LMCP_Hall Association

LODGE MANAGEMENT CERTIFICATION PROGRAM

HALL ASSOCIATION MANAGEMENT

INTRODUCTION: Why you’re taking this course

Course outcomes In this course, we will cover lessons on how to: ▪ Understand the basic purpose and structure of a hall association. ▪ Provide insight into the government of a hall association. ▪ Respect the limitations and requirements placed upon halls by the California Masonic Code and state and federal law. ▪ Implement best practices for hiring employees and engaging contractors. ▪ Manage hall rentals ▪ Create plans for critical building maintenance and long-term capital improvements.

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▪ Protect the hall from risk with comprehensive insurance coverage and compliance measures. ▪ Complete federal, state, and Grand Lodge reporting requirements accurately and on time.

This course supports the “strong halls and lodges” priority of the current fraternity plan.

RESOURCES:

2020 Fraternity Plan printable brochure Lodge Health Check “Effective Operating Plan for Hall”

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TABLE OF CONTENTS

CHAPTER 1: PURPOSE AND STRUCTURE What is a hall association? Articles of Incorporation Bylaws

Tax Status Ownership

CHAPTER 2: GOVERNANCE Board of Directors and Officers

Directors – Single Ownership Directors – Multiple Ownership Powers and Responsibilities of Directors Specific Powers Specific Responsibilities Hall Officers Officer Powers and Responsibilities

CHAPTER 3: OPERATING LIMITATIONS Key Real Estate Decisions Alcoholic Beverages Further Limitations on Alcoholic Beverages

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CHAPTER 4: HALL EMPLOYEES AND VENDORS Purpose of Employees and Vendors Vendors Employees Distinguishing Between Employees and Vendors Independent Contractor Test

CHAPTER 5: RENTING THE HALL Rentals Setting Rental Rates Use Agreements Lease Agreements

CHAPTER 6: BUILDING MAINTENANCE, IMPROVEMENTS, AND CAPITAL PLANNING Maintenance Plan Professional Maintenance Efficiency Options Capital Plan Building Assessment Major Equipment Replacement Capital Budget

Professional Contractors Requirement Approvals Capital Improvement Reports

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CHAPTER 7: INSURANCE Comprehensive Insurance Coverage Property Insurance General Liability Insurance Directors’ and Officers’ Liability Insurance Workers Compensation Tenant Users Liability Insurance Policy Other Ways to Manage Risk

CHAPTER 8: FINANCIAL, TAX, AND INFORMATION REPORTING Reporting and Support IRS Form 990 California Form 199 SI-100 Secretary of State Statement of Information IRS Form 1099 and 1096 Form 941 Forms DE9/DE9C and DE88 Form 940 Form W-2 and W-3

Grand Lodge Form 200 Annual Financial Report Semi-Annual Financial Report

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CHAPTER 1 Purpose and structure

What is a hall association? A hall association is a corporation, validly formed under California law. Its purpose is to hold title to lodge real estate, manage the property, collect income (rents) therefrom, and turn over all of the income derived from the property, less expenses, to the hall association’s owner. This limited purpose follows

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federal tax laws for a hall association. A hall association may not conduct business that is not in furtherance of these purposes. Every lodge that purchases, erects, or maintains a building for lodge use must have a hall association that holds title to the lodge building.

Corporations are required to have articles of incorporation, which are filed with the California secretary of state, and bylaws.

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Articles of Incorporation

Corporations are created by filing articles of incorporation with the secretary of state. Articles typically are brief and set out the legal name of the corporation and a general description of the corporation’s purpose. The Masonic Properties Committee has standard articles of incorporation to be used in the formation of any new hall association.

RESOURCE: Grand Lodge Real Estate Team

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Bylaws

Each corporation in California must adopt bylaws, which are essentially the corporation’s rulebook. Bylaws set the owners of the corporation, which are named “members” for non-profit corporations. Bylaws establish a board of directors and set the number of directors that will constitute the board, how directors are appointed, what their powers are, and how the board operates. Bylaws describe the corporation’s required officers and their duties.

