William Penn, 1963 (46. évfolyam, 5-23. szám)

1963-09-18 / 18. szám

PAGE 8

September 18, 1963

William Penn

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The failure to proceed can be attributed to a number of factors, each one of which entailed considerable risks to the Association, and which your Board, on the recommendation of your Building Committee, did not wish to assume. It, in our considered opinion, constituted an unburdenable risk to the Association.

The construction of this project was to be undertaken by the Wilpenn Realty Corporation, a wholly-owned subsidiary. It was contemplated that the William Penn Fraternal Association would make an investment in the Realty Corporation and the Wilpenn would contract for the construction, as well as secure the necessary tenant leases and also procure the mortgage financing. We endeavored to procure sufficient long-term (10-20 year) leases from nationally-rated tenants to occupy at least 60% of the building space, thus safeguarding as much as possible the Association’s investment. This failed to materialize due to a general softening of the rental situation in Pittsburgh, due primarily to the substantial amount of new space already on the market or about to come on the market. We did, however, have commitments for 45,000 sq. ft. of space, about 25% on a “letter of intent” basis, which would have become firm leases once evidence of building construction began. All of these leases were from reputable and well-established Pittsburgh corporations.

In view of the insufficiency of long-term leases, a mortgage commitment could not be obtained unless the Association pledged or guaranteed to meet any deficiency in payment of principal and interest on the mortgage, and the financing of the construction could not proceed. This presented a great problem to the Association — whether to take on, as guarantor, a considerable amount of debt, or to attempt to develop the construction through some other means, without assuming any guarantees of any kind. In other words, attempt the construction without any risk whatsoever, or without committing the Association to any part of the liability. Although legal opinions obtained clearly indicated that the Association had the power and authority to pledge its assets, and assume this guarantee, no positive action was taken due to the seemingly large risks involved. Clearly there was no avenue open to us except a development where the Association would not be called upon to assume any risk whatsoever.

Your Board, therefore, after carefully weighing all the factors, did not wish to either commit its assets, or pledge, for the possible payment of principal or interest, any of its future investment income, and without this pledge or guarantee, there was absolutely no way to secure the necessary financing.

On January 27, 1961, the U. S. Treasury Department rendered a ruling on our application of October 16, 1958, on the tax aspects of the Wilpenn Realty Corporation, and its relationship to the William Penn Fraternal Association. The ruling was adverse. We had some prior knowledge of the tax consequences of the Wilpenn Realty Corporation, but had not anticipated that the ruling would be adverse to the William Penn Fraternal Association itself, as there are instances on record where corporations have been created for the purpose of generating income which is turned over to a tax exempt entity. From this ruling, however, it was clear that if the William Penn by itself, or through a subsidiary, such as the Wilpenn Realty Corporation, were to engage in the business of “an unrelated business enterprise”, as would clearly be indicated in leasing, construction and managing ... this activity would render the Association taxable. Your Board clearly did not want to jeopardize this exemption.

It was apparent from all the above developments that your Building Committee and Board had only one recourse — to develop the properties by leasing the land, without in any way involving ourself in construction or leasing, which activity might be construed by the Treasury Department as an “unrelated business enterprise”. This was the course embarked upon and several attempts were made, until finally, in January, 1963, after more than a year of negotiation, a plan of development was rejected when we could not come to satisfactory terms with the developing syndicate. Further talks were considered useless and your Board at the 1963 Spring Meeting closed the William Penn Insurance Building matter.

We respectfully request the Convention to approve and adopt the foregoing report.

Respectfully submitted:

JULIUS MACKER, President; LOUIS L. VARGA, 1st Vice-President; JULIUS J. LEN ART, 2nd Vice-President; JOHN P. BALL A, Director & Board Secretary; Directors: DR. ANDREW KOVÁCS, STEPHEN DANKO, STEPHEN LANG, MICHAEL J. FACZAN, FRANK MAGYARY, ALBERT IBOS, JULIUS.Z. NADAS, JOSEPH KORMONDY, FRANK RADVANY, MICHAEL KOROSY, LOUIS VASSY. ALBERT J. STELKOVICS, Secretary; JOHN SABO, Controller; JULIUS E. SOMOGYI, Treasurer; RICHARD J. PHILLIPS, Investment Manager; ELMER CHARLES, Field Manager.

REPORT

OF THE AUDITING COMMITTEE OF THE WILLIAM PENN FRATERNAL ASSOCIATION TO THE XXV-TH NATIONAL CONVENTION, SEPTEMBER 9, 1963

Dear Brother and Sister Delegates:

We, the undersigned members of the Auditing Committe, in accordance with the rights and duties contained in Section 37 of the By-Laws of our Association, do hereby submit to this time-honored Convention the following report:

Before all you Worthy Delegates, we wish to emphasize the fact that we endeavored with our best ability and knowledge to fulfill the very important, and in some cases, intricate tasks entrusted to us by the wise foresight of the previous Convention. Disregarding any and all other motives or purposes, we were guided in our duties by one principle and one principle only, namely; THE PROTECTION OF THE WELFARE AND INTERESTS OF OUR ASSOCIATION

You have already received the report of the independent Certified Public Accountant, selected by us in accordance with the provisions of our By-Laws, and the figures therein speak for themselves.

