Summary of Finance Committee Meeting of 16 May 2006

Present:

            Finance Committee:  John Frisch, Don Horan, John Lynch, Paul Rankin, Jean Strub

            Board of Directors (BoD):  Mal Malo

            Koger Management:  Sylva Southwell

Evaluation of Proposals:  Sylva Southwell brought proposals for three different tasks for the committee’s review.  Proposals from Executive Electric Services, Inc. and  Robert D. Samuels, Inc. to install a new street light at the Middlebrook entrance were evaluated.  The committee recommended that the proposal from Robert D. Samuels, Inc. be accepted.  Proposals from Executive Electric Services, Inc., Ashwood Lock & Security, and Omnitech Photonics & Controls, Inc. to install a closed-circuit television system to observe the indoor pool, outdoor pool, and the fitness room were briefly discussed.  The committee deferred recommendation until the purpose of this camera system is better defined.  The committee briefly discussed proposals from Hartwood Disposal, Inc. and Shifflett’s Trash Service for rubbish pick-up service.  However, since the contract with Waste Management, Inc. runs through August 2007, any recommendation would be premature.

 Financial Reports of 30 April 2006; Financial Reports in General:  There was a lengthy discussion concerning the quality and accuracy of the monthly financial reports and overall financial management by Koger Management.  There appears to be a lack of quality control.  Expenses are frequently debited from the wrong sub-accounts; payments are occasionally late and incur a penalty charge; interest earned on our investments is not properly recorded on the monthly financial reports, etc.  The committee has tried to obtain copies of all invoices supporting our 2006 financial activity, but with little success.  Mal Malo directed Don Horan to arrange a meeting with Jeff Koger at Koger Management’s Fairfax office to discuss these issues.  Progress with requested modifications to the monthly Balance Sheets was also discussed.  Most of the requested modifications have been made by Koger Management.  However, the status of the investments is still not being updated each month.  The monthly financial reports are now being provided electronically.  

Monitor Community Center Account:  Computer based checks are in.  John Frisch will work with Ann Jones to show her how to use them.  Ann successfully reconciled the 30 April bank statements for the Community Center account with the Quicken data.  John will continue working on using Quicken to provide a summary of included items when mixed sums are received or sent.

 Contracts:  The contracting action list was reviewed.  If the BoD plans to purchase the fitness equipment for $1, notice must be immediately sent to the appropriate company notifying them of this intention.  The timing of the mandatory 30-day notice is unclear, and the deadline for notification could be as early as 1 June 2006.  The guidelines for contracting prepared by the Finance Committee have been approved by the BoD and will apply to all contracts for acquisition of goods or services for the FRCA.

 Investment Strategy:  The investment of FRCA funds was discussed based on an analysis document prepared by Paul Rankin.  It appears that our funds are presently invested in a Merrill Lynch Working Capital Management Account (WCMA), ~$60,000; in a money market account at Community Association Banc (CAB), a division of the First National Bank of Arizona , ~$333,000; and a certificate of deposit (CD) in the Merrill Lynch (ML) Bank, ~$100,000.  The WCMA at Merrill Lynch is a securities account and, as such, has no FDIC insurance protection.  Also, a significant portion of the investment is in bonds, which are losing value in today’s market.  Therefore, the committee recommends that the funds invested in the Merrill Lynch WCMA be completely withdrawn as soon as possible, the funds be deposited in the CAB MMKT Account, and the Merrill Lynch WCMA be closed.  The CD at the Merrill Lynch Bank will mature on 31 May 2006.  In order to completely configure the FRCA investments, the committee recommends that the CD not be allowed to renew when it matures on 31 May 2006, and that the funds also be deposited in the CAB MMKT Account.  The Finance Committee will then recommend an investment strategy for the FRCA funds using a combination of CDs in FDIC insured banks and U. S. Treasury bills with maturity dates compatible with FRCA's replacement reserve requirements.