PROPERTY INSURANCE
ASSOCIATION OF LOUISIANA
(PIAL)
BOARD MEETING
FEBRUARY 20, 2008
5555 Hilton Avenue, 3rd Floor
Baton Rouge, Louisiana
1:00 p.m.
2
APPEARANCES:
CHAIRMAN:
Mr. Dennis Cook
EXECUTIVE DIRECTOR:
Mr. Robert Moorman
BOARD MEMBERS:
Ms. Clarissa Preston
Ms. Martietha Brooks
Mr. Bill Lepine
Mr. Paul Hagan
Mr. Joe O'Connor
Mr. Paul Dreher
Mr. William Gourgues
Mr. Ed O'Brien
Mr. Arnold M. Goldberg
ALSO PRESENT:
Mr. A.J. Herbert
Mr. E.L. "Bubba" Henry
3
ANTI-TRUST PREAMBLE
The Property Insurance Association of
Louisiana/Louisiana Joint Reinsurance
Plan/Louisiana Underwriting Plan strives to
conduct all its activities in compliance with
the antitrust laws. The federal antitrust laws
prohibit all agreements which unreasonably
interfere with free and open competition. The
McCarran-Ferguson Act allows the insurance
industry to operate under a limited federal
antitrust exemption, subject to insurance
regulation by the states. With the exception
of acts of boycotts, coercion and intimidation
which are matters saved for federal antitrust
enforcement, the states provide for the
regulation of insurance and enforcement
sanctions. State regulations are administering
the insurance industry in areas such as rates,
unfair trade practices, claims practices,
solvency, as well as others.
The extent of the limited exemption is not well
defined and antitrust concerns are serious
matters, particularly in the area of pricing.
Price fixing and conspiracies to set prices
are, per se, violations of federal antitrust
laws. Other than that, application of the
antitrust laws to a particular set of
circumstances can be ambiguous. Therefore,
this meeting will err on the side of caution to
avoid any chance that you as participants may
be subject to prison and/or treble damages.
Most importantly, remember that discussions in
violation of antitrust laws are no less
punishable if they take place outside of this
meeting room.
The following subjects will give rise to
antitrust problems. We will not be discussing
them as part of any joint activities except as
authorized and/or mandated by Louisiana
statutes:
* Raising, lowering or stabilizing actual
rates
* Restricting the availability of insurance
4
* Allocating markets, territories or
insureds
* Boycotting in any form
* Actual or future prices
* Profit levels
* Credit terms
* Premium costs
* Quoting or not quoting certain classes or
types of risks
If any company participating in this meeting
were to transact its business with respect to
any one of the above topics in a manner similar
to a participant who is a competitor, the
discussion of that topic at this meeting may be
offered as evidence of a conspiracy in
violation of the antitrust laws.
5
1 *****
2 MR. COOK:
3 I am going to call the meeting
4 to order. I am going to need a
5 motion to go ahead and -- do you want
6 to --
7 MR. HERBERT:
8 Can we get a motion, please, to
9 go out of order on the Agenda, so
10 that we can seat the new Board
11 Members, so that we have our quorum?
12 MR. O'CONNOR:
13 So moved.
14 MR. LEPINE:
15 Second.
16 MR. COOK:
17 Any opposed?
18 (No response.)
19 MR. COOK:
20 Our first piece of business is
21 we are going to fill our open
22 positions. Our new appointments
23 are Senator Donald Cravins, who is
24 the Senate Insurance Committee
25 Chairman and Chuck Kleckey is the
6
1 House Insurance Committee Chairman.
2 Also, the Commissioner has two
3 appointments, Mr. Ed O'Brien and Mr.
4 Arnold Goldberg. Now, I would assume
5 that is Mr. Goldberg?
6 MR. GOLDBERG:
7 That's me.
8 MR. COOK:
9 So, do we have --
10 MR. HERBERT:
11 Do we have a motion to adopt the
12 whole slate of new appointments?
13 MR. O'CONNOR:
14 I'll move.
15 MR. COOK:
16 Moved by Joe.
17 MR. LEPINE:
18 I'll second.
19 MR. COOK:
20 Second. Okay.
21 Anybody opposed?
22 (No response.)
23 MR. COOK:
24 Welcome, Guys, appreciate it.
25 (Off-the-record discussion.)
7
1 MR. HERBERT:
2 I will note for Mr. Goldberg,
3 previously Christine -- well, it
4 was Christine Berry, who held that
5 appointment to the Board as a
6 designee of the Louisiana Insurance
7 Rating Commission, but that being
8 abolished, that appointment reverted
9 to the Commissioner. So, Mr.
10 Goldberg is the Commissioner's
11 appointment to this Board.
12 (Off-the-record discussion.)
13 MR. COOK:
14 Moving on, we are going to --
15 we need to ratify our previous
16 Board meeting. It was E-mailed
17 to everybody. I'm sure everybody
18 has had a chance to look over
19 it.
20 Do we have a motion to accept
21 those minutes?
22 MR. LEPINE:
23 I'll move.
24 MR. COOK:
25 Moved.
8
1 Second?
2 MR. O'CONNOR:
3 Second.
4 MR. COOK:
5 All right. Anyone opposed?
6 (No response.)
7 MR. COOK:
8 That moves on.
9 Moving on, Executive Director.
10 MR. HERBERT:
11 Well, we could do that in
12 Executive Session, but there's no
13 one here who would have to leave
14 in Executive Session. So, at the
15 last Board meeting, we talked about
16 the fact that Mr. Joe Deutsch had
17 resigned as Executive Director of
18 PIAL. I think he left February
19 1st.
20 We looked around and found
21 Mr. Robert Moorman, who is a CPA in
22 Texas and he agreed that he would
23 come in and serve as the Executive
24 Director on a contract basis and he
25 has actually been functioning at PIAL
9
1 for about the past two weeks.
2 At the previous Board meeting, we
3 circulated his resume. The Board at
4 that time felt it was important for
5 him to get started right away.
6 What I think would be appropriate
7 is, Bob, why don't you tell the Board
8 a few things about yourself. Then,
9 excuse yourself from the meeting and
10 we can talk about stuff behind your
11 back.
12 MR. MOORMAN:
13 I have actually been on site over
14 there since last week. So, it's
15 about four or five actual days. I am
16 a CPA. I have been -- I have a
17 background in the insurance industry
18 and have been in the industry since
19 1976 and a little bit before that. I
20 started with Prudential Insurance and
21 went to a small malpractice writer
22 and was Chief Operating Officer and
23 Chief Financial Officer of that group
24 for a six year period while we were
25 expanding throughout the United
10
1 States.
2 I left there and I have been
3 doing a consulting practice since
4 1972 -- 1982 in Texas for primarily
5 small carriers, some large ones,
6 doing anything regulatory, annual
7 statement, accounting, investments,
8 the whole deal for property casualty
9 companies.
10 I have done some litigation
11 support work both in the industry and
12 outside of the industry. I worked
13 with A.J. before when I was an on
14 site liquidator for the Louisiana
15 department of a Louisiana chartered
16 company that happened to be domiciled
17 in Houston and needed to be put to
18 sleep. So, I presided over that and
19 the disposition of the assets and
20 liabilities and so forth working with
21 A.J. on that back in the '90s and I
22 have, on a number of occasions,
23 worked with failed or failing P&C
24 companies, cleaning them up, catching
25 them up, that sort of thing.
11
1 I mention that, because it is --
2 in some ways, there is a similar
3 situation and that is the -- things
4 are in a flux and the employees are a
5 little disconcerted about what is
6 going on and we have some basic
7 decisions to make about how to
8 organize things and proceed. So, I
9 think it -- I do have pertinent
10 experience to that having done that a
11 number of times.
12 So, I have been in the industry
13 for thirty plus years in --
14 primarily, in Texas.
15 MR. HERBERT:
16 We had -- at the previous Board
17 meeting, there was discussion about
18 whether or not to engage Mr. Moorman
19 as an employee or as a contractor and
20 given some of the uncertainties about
21 PIAL as it goes through this
22 Legislative Session, Warren Byrd,
23 another one of the Commissioner's
24 designees, suggested that we just
25 engage Mr. Moorman on a contract
12
1 basis for -- at least through the
2 Session, and then, we will go from
3 there.
