FALLS RUN COMMUNITY ASSOCIATION

Meeting Minutes:

Minutes

Meeting of the FRCA Board of Directors

Date: 22 October 2008

Time: 10:00am

Members Present: Toni Brown, Don Webb, Harriet Schrader, Don Horan, Jack Mounts, Jake Bernard, Chuck Strub

Members Absent: None.

Others Present: Susan Manch, Armstrong Management Services.

I: The meeting was called to order at 10:00am by Toni Brown, FRCA Board President.

II: Open Forum: The following topics were discussed at the open forum:

a: Excess retained funds: How are the $180,000 excess retained funds going to be used? Toni Brown asked that this be deferred until later in the meeting when the 2009 Budget is discussed.

b: Can residents get copies of the 2009 Budget? Copies will be available on the Falls Run website and Armstrong Connect.

c: The Board and Activity Director were complimented on the Volunteer Appreciation Day event.

d: Can anything be done about the paint spots on the sidewalks on Bridgewater Circle?

III: Announcements:

a: The Board is pleased to announce that Ms. Debbie Sutton has been selected as the new Property Manager. She will be starting in this position in 2-3 weeks.

b: Recaps of all motions and policy decisions made by the FRCA Board of Directors since 1 January 2006 are available and will be posted on the website

IV: Don Webb made a motion, seconded by Jack Mounts, to approve as written the minutes of the 8 October 2008 Special Budget meeting and the minutes of the 8 October 2008 Regular Board meeting. Approved 7-0.

V: Management Report: Susan Manch reported that:

a: She has enjoyed her time as the interim Property Manager and thanked the community for their assistance.

b: Has coordinated with the Elections Committee regarding the mailing for the Board of Directors election.

c: Faucets in the bathrooms off the billiard room have been replaced.

d: United States, Virginia and Stafford County flags have been replaced and extras are on hand for use as needed.

e: Tree trimming at the Gladstone Gate has been accomplished.

f: Circuit #42 serving the conference room will be split into two circuits to better handle the load caused by the conference room lighting.

g: The fitness room air conditioner is not functional. Robert B Payne Inc. has given us proposals for repair [$6,700] and total replacement [$7480]. Replacement is the most cost effective. After a short discussion, Don Horan made a motion, seconded by Jack Mounts, to withdraw $7,500 from the Replacement Reserve to replace the fitness room air conditioner. Approved 7-0.

h: We have a proposal in hand to add the additional light at the Gladstone Gate. .

i: Office furniture in the Property Manager’s office needs to be updated or replaced. The laptop computer should be replaced with a modern desktop machine with a flat monitor to free desk space. Additional shelving, a crosscut shredder and file storage are also needed. The estimated cost to do everything is $2,100. After discussion, Jack Mounts made a motion, seconded by Harriet Schrader, to authorize the expenditure of not to exceed $2,500 for office furniture, equipment and other items as necessary for the office of the Property Manager. Approved 7-0.

j: The snow removal contract is being processed.

VI: Treasurer’s Report: Don Horan reported that:

a: The FRCA attorney has recommended that FRCA write off as uncollectible a debt resulting from foreclosure on a residence. Don Horan made a motion, seconded by Jack Mounts, that the $985.46 debt left in the FRCA attorney’s case number 082376.00300 due to foreclosure be written off as uncollectible at the recommendation of our attorney. Approved 7-0.

b: Replacement Reserve Budget for 2009 – Draft 2: Don Horan noted that inflation is running higher than the 2007 Mason & Mason study had anticipated. They had planned on 3.5% and the latest figures appear to be about 5.5%. Also, we have had to begin some equipment replacements earlier than expected.

c: Board of Directors’ 2009 Operating Budget – Draft 2: Don Horan discussed the use of the $180,000 excess retained funds and explained that most of this money was the result of unexpected income from the Koger insurance claim and the Villa Association payments. $119,240 would be used as an extra addition to the Replacement Reserve, $760 would be used to reduce the planned 2009 contribution to the Replacement Reserve from $297,696 to $296,936 and $60,000 would cover our planned deficit and reduce the resident’s monthly assessment by $6.40 per month. Without the planned deficit, the proposed 2009 Operating Budget would require an increase in the monthly assessment of $18.40 instead of the planned $12.00 increase to $152.00 per month. Don also noted that the approved 2008 Operating Budget deficit reduced the required monthly assessment in 2008 by $8.00 from a balanced budget requirement of $148.00 per month.

d: Motions:

1/ Don Horan made the following motion, seconded by Harriet Schrader: I move that the Board of Directors approve the budget identified as "Board of Directors' 2009 Operating Budget - Draft 2" of 19 October 2008 as the FRCA 2009 Operating Budget, and the budget identified as "Replacement Reserve Budget for 2009 - Draft 2" of 19 October 2008 as the FRCA 2009 Replacement Reserve Budget. The motion was approved 6-1, Don Webb opposed.

2/ Don Horan made the following motion, seconded by Chuck Strub: I

move that $120,000.00 be transferred from Retained Earnings to Replacement Reserves and, prior to 31 December 2008, the FRCA Treasurer make a corresponding transfer from operating funds accounts to Replacement Reserve accounts. The motion was approved 7-0.

VII: Committee Reports:

a: Volunteer Appreciation Day affair: Harriet Schrader reported that over 150 residents attended the affair. Also, door prizes and gifts donated by local businesses were given out at the affair.

b: Waterfall Ad-Hoc Committee: Bill Barnes and Dan Owens reported that the plantings around the waterfall are in need of replacement due to insect damage and the committee feels that more colorful vegetation would enhance the waterfall area. A maintenance contract should be developed with Virginia Water Gardens to handle all routine maintenance of the waterfall’s pumps and other fixtures. Also, the lower spotlights should be moved to better illuminate the Falls Run sign and avoid glare off the water. The proposal in hand to move the floodlights and re-wire them at $675 seems reasonable. They would like to involve the Property & Grounds committee in planning the enhancements.

c: Covenants Committee: No report.

d: Community Center Committee: Not ready to discuss the pool contracts.

e: Property & Grounds Committee: Cindy Horan reported that:

1/ The committee is ready to contract with Shenandoah Landscaping Services to trim/remove various tall grasses and to add new seasonal plantings to the common areas. After discussion, Don Webb made a motion, seconded by Jake Bernard, to accept Shenandoah Landscaping Services proposal #EFRLJW08-13123 Rev 1 in the amount of $4,457. Approved 7-0.

2/ The committee is ready to go ahead and contract with Shenandoah to replace 14 dead/dying trees in the common areas. The work will be done at the same time as the new tree plantings previously authorized as part of the Master Landscaping Plan, Phase I, and will cost $4,605. The committee was authorized on 24 September 2008 to spend up to $5,000 for this purpose.

f: Modifications Committee: Chuck Heath presented the Board with proposed modifications to the Design Guidelines. They deal with landscaping issues including clarification of areas covered and types of prohibited plantings and grasses. The Board approved the changes without a formal motion and directed that the changes be sent to all residents.

g: Elections Committee: No report.

h: Communications Committee: Jack Mounts reported that he has developed a standard listing of the types of Board actions and policy documents which should be available to the residents and where/how they would be stored. After a short discussion, Jack Mounts made a motion, seconded by Harriet Schrader, that the Board adopt the “Reference Information on FRCA Board Minutes and Policy Statements” Approved 7-0.

i: Finance Committee: No report.

VIII: Old Business:

a: Gladstone Gate lighting: Jack Mounts made a motion, seconded by Chuck Strub, to direct the Property Manager to proceed with the installation of increased lighting at the Gladstone Gate by ESV Inc. and to increase the previously approved $1,795 to a new total of $2,165 for that purpose. Approved 7-0.

b: Attorney Review of By-Laws: Jack Mounts informed the Board that the revised By-Laws are ready for attorney review and made a motion, seconded by Chuck Strub, that the Board prepare a letter transmitting the proposed, revised By-Laws to the FRCA attorney for review. Approved 7-0.

IX: New Business: None.

X: Open Forum: The following topics were discussed during the open forum:

a: The new Property Manager should be given some say in how the office is arranged.

b: Policy documents: Residents desired that policy documents should be kept up to date through some review process.

c: Approved write-off of foreclosed residence debt.

d: Increased assessment: Can we conserve resources somehow and reduce the increase in assessments.

e: Identification card use at the Community Center. The Activity Director believes that this subject should be reviewed and possibly re-instated.

f: Replacement of Community Center computers is anticipated in the near future. Does it matter when it occurs? Since this is a Replacement Reserve funded item, it can be done when necessary without impacting the Operating Budget.

XI: Chuck Strub made a motion, seconded by Jake Bernard, to adjourn. The motion was approved 7-0 and the meeting adjourned at 12:12pm.

THOMAS J. WHALEN

Recorder

Members Present: Toni Brown, Don Webb, Harriet Schrader, Don Horan, Jack Mounts, Jake Bernard, Chuck Strub

I: The meeting was called to order at 10:00am by Toni Brown, FRCA Board President.

a: Excess retained funds: How are the $180,000 excess retained funds going to be used? Toni Brown asked that this be deferred until later in the meeting when the 2009 Budget is discussed.

b: Can residents get copies of the 2009 Budget? Copies will be available on the Falls Run website and Armstrong Connect.

c: The Board and Activity Director were complimented on the Volunteer Appreciation Day event.

d: Can anything be done about the paint spots on the sidewalks on Bridgewater Circle?

a: The Board is pleased to announce that Ms. Debbie Sutton has been selected as the new Property Manager. She will be starting in this position in 2-3 weeks.

b: Recaps of all motions and policy decisions made by the FRCA Board of Directors since 1 January 2006 are available and will be posted on the website [See attachments 2/3 to these Notes]. This recap will be kept up to date in the future.

a: She has enjoyed her time as the interim Property Manager and thanked the community for their assistance.

b: Has coordinated with the Elections Committee regarding the mailing for the Board of Directors election. Imprinted envelopes will be used instead of labels as the cost was competitive.

d: United States, Virginia and Stafford County flags have been replaced and extras are on hand for use as needed.

f: Circuit #42 serving the conference room will be split into two circuits to better handle the load caused by the conference room lighting.

h: We have a proposal in hand to add the additional light at the Gladstone Gate. The total cost would be $2,165.

a: Volunteer Appreciation Day affair: Harriet Schrader reported that over 150 residents attended the affair which cost $2,105.55 of the allocated $3,000. Also, there were over $8.000 worth of door prizes and gifts donated by local businesses and given out at the affair.

b: Waterfall Ad-Hoc Committee: Bill Barnes and Dan Owens reported that the plantings around the waterfall are in need of replacement due to insect damage and the committee feels that more colorful vegetation would enhance the waterfall area. A maintenance contract should be developed with Virginia Water Gardens to handle all routine maintenance of the waterfall’s pumps and other fixtures. The waterfall area is not included in the Shenandoah landscape maintenance contract. Also, the lower spotlights should be moved to better illuminate the Falls Run sign and avoid glare off the water. The proposal in hand to move the floodlights and re-wire them at $675 seems reasonable. They would like to involve the Property & Grounds committee in planning the enhancements.

a: The new Property Manager should be given some say in how the office is arranged.

b: Policy documents: Residents desired that policy documents should be kept up to date through some review process.

c: Approved write-off of foreclosed residence debt. The FRCA attorney has noted that the cost of trying to collect the debt was significant and could easily exceed the debt itself.

d: Increased assessment: Can we conserve resources somehow and reduce the increase in assessments.

e: Identification card use at the Community Center. The Activity Director believes that this subject should be reviewed and possibly re-instated.

XI: Chuck Strub made a motion, seconded by Jake Bernard, to adjourn. The motion was approved 7-0 and the meeting adjourned at 12:12pm.

A motion was made by Toni Brown to authorize Koger Management to make a partial payment of invoices from Executive Electric for snow removal in the Villas and the single family areas as follows:

Mal Malo moved that the Board approve the Charter for the Finance Committee of the Falls Run Community Association (See Charter attached), with Don Horan as Chairman.

