Board Minutes February 2005

MINUTES OF A MEETING

OF THE BOARD OF DIRECTORS

POINT PLEASANT VILLA OWNERS’ ASSOCIATION

A Board of Directors meeting was held on Friday February 4 and Saturday, February 5, 2005 at the resort.

The following Board members were in attendance:

Jack Cistriano, President Tim Reynolds Walter Oliwa

Mary Ann Simensen Lou Flori Bruno Battistoli

Bruce Watson

Others present at times:

Gary VanOosten BobSteller B-14 Joanne Costello D- 18
Larry Kemp

Jack called the regular Board meeting to order at 8:34 am. He indicated that he wanted the new Board to move forward in a positive manner to make important decisions that need to be made.

Approval of Minutes

Moved to approve the Board minutes of Annual meeting of October 23^rd as adjusted. 2004. All in favor

Moved to approve the Board Executive Session Minutes of October 22^nd and 23^rd, 2004. All in favor.

Financial Matters

Bruce introduced Larry Kemp who will be working to support the Treasurer and Amelda in the same way that Jeannie Brennan did in the past.

2004 Closeout - Larry discussed his findings with the Board of the closeout for December 2004. There was a deficit of $50,325 in the operating account at year-end. The operating account owes more than $30,000 to the supplemental budget account in funds that must be transferred, because they were deposited in the operating account upon receipt from the owners. There is an account receivable from Antilles of some $20,000, but Bruce said there is an account payable to Antilles from Water Bay Management of some $16,000-$17,000 which would offset it, but is not shown on the PPOA books. Water Bay debts should not affect PPVOA’s account. Larry said that payable must be recorded in the PPOA books. . Receivables are very high. They were $132,727 on December, 31. 45% of what is owed is from 16 units. 8 units owe in excess of $4,000. We must do something about this problem. Our attorney has indicated that we can cut off utilities on delinquent owners and it is not considered to be a constructive eviction. 75% of our owners pay everything on time. We need to draw the line. We have accounts payable of $101,064 as of Dec.31. The largest is $40,000 to WAPA. We have cleared up some old balances. .

Lien status – Liens have been filed on 4 units - D-18, C-12, A-8, D-6. Each owed around $5,000. $29,683.18 is total still owed from assessments. We need to start doing something to get the funds from the others who owe back dues, assessments and utilities. Looking at the big picture the total owed is $83,000 from 16 owners, Agave, Fungis, and Antilles (which may be a wash). The Board discussed how serious we need to be. If we shut off utilities, what are the cutoff dates and the amounts for cutoff? We need to be realistic. Being reasonable has not brought in the funds. What is the late fee policy? If you want your electricity turned back on you pay a late fee and service charge to restore power. What will these costs be? WAPA shuts off after 10 days. Lou suggested 2 months or $2,000 whichever is first. To our good we have only $29,000 over 90 days late. In many cases there are mitigating circumstances, but we have to apply any policy uniformly. The Board has been too lenient in the past.

Moved that if late in payments of any monies owed 60 days or more you are subject to utilities being shut off without further notice. All in favor.

Moved that there will be a $50 reconnect fee for utility reconnection. All in favor.

Our utility bills have been coming out late. We have just sent out the bill for November utilities. This is one reason why we are behind with WAPA, since their bills come on the first of the month. The burden is on PPOA to provide a timely bill. The entire billing process must speed up. Procedure: Warning on shut-off of utilities to go out on every statement, along with notice of the reconnection fee. But billing process is too slow, and will be refined with Larry’s input. Bruno and Louis will develop language for late statement with Larry Kemp.

Moved that we conduct a review of the bookkeeping processes and develop policy for return check charges and late fees charges that is consistent with the bylaws. All in favor. (Bylaws say $35 late fee.)

