Congregational Meeting – Sunday, April 2nd<

Congregational Meeting
Sunday, April 2nd
10:00 – 11:30 a.m.

CBD members are warmly invited and strongly encouraged to attend this congregational meeting where we will vote on Next 50 Financial Outcomes. All members received a ballot ticket in the letter mailed on March 14th. Bring your ticket to the meeting to receive your ballot.

Read important information about the meeting:

Letter sent to CBD members on March 14th
From Madelyn Isaacs, Recording Secretary, CBD Board of Directors

The President of our congregation has called for a special congregational meeting on April 2, 2017 from 10:00am-11:30am, at which time a vote of the congregation will be held to give guidance to the Board of Directors regarding the options to repay the debt remaining from the Next50 building project. A quorum of 75 members at the meeting is required for the vote.

In his President’s column in the March 2017 Dvar, Bill Beyda reviewed the status of the debt, the series of congregation and committee meetings to identify options, the options identified, and the two main options identified for congregational consideration at this meeting. The text of the Dvar article is below for your review.

At the April 2 meeting, prior to the vote, the congregation will be presented with information regarding operational changes that would be required in each case. As Bill requested, please attend the meeting, voice your concerns, get your questions answered, and ideally, wait to vote until you have the most facts available to you.

At its regular meeting on February 22, 2017, the Board of Directors passed the following resolution for presentation to the congregation at the April 2, 2017 special congregational meeting:

RESOLUTION
RESOLVED, that, in accordance with the Congregation’s Bylaws, section 3.2.1., Congregation Beth David’s Board of Directors requests that the President call a special meeting of the Congregation to take place on or about Sunday, April 2, 2017 at 10:00 a.m., to consider and vote upon the following resolutions:

Congregants are asked to vote for one of the following two alternatives:

Option 1: The members of Congregation Beth David direct the Board of Directors to cause the sale, on or after July 1, 2017, of one or two of the Congregation’s undeveloped residential lots located on Scully Avenue, currently a part of the parking lot, but only if the Congregation does not receive before June 30, 2017 an additional $2.3 million dollars in Next50 designated funds, i.e., over and above what has been pledged or received before February 1, 2017. The members further authorize the Board to build the parking area(s) mandated by the City of Saratoga at a cost not to exceed $750,000. The net revenue from the sale shall be used to pay the debt incurred by the Next50 project, with any surplus to be paid to the Congregation Beth David Endowment Foundation’s fund for building maintenance.

Option 2: The members of Congregation Beth David authorize and grant discretion to the Board of Directors to borrow up to $2.5 million on such terms that the Board determines to be most favorable to the Congregation to refinance the debt incurred for the Next50 project.

CBD members received a ballot ticket in the letter mailed on March 14th. Bring your ticket to the meeting to receive your ballot.


President’s Perspective, by Bill Beyda
Originally printed in March D’var

Our congregation has an important decision coming up on April 2nd regarding our building debt. In the fall we invited all members to join the Next50 Debt Retirement Committee. Sixteen people volunteered to create and review a number of options for the congregation. On January 22nd and 30th we held informational meetings for all congregants to describe the current debt situation, discuss possible solutions, and seek input on additional options. We assigned committee members to research those new options further. In an effort to inform as many congregants as possible, I will provide a summary of the key facts here.

Our building project is complete and we remain $2.76 million in debt. We need to repay $2.46 million by December 2018, and the remaining $300,000 is owed to the endowment. To provide perspective on our debt, it’s about the same amount we spend operating CBD for two years.

We have several possibilities for repaying this debt, fundraising being the obvious first choice. Those who haven’t yet donated, we ask you to contribute. Letters are also being sent to existing donors who have donated but have yet to raise their original contributions to ask if they would reconsider an increase. The board continues to monitor the amount donated, and if/when sufficient funds are raised, we can forgo less palatable options.  If you want your contribution to alter our course of action, please donate by March 15th. If we don’t have $2.46 million additional donations by March 15th, we will request congregational guidance at the April 2nd meeting on which choice to make to cover our debt.

Our legal case continues, though we don’t expect resolution in the next year. We need to develop a plan for retiring our debt without knowing whether, or how much, we will recover. Think of this as potential upside — anything we recover can go into the endowment for future building maintenance and upkeep. It just won’t help in retiring our current debt.

We have two main options to be considered by the congregation: selling part of the parking lot adjacent to the street for residential use (and moving that part of the parking lot to the side of our building) or taking a long-term loan.

Selling these two residential lots is expected to net enough to repay our entire debt, and there may be a bit left over for an endowment. Of course, real estate values and mortgage interest rates change, so it is difficult to predict exactly what we will net several months out. Selling earlier makes it easier to approximate. Selling the next year might allow additional appreciation to occur, but values could also go down. We can’t predict the future so nobody knows for certain when would be the best time to sell.

Alternatively, if we obtain a 15-year loan at 4%, it would cost us roughly $248,237 per year to make these payments, totaling $3,723,561 in principal and interest combined. Since 70% of our $1.4 million in annual expenses are headcount and facilities, the only way to afford a $248,237 annual loan payment would be a major staff reduction, with consequent reductions in service and programming.

Selling the lots or taking out a loan by November of 2018 would allow us to repay our current financing. However, in the interim we are paying roughly $70,000 a year in interest on these loans. So if the congregation chooses to sell the lots, selling them sooner, rather than later, allows us to spend this money on operations and programming rather than interest payments.

If the congregation chooses the loan option, we will consider long term congregant loans, debentures, and traditional bank financing, and would seek to phase in the financing in the most cost effective way for the congregation.

Numerous other ideas were raised by congregants, such as charitable remainder trusts, legacy giving, annuities, etc.  While excellent for building our endowment, they don’t provide cash in time for the required December 2018 loan payout. If you want details on why these options weren’t feasible, please contact Michael Schaffer at treasurer@beth-david.org .

The board is drafting a budget for next year based on both options, and will model the type of operational changes that would be required in each case.  This information will be presented at the April 2nd meeting. Please join us, voice your concerns, and get your questions answered. I request that you wait to fill in your ballot until we call for the vote at the meeting, so you have the most facts available to you. In the end, it’s not my decision to make and it’s not the board’s decision. It’s yours. It’s the congregation’s choice. It’s your building. It’s your community. It’s our congregation’s future. I, and the rest of the board, will follow your lead. Please join us April 2nd  from 10:00 – 11:30am for this important decision.

Absentee ballots are available, contact the synagogue office 408-257-3333. Attendance at the meeting is preferred and quorum is required for the vote.

 

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