Executive Council Meeting

July 15, 2002
Muncie IN

Note: All minutes are unofficial until approved at the following Executive Council meeting (October 26, 27, 2002).

Introductions
President's Report
Executive Vice President's Report
Executive Director's Report
NAA Report
Committee Reports:
New Business
Old Business
Action Items
Feasibility/Dues Structure Meeting

The President called the meeting to order at 8:00 a.m.

INTRODUCTIONS

President Dave Brown, Hamilton, OH; Executive Vice President Doug Holland, Raleigh, NC; District Vice Presidents: I-Don Krafft, Duxbury, MA; II-Dave Mathewson, Camillus, NY; III-Bob Brown, Bradford, PA; IV-Bliss Teague, Hickory, NC; V-Jim McNeill, Birmingham, AL; VI-Charlie Bauer, Norridge, IL; VII-Bill Oberdieck, Southgate, MI; VIII-Sandy Frank, Weatherford, TX; IX-Russ Miller, Carrington, ND; X-Rich Hanson, Scottsdale, AZ; XI-Bruce Nelson, Spokane, WA; NAA Representative Don Koranda; Executive Director Joyce Hager. 

Attending from AMA HQ staff were Jay Mealy, Carl P. Maroney, Rob Kurek, and Michael Smith. Guests included Peter Seiffert, AVP District III; Joe Vislay, AVP District II; and Shirley Teague.

PRESIDENT’S REPORT  

  • The President reminded Council members to make the appropriate appointments to the Contest Boards, if they have not already done so.
  • The President will be out of the country from August 14 through September 2, 2002.
  • The President received some questions regarding the requirement for by laws. Confusion arose when a club noted they had a constitution in place, and creating a set of by laws would result in a potential conflict with two documents. The President indicated the intent was to require a document that governed their organization. Amend AMA documents to reflect by laws and constitutions are synonymous.
  • The President, Executive Director, Programs Director Jay Mealy and Don Koranda visited the FAA to express concerns with re-drafting of AC 91-57. They were presented with the question of how AMA and aero modeling will fit within the security response system to increasing levels of security alert as established by the U. S. President and the home land security group. In other words, what restrictions would be put into place should the security alert levels change. Discussion included: prohibiting the coupling of a navigationally enhanced auto pilot; restricting flight to AMA flying sites; compiling a registry of all RC flying sites. Having a registry in place would allow AMA to direct police or government agencies to a specific contact person (could be VP, AVP), to determine if the activity is suspicious. The President appointed a committee (Jay Mealy, Rich Hanson, Bruce Nelson, Don Koranda) to develop a recommended plan and report at the next Council meeting. Headquarters will look into establishing a mechanism to deal with the press and formalized responses.
  • The President stated the need to develop a loss prevention program. There is increased vulnerability due to technology creeping higher. Some recommendations included: safety programs for clubs; video safety seminars; check list for a safe flying site; flight proficiency programs, and possibly a column in the magazine. AMA needs to assess where the risks are. Carl Maroney will coordinate with the Safety Committee to develop a program. (Suggested program of recognition of advancement through a system of testing of skill levels). Any suggestions from Council should be given to Carl within the next thirty days. It was suggested that input from high caliber pilots (TOC, FAI, etc. pilots) be solicited.

APPROVAL OF MAY EC MINUTES
It was moved, and approved by acclamation, to accept the minutes of the May 4, 2002 Executive Council meeting.
Note: The President indicated that the tabled motion from the May meeting be addressed following the NAA Report.

EXECUTIVE VICE PRESIDENT'S REPORT 

MOTION I: Moved by R. Miller (IX), seconded by B. Brown (III), to give permission for the Corporate Resolution. MOTION passed unanimously.
  • The EVP will be working for a balanced budget based on financial position.
  • There is a need for the Academy to develop a more definitive set of qualifying criteria for individuals seeking the position of EVP.
  • The EVP is still working on splitting the corporations assets into three different corporations. Should have something to present for a vote by the end of the year.

