemployer plan results from a collectively bargained employment agreement that includes more than one employer, usually within the same or related industries, and a labor union.

 

Continue reading 

 

 

In The News
"Tools for Board Members"
  
Join us for a presentation given by Woody Goldstein, Senior Manager, hosted by CAI-LI. Topics that will be discussed include budgeting, minutes, independent contractor versus employee, and the one hour board meeting. For more information, please contact Amanda Zyta at
  
May 16, 2013
6:00 - 7:30 PM
Fairfield at St. James
1 Fairfield Drive, St. James
Limits of Board Power  

 

Everybody sometimes disagrees with the decisions of their co-op, condo or  homeowners association board. But what if the board does things that seem to be beyond the pale-perhaps even illegal? Click here to read this article by The Cooperator.
Real Estate Brochure
  
Click here to view our brochure and learn more about the services we offer.
The ABC's of Financial Statements Handout
  
Click here to view our financial reports handout which breaks down key points to remember for each report received. 
  
If you have any questions, issues or comments you would like us to address in the next newsletter, please do not hesitate to contact us.
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Mayer Meinberg
6900 Jericho Turnpike Suite 312 | Syosset, NY 11791 | Phone: 516-921-8900
14 Penn Plaza Suite 1011 | New York, NY 10122 | Phone: 212-631-9500