The Board of Trustees shall fix from time to time the dues … to be paid by the members in each class, and
the terms and conditions of payments.
Dues may be revised and amended at the discretion of the Board of Trustees.
Dues, when approved by the Board … shall accrue on all classes of membership
until the end of the month in which written resignation is received by the Board
of Trustees.
Article I, Section 6
Current amounts: see Chapter 110.
The Board of Trustees shall … from time to time … propose assessments to be paid by the members in each class, and
the terms and conditions of payment….
[A]ssessments, when approved by the membership, shall accrue on all classes of membership until the end of the month
in which written resignation is received by the Board of Trustees.
Article I, Section 6
Current amounts: see Chapter 110.
The Board of Trustees shall fix from time to time the amount of initiation fees for the various classes of membership, and
the terms and conditions upon which such fees shall be paid.
Initiation fees shall include the charges, if any, for the transfer from one class of membership to another – for example,
the change from JSP membership to Social or Active.
Article I, Section 5
... once a member has transferred to another class, the fee prescribed at the time of transfer for such transfer
cannot be increased nor may the terms of payment be made more burdensome.
Article I, Section 5
Current amounts: see Chapter 110.
Timing: see Chapter 110, including "grandfathering" of timing of pre-August 1, 2019 Senior Transfer fees to comply with Article I, Section 5.1. Separation of Operating and Non-Operating Results. The Club separates both income and expenses into "operating" and "non-operating" items, so that financial statements show, separately, net operating income and net non-operating income.
(a) Purpose. The purpose of net non-operating income (non-operating income, less non-operating expenses) is to supply funds needed for capital expenditures and to service debt incurred to pay capital expenditures. This includes both capital expenditures of the sort that arise in the course of ordinary operations, which may recur at intervals of several years (e.g. resurfacing of tennis courts, replacement of furniture, repair of systems, replacement of vehicles), as well as capital expenditures for major capital projects undertaken to improve the Club (e.g. the 1999 "big remodel," the gym and sprinkler project and the parking lot and entryway project).
The purpose of operating income is to pay operating expenses. To the extent funds are raised for capital expenditures by charges imposed on members, those charges should be treated not as dues, but as assessments, and subject to member approval. Accordingly, the Club attempts to have cumulative net operating income (operating income, less operating expenses) be positive, but close to zero. Ordinarily, annual operating budgets should show a positive net operating income, as a "cushion" against the risk of suffering an annual operating loss.
If operating losses occur, and continue, the necessary result is that non-operating income – which is intended for capital expenditures – is used to pay operating expenses. If significant operating gains occur, and continue, the likely result is that member dues – which are intended for current operating expenses – are used to supply funds for capital expenditures, rather than member-approved assessments.
(b) Non-operating income includes:
(i) assessments;
(ii) initiation fees;
(iii) income from rental real estate properties;
(iv) interest and other returns on the investment of the Club's general funds; and
(v) other items classified by the Board of Trustees as non-operating income, because their nature or other considerations make it appropriate to set them aside to be applied to capital expenditures generally (or to a specific capital item).
(c) Non-operating expenses include:
(i) depreciation and losses on the sale of capital assets;
(ii) expenses associated with rental real estate properties;
(iii) interest expense;
(iv) federal income taxes; and
(v) other items classified by the Board of Trustees as non-operating expenses, because they are associated with the earning of non-operating income.
(d) Operating income and expenses are all income and expenses that are not non-operating.
7/25/19: General separation principles confirmed.
Example of a classification of a specific item of income as non-operating:
4/28/05: MSP as follows: To charge the University of Washington a $5,000 court usage fee for the 2006 NCAA Championship Tournament.
To classify the court usage fee as non-operating income.
To approve the capital expenditure of up to $15,000 ($10,000, net of the court usage fee) to resurface all of the indoor courts:
$5,000 of such capital expenditure to be treated as an additional capital item beyond the approved budget, and
the balance to be treated as a usage of the budgeted contingency.
2. Enforcement of Separation. Beginning with calendar year 2020, the Club shall track the cumulative net operating income (or loss). At the end of each year in which there is positive net operating income, the cumulative net operating income shall increase by the amount theref; at the end of each year in which there is a net operating loss, the cumulative net operating income shall decrease by the amount thereof.
(a) Repayment of Loan to Cover Operating Losses. If, as a result of an operating loss for a year, there is a cumulative net operating loss (i.e. cumulative net operating income is negative), the Board (or its designated representative) may authorize a twelve-month loan of capital funds to temporarily cover the cumulative net operating loss. Such a loan must be budgeted for and repaid from the next year’s operating revenues.
7/25/19: Adopted Section 2(a) regarding repayment of loan to cover Operating Losses.
(b) Source of Funds Used for Capital Purpose. Except as described in subsection (c) below, the cash needed for capital expenditures (and to service debt incurred to pay capital expenditures) must come from net non-operating income or from debt incurred for the purpose of making capital expenditures and repaid with cash from net non-operating income.
(c) Transfer of Operating Income to Non-Operating. The Board may from time to time propose to transfer all or a portion of the cumulative net operating income to non-operating (i.e. capital) funds. Upon approval by the members, such a transfer shall reduce the cumulative net operating income by the amount transferred, and make cash equal to the amount transferred available to make capital expenditures (and to service debt incurred to pay capital expenditures).
10/28/21: "MSP to move the excess 2020 operating surplus of 398,816 to capital funds subject to member approval at the next Annual Meeting." 3/16/22: Transfer approved by a vote of the members at the Annual Meeting.
(d) Operating Reserve. Cumulative net operating income may be held as an operating reserve, to be applied to offset future net operating losses.
3. Tax-Exempt Status under 501(c)(7). (a) The Club shall operate in a manner so as to maintain its exemption from federal income taxes under Internal Revenue Code Section 501(c)(7).
(b) The Club shall ensure that:
(i) its non-exempt function income does not exceed the relevant safe harbor limitation under applicable law (currently 15% of "gross receipts," as defined by the IRS);
(ii) its nonmember income, including investment income, does not exceed the relevant safe harbor limit under applicable law (currently 35% of "gross receipts"); and
(iii) its income from nontraditional activities (including the sale of takeout food and beverages) is insubstantial, and in any event does not exceed 5% of gross revenue.
"Gross receipts" as defined by the IRS is generally the same as the Club's gross operating income, plus investment income. It expressly does not include initiation fees or assessments. It also does not include income from nontraditional activities.
4. Presumption of Self-Support. All membership activities and events are intended to be financially self-supporting unless otherwise approved by the Board of Trustees. Requests for such Board approval should ordinarily be submitted in time to be incorporated in the annual Operating Budget.
1. Wait List Deposits. Wait list deposits are shown as current liabilities, but are not maintained in a separate account from Club funds generally. Wait list deposits are amounts that would be refundable if an applicant chooses not to complete a final application and join the Club, but do not include non-refundable amounts (such as Social initiation fees paid by applicants who elect to be placed on the Active wait list and to join as Social members at the same time).
3/24/05: Removed requirement to hold of deposits separate from general operating funds.
2. Leases. Immaterial leases need not be reflected as an asset and liability on the Club’s financial statements. An immaterial lease is any lease under which the aggregate rent payable over the term does not exceed $50,000, provided that, if the aggregate rent payable over the term of leases that would otherwise be immaterial exceeds $200,000, such leases are not immaterial. Rent payable under an immaterial lease shall be treated as an operating expense when payable.
4/25/24: Added Section 2, explicitly defining what is an "immaterial" lease for general accounting and operating/nonoperating purposes.
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7/28/22: Chapter 220 approved by the Board.