I.          CDOA President & CEO Don R. Thomas called the meeting to order in the Board Room of the Donatello at 11:00 a.m. Board Members present were Lexis Allen, Daryl Clark, Bob Egan, Leroy Gilsdorf, Ernie Mongeon, Don R. Thomas, and Les Yeffa via teleconference call. Also present were Legal Counsel-Michael Milnes, CFO-Larry Stephens, FMC Committee Chair-Cleland Noret, Risk Management Chair-Monroe Johnson and Educational/Social Events Chair-Ann Carlos. Other Owners present were Suella and Gerald Martin, Al and Marcia Silver, Dennis Preger, Alistair and Jenny Lyness, Howard Seto, Javier Perez, Jan Clark, Bob and Marlene Hunter, J. Craig Carlos, and Richard Daniels. Club Management Team Members present were Mandy Vergara and Marie Vergara. Don Langley was present as Editor of the Club Donatello Communique'.

 II.         Following roll call, we held the Pledge of Allegiance.

 III.        Review and Approval of Agenda

The agenda was reviewed and Daryl Clark moved that the Owner Billing Package, Budget for 2006 and Dues from the New Business section be moved earlier in the meeting to Item V. on the agenda after the Owner’s Forum. LeRoy Gilsdorf seconded the motion. The motion was passed unanimously. The agenda was amended and approved.

 IV.        Owner’s Forum

 1.      Ann Carlos stated that she learned that there are currently 3 (three) EEOC complaints filed against the CDOA and how we are treating our employees. Mrs. Carlos asked what the CDOA is doing about these complaints. Mr. Thomas replied by stating that the CDOA is not aware of any complaints filed with the EEOC, however, there is 1 (one) complaint that is currently under investigation with the CA Department of Fair Labor and Housing. Procedurally, the EEOC receives a copy of any such claims filed with the CA Fair Employment and Housing Department, but does not investigate any such claims unless formally presented to them under appeal by a claimant should a decision be rendered by the CA Fair Employment and Housing Department that the claimant may not accept. This matter is a confidential HRM matter and will only be discussed during executive session. Mr. Thomas also asked if Mrs. Carlos could provide the CDOA with more details regarding these alleged claims and where she saw or obtained such information about EEOC claims against the CDOA. Mrs. Carlos did not provide any answers to this request.

2.      Howard Seto commented that there are still no disinfectant spray bottles in the Fitness Center area for Guests to use to wipe down equipment in Club 1500. Mr.Thomas responded that this is a PPCA matter and he will follow-up on this matter with Trond Aakre, General Manager of the Hotel Donatello, who is the entity that manages that part of the Donatello building, at the next PPCA meeting, which is on Thursday, 10/20/05.

V.         Owner Billing Package, 2006 Budget and Dues

1. FMC Chair, Cleland Noret reported on the work of the budget planning team from 9/19/05, and recommended to the Board of Directors that a $105.00 per PIU increase for 2006 from last year. This will bring the 2006 Dues to $795.00 per PIU. Daryl Clark commented that he is concerned about the total amount the CDOA owes the Reserves and that he has estimated that there would be a shortfall of $500K for the remainder of the year.

There were further discussions regarding the past and present financial status of the CDOA. Jan Clark commented that in 2004, she thought that we had borrowed money from the Reserves in September and in 2005, we borrowed money from the Reserves in August. Mrs. Clark also added that in her opinion the 7-year Financial Plan is not working. J. Craig then asked how much money was repaid to the Reserves Account for the year-ending 2004. 

Cleland Noret attempted to clarify the answers to these questions, stating that a repayment of $10,000, which was invested in a 1 year CD with California Bank & Trust, was part of the repayment to the Reserves. The action of investing the $10K into a 12-month CD was recommended by the Investments Committee and approved by the Board of Directors at its February Board Meeting. There was a subsequent Board action based on an Investments Committee recommendation involving a $100,000 short-term CD investment that just recently matured in early October. Daryl Clark further stated that he believes that the CDOA is averaging a $176K per month expense and that there was a total of approximately $360K used from the 2005 Dues collected for handling 2004 operating expenses. Mr. Thomas gave a brief history of the financial state of the CDOA from 1994 when the Owners Association took over with only $25K in Reserves to where we are today, and that the practice of reimbursing the Operating Account from the Reserves Account at least 2x per year has been a standing Board process for the past 10 years. The reason being that the purchase of Capital Assets, and Repairs of Capital Assets are paid for out of the Operating Account and then 2x each year, the Board reviews this total listing of payments made and takes appropriate action to reimburse the Operating Account from Reserves.  

There were more discussions regarding the total money needed in the Reserves Account based on the independent Reserve Study. It was noted that we are currently following the Current Assessment Model Funding Summary report as provided by ARA (Applied Reserve Analysis), and this is the independent company contracted by the CDOA to do an annual review of the Reserves as required by CA law. 

