Executive Council Meeting

July 16, 2016
Muncie IN
Official

Introductions
President's Report
Executive Vice President's Report
Chief Financial Officer's Report
Executive Director's Report
Committee Reports
Old Business
New Business

1. Opening Business 

Note: NAA President J. Gaffney was not in attendance.

Nominations Committee meeting 8:00 am – 10:00 am. The regular meeting of the Executive Council was called to order at 10:15 am.

a. Introductions: President Bob Brown, Bradford, PA; Executive Vice President Gary Fitch, Delevan, NY; Chief Financial Officer Keith Sessions, Burlington, KY; District Vice Presidents: I-Andy Argenio, Smithfield, RI; II-Eric Williams, Schenectady, NY; III-Mark Radcliff, St. Marys, WV; IV-Jay Marsh, High Point, NC; Interim VP District V-Andy Griffith, Jacksonville, FL; VI-Randy Cameron, Springfield, MO; VII-Tim Jesky, Monroe, MI; VIII-Lawrence Harville, Hurst, TX; IX-Jim Tiller, Custer, SD; X-Lawrence Tougas, Fairfield, CA; XI-Chuck Bower, Langley, WA; Executive Director Dave Mathewson and Legal Counsel Felix Gora, Rendigs Fry Kiely and Dennis.

Others in attendance: Shawn Grubbs, AMA staff; Vicki Barkdull, AMA staff; Rob Kurek, AMA staff; Al Kanser, AVP Dist. II; Marc Shelstrom, AVP Dist. VII; Bob Reynolds, Brady Ware; Rich Hanson AMA Government Affairs; Bob Klenke, JPO President and Jim McEwen, JPO Executive Vice President.

b. Additions to the agenda:

Old Business - Government affairs update: Rich Hanson; Safety Committee report deferred until a complete review of the Safety Code is done; Old Business item re membership card was withdrawn per A. Argenio (6/30/2016).

c. Final Flight recognition (Appendix):

A moment of silence was observed.

2. Consent Agenda:

It was moved, seconded, and approved by unanimous acclamation to accept the minutes of the April 16, 2016 Executive Council meeting.
The mail vote re: acceptance of the Scholarship Committee report was read into the minutes.

3. President’s Report

Travel:
• AUVSI Convention with R. Hanson and C. Budreau; met with M. Huerta, M. Gibson and other FAA officials. Attendance at these conventions is a chance for the AMA to meet with leaders in the industry
• Joe Nall; membership meeting was called early due to weather but had the chance to talk with many members about AMA and FAA issues
• Attended FPV races in Covington, VA (held in a cave); and Columbus, OH
• Assisted a new CD with holding an FPV race in Cuba, NY; attended Cuba, NY STARS club Fun Fly
• Attended retirement dinner for Art Pesch (Hobbico) and presented he and Carol Pesch the President’s Award
• Flite Fest in Malvern, OH; the President was of the opinion that AMA should have had a presence at this event

The President created an Ad hoc committee to review expense expenditures; this will be discussed later in the meeting

The President asked A. Argenio to initiate the ED evaluation in the proper timeframe.

4. Executive Vice President's Report

• Attended Joe Nall; worked the AMA booth and participated in the abbreviated membership meeting. While there met with B. Brown, K. Sessions and a VP concerning EC expense policy and the need for changes
• Met in Muncie with R. Cameron, the Competition, IT and Marketing staff and a potential software manufacturer
• Participated in an EC expense policy conference call to review existing policy and make recommended changes
• Chaired a conference call with the Ad hoc committee looking at the new software program
• Worked with the Southern Tier Aero Radio Society in putting on their fun fly; met with members and discussed AMA’s current situation with the FAA and government
• Participated in conference call with the President, CFO and staff accountant concerning the 2015 audit
• As chairman of the Marketing Committee, met with E. Williams, Marketing and Membership departments to discuss current and future marketing efforts

5. Chief Financial Officer's Report

Sessions thanked V. Barkdull and B. Reynolds for their work on this report. The audit was moved to the second quarter, which is a cost savings for the Academy. As we go through the report Council should keep in mind there was a dues incentive for people to renew for 2 years, so the income seen on this year will not be seen next year. Sessions noted economic indicators report the chances of a recession in 2017/2018 are increased dramatically. AMA is a discretionary hobby and our dues will be impacted by a recession.

