FOUR WINDS BEACH RESORT CONDOMINIUM ASSOCIATION, INC.

BOARD OF DIRECTOR’S MEETING

FEBRUARY 6, 2007

 

A meeting of the Board of Directors of the Four Winds Beach Resort Condominium Association, Inc. was held at 10:00 AM, on February 6, 2007 at the resort.  Present were President Joe Walsh, Vice President Pat Webb, Treasurer John Tanner, Secretary Paul Erickson, Directors Bill Cunningham, Shirley Schilla, and Jay Walters, Four Winds Realtor Kathleen Rhodes, Four Winds General Manager Nancy Yoder and Assistant Manager Larry Claypool.  Twenty-four Four Winds owners were also present.  (All persons mentioned in these minutes who are not otherwise identified are Four Winds owners.)

 

Notice of the February 6, 2007 Board of Directors meeting was posted on the property more than forty-eight hours in advance of the meeting.

 

President Walsh called the meeting to order.

 

APPROVAL OF MINUTES:

After the Board and other principal participants were introduced to the audience, President Walsh asked the Board to review the minutes from the last five Board meetings before approving them.  Treasurer Tanner pointed out that in the minutes of December 28 and January 12, in the sections on Adjournment, they erroneously referred to Treasurer Walters.  Larry said he would correct those mistakes.  He was also instructed to make a notation at the end of the November 8 minutes that the date of the February meeting (this one) was changed.  Director Cunningham moved that the minutes be accepted as modified above.  Treasurer Tanner seconded the motion, which then passed unanimously.

 

FINANCIAL BUSINESS:

2006 Unallocated Reserve Interest

Treasurer Tanner explained that the Resort ended 2006 with a deficit in Operating, and that he recommended moving any Unallocated Reserve Interest into Operating to cover this shortfall.  He explained that the deficit appeared to be at least $25,000.  Director Walters reiterated that at some point the Board would have to decide what to do with the money the Property Tax account had earned.  Treasurer Tanner moved that all the interest from 2006, except for that in the Property Tax account, be applied to the Operating account.  This motion was seconded by Director Walters and carried unanimously.

 

Budget Proposal

Treasurer Tanner presented a proposed modification to the 2007 Operating Budget, which allocated funds tailored to the expected costs per month (as opposed to an even amount each month), adjusted some line items, and allowed for some money to be reallocated in May and September.  Director Walters said that his concern was that the line items not be exceeded, and that he thought the Board should wait until May to make any kind of adjustments.  Treasurer Tanner emphasized that by allocating funds as accurately as possible per month the Board would have a more accurate picture of the financial position of the Resort.  Director Walters asked Nancy and Larry if they were in support of this proposal.  Nancy said she was willing to go along with any of the options discussed.  After further discussion, and in response to Director Walters, Treasurer Tanner explained that his revised budget would not go over the Budget passed in November.  He also said he thought the Board needed to adjust the Budget allocations every meeting.  Director Walters asked Treasurer Tanner, if at all possible, to get these kinds of proposals to the Board for consideration further in advance of meetings.  Secretary Erickson moved, with Vice President Webb seconding, that the Board accept the proposed Budget allocations as presented.  The motion carried with all Board members voting for it, except Director Walters, who voted against it.

 

Approve Accounting Firm

Treasurer Tanner explained that the Resort’s current accounting firm was no longer interested in handling our account, basically because they could make more money elsewhere.  He recommended that the Board contract for one year with Loton Williams, a local firm recommended by Nancy, and, which also had the lowest bid.  Director Walters moved that the Board act on Treasurer Tanner’s recommendation.  Director Cunningham seconded the motion, which then carried unanimously.

 

UNFINISHED BUSINESS:

Smoking in Units

President Walsh introduced the issue by explaining the difficulties of making a resort smoke-free, no matter how desirable a goal it was.  Nancy explained that Dan Lobeck, attorney for the Association, had written a letter on this subject, responding to the Board’s query, and that she had been directed to put the matter on the agenda for this meeting.  Director Walters suggested asking for the audience’s input on this subject during the Owner Participation part of the meeting.  Nancy explained that the “tent” signs asking people to refrain from smoking in the units seemed to be helping.  Treasurer Tanner suggested that the Board could probably not realistically keep people from smoking in the units, but that if people were charged for extensive cleaning of a smoky room it might be a suitably effective deterrent.  After several options were mentioned and briefly discussed, further consideration of this topic was postponed until the Owner Participation portion of the meeting.

