The Board meeting commenced at 7:00 PM. The following Board members were present: President, Paul Zacharias, Vice President, Sara Clarke, Secretary, Peggy Steele, Treasurer, Karen Joyce and Operations Coordinator, Joe Bowen.

The following homeowners, all invited by an e mail message, by notice enclosed with the minutes and by posting of a notice on the community bulletin board, were present: Larry Amuso, Frank Carelli, Marie Miller, Dave Miller, John Bonner, Harold Clarke, Jim Morelewicz, Jean Mattson, Lou Ciasulli, Dr. Charles Weiss, Teena Weiss, Renata Sherwin, Jean Sherwin, and Robin Cotie.

Before calling the meeting to order, Paul said that he would open the floor for comments when the pool area beautification project is diacussed. Larry Amuso asked if members would be able to comment on the C&Rs. Paul said that if any members have comments about the C&Rs they will be able to make their comments when the agenda item is discussed or they can make their comments now if they choose not to stay for the entire meeting.

* Marie Miller asked about signs to direct traffic to A1A and Paul said we will be discussing this issue during the meeting and at that if there was still a concern she could address the board then.

* Harold said that work should be done around the pool fence. Joe Bowen said he has 2 metal plates that he would donate to fix the gate. Harold suggested that new wire could be placed on the gates at a reasonable cost and with a few other repairs to some fence posts and the screening cloth the fence might last another year or two. Paul said that lack of volunteer help to perform such repair work is a problem right now and it’s a problem getting any work done.

* Renata Sherwin asked about updating the member list. Jean Mattson said she has e mailed Joe Sermarini who does the website for HBEHOA and she has not had any responses. Paul said that there are some people who do not want their e mail addresses published to the website. Paul said that he will contact Joe when he returns to have Jean’s address added to the website. Paul said that we have the information mostly updated and it will be compiled and Peggy will get a hard copy to Karen. Peggy & Karen will work to get the membership list updated and distribute a copy to the membership.

* Lou Ciasulli said that he had trouble finding the agenda for this meeting on the website. Paul said that it is at the bottom under "Whats New". He will ask Joe to list the information under "Documents" as well as "Whats New".

* Frank asked about the email name which showed up on our email site and Paul explained that he had e mailed a message to a State of Florida official and had forgotten to delete the name from our association email list when he sent out information to homeowners. That has been taken care of. Her response requesting that she be removed from the list had a notice on it that her email was an official government record.

* Frank asked if the Homeowners Assoc is represented by an attorney and if so, he would like to know who it is as he might hire his own attorney. Paul said that at this time the Association does not have an on going relationship with an attorney.

1.Paul called the meeting to order at 7:10 PM.

Paul added 4 items to the agenda: 1: Establishment of a nominating committee

2: Communication about Lot #70

3: Holiday party

4: Upcoming legislation concerning the bike path on A1A.

With no other items to add to the agenda Sara made the motion to adopt the agenda which was seconded and adopted.

2. Approval of minutes: Paul asked for any changed or additions to the Board meetings of May 4, 2006 and May 18. 2006. There being none, the minutes were approved as written.

3. Treasurers report: Karen said that the one delinquent member has been contacted and he will send in his dues. With the collection of that outstanding bill, all dues have been received.

Karen distributed a report (attached) showing that based on expenses through July 31, 2006, the budget showed a projected net gain from operations of $4503 versus a budgeted amount of $2960. If no amount of money were spent on betterments ($1000 was budgeted) our projected amount in reserves at the end of year is $17381. Paul said we are OK with the budget.

4. Enhancement to pool recreation area: Paul displayed the planned improvement sketch to the membership and read the report from the pool improvement task force (see attached report, sketch, and the drawing and picture of the four proposed gazeboes.) Phase 1 will be implemented in Nov-Dec. 2006, with refinishing the 2 existing picnic tables to match the newly constructed gazebo tables in Dec. 06-Jan-07.

