TO: Ray Dongelewicz Chris Stamatopoulos Joe Natale Larry McCutcheon Randy Galgon Tom Marcheski George Denke Tom Pierson Today, June 17, 1992, I have been provided with a copy of the June 6, 1992 minutes of the VOLCA General Membership Meeting, held at Edgewood In The Pines Restaurant. My comments and/or responses are to be distributed to all VOLCA Board Members, in order that they have a balanced report. This is in keeping with the agreement made when a dialogue was initiated between myself and two (2) VOLCA board members, Ray Dongelewicz and George Denke and later at a meeting between myself, Ray Dongelewicz, George Denke, Tom Pierson and Cathy Stamapoulos. I was both surprised and disappointed to learn that VOLCA had had two meetings with First Eastern Bank, without C.B.G representation. This is considered both counter productive and interference in the process required to achieve the aims, not only of C.B.G., but most importantly, those of the property owners. This common objective is and should be, to see to the proper and complete development of the entire property. Since C.B.G. was not present and/or represented at these meetings, it could not comment on things that are of vital common interest for Valley property owners and C.B.G.. For example, I would wager that the representatives of First Eastern Bank did not offer the information that they favor a Chapter 7 Liquidation to gain a rapid payoff of their secured position. Nor did First Eastern Bank offer the information that they opposed use of funds (not theirs) that had been released from an escrow account in our name, for any development or marketing purposes, but would only agree to their use in a "bare bones" maintenance operation. Both of these facts are a matter of record in the court proceedings, where they blocked the use of $250,000.00 of our own money and an emergency offer of $500,000.00 in bridge financing. This was in the month of May. How much further could we have been if registrations were in place, marketing commenced and water and sewer work continuing on an unabated basis? I agree with the comments made by Tom Marcheski relative to a class action suit being preferable to get more equitable real estate taxation. However, it would have a far greater chance of success, if led by C.B.G. and pursued properly, with definitive comparables and a large variety of classifications. Presently, the two counties use different methods and are based on ridiculous classifications actually defined by the prior developer. Individual suits are simply ignored and turned down. As the largest taxpayer, C.B.G. shares the aim of a lower tax rate. In addition, high real estate taxes discourage both sales and growth. 2 The completion of Lake Algonquin, as well as the completion of the utilities in Section E, the completion of roadwork in D, E, & EA, are all covered not only under the plan to be submitted, but will share equal importance with the golf course on a simultaneous basis. Why? Funds from sales of golf course properties will dramatically escalate the completion of all infrastructure, even though the remaining land values in the Valley alone, exceed the projected costs of the Valley area infrastructure. Additionally, income from sales of townhomes in the Arapahoe West Section, Townhomes on the Eagle Rock Golf Course and time-share units that will replace the old Eagle Rock motel, will all be used to complete the Valley area more rapidly, as well as the Golf Course. C.B.G. is not just developing the Valley area alone, it is developing the upper mountain residential areas and the commercial facilities. It is this total planned approach that attracted the present property owners, will attract future property owners and gives value to your property and investment. It most assuredly adds dramatically to the lifestyle. YOU CAN EASILY VERIFY THESE STATEMENTS WITH PROPERTY OWNERS WHO WERE HERE BEFORE C.B.G. I regret the interference of VOLCA in the area of Arnold Palmer. This is not the first time. I will not tolerate it again. You should be made aware that not only do we enjoy a very fine relationship with the entire Palmer organization, but that they support us far more than has been demonstrated by VOLCA to date. In any event, our contract prohibits the dissemination of any information on our contract without our approval. This is a mutual thing. Prior to any response to VOLCA, I was contacted by the Palmer Organization and told them, "Just give them the up to date information as you know it". They are one of the finest professional groups in the nation and I have made it a point to keep them advised every step of the way. I believe that we have refunded all advance golf club memberships, except two. However, I will check to be certain. Upon approval of the court, any remaining refunds will be made. Memberships will not be made available to anyone, until the first nine is completed and the back nine is well underway. Another point I would like to make has to do with Maintenance Fees. At the time of purchase it was explained in detail, it is also in the Purchase Agreement, it is on your recorded deed and inherent with the recorded Covenants and Restrictions. Maintenance Fees have no relationship and are not contingent on whether or not you live in the Valley or whether or not utilities and/or roads have been installed to your property. It is these fees that provide the repairs, services and maintenance and staffing of amenities that makes life desireable and gives value to the property. Property owners that refuse to pay do a disservice to themselves and everyone else. If these fees were current (they are presently delinquent) we would not have to divert as much development dollars as we have in the past. VOLCA can do much to improve on this serious condition. The same is true of the horrendous delinquency in P.U.C. approved and mandated water and sewer utility fees. 3 Regarding the comment made relative to the possibility that some lakefront lots are considered wetlands, this is just not true. What is true is that a small portion of C.B.G.'s easement area in only several cases is considered wetlands. This