Mal Malo made a motion to authorize Koger Management to issue a check in the amount of $1,425.00 to reimburse the Villa Condominium Association for an overbilling by Executive Electric for snow removal on the Villa’s streets. Invoice should have been billed to the FRCA.

Mal moved to direct Koger Management - after audit by independent accountant – to increase the contribution to the 2005 Replacement Reserve to $170,000 and transfer the remaining balance to 2006 Operating Reserve.

Art Gabler moved to accept the landscape maintenance contract with Shenandoah Landscape as recommended by the Property & Grounds Committee.

Toni Brown motioned to table discussion of Activities Director’s compensation in order to gather more information.

Mal Malo made a motion to resolve to authorize the Board to submit a survey for a census to determine 80/20 ratio of 55 to 50-55 residents in the community.

A motion was made by Jackie Richards to table discussion on Koger Contract until the Board has further clarification.

Toni Brown moved that the Board reinstate the Covenants Committee with Marvin Wagner as Chairman and to have said Committee review the Declaration of Covenants, Conditions and Restrictions and Bylaws to eliminate Del Webb from the documents and to review for other possible revisions to be presented to the community.

A motion by Mal Malo to accept Koger Contract as presented in Executive Session subject to minor editorial changes.

Mal Malo moved the salary of the Activities Director, Ann Jones, be increased per agreement during executive session, retroactive to January 1, 2006 to coincide with the fiscal year, and that this increase be in lieu of benefits excluding 2 weeks leave and 5 personal days per calendar year. Leave will be subject to a policy to be developed. A letter of confirmation will be given to Ann.

Mal Malo moved that the Board develop a Human Resource policy that would include all potential benefits for current and future employees full and part time. The policy must include leave, payoff, carry over, use or lose, etc and that employee performance review be established for all full and part time, current and future employees.

Nancy Arnn moved that Dan Owens, with help from others pursue avenues for outsourcing the entire operation of the Gazette. Jackie Richards 2^nd the motion. The motion carried unanimously.

Art Gabler moved to authorize Dan Augustine, Web-master, to new the domain name for Falls Run web site for five years. Mal Malo seconded. The motion carried unanimously

Toni Brown moved that the Board authorize purchase of special software program to create and Employee Handbook. Art Gabler 2^nd. The motion carried unanimously.

Jackie Richards moved that the Board sanction the following division of duties as related to the Modifications Committee, the Covenants Committee and Koger Management for imposing sanctions:

Modifications Committee will continue as they have in the past with architectural and landscaping function. The committee will authorize violation letters within their charger function. (#1, 2, 3, 4)

Covenants Committee will continually review CC&R’s and Bylaws and make revisions as recommended by Board, Modifications Committee or Koger Management. We requested by residents, the committee will arrange hearing meetings and send out the hearing notice. (5).

Koger Management will report violations other than architectural/landscaping to the Board. Violation letters will be authorized by the President of the Board.

Toni Brown moved that Sylva be authorized to develop specifications for re-bidding the maintenance on gates and street lights. Motion was seconded by Dan Owens. The motion carried unanimously.

Dan Owens moved that the Board approve the Charter for the Communications Committee of the Falls Run Community Association, with Jack Mounts as Chairman.

Art Gabler moved to accept the indoor and outdoor pool contract with Douglas Aquatics not to exceed $36,000. Nancy Arnn 2^nd the motion. The motion was carried unanimously.

Jackie Richards moved to establish a checking account of $2000 for unexpected expenses at the Center. The motion was 2^nd by Dan Owens. The motion was carried unanimously

The following motions were approved unanimously after a report by CC&R’s Chairman, Marvin Wagner:

I move that the Board of Directors approve the proposed amendments to the Covenants, Conditions and Restrictions subject to the inclusion of language of Section 55.513B being amended to reflect any changes in the assessments by the statutory change be adopted by Section 8.8. Unanimous approval.

I move that the By-laws be accepted as presented by the Covenants Committee. Unanimous approval.

The Board approves the expenditure of funds necessary to print and distribute the Amended CC&R’s, Amended By-laws and cover letter. Unanimous approval.

Create a paid position of Production Coordinator to replace volunteer editors on the Gazette staff. Unanimous approval.

Due to a missed communication at the March 1, 2006 meeting in recording the motion to accept the indoor and outdoor pool contract, I, Toni Brown, move that the original motion be amended to state:

That the Board accepts the pool contract with Douglas Aquatics of Fredericksburg as follows:

In addition to the contract total, I move the Board approve the additional cost of approximately $350.00 in electrical work. Unanimous approval.

March 23, 2006 at 7:00 PM at the Center for a regular Homeowners’ Association Meeting.

A motion was made by Bill Nosal to accept proposal by Executive Electrical to provide and install motion sensor at a cost of $373. 2^nd by Nancy Arnn. Carried unanimously.

Art Gabler moved to leave the Middlebrook Gate (Main Gate) open during the hours of 6:00 AM through 7:00 PM effective Monday, April 10, 2006. All other gates will remain closed, except Legend while construction is ongoing. 2^nd by Dan Owens. The motion carried four (4) – Nancy Arnn, Jackie Richards, Art Gabler and Dan Owens to two (2) – Mal Malo and Toni Brown.

Mal Malo moved, with a second by Dan Owens, to form a sub-committee made up of Board members Dan Owens, Toni Brown and Mal Malo to develop a letter to Koger Management Company regarding their contract performance to be sent prior to requesting a meeting with Jeff Koger, Dana Jonas and Sylva Southwell, all of Koger Management. The motion carried unanimously.

Mal Malo moved the adoption of the Contracting Guidelines (copy attached) as previously submitted. Dan Owens 2^nd. Carried unanimously.

Toni Brown moved to check on the cost of alternative sources to be used to fill the basin at the water fall. 2^nd by Dan Owens. Carried unanimously.

Mal Malo moved to engage the CPA firm of Goldklang, Cavanaugh & Associates, P.C. of Reston, VA, as recommended by the Finance Committee, to prepare audited financial statements for year ending December 31, 2005 and federal and state tax returns for 2005. 2^nd by Dan Owens. Carried unanimously.

Mal Malo moved the Koger Management review the procedure the Finance Committee has developed regarding delinquencies of assessments and gives their opinion within the next two weeks. Dan Owens 2^nd. Carried unanimously.

Mal Malo moved, subject to above change, to approve regulations and rules as proposed and to rescind all prior rules and regulations. 2^nd by Art Gabler. Carried unanimously.

Following a request by Toni Brown asking the Board to discuss letter from our attorney regarding whether the Board could assess monetary charges or impose other sanctions against residents who have not provided the census data requested by the Association:

Art Gabler moved, in accordance with the recommendation of attorney: to first send second letter to residents who have not yet submitted the required paperwork. If the member does not respond to the second letter, the Board of Directors will then initiate enforcement proceedings. In accordance with Section 3.18 of the Bylaws, a third letter will be a notice of violation letter. The letter will inform the owner/member of the (i) nature of the alleged violation, (ii) the proposed sanction to be imposed, (iii) a statement that the alleged violator may present a written request for a hearing to the Board of Directors or Covenant Committee within fifteen (15) days of the notice; and (iv) a statement that the proposed sanction shall be imposed as contained in the notice unless a written request for a hearing is received by the Board or the Covenants Committee within such time period. 2^nd by Nancy Arnn. Carried unanimously.

Mal Malo moved the Board accept the Finance Committee’s recommendation for the hiring of a Gazette editor who should be an employee of the FRCA and on their payroll. Art Gabler 2^nd. Carried unanimously.

Dan Owens moved that Board approve the Communications Committee’s request to establish an additional shared-responsibility concierge position for information technology at the Center. This proposal is outlined in the associated decision document. The rate of pay is the same as other concierge positions with a limit of 10 hours per week. However, unused hours in any week may be carried over to successive weeks with an annual limit of 520 hours which will equate to $5,200 annually. This motion will also include a provision for software. Mal Malo 2^nd. Carried unanimously.

Dan Owens moved that the Board approve the Communications Committee to start the process of developing specifications and requirements for a Falls Run Information System (FRIS). 2^nd by Mal Malo. Carried unanimously.

Dan Owens moved that the Board approve the Communications Committee proposal to establish a format and procedure for use by committees when requesting a decision by the Board as outlined in the associated decision document. Mal Malo 2^nd. Carried unanimously.

Mal Malo moved to adjourn to Executive Session at 11:00 AM to discuss Koger Management Contract and Community Center contract proposals. Art Gabler 2^nd. Carried unanimously.

Toni Brown moved to close Executive Session at 12:35 PM and reconvene in Working Session. Mal Malo 2^nd. Carried unanimously.

The Board conducted a review of Koger Management Contract with Jeff Koger, Elaine Curry and Sylva Southwell of Koger Management.

In order to make corrections to minutes and meeting notes the following motions were made:
Motion: To amend the minutes of April 5, 2006 to reflect the vote of each board member on the gates issue. Motion by Nancy Arnn, seconded by Jackie Richards and passed unanimously.
Motion: Amend the notes of the May 12 meeting to reflect the actual vote count of 95 for closed gates and 60 for gates open as quoted in the May 3 HOA meeting notes. Motion by Nancy Arnn, seconded by Art Gabler and passed unanimously

After Board discussions the following motions were made:

      Motion: To authorize Sylva to purchase and install security camera equipment in an amount up to $250 along with an appropriate security sign. Motion by Art Gabler, seconded by Nancy Arnn and passed unanimously.

     Motion: To authorize Sylva to expend no more than $1500 to repair the irrigation system through Shenandoah following negotiations with Del Webb and subject to the approval of the Finance Committee. Motion by Art Gabler, seconded by Nancy Arnn.
Board vote: Bill Nosal (yea), Nancy Arnn (yea), Art Gabler (yea), Dan Owens (nay), Jackie Richards (yea). The motion carried 4 for and 1 against.

     Motion: That the board accept the proposal from Robert D. Samuels, Inc. to install a new street light at the Middlebrook entrance. That the FRCA funds of approximately $60,000 invested in the Merrill Lynch account be completely withdrawn as soon as possible, and the funds be deposited in the CAB MMKT Account (0275805823) and further that the Merrill Lynch Account be closed. That the certificate of deposit (CD) for approximately $100,000 held by the Merrill Lynch (ML) Bank not be allowed to renew when it matures on 31 May 2006, and that the funds be deposited in the CAB MMKT Account (0275805823). Motion by Dan Owens, seconded by Nancy Arnn and passed unanimously.

Motion: That the Board go into a 15 minute Executive Session in order to address Modification Committee concerns. Motion by Nancy Arnn, seconded by Dan Owens.

     Following the Executive Session and in open session, the following motion was made:
     Motion: That the Board adopt a resolution that Modification Committee inspections be limited to the committee members and management only. Motion by Dan Owens, seconded by Nancy Arnn and passed unanimously.

    Motion: To authorize Sylva Southwell to address with Dennis Ouellette the proposed funding of $1000 in order to go forth with the Gladstone gate landscaping. Motion by Dan Owens, seconded by Nancy Arnn and passed unanimously.

    Motion: That the Covenants Committee Charter and the Covenants Committee Hearing Procedures be approved as submitted. Motion by Jackie Richards, seconded by Art Gabler and passed unanimously.
    Motion: That the “Request for Action Procedures” be adopted and that this information be distributed to all committee chairs and members. Motion by Nancy Arnn, seconded by Jackie Richards and passed unanimously. Sylvia Southwell agreed to submit the information to the above mentioned.

    Motion: To change CC&R paragraph 9.14 Business use to read (change underlined):
       No transient tenants may be accommodated in a Dwelling Unit, and all leases shall be for an initial term of no less than ninety (90) days. Notice of any lease, together with such additional information as may be required by the Board, shall be given to the Board through its Managing Agent by the Dwelling Unit Owner within ten (10) days of execution of the lease. The Owner must make available to the lessee copies of the Governing Documents. The Board may adopt reasonable rules regulating leasing and subleasing.
      Motion made by Nancy Arnn, seconded by Art Gabler and passed unanimously by quorum of board members present. Dan Owens chose not to vote on this issue and left the meeting before the vote was taken.

