Finance Committee Minutes

February 19, 2009

The Finance Committee of the Falls Run Homeowners’ Association met this afternoon in the Center.

Personnel in Attendance: Don Horan, Daniel Owens, Dottie Fields, John Frisch, Art Gabler, Nancy Garner, Sanya Ham, Bill Trzyna, and Casey Naatjes. Also in attendance was Debbie Sutton.

Insurance Discussion:

Mr. John A. Martin, from Nationwide Insurance, was our guest for the day. His purpose was to review our current insurance policy for us. He stated that he would cover each of the five policies we have.

• The first policy is classified as a Business Owners Policy. This policy is the broadest in terms of coverage. Several aspects of this policy were summarized by Mr. Martin.

  • Our property coverage for fire, storms, malfunctions, and etc has a global blanket limit of $4,611,000. The center value is $4,081,000; the outdoor swimming pool is $265,000, gates are $53,000, the tennis court is $106,000 and the bathhouse is $106,000. There is a $1,000 deductible on property loss. It was noted that the Legend Gate might not be included in the list of gates and that the new waterfall might dictate an adjustment. Art Gable will be researching this potential concern. Casey has a copy of the Reserve Study and will assist Art G.

  • Liability coverage has limits of $2 million per occurrence and $4 million annually.

  • Medical payments coverage is $5,000 per person

  • Water damages such as a sewage backup have limits of $25,000 per event and $50,000 per year.

  • There was a separate clause to allow us to get back in synch with “new” code if that ever became necessary in the future. This coverage was for $770,000.

• The second policy covers employee dishonesty. Essentially, this is bonding for the Board, Committees, and Employees. Our coverage is up to $1 million

• The third policy is Workers Compensation. Each year, we provide salary data to Nationwide, classified in broad employee categories (janitorial is in a different class than office workers).

• The fourth policy is an umbrella policy for additional liability coverage. Our coverage is up to $6 million.

• Our fifth and final policy, Directors & Officers Liability, is for wrongful acts defense coverage. We have legal coverage for up to $1 million, but with a $2,500 deductible feature. This is written through a secondary insurance firm, CNA, which specializes in this form of insurance. Our umbrella policy will provide additional coverage up to $6 million.

Mr. Martin stayed to answer several questions, expressing a willingness and desire to help us in any way he could. He was excused with our gratitude at that point.

Cash Replenishment

The committee reviewed the final working of the motion now before the Board. It was noted that the Board would be acting on the motion at the next regular meeting.

Amazon Products Link from HOA Web Site

Mr. Dan Augustine provided us with a suggestion for raising funds for HOA work. Mr. Augustine’s communication is quoted here.

Proposal to Sell Amazon Products through the Falls Run Web Site

Committee or activity: Falls Run Web Site

 Chairman or initiator of request: Dan Augustine

 Description of issue:  A plan to raise money to offset the cost of Falls Run activities

 Action requested of Board of Directors:

 Grant permission to set up Falls Run as an Amazon Associates with a link to Amazon from the fallsrun.org website.

 Statement Supporting Requested Action:

My proposal is to set up Falls Run as an Amazon associate and use any commissions that are earned to help defray the cost of Falls Run activities, such as the annual holiday party. 

The program has been successfully implemented on two web sites that are administered by me, one of which is the Rappahannock Valley Civil War Roundtable (RVCWRT.)  In the case of the RVCWRT, the earnings from Amazon are dedicated to battlefield preservation and are donated to the Central Virginia Battlefields Trust. In the three and one-half years that the Amazon program has been in place in this organization, sales have been in excess of twenty three thousand dollars, and commissions paid to the RVCWRT have been in excess of one thousand two hundred dollars. This amount has been raised through RVCWRT member purchases. Our membership is approximately one hundred fifty members. Imagine what we might do with over seven hundred fifty households. At our monthly meetings, I always stress to our membership that Amazon has almost anything that they might want, and many times at a better price than the local stores. I stress that they should only buy through Amazon when they can save money by doing so. The same philosophy should apply at Falls Run.

The program can be operational within a day of Board approval.  It is very easy to set up.

The program operates as follows:

1.       Falls Run registers as an Amazon Associate.

This entails registering our organization. We would need to supply Amazon with our federal taxpayer ID number, and our checking account information for direct deposit of our commissions. Direct deposit avoids paying Amazon a fee for a paper check, and gets our commissions paid monthly rather than quarterly.

2.       A link to Amazon will be placed on the fallsrun.org web site. Amazon will track all “click-throughs” from our link in order to pay us all commissions that are earned.  Reports of items ordered and items shipped are available on-line at all times.

3.       Amazon pays commissions of between four and six percent (depending on volume of sales) for referrals to their web site.

4.       Log-on information would be provided to anyone designated by the FRCA Board for auditing purposes. Information available includes sales, shipments, commissions earned, commissions paid, and dates of payments.

Respectfully submitted,

Dan Augustine

Falls Run web administrator

Sanya Ham raised the question of whether this could jeopardize on status as a non profit organization. Don Horan agreed to field this concern.

A motion was made seconded and approved that we would recommend adoption of this suggestion to the Board, absent an unfavorable finding on the concern raised by Ms Ham.

December Financial Results

The committee reviewed the final set of questions and remarks that was provided to AMS regarding the Financial Reports package for December, 2008. We noted the unexplained variance of $756.07 between Reserve Assets and the Reserve Fund that AMS is supposed to research and report. We noted the $455.59 difference in the Social Budget on which we asked AMS to comment.

Casey N reported that the Reserve Summary for 2008 had been modified to use Table 3, rather than Table 4, of the Mason and Mason Study as the basis for comparisons. This change results in a significantly more favorable conclusion as to the “state” of the Reserve Fund.

Finally, Casey and Bill T agreed to research a variance between the bank reconciliation of the Center Bank Account and the general ledger balance as reflected in the Balance Sheet. They will report results back to the committee when that project is complete.

Financial Review of Contracts

We discussed the role of the Finance Committee regarding contracts, proposals, and work orders. Don H assured the committee that he wanted our active input. He stressed that administrative measures had been taken to ensure that the Casey N would get copies of all proposals (as well as the functional committee responsible for that contract). Casey N reported that he was working on a draft Standard Operating Procedure (SOP) that would be used by Bill Barnes, Don H and himself to fine tune existing guidance (clarify gray areas). Progress will be review at the next monthly meeting.

Adjournment: 4:50 pm.

Casey Naatjes

Chair