President's Report September 30

F R E N C H M A N ’ S C R E E K , I N C .

President’s Report

Norman Barham, President

September 30, 2020—Issue 8

Dear Members: As we say every fall...where did the summer go? If you have been watching the news, you know that the coronavirus hasn't taken any vacation time at all. As Frenchman's Creek members scattered to their northern quarantine (or stayed put in Frenchman’s Creek), please know that your Board of Governors was very busy. A scheduled July 23rd ZOOM Board meeting was preceded by a July 1st Emergency meeting, followed by an unscheduled August 20th meeting. In addition, an unprecedented (to use a very over-used word in these unprecedented times) open-to-the-community Board Retreat (normally held off-premises) was held on September 17th. The annual retreat is used as a planning and idea session for the future and typically lasts a day and a half. This year's retreat was a 5-hour ZOOM meeting and that was really tough on the eyes! Topics covered that morning-into-afternoon includ- ed the Clubhouse project, COVID-19 protocols, Lot Development Proposals and Future Planning ideas (summarized below).

FINANCIAL MATTERS (Jonathan Nelson, Treasurer and Finance Committee Chair): At the time of the July Board meeting, Treasurer Jonathan Nelson was reporting pos- itive financials. COVID-19 was continuing to impact all aspects of the community; with pandemic-related expenses reaching over $133K for the first 2 months of the fiscal year. Expenses related to the pandemic totaled over $246K for the first 3 months with $112K in July alone. Additional unbudgeted items in- clude the testing of employees, masks, sani- tizer, touch-less faucets and soap dispensers as well as additional labor involved in clean- ing and food delivery. Because more peo- ple stayed in FC in June, Main Club Food & Beverage revenue (mostly in take-out) fin- ished the month higher than budget. The Beach Club, scheduled to be closed for most of June (and budgeted accordingly), remained open and also ended the month

in positive territory. Golf-related revenue was also impacted by both the pandemic and the high- er-than-normal June occupancy rate. Golf shop sales doubled the budget but non-member and guest fees dropped. Most overhead depart- ments had favorable variances due to the con- tinuing cost saving measures put in place at the beginning of the pandemic. HOME SALES: Sales continue to be robust and we are in line with this time last year with 12 sales closed and 5 additional sales pending; all with closing dates by October 30th.

Report Continues on Page 2

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COMMITTEE REPORTS PROPERTY DEVELOPMENT AD HOC COMMITTEE (Larry Kleinberg, Chair): Larry Kleinberg, reported that several meet- ings have been held; the Board decided that due to the importance of the information pre- sented, another meeting should be scheduled for the fall to give the Board more time to dis- cuss and consider the matter. Dr. Friedman provided an update and sev- eral rules were recommended and adopted. As conditions change, the Medical Committee and the Board will continue to provide updates to the community. We are looking into how re- cent changes announced by Governor De- Santis and the local Mayors will effect us at Frenchman's Creek. (See also the RESTRICTIONS REMINDER you received via email on Septem- ber 7 & 24, 2020 with rules for Returning Mem- bers). An Emergency Board meeting was held on July 1st via ZOOM and in-person. The purpose of that meeting was to implement rule modifi- cations after a second member tested positive for COVID-19. It was decided to add an August 23rd ZOOM meeting to the Board schedule. Three months into our fiscal year and approximately 40 days away from the end of summer, the lingering pandemic continued to impact the community. All methods used to keep the Clubhouse and Recreational facilities clean and sanitized remained in place with daily dis- infecting, fogging and using Ultraviolet lighting. While we are hopeful that the pandemic will soon show signs of easing, we continue to be steadfast in our efforts to achieve operational goals, provide you with the highest quality ser- vice and maintain the FC philosophy and standards of excellence. Highlights of that meeting are summarized below. MEDICAL ADVISORY COMMITTEE (Dr. Stuart Friedman, Chair):

AUDIT COMMITTEE (Eric Wolf, Chair): The Audit Committee met in August; the chairman's report is attached (see page 4). It was a great AUDIT and we thank Eric Wolf, the Audit committee and Jonathan Nelson for an excellent job of keeping our financial house in order. The auditor's analysis of key financial statement metrics indicate that the club “... performs better than similarly situated clubs in South Florida.” We are in excellent fiscal shape!! CLUBHOUSE OVERSIGHT COMMITTEE (Michael Azeez, Chair): Michael Azeez, Chair thanked his commit- tee members for interfacing effectively with the appointed Subcommittees and stated that a lot of work has been accomplished. He provid- ed a report on the status of each Subcommit- tee: • New Clubhouse Subcommittee (Herbert Selzer, Chair): Considering designs to meet the needs of the community (i.e., size and functionality) . • Renovation Subcommittee (Martin Cohen, Chair): Looking at redesigns and renovating the existing space; adding several different aspects. • Lifestyle Center Subcommittee (Jeff Glaz- er, Chair): Preliminary designs are now be- ing costed out. • Temporary Facilities Subcommittee (Brett Handler, Chair): Considering different alter- natives and the potential need for trailers and/or tents. • Palm Beach Gardens Planning & Building Department: Currently resolving a few issues regarding the site plan. The Building Project Committees have been actively working hard and progressing toward a November presentation to the community for a vote for either a new building or a major reno- vation. At that time the community will be able

