FALLS RUN COMMUNITY ASSOCIATION

Meeting Minutes:

The Falls Run Community Association, Inc.’s Board of Directors met on September 12, 2007 for a Work Session and Open Forum at the Center.

A quorum was present. Board members attending were: Bill Nosal, Jake Bernard, Toni Brown, Art Gabler, Dan Owens, and Jim Stagner. Mal Malo was away.

Also present: Jim Armstrong and Sylva Southwell, Property Managers of Armstrong Management as well as Susan Manch of Armstrong Management.

Art Gabler moved, 2^nd by Jim Stagner, to approve and suspend the reading of the minutes of the August 22, 2007 meeting. Carried unanimously.

Bill Nosal introduced Jay Rogers of East Coast Fire Protection, Inc. Mr. Rogers was invited to give an overview of the Fire Alarm System Assessment Summary, dated September 4, 2007, his company presented to the Board. (See attached September 12^th notes for additional detail.).

Jim Stagner, 2^nd by Dan Owens, moved to accept the proposal for new liability insurance submitted by Nationwide Insurance Company totaling $15,370. Carried unanimously.

The umbrella policy was increased from $2,000,000 to $6,000,000 after consideration of the exposure we face because of the pools, and the work-out facility.

The current budget allows $25,000 for insurance and the quote from our current carrier for this proposal, with umbrella of $2,000,000, was $20,404. The switch represents an approximate savings to the Association of $5,034.

Toni Brown moved, 2^nd by Jim Stagner, that based upon the opinion of counsel the FRCA Board instruct Ed O’Connell of Whiteford, Taylor & Preston LLP to issue a letter to Kevin Cavanaugh of Goldklang, Cavanaugh & Associates instructing him to reclassify $93,600 of the $180,798.50 from Koger Management to the Villas account. Carried unanimously.

The reclassification will decrease the receivable from the Villas to $208,450 and increase the receivable from Koger Management to $98,631. (See attached notes for additional details.)

Jake Bernard moved, 2^nd by Dan Owens, to close one side of each inbound and outbound gate at Legend and Middlebrook. Carried unanimously.

Joan Ryan, resident, asked the Board for permission to make a special presentation, which the Board granted. (See attached notes for additional details.)

Art Gabler moved, 2^nd by Dan Owens, to adjourn the meeting at 8:35 PM. Carried unanimously.

There will be a special meeting at 3:00 PM on Monday, September 17, 2007 at the Center to review the repair of the fire alarm system at the Center based on the report from East Coast Fire Protection, Inc. A decision will be made on how to proceed.

The Board will also address concerns expressed by Joan Ryan at the September 12, 2007 meeting.

A Town Meeting will be held at Gayle Middle School on Wednesday, September 19, 2007 at 7:00 PM.

The purpose of the Town Meeting is to inform all residents of Falls Run regarding the legal issues surrounding the Koger Management bankruptcy and potential insurance claims issues, as well as provide a report from our auditor on the 2006 draft audit.

The Falls Run Community Association, Inc.’s Board of Directors met on September 12, 2007 for a Work Session and Open Forum at the Center.

A quorum was present. Board members attending were: Bill Nosal, Jake Bernard, Toni Brown, Art Gabler, Dan Owens, and Jim Stagner. Mal Malo was away.

Also present: Jim Armstrong and Sylva Southwell, Property Managers of Armstrong Management as well as Susan Manch of Armstrong Management.

Art Gabler moved, 2^nd by Jim Stagner, to approve and suspend the reading of the minutes of the August 22, 2007 meeting. Carried unanimously.

Bill Nosal introduced Jay Rogers of East Coast Fire Protection, Inc. Mr. Rogers was invited to give an overview of the Fire Alarm System Assessment Summary, dated September 4, 2007, his company presented to the Board. The assessment report was forwarded to Pulte and Stafford county officials including Supervisor, George Schwartz.