Amendment to change CC&R paragraph 9.14 Business:

Motion: On the recommendation of the Covenants Committee, add the following change in Section 9.14 Business Use to the approved proposed CC&R changes to be voted on by the community in the Fall of 2006. Motion by Jackie Richards, seconded by Mal Malo and passed unanimously.

Jackie Richards moved: For purposes of clarification I move that the following first sentence be added to the motion of May 17, 2006 minutes to change CC&R paragraph 9.14 Business Use to read:

On the recommendation of the Covenants Committee, add the following change in Section 9.14 Business Use to the approved proposed CC&R changes to be voted on by the Community in the fall of 2006. The motion was 2^nd by Mal Malo. Carried unanimously.

Mal Malo moved to accept the May 3^rd, 2006 recommendation of the Planting and Design Committee to implement the Shenandoah proposal for numerous landscape enhancements in the amount of $9,887. 2^nd by Jackie Richards. Carried unanimously.

Mal Malo moved to authorize up to $2,500 to the development of garden plot by the Garden Club. 2^nd by Toni Brown. Carried unanimously

Art Gabler moved: The Falls Run Community Association has voted to take advantage of the option to purchase for $1.00 all of the Life Fitness equipment under CIT lease number 1877-007. Therefore, I move that the Board authorize our property manager, Sylva Southwell, to issue a check to CIT in an amount not to exceed $15,000, to payoff the balance due on the lease. It is estimated that this action will save the Association about $150 in interest. 2^nd by Mal Malo. Carried unanimously

Dan Owens, 2^nd by Mal Malo, moved to accept a fitness equipment preventative maintenance and repair services contract with Fitness Resource in the amount of $4,088.00/year to be paid quarterly in the amount of $1,022.00. Passed unanimously.

Toni Brown, 2^nd by Jackie Richards, moved that we contract with Shenandoah to water all trees and shrubs in the common areas and the grassy common area on Smithfield near Goosecreek with a water truck at the cost of $75.00/hr (2 hour minimum). Passed unanimously.

Mal Malo moved, 2^nd by Nancy Arnn, to adopt the Assessment Collection Procedure as presented. (See attached) Passed unanimously.

Nancy Arnn moved, 2^nd by Dan Owens, to approve the Final Elections Committee Report detailing the 2006 Board of Directors election process , which includes modifications to the 2005 process. (See attached).

Toni Brown moved, 2^nd by Mal Malo, to approve a change to the By-Laws as follows:

New subdivision (b) of Section 3.18 to read as follows: Any owner contesting the ruling of the Charging Authority where the owner has a vested interest may request a hearing before the Covenants Committee. Such a request must be made within fifteen (15) days from the ruling of the Charging Authority or fifteen (15) days from the owner having knowledge of or receiving notice of the said ruling. Upon such request, the action which the Charging Authority has authorized shall be suspended until the appeal to the Covenants Committee, and a subsequent appeal to the Board of Directors, if any, has been finalized.

(Current subdivision (b) to become subdivision (c) and current subdivision (c) to become subdivision (d).

Toni also moved to approve proposed change to the Covenants, Conditions and Restrictions, which will be included with other changes to the CC&R’s that will be submitted to the members (owners) for their approval, as follows: Change to Covenants (Section 8.3, Article VIII). Change From: So long as the Reviewing Entity has acted in good faith, its findings and conclusions with respect to the appropriateness of, applicability of, or compliance with the Design Guidelines and this Declaration shall be final.

Amend to: So long as the Reviewing Entity has acted in good faith, its findings and conclusions with respect to appropriateness of, applicability of or compliance with the Design Guidelines and this Declaration shall be presumed to be correct.

Add to Section 8.3 of Article VIII: Any owner who has standing in the findings of the Reviewing Entity shall have the right to appeal these findings to the Covenants committee, as found in Section 3.18, subdivision (b) of the By-Laws.

Toni Brown moved, 2^nd by Jackie Richards to approve the changes to the Covenants Committee Hearing Procedures as presented by the Committee. (See attached).

Art Gabler moved, 2^nd by Nancy Arnn, to approve janitorial contract with Mullins Cleaning Service in the amount of $1700.00/mo. Service will begin July 1, 2006. There is a 45 day probationary period. Carried unanimously.

Toni Brown moved, 2^nd by Jackie Richards, to approve a contract with Shenandoah Landscaping to water the trees and bushes in the common area when directed to do so by management company at a cost of $75/hr for water truck, and $45/hr if using a hose with metered water from fire hydrant (water cost is extra depending on amount used). Carried unanimously.

The following motions were made by Jackie Richards based on Board discussion during Executive Session:

1. I move that the revised Falls Run Design Guidelines by adopted by the Board as of this date. 2^nd by Nancy Arnn. Passed unanimously by members present. Dan Owens voted yes by proxy.

2. I move that the Modifications Committee be authorized to spend an amount up to $900 for printing of the revised Design Guidelines. 2^nd by Nancy Arnn. Passed unanimously by members present. Dan Owens voted yes by proxy.

3. I move that the two lawn violation letters, attached, presented by Doug Filler, Modifications Chairman be adopted as of this date. 2^nd by Nancy Arnn. Passed unanimously by members present. Dan Owens voted yes by proxy.

4. I move to delete paragraph four of the Modifications Committee first offense violation letter that reads:

“If we do not receive an appropriate response to this courtesy notice within 30 days, it will be assumed that corrective action has not been taken. At that time, we will review the continued non-compliance and specific sanctions may be imposed pursuant to the applicable Virginia statutes”.

2^nd by Nancy Arnn. Passed unanimously by members present. Dan Owens voted yes by proxy.

5. I move that the Modifications Committee be authorized specific authority to approve placement, on a homeowner’s individual lot, a security/alarm sign that is issued by a company providing the service to the homeowner. 2^nd by Nancy Arnn. Passed unanimously by members present. Dan Owens voted yes by proxy.

6. I move that the Board accept, with regret, Doug Filler’s resignation as Chairman of the Modification Committee and hereby appoints Chuck Heath, Chairman of the Modifications Committee. 2^nd by Nancy Arnn. Passed unanimously by members present. Dan Owens voted yes by proxy.

Bill Nosal then recognized Toni Brown who made the following statement and motion:

The Election Committee has asked the Board of Directors to consider and make a determination about creating a Voting Member Designation form. This form would be used to determine the voting member of a dwelling unit.

The Board has studied the governing documents and has considered the advice of attorneys Rees, Broome, & Diaz. The Board is satisfied that our election procedures as previously accepted by the Board satisfy the intent of the governing documents.

Therefore, I move that we do not approve a Voting Member Designation form. 2^nd by Art Gabler. Passed unanimously by members present. Dan Owens voted yes by proxy.

Mal Malo moved, 2^nd by Jackie Richards, that Koger management be notified that the Board has reviewed the provisions of our existing contract and per the provision of Schedule A of the contract, FRCA desires to continue the services of the full-time, on site property manager for the duration of the current contract. Passed unanimously by members present. Dan Owens voted yes by proxy.

Mal Malo moved, 2^nd by Art Gabler, per the discussion in Executive Session, and the Board’s directive, that he draft a letter to Koger Management expressing our dissatisfaction with their performance, primarily in the financial area. Said draft to be reviewed by the Board members and sent registered mail, return receipt requested to Koger. . Passed unanimously by members present. Dan Owens voted yes by proxy.

Nancy Arnn, 2^nd by Jackie Richards, moved to approve the Request for Action by the Communications Committee, dated June 21, 2006, to authorize Koger Management to develop and maintain an accurate Falls Run Information System (FRIS), using Microsoft Access for data bases and Excel for spread sheets, for use by the Falls Run Board of Directors, management and committees. Art Gabler abstained. Dan Owens voted yes by proxy. Each of the 5 remaining directors voted yes.

Mal Malo moved, 2^nd by Jackie Richards, based on a July 18th recommendation by the Finance Committee, that Koger Management be directed to use $400,000 from the Super NOW Account and obtain 4 CDs of $100,000 each at Community Association Bank (CAB):

Each of these four CDs is to be identified as Replacement Reserves funds. The remaining $42,710.17 of Replacement Reserves in the Super NOW account, plus any additional allocations of funds for Replacement Reserves, are to be put into a HOA Market Account at CAB (recently earning approximately 2%), and identified as Replacement Reserves. The remaining money in the Super NOW account is to be put into a second HOA Market Account at CAB and identified as Operating Reserves. The Super NOW account is to be closed. Money put into CDs and HOA Market accounts at

CAB are to be distributed to obtain FDIC insurance on $300,000 or more. All present voted yes. Dan Owens’ proxy was not used.

Mal moved, 2^nd by Nancy Arnn, that all directives to our attorneys must be authorized by the president or vice-president of the Board. All present voted yes. Dan Owens’ proxy was not used.

Mal Malo moved, 2^nd by Nancy Arnn, that Perma Treat will perform mosquito abatement at cost of $850/month. All present voted yes. Dan Owens’ proxy was not used.

Service will be once a month from March through October. On call from November through February.

The special meeting was called to discuss a personnel issue and an issue of a time sensitive nature regarding management contract. Two members of the Board would be absent from the next Working Session of August 2, 2006 and any required action would then be delayed until August 16, the next available meeting. Board member Toni Brown requested the Special Meeting and all members were able to attend.

It was decided to split the two issues for discussion in Executive Session and treat them individually.

The first session was devoted to a discussion of questions raised by Sylva Southwell regarding division of duties, with Sylva Southwell attending.

The second session was devoted to a review of the Koger Management contract. Sylva was not included.

Nancy Arnn moved, 2^nd by Art Gabler to adjourn to Executive Session. Carried unanimously.

The Board reconvened in open session upon a motion by Nancy Arnn, 2^nd by Jackie Richards. Carried unanimously.

I move that the insurance agent and attorney be notified that they should only accept calls that require action from our president or vice-president. 2^nd by Art Gabler. Carried unanimously.

I move that Art Gabler, Bob Gilbert and the Community Center Committee develop within the next two weeks an outline of Ann’s duties with respect to the Center facility as well as those of Koger Management in order to avoid duplication of effort. 2^nd by Dan Owens. Carried unanimously.

I move that the Finance Committee be directed to develop a draft Request for Proposals (RFP) for management services and that a draft be presented to the Board no later than September 1, 2006, preferably by August, 15, 2006 if possible. 2^nd by Dan Owens. Carried unanimously.

Dan Owens moved to approve and distribute the Communications Survey, 2^nd by Jackie Richards. The motion carried 6 to 1. Two proxy votes were included for Bill Nosal and Mal Malo. Toni Brown voted no.

Dan Owens moved to accept and implement the RFA request to review approaches to improve operational environment of the Falls Run Audio/Video, Internet, and LAN equipment and provide access to the front and back of the units. 2^nd by Toni Brown. Carried unanimously.

Art Gabler moved to accept the recommendation of the Community Center Committee to re-arrange the equipment in the exercise room, to trade in three of the treadmills and to buy two new exercise bikes, that are walk-thru, and also to purchase a Hip Abductor.

The total cost after the above is done would be approximately $3,000. 2^nd by Dan Owens. Carried unanimously with proxies by Bill Nosal and Mal Malo.

Jackie Richards: I move that the Lawn Maintenance Standards as developed by the Modification Committee be adopted. 2^nd by Dan Owens. Carried unanimously.

Jackie Richards moved that the entire sentence in the design guidelines, Section II, Part 2,d, that states: ”where turf is used within the private area, this shall consist of blue grass blends of 3 or more with no more than a 20 percent mixture of perennial rye or fescue added to the blend” BE DELETED. Motion was 2^nd by Mal Malo. Carried unanimously

Art Gabler moved to ask Robert B. Payne of Fredericksburg, VA to inspect the Desert-Aire system and to provide a quote for a preventative maintenance program (see attached). 2^nd by Nancy Arnn. Carried unanimously.

Art moved that FRCA make a $100 donation to the Stafford County Department of Fire and Rescue station that provided the hoses to refill the pool after cleaning. Dan Owens 2^nd the motion. Carried unanimously.

