The Galena Territory Association, Inc. and Galena Trading Corporation Board of Directors Meeting Minutes: Aug. 24, 2013 [Telegraph-Herald (Dubuque, IA)]

Following are the unapproved minutes from the Aug. 24, 2013, Board of Directors Meeting of The Galena Territory Association, Inc.

1. President R. J. Winkelhake called the meeting to order at 7:30 a.m. at the Owners' Club in The Galena Territory.

Present: R. J. Winkelhake, president; Sue Hinrichsen, vice president; Dennis Scully, treasurer; Kathy Oczak, secretary; Bill Dexter; Larry Galer; John Holiday; Bill Kimball; Dale Nederhoff; Doug Sury, attorney; Joe Mattingley, general manager; Susan Miller, executive director of Corporate Services, and Dave Oldenburg, executive director of Architectural Compliance.

It was noted that a quorum was present.

2. It was moved and seconded (Oczak, Scully) to approve the agenda as amended to add two new items under New Business, Management Report: NICOR right-of-way maintenance and legislative update.

Motion approved: unanimously.

3. It was moved and seconded (Galer, Kimball) to move into Executive Session to discuss litigation or pending litigation, third- party contracts, appointment, employment or dismissal of an employee, and violations of rules and regulations or an owner's unpaid share of common expenses.

Motion approved: unanimously.

4. It was moved and seconded (Dexter, Oczak) to move to come out of Executive Session at 9:04 a.m.

Motion approved: unanimously.

5. Owner Comments

The board heard comments from the membership regarding improved customer service, a noise complaint, the recent problem with some Ferrellgas contracts, and a request to establish a pool committee. Ken Simpson, president of the Eagle Ridge Townhouse Association Board of Directors, expressed his appreciation to the GTA Board and staff for their assistance since ERTA contracted with GTA/GTC in September 2011, stating ERTA wouldn't have made it this far without the GTA/GTC.

6. President's Report

a) Eagle Ridge General Manager Thomas Ruhs is out of town and was unable to attend today's meeting.

b) President Winkelhake thanked everyone for coming and apologized for starting the meeting a couple minutes late.

c) He noted that one of the agenda items today will be the review of the 2014 budget and one of the changes he is implementing is to use a roll call vote for any item involving disbursement of cash.

7. It was moved and seconded (Kimball, Scully) to approve the consent agenda consisting of the minutes of the June 22, 2013, board meeting; write off bad debt for S26-15; pay the real estate taxes for T1-043, E3-030 and T5-005; and to change the Employee Handbook Policy: Conflict of Interest.

Motion approved: unanimously.

8. Management presented the financial report for June and July 2013, including balance sheet and income statements. New this month was an additional report showing year-end projections, the variance amount of budget versus the forecast and the variance percentage. This report was created to be in compliance with the Financial Reporting Policy.

9. Strategic Planning Strat-egies:

a) Engage our Customers

i) It was moved and seconded (Galer, Kimball) to approve the six questions as recommended by the Architectural Review Committee and GTA management for inclusion in a 2013 mid-year member survey.

Discussion: There was considerable discussion regarding the real estate signs and construction manager questions. Some felt the questions were leading and others requested additional information. It was pointed out that this is preliminary research being used to find out what the property owners think about these topics.

Motion approved: 6 yes, 2 no (Oczak, Hinrichsen)

ii) Management Update

(1) Director of Communi-cation Jan Hoedebecke presented Roy Wiemerslage with a plaque acknowledging his service as Webmaster to the Association since 2006. Mr. Wiemerslage is retiring at the end of August.

(2) Discover The Galena Territory publication for 2013 was distributed to the Board.

b) Change the Way We Work

i) It was moved and seconded (Kimball, Galer) to approve the Employee Handbook Policy: Bereavement.

It was moved and seconded (Hinrichsen, Kimball) to amend the definition of family to include domestic partners.

Motion approved: unanimously.

The board then voted on the amended motion as follows: to approve the Employee Handbook Policy: Bereavement, as amended.

Motion approved: unanimously.

ii) Kathy Oczak reported that two applications have been received for the upcoming election. The meet and greet for any other members interested in becoming a candidate will be held on Saturday, Sept. 7, 2013, at 9 a.m. in the Owners' Club lounge.

iii) It was moved and seconded (Kimball, Galer) approve the Board President Position Description Policy as amended.

Motion approved: unanimously.

iv) It was moved and seconded (Kimball, Scully) to approve the Board of Directors - General Manager Relationship Policy as presented.

Motion approved: unanimously.

v) Management Update

(1) GM Mattingley introduced the GTA's new legal counsel, Doug Sury, of Keay and Costello, of Wheaton, Ill.

