Housing Alternatives Development Company

“No committees are currently acting on behalf of the full governing board.”

“The draft of the 990 is shared with management, the entire board, and outside exempt organization tax counsel for review and comment. The final return is provided to all board members prior to filing.”

“HADC's Board has established by a policy and attendant procedures that define financial conflicts, as well as arenas where a perceived conflict of interest is present. Board members, and the organization's CEO/President and specified other "key employees" as defined by the organization (i.e., not the same as employed by the Form 990), are required to make disclosure to the Board whensoever they become aware that a present or potential conflict of interest exists. The Board then determines if the matter fits the policy's definitions, and if so, the Board then further evaluates if the applicant organization or vendor's services have been (in the case of an already transacted matter) or can be (relating to a proposed transaction) availed of at appropriate reasonable and fair terms. In such deliberations and evaluations, any Board Member who has any business or family relationship (or other attendant interest by which a perception conflict is defined) with the party who is the subject of the conflict neither participates in the Board's determinations, aside from providing information about the applicant organization or vendor and the subject transaction upon the Board's request. In matters involving a conflict scenario involving an employee other than a key employee, the Board and the CEO/President shall determine if the matter need be elevated to the Board. All of the Board's determinations as to how a conflicted transaction or event has been handled in line with Board policy and procedures, including a record of Board members who were not participating due to the invocation of the COI Policy, are promptly recorded in the Minutes.”

“HADC's Board most recently procured a comparability study for the CEO/President's compensation package in December 2018. That study supported the rate of remuneration in fiscal year ended 3/31/2020. HADC has maintained compensation for that function in line with that study in the present fiscal year.”

“The Organization made its governing documents, conflict of interest policy, and financial statements available upon request.”

“Former officer/director, Pakonen, commenced litigation against the organization seeking both payment under a deferred compensation plan adopted for his benefit by a prior Board (during Pakonen's tenure as a member of that Board), sometime in the mid-2000s, and payment of severance benefits under his March 31, 2017 employment agreement that HADC terminated effective December 31, 2018. Both the deferred compensation plan and the employment agreement had been adopted prior to the current Board members being seated. The current Board believed the deferred compensation plan with Pakonen had previously been terminated, and the organization's Forms 990 had not reported compensation attributable to that plan on any tax years from 2008 forward. Accordingly, the Board rejected all of Pakonen's claims asserting, among other defenses, that both the deferred compensation plan and Pakonen's employment agreement had not been adopted by independent directors utilizing comparable pay data and the fact that Pakonen's conflict of interest was not addressed by the prior board in accordance with Minnesota Statutes safe-harbors, thus rendering the arrangements both voidable under Minnesota Statutes and their consummation a potential excess benefit transaction. At trial, the jury awarded Pakonen $292,573.06 in deferred compensation that was characterized by the Court as a post-termination of service benefit, but awarded no damages for severance under the employment agreement. The court denied Pakonen's claim for reimbursement of attorney's fees. Pakonen has appealed the portion of the final judgment denying his fee reimbursement claim. The current Board will continue to vigorously defend against these claims. However, HADC has accrued a liability in an amount equal to the jury's award of deferred compensation (plus statutory interest on the judgment), even though the court's final decision and any attendant payment will not occur until after a decision on the appeal is rendered. The jury's awarding of "deferred compensation" relating to Pakonen's service as a Board member and officer of the organization from 2004-2018, and interest accrued through 12/31/2021, is thus entered in both Core Form Part VII-A and in Schedule J Part II. In light of the jury's award and determination that the deferred compensation was fair and reasonable, notwithstanding the organization's positions to the contrary, the accrued liability is not reported on Schedule L, Part I.”

“-Aid low and moderate income households -Advance equal housing opportunity -Combat community deterioration and blight through programs fostering housing and economic development to encourage and strengthen integration in housing -Provide quality low and moderate income and senior housing options that offer comfortable living environments, with programs and services that encourage continued independence and active retirement with preventive and supportive health care Housing Alternatives Development Company (HADC) was formed for the purpose of owning, managing, and operating single and multifamily rental housing and elderly housing. The Organization's primary exempt purpose is to provide low and moderate income housing, senior housing, senior assisted living facilities, nursing homes, and student housing, and promote health in the senior community and the general community in underserved communities. The purpose of HADC shall include the acquisition, construction, rehabilitation, ownership, management, operation, leasing, improving, financing, refinancing, pledging and selling facilities to provide these services. Substantially all of the Corporation's revenue is derived from the rental of its housing units and various services provided to the residents.”

“Increase in CSV of Life Insurance - Unrealized 55,886. Net Transfer to Related Organization -798,851. Rounding -2.”