Mal Malo moved to accept the 3 year contract with no increase in annual contract price proposed by Shenandoah Landscaping subject to editing of XIV Termination as follows: DELETE the last part of the last sentence…”including any amount in excess of the monthly charges paid by the Owner through the date of termination.” In other words end that paragraph with a period after the word profit. (See attached reference from contract)

The Board of Directors conducted a vote via e-mail after the meeting of August 16, 2006, to approve election policy documents submitted by the Election Committee. The documents were approved unanimously.

Toni Brown moved to direct Shenandoah to mow the area behind and in front of the guard rail on Plantation Drive for an amount not to exceed $300.00, 2^nd by Nancy Arnn. Carried unanimously.

5.1 – General – The Board may establish such committees as it deems appropriate to perform such tasks and functions as the Board may designate by resolution. The Board shall announce the formation of any new Committee through all available Association media and shall solicit volunteers to serve on the Committee from the general membership. The Board may appoint the Chairperson of the Committee at the time of its establishment. If such Chairperson is not selected by the Board, the Chairperson shall be selected by the appointed members of the Committee. The Board may determine the minimum and/or maximum number of the members to serve on the Committee. Committee members serve at the Board’s discretion for such periods as the Board may designate by resolution; provided, however, any Committee member, including the Committee Chair, may be removed by the vote of a majority of the Directors. Each Committee shall operate in accordance with the terms of the resolution establishing such Committee.

Mal Malo moved, 2^nd by Toni Brown, to ask Shenandoah Landscape Services to revise their bid #EFRLJW06-11376, Rev 1 for the planting of annuals in the amount of $2,516.25 and make it Amendment 1 to the Annual Landscape Maintenance Program contract. Also to instruct Shenandoah Landscape Services to issue all bids in the future as an amendment to the annual contract, thereby eliminating the need to revise bids to include additional liability clauses. Carried unanimously.

Mal Malo moved, 2^nd by Art Malo, to pay an invoice in the amount of $400 for removal of beavers and their dam behind Covington. Carried unanimously.

Mal Malo moved, 2^nd by Jackie Richards to table the idea of a long range Strategic Planning Committee. Carried unanimously.

Art Gabler moved, 2^nd by Mal Malo to accept a new cleaning contract with Maid Perfect Cleaning. They will clean from 4:00 AM – 12:00 PM. Carried unanimously.

Mal Malo moved, 2^nd by Nancy Arnn that Bill Smith establish a long-range planning committee and as their first task validate the need for additional space requirements\ and if there are any, to determine alternatives. Carried unanimously.

Mal Malo moved, 2^nd by Nancy Arnn, to convene in Executive Session at 10:00 AM to interview prospective management company representatives. Carried unanimously.

The Board reconvened in regular session at 1:40 PM after interviewing the three finalists recommended by the Finance Committee.

It was agreed that the Board will meet again on Wednesday, October 25, 2006 at 9:00 AM at the Center and convene immediately in Executive Session to make its decision regarding a new management company for Falls Run. The Board expects the Executive Session to take approximately one hour. They will reconvene in regular session at approximately 10:00 AM.

Nancy Arnn moved, 2^nd by Mal Malo to convene in Executive Session to discuss selection of property management company and to discuss draft budget.

The Board reconvened for work session at 10:05 AM upon a motion by Nancy Arnn, 2^nd by Art Gabler. Carried unanimously.

Bill Nosal immediately asked for a vote of approval for a management company effective January 1, 2007:

Armstrong – Pricing in the middle. Very positive. They use a team approach the Board especially liked. We will be involved in selecting the full time property manager from a list of their candidates.

Dan Owens moved, 2^nd by Nancy Arnn, to notify Armstrong of their selection. Carried unanimously.

Dan Owens moved, 2^nd by Mal Malo, that the Community Center room rental rates in the draft proposal be used by the Activities Director as the interim rates until rates have been approved by the Board. Final rates to be established after the Community Center Committee’s report to the Board. Carried unanimously.

Nancy Arnn moved, 2^nd by Jackie Richards, to accept the Property & Grounds recommendation to the Board for snow removal by contractor Goodfella after miscellaneous corrections have been made. Carried unanimously. The Finance committee has reviewed and approved their proposed contract.

Mal Malo moved, 2^nd by Jackie Richards, to proceed with request for bid from Shenandoah to repair sites where dead trees planted by Del Webb have been removed at an estimated cost of $1,500. Carried unanimously.

Dan Owens moved, 2^nd by Mal Malo, that effective January 1 when Armstrong takes over as our managing company all emails must be in a format that he is able to read on his computer. Carried unanimously.

Mal Malo moved, 2^nd by Nancy Arnn, to table any action until Art Gabler has verified the amount of resulting reduction in insurance expense. Carried unanimously

Toni Brown moved, 2^nd by Nancy Arnn, to increase monthly assessment to $137.00/month based on 2007 budget of $ 1,377,496.00. Carried unanimously. Change will be effective January 1, 2007.

Secretary Toni Brown explained a mix-up created by a correction which should have been made to the October 18, 2006 notes, not the minutes of that meeting. Therefore, Toni Brown moved, 2^nd by Dan Owens, for approval of the October 18^th minutes without correction. Carried unanimously.

Mal Malo moved, 2^nd by Nancy Arnn, that the Association elects to apply all or part of the excess assessment income to the following year’s operating reserve budget and that such final amount shall be at the Board’s discretion. Carried unanimously.

Dan Owens requested the following be read into the minutes of the meeting and for the benefit of attendees of the meeting:

vying for approval. Before approving items on a piecemeal basis, we need to consider a number of factors before proceeding. Currently, we know about the bleacher conversion, server room alteration, gate camera proposals, first phase of speeding control, and automatic door for the Center. These items should be put in a priority order along with any other projects that committees or others have on the drawing board. Each project needs a total initial cost plus any ongoing maintenance costs. Each project needs a request for action which, in some cases, requires a cost/benefit analysis and other relevant information to judge the worthiness. For example, the gate camera project should have the expected out-of-pocket cost of damage costs so an expected payback period can be calculated. Also, what is the expected likelihood of reimbursement from the violators?

From a budget standpoint, how much of the $115,000 operating reserve carried into 2006 is still available? How much surplus will we have from this year's operating budget? How much operating reserve do we want to carry into 2007? Unless there is a demonstrated urgency, I believe that we should not approve any more projects until we develop a plan and answer the appropriate questions. The 2007 budget we just approved has virtually no operating reserve built in.

All this is intended to stimulate thinking on our part. There are probably other factors and questions that I have overlooked in this snapshot. Therefore, I want this as an agenda item for our November 1 meeting for further discussion and consideration.

Art Gabler moved, 2^nd by Nancy Arnn, to contract to reinforce the concrete base which supports the gate mechanism at the Middlebrook gate as necessary, not to exceed $1,000. The motion carried 6 to 1, with Dan Owens voting nay.

Nancy Arnn moved to create a three way stop at Smithfield and Harborton. Motion died for a lack of a second.

Toni Brown moved, 2^nd by Nancy Arnn, that Sylva check with the county to determine what is required to create an easement between Falls Run Community Association and a property owner of the neighboring development. His property is situated next to the Legend gate monument. The monument is partially located on his property. If legal involvement is required, she is authorized to contact attorney Ed O’Connell to finalize easement. Carried unanimously.

Mal Malo moved, 2^nd by Art Gabler, to ask Goldklang, Cavanaugh & Associates, P.C. to submit an engagement letter to perform the 2006 audit. Carried unanimously.

Mal Malo, 2^nd by Nancy Arnn, moved to contract with Mason & Mason to do a Condition Assessment and Reserve Fund Plan update for 2007. Contract cost is $7,000. Budgeted amount: $10,000. Carried unanimously.

Bill Nosal moved, Art Gabler 2^nd, to accept the bid from Shenandoah to remove dead trees and repair area of removal in the amount of $1135. Carried unanimously.

Dan Owens moved, 2^nd by Nancy Arnn, to accept the results of the election for three seats on the Board of Directors. Elected for a two year term were Chuck Heath, Toni Brown and Jim Stagner. Carried unanimously.

Art Gabler moved, 2^nd by Nancy Arnn, to authorize Sylva to have stop signs installed at Smithfield and Harborton as soon as possible. Carried unanimously.

Mal Malo, 2^nd by Dan Owens, moved to approve the nominations of officers. Those elected by acclamation were:

On a motion by Art Gabler, 2^nd by Chuck Heath, the Board voted unanimously, after a recommendation by the Community Center Committee, to accept a bid from Abby Construction to fireproof the Center’s Audio Visual Storage Room and adjacent Electrical Room, to install a cooling fan in the audio visual room and to remove the wall between the two rooms to gain easier access to the equipment. Price not to exceed $6,000.00.

A motion was made by Mal Malo, 2^nd by Bill Nosal, to agree it is necessary to have Sylva at the Center on a full time basis. The motion carried with six yes votes; Dan Owens abstained.

Art Gabler moved, 2^nd by Dan Owens, to install “No Parking” signs at the entrance to the Legend gate. Carried unanimously.

A Board of Director’s consent form will be drafted in lieu of a Board of Director’s meeting requesting that all Falls Run Community Association accounts still under Koger Management Group, Inc. be turned over to the Falls Run Community Association. Mal Malo and Bill Nosal will be signatory on all accounts that remain with Koger

Mal moved that the document be made part of the 2-21-07 minutes, Jim Stagner 2^nd the motion; motion passed unanimously.

Dan Owens moved that the Falls Run Welcome Package to be developed per Jack Mount’s request for action, 2^nd by Mal Malo; passed unanimously.

Bill Nosal moved that emergency contact information to be available to management and Board of Directors, 2^nd by Dan Owens; motion passed unanimously.

Homeowner, Suzanne Lazanov, requested an OK to create a service based committee to list vendors, services, etc. available to the Falls Run Community. Armstrong Management was requested to draft a disclaimer stating the service(s), action of contractor(s), and vendor(s) is not under the direction of the Board of Directors or management.

Mal Malo moved to accept the disclaimer 2^nd by Art Gabler, motion passed unanimously.

Mal Malo moved, 2nd by Dan Owens, to accept and sign the Fitness Repair and East Coast Fire Protection contracts. Motion passed unanimously.

Art Gabler moved to restrict the entrance at the Middlebrook gate to one lane, 2^nd by Chuck Heath. Carried unanimously.

Chuck Heath moved, 2^nd by Jim Stagner, to go forward with construction of an on-site office for the property manager at a cost not to exceed $10,000. This must include electrical, data, computer and phone lines. Carried unanimously.

Toni Brown moved, 2^nd by Jim Stagner, that the Community Center be unrestricted as to religious and political gatherings for Falls Run residents. Carried unanimously with a vote of 6-0.

Mal Malo moved, 2^nd by Dan Owens, to pursue the extension of the Goodfellers snow contract for 2007/2008 at no additional cost. Carried unanimously with a vote of 6-0.

Bill Nosal moved, 2^nd by Mal Malo, that Toni Brown draft a statement to the community requesting that residents refrain from using the Yahoo network to air personal complaints. Carried unanimously with a vote of 6-0.

Art Gabler moved, 2^nd by Chuck Heath, to hire a full-time, 8 hours/day custodian/handy man at $16.00/hour. This position will replace the need for janitorial services which have proven unsatisfactory. Job description will be drafted and presented when he begins work. Passed unanimously.

Art Gabler moved, 2^nd by Jim Stagner, to approve the 2007 Indoor and Outdoor Pool Contracts with Douglas Aquatic as follows:

An ozone generator will be installed in the spa at an additional cost of $940.00. This system will enhance the spa’s water quality.

A salt/chlorine generator will be installed in the outdoor pool at an addition cost of $5771.36. Passed unanimously.

Art Gabler moved, 2^nd by Chuck Heath, to replace tops on seven card tables with wood grain Formica. At the same time the height of the tables will be lowered, if possible, to a more comfortable level. Total cost for seven tables $2,900.00. Passed unanimously.

The Board has approved the hiring of Lin Bailey, effective May 1, 2007 as a full time custodian/handyman to replace Maid Perfect.