Bob Reynolds began by thanking Council for allowing Brady Ware to continue their work with the Academy; they value AMA’s business, trust and confidence they place in them. He also thanked D. Mathewson, V. Barkdull and the staff. He reported on the concepts that underlie the numbers that are provided on the balance sheet and income statement as well as drawing attention to what they see as trends. The Academy is an accrual basis financial reporter which means they recognize revenue when it is earned and expenses when the obligation to pay has occurred. He noted there is a push underway globally to move to an international financial reporting standard which would bring commonality in the global market across numerous countries. AMA had an unrelated business income tax bill in 2015 and will have moving forward; AMA has used up all the prior operating tax losses. Certain activities the AMA engages in (museum sales/retail goods and advertising) are taxed just like any other company. Reynolds spoke to credit card use and the internal revenue code. Substantiation for use of a credit card (documents to support a business expense) as reported by the IRS – who is paid, how much is paid, date of expenditure and a description of the transaction that is sufficient enough to document what the expenditure was for. Travel, transportation and entertainment-IRS Publication 463 has everything the IRS expects to see when it comes to meals and entertainment. In the non-profit world, meals/entertainment and personal use of a credit card have been cited by the IRS as significant areas of concern. When it comes to credit card use for meals, you must include the date, place, all the people paid for (their relationship to the Academy) and the business purpose; this also applies to travel expenses. AMA requires receipts for all charges over $25.

The receipts should go to V. Barkdull, she will code them, distribute them in the general ledger and pay the bill. Once the processing of them has been completed, the documentation supporting the credit card charge should be reviewed by the CFO. Reynolds feels a bi-monthly report should be provided to the CFO for review. When asked about monitoring the Academy’s travel and expense policy Reynolds is of the opinion it should be the responsibility of the Chief Financial Officer, not the accounting department. He noted that internal control by a subordinate over a supervisor is inherently flawed.

AMA’s capitalization threshold was questioned. (It is $1,000 now but considering changing it to $500.) The IRS’s is $5,000 and Reynolds was asked what he thought AMA’s should be. As our auditor he is not allowed to tell us what number to use. He felt $5,000 was too high, but $500 was too low. Reynolds is of the opinion that there is no issue with a VP being reimbursed for gas charges using their personal vehicle for business purposes, in lieu of reimbursement for mileage. Cell phone usage and internet services are legitimate business expenses. It should be noted that if the cell phone or computer were purchased out of district funds, these items must be returned to the AMA at the completion of their term of office. Reynolds stated council members must use and adhere to the policy they have established. AMA’s policy must at least meet the IRS policy, if it is more restrictive than the IRS’s, that is fine. When asked about a VP purchasing a product with district funds with the intent of selling it to make a profit to benefit a club or district, Reynolds stated that the documentation and profit should be sent back to the AMA and they will make the proper credits. This process minimizes the perception or likelihood of misuse. There was a brief discussion of AMA District assets, noting there should be a mechanism to document what a person has upon leaving office.

It was moved, seconded, and approved by unanimous acclamation to accept the Audit Report as presented July 16, 2016.

JPO Presentation

Bob Klenke, JPO President and Jim McEwen, JPO Executive VP were introduced. They reported to the Executive Council what they have been doing, what the JPO is about and their future plans. It was noted that for the past couple of years JPO had been relatively inactive but they are getting revamped and working to increase membership and participation.

Discussion included the changes to the turbine thrust rules; updating the web site; their ability of electronic membership; and working with I. Maine to send out a survey via Survey Monkey (of the 1,400 people that received the email they received just over 200 responses). They reviewed the JPO mission, topics for their publication Contrails and the activity of the community. Future plans are to build their membership; maintain the turbine rules, update LTMA (Large Turbine Model Aircraft) rules and rules compliance by turbine and LTMA holders working with AMA. As an AMA SIG (Special Interest Group) they will work closer with SIG chairman R. Cameron.

