5/29/2010
Board Meeting Notes 5-27-10
Board Meeting 5-27-10 Notes as viewed by Diane Porterfield
Board Members Present –
Betts Windsor Mary Pracht Jim Hannon acting as President
Tom Wright Terry Shipp
Tom Lockett Charles Wood
Frank Pohlkamp and Ray Massey - absent
Board Members Present –
Betts Windsor Mary Pracht Jim Hannon acting as President
Tom Wright Terry Shipp
Tom Lockett Charles Wood
Frank Pohlkamp and Ray Massey - absent
5/26/2010
Family Fun Center Vote - Postponed
Just wanted to let you know the Board is still working on the contract for the new Hotel/Condo Fun Center project and it will not be voted on this Thursday. We will have a special Board Meeting next Thursday specifically for the HotelCondo.
Todd Belz
Todd Belz
5/22/2010
Town Meeting 5-20-10
These are the Notes from the Town Meeting as viewed by Diane Porterfield
[If anyone would like to enter his or her own version on last Thursday night’s meeting, please feel free to do so. I will be happy to post it, as well.]
7pm - Terry Shipp giving the Treasure’s Report opened the meeting. I will post a copy of his report to go along with these notes. His primary focus seemed to be on the number of delinquent lots. Noting that out of the 1201 billed lots (&1/2 lots) 602 are delinquent by at least one month, or 50%.
[If anyone would like to enter his or her own version on last Thursday night’s meeting, please feel free to do so. I will be happy to post it, as well.]
7pm - Terry Shipp giving the Treasure’s Report opened the meeting. I will post a copy of his report to go along with these notes. His primary focus seemed to be on the number of delinquent lots. Noting that out of the 1201 billed lots (&1/2 lots) 602 are delinquent by at least one month, or 50%.
5/20/2010
Conversation with a board member
Vicki Hunsinger 5-19-10
In business one of the most important tools are facts. That is why it is important to make sure that the information given to you can be verified. I have repeatedly asked Mr. Brown for the verifiable information for his Diamondhead Condo Hotel, Ltd. project. I have asked the Board to perform due diligence. To my knowledge, none of those things have been completed. Because I am a property holder in Diamondhead and a former resident, I want to make sure that my interests and the interests of my neighbors are considered and protected in business dealings.
In business one of the most important tools are facts. That is why it is important to make sure that the information given to you can be verified. I have repeatedly asked Mr. Brown for the verifiable information for his Diamondhead Condo Hotel, Ltd. project. I have asked the Board to perform due diligence. To my knowledge, none of those things have been completed. Because I am a property holder in Diamondhead and a former resident, I want to make sure that my interests and the interests of my neighbors are considered and protected in business dealings.
Potential Liability for Diamondhead
Vicki Hunsinger
Here is what I wrote on 5/18 regarding my conversation with a former Maveron executive:
After only a couple of minutes in to the conversation, he stopped me with his take on what was happening at Diamondhead. He then went on to tell what "would happen to Diamondhead" if the venture was not successful. He was very clear that Diamondhead is in control of this situation; not Mr. Brown. Diamondhead has what Mr. Brown needs to make his venture profitable. He said that Diamondhead should be making the terms, not Brown, and that Diamondhead should have Mr. Brown put up a portion of the money in good faith. This money would not be refundable if Brown can not build.
Here is what he told me during our discussion. I am paraphrasing our discussion.
Vicki, you know this is a scam. If Diamondhead enters into a venture and this person moves on with the money that belongs to other people before he delivers any product, then the recourse of those damaged people will be to sue Diamondhead. Diamondhead will be viewed as the "deep pockets" in this business deal. The developer is gone and is protected by his LLC status to some extent. If he has nothing to begin with, then he has nothing to lose. Not only will the reputation of the community be ruined, but property values will reflect that view. In addition, legal costs, increased insurance costs, and costs for legal counsel if the insurance company will not cover this situation. In any event, any excess damages above insurance will be passed on to the property owners. This does not consider what the diversion of moneys normally spent on Diamondhead facilities will mean in terms of maintaining the community at an appropriate level. Individuals, even if on the Board, can be sued by damaged clients. This is certainly true if Diamondhead did not conduct this business transaction in a prudent, wise business manner. By this I mean that Diamondhead did not do the work necessary to assure that they were entering into an agreement which was ethical, legal, etc. If Diamondhead had fore-knowledge that this was not an ethical business deal, or even had doubts that it was ethical, then the parties to that deal have liability. If those parties are in anyway receiving some type of remuneration for participating in this, it compounds their liability. He went on to tell me about another venture capital group (I am personally a friend with the principle business associate in this group, so I knew of whom he was speaking) that has done several of these deals over the past 10 years. He told me that they require a significant amount of money be placed in escrow by the developer to show his good faith. He told me that serious developers will do the deposit, otherwise there is no capital investment by this firm. He told me that a percentage of the developers were unable to get their projects off the ground and the non-refundable deposit went to the investment group.
