Present were Board Members President Roger Hirschland, Treasurer Joseph Morris, Secretary Elizabeth VanderPutten, Vice President Dwight Clark, Vice President John Filice and a sufficient number of owners in person or represented by proxy (45.2610%) to constitute a quorum. Also present at the meeting were Property Manager Walter Krolman; legal counsel Joe Douglass from the firm of Whiteford, Taylor, Preston; and Larry Simmons, president of the Simmons Management Group.

HVAC - The President discussed the situation of the HVAC system. The board appointed a committee of Brian Larkin, Dwight Clark, and John Filice. Based on previous surveys and studies, it is clear that the HVAC Whalen units need to be replaced. The committee reviewed several options and concluded that the most cost effective approach was to replace the current system with a similar system. The board did not want to have to levy a special assessment now or in the future or to borrow the $2 million for the HVAC replacement. They asked owner and former board member Brian Larkin, an economist, to develop a plan that could pay for the replacement by increasing condo fees and spreading payments over a period of years. In order to extend the life of the current units, the board arranged for the sealing of condensation pans in the current units, which has been accomplished. Starting with the 2007 budget, a special HVAC reserve account has been established. This will allow the Lauren to replace the units when necessary necessary-in an estimated six to seven years-without having to collect a special assessment or to totally deplete the reserves below $500,000 at any time.

Tax Issues - There have been some D.C. tax issues that needed to be resolved, including lost payments and payments credited to other accounts. Only $1,200 remains to be resolved, and the manager is in communication with the D.C. tax office regarding the matter.

Emergency Preparedness - The President reminded the owners of the PEPCO transformer failure outside the building in February. Since then, the Lauren has acquired additional flashlights so that if this were to happen again, at least there would be sufficient light for people returning to the building to reach their units. The President reminded owners that it is their responsibility to have appropriate emergency supplies inside their own units.

Water Valve Replacements - The President discussed the need to replace two sets of water valves in the building. The main valves to the building were corroded and could no longer be totally closed. In addition, many of the 17 riser valves that control water in each tier could not be completely closed and needed to be replaced. Since these valves are located inside owners' units on the 10th floor, the board opted to move them at the same time into the hallways where they are always accessible in emergencies. Appropriate notice will be given to owners and residents about impending water shut-offs, as was done when the main valve was replaced.

Redecoration - The President reported that a redecoration committee has been working under the direction of Erin Erlenborn, and includes Barrett Witkin, Dwight Clark, John Filice, and Roger Hirschland. The charge is to develop a plan to update the hallways and elevators within a reasonable budget. The last time the hallways were redone was 1996.

Other Business - The board is conducting a study of how best to replace the boiler to increase efficiency and effectiveness. The bicycle cage has been repaired. There is now upgraded security equipment, including a new camera on the lower level. This will also help the Lauren identify persons who leave discarded heavy equipment or furniture, so it can be removed at the expense of the owner, rather than of the Lauren.

We expected to have the final 2005 audit available for distribution at this meeting, but at the last minute, our auditor informed us that he was missing a necessary balance confirmation statement from one of the banks in which we have CDs, so the audit has not been finalized. We believe it will be completed momentarily; the new board will distribute it as soon as it is available. Because of the problems with unsatisfactory record keeping by our previous management company, the 2006 audit will be delayed for some months. We do not yet have an estimate from our auditor of when the 2006 audit will be delivered.

The graphs distributed summarize the history of the finances of the association. These are updates of the graphs handed out at last year's meeting. The dollar amounts are from the annual audited statements through 2004. 2005 data are from the 2005 draft audit and 2006 data are from the December monthly statement from the financial management company.

The first graph shows the history of operating expenses since 1990. The three components are labor costs, utilities, and everything else.

The second graph shows annual percentage increases in total operating expenses, labor, and utilities. Most noteworthy are the increases in utilities in the past several years: up 11 percent in 2004, 9 percent in 2005, and 14 percent in 2006. The 2007 budget anticipates a small decline in utilities from last year because of reduced gas rates. Total operating expenses are rising faster than inflation-it took 10 years for the Lauren's operating expenses to grow from $500,000 to $600,000, four years to go from $600,000 to $700,000, and just 2 years from $700,000 to $800,000.