Phase 2, consisting of the landscaping, irrigation, pathways, etc. will be done in Jan 07-Mar 07. The final stages of the project will be done in the Fall of 07-Spring 08.

Paul said that from the feedback from the vote on the pavilion, the members who voted "no" did not feel that $35000 should be spent building a single large structure. By the time the landscaping was completed, the cost for the pavilion would have likely amounted to over $40000 (or about $250-$300 per lot owner.) . Paul said that the estimated cost for the entire proposed project will be between $14500 and $19500, or a total of about $50-$75 per lot owner over the next couple years.

The task force has come up with a workable alternative concept to a single large pavilion. Hopefully this arrangement will be useful for the whole community on an ongoing basis, and not only for the few planned association events that have been held each year. The gazebos will be constructed to withstand severe winds This type of structure will eliminate the need for volunteers to take down umbrellas, etc. when a storm is approaching. Paul said that the time frame for phase 1 starting in Nov is because it would be after the hurricane season and close to the beginning of the next year when dues would be paid in Jan 2007, therefore our funds would be replenished for any unexpected emergency.

The proposal states said that the cost for building the gazebos is $7880, not including permit costs and the cost of a concrete or wood floor for each gazebo, which may bring the total for phase I to close to $10,000.. The task force recommended the board giving approval for expenditure of funds from this years budget to complete phase 1.

Joe said that the building codes are much stronger than they used to be. He has gotten an estimate for the construction for concrete pads for the gazebos which totals $1600, added to the $7880 for all 4 gazebos. This estimate was given by "Southern Restoration" Total cost--$9480 plus the cost of permits (estimated at $100 or less.). Precision Co. gave a bid of $4005 per tiki hut + $650 for pad+ $1000 for contractors fees and permits. The total estimate is $19620. He concluded, and the Board members concurred, that the bid from Southern Restoration seemed reasonable. Joe also noted that this vendor had performed high quality work in repairing our beach walkover following hurricane damage, so the vendor is a known entity.

Joe said he has also investigated the sprinkler system at the pool. The current system provides water to the pool lot and there are 2 sprinkler heads west of the pool area and most heads work. Sara said that Harold & John Bonner put in the 2 heads west of the pool area and they are working fine. Joe was going to provide additional estimates on the cost of sprinkler system expansion and for concrete curbing but Paul asked that he not present the information at this time because the information would be more timely when alternatives were being considered for walkways, groundcover, and landscaping in phases 2 and 3.

Paul asked if the Board or any members had any questions about the structures or design of concept. Karen asked if more tables could be added if wanted. Paul said that a portion of the area on the north side of the property could be used. He explained that the seating at the gazebos and 2 existing tables would be ample and that there are a lot of options for extra seating if necessary. Karen said she like d the design but wanted to make sure there was enough room to grow with our expanding population. Sara said that the tables under trees should sit 20-24 people and with the addition of 4 large gazebos the design should be functional. Harold said that probably the septic would be eliminated with sewers coming in the future.

Frank questioned the climbing cost jumping from $7800 to $10000 . Paul said that amount in the work group proposal did not include the permits and the pads. Allowing for permits and any other costs not anticipated, he rounded off the cost to $10000 for discussion.

Jean Sherwin asked about large groups of people gathering, and wondered if a large table might be better, rather than several smaller ones. Paul said that based on usage, he found that people usually come to pool in small groups, rather than large groups. The area will give a unified feeling when the paths and curbings are installed.

Sara said that she felt the task group did an excellent job with the plan and thanks the members.

A question was raised about increased taxes . Paul said that the taxes probably would go up a little but did not anticipate a huge increase given that the tables would cost less than $10,000.

Paul asked if the board had any more questions before voting. No board member had questions

Paul asked if the board is in agreement with the concept of the design and building phases as proposed.

Sara made the motion to accept the basic design of the pool area beautification project as proposed. The motion was seconded and approved unanimously.