East Coast was hired to take over the monitoring of the alarm system and in that process discovered other issues which resulted in the comprehensive report detailing the various problems with the current fire alarm system. Key highlights of his presentation included:

Ø The system needs to be repaired while “backward engineering” is done to correct deficiencies.

Ø In the mean time, the Center is adequately protected by the sprinkler system which has been operational at all times

A repair proposal was attached to the assessment report; however, Mr. Rogers pointed out the work described in the proposal was just a beginning of what needs to be done to fully correct all deficiencies.

Bill Nosal proceeded to add to Mr. Rogers’ comments. He pointed out how we have been plagued with false alarms, creating a major nuisance. He then announced that he had met with Kimmel Daniels (Dennis Ouellette’s replacement) and Pete Cook of Pulte and reported that Pulte will engage Executive Electric to proceed with repairs to the system based upon the report by East Coast, under the supervision of Pulte staff. Mr. Daniels also told Bill that if the repairs by Executive Electric did not work out they would then bring in East Coast.

On the same day that Bill met with Pulte representatives, the fire marshal issued Falls Run with a citation based on the East Coast report. Corrections to the system must be made within thirty days.

Jim Armstrong introduced Susan Manch as the new Regional Area Manager for Armstrong Management who will be working out of her Fredericksburg office at 10500 Wakeman Drive, Ste 100. Susan is a certified property manager with over 15 years of experience. Jim Armstrong will become less directly involved with Falls Run’s management. He worked closely with us during the management transition and the Koger situation, and now believes the time is right to shift the responsibility to the Fredericksburg office. Welcome to Falls Run, Susan. You will not be bored!

Bill Nosal announced that both boards of directors met on Monday, September 10, 2007 in Fairfax at the office of Armstrong Management. The purpose of the meeting was a briefing by our legal counsel and our accountant in advance of the Town Meeting that will be held at Gayle Middle School on September 19, 2007 at 7:00 PM. The purpose of the Town Meeting is to inform all residents of Falls Run regarding the legal issues surrounding the Koger Management bankruptcy and potential insurance claims issues, as well as provide a report from our auditor on the 2006 draft audit.

While at the meeting in Fairfax, the Board reviewed quotes from five insurance companies that responded to the Request for Proposal that went out for new liability insurance.

As a result of that review, Jim Stagner, 2^nd by Dan Owens, moved to accept the proposal submitted by Nationwide Insurance Company totaling $15,370. Carried unanimously.

The umbrella policy was increased from $2,000,000 to $6,000,000 after consideration of the exposure we face because of the pools, and the work-out facility.

Armstrong Management contacted five landscape architects. Three responded with an interest in providing a landscaping master plan. Any architect will need detailed direction for the landscape goals from the community.

There will be meeting of the Property and Grounds Committee at 1:00 on Thursday. Those in attendance at the Wednesday night meeting were urged to attend.

As has been pointed out many times, once a master plan is in place the work to complete it will be done in stages, the cost will be several hundred thousand dollars which will be included in annual budgets and will take several seasons to accomplish.

Toni Brown gave a summary of the briefing the Board received at the Monday, September 10th meeting in Fairfax from auditor Kevin Cavanaugh.

The draft 2006 audit shows the Villas owing the FRCA $302,050 and Koger Management owing the FRCA $5,031.

We know the Villas forwarded their assessment payments to Koger Management; however, those payments did not reach the FRCA account. We also know that Koger Management was making unauthorized withdrawals from the association’s accounts over a period of years.

Mr. Cavanaugh reported that $180,798.50 had been deposited back into the FRCA accounts during 2006 by Koger but that the source was undetermined. However, having stated although the source was unidentified, in the interest of consistent accounting, Koger Management was given credit for that amount along with another $4,250 unidentified amount.

The question was raised whether the 2006 draft audit could be revised to reflect that the August 25, 2005 payment of $93,600 from the Villas to the FRCA could be credited as having been received by the FRCA on June 30, 2006 as part of the $180,798.50 from Koger Management.

The reclassification will decrease the receivable from the Villas to $208,450 and increase the receivable from Koger Management to $98,631.

