SUMMARY OF MEETING OF THE HOLLY LAKE RANCH
ASSOCIATION BOARD OF DIRECTORS
JANUARY 29, 2008

I. Call the Meeting to Order.  Bob Levy, President called the meeting to order.  Members present from the A Board:  Bob Levy, Michael Hall, Rebecca Hitt, Wayne Hit, and Jane McMillan.  Members present from the B Board:  John Sparks, Jeanette Sterner, Larry Bowman, and Bill Beggs.
A.  The restaurant has been leased to John Livingston and Melissa Sudik.  They were introduced to the Board.  Each gave a brief presentation as to their backgrounds and their reasons for wanting to lease the restaurant.  They talked about their individual desire to lease the restaurant independently, but then explained how they decided to meet and discuss the possibility of a joint ownership.  Obviously, they decided that they both had talents and ideas that work very well together and make the restaurant a successful business.  They both desire to provide the people with a pleasurable eating experience.  They went through their menu for both the 19th Hole and Fore Seasons and ideas for special events.  John said that they hope to start a “home delivery” program soon for those who have difficulty getting around.  John also said they will soon have a Tuesday evening buffet.  They briefly discussed the improvements they are making at the restaurant.  They thanked Rob and the B Board for working with them in their efforts to make the restaurant a place where people can come for good food, good service, fellowship, and occasional special entertainment features.
II. Approval of Annual Property Owners Meeting Minutes – December 1, 2007.  A motion was made by Larry Bowman and seconded by Bill Beggs to accept the minutes of the December 1, 2007 Annual Property Owners Meeting.  The motion passed.
III. Approval of Regular Board Meeting Minutes – November 20, 2007.  A motion was made by Jeanette Sterner and seconded by Larry Bowman to accept the minutes of the November 20, 2007 Regular Board Meeting.  The motion passed.
IV. Ratification of Board of Directors’ Officers.  A motion was made by Larry Bowman and seconded by John Sparks to accept the Board of Directors’ Officers, who are:  Bob Levy, President; John Sparks, Vice President; Larry Bowman, Treasurer; and Jeanette Sterner, Secretary.  The motion passed.
V. BOD Schedule of Meetings.  It was recommended that the following dates for the 2008 Board of Director Meetings be accepted:  January 29, March 25, May 20 (Out of sequence due to a holiday,) July 22, September 23, November 18 (Out of sequence due to a holiday,) and December 6.  All meetings will be held at 10:00a.m. at the HLR Lodge, except for the December 6 meeting, which is the Annual Meeting with the property owners and it will be held at 2:00p.m. at HLR Holly Hall.  A motion was made by Jeanette Sterner and seconded by Bill Beggs to accept this schedule of meetings.  The motion passed.
VI. Greens Committee Member Recommendation.  It was recommended that the following individuals serve on the HLR 2008 Greens Committee:  MGA President, Bill McDaniel; WGA President, Glenda Farrell; 9-Hole President, Twilla Wanker; MGA Appointee, Don Stokesbury; At Large, Howard Hunt; At Large, Forrest Aven; At Large, Dick Sparks; At Large, Bill Dunlap; B Board Liaison, Jeanette Sterner.  A motion was made by Larry Bowman and seconded by John Sparks to accept this recommended Greens Committee.  The motion passed.