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All hall associations are required to adopt one of the following two standard forms of bylaws, depending upon whether they have one or more than one owner. The Bylaws should be stored in a designated location and a copy should be provided to the Grand Secretary. Before a hall association amends its bylaws, it should consult the Masonic Properties Committee. All amendments should be filed with the Grand Secretary.

RESOURCES:

Uniform Code of By-Laws for Hall Associations (Single Ownership) Uniform Code of By-Laws for Hall Associations (Multiple Ownership)

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Tax Status

Hall associations are organized as nonprofit corporations under the federal Internal Revenue Code. Section 501(c)(2) of the Internal Revenue Code specifically exempts from federal income tax corporations that are formed for the “exclusive purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, to an organization which is itself exempt.” Sound familiar?

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To maintain these federal and state income tax exemptions, halls must file tax returns annually. One of the key responsibilities of hall directors and officers is to ensure that this is done.

Ownership

Corporations have owners that are often called shareholders. A corporation with only one owner simply has one shareholder that owns 100 percent of the company. A corporation with multiple shareholders issues stock to each shareholder, evidencing their ownership.

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Nonprofits such as hall associations refer to their owners as “members,” rather than shareholders. Halls can have one member/owner or multiple members/owners. Generally, a hall will have one “member/owner” that is a lodge. In some instances, however, more than one lodge may share ownership of a hall. In still other instances, one or more lodges may share ownership of a hall with another entity that is not a lodge, like an Eastern Star Chapter. For clarity, we typically use the term “owners” throughout this course.

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CHAPTER 2

Governance

Board of Directors and Officers

Corporations (including halls) are governed by their boards of directors and operated by their officers. The owner(s) elect and remove directors. Directors elect and remove officers.

For a hall with a single lodge owner, the lodge has the sole power to elect and remove hall directors and the directors

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have sole power to elect and remove hall officers. Election of directors takes place at the November stated meeting and all Master Masons in good standing present must vote. In the case of halls that have multiple owners, the election of directors is done by a vote of all of the hall’s owners, with each owner voting according to its percentage of ownership and total votes as set out in the bylaws. Elections are held at an annual meeting designated in the bylaws. The number of directors should be divisible by three. The lodge master and senior warden are required to be directors, in addition to the number set out in the bylaws. Directors must be lodge members in good standing. The master and senior warden serve as directors for as long as they hold those lodge officer positions. The other directors must be elected to terms of three years, which are staggered so that each year one-third of the director seats comes up for election. No lodge member can serve more than six consecutive years as a director. Directors – Single Ownership

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The master and senior warden are required to act with the same responsibilities as elected directors (attending meetings, voting, etc.)

Directors – Multiple Ownership

The number of directors should be divisible by three. The lodge master and senior warden are not automatically directors. All hall directors must be members in good standing of at least one of the hall’s owners. RESOURCE: Appendix A: Electing and Removing Hall Directors and Officers

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Powers and Responsibilities of Hall Directors

Hall boards of directors are given the authority – and the responsibility – to conduct the business affairs of their halls. While a hall board may delegate the management of the hall activities to the officers of the hall, these activities must be managed under the direction of the board. In practice, a hall board does not need to directly handle every task and chore. The board must, however, be made aware of, review, and approve all of the important, material decisions, risks, and actions to be taken by the hall.

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The board must monitor the overall business, legal, and financial activities of the hall. This is best done by requiring each of the officers of the hall to report to the hall board at each board meeting as to hall activities within each of their particular areas of responsibility.

Specific Powers

The Uniform Bylaws specifically give the following powers to hall directors. ▪ Selection and removal of officers, employees, and agents of the hall ▪ Management and control of the affairs of the hall and the setting of policy and procedures for the hall ▪ Borrowing money and incurring debt on behalf of the hall, subject to the limitations of the CMC

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Specific Responsibilities

The Uniform Bylaws specifically give the following responsibilities to hall directors.

