March 8, 2006

The following document is not a final copy and is currently under discussion and subject to revisions.

Administering the New Town of Columbia

"A Cooperative Endeavor"

Approved: September 14, 2000

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Executive Summary Section 1 - Introduction 1.1 - Mission Statement 1.2 - Background 1.3 - Definitions/Abbreviations Section 2 - Roles / Responsibilities 2.1 2.2 2.3 2.4 2.4.1 2.4.2 2.5 Corporate Directors (General) Columbia Council Representatives Community Associations Sole Responsibilities - Community Associations - CA Joint/Shared Responsibilities

Section 3 - Enabling the Cooperative Partnership Section 4 - Assessing Accomplishments Section 5

r Funding

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Executive Summary
The purpose of this document is to establish in writing the basis for a cooperative relationship between the Columbia Association and the ten Community Associations in Columbia. The document describes the various roles and responsibilities of each party. In particular, three joint/shared responsibilities are discussed: Covenants, Civic Activities, and Operation/Maintenance/Development of Community Facilities and Services. These joint/shared responsibilities provide the rationale for why the Columbia Association provides resources (both facilities and money) to the ten Community Associations. This document describes the ideal relationship between the Columbia Association and the Community Associations as a cooperative endeavor dedicated to best providing for the common good and social welfare of the people of Columbia. The document stresses the importance of mutual respect, willingness to work together and effective communication as crucial to the success of a cooperative endeavor. The document recognizes that any provision of funding must be matched by a responsibility to report on how the resources are used to fulfill the joint/shared responsibilities. The highlights of this document include to: 1. Provide an understanding of legal responsibilities of Boards of Directors in the State of Maryland, in particular, the two primary obligations (duties): a Duty of Care and a Duty of Loyalty. 2. Provide an acknowledgment that each Board of Directors has unique responsibilities, which cannot be delegated to another body. 3. Provide an understanding of the roles of the Columbia Council Representatives, the Boards of Directors of the ten Community Associations, and their joint/shared responsibilities. 4. Request the establishment of a standing CA/Village Commit-tee to replace the Village Relations Task Force. 5. Request that the Boards of Directors of all parties meet at least annually. 6. Require each Columbia Community Association to: maintain a cash reserve, remain non-profit, maintain an active covenant enforcement process, and provide all required reports to the Columbia Association in timely manner. 7. Identify the resources that the Columbia Association will need to provide to enable the relationship to succeed.

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Require each Community Association to report on Covenants, Financial Matters, and Provision of Community Activities/Services/Facilities. 9. Require an independent audit of each Community Association be completed at least once every three years. 10.Require the Columbia Council and the Board of Directors of a Community Association to meet, at agreed upon intervals, for a review and discussion of the relationship. This document should be reviewed on a five- (5) year schedule jointly by the Columbia Association and the Community Associations.

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Section 1 - Introduction
1.1 - Mission Statement The Village Relationship Task Force was formed, under the auspices of the Columbia Association (CA) and the ten Community Associations, for the purpose of improving the working relationships of the Community Associations and CA. The Task Force was comprised of representatives from the Community Associations and CA. The Community Associations and CA have, as their utmost responsibility, the promotion of the common good and social welfare of the people of Columbia. Establishing and maintaining close working relations that are meaningful, respectful, and based upon mutual trust are essential to the overall success of the community. The Task Force was charged with developing a plan for improving and fostering good working relationships among the Community Associations and CA using five initial identified goals. These goals include, but are not limited to: 1. Defining roles and responsibilities, including those exclusive and joint/shared; 2. Improving communications, with emphasis on responsiveness and timeliness; 3. Refining the budgeting/reporting mechanisms; 4. Defining measures of success; and 5. Reviewing and revising the Village/CA Management Contract and other relevant documents. Specific areas of concern included strengthening covenant policy, the-operation and maintenance of community facilities and services, and Community Association allocations. Maintaining effective working relationships is a continuous process. As part of this process, the Task Force served to foster understanding and good will between the Community Associations and CA as each party exercises their respective duties and responsibilities in administering the new town of Columbia. 1.2 - Background