Paul said that we have a projected $17381 in reserves. If we were to use $9600 to complete Phase 1, we would still have $7781 left in projected reserves at the end of the year. .

Paul asked for a motion to spend $9600 and give Southern Restoration the contract to start phase 1. Paul said the funds will come from the funds for betterment for this year . Sara made the motion as requested, which was seconded and approved unanimously by the Board. .

Paul said that it would be helpful if there was someone in the membership who could volunteer to be the on-site liaison to the contractor once work begins in November. Joe said that if would be helpful to have someone not on the Board to perform this task.

5. Proposed revisions to C&Rs—reports of working groups: Paul said that the main goal for the three working groups is to bring a set of revisions to the C&Rs to the membership for a vote at the annual meeting in December. Any changes can be put to a vote at that point. Paul gave the board members a copy of the changes that he has made to the first 2 Articles of the C&Rs, which were not included in the work of the three work groups who focused Article III to the end. Following our May 5 Board meeting, the proposed revisions were available in hard copy to the membership upon request and available on our website. The work groups have thus far received a few comments on specific issues from a couple of members. The only comprehensive comments were from Bob Rohr. The president of the Board, Paul, is appreciative of the fact that Bob did a thorough review of the proposed revisions. While Paul does not necessarily agree with everything that Bob suggested, the fact that he was willing to go through the articles, correcting wording, typos, and offering suggestions was helpful in raising issues for the work groups to consider. (Bob’s suggestions were provided to each of the appropriate work group.) Paul said that he is very appreciative of Bob’s effort.—Thank you Bob.

Paul said that the kind of changes that we need to make are:

Paul said that changes in the third category are the ones that will likely be the most controversial and cited several examples of wording in the current C&Rs that needs to be changed to clarify the enforceability of the particular restriction. Paul said he would like each of the task groups by the end of the month to prepare a two column document showing in column one the current wording and in column two their proposed revised wording for each of the category 3 type changes in their respective areas. These will be made available to the membership on the website and upon request from Peggy in hard copy. Members will be able to submit written comments. Paul said he will schedule at least one "Member Forum" in early September to allow members to provide their views and suggestions on the wording of the proposed revisions in the hope of arriving at a set of revisions that will have the best chance of passage when the C&R revisions are put to a vote at the Annual Members Meeting on December 7

Karen said that her work group is looking at the wording of the "pet restriction" and is finding it a very delicate issue. She also expressed concern as a Board member about how to apply the property maintenance standards in a fair and evenhanded manner. Every homeowner should be accountable for keeping his home up to the standards set forth in the C&Rs, therefore, the standards should be specific. Paul said there are some standards set forth in current C&Rs, but the work group might elaborate on some of the issues. Karen asked about enforcement after contacting the homeowner of a violation of the C&R. Sara said that a 15 day grace period is provided to correct the violation. If the violation has not been corrected, a certified letter will go out stating that the problem will be turned over to Board for a vote on a potential fine or suspension to be reviewed and approved at a hearing by the fining committee. Sara said that the grace period is given because there have been instances where homeowners have not been given the C&Rs and are unaware of existing restrictions. The C&Rs are published on the HBEHOA website or are can be obtained from any board member.

Sara suggested that the workgroup for changing the maintenance standards work with the fining committee because they are familiar with the restrictions that now exist. Frank Carelli, a member of the fining committee, said that the maintenance standards should be more explicit. Paul said that the fining committee members hopefully will either provide written comments or provide suggestions during the members forum. Larry Amuso, another member of the fining committee, said that he had a problem with the garbage collection which sat beside the road for several weeks and he told a member of the board that he had been trying to have it taken care of in good faith, so further action was not taken by the Board.. Larry said he wanted homeowners to know that the board is not just going out to find fault---that whatever action is taken it is in the best interest of the whole community.