VII. Golf Tournament Schedule Recommendation.  There are 28 tournaments listed on this schedule.  Rob said that we had about the same number of tournaments last year.  The Pro Shop has accepted all of the tournament requests and Rob admits it does bring money to the Association.  However, the Pro Shop and Rob have received complaints that there are too many tournaments.  Golfers, who do not usually play in tournaments, are complaining that the course is “tied up” with too many tournaments of the local golf organizations and it keeps them from playing.  They feel this is not fair since they pay their golf dues and they cannot always play when these tournaments are scheduled.  The other complaint centers around the fundraising tournaments.  The organizers of the benefit tournaments feel they are losing players because those who like to participate in these fund-raisers cannot afford to play in so many tournaments.  The organizers cannot make as much money from sponsors because there are so many people requesting donations and the businesses cannot support all of the benefit tournaments.  The businesses do not like to turn people down, but they have just so many “advertising” dollars.  Jeanette asked if the Pro Shop was going to raise the amount of money they receive from the individual players of the benefit tournaments.  She said earlier in the year, Rob mentioned they may raise the amount earned by the Pro Shop from $30 to $35.  She said if the organizations only make $5 a player, it is not worth it to them to set up the benefit tournaments.  They would have to rely even more on the business sponsorships in order to make any money and as was stated, they are being inundated with requests for donations.  For only $5 a player, it would be more difficult to justify the work involved in setting up a tournament.  The result could be that some organizations may not have tournaments and the Association will not make as much money.  Rob said that the fee required by the benefit organizations will remain $30 if they charge $40 a player, which is the usual charge for each golfer.  The two exceptions are the VFD and the Library, who are not charged a fee by the Pro Shop.  They keep the entire entry fee for their organization.  Rob, did add that due to the complaints mentioned above, the issue of the number of tournaments will have to be reviewed by the Administration, the Pro Shop, MGA, WGA, 9-holers, and the various benefit organizers.  A motion was made by John Sparks and seconded by Larry Bowman to accept the Golf Tournament Schedule.  The motion passed.
VIII. ACC Member Recommendation.  Rob noted that this is the first year that the ACC is under the authority of the B Board and they appoint the members of the ACC.  The reason for this is that the B Board and the GM work very closely with the ACC.  They have reviewed the Rules and Regulations, which property owners have to abide when building structures on their property or when they wish to change the landscape of their property.   They have worked on policies to enforce these Rules and Regulations.  (Note:  The original ACC was established by the Developer.  As the property was purchased, the involvement of the Developer has lessened.  Therefore, the involvement of the B Board has increased since most of the “undeveloped” land is now owned by property and home owners.)  A motion was made by Bill Beggs and seconded by Larry Bowman to accept Chuck Davis, Bill Fingerlie, and Bit McCrary to the ACC.  The motion passed.  Larry noted that we have one vacancy on the committee, but hope to fill it soon.
IX. Section 3 Initiation/Extra Lot Fee Recommendation.  Rob explained that two things happen in Section 3.  One is that they have difficulty selling their lot because of the $2500 Initiation Fee.  More times than not, the fee is higher than what the lot is worth, so people are not willing to buy those lots if they have to pay the $2500.  Jeanette added that since they cannot sell their lots, many have stopped paying their Association dues as well.  In an effort to get people to renew their payments and also increase the likelihood of selling property in Section 3, new policies are proposed.  It is recommended that the new policy become effective February 1, 2008.  The new policy is, “The lot initiation fee for Section 3 is hereby changed to be Two Hundred Fifty ($250) dollars or ten (10%) percent of normal lot initiation fees, whichever is greater, for all properties purchased in Section 3.  Rob said that the other recommendation has to do with the current extra lot fee.  If you own more than one lot, you pay a half of the dues for that lot.  The lots in Section 3 are approximately half the size of most average lots at Holly Lake.  With the new septic tank laws, the owner cannot get a septic tank system and a home on that small of a lot.   John said that we are trying to encourage outside buyers to buy more than one lot in Section 3 so they can have a mobile home and septic system on the two lots.  The recommendation is that the Board eliminates the extra lot fee for Section 3 only.   A motion was made by Bill Beggs and seconded by Larry Bowman that we accept the new section 3 initiation fee/extra lot fee policy.  The motion passed.  (More information on these recommendations can be found in the Summary of the Open B Board meeting held January 22, 2008.)
X. Managers’ Car Allowance Recommendation.  In the past three managers had a car that was purchased by HLRA.  They were allowed to drive the vehicle off property with no written restrictions.  The Association paid for the insurance, maintenance and most of the fuel.  A new car allowance policy for management is recommended to begin February 1, 2008.  Rob said that since the Maintenance Manager resigned, the new manager will not receive any car allowance.  The policy is as follows:  The General Manager and Department Manager, as approved by the Board, will receive a car allowance rather than use of an Association vehicle.  This allowance is as follows, but at the discretion of the Board of Directors, may be modified from time to time.  General Manager will receive $700 a month.  The Golf Maintenance Manager will receive $500 a month.  (The two employees drive their own personal vehicle to and from work.  They may use an appropriate HLRA vehicle to conduct business on HLR.)  A motion was made by Larry Bowman and seconded by Jeanette Sterner that the Board accept the Managers’ Car Allowance Policy.  The motion passed. 