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The new town of Columbia is situated on 14,500 acres of land in Howard County, Maryland. James Rouse founded it in 1967. The town of Columbia is not an incorporated city. In designing Columbia, James Rouse created two structures to administer the city, Community Associations and the Columbia Parks and Recreation Association (CPRA). Both structures jointly share responsibility for the administration of Columbia. As of the creation of this document, there are 10 Community Associations in the town of Columbia. DS HC HR KC LR OM OB RH TC WL Dorsey's Search Harper's Choice Hickory Ridge Kings Contrivance Long Reach Oakland Mills Owen Brown River Hill Town Center Wilde Lake

Each Community Association is an independent, nonprofit community service corporation chartered under the laws of the State of Maryland. Each Community Association has Articles of Incorporation and By-laws, which define its powers and duties. To be a member of a particular Community Association, one must either own land or rent property, which is subject to that Community Association's Covenants document. It should be noted that both Kings Contrivance and River Hill have modified documents so that membership in their respective Community Association is open to all residents 18 years or older. A Board of Directors runs each Community Association. An officer, known as the Village Manager, handles the day to day affairs of the Community Association. The Board of Directors of each Community Association appoints the Village Manager. In addition, each Community Association is entitled to elect one representative to the Columbia Council. In addition to the 10 Community Associations, the new town of Columbia also has the Columbia Association (formerly known as the Columbia Parks and Recreation Association, or CPRA). The Columbia Association is also an independent, nonprofit, community service corporation chartered under the laws of the State of Maryland. Its Charter and By-laws are separate from the Community Associations. A Board of Directors also oversees the operation of the Columbia Association. The Columbia Association Board of Directors consists of the 10 Columbia Council Representatives plus the President of the Columbia Association (as an ex-officio
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member). The CA Board of Directors chooses the President and other Officers of CA. A unique feature of the Columbia Association is that the only members of the association are the Columbia Council Representatives. In designing the structure for Columbia, the Rouse Company chose not to have each property owner/renter be a member of CPRA. Instead, property owners/renters are members of Community Associations. As members of a Community Association, they are entitled to elect the Columbia Council Representative (who then becomes a member of CPRA). Columbia Council Representatives, as members of CPRA, are entitled to elect the people who will serve on the CA Board of Directors. Through this process, the Board of Directors of CA and the Boards of Directors of the Community Associations are accountable to the members of the Community Associations. In terms of administering Columbia, the key officials are the Boards of Directors and Village Manager of each community association and the Columbia Council Representatives (also serving as the CA Board of Directors) and the Officers of the Columbia Association. Due to overlapping charters of the eleven associations and the fact that each association is an independent entity under Maryland law, a cooperative endeavor between and among the various Community Associations and the Columbia Association is necessary to ensure the successful administration of Columbia. It should be noted that neither the Columbia Association nor the community associations are political entities. They are independent not-for-profit corporations.

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1.3 - Definitions/Abbreviations The following terms / abbreviations are used in this document: CA = the Columbia Association CA Board = the Board of Directors of CA Columbia Council = the entity composed of the ten representatives elected from the Community Associations Columbia = all land within Howard County, Maryland subject to the CPRA Covenants the Columbia Parks and Recreation CPRA = Association, the former name of CA HRD = Howard Research & Development Corporation Partnership = as used in this document, partnership is an association of two or more independent entities working in concordance to provide a service / enterprise. It is not intended to signify the creation of a new legal entity. Village = a Community Association Village Board = the Board of Directors of a Community Association

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Section 2 - Roles / Responsibilities