Paul said that when buying into this development you are entering into a private, voluntary contract with the association and you are thereby accepting the C&Rs as written, until they are revised by whatever revision process is provided for in the C&Rs. Paul said that all restrictions should be very clear as to what procedures can be followed. He said that the Board, being "contract administrators" is charged with interpreting, enforcing, and administering the contract on behalf of the homeowners. For example, as a reminder to members as election time approaches, the C&Rs do not allow members to display campaign signs in their yards—that’s what we all have agreed to until the such time as the C&Rs might be revised.

6. Operations: Joe said that the ponds are being treated for the growth of cattails. Someone has been fishing in the big pond and most of the carp are gone and are hard to get right now. Paul noted that Joe still has $200 in the budget for pond maintenance.

Joe will try to get the storm sewer grates taken care of on N. Mahoe to prevent small pets from falling in. . He will check into ways to fix the gates at the pool. Paul will work with Joe to have the gates repaired.

Paul asked about signs for the community to curb some of the traffic flow. Sara and Peggy agreed that a "No outlet" sign be placed at the corner of Armand Beach Drive and Mahoe (below the Stop sign), along with a "To A1A ß " sign on the street sign post at the same intersection to direct traffic from South Mahoe onto Armand Beach Drive. Paul asked about putting additional "To A1A" signs on Cottonwood and/or Solee. Sara said that she & Peggy felt that putting both signs at the corner of Mahoe and Armand Beach would take care of the problem The signs would be mounted on the existing posts.They do not want to have a lot of signs making the community look "tacky". Lou suggested that we could put a "no outlet" sign at A1A,since there is no outlet back to A1A from any of the streets off of Armand Beach Drive. Paul said that might be a good idea and we would have to work with the County and the residents along Armand Beach Drive to get that done. For now, we will go with having a "no outlet" sign and "to A1A" sign at the corner of Armand Beach and Mahoe as recommended. After seeing how this works, we can then make a judgment about putting up further signs. We also need a "stop" sign at the corner of Laurel Lane and Armand Beach Drive. There is money budgeted for this, and the motion was made to give Joe permission to have the signs made. The motion was seconded and Joe will go ahead with having the signs made.

Paul said that some people have been complaining that the alligators in the pond between Cottonwood and Solee were being fed and as a result, alligators have been coming up to the shoreline when people are present. A member, whose house borders the pond, purchased a "do not feed alligators" sign and asked if the Board would consider putting such a sign at either end of the pond. Paul showed members the sign and asked the Board to consider the request. Sara confirmed that alligator feeding is a problem noting that she has seen some homeowners feeding the alligators. She said that "all member should be reminded that Florida Law prohibits feeding alligators". Joe asked about attaching the sign to the existing "no fishing" sign rather than creating additional sign posts. Harold suggested putting the "no feeding" sign at the bottom of the "no fishing" sign thereby covering up some of the wording that was creating confusion about whether the current sign applies to members. The motion was made to put the "no feeding" sign at the bottom of the "no fishing" signs at both ponds and the board voted unanimously to proceed.

7. C&R enforcement and related issues: Sara said no further letters have been issued. She said that there is a complaint about a house on Mahoe having mold and also the yard needs attention. Sara said the owner is trying to get the house finished to move into. The owner intends to resod and relandscape as soon as he is here. He has contacted Torode to mow the front, but not the back. Sara says she will follow up on this and try to find out why the owner does not want the back mowed. Sara said the whole yard has to be maintained. Paul asked if any other board member had issues to be taken care of. Peggy said that the back and side yards at #2 Laurel Drive, which is a rental property, needs to be weeded. The weeds are taking over in the clusters of pampas grass which was growing around palm trees. Palm fronds are still laying around and the weeds are growing into the yard along the south side of the property. Sara said she has contacted the owner and will follow up on this issue.

Karen said that another homeowner needs to be alerted about the lawn because the grass is dying due to lack of water--only weeds are growing. Sara said you can’t force someone to water, especially now with the fire hazard "high‘, and the request from Palm Coast Water Authority to restrict landscape watering. This is something we will just have to live with. .