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to have all their questions answered via ZOOM. Details will be communicated soon, including financing plans, member costs, floor plans, temporary facilities, etc. After the November vote the Oversight Committee will be disbanded and construc- tion/implementation and interior design groups will be formed. GOVERNANCE & LEGAL COMMITTEE (Jane Feinstein, Governance Chair & Peter Berkley, Legal Chair) These committees have been working dili- gently for months on updating/redrafting the By-Laws and Declaration. This is a huge job which hasn't been done in many years. These revised Governing Documents will be present- ed to the community for a vote soon. Fred Corvo reported on the work being done to enhance our perimeter security. The majority of the work has been completed, in- cluding our camera network and designing so- lutions which strengthen our security profile. Security remains in close contact with local law enforcement agencies and our security staff has been placed on high alert in light of recent vehicle and home burglaries in neighboring communities. Residents of Frenchman’s Creek are being asked to take all necessary precau- tions by being proactive: keep your vehicles and homes locked at all times and never leave keys in your vehicles. When you leave your house or retire for the evening, lock your doors and set your alarms. Outbound resident lanes will continue to be closed at 10:00PM each evening and all homes in the community will be inspected to be sure that garage doors are closed. Officers will continue to patrol our perimeter for high visibility from 10:00PM to 6:00AM every night. SECURITY COMMITTEE (Frank Spitalny, Chair—Fred Corvo, Director):

BOARD RETREAT September 17, 2020

As noted, historically the annual Board Re- treat is held off-campus. In light of COVID re- lated restrictions, a 5-hour ZOOM webinar was scheduled instead. A notice of a Board Re- treat Workshop was posted on September 14, 2020, and a mass email was sent to the membership each day until September 17th. The retreat is an informal, discussion only Board workshop for the purpose of future plan- ning. Members of the community were invit- ed to listen in on the Board Workshop via ZOOM Webinar in a “listen only” link. Agenda items included Board Member introductions, the Clubhouse Project, COVID-19 Protocols (Jupiter Medical Center testing) and Real Es- tate (Lot Development Proposals), Club Future and Operations Review/ Audit. The missing key component of the usual Board Retreat was the social aspect; Board members usually get to meet informally and get to know each bet- ter in the off-campus setting; an integral part of this annual meeting. FINAL THOUGHTS And finally, a few thank you’s are in order: Thank you to Chef Ernesto and his staff for their continuing creativity and hard work in keeping the community fed so deliciously! And a special thank you to our manage- ment team who continue to do an amazing and above and beyond job of meeting the moment. Mr. Goswami and Mr. Polselli and their staff have been doing a magnificent job taking such devoted care of us in these chal- lenging and difficult days! Carole and I will be back in Frenchman's Creek in early October and we look forward to seeing you all around the Food Trucks (after our quarantine, of course!). And please, please STAY WELL!!!

Sincerely, Norman Barham, President

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LETTER FROM ERIC WOLF, AUDIT COMMITTEE CHAIR

TO JONATHAN NELSON, TREASURER

As you will recall, at our Audit Committee meeting in August, we had detailed discussions with the team from RSM regarding the audit of the financial Statements for the year ended April 30, 2020. In addi- tion to this discussion, we asked RSM to provide us with a document summarizing their findings regarding the audit. Attached is the document they have given us. Pursuant to your request, I am happy to provide my comments regarding their findings, as well as comments regarding the work of RSM (and in addition, the Auditors for the Qualified Retirement Plan), and our internal Accounting Department. As to the RSM document, I would state that their findings are uniformly positive. The audit resulted in a clean, unmodified audit opinion. Their analysis of key financial statement metrics show the Club to perform better than similarly situated Clubs in Florida. Their work found no uncorrected misstatements, no disagreements with management, no unusual transactions, no difficulties in performing the audit, no man- agement letter comments noting internal issues, and no significant deficiencies or material weaknesses in internal control. Their findings regarding their analysis of various areas of "Audit Risk" report no noted issues in the evaluation of Cash, Accounts Receivable, Fixed Assets, Inventory, Accounts Payable and Expenses, Debt & Capital Leases, Revenue, Payroll, Dues and Fees collected in advance, Deferred Compensation, Equity, Legal, and Management Override of Controls. In my experience serving on Audit Committees, both with the Club and other entities, I believe this report is exemplary, and our in-person (via Zoom) discussions with the Auditors certainly re-enforced my view. At the start of the audit process, I think the Audit Committee had some concerns as to how things would go this year. While Covid-19 required all of us to adapt to a more "virtual" audit experience, we were pleased that this was very much a non-issue for the auditors and our finance group. Because we have relatively advanced internal financial systems, the auditors had access to all documentation and records remotely. This has been in place for several years, and both the Auditors and our staff found it to be a seamless process. We also were alert to risks that may have arisen due to staffing changes, both with the Auditors and our staff. The RSM partner who had handled our Audit for many years retired, and one of their experi- enced staff who had previously worked on our audit left RSM. In addition, our Controller left the Club just as the Audit was starting, and a new Controller was hired from outside. In my view, these matters turned out to be non-events. The RSM partner who took over is not only a very experienced partner, but also RSM's National Director of their Club and Hospitality practice. The ex- perienced staff member was replaced by two much more senior professionals from that same group. Our new Controller also performed at a high level. Each of them expressed to the Audit Commit- tee that there were no issues in the transition, and they believe they worked together very well. We had a similar experience this year with the audit of the Club's retirement plan. The auditors ex- pressed that everything thing went well, they noted no difficulties or deficiencies, and that our approach of utilizing our Third Party Administrator, Investment Advisors, and Fiduciary to work with our management team compared most favorably with other clients. I have heard from each member of the Audit Committee that they are pleased with the work done by our financial department and external auditors. Please let me know if you have any questions or comments.

Best regards, Eric Wolf