NAA REPORT

  • Koranda reported on a legal issue that developed at the conclusion of the World Air Games.
  • Directors are pushing harder within the FAI for all the commissions to recognize their duty to protect their franchise. Koranda noted there is sport parachuting group that is not a member of the FAI, but they have taken the FAI rulebook and copied it and are using those rules for their competitions. The Parachuting Commission is being pushed to address the issue.
  • President of the IAC recently resigned over an internal board dispute. Koranda cautioned about control when separating entities.
  • Working on an air sport group meeting for late August or early September.
  • There will be an Aviation Worlds Fair in Virginia in April 2003. Koranda’s job is to get all air sport groups involved. J. Mealy indicated that an AMA Air Show Team is on board for event already, and the ED has received information about it.
  • The General Aviation Coalition met with Jane Garvey. She will be leaving in August and it is expected that she will not be replaced right away. The main topic of conversation had to do with security. They are trying to position themselves to be able to put forth guidelines that pilots can follow. Koranda listed a few of the common sense guidelines. The next part is what steps would they take to do these things. This is the subject of further discussion going on in Washington, D.C.

EXECUTIVE DIRECTOR'S REPORT 

  • There is a vacant building in Muncie where they use to build transformers. The President, Jay Mealy, Ron Morgan and others will tour the building. There may be the potential to lease it as an indoor site. They will have a report after the tour.
  • On-line membership is the biggest way we are bringing in members currently, both new and renewals. Renewed 25,167 members on-line.
  • Currently there are 1,117 contestants for the Nationals. Numbers are similar to those of last year, with Scale being slightly down.
  • Renovation of the museum is almost complete.
  • The EVP reported that the balloon event and dog show have generated sufficient money to put in electricity at Site 4, without affecting the Operating Budget. Cost was approximately $6,000-$7,000 for electricity. It was suggested that signs be placed in the parking lot area of Stage Center that camping there is $5.00/night donation, and that a fund will be set up with this money that will be used to install electricity at this site at a later time.
  • Membership is running at 1-2%.
  • Renewals will go out first of September. There will be no electronic voting this year.

The President indicated that at this time Council would entertain action on the two subjects discussed at the Sunday meeting. (Captive Insurance and Fees/Dues Structure)

Captive Insurance
The President asked if anyone would like to make a motion regarding establishment of the Captive Insurance entity. The EVP suggested establishing the captive, but not fund it at this time. Further investigation needs to be done on where the captive will be located. If all factors were equal, it is preferred to have it in the United States. Tax implications could make that an extremely expensive option.

MOTION II: Moved by R. Miller (IX), seconded by B. Teague (IV), to establish a captive to a dormant non-funded state, pending outcome of pending issues involving taxes, bonding, and legal issues. Funding not to exceed $20,000. MOTION passed unanimously.

More thought needs to be given to the affecting issues before officers can be designated and a name assigned to this corporation. The minimum will be done to establish the corporation; changes can be made once it is in place.

Fees/Dues StructureCouncil reviewed the draft outline of the elements of change in the fee structure (dues not included). The affect these changes would have on the budget came to approximately $202,000. These changes were made to more appropriately reflect the actual risk AMA was assuming and the cost of providing these items, as opposed to increasing income.

Discussion on funding the captive included:

  • The members need to know that we must establish a self-funded insurance program.
  • There is money currently on the books (in stock market) as insurance reserves. Much of what would go to capitalize and fund the captive would become our insurance reserve. About 1.4 million is needed to start the captive moving ahead. That means we need to generate an additional $300,000 in cash.
  • May have to take a portion of existing reserves, which is necessary to cover the reserves that is set for each of the cases, and transfer that out of what we currently have in the stock market into this captive. The captive would then take over the liability for those claims and future claims.
  • It was stated that AMA has been under reserving for the insurance program. Need to build up the insurance reserves in hard monies.
MOTION III: Moved by R. Miller (IX), seconded by C. Bauer (VI), the following list reflects the changes made to the fee structure for 2003 – Club Charter fee-$30; Additional Insured Certificate-$60/regular wording $80/special wording; Leader Member application fee-$10; FAI Stamp-$15 above NAA’s cost to AMA; Sanction Application fee-$20; all Earned (free) Memberships will now receive a 50% credit on cost of their dues. Insurance Certificates for sanction applications and Chartered Club Dated Certificates will remain the same. MOTION passed unanimously.