▪ Make themselves knowledgeable of the hall’s purposes, goals, policies, services, strengths, and needs ▪ Prepare for, and actively participate in, board meetings ▪ Avoid even the appearance of a conflict of interest that might embarrass the board or the hall; disclose any possible conflicts to the board ▪ Ensure hall compliance with the CMC ▪ Control the funds of the hall so that they are used only for the maintenance and operations of the hall or turned over to the hall’s owner(s) ▪ Ensure that all required federal and state tax returns and other filings are timely made (and all taxes due are timely paid)

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Hall Officers

At each annual organizational meeting of the hall board of director, hall directors select the following hall officer positions from among themselves.

▪ President ▪ Vice president ▪ Secretary ▪ Chief financial officer

Only board directors may be appointed by the board to fill the officer positions. The board directors may remove any officer, with or without cause, at any time. The director

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serving as president may not also serve in any other hall officer position. The secretary and treasurer of a lodge should not serve as secretary or treasurer of the hall.

Officer Powers and Responsibilities The Uniform Bylaws set out the following powers and responsibilities for the hall officers.

President Serves as the chief executive officer of the hall with general supervision, direction, and control of the business of the hall, subject to the board’s control and oversight. The president makes sure that all required filings under the CMC are timely made. The president presides at all meetings of the board but does not vote at board meetings unless it is necessary to break a tie. Vice President In the absence of the president, the vice president performs the duties of the president and presides at board meetings.

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Secretary The secretary prepares and maintains minutes of all board meetings. The secretary ensures up-to-date copies of the hall’s bylaws, articles of incorporation, regulatory filings, and other key corporate documents are organized and readily available to directors, the Inspector and other representatives of Grand Lodge. The secretary gives notice of all meetings of the board to directors as required by the hall bylaws. He completes the Form 200 annually. Chief Financial Officer (CFO) The CFO receives and safely keeps all funds of the hall and deposits them timely with financial institutions. The CFO pays out funds as necessary and only in the form of checks signed by at least two officers of the hall. The CFO maintains accounts of the hall’s financial transactions and produces timely reports to board of directors, the owners, and the Grand Lodge.

RESOURCE: The Leader: Strong hall association

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CHAPTER 3

Operating limitations

Key Real Estate Decisions

The CMC requires a hall to take certain steps before making key decisions affecting its real estate. Before selling, leasing, conveying, transferring, or otherwise disposing of any part of its real estate, a hall must obtain the approval of

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the hall board of directors and a majority of the votes of the hall’s owner(s).

A hall must also obtain the approval of the Grand Lodge Masonic Properties Committee prior to the sale, listing for sale, lease, obtaining a loan or encumbrance of the real estate; or contract for the commencement of construction, alternation, alteration, improvement, repairs, replacement or maintenance of real property if the cost exceeds $25,000. CMC Section 406.060 sets out when a hall must obtain approval from the Grand Lodge Properties Committee. Grand Lodge Real Estate Services provides support for completing Masonic Properties Committee applications.

RESOURCES:

Grand Lodge Real Estate Services

Application to List Property for Sale

Application for Property Sale

Application for Property Purchase

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Application to Approve Property Encumbrance

Application to Lease Hall Space for Term Exceeding 36 Months

Application for Improvements Greater than $25,000

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Alcoholic Beverages

A hall has the right to prohibit the selling, serving, and consumption of alcoholic beverages at its facility. But in the event that a hall allows some form of selling, serving, or consumption of alcoholic beverages within its facility – by itself or by its tenants/users – it must take care to follow all state laws and CMC regulations.