Cash flow analysis for 2004 - Maintenance income is below predictions. This is a convenience for owners, but is costly to our budget because we do not have the staff to perform the work since currently less than half the staff able to provide this service. Utility income is way under budget since WAPA has increased rates 4 times and we have not. We will discuss later the utility costs. There is a big disparity in water usage. Security guards are exceeding budget. By switching to contract the groundskeeper is under budget by $20,000, but this doesn’t include the contract portion. Credit card fees are higher, but some of this cost is due to assessment and should be deducted from the assessment account. Maintenance supply is double the budget. Grounds and landscaping includes the $6,000 split fee between PPOA, Reynolds, and Antilles at the front entrance. Utilities are $90,000 over the budgeted amount. Net loss is $45,600. Antilles receivable/payable accounts have not been reconciled since 2003, but may turn out to be almost a wash. Antilles owes us for maintenance and electricity and we owe them for security and exercise equipment. Antilles impact needs to be reconciled to complete these financials as a payable and/or a receivable. We are installing electric and water meters for the commercial laundry portion. The auditor review by Jeannie Brennan will be scheduled for April.

Planning - Bruno and Larry will work on billing as a first priority, then policy and procedures for billing, ‘04 reconciliation, ‘05 budget revision, and the supplemental budget.

2005 budget – Bruno spoke about the 2005 budget and its problems. The first problem is in utility income that is short of budget expectations. Consumption has gone up so income should go up. We are not sure why the consumption has increased. It could be because of increased occupancy. We need to adjust utility income because of increased rates and usage. Under payroll we will increase the maintenance supervisor from $37,400 to $40,000 and add one person to maintenance staff at $10/hr. for a total of $20,800/year. Under expenses, we will be spending more for accounting consultants. Larry’s costs will be more than the $1,500 we’ve budgeted for the year since he charges $75/hr. We will increase the yearly figure from $1,500 to $12,000. The Consultant budget line, which we’ve used for Bruce, is only $5,000, but support is needed since Gary has had little support on the maintenance side and is consumed there. We are going to use Bruce through the owners’ meeting, so we are funding that line through October. Travel expense for the consultant needs to be increased to $5,000 from $1,500.The manager’s job is more than one job, but not two. We will budget $40,000 for the consultant line, which is presently at $5,000. Credit card commission was increased to $20,000. Electrical and mechanical supplies were increased to $9,000 from $3,600. Building and maintenance supplies was increased from $24,000 to $30,000. Plumbing & Fixtures was increased from $0 to $9,000. Landscaping is now all outsourced so payroll for groundskeeper was reduced to $1,655 to cover the costs for January. The Grounds and Landscaping line will increase to $36,000 to pay for contract labor. Printing and office supplies were not budgeted so a line was created for $3,600. Electric power was seriously under-budgeted in 2004 ($$353,043 actual vs.’04 budget of $263,292, a difference of $89,751), and we are budgeting $400,000 for ‘05. The electric income was budgeted at $272,000, but came in at $245,515, a shortfall of <$26,485>. We increased this budget line to $320,000. These items will be used to correct the budget but we cannot change the monthly condo fee. Overages must go into an assessment.

Quarterly performance – The operating account is running a $50,325 deficit with outstanding payables in excess of $100,000. We haven’t yet determined the exact amount the operating account owes to the supplemental budget account. Larry Kemp will examine the supplemental budget account and produce a balance sheet for it. Dealing with our funds is a tough job since we never have enough funds in our accounts, but Amelda is managing the cash flow as best she can. We will need $20,000/mo. to pay the liability insurance, and at least $20,000 for a down payment for the liability insurance in the spring.

Supplemental Budget – According to Bruce’s spreadsheet, about $30,000 is still outstanding. Bruce is projecting about a $30,000 shortfall in the supplemental account – Bruno has that figure at about $38,000, which is roughly equal to the non-approved disbursements (repairs not included in the supplemental budget estimate, including:

upper and lower highrise electrical failure, upper and lower highrise deck repairs, , B-20 walkway, repair needed on B-21 repair because of the B-20 repair, lower highrise electrical and D14/taxi curb/middle pool tile/crack repairs and misc. These were not specifically in the supplemental budget. The lower highrise was supposed to be in the 2004 budget not the supplemental, but was under-budgeted in the 2004 regular budget. We have repaired concrete on three buildings instead of one. Subsequent to the determination of the supplemental budget some emergency deferred maintenance had to take precedence.

Moved subsequent to our approval of the supplemental budget a number of unbudgeted maintenance issues arose that were emergency in nature that fell into the basic objectives of the special assessment and supplemental budget. They were discussed and it was agreed that they took precedence. All in favor.