The President then addressed the tabled motion from the May 4, 2002 EC Meeting. That motion was "to increase the membership dues by $7.00 for the year 2003."

An amendment was made to increase the cost of the Open membership by $10; Senior Citizen by $10; and to increase the cost of a youth with magazine membership to $15.

A second amendment was made to include a 5% overall reduction in the budget for year 2003, to show financial responsibility on AMA’s part. In response to the amendment, it was stated that the only way to cut 5% would be to cut services/programs to the members. It was suggested that the staff be asked for their input, to do their best to give a 5% reduction in their budgets.

There was concern that this information on the dues/fees increase would immediately get out to the members. The President will address the increases in his next column. He will give an advance copy to all members of Council that they should use as a basis for responding to questions. An alternative is to refer the questioning party to the President’s column.

MOTION IV: Moved by S. Frank (VIII), seconded by R. Miller (IX), to amend tabled motion from the May 4, 2002 Executive Council meeting to include a 5% reduction in the budget for year 2003. MOTION passed: 10 yes; 3 no (I, V, X).

The President clarified that the intent of the proposal was for the budget to be 5% less than it was for 2002.

MOTION V: Moved by C. Bauer (VI), seconded by B. Teague (IV), to amend tabled motion from the May 4, 2002 Executive Council meeting to read: Dues structure for 2003 will be as follows: Open-$58; Senior Citizen-$48; Youth-No magazine $1, with magazine $15. Additional Family Member and Affiliate Member remain the same. MOTION passed: 10 yes; 3 no (VII, VIII, X).
MOTION VI: Moved by C. Bauer (VI), seconded by B. Oberdieck (VII), to accept the established dues structure for 2003, as amended. MOTION passed: 11 yes; 2 no (VII, VIII).

Report on Nominating Committee Meeting (Appendix I)
The Chairman reported that the committee met on Sunday morning to review all nominations. He reported there we no contentious issues in terms of qualifications. The position of EVP originally had four nominees, but one withdrew his nomination. All candidates were voted on by acclamation and will be placed on the 2002 election ballot.

The Chairman indicated that one of the nominations received at headquarters had not been signed or dated by the candidate nor date stamped at HQ. To be procedurally clean, it is imperative that all documents received at headquarters on nominations and acceptances be officially date stamped.

As mentioned in the EVP Report, the Nominating Committee recommends that a description for the position of EVP be developed.

MOTION VII: Moved by R. Hanson (X), seconded by B. Nelson (XI), That the Nominating Committee report be accepted and recorded in the minutes. MOTION passed unanimously.

2002 Election Ballot:

District III- Bob Brown (incumbent)

District VII- Dave Gish
Bill Oberdieck (incumbent)

District XI- Bruce Nelson (incumbent)

EVP- Douglas Barry
Horrace Cain
Doug Holland (incumbent)

District IV Special Election
Randy Elliot
Bliss Teague (incumbent)

Lunch Break 12:10 p.m.

COMMITTEE REPORTS

Frequency (Appendix II)The Frequency Committee had been working on the reduction of 3 miles separation to 2 miles separation using AMA guideline receivers. This was predicated on the industry creating a system that would advise customers if they had the guideline receivers. There has been no such commitment from RCMA to date. Who is eligible to sign allocation plans or interference tests was clarified for inclusion in the code. The committee recommends Council approve the following motion:

MOTION VIII: Moved by J. McNeill (V), seconded by C. Bauer (VI), to accept the Frequency Committee’s recommended change to Radio Control, item 5 in the Safety Code. New Radio Control, item 5 to read: "Flying sites separated by three miles or more are considered safe from site-to-site interference, even when both sites use the same frequencies. Any circumstances under three miles separation require a frequency management arrangement which may be either an allocation of specific frequencies for each site or testing to determine that freedom from interference exists. Allocation plans or interference test reports shall be signed by the parties involved and provided to AMA Headquarters. Documents of agreement and reports may exist between two or more AMA chartered clubs, AMA clubs and individual AMA members not associated with AMA clubs or individual AMA members." MOTION passed unanimously.