 

Gas Usage Report

Mr. Claypool explained the Gas Usage Report he had prepared for the Board.  He pointed out that, according to his estimation, based upon the therms listed on the monthly gas bills, the new gas heater for the pool seems to cost $6128.87 per year.  Nancy and Larry could not say, with the information currently available, how much the spa heater cost to run.  Treasurer Tanner explained that he had asked for the report because he was curious to see if the Board should consider purchasing a geo-thermal heater instead of gas, which seemed to be feasible if it could save $6000 a year, particularly for the spa, which was likely to need replacing in the near future.  He pointed out that this led directly into the next agenda item…

 

NEW BUSINESS:

Spa Heater

Treasurer Tanner explained that he thought the Resort would save money if the Board decided to go with a geo-thermal spa heater.  Nancy informed the Board that she did have a current bid for geo-thermal heaters: $23,077 for the pool and $8,862 for the spa, which was more than a 20% increase over the previous year’s bid.  Treasurer Tanner suggested putting in a geo-thermal spa heater and evaluating the savings in regard to putting in a geo-thermal pool heater later.  Nancy told the Board that the current spa heater was “limping along” and could go at any point.  She added that the over all cost, including unforeseen expenses, would be more than $8,862.  Director Walters made the motion, seconded by Director Cunningham and carried unanimously, to buy a geo-thermal heater for the spa, but, in the time between now and the installation of that heater, to have a meter put on the current hot tub heater to measure its gas usage.  Nancy was told the money was to come out of Reserves.

 

Sunshine Cleaning Pay Increase

Nancy explained that Sunshine Cleaning was seeking a 4% raise, although they had not asked for one prior to the September Budget Meeting.  Director Walters said that Sunshine Cleaning was aware of the Resort’s budgeting procedures as well as the cleaning contract details, and that if they had not sought a raise at the appropriate time the Board should not consider it now, letting Sunshine wait until September.  President Walsh said he did not think they would wait that long.  Nancy explained that the owner of Sunshine Cleaning, Rodolpho Marin, had said that he could cut costs on cleaning and unit inventory supplies significantly.  Treasurer Tanner suggested that the Board approve a 3% raise contingent upon a matching reduction in cleaning and unit supplies.  Director Schilla wanted to know where the money to pay for this was to come from in the meantime.  Treasurer Tanner admitted that there was no extra money in the budget for this item.  The Board generally agreed that waste of unit supplies must be curtailed.  Further discussion was tabled until the Sunshine Cleaning contract could be reviewed during the lunch break.

 

OWNER PARTICIPATION I:

Smoking in Units

The owners present expressed general approval of making smoking in the units “prohibited,” in order to protect the health and rights of the majority of the owners.  Director Cunningham said he would not expect a strong reaction to such a prohibition, because people have come to expect such a restriction.  It was emphasized that there was no real question of active policing, but merely a matter of “smoking is prohibited, and if we have to clean up after a violation of this policy you will be charged.”  Mr. Houseman emphasized that some advance warning should be given to incoming guests.  The Board and owners generally seemed to think that the fenced in pool and spa areas should be included in the prohibited areas.

 

MEETING WITH FOUR WINDS ATTORNEY DAN LOBECK:

President Walsh introduced Attorney Dan Lobeck, saying that he was present to explain recent legal actions concerning the Resort and to explain resulting actions taken by the Board of Directors, with a view to answering any questions the owners might have.  Mr. Lobeck explained that he had been asked to review the legal position of making units non-smoking, and that the Florida statute seemed to encourage Four Winds making non-smoking all units that are ever up for rent, or subject to being up for rent, but are not specifically identified as “smoking units.”  He also said that it seemed to be within the Board’s “rule making” powers to prohibit smoking in the units, but that notice to the owners would need to be made. 

 

Mr. Lobeck then explained the issues covered in the minutes of January 12, 2007 (the letter of complaint from attorney Dan Scott, on behalf of several Four Winds owners, including Director Walters, to Kathleen Rhodes in regard to Four Winds election procedures).  He read the original letter as well as the response letter drafted and delivered by him at the direction of the Board.  He explained that while disagreements among Board members was normal and healthy, the letter addressed to Ms. Rhodes clearly crossed a line into inappropriate behavior.  He also added that he did not really expect any response to his letter, because the only viable response was to apologize, and he didn’t think Mr. Scott’s clients wanted him to do that.

 

When Mr. Hoffinger asked if a Board Member had a right to hire an attorney to ask an employee to break a contract with the Board, Mr. Lobeck said that was “more egregious than just a unit-week owner doing it, because not only is it tortious interference with the Association’s contract, but it can be construed as breach of fiduciary duty by acting in that owner’s interest contrary to the interests of the Association as a whole.”  When asked if the Board had the power to remove a Board member who had engaged in such a breach of duty, though, Mr. Lobeck said, “No, the only way a director can be removed, short of the director’s resignation (and the Board could ask for the director’s resignation if they chose to)… but, short of voluntary resignation, it would take recall and removal by a vote of the owners under Florida statutes.” 