is true of both Algonquin and Choctaw. It would not encroach on any lot. However, when the lake contouring commences and we can visually see the entire outline, including the projected high water mark, I may seek a revision and give an even greater wetlands area on the discharge side of the dam. This would be a delightfully planted, scenic ponding area, with footbridges and stepping stones, etc. It would also totally eliminate any perimeter wetlands allocation. Proper procedure was not followed, re: the pig roast. A formal letter request for a family outing was received from Dr. Greco in March and approved by C.B.G. VOLCA was out of order in announcing an event that they had not received a clearance on. Hovever, it may still be held, providing proper channels are followed. It must be a Valley of Lakes property owner function and follow the procedures used last year, sponsored by an individual. Both the letter seeking approval and the announcement must be revised. Regarding bonds for infrastructure, C.B.G. was the first developer to use bonds. Until that time, Schuylkill County never required sub-division bonds to guarantee infrastructure. Therefore, the areas that were platted, engineered, recorded and approved prior to C.B.G. are not bonded. The Arapahoe West Townhuse area is bonded (first phase), the Eagle Rock Estates section is bonded for the infrastructure for lots surrounding the first 9 holes. The Valley Utilities Sewer Plant was bonded by C.B.G. Each section to be released, whether in Schuylkill County or Luzerne County, will be bonded. Bonds are not required to complete improvements that are not to be sold, i.e. recreational amenities, golf course, stables and equestrian center, etc. Ken Heim's statement that $25.0 million was set aside for improvements is wrong. He may be referring to the amount of money that was spent to that date in property improvements including buildings, amenities and infrastructure. He most certainly never heard that from me and I feel certain he will concur. Regarding the $5.0 million for the golf course, as a budgeted figure, not set aside, if he is referring to the golf course, together with its clubhouse, pool, tennis courts and related structures, he would be accurate. If he is including infrastructure, he is low by 50%. Lake Calumet was an illegally planned and executed abortion, built by the prior developers and dangerous as constructed. That's why the dam was cut through. However, C.B.G. has wonderful plans for the Calumet area which include doubling its water retention area, dramatically raising the surrounding area, installing park like amenities, stone barbeque areas, lighting, cleaning and contouring the bed interior, heavily stocking it with fish, etc. This is planned to compliment the planned Valley area country club and be the ultimate focal point of family activity, not open to patrons of the commercial area. 4 Phil Kauffman's comments are regrettable. He would be wise to talk to those who have lived through that experience. Larry McCutcheon's comments are very accurate. Mr. Galgon's comments on the bank's condition, their intentions and the proposed disposition are all wrong. First, the bank has been heavily criticized by the Office of the Controller of the Currency, as it was relayed to me by executives and counsel to the bank. Second, a Federal watchdog type of committee has been set up to monitor and/or approve most actions. Third, an outside consulting firm has been hired to advise them. Fourth, a special committee of the Board of Directors has been formed. Fifth, most of their top executives have been either fired, resigned or asked to leave. The Chairman of the Board, President, Executive Vice-President, Senior Vice-President and other Vice-Presidents. Sixth, they are under an order to increase their capital base. Seventh, they have been reported in a Wall Street Journal article, as being in one of the worst conditions a bank can be listed in. They are not allowed to take brokered deposits or pay incentive interest rates to attract money for investment or loans. They are not even allowed to ask permission from the O.C.C. to do so, according to the Article. If the bank could force a Chapter 7, get control of C.B.G.'s assets and rapidly dispose of them, their operating capital would jump by anywhere from $16 - 18 million and they would also free up a loss reserve. What is the fastest way to do that? No less than four (4) separate utilities companies are interested in purchasing our utilities. This could be done rapidly. We have definitely cut into the business of several ski areas because of our family oriented slopes, excellent state of the art snowmaking equipment, lighting, beautiful lodges, computerized ticketing, close by large parking areas, good staff and ski school, etc. This year promises to be much better, whether it snows or not due to our dramatically increased snow making capacity and headstart in signing up groups. Anyone of a number of other ski areas could buy, finance and take over this facility. The Golf Course and its surrounding lots could be sold separately, as could the motel, E.R. lodge, etc. Lots could be sold at auction to individuals, builders, etc. The townhouses ditto. An appraiser together with a real estate auction firm have already visited the property twice. 