MINUTES OF THE

SPECIAL BOARD OF DIRECTORS MEETING

SUN CITY HILTON HEAD COMMUNITY ASSOCIATION

 

May 5, 2003

 

1.                  Call to Order:  Ken Hull called the meeting to order.

 

2.                  Quorum:  Secretary Steve Koehl stated that there was a quorum.  Directors present were Ken Hull, Ed Wiler, Jerry McQuaid, Richard Espinoza, Steve Koehl, Margaret Johnson, and Fred Fochtman.  Steve O’Donnell, Vice President and Executive Director of CAM, was also present.  

 

3.         Consent Agenda (**Attachments included in agenda packet are available for viewing in the Wall Street Reading Room.  Copies may be obtained through the CAM Administrative Office at the requester’s expense):  The Board Secretary, Steve Koehl, summarized the following consent agenda item.  This is a routine housekeeping item that requires acknowledgement:  a) Resolution for Acquiring Supplemental Flood & Earthquake Insurance Coverage – Policy No. 0304.7. 

 

4.         Insurance Background/Summary (**): Following are highlights from Steve O’Donnell’s summary of insurance issues relating to the Association and attached product neighborhoods: 

 

            Mr. O’Donnell provided a chronological presentation that summarized the key events leading up to the December 31, 2002 separation of the Association’s insurance program from within the Pulte/Del Webb corporate program into its current stand along format, fully within the control of the Association.  The presentation provided background information, an explanation of pivotal program issues and concerns, the manner and specifics that led to resolution, and the final conclusions that brought the Board to today’s policy initiative. 

           

5.                  Policy on Management of Insurance Coverage and Allocation of Deductibles – Policy No. 0304.7A (**):  Secretary Steve Koehl moved that the Board adopt a policy to offset the significant and unforeseen increased in Association insurance premiums incurred this year, to include a written process to effectively and efficiently manage insurance program details, such as deductibles.  He moved that the policy contain specific provisions as detailed in the attached motion.

 

Mr. Koehl’s motion was seconded, and a call for Board discussion was made.  Mr. Wiler explained that as our broker, Acordia shopped around and obtained the best possible bids from qualified carriers.  In addressing those present who participated in authoring the Revised 5-Year Financial Plan, Mr. Wiler noted that the Association had performed its duties and responsibilities admirably from the date of approval of the Revised 5-Year Financial Plan until the present time.  He further noted that the insurance issue falls outside the bounds of the 5-Year Financial Plan, but must be addressed by the Association and the Board in a manner that is fiscally responsible to all. 

 

There being no further discussion from the Board, President Ken Hull deviated from normal protocol and opened the floor for resident questions.  The following questions were raised (note that Board/Association response to questions is bolded):

¨       1) If both Association and villas are damaged, will villa owners be double-billed?  Yes; villa owners would be billed as members of the Association and as villa owners.  2) What is Acordia rep’s response to coverage for villa owner to stay elsewhere if his/her villa unit were to receive significant damage? This expense would not be covered.  Villa owners should check their own “condo” coverage, as that is where this type of coverage would be.  3) What is the flood and quake deductible?  That number is not currently available, but would generally be a percentage of total values. 

¨       Resident voiced the opinion that this was just one more instance of the residents bearing the brunt of a bad Pulte/Del Webb decision.  The Board and the Finance Committee spent the last 6 months working on this program.  The Board has a fiduciary responsibility to cover the community’s exposure, and concludes that Del Webb will assume 23% of the responsibility as based on the subsidy.  Further, the governing documents preclude the Association from subsidizing insurance coverage for attached products neighborhoods.  It should be noted that Acordia was given a premise of attached product neighborhoods having the ability to obtain their own insurance coverage, and they found that coverage would cost approximately $200-300 more than it will cost under Acordia’s program. 

¨       Why was Acordia chosen as the broker?  Why not start now for next year by bringing in competitive bids from other brokers?  Acordia covers all transitioned and Pulte-controlled Sun Cities, so there both understanding and experience in servicing our unique needs. They are experts in covering community associations.  Because of the 12/31/02 push to obtain coverage at ’02 rates, the Board decided to go with a name they knew (Acordia).  Ken Hull agreed that it might be feasible to consider other brokers for subsequent years. 

¨       Resident suggested full-page in SunSations every month addressing safety issues. This is already being done.  Is the allocated insurance premium increase going to be the same percentage per household?  No.  The percentage will be different for the villas because they will be billed both as members of the general membership and as villa owners.

¨       There were 68 tornadoes in the U.S. yesterday; why don’t we have sirens?  This issue will be addressed separately.

¨       Resident wants specific detail on allocations to villas/general membership/Association/developer. Steve O’Donnell will be distributing a community-wide explanation of the insurance program in the next week or so.  The Finance Committee and the resident Board members have been heavily involved in this issue and have all given their input on behalf of all residents.  The general membership may want to approach some of these resident leaders for discussion of some of the insurance specifics. 

¨       Resident requested a copy of Steve O’Donnell’s notes.  Mr. O’Donnell’s notes are simply bullets.  The issues as discussed in this meeting will be attached to the minutes as a matter of record.  Further, the community-wide communication that will be distributed will be very specific in terms of detail.

¨       Resident asked that a copy of the master policy be made available for public review.  This document is 1,000+ pages long, so it will not be distributed.  However, once one full copy is received, it will be made available for resident review by appointment. 

¨       The Chair of the Neighborhood Representative Council indicated that the entire NRC had the opportunity to meet with Steve O’Donnell to have the insurance program explained.  He feels that Steve and the BOD have done an excellent job on behalf of the residents, and that the true villains in this situation are the insurance companies. 

¨       Resident suggested that the BOD try to leverage the buying power of all the Sun Cities in the future.  While Acordia is the broker of choice for all Sun Cities, differing deadlines for transitioning insurance prevented use of buying power this year.  Leveraging is a definite possibility in the future.  Why can’t the Association carry an umbrella (self-insured) policy on behalf of the residents?  This would require insurance reserves (as a percentage of the assessments) or increased or special assessments, both of which would still be an additional cost to the residents. 

 

Ken Hull closed the floor discussion and asked if there was any further BOD discussion.  Resident Board member Jerry McQuaid offered the following:  Over the life of this project, the residents have had access to some very cheap insurance by virtue of Pulte/Del Webb’s risk management abilities under their umbrella.  This Board has procured the best possible coverage available, while protecting the residents.  He feels that the right choices have been made, and he supports the motion on the table.

 

Mr. Hull called for a vote of the Board.  All voted in favor of the proposed policy, and the motion carried. 

 

10.               Adjournment – There being no further business to discuss, the meeting was adjourned.

 

 

_____________________________

Kenneth R. Hull, President        

 

The next regular meeting of the Board will be Thursday, July 24, 2003.