In a brief discussion of a recent incident involving a jet, it was revealed that individuals were not willing to step up to address the concerns. As an AMA SIG, JPO is the watchdog for this community. AMA is dependent upon members to police each other and the community should be willing to step up and demand pilots at these events fly safely. Contest Directors need to ensure that pilots hold the proper credentials to fly. This goes for all disciplines across the board. Mathewson noted that in 2008/2009 AMA was engaged with the FAA when large model aircraft and turbines were on the cutting block. Due to R. Hanson’s efforts and our Turbine Waiver Program we were able to convince the FAA that those models could be flown safely and responsibly in the airspace. He feels we are literally one major incident away from losing that privilege. Klenke reported he knows there is a problem and they want to be part of the solution but they need to address it without driving away members. McEwen stated they need to communicate and educate members more effectively. AMA is willing to help JPO but there must be communication between the two organizations. Klenke stated they will work on the rules compliance issue. The President thanked Klenke and McEwen for their update.

6. Executive Director’s Report

Best Buy – Revenue continues to trickle in; to date we have received $70,376 as a result of the program. The cost to implement the program was $23,000 so we have realized significant revenue. AMA realizes about $72.33 per member that joins AMA as a result of the Best Buy program. AMA also realized about 1,000 new members as a result of the program.

UAS4STEM – One regional competition is left in Washington State; the national competitions will be held in Muncie in August. Mathewson reported we significantly underestimated the amount of interest that program was going to generate. We’ve compensated that for next year; registration for 2017 is already open. This initiative has been incredibly successful so far in 2016.

National Model Aviation Day (NMAD) – Club participation is way down this year; this was expected after we changed direction with the charity. As of July 15, only 105 clubs have signed up (200 last year). Still expect a few more before the end of the registration period. Part of that factor is that we opened the door to let clubs select a local charity to support as opposed to the national charity that AMA recommended.

Camp AMA - Successful, had a full contingent of students. The Education Department does an incredible job with the students. Mathewson especially wanted to thank AC Glenn, RJ Gritter, Andrew Jesky and Nick Maxwell for their participation with the students.

AMA Day Camp – This is a resource for educators and clubs in local areas that want to reach out to their communities.

AMS Project – On track with timeline; moving into the vetting. Have responses from 8 vendors and will cut that down to 3 or 4 to be part of the RFP process. Steps going forward: RFP will be released; comment period will be scheduled as a result of that; Q & A period; RFP submission page due by end of July. There will then be a review and clarification period; finalists will be selected and references contacted; on-site presentations will be held; final negotiations with a final offer. Results will be brought to Council for consideration.

Club Charter renewals – As of this week 2,283 clubs have renewed or newly chartered; this is on track with last year.

Membership numbers – Renewal rate is running about 99% of last year which is significant since there was a dues increase. New memberships are trending up about 20%; overall paid memberships are up about 2% for the year.

Government Relations – Tyler Dobbs was brought on board; he is getting up to speed relatively quickly. In the last month he has interfaced with 27 communities relative to local level legislation. Three of those contacts were to address problems with legislation that had already passed; seven were to address pending legislation and 17 were to address legislation that has not been written. What we have now with the extra resource is the ability to reach out in advance to these legislators who are considering writing bills and ordinances and have an impact on that before it gets too far down the road with legislation already written. AMA had a lengthy conversation with Senator Jackson (District X) and was asked for input and to look at the legislation before it was submitted (his bill was shot down twice). This is significant and is the direction we are going with our government relations.

Rantoul, IL – This item is for discussion only. This is where the Indoor Nats will be held. An AMA member came to AMA with a proposal to purchase the Rantoul facility. It is an old hangar with a 98-foot ceiling; would be appropriate for Indoor FF and Indoor RC. The city currently owns it; the sale price is around 250k. Renovations to the facility could be as high as 2mil. It is on an airport and there are no zoning requirements. The ED would like to let staff do more research on the project; it is a historical building and there may be an opportunity for a historical grant; could also negotiate with the city. Maintenance of the site would need to be considered. Once more research is completed, the ED will come back to Council with more information.