In implementing a cooperative partnership, it is important to state clearly the roles/responsibilities of each party. Since administration of Columbia is split between the Community Associations and CA, the roles and responsibilities have the potential to overlap. This section will discuss the roles of the Boards of Directors of Community Associations, the roles of the CA Board of Directors, sole responsibilities, and then joint responsibilities. It should be noted that this section deals with the Columbia Council Representatives since they appoint the CA Board of Directors. Similarly, the Village Board roles were chosen since they appoint the Village Manager. 2.1 - Corporate Director (General) As previously stated, all eleven associations are nonprofit corporations chartered under Maryland law. Each is governed by a Board of Directors. The Board of Directors, as the governing body of a Corporation, has the responsibility and the authority to direct the Corporation. Only the Board of Directors or duly authorized Officers or representatives may legally obligate the Corporation. Maryland law specifies certain general responsibilities and duties of a corporate director for any non-profit corporation. These responsibilities and duties apply equally to the Village Boards and the CA Board of Directors. It is important that a corporate director understand his or her responsibilities and duties under Maryland law. The principal responsibility of a corporate director is to promote the best interests of the corporation in directing the corporation's business and affairs. The corporate directors carry out this responsibility by overseeing the management of the corporation with the following actions: approve fundamental operating, financial, and other corporate plans, goals, objectives, and strategies; evaluate the performance of the corporation and its senior management; select, regularly evaluate and fix the compensation package of senior management; and

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adopt policies of corporate conduct, including compliance with applicable laws and regulations, and maintenance of accounting, financial and other controls.

In order to be effective and meet legal obligations, corporate directors should be satisfied that there is timely reporting on: current business and financial performance and the degree of achievement of approved objectives; financial statements; compliance with law and corporate policies; and

material litigation and regulatory matters. Corporate directors should also be satisfied that the: corporation's disclosure documents present all material information fairly and accurately; corporation's policies comply with applicable laws and regulations; corporation has effective systems in place for approval of commitments of the corporation's resources; corporation maintains an adequate system of internal controls; corporation maintains an adequate program for the protection of the corporation's assets; and corporation provides board members competent legal advice (as required) regarding the corporation's affairs and the conduct of its corporate directors. In carrying out their functions, corporate directors are subject to two primary obligations (duties): a Duty of Care and a Duty of Loyalty. The Duty of Care requires a corporate director to participate in the decisions of the board of directors and to be informed as to data relevant to such decisions. Basically, the Duty of Care requires a corporate director: to be reasonably informed;

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 to participate in decisions (to include regular attendance at meetings and to exercise independent judgment on all corporate matters); and to participate in the affairs of the corporation in good faith and with the care of an ordinarily prudent person in similar circumstances. The Duty of Loyalty requires corporate directors to exercise their powers in the interest of the corporation, not in their own interest or the interest of another entity or person. Corporate directors must disclose any conflicts of interest and act with candor and care in dealing with any such situations. The Board of Directors of a corporation does not operate the day to day business of the corporation. It delegates that function to other people such as senior staff. However, the Board of Directors must set policies and oversee the corporate agents/senior staff.

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2.2 - Columbia Council Representatives (CA Board of Directors) A member of the Columbia Council represents the members of a particular Community Association and is a non-voting ex-officio member of the Board of Directors of that particular Community Association. The representative is also a member of the CA Board of Directors. The roles of a representative can be grouped into the following categories (in alphabetical order). 1. Advocacy exercise community leadership balancing village needs in the context of total community requirements represent Columbia/CA before various boards / commissions / organizations such as the County, State, and HRD support Community Association advocacy efforts be a positive image maker for CA 2. Assistance to Community Association empower Community Associations to allow them to perform their duties assist Community Associations in the operation, maintenance, and development of community facilities assist Community Associations in the development, operation, and maintenance of community services assist Community Associations in the covenant enforcement process 3. Sponsorship of Civic Activities sponsor activities and programs which enhance the sense of community 4. Oversight of the Columbia Association (in capacity as CA Board Member) develop policy and set strategic direction hire the President and other Officers, measure performance and hold accountable for results maintain oversight/responsibility for CA property maintain oversight/responsibility for CA fiscal matters maintain oversight/responsibility for CA contracts These duties/roles/responsibilities are based upon the Charter of the Columbia Association (equivalent to the Articles of Incorporation). The Charter states

