Fairlington Glen Board Meeting                        Draft #2

May 2, 2006

 

Attendees: Bob Patrician (President); John Fuller (Vice-President); Charlie Robbins (B&G Liaison); Margaret Windus (Treasurer); Alison Burns Trimble (Secretary)

 

Co-Owners: Regina Smith (Ct 9); Mary Bley (Ct 12); Paula Mathews (Ct 10); Bill Worsley (Ct 16); Guy Hughes (Ct 12); Victoria Herman (Ct 12); Jason Johannes (Renter-Court 12)

 

Staff: April Ludtke (Legum & Norman); Andrew Barnes (Legum & Norman); Ricky Solares (On-Site Manager)

 

Other: Elisabeth Hansen

 

The meeting was convened at 7:35pm by Bob Patrician.

 

Residents’ Forum

 

Regina Smith (Ct 9) outlined the water problem with their front porch overhang. Water is pouring over the edge of their front stoop roof onto the stairs and forming a large puddle. This becomes dangerous when the water freezes. The Board instructed Ricky Solares to gather more information on the problem during and/or after the next significant rainfall and come back to the Board with ways it might be addressed.

 

Minutes

 

02.05.06.01 MOTION Approve the minutes as amended in Draft #3 of the April 4, 2006 meeting. The motion carried: 5-0-0.

 

Tot Lot Task Force

 

Paula Mathews reported on the findings of the Tot Lot Task Force. The structure has been inspected by an engineer and is in fairly good shape. However, several safety repairs need to be made. A work order will be sent to our maintenance staff along with a list of the needed supplies.

 

Paula outlined the list of enhancements that the Task Force would like to see added to the area. These include replacing the benches, adding a new small piece of play equipment, adding more shade to the area, adding a seating area, and, a tetherball court.  These items will be considered primarily as a part of the 2007 Budget planning process.

 

Andrew Barnes, Legum & Norman, advised that any additional play equipment would need to be added to the Glen insurance policy.

 

Treasurer's Report

 

Margaret Windus reported on the steep water and sewer rate increases which we have under-budgeted for in 2006. At the current rate of usage, the Glen will be over $40,000 in unplanned expense. Next year’s water rates are also expected to rise due to need for massive upgrades at the Arlington County water treatment facility. Charles Robbins suggested the Finance Committee provide a range of 2007options for the Board to consider rather than a single budget number.  The Board thought this was a good idea and the Treasurer agreed.

 

Investment Policy for Reserve Funds

 

Bill Worsley, Glen Finance Committee member, explained the need for the Board to adopt an investment policy to maintain the integrity and liquidity of the Glen’s reserve funds. This policy is a control document to instruct future investments for the Glen. It is expected that the Board and its fiduciaries would abide by this statement and revise it in the future as circumstances warrant. (The resolution is attached to these minutes.)

 

02.05.06.02 MOTION Approve the investment policy for replacement reserves as written. The motion carried: 5-0-0

 

 

Covenant Hearing

 

02.05.06.03 MOTION Move into closed session for a covenant hearing in the matter involving 3574 S. Stafford Street. The motion carried: 5-0-0

 

02.05.06.04 MOTION Move back into open session. The motion carried 5-0-0

 

B&G Liaison Report

 

John Fuller reported on the last B&G Liaison meeting. The Landscape proposal took up 90% of meeting.

 

02.05.06.05 MOTION Landscape proposal from Environmental Enhancements as amended on 5/1/06. The motion carried: 5-0-0

 

 

Management Report

 

Phones

Andrew Barnes, Legum & Norman, reviewed the choices to consolidate the Glen’s communications services.  The decision was made to pay each staff member $30 per month for cell phones in place of the current two phone Nextel arrangement. Each staff member will choose their own phone and service. The expectation of the Board is that all staff will be reachable as needed via cell phone during emergencies unless otherwise excused. The pagers will be terminated. The phone lines will be reduced to one office line with DSL capabilities. AOL service will be terminated. The mandated pool line will be an outgoing line only.

 

 

02.05.06.06 MOTION Move to closed session for the purpose of discussing contracts. The motion carried: 5-0-0

 

02.05.06.07 MOTION Move to open session. The motion carried: 5-0-0

 

Painting Contract

 

02.05.06.08 MOTION Approve $44,450.00 to Middledorf Painting for painting in Court 5-8 including the roof valley flashings. The motion carried: 5-0-0

 

Paving Contract

 

02.05.06.09 MOTION Approve Dominion Paving for Court repair as amended. The motion carried.5-0-0

 

Sidewalk Repair

 

02.05.06.10 MOTION Approve sidewalk repair bid of $17,695.00 from Dominion as submitted. The motion carried: 5-0-0

 

Pool Life Guard Chair

 

02.05.06.11 MOTION Move to grant Bob Patrician (President) the authority to approve the expenditure of up to $3000 for a new life guard station chair. The motion carried:  5-0-0

Adjourn

 

02.05.06.12 MOTION Move to adjourn. The motion carried: 5-0-0

 

The meeting was adjourned at 9:59pm.

