Board Minutes July 26, 2006

CLUB DONATELLO OWNERS ASSOCIATION
BOARD OF DIRECTORS QUARTERLY MEETING

I. The meeting was called to order in the Board Room of the Donatello at 8:30 a.m. by President Don R. Thomas. Board members present were Lexis Allen, Daryl Clark, LeRoy Gilsdorf Larry Stephens, Don R. Thomas and Les Yeffa. Also present were Committee Chairs, Wayne Jerves, Suella Martin, Mike Milnes, Dennis Myers and Cleland Noret. Other Owners present were Nadya Andrews, J. Craig Carlos, Jan Clark, Hannah Goody, Elmo Lorenzi, Jerry Martin, Ken and Loretta Reaves, Howard and Myrna Seto, Charmaine Thomas, and Nancy Yeffa. Don Langley, Communiqué Editor was also in attendance. Team Management Leaders present were Marie and Mandy Vergara along with Team Members Rodolfo Pelaez and Bill Clune.

II. Following roll call, Daryl Clark led us in the Pledge of Allegiance.

III. The agenda as presented was reviewed and approved.

IV. *It was moved by Lexis Allen and seconded by Daryl Clark to confirm the Electronic Approval of the Minutes of the Board of Directors Meeting of June 2, 2006, the Executive Session of June 2, 2006, the minutes of the Annual Owners Meeting of June 3, 2006 and the Organizational Meeting of June 3 006. Motion passed unanimously.

V. OWNERS FORUM

Cleland Noret reported that he received his personal wake up call late. As wake up calls are important, Mandy will discuss this with the Front Desk staff.

It was reported that the television in Room 1419 had some distortion. Don Thomas discussed the plans for replacing the television sets in 2007. We are trying to work out a tie in with the Hotel when they purchase their new TV sets next year to enable us to get a better price for our units based on the total volume for both the Club and Hotel rooms.

Wayne Jerves brought up the discussion of having the ability of printing out boarding passes for airlines. Don Thomas said that the Hotel is working on a facility where this could be done in the Lobby.It was also noted that the wireless accessibility is very slow. Don Thomas said they are having temporary problems with it in the Hotel and Trond is working on it.

VI. BOARD COMMITTEE REPORTS

*FINANCIAL MANAGEMENT: Chair Cleland Noret reported that Bill Clune, who works in the Administration Office and does the accounting, is doing a great job in formatting the Financial Reports and having them issued on time. Marie Vergara is delegating more of the financial accounting responsibilities to him. Cleland discussed the Capital Reserves for the first quarter. There had been an error in the numbers due to the new Reserves allocation formula approved at the February Board meeting and this was corrected subsequently with an Electronic Vote of the Board. Cleland instructed Marie to make the corrections. Cleland reviewed the new formats for the monthly reports. Daryl Clark moved we accept the new formats, which are very good, to be used on a regular basis. Motion seconded by LeRoy Gilsdorf and passed. Cleland then reported that we have over-accrued the amount due the PPCA. The Third Quarter Report will show a drastic change, as we will not owe the PPCA any funds.

The over accrual was caused by the booking and financial reporting problems Shell has had since the conversion to a centralized accounting system. Those problems have been corrected. There was a discussion regarding the delinquent accounts. The Board agreed that we need to implement a tougher collection policy. We need to stop allowing Owners to get so far in arrears. Don Thomas said we needed to discuss this in Executive Session as there are some legal matters concerning some of the Owners. We will draft a new “get tough policy” and pass it by the FMC prior to adoption by the Board. Cleland then discussed the history of the ownership of the land and the Donatello building with information that we received from the title company. With this information, he can place values on the assets that need to be on the financial statements of the PPCA. The CDOA in turn would be able to place our percentage of ownership of those assets on our financial statements.