(2) GM Mattingley will be going to Minneapolis for a Jo-Carroll Energy meeting in September and at the same time will meet with Seth Finestack of Wipfli to discuss the change management plan.

(3) GM Mattingley has met with Ferrellgas regarding the recent issue with LP Gas Co-op contracts and has made arrangements to verify the contracts and pricing for Co-op members. He expressed his disappointment with the customer service issues to Ferrellgas Regional Vice President Howard Davis.

c) Grow Non-Assessment Revenue

i) It was moved and seconded (Scully, Kimball) to approve the paddle vessel rental fee schedule for the Marina.

Discussion: The board requested a cost benefit analysis for the addition of kayaks and canoes.

Motion approved: unanimously.

ii) Management Update - None

d) Preserve Amenity Value

i) It was moved and seconded (Galer, Kimball) to stain the concrete wall around the pool using the contingency expense budget line at a cost not to exceed $9,500.

Motion approved: unanimously.

ii) Management Update

(1) Dave Oldenburg reported that the dredging project is about a month behind due to a broken shaft in the pump.

(2) The deflection weir has been installed. The weir is part of the short-term flood mitigation work and is designed to deflect debris away from the docks. The weir is also being used as a fishing dock.

(3) There will be some more landscaping plants installed around the Owners' Club this fall. There will also be a tube extension under Territory Drive between the road and the dam on Pond Court as part of the plan to extend the trail from Pond Court to the Owners' Club.

(4) There is no word yet on the Marina Flood Mitigation grant application at this time.

10. Unfinished Business - None

11.New Business

a) It was moved and seconded (Kimball, Hinrichsen) to approve the proposed revisions to the General Declaration of Covenants and Restrictions and the Bylaws to bring them into compliance with the Common Interest Community Association Act (CICAA).

b) Discussion: Attorney Doug Sury stated that the recommended changes are only those that are required by law or are otherwise included in the Common Interest Community Association Act and do not include any changes that would require membership approval. The changes on the agenda today require two-thirds approval of the board members.

The board questioned several items, in particular Article 11 regarding the Architectural Review Committee. Mr. Sury noted that the Illinois Not-For-Profit Act requires that a committee with decision-making authority must consist of a majority of board members. There are two options, either bring all Architectural Review Committee decisions to the Board of Directors for approval, or consider a bylaw amendment to transfer that responsibility to the committee. Any proposed bylaw would need to include the ability for the board to get involved during disputes. Management was instructed to start the process of working with the Architectural Review Committee and Mr. Sury to draft a bylaw for board consideration.

It was also noted that as CICAA changes at the state legislature level, additional amendments may be required to the GTA Declarations in the future.

Motion approved: unanimously.

c) It was moved and seconded (Scully, Oczak) to approve the proposed 2014 budget for presentation to the membership.

Dicussion: Treasurer Dennis Scully noted that many months are invested by management and staff in the process of developing the budget each year, followed by intensive review by the Budget and Audit Committee. Following that work the Board of Directors spent several hours in a workshop reviewing the proposed budget. In accordance with the Common Interest Community Association Act, the Board will approve a budget for presentation to the members, the budget is then posted in the Territory Times for membership review and comment, and the final approval of the budget is done at the October Board meeting.

At the workshop, the Board reviewed the budget, along with two recommendations by the Budget and Audit Committee. The first recommendation was to reduce the emergency assessment fund from $130,000 to $100,000; the Board supported this recommendation. The second was to eliminate the funding for the trail expansion as proposed in the Long Range Plan. The Board agreed to postpone funding for that project but to keep it on the list for future consideration pending a cost benefit analysis.

Following review of the July financial statements in comparing them with the budget, Budget and Audit Committee member Jim Dvorak found a discrepancy in the ending cash balance and has worked with Rise Van Lent for the last few days to correct said discrepancy. They discovered a miscalculation on the 2013 ending cash balance. In accrual basis accounting, the revenues earned but not yet received ($278,600) and prepaid expenses ($56,600) should have been added back into the cash balance, but were erroneously excluded during the budget computations for 2013. This was mostly due to timing of payments and how they are reported. This resulted in an understatement of the beginning cash balance by $358,700.

GM Mattingley noted that we would have found this at the end of the year when we were closing the books, but Jim Dvorak found it now and wanted to thank him for identifying it at this time. It was noted that no assessments collected at the end of the year can be used until 2014. He also noted that the board can balance operating cash, add back capital purchases and lower assessments if desired.

Management proposed the following options:

1. Bring the 2014 ending cash balance to $550,000 (10% of the operating budget as recommended by the auditor) at a cost of $91,075;

2. Add back the capital purchases cut from the 2014 budget to assure the assessment increases were limited to an increase of 1.7% at a cost of $167,700, or

3. A combination of the above: Bring the 2014 ending cash balance to $550,000 and add back the capital purchases at a total cost of $258,775.