7. Committee Reports

a. Nominations (Appendix)
The Nominations Committee accepted the documentation for L. Tougas, R. Hanson and E. Williams for the office of President. There was only one nomination in each of the three districts up for election this year. The committee accepted those nominations as well. Terms for the above offices begin January 1, 2017.

MOTION I: Moved by T. Jesky (VII) and seconded by M. Radcliff (III) to accept the report of the 2016 Nominations Committee. Names on ballot: President – Rich Hanson, Lawrence Tougas, Eric Williams District I – Andy Argenio (incumbent) District V – Robert (Bob) Brogdon District IX – Jim Tiller (incumbent)
MOTION passed unanimously.

Travel and Entertainment Policy – Ad hoc (Appendix)

J. Tiller reported that looking at the current policy the committee felt there were three areas that needed to be reviewed; how expenses are reported, the procedure if a default occurs and how money should be spent. The committee only addressed two of those – how expenses are reported and the procedures if a default occurs. There was much discussion on how the budgets should be spent but there was no consensus. As a result of the discussion with the auditor this morning, the section referring to ‘red flag’ and ‘IRS’ will be rewritten. The chairman feels the changes that were put in were needed to make this a more business-like procedure, following standard business practices that would sustain an IRS audit. The committee recommends using a standard report form (Excel spreadsheet that was okayed by V. Barkdull and K. Sessions). The committee recommends (as did the auditor) that if a default occurs the CFO should address it.

Additional recommendations by EC members will be forwarded to the committee; these will be considered for inclusion in the policy. It was clarified that the $500 limit is what the Academy wants to account for so we can utilize it for depreciation. We paid around 42k in taxes this year and the CFO would like to save the Academy money. The capital expenditure amount ($1,000) was not changed. There was a brief discussion on the gas vs. mileage reimbursement; Sessions understands why a VP would like to be reimbursed for gas instead of mileage but noted it is difficult to account for personal usage vs. business usage. Any credit card gas charges must have a mileage explanation associated with it.

Session noted the Travel and Entertainment Policy is in place to ensure we are within the guidelines of the IRS and ensure we can conduct business and greatly reduce/restrict the opportunity for misuse.

MOTION II: Moved by L. Tougas (X) and seconded by J. Marsh (IV) to table discussion of the Executive Council Travel and Entertainment Policy changes. Council members will submit further input to committee chair J. Tiller. This item will be brought back for vote at the October meeting.
MOTION passed unanimously.

The President strongly urged council and committee members to conduct discussion and possible resolution of this via electronic means prior to being presented in October.

Hall of Fame (Appendix)

In the agenda is the report from the committee chairman and list of this year’s inductees into the AMA National Model Aviation Hall of Fame. Before contacting any of the winners Council members should check with E. Dobbs/B. Brown to see what the nominees’ preferences are relative to presentation. There were 27 applications and 7 were selected. The chairman noted that there has been a consistent problem over the years with committee members not voting. Each District VP can appoint a representative to sit on the Hall of Fame Committee; past presidents are also on that committee. In J. Neuberger’s letter he noted those that have not been voting and requests that the District VP’s appoint other representatives. The Districts that need a representative or have one who did not vote are:

District I – A. Argenio VP – John Buckley HOF Rep
District II – E. Williams VP – Bob Aberle HOF Rep (Williams has taken care of this)
District V – A. Griffith Interim VP – awaiting VP appointment to replace T. Stillman
District VIII – L. Harville VP – Riley Wooten HOF Rep
District IX – J. Tiller VP – H. Michael Harrington HOF Rep
District XI – C. Bower VP – Bruce Nelson HOF Rep (not voted in 4 years)
Past president Don Lowe has requested removal from the committee, the chairman feels it is time to honor his request.

It was moved, seconded, and approved by unanimous acclamation to accept the recommendation of the AMA National Model Aviation Hall of Fame Committee as presented July 16, 2016.