 

XI. Food Assessment Recommendation. (NOTE:  SEE REVOCATION STATEMENT BELOW THIS SECTION.  THE SUMMARY OF THE MINUTES INDICATES THAT THE ISSUE WAS DISCUSSED BY THE BOARD; HOWEVER AT A LATER DATE, JOHN, MELISSA, THE B BOARD AND THE GENERAL MANAGER DECIDED NOT TO IMPLEMENT THE FOOD ASSESSMENT.) Rob presented a letter that was to be mailed to all of the property owners.  The letter outlines the assessment for the Fore Seasons/19th Hole Restaurant Facility which would have taken affect the first of April.  The effectiveness of the assessment will be reviewed in six months from the start of the implementation and then again after a full year (March/April of 2009.)  At that time it will be determined if the assessment should be continued, lessened, or eliminated.  Each member will be billed on their account for the appropriate amount.  There are three possible assessments: $20, $12, or $6.  Currently, the Board, the General Manager, John Livingston, and Melissa Sudik are researching the implementation of this food assessment with appropriate vendors.  This has been a long and tedious process.  Bob Levy said that such an assessment is not uncommon.
A. Jeanette requested Silverleaf to consider some type of payment for the restaurant along the same lines as the food assessment.  She realizes that the By-Laws state that Silverleaf does not pay assessments, as they did not do when other assessments have been authorized in the past, for example, the Road Assessment.  However, Silverleaf did raise their dues per unit, when we changed the “road assessment” to being a raise in dues.  With that change, Silverleaf was able to help with paying for roads.  The A Board is aware of the effort the property owners have made to pay off the loan for the restaurant building.  She said that the restaurant benefits not only the property owners but also Silverleaf.  It adds to the reason why people vacation at Holly Lake.  Because of the location of the Holly Lake Resort, it gives the timeshare owners a place to have their meals in a convenient restaurant, with a pleasant atmosphere.  She suggested that perhaps Silverleaf would assist the Association with paying off this note.     As was suggested by John Sparks, this is a gated community, so some monetary assistance from Silverleaf would be beneficial.  Jeanette also reminded them of Larry’s comments earlier, which included a comment about the money we have had to use from the General Fund to pay for the excessive losses due to labor and food costs.  We hope that with the new management, this will turn around.  However, the costs did effect the Association in a negative way.  So, again would it be possible for Silverleaf to assist with the paying of the note.  She asked, if an amount be paid by Silverleaf for every unit so as to help with the loan payment?  Bob said that Silverleaf will not pay an assessment as Jeanette noted.  But, perhaps a percentage would be more appropriate.  Rob said that Silverleaf pays roughly $10 per unit.  Bill said that it would show a good faith effort to pay some percentage.  People ask what Silverleaf is paying toward the restaurant since it is beneficial to their timeshare owners.  It is more a case of principle.  Jeanette asked how Silverleaf would approach this “volunteer” payment.  Bob said that he will bring it up and he feels that some type of “volunteer payment” can be worked out, but he will have to get back with us on the matter.  Bob said that they might start paying the Silverleaf portion of it before the next meeting, but he needs to look at the numbers first.  He will let Rob know of the decision.  Rob said that the assessment does not start until April anyway, so there is time for Silverleaf to examine the issue.  

 

 MESSAGE FROM MELISSA JOHN, B BOARD AND THE GENERAL MANAGER AS ANNOUNCED BY ROB JAMES:  After a meeting with the “B” Board and the General Manager, John Livingston and Melissa Sudik have requested that the $20/$12/$6 food assessment not be implemented as planned. Not only was the cost of the software prohibitive, but it is also John and Melissa contention that the food and service will speak for itself and that property owners will support the restaurant even without an assessment. By not implementing the assessment, the Board and the operators believe it will greatly reduce the negativity associated with the proposed assessment and even build good will with the membership. This is a BOLD move on the part of John and Melissa and they realize that their product must be outstanding in order to succeed. The “B” Board and the General Manager are very confident that John and Melissa will fulfill their obligation of quality food and service and it is our hope that each of you will give them the opportunity to impress you.