4 He has agreed to do that at an
5 hourly rate. The hourly rate is a
6 hundred and ten dollars an hour. He
7 will bear his own expenses in
8 commuting between Houston and New
9 Orleans. He will be reimbursed for
10 his commuting between New Orleans and
11 Baton Rouge for Legislative purposes
12 and he will bear his own expenses for
13 living arrangements while he is in
14 New Orleans.
15 So, we will, you know, put
16 together a contract for him should
17 the Board decide to proceed with the
18 engagement. What I would suggest is
19 that if anyone has any questions that
20 they want to ask Mr. Moorman
21 directly, do so now, and then, we can
22 excuse him from the room and the
23 Board can debate it.
24 MR. MOORMAN:
25 I will say one other thing
13
1 before I step out. I do ask that
2 the Board, in some fashion, indemnify
3 me for acts within the course and
4 scope of the duties, so that I don't
5 have to answer what might be
6 frivolous lawsuits or other lawsuits
7 for the next several years from, you
8 know, three hundred and fifty miles
9 away and some indemnification for
10 that under defense costs, certainly
11 not for anything out of the scope of
12 the --
13 MR. HERBERT:
14 That provision is for employees,
15 but you not being an employee, it
16 would be provided for in your
17 contract.
18 (Off-the-record discussion.)
19 MR. HERBERT:
20 Now, we are back on the
21 record and if anyone wants to make a
22 motion.
23 MR. COOK:
24 Do you want to call him in or
25 make the motion first?
14
1 MR. HERBERT:
2 It doesn't matter.
3 MR. COOK:
4 Do I have a motion to accept
5 hiring Bob Moorman on a contract
6 basis?
7 MR. O'CONNOR:
8 I'll move.
9 MR. COOK:
10 Moved by Joe.
11 MR. LEPINE:
12 Second.
13 MR. COOK:
14 Any opposed?
15 (No response.)
16 MR. COOK:
17 All right.
18 MR. HERBERT:
19 Tag, you're it.
20 MR. MOORMAN:
21 I guess that's good.
22 MR. COOK:
23 Congratulations. It was
24 unanimous.
25 Just -- since Clarissa is not
15
1 here, I did -- under "Board
2 Composition", we do have some open
3 positions.
4 Ed, since this is something
5 that -- I think it would fall
6 under the Department of Insurance,
7 A.J.?
8 MR. HERBERT:
9 Yes.
10 The Property and Casualty
11 Commission, Ed, are you familiar with
12 this creature, yet?
13 MR. O'BRIEN:
14 Yes.
15 MR. HERBERT:
16 PIAL has an appointee to the
17 Property and Casualty Insurance
18 Commission.
19 MR. O'BRIEN:
20 Correct.
21 MR. COOK:
22 Well, hold on. I was talking
23 about our open position.
24 MR. MOORMAN:
25 Filling this Board.
16
1 MR. HERBERT:
2 I thought we did that.
3 MR. O'CONNOR:
4 Yes. We have two vacant
5 positions.
6 MR. COOK:
7 We still have companies --
8 MR. HERBERT:
9 Oh, yes, I'm sorry. I'm sorry.
10 There are still some open
11 positions on the companies and we --
12 MR. COOK:
13 Hold on, Clarissa is walking
14 in.
15 MR. HERBERT:
16 Oh.
17 MS. PRESTON:
18 What part are you on?
19 MR. COOK:
20 We are on the open positions for
21 company representatives.
22 MS. PRESTON:
23 Okay.
24 MR. COOK:
25 Did we do any research on that,
17
1 is that something that is going to --
2 Ed can do now or --
3 MS. PRESTON:
4 The Department was really
5 hoping to not necessarily make
6 recommendations, but to give contact
7 information and we gave you the list
8 of the top twenty --
9 MR. HERBERT:
10 Companies, but we need to know
11 the contact people to call to get
12 them to appoint someone.
13 MS. PRESTON:
14 Any of them in particular, I can
15 do that for you.
16 MR. HERBERT:
17 Is there--
18 MS. PRESTON:
19 I just can't make the call.
20 MR. HERBERT:
21 Okay.
22 In terms of providing the contact
23 info, is that you or Ed?
24 MS. PRESTON:
25 I probably would have most of
18
1 them more than Ed would and if I'm
2 not there, you know my assistant,
3 Janaya (phonetic) is there and I will
4 let her know. If you just send a
5 list of the companies that you want
6 to get to, I can get you that contact
7 information.
8 MR. HERBERT:
9 Okay.
10 MR. COOK:
11 Now, we will move on to the
12 appointment to the Louisiana Property
13 and Casualty Commission.
14 The Commission's office has
15 sent us a letter requesting that
16 we appoint somebody to this. Joe
17 was appointed before and being that
18 Mr. Moorman is a Texas resident, he
19 wouldn't qualify for it.
20 MR. HERBERT:
21 If I can correct that, we
22 checked and there's no residency
23 requirement --
24 MR. COOK:
25 Okay.
19
1 MR. HERBERT:
2 -- for the Property and Casualty
3 Commission.
4 So, if -- previously, I think
5 Joe was the appointee, but the
6 Board does need to make an
7 appointment from PIAL to the P&C
8 Commission.
9 You said you are too busy.
10 Bob, will you --
11 MR. MOORMAN:
12 I will defer to the wisdom of the
13 Board.
14 MR. COOK:
15 Does anybody want to accept the
16 position?
17 MR. MOORMAN:
18 I'll certainly accept it.
19 MS. PRESTON:
20 Speaking of that, there is
21 actually a meeting tomorrow --
22 MR. HERBERT:
23 Tomorrow at 1:30.
24 MS. PRESTON:
25 -- at 1:30.
20
1 MR. MOORMAN:
2 I tell you, I have -- if I
3 could get appointed after that.
4 John Wortman has called a companywide
5 employee meeting tomorrow and I
6 think I need to appear at that at
7 1:30, but again, y'all tell me what
8 the priorities should be.
9 MR. HENRY:
10 Well, could I offer this?
11 The meeting will be well covered
12 tomorrow by folks and I don't know
13 that there is anything on the
14 Agenda that is of such a magnitude
15 that you would have to be there.
16 Going forward, I would also
17 like to say, if you are going to
18 serve, I noticed at the last
19 meeting, the Chairman came up with
20 the notion of having some around
21 the State meetings for this outfit
22 and I personally think that is
23 highly ridiculous and I told the
24 Commissioner that. It makes it
25 awfully inconvenient and I have
21
1 asked him if he would to use the
2 influence of his office to slow that
3 down, because it -- Baton Rouge,
4 whether people like it or not, is
5 the center of Government for this
6 State and we ought to go out in the
7 Netherlends (phonetic), but that just
8 gets to be a circus and it gets to be
9 expensive, I have always found.
10 So, if you are going to serve
11 on that, I wish you would sort of
12 approach it with that in mind,
13 because you are going to have people,
14 anyway. It is not a good idea,
15 generally speaking, to have meetings
16 like that around the State unless
17 there is some defined purpose for it,
18 I have found. That is just my
19 thinking.
20 Clarissa is -- some of you older
21 people, I'm talking to you.
22 MR. O'BRIEN:
23 Me?
24 MR. HENRY:
25 Yes.
22
1 MR. O'BRIEN:
2 When you say older, I looked at
3 you. I thought you were looking at
4 Joe.
5 MR. HENRY:
6 That is just an observation.
7 MR. O'BRIEN:
8 That is an astute observation.
9 The meeting tomorrow generally is
10 going to be to review the
11 Commissioner's Legislative Agenda and
12 there is -- the last I heard late
13 yesterday afternoon, there was a
14 quorum. So, we are planning on going
15 ahead whether or not PIAL has an
16 appointed designee or not.
17 MR. HENRY:
18 But, there will be --
19 MR. O'BRIEN:
20 Right.
21 MR. HENRY:
22 -- there will be some -- if
23 this is any consolation to you, you
24 won't vote or anything, but there
25 will be somebody covering it from my
23
1 office, because I always have
2 somebody go. I don't go myself,
3 because it lowers my IQ any time I
4 go. I can't stand that --
5 MR. MOORMAN:
6 It might raise mine, at least as far
7 as --
8 MR. HENRY:
9 No.
10 MR. O'BRIEN:
11 No. No.
12 MR. MOORMAN:
13 But, I do think this meeting I
14 have there at PIAL is fairly crucial
15 this first week on the job.