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The CMC prohibits:

▪ Selling, serving, or consuming alcoholic beverages in a lodge room or in a room in which Masonic ceremonies are normally conducted, except when such room serves a dual purpose as a ceremonial room and social room ▪ Maintaining a bar stocked with alcoholic beverages ▪ Using hall funds to purchase or reimburse the purchase of alcoholic beverages ▪ Selling, serving, or consuming alcoholic beverages during a hall association meeting ▪ Renting property to a business wherein alcoholic beverages are served, consumed, or sold unless it is incident to, and not the primary purpose of, the business ▪ Hall guests or members bringing their own alcohol to a hall event; if alcoholic beverages are donated for a hall event, one person only must donate all the alcoholic beverages ▪ Selling alcoholic beverages at a hall event unless both the serving and the selling is performed by a caterer with an ABC license

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Further Limitations on Alcoholic Beverages

A hall may not operate a cash bar, sell drink tickets or tokens, or charge additional fees to cover alcoholic beverages. A hall is prohibited from, directly or indirectly, applying for, assuming title to, or operating under any government license or permit for the purpose of consuming, serving, or selling alcoholic beverages, whether in, on, or away from premises owned, leased, or rented by the hall. The general public may not be present when alcoholic beverages are served without a license. The term “general public” does not include members of a lodge or their family or friends.

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CHAPTER 4

Hall employees and vendors

Purpose of Employees and Vendors

In carrying out its mission, a hall may require services beyond what can reasonably be provided by its board and officers. Such services could include ▪ Property management, maintenance, and landscaping services

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▪ Building improvement services ▪ Security services ▪ Legal, financial, and other professional and administrative services

Hall bylaws empower the board of directors to

▪ Hire employees and engage vendors to perform such services

▪ Set the compensation of employees ▪ Agree to the fees to be paid to vendors

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Vendors

A hall will often choose to contract with a vendor (rather than hire an employee) to provide periodic services, such as painting or construction, or to provide services that are specialized in nature, such as security or landscaping. Vendors may be large companies, small companies, or independent contractors. Regardless of the size or type of vendor, the hall board should follow these best practices: ▪ Agree upon the scope of the services that are needed and a budget for the costs of the services

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▪ Obtain sufficient competitive bids from different vendors; typically, three bids are a good practice ▪ Research the experience and background of potential vendors; check references – try not to engage vendors that do not exhibit both experience and financial stability ▪ Review CMC section 406.060 to determine whether Grand Lodge Properties Committee approval is required before engaging the vendor for the project

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When engaging a vendor, enter into a signed written agreement with the vendor that specifies: ▪ The scope of the project, the project deliverables and delivery time-frames, and the fees to be paid for such services (including the timing of payment) ▪ The insurance required to be maintained by the vendor, including at least workers compensation and general liability coverage and amounts of coverage (*Note: You should also require the vendor to provide the hall with current certificates of insurance) ▪ That the vendor has all licenses, permits, and other regulatory approvals necessary to perform the work ▪ Warranties that the vendor agrees to provide to the hall to back up the quality of their work If a contract is related to a complex or expensive project, have legal counsel review it before signing. Consult with Grand Lodge Real Estate Services with questions about engaging a hall vendor.

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After engaging a vendor,

▪ Closely monitor the vendor’s performance ▪ Timely pay the vendor only those fees that are due under the contract and for services that have been satisfactorily provided ▪ Determine if the hall is required to file a Tax Form 1099* for the fees paid to the vendor – and if so, obtain a vendor package with the contractor’s social

security number or tax ID, compensation insurance certificate, and liability insurance

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Employees

For larger halls, it might make sense to hire one or more employees to assist with day-to-day operations. The act of hiring even one employee will trigger many legal responsibilities for a hall, including:

▪ Verifying employment eligibility (I-9 Form) ▪ Observing minimum wage laws and other

compensation-related laws covering, for example, exempt versus non-exempt work, breaks, lunch hours, and overtime ▪ Providing workers compensation insurance

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▪ Maintaining personnel files that document hiring records, compensation levels, performance reviews, and job descriptions ▪ Processing payroll timely; correctly withholding federal and state income taxes; and making quarterly and annual employee regulatory filings (*Note that hall funds, not lodge funds, must be used to compensate hall employees) ▪ Providing employees with W-2s for prior year compensation