Art Gabler moved, 2^nd by Chuck Heath, to bring Mr. Bailey in at once on an hourly basis to attend to a list of repairs in the center. Dan Owens verified that Mr. Bailey recognizes that cleaning comes first in his job description. (See copy of Custodian/Handyman Job Description)

Dan Owens moved, 2^nd by Chuck Heath, to add workmen’s compensation insurance necessary to cover this job description. Cost approximately $1,672 per year.

Bill Nosal moved, 2^nd by Chuck Heath, to fund three certificates of deposits in three different banks as follows:

All three will be for five (5) years and clearly identified on financial statements as Replacement Reserve Funds:

Chuck Heath moved, 2^nd by Dan Owens, to approve the revised modifications application forms and the flyer. Carried unanimously.

Jim Stagner moved, 2^nd by Chuck Heath, to approve Shenandoah Landscape Services proposals for:

Chuck Heath moved, 2^nd by Toni Brown, that all committees will review their charter documents and submit modified charters by April 30, 2007.

Chuck Heath moved, 2^nd by Dan Owens, to create a special task force made up of community volunteers to study the Audio/Visual needs and submit recommendations to the Board. Chairman of this special task force shall be a non-committee person and selected by the task force. . Carried unanimously.

Upon a motion by Chuck Heath, 2^nd by Jim Stagner, which carried unanimously, the Board adjourned to Executive Session at 2:30 PM to discuss use of the Center and to review resident feedback. The Board reconvened in open session at 3:35 PM.

Toni Brown moved, 2^nd by Chuck Heath, to suspend the following activities as advised by our attorney. We will continue to study the matter to determine whether there are reasonable alternatives. Those activities are:

Mal Malo, 2^nd by Art Gabler, moved to continue with Ed O’Connell as our attorney. Carried unanimously.

Mal Malo moved, 2^nd by Jim Stagner, to adopt a new meeting schedule. Carried unanimously.

May 16 - Wednesday - 7:00 PM Working Session with Open Forum - (As previously scheduled)

May 23rd and every 4th Wednesday thereafter- 10:00 AM at Center for Working Session.

Art Gabler moved, 2^nd by Dan Owens, to approve 2007 pool rules. Carried unanimously.

Jim Stagner, 2^nd by Art Gabler moved to convert the bleachers to planters at a cost not to exceed $4,000. The vote carried with five (5) ayes and two (2) nays. Mal Malo and Dan Owens voted nay.

Mal Malo moved, 2^nd by Dan Owens to approve all committee charters as submitted, to include the Property and Grounds after suggested amendment to one item in their charter. Carried unanimously.

The Board agreed to accept the bid from Hurricane Fence Company to repair seven (7) line posts and sixty feet of top rail that was damaged by wind. They will take down the fence and replace/repair bent poles and re-stretch existing wire at a cost of $2,963.00. Additionally, they will replace/repair four (4) extra line posts at the same time as above work is performed at an additional cost of $700.00.

The Board, after some discussion, agreed that showing movies as we were is a non-issue; therefore, the Board agreed to the resumption of showing movies.

The Board agreed that Sylva Southwell, property manager, is authorized to spend an amount not to exceed $1,500 for furniture for the property manager’s office at the Center.

Mal Malo moved, 2^nd by Art Gabler, to authorize management to issue a certified notice to residents if lawns do not meet Modification Committee standards. The letter will give the owner five to seven business days to mow the lawn. If owner does not comply, management will arrange for the lawn to be mowed at a cost of $25.00/ hour which will be added to owner’s assessment.

Mal Malo moved, 2^nd by Art Gabler, to immediately convene in executive session to discuss: A director replacement for member Chuck Heath who resigned June 13, 2007, appointment of a vice-president and liaison to the Modification Committee, delinquencies list, employee policies, and dog complaint. Carried unanimously.

Mal Malo, 2^nd by Jim Stagner, moved to appoint Jake Bernard to replace Chuck Heath as a member of the Board of Directors. Jake was selected by the Board based on the fact that he received the next highest number of votes in the preceding election. Using the By-Laws and the Articles of Incorporation as the authority, it was determined Jake’s term will expire at the end of the year. Five seats will then be vacant, four with a term of two years and one with a term of one year. Candidates will serve based on the number of votes received, the first four highest votes will serve for two years, the fifth highest will serve one year, or, in other words, the remainder of the 2007 term, thus ensuring staggered terms. Carried unanimously.

Mal Malo moved, 2^nd by Art Gabler, to appoint Dan Owens as vice-president. Carried unanimously.

Liaison appointments were made: Toni Brown will replace Chuck Heath on the Modifications Committee and Jake Bernard will take Toni’s place on the Covenants Committee.

Mal Malo, 2^nd by Art Gabler, moved to direct Armstrong Management to write off four delinquent assessment accounts amounting to approximately $300. Accounts were deemed not worth pursuing for collection as residents have since moved and the amounts due were carried over from Koger accounting and could not be verified. Carried unanimously.

Upon the recommendation of the Finance Committee, Mal Malo asked the Board to approve investing in two CDs from funds in the reserve account at BB&T. Currently there is approximately $145,000 in the BB&T account. The Board agreed to purchase one CD in the amount of $75,000 and another in the amount of $35,000. Maturity dates are to be laddered against other CDs previously purchased. These will have a term of five years.

The Finance Committee also recommended setting up a treasury direct account between our First Trust operating account which has a balance of $208,000 and the BB&T account. Treasury bills can be purchased without regard to the FDIC $100,000 insurance limit and will give the association flexibility to manage funds in ways that will provide more return on our investments.

Armstrong Management was advised that the CD in the amount of $100,000 maturing on July 25, 2007 should not be allowed to roll over into another term, but is to be deposited in the BB&T account for future investment.

Mal Malo, 2^nd by Jim Stagner, moved to install rain sensors for sprinklers around the Center at a cost of $760.50. Carried unanimously.

Jim Stagner, 2^nd by Toni Brown, moved to accept Shenandoah’s proposal for creation of a Master Plan in the amount of $5,760. The plan will be created with input from the Property and Grounds committee, other interested members and Shenandoah. Final design of Master Plan is expected to be implemented over a period of years. Carried unanimously.

Mal Malo moved, 2^nd by Art Gabler, to adjourn at 12:10 PM. Carried unanimously.

Art Gabler moved, 2^nd by Jim Stagner, to purchase a digital video camcorder and accessories to record important Falls Run Community events such as: Meet the Board Member Candidates sessions, Board meetings, etc. Purchase price not to exceed $1500. Carried 5 to 1 with Dan Owens opposed.

Art Gabler moved, 2^nd by Dan Owens, to purchase based on the 20 July CD rates, a 36-month CD for $75,000 at 5.16% from Alliance Bank, and a 24-month CD for $50,000 at 4.94% from Congressional Bank. Carried unanimously.

Art Gabler moved, 2^nd by Jim Stagner, to accept the bid by American Disposal for seasonal trash pickup in the amount of $117,703 per year. Contract to begin September 1, 2007. Carried unanimously.

The contract with Cox is up for renewal. Upon the recommendation of the Finance Committee, Dan Owens moved, 2^nd by Art Gabler to extend their contract for one year. Carried unanimously.

Base upon a recommendation by Ann Jones, Activities Director, Art Gabler moved, 2^nd by Dan Owens, to allow food/snacks to be consumed on the pool deck ten feet back from the pool itself, and to continue to allow beverages to be consumed by the pool deck provided they are non-alcoholic and in a plastic container. Carried 5 to 1, with Jake Bernard opposed.

Dan Owens moved, 2^nd by Art Gabler, to reconvene in executive session to discuss the legal aspects of the Koger Management situation and to review functions of committees. Carried unanimously.

The Board met in executive session from 9:05 AM until 12:00 PM. At which time it reconvened in open session for a Special Meeting.

1. Authorize Jim Armstrong of Armstrong Management to file an insurance claim for potential losses created by Koger Management. Claim to be filed by August 17, 2007 (date may be changed as a result of the Chapter 11 bankruptcy filing).

2. Ask current counsel, Ed O’Connell, for a recommendation for an independent counsel to advise the Board pertaining to legal options involving Koger Management.

Jake Bernard moved, 2^nd by Jim Stagner, to suspend the Board’s June 27, 2007 approval of Shenandoah’s contract for creation of a Master Landscaping Plan in the amount of $5,760 to allow time to work with Shenandoah to:

1. consider an inclusion of a credit provision for hiring Shenandoah to provide the materials and to do the work designed in the Master Plan

3. to create an overall plan for the common areas as opposed to a site specific plan

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.

Art Gabler, 2^nd by Jim Stagner, moved that East Coast be paid $4,875 by the Association to do repairs per their proposal dated August 7, 2007, identified as Phase I by the Board. Board will pursue reimbursement from Pulte for $4,875.00 to cover costs of Phase I. Carried unanimously. The work will commence October 1, 2007

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.

Mal Malo moved, 2^nd by Art Gabler, to allow employees, but not their families, to use the pool and fitness center. Employees must provide the activities director with a health certificate signed by the employee’s doctor. The motion carried unanimously.

Mal Malo moved, 2^nd by Art Gabler to approve the 2008 budget as submitted. Carried unanimously. (See notes for details)

Art Gabler moved, 2^nd by Jim Stagner, to have Sylva approach Pulte’s manager, Kimmel Daniel, to ask if Pulte will agree to reimburse the FRCA for the total cost of repairs ($6,275) with the Association signing a waiver for any and all claims against Del Webb/Pulte regarding the alarm system and electrical system at the Center. The Association would also ask Pulte to accept the revised version of the waiver as prepared by our legal counsel, Ed O’Connell. If Pulte refuses to pay the full amount, Sylva is authorized to accept $4,875. Carried unanimously.

Toni Brown moved, 2^nd by Art Gabler, to form a special committee made up of Board members Toni Brown, Jake Bernard and Dan Owens as well as Marvin Wagner and Ann Jones to do a complete review of the Rules and Regulations and report their recommendations to the Board at the November 14^th Board meeting. New provisions regarding alcohol consumption and gambling will be treated as an addendum in the interim. The consumption of beer or wine will be allowed at the discretion of the residents and not limited to Center events. The motion carried six (6) to one (1) with Dan Owens voting nay.

Toni Brown moved, 2^nd by Art Gabler, to approve, subject to noted corrections and additions, the recommended revised Community Center Rules and Regulations, effective November 14, 2007. Carried unanimously.

Jake Bernard, 2^nd by Jim Stagner, moved to do away with the Operating Rules and Regulations as an official document of the Association. Carried unanimously.

Mal Malo moved, 2^nd by Art Gabler, to contract with Goldklang, Cavanaugh & Associates to prepare audits for the years ending 2007 and 2008. The fee for the preparation of the 2007 and 2008 audits will be $4,100 and $4,250 respectively. The firm will prepare the annual federal and state tax returns for a fee of $275 per year. There is an administrative fee of $75 per year. The motion carried six to one with Toni Brown voting nay.

Jim Stagner moved, 2^nd by Art Gabler to reallocate approximately $3,200 from the fall flower planting budget of $8,000 to the placement of benches in the community. One bench would be placed at Smithfield and Ripplemead, one by the SWM Pond #5 near the Villas and two would be placed on the walking path. Carried unanimously. (See notes for additional information).

Dan Owens moved, 2^nd by Art Gabler to approve the installation of automatic doors on the right side of both incoming doors to the Center, after clearance by the Finance Committee of submitted proposals, for a cost not to exceed $6,000. Carried unanimously.

Dan Owens moved, 2^nd by Jake Bernard, to move to Executive Session to discuss the proposed the 2008 Armstrong Management contract. Jim Stagner was not able to attend and Don Horan, Finance Committee chair was asked to attend.

The executive session was adjourned at 1:00. The decision made during the meeting was to ask Susan Manch, Armstrong’s Regional Area Manager, to advise Armstrong Management that the Board considers the 2007 contract to still be in effect and to ask Armstrong to come back to the Board with any changes they want to make. The FRCA Board has every desire and intention to continue their relationship with Armstrong Management.

Jim Stagner made a motion to accept and make official the election results; Dan Owens seconded it.