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"...The purposes for which the Corporation is formed are as follows: To organize and operate a civic organization which shall not be organized or operated for profit, but which shall be organized and operated exclusively for the promotion of the common good and social welfare of the people of the community of Columbia and its environs... The Corporation shall have no members other than the Columbia Council Representatives, as hereinafter defined, and no part of the net earnings of the Corporation shall at any time in any manner inure to the benefit of any member, director, or individual. No substantial part of the activities of the Corporation shall consist of carrying on propaganda or otherwise attempting to influence legislation... nor shall it in any manner or to any extent participate in or intervene in (including the publishing or distribution of tatements) any political campaign on behalf of any candidate for public office; nor shall the Corporation engage in any activities that are unlawful under applicable Federal, state, or local laws."

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2.3 - Community Associations Boards of Directors of Community Associations are focused upon their particular Community Association. Their roles can be grouped into the following categories (in alphabetical order): 1. Advocacy represent the community before various boards / commissions / organizations such as the Columbia Association, County, State, and HRD request/propose changes to enhance the community (such areas as transportation, education, safety, environment, and civic issues) develop policy for the Community Association 2. Assistance to the Columbia Association assist CA in the operation, maintenance, and development of community facilities assist CA in the development, operation, and maintenance of community services provide input to CA regarding CA policies, plans, budgets, etc. 3. Covenants develop covenant enforcement process for Community Association oversee covenant enforcement process provide for volunteer participation in the covenant enforcement process 4. Oversight/responsibility oversee Community Association oversee Community Association oversee Community Association oversee Community Association oversee Community Association property fiscal matters contracts officials policy development

5. Oversight of Election of the Columbia Council Representative develop and supervise the election process resolve elections disputes/problems 6. Referral and Communication provide referral services for community provide information to the community (through such vehicles as newsletter, Web site, etc.) acquire information from the community
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7. Sponsorship of Civic Activities to Enhance Sense of Community offer classes and programs for the community offer special activities and events for the community Where do these roles/responsibilities come from? Most are based upon the Articles of Incorporation for a Community Association. As an example, consider the Articles of Incorporation for Harper's Choice Community Association. The following is quoted from this document:

as follows:

"...The purposes for which the Association is formed are

To organize and operate a nonprofit civic organization, which shall be organized and operated exclusively for the promotion of the health, safety, common good, and social welfare of the owners of property in, and the residents of, that area of Columbia, a new town being developed in Howard County, Maryland, by The Howard Research and Development Corporation, a Maryland corporation (hereinafter referred to as "HRD"), known as the Village of Harper's Choice (the "Property")_ For the general purpose aforesaid, and limited to that purpose (hereinafter sometimes referred to as the "Purpose"), the Association shall have the following specific purposes: 1. to do any and all lawful things and acts within its powers, as hereinafter set forth, which the Association from time to time may deem to be appropriate in order . ta benefit, aid, promote and provide for peace, health, safety, convenience, comfort and the general welfare of the owners of property in, and the residents of, the Property; 2. to assist CPRA in the conduct of its activities and performance of its responsibilities relating to the operation, maintenance and development of community facilities and services within Columbia, and particularly that part thereof forming the Property... 3. to provide an organization through which owners of property in, and the residents of, the Property shall be represented, by a member of the Association, on the Columbia Council, an unincorporated association, the membership of which will be composed of representatives of various
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associations in Columbia which have been approved by CPRA, said Council, in turn, being entitled to nominate from among its membership, persons to be elected and serve on the Board of Directors of CPRA, all as provided in the Articles of Incorporation of CPRA; and 4. to operate and maintain any and all property or facilities which it may acquire for the use and benefit of its members. Solely in aid of the Purposes of the Association, the Association shall have the following powers: 6. to make contracts, incur liabilities, and borrow money and to issue bonds, notes, or other obligations and secure the same by mortgage or deed of trust of all or any part of the property, franchise or income owned by the Association and to guarantee the obligations of others in which it may be interested for the furtherance of the Purposes of the Association, 7. to undertake and prepare or cause to be prepared studies, plans, recommendations, budgets and any other similar things (for submission to any public authority, civic group or association, CPRA, or for its own use) which relate to any phase or aspect of the physical, social or cultural development of the Property or Columbia as a whole, and to create or cause to be created, committees and other organizations for the supervision and implementation thereof; 8. to engage in and sponsor civic activities relating to the cultural, educational, social and civic affairs of the owners of property in, or residents of, the Property, or Columbia as a whole, and to appear before and represent its members in of before other civic groups, associations, boards or other like organizations; 9. to sponsor, engage in, conduct and encourage cultural, educational, social and civic and other beneficial activities relating to the Property, or Columbia as a whole; 10.to have and exercise to the extent necessary or desirable for the accomplishment of the aforesaid specific purposes and to the extent that they are not inconsistent with the Purposes of the Association, any and all powers conferred upon corporations of a similar character by the General Laws of the State of Maryland."