 

Mr. Houseman asked what the rights of Four Winds owners were in relation to viewing of the proxies for the 2006 annual meeting, which were ostensibly secret ballots.  Mr. Lobeck explained that in accord with Four Winds Condominium Documents an owner’s name and unit-weeks must be specified on each proxy, that according to the [Florida] Condominium and Timeshare Acts any owner has a right to, at their own expense, receive copies of all Association documents (which the proxies clearly are), and, however, “there is a provision of the Timeshare Act that says, notwithstanding any other provision of the Timeshare Act or the Condominium Act, the Association is prohibited from disclosing to any unit-week owner the name of another unit-week owner.”  He explained that this latter provision was intended primarily to forestall the use of owner lists for mass-marketing purposes.  He also said he was filing, on behalf of the Board, a petition for Declatory Statement, asking the State “to rule officially as to whether that name secrecy statute trumps the records access statute.”  He also said as a subsidiary issue they were also asking whether a Board member has any special right of access.

 

When asked, by Mr. Bline, to give his opinion of the letter sent to Ms. Rhodes, partially on his behalf, Director Walters said, “No comment.”

 

Mr. Hoffinger said, “If we’re talking about process, it seems to me, that for any member of the Board to lend himself or herself to an extortionate letter, which this is, is so offensive that it seems to me that if there isn’t a response then it gets back to, you know, the business about the reason there is so much wrong in the world is because the good people are silent.  There is something very offensive about this letter.  Right or wrong… The letter may be based on true facts; it may be right, but the letter is extortionate.  And for an extortionate letter to be written by any one person on the Board is unbelievable to me, and I just don’t understand how that can be tolerated.  I really don’t.  And it seems to me that where there’s a wrong there has to be a remedy.  Forgetting about basic law, humanity demands a remedy when there’s something profoundly wrong.  And if it isn’t profoundly wrong, then what are we talking about?  Either it is or it isn’t, and if it is let’s say it is, and say something about it and perhaps do something about it.  And I don’t mean lawsuits.  I’m talking about an expression from the Board. … It has nothing to do with the merits of the letter, if you know what I mean.  I mean, if there’s merit to it, then let those people who think they have merit proceed in a way that is legal and proper, instead of in an extortionate way, which is criminal.” 

 

In response, Mr. Lobeck said, “I think the silence that you’re hearing, and that I’m hearing from Mr. Scott [the attorney who drafted the letter to Ms. Rhodes], speaks volumes.  I think it has been impressed on these people that they did wrong, that it was inappropriate, and I think they’re sorry they did it.  I don’t think they’re prepared to say they’re sorry they did it, but so be it.  I think it’s backfired tremendously on them.  I am sincerely hoping – and I know I speak for the Board on this – am sincerely hoping that Kathleen brushes this off and doesn’t let it bother her anymore, because there is no merit to it.  There is no realistic threat with regard to her license.  And, if anybody did file a complaint, fury would descend upon them, and I don’t think anybody is even going to contemplate that anymore.  So, perhaps that to the extent that one feels violated by this, and I can understand that, some sense of vindication might be taken by thinking of how those that did this now feel.  I think they probably hugely regret it and realize that it backfired very largely in their face.”

 

Mr. Brown insisted that the Board focus upon the process, saying, “If there’s a problem, fix it.”  He reminded everyone that the balloting procedure was as the Board had established it, and that it was up to the Board to correct the process if it perceived that there was a problem.  He pointed out that there were relatively easy procedural changes available to fix any of the so-called problems he had heard mentioned.  Mr. Lobeck agreed with Mr. Brown’s statements, and Mr. Halbower took the opportunity to agree, and say that he considered having an accounting firm conduct the proxy count was “overkill.”  Mr. Lobeck said that, although his experience was limited, he was of the impression that other timeshares tended to use basically the same proxy/voting procedure Four Winds had been using prior to 2006. 

 

Mr. Lobeck also said that as far as the issue of contractors or staff influencing people to vote one way or another, “that’s a matter for the Board to be involved with as well.”  For instance, employees could be directed to not discuss candidates as part of the employee manual; contracted employees could be limited by the inclusion of pertinent stipulations in their contract with the Association, by mutual consent; or, if the Board believes it is “the free speech rights of contract personnel or employees to indicate their informed preference to any owner who might inquire, then it might be left at that.” 

 

When asked if the Board had taken a vote specifically in support of Ms. Rhodes, President Walsh pointed out that the Board had in the past year approved a new contract with her, and that the Board was very much behind her.  Mr. Lobeck pointed out that the Board was indicating its strong support by voting five to two to send that letter on her behalf.