RESOURCE: Grand Lodge Financial Services

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Distinguishing Between Vendors and Employees

There may be instances when it’s difficult to tell whether an individual who performs work for a hall is most accurately classified as an employee or as an independent contractor/vendor. This classification can be particularly tricky when the worker is not employed by a separate company but is working directly for the hall. Your hall should be mindful that state courts and employment and taxing agencies often determine that such workers should be classified as employees. This classification is important because: ▪ Employees have many protections that vendors do not. ▪ Corporations have many more obligations (including tax withholding) with respect to employees that they do not have when engaging vendors.

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Independent Contractor Test In California, courts and agencies generally consider an individual who is working on behalf of a company to be that company’s employee unless the company can demonstrate each of the following three requirements (A, B, and C). A. The worker is free from the control and direction of the hirer in connection with the performance B. The worker performs work that is outside the usual course of the hiring entity's business; and C. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. This “ABC” test can be difficult for companies to overcome. If your hall engages independent contractors, consult legal counsel to review any independent contractor relationships under the ABC test. of the work, both under the contract for the performance of the work and in fact; and

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CHAPTER 5

Renting the hall

Rentals

Rentals are an important source of revenue for many halls. Make sure you use your real estate assets strategically, and have the right rates and agreements in place.

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Leverage the hall’s idle time – ex. weeknights and weekends – into income through rentals. Consider: ▪ Adding retail tenants to storefront space, if applicable ▪ Renting the hall to other lodges, concordant

bodies, schools, churches, and community groups ▪ If the hall has a larger kitchen, renting to caterers and cooking schools ▪ Contacting the local chamber of commerce to advertise availability for limited, periodic rentals such as focus groups, dance classes, off-site training, and parties ▪ Using peerspace.com and rentals.com to list and rent space on an hourly or daily basis

RESOURCE: The Leader: Optimize your real estate assets

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Setting Rental Rates

To set your hall’s rental rate, assess the building’s minimum operating cost and research its fair market rental value.

Minimum Operating Cost:

▪ Average three years’ worth of operating expenses to find the average annual operating cost ▪ Divide by 365 to find the average daily cost ▪ Divide by the property’s square footage to find the average daily per-square-foot cost ▪ Multiply the daily per-square-foot cost by the square footage being rented and the time frame to find your minimum operating cost

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Fair Market Rental Value:

▪ Benchmark your rental rate against comparable buildings in the community such as community centers, libraries, senior centers, churches, and event venues. ▪ Brokers will often provide market info for free. ▪ If your hall’s current rental rate doesn’t cover its minimum operating costs, and/or it isn’t earning fair market value, discuss raising rental rates.

RESOURCE: The Leader: Maintaining a healthy hall

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Use Agreements Use agreements should be used for all rentals of the building, whether it is regular, periodic, or one-time use. A use agreement should be used even for the lodge that may be an owner, if the space or spaces used by the lodge are also used by other lodges, organizations, or people. The types of users include: ▪ Lodge ▪ Other Masonic groups such as Eastern Star, youth orders, York Rite, etc. ▪ Non-Masonic groups such as churches or businesses ▪ One-day events such as parties, funerals, or community events

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Contact Grand Lodge Real Estate Services for help structuring agreements. Have your legal counsel and insurance company review use agreements prior to scheduling events.

RESOURCES:

Lodge Use Agreement

Hall Association Use and Event Agreement

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Lease Agreements

Leases should be used for anyone that wants to lease hall building space on an exclusive basis, whether short- or long-term. This can include commercial use, use by nonprofits, and government functions like a post office. Where applicable, the hall should list its retail space with a licensed commercial real estate broker. Execute a lease agreement for anyone who will lease the hall on an ongoing basis. This includes the hall’s owner(s). Contact Grand Lodge Real Estate Services for help structuring agreements. Have your legal counsel and insurance company review all lease agreements. Obtain

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approval from the Masonic Properties Committee for any lease over three years, including renewal options. For example, if you have a lease for two years with a renewal option for one or more years, you would need to obtain approval from the Masonic Properties Committee.