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The duties/roles/responsibilities associated with Advocacy, Assistance to CA, Referral and Communication, and Sponsorship of Civic Activities come from the Articles of Incorporation. The duties/roles/responsibilities associated with Covenants come from the Architectural Covenants for each Community Association. The duties / roles / responsibilities for Oversight and Elections come from Maryland State Law, the Articles of Incorporation, and the By-laws for each Community Association.

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2.4 - Sole Responsibilities 2.4.1 - Community Associations A Community Association has the power to do any and all lawful things and acts within its powers (as allowed by the community association documents and Maryland law) which the association may deem appropriate in order to benefit, aid, promote, and provide for the peace, health, safety, convenience, comfort, and general welfare of the members of the association. The Community Association was formed solely to promote the health, safety, and common good and social welfare of the members (owners/renters/residents) of that association: Oversight/supervision of Community Associations By law, Community Association Boards of Directors are responsible for the affairs of their respective corporations. This includes determination of the financial system to be used by the corporation. > Elections Only Community Associations can conduct elections for their board of directors and Columbia Council Representatives. They set the rules and hold elections. Referral and Communication Community Associations have the legal responsibility to inform the members of their corporation about association activities/affairs. 2.4.2 - CA Consistent with the authority set forth in the Amended and Restated Charter of the Columbia Association, Inc. effective May 1, 1991, the Columbia Association has sole authority for managing day-to-day operations responding to/supporting the Council and CA Board of Directors implementing the CA Board's policies and objectives efficiently administering CA resources budgeting, strategic, and financial planning evaluating the effectiveness of programs and activities
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 planning and executing programs providing information to the public maintaining effective relationships

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2.5 - Joint/Shared Responsibilities > Covenants: There are 11 separate Covenant documents in Columbia. Each Community Association has its own Architectural Covenant document while all land in Columbia is also subject to the CPRA (CA) Covenants. Enforce of the covenants (in terms of building and maintenance) is the joint responsibility of CA and each Community Association (as per the legal documents). Authority for enforcement of the Covenants resides in the Covenant document for each Community Association and is unique to that Community Association, along with CA. The CPRA Covenant is concerned with the CPRA assessment, the use of funds, and the use of community facilities. Operation, maintenance, and development of community facilities AND development, operation, and maintenance of community services: CA has an obligation to provide community facilities and services. Each Community Association, as part of its Articles of Incorporation, has a responsibility to assist CA in the development, operation, and maintenance of community facilities and services within Columbia as a whole and in particular, those facilities/services in their respective village. > Civic activities: Both CA and the Community Associations are non-profit civic associations created to provide services to residents of Columbia. Both provide civic activities, either solely or jointly.