Election ProcessIt was reported that HQ would not do voting via an 800 number or electronic voting this year. Additional information is being collected. To do an insert in the magazine as a tear-out postcard, the insert alone would cost approximately $3,200. The true cost is what the auditors charge ($10,000 for national election; $7,000 regular election).

The discussion following included:

  • How to possibly handle ballots that were received at headquarters.
  • Large, bold printing on the ballot/renewal noting that they must be sent to different addresses.
  • Possibly printing the ballot portion of the renewal at the top instead of beneath the renewal form.
  • Electronic voting could be done with validation numbers so an individual could only vote one time.
  • It was suggested that an article be put in Model Aviation addressing how to and how not to vote. Could also have a full page that shows election do’s and don’t. This should be done in the November cover issue. Something will be put on the web site also.
  • The E.D. will continue to pursue the idea of electronic voting.
  • It was agreed by Council that Headquarters staff continue to void any ballots sent to Headquarters.
  •  

Museum

  • M. Smith reported that the museum is keeping busy. Since Headquarters operations moved to the new building, they have been converting that space to usable museum space. He and Librarian Rich LaGrange have new office space. Have used some space to separate some of the collection. Primarily the library, plans and archives. Now have a separate area for all magazines. The old membership department is now the restoration shop.
  • The theater is being closed and that space will be incorporated into the library. The theater will be relocated into the old conference room and will be able to accommodate 25-30 people. An exhibit showing the history of AMA will be done in the lobby when you enter the museum.
  • It was suggested that an area be dedicated to the Navy as it was very important to the growth of the AMA.
  • It was suggested that interviews that can be archived be done on the older members. It was reported that completed biographies are now available for viewing.
  • Attendance in the museum for 2000 was 4,200; in 2001 it was 6,500.
  • Museum has done a great deal regarding outreach programs. Includes presenting programs to schools; going to local regional fairs and having booths advertising AMA. A brochure has been done to inform locals that the museum and site are here. Working to get brochure out to hotels and the visitor’s center.
  • Over $6,000 has been raised through the sale of magazines and books. That money will be put back into the library for things such as shelving, etc.

Park Flyer (Appendix III)
Will make a report at the next Council meeting. The Committee is concerned that AMA is not giving enough attention to the park flyer market. It is growing incredibly fast. D. Mathewson was contacted by the P.R. people at Hasbro Corporation relative to finding for a field to do a P.R. demonstration for the press of a new plane. There is the potential that millions of these units will be sold eventually and could get involved in model aviation. We need to introduce these people to the Academy.

It was suggested that AMA attend the New York Toy Fair. AMA needs to do marketing to target this group. The E.D. will address this concern.

PublicationsThe Committee was informed that a person wanted to make a presentation to Council, pertaining to on-line classified ads. Not all committee members agreed to allow this presentation. However, the Chairman decided to let the presentation be made. It was stated that Council should give their recommendations to the Committee and they will address it. The web survey done a couple of years ago showed that 87% of the people who responded to the survey were either somewhat interested or very interested in the AMA designing (sometime in the future), an on-line classified system.

Michael Kranitz representing Kranitz Enterprise, Inc., gave a short presentation addressing on-line classifieds. Discussion following the presentation included:

  • AMA wants people to return to the AMA web site; on-line ads may give them a reason to return.
  • AMA should not have to hire additional personnel to handle this.
  • There would need to be a way to filter out inappropriate ads.
  • AMA should have the opportunity to buy out.
  • AMA should be able to have their specific disclaimers.
  • Concern was expressed that club and member information (however public) was gleaned from the AMA web site for use in the rcairport.com Web site. M. Kranitz indicated he spoke with a woman at headquarters prior to this, but was unable to name the individual whom he spoke with.