Here is what I wrote on 5/18 regarding my conversation with a former Maveron executive:
After only a couple of minutes in to the conversation, he stopped me with his take on what was happening at Diamondhead. He then went on to tell what "would happen to Diamondhead" if the venture was not successful. He was very clear that Diamondhead is in control of this situation; not Mr. Brown. Diamondhead has what Mr. Brown needs to make his venture profitable. He said that Diamondhead should be making the terms, not Brown, and that Diamondhead should have Mr. Brown put up a portion of the money in good faith. This money would not be refundable if Brown can not build.
Here is what he told me during our discussion. I am paraphrasing our discussion.
Vicki, you know this is a scam. If Diamondhead enters into a venture and this person moves on with the money that belongs to other people before he delivers any product, then the recourse of those damaged people will be to sue Diamondhead. Diamondhead will be viewed as the "deep pockets" in this business deal. The developer is gone and is protected by his LLC status to some extent. If he has nothing to begin with, then he has nothing to lose. Not only will the reputation of the community be ruined, but property values will reflect that view. In addition, legal costs, increased insurance costs, and costs for legal counsel if the insurance company will not cover this situation. In any event, any excess damages above insurance will be passed on to the property owners. This does not consider what the diversion of moneys normally spent on Diamondhead facilities will mean in terms of maintaining the community at an appropriate level. Individuals, even if on the Board, can be sued by damaged clients. This is certainly true if Diamondhead did not conduct this business transaction in a prudent, wise business manner. By this I mean that Diamondhead did not do the work necessary to assure that they were entering into an agreement which was ethical, legal, etc. If Diamondhead had fore-knowledge that this was not an ethical business deal, or even had doubts that it was ethical, then the parties to that deal have liability. If those parties are in anyway receiving some type of remuneration for participating in this, it compounds their liability. He went on to tell me about another venture capital group (I am personally a friend with the principle business associate in this group, so I knew of whom he was speaking) that has done several of these deals over the past 10 years. He told me that they require a significant amount of money be placed in escrow by the developer to show his good faith. He told me that serious developers will do the deposit, otherwise there is no capital investment by this firm. He told me that a percentage of the developers were unable to get their projects off the ground and the non-refundable deposit went to the investment group.
Family Fun Center News Paper article
 |
| GM Todd Belz with Larry & Rita Brown "Family Fun Center" May 20, 2010 |
5/18/2010
Money and Potential
Good Morning Diane,
I just wanted to let you know that last nite I called a former executive of Maveron. Maveron is a company in Seattle that provides money (venture capital) to start up companies. It is made up of a group of investor's who fund about $20 million a year to start ups. The person I called spent 2008/2009 handling all the "potential" investors. Here is what he told me,
I just wanted to let you know that last nite I called a former executive of Maveron. Maveron is a company in Seattle that provides money (venture capital) to start up companies. It is made up of a group of investor's who fund about $20 million a year to start ups. The person I called spent 2008/2009 handling all the "potential" investors. Here is what he told me,
5/17/2010
Family Fun Center -- Due Diligence
Vicki Hunsinger – Property Owner
Here are some facts I have discovered:
1. The construction contractor that Mr. Brown indicated would be “breaking ground” , is Metro Group Contracting dba: Metro Estate Planning Group. The address for these two “groups” is Mr. Brown’s home address. The telephone number is listed to 5 people. Two at Mr. Brown’s address, 35 Cherokee Drive, Saulsbury, and to the three Ervins in Bolivar, TN all living at the same address in Bolivar.
2. Metro Group Contracting dba: Metro Estate Planning Group has 3 employees. Dorothy Brown, President, Larry Brown, secretary, and an unidentified third person.