Lastly, Cleland discussed the Hotel Occupancy Credits. This is the difference between what the Hotel has charged the CDOA for booked/reserved rooms and the actual number of rooms occupied. The Hotel has gone by reservations made, not actual occupancy, which can occur when Owners/Guests plans change at the last minutes or travel problems result in delayed check-in situation. For the first six months of 2006, the Hotel owes the CDOA $10,000 . Mandy Vergara is completing the review for the period of 2000 –2005. This number could be close to $100,000. Don Thomas will negotiate with the Hotel for how best we can apply this credit to our account. This might have to be spread over a 2-3 years period starting in January 2007. There is a total of $79,312 of capital expense that has been paid by the Operating account. LeRoy Gilsdorf moved that we reduce the Reserves Receivable by $39,312, and the $40,000 balance due to be drawn from the Reserves when the cash flow requires it. Motion seconded by Daryl Clark and passed unanimously.

*EDUCATIONAL AND SOCIAL EVENTS: Chair Suella Martin said that the sign ups for the Christmas party were down. We need better attendance at it. She also discussed the possibility of our issuing at least a one-page Communiqué. The committee believes that attendance is down on many of the functions because the Owners are not receiving notice of them since we discontinued the Communique’ publication. She also requested that a one-page framed Schedule of Events be placed in each room. Suella then opened a discussion regarding whether or not our events were open to any guest (exchange guest or hotel guest) or just for CDOA Owners. It was felt that except for selected events (ie: the Christmas Party) our events are open to anyone, and that we encourage our Owners to bring family and friends to enjoy what the Club Donatello has to offer them. It was also discussed that when an exchange reservation is made, the incoming guest should be notified of any activity for the week they will be here. Lexis Allen moved that event information should be placed in each room and handed out at the weekly WELCOME event jointly hosted by the Club and the Hotel. Motion seconded by Larry Stephens and passed unanimously. Suella also reported that Nancy and Les Yeffa were trying to put together a cruise of the Christmas Markets along the Danube. The cruise would leave the day after the Christmas party in December 2007. This information will be put on the website.

*CC&Rs/Bylaws/Rules: Chairman Dennis Myers said the committee recommended that the Board implement the latest revisions of the Rules and Regulations as they had been presented to our Owners prior to the Annual Owner’s Meeting for the 30-day period of time of notification. Lexis Allen moved this be done. Motion seconded by Daryl Clark and passed. Copies will be placed in all the Club rooms.

Dennis then discussed the status and changes to the CDOA CC&Rs/Bylaws due in accordance with the 2006 legislative changes to the Davis-Stirling Common Interest Development Act. Lexis Allen and Bob Hunter will meet during August to revise the Bylaws so that like items will be grouped together. The results of the Bylaws revisions will be e-mailed to the committee members for comment. The committee will then take action on the revisions at their next meeting on October 3^rd and will present them to the Board for approval.

The discussion of smoking rooms then took place. Many major hotels are moving to become completely non-smoking facilities. The question was should we reduce the number of current Club smoking rooms (6), eliminate them completely, or not do anything at this time. Current use ofour 6 smoking rooms is about 20 per month. Les Yeffa moved that we reduce the number of smoking rooms to 3, at least for a trial period to see if there are any complaints. Motion seconded by Daryl Clark and passed. Don Thomas, as President & CEO does not vote unless there are tie votes , however, he registered his position that the Board should not take action on such matters without providing an opportunity for Owner input in advance.

*MARKETING: Chairman Wayne Jerves reported that the “Shop Til You Drop” campaign was extended through August 31, 2006, because of positive response. He said the committee was also looking at providing a discounted military package for active military personnel.

*CLUB MANAGEMENT TEAM: Mandy Vergara introduced Rudolfo Pelaez, Supervisor in Housekeeping, and said that he will be at future Board meetings and making the Housakeeping reports. Rudolfo then reported that 13 Club Rooms now have the new curved shower rods. There are four Team Members that are now certified for CPR, Mandy and Marie Vergara, Rudolfo and Phillip Dai.

