A MEETING OF THE BOARD OF MANAGERS OF MANOR VAIL CONDOMINUM ASSOCIATION. Saturday, March 31, :00 a.m.

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1 A MEETING OF THE BOARD OF MANAGERS OF MANOR VAIL CONDOMINUM ASSOCIATION Saturday, March 31, :00 a.m. A meeting of the Board of Managers of Manor Vail Condominium Association was called to order at 8:00 a.m. on Saturday, March 31, 2007, by President G. Porzak in the Board Room at Manor Vail Resort. Present: John Anstey Bill Bethke Lloyd Bishop Ron Byrne Mike Fay Desmond Kearns Rosi Littlefield Glenn Porzak Ingrid Raiser Reed Roesler Present by Invitation: Also present: Bob McCleary, General Manager Leanna Roberts, Assistant General Manager Sara Newsam, Recording Secretary Steph Moore, Controller Brad Perry, Director of Maintenance Bob Hottman, EKSH Harry Hathaway, Owner Units 245A and 248A Managers Report All slides that R. McCleary discussed are included as a part of these minutes. R. McCleary reported that after we had the units re-rated there was a reduction in the percentage rating by the Lodging Quality Assurance Program. Management has a plan to address upgrading of the units during the construction period. It is management s intention to reopen as a 4 diamond property and further discussion of this will be held later in the meeting. R. McCleary discussed the combined operations summary for 2006 and reported that from a revenue standpoint we had a pretty good year. The uncertainty of the project caused some financial inefficiency. Payroll was about where it should have been. but losses were in operating expenses and undistributed expenses. Expenses were almost10% over budget. The single biggest reason was deferred maintenance and we added one more staff member. Marketing and Sales was over budget due to the start and stop of the operation. Total fixed expenses were about right on budget. We had budgeted

2 for a $449,000 catch up assessment and it came in at $649,000. At the end of July we were better than budget and at the end of the year, after the shutdown for sprinklers, we were over budget. Last yeas the loss was $103,000 and this year it is $433,000. Most of this loss is due to the shutdown and restart of the operation in the fall. Food and Beverage loss is attributed to the replacement of the majority of the kitchen staff and the loss of group business, again due to project timing uncertainty. Our group/banquet business was significantly affected by the shutdown. The Source of Business chart shows that wholesale business has increased significantly. Wholesale business can act quickly when a business wants to fill space and is a good source of business but it is discounted business. From a business strategy wholesalers would not be the first choice of business. Reservations from the Internet continue to increase. Repeat guests have not dropped off but referral guests have. Association Operations Summary we did increase dues as of June 1 st. The budget before the dues increase was $336,000 and maintenance expenses and the 175 settlement had to be added on to this. There will be a catch up assessment this year of approximately $1,300 per studio and $2,600 per Manor House. If we had increased the dues at the beginning of the year we would have been right on. Reserve fund Through the end of 2007 the reserve fund will be at $1,571, Capital Expenditures This list shows the items that will be done in the spring of 2008 in anticipation of reopening in July of Included in these expenditures is the remodeling of the mezzanine which includes the replacement of carpeting, removal of the bar area, new and improved bathrooms, removal of the HVAC system and opening up of the walls to have the capability to be a part of the Lord Gore. We will have bids and plans for the mezzanine at the fall meeting. The question was raised about heated sidewalks around the property. Currently the walkway from the garage to the lobby is heated and the walkway to the garage is heated. There is no plan at this time to heat the sidewalks in front of the Manor Houses. Estimates will be obtained to heat the sidewalks in front of the Manor Houses and the studio buildings. If we were to spend $1.3 million from the capital fund in 2008 the reserve fund would drop to $583,399. There will be an updated 10 year plan available for the fall meeting. Project Expenses This summary shows how the expenses have been paid. The special assessment money is in a special account at Wells Fargo Bank. The 2