3. Metro Group Contracting is in the phone book and on the Internet listed under: Mobile Home Improvements category.
4. The annual revenues as reported are an estimated $175K for Metro Group Contracting dba: Metro Estate Planning Group.
5. The letterhead on the draft proposal letter is: Diamondhead Condo Hotel, Ltd. This is probably something made up for the presentation to the Diamondhead group. Ltd is a limited liability corporation in Great Britain, Canada, Australia, Wales, etc. In the United States the correct designation is LLC or LLP. There is no listing for such a company in Tennessee or Arkansas. What is the explanation for the Ltd designation? Please don’t laugh this off - if they don’t understand the correct designation for a corporation, what else don’t they understand? Or was this deliberate?
6. A research of the licenses issued for General Contractors in Arkansas and Tennessee did not show a Metro Group Contracting in the lists of companies with General Contractor licenses.
7. Mr. Brown will give the DPOA $240 for each corporate membership sold (estimated 400). What is the actual price of the membership sold by Mr. Brown? What is our cost to allow two people to play a round of golf with cart for $20? Is it more than $20?
8. 400 corporate memberships X 5 families per membership = 2000 families X 4 members each = 8,000 additional people with access to facilities? What are our capacities? What does a country club charge for golf, pool, boat docks, clubhouse, tennis courts, annual membership? Corporate membership at Hot Springs country club: Initiation fee: $3,500.00; monthly dues $272.00; good for 1 family only. The second corporate family would have an initiation fee of $3,000.00 plus the same monthly dues of $272.00.
9. With this type of membership sales will come additional responsibilities and costs to Diamondhead. If corporations pay Mr. Brown several thousand dollars, there will be specific expectations that Diamondhead will have to meet.
10. If the project is to bring in $17.5 million with $12 million construction costs; what is Mr. Brown’s profit on the construction? What is Mr. Brown’s profit on the “presold” memberships at Diamondhead?
11. Where is the Environmental Impact Statement? Status?
12. It has been over five weeks since the draft proposal letter was presented. Mr. Brown states in that draft proposal letter that, “ these plans are somewhat sketchy, as we still do not have the planning and design phase completed”. Please show good faith and share your marketing plan, business plan, planning and design aka: project plan.
13. Please show good faith and provide information on the funding source for this project? This would include the financial plan for the project. Include a list of the principle parties involved in the project.
14. Would the Board please share a copy of the due diligence report that they have done on the discovery process for this project?
15. I do not know what the cost of construction is in Arkansas. But, I am going to use the lowest national average of $85.00 per square foot for residential new home: hypothetically 1500 (average is 1600) square feet for a 3 bedroom, 2 bath condo = $127,500. 110 condos X $127,500 = $14,025,000. Remember, these are “upscale” dwellings and I am using the lowest estimate per foot (a standard quality cost is $120.30 per sq. foot). A commercial center at 40,000 square feet (using the lower estimate of footage) and the lowest average price for economy structure 40,000 x $217.20 = $8,688,000. This does not include the amenities required for a Fun Center to be a fun center. Total to build this project: $22,713,000.00. To build an apartment style building which is more along the lines of the condo hotel idea the cost is much higher, $179.80 per square foot X 165,000 sq. feet = $29,667,000 plus the cost of the fun center building. This is probably a $40 million to $50 million project.
16. Presales will mean that Mr. Brown will begin to take in money for “memberships” to Diamondhead and down payments on the condo hotels units. Hypothetically, if Mr. Brown sells a corporate membership at $1250. (that’s $250 per family for the 5 families, a bargain) he should realize the following profit: $1250 X 400 = $500,000 - $96,000 (Diamondhead share) = $404,000.00. Pre-sell 110 condos at $5,000.00 down payment . Take 110 X $5000 = $550,000.00. Total to Mr. Brown is $954,000.00. Memberships at Diamondhead to condo purchasers at $360 X 110 = $36,600.00. This $36,600.00 appears to be less than the cost of one full time employee with benefits. If these are prepaid and the condos aren’t built??????? And, if they sign a contract, is Diamondhead obligated to assure that they will “always” have access to Diamondhead facilities?
