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Minutes of TUUC Congregational Meeting
August 14, 2011
Moderator Dick Sass called the meeting to order at 12 noon. The meeting began with opening words by Rev. Clare Petersberger.
Dick confirmed a quorum was present.
President Melissa Reuland opened the meeting with a review of the timeline involved with the downstairs renovations. TUUC received inquiries from several schools about renting the downstairs space. After the Board approved renting the space to the Auburn School, we consulted with the Baltimore County Planning Board. To avoid having to install a sprinkler system, the building is in essence considered two spaces: the downstairs level for education and the upper level for assembly. In June drawings were submitted to the county and we started to get estimates for required downstairs renovations. At the June congregational meeting, the congregation approved a budget that included $48,000 in rental income from the Auburn School, as well as six additional hours for the Church Administrator to administer the rental. In early July we received the final estimates for the work required in order to get permits to rent to the school, which were approximately $108,000. The required changes include disability-accessible bathrooms, which coincides with TUUC's strategic plan to improve accessibility for the building. At that time the Board sent out the notice for the congregational meeting.
The following motion was made by Melissa, seconded by Aynsley Hammel:
Motion #1: To improve our accessibility, meet fire safety standards, rent to an educational institution, and pay off our first mortgage, TUUC has the authority to borrow up to $150.000.
Discussion.
A question was asked as to what a "long term rental" meant. Melissa responded that under TUUC's policies and procedures a long-term rental was anything other than a sporadic or short (e.g., 2-week) rental, and it requires Board approval, as there may be ramifications such as the effect on property tax exemptions. The lease with Auburn School provides that if TUUC has to pay property taxes due to the rental, the school will pay for those taxes. The current term of the lease is two years.
In response to a question as to how many students are enrolled, Melissa responded the school currently had 7 students, and anticipates additional students now that it is sure of its location.
Melissa explained that the Board was seeking authority for up to $150,000 to cover the construction estimates of $108,000, the pay-off of the current mortgage ($25,500), plus the possibility of unanticipated/unavoidable additional expenditures.
In response to questions regarding additional costs to TUUC from the lease, Melissa indicated that the school will be hiring its own custodial staff, and will pay us for use of our copiers. A question was raised about snow removal, and that the Montessori school used to pay a share of the plowing cost.
A question was asked about whether we could borrow funds from the Endowment Fund. Paul Konka responded that the endowment is a long-term enterprise, and that over any 30-year period, the stock market has averaged between 8 - 11%. If the Endowment loaned funds to the church at 4.5%, it would be in essence losing money for TUUC, because it is giving up the virtual certainty (over the long term) of obtaining 8-11% for the church and instead getting only 4.5%.
Sue Royer asked about options for commercial loans. Marilyn Maze responded that she has been calling banks. The bank that holds our current mortgage will no longer lend to churches. Our regular commercial bank is willing to offer a loan between 5.75 - 6.75%, but has not yet committed to a specific rate. A private lender (not a church member) has offered to lend the church $130,000 at 8.5% over 8 years. Marilyn is continuing to call other banks.
Our current mortgage annual payment is $13,500 at 6.25% ($25,500 remaining) and will be paid off in June 2013 unless we pay if off earlier.
The question was called, and a vote was taken. Motion #1 carried by a substantial margin on a showing of hands, with 2 abstentions and no negative votes.
The following motion was made by Marilyn Maze, and seconded by several members.
Motion #2: TUUC has the authority to borrow $150,000 from members at a 4.5% interest rate over eight years. Portions of the total will be loaned by qualified members in increments of $10,000.
(“Qualified members” must have been members for at least two years who have paid their dues. They must indicate interest in making a loan by Sun., Aug. 21, 2011. The loans must be paid in full to TUUC by Wed., Aug. 24, 2011.)
Discussion.
Marilyn explained that the 4.5% interest rate was halfway between Treasury rates of 2.5% and the commercial loan rate of 6.5%. She is continuing to pursue commercial loan options. She stated that we are not begging members to loan us the funds. If we don't get enough members to loan the entire amount, we will get some or all of the funds from a bank. A loan from the members would avoid paying points or loan origination fees.
In response to a question on interest rates, Marilyn indicated interest would be accrued monthly, and checks would be sent to the Lender(s) quarterly for three times the monthly amount.
In response to a question as to whether a loan from a member to the church would be different from a loan to a friend, Marilyn explained that in the event of default, the assets of the church could be attached.
A comment was made that TUUC should issue 1099-INTs to members who lend funds to the church to reflect their annual interest earnings from such loans. Questions were raised about what happens if a Lender dies before the loan has been repaid. Marilyn indicated that the Board would assist in finding another member to buy out the remaining portion of the loan so that the estate could be paid. The possibility was also raised that a Lender might, upon death, donate the remaining balance of the loan to the church, as happened in the past when TUUC borrowed funds from members. The loan agreement will address these options.
The question was called, and that motion passed with 2 abstentions.
Motion #2 was then voted upon, and passed by a substantial show of hands, with 2 nays and 3 abstentions.
The business of the meeting having been concluded, the meeting was adjourned at 1 pm.
Respectfully submitted,
Carel Hedlund