976 price

[Steve Gordon]

The "finding another member" option would likely have to be the
responsibility of the member who is leaving or else we probably would not be
able to use the new member's joining fee directly toward the old member's
refund.  I would not want to be responsible for finding a new member to
replace me if I wished to leave.

I think we have established that we do not have the ability to borrow money
without a personal guarantee.

That leaves the special assessment.  Personally I don't like surprise fees,
especially if they are accompanied by an increase in regular dues.  I
wouldn't feel comfortable knowing that I could be responsible for a special
assessment fee and a monthly fee increase at any time if any member decides
to leave.

Selling the plane and shutting down would be extremely unfortunate.
However, it could be a real possibility under the right circumstances.  It
only takes a few members leaving in a relatively short period of time to set
us up for this.  I don't like being that vulnerable.

-Steve 

-----Original Message-----
From: eefc-core-bounces at workingcode.com
[mailto:eefc-core-bounces at workingcode.com] On Behalf Of James Carlson
Sent: Wednesday, April 15, 2009 12:55 PM
To: Eagle East Flying Club Core Team
Subject: RE: 976 price

Steve Gordon writes:
> There seems to be one hole.  If a member leaves and is entitled to some
> refund, where would the refund money come from?

It'd have to come out of the equity we have in the plane.  The ways to
do that would include finding a new member (there should probably be
net 60 terms on that cash-out, so we have a chance to do that),
borrowing against the value of the plane (if that's possible), asking
the remaining members for a special assessment to adjust the balance
(just recompute with the smaller membership numbers; the arithmetic
will work out), and, in the extreme, selling the plane and shutting
down the club.

As an example of how to that "special assessment" (the third option on
the list; should exhaust the first two before getting there), let's
say we started with 10 members at $3300 each (total $33,000), we
assume 180 months to pay, and one leaves after 6 months.

The one member leaving needs $3300*174/180 = $3190.

If we simply assume that the 10th member (who is now leaving) never
joined in the first place, the remaining 9 members would have
initially paid $3666.67 each.  Their current balance (174/180) would
be $3544.44, but it is actually $3190, just like the one member who is
leaving.  This means that each of the 9 must pay in $354.44 to adjust
his balance back to where it should be at this moment in time.

That 9 * $354.44 is the $3190 that goes out to the leaving member.
(I'll personally guarantee the $0.04 rounding error.  ;-})

>  Over time the club may
> build savings, but if a member leaves too soon the club would have
> insufficient funds to pay back the member.  If more than one member
decides
> to leave, that would only exacerbate the cash flow problem.  Such an event
> may leave us with little choice but to make a special one-time assessment
to
> cover the loss of membership.  I would not want to be surprised with a
$500
> - $1,000 fee accompanied by an increase in monthly dues.

The by-laws should probably have a minimum membership, so there's a
maximum amount out of pocket before we end up either dissolving or
finding some other way to finance our flight habit.

-- 
James Carlson         42.703N 71.076W         <carlsonj at workingcode.com>
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