March 6, 2008 Issue                                       

©2007 The Chestnut Hill Local

Board reviews audit, raises rates
by PETE MAZZACCARO

The much-anticipated final audit report on Chestnut Hill Community Association finances for the fiscal year ending March 2007 was presented by the auditing firm of St. Clair Associates at the association’s board of director’s meeting on Feb. 28.

The report, a subject of much debate during the past two years, was offered as an unqualified audit, meaning that the auditors believed it accurately represented the financial status of the association and the Chestnut Hill Local  (wholly owned by the association) based on available information.

The St. Clair firm’s auditors, Alan Gubernick and Joseph Lepera, said repeatedly, however, that they were bound to revisit their report if new information became available.

The last statement was the subject of some debate at the meeting because the basic financial status of the association has been challenged by several board members who late last year engaged a law firm to request access to all of the association’s and the Local’s financial records.

Several directors involved in that action asked the auditors specifically why $180,000 of Chestnut Hill Community Fund money borrowed by the association was not documented in the audit.

“[That] debt is not reflected in the balance sheet,” said board member Jim Foster, one of the board members involved in the action. “I understand it would be difficult to find $180,000 in debt if no one told you it existed. It needs to be addressed.”

Gubernick said auditors could not find documentation of any loans between the CHCF and the association and, therefore, could not document the debt.

“I can’t put things in a report that I don’t know about,” he said, stressing the need for documentation. “If it’s determined we need to [amend the report], we’ll do it.”

Dina Hitchcock, CHCA vice president of operations, said she thought it unfair to assume the debt in question was used by the association to pay operating expenses.

“We’ve been going round and round about this,” she said. “$60,000 was used to pay program expenses. ... Secondly, as someone who has gone through the general ledger ... there have been quite a few expenses to fund assets.”

Hitchcock said those expenses were largely for maintenance of buildings the fund owned. The CHCA owns 8434 Germantown Ave. and, until one year ago, owned 8431 Germantown Ave.

After discussion of the board members’ action to review the association’s books, one association member, Shaun O’Malley, said he believed the numbers contained in the audit suggested that the association was insolvent. The audit showed the association with a deficit of $39,762 at the end of March 2007 and the Local with earnings of $13,061. The combined figures put the organization at a deficit of $26,701.

“Did you consider that the association might be in a position of bankruptcy?” O’Malley asked.

Gubernick said the auditors considered the question but added that they saw no evidence that the association would be at risk of insolvency in the next year.

For a complete copy of the 2007 CHCA audit report, visit www.chestnuthilllocal.com. A PDF file is available for download.

Rate increases

After several months of considering the question, the board voted to approve two separate proposals that will raise membership fees for the association and the price of the Local some time after June.

The first proposal approved was made by the Local to increase its subscription rate to $28 and its newsstand price to 75 cents, an increase from $20 and 50 cents, respectively.

After some input from board members who thought the rates should be higher, a vote was taken to approve the rates as proposed.

The second proposal to raise association membership from $30 to $50 was made by chair Jane Piotrowski, chair of the Membership Committee. The membership fee would still include a subscription to the Local and increases the Local’s share of the fee from $15 to $20.

After a brief discussion, the membership fee was approved.

(For more on the membership increase, see forum, page 4.)

Other news/action items

Association President Tolis Vardakis proposed to appoint Chestnut Hill resident and businessman Bill McGuckin to the board of trustees of the Chestnut Hill Community Fund. Some board members, however, voiced concerns that (1) a committee process that had been created to find new trustees last year was not followed, and that (2) board members had found out about the proposed appointment only a day before the meeting.

Former president Ron Recko said he was concerned that the resignation of trustee William Butcher was not made public to the board.

The motion to appoint McGuckin was tabled, meaning it could come up for a vote at the next board meeting in March.

Pat Moran, chair of the newly reorganized Traffic Transportation and Parking Committee, presented a mission statement and application of review form to the board for approval.

Moran said that the new committee members had discussed the mission at an organizational meeting. The application, he said, is a way of organizing the committee’s meetings.

Board member Ed Berg gave a report on the findings of an ad hoc committee that was charged with examining the legal issues raised by the Chestnut Hill Community Fund giving money to the association.

Berg said it was clear that the association was not a 501(c)3 and could not, therefore, receive money from the fund for operating expenses. The fund, he said, was only able to give money for charitable purposes, but he added that even nonprofits not designated as 501(c)3 could receive funds for certain projects.

Ron Recko asked if the committee had investigated whether or not the fund could lend money to the CHCA. Berg said the committee had not.

In a final action, the board honored the Holiday House Tour organizers with a citation proposed by board member Stewart Graham. Tour organizer Jane Piotrowski said the tour had made a profit of $24,758, beating a budgeted expectation of $22,000.