Safety (Appendices IV, V)A revised 2003 safety code was presented for consideration. Each revision was addressed individually and any concerns or comments aired.

Changes included:

  • Delete old GENERAL items 4, 5 and 6.
  • New GENERAL item 4 to read: "The maximum takeoff weight of a model is 55 pounds, except models flown under Experimental Aircraft rules." (Make reference to those rules.)
  • New GENERAL item 9 to read: "Children under 6 years old are only allowed on the flight line as a pilot or while under flight instruction."
  • Proposed GENERAL item 10: refer to RCCA for recommendation to Safety Committee and ultimately Council.
  • ·Proposed GENERAL item 11: replace with new RADIO CONTROL item 8 (see RC item 8 below).
  • Delete old RADIO CONTROL item 3; replace with new item 3: "At all flying sites a straight or curved line(s) must be established in front of which all flying takes place with the other side for spectators. Only personnel involved with flying the aircraft are allowed at or in the front of the flight line. Intentional flying behind the flight line is prohibited."
  • RADIO CONTROL item 6: add after ….200 feet.); "electric motors will be based on equivalent combustion engine size. Additional safety requirements will be per the RC Combat section of the current Competition Regulations.
  • Proposed new RADIO CONTROL item 7: Delete last sentence, starting "The only exceptions which may….. and ending with "and Executive Director." New item 7 to read: "At air shows or model flying demonstrations a single straight line must be established, one side of which is for flying, with the other side for spectators."
  • New RADIO CONTROL item 8 to read: "With the exception of events flown under the AMA Competition rules, after launch, except for pilots or helpers being used, no powered model may be flown closer than 25 feet to any person."
  • New RADIO CONTROL item 9 to read: "Under no circumstances may a pilot or other person touch a powered model in flight."
MOTION IX: Moved by C. Bauer (VI), seconded by B. Nelson (XI), to accept the 2003 Official AMA National Model Aircraft Safety Code, with changes. MOTION passed unanimously.

Minor changes and language clean up of the document titled SAFETY REGULATIONS FOR MODEL AIRCRAFT GAS TURBINES were reviewed. Following a brief discussion the following motion was made.

MOTION X: Moved by B. Nelson (XI), seconded by B. Teague (IV), to accept the changes to document titled SAFETY REGULATIONS FOR MODEL AIRCRAFT GAS TURBINES. MOTION passed unanimously.

The Safety Committee hopes to come to the Council in October with something pertaining to turbine helicopters and control line turbines.

The Committee is recommending a set of standing regulations for RC pulse jet engines. Following a review of the document, a motion was made.

MOTION XI: Moved by C. Bauer (VI), seconded by B. Teague (IV), to accept the document titled SAFETY REGULATIONS FOR RADIO CONTROLLED PULSE JET ENGINES. MOTION passed: 12 yes; 1 abstain (I).

Sanctions and Liability (Appendix VI)
The committee presented recommendations to be implemented as soon as time permits. Recommendations included obtaining the expertise of various committees and departments. A report will be given once this has been received.

Scholarship (Appendix VII)
The committee presented its’ recommendations. There were 37 candidates for the 2002 awards. The Hutchison awards for this year will close that account if no further funding is forthcoming. There were no changes to the program recommended by the committee.

The Scholarship Committee report and recommendations were accepted by acclamation.

Waivers (Appendix VIII)
An ad hoc committee was formed at the last meeting as a result of concern expressed by a member relative to a turbine helicopter and engine related to it. It was hoped to have a change to the Safety Code that would provide a provision for AMA to waive what was to be considered non-standard. The committee was trying to create a document for turbine manufacturers to give them a waiver for an engine that has not gone through the acceptance process that AMA has, and fly it at an event. There was some confusion on what exactly the committee was charged with. After a conference call and discussion with the President, general counsel felt they knew what the President was looking for. They recommended the following addition to the Safety Code: GENERAL item 12) For any deviation of this Code a prior written waiver must be obtained from the AMA President, Executive Director and Director of Special Services. (Council received a copy of the waiver for review.)