3 interest that it has earned is around $271,084. A portion of this interest was used to pay for legal fees associated with the project and the asbestos abatement consultant s costs. R. McCleary reported that the Ford Park handicap access will be on Vail Valley Drive. East West will reconfigure the path off of Vail Valley Drive to the amphitheater to accommodate ADA access and then the Ford Park Path will be closed during the construction. Bank Line of Credit Upon motion made and seconded, it was RESOLVED, that management is authorized to maintain and draw upon the existing $200,000 line of credit with First Bank of Vail and to increase this line of credit by $100,000 if required for working capital. Legal Update R. McCleary reported that the slip and fall case had been settled, the 175 matter had been settled and that the injury reported by the daughter of the co-owner of 287 is in the hands of the insurance company. Regarding Mr. Cinader s motion to stay the project (filed on March 30, 2007) no hearing date has yet been set. The timing of Mr. Cinader s appeal is not known at this time. Owner H. Hathaway pointed out that this very serious business and that the Board must realize that they have a strong fiduciary responsibility to all owners not have any communication between the Board and Mr. Cinader. Our legal counsel feels strongly that we need to move forward with the project. Building Permit R. Byrne wondered why we are removing furniture from the units when a building permit has not been issued. R. McCleary reported that we had come to the conclusion that we would have to move the furniture for the sprinkler installation whether or not we had a project and we have a contract with Johnson Storage and Moving to begin this work on April 2, R. Byrne made the motion not to move the furniture from the units until there is a building permit in hand. This motion died for lack of a second. At this time East West Partners joined the meeting. J. Telling talked about the status of the project - they have the gross maximum price from G. E. Johnson and they hope to have the partial permit in the near future and the full permit within about four weeks. Closing on the development rights is expected to take place this next week. Six units have sold and there are still two or three really good interested prospects. They reported that they feel that Mr. Cinader s appeal does not have merit and they are proceeding full speed ahead. If they stopped now, it would have a very detrimental effect on the project. 3

4 Audit Committee A charter for the Audit Committee was reviewed by B. McCleary, G. Porzak, B. Hottman, J. Anstey and B. Bethke. Following review of this charter, which is attached as a part of these minutes, upon motion made and seconded, it was RESOLVED to approve the Audit Committee Charter. This committee will be made up of two Board members and in the future may include a non-board member owner. Upon motion made and seconded, it was RESOLVED, to appoint John Anstey and Bill Bethke to the Audit Committee. B. Bethke will serve as Chairman of the Audit Committee. Board Composition In September the terms of four Board members will end. A letter will be send to all owners asking for anyone interested in serving on the Board. The annual owners meeting will be held on Saturday, September 1, The location will be determined and the owners will be notified. It is the hope that we will be able to hold this meeting near Manor Vail and that the owners will have a tour of the construction. Audit Report Bob Hottman reported that they are delighted to have Steph Moore back as Controller. On the financial statements you will see all of the information that the audit report will contain. Owners will get the rental assessment on the March statement. Page 4 of the fund balance gives a running account on the equity of the operation. We have the opportunity to build a brand new reserve schedule once the new units are on board. Industry comparisons are right on for rooms division and food and beverage. Marketing is close to standard but next year it will be a bit higher because basically we will be opening a new property. The management fee is right on and comparable to industry standards. Quality of the facilities is a serious consideration and the common areas will need to be improved. R. Hottman reported that once new units are on board the cost allocations need to be reviewed to make sure that they are equitable. R. McCleary, S. Moore and B. Hottman will review East West expenditures to make sure that Manor Vail knows the methodology of the home run clause. East West Partners is obligated to share all invoices with Manor Vail Condominium Association. B. Hottman feels that the home run clause needs to be absolutely adequately defined. The key role of the Audit Committee should be to dialogue with R. McCleary and staff. R. McCleary feels it is very important that everyone be very comfortable with the invoices and the numbers. Upon motion made and seconded, it was 4

5 RESOLVED, to approve the audited report for AAA Four Diamond Rating R. McCleary reported that it is Management s intention to open Manor Vail in 2008 as a AAA Four Diamond Resort. Preliminary information on the AAA Four Diamond Rating is included as a part of these minutes. Staff is working on the standards necessary to achieve this rating and will come back to the Board at the fall meeting with plans and costs to achieve this goal. Following additional discussion by members of the Board and upon motion made and seconded, it was RESOLVED, that when Manor Vail reopens in 2008 the units will have to be rated at least 80% by the lodging quality assurance program in order to stay in the rental program. There being no further business to come before this meeting, upon motion made and seconded the meeting was adjourned at 11:45 a.m. Recording Secretary 5