Association of Apartment Owners Maui Sands I and Maui Sands II Board of Directors Meeting Minutes October 15, Page 1

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1 October 15, Page 1 DRAFT Association of Apartment Owners Maui Sands I & II October 15, 2011 Maui Sands I Board Members Present: (In Person) Maui Sands I Board Members Present: (By Telephone/Skype) Maui Sands II Board Members Present: (In Person) Maui Sands II Board Members Absent: Owners Present (In Person): Other Attendees: Rosa McAllister, Keith Hertz, John Cush, Jean Rachkowski and Doug Wallway Laura Cowan Art Ford and Lucia Livoti Tracy Barrett Bob Jenks, 3D; Ray Rachkowski, 5G; Carol Carolan, 719; and Gay Jardine, 3A. David Ferguson, Management Consultants of Hawaii; Chyna Colorado, Recording Secretary Michael Pang, Monarch Properties I. DECLARATION OF QUORUM A quorum was declared for both. II. CALL TO ORDER President Rosa McAllister called the Board of Directors meetings to order at 9:21 a.m. The meeting was held onsite at the Maui Sands, Honokowai, Maui, Hawaii. III. REPLACEMENT OF DIRECTOR Claire Lachance is taking over a trust and no longer has time to serve on the Maui Sands II Board. Tracy Barrett will replace her. To replace Claire Lachance with Tracy Barrett on the Maui Sands II Board. Ford/Livoti IV. APPROVAL OF MINUTES

2 October 15, Page 2 The Board considered approval of the April 16, 2011,. On page two under Old Business, the phrase with seven negative votes should be deleted. To approve the April 16, 2011, as amended. Hertz/Wallway The Board considered approval of the April 23, 2011, Maui Sands I & II Annual Meeting Minutes. Under Declaration of Quorum, the percentages should be changed from 85.5% to 85% and from 75% to 80%. Under President s Reports, the second paragraph should begin with The House Rules have been revised To approve the April 23, 2011, Maui Sands I & II Annual Meeting Minutes as amended. McAllister/Hertz The Board considered approval of the April 23, 2011, Maui Sands I & II Organizational. Director Livoti was not present, so there was a Quorum of two Maui Sands II Board members and six (not seven) Directors present. Under Meeting Dates, the time for the July 16, 2011, Board meeting should be changed to 9 a.m. To approve the April 23, 2011, Maui Sands I & II Organizational Board of Directors Meeting Minutes as amended. Wallway/Hertz The Board reviewed the July 16, 2011,. The following changes were noted: David Stuffler is not a Board member; under Owners Present, 5E should be Farzad Azad and Jeff Cohen should be changed to Cowan; under Financial Report, Director Lachance s name is misspelled and the legislation is Act 48, not 40; under Seawall Repairs, David Stuffler s name should be removed from the landscaping evaluation committee, Carol Carolan s name is misspelled and Ryan Logtenberg was suggested but not appointed; Rooting Contract Maui Sands I should be changed to Roofing, the next meeting was scheduled at Director Wallway s unit (not Cush), and the motion should state To ask the roofing contractor ; in Community Work Days & Social Gatherings, Owner Carolan s name is misspelled; and under WIFI, the phrase The approximate cost to the owners is $.40 monthly should be deleted. V. FINANCIAL REPORT The Financial Statements for the month ending August 31, 2011, were distributed to the Directors.