XII. Restaurant Contract Recommendation.  Rob said that John Alexander, the HLRA lawyer, has not completed his review of the contract between HLRA and BOSHA Food Service Group (John Livingston and Melissa Sudik.)  It should be ready by the end of the week. It was recommended that Rob send the contract, with any changes highlighted, to all of the Board members to review and vote upon.  The motion was made by John Sparks and seconded by Larry Bowman that we table the vote until all of the members have received the contract.  After review, each Board member informs Rob by phone of his/her vote on the contract.  The motion passed.     
XIII. Outside Restaurant Membership Discussion.  Rob said there is not much to talk about at this time on the recommendation to open the restaurant to outside membership.  It has been discussed briefly at meetings with the property owners and it was on the Restaurant Ballot.  The majority of the voters responded in favor of a “controlled” outside membership to the restaurant.  This issue was discussed with the new restaurant owners as well.  The recommendation to open the restaurant to outside membership is for the purpose of increasing the revenue of the restaurant and; therefore, increasing the success of the restaurant.  Bob Levy said that Silverleaf will probably open the water park at the resort in Palestine, to the public during the week to help cover expenses.  Larry said that most of the restaurants that have been part of a gated housing complex or club, have been opened to outside patrons because it is difficult for the restaurant to be successful unless they do open it to the public.  Heritage, which was one of the bidders for running the restaurant, stated to us that 40% of their revenue comes from outside customers.  Larry said that we have researched the idea of a color-coded card that will be used to identify members.  When the outside member comes to the security office, the card will identify them as “restaurant members” and they will be given a token to enter the main gate and go to the restaurant.  John Sparks said that we have approximately 3500 people who live here full-time and part-time.  Silverleaf probably adds another 2,000 or so, which raises the number to 5,000.  That does not give the owners a very large marketing base.  That is why this issue has been discussed on several occasions, beginning over a year ago.  There is another 5,000 people in Precinct 3, which includes Hawkins and several housing projects in the area, such as Brookhaven.  We have discussed a reasonable membership fee that would probably not be purchased by the “bad” guys.  This fee would help pay for the application process and the special membership card.  Bob mentioned that one of the other resorts does their restaurant that way, so that the general public can go through security and eat.  Bob said that this decision will be determined by the GM and the B Board because we have a better feel for the response and receptiveness of the property owners of HLR.  The A Board will accept whatever decision is proposed.  As the situation develops, the GM and the B Board will bring the issue up again.     
XIV. 19th Hole Liquor Board of Directors Recommendation.  Robs said that he and Carl Worley are on the Liquor Board.  He feels that Carl is not the appropriate person to be on this Board now.  He was on the Board because he works near the restaurant.  It is recommended that Carl Worley be taken off of the Board and add John Sparks and John Livingston.  Rob will remain on the Board.  John Sparks will be the President and John Livingston will be the Vice President.  A motion was made by Larry Bowman and seconded by Jeanette Sterner to accept the recommendation.  The motion passed.
XV. Automated TABC Membership Recommendation.  Rob said that we currently pay the membership fee for the property owners with the “operating fund” of the TABC account.  He said this procedure is approved by TABC.  It is recommended to use money from the liquor operating fund to implement the Unicard system at the restaurant.  To insure compliance with TABC regulations, the membership to the liquor club will be tracked by each individual who wishes to buy liquor at the restaurant.  The individual’s driver’s license will swiped so as to “register” them in the Unicard system.  No separate card will be issued.    (Note:  In the past, “dry” counties issued a separate Unicard to prove their membership to the liquor club.  This new procedure is currently being used by most restaurants in dry counties.  The use of the driver’s license should help prevent minors from buying alcohol.)  A motion was made by John Sparks and seconded by Larry Bowman to accept the recommendation.  The motion passed. 