Jake Bernard moved, seconded by Harriet Schrader, that the board approve the FRCA personnel manual with job descriptions for the positions of activities director, concierge, and custodian (with modifications if required) and that all documents become effective 1/1/08. The motion as stated was carried unanimously. (See notes for discussion.)

The purpose of the meeting was to announce the resignation of Jim Stagner as a Board Member and to vote on who would fill his vacant seat. Toni Brown spoke of a precedent established by the previous Board wherein a vacant seat would be filled by a candidate who had unsuccessfully run for the Board of Directors. Chuck Strub moved, 2nd by Jack Mounts for Don Webb to fill the seat of Jim Stagner. Carried unanimously. Don Webb accepted as well as the appointment of Secretary to the Board of Directors and the liaison to the Property and Grounds Committee.

Toni Brown explained to the Board about the actions taken to implement the installation of a traffic light at the intersection of Plantation Drive and Gladstone/Lyons. She informed the Board of the discussions and meetings held with regard to this matter and asked for a vote of approval from the Board of Directors with regard to the actions taken to date as well as future involvement, i.e. meetings, presentations, community-wide effort, etc. Harriet Schrader moved, 2nd by Jack Mounts. Carried unanimously.

Motion : That the Board of Directors authorize the treasurer, in consultation with the Finance Committee to direct Armstrong Management Services to purchase in early February, 2008 up to $200,000.00 in CDs at FDIC insured banks in amounts and durations to be determined by CD interest rates prevailing at that time. By Don Horan, seconded by Chuck Strub. Passed.

Motion: That we use the new forms that have been drafted for the community to renew or obtain new contracts. By Harriet Schrader, seconded by Jack Mounts. Passed

Motion: The Property and Grounds Committee cost out the assembly and placing of benches by Len Bailey. By Don Horan, seconded by Don Webb. Passed.

Motion that Sylva obtain 2 more proposals for Programmable Thermostats (5) with a lock out code to be controlled by the Activities Director and Property Manager. By Don Horan, seconded by Chuck Strub. Passed

A motion For a study of the Community Center made by Jack Mounts. Motion follows: I make a motion to the Falls Run Board of Directors to have a highly qualified building inspector conduct a study of all areas of the Falls Run Community Center and the cause of repeated activation of sprinkler heads without the incident of fire and make recommendations for remedies to prevent further occurrences and to report any other building problem areas noted in the study of the sprinkler situation.

Motion Defeated: Jack Mounts, Chuck Strub, and Don Horan voted aye (3 ayes). Jake Bernard, Toni Brown, Harriet Schrader and Don Webb voted nay (4 nays).

A motion made by Toni Brown to have Sylva gather more information about the sprinkler and HVAC system and to have a qualified person give estimates as to cost of an inspection of the Community Center. Sylva is to report back to the Board at the February 27, 2008 meeting. Motion passed.

Jack Mounts moved, second Don Webb; that the FRCA board accepts the Villa Board proposal to maintain and beautify the following areas:

Land on the east side of Harborton Lane between the last house {#12] and the first villa [#20]

Land on the west side of Harborton Lane opposite 20-26 Harborton Lane and between the last house [#15] and first villa [#31]. Some of the area sloping into pond #5 will be left in a natural state along with the area on the north/northeast sides of the pond.

Obtain legal advise on how to accomplish this objective including if necessary, use of formal easements.

Don Horan briefed that the November draft proposal by Armstrong had been reviewed and all FRCA requested changes had been agreed to by Armstrong. The contract would cost $62.4K per annum and contains a 90 day escape clause. Don Horan made the following motion:

Motion: That the Armstrong Management Services draft contract be accepted for a two year term. Seconded by Jack Mounts. Jake Bernard moved to table consideration of this motion pending legal review by the FRCA attorney. Motion not seconded.

Don Horan made a motion that the content of and access to the Connect database be approved as suggested by the Communication Committee and modified during the discussion above. Seconded by Jack Mounts. The Board approved the motion 7-0.

Executive Session: A motion was made at 12.35pm to adjourn to executive session. Motion made by Check Strub, seconded Jake Bernard. Passed 7-0.

The Board reconvened in open session at 1.30pm. Per discussion in executive session the following motion was considered

Motion concerning Marketing Service Agreement with Cox Communications: That in order to avoid violating the terms of the MSA which requires that FRCA, Inc., by assignment from the Developer “shall not engage in promotional or marketing activities of any kind in its sales offices or community centers on Property for the benefit of any other communications services carrier”, the following activities shall NOT be sponsored, approved, or allowed by FRCA, Inc. for any communications services provider competing with Cox Communications until the MSA expires in October 2012:

Use of the FRCA Community Center for marketing presentation to the Board of Directors or to the residents, or for display of marketing information or brochures.

Use of the Gazette, the Falls Run Directory, Channel 20, or any other communications medium of FRCA, Inc. to advertise their products, including insertion of flyers to be delivered with a FRCA publication.

Special permission, beyond what is allowed to any other commercial enterprise by our governing documents, to hand deliver marketing information to residents by hanging it on doorknobs or placing it into the newspaper boxes.

The prohibitions contained in this motion pertain to FRCA, Inc. and not to interaction between individual residents and any communications services provider.

Toni Brown called on Jean Strub, Finance Committee Chair, to present the Review and Budget Strategy for 2009. This Review and Budget Strategy is attached as an addendum to these Minutes.

Toni Brown stated that based on discussion this evening, and the presentation by Jean Strub of her Budget Strategy Overview, we would like to make it a part of the minutes of this meeting that the Board is in support of the Strategy for 2009, and that the Board also supports information gathered from the committees for 2008, and that they will support the budgeting model for 2009. This motion was supported by the Board. No dissenters—all agreed.

Don Horan, Treasurer, spoke regarding the audits for 2005 and 2006, they stated that the villas owed $27,405 because FRCA paid for some of the Villas’ bills for maintaining lawns and insurance payments. There has been a meeting between the both Boards, and they have reached an agreement, backed up by invoices, that the actual amount owed was $18,707. A check has been given by the Villas to the FRCA.

A motion was made that we accept the check in the amount of $18,707 from the Villas as full payment of the amount declared to be owed in the 2006 audit. The motion was seconded by Don Horan. Carried unanimously.

After some discussion regarding a study of the sprinkler system to be done by Merton Bunker, Jack Mounts made the following motion:

To award a contract to Merton Bunker for $1,550 to conduct a study of the sprinkler system in all areas of the Falls Run Community Center and the cause of repeated activation of sprinker heads without the incident of fire and make recommendations for

remedies to prevent further occurrences and to report any other building problem areas noted in the study of the sprinker situation. The motion was seconded by Don Horan. Motion was not passed 2 – 5.

Jack Mounts spoke about amending the Bylaws to provide for resident/tenant age verification. He made the following motion:

6.7 Verification of Age: The Falls Run Community Association is classified as housing for older persons under Department of Housing and Urban Development, 24 CFR Part 100, Subpart E, para. 100.304; therefore at least 80 percent of its occupied units must be occupied by at least one person 55 years or older. To enable the Falls Run Community Association to continue to meet this reqirement for verification of age, all Falls Run residents should complete either the Age Qualification Statement or the Tenant Certification form. Harriet Schrader seconded this motion. Motion was not passed: 2 – 5.

Summer Plantings & Pool Plantings: Don Webb made a motion to approve the recommendation of the committee to accept the revised proposal from Shenandoah for summer flowers with the changes noted in the request. Cost of this proposal was included in the 2008 budget. Seconded Jack Mounts. Approved 6-0.

Bluebird Houses: Don Webb made a motion to accept the proposal from the committee to place bluebird houses in the natural areas around Falls Run per North American Bluebird Society standards and with county approval. This would be done by volunteer residents at no cost. Seconded by Chuck Strub. Approved 6-0.

Extension of Natural Areas: Don Webb made a motion to approve the request of the committee to increase natural areas in two places. Seconded by Jack Mounts. Approved 6-0

Room fees for service providers: After discussion, Harriet Schrader made a motion to eliminate room rental charges for service providers at the discretion of the Activity Director. Seconded by Jake Bernard. Approved 6-0

Lin Bailey is going to put the six new benches together and in place throughout the community. Chuck Strub made a motion, seconded by Don Horan to authorize Lin to do this work on an overtime basis. Approved 6-0.

Election Policy: A motion was made by Jack Mounts, seconded by Harriet Schrader, to accept the proposed election policy and nomination of candidates. Approved 6-0. Toni Brown, Jack Mounts and Harriet Schrader will review the By-Laws and recommend changes as needed.

Middlebrook Gate: The Ad-Hoc Gate Committee has requested a delay in their presentation date from the present 14 May date. After extensive discussion, the board agreed 5-1 [Chuck Strub opposed] to set 11 June as the new date for the committee to make its’ proposal.

The Board resumed open session at 12:35 PM. Motion by Chuck Strub, 2nd by Don Horan, to reimburse resident for damages in the amount of $174.00. Carried unanimously.

Items/projects to be implemented immediately and funded by means noted by each item:

a. Bartlett Tree Removal: August 2007 proposal is being updated and new proposal is due to be received 29 April. It will be divided into priority 1, 2 and 3 tree removal. Estimated cost @$10,000. The 2008 budget contains $15,000 for tree removal and replacement. The Board voted 5-1 [Don Horan opposed] to authorize immediate action for priority 1 tree removal and to fund this with the 2008 budgeted funds.

b. Purchase of a scanner for use by the Property Manager: Estimated cost is $550. The Board voted 6-0 to authorize immediate purchase using current operating funds.

c. Purchase of a printer for use by residents: Estimated cost is $200. The Board voted 6-0 to authorize immediate purchase using current operating funds.

d. Heater for indoor pool: Estimated cost is $6900. The Board voted 4-2 [Don Horan, Chuck Strub opposed] to fund this from replacement reserve funds.

a. Additional streetlights for the corner of Smithfield Way/Plantation Drive and at an undetermined location on Gladstone Dr. Estimated cost is $1,500 each.

c. Purchase and installation of solar film on the windows in the Fitness Room. Estimated cost is $1,100.

d. Copying of Community Center records of inventory/drawings on DVD for off-site storage. Estimated cost is $600.

e. Street Sign Post Maintenance throughout the community: Estimated cost is $3,000.

A Motion was made by Don Horan, seconded by Harriet Schrader, to fund all HIGH priority items listed above at this time. Approved 6-0.

Don Horan made a motion, seconded by Don Webb, that $2970 be paid per year in 2008 and 2009 to The Villas of Falls Run Condominium Unit Owners Association as our share of the landscape maintenance costs based on the license agreement accepted at the 14 March 2008 Joint Boards meeting. Passed 7-0.

Recommendation for replacement flooring contractor: After discussion, Chuck Strub made a motion, seconded by Don Horan, to accept the Lee’s I Carpet proposal for installation of carpeting and flooring in the amount of $24, 367.40. Motion passed 6-1, Jake Bernard opposed.

Requests for Action on Pillars to Middlebrook, Smithfield and Legend Gates; cleaning, repair and painting of the metal railing atop the modular block walls; and painting and repair of custom street signage: Sylva will work with the Property & Grounds Committee to develop Statements of Work for these items. The Armstrong Contract Team be utilized to assist. The Board will have to approve the Statements of Work. The Board approved this procedure 7-0.

Remotes for Fire Department: After discussion, Harriet Schrader made a motion, seconded by Jack Mounts, to purchase four remotes for the Fire Department. The motion passed 6-1, Jake Bernard opposed.

Eliminate Board e-mail address on the website: After discussion, Chuck Strub made a motion, seconded by Don Webb, to eliminate the Board e-mail address on the website. The motion was approved 7-0.

a. 2007 Audit: The second draft of the 2007 audit has been received. Don Horan, seconded by Chuck Strub, made a motion: To accept the Draft 2 of the 2007 Financial Audit and have it issued as the final 2007 Audit. Approved 7-0.

b. Toni Brown made the following motion, seconded by Chuck Strub: I move that the Board accept the agreement for a payment plan as discussed in executive session on April 24, 2008. The Board agreed with that certain resident for a payment plan to bring account current. The resident will add $80 each month to the assessment payment. The $80.00 is to be applied to balance in arrears. There will be no further late charges provided the payment plan is adhered to and all assessment payments are made timely. Interest charges will continue to be added each month until the past due balance has been paid in full. The identity of the resident will be addressed in a separate correspondence, along with a copy of this motion, to Armstrong Accounting, as authorization for the implementation of this agreement. Armstrong Accounting was notified April 25, 2008 to immediately halt any and all legal action against this resident. Approved 7-0.

c. A motion was made by Chuck Strub, seconded by Don Horan, to approve the Mason & Mason 2007 study. Approved 6-0 with Harriet Schrader abstaining.

d. Landscaping Master Plan: The Board has received a request from the Property and Grounds Committee to begin the implementation of the Master Plan. They recommend the following work be done this year:

1/ Purchase and install the 87 shade trees since they will take the longest time to grow.