5 In this scenario, the component parts can exceed the whole, because there are a thousand times more parcel buyers (who have absolutely no liability of the preceding developer) than there are large tract community builders. Under this scenario, the new utilities owners can take all the time they need to install service, since only demand, actual usage, is their motivation. Second, they would immediately file new rate hike requests, based on new proven actuals. Their overhead would be far more substantial than ours and proveable. They cannot, under the law, since they are a regulated industry be forced to lose money and can demand the profit to which they are entitled. Neither the P.U.C., nor the Consumer Advocate, not even the Attorney General can order anything different to be done.. Any unacceptable rate would be appealed and appealed again. until won. Under this scenario, your rates could be a lot closer to those suffered by the people of Hazleton, not one-fourth, of that amount, as they are now. The Eagle Rock Entrance would most certainly be closed off to Valley of Lakes property owners, since it is a separate commercial tract, with no relationship to the lower Valley residential area. Special rates for property owners at the ski area and/or golf course are not incumbent on new owners. The interest of all property owners and C.B.G. Limited are and must of necessity be one. Regarding George DePersia's comments concerning why I have not paid maintenance fees on properties I and a few friends purchased independently at Cove Ski Village, the following is offered: 1. Cove Ski Village's maintenance fees are $600.00 per lot per year, for which they do practically nothing. 2. They have misused the money for non-budgeted purposes, to satisfy the aims of an elite group. 3. They have applied fees retroactively to lots on which I did not have legal title, because of illegal procedure used by the Schuylkill County Tax Office, in not properly notifying prior owners. I cleaned up a practice which had been in place for many, many years. As a result, we (the county and I) entered into an agreement where we would escrow the funds and we would assume the expense for cleaning up the title. 88 out of 89 sales were illegal initially. We spent 2 years cleaning up most of the titles and are still working on some. I have stated time and again that lot sales do not make a community, people do. To assist Cove Ski in developing, so they could afford paved roads, full time amenities and decent water delivery (they have only a 500 gallon tank for water storage) I resold lots to builders with a restriction that they must build and not re-sell them for a profit. Those lots were sold at cost or below. Keeping the lots out of the hands of land sales operators was exactly what I wanted to accomplish. Naturally, this angered the chosen few, who wanted first, a rural private enclave and second, privileged treatment. 6 I will match Ned Leiby's offer of a $500.00 reward for the arrest and prosecution of the vandalism to the circle and destruction of the lighting at St. Jude's statue. Mr. Reese might be interested to know that I led the opposition that defeated the dump, made the first donation to start the legal fund, matched the entire amount raised by all residents on the very next day, paid legal expenses for one law firm and for experts to testify. That is a matter of public record. Regarding the purchase of the Cove Ski Lots, myself, and three other persons, not connected with C.B.G, who helped me acquire these properties, paid more than $200,000.00 out of our pockets, plus, I borrowed personally $240,000 from United Penn Bank to acquire the lots, pay the legal and other fees to clean up their titles and carry them to this date. Not one cent came from C.B.G. Limited. Even though it is not the business of any property owner, for any reason, I felt you should know. How many of our property owners would make such a disclosure of their own private ventures? Rumor, conjecture, malicious gossip never helps any cause. I have never failed to respond to any legitimate inquiry. Can you noN understand how the original VOLCA organization degenerated into an ineffective destructive mess during prior administrations? I can answer both George Morris' and Mr. Reese's questions concerning the holding tank in Section E. It is being maintained and will come out in a short time after C.B.G. takes down the 3.5 million loan. This is scheduled and is a priority. The line is to be run through EA all the way back to the plant. Without C.B.G., it will not be done; the bank cannot be forced to do it and the property owners do not and cannot get the legal right to do it. Oneida had been drinking contaminated water for years and had raw sewage in their drainage ditches before C.B.G. For more than 100 years - where was the Board of Health and D.E.R.? Nuremberg and Sheppton have been under a D.E.R. ordered Mandate to install central water and sewers for 20 years. Why in the name of God don't they have it yet? With the new system recently approved, coupled with Federal Grants, F.H.A. and other low cost loans, their user rates are projected at more than double those of Valley of Lakes residents, plus they will pay a one time stiff assessment or connection fee. In response to Mr. Matios question re: liability, ask those who have lived through a bank ownership and who spent much money to get services. Ask George Denke, Racobinski, Natale, Bott, Tokanets, Marcheski, Moylan, Sacco. I am certain they will respond honestly. Ken Heim's statements will either be retracted or he will face suit for libel. Every single item required for disclosure has always been made, and kept current with our bank, our legal counsel, our registration counsel, H.U.D. and all state commissions. When we encountered financial difficulties, due to our bank's inability to fund despite promises to the contrary, we communicated with all required to know and took 7 appropriate action without causing alarm. I will address the issue of New Jersey Steel in a separate communication, after consulting with legal counsel. In closing, I want to state that it would be extremely helpful, if C.B.G. Limited and the property owners of the Valley of Lakes presented a united front to assure approval of our financing. For those of you who were not here in the beginning, you should that when C.B.G first took over this then devastated property, our first concern was attending to the immediate needs of residents, not short term profits. We then attended to the needs of those who had wanted to build for years but were unable to. We were not legally or morally obligated to do either one. We were not bound by the promises or failures of our predecessors. We did not buy the old developer's corporation. We brought property. However, we did what I felt was right and still intend to do. Your support is both solicited and desireable.
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