16 MR. HERBERT:
17 Can I suggest that the Board go
18 ahead and appoint Bob as its designee
19 to that Board, but just understand that
20 he can't be in attendance tomorrow since
21 we --
22 MS. PRESTON:
23 Ed and I will be there.
24 MR. O'BRIEN:
25 We'll both be there.
24
1 MR. MOORMAN:
2 Or maybe make it effective day
3 after tomorrow, however you --
4 MR. COOK:
5 I'm sure we will all see it in
6 the Commissioner's package before it
7 is all said and done.
8 So, do I have a motion to
9 appoint Mr. Moorman to the
10 Louisiana Property and Casualty
11 Commission?
12 Does somebody move?
13 MR. LEPINE:
14 Moved.
15 MR. COOK:
16 Do I have a second?
17 MS. BROOKS:
18 Second.
19 MR. COOK:
20 All right. Anyone opposed?
21 (No response.)
22 MR. COOK:
23 We will be keeping you busy.
24 Next on the Agenda is formation
25 of committees.
25
1 MR. HERBERT:
2 There are two committees that I
3 thought we might ask to be formed.
4 The first one is, PIAL has never had
5 an Audit Committee and I do think it
6 is important that we go ahead and
7 establish one first just for general
8 business purposes. I think it is
9 important to have one of those.
10 Secondly, much more specific, we
11 have had incredible issues come up in
12 connection with PIAL's prior audit
13 and, you know, I wonder whether some
14 of that stuff could have been
15 corrected if there were more eyes
16 looking at it way back when. So, I
17 was hoping that we could form a
18 committee of the PIAL Board, just two
19 or three members who are experienced
20 in review of accounting or financial
21 analysis.
22 I don't think it is something
23 that is going to create a great
24 burden on your time, but I do think
25 it is important that we have this to
26
1 show that PIAL is adopting practices
2 to prevent some of the things that
3 have dogged us in the past.
4 Can we start by having a motion
5 to form an Audit Committee?
6 MS. PRESTON:
7 I move.
8 MS. BROOKS:
9 Second.
10 MR. COOK:
11 Anyone opposed to that?
12 Now, the hard part. Who wants to
13 serve on that?
14 (Off-the-record discussion.)
15 MR. O'CONNOR:
16 I will serve on it.
17 MR. HERBERT:
18 Thank you.
19 MR. O'BRIEN:
20 I can serve on it.
21 MR. HERBERT:
22 That's great.
23 Could we have one more just to --
24 MR. COOK:
25 I'll do -- we are in New Orleans
27
1 and I will serve on it --
2 MR. HERBERT:
3 Okay. Great. Now, we've got three.
4 MR. COOK:
5 -- because, we can meet in New
6 Orleans.
7 MR. MOORMAN:
8 Am I member of this Board?
9 MR. HERBERT:
10 No, you are not.
11 MR. MOORMAN:
12 Then, I won't vote.
13 MR. HERBERT:
14 Correct.
15 The second thing is, there is
16 going to be -- PIAL will be a subject
17 of legislation this Session. That is
18 likely to get shaped a fair amount.
19 This started with, I guess, the
20 Commissioner announcing maybe four or
21 five months ago that it was his
22 intention to introduce legislation to
23 abolish PIAL, but since that time,
24 PIAL has implemented a lot of steps
25 to correct the problems that got us
28
1 in the news and new procedures have
2 been put in place.
3 We have terminated the agreement
4 with LAIP. We are in the process of
5 separating from Citizens and that
6 process should be complete by the end
7 of the first quarter.
8 So, there has been some sentiment
9 that PIAL should just get out of
10 doing those things that it wasn't
11 formed to do and get back to doing
12 those things that it has been doing
13 for a hundred and twenty years, which
14 is the fire side.
15 The Fire Chiefs have apparently
16 weighed in with that as being in
17 favor of keeping PIAL as an ongoing
18 entity back -- going back to its
19 original purpose. Bubba and I were
20 in a House Insurance Committee
21 meeting this morning and there was
22 sentiment on that committee to --
23 of not throwing the baby out with
24 the bath water and to take a serious
25 look at maintaining PIAL, but only to
29
1 do what it was set up to do and not
2 the other things that it started to
3 do like manage residual plans and
4 things like that that led to the
5 problems.
6 The bottom line to all of that
7 is, I'm sure Bubba can describe it so
8 much better, but the legislative
9 process will be fluid and there won't
10 be a lot of time for us to wait to
11 have a monthly Board meeting to get
12 some feedback.
13 The folks from the D.O.I. that
14 are on the Board, they are usually in
15 these same meetings, but we would
16 like to have some industry
17 representation available that we can
18 go to quickly and say, "Look, you
19 know, this proposal is being made,
20 what is the industry response to it?"
21 We are going to need to be able to go
22 to get some feedback.
23 So, I was hoping that we could
24 get, you know, one or two members
25 from the insurance industry side
30
1 and one or two members from the
2 agents' side that we could consult
3 with quickly as we go through the
4 process.
5 Bubba, is there anything you want
6 to add to that?
7 MR. HENRY:
8 No, and I think your points are
9 well made. We have some thoughts on
10 this and we have advanced those
11 thoughts with regard to shaping the
12 legislation, so that PIAL can do what
13 PIAL was required to do and it won't
14 take much fooling with the current
15 enabling legislation, but we know --
16 we met with the Commissioner and we
17 know where the Commissioner is.
18 The Commissioner even agreed with
19 us that we ought not to abolish it
20 right now, but he has some concerns
21 about the rating situation, but I
22 think the more he finds out, maybe --
23 and I think the more Legislators talk
24 about this, there is a bigger
25 opposition to abolishing the PIAL,
31
1 period, than I would have thought and
2 there is going to be legislation to
3 keep it from going away.
4 So, we need to be in a position
5 to do what you want us to do and we
6 need -- we will need somebody to
7 bounce the notions off just to keep
8 you apprised of what is going on and
9 letting you know what we think, so if
10 we think it wrong, you can tell us
11 during the Session.
12 MR. COOK:
13 Bubba, you -- I'm sure you are
14 going to get State Farm's perspective
15 on where they stand with it.
16 MR. HENRY:
17 I would assume, yes.
18 MR. COOK:
19 Then, at the same time, both of
20 our organizations have lobbyists and
21 one-half of those work in the office
22 are ours. So, I'm sure the Board, we
23 would -- we always have a
24 Governmental Affairs Committee and
25 I'm sure that we review all bills and
32
1 we can have our lobbyists get with
2 you to see what our position is.
3 MR. HENRY:
4 Okay. That's good.
5 MR. COOK:
6 So, that is the agents' side. As far
7 as the company side, we can get a couple
8 more people --
9 MR. HERBERT:
10 Well, I guess what I hear you
11 saying is that we may not need that
12 committee.
13 MR. COOK:
14 Well, I mean, we are going to
15 give them the agents' -- we could
16 give -- me and Joe could give them
17 the -- go back to our Boards and have
18 them -- we are going to look at all
19 of the Bills that have to do with
20 insurance and we will give them our
21 -- we will get with Bubba and tell
22 him our position, but as far as some
23 of the companies, I think some of the
24 companies need to get with Bubba and
25 have a feeling of what their
33
1 perspective is.
2 MR. LEPINE:
3 I volunteer.
4 MS. BROOKS:
5 I would like to.
6 MR. O'BRIEN:
7 We need more than one.
8 MR. COOK:
9 So, I'm still thinking we are
10 going to have a committee, but it is
11 not for me and Joe to make a decision
12 for our group.
13 MR. HERBERT:
14 Okay. That's fine.
15 MR. O'CONNOR:
16 We've got lobbyists that are
17 there, too.
18 MR. HERBERT:
19 Great. Okay.
20 Bob?
21 MR. COOK:
22 We have an update from our new
23 Executive Director.
24 MR. MOORMAN:
25 Well, I don't -- the 2006 audit
34
1 update, I have to apologize. I don't
2 have any knowledge of that at this
3 point. I think we do have an
4 engagement letter.