Mr. Thomas also referred the Owners present to please read the CC&R’s regarding the        Reserves requirements on page 9 of our Owner's Guide, as this clearly indicates that what the Board has done over the past 10+ years is in full compliance with our CC&R's. Via telephonic connection, Mr. Yeffa commented that in the past 11 years since the Owners Association took over, it is evident that the CDOA is doing financially better than where it started. There was more discussion regarding the proposed dues for next year. It was stated that most of the answers to these questions is part of the Annual Billing package, inclusive of a survey that lists most of the dues and special assessments taking place for comparable timeshares in San Francisco.

A motion to accept the proposed $795.00 per PIU with $728 for Operating Expenses and $67.00 for Reserves Assessments was made by Bob Egan and seconded by Ernie Mongeon. Daryl Clark and LeRoy Gilsdorf were not in favor of the motion, however, after further discussion the majority of the Board of Directors voted in favor of the motion. The motion was passed and approved.

VI. Board Committee Reports:

1. Marketing – Wayne Jerves had previously circulated an E-mail report on the progress of the new Website. The redesigned Website. is expected to be launched during the 1st week of November. 

The Marketing Committee is also planning to add the Club Donatello Website into www.fogster.com . The fogster Website is a unique web site offering organizations and companies to post listings on line for free. There have been no new newspaper ads placed and none are planned for the remainder of the year.

2. Financial Management – Cleland Noret stated that part of his report was included in the discussion regarding the Billing Package, 2006 Dues and 2006 Budget. A recommendation to the Board of Directors was made to pay down at least $50K of the current Line of Credit with CBT, for which we are being charged 9.25% interest. The $50K will be taken from the $100K investment account from World Savings Bank, which was deposited back into the Dues Account in early October. The payment will bring the balance down to $72,700. Les Yeffa moved to approve the recommendation from Cleland Noret, and Ernie Mongeon seconded. The motion was passed unanimously.

 3. Investments – There was no report to be given at this time.

4. Educational & Social Events – Ann Carlos reported that the Committee will meet again on November 9 to finalize the preparations for the Christmas/Holiday party at Marines Memorial. The Committee will have a light lunch provided, but no COMP rooms are approved for this working meeting. There was also a discussion regarding the credit card fee charges for any Owner who wishes to pay tickets for an event. Daryl Clark moved that any cost/s associated for the use of a credit card for any payment made by an Owner for a CDOA event should be built into the cost of the ticket charged. LeRoy Gilsdorf seconded the motion, which  was passed unanimously. Lexis Allen also mentioned that they are planning an Educational Seminar sometime in spring of 2006. This will be announced in the Communiqué and on the new web site. 

5. Nominating – Warren Shukis called Don Thomas and reported that they are currently processing 2 (two) applications for committees, namely Owners Kenneth Reaves and Hal Alpert. Don Thomas will follow-up on this for the respective committee Chairs and Board Liaisons implementation of their appointments.

6. Risk Management – Monroe Johnson reported that the CDOA’s experience modification rate for Worker’s Compensation Insurance went down from 82% to 79%, which represents a lower cost of the premium to the CDOA. A Farmer’s agent conducted an on-site loss control inspection for underwriting and loss prevention with Mandy Vergara and Monroe Johnson. A letter was received from Farmers stating that the walk through audit was successful and there are no recommendations for action at this time.

7. CC&R’s, Rules and ByLaws – This committee is still working on the updating and reprinting of the complete Owner’s Guide for 2006 due to various new laws that the State of California has passed for Common Interest Development organizations, such as the CDOA and PPCA. This will include a comprehensive updating of rules, policies, collection fees and administration fees, and compliance with the Civil Code. The updated Owner’s Guide will be ready before the Annual Owner’s Meeting in 2006.

8. Human Resources Management – Marie Vergara reported for the Committee and stated that the Annual HRM Audit was done by Herman Harrow and Jane Lopez. The on-site compliance audit is completed and a report will be circulated via E-mail. Marie also stated that the recommendations are currently being implemented and some of them are already completed. An updating of the I-9 Employment Eligibility Forms for any Team Member hired before 2000 has been completed.

The Committee is also completing a Salary & Benefits survey and an updating of the HRM Manual and Team Member Handbook that will be ready for issuance by the February 2006 Board Meeting. 

9. Legal Advisory – Michael Milnes reported that the current claim against the SFFD will be discussed in Executive Session.

VII. Club Management Team Report

The CMT prepared a Quarterly report, which was mailed to the Board of Directors before the meeting. Daryl Clark commented that he noticed COMP Room usage for 2004 went up 143 nights from the 155 total COMP nights used in 2003. There were some discussion regarding COMP nights used by BOD and Committee Members during Quarterly meetings and how this is treated on our Financial Statements. Cleland Noret and Marie Vergara will present a formula to the Board of Directors for COMP nights so that it can be properly expensed on the monthly financial statements.

