FALLS RUN COMMUNITY ASSOCIATION

Meeting Minutes:

The Falls Run Community Association, Inc.’s Board of Directors met on September 26, 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, Dan Owens, Jim Stagner and Mal Malo. Art Gabler was away.

Also present: Susan Manch, Regional Area Manager and Sylva Southwell, Property Manager, both of Armstrong Management, Marvin Wagner, acting as parliamentarian and Ann Jones, Activities Director.

Dan Owens moved, 2^nd by Jim Stagner, to approve and suspend the reading of the minutes of the September 12th, 2007 meeting. Carried unanimously

Jim Stagner moved, 2^nd by Mal Malo, to approve the previous proposal submitted by Shenandoah Landscape Services in the amount of $5,760. The proposal will be attached to and made a part of the document written by Armstrong Management called 2007 Landscape Design Plans Provision Agreement between Falls Run Community Association and Shenandoah Landscape Services, Inc. The Design Plan will not be considered a total Master Plan, but rather a plan to develop certain areas of the common grounds in phases until all common grounds have been addressed. Carried unanimously.

Mal Malo moved, 2^nd by Dan Owens, to direct Armstrong Management, in conjunction with the other adjusting entries they must make when the 2006 audit is finalized, to reduce Retained Earnings by $59,441 and increase the Replacement Reserve by the same amount. The basis for this is a $40,657 investment in October 2005 that was not credited to reserves, $2,884 interest on that investment, and $15,900 additional cash investments that exceed the reserve account. After discussion when Toni Brown stated her dissatisfaction with the auditor for not picking up on this discrepancy during the audit process, the motion carried five to one with Toni Brown voting nay.

Mal Malo moved, 2^nd by Toni Brown, to remove the pots at the Middlebrook Gate, to leave one gate arm down while allowing the ad-hoc committee to return with its recommendations. A vote was taken resulting in a tie (Aye: Mal Malo, Toni Brown and Bill Nosal; Nay: Jake Bernard, Dan Owens and Jim Stagner) causing the motion to die; however, Bill Nosal asked for a revote whereupon Jim Stagner changed his vote to Aye and the motion carried. (See Notes for detail)

Mal Malo moved, 2^nd by Jim Stagner, at 12:30 PM to adjourn. Carried unanimously.

The Falls Run Community Association, Inc.’s Board of Directors met on September 26, 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, Dan Owens, Jim Stagner and Mal Malo. Art Gabler was away.

Also present: Susan Manch, Regional Area Manager and Sylva Southwell, Property Manager, both of Armstrong Management, Marvin Wagner, acting as parliamentarian and Ann Jones, Activities Director.

Dan Owens moved, 2^nd by Jim Stagner, to approve and suspend the reading of the minutes of the September 12th, 2007 meeting. Carried unanimously.

Gordon Ashley of Shenandoah Landscaping was present to report that most of the fall work is complete. More fertilizer will be applied later in the season. The seeding looks destructive, but it is the most effective method for reseeding especially with conditions like ours. It is very dry and rain would be very welcome to improve the process.

Various members of the Board and attendees raised questions about certain areas in the community. Gordon assured all that each area would be rechecked and taken care of.

Cindy Horan, chair of the Property and Grounds committee stated that we need to start adding top soil throughout the common grounds in phases. Shenandoah will provide a proposal for doing so.

There was a proposal to Pulte from Shenandoah and Farrar for top soiling the common grounds in the amount of $180,000. Pulte rejected the proposal.

As part of his comments, Gordon assured us once again that they are interested in having the community look as good as possible and are willing to work with the Association, even to the extent of providing creative financing, if necessary. As he has before, he reminded us we are suffering from drought conditions which make all maintenance difficult.

As has been previously announced, Falls Run Community Association now has a wine and beer license. Ann has briefed all concierge staff on the rules and regulations pertaining to the license. Rules and regulation for the Center need to be rewritten in light of recent decisions about Bingo, gambling, and alcohol consumption, etc. Ann provided the Board with her suggestions for changes. Her suggestions will be considered by the Board at the October 10, 7:00 PM meeting.

There was discussion about allowing the use of the pool and fitness equipment by employees, Ann Jones and Lin Bailey during off hours. The Board considered the possibility, but took no action, during an executive session agreeing, if approved, use would be restricted to employee only and not include any family member. Jake Bernard cited the CC& R’s Article 2.1, page 12, Right to Use and Enjoy Common Area as restricting the use of such facilities to Association members only. Bill Nosal countered that Article 4.8, page 21, Change of Use of Common Area made such a decision by the Board possible.

The Board asked that Marvin Wagner in his capacity as parliamentarian, review the CC& R’s and be prepared to advise the Board at the October 10, 7:00 meeting.

Mal Malo reported that after discussion with the Postmaster the mail boxes will remain clustered as they are now. The post office is firm in its position. There is a post office regulation in place that does not allow carriers to turn around. It is a safety issue.

Residents need to be aware that they can apply directly to the post office for their mail to be delivered to their house if they are physically unable to collect mail from their box.

Cox has assured us, in writing, it will not be billing us for any under billing during this past year. The Board had budgeted for a 2007 proposed increase that never happened. However, there will be an increase in 2008 to $13.40 per resident per month, totaling $132,000 annually. There will be a further increase in 2009 of $3.59 bringing the total per residence to $16.99. These rates will be reflected in future budgets.