 

Next Meetings

 

The next Glen Board meeting will be a dinner meeting to be held

The next regular Board meeting will be held Tuesday, June 6, 2006.

 

 

Respectfully submitted by,

 

 

Alison Burns Trimble

Secretary

 

ATTACHMENT

 

FAIRLINGTON GLEN COUNCIL OF CO-OWNERS

RESOLUTION OF THE BOARD OF DIRECTORS

 

May 2, 2006

 

WHEREAS, Fairlington Glen’s directors are fiduciaries of the reserve funds of the Council of Co-Owners, and have a fiduciary duty to prudently manage reserve assets for the sole benefit of the Co-Owners of Fairlington Glen;

 

WHEREAS, the Board of Directors wishes to provide an investment policy to guide future boards, treasurers, and finance committees;

 

RESOLUTION

 

It is hereby resolved that replacement reserves shall be invested in such amounts as may be authorized by the Board of Directors in accordance with the following policy.

 

  1. No funds shall be deposited or invested except in types of investments authorized by the Fairlington Glen Board of Directors (see Permissible Investments below).
  2. All accounts, instruments, and other documentation of such investments shall be subject to the approval of, and may from time to time be amended by, the Board of Directors as appropriate, and they shall be reviewed at least annually by the Board or the Finance Committee.
  3. Investments shall be guided by the following general goals, listed in decreasing order of importance:
    1. Safety and risk reduction.  The most important long-term goal is safety of the purchasing power of the replacement reserves.  The volatility of the value of the reserve assets should be mitigated.  Only high quality investments are appropriate.
    2. Liquidity and accessibility.  Funds should be readily accessible for projected or unexpected expenditures.  Maturities should be structured to ensure availability of assets when needed.
    3. Return.  Funds should be invested to seek the highest level of return that is consistent with preservation of the purchasing power of the principal and accumulated interest and capital gains.  The long-term target return of the reserves is to exceed inflation, as measured by the Consumer Price Index, by one to three percentage points annually, after taxes and management costs.
    4. Professional management.  The Board shall seek competent professional advice for the management of reserves.  The Board will review the performance of the reserve funds annually. 
    5. Minimal costs.  Investment costs (management fees, redemption fees, commissions, and transaction costs) should be minimized, and should be consistent with return opportunities.

 

Permissible Investments

 

Since safety of principal is a key goal, only the following types of investments will be permitted for replacement reserves:

  1. money market funds
  2. bank certificates of deposit insured by the FDIC
  3. U.S. Treasury securities (including Treasury strips)
  4. agency mortgage-backed securities (e.g., those issued by Ginnie Mae, Fannie Mae, and Freddie Mac)
  5. bank checking accounts insured by the FDIC
  6. mutual funds exclusively containing U.S. fixed income securities, with an overall credit rating of at least AA

 

No fixed income securities or mutual funds containing fixed income securities with a credit rating below AA will be permitted.  No non-U.S. fixed income securities or mutual funds predominantly holding them will be permitted. 

 

Since Fairlington Glen’s marginal tax rate is normally too low to make municipal bonds advisable, no reserves will be invested in municipal bonds (or municipal bond funds) unless the taxable equivalent yield of the municipal bond exceeds the yield of taxable bonds with comparable maturity and risk.  The taxable equivalent rate of a municipal bond equals the bond’s tax-exempt yield divided by one minus the marginal tax rate.  For example, if the Glen’s federal marginal tax rate is 25% and a municipal bond’s yield is 3.0%, then the bond’s taxable equivalent yield is 0.03/(1- .25), or 4.0%. 

 

No further purchases of securities or mutual funds with equity market risks shall be permitted, including hybrid securities such as convertible bonds or equity-linked notes.

 

Investment Strategy

 

The investment strategy and the mix of investment vehicles that are appropriate in any given year will vary with the current level of reserve assets, short-term and long-term liquidity needs, interest rates available in fixed income markets, and market risks. 

 

Interest rate risk, credit risk, mortgage prepayment risk, and other risks of fixed income securities shall be moderated by diversification.  No more than 25% of the replacement reserves should be invested in a single U.S. Treasury bond or agency mortgage-backed security.

 

In normal market environments, where fixed income securities with longer-term maturities yield more than those with short-term maturities, a laddered structure for reserve investments will be used.  During unusual market conditions, when short-term yields are as high or higher than long-term yields, short-term maturities may be preferred over a laddered structure.

 

To create a laddered maturity structure, reserve funds not needed in the current year will be invested to take advantage of higher long-term rates.  Securities, such as certificates of deposit, will be purchased to mature at various intervals (such as one, two, three, five years, or longer), consistent with Fairlington Glen’s projected liquidity needs.  As the securities mature over time, the funds shall be reinvested at the long end of the maturity range, if not needed for current expenditures, to maintain the laddered structure.

 

Future Amendment of Investment Policy

 

As the reserve needs of Fairlington Glen change, this investment policy shall be reviewed and amended as necessary to accommodate changing return objectives, risk tolerance, time horizon, market conditions, and other factors affecting reserve investments.