VIII. PPCA Board Presentation

Don R. Thomas reported that the PPCA Board Meeting was rescheduled until Thursday, 10/20/05, and that he will be attending with Mandy Vergara. Mr. Thomas also reminded all Owners present that any CDOA Owner who wishes to attend the PPCA Board meeting can do so. Some of the top issues to be discussed at the PPCA Board Meeting will be to possibly recover some of the $100,000 in CDOA Reserves that are part of the secured monies with Bank of America, since the $1.5M loan has been substantially repaid. There is still continued discussion regarding the Financial Statement Reconciliation of all assets allocations for the PPCA in the Donatello building and how this can benefit both CDOA and PPCA in our identification/allocation of assets that we also "own" and their scheduled depreciation for our Balance Sheet. Don Thomas identified a Task Force that had been formed of Cleland Noret, Larry Stephens and LeRoy Gilsdorf to work on a proposed formula for presentation to the PPCA Board at a future date regarding this issue, and hopefully this could be accomplished before the end of this year so that we could start out 2006 with an updated PPCA set of Financials/Operating Statement and for CDOA's as well.

 IX. Old Business:

1. LeRoy Gilsdorf stated that he believes there should only be one Resales Agent designated  for the CDOA. There were some discussions of external and internal legal opinions on this    matter and the pros and cons of only assigning/referring one (1) agent to CDOA Owners, as we currently have more than 1 Owner who is a certified CA Real Estate Agent and who is willing to assist our Owners.

It was also recommended that an agreement could be drafted and entered into by the CDOA and the "agent" that should be a "hold harmless" one for the CDOA. It should also clearly state that the agents identified are only "referrals", not "recommendations", and that any CDOA Owner has the right and responsibility to sell/buy their CDOA PIU in any way they wish. 

Daryl Clark moved that the CDOA establish a new working relationship with the J. Craig Carlos company for Owners to handle resales referrals for a 1-year time period, beginning as of January 1, 2006, with an annual comprehensive review by the Board of Directors regarding its effectiveness. LeRoy Gilsdorf seconded the motion. A discussion was presented on how best to communicate with the other 3 CDOA Owners that expressed interest in providing this service to the CDOA. Don Thomas will get together with J. Craig Carlos to work out those details, including the drafting of the 1-year working agreement. CDOA Legal Counsel will review and advise on the agreement prior to implementation. A majority of the Board voted in favor of this action and it passed. 

2. Appointment of Chief Technology Officer – A proposal was circulated via E-mail regarding the creation of an Independent Contractor for this position, who will be responsible to oversee all technology and systems upgrades for the CDOA. Wayne Jerves volunteered for this position, and it was clearly stated that this position will not be an additional expense to the CDOA and its budget for 2006. Don Thomas will speak with Trond Aakre for a reallocation of some of the Monthly Hotel Charges, particularly the $550.00 Management Fee, so these same funds can be used under the IC Agreement to be worked out with Wayne Jerves  and the CDOA. Ernie Mongeon moved to accept this proposal, which was seconded by Lexis Allen. The motion was passed unanimously. 

3. RFP – Possible Timeshare Management Company Options – This agenda item was presented by LeRoy Gilsdorf to explore the possibility of saving the CDOA some money for management of Club Donatello and CDOA operations. LeRoy Gilsdorf moved that an RFP be developed and sent to Timeshare & Property Management Companies to be reviewed by the February Board meeting. Daryl Clark seconded the motion. Ernie Mongeon stated that he is against the proposal due to experiences with such management companies in other organizations and the problems involved with using an outside company to run our Club. The motion was passed by a majority of the Board with Ernie Mongeon voting against it. 

4. Board Reorganization Proposal – This agenda item was also presented by LeRoy Gilsdorf. Mr. Gilsdorf stated that he wanted this item on the agenda just in case he did not agree with the outcome of the Resales Program issue and his intent to resign if it had not passed. No action was taken regarding this Agenda item. Daryl Clark stated that he was still concerned about the financial status of the CDOA but would discuss his concerns separately with Larry Stephens and Cleland Noret before making any decision about his future status on the Board of Directors. 

5. 2006 Budget – The 2006 Budget, including the previously proposed Dues increase of $105 per PIU, was presented to the Board of Directors for approval by FMC Chair Cleland Noret. LeRoy Gilsdorf moved to accept and approve the 2006 Budget as presented, which was seconded by Lexis Allen. The budget was approved and accepted unanimously. 

X. Adjournment of Regular Meeting – No further business appearing, it was moved and passed that the regular meeting for the Board of Directors be adjourned. Meeting was adjourned at 1:00 PM.

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