MINUTES FOR THE MEETING OF THE BOARD OF DIRECTORS OF ...

MINUTES FOR THE MEETING OF THE BOARD OF DIRECTORSOF THEEAGLE CREST MASTER ASSOCIATIONCALL TO ORDERATTENDANCEPRIOR MINUTESOLD BUSINESSNEW BUSINESSCOMMERCIALPROJECTDIRECTORPursuant to call by the President of the Association, the first quartermeeting of the Board of Directors was held on February 10, 2012 at 10:00a.m. at the Eagle Crest Administrative Office in Redmond, Oregon.Directors present included Pat Duffy, Hank Cavender, Mike Bessonette,Bill Neumann and Chris Earnest (appointed to the commercial directorposition during the meeting). Staff members present included CurtHeimuller, TJ Paskewich, Karen Smith, Lauri Miller, Scott Pickert, RobinDowty and Debbie Hahn. David Bishop of Edward Jones Investments andseveral members of the Association also attended. Pat Duffy, President,presided at the meeting, and Debbie Hahn recorded the minutes on behalfof the Secretary.Following motion duly made, seconded and carried, the reading of theprior meeting minutes dated December 7, 2011 was waived and theminutes were approved as written. Pat announced the agenda for themeeting (see attached) and opened the discussion of business items.None pending.Pat advised Alan VanVliet is no longer an employee of a commercialproject owner, and therefore has resigned from the Commercial ProjectDirector position. There is now a need for the board to appoint a directorto fill the vacancy. Pat noted there are two owners of commercial lotswithin ECMA, and the owner of the majority of such lots, Eagle CrestResort Development, LLC, has nominated Chris Earnest, FinancialDirector for that entity. Pat referenced the nomination and resume’previously sent to directors (“Attachment 1”). Karen Smith confirmed sheadvised the other commercial lot owner of the vacancy, but no nominationwas received from that owner.Following discussion and upon motion duly made and seconded, thefollowing resolution was unanimously approved:RESOLVED, that Chris Earnest be appointed as CommercialProject Director to complete the remainder of the term expiringin September 2013.FINANCIALREPORTCurt Heimuller referred directors to a memo he authored with a subject of“Reserve Fund Investments and OR Planned Community Act (“Act”)Update and Proposal on law change activities” dated February 7, 2012(“Attachment 2”). Curt reminded directors the previous direction to1

management was to work toward changing the law as described in hismemo, with the current goal to present legislation during the 2013legislative session. Curt next reminded directors of their previous directionto management to hold the bond investments with Edward Jones but toplace new reserve contributions as well as principal/interest payments onthe bonds into an FDIC insured institution. He confirmed management hasproceeded accordingly. He asked if directors would either confirm thisinvestment plan or provide alternate instructions to management.Directors agreed with continuing the current approach and took no actionto revise their previous direction.Curt asked Karen Smith of Resort Resources to review the proposalsubmitted to Eagle Crest Management to pursue the law change proposalas detailed in Exhibit 3 of “Attachment 2”. Curt clarified the costsinvolved would be to engage Resort Resources, Inc. to work with staterepresentatives, legislative action committees, and the Oregon Chapter ofCommunity Associations Institute to propose the law change for the 2013legislative session. Directors discussed and clarified that the costs outlinedin the proposal were intended to be shared with other owner associations.Following discussion and upon motion duly made and seconded, thefollowing resolution was unanimously approved:RESOLVED, that the proposal as detailed in Exhibit 3 of“Attachment 2” engaging Resort Resources to pursue support ofthe legislative change with a maximum of amount of $3,000 forthe ECMA portion of the project be hereby approved.David Bishop of Edward Jones Investments attended the meeting to reporton the Association reserve investment portfolio (“Attachment 3”). Davidconfirmed at this time all investments are in mortgage-backed securities ingovernment programs (GNMA, FNMA, Freddie Mac). David indicatedthese investments return principal and interest on a monthly basis allowingthe Association to have cash flow that matches expected expenditures.The current yield on the bonds in the investment portfolio is at 4.72%.David indicated the focus has been on keeping the investments safe andliquid and having cash flow available to meet projected expenses. At thistime, David recommended staying on course with the current investmentprogram in regards to the bonds, adding that any principal and interestreturned each month is transferred by management to FDIC insuredinstitution money market funds or CDs. Directors concurred in continuingthis approach.David advised the state representative for the Eagle Crest area may changefrom Gene Whisnant to John Huffman from The Dalles. David has alreadycontacted John Huffman and after this legislative session, he plans to meetwith Mr. Huffman to educate him on the issue regarding the proposed2

