Diamond Island Assn

“The Diamond Island community consists of 93 households, many of which have been owned by the multiple generations of the same families for decades. Next-generation family members often purchase other households on the Island. Hence, from time to time, directors and officers may be related, provided they live in different households on the Island. In 2021, the Treasurer and Secretary were uncle and niece, respectively.”

“The Board proposed revised Bylaws, which were approved by members by majority vote at the August, 2021 Annual Meeting. The amendments were intended to modernize the Association's governance rules and practices, such as promoting electronic communications.”

“The Association has 93 households, each of which constitutes a member of the Association.”

“The members elect the 9-person Board of Directors. Each Director is elected for a 3-year term. The Directors elect officers for one-year terms.”

“The Bylaws state that certain actions of the Board be approved in advance or affirmed afterwards by simple-majority or super-majority votes. For example, special assessments must be approved by a 70% vote of the Members and the Board generally cannot incur an expenditure in excess of $10,000 without prior approval by a majority vote of the members.”

“The Form 990 is prepared and executed by the Assistant Treasurer--Financial Reporting, an officer authorized by the Board to execute this return on behalf of the Association. This authorization requires that this return be reviewed by at least one other Officer.”

“The Association does not make its governing documents and financials available to the public, except as part of the Association's state corporate filings and Federal tax returns, respectively. The Association has no conflicts of interest policy.”

“The Association owns a barge placed in service in July, 2019. The original basis of $266,168 is depreciated on a straight-line basis over 18 years. In 2021, several subsystems on the barge unexpectedly and prematurely began to fail. The Association incurred capital expenditures of $35,465 to replace a thruster, which it will depreciate on a straight-line basis over the barge's remaining useful life.”

“During 2021, various subsystems (e.g., thrusters, the diesel engine) began to prematurely fail. These failures resulted in repeated stoppages and other disruptions to the ferry. The Association spent $35,465 in capital expenditures to restore the barge to its original operating condition. The Association reports this increment to the original basis and the related depreciation on a straight-line basis over the barge's remaining useful life.”

“This adjustment is made so that the sum of Parts XI, Lines 3 and 4 equal Part XI, Line 10. Despite repeated attempts to determine the reason why the sum of taxable income and the BoY net assets does not equal the EoY net assets (including mathematical errors), the Association is unable to provide a specific explanation. Historically, the Association has employed rudimentary accounting. Since 2018, the Association has had to account for more complex transactions, including the construction and subsequently the repair of a quarter-million dollar barge, the servicing of a large construction loan, and coordinating multiple special assessments. The Association continues to upgrade its accounting practices with the goal of eliminating the ongoing need for this adjustment.”