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STRAUSS: I’m sorry, and I’ll make sure that I identify myself if I start to speak. <br />GRAHAM: Fine, thanks. Rene’, do you have a follow-up on that? <br />SIRACUSA: Yes, I do. Steve, you said that this prospectus is not going out to the <br />general public, it’s being offered to specific people who are members of Kalani Honua who have <br />had a history with Kalani, who have been affiliated in some way or another in a positive <br />productive way. But Kalani Honua Inc is a nonprofit; and the laws governing nonprofits are that <br />members and especially board members are not supposed to gain personal fiduciary benefits by <br />virtue of their membership. Now I know that this year, this past year, the IRS came up with <br />some very new tight rules to close up a lot of loopholes in the rules governing nonprofits. And <br />I’m having some problem knowing what some of those are, you know, like about how much of <br />your income has to go towards your exempt purpose, for example, and how much staff and <br />management and trustees can expect to take as renumeration for their work. I’m having some <br />trouble with this. Mr. Koob’s, you know, personal, he’s getting paid from Kalani Honua Inc., <br />he’s going to be getting paid from the LLC. People who are members of the nonprofit are going <br />to be receiving fiduciary benefits. And I would feel a lot more comfortable if the IRS reviewed <br />your whole proposal and came back and said to us this is okay, you’re not violating any terms of <br />your nonprofit status. Because my concern is that if we approve something like this and it turns <br />out that it’s not 100 percent, you know, legal according to the new regulations, I don’t want to be <br />considered to be abetting by approving your proposal. <br />GRAHAM: Thank you. <br />STRAUSS: Yeah, I understand. I think in the first instance, this is Steven Strauss, I <br />think in the first instance that that’s way outside your jurisdiction as a Planning Commission. <br />Secondly, we have accountants and we’ve had three attorneys involved in this. The third, the <br />impression that Mr. Koob will attain some benefit from Kalani Kai LLC is incorrect. There is no <br />benefit that he obtains. There is no fiduciary responsibility to a nonprofit that’s compromised <br />here. There’s no salaries being generated by the LLC which is a land-holding company and a <br />land-owning company. It is not generating revenue. In fact, it will probably, the goal is to break <br />even if it can break even. The revenues that are generated from the Kalani Kai LLC operations, <br />if there are any, would go to the individual members of the company which includes the <br />nonprofit. This is the nonprofit that has the potential to gain revenue in a legitimate funding <br />way. It is not that any individuals are gaining revenue and, certainly, not as wearing two hats in <br />this case. <br />SIRACUSA: One -. <br />GRAHAM: Thank you, Mr. Strauss. Rene’, could you hold on a minute? <br />SIRACUSA: Just one final -. <br />GRAHAM: Well, we’re going to have to break in less than five minutes. <br />SIRACUSA: Okay. Just one very quick -. <br /> EXHIBIT C 12 <br /> <br />