Here are some facts I have discovered:
1. The construction contractor that Mr. Brown indicated would be “breaking ground” , is Metro Group Contracting dba: Metro Estate Planning Group. The address for these two “groups” is Mr. Brown’s home address. The telephone number is listed to 5 people. Two at Mr. Brown’s address, 35 Cherokee Drive, Saulsbury, and to the three Ervins in Bolivar, TN all living at the same address in Bolivar.
2. Metro Group Contracting dba: Metro Estate Planning Group has 3 employees. Dorothy Brown, President, Larry Brown, secretary, and an unidentified third person.
3. Metro Group Contracting is in the phone book and on the Internet listed under: Mobile Home Improvements category.
4. The annual revenues as reported are an estimated $175K for Metro Group Contracting dba: Metro Estate Planning Group.
5. The letterhead on the draft proposal letter is: Diamondhead Condo Hotel, Ltd. This is probably something made up for the presentation to the Diamondhead group. Ltd is a limited liability corporation in Great Britain, Canada, Australia, Wales, etc. In the United States the correct designation is LLC or LLP. There is no listing for such a company in Tennessee or Arkansas. What is the explanation for the Ltd designation? Please don’t laugh this off - if they don’t understand the correct designation for a corporation, what else don’t they understand? Or was this deliberate?
6. A research of the licenses issued for General Contractors in Arkansas and Tennessee did not show a Metro Group Contracting in the lists of companies with General Contractor licenses.
7. Mr. Brown will give the DPOA $240 for each corporate membership sold (estimated 400). What is the actual price of the membership sold by Mr. Brown? What is our cost to allow two people to play a round of golf with cart for $20? Is it more than $20?
8. 400 corporate memberships X 5 families per membership = 2000 families X 4 members each = 8,000 additional people with access to facilities? What are our capacities? What does a country club charge for golf, pool, boat docks, clubhouse, tennis courts, annual membership? Corporate membership at Hot Springs country club: Initiation fee: $3,500.00; monthly dues $272.00; good for 1 family only. The second corporate family would have an initiation fee of $3,000.00 plus the same monthly dues of $272.00.
9. With this type of membership sales will come additional responsibilities and costs to Diamondhead. If corporations pay Mr. Brown several thousand dollars, there will be specific expectations that Diamondhead will have to meet.
10. If the project is to bring in $17.5 million with $12 million construction costs; what is Mr. Brown’s profit on the construction? What is Mr. Brown’s profit on the “presold” memberships at Diamondhead?
11. Where is the Environmental Impact Statement? Status?
12. It has been over five weeks since the draft proposal letter was presented. Mr. Brown states in that draft proposal letter that, “ these plans are somewhat sketchy, as we still do not have the planning and design phase completed”. Please show good faith and share your marketing plan, business plan, planning and design aka: project plan.
13. Please show good faith and provide information on the funding source for this project? This would include the financial plan for the project. Include a list of the principle parties involved in the project.
14. Would the Board please share a copy of the due diligence report that they have done on the discovery process for this project?
15. I do not know what the cost of construction is in Arkansas. But, I am going to use the lowest national average of $85.00 per square foot for residential new home: hypothetically 1500 (average is 1600) square feet for a 3 bedroom, 2 bath condo = $127,500. 110 condos X $127,500 = $14,025,000. Remember, these are “upscale” dwellings and I am using the lowest estimate per foot (a standard quality cost is $120.30 per sq. foot). A commercial center at 40,000 square feet (using the lower estimate of footage) and the lowest average price for economy structure 40,000 x $217.20 = $8,688,000. This does not include the amenities required for a Fun Center to be a fun center. Total to build this project: $22,713,000.00. To build an apartment style building which is more along the lines of the condo hotel idea the cost is much higher, $179.80 per square foot X 165,000 sq. feet = $29,667,000 plus the cost of the fun center building. This is probably a $40 million to $50 million project.
16. Presales will mean that Mr. Brown will begin to take in money for “memberships” to Diamondhead and down payments on the condo hotels units. Hypothetically, if Mr. Brown sells a corporate membership at $1250. (that’s $250 per family for the 5 families, a bargain) he should realize the following profit: $1250 X 400 = $500,000 - $96,000 (Diamondhead share) = $404,000.00. Pre-sell 110 condos at $5,000.00 down payment . Take 110 X $5000 = $550,000.00. Total to Mr. Brown is $954,000.00. Memberships at Diamondhead to condo purchasers at $360 X 110 = $36,600.00. This $36,600.00 appears to be less than the cost of one full time employee with benefits. If these are prepaid and the condos aren’t built??????? And, if they sign a contract, is Diamondhead obligated to assure that they will “always” have access to Diamondhead facilities?
