Our group began the meeting with a review of the financials, and an addition to the agenda that had been distributed a week or so in advance of this Annual Meeting. Once all of that was settled we reviewed the projects that were accomplished or not in 2022 that had been discussed at the previous Annual Meeting. Significantly the Farmhouse had finally had new heat pumps installed just after the new year, which will be able to replace the need for the oil fired furnace. They will also be able to be powered (all or in-part) by the solar panels installed several years ago on the barn roof creating a much more sustainable farm with a much lower carbon footprint. The south side of the barn had also been re-clad with board and batten siding over the summer, and the same contractor had already promised to replace/repair several barn windows in the last phase of that work. The brown tail moth remediation work in 2022 had been successful, so a similar plan was set up for the spring of 2023. We then reviewed the rest of the plan for 2023, as well as a number of “long-term” projects that were on the horizon, but not necessary set to be accomplished in the coming year. Once we had set the quarterly dates for our check-in meetings we were able to adjourn.
Quarterly Check-in Meetings
Beginning at the 2018 Annual Meeting the members agreed that it would be helpful to have a set of regularly scheduled “check-in” meetings so that issues/concerns/questions don’t have to wait until the next annual meeting to be addressed. No minutes or formal agenda is created for the check-in meetings. That said, given that there is are enough shares represented at a check-in meeting, business can be transacted outside of the Annual Meeting if necessary (which would then need to be documented and referred to in the minutes of the following Annual Meeting, naturally). The members decided that quarterly would be a good spacing for these meetings, and that the dates could be flexible if other business interfered. In general, we set dates for the three extra meetings (the Annual Meeting being a DELUXE check-in meeting) at each annual meeting, and then a few weeks ahead of that set date we’ll all communicate to confirm the date and set a time, or request a date change, and propose a new date/time within a week or two of the set date. This process has worked really well for us so far, and has accomplished the goal of better communication within the cooperative. I would highly recommend adoption something along these lines in a similar farmstead cooperative structure.
Annual Meeting 2022
After approving the 2021 financials so that we could submit them to our accountant to prepare tax returns, and approving the minutes of the 2021 annual meeting, we reviewed updates on projects that had been accomplished in 2021 (such as the sale of the 1949 Ford 8N tractor, with the proceeds distributed to the members as agreed to in the by-laws). We then discussed projects anticipated to be launched in 2022 such as getting bids for re-cladding one of the exterior sides of our barn, getting more aggressive about brown tail moth remediation around the farmhouse, and to begin research on replacing the 40 year old oil furnace in the farmhouse. Once completed, the members representing Second Frost Farm (formerly Dickey Hill Farm as they had decided on a name-change) presented an overview of the projects they wanted to accomplish for their business that would change the buildings and the land for the better. The meeting was successfully concluded in a little over an hour.
Annual Meeting 2021
Our *distanced* Annual Meeting took place over Facetime this year, but we were still able to accomplish all of our annual work (approve financials, sign paperwork, review maintenance work, discuss larger projects). We also decided to post-pone making a By-laws change that was meant to resolve something that had come up in one of our 2020 quarterly check-in meetings. We all felt that the matter had been successfully dealt with since then and may not need a specific by-law entry to resolve any future needs.
We established that a new well would be scheduled for drilling this spring and agreed upon a rough location that would be far enough from the septic field, but close enough to the house for hooking into the existing plumbing. We also resolved to pursue selling our beloved 1949 Ford 8N tractor which, now that the newer and larger Kubota was on the scene, had lost it’s value to the WFC. Rather than let it gather dust, we agreed that it could be passed along to a new caretaker after a thorough tune up. We will discuss the appropriate use of those proceeds once the sale is made.
Annual Meeting 2020
We learned about several big plans for the farm from our farm-partners at this year’s meeting, besides doing the financials, signed documents, and general review of maintenance projects completed/planned. First, they had researched how/whether to classify the property as farmland for property tax purposes. There was talk about a new well and/or well pump to satisfy the increasing water needs during the hottest months of the year, especially as they plan to add their FOURTH production high tunnel. And they will be investigating the best way to better insulate the old farmhouse. Some of these projects will plan to be launched in 2020, while others may become longer term projects. In general, however, Alison and I were very positive about all the proposals.