XVI. Security Vehicle Purchase Recommendation.  Rob presented the three bids he received on the purchase of the new security truck.  He reviewed the specification sheets from each company.  He recommended that the Board accept the bid for a vehicle that would cost $21,459.  The budget calls for payments of $550 for a new security vehicle.  John asked if the vehicle has the equipment and power capability to handle the needs of the officers.  Rob said that it did.  Rob said that The HLRA payments will be $497 for 4 years.  A motion was made by Larry Bowman and seconded by Bill Beggs to accept the recommendation.  The motion passed. 
XVII. Dump Truck Purchase Recommendation.  Rob said that the present truck is leaking fuel and oil.  It has some transmission problems as well.  It is not cost effective to continue repairing the truck.  Rob and the manager have been looking for a used dump truck.  They found one that is low mileage.  It is recommended that the used truck be purchased.  We budgeted $36,000 for a truck and we found on for $26,871.  The workers are pleased with the truck’s capabilities.  A tarp comes with the truck.  The new Maintenance Manager knows how to repair such vehicles, so the repair manuals were also purchased.  The only problem is that the company does not take trade-ins, so will have to try and sell the old truck.  Rob will report more on that issue once a buyer is found.  A motion was made by John Sparks and seconded by Bill Beggs to accept the recommendation.  The motion passed.       
XVIII. Trailer Purchase Recommendation.  It was recommended to purchase a tandem dual axle pintle trailer from Pro Trak.  The trailer will cost $6950 with an additional $1300 for a winch, tool box and mounting plate for grand total of $8250.  The budget called for $20,000.  Rob said this would save on the wear and tear of some of the heavy equipment.  Instead of driving some of the equipment to the work site, which would damage the roads as well, it will be hauled to the site.  A motion was made by Bill Beggs and seconded by Larry Bowman.  The motion passed. 
XIX. Fire Marshall Appointment Recommendation.  Rob said that 8 years ago HLRA had a fire marshal.  He was helpful in examining structures to determine if they were safe and met fire codes.  HLRA has not had a fire marshal since that time.  It is recommended that the Board approve Red Bailey to act as the Fire Marshal for HLR.  Red is a qualified under the State of Texas to perform these duties.  A motion was made by Larry Bowman and seconded by John Sparks to accept the recommendation.  The motion passed.
XX. Answer To Annual Meeting Question Concerning the Developer.  At the 2007 Annual Meeting of the Property Owners, Bob Levy was asked if there was a proposed timeline for the developer, Bob Mead, to turnover the control of the Association to the Property Owners.  Bob Levy did speak with Bob Mead and his reply was that as long as Silverleaf has an investment here at Holly Lake Ranch (HLR), Silverleaf will not consider relinquishing control of the operation of HLR to the Property Owners.
XXI. By-Law Change Recommendation.  On more than one occasion, The B Board, with the assistance of the By-Laws Work Group, has presented proposed changes to some of the Articles of the By-Laws that would be a positive addition to the current By-Laws. At the Open B Board meeting held on January 22, 2008, the B Board presented to the Property Owners the following recommendation to Article VIII, Section 1:  “Any special assessment or non-emergency contract or capital expenditure equaling or exceeding $100,000 (One Hundred Thousand Dollars) in total shall require Class B Membership approval constituting a majority of the votes cast by the eligible voters.”  Similar wording was submitted for Article III, Section 7 and Article IX, Section 2 & 3.  The B Board feels these changes to the By-Laws should be voted on and accepted by the A & B Board of Directors.  (NOTE: The A Board had the opportunity to review a typed copy of the proposed By-Law changes before the meeting held on January 29, 2008.  For several months, the A Board has been aware of these proposed By-Law amendments.  These are the same recommendations that have been publicized for the Property Owners to review as well.) 
A. Bill Beggs said that the intent of the By-Law change is to limit ourselves in how much the Association spends on major expenditures.  We are hoping to prevent some of the major expenditures for projects that have occurred in the past, which have affected the overall budget of the Association over a longer period of time than anticipated.  This By-Law change would allow the people to have a voice in a capital expenditure that exceeds $100,000.  Again, this recommendation does not include the need for expenditures due to an emergency situation that might occur.