5/13/2010
Agenda Meeting 5-13-10
I am very happy to announce that Jack Watson was able to attend and provide us, the membership of Diamondhead, with the following information. Click on the "Read More" to learn what happened at the Agenda meeting, today (5-13-10)
Here are my notes from the meeting.
There was agreement to replace a pool backwash valve at a cost of $1700. Pool could not be opened without it.
It was agreed that there would be no exceptions made to collection of late fees on DPOA fee. This is required by the By-Laws.
An outline of an agreement between the DPOA Board and Larry Brown [Family Fun Center] was presented. It was agreed that Mr. Brown would have his attorney formalize the agreement and it would be given to DPOA attorney for review. It is the intent to present it at the May 20,2010 Town Hall meeting. A copy was not provided to observers but the folowing items were discussed: 1) Golf round fee; $20+tax which is lower than proposed property owner fee. It was agreed that this would not be fair and therefore the property owner fee would be reduced to the same amount. 2) Mr. Brown's organization would market any Golf Corporate Membership program authorized by the Board for an agreed upon fee. 3) Mr. Brown's organization would be granted developer status for any lots taken over during a condo purchase agreement. 4) No construction of the Fun Center will begin until all condo units are pre-sold. 5) Lot owners will be given a opportunity to sell their lot to Mr. Brown in conjunction with the purchase of a condo unit with special emphasis on marketing to DPOA delinquent lot owners.
There was a discussion regarding a possible moratorium on hunting. It was discussed that maybe an evaluation by Fish & Game Commission should be conducted.
There was a discussion regarding the dog enclosure on Diamondhead Dr. with no clear conclusion.
The Special Board meeting scheduled was conducted in Executive session.
Jack Watson
Here are my notes from the meeting.
There was agreement to replace a pool backwash valve at a cost of $1700. Pool could not be opened without it.
It was agreed that there would be no exceptions made to collection of late fees on DPOA fee. This is required by the By-Laws.
An outline of an agreement between the DPOA Board and Larry Brown [Family Fun Center] was presented. It was agreed that Mr. Brown would have his attorney formalize the agreement and it would be given to DPOA attorney for review. It is the intent to present it at the May 20,2010 Town Hall meeting. A copy was not provided to observers but the folowing items were discussed: 1) Golf round fee; $20+tax which is lower than proposed property owner fee. It was agreed that this would not be fair and therefore the property owner fee would be reduced to the same amount. 2) Mr. Brown's organization would market any Golf Corporate Membership program authorized by the Board for an agreed upon fee. 3) Mr. Brown's organization would be granted developer status for any lots taken over during a condo purchase agreement. 4) No construction of the Fun Center will begin until all condo units are pre-sold. 5) Lot owners will be given a opportunity to sell their lot to Mr. Brown in conjunction with the purchase of a condo unit with special emphasis on marketing to DPOA delinquent lot owners.
There was a discussion regarding a possible moratorium on hunting. It was discussed that maybe an evaluation by Fish & Game Commission should be conducted.
There was a discussion regarding the dog enclosure on Diamondhead Dr. with no clear conclusion.
The Special Board meeting scheduled was conducted in Executive session.
Jack Watson
5/06/2010
President Massey - Family Fun Center
Many of the e-mails you may have recently received, concerning the proposed family entertainment center, contain inaccurate information that should be clarified. Some were sent anonymously, for which there is no responsibility for content or accuracy. The proposal itself is in the preliminary discussion and negotiation process. Most business dealings, as you are aware, are always subject to negotiations and revisions and generally not available for publication until completion.
Some of the inaccuracies are the following:
1. This offer is not from DRC. The only involvement with DRC is the sale of the land.
2. The units will not be sold for $1K to $2K per sq. ft. The units will vary in size from 1 to 3 bedrooms and average $175K in price.
3. One must realize that the primary reason for purchasing or usage of the condos is the entertainment center, not Diamondhead amenities.
4. The condition of our amenities is not exactly marginal. We now have a new country club facility that will enable prospective new property owners to see something positive happening in the community. It also provides a beautiful setting for corporate meetings and private parties. The pool, like any other 30-year old project, is always subject to maintenance and repair. The pool manager has stated that we have a more than sufficient area for the limited amount of visitors expected from the family center. It is so underused, that it will be closed on Mondays.