Larry Johnson stated they had talked to Royal about this through our wholesaler out of Chicago Tri-Cities, and Royal would like some examples of under what circumstances this type of waiver would be issued. One example stated was issuing a waiver for testing in order to develop appropriate safety rules for a particular category. In most instances a waiver would be issued for one day. It could also be stated that a limit on the duration of the waiver is one week. This waiver must be signed by the AMA President, the Executive Director, and the Special Services Director to be accepted. There was a board resolution to authorize the waiver with permission from the insurance company. Nothing can be done however until AMA receives Royals acquiescence.

Maroney then presented an announcement that was developed for a Manufacturers Turbine Engine Demonstration Program. This is for a product that they have been working on (they have produced a production engine), that has not yet gone into full production but would like to have the ability to show it, for example, at a sanctioned event. Part of that announcement is a Hold Harmless and Indemnity Agreement.

MOTION XII: Moved by C. Bauer (VI), seconded by B. Nelson (XI), to accept the MANUFACTURERS TURBINE ENGINE DEMONSTRATION PROGRAM as presented. MOTION passed: 12 yes; 1 abstain (V).

IMAA MeetingS. Frank attended the meeting held at AMA Headquarters approximately one month ago. He indicated that they have had minimal problems with sanctioning and contest coordination. Frank reported that the organization is in decline. For the past two years they have lost 15% of their members each year. They are losing thousands of dollars each time they produce their High Flight magazine. Tom Hayden is the new IMAA President.

Due to the fact that the E.D. needed to leave the meeting, the President indicated a change in the agenda to accommodate a Headquarters item – Committee Etiquette.

Committee Etiquette
The Executive Director stated the need for a procedure to be put in place relative to a person/persons attending a committee meeting as an observer and what said observer can publicize on the Internet. The discussion following included:

  • Items should be reviewed by the committee for approval as minutes, and forwarded to the Executive Council.
  • The Committee Chairman is responsible for how the information is disseminated.
  • If a Council member receives a call and knows nothing about what was being asked, they should inform the person they are not aware of it, but will try to find an answer.
  • The President stated that he has no problem with sharing information we have on the board, but if the intent is to post it on the Internet, this should be stated.
  • The problem isn’t necessarily what is posted on the Internet, but when. This is especially true with items such as the Hall of Fame, Flying Site Grants and Scholarships.

The President suggested the following "Gentleman’s Agreement." When one wishes to post something to the Internet they should first ask themselves is it my responsibility to post this? If not, they should ask the person responsible if it is okay to publish. There was no opposition to this agreement.

OLD BUSINESS

Delta DartsMaroney reported there were people who wanted to produce the Delta Dart. He has contacted John Worth regarding what Frank Ehling's intent was. Has not had a response as yet. Maroney is hoping by October to have information to provide. He feels they will need to create a document to define what the understanding was, if someone wished to produce it.

Galeville (Appendix IX)
Mathewson reported that the Galeville issue was escalating into more than just a local situation. He distributed a letter from James V. Hansen, U.S. House of Representative Committee on Resources Chairman, to the Director of the U.S. Fish and Wildlife Service. This letter was sent on June 5, 2002 and they are awaiting a response.

On May 13, Mathewson reported they met with Congressman Ben Gillman in N.Y relative to the Galeville issue and returning modeling to Shawangunk. The congressman outlined three options available: to appeal the decision; possibly propose legislation to allow modeling to return to the facility; and if those options failed, he indicated there might be the possibility he could find another site down in that area. The congressman was informed that an appeal was filed based on information from counsel and they were denied that process. The legislation issue has been on the board for several years, and other sites in the area continue to be investigated.

On the morning of July 15, 2002 they received a call from Dr. Parker of the Fish and Wildlife Regional in Massachusetts. A meeting has been set for October 1 to meet with the regional director. Mathewson indicated they would like to address the compatibility issue between modeling and national wildlife refuges, as well as speaking on the Galeville issue and letting them know who AMA is and what AMA does.