2006 was a relatively slow year for capital expenditures (third graph), about $60,000 for various improvements, replacements and engineering studies. The President has described possible upcoming capital expenditures.

The fourth graph shows how the association has been preparing for needed capital expenditures. The graph, labeled "net cash," shows the sum of all our bank account and CD balances, less all amounts currently owed to employees and outside parties. In other words, we could pay all our current bills and have this amount left over. This measure excludes the association's other principal asset (in addition to bank accounts and CDs), which is the Lauren apartment we own.

As the President explained, starting this year we have accelerated contributions to the capital reserve because we anticipate the need to replace all of the in-unit heating and air conditioning equipment from approximately 2013 to 2015. This will be the largest capital project ever undertaken by the association. For planning purposes, we are assuming an expenditure of $2 million over three years.

The bottom graph on the right (to a different scale than the one beside it) shows the plan that the outgoing board developed for paying the HVAC replacement. It will be up to each future board to decide each year whether to stick to this plan. The plan calls for increasing the rate of annual contributions to the reserve fund to build up a fund approaching 2 million dollars in five years, and then drawing down the fund to pay for the HVAC.

Higher contributions to reserves must be paid for with higher condominium fees. In 2006, the contribution to the reserve fund (not including interest) was equal to 16 percent of condominium fee revenue. In 2007, this ratio will be 21 percent and, according to the plan developed by the board, in 2016 the reserve contribution will equal 28 percent of condominium fee revenue.

The graph does not show it, but, to help us monitor progress toward paying for the HVAC, the board has begun to keep track of the capital reserve as two separate accounts, the normal reserve, and the HVAC reserve. The 2007 budget and the monthly treasurer's report at board meetings show the totals in each of these two accounts.

Four serving board members were nominated. In addition, Jeffrey Wertkin was nominated. The nominees were elected by acclamation. The 2007-2008 Board of Directors is:

President Roger Hirschland opened a discussion about smoking inside apartments. The board has received a number of complaints. There are some floors where a number of persons smoke in their apartment and the smoke leaks into adjoining units and the hallways. Minutes of board meetings have reported on this topic.

Some owners, he reported, have suggested that the entire building become smoke free, but that would mean telling people what they cannot do in their own units. According to the Lauren attorney, there are some legal precedents for this and some condominiums have implemented such policies. If the Lauren were to do this, it would probably grandfather current owners who smoke. Our legal counsel advises that it would be best to change the bylaws, rather than having just the board make the policy by decree. Changing the bylaws to prohibit all smoking would require approval by 80 percent of the ownership.

One question dealt with the potential impact on property values, noting that the effect of a nonsmoking policy could be positive or negative. Mr. Hirschland responded that one possible comparison is that of the effect on bars and restaurants in D.C., which became smoke free January 2, 2007. The experience has been generally positive. He also noted that restaurants in California and New York have reported increases in sales since going smoke free. Most of those present expressed agreement. Brian Larkin, who maintains the Lauren Web site, reported that almost all owners who advertise their units for rent include no-smoking notices.

Enforcement is another issue. Are there penalties? How do you handle reporting? Joe Douglass pointed out that there are always people who will violate rules. The kinds of sanctions include possible fines or injunctive relief. That is one reason why the grandfathering of current owners and residents is recommended. The Lauren has in several cases attempted to seal air leaks in affected units, including the use of foam, and installing smoke filters inside smokers' units. No remedy has been successful.

One suggestion was to do a survey of the entire ownership before going through the full process of amendment. Another suggestion was to talk with realtors about their perspective. The President asked for a nonbinding vote to gauge interest in pursuing the matter. Approval for looking into the matter for further action was almost unanimous.

D.C. Property Assessments - Nathalie Peter asked whether others had appealed their assessment. Efficiencies appear to have been assessed higher than the selling prices. No other owners indicated that they had appealed the assessments.