New capital reserve assessment and procedures – This new account was not intended to be used as a dipping well or as a supplemental budget. The funds need to be segregated in a separate account. We need to not touch it in order to build a reserve. Bruno wants restricted signatures of Treasurer and President. We have decided to use the e-trade account for these funds. Signatures on the operating budget and on payroll account will be Amelda, Gary, Bruce and Bruno. E- trade account will be the board officers. We need to create a new PPOA sweep account into which checks are deposited and funneled into appropriate accounts that use the same signatures. Special assessment supplemental account signatures will be Gary, Tim, Lewis and Bruno. We need to develop a petty cash account for Gary to use for operational work. He will be accountable for this to the Board as a single signature account. Gary needs to come up with an inventory list.

Sale of units - D-12, B-14, A-7, C-12, C-2, D-8, F-11, F-3, D-25, B-25, and B-26 are on the market or under agreement.

Insurance Matters – property insurance estimates are $250,000 plus interest for $1.5 million; $1 million liability insurance bill came in at $63,000, D & O was $2,400. Manfred’s proposal would currently not satisfy mortgage underwriters.

Property Report

Gary prepared a comprehensive report for the Board. He reported that B-20 is finished.

Quotes for the B-29 deck came in for concrete, wood, and ipe. They are substantial. Another possibility is to jack it up instead of tearing it all down. We must get the footings on solid ground no matter what we do. This is a big hand labor job. This will be at least $10,000 to $15,000 job and will be tried before the removal of the entire deck. The Wastewater and water plants have had all the electrical updated, but we need an emergency eyewash station there to be OSHA-compliant. We need to consider backup vertical pump for the lift station and 2 backup pumps for gray water so that if there is a failure in one pump the sewage does not spill down the hill. Both plants are running now as good as when they were new.

Major electrical repairs were needed for cabling on the property. Cables were rated at code for 30 years when installed, but this is not code any longer and they have been in the ground now for 30 years. Now code is for 60-year load. One cable went down this year. We need to plan to begin replacement before additional breakdown. This last one cost $21,000 for the lower highrise and Fungis for only 300 feet. The cable cost was almost half of the bill and we need to buy the cable in the states where it will be cheaper. We will need about 2,000 feet, since we have to cover up and down the hillside, D units, and the shoreline. This should be done in phases.

Phones – Phone lines are deteriorating. S&R does the phones. The switch in the office is the property of Antilles. We need more lines and we have internal wiring problems.

Preventive maintenance program – Lou wants to track what it is that breaks before it breaks so that we could save money. We don’t have the data now on usable life of equipment, but it is available in the Smart Wear software to tell us what repair was requested. One of Gary’s long-range goals is to do preventive maintenance and not put out fires. Check valves on water heaters are one big prevention issue, but that would be a cost to owners. It’s a case of lack of funds. We have to repair any dangerous ones first.

Railings - We can’t re-rail the property for several years since it is too costly. The bylaws say that limited common areas are the responsibility of the owner, but we have historically done these repairs on railings and absorbed the costs. We cannot do this any longer. Railings are the responsibility of the owner.

Repair billing – most all maintenance items should be billed out including electrical, plumbing, and railings. Limited common areas are the responsibility of the owner. We need to make a list of items that PPOA is responsible for and what the owner is responsible for and post it on the web site and have it as a one-page handout. The Board has the responsibility of repairing in an emergency basis and billing the owner for items that are unsafe. As of today, per the declaration and bylaws, we are not paying any longer for limited common areas. We should also make a list of estimated costs for frequently requested repair items to assist owners.

Moved that the minimum hourly rate for maintenance billing to owners is $40. All in favor.

Choice TV contract – Most units are connected.

Electrical poles and WAPA – the leaning pole is their pole and the transformer is theirs, but transformers are not their business any more. They will move the pole to level ground. Our best option is to move the pole. If we can get a ground transformer, that would be the best solution unless we would be required to bury the lines down the whole hill. The potential cost is $15,000.

Lighting test in A building has not been happened yet because we haven’t got the bulbs. A 60-watt light bulb consumes 60 watts, the florescent light bulb consumes 14 watts. Bruno will ship some in from the states.