5 MR. HERBERT:
6 That is for the 2007 audit. I
7 can tell you that the 2006 audit is
8 in process and they think that they
9 will have it complete fairly soon.
10 The issues remain that the issue
11 about -- there is a significant
12 amount of restating of the financials
13 that needs to be done, because things
14 were recorded as assets of PIAL that
15 frankly were paid for by Citizens and
16 should not have been assets on PIAL's
17 books. There has been a fair amount
18 of clean up associated with that.
19 We do need to go ahead and get
20 started, though, on the 2007 audit.
21 We would propose to use the same firm
22 that was used for the 2006 audit.
23 They have now come up to speed on
24 PIAL and what the issues are and they
25 are probably in the best position and
35
1 least cost option to do that instead
2 of re-educating someone else.
3 The name of the firm is Paillet,
4 Meunier (phonetic). They are on the
5 approved list by the Legislative
6 Auditor and the Legislative Auditor
7 did approve their engagement for
8 2006. So, I think it would be
9 probably the most cost efficient
10 thing to proceed with them for the
11 2007 audit.
12 Could we get a motion to approve
13 that engagement?
14 MR. HAGAN:
15 Moved.
16 MR. COOK:
17 Paul.
18 Do we have a second?
19 MR. O'CONNOR:
20 I'll second.
21 MR. COOK:
22 Any opposed?
23 (No response.)
24 MR. COOK:
25 Thank you.
36
1 MR. MOORMAN:
2 The next thing that I haven't had
3 an opportunity to look at yet is the
4 budget and financials.
5 MR. HERBERT:
6 I don't think that they prepared
7 -- did they?
8 MR. MOORMAN:
9 I thought we had a packet
10 included.
11 We have received a substantial
12 amount -- I thought we had a packet
13 included, but perhaps not. I have
14 spent a few minutes with the budget
15 as I found it. I haven't spent any
16 time with the back up. I am not
17 intending, by the way, to be the
18 Organization's accountant. We do
19 have an accountant, Don Bourgeois,
20 who is working two days a week
21 primarily bringing forward some Fair
22 and Coastal reconciliations from the
23 old days and I'm not familiar with
24 exactly what that is, but he is doing
25 basic budget and accounting work, and
37
1 then, Patricia Ginn, who is on the --
2 an employee in the office is
3 preparing the general operating
4 expenses.
5 I do have a balance sheet that
6 shows -- and I'm sorry, I thought we
7 had copies for everyone. You can
8 certainly pass this around. It shows
9 thirty-one million dollars in assets
10 and the last one I had seen just two
11 or three weeks ago was a couple
12 million bucks in the bank. So, we
13 have collected a substantial part of
14 the assessments now just in this
15 first month, although I'm not sure
16 what makes up that thirty-one million
17 dollars, but I understand we have
18 quite a large balance.
19 I have on my agenda now that I am
20 appointed to get together with the Whitney
21 Bank folks who are investing the money and
22 make sure to make contact with them and
23 bring to the Board anything I see there or
24 recommendations, but I understand there is
25 an investment program in place. I believe
38
1 it is in -- the money is in Jennie Mae's
2 at this point, government backed
3 securities and cash.
4 I do note that there is a
5 substantial amount of cash in
6 essentially one bank and that is
7 something maybe to be looked at in
8 terms of diversification given the
9 shake up in the banking system that
10 may or may not develop and maybe look
11 at the investments, but just to
12 report that the assessments
13 apparently are coming in or have come
14 in, in large percentage for this
15 year.
16 I do have some things I need
17 to understand from the Board in
18 order to operate the office. I
19 have a stack of expenses, bills,
20 to pay. Checks have been prepared
21 and they are in the normal course
22 of business, but some of the
23 amounts are three, four, five
24 thousand dollars for workers' comp,
25 for other types of insurance
39
1 coverages, that sort of thing, and
2 I don't know anything about levels
3 of authority. We have set up
4 signature authority.
5 So, I guess I would ask the Board
6 to, in some form, say grace on my
7 authorizing payments that are not
8 just in the normal course of
9 business, but also in the normal
10 course of what the practice has
11 been. So, you know, nothing
12 particularly unusual at this point
13 is what I'm saying. So, we can
14 just go ahead and get the checks
15 signed and sent out.
16 One of the items of particular
17 interest is a six hundred and twenty-
18 seven thousand dollar bill from
19 Insurance Services Office, which is
20 to be paid in four installments, one
21 which is due February 15th, but I'm
22 assured there's no big hurry on that,
23 but this is a normal billing and it
24 is for the -- my understanding the
25 rates and forms that are produced by
40
1 ISO on behalf of PIAL and it is a --
2 the amount I have looked back for
3 four years is roughly consistent with
4 what the billings have been for the
5 last four years. So, I would want to
6 go ahead and make that hundred and
7 fifty-six thousand, I think, payment
8 on the first of those. I will give
9 you the exact amount, but again, it
10 is in the normal course of business
11 and -- I don't seem to find my
12 folder.
13 MR. COOK:
14 We did approve the 2008 budget.
15 Was that in the budget?
16 MR. MOORMAN:
17 I assume it is in the budget,
18 but --
19 MR. LEPINE:
20 I thought it was.
21 MR. COOK:
22 Do you have a copy of the 2008
23 budget?
24 MR. MOORMAN:
25 I do have. Unfortunately, it
41
1 doesn't -- the copy I have, I don't
2 have all of the back up. So, I'm not
3 sure what exactly -- I do have a line
4 item here that inspection fees-plans,
5 a million six, but this is only six
6 hundred thousand. I just have not
7 had time at this point to look at the
8 details, but I do have the billing
9 here.
10 It is six-twenty-seven-five-
11 seventy-two paid quarterly and it is
12 for commercial and dwelling service
13 at a hundred percent full service
14 level as you have received in past
15 years and an additional three
16 thousand for building code
17 effectiveness (phonetic) grading
18 schedule.
19 So, it is a standard billing,
20 if anyone would care to look at it,
21 and I did look at the prior year's
22 allocations on it. I will have
23 one issue to look at on that and
24 that is whether we are properly
25 assessing Citizens for reimbursement,
42
1 but the custom has been for PIAL to
2 pay this.
3 In looking back, there was a
4 fairly decent allocation to Citizens
5 back in '04, but then the allocation
6 seems to have gotten substantially
7 smaller over the last couple of
8 years. So, I would want to look back
9 at that to see if there is a change
10 to be made there, but the amount of
11 the assessment has gone from two-
12 sixty-two to two-seventy-four to two-
13 fifty to two-seventy-seven, and then,
14 this year -- excuse me, I need to
15 round all of those numbers up, into
16 the mid three hundreds, and then,
17 this year, it looks like six hundred.
18 So, I can't speak to the difference.
19 I did call ISO and it is the
20 normal billing. I'm afraid this
21 Board may have caught me a little
22 ahead, but I would recommend that
23 we pay this quarterly installment
24 certainly dealing with ISO. If
25 there was anything to be recovered,
43
1 there wouldn't be any problem doing
2 that. Certainly, you could recover
3 it against the subsequent quarterly
4 payments.
5 So, I guess that is --
6 MR. COOK:
7 We don't need a motion for that.
8 MR. HERBERT:
9 No. No.
10 MR. MOORMAN:
11 I'm certain this is in the
12 budget.
13 MR. COOK:
14 Yes.
15 MR. MOORMAN:
16 I think I would be safe in
17 assuming that these other insurance
18 payments, utilities, postage, such as
19 that -- just to put you at ease, I am
20 not a spender. Having said that, I
21 am not Joe Deutsch either . I don't
22 know if -- how much time you spent
23 with Joe, but I -- from what I have
24 seen so far, he was too far on the
25 opposite way. I do believe in doing
44
1 what is necessary to make a business
2 function, but you won't be getting
3 expense reports from me that you will
4 wonder about or anything like that.
5 I probably won't turn anything more
6 than fifty dollars in the whole time
7 I am here for mileage or something,
8 nor will you wonder about the
9 expenditures in the office. It just
10 won't be an issue. I am not a
11 spender or a wasteful guy.
12 I just want to bring these --
13 I would like to be able to go ahead
14 and pay these bills that were
15 presented to me and get that down
16 the road, and then, in the next
17 cycle, look a little more closely
18 at them if the Board is comfortable
19 with that.