RESOURCE: Grand Lodge Real Estate Team

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CHAPTER 6

Building maintenance, improvements, and capital planning

Maintenance Plan

A hall association should create and maintain a multi-year maintenance plan for critical building upkeep. Building maintenance is part of the annual operating budget. Since deferring maintenance is ultimately very expensive and can cause emergency repairs, it’s crucial to have a sufficient

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annual maintenance budget. The maintenance plan should include:

▪ Landscaping ▪ Pest control*

▪ Window cleaning ▪ Gutter cleaning* ▪ Janitorial services ▪ Light replacement and upgrades* ▪ Painting ▪ Carpet/floor cleaning and repair ▪ Roof repair* ▪ Plumbing, electrical, and HVAC service* ▪ Elevator maintenance ▪ Fire extinguishers and smoke and other detectors* ▪ Fire alarm* ▪ Security alarm ▪ Parking lot striping and repair*

*These items typically require inspections.

In creating a plan, consider the age of the building, season conditions, tenant needs, and risk management.

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Professional Maintenance

Limit the hall association’s risk and liability by making sure all work is done by capable professionals (preferably, contractors rather than employees) who have the right insurance. Review Chapter 4 for hiring standards, and obtain sufficient competitive bids. Three bids is a good practice and are required for projects that cost more than $25,000.

Efficiency Options

Consider lowering utility expenses through conservation and efficiency improvements, including:

▪ LED lights ▪ Motion sensors ▪ Insulation ▪ Low-energy use or low-flow water fixtures ▪ Timers ▪ Solar energy

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Capital Plan

A capital plan directs “capital improvements” – building improvements above and beyond routine maintenance and upkeep. Examples of capital improvements include installing air conditioning, making ADA improvements, and upgrading or installing elevators. These improvements come out of the hall’s capital budget versus the operating budget. Capital improvements are necessary for maintaining safety, efficiency, accessibility, security, and code compliance. These improvements also build member pride, improve prospect interest, create a favorable public impression, and increase rental and revenue potential.

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Building Assessment

Hire competent contractors to inspect the building and recommend repair, maintenance, and replacement needs for the next 10 years and update the plan periodically. Inspections should include structural, plumbing, electrical, and mechanical.

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Major Equipment Replacement

The plan should include estimates of a timeframe to replace major equipment, including:

▪ Roof ▪ HVAC ▪ Lighting and other energy efficiency requirements for Title 24 of CA building codes ▪ Building accessibility for ADA compliance ▪ Parking lot ▪ Kitchen equipment ▪ Plumbing ▪ Boiler/heater ▪ Fire suppression system (*Your local fire department will often provide a free inspection)

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Capital Budget

Based on the needs identified in the plan, a capital budget should be created. Seek multiple opinions and quotes on any major items, using the same scope of work. Three competitive bids is a good practice. Use the timeline to spread the expenses over the plan period.

Professional Contractors

Limit the hall association’s risk and liability by making sure all work is done by capable professionals (preferably licensed contractors rather than employees) who have the right insurance. Review Chapter 4 for hiring standards. Inform contractors upfront that potential contracts are contingent on lodge and Grand Lodge approval.

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Required Approvals

Once you have an overall capital plan, present it to the hall’s owner(s) to obtain general buy-in and input from the lodge or owners. Before any work is commenced, work in excess of $25,000 requires the approval of the lodge and/or owners and the Masonic Properties Committee. Projects cannot be divided in order to avoid these approvals.

All state, county, and local requirements for permits, inspections, and approvals must be obtained before work is commenced.

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Capital Improvement Reports

In addition to required financial reports at the February and August stated meetings, give a progress report on any ongoing capital improvements at every stated meeting of the lodge and other owners.

