Arrears: Soft Boards & Hard Cash Manitoba Spring Education Event April 22, 2017 What is a housing co-op? A corporation legal entity A collection of buildings townhouses, apartments, A collection of people members, children other occupants A community co-operative organization What else is a housing co-op..?
A Housing Co-op is a BUSINESS! The Role of the Board The primary decision maker at a policy level Oversee the business of the cooperative Enforce the rules of the Co-op To regularly review the rules and make recommendation for change to the membership Leadership
Maximizing Revenue Collection of housing charges Collection of bad debt Limit vacancy loss What are Arrears? Unpaid housing charges that are still owed by a member. What is Bad Debt? Unpaid housing charges after someone moves. What is Vacancy Loss? Lost revenue when a unit remains empty
Why are Arrears a Problem? Can affect cash flow Causes regulators to ask questions, require reporting Symptom of of respecting fellow members and the co-op Culture of non-payment encourages others to default Makes extra work for staff & board COSTS EVERYONE MONEY! Who Makes the Rules about Payment? The Co-operative s Board of Directors set policy on when housing charges are paid, late fees, penalties, and procedures for collection. Following through on these rules is delegated to Management Policies must not contradict the Cooperatives Act.
Effective Arrears Policies and By-Laws CRITERIA OF A GOOD RULE Fast Easily implemented Minimal paperwork involved Assumption that people pay on time and in full Has some flexibility Easily understood by everyone NOT COMPLEX Contain both incentives and disincentives reward good behaviour punish bad Arrears Policies Panelists today are: Carolyn Crawford, Westboine Park Housing Co-op Linda Ferguson, Village Canadien Housing Co-op Each panelist will briefly outline the arrears policies at their co-op.
Payment due Demand for payment Received in full on due date? no Response from member yes no yes Payment agreement Termination Plan being followed? no Member in good standing yes Scenarios Break into 3 small groups Each Group will get one Scenario to discuss Workshop Leaders and Panellists will each join a group and report back (Linda #1, Carolyn #2, Blair #3)
Arrears By-Laws & Policies What should be in your bylaw/policy How, when and where members should pay their housing charges Rules about late payment is there a fine? How many? Rules about NSF s? How many? Fines? Bank Charges? Rules about payment agreements What and when notices are sent for lateness, NSF s, Notices of termination/ notices to Appear Rewards for good payment? Payment Agreements Contracts between the member and the Co-op that: Set out the amount owed, how to repay and when, consequences of default Should be for a short time period with reasonable payments Creates monitoring challenges Upon default should act quickly and follow up with termination
Notices to Appear Either board or manager (depending on policy) can trigger a notice to appear before the board. Notice to Appear must be given in accordance with bylaw. Board listens to evidence from: Management history of arrears, account ledger The Household the members story Board can ask questions Termination and Notices to Appear Board discusses the issue and decides without the member Reviews the evidence Makes a decision Termination or a Performance/ Payment Agreement Management informs the member Members may appeal a Termination Must be within the process outlined in the by-laws and the Cooperatives Act.
Outside Resources Know your communities resources Social service agencies Credit counseling agencies Rent banks Wrap Up & Evaluation Please complete the evaluation form What will you take back with you from today to your coop? How will you introduce change?