Since the last Convention, we made eight Audits at the Home Office. On each and every occasion, after having completed our examination, we met in special session with the Officers. We advised them as to our observations, exceptions and suggestions, and requested them to submit some of our aforesaid observations, exceptions and suggestions to the next Board meeting.

Some of the more important points to be noted are as follows:

1. Recommendation to reduce personnel at the Home Office.

2. Redevelopment of Branch Management by usage of local talent.

3. Insistence on elimination of unproductive personnel in the Field.

4. Implementation of the “O’Toole Report”.

5. Curtail all overtime pay and give salary increases on merit basis only.

We would also like to direct yöur kind attention to our following comments on:

1. Bowling Tournament and Children’s Christmas Parties

2. New Building

3. The Field

4. General overall condition

5. O’Toole Report

6. Conclusion.

1. Bowling Tournaments are desirable recreational events. They help acquaint the membership of the Association with the fraternal aspect of their insurance. They are loads of fun and a happy get-tógrther! They are vitally necessary and show favorable returns for the investment involved.

Children’s Christmas Parties have been growing nicely since their inception. Branches are taking a much more active financial role in their production, which is good. Our children are our greatest asset and these parties are a desirable means for their membership retention and closer adherence to our Association. This will help them to become and remain fraternalists.

2. As yor^ no doubt know, at the last Convention, the Board of Directors was authorized to carry out the new building program on our location at Fourth Ave. and Grant Street, in the City of Pittsburgh, Pennsylvania. However, we understand that because of difficulty in obtaining the necessary tenants for the new building, financing was not possible and therefore the new building could not be erected.

3. The results obtained from the Field have not been up to expectations. The combination of constantly aging members, death, cash surrenders and lapses, plus low production in new business, has brought about a drastic reduction in our total membership strength. This trend must be checked and reversed. It cannot be allowed to continue, as its effect on our Association can cause irreparable damage.

5. Several years ago, the Board authorized the hiring of a Management Consultant firm for the purpose of reviewing the Association’s activities and method of operation. To this end, O’Toole & Associates were hired.

6. It is felt, that the action this Convention takes now, will go far in determining the composition, organization and soundness of our Association in the years to come. It is a great responsibility and one which should not be taken lightly. The welfare of some 80,000 members rests with the decisions you make here today. Will you fulfill your responsibility to your members and effect decisions for their eventual betterment and protection? We will assist you in every possible way — please call on us.

We respectfully request that you accept our preesnt report and favor us with your release.

GÁSPÁR PAPP, Chairman of the Auditing Committee. WILLIAM C. KOHUT, Recording Secretary of the Auditing Committee. MICHAEL HEGEDŰS, JR., Member of the Auditing Committee. LÁSZLÓ KERESZTI, Member of the Auditing Committee, VALENTINE KONYHA, Member of the Auditing Committee.

officer and was auditor for more than thirty years.

Congratulations to Mr. and Mrs, Gancsos.

lOQ COLUMBUS Ohio

Member Frank László died August 4 following an illness. Mr. László, a charter member and officer of the Hungarian Reformed Church in Columbus, was given final religious rites by the Rev. Victor Orth. He was at one time president of Branch 130 of the former Rákóczi Aid Association, which branch later merged with Branch 129. He was born in Transylvania, Hungary, immigrated to the United States in 1920, and married Esther Chattos in 1923. The branch extends its sympathies to the survivors of member László.

Columnist Austen Lake of the Boston Record-American considers his profession: “The danger in conducting a daily column is that a writer tends to pontificate on the vast ponderosities instead of sticking to his role as an observing reporter of the earthly ordinaries. Now there! See what I mean? Persiflage replaces ideas! One succumbs to the sweet, senselulling harsheesh of polysyllabics. The misty vapor of words substitutes for the solid nourishment of corn-beef’n-eabbage logic. But it only takes a small pinprick to let the gas out of one’s bag.”

Let us be of good cheer, remembering that the misfortunes hardest to bear are those which never come.

—James Russell Lowell

Branch High Lights

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Veszprémi. 1 pr. Pillow Cases, June Gross. 1 qt. whiskey, Jolán Lucas. 1 qt. whiskey, Martin Marton. 1 qt. whiskey, Elizabeth Rigo.

JOLÁN LUCAS Reporter

Ol J FLINT, Lk\!\ Michigan

Mr. and Mrs. Peter Gancsos on the occasion of their 50th wedding anniversary were feted at the home of their daughter by their children, grandchildren and friends. They were married July 21, 1913 and celebrated their golden wedding exactly 50 years later. They are proud of their four children (two sons and two daughters), nine grandchildren and three great-grandchildren.

Mr. Gancsos has been a examplary member of our Association. He was a charter member of former Verhovay Branch 105 and served as ita treasurer for twelve years, and when he joined Branch 214 he became an