3 October 15, Page 3 Director Cowan noted that improvements have been made on some units. Mr. Ferguson noted that $47,949 that should be in Reserves is in the Operating Account. Expenditures are looking better than before, and the Association has an operating surplus. The Board s frugality in expenses is helping. VI. UNFINISHED BUSINESS A. WIFI and Internet Service Mr. Hertz reported that it will cost an additional $69 per month to upgrade Internet service with two times more speed and bandwidth, assuming that Maui Sands I is currently on the lowest possible bandwidth. The Board discussed obstacles with Internet access for all of Building 7. A router (repeater) for $100 for the building would likely improve service. Guests can also be informed to seek hot spots, such as the pool area, where reception is strong. Director Livoti believes Internet access is the owner s responsibility. She doesn t feel the Association should provide service for the entire building, but after much discussion and stating again the expenditure needed is just a one-time only $100, Director Livoti agreed. To purchase one more repeater to see if that, in itself, can provide minimal bandwidth and Internet service to the entire Maui Sands property. McAllister/Wallway B. Seawall Repairs, Landscaping, Protection President McAllister said the landscaping on the oceanfront has been fixed in front of 5D on the corner property line with Papakea and looks great. When the large screen of bamboo, foliage and fencing was removed at the Papakea property line, there were immediate access concerns. People coming down the beach access between Maui Sands and Papakea could easily step up on the property. Poles were erected for a fence to remedy the situation, which led to controversy and complaints from Papakea and the owner of 5D. An immediate emergency solution was to plant natal plum, a fragrant, sea-tolerant and thorny plant, in that area with the idea that it would cascade down the seawall to prevent trespassing. It almost immediately stopped trespassing at that section of the wall, but with an almost staircase in the seawall nearby, people could still enter the property. A committee comprised of Directors Wallway and Cowan, and owners Carolyn Carolan, Darcie Olsen, Rich Harlan and Morgan Kunitomo was established after the last meeting to investigate the issue and potential solutions, such as replanting naupaka destroyed by the spring 2011 Pacific tsunami.

4 October 15, Page 4 Director Wallway circulated an with possible solutions concerning, the following: 1) Liability, including putting up warning signs or a railing on top of the wall); 2) Protection, replanting a continuous barrier along the wall, install planters with grassy areas in between or install a solid or semi-solid railing for the wall; 3) View, leave grass for best ocean views or install a see-through wall railing; 4) Privacy, posting signs discouraging walk-throughs; and, 5) Aesthetics, raise the wall of lava rock or install plants around the lawn. No matter what the committee proposes and the Board approves, there will likely be some opposition. There is consensus that near the top of the seawall there should be thorny foliage to keep people off the wall and limit liability. Director Wallway looks forward to receiving input on creative solutions, such as a naupaka-type planting on the property or use of planters to provide some privacy and preserve views. A related issue is security. State law allows beach access, but local teenagers were seen on one occasion using the area in front of the units as a playground, and people have walked on the seawall into the property. The seawall is public property, but the Association can post signs noting the danger of the wall and that Maui Sands is private property. President McAllister noted that the naupaka made a difference in protecting the property and lower units from the tsunami. Owner Bob Jenks thought that FEMA and the Army Corps of Engineers in 2006 or 2007 conducted a flood zone survey, and Maui Sands discovered the property is five feet above the high tide line. The minimum is six feet. The roofing project and additional work on the property requires a shoreline certification, and seawall specialist Maria Isotov-Chang will visit Maui Sands Thursday. The Board will wait to hear from Ms. Isotov-Chang before considering proposals to repair the seawall or raise the seawall, because there are many legal requirements to consider in any change to a seawall. To address security, Director Livoti recommended signage on the seawall. Mr. Jenks recommended replanting naupaka, since it has proven to work in the past. To put up signage immediately signifying the dangers associated with the seawall and the ocean. Cush/Hertz C. Roof Contract Status, Maui Sands I The new roof on Building 6 is going up. Finishing Touch reported that the project is going very well but behind schedule due to rain. A Certainteed representative did a roof inspection and reported that the workers did a great job. He will return at the end of the