There was a brief discussion on the selection process. Suggestions included allowing the Executive Council to select additional winners; selecting “teams” in addition to individuals; allowing Council to make additional selection(s) from the list of non-winners; and the committee chairman should contact all committee members prior to the selection process and determine if they are still willing to participate in the process. The ED noted it is an enormous task to review all the applications received. The President reiterated that VP’s need to ensure their district representative is willing to participate in the selection process and if they do not want to continue, to appoint a new individual. An Ad hoc committee was created by the President to review the HOF selection process; the chairman is M. Radcliff. A report should be given at October meeting.

Club Legal Defense (Appendix)

A District VP would like to help a club receive assistance from this fund; the President asked that more information be submitted.

J. Tiller reviewed the changes to the current policy. These included the composition of the committee and who appoints it; a general recommendation that the club be responsible for at least 50% of its own legal defense; the club has to be involved in their own legal defense; funds will not be allocated if the case falls under coverage of AMA insurance or if the litigation has issues that involve legal action with the AMA itself and the allocated funds will be paid to the clubs’ legal counsel. AMA or it’s legal counsel will review the outcome of the legal action including the billing statements. The results will be presented to the EC at a regular meeting. There is a cap on the amount a single club can receive; this will not exceed 80% of one year’s budget of the fund. Felix Gora explained that club expenditure requests will vary depending on the geographical location of the club. As there are numerous changes to the policy, the exact wording for all changes can be found in the appendix which is attached to these minutes.

MOTION III: Moved by R. Cameron (VI) and seconded by J. Tiller (IX) to accept the changes to the Club Legal Defense Fund Policy as presented July 16, 2016. Current cases do not fall under this policy change.
MOTION passed unanimously.

Marketing

G. Fitch presented a proposal for an event called Spaceport America Drone Summit 2016 which was submitted by Spaceport America (which is owned by the state of New Mexico). The FAA told the organizers the event must be sanctioned by the AMA. Tony Stillman and Jim Tiller recently visited the site and spoke with some of the organizers; they are of the opinion Council should consider some level of involvement. An MOU is expected to be developed by August 11, after which time Tiller feels he could present a budget for approval in a conference call.

Discussion included:
• Site is about an hour drive from Truth or Consequences, NM
• Site has a full functioning 12,000’ runway and airport with fire station
• AMA membership would be required to participate in all flying events
• They would like AMA to give 1 or 2 seminars
• Spaceport America stated their marketing potential is huge in the state
• Hotels are 35-40 miles from the site; primitive camping would be allowed on the secured site
• The event has the potential to become very large but may not be the first year
• Spaceport America has committed to some funding to get Stillman and Tiller there but AMA will need to commit to some level of financial support
• AMA will need to commit to marketing the event in our magazine and media outlets
• The MOU must outline who is responsible for what and the financial commitments of all parties involved
• Since they need the AMA to hold this event, AMA should negotiate terms so it does not realize any financial loss
• The simulator trailer and some HQ staff would need to attend

It was moved, seconded, and approved by majority acclamation to change the fall Executive Council meeting to October 29-30, 2016.

NOTE: Subsequent to this meeting, the date of the fall Executive Council meeting was voted on and returned to November 11-12, 2016 by majority vote.

Fitch reported on membership numbers as of July 11, 2016. Overall open/adult membership are up to 76,450, of which 15,974 are new members. Seniors are up 471 members to 49,890; Park Pilot members are up 495 to 2,326; Youth members up 6,876 to 54,668 (35-40% of youth memberships are attributed to our relationship with EAA). Overall memberships are up 9,089 to 188,862 or 5% over this time last year. Best Buy program accounts for 987 new members since December. New members from trackable print and digital media advertising are 5,900; Google advertising continues to lead the way with a total of 10,463 members at an acquisition cost of $6.37/each.

The hobby shop program added 40 new shops this year; as this program begins under the new dealer incentive it is hoped that we will see an increase in new AMA memberships. AMA’s relationship with EAA continues to flourish; EAA realized 150 new members from the push email sent to AMA members; EAA’s offer to their members to buy a specially priced sportsman RC aircraft and get a free AMA membership resulted in 52 new members for AMA. EAA’s AirVenture is an example of the EAA/AMA relationship; AMA will be represented at six different stations including RC flying for the second year. Council viewed a short video produced by AMA that features Scott Huff.