20 MR. HERBERT:
21 I think that the practice has
22 been that budgeted items, the budget
23 is approved by the Board and the
24 expenses are in the normal course of
25 business and they are paid. Now,
45
1 like when it is time to re-up on the
2 insurance, that would come back to
3 the Board. If there is a new lease,
4 that would come back to the Board,
5 but once approved, it has not been
6 the practice that you come back every
7 month with a stack of bills before
8 you pay them if they are in the
9 ordinary course.
10 MR. MOORMAN:
11 My only point here is that I can't
12 swear up and down these are in the budget,
13 but they are reasonable and fairly small
14 expenses and I feel certain they should be
15 if they are not.
16 So, I would just go ahead and --
17 I don't guess I really need anything
18 from the Board, but I just wanted to
19 let the Board know that I would be
20 doing that.
21 If I still have the floor, if
22 you will indulge me a little bit, I
23 will give you my sense of where the
24 organization is and it is a very
25 top end analysis at this point. I
46
1 have spent some time with the
2 employees. I have had the -- this
3 is the -- we have twenty to twenty-
4 five staff who will stay with PIAL.
5 About half of those are in the field,
6 about ten, I guess, and a dozen in my
7 office and I met for over an hour
8 with four, five, six of them and met
9 the others.
10 I have a sense for where they
11 stand and that is that you have some
12 really committed folks who really
13 like what they are doing, but they
14 just -- they are in shock and have
15 been. They -- it is like they have
16 had their legs cut out from under
17 them and they don't know what is
18 going on and they have just been
19 patiently waiting for the hammer to
20 drop on this thing.
21 I was obviously not party to
22 how this has progressed, but my
23 understanding is that the Citizens
24 side never talked to these folks.
25 No one has talked to them about where
47
1 they are going to go or what they are
2 going to be doing. The Citizens
3 folks that picked who they wanted to
4 take from PIAL's organization
5 basically and talked to them, but
6 never spoke to the folks that were
7 going to remain, never offered them
8 anything with Citizens, never talked
9 to them about it.
10 So, they were walking on egg
11 shells when I walked in and when they
12 just found out I was a normal person,
13 they were greatly relieved.
14 The next thing we did was started
15 talking about the separation and I had a
16 conversation with A.J. and he said,
17 "Remember, you are not separated", but, in
18 fact, defacto the separation has occurred.
19 There are these folks that are PIAL
20 employees and they know clearly who they
21 are and there are these others who are
22 Citizens employees and they know clearly
23 who they are and there is a Chinese wall
24 between them or an invisible wall.
25 Communication has broken down. It is just
48
1 -- it is kind of tough.
2 So, one of the first things I did
3 was go down and look at the space
4 that we are supposed to move to and
5 just to be candid, again I'm not a
6 spender, but I was horrified. It is
7 just filthy and too small and I do
8 have some photos here. These photos
9 don't do justice to it, but I asked
10 Kurt Reeson to just bring some of
11 these. Actually, they do, do some
12 justice and I just would like for you
13 to look at some of these showing what
14 the carpet looks like and this kind
15 of thing.
16 Joe Deutsch went down and I
17 understand his motivation was to keep
18 this thing as minimal as possible,
19 the idea, of course, that we don't
20 want to spend a bunch of money if the
21 Legislature should decide to dissolve
22 the office, but I see us as having
23 two issues here.
24 One is the size of the space, in my
25 opinion, is just flat not adequate, if
49
1 this is going to be an operating entity,
2 the way Joe had it set up and two is the
3 condition of the space. For a few --
4 well, actually, about five thousand
5 dollars, we could make it look nice and
6 I think do a world of good for the
7 employees that are there and I really
8 think that is a reasonable price, but
9 he has executed a lease to keep three
10 thousand -- it is actually twenty-six
11 hundred square feet and it is net
12 usable. It is quite a bit less than
13 that for the dozen or so employees in
14 the office down on the third floor.
15 They split the leases. The lease
16 is such that it could be cancelled
17 on ninety days notice if the
18 organization were to close down and
19 this is on the third floor and that
20 is the space that I am passing the
21 pictures around. It is just dirty.
22 He, in order to execute the
23 lease, waived any options about build
24 out or clean up or anything else and
25 the landlord agreed to that and that
50
1 is part of why we got the termination
2 provision -- favorable termination
3 provision.
4 Splitting up the office space
5 that PIAL has, there is a lot of
6 extra space and one of them is a
7 suite on the second floor that
8 Citizens is going to move out of,
9 but they were going to devolve it
10 back to the landlord, if that's a
11 good word, after the move takes place
12 and it is sixteen hundred square
13 feet and my proposal is really two
14 things.
15 One, if this is going to operate --
16 and I -- you know, that is obviously not
17 my decision, but if you are going to
18 operate, you are going to have to have
19 additional square footage, just have to.
20 It is not optional and if we let that
21 suite go, there may not be square footage
22 available in that office. They are liable
23 to lease it.
24 The second floor space is very
25 clean and very nice and Citizens is
51
1 using it, now. The carpet was redone
2 two or three years ago and move right
3 in.
4 Our current lease that has
5 been executed is forty-six hundred
6 a month for the three thousand
7 feet. This would add -- and I
8 have met with the landlord. This
9 would add an additional twenty-six
10 hundred dollars. So, it would go
11 from forty-six hundred to seventy-two
12 hundred a month, but it would add
13 sixteen hundred square feet of
14 immediately usable space and she
15 agrees to the same ninety day
16 termination provision, adding it on.
17 A.J. insisted on that.
18 So, an additional twenty-six
19 hundred dollars a month for -- you
20 know, if the organization were to
21 shut down for ninety days or
22 whatever, it would guaranty us the
23 space we need going forward and it
24 would also give us something useful
25 right away.
52
1 That, to me, is just something
2 that has to be done. There's not
3 even storage space available. This
4 three thousand feet is for twelve
5 employees including all of the files.
6 You know, they have a plotter machine
7 that is -- it is literally six feet
8 long and about three feet deep. That
9 is like adding an employee in terms
10 of space.
11 So, the way it is situated now,
12 without that added space, you could put
13 those people in there, but it is going to
14 be like they are working in the file room
15 and I think you kind of get what you
16 expect out of folks when you do that to
17 them.
18 For the third floor space, the clean
19 up, and by this I mean some new carpet,
20 not only the whole space, but two-thirds
21 of the new carpet and a fresh coat of
22 paint, generally speaking, through it,
23 fifteen hundred and seventy-five dollars
24 for the paint, thirty-five hundred for the
25 carpet. So -- and that would have to come
53
1 out of our pocket, because they negotiated
2 the lease.
3 I have four of these. This is
4 the rental and here is the build out.
5 I have plenty of these.
6 MR. COOK:
7 When is the separation? We still
8 don't have an exact date.
9 MR. HERBERT:
10 March 31st.
11 MR. MOORMAN:
12 We are aiming for March 31st to
13 actually do the move.
14 They are already starting to do
15 the communications work in the suite
16 and set up things.
17 MR. COOK:
18 So, we have two proposals. The
19 first proposal was the one that we are
20 under lease that we do some improvements
21 of about five thousand dollars?
22 MR. MOORMAN:
23 Yes. It is really more in the nature
24 of clean up. It is not even any build out
25 or doors or things that we might do later
54
1 and if it is viable.
2 MR. O'BRIEN:
3 I have a question. Could they
4 operate on two floors?
5 MR. MOORMAN:
6 Yes.
7 MR. HERBERT:
8 They do, now.
9 MR. MOORMAN:
10 In fact --
11 MR. O'BRIEN:
12 Well, I know they do, but I
13 didn't know if PIAL could operate on
14 two floors.
15 MR. O'CONNOR:
16 So, we would be on the second
17 floor?
18 MR. MOORMAN:
19 The second floor and the second
20 floor space has an actual --
21 MR. COOK:
22 What floor are we going to?
23 MR. MOORMAN:
24 Third is the one that is presently
25 open. The second floor actually has a
55
1 natural reception area, too, which might
2 serve as a front door. There are natural
3 breaks within the organization that would
4 work.