Animal violations – Cats are in a lot of units. We don’t want to deal with barking dogs and dog waste. Fines on dogs have not been given since a Board member has a cat and other owners have cats, birds, and gerbils. Cats serve a purpose in keeping the rats down. The declaration indicates that you can petition the Board for exemption subject to rules that they establish. We want the dog rule enforced. Gary will send notices to everyone he knows who has a pet that indicated that the Board intends to follow the rules and they can petition the Board for an exemption.

Paving – Spots needing repair have been highlighted. We have not done this work because of lack of funds. Tim will pave up at the top and Locke will do the big pothole at the bottom of the hill. We need to divert the water coming down the hill toward the A building with some type of speed bump. We need more concrete work, but a lot of work goes into the preparation for the concrete. It will have to be done in phases.

Landscaping – it would be nice to have irrigation for the plants along the road up similar to the plants in the front of the property.

Parking issues – Sticker purchase is going well. Our issues are few and far between. Security has been given authority to do what is needed without warning. Towing will be to a site off the property. Enforcement for employees who violate the parking rules is weak. We do not have to allow public access to the water.

Pools have been completed. We did not do tiling on the middle and upper pools.

Garbage problem – There is trash all over the property. We need to train maintenance staff to pick up what they see. This is being addressed by Gary and will be addressed more in the future. The receptacles are in bad shape. They are outdated and too small. Except for the cost of garbage bags our system works. We need larger containers. We do have daily pickup. Non-household trash is not to be put in these containers. We spend $28/wk. on garbage bags alone.

Old Business

Bylaws are now at 66.22% based on the 100% ownership list. 12 individuals were not entitled to vote because of failure to be current with fees. We need to determine legally if the base for passage should be the 100% or 100% minus those ineligible to vote. Based on the totals so far, the bylaw changes have passed, but we need more owners to vote in order for the declaration changes to pass.

Request of waiver for B-20 window - The windows we have now were not available. It was done because of continuity to match the other window that PPVOA installed in the previous reconstruction. B-29 had a similar replacement when it was rebuilt. Both windows came in bigger than spec. The size of the pane makes it look different. Jack reviewed the policy for change that requires prior board approval. We want to maintain continuity. Mary Ann indicated that she would not have given approval if the Board itself in previous construction prior to the arrival of this owner we had not done the original window change. The owner needed to make matching windows for unit consistency. Since this window was installed we have received many positive comments. Bruce indicated that if we were to allow windows of this type they should stay within the original size. The Board agreed that with the measurements we would approve.

Consistency for changes - The Board discussed a policy for consistency when owners come for changes. Most particularly we expect to receive requests for windows and railings. Long term, the new railing fastening system is better because it does not trap water. Gary agreed that how it is fastened on the bottom is an improvement. Tim indicated that esthetics is a big issue and is concerned it will become a hodgepodge if we don’t set standards. Bruce indicted that the new type fasteners must have washers or flashing. Since we can’t modify the entire property we need to maintain the look. The Board fabricated the railing in B-20 as a model. In the current decking there is nothing to fasten the verticals to. Lou indicated that failure of the current decks is due to the design of construction and developed a design to repair the current decks. He suggested an architectural review committee to review requests according to specs. We should announce that if you are considering any changes it must be according to the specs and come to the Board for review prior to construction. The board did a model to try a new system, but since then we have reviewed our position and since we cannot afford an assessment for this purpose we must stick with the old style. The same stain must be used. Bruce and Gary will spec out prototypes for the May meeting.

Drew Brown’s small claims suit – We won in court, but Drew has only made limited payments toward his outstanding bill. He thinks he has established a payment plan with Amelda Miller, but she does not have the authority to do this.

Gary’s Written Property Report – Gary prepared a comprehensive report for the Board. Two staff members have left. We have hired one new person, Timmy, who is on a 60-day probation period. We need a replacement for Malcolm, who has resigned. We need the supervisor to keep workers going all day and deal with time cards, vacation requests etc. We need to increase the maintenance supervisor to $40,000 and add a maintenance man at $22,880. We would like another maintenance man $20,800. We need these employees to have varied schedules so the property is covered on site 7 days a week. Gary has been working 7 days a week. The intent is to alternate covering weekends and stagger the workforce by days and hours to provide support.

Complaints - Gary highlighted the lack of direction for complaints, issues, and concerns. The board indicated that they are to be channeled through Gary and sent to the Board through Bruce for concerns. Gary appreciates the support and help.