However, the biggest news of the previous year was really just a recap of a project that came up during one of our quarterly check-in meetings earlier in the year: we decided, together, that the WFC would sell the Airstream camp trailer that had been used to house farm apprentices, guests, and briefly as an AirBnB income producer for the WFC. We would also sell the Kubota B1700 diesel tractor and bucket loader that had been a workhorse for the Rector’s, and then for our farm partners. Then the WFC would use the proceeds to purchase a new (or ‘new-ish’) tractor with a slightly bigger frame and engine (we settled on the Kubota B2300 series and companion bucket). After hashing through how the financials would work, and then dividing up the research and sales responsibilities, we were able to accomplish all of that, PLUS we had enough income left over from the sales of both pieces of equipment to purchase a new rechargable electric powered ride-on grass mower! It was kind of amazing how well the plan worked out, including seeing the excitement of the new owner of the Airstream and hearing about his plans for it.
Annual Meeting 2019
This year’s Annual Meeting was very straight-forward from our end; a review of work done / not done in 2018, then a work list for the upcoming year; approved the 2018 financials so they can be sent to our accountant for tax preparations; signing ancillary support documents; and some general discussion about long term plans/goals for infrastructure.
Annual Meeting 2018
The Annual Meeting was held in February this year, and it began with approval of the minutes of the previous member meeting, a review of the agenda, and then the LLC finanical reports. The group discussed the logistics of adding N&J on as signatories of the LLC’s bank account, and a date was scheduled to accomplish that task. Other financial housekeeping items were also discussed.
The 2017 list of proposed repair and maintenance projects, as well as new items that had been added mid-year were assessed, completed projects crossed off, and incomplete projects were re-prioritized. Then all members discussed adding new items onto the list for 2018 and prioritizing them.
Significantly the members agreed to amend the By-Laws to include a whereby “sunk costs” independently paid for by only one member would be reimbursed by the LLC if member chose to sell their shares. A motion was made regarding agreed upon language, and the members voted to amend the By-Laws.
A new lease agreement for the Farmhouse and the Barn was distributed, reviewed, discussed, and signed by all members.
Eric and Alison proposed initiating scheduled “Quarterly Check-in” meetings when members agreed to informally meet to discuss various on-going LLC business. If any business required an official LLC meeting to be held the members would arrange for that according to the By-Laws. Otherwise it was felt that the LLC business process would flow better and members might feel more informed and have a voice in that business outside of the required Annual Meeting. The group agreed to begin these check-ins.
With no additional business to discuss the meeting was adjourned.
Annual Meeting 2017
Our Annual Meeting was held in January again this year.
The group began the meeting by reviewing the agenda and the financial reports.
This is an important year in the evolution of the Windswept Farmstead Cooperative: both parties have agreed to move forward to become ownership partners of the LLC that owns the land. The initial lease agreement terminates on March 1st, at which point N&J will receive their first ownership shares under the terms of the Purchase and Sale Agreement. After that they agree to continue to purchase shares from Eric and Alison until they own 100% of the shares.
The group worked on the logistics of making this transition work smoothly, and they also reviewed all the language of the Purchase and Sale Agreement together to discuss and resolve any questions that came up before the initial equity transfer.
After the group had a shared understanding of the work that would need to be done before March 1st and then on the appointed day for signing all the necessary paperwork, the group discussed progress on the list of repair and maintenance tasks that had been drawn up at the 2016 Annual Meeting. They crossed off items that had been accomplished, and re-prioritized those that had not. Then they each brought up the items they would like added onto the 2017 task list and prioritized those, assigning responsibility for each of them to the current and future LLC members.
N&J brought up two issues that possibly involved By-Laws changes and the group discussed these. It was clear that a shared understanding of these issues could not be accomplished during this Annual Meeting, so an additional meeting was scheduled for resolving them after some necessary research.
N&J outlined new projects for their business — Dickey Hill Farm — that they planned to proceed with beginning in 2017.
With no other business remaining on the agenda, the Annual Meeting was adjourned.
