'The Worst" of GHI Bylaws Up for Vote Thursday

Two bylaws issues are up for a vote at the (GHI) annual membership meeting Thursday, beginning at 7:30 p.m. in the

One of the suggested bylaws changes addresses contracts, the other—living trusts.

When discussing the contract portion of the bylaws, GHI Treasurer Chuck Hess used the phrase "I think" liberally. Which gets directly to the point of why it is coming before the membership for a vote.

It confuses people, Hess said, explaining that there has been much debate over what it means.

"I know of nobody who thinks this is an easy to understand provision,” Hess said.

Under the current bylaws (see below), if a contract with an outside vendor costs more than $20,000 in one year and its total amounts to more than $200,000, and its duration is more than five years, it is only valid if it passes at a membership meeting by a two-thirds vote.
 
As the bylaws stand now, GHI could enter into a million dollar contract without a membership vote, if the contract was for under one year, according to Hess. However if GHI wanted to enter into a $201,000 contract that lasted for more than five years, it couldn't, according to Hess.
 
If members vote on Thursday to pass the recommended changes (see below) to the bylaws wording, and afterward GHI decided to upgrade housing unit but it could do so without a membership vote, according to Hess. It could move forward, even if, hypothetically, it cost $10 million, according to Hess. But he thinks the contract would have to last for under two years.

"Think" is the magic word. If the replacement reserves, which as of December 2011 amounted to $8,396,339, were not enough to cover an upgrade, GHI might have to take out a loan for the upgrades. In this case, Hess thinks there is a provision somewhere in the bylaws regarding restrictions on mortgages that would be triggered.

"I think rather than know," he said.

For this and other reasons, Hess advocates rewriting the bylaws entirely.

"The bylaws since they were started have been changed, amended, added to, subtracted, so many times that they have lost a coherency in easily understanding of them," he said.

The contract provision that is up for a vote tonight is the worst offender in Hess's view.

As for the suggested changes, Hess said they are not intended to give the GHI Board additional power, the intention is to say that the board can not enter into a contract that covers multiple years that would tie the hands of future boards.

GHI Bylaws Language (Article VIII, Section 11f)

The current bylaws state:

f. No contract entered into by the Corporation for in excess of $20,000 per year and/or duration in excess of five years, subject to total outstanding multi­year contracts in the amount of $200,000 shall be valid or binding upon the Corporation for a period of more than one year from the date thereof  unless said contract shall be approved at a membership meeting by a two-thirds vote. (except contracts with respect to borrowing money, mortgages, mortgage notes, and insurance with the usual one­ year cancellation clause) provided that the provisions of these Bylaws and the time and purpose limitations thereon as to contracts or obligations, shall not apply to consents, contracts, or obligations of the Corporation relating:

1. To assignments now or hereafter made by members of their Mutual Ownership Contracts;

2. To the handling by the Corporation of the servicing of loans made to members; or

3. Otherwise to matters connected with loans to members.

The suggested bylaws changes state:

f.  No contract for more than two years shall be valid or binding upon the Corporation unless said contract shall be approved at a membership meeting by a two-thirds vote. This subsection does not apply to:

1. Assignments now or hereafter made by members of their Mutual Ownership Contracts, or

2. Matters connected with loans to members, or

3. Contracts that may be cancelled, on not more than one year’s notice, or

4. Contracts with respect to borrowing money, mortgages or mortgage notes.