5 MR. COOK:
6 Are there two separate --
7 MR. HERBERT:
8 Two separate leases?
9 MR. COOK:
10 Two separate motions.
11 MR. HERBERT:
12 Yes.
13 MR. COOK:
14 The first one is we are in a
15 lease now on the third floor. We
16 have seen the pictures. I think we
17 need to get a motion to go ahead and
18 start the work on that office,
19 getting the paint and the carpet.
20 So, can I get a motion to go
21 ahead and start that process?
22 MR. O'BRIEN:
23 I'll make that motion.
24 MR. COOK:
25 Ed.
56
1 Second?
2 MR. LEPINE:
3 I'll second.
4 MR. COOK:
5 Anybody opposed?
6 (No response.)
7 MR. COOK:
8 All right. We will start. So,
9 go ahead and --
10 MR. MOORMAN:
11 He said he could have that done
12 in a couple of weeks, the contractor.
13 Folks, just that right there is
14 going to send a message to these
15 employees that is going to be worth
16 five times what you spend. I promise
17 you.
18 MR. HERBERT:
19 Bob, did we do any shopping of
20 the contractor or is this mandated by
21 the building to use one person?
22 MR. MOORMAN:
23 It is not mandated. We could shop
24 contractors. We would have to get all of
25 the insurance certificates and that kind
57
1 of thing.
2 This is the contractor that does work
3 for the landlord, the only bid I got
4 yesterday afternoon. I think it is
5 reasonable. It is about five dollars a
6 foot for paint and carpet.
7 MR. DREHER:
8 Any other changes that need to be
9 made or additions, threshold (phonetic) or
10 anything like that?
11 MR. MOORMAN:
12 There will be. They have doors
13 in the same places and switches, but
14 those are things I believe we can do
15 later as we get -- rather than spend
16 the money, now. If the organization
17 is viable, then we do a little better
18 space planning and do those things.
19 Even that would not be extremely
20 expensive.
21 For example, part of the third
22 floor space is an office that doesn't
23 open into the suite. It only opens
24 outside into the hall and is not
25 connected. We would want to put a
58
1 door there at some point, but for the
2 time being, we can use it for an
3 office and it has been cleaned up and
4 it is in perfect shape.
5 So, I appreciate your asking
6 and I just think we can wait and do
7 that later and -- without a major
8 disruption.
9 MR. COOK:
10 So, our next piece of business
11 is, A.J., the new lease.
12 MR. MOORMAN:
13 Yes, the second space. She did
14 assure me that we --
15 MR. HERBERT:
16 The same back door.
17 MR. MOORMAN:
18 -- was the same.
19 So, it is an additional -- it is
20 that additional space on the second
21 floor. Because this has come up
22 relatively quickly -- if we would
23 have had more time, I would have
24 shown you where we wanted to put
25 people and how we wanted to arrange
59
1 it. We have some ideas, but we
2 didn't want to spend a lot of time on
3 that until we have the sense of the
4 Board on it, but --
5 MR. LEPINE:
6 What are you going to do for
7 functions?
8 MR. MOORMAN:
9 My understanding is that the
10 furnishings are generally following the
11 employees.
12 MR. HERBERT:
13 Yes.
14 MR. MOORMAN:
15 So, we should have --
16 MR. LEPINE:
17 Enough.
18 MR. MOORMAN:
19 -- most of what we need.
20 Now, my -- we are going to have
21 other things to talk about. For
22 example, we are not going to have a
23 postage machine. We will not have
24 things like that that we are going to
25 deal with, but pretty much file
60
1 cabinets and furnishings, we are led
2 to believe will go with the
3 employees. So, that is part of the
4 -- we will have to spend some money
5 to move some cubicles and re-set up
6 those and those kinds of things.
7 MR. COOK:
8 Could I make a suggestion? Since
9 Citizens is not going to move out, we will
10 meet before March 31st. If we can maybe
11 start the process of putting the lease
12 together and having some plans of what it
13 will look like before we vote on it or do
14 we have to move on it before that?
15 MR. MOORMAN:
16 Yes. She is putting it on the
17 market right now or getting ready to,
18 but Citizens won't be moving out
19 right away. I'm not sure exactly --
20 MR. HERBERT:
21 If there is a ninety day out, I don't
22 have a big concern about adding additional
23 lease space --
24 MR. MOORMAN:
25 She -- I specifically requested
61
1 -- here is the lease.
2 MR. HERBERT:
3 -- because, even if the
4 Legislature does decide to abolish
5 PIAL, that is not going to happen
6 overnight. There will be a period of
7 time where there's got to be
8 sufficient resources for people to
9 operate while it winds down.
10 MR. MOORMAN:
11 Well, this particular spot, if we
12 were to move in, and then, shut down
13 and vacate it, it will be ready to
14 rent. It won't be -- we are not
15 going to do any build out or anything
16 in there. It is -- it will be
17 something that -- I know in Texas you
18 can't -- you know, if you re-lease
19 the space, you can't ding the prior
20 tenant more than what you actually
21 lost on the deal.
22 So, I don't know if that is the
23 case here in Louisiana, but this is
24 space that would lease fairly
25 quickly, I think. I don't think
62
1 there is any other space available in
2 the building other than little
3 pieces.
4 MR. COOK:
5 Well, I am going to need a motion
6 from the Board to go ahead and
7 lease the second floor space.
8 That would give us seventy-two
9 hundred -- I'm sorry, forty-six
10 hundred square feet at seventy-two
11 hundred dollars a month for both
12 locations.
13 MR. GOURGUES:
14 Motion.
15 MR. GOLDBERG:
16 Second.
17 MR. COOK:
18 Anybody opposed to that?
19 (No response.)
20 MR. COOK:
21 All right. We have approved
22 that.
23 MR. MOORMAN:
24 Thank you very much.
25 Executive Director expense
63
1 reimbursement, I'm not sure what
2 that --
3 MR. HERBERT:
4 There was an issue with the
5 Legislative Auditor that expenses of the
6 prior Executive Director were not -- did
7 not go through a formalized system. So, a
8 system was implemented that your expenses
9 would go to Dennis --
10 MR. COOK:
11 And Joe.
12 MR. HERBERT:
13 -- and Joe would sign off on them,
14 and then, a copy would be provided to
15 the Board for informational purposes and
16 that was just to address that prior
17 problem.
18 MR. MOORMAN:
19 Again, I do plan to submit my
20 billing invoices through Dennis
21 and be ratified here, I suppose,
22 but my expense reimbursements I
23 will apply for will be mileage
24 between New Orleans and Baton Rouge
25 and back and the occasional take
64
1 the employees to lunch to talk
2 business and that kind of thing.
3 It will be deminimus. I won't
4 spend the money unless the Board
5 knows about it ahead of time.
6 The employee vehicle lease is not
7 for me. The practice has been -- and
8 that was in your packet, I believe.
9 The practice has been that the
10 inspectors -- field inspectors are
11 given a car and the company has owned
12 these vehicles and my understanding
13 is that they have been trading them
14 in every sixty thousand miles. We
15 will deal with that issue later.
16 That seems kind of low to me, but it
17 is part of the compensation package
18 for these field inspectors.
19 One -- we were short -- my
20 understanding is, short one car as of
21 December, say, of this last year and
22 had one extra field inspector.
23 Perhaps, he has been hired, and then,
24 one was let go, Bubba Gagenheimer
25 (phonetic) -- or Buddy.
65
1 MR. HERBERT:
2 Buddy.
3 MR. MOORMAN:
4 Anyway, he was let go. His wife,
5 by the way, still works right outside my
6 office and she seems content, happy,
7 everyone is getting along okay, but when
8 he was let go, his car was given to the
9 one that was renting a car, but now we
10 have hired one to replace Buddy. He has
11 been -- he was hired the first of January
12 to keep the staff at the level it was.
13 According to Todd Maddox, the
14 Pricing Department Manager, he won't
15 be ready to be live in the field
16 until April, but he has gone to --
17 gosh, I'm blank. Is it Avis or
18 Hertz?
19 MR. LEPINE:
20 Enterprise.
21 MR. O'CONNOR:
22 Enterprise.
23 MR. MOORMAN:
24 Enterprise will rent the car,
25 rent a Malibu, which is second from
66
1 the smallest, for seven hundred and
2 thirty-five dollars a month. We pay
3 gas, but it is a straight rental. It
4 is a month to month. There is no
5 contract, no guaranty.
