§8 FISCAL MANAGEMENT & FINANCES
8.10. Fiscal Year. The fiscal year of the Cooperative shall be a calendar year, except that the first fiscal year of the Cooperative shall begin at the date of incorporation.
8.20. Preparation and Distribution of Financial Statements, Reports, and Copies of Governing Instruments. This section is intended to implement the requirements established by Section 1365 of the California Civil Code. To the extent that Section 1365 is amended or replaced, the provisions of this Section shall be automatically amended and replaced by the new statutory provisions. The Board of Directors shall prepare and distribute to its Owner Members the following financial statements, reports, and copies of the governing instruments as follows:
(A) A balance sheet rendered as of an accounting date that is the last day of the month closest in time to six (6) months from the date of closing of the first sale of a Lease ("Accounting Date") and an operating statement for the period commencing with the date of closing of the first sale and ending on the accounting date. The operating statement shall include a schedule of Assessments received or receivable identified by the Unit number and the name of the Owner Member assessed. Copies of the balance sheet and operating statement shall be distributed to each Owner Member within sixty (60) days after the accounting date;(B) A pro forma operating budget for each fiscal year shall be distributed not less than forty-five (45) days before nor more than sixty (60) days before the beginning of the fiscal year consisting of at least the following:
(1) the estimated revenues and expenses on an accrual basis;
(2) a summary of the Cooperative’s reserves based on the most recent reserves review or study conducted under California Civil Code §1365.5, which shall be printed in bold type and shall include the following.
(i) the current estimated replacement cost, estimated remaining life, and estimated useful life of each major component of the Project that the Cooperative is obligated to maintain (collectively the “Major Components”);
(ii) as of the end of the fiscal year for which the study was prepared: (a) the current estimate of cash reserves necessary to repair, replace, restore or maintain the major components; (b) the current amount of accumulated cash reserves actually set aside to repair, replace, restore or maintain the major components; and (c) the percentage of the amount in (ii)(a) that the amount in (ii)(b) represents;
(iii) a statement as to whether the Board of Directors has determined or anticipates that the levy of one or more Special Assessments will be required to repair, replace or restore any major component or to provide adequate reserves therefore;
(iv) a general statement addressing the procedures used for the calculation and establishment of those reserves to defray the future repair, replacement, or additions to those major components the Cooperative is obligated to maintain; and
(v) a general statement regarding the Owner Members’ right to have copies of the minutes of meetings of the Board and how and when these minutes may be obtained.
Instead of distributing the pro forma operating budget, the Board of Directors may elect to distribute a summary of the budget to all of its Owner Members with a written notice that the budget is available electronically and at the business office of the Cooperative or at another suitable location within the boundaries of the Project and that copies will be provided on request at the expense of the Cooperative. The notice must be in at least 10-point bold type and must appear on the front page of the summary of the budget. Any Member who requests a copy of the budget shall be provided a copy by the Cooperative in person, or by first-class mail at the Cooperative's expense within five (5) days of the date the Cooperative receives such request, if they are unable to access the report electronically.
(C) An annual report consisting of a balance sheet rendered as of the last day of the fiscal year, an operating statement for the fiscal year, and a statement of changes in financial position for the fiscal year. A copy of the annual report shall be distributed to each Owner Member within one hundred twenty (120) days after the close of the fiscal year. If the annual report is not reviewed by an independent accountant, the report shall be accompanied by the certificate of an authorized officer of the Cooperative that the report was prepared from the books and records of the Cooperative without independent audit or review. At least once every five years, The Board of Directors shall have a licensed Certified Public Accountant prepare an audit or review of the Coopersative's books according to generally accepted accounting principles. The audit or review shall be distributed to all Owner Members within thirty (30) days of its competion.
(D) On a quarterly basis, a report containing a current reconciliation (including income and expense) of the Cooperative’s operating accounts and reserve accounts; a reconciliation of the current year’s revenues and expenses to the projected budget for the current year; current account statements prepared by the financial institution where the Cooperative has its operating and reserve accounts.
(E) A statement of the Cooperative’s policies and practices in enforcing its remedies against Owner Members for delinquent Annual or Special Assessments including the recording and foreclosing of liens against a delinquent Member’s Lease and appurtenant Membership. A copy of this statement shall be distributed to each Owner Member that has requested a copy within sixty (60) days prior to the beginning of each fiscal year; and
(F) Copies of the Governing Documents shall be provided to any Member within ten (10) days of the mailing or delivery of a written request. Theese documents may also be made available electronically. The Board may impose a fee to provide these materials not to exceed the Cooperative's reasonable costs in preparing and reproducing the materials.