Having an Interest
I hope that many people have an interest in the idea of a Farmstead Cooperative.
In this case I’d like to address the concept of “interest” when addressing a financial transaction of LLC shares over time, and how that transaction compares to a typical mortgage agreement.
Typically mortgage holders are paid interest over and above the payback of the mortgage amount/principal. Interest is the cost of borrowing a big chunk of money to purchase real estate, repaying it in bits over time a set time period — usually 15 or 30 years for most mortgages held by US banks. The mortgage is secured by a lien on the title of the land, which remains in the bank’s name for the duration of the mortgage agreement. Once the entire principal of a mortgage note is repaid on schedule (or ahead of schedule), and all interest due during the term of the mortgage is paid, the bank releases the real estate lien, and the title of that real estate is ‘free and clear’ of any claim by the bank.
Interest payments are the primary means of income for commercial banks all over the US. Borrowers are willing to pay to borrow money because they believe that they will benefit more by having the use of a big chunk of money for a set period of time than the cost of borrowing that money.
That’s the simple way to explain a financial instrument that is also tied up (in the US at least) in a tangle of financial regulations and insurance products. The fine-print documents that make-up a typical US mortgage can run from 30 to 60 or more pages requiring at least an hour of ‘signing on the dotted line’ — much more if you wait to read the mortgage agreements at the closing itself.
However, transferring shares of an LLC — especially if done over a set period of time like a mortgage — is very different. The title of any real estate owned by the LLC is held by the LLC of which all members own a share. An agreement to gradually sell the shares of an LLC is very different from the agreement to gradually pay back a large loan. Still, the word ‘interest’ remains an important factor in both agreements.
In the case of a gradual transfer of shares the seller of LLC shares retains an ‘interest’ in the property owned by the LLC as long as they continue to own shares. That ‘interest’ gives the seller all the benefits of being a member of the LLC as defined in the By-Laws. Literally this is a ‘common interest’ between the purchaser and the seller who both maintain some control of the present and future use of the property owned by the LLC. A bank cannot tell the mortgagee what color to paint the house, but an LLC member can.
I believe this is an important concept for both parties to digest when writing up any Purchase and Sale Agreement to transfer LLC ownership shares.
Annual Meeting 2016
We held our WFC Annual Meeting in late January. Although N&J aren’t yet equity shareholders, we still benefit from their input on any decisions that will be made at this meeting of the owners. We are also interested in talking about their long-term plans and learning how they feel after nearly a year in residence at the farm.
First we review the financial reports from 2015 and discussed any questions that they generated. We looked at the task list of items we had discussed at our first WFC Annual Meeting the year before, to cross off those items that had been successfully completed, and to prioritize the items that had not been addressed. Then we all listed the items that we wanted to address in 2016.
In addition to WFC work that we wanted to get done (and budget payment for) in 2016, N&J also listed the capital investment they were interested in making in their own farm business, Dickey Hill Farm. The group discussed whether any of the projects on their list would improve WFC but not be able to be removed if N&J ever wanted to leave the LLC. Often this is called “sunk cost” when it involves a leased property. For example when a business leases a retail space for a store, they may move walls, strip and refinish the floor, and improve the electrical system to accommodate their equipment. When the lease runs out, none of that can be removed by the business, so the lessor and lessee should have already agreed on a way to deal with any “sunk cost” in the property before the lease is signed.
Other discussion items included:
- the future plans of the cow herd, ownership of which was slowing being transferred over to Dickey Hill Farm outside of the WFC arrangement;
- the future use of the Airstream trailer that was a part of the WFC;
- the best way to monitor and split the costs of energy use between the cheese studio, and the walk-in refrigerator that N&J had built in 2015.
The group also reviewed the timetable set up in the Purchase and Sale Agreement: when the initial lease ran out in early 2017 N&J could could be voted into WFC as members and become equity shareholders. The P&SA also specifies that if either party wished to back out of the P&S they would have to notify the other party of their intentions at least six months before the end of the lease. The P&SA was reviewed, and the specific deadline date in late summer was acknowledged.
Without any more agenda items, the meeting was adjourned until 2017.
You must be logged in to post a comment.