6 When they did it before for that
7 one field inspector for a short
8 period of time, they gave him a new
9 car. I'm not sure that that's a
10 guaranty, but low mileage cars, to
11 me, that seems perfect for our
12 situation. The whole idea of owning
13 a fleet of cars compared to this
14 option of renting seems probably
15 problematic anyway.
16 So, the immediate need is to
17 authorize the rental on this car for
18 this field inspector, who is already
19 on staff, when he is ready to go in
20 the field, which will be another mont
21 or so.
22 MR. O'BRIEN:
23 Is there a mileage limitation?
24 MR. MOORMAN:
25 There's no mileage limitation --
67
1 I take that back, Ed. I think it is
2 three thousand a month.
3 MR. O'BRIEN:
4 Three thousand and thirty-six
5 thousand a year.
6 MR. MOORMAN:
7 So, it is well above -- Todd
8 indicates that they are averaging, I
9 think, fifteen hundred a month, something
10 like that.
11 MR. O'BRIEN:
12 They do the maintenance, the oil
13 change and brakes?
14 MR. MOORMAN:
15 They do the maintenance, I believe,
16 and all we do is pay the gas.
17 MR. COOK:
18 What about insurance?
19 MR. MOORMAN:
20 You know, I wish I knew the
21 answer to the insurance, but
22 certainly we would have to insure
23 ourselves.
24 MR, O'BRIEN:
25 We would have to insure
68
1 ourselves.
2 MR. MOORMAN:
3 You know, I just don't know the
4 answer to that.
5 MR. LEPINE:
6 You said it was a month to month
7 lease, it is not any longer than that?
8 MR. MOORMAN:
9 Yes. There's no commitment is
10 the way I understand it.
11 Charles Davidson is our new guy.
12 Here, I will pass these around.
13 This is the memo from Todd Maddox.
14 MR. O'CONNOR:
15 We have that.
16 MR. COOK:
17 This one is more detailed.
18 MR. MOORMAN:
19 Yes. He talks about the average
20 use and so forth. That is my
21 understanding. You know, one way or
22 another, we have to insure ourselves,
23 of course, but even at that, it is
24 perfect for our situation, I think,
25 and then, I think down the road, if
69
1 it is a viable entity, we visit the
2 issue about whether to work something
3 out like that on a permanent basis.
4 MR. COOK:
5 Could we add a rental car to
6 that?
7 MR. O'BRIEN:
8 Yes. We had the last one on
9 there.
10 MR. COOK:
11 The business auto policy.
12 MR. O'CONNOR:
13 We ought to ask Paul.
14 Do we need a motion?
15 MR. COOK:
16 We need a motion to go ahead and
17 rent this car for our new employee
18 starting in April.
19 MS. PRESTON:
20 Didn't we vote on this before for
21 somebody?
22 MR. O'CONNOR:
23 Yes, we did.
24 MR. LEPINE:
25 We said we would provide him a
70
1 car.
2 MR. COOK:
3 I thought we were buying a car.
4 MS. PRESTON:
5 We were buying a car, but then
6 there was a suggestion -- I think I
7 made the suggestion that we rent
8 until we figure out what is going to
9 happen with PIAL.
10 MR. DREHER:
11 I think the employee ended up not
12 needing a car.
13 MR. O'CONNOR:
14 Exactly. It was mooted and now
15 they have hired somebody.
16 MR. COOK:
17 Well, I think we were going the
18 rental route.
19 MR. MOORMAN:
20 Actually, I believe they rented
21 one for a couple of weeks or a month
22 or something until the guy was fired,
23 and then, they have him his car.
24 MR. COOK:
25 Do I have a motion to accept?
71
1 MR. O'CONNOR:
2 So moved.
3 MR. O'BRIEN:
4 I'll second.
5 MR. COOK:
6 Second, Ed.
7 Anybody opposed?
8 (No response.)
9 MR. COOK:
10 All right, Mr. Executive Director,
11 anything else?
12 MR. MOORMAN:
13 Well, I have something further
14 down on the Agenda.
15 MR. COOK:
16 Our next piece of business is
17 network infrastructure implementation
18 by ITBD.
19 A.J., do you have anything on
20 that?
21 MR. HERBERT:
22 There should be a status report
23 for the Board that is included in
24 your packet. Let me make sure of
25 that. Yes, there is.
72
1 Basically, I.T. By Design is the
2 vendor that was hired at the last
3 meeting to handle the separation of
4 the technology from PIAL and Citizens
5 and to get PIAL set up in its new
6 offices. So, they are going to be
7 basically -- right now, PIAL and
8 Citizens share servers and they are
9 going to handle the separation of all
10 of that. So, Citizens keeps their
11 data. PIAL keeps its data.
12 You know, they are going to wire
13 the phones. They are going to --
14 then, pursuant to this, PIAL's
15 servers are now going to be hosted at
16 a secure center in Baton Rouge that
17 is hurricane proof and all that other
18 stuff and where they are now, they
19 are, you know, in some jeopardy since
20 they are in Metairie, but it will all
21 be moved to Baton Rouge in the secure
22 site.
23 So, that is just a status report
24 from the vendor on what is going on
25 with that. That is only for
73
1 informational purposes. No action on
2 it is required.
3 MR. COOK:
4 Now, we have the resolution to
5 separate from Citizens.
6 MR. HERBERT:
7 Yes. I am going to --
8 MR. COOK:
9 It is a handout.
10 MR. HERBERT:
11 -- pass this around.
12 Over the course of the -- I
13 guess, the past sixty days or so,
14 PIAL has been working with Citizens
15 to separate and we have been working
16 with vendors, because, for example,
17 all of the pension was under PIAL.
18 There was a million dollar under
19 funded pension liability that was
20 fully funded in December of last
21 year.
22 We are moving personnel to
23 Citizens, but we have got to make
24 sure that the pension follows them.
25 We have got to make sure that the
74
1 401K is done and as we deal with the
2 vendors in going about splitting up
3 the benefits issues, the vendors have
4 been asking for some Board
5 authorization of splitting the two
6 entities.
7 I know we have talked about it,
8 but just to have something that we
9 can always provide for them in the
10 future, I am asking the Board to
11 approve this resolution, so, that we
12 won't have any delays in trying to
13 complete the separation by March
14 31st.
15 Frankly, it is better for the
16 employees. They are tired of all the
17 insecurity and wondering what is
18 going to happen and I think it helps
19 us in order to demonstrate some
20 certainty and to put a date there
21 that everyone is working towards.
22 MR. COOK:
23 We are going to need a motion to
24 accept the resolution and a second
25 and a roll call vote?
75
1 MR. HERBERT:
2 It really doesn't need to be roll
3 call.
4 MR. COOK:
5 So, do I have a motion to accept
6 this resolution?
7 MR. MOORMAN:
8 We have John Wortman's passive
9 agreement on that.
10 Do we need to have him endorse
11 this formally?
12 MR. HERBERT:
13 They are going to have to do
14 their own resolution. I mean, we
15 agreed to the March 31st date.
16 MR. GOURGUES:
17 Motion.
18 MR. COOK:
19 And a second?
20 MS. BROOKS:
21 Second.
22 MR. COOK:
23 Is anyone opposed to this
24 resolution?
25 (No response.)
76
1 MR. COOK:
2 This will be signed by the
3 Secretary.
4 MR. O'CONNOR:
5 Who is the Secretary?
6 MR. HERBERT:
7 We will just make it signed by
8 the Chairman.
9 MR. O'CONNOR:
10 I don't think we have a Secretary
11 anymore, do we?
12 MR. LEPINE:
13 Do we need to add Bob's name
14 in here since you've got Wortman's
15 name?
16 MR. HERBERT:
17 Well, we have -- Paragraph 3 has
18 Bob as the Executive Director.
19 MR. LEPINE:
20 Well, it says -- No. 1 has, "PIAL
21 shall cooperate with John Wortman,
22 Executive Director." Don't we need
23 to specifically put --
24 MR. HERBERT:
25 I'm not understanding --
77
1 MR. LEPINE:
2 -- put Bob Moorman's name --
3 MR. HERBERT:
4 All right. Section 1 --
5 MR. COOK:
6 We are going on to the phone and
7 the P.O. Box.