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Section 3 - Enabling the Cooperative Partnership

"Partnership", as used in this document, is an association of two or more independent entities working in concordance to provide a service/enterprise. Successful partnerships are composed of entities working together for the common good. The term PARTNERSHIP has been specifically chosen to describe the ideal relationship between CA and the Community Associations. CA and the Community Associations are each independent corporations with significant differences. The most significant difference is in size and scope of the corporations. CA is a multi-million dollar corporation with hundreds of employees, numerous buildings, and other assets; the Community Associations are smaller corporations with very few employees. The scope of Community Association functions is generally smaller than the scope of CA. The primary focus of each Community Association is itself. Due to the disparity in size and scope, care must be taken to prevent adversarial relationships from developing. The autonomy of all eleven Corporations must be recognized and appreciated. It is essential that trust and respect be established among all parties. To enable this cooperative partnership to succeed, several things must occur: 1. Acknowledgment of the independence of each party 2. Mutual respect 3. Understanding the duties/roles/responsibilities of each party 4. Willingness to woik together to benefit Columbia residents 5. Provision of resources to include adequate and stable funding 6. Process for resolving problems/grievances 7. Effective communication Implementation:

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Adoption of this Cooperative Partnership Agreement The adoption of this cooperative partnership concept by all eleven corporations addresses items one through four (as listed on the previous page). This document states the independence of each corporation. It lays out the roles and responsibilities of all parties. It demonstrates a willingness to work together to benefit the residents of Columbia, and it focuses on a mutual respect for all parties. This cooperative partnership is a joint effort between CA and the Community Associations. The adoption of this partnership concept will significantly improve relations between CA and the Community Associations and will demonstrate to the residents of Columbia that all parties can and will work together. Provision of resources The cooperative partnership cannot survive without adequate resources. Resources include money, buildings, and people. The Community Associations do not have the financial resources of CA and so must depend upon CA, to a certain extent, to provide adequate resources to meet the shared responsibilities. CA also has a vested interest in providing resources to ensure that the Community Associations can conduct elections (since the elections involve the Columbia Council Representative) and that the Community Associations provide adequate supervision as required by corporate law. Adequate resources allow all parties to fulfill their responsibilities / obligations as presented in this cooperative partnership document. CA provides community facilities for each Community Association. These facilities are the property of CA. In order to enable this cooperative partnership arrangement, CA grants the Community Associations the right to operate these community facilities. The operation of each facility is governed by a Management Contract negotiated between CA and each Community Association. Funding provided by CA to the Community Associations is of two types: direct to the Community Associations and indirect to the Community Associations. Direct funding is the actual cash given to the Community Associations to operate. Indirect funding includes the money paid by CA for the interest on the funds borrowed to construct the various community facilities and the funds paid by CA to administer its portion of this arrangement. The amount provided for indirect funding is fixed in that CA must repay the funds borrowed and in that CA determines its costs to oversee its
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portion of this arrangement. Direct funding is more flexible than indirect funding and must involve the Community Associations in its determination. Section 5 discuses in greater detail, the direct funding to be provided by CA to each Community Association. Since CA provides both funding and facilities to the Community Associations,it is incumbent upon the Community A 7s"biations to account for theseresnrnes. Section 4 of tnis document discusses accounting for such resources.
c urces In stabi 1 ; ty mu et JDe - addition to adequate res~ provia a . : - e .. ' . ,s the Community Assoc ions to . -te . onsibilities and not to be in c. . Par over fundirig It a lows for long range planning. The adoption of this cooperative partnership arrangement will provide the stability required.