Lighting - We need to look in detail at the May meeting for the lights on the property. Gary will put numbers next to items he has found needing repair and replacement.

Review of the Purchase and Utilities and Development Agreement – We are close but there are a few details that need to be accomplished. Mary Ann voiced concern about being left out of the last loop and still not having exhibits in hand. Lou indicated that he has a copy and we will get together on this. Concerns were raised on unrestricted easements for the new development. Concerns related to the road extension by the D building which Tim said he could live without this. Discussion took place relative unrestricted easement and its impact on new owners being able to walk their animals on our property. Extensive discussion took place relative to this. Tim wants bullet points inserted into the contract to give to Tim. Mary Ann and Lou will meet today and will copy Tim, Mike and Jack. The utility agreement needed only a few technical changes and the need to deal with treating their sewage. We will be ready to come to closure in 30 days on this issue. We want the deal, but just want to refine the details.

New Business

Assessment – Current balances show that we have spent $303,199.24 so far from the special assessment out of the $382,400 billed. $29,194 is still outstanding. We will get an analyzed statement of the account from Larry Kemp. We are examining the statement to see if the non-approved disbursements will need to be added to the new special assessment. We expect there will be approximately a $35,000 shortfall in the previous assessment. Bruno distributed a sheet based on the effect of the budget changes discussed yesterday. The net increase in expenses leaves us $79,473 short of needs. Current accounts payable is $101,064. Accounts receivable is $122,727, but includes the Antilles amount of some $20,000, which probably will be offset with a payable. Our single biggest expense is $400,000 for utilities with 4 rate increases during the year, but this is still a best guess based on continually increasing rates. We must cover this operating deficit in the new assessment. Our operating shortfall is projected at $165,000. In addition we need to cover shortfall in last assessment. Some of this we need right away but the money may not come in quickly. We will give the owners 30 days notice.

Key items to include in special assessment are: Coverage of shortfall on budget of $35,000, B-29 repair of $55,000; replacement of light pole of $15,000; lighting and outdoor ground fixtures $10,000; 2 gray water back up pumps at $600 each, $1,200; lift pump for sewage $4,000; barrier cable as first part of 3-year plan for $30,000; trash receptacles for $5,500; phone line replacement $25,000; concrete road repair $7,500; parts inventory including water heaters and air conditioners of $5,000; common railings and stairs in common areas $10,000; deferred electrical repairs and security for transformers $10,000. This total is $213,200. When added to the $165,000 projected increase in 2005 budget, this yields a figure for a special assessment of $378,200. $56,000 could be deferred if necessary for lower priority items: such as cable and phone, but it should be noted that these items could fail at any time, resulting in an emergency repair that would be more costly than a preventative replacement. All prices are ballpark estimates.

Moved to have a special assessment for 2005 for a studio share of $3,000. All in favor

Moved to split into 2 payments April 1, and July 1. All in favor

Master Hotel Rental Agreement – Comments received from Belfi, Simensen, and Watson are being incorporated into the original document. Bruce wants to supply all Board members with the opportunity to review for their input. There are issues like security and capital improvements that need to be put into the agreement. This agreement gives us the opportunity to be unified and collective in our discussions with Antilles.

Appearance and Marketing – general appearance from landscapers is OK, but they only cut and take. We need to consider wood chip, dirt, and plantings to make PPVOA look better. Response is that rain washes it out.

Noise – Some A building units have problems relative to loud talk re laundry needs early in the morning. Perhaps a solution in addition to the quiet request is to block off the door on the A building side. Windham has a sand cleaner running every other day early in the morning which creates incredible noise.

Smith Bay Owner’s Association – Mary Ann indicated that it should be shut down at the same time as Water Bay.

Energy crisis – Can we get someone to assess all the different meters and consumption? Registe is the most logical person to do this. We still have lights on everyday during the day. This needs to be corrected. Out of control landscape growth is responsible and it must be cut back so the timers function properly.

The Board thanked Gary for his hospitality. Jack thanked the Board for their efforts. Bruno thanked Jack for how well he ran the meeting.

Next meeting is May 27 and 28, 2005

Meeting adjourned at 1:10 pm on Saturday.

Respectfully Submitted,
Mary Ann Simensen
Secretary