2/ Plantings to control erosion around the Community Center and at the top of the walking trail.

e. Don Webb made a motion, seconded by Harriet Schrader, to approve the Landscaping Master Plan and to obtain bids for the four areas of work recommended by the Property & Grounds Committee with the option to approve spending on each area as funds are available. Approved 7-0.

f. Resident donations for Master Plan: After a discussion of funds accountability, Don Webb made a motion, seconded by Jack Mounts, to accept resident contributions for the Landscaping Master Plan using the form prepared by the Property & Grounds Committee. Approved 7-0

a. Checking account for Property Manager: Don Horan made a motion, seconded by Chuck Strub, to open a checking account at Union Bank for the Property Manager’s use, to include a debit card and to maintain a $5,000 balance in the account. Approved 7-0. In addition, it was agreed that only one person would be needed to sign a check and that two members of the Board would also be on the account.

b. Common areas: Don Webb made a motion, seconded by Harriet Schrader, that the FRCA Board of Directors approve the non-mowing areas that have been recommended by the Property & Grounds Committee and have been implemented in the different areas of the community subject to Board modification. Approved 7-0

Proposal #1: This proposal describes changes to the existing entrance gate system at the Middlebrook entrance to the Falls Run Community. In general, the changes will include restoring the original appearance of the main entrance by removal of the existing barrier pots; providing two parallel entrance traffic lanes to the existing left and right gates; and reducing the existing gap between the gates.

c: Proposal #2: This proposal will restore the entrance gate system at the Middlebrook entrance to the Falls Run Community to the configuration provided by the developer. In general, it will restore the original appearance of the main entrance by removal of the existing barrier pots and reactivate operation of both entrance gate arms. In addition, it will include recommended improvements including reducing the gap between the gate arms, a surge suppression system and signage.

d: Recommendations: The Middlebrook Gate Ad Hoc Committee recommends that the Falls Run Board of Directors vote to remove the existing pots from the entrance as soon as possible. In addition, we recommend that you form a committee to oversee the implementation of the approved proposal.

Don Horan, seconded by Jack Mounts, made a motion to form a committee to assist the Property Manager and implement the Ad Hoc Committee’s recommendations and Proposal #1. Votes in favor: 3 – Don Horan, Jack Mounts, Toni Brown. Votes opposed: 4 – Jake Bernard, Harriet Schrader, Don Webb, Chuck Strub. The motion was defeated.

Harriet Schrader made a motion to accept Proposal #2. The proposal did not receive a second and therefore was not considered.

Legal counsel re: Villa’s account receivable. Harriet Schrader made a motion, seconded by Chuck Strub, that the FRCA Board of Directors engage the firm of MercerTrigiani, as of this date, to serve as legal counsel for the Association regarding the collection of the accounts receivable from the Villas at Falls Run in the amount of $183,237.31 including questions the Board may have relating to that issue. The Association agrees to pay for such services in the amount of $350.00 per hour. The motion was approved 6-1, Don Webb opposed.

Don Webb, seconded by Jake Bernard, made a motion to increase the amount of money allocated for installation of a traffic light at the Smithfield Gate from $1500 to $1850 due to increased cost. Approved 7-0.

Don Horan, seconded by Harriet Schrader, made a motion to increase the amount of money allocated from the replacement reserve for installation of new indoor pool/spa heaters from $6,900 to $8,654. Approved 7-0.

Harriet Schrader, seconded by Jake Bernard, made a motion to direct the Property Manager to start the process of cleaning/repairing the waterfall to return it to operation as soon as possible and to form a committee to review all aspects of the waterfall’s appearance and make recommendations to the Board. Approved 7-0.

Toni Brown made the following motion, seconded by Don Webb; Middlebrook Gate will be a one lane entrance, existing traffic control pots will be removed and returned to their previous locations at the same time that a contractor installs lane edge stripes to create a 14 foot wide entrance lane in compliance with applicable State and County standards from Plantation Drive to the kiosk and gate structure. The area between the present curbing and the new lane edge stripe will be filled with diagonal paint or tape stripping based upon the contractor’s recommendation. In addition, signage to guide visitors to the kiosk will be added and the right gate arm will be extended to close the gap to the new lane marking and remain closed at all times. Residents will continue to be able to enter using either the kiosk or their remote controls. The motion was approved 7-0.

Community Center ‘As Built” Plans: Jack Mounts addressed this issue in detail: After discussion which noted the possibility of a “statute of limitations” regarding our ability to get Del Webb-Pulte to pay for any plans; Jack Mounts made a motion, seconded by Harriet Schrader, that the Falls Run Board of Directors ask the President to draft a letter, for approval by the Board, to Del Webb-Pulte [copy to Stafford County] requesting "final plans' or 'as builts" for the Falls Run Community Center, per Code of Virginia, "Property Owners Association Act, 55-509.2, Documents to be provided by declarant upon transfer of control" and, if "as builts" or "final plans" do not exist, Del Webb-Pulte will develop these "as builts" or "final" documents. A response to the letter should be sought within two weeks of receipt by Del Webb-Pulte. Approved 6-0

Status of audit delivery: The final audit report was delivered on 24 June 2008. Don Horan made a motion, seconded by Jack Mounts, to accept the final audit as provided. Approved 6-0.

Sprinkler system review after HVAC inspection report: A motion made by Jack Mounts to hire a sprinkler consultant to review the system did not receive a second.

Special Presentation: Louise Mulholland and Steven Cohen of Utility Management Services Inc. [UMS] made a presentation to the board regarding our utility bills. Their firm had conducted an audit of the last two years electric utility expenditure for the FRCA accounts. FRCA has signed a four year contract with UMS for their services. We pay UMS one-half of all independently verified savings from our current rate structure after realization of the savings.

a: In an action taken after the meeting, the Board instructed the Property Manager to cancel the contract noted above with Utility Management Services Inc. The Board voted on this action by email and approved it 5-2, Jake Bernard and Don Webb opposed.

A petition was circulated among the residents asking to extend the hours of the outdoor pool use until 15 September 2008 instead of closing the pool on Labor Day. It was estimated that the cost to do this would be $500. Don Horan made a motion, seconded by Harriet Schrader, to extend the outdoor pool season through 15 September as requested in the petition. The motion was approved 5-2, Jake Bernard and Chuck Strub opposed.

Don Horan made a motion, seconded by Chuck Strub, to initiate an investment account with Smith, Barney and to authorize the FRCA Board President, Treasurer and Finance Committee chair to be the contacts with Smith, Barney. Approved 7-0.

Motion regarding delinquency letters: Don Horan explained the process to be used and described the various form letters prepared. Don Horan then made a motion, seconded by Don Webb, that FRCA adopt the outlined policy describing the actions to be taken in cases of delinquent payment of assessments and the proposed wording of the four letters to be sent to owners who are delinquent in their assessment payments. Approved 7-0.

Motion approving purchase of new server for Center: Jack Mounts made a motion, seconded by Don Horan, to approve the purchase, including software and training, of a IPK SBS small business server 2003 system, which is a basic 5 user file/mail server, to be installed in the Falls Run Community Center for a total cost of $4,000. Approved 7-0.

Motion approving renewal of mowing by Shenandoah behind Reston Court: Don Webb, seconded by Harriet Schrader, moved that the Board approve the renewal of mowing by Shenandoah behind the homes on Reston Court. Approved 7-0.

Waterfall Ad-Hoc Committee: Bill Barnes reported that the Committee has determined that the three main avenues of approach are to convert the waterfall to a planting area without water; modifications to the existing setup to attempt to solve the present problems, or converting it to a pondless waterfall. The Committee asks that the Board delay restarting the waterfall to allow the Committee time to do further research and report back to the Board. After a short discussion, Jake Bernard made a motion, seconded by Don Webb, to rescind the motion made on 11 June 2008 to direct the Property Manager to start the process of cleaning/repairing the waterfall to return it to operation as soon as possible and that the Board give the Waterfall Ad-Hoc Committee time to research the proposals presented tonight. The Committee is to present their findings/progress to the Board no later than 27 August 2008. Approved 7-0.

This Special Meeting was called to discuss and consider possible revisions to the By-Laws of the Falls Run Community Association.

Proposal re painting signs and Middlebrook pillars: The board has evaluated one proposal received for this work. After discussion, Don Horan made a motion, seconded by Chuck Strub, to accept Old Time Construction’s 21 July 2008 proposal in the amount of $5,670 for this work. Approved 7-0.

Status of Gladstone and Smithfield Gates: The Board discussed the necessity to replace the current gate control boxes at the Gladstone and Smithfield Gates. After this discussion, a motion was made by Jake Bernard, seconded by Don Horan, to approve estimate #1181, dated 23 July 2008, from ESV, Inc, in the amount of $20,598 for the installation of new gate boxes at Gladstone and Smithfield Gates and to fund this cost from replacement reserve funds. Approved 7-0.

b: Proposal – 5 Year Sprinkler Inspection: The Board discussed the proposal from East Coast Fire Protection, Inc. After discussion, a motion was made by Don Horan, seconded by Jake Bernard, to accept the 28 May 2008 proposal from East Coast Fire Protection Inc. in the amount of $1,520 to perform the inspection as detailed in the proposal. Approved 7-0.

Joint Meeting of the Falls Run Community Association & Villas Boards of Directors

AMS/JCA coordination is important. The decision was made that the following would be exchanged between JCA/AMS, (i.e., Sylva and Liz) via email and scanning: resale inspection requests, HUD statements, any lease information, age data information, and modification applications.

AMS and JCA will contact each other when they receive resale information to ensure both are informed.

Replacement Reserve Disbursements Procedure: The proposed procedure to authorize and control disbursements from the Replacement Reserve was discussed in detail by the Board. After this discussion, a motion was made by Don Horan, seconded by Jack Mounts, to approve the proposed FRCA Replacement Reserve Disbursements Procedure and to implement it immediately. Approved 7-0.

Specific RR Disbursement for pool heaters: Don Horan made a motion, seconded by Jack Mounts, that $6,900 approved on 28 April 2008 and an additional $1,754 approved on 11 June 2008 for a total of $8,654 to be used to replace one heater for the indoor pool and one heater for the spa be disbursed from the Replacement Reserve based on Mason and Mason Component 5.18 Pool Pumps, Filters, Heaters, & Chlorinators & Dechlorinators Allowance. Approved 7-0.

Specific RR Disbursement for server: Don Horan made a motion, seconded by Jack Mounts, that the $4,000 approved on 23 July 2008 to purchase a replacement server be disbursed from the Replacement Reserve based on Mason and Mason Component 4.11 Office Furnishings & Equipment. Approved 7-0.

Specific RR Disbursement for Gladstone and Smithfield gates: Don Horan made a motion, seconded by Jack Mounts, that the $20,598 approved on 13 August 2008 to replace the existing gates at the Gladstone and Smithfield entrances be disbursed from the Replacement Reserve based on Mason and Mason Component 3.5 Access Control Gates & Key Pad Systems. Approved 7-0.

Approval of prior purchase of certificates of deposit: Don Horan made a motion, seconded by Jack Mounts, that the Board of Directors acknowledge and approve the following three Replacement Reserve certificates of deposit which were purchased based on the Board's approval on 23 January 2008 authorizing use of up to $200,000 of Replacement Reserve funds to purchase CDs:

Approval of deposit of $98,431 check into operating fund: Don Horan made a motion, seconded by Jack Mounts, that the Board of Directors approve the deposit of the $98,431.00 check from CBA on 30 July 2008 into FRCA's money market operating funds account at Firstrust bank. This check was in settlement of our insurance claim for damages caused by Koger Management Group's misuse of FRCA funds. Approved 7-0.