Associa ions o ena.le this c eople p and. the attention o 'a aft. le Communit fiZp implement their portions of this arran.ement. Creation of a Standing CA/Village Committee To address item six, CA and the Community Associations need to create a joint committee, which will meet periodically, to resolve any problems or grievances. The committee should consist of seven members, each of whom serves a one-year term, The CA Vice President of Community Services shall be a member. The Columbia Council shall appoint three members. And three members shall be designated by the Community Associations (one member from a Community Association rotated alphabetically through all ten Community Associations; each Community Association, when its turn for serving on the committee occurs, will determine whom to appoint). > Communication Communication is very important to the cooperative partnership. The Columbia Council/CA Board of Directors and the Community Association Boards of Directors should meet at least annually. Each Community Association should ensure that CA receives a copy of its Board of Directors agendas and minutes. CA should ensure that each Community Association receives a copy of the Columbia Council and the CA Board of Director agendas and.minutes. The use of e-mail
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and Web pages to distribute information is strongly encouraged. All eleven corporations should have a presence on the Web. At times, information to be shared may be considered confidential (including, but not limited to, attorney-client communications, negotiating strategies for contracts, etc.). Sharing this type of information could lead to inappropriate disclosures. All parties to the sharing of this type of information must be aware of their respective responsibilities to protect this information from disclosure.

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Section 4 - Assessing Accomplishments

Success is a relative term and involves assessing accomplishments. The process of assessing accomplishments must be matched to each Community Association. Community Associations are diverse and diversity is good. Each Community Association is unique. Each Community Association determines how best to meet its responsibilities. Community Associations and the services they provide can be different. Assessing accomplishments should involve setting goals. Since each Community Association is unique, each Community Association needs to set goals for itself. Assessing accomplishments would then be done by comparing accomplishments to goals. There are certain goals achieved annually by Community Associations that are acknowledged as being central to the Community Associations' missions. All Community Associations will accomplish these basic goals while maintaining their non-profit status. The Management Contract will outline specific reports to be filed and their timing. > Advocacy: GOAL - offer advocacy services through the Community Association office and the Village Board. Submit an Annual Report to CA detailing the services provided by the Community Association. Accounting, Reporting and Personnel Management: GOAL - provide to CA reports mutually agreed upon through negotiation of the Management Contract.
,

Assure that proper and appropriate accounting and personnel management techniques are employed.

Covenant Compliance: GOAL - offer services of covenant advisor and an architectural committee such as Resident Architectural Committee (RAC) or Executive Architecture committee (EAC). Submit an annual report to CA that includes statistics relating to this function. This report

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may be included in the overall Annual Report. i Information and Referral: GOAL - offer information and referral services through a newsletter, Web sites, or by making available appropriate brochures and press releases at the Community Association office. Offer information and opportunities to newcomers that will allow them easier assimilation into Community Association and Columbia life. Include information on meeting this goal in the Annual Report to CA. Programming and Special Events/Facility Rentals and Leases: GOAL - offer programming, classes, or special events and offer rentals and leases. Offer rates at least 10% lower to assessment payers. Offer opportunities for feedback on services. Submit a Facility Use Report as part of the Annual Report to CA. In addition to these basic goals, each Community Association may, if it so chooses, develop other goals and strategies to implement them. If these other goals are developed, they may be shared with CA. In addition to goals for Community Associations, there are also goals for the Columbia Council/CA. The basic goals for the Columbia Council/CA are as follows: Advocacy GOAL - represent Columbia/CA before various boards / commissions/ organizations such as the County, State, and be a positive image maker for CA. Produce an Annual Report detailing the advocacy efforts of CA during the past year. i Assistance to Community Associations GOAL - offer resources to the Community Associations as specified in this document and the management contracts.

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Produce an Annual Report detailing the resources provided to Community Association by CA during the past year. Civic Activities GOAL - sponsor activities and programs which enhance the sense of community in Columbia. Produce an Annual Report detailing the civic activities/programs offered by CA during the past year. Accounting, Reporting, and Personnel Management GOAL - assure that proper and appropriate accounting and personnel management techniques are employed. Produce quarterly fiscal reports and prepare an end-of-the-year report on CA's fiscal health. At least once every three years, each Community Association will engage the services of an independent auditor and the results will be shared with CA. At agreed upon intervals, the Columbia Council and each Village Board will meet in a special, open meeting to review the Community Association's use of facilities, to review the ways in which the Community Association uses the funds provided by CA, and to discuss other issues of mutual interest.