AMA ConventionJay Mealy gave background on how the show has grown since AMA acquired it in June of 1998. To make it as good as possible, the show will be held at the Ontario Convention Center in Ontario California. This answers all the concerns about Pasadena. (For example, there was not enough parking, or loading and unloading areas.) The space in Ontario is larger and can encompass all activities in one room. (70,000 square feet, 28 foot ceiling.)

AWARDS

NEXT MEETING

October 26-27, 2002

The meeting adjourned at 7:30 p.m.

Respectfully submitted by JoAnne Brown, Recording Secretary of the July 14-15, 2002 Executive Council Meeting

Action items as a result of the July 15, 2002 Executive Council meeting:

  • 1) Headquarters should amend documents/web site to reflect that by laws and constitutions are synonymous.
  • 2) President appointed committee (Jay Mealy, Rich Hanson, Bruce Nelson and Don Koranda) to develop a recommended plan having to do with increase national security levels/modeling. Report at the October council meeting. Headquarters will look into establishing a mechanism to deal with the press and formalized responses. (See President’s Report)
  • 3) C. Maroney to coordinate with Safety Committee to develop a loss prevention program. (See President’s report)
  • 4) Something should be placed in the magazine and on the web site, addressing election do’s and don’ts. (See Election Process report)
  • 5) Council agreed to the following "Gentleman’s Agreement": When one wishes to post something to the Internet they should first ask themselves is it my responsibility to post this? If not, they should ask the person responsible if it is okay to publish.

FEASIBILITY STUDY/DUES STRUCTURE MEETINGSunday July 14, 2002

The President called the meeting to order at 9:45 a.m.

In attendance: President Dave Brown; EVP Doug Holland; District Vice Presidents I-Don Krafft; II-Dave Mathewson; III-Bob Brown; IV-Bliss Teague; V-Jim McNeill; VI-Charlie Bauer; VII-Bill Oberdieck; VIII-Sandy Frank; IX-Russ Miller; X-Rich Hanson; XI-Bruce Nelson; Executive Director Joyce Hager; Recording Secretary JoAnne Brown. The NAA representative Don Koranda was not in attendance. Guests included AMA Special Services Director Carl P. Maroney; District III AVP Joe Vislay; District II AVP Peter Seiffert; Larry Johnson of First Line Insurance Services; Stuart Grayston of USA Risk Group; Joe Gelwicks, General Counsel, and Shirley Teague. NAA representative was not present on Sunday.

Feasibility Study presented by Stuart Grayston

Stuart Grayston defined a Captive Insurance Company as an insurance company owned by a single parent or group of shareholders, where the captive insures the risks of the parents(s). Captives are part of a broader concept of alternative risk transfer mechanisms operating outside the traditional insurance markets that have grown to almost 40% of the insurance market today.

Why AMA should consider a captive: There is a difficult insurance market along with increased claims severity. Funds must be set aside for present and future claims, and to ensure long-term control of an insurance program by the AMA.

Captive vs. Rent-a-Captive: A captive would provide AMA the most flexibility for investment of funds and control of bank accounts. It would allow direct access to the reinsurance market. Disadvantages could include inadequate loss reserves, and the additional cost of staff and management time.

AMA would have less control over the operation of a rent-a-captive including control over insurance funds retained in the program. Advantages of the rent-a-captive include no capitalization required, minimal organizational and regulatory issues and minimal start-up expenses. Either one would integrate easily into AMA’s existing program with Royal, by replacing the existing SIR.

Policy options include a fronted self-insured retention and a corporate deductible reimbursement policy. Larry Johnson suggested the corporate deductible reimbursement policy, as it would issue a separate policy directly to the AMA, reimbursing the AMA for claims paid within the self-insured retention. Past claims have been infrequent and unpredictable, but with the increase in loss severity in recent years Royal may opt not to renew AMA or could increase the retention needed. Headquarters does have the option of getting alternative bids, but feels they would not be as tailored as that of Royals.

On-shore vs. Offshore captives. AMA should consider accessibility, communication, flexibility, image, and operating costs. Establishing an on-shore captive gives the greatest flexibility for funds handling and hands on oversight. Items to consider with an offshore captive include the requirement of an acceptable business plan and 5-year financial projections, an annual audit report prepared by an independent firm and an offshore captive must be managed by a Resident Insurance Manager.