There is an insurance policy in place that will allow each association to make a claim of $100,000 for losses incurred. It should be noted that recovery of funds via insurance or bankruptcy is not guaranteed and will take longer than we would like.

During the September 10th briefing, it was noted that an expense for property tax in the amount of $8,438 was recorded in the 2006 draft audit. It is a matter of record that the Board received a refund from the county for that erroneous payment. The county’s refund check was forwarded to Koger Management; however, Sylva learned during a follow up with the county that the check was never cashed. The county will issue a new check for $9,994.51, an amount that includes interest.

Jake Bernard moved, 2^nd by Dan Owens, to close one side of each inbound and outbound gate at Legend and Middlebrook. Carried unanimously.

The rational behind this decision was to preserve the gate motors. It was determined closing one side of each gate would have no impact on emergency vehicles entrance.

The deadline of September 25^th for nominations to the FRCA Board of Directors is fast approaching with only two nominations currently received by the election committee.

1. Will the Town Hall meeting be taped for later viewing by those who are unable to attend?

Yes. The Board was reminded they had previously approved (see July 25, 2007 notes) the purchase of a camcorder and equipment to be used for this purpose.

2. Are our storm water management ponds capable of handling several days of heavy rain fall?

Include such an option in the 2008 outdoor pool contract and be sure the extra cost involved is included in the budget. Providing life guards could be a problem. This decision needs to be addressed at the time the Board is deciding on pool contracts.

Jake announced that he is working on a plan to get rid of the pots which he will present at the 10:00 AM Board meeting on September 26, 2007. General discussion followed with considerable input from community residents indicating they want to have input in any decision about the gate entrance.

The Board is willing to listen to resident input, yet, as was pointed out by Dan Owens, the ‘buck’ stops with the Board. The Board is elected to be the decision maker and is prepared to fulfill that role when necessary. It is not possible to please everyone.

5. Joan Ryan, resident, asked the Board for permission to make a special presentation, which the Board granted. Joan had written to the BOD and Armstrong on August 8^th about closed meetings between the Board and or management with Pulte to discuss any construction deficiencies throughout the community. She again voiced her concern about these closed meetings and added her concern that homeowners might be left paying to correct problems that were caused by Pulte/Del Webb. On August 24^th, she contacted George Schwartz, Falmouth District Supervisor to ask about the bonds being held by Stafford County and to express her concerns about : 1) retaining walls; 2) erosion and drainage; 3) ongoing electrical problems at the Center. Mr. Schwartz forwarded her e-mail to the Stafford County Code Administration office. As a result, she met with the appropriate county officials. Joan’s presentation consists of twenty-four (24) pages which are included here as an attachment. A hard copy of Joan’s report is also available at the Center.

The Board was unable to respond to this question/comment. The questioner’s point was made that it should not take days, but hours, to correct or replace pumps.

7. It was noted that Shenandoah broadcasted seed onto driveways and sidewalks while seeding in the Villas. Is that to be expected?

No. As part of the agreement to obtain an easement with the owner of the property the monument encroached on, it was agreed the light would be off. It was shining in the bedroom window of the owner’s house. It was also noted that the easement has yet to be filed as it is still in the hands of Pulte although the owner has signed the easement.

Before the library is opened, maybe 2008 or 2009. The reported cost of the signal is $200,000.

1. The committee will begin community inspections on October 9. They will be surveying for infractions of design guidelines.

2. Each homeowner should retain a copy of any modification request approved by the committee as part of household records.

5. Homeowners are responsible for their grass strip by the street. The committee acknowledges this is a difficult area to maintain, but it must be mowed and ideally, watered.

Art Gabler moved, 2^nd by Dan Owens, to adjourn the meeting at 8:35 PM. Carried unanimously.

The Board will also address concerns expressed by Joan Ryan at the September 12, 2007 meeting.

A Town Meeting will be held at Gayle Middle School on Wednesday, September 19, 2007 at 7:00 PM.