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Section 5 - Funding
On April 24, 1997, the Columbia Council unanimously approved a new allocation model for funding Community Associations. This allocation model replaced all other models and formed the basis for funding Community Associations. This allocation model resulted from the Village Managers working with CA management to determine a new base figure for funding for each Community Association. This was an extensive process that did a zero-based review of each Community Association's expenses. Previous allocation assumptions were re-examined and new approaches were explored. Common elements among the Community Associations were identified, as were differences in physical plants, demographics, emphases and expectations of Village Boards, income potential, and characteristics of villages and neighborhoods. Based upon this allocation model, CA and the Community Associations agree to the following procedures: 1. In FY-1999 a new baseline figure was established for each Community Association. Each fiscal year after FY-1999, the baseline figure will be adjusted. This adjustment to the Community Association allocations will be tied to CA's annual budget assumption. This number will be provided to the Community Associations by CA staff as early as possible. 2. Community Association budgets will be presented for approval to the appropriate Community Association Board of Directors, who provide fiscal oversight for their Associations. 3. Once approved by the Community Association Board of Directors, the Community Association budget will be submitted to the CA Vice President of Community Services for CA's review and approval, as required by the Management Contract. 4. The Columbia Council will review and approve adjustments to the base allocation for an individual Community Association whenever a major change in Community Association operations occurs (e.g., change in number of facilities, covenant advisor hours, or benefits).

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5. The Community Associations will report various fiscal matters to CA using the charts and reports as specified in the Management Contract. 6. An All-Village Contingency Fund will be established to deal with exceptional needs. An exceptional need is an unanticipated one-time expense. Any change that will be ongoing will require a change in base allocation. 7. The All-Village Contingency Fund will be funded by contributions from the villages. The strong sense of community among the villages is thus both recognized and affirmed. 8. Community Associations must maintain cash reserves. The Community Association limitation on cash reserves will be 18% of previous year's operating expenses. Any excess will be added to the AllVillage Contingency Fund. 9. The All-Village Contingency Fund will be capped at 5% of CA's total Community Association allocation for a given year. Any excess will be returned to the Columbia Association general fund. 10.The All-Village Contingency Fund will be administered by a committee, to meet on an ad hoc basis. A Community Association applying for a grant from the Fund must justify its need to the committee. a) The CA Vice President of Community Services, three Village Managers and one Columbia Council Representative will make up the committee. b) Committee membership will rotate annually among the Community Associations. In a year in which the petitioning Community Association has a member serving on the committee, that member will be replaced by a representative from the next Community Association in the rotation. c) The full committee will constitute a quorum. Decision will be by majority vote. d) The CA Vice President of Community Services will be responsible for maintaining the records for the fund. The fund will be exempt from any administration fee and CA fiscal process.
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11. A Community Association may request additional funds from CA, but CA is not obligated to fund the request. Since CA has the ability to borrow large sums of money and due to the fact that CA owns the community facilities, CA will cover capital costs for community facilities. Such costs must be approved as part of CA's Capital Budget. To finance construction of community facilities, CA has issued bonds. In issuing these bonds, CA has entered into a Trust Agreement which places certain restrictions (such as reserve requirements, ability to create liens on facilities, etc.) upon CA. The Columbia Association is bound by the terms of a Trust Agreement, dated 30 January 1973, as amended, under which the Columbia Association has issued approximately $80 Million dollars (as of August 2000) of its bonds to finance community facilities. CA not approve any request that contradicts the terms of this Trust Agreement.

will

Funding solutions must be addressed to account for personnel changes which tool effect July 1, 1999 and the outcome of the Village compensation study to be completed in the Fall of 2000. This allocation model allows each Community Association to be adequately funded to achieve the goals of the Management Contract between the Association and CA. It allows each Community Association to achieve the community service objectives in its own documents and in CA's mission statement. Through this allocation model the diversity of the community centers and of Community Associations themselves is acknowledged and celebrated. The allocation model will be reviewed periodically as this document is reviewed {every five years).

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