The process for and cost of incorporation of a captive was reviewed. The whole process should take approximately 12 weeks. Having a business plan is the key to how quickly a captive can be established. A large portion of time will be spent on collecting biographical information on board members (this should be kept in mind when selecting the number to be assigned to the board.)

In conclusion, if AMA decides to set up a captive, Grayston recommends AMA establish a loss prevention and training program, obtain expert tax advice consulting with attorneys and auditors, and incorporate the captive. A timeline has been provided.

AMA could institute a number of programs with the intention of controlling loss prevention. These programs could reduce losses; reduce premiums; reduce erratic financial impact on AMA; increase member services while reducing costs; increase member confidence and increase safety and member enjoyment at events.

The AMA President has been in contact with a member from New Jersey who has been involved with captives and offered his services. Maroney suggests he be used as an advisor if AMA decides to proceed.

Lunch Break - 12:00 p.m.

Discussion on Dues/Fees Structure

  • The EVP recommends an additional 1.1 million dollars in total income. The total income currently stands at 8.5 million.
  • Feedback the President received was heavily supportive of a dues increase. They overwhelmingly agreed that one large increase is preferable over several smaller ones.
  • Each Council member then relayed the feedback they received from within their own districts, and suggestions they have and that they received. Some of that feedback is listed below.
  • Increasing Open/Sr. Citizen by $10.
  • Risk takers should burden the increase. The higher the risk, the higher the yearly dues.
  • Increase the charter fees to reflect the actual cost to service clubs.
  • Create (issue) a stamp (for a fee) for those who wish to compete.
  • Eliminate or tighten the earned (free) memberships.
  • Increase the Leader Member application fee.
  • Review and possibly sunset some current AMA programs
  • Cut down the limits of the insurance program.
  • Increase the cost of site owner certificates; this would cut down on those requested because they are currently so cheap. It was noted that these certificates are primary coverage.
  • Increase special wording certificates.
  • AMA needs to show that they are cutting costs also.
  • Increase FAI stamp fee.
  • The EVP reported the need for AMA to fund the depreciation; this has not been done in 4 or 5 years. He indicated they are in the process of moving stocks around. A callable CD guaranteed at 7% is being utilized.

Council then went into Executive Session (2:05 p.m. – 3:05 p.m.)

Discussion on the dues/fees structure continued:

  • The President suggested the possibility of tying the concept of safety awareness into the dues increase. With all renewals a safety questionnaire would be included. Concept would be if the individual fills out the safety questionnaire completely, they receive a $2 credit on his renewal. Questions would be about general safety and not restricted to the safety code. It could be an electronic form, such as Scantron or it could be done over through the web site.
  • Proposals for suggested dues/fees increase were reviewed.
  • It was suggested that the CD license be an annual license that must be renewed each year. Give the CD the earned membership, but charge them for renewing the license each year. (Renewing the CD license would require passing a test including some questions pertaining to safety. The ED will work with the Technical Director to develop this.)
  • Provide a CD with an earned membership or partial year credit contingent on the type of event they directed.

The President indicated that we are trying to create an equitable system to subsidize the various programs AMA offers. He reviewed how the dues/fees structure relates to the insurance captive.

Incorporating ideas from Council, the fee structure to be voted on is as follows:

Charter Fee-$30; Additional Insured Certificate-$60/regular wording $80/special wording; Leader Member application fee-$10; FAI Stamp-$15 above NAA’s cost to AMA; Sanction Application fee-$20; all earned (free) memberships will now receive a 50% credit on cost of their dues. Insurance Certificates for sanction applications and Chartered Club Dated Certificates will remain the same.

The dues structure to be voted on is as follows:

Open-$58; Senior Citizen-$48; Youth-No magazine $1, with magazine $15. Additional family member and Affiliate member remain the same.

A motion was made and seconded to recess the meeting.

The meeting was recessed at 6:15 p.m.

NEW BUSINESS