At the September 1 Board meeting, newly elected Treasurer Janet Danola responded to numerous allegations, which were put forward in a letter authored by the Past Presidents’ Council (PPC). The series of allegations from the PPC suggested that the Association was not following “acceptable financial procedures” which may result in misallocated funds and ballooning costs. Danola addressed three main areas of concern in a 30-minute presentation: increased administrative costs compared to 2015, expenditures from the Covenant Enhancement Fund (CEF), and authorized signers for Association finances.
Danola explained that the reason for a net increase of $349,000 in administrative costs in 2016 compared to 2015 was due to the hire of two administrative managers, severance for two former employees, and higher healthcare costs. Other contributing factors included litigation and the printing of governing documents materials.
Danola noted, “The Board will make every effort to manage the business of the Association in such a way that overall legal cost is controlled.” Legal costs are difficult to preemptively budget for since it is not possible to predict litigation that might arise throughout the fiscal year she explained.
Covenant Enhancement Fund
Danola explained that expenses related to the enhancement fund were accounted for. Projects funded by the CEF include: Covenant Club Feasibility Survey, Community Outreach and consulting for the Fiber project, roundabout project expenses, alternative water project expenses, and repairs to the Osuna Ranch.
Conversely, the only payment to the CEF came from interest income. Danola explained, “I think it’s important to note that the assessment was zero. So we had no additions to the fund other than the interest income.”
At the close of her presentation, Danola addressed the PPC’s accusations that unauthorized personnel had signed checks on behalf of the association and that checks with computer generated e-signatures were submitted after the signer was no longer employed by the Association. In order to investigate, Don May, Director of Accounting, Technology and Compliance, visually examined over 1,000 checks.
Danola reported of the checks, “Nothing appeared out of the ordinary.” She added, “Authorized signers as of today are either employees of the Association or Board members.”
Her findings showed that Kim Eggleston, as Treasurer, signed a bank-issued authorization form in July 2016, giving Association Controller, Matthew Ditonto, signing privileges.
Former Board member Marie Addario was the only PPC member in attendance and thanked the Board for their diligence, saying, “As a representative of the Past Presidents' Council I want to thank you and the Board for dealing with our questions. We appreciate the time spent and know your time is extremely valuable.”
Following Danola’s presentation, Board President Fred Wasserman announced that a full, enumerated report will be made available once the review was fully complete. “We appreciate your patience on this; it’s not an easy task when you’ve got to review 1,000 checks. Once we get everything done we’ll do a final report at one of our Board meetings.”
Board Reviews VIBE, Public Safety, Budget, and Fiber
The remainder of the Board meeting was mainly dedicated to a presentation from Stacey Pennington regarding the Village VIBE community engagement program, an annual public safety report from Patrol Chief, Matt Wellhouser, 2016-2017 budget discussion from Controller, Matthew Ditonto, and an update from Board Director Allen Finkelson regarding the fiber project.
Pennington reviewed her past year of working with on revitalizing the Village through the Village VIBE project. She reported an increase in event attendance since the project began and reminded members that this year’s Rancho Days celebration will start on October 1st and continue through the 9th.
During his budget discussion, Ditonto noted a 5 percent projected increase in assessment revenue as home values have gone up in recent years.
Wellhouser reported that burglaries had increased in the first half of 2016, compared to the first half of 2015. He advised residents to always secure their homes and vehicles since these crimes tend to be crimes of opportunity.
Finkelson briefly remarked that negotiations with Hotwire were ongoing and disbursements for consulting services were on hold until a finalized agreement is reached between Hotwire and the Association.