Managing the Cooperative’s Finances

Every month, the Board reviews the financial statements from our management company and ensures that we are meeting our obligations, particularly around our mortgage and sticking to our overall budget.

Every fall the management company recommends a budget for the following year to the Board. The Board considers any additional needs and reviews the long term needs of the Cooperative for long term maintenance and capital replacement in finalizing the budget. The Board usually considers an increase of Carrying Charges (rent) about 3-5% per year. This helps maintain our cash reserves and avoids sudden large changes in our carrying charges.

The Cooperative has a blanket mortgage loan that is refinanced periodically. This helps provide longer term financing for replacing capital items like HVAC systems, roof replacements, and other structural and infrastructure needs.

During training applicants will learn more about the financing structure of the Cooperative including budgeting and financial statements.

Owner/Shareholder Equity and Market Value

The equity in the building is represented by the Cooperative Corporation’s shares. Because of the covenants and the mortgages, and a Right of First Refusal held by SART, it is unlikely that the building would be sold on the open market, and so the notion of a market value is academic to the operation of the Cooperative. The maximum resale price of the Cooperative shares is limited by a limited equity formula to a 5% annual increase. Practically speaking, however, the actual transfer price of the Cooperative’s shares is limited by available financing and the income limits imposed on applicants.

Applicant Due Diligence

The foregoing is just an attempt to broadly summarize certain aspects of the Cooperative’s financial structure. A purchaser should, with their attorney, always review the actual documents, available on request from the Cooperative and in some instances on-line in the Suffolk Registry of Deeds. If there is a conflict between the terms of the actual documents and this summary, the terms of the actual documents shall control.