8 MR. MOORMAN:
9 We have been assigned, I believe,
10 a new phone number and they are now
11 operating with two separate phones at
12 the main switchboard.
13 It is not -- in my opinion, it
14 would be hard to make an improvement
15 on this. I called in there a couple
16 of weeks ago when I was first coming
17 over and couldn't figure out how to
18 get through to anybody and this
19 morning John Wortman announced that
20 they had solve that problem and put
21 in a new directory system for
22 Citizens. So, we will have the same
23 for us, a look up system on the last
24 name.
25 Now, we are going to have some
78
1 issues on the phone system that I'm
2 not up to speed on yet, but, you
3 know, they apparently have a very
4 expensive Cisco system there now and
5 we are certainly not going to go out
6 and spend a zillion dollars on a
7 phone system for a dozen folks. So,
8 I think I will be able to speak to
9 that a little bit better next time,
10 but we do have a phone number.
11 We need a post office box and
12 it needs to have a New Orleans
13 address and I have just -- I just got
14 an E-mail message that one has come
15 open at the same station we have been
16 using, which would be a hundred and
17 fifty bucks for six months and it is
18 Loyola, I believe. It just came in.
19 We had just found -- the only one we
20 could get was Carrollton, but I got
21 an E-mail that there is one at
22 Loyola, eleven by eleven post office
23 box and we will have our statutory
24 New Orleans address.
25 But, just to give you an idea of
79
1 the little issues, it is like running
2 a small business. Where the current
3 situation has a man going to the post
4 office everyday in the company van,
5 we are not going to have that. So,
6 we are going to have to have somebody
7 dropping by the Post Office to pick
8 up the mail.
9 You know, you always have to be
10 careful about the insurance issues on
11 that.
12 MR. HENRY:
13 May I ask a question? The reason
14 is the domicile issue?
15 MR. HERBERT:
16 Yes.
17 MR. HENRY:
18 If we could fix that --
19 MR. HERBERT:
20 In the Legislative Session.
21 MR. HENRY:
22 -- what we propose to do in this
23 Session, if that helps you -- and I
24 know you have to deal with it until
25 then, but that should have been fixed
80
1 already. The folks didn't want it
2 fixed before and we didn't fix it.
3 If you don't have any problem with
4 that, we are going to fix that during
5 this Session.
6 MR. MOORMAN:
7 I think we can get a box within a
8 few blocks of the office, if I'm not
9 mistaken, and certainly have some of the
10 mail come to the office, but that would
11 help.
12 MR. HENRY:
13 That doesn't help you right now,
14 but I just didn't want to --
15 MR. O'BRIEN:
16 Have you looked at a courier service?
17 MR. MOORMAN:
18 No, I haven't.
19 MR. O'BRIEN:
20 Why don't you look at a private
21 courier service and make sure they
22 have insurance.
23 MR. MOORMAN:
24 See if they do that everyday and
25 that is a good thought.
81
1 MR. O'BRIEN:
2 Yes. That would save the problem
3 of an employee out of the office
4 worried about traffic and accidents.
5 MR. MOORMAN:
6 We have a couple of guys,
7 department heads, you know, that we
8 could have do that in their company
9 cars.
10 MR. O'BRIEN:
11 That's still -- you may find a
12 courier service would be --
13 MR. MOORMAN:
14 Yes.
15 MR. O'BRIEN:
16 -- would solve a whole lot of
17 problems.
18 MR. MOORMAN:
19 The idea of running a business
20 and not getting the mail everyday --
21 MR. O'BRIEN:
22 Correct.
23 MR. MOORMAN:
24 -- is not the way to do it.
25 Thank you for that.
82
1 MR. O'BRIEN:
2 Just for your information.
3 Zip code 7123 -- 0123 is where I
4 live in Harahan, but if you enter New
5 Orleans, Louisiana, 70123, it goes to
6 the Harahan station. It is the trick
7 in the trade, but they rate my car
8 insurance based on New Orleans.
9 MR. HENRY:
10 They should if they write it at
11 all.
12 MR. O'CONNOR:
13 I don't know why they write it.
14 MR. O'BRIEN:
15 I should be with State Farm, but
16 I'm not.
17 MR. O'CONNOR:
18 I don't know why they write it.
19 MR. O'BRIEN:
20 What?
21 MR. O'CONNOR:
22 I don't know why they write it.
23 MR. O'BRIEN:
24 I haven't had an accident in a
25 year -- well, ten months.
83
1 MR. MOORMAN:
2 Other transition issues, as I
3 say, are going to come up. Looking
4 at -- I understand we are sending out
5 twelve hundred or so pieces of mail
6 each month, various things. We are
7 not going to have a postage machine
8 and the first blush on that is four
9 hundred a month for a sixty-three
10 month minimum lease kind of thing,
11 but then now we are hearing that
12 Pitney-Bowes has a little higher rate
13 for a shorter term lease, it is kind
14 of a close call in there.
15 The suggestion was made that
16 maybe we could get Citizens to do our
17 mailings for us and I'm thinking that
18 is not a good idea once we are
19 separated. So, that is just is an
20 example of another, you know, little
21 issue. There are going to be a lot
22 of these little things when you
23 basically start a new business that
24 we will have to look at.
25 Certainly, for the time being, we
84
1 can get a roll of stamps.
2 MR. O'BRIEN:
3 Another idea, either go online or
4 call the Postal Service and see if
5 they will pick up your mail and run
6 it through the machine for you for a
7 service charge.
8 MR. MOORMAN:
9 The Postal Service will do that?
10 MR. O'BRIEN:
11 At one time, they did. I don't know
12 if they still do.
13 MR. HENRY:
14 Tell them you know Ed O'Brien.
15 MR. O'BRIEN:
16 That will make sure they won't do
17 it. I would use Mr. E.L. Henry on
18 that.
19 You are more of a postal guy than
20 I am.
21 MR. COOK:
22 You have our new P.O. Box you
23 said?
24 MR. MOORMAN:
25 No. With the Board's approval,
85
1 we will contract for a new P.O. Box
2 and I guess it will be in the station
3 where we've been we can place the
4 bid, and then, it would be a hundred
5 and fifty dollars for six months.
6 MR. COOK:
7 We talked about seeing if we
8 could do it in Jefferson or by
9 statute, does it have to be New
10 Orleans?
11 MR. HERBERT:
12 By statute, it is supposed to be
13 domiciled in New Orleans and they are
14 domiciled in Metairie. So, the post
15 office box is kept there as a result
16 of that issue. What Bubba has raised
17 is that as we go about making some of
18 the technical amendments to PIAL
19 legislation, that's one where we can
20 fix it.
21 MR. MOORMAN:
22 In the meantime, we will have to
23 get that in New Orleans, you know,
24 but there again, we are talking
25 stationery, business cards, all kinds
86
1 of things, every time you do these
2 kinds of things. We will try to keep
3 that to a minimum.
4 MR. HERBERT:
5 Well, don't -- can't you just put
6 the physical address on business
7 cards?
8 MR. MOORMAN:
9 I suppose we can.
10 MR. LEPINE:
11 Then, they will deliver to
12 that physical address. It won't
13 go to the post office box. You
14 would defeat the purpose if you do
15 that if they are mailing you
16 something.
17 MR. MOORMAN:
18 We will make a decision which
19 suite we are going to use for our
20 main address.
21 MR. COOK:
22 Anything else?
23 MR. MOORMAN:
24 That's all.
25 I will say I -- as I have talked
87
1 to these folks, Todd Maddox, Pricing
2 Department, Blane Robbe (phonetic),
3 who is the Public Protection Fire
4 Rating side, they really have some
5 definite ideas about what can be done
6 going forward either to produce
7 revenues or just to improve the
8 service and they also are thinking in
9 terms of staff needs and if it
10 continues as a viable entity, there
11 will have to be some additional staff
12 over the next, you know, several
13 months or year, it looks like, in
14 order to kind of pick up the slack
15 that is -- well, they have been
16 getting a little bit behind.
17 Some very interesting things have
18 come out, but I think one thing that
19 became clear to me this morning in
20 the House Insurance Committee meeting
21 is that one of the issues I need to
22 address is the consistency and
23 predictability of the rating system
24 and even application and kind of
25 quality control on that.
88
1 My sense is that they are really
2 on top of this. The average length