5. According to Riviera Utilities, our sewer system currently has the capacity for at least 200 more homes. The center will only have 100 units with an anticipated 35% to 50% occupancy at one time, and will have no adverse effect on the water supply.
6. A special committee, Golf Revenue Working Group, has just completed a review of golf course revenue, expenses (approximate $250K shortfall/subsidy), usage, fee structures and marketing. There were approximately 25 people, the great majority of them golfers, in attendance at these meetings. They realized the steps that must be taken to increase membership and play in order to reduce the significant shortfall/subsidy for the enhancement and well-being of the entire community. They made many positive and constructive recommendations to increase play for the board to review and adopt.
7. Regarding the “overplay” statement, we were made aware of the fact that most golf courses have an annual play of approximately 35K-50K rounds. Our course has approximately 20K, so you can see any play resulting from the condos will have a very welcome effect. Using minimal figures on anticipated golf play, we could reduce the shortfall/subsidy by approximately $200K.
8. This in no way “…is another attempt of DRC to control of the Diamondhead community without any responsibility”. The family center is to be built by Metro Group Contractors, Inc. and has absolutely no ties to DRC, other than the land purchase.
9. Regarding “Should these negotiations end as other “negotiations” in the past we can expect a monumental give away of our property rights.” In fact, we are giving away nothing, but increasing the potential to significantly increase revenues at the 19th Hole and the golf course, both operating with significant losses.
10. Now let’s look at some other facts:
a. This year we have 17 houses delinquent in annual maintenance fees. Last year we had 11.
b. This year we billed 1201 lots, last year 1239. We currently have 50 Garland County lots up for auction by the state. These are lots where no taxes have been paid for three years. There has also been no annual maintenance fee paid for at least this long. This does not include any Hot Spring County lots that will be announced at a later date. The state also has another 139 lots in their inventory for sale.
c. This year we have 387 lots on our roles that are delinquent in annual maintenance fees. Last year 314.
This is not a trend specific to Diamondhead, but in resort communities nationwide. It is, nevertheless, a significant loss of revenue. Currently, there are no homes under construction in DH. Something must be done, but it takes a major amount of funding to market a community such as ours.
So now comes Larry and Reba Brown, owners of Metro Group Contractors. They are under no obligation to give us anything. They are not building in/on Diamondhead platted residential property, so they have absolutely no annual maintenance fee obligation, or anything else. Currently, anyone can eat and drink at the 19th Hole restaurant, or play golf, and we certainly encourage that. However, they are willing to minimally share with us the following (still being negotiated):
1. Dues on condos--$36,000 per year
2. Corporate Memberships--$96,000 per year
3. Contribution from profits--$25,000 per year.
Total Projected Annual Income--$157,000.
Additionally, they will give a one-time $150,000 donation from the sale of the condos. The project will provide approximately 125 temporary construction jobs, and an additional 125-150 permanent jobs. Many of our residents may want some of these, others who are employed there may want to purchase homes in Diamondhead. This will give us the opportunity to sell lots and homes to those who would not, without the facility, ever even hear of Diamondhead. The Browns also intend to build homes on many of the lots they receive as trade-in for partial payment on condos. The center will also provide its own security.
This is a $12M project that will greatly contribute to the positive welfare of Diamondhead. There should not be a substantial influx of traffic coming into Diamondhead causing the problems anticipated by some. As stated above, these people are coming primarily for the family entertainment center, not Diamondhead.
Two Diamondhead property owners, who were very skeptical of the facility, visited a similar facility in Missouri . They were extremely impressed with what they saw and believe it will be a huge asset for Diamondhead.
And last, but certainly not least, at the last Town Meeting with a near-capacity audience, and after all questions had been answered, the overwhelming response was to welcome the project.
Hopefully this will provide a better understanding of this project and the need for it.
Submitted by DPOA Board President, Ray Massey
Some of the inaccuracies are the following:
1. This offer is not from DRC. The only involvement with DRC is the sale of the land.
2. The units will not be sold for $1K to $2K per sq. ft. The units will vary in size from 1 to 3 bedrooms and average $175K in price.