legislative change.Karen Smith presented the insurance report (“Attachment 4”) noting thereis no new activity to report. Next, Karen referred directors to her memowith subject line of “Insurance – D&O Liability; General Liability”(“Attachment 5”). Karen noted the underwriter of the general liabilitypolicy is now Philadelphia. Philadelphia’s practice is to include “medicalpayments” coverage which gives the insurance company approval to payclaimants up to $5,000 rather than investigate incidents. This coveragewas automatically added to the Association’s policy, however it is anoption to waive this coverage. Lauri commented the coverage was notpreviously included since the Association does not have a choice onwhether the underwriter pays or not, which can negatively affect futurepremiums. Karen noted there is a cost for the medical paymentscoverage, but it is very small.Karen advised the president requested director ratification of his actionrenewing the D&O liability insurance as noted in “Attachment 5”. Theboard had previously authorized the President to sign binding orders forthe policy.Following discussion and upon motions duly made and seconded, thefollowing resolutions were unanimously approved:RESOLVED, that management notify J&W Risk Services toexclude medical payments coverage from the Association’sGeneral Liability policy; andBE IT FURTHER RESOLVED, that the President’s action ofsigning binding orders to renew the Directors and OfficersLiability policy be hereby ratified.Lauri Miller presented the financial report, reviewing the internallyprepared year-end 2011 financial statements (“Attachment 7”) noting theitems detailed in the financial summary (“Attachment 6”). Lauriconfirmed that all operating funds ended the year better than projected witha positive variance in each. She advised the reported operating fundbalances at year-end exceed the amounts estimated for the 2012 budgets,but no changes are needed to those budgets. Lauri noted the CPA’s will beconducting the audit in April, so these year-end statements are preliminary.The approved 2012 Association budget updated for actual 2011 year endresults (“Attachment 8”) was included in the director materials forreference purposes.Following discussion and upon motion duly made and seconded, thefollowing resolution was unanimously approved:RESOLVED, that the financial report submitted by Lauri3

Miller including “Attachment 6”, “Attachment 7” and“Attachment 8” be hereby approved subject to audit.In response to a member question, Karen clarified approved meetingminutes are available on the owner website and related attachments areavailable upon request.Karen noted that the Evaluation of Reserve Account Expenditures vs.Budget per 2011 Reserve Study (“Attachment 9”) is the final report on2011 activity. There are two minor variances related to freight charges forwhich management is requesting approval.Karen Smith reviewed the Evaluation of Reserve Account Expenditures vs.Budget Per 2012 Reserve Study (“Attachment 10”). Planned items arenoted by “yes” in the column labeled “planned” and are the expense itemsrequested by management for approval. The remaining items are pendingrecommendation by the management company in the event of asset failure.Management is requesting approval of one unscheduled reserve expensefor a fire hydrant replacement, which asset is listed in the 2012 reservestudy titled “Water Infrastructure Repair Estimation Plan.”Following discussion and upon motions duly made and seconded, thefollowing resolutions were unanimously approved:RESOLVED, that the Evaluation of Reserve AccountExpenditures vs. Budget per 2011 Reserve Study datedJanuary 13, 2012 (“Attachment 9”), including two notedvariances, be hereby approved as recommended bymanagement; andBE IT FURTHER RESOLVED, that the Evaluation ofReserve Account Expenditures vs. Budget per 2012Reserve Study dated January 13, 2012 (“Attachment10”), specifically expense items indicated as “planned”,and the one variance for the fire hydrant replacement ata cost of $3,800 be hereby approved as recommended bymanagement.GOLF COURSECOMMITTEEHank Cavender, Committee Chair, stated during the past quarter thecommittee worked on recruiting additional members.Following discussion and upon motion duly made and seconded, thefollowing resolution was unanimously approved:RESOLVED, that Mark Hunt (VROA), Doug Bristol(Worldmark), Steve Peccia (EHOA) and Bill Greeley(EHOA) be hereby appointed to the Golf Committee toserve at the will of the Board.4