B. Larry Bowman made a motion that the Board accepts the Proposed Bylaw Changes.  Jeanette Sterner seconded the motion.  The vote on the motion was 5 against and 4 in favor of the motion.  The A Board voted “No” and the B Board voted “Yes.”
C. Larry asked Bob Levy to explain the reasoning for the A Board to vote against the proposed changes.  They have been discussed before in other meetings and they know the problems certain expenditures have caused the property owners and the Association.  Bob said that the By-Laws have served the Association well and there is no need to change them.  Larry noted that the Texas State Constitution has served the citizens well over the years.  Yet, in 2007 sixteen amendments were proposed to the citizens of Texas for a vote.  These amendments were proposed due to needs and changes that have occurred in Texas over time.  He feels that the same is true for the need for changes in the Association By-Laws.  Bob said that as Chief Operating Officer and President of the Board, it is felt that there is not a need to change the By-Laws.
D. John said that the issue with the cost of the restaurant, which the present structure was not voted on by the property owners, has been a very difficult problem to overcome.  He said that we do not want to go through something like that again as Board members or as property owners.  So, we want the empowerment of our fellow property owners in making such major decisions.  Therefore, in practice, we will take a similar expenditure proposal to the people for a vote, even if it is only a referendum.
E. Bob Levy said that what the B Board has done to limit expenditures is commendable.  Larry said that future Board members might benefit by having such an expenditure restriction, so that the financial dilemma, as we have experienced in the past two years, would not be endured by the property owners.  Such a problem eventually affects Silverleaf as well, so he does not understand Silverleaf’s reluctance to approve these proposals.
F. Rob James said that there has never been a time when the A Board put something on his agenda that would require the Association to spend money in the nine years he has been at HLR.  John Sparks asked about the Golf Course proposal of 2006, which was proposed by Silverleaf.  Rob said that is true, but we (the Association) did not do it because we put it out for a vote.?   
XXII. 9-Hole Golf Course Agreement Discussion.  Bob said that a lot of time and money has been spent on the 9-hole golf course proposal, but you do not seem to like it.  Larry said it is not a matter or “liking it.”  The proposal has nothing to do with it.  It is the contract presented to the B Board in October was quite different than the proposal we have been working off of since February of 2007.  He said for one thing who would sign a contract that states that we, the property owners, will never sue for anything in the past, “from the beginning of time” or in the future.  So, we asked such statements be removed from the contract because any attorney would advise us not to sign such a document.  But, it does not seem that you are willing to change some statements in the contract.  Again, it is not about the golf course proposal because the most of the property owners thought the proposal that was discussed was acceptable.  It is a matter of “contract language,” not the actual golf proposal.  He could not in conscious sign such a contract.  Bob said that they cannot go with the contract you sent back.  There may be some areas that we can work on with you.  The concern Jeanette had was the additional expenditures that were outlined in the contract, which would be paid for by the Association.  This is after we were told that the golf course and the infrastructure would be paid for entirely by Silverleaf.  We were told that there would be no capital expenditures charged to the Property Owners’ Association.  Even Mr. Mead said that there would be no capital expenditures charged to the property owners.  Then all of a sudden the contract that we were presented during that Dallas meeting, listed the building of an additional gate, a parking lot, and additional lighting in that new area.  All of which would be the responsibility of the Association.  So, that was one of her objections.  The By-Law change recommendation indicates that the Association was not going to spend over $100,000 for the infrastructure projects outlined in the contract; especially since they were told that we were not going to spend any Association money for such items.  We understood that we would establish an account to pay for the maintenance of the extra 9 holes, that would carryover a multiple-year time period.  Jeanette stated that Larry, especially, worked very hard working on a plan that would be successful in paying for the maintenance program.  But, that is different from “capital” expenditures to actually build the golf course.  The Association is now responsible for the maintenance of the 18-hole course, so it was understood that we would have partial responsibility.  (The increase in dues that Silverleaf would begin paying once ground was broken, would also be used for the maintenance of the new golf course.)  Bob asked how much would these infrastructure items cost.  Jeanette said that no amount was listed in the contract.  We kept selling that point to the property owners