8.30. Inspection of Cooperative Books and Records. Any Owner Member, or that Member’s duly appointed representative, may have access electronically or, after giving reasonable notice to the secretary or to the appropriate custodian, shall have access to the Cooperative’s membership register, including mailing addresses and telephone numbers, books of account, and minutes from any meeting of the Members, the Board of Directors, or any committee of the Board, in order to inspect and copy such records for any purpose reasonably related to his or her interest as an Owner Member. Access shall be at any reasonable time at the office of the Cooperative or such other place within the Project as the Board prescribes. The Board shall establish rules regarding the notice the Owner Member must give to the custodian of the records to obtain access, the hours and days of the week when the records may be inspected and copied, and the charges imposed by the Cooperative for copying records requested by the Owner Member.
Any member of the Board of the Directors may at any reasonable time inspect, copy or make extracts of any books, records and documents of the Cooperative and inspect the physical properties owned or controlled by the Cooperative.
8.40. Records Kept at the Cooperative. Commencing as soon as reasonably available, but not later than thirty (30) days after the closing and recording of the sale of the first Lease, the following documents shall be maintained at the office of the Cooperative or at such other place within the Project as the Board shall prescribe:
(A) The recorded Map and the Plan and all amendments thereto, and a copy of the Ground Lease;
(B) The Cooperative's Bylaws and filed Articles, and all amendments thereto;
(C) All Cooperative Rules promulgated by the Cooperative, including architectural guidelines;
(D) Any insurance policy procured by the Cooperative and any lease or contract to which the Cooperative is a party;
(E) The Membership register, including mailing addresses and telephone numbers, books of account and any minutes of meetings of the Members, the Board and any committees of the Board; and
(F) Any other instrument which establishes or defines the common, mutual and reciprocal rights and responsibilities of the Members as Members of the Cooperative.8.50. Execution of Cooperative Documents. With the prior authorization of the Board, all notes and contracts, including Leases, shall be executed on behalf of the Cooperative by at least two (2) directors, one (1) of which shall be the president or vice-president.
8.60. Cooperative Equity. Cooperative equity is the excess of taxable, fair market value of the property over the sum of current transfer value of all Membership interests, reduced by outstanding encumbrances. By a vote of the Board of Directors made in accordance with provisions set forth for Major Decisions, the Cooperative equity may be used for the following purposes only:
(A) For the benefit of the Cooperative; or
(B) For the public's benefit. Such distribution may occur in the event of(i) termination and non-renewal of the Ground Lease;(ii) other reversion of possession of the property leased by the Cooperative;
(iii) destruction of the Improvements and a decision not to rebuild; or
(iv) dissolution of the Cooperative as a result of condemnation of all or a portion of the Property.
Under no circumstances may the Cooperative equity be assigned to or become a component of Member equity. Upon dissolution all Cooperative equity shall be disbursed in accordance with Section 9.
8.70. Financial Authority and Responsibilities. Owner Members have the authority to cause the Cooperative to purchase, own and hold real and personal property and to mortgage this property, to rent property, to borrow money, to execute notes and to undertake other obligations as necessary to accomplish the goals of the Cooperative.
8.75. Dedication of Earnings and Assets. The net earnings, properties, and assets of the Cooperative are dedicated to benefit the Cooperative and its public benefit purposes. Any funds accumulated in excess of budgeted reserves will be used to benefit the Cooperative to expand or improve facilities or services or for other purposes consistent with these Bylaws.
8.80. Financial Contributions and Loans. The Cooperative may receive donations and loans to support its mission, to make improvements to the property, and for other purposes which the Owner Members see fit to accept. In the case of loans, a contract will be drawn up specifying the conditions of each loan, including the term of repayment and interest rate (if any).
8.81. Authorization of Debt and Expense. The Board of Directors may authorize individuals to spend money or incur debt on behalf of the Cooperative.
8.82 Non-Liability. No Member or Renter of the Cooperative shall be individually liable for the debts, liabilities, or obligations of the Cooperative except for debts lawfully contracted between the Cooperative and a Resident. Likewise, the Cooperative may not extend credit to, and is not liable for, the individual debts, liabilities, or obligations of residents.
8.83. Records. Current and correct financial records will be kept by the Cooperative’s Treasurer. The Cooperative’s Secretary will take or cause to be taken minutes at all meetings. Any Member may inspect these records and minutes at any time, except those minutes that may be designated by the Board as confidential and sensitive.