Marie introduced Bill Clune who is assisting her with the accounting. He had previously worked for the Hotel in the Accounting Department, so he is very familiar with what is needed. Bill was complimented on the good job he is doing. Marie also discussed the change to the $20 co-pay on the Team Member Health insurance plan. There are some additional changes that need to be made. She also said that the Management Team is going to bring back the monthly Team Member Recognition luncheon. This will still be done within budget.

*CHIEF TECHNOLOGY OFFICER REPORT: Wayne Jerves reported that an e-mail template for newsletters has been created. He said there is nothing new regarding the update of LodgeNet TV Services and communication uses of that system. That is still being worked on with the Hotel Donatello and LodgeNet representatives.

HOTEL MANAGEMENT REPORT: Mandy Vergara reported for Trond Aakre who could not make the meeting. The locker room in Club 1500 has been refurbished. The Hotel will be testing some different television sets for updating. We will piggyback with the Hotel and should have the information by the budget-planning meeting.

PPCA: Don Thomas reported that the CDOA Task Force Reserve Study and recommendations for accounting changes for assets of the land and building has been submitted to Steve Hicks, President of PPCA and Shell Hospitality and to the rest of the PPCA Board of Directors.

VII. OLD BUSINESS

The Board reviewed the Annual Owners Meeting expense profile for the past four years. The profile showed that the cost of this year’s meeting was less than one third of the previous years cost. The Board requested that this profile be expanded to include the reimbursements from the PPCA and from Owner paid meals and to show how many were in attendance so that we can compare a per person cost ratio. There was discussion regarding the day of the week for the Annual meeting and it was felt that with many Owners working it would still be better to keep the Annual Meeting on a Saturday. Don Thomas will send out a draft for the time schedule for next year’s meeting for Board action so that we can finalize that date and announce it to our Owners far enough in advance for their planning.

VIII. NEW BUSINESS

MERGE COMMITTEES: There was discussion regarding the merger of some of the committees for cost/time effectiveness of the Owners participating in these meetings. After some discussion, Daryl Clark moved that the following committees be joined: Financial Management and Investments; CC&Rs/Bylaws/Rules and Nominating; Marketing and Value-Added Products/Services; and a new committee Legal Advisory and Legislative Liaisons be formed to deal with the growing number of legislative issues impacting on us as a nonprofit mutual benefit corporation, a condominium and homeowners association and as a small employer. Motion was seconded by LeRoy Gilsdorf and passed unanimously. Don Thomas will draw up the new format for the transition of the committees and the chairman and co-chair of each committee and the Board Liaison.

BOARD MEMBERS/ADVISORY GROUP: This was discussed as a follow-up to an idea presented at the Annual Owner’s Meeting back in early June. Don Thomas identified the names former Board Members who are still Owners at the Club Donatello. They would not receive a comp room for the Board Meetings unless they were active on a standing task force or committee. They would be included in any electronic e-mail Board communications for their advice and counsel, but not for any voting by the Board. LeRoy moved that we form this Board Advisory Group. Motion seconded by Lexis Allen and passed unanimously.

COMMUNIQUÉ: Don Langley is going to put together a format for a new one page Communiqué. There was discussion as to whether or not the Owner’s ame could be put onto the one page, as in a trifold, or if it would have to be stuffed into an envelope and the cost savings involved. The Communiqué would primarily notify the Owners of the Educational/Social Events and any major changes happening at the Club.

TIMESHARE MANAGEMENT PROPOSAL - There was discussion regarding the possible
use of an external

      No further business appearing, it was moved, seconded and passed the meeting be adjourned at
      11: 40 AM.

      IX. EXECUTIVE SESSION

The Board moved into Executive Session at 12:15 PM. HRM matters, legal matters and confidential Owner account and disciplinary matters were discussed.

Respectfully submitted,

/s/ Leslie A. Yeffa
Leslie A. Yeffa, Secretary

/s/ Don R. Thomas
Don R. Thomas, President & CEO
* Complete reports are on file in the Administration Office.

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