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​Pros and Cons of Different Lake Associations


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Some Advantages and Disadvantages of Unincorporated Lake Associations, Qualified Lake Associations (Incorporated) and Public Inland Lake Protection and Rehabilitation Districts


General Principles:


Unincorporated Lake Association:  
 
Advantages:
  1. Informality of operations. No legal guidelines, no formal organizational requirements to govern operations.
Disadvantages:
  1. Cannot hold title to real property. Setting up an interest-bearing accuont may be difficult.
  2. Inability to shelter participant�s individual assets from claims for damages arising out of organization�s activities.
  3. Not eligible for lake planning and protection grants.
Unincorporated status may be appropriate under the following circumstances:
  • Informality is desirable.
  • Small membership
  • Minimal activities
  • Small budget
  • Little danger of tort liability
  • No need to own property or hold a bank account.

Qualified Lake Association:

Advantages

  1. Legal certainty.  Nonstock corporations are governed by a well developed statutory framework (ch. 181 Wis. Stats).
  2. Simplified business activities.  An incorporated lake association can engage in a greater amount of lake protection activities by virtue of its ability to hold a bank account, make contracts and borrow money.
  3. Qualified lake associations are eligible for lake planning and protection grants.
  4. Limited liability.  Members, officers and directors can be sheltered from personal liability.
  5. Eligible for lake planning and protection grants.
 
Disadvantages
  1. Slightly more complex organizational form and more formality in operations.
  2. No authority over shoreland development or lake use.
 
Qualified lake associations may be appropriate when the following circumstances exist:
  • Lake organization expects to play active role in lake protection.
  • Larger membership.
  • Legal certainty desirable.
  • Long term existence desirable.
  • Activities create possible exposure to liability.
 
Lake Protection and Rehabilitation Districts:
 
Advantages:
  1. Because the lake district has the ability to tax property owners within its boundaries, it is generally in a better financial position to undertake various lake management activities.
  2. The lake district has all the powers of a body corporate.
  3. The lake district may regulate use of the lake through the adoption of boating ordinances if the authority is delegated from the appropriate units of government.
  4. The lake district may adopt certain powers of sanitary districts.
  5. Lake protection and rehabilitation districts are eligible to apply for lake planning and protection grants.
  6. Limited liability for officers and members.
 
Disadvantages:
  1. A more complex organizational structure requires a higher level of maintenance.
  2. All property owners within the district are subject to the district�s property tax levy.
  3. No control over shoreline development.
 
Lake district status may be appropriate when the following circumstances exist:
  • Lake organization expects to play active role in lake protection.
  • Legal certainty is desirable.
  • Long term planning for lake is anticipated.   
 
References: 
 
A Guide for Wisconsin Nonprofit Organizations, State Bar of Wisconsin (1992). 
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