ENVIRONMENTALCONTROLCOMMITTEECOVENANTCOMPLIANCECOMMITTEEJim Madison, Committee Chair, noted there was one action item since thelast board meeting. The request was to change the sign at the hotel, whichwas approved. Pat asked Jim if he was willing to continue to serve on thecommittee and Jim confirmed he was willing.Following discussion and upon motion duly made and seconded, thefollowing resolution was unanimously approved:RESOLVED, that Jim Madison be reappointed to theEnvironmental Control Committee, with a 3-year termexpiring February 2015.Hank Cavender, Committee Chair, advised the committee had no activityto report. Hank noted the committee had one vacancy and recommendedDoug Bristol of Worldmark to replace Steve Sansone.Following discussion and upon motion duly made and seconded, thefollowing resolution was unanimously approved:RESOLVED, that Doug Bristol be appointed to theCovenant Compliance Committee to serve at the will ofthe Board.UTILITYSYSTEMSOPERATIONSREPORTOTHER BUSINESSTJ Paskewich advised there was a failed fire hydrant that requiredreplacement during the past quarter, but no other significant operatingissues to report. TJ presented the Water Consumption Report(“Attachment 11”) noting the information includes data through the end of2011. TJ reported the sewer system master plan update is expected fromWH Pacific by the end of March.TJ Paskewich referred to his written operations report (“Attachment 12”),sports center usage statistics (“Attachment 13”) and Holiday Inn pressrelease (“Attachment 14”). TJ noted the Holiday Inn press release was forinformational purposes only and is specific to the 100 rooms at the Lodgeat Eagle Crest (fka Inn at Eagle Crest). TJ then presented a memo fromResort Resources on Common Area Parcel Ownership (“Attachment 15”)which details a title transfer which is currently in process.Pat advised he requested a management recommendation for a recordsexamination policy to clarify the governing document requirements in thisregard and incorporate updates in State law. He referred directors to thedraft policy prepared by management (“Attachment 16”). Karen added themajority of the draft is a compilation of ECMA Bylaws content and therelated Oregon Statutes content, along with policy language sourcedoriginally from the Stoel Rives law firm for another Oregon ownersassociation. The board asked management to draft an additional cover5

sheet and procedure for inclusion with the policy, further specifying byexamples what would generally be considered proper and/or improper useof Association documents.Following discussion and upon motion duly made and seconded, thefollowing resolution was unanimously approved:RESOLVED, that the Record Examination and PrivacyPolicy be approved as presented, subject to the additionof a procedural guideline to be prepared bymanagement to clarify examples of proper and/orimprover use of Association documents.Mike Bessonette noted the Estate Homesite Association and the Ridge atEagle Crest Owners Association have adopted extensive ladder fuelsreduction policies to reduce risk of damage in the event of a wild fire.Mike advised he believes certain ECMA common areas are in need ofladder fuels reduction and recommends a ladder fuels reduction policy beconsidered for the Association. TJ offered to prepare a draft policy topresent to the board at the next meeting. Directors discussed that policyadoption would be the first step, after which they would need to addressscheduling any work and budgeting for those costs. Mike suggestedattention be first focused on common areas along the Deschutes Rivercanyon. The board directed management to prepare a proposal to presentat a future meeting.Mike proposed changing the speed limits on ECMA controlled roads to 20miles per hour, referencing the speed limit set by the Ridge at Eagle CrestOwners Association for its roadways.. TJ noted management recommendskeeping speed limits at 15 in the more congested areas, such as Red TailHawk Drive. Pat asked management to prepare and present a proposal at afuture meeting regarding speed limit recommendations.Mike advised some residents of Eagle Crest would like an off-leash areafor dogs and that he received an informal proposal suggesting some part ofthe former equestrian facility be used for this purpose. Pat advised theBoard was not in a position to respond or discuss the idea until a formalwritten proposal is submitted by the proponents of this idea. Directorsacknowledged information from management with regard to governingdocument restrictions on pets. Pat closed the discussion stating a formalproposal would be needed before taking the matter under consideration.At this time, and upon motion duly made, seconded and approved, theboard convened to executive session to discuss two pending contracts withthe Association. Upon returning from executive session, motions wereduly made and seconded, and the following resolutions were approvedwith four directors in favor and one director abstaining (Earnest):6

RESOLVED, to approve a management agreement withEagle Crest Management, LLC as detailed in“Attachment 17”; andBE IT FURTHER RESOLVED, that the professionalservices agreement with Resort Resources, Inc. andrelated task orders as presented in “Attachment 18” behereby approved.Directors confirmed the second quarter meeting on Friday, May 18, 2012,10:00 a.m., at the Eagle Crest Administrative Office in Redmond, Oregon.ADJOURNMENTThere being no further business, the meeting was adjourned.________________________________Secretary to the Association7