Approval of deposit of $58,838 check into operating fund: Don Horan made a motion, seconded by Jack Mounts, that the Board of Directors approve the deposit of the $58,838 check from the Villas at Falls Run into FRCA's money market operating funds account at Firstrust bank. This check represents the amount of assessments collected in 2006 by the Villas at Falls Run on behalf of the FRCA, but never forwarded to FRCA by Koger Management Group. Approved 7-0.

Approval of transfer of Replacement Reserve funds to our Smith Barney RR account and purchase of CDs: Don Horan made a motion, seconded by Jack Mounts, that the Board of Directors approve the recent transfer of $190,000 from the FRCA Replacement Reserve money market account at B B & T to the FRCA RR money market account at Smith Barney and the purchase of $190,000 of FDIC insured, long-term Replacement Reserve CDs through Smith Barney with maturities up to 5 years based on prevailing interest rates. Approved 7-0.

Approval of transfer of operating funds to our Smith Barney operating funds account and purchase of CDs: Don Horan made a motion, seconded by Jack Mounts, that the Board of Directors approve the transfer of $95,000 from the FRCA operating funds money market account at Firstrust Bank to the FRCA operating funds money market account at Smith Barney and the purchase of $95,000 of FDIC insured, short-term CDs through Smith Barney with maturities up to 90 days based on prevailing interest rates. Approved 7-0.

Jack Mounts made a motion, seconded by Harriet Schrader, to conduct an age census of all owners/residents who do not have age data in AMS Connect. The census forms would be returned by mail or hand delivery to the Property Manager at the Community Center. Approved 7-0.

Contract proposal for heaters in dressing rooms: Since the last Board meeting, the Property Manager has received a proposal from Samuels for electrical work to complement the Robert B Payne proposal for heaters. That combined cost is $5,520. Also, ESV Inc. has submitted a proposal for heaters to be mounted just above the floor in each locker room. After discussion, Don Horan made a motion, seconded by Harriet Schrader, to accept ESV Inc’s proposal #1219, dated 25 August 2008, for 3kw heaters to be installed in the locker rooms at a cost of $3,045.24 as described in the proposal. Approved 7-0.

“No Mow” Areas: The Board discussed this topic’s history and results achieved to date. After discussion, Chuck Strub made a motion, seconded by Jack Mounts, to eliminate the ‘no mow’ areas previously established and return to the previous mowing areas in all parts of the community under the FRCA contract with Shenandoah Landscape Service. It was noted that this change does not apply to the lawn cutting/maintenance done under Shenandoah’s contract with the Villa association. Approved 7-0.

Resolution re: resale inspections: The Board discussed AMS’ request for a change to resale inspection procedures and our attorney’s proposed resolution on this topic. After discussion, Chuck Strub made a motion, seconded by Harriet Schrader, to accept the resolution regarding Association Disclosure Packet Inspection Procedures as written by our attorney, Ed O’Connell, and the Amendment to Association Services Agreement and to accept alternative #1 as submitted by the Chair of the Modifications Committee, Robbin Sentell. Approved 7-0.

Property Manager’s debit card dollar allocation: Toni Brown made a motion, seconded by Don Webb, to establish a $1,000 limit on any single purchase on the Property Manager’s debit card and to authorize regular replenishment of the account supporting the card to the agreed $5,000 limit. After discussion, the motion was approved 7-0.

Request to Award Contract – Installation of packages A, B, C & D of Master Plan Phase I: The Board discussed the Property & Grounds Committee request for contract award. Discussion topics included soil conditions, erosion issues, maintenance vs enhancement of the common grounds and the price differentials between vendors.

After the discussion, Don Webb made a motion, seconded by Don Horan, to accept and approve the recommendation of the Property & Grounds Committee to accept the bid of $46,820.00 from Shenandoah Landscape Services for the implementation of the Master Plan, Phase I. This includes Packages A, B, C & D. This will take effect if approved in time for the fall planting of 2008. The Board voted to NOT approve the motion 3-4 [Harriet Schrader, Jack Mounts, Jake Bernard, Chuck Strub opposed].

Harriet Schrader made a motion, seconded by Don Horan, to accept the bid from Shenandoah Landscape Services for the implementation of the Master Plan, Phase I, Package A only, at a cost of $25,145.00. The Board voted to approve the motion, 5-2 [Jake Bernard, Chuck Strub opposed].

Don Horan made a motion, seconded by Don Webb, to accept the bid from Shenandoah Landscape Services for the implementation of the Master Plan, Phase I, Package B only, at a cost of $13,331.00. The Board voted to NOT approve the motion, 3-4 [Harriet Schrader, Jack Mounts, Jake Bernard Chuck Strub opposed].

Don Webb made a motion, seconded by Don Horan, to accept the bid from Shenandoah Landscape Services for the implementation of the Master Plan, Phase I, Package C only, at a cost of $3,078.00/ The board voted to approve the motion 4-3 [Jake Bernard, Jack Mounts, Chuck Strub opposed].

Don Horan made a motion, seconded by Jake Bernard, to accept the bid from Shenandoah Landscape Services for the implementation of the Master Plan, Phase I, Package D only, at a cost of $5,266.00. The Board voted to NOT approve the motion 3-4 [Harriet Schrader, Chuck Strub, Jack Mounts, Jake Bernard opposed].

Waterfall Ad-hoc Committee: Dan Owens and Bill Barnes made a presentation to the Board of the three options identified by the committee and pursued with possible contractors. They detailed the pros, cons, and projected costs of the options:

4/ Bill Barnes discussed the differences between option 3 as presented and the earlier proposal for similar modifications presented to the Board.

5/ Recommendation: The Waterfall Ad-hoc Committee recommends that the Board approve option 3 as described above including a maintenance contract. The committee noted that this option would take 10-12 weeks to have operational after contract award

6/ The Board President thanked the committee for its’ report. After discussion, Jake Bernard made a motion, seconded by Harriet Schrader, to accept the bid from Virginia Water Gardens in the amount of $36,024 for option 3 and proceed with the installation of a pondless re-circulating system. Approved 6-0.

Resident request for ad-hoc committee to monitor Shenandoah’s work: After a short discussion, Toni Brown made a motion, seconded by Chuck Strub, that the Board not form an ad-hoc committee to monitor Shenandoah Landscaping’ work. Approved 6-0.

Installation of street light at Gladstone entrance: Jack Mounts made a motion, seconded by Chuck Strub, to add an additional street light at the Gladstone entrance and to accept ESV Inc proposal #1230, dated 5 September 2008, in the amount of $1,795 to do this work. Approved 4-2, Toni Brown and Chuck Strub opposed.

Movement of funds to the accounts at Smith, Barney should continue. To do that, Don Horan made a motion, seconded by Don Webb, to approve the transfer of $150,000 from the FRCA Operating Funds money market account at Firstrust Bank to the FRCA Operation funds money market account at Smith Barney and the purchase of $150,000 of FDIC insured, short-term CDs through Smith Barney with maturities up to 90 days based on prevailing interest rates. Approved 7-0.

The Committee wished to spend $5,000 contained in the 2008 budget for tree replacement to replace 13 trees planted originally by Del Webb/Pulte which have died and should be replaced to maintain the appearance of the community. Don Webb made a motion, seconded by Harriet Schrader, to authorize the Property & Grounds committee to proceed with the replacement of 13 trees as requested at a cost not to exceed the $5,000 contained in the 2008 budget. After discussion centering on including these 13 trees among those authorized in the Master Landscaping Plan Phase I purchase of 87 trees, the Board approved the motion, 6-1, Chuck Strub opposed.

Harriet Schrader made a motion, seconded by Toni Brown, that the Activity Director be authorized to spend allocated funds as seen fit for social activities including using funds to reduce social events costs to residents by supplementing event fees provided the total expenditures do not exceed the amount authorized for the Social budget. The motion failed to pass 3-3; Don Webb, Jake Bernard, Chuck Strub opposed.

Use of Social Budget by Activity Director: The Board noted that no resolution of this subject had been reached on 29 September due to the absence of one member.

1/ Jack Mounts made a motion, seconded by Toni Brown, to reconsider the issue. After discussion of the history of this subject, the Board voted to reconsider the issue 6-0 with Jake Bernard abstaining.

2/ Harriet Schrader made a motion, seconded by Toni Brown, that the Activity Director be authorized to spend allocated funds as seen fit for social activities including using funds to reduce social events costs to residents by supplementing event fees provided the total expenditures do not exceed the amount authorized for the Social budget. After discussion, the Board voted to approve the motion 5-1, Don Webb opposed, Jake Bernard abstaining.

Don Horan made a motion, seconded by Chuck Strub, to direct the Treasurer to prepare final 2009 Operating Budget and 2009 Replacement Reserve Budget based upon line 24 of the Examples worksheet and a $12.00 per month increase in the monthly assessments to a total of $152.00 per month. The motion was approved 6-1, Don Webb opposed.

Don Horan began with an announcement that he has moved assets where necessary and that all financial assets are now in FDIC insured CDs. He then presented a series of motions to clear up FRCA finances:

a: Approval of transfer of operating funds to FRCA's Smith Barney operating funds account and purchase of CDs: I move that the Board of Directors acknowledge and approve the recent transfer of $100,000 from the FRCA operating funds money market account at Firstrust Bank to the FRCA operating funds money market account at Smith Barney and the purchase of up to $100,000 of FDIC insured, short-term CDs through Smith Barney with maturities up to 90 days based on prevailing interest rates. The motion was seconded by Jack Mounts and approved 7-0.

b: Motion to Write Off Listed Villas' Debt to FRCA: Because the auditor for Falls Run Community Association, Inc. (FRCA) and The Villas at Falls Run Condominium Unit Owners Association (Villas). Goldklang, Cavanaugh & Associates, P. C., has determined that both the amount of the Villas' debt to FRCA and the requirement to pay are uncertain due to failure of Koger Management Group to properly maintain records in 2005 and 2006; and because FRCA's legal counsel for this matter, Mercer Trigiani, finds that not only is writing off the remainder of the Villas' listed debt to FRCA not a breach of the FRCA's Board of Directors fiduciary duty, but that failure to write off the debt might be a breach of that fiduciary duty; and because of the good faith payment of $58,838.00 by the Villas based on their belief that their review of and responsibility for the available records for 2006 supported a debt in that amount, I move that the $124,399.31 presently carried on FRCA's financial records as "Condominium Assessments Receivable" be written off and the amount listed as "Retained Earnings" be appropriately adjusted. The motion was seconded by Harriet Schrader and approved 7-0.

it is the deductible from the insurance settlement for Koger Management Group's debt to Falls Run Community Association, Inc., I move that the $250.20 presently carried on FRCA's financial records as "Account Receivable From Prior Management" be written off as uncollectible. The motion was seconded by Jack Mounts and approved 7-0.

for Federal Tax Filing Methods: I move that Falls Run Community Association, Inc. elect to apply all or part of the excess assessment income to the following year's assessments and that such final amount shall be at the Board's discretion. The motion was seconded by Don Webb and approved 7-0.

e: Snow contract: Don Horan stated that two companies had submitted proposals to handle snow removal for the community this winter. Kinetic requires a $3,500 retainer which would be applied to billing for hours worked; Goodfellas only requires $250 to preposition equipment when severe weather is forecast. Also, the Villas will be using Goodfellas this winter. Hourly rates for equipment are comparable. Don Horan made a motion, seconded by Don Webb to accept the proposal by Goodfellas to be our snow removal company for the winter of 2008-9. The motion was approved 7-0.

1/ Toni Brown made a motion, seconded by Don Horan, to establish as policy that members of the Villas Board may serve as concierges at the Community Center. Approved 6-1, Jack Mounts opposed.

2/ Toni Brown made a motion, seconded by Chuck Strub, that under no circumstances will FRCA Board of Directors members serve as concierges at the Community Center. Approved 7-0.