Talk:EcoReality land purchase trust
Questions from Shannon:
- Do we have a definition on the wiki of what a "member in good standing" means to identify those EcoReality members who would be eligible to be Trustees? I only see it referenced on Coop_rules/2_Membership and not actually a definition. I suggest we need it defined before it can be approved as a term of reference for the eligibility of a Trustee of this proposed trust fund.
- JWS: Excellent point. Googling around revealed no consistent definition of "good standing," but with general consensus that it means that debts and obligations are up-to-date and there are no outstanding disciplinary actions. The International Brotherhood of Electrical Workers require no more than 60 days arrears in dues payments to be considered "in good standing." From reviewing our time sheet log book, I think we only have two members "in good standing" at the present... :-)
- So yes, we should define this. How about "Financial and labour commitments no more than 60 days in arrears and no outstanding disciplinary action in force," as a straw man to poke holes at? (I'v added a request for formal definition of good standing to the next two meetings.)
- I would like clarity on the following:
- JWS: the intention is that income from trust funds pay The Trusts's legal fees (which will have to be loaned to The Trust until there is income), and to go toward Trustee's time setting up and managing The Trust, plus any incidental expenses incurred.
- What I hear reading this is summarized here (with specific Shannon questions in parentheses):
- income from trust fund is intended to be used four ways:
- pay Trusts' legal fees (seems feasible to me)
- pay Trustee's time setting up and managing the Trust (Is this Jim Pasuta's time and two Co-Op members' time? If so, how does the time of the lawyer Trustee differ from "legal fees"? How much do you propose the "time setting up and managing" is going to amount to in hours and how much pay per hour do you propose is feasible and/or appropriate? Why would this be payable to Trustee's when to date other Co-Op roles and responsibilities have not been reimbursed to members who complete tasks for the Co-Op ? (with one exception to this I'm aware of: the Co-Op agreed Jan could bank hours spent in the role of Land Use Planning Steward to be potentially reimbursed (in form of shares or cash) at some point.)
- JWS: First off, The Trust is not a part of EcoReality Co-op, so any precedent we imagine may exist would not apply. This is primarily set up for the convenience and security of Prospective Members, and I don't think Members should have to donate their time for such things. I think many of us are tired of working for free, but are willing to do so for each other who are "all in the same boat." Now, in order to attract funders, we're considering building a better boat, with much less risk of sinking, and I think the time the Member-Trustees put into putting this together and maintaining it should be compensated at our customary rate of $15/hour.
- pay any incidental expenses incurred (what might these be? Bank account fees for example? Anything else? What amount per $1000 funded would you imagine might be incidental expense?)
- JWS: Incidental expenses might include postage, bank fees, and administration time. Such expenses, by definition (3.2.5), come from the fund's income, not from the principle. If The Trust conservatively puts money in time deposits paying 3%, then up to $30 per $1000 held could be used for any and all expenses, per year.
- pay settlors/beneficiaries (either the principal amount of their funding or ratably, as appropriate) in either cash or Class A shares. (Am I understanding this fully?)
- JWS: If I am understanding your question, yes, the end result is that people will get back no more than the money they put in, in either Class A shares (hopefully!) or cash distribution from terminating The Trust. The word "ratably" means there is no guarantee they will not get back less -- the bank holding the TDs could go under! So if for some reason income didn't meet expenses -- say, the money loaned to The Trust to pay initial legal fees was not covered by income -- then the value of The Trust might be less upon dissolution than the amount put in. But nobody wants to see that happen.
- income from trust fund is intended to be used four ways:
- I suggest that clarifying when the "periodic reports" on conditions of the trust would be given to the Co-Op by Trustee's is useful information to agree upon at this stage.
- JWS: I purposely left it vague. We don't expect this beast to live more than a year. I would not want it to be more often than annually.
- Under section 4, part 1 it is stated "In such a case, beneficiaries will receive EcoReality Co-op Class A investment shares in an amount equal to their total contribution to The Trust. " (My question: Is it possible to ensure that the fees will be paid out of income from the trust's investments only, and will never dig into the principal - especially in the current economic conditions where it seems many funds are accruing negative interest???)
- JWS: I don't think we should make any guarantees. Say the Trustees invest very conservatively, in TDs that are supposed to pay 3%. Now the global recession gets much worse, and the bank goes under. Deposit insurance is only good to $200,000. Who is going to bear the brunt of such losses? EcoReality Co-op? I'm not willing to bear that risk in addition to what I already bear! The Trust is proposed as a way of mitigating risk, not eliminating risk. That said, 3.2.3 says funds are to be managed "in a low-risk manner, as to preserve its capital value," and 3.2.5 says that expenses will be paid from income, rather than from principle.
Shan 03:08, 9 July 2009 (UTC) That is it for now! Thanks for considering my questions everyone.
JWS: Shannon, your questions help to make me wonder, "Why would anyone want to put their money in The Trust? What's in it for them?" Sure, their risk of a heavy loss is mitigated, but why not just keep their money in the bank until the last minute, and they can collect the 3%?
In many budding ecovillages, early funders receive some sort of reward, such as choice of building sites, or reduced site fees, or simplified small business opportunities, or some less tangible benefit. Thanks to your questions, I think that we need to establish some sort of reward for early funders in order to make this work. We need to "lock in" people's financial commitment. How are we prepared to reward such a commitment? (Are we brave enough to extend such rewards to those who have already committed?)
Some perks that could be enticing might be:
- simply the ability to live on-site without paying rent (our bylaws already say that only those who have funded a certain amount have the right to live here)
- or, if not fully vested, the ability to have the principle amount of internal loan payments accrue to Class A Shares,
- or, the ability to run an on-site business.
These three are currently "perks" enjoyed by fully and partially vested members, so it would be creating nothing new to make these perks explicit.
Thanks for your insightful questions, Shannon!
Replace "Plain English Summary" section and revise "Purpose" and "Background" sections.
This trust (The Trust) is established for the sole purpose of assembling funds for the purchase of land for EcoReality Sustainable Land Use and Education Cooperative (EcoReality Co-op) in a way that assures funders, as settlors/beneficiaries of the trust, that they will receive their money back if, by the deadline of October 1, 2010, not enough funds have been raised to complete the land purchase, or if EcoReality Co-op becomes otherwise insolvent before that date.
EcoReality Co-op has completed the purchase of 43 acres with structures on Salt Spring Island. The purchase agreement includes a $900,000 down payment, with an $800,000 principal payment to be paid no later than 1 October 2010, upon delivery of title to the 43 acre parcel. EcoReality Co-op is seeking member-funders to help retire this debt and make EcoReality's ownership of the land free and clear. To protect partial funders from losing their investment if less than the total amount needed is committed before, October 1, 2010, the trust will hold those funds until the entire amount has been raised. Funders will be either: (1) potential owner-residents, those joining EcoReality Co-op and purchasing enough Class A Shares to have the right to build or purchase a dwelling unit on the land, and/or (2) funders wishing to financially support the mission and goals of EcoReality Co-op.
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