Option three allows for a reduction of the assessment from 2013's level of $1,117 to $1,079, or a savings a 3.4% (year-over-year).

The Board discussed all three options, including the impact to future assessment increases and the current ratio for the loan covenant. They noted that they had planned to do an assessment decrease before this was discovered and this will just make the decrease larger.

The Budget and Audit Committee did not have an opportunity to discuss this since it was just discovered during the last couple of days.

Management prefers the third option for two reasons: 1) It allows the GTA to replace the capital equipment previously cut from the budget, and 2) It would put the ending operating cash at 10% of the operating budget, which is the recommended level for non-profit organizations such as the GTA. This will demonstrate that the GTA is managing the finances of the Association in a fiscally responsible manner.

It was moved and seconded (Scully, Kimball) to approve option 3 to bring the ending cash balance to $550,000, to add back the capital purchases previously cut from the budget, and to reduce the 2014 assessment from $1,117 to $1,079.

Motion approved: 7 yes, 2 no (Oczak, Galer).

The Board then voted on the revised motion as follows: to approve the proposed 2014 budget for presentation to the membership as amended, to approve option 3 to bring the GTA's ending cash balance to $550,000, to add back the capital purchases previously cut from the budget, and to reduce the 2014 assessment from $1,117 to $1,079.

Motion approved: unanimously.

b) It was moved and seconded (Scully, Holiday) to approve the deployment of directional signs to create awareness of Open House events at Belden School on the first and third Saturdays, June through October.

Motion approved: unanimously.

c) Management Report

i) Susan Miller reported that the Insurance Work Group is recommending that the GTA hire an insurance professional to work for the Association to understand our needs, draft bid specifications, and obtain the bids for consideration. There will probably be a fee for this, but the group felt it would be offset in premium savings. The group also recommended changing the policy expiration date to June 1, which would allow us to utilize accurate premium numbers for the budgeting process and would tie in with the business and strategic planning processes.

ii) GM Mattingley reported that the User Fee Advisory Group met last Friday and will be coming back with a recommendation, but may need more guidance. At this time they don't have a lot of recommendations for significant changes. It was noted that a legal opinion may be required, but the group needs to be allowed to finish their work.

iii) GM Mattingley noted that the Board self-appraisal work group will be meeting in September to begin the process.

iv) Contract negotiations with Midwest Medical Center to utilize the indoor swimming pool for water therapy did not come to fruition as the two parties were unable to come to terms on the rate for use of the indoor pool.

v) The Galena High School did not form a Bass Fishing Club so they will not be utilizing Lake Galena.

vi) Susan Miller acknowledged four lifeguards for seven saves so far this season. The slide is an attractive nuisance as kids don't realize how deep the water is and they don't swim quite as well as they think they can.

vii) Dave Oldenburg reported that the Longhollow Bridge project was delayed a couple of months due to delays encountered at the state level. The bids will hopefully be let in January with construction to start in the spring, weather permitting.

viii) GM Mattingley noted that the GTA foreclosed on several lots and they have not been resold as of this time. Staff has gone through the established resale process with no sale, so they will be developing an expanded policy and will bring it back to the next meeting for board consideration.

ix) Dave Oldenburg reported that NICOR will be conducting right- of-way maintenance and will need to clear some trees over their high- pressure pipeline. That will affect a few lots and some Greenspace on the north and east corners of The Territory. This is federally- mandated maintenance and the GTA has no say in its completion.

x) GM Mattingley reported on the following legislation:

(1) CICAA was amended to clarify wording on contracts between Board members and the association that they are a Board member effective as of January 1, 2013.(2) There were a number of changes to clean-up wording in the Manager's Licensing Act. He also noted that a conflict between the fidelity insurance between the Manager's Licensing Act and CICAA will need to be fixed in the future.

(3) Representative Cheri Bustos will be in the area on September 25 to hold meetings with local constituents.

(4) Illinois State Represen-tative Jim Sacia has announced that he is not running for re-election.

d) It was moved and seconded (Kimball, Oczak) to approve the General Manager contract as presented from January 1, 2014, through December 31, 2016.

Motion approved: unanimously.

12. Property Owner Correspondence, comments and suggestions

The Board heard additional comments from the membership regarding the change to the budget.

13. It was moved and seconded (Kimball, Scully) to adjourn the meeting at 11:21 a.m.

Motion approved: unanimously.

The next regularly scheduled meeting of the Board of Directors will be held on Saturday, Oct. 26, 2013, at the Owners' Club in The Galena Territory.