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CHAPTER 7 Insurance

Comprehensive Insurance Coverage

Protect the hall from legal risk with comprehensive insurance coverage and compliance measures. Grand Lodge does not pay for hall association insurance, and hall associations are not covered by an owner lodge’s policy.

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Hall associations require their own policies for the following types of insurance.

Grand Lodge offers MARSH voluntary insurance program for individual hall associations, which provides full coverage for most of the following type of insurance.

RESOURCE: MARSH insurance booklet

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Property Insurance

Property insurance including fire damage, extended coverage (wind, hail, aircraft, vehicle, explosion, riot, smoke), theft (parts and/or contents). ▪ Optional coverage may also include: ▪ Floods (due to weather) ▪ Earthquakes ▪ Equipment breakdown (extended warranty) ▪ Building ordinances ▪ Demolition/debris removal ▪ Loss of income or extra expense

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Keep an accurate inventory of all your hall association property, including the building, furnishings, and all paraphernalia. (Note: This inventory is separate from lodge-owned assets .) In case of a claim, you will need complete records to substantiate your needs for replacement.

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General Liability Insurance

General liability insurance protects the hall association, should anyone make a claim that it has in some way caused them harm or injury. General liability insurance: ▪ Must be adequate to protect the assets of the hall association ▪ Must be reviewed annually to ensure proper insurance limits ▪ Should not be used to cover the liability of tenants (as noted below, tenants must carry their own general liability insurance)

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Optional coverage may include:

▪ Hired and non-owned automobiles ▪ Volunteers ▪ Crime/dishonesty

All tenants and contractors are required to carry their own general liability insurance and name the hall association as an additional insured

Directors’ and Officers’ Liability Insurance

This insurance protects the directors and the officers in case someone files a personal claim against them, such as:

▪ Unfair employment practices ▪ Failure to exercise prudent actions/decisions ▪ Discrimination ▪ Sexual harassment

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Workers Compensation

If the hall association is paying an employee, the hall must report payroll taxes under the hall association’s Federal Employer Identification Number and obtain workers compensation coverage. Workers compensation for hall employees is not covered by the owner lodge(s) or Grand Lodge. If coverage is needed, contact the California State Fund at (877) 405-4545.

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Tenant Users Liability Insurance Policy (TULIP)

All renters and leaseholders should provide the hall association with a certificate of liability insurance, even if they’re just using the hall for one day. Grand Lodge has set up a convenient policy for single-use renters. The TULIP program is available through One Beacon Entertainment, which easily provides an insurance policy and the necessary certificate of liability insurance.

RESOURCE: TULIP Program Information

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Other Ways to Manage Risk

▪ Ensure that the hall has an adequate security system in place. ▪ Regularly review the hall’s safety, emergency, and first aid provisions, and make updates as needed. Local departments such as the fire department will often do a free survey of the property. ▪ Periodically check new code requirements from building officials to make sure the hall is in compliance. Periodically review local, county, and state zoning and use conditions to ensure the hall is compliant. Create a process to stay current as ordinances and laws change.

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CHAPTER 8

Financial, tax, and information reporting

Reporting and Support

In this chapter, we’ll cover the numerous reports that the hall must submit and share best practices for keeping the lodge informed. The Grand Lodge provides a number of service to support halls in this responsibility including the

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Intacct accounting system and support, tax return services, and tax exempt status renewal and reinstatement services.

RESOURCES:

Intacct

Grand Lodge tax preparation services

IRS Form 990 (Return of Organization Exempt from Income Tax)

The IRS Form 990 is an information return required from all nonprofit organizations regardless of gross income. The type of form required is based on gross income. The deadline to file the Form 990 is May 15 for hall associations operating on the calendar year – or, if you’re one of the few associations with a fiscal year different from the calendar year, the 15 th day of the 5 th month after the end of the fiscal year. Halls that do not file on a timely basis

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may lose their tax-exempt status, making hall income subject to federal income tax.