5 October 15, Page 5 project. Roofing Consultant Grant Henry will also conduct inspections on a regular basis. Those inspections from Grant and the architect, Marie Kimmey, have to-date all been very positive. To approve the Maui Sands I change order to the contract for the Fascia, which was discussed at length at prior meetings and approved. McAllister Owner Carol Carolan asked Maui Sands II Board for an update regarding their needed roof. Mr. Ferguson explained that Maui Sands II has applied for permits for its roofing project. All county departments review the application. An official with the Department of Water Supply expressed concerns that Maui Sands is built on three different lots. A permit is required for each water meter, unless the property has a signed letter from the department. Mr. Ferguson said the Association has a signed letter from 1967, but he doesn t think anyone has it in their files. He suggests appealing additional water permits, as each separate meter will be very expensive. The water department review is one item that is holding up the roofing building permit and project for Maui Sands II. Director Rachkowski has been sending out roofing project updates to Maui Sands I owners. The work will impact parking, and some machinery will be used on the lawns. Maui Sands I owners will continue to receive written updates. The Board agreed on Beaver Brown as the color for the gutters, which matches the brown window trim and coordinates well with the roofing. Samples of the Dirty Sand colored shingles are on view for owners behind Building C. D. Condominium Council of Maui Workshop Directors McAllister and Rachkowski and Mr. Rachkowski attended the recent Condominium Council of Maui workshop that focused on legislation. The prior workshop offered information on seawalls. Mr. Ferguson attended this and reported that any work done on shorelines requires multiple approvals. He is encouraged that a consultant to the county from the University of Hawaii is approachable on shoreline issues. He also said that Act 48 may be softened for Associations. A panel of state legislators is working on amendments. Changes may ease impacts on condominium associations, which cannot move on judicial foreclosures. Director Rachkowski said the next CCM workshop on November 10, 2011, will focus on renovations and Reserve Studies. Information from the meeting will be circulated. President McAllister said Act 175, which allows guests to travel with comfort animals, has been expanded and is much more lenient.

6 October 15, Page 6 E. AED Purchase and Training President McAllister said an automated external defibrillator and rescue oxygen has been purchased. The AED will be mounted near the pool. First Aid/CPR classes will be held on the property, as well as training in use of the new lifesaving equipment. These measures will improve safety, but residents and guests should call 911 immediately in the event of an emergency. F. Maui Sands I and II Discussions President McAllister reported that Maui Sands I and II are holding discussions concerning financials, differences in maintenance fees and other issues. This is a long-standing issue which was recently raised again by the Maui Sands II Board. Attorney Christian Porter, who has been hired to assist with delinquencies, is representing Maui Sands I. He is researching historic documents and the relationship between Maui Sands I and II, why they were created and their differences. Maui Sands II has also hired an attorney. A meeting with both phases is scheduled. G. Michael Pang - Lease Renegotiation & Fee Purchase (Mr. Pang joined the meeting in person at this time.) Mr. Pang updated the Board on the status of lease rent and lease-to-fee conversion negotiations. He reported that by July 1, a new lease rent agreement will need to be developed if no fee conversion is possible. He described the fee conversion process, adding that the transaction will probably not be done before July with the landowners: The Weinberg Foundation (50,268 square feet) and Robinson Family (70,188 square feet) comprise Maui Sands I. Robinson Family is the landowner for Maui Sands II (19,630 square feet). VII. NEW BUSINESS A. Budget 2012 Mr. Ferguson reported that the 2012 budget draft will soon be sent to Board members. The spending plan keeps maintenance fees flat. He prefers to keep the budget level in totality, rather than increase the operating side. He does not yet have final numbers for insurance costs, but estimates are available. B. Phase I - Revised Collection Policy Mr. Ferguson reported that Chris Porter has revised the collection policy for Maui Sands I, which should be adopted and signed. President McAllister noted that there are no

7 October 15, Page 7 substantial changes from the agreement with Mr. Porter in March 2011, which was unanimously agreed to by the Maui Sands I Board. The policy still allows payment plans for delinquent owners for up to 12 months. Mr. Porter has sent letters to all owners in delinquency and has received one response so far. He could also help Maui Sands II in collections, but that could be a conflict of interest, since he is also representing Maui Sands I in the dispute raised by Maui Sands II. To approve the updated collection procedure/policy, which is very similar to the policy previously approved. McAllister/Cush VIII. ADJOURNMENT / EXECUTIVE SESSION The meeting duly adjourned to Executive for Maui Sands I and II Board Members at 11:22 a.m. Respectfully submitted, Louise Rockett Louise Rockett Transcriptionist