 

Mr. Houseman expressed his strong support for both Ms. Rhodes and the Four Winds staff, and said he did not believe any of the allegations made against them.  He went on to say that he strongly felt the proxy and vote counting process should be handled without the staff being involved at all, to avoid any appearance of impropriety, but that it was important that owners be able to consult with Ms. Rhodes, Garry Smith, or the staff to gather information about and opinions of prospective Board candidates.  Mr. Houseman also related that as a member of another board he had participated in asking a board member to resign, because that board member had sought to subvert the proper function of the body by pursuing outside means of exerting pressure.  “We asked that board member to resign, because, personally, we didn’t feel that if a board member could not live within the context and operate within the context of the board and had to seek outside efforts of people to overturn what the board was trying to do, then I don’t think he ought to be on the board.  I think that person should have… has a moral obligation to resign.”

 

OWNER PARTICIPATION II:

After Mr. Lobeck left, President Walsh continued the Owner Participation portion of the meeting.  Mr. Bline detailed his interactions with Director Walters in relation to the proxy and voting procedures of the past election, for the purpose of making his objections to Director Walters’ conduct and statements a matter of record.  Director Walters said, “There’s two sides to everything.   You go right ahead, and, Joe, you go right ahead and run this meeting, and let him openly sit out there when you should have contained him on this attacking me.”  President Walsh directed everyone to refrain from discussing personalities. 

 

Changing the subject, Mr. Halbower said he was in favor of purchasing a geo-thermal heater, if it was the best, most efficient option, because it was more sensible to spend a more money now if the overall result would be a significant savings.

 

Mr. Taubenblatt asked if the Board could look into more effective ways of marketing rental units available, particularly on the internet, and if there were other exhange organizations available that were any better than RCI.  President Walsh explained that he and Nancy had discussed the possibility of putting more information on the Resort web page.  He and Ms. Rhodes pointed out that Four Winds owners were free to use any exchange service they chose.  Mr. Schilla suggested it might be time to revisit the idea of placing a sign by the road to advertise “vacancy” when units were available for immediate rental.  Treasurer Tanner pointed out that tourism, in general, was down in Florida, and that the changing demographic of Longboat Key was not helping the rental situation at Four Winds. 

 

UNFINISHED BUSINESS (continued):

Smoking in Units (continued)

At President Walsh’s request, Director Schilla moved that, “We put signs in the room[s] that smoking is prohibited in the units and in the fenced-in pool and spa areas, and they can smoke on the balcony or outside.”  President Walsh said to go ahead and send a mass mailing out to notify owners of this change, and that the Board would find the money to pay for this unbudgeted expense.  Secretary Erickson seconded the motion.  Treasurer Tanner said that he did not support prohibiting smoking in any outdoor area, and Director Walters pointed out that this was going to be very difficult to enforce.  After discussion, Director Schilla offered to modify the motion, Ms. Yoder said that, from a management standpoint, there was no problem with anything but smoking in the rooms so she did not understand why the Board was worrying about smoking elsewhere, and Mr. Brown strongly suggested that the Board simplify the rule to “smoking in the units is prohibited” and move on.  Director Schilla changed her motion, to “smoking will be prohibited in the units.”  Director Cunningham seconded the motion, which then carried unanimously.

 

Sunshine Cleaning Pay Increase (continued)

President Walsh explained that there was an annual renewal clause in the contract with Sunshine Cleaning, with a 30-day notice option to rescind the contract on the part of either party.  After some further discussion of points raised earlier, the Board considered offering a 2% increase.  Director Walters suggested giving Sunshine Cleaning half the money saved on unit and cleaning supplies up to 4% of their current pay.  After more discussion, Director Walters moved that the Board deny the request of Sunshine Cleaning for a 4% increase.  Director Cunningham seconded the motion.  Secretary Erickson emphasized the point made earlier that the Board did not feel in September or November that they could afford to give the Four Winds employees any increase for 2007, and said that, while it might be reasonable to give Sunshine more money once the savings in supplies was in hand, it was not good practice to do so up front.  The motion passed with Secretary Erickson and Directors Cunningham, Schilla and Walters voting for it, and President Walsh, Vice President Webb, and Treasurer Tanner voting against it.

 

Front Desk Hours

Director Cunningham asked the Board to consider whether the Association was wasting money having the Front Desk open until ten every night.  The Board reviewed the considerations gone through in past meetings to decide on the Front Desk hours.

 

Owner Letters

President Walsh explained that a number of owners had written letters in support of Ms. Rhodes, and that Mr. Claypool had copies of those if anyone would like to see them.

 

ADJOURNMENT:

Director Cunningham moved that the meeting be adjourned.  Secretary Erickson seconded the motion, which then carried unanimously.  The next meeting of the Four Winds Condominium Association Board of Directors is a teleconference on May 22, 2007, at 10 AM (EDT).

 

Respectfully submitted,

Larry Claypool

For Paul Erickson

2/17/07