There is a need to finalize the 2006 audit in order to file the insurance claims against Koger Management Company. The second draft does not remark on the accounts receivable due from the Villas; however, we should have that clarification by the end of the week. Toni Brown asked Mal to comment on the difference between the amount due from the Villas as reported on the 2006 audited Balance Sheet in the amount of $208,450 and the amount of $167,667 that was reported at the September 19, Town Meeting as the amount due to the Villas by Koger.

The FRCA audit figures can be broken down as follows: According to the auditor’s report, $27,405 was incorrectly paid by the FRCA for Villas’ operating expenses. Subtracting the $27,405 from the total of $208,450, leaves a remainder of $181,045 which is made up of assessments and working capital not received from the Villas. The reason assessments and working capital funds were not received by the FRCA from the Villas is not because the Villas never paid them. The Villas paid them but Koger Management Company diverted the funds and the money never reached the FRCA account.

The point is if the Villas were to recover the $167,667 from Koger and turn it over to the FRCA, there would still be a short-fall of $13,738 owing to the FRCA from the Villas, in addition to the $27,405 of operating expenses paid by the FRCA based on the audit.

However, Paul Niemi, president of the Villas Board, was at the meeting and stated that the Villas is doing further research to determine an amount of money that may have been paid by the Villas for FRCA operating expenses. That dollar amount has not yet been determined.

Our Replacement Reserve account is understated by a significant amount compared to our actual reserve investments. To correct the current financial statements, Mal Malo moved, 2^nd by Dan Owens, to direct Armstrong Management, in conjunction with the other adjusting entries they must make when the 2006 audit is finalized, to reduce Retained Earnings by $59,441 and increase the Replacement Reserve by the same amount. The basis for this is a $40,657 investment in October 2005 that was not credited to reserves, $2,884 interest on that investment, and $15,900 additional cash investments that exceed the reserve account. After discussion when Toni Brown stated her dissatisfaction with the auditor for not picking up on this discrepancy during the audit process, the motion carried five to one with Toni Brown voting nay.

The Finance Committee has submitted its recommendations for the 2008 budget. Mal Malo reported that an increase in the amount deposited to Replacement Reserves will have to be increased in 2008. After careful review, the Finance Committee’s recommendation for 2008 is an allocation of $254,000 that, if approved by the Board, would be made in monthly installments. The Finance Committee is submitting a negative budget to the Board with recommendations for bringing it into balance. The Board will meet in executive session at 10:00 AM on October 3, 2007 to review budget details.

Pulte has agreed to pay East Coast Fire Protection, Inc. $4,875 to repair the system per their repair proposal with the provision that… “Pulte/Del Webb will pay the agreed upon amount that East Coast Fire Protection has quoted which is $4875.00 to repair the deficiencies that were found from assessment of fire and security alarm system in Falls Run Rec Center on August 7, 2007. We would ask that once punch list is complete from East Coast Fire Protection assessment that list be signed off as completed.

from any future electrical work at Falls Run Rec Center.” (quoted from e-mail from Kimmel Daniels, Pulte General Manager).

However, the Board has already been advised by Jay Rogers of East Coast that the proposed repairs are just the first phase of necessary repairs to bring the system up to what it should be. The additional work required has not been specifically identified; therefore, there is no cost estimate. The Board will ask for legal guidance and is not prepared to make a decision at this time.

Jake stated that his original idea for the main gate was to remove the pots and replace them with curbing to maintain one lane. His suggestion was to backfill the curbed area with soil and landscape.

Barbara Chadwick, representing the newly formed ad-hoc Main Gate Committee, presented the Board with a petition signed by 142 residents requesting that the Board take action to remove the pots immediately and to spend no additional money until the committee can do further research and return with its recommendations.

1. Can a moving truck get through with just one side of the gates opening? Yes. Not a problem.

3. Does Jake keep a log of his gate repairs? He does turn in invoices for material costs. His labor is donated. He has replaced the gate arm three times in one day.

4. Would better gates eliminate the problem? Won’t solve the problem of people’s impatience.

5. How do we gain control at the Main gate. Legend gate is the same, but without issues.

7. The Board has a responsibility to correct problems that create cost and safety issues.

The discussion was lively ending in a motion by Mal Malo, 2^nd by Toni Brown, to remove the pots, to leave one gate arm down while allowing the ad-hoc committee to return with its recommendations. A vote was taken resulting in a tie (Aye: Mal Malo, Toni Brown and Bill Nosal; Nay: Jake Bernard, Dan Owens and Jim Stagner) causing the motion to die; however, Bill Nosal asked for a revote whereupon Jim Stagner changed his vote to Aye and the motion carried.

Susan Manch gave a brief historical review of the management’s charge for the resale package required when selling a dwelling. As of July 1, 2007 the State of Virginia mandated the maximum fee could be raised as high as $325. Armstrong raised its fee from $100 to $275 which barely covers its costs in many instances.

Margie Kramer, president of the Election Committee reported there were six nominations received for the FRCA Board of Directors election. This was accomplished after a great deal of effort on the part of the committee. The candidates will not be announced until they have returned their required form by October 2, 2007. There will be a Meet the Candidates night as in the past two elections. No voting will be allowed until all candidates have spoken at that event.

Mal Malo moved, 2^nd by Jim Stagner, at 12:30 PM to adjourn. Carried unanimously.