RESOURCE: IRS Form 990 filing thresholds

California Form 199: Franchise Tax Board (California Exempt Organization Annual Information Return) The California Form 199 is an information return required from all nonprofit organizations in California regardless of gross income. The type of form requires is based on gross income. The deadline to file the Form 199 is May 15 for hall associations operating on the calendar year – or, if you’re one of the few associations with a fiscal year different from the calendar year, the 15 th day of the 5 th month after the end of the fiscal year. Halls that do not file on a timely basis may lose their tax-exempt status, making hall income subject to California income tax.

RESOURCE: California Franchise Tax Board website

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SI-100: Secretary of State Statement of Information

Every California nonprofit organization, such as a hall association, is required to file a Statement of Information (SI-100) with the California Secretary of State every two years during the calendar month in which the initial articles of incorporation were filed, or during the immediately preceding five calendar months. Failure to file on time will result in suspension of the corporation’s status, a $250 penalty, and possible revocation of tax exemption.

RESOURCES:

California Secretary of State website

Instructions for Completing the Statement of Information (Form SI-100)

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IRS Form 1099 and 1096

Form 1099 must be filed for each contractor or outside service provider that the hall has paid $600 or more in the previous calendar year. Form 1096 (the “transmittal” form, like a summary) should be filed with Forms 1099. Payments made to reimburse and expense, rents to real estate agents, and payments to corporations are not reported. The deadline to submit Forms 1099 and 1096 to the IRS and to the contractor or service provider is January 31.

See IRS Instructions for Form 1099-MISC for additional items and clarification.

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Form 941 (or in special cases, 944)

If the hall has employees, the Form 941 reports these wages and the employment taxes, including federal income tax withheld, social security and Medicare taxes withheld, and the hall’s share of social security and Medicare taxes. The reports are due quarterly in April, July, October, and January. In special cases the IRS may approve an annual filing of Form 944, designed for employers with an annual employment tax liability of $1,000 or less, instead of Form 941. Form DE9/DE9C is California’s equivalent of the federal Form 941, except the detailed withholding for each employee is report. The form is due quarterly in April, July, October, and January. Form DE88 is a payroll tax deposit form and should be submitted quarterly (at a minimum) with DE9/DE9C. Forms DE9/DE9C and DE88

Form 940

Form 940 reports the hall’s annual Federal Unemployment Tax Act (FUTA) tax. The deadline is January 31.

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Form W-2 and W-3

Form W-2 reports an employee's annual wages and the amount of taxes withheld from their paycheck. Form W-3 is the “transmittal” form, like a summary, and is filed with the IRS along with copies of all employee W-2s. The deadline to submit both to IRS: January 31. The deadline to distribute Form W-2 to employees is January 31. The Grand Lodge Payroll service will manage these and other forms, if requested to do so by the hall association.

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Grand Lodge Form 200

Form 200 is the hall association’s required annual filing to Grand Lodge. The deadline to file is March 15. It is filed electronically through the member center. There are two parts to the Form 200. Part A describes ownership, practices, and policies. Part B describes the financial statements. Form 200 can be found in the Member Center under Reports & Features.

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Annual Financial Report

The hall must present to the lodge and other owners, if any, an annual financial report stating the assets and liabilities and income and expense for the prior fiscal year. This report must be presented at the February stated meeting of the lodge owner.

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Semi-Annual Financial Report

The hall must present to the lodge and other owners, if any, a semi-annual financial report stating the assets and liabilities and income and expense for the period of January 1 to June 30. This report must be presented at the August stated meeting of the lodge owner.

RESOURCES:

Hall Association Calendar of Deadlines

The Leader’s monthly checklist

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Taking the Exam Congratulations! This concludes the instructional portion of the Hall Association Management course. You may now take the exam. When taking the exam, you may refer to any section of this book to aid you. To begin the exam, click on the link below or visit the LMCP page on freemason.org. Should you have any questions, be sure to reach out to Member Services at memberservices@freemason.org .

Test: Hall Association Management

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