Fitch also reported there will be a new Member Guide to educate members on the benefits of AMA membership; this will be included in the membership kit received by all of our paid members.

8. Old Business

FAA Update

Hanson updated Council on issues AMA has faced since last December; registration, the FAA Reauthorization Bill, final rule for small UAS; the petition AMA had before the court of appeals on the Interpretive Rule; the House Bill and the Senate Bill.

Interpretive Rule – the rule left it unclear whether we could continue to use model aircraft as a teaching tool for STEM curriculum. That was resolved in May at the FAA Symposium where administrator Huerta announced as long as the educational institution itself was not operating the model aircraft and the aircraft wasn’t being used for a research and development project, being used by the student as a teaching tool could be done under the hobby rule.

The 400-foot issue – this issue comes up weekly, if not daily at AMA HQ. We have made it a point to tell our members that the 400-foot limit is a guideline. A guideline that AMA supports and believes that when there is no reason to go above 400 feet the model should remain below 400 feet. There are modeling activities that need to go above 400 feet (soaring for instance) and others that have to go above that to operate safely (IMAC-size aircraft, turbine aircraft, and when teaching students so they have time to recover if control is lost.) The FAA has always said that under Part 336 there is no restriction and we could set our own rules for altitude, we asked them to provide something on FAA letterhead that would clarify that. AMA has received a letter on FAA letterhead, signed by Earl Lawrence the Director of the Unmanned Aircraft Systems Integration Office, that supports the concept that under Part 336 you can operate by AMA’s rules. (The Executive Director will contact CLS to determine the best means to promote this letter, to our membership and outside of our membership. It will also be placed in Drop Box.)

Another issue that came up out of the registration is our large model aircraft program. Part 47 that requires registration talks about 55 lbs. and under and is mute on the issue of model aircraft over 55 lbs. A solution could be that AMA apply for an exemption to Part 47 for large model aircraft. The exemption process is designed for the petition of a system by which you are achieving an equivalent level of safety through an alternate means; Hanson will investigate this option.

Small UAS rule – The small UAS rule was finalized June 21; the hobbyist, as well as the hobby industry can operate under the hobby rules.

Part 107 – In the proposed rule, you had to be 17 years old or older to operate under Part 107; they have since conceded to change that age to 16 years old. Also in the proposed rule the altitude limit for Part 107 was set at 500 feet; everywhere else they mentioned it at 400 feet; in the final rule they brought it back to 400 feet. The biggest takeaway from Part 107 is it finally codifies the way we operate under 336. As long as you operate in accordance with all the criteria in 336 to include operating in accordance with the safety guidelines and within the safety programming of a community based organization, you are no longer required to operate under Part 107; but you must meet all the requirements of 336.

Hanson noted there is still internal work to be done to harmonize the AMA Safety Code with 336. AMA may need to look at safety guidelines for people who will be flying above 400 feet routinely, some way of showing they have some additional skill or knowledge validation. We will continue to monitor what Congress is doing with the Reauthorization Bill.

9. New Business

Award of Recognition

A motion was made to create an AMA award, known as the “AMA Award of Recognition”. This award shall be for presentation to deserving individuals or organizations that have made significant contribution to: AMA, an AMA club, education, the US military, charities, the community at large, or other deserving acts, deeds or service. The award shall be at the discretion of any AMA District Vice President, and shall consist of a printed certificate.

Current AMA awards, such as the District Service Award, are not applicable for this type of recognition. Clubs and members have made requests to recognize individuals for local and/or club contributions.

It was moved, seconded, and approved by acclamation to accept the proposal and create the AMA Award of Recognition.

Executive Session

AWARDS
Distinguished Service – Blaine Kearney (Jesky, Dist VII) The award was approved by acclamation.
 
NEXT MEETING
November 11-12, 2016 Muncie, IN
 
The meeting adjourned at 6:20 p.m.