Paul said that the "for sale" signs can only be 3 sq. ft.. Realtors have added smaller signs to the original sign making at least some of the signs in excess of 3 sq. ft. Paul asked Sara to go around and check on the signs and language, and to work along with Karen who is in the real estate business to communicate with the realtors, and perhaps this issue can be resolved easily. Paul said that we do not have the option right now to say "for lease" or " for rent" according to our current C&Rs.

Paul said that there are no architectural review matters at the present time.

8. Items added at the start of the meeting:

a. Elections: Paul said that at the beginning of 2005 we adopted election procedures. One of the requirements of these procedures is that a nominating committee has to be named 120 days before the annual meeting. The committee will consist of 1 board member and 2 other association members to review the election procedures and recommend to the board any changes. The procedures have to be approved by the Board and in place by 60 days before the Annual Meeting—i.e., Oct. 6. The board seats held by Sara and Karen are to be filled at this election and these seats will now be for two-year terms. Since Sara and Karen are possible candidates and Joe has a number of operations tasks on his plate, Paul asked Peggy to serve on the nominating committee. The board agreed that it would be acceptable for her to work with any volunteers or choose 2 members to serve on the committee with her. Paul said that he will be out of town when the Board needs to approve the nominating committees proposed procedures and asked Sara if she would work with Peggy to schedule a Special Purpose Board Meeting to approve the procedures that could be held at the pool before Oct 6. Finally, Paul noted that the procedures used at the last election went to great lengths to try to prevent the vote counters from seeing who each member voted for. Paul asked for a show of hands from the association members in attendance as to how they feel about the ballot counters knowing who voted for or against the candidate. Those in attendance were nearly unanimous in the view that ballot counters could know who a member voted for, indicating that the procedures may be able to be simplified. Sara said that vote counters pledge to not divulge voting information to another person anyway.

b. Lot 70: Paul explained that the owner of Lot 70 on Armand Beach Drive has recently obtained a release from the Army Corp of Engineers Permit that included the lot as part of the development’s conservation area and obtained a determination from the Flagler County Planning and Zoning Department that the lot is now buildable subject to the owner filing to obtain a release from the Conservation Easement that now includes the lot. It is Paul’s understanding that the owner of lot 71 is pursuing the same action. Paul has been approached by some members who are concerned about these lots now having houses because of water drainage and other concerns. Paul said that the two lots are owned by association members and that in his view the Board should not take sides. Paul did find out that there is an appeal process for the Flagler County Planning and Zoning Department decision and the forms and instructions for this process will be posted on the website should any member want to formally challenge the County’s determination.

c. Holiday Party: Paul asked Peggy about the Holiday party. She said that the VFW hall on Old Kings Road has been hired and a deposit was submitted in late Jan to hold the hall for us . A live band has now been hired, the cost for which will be incorporated into ticket prices for the event. The date and time for the party is Sunday, Dec.l0 from 5:30pm to 9:30pm, which was the only open date when arrangements were being made. More details will follow as the date approaches.

d. Use of the Bike Path on AIA. Paul received a call from Skip Jedlicka who lives on Armand Beach Drive saying that county has made a determination that spells out what types of vehicles will be permitted on the bike path along A1A. The notice is being sent to all homeowner associations for distribution to their members. The Board approved Paul’s request that the notice could be attached to the minutes of this meeting. (Paul received a "draft notice, which is attached. It is our understanding that the A1A Scenic Pride Committee and the Hammock Community Conservation Corporation may discuss this letter at upcoming meetings.)

With no other items on the agenda, the meeting was adjourned at 9:15 PM.

The next scheduled meeting is scheduled for October 12,2006, at which time the Board will discuss, among other things, the proposed Budget and dues assessment for 2007

Respectfully submitted,

Peggy Steele, Sec.

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