3. One must realize that the primary reason for purchasing or usage of the condos is the entertainment center, not Diamondhead amenities.
4. The condition of our amenities is not exactly marginal. We now have a new country club facility that will enable prospective new property owners to see something positive happening in the community. It also provides a beautiful setting for corporate meetings and private parties. The pool, like any other 30-year old project, is always subject to maintenance and repair. The pool manager has stated that we have a more than sufficient area for the limited amount of visitors expected from the family center. It is so underused, that it will be closed on Mondays.
5. According to Riviera Utilities, our sewer system currently has the capacity for at least 200 more homes. The center will only have 100 units with an anticipated 35% to 50% occupancy at one time, and will have no adverse effect on the water supply.
6. A special committee, Golf Revenue Working Group, has just completed a review of golf course revenue, expenses (approximate $250K shortfall/subsidy), usage, fee structures and marketing. There were approximately 25 people, the great majority of them golfers, in attendance at these meetings. They realized the steps that must be taken to increase membership and play in order to reduce the significant shortfall/subsidy for the enhancement and well-being of the entire community. They made many positive and constructive recommendations to increase play for the board to review and adopt.
7. Regarding the “overplay” statement, we were made aware of the fact that most golf courses have an annual play of approximately 35K-50K rounds. Our course has approximately 20K, so you can see any play resulting from the condos will have a very welcome effect. Using minimal figures on anticipated golf play, we could reduce the shortfall/subsidy by approximately $200K.
8. This in no way “…is another attempt of DRC to control of the Diamondhead community without any responsibility”. The family center is to be built by Metro Group Contractors, Inc. and has absolutely no ties to DRC, other than the land purchase.
9. Regarding “Should these negotiations end as other “negotiations” in the past we can expect a monumental give away of our property rights.” In fact, we are giving away nothing, but increasing the potential to significantly increase revenues at the 19th Hole and the golf course, both operating with significant losses.
10. Now let’s look at some other facts:
a. This year we have 17 houses delinquent in annual maintenance fees. Last year we had 11.
b. This year we billed 1201 lots, last year 1239. We currently have 50 Garland County lots up for auction by the state. These are lots where no taxes have been paid for three years. There has also been no annual maintenance fee paid for at least this long. This does not include any Hot Spring County lots that will be announced at a later date. The state also has another 139 lots in their inventory for sale.
c. This year we have 387 lots on our roles that are delinquent in annual maintenance fees. Last year 314.
This is not a trend specific to Diamondhead, but in resort communities nationwide. It is, nevertheless, a significant loss of revenue. Currently, there are no homes under construction in DH. Something must be done, but it takes a major amount of funding to market a community such as ours.
So now comes Larry and Reba Brown, owners of Metro Group Contractors. They are under no obligation to give us anything. They are not building in/on Diamondhead platted residential property, so they have absolutely no annual maintenance fee obligation, or anything else. Currently, anyone can eat and drink at the 19th Hole restaurant, or play golf, and we certainly encourage that. However, they are willing to minimally share with us the following (still being negotiated):
1. Dues on condos--$36,000 per year
2. Corporate Memberships--$96,000 per year
3. Contribution from profits--$25,000 per year.
Total Projected Annual Income--$157,000.
Additionally, they will give a one-time $150,000 donation from the sale of the condos. The project will provide approximately 125 temporary construction jobs, and an additional 125-150 permanent jobs. Many of our residents may want some of these, others who are employed there may want to purchase homes in Diamondhead. This will give us the opportunity to sell lots and homes to those who would not, without the facility, ever even hear of Diamondhead. The Browns also intend to build homes on many of the lots they receive as trade-in for partial payment on condos. The center will also provide its own security.
This is a $12M project that will greatly contribute to the positive welfare of Diamondhead. There should not be a substantial influx of traffic coming into Diamondhead causing the problems anticipated by some. As stated above, these people are coming primarily for the family entertainment center, not Diamondhead.
Two Diamondhead property owners, who were very skeptical of the facility, visited a similar facility in Missouri . They were extremely impressed with what they saw and believe it will be a huge asset for Diamondhead.
And last, but certainly not least, at the last Town Meeting with a near-capacity audience, and after all questions had been answered, the overwhelming response was to welcome the project.
Hopefully this will provide a better understanding